CENTRAL & SOUTH WEST CORP, DEFA14A, 1999-03-10

CENTRAL & SOUTH WEST CORP
DEFA14A, 1999-03-10
ELECTRIC SERVICES

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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CENTRAL AND SOUTH WEST CORPORATION

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<PAGE>

>
COVER

CENTRAL AND SOUTHWEST CORPORATION
1998 SUMMARY ANNUAL REPORT

[GRAPHICS OMITTED]

Focus on the Future. Focus on Success.
<PAGE>

INSIDE COVER

Central and South West Corporation

1998 Summary Annual Report

Table of Contents
CSW Milestones 3
Letter from the Chairman 4
CSW Operations 10
Financial Information 23
Comparative Statistical and Financial Record 28
Board of Directors and Officers 30
Shareholder Information 31

CSW Profile

Central and South West Corporation is an investor-owned electric utility
holding company based in Dallas, Texas.
CSW owns and operates four electric utilities in the United States: Central
Power and Light Company, Public Service Company of Oklahoma, Southwestern
Electric Power Company and West Texas Utilities Company. These companies serve
1.7 million customers in an area covering 152,000 square miles of Texas,
Oklahoma, Louisiana and Arkansas.
CSW also owns a regional electricity company in the United Kingdom, SEEBOARD
plc, which serves 2 million customers in Southeast England.
CSW engages in international energy, telecommunications and energy services
businesses through the following nonutility subsidiaries:
-CSW Energy, Inc., which develops, acquires, constructs, owns and operates
nonutility power projects and exempt wholesale generators in the United
States;
-CSW International, Inc., which engages in international activities,
including developing, acquiring, financing and owning foreign utility
companies;
-C3 Communications, Inc., which provides automated metering, interval meter
data and related products and services, and high-capacity city-to-city
fiber networks for telecommunications carriers and other wholesale
customers;
-EnerShop Inc., which provides energy-management analysis, equipment and
EnerACTSM services to increase productivity and lower energy costs for
customers nationwide;
-CSW Credit, Inc., which buys the accounts receivable of our electric
utility subsidiaries and other utilities;
-CSW Leasing, Inc., which owns leveraged leases of capital equipment; and
-Central and South West Services, Inc., which provides management and
professional services; all services for the corporation and its four U.S.
electric companies are conducted at cost.

Through separate investments in various joint ventures, CSW owns indirect
interests in:
-Numanco, which provides staffing services for nuclear power plants;
-Diversified Energy Contractors Company, a CSW Energy subsidiary that
repairs, upgrades, installs and maintains steam, power and process systems
in the U.S.;
-Empresa de Eletricidade Vale Paranapanema S.A., an electric distribution
company serving 1.9 million customers in Brazil;
-Enertek, a joint-venture company that owns Mexico's first major
cogeneration project located in Altamira, Tamaulipas;
-Beacon Gas, a joint venture with BP Amoco to market natural gas throughout
the U.K.;
-Medway Power, a joint venture among SEEBOARD, Southern Electric Power
Generation Limited and AES Medway Electric Ltd., that owns and operates a
675-megawatt independent power station on the Isle of Grain in the U.K.;
and
-South Coast Power Limited, a joint venture with Scottish Power plc to build
a 400-megawatt combined-cycle generating station in West Sussex, England.

<PAGE>

Focus on the Future. Focus on Success.

As we continue to pursue our merger with American Electric Power Company and to
prepare for the opening of the electric power industry to greater competition,
we are focused on the future and a strategy of success for Central and South
West. We are positioning CSW for this new era by enhancing and building on our
traditional strengths.

Our strategy is to seek excellence in customer service, to lower costs in our
operations and to invest in a dynamic portfolio of assets and services that can
be optimally managed with our proven capabilities.

Given the progress we made on our goals in 1998, we believe we are positioned
for success in the new electric power world of tomorrow.

1
<PAGE>

Financial Highlights
Central and South West Corporation

For the years ended December 31, 1998 1997
________________________________________________________________________________
financial data in millions

Operating Revenues $5,482 $5,268
U.S. Electric Fuel and Purchased Power 1,301 1,266
United Kingdom Cost of Sales 1,204 1,291
Other Operating Expenses 1,719 1,630
Taxes 392 346
________________________________________________________________________________
Operating Income 866 735
Other Income 42 32
Interest and Other Charges (468) (438)
Extraordinary Item - (176)
________________________________________________________________________________
Net Income for Common Stock $ 440 $ 153
================================================================================

common stock data and dividends

Basic and Diluted Earnings per Share $2.07 $0.72
Dividends per Share $1.74 $1.74
Book Value per Share $17.04 $16.76
Average Common Shares Outstanding (millions) 212.4 212.1
Return on Average Common Equity 12.4% 4.2%
Dividend Yield 6.3% 6.4%
Dividend Payout Ratio 84% 242%
Year-End Market Price $27 7/16 $27 1/16
================================================================================

closing market price dividends
high low paid
________________________________________________________________________________
1998

First Quarter $27 13/16 $26 1/4 $0.435
Second Quarter $27 5/8 $25 5/8 $0.435
Third Quarter $28 3/4 $25 1/4 $0.435
Fourth Quarter $30 1/16 $27 3/8 $0.435
________________________________________________________________________________
$1.74
===============================
________________________________________________________________________________
1997

First Quarter $25 3/4 $21 1/4 $0.435
Second Quarter $22 1/8 $18 1/4 $0.435
Third Quarter $22 7/16 $19 3/4 $0.435
Fourth Quarter $27 5/16 $20 5/8 $0.435
________________________________________________________________________________
$1.74
===============================

The condensed consolidated statements in this summary annual report were derived
from the consolidated financial statements that appear in CSW's 1998 Financial
Report to shareholders. Copies of the consolidated financial statements and the
report of Arthur Andersen LLP thereon may be obtained by calling Central and
South West Corporation's Investor Services Department at 1-800-527-5797.
2
<PAGE>

CSW Milestones

CORPORATE
-Received strong support for our merger with American Electric Power Company
from the shareholders of both companies.
-Gained authorization for the merger from the U.S. Nuclear Regulatory
Commission and a conditional approval from the Arkansas Public Service
Commission.
-Supported legislation to open electric power to fair competition in Texas,
Oklahoma, Louisiana and Arkansas.

U.S. ELECTRIC UTILITIES
-Controlled operating and maintenance costs to save approximately $21
million in 1998 compared to the effects of inflation.
-Set records for the amount of power generated and revenues earned.
-Met power demands for the record heat wave in 1998 without any significant
power disruption.
-Rated by Public Utilities Fortnightly as the sixth-most-efficient electric
utility among the top 100 in the U.S.
-Won the 1998 Texas Environmental Excellence Award from the Texas Natural
Resource Conservation Commission for our renewable energy project in West
Texas.
-Honored as 1999 Tree Line USA Utilities by the National Arbor Day
Foundation for work in tree care, tree planting and public education.

INTERNATIONAL UTILITIES
-Our English utility subsidiary, SEEBOARD plc, began operating in a
competitive market, with customers in certain areas now able to select
their electric power supplier.
-SEEBOARD began a 30-year contract to operate, maintain and renew the power
supply network for the London Underground, the world's largest metro rail
system.
-Increased our investment in Vale, a private Brazilian electric system, to
$180 million.

INDEPENDENT POWER PLANTS
-Began operating a 330-megawatt cogeneration power plant that provides
electricity and steam to Phillips Petroleum's adjacent facility and sells
electricity in the Texas competitive market.
-Began operating a 109-megawatt cogeneration plant near Tampico, Mexico, in
partnership with Alpek, S.A. de C.V., a subsidiary of ALFA.
-Began constructing a 500-megawatt merchant power plant in the Rio Grande
Valley of Texas.
-Began constructing a 400-megawatt combined-cycle gas-turbine power station
in West Sussex, England, in partnership with Scottish Power plc.

OTHER NONUTILITY SERVICES
-Our EnerShop subsidiary made progress offering its EnerACT
energy-management services, which help clients better understand and
monitor energy costs at their facilities.
-Restructured C3 Communications' telecommunications business by selling its
retail telephone operations to a former partner for $56 million.
-C3's Utility Automation Division completed its state-of-the-art Meter Data
Center to collect, validate and deliver interval meter data to one-third of
California's direct-access market.

3
<PAGE>

Letter from the Chairman

I am pleased to report that 1998 was a strong year for CSW, in terms of both
short-term achievements and progress on our strategic goals. Our financial
results rebounded from those of 1997, and we achieved improvements in every key
measure. We did so by focusing on what we do best--providing excellent customer
service and operating efficient, low-cost power systems. These strengths
position us well for the future competitive electric marketplace and for our
pending merger with American Electric Power Company.

For 1998 we set four priorities:
-Improve our financial performance significantly;
-Work to complete our merger with AEP;
-Continue adapting our utility business for the coming competitive
marketplace; and
-Seek state and federal legislation to restructure electric utilities in a
way that is fair to all parties.
As the milestones on page 3 illustrate, we made excellent progress in all four
areas.

FINANCIAL PERFORMANCE
CSW turned in significantly improved results in 1998. For the year, our
consolidated earnings were $2.07 per share, compared to $0.72 in 1997, when we
encountered several major regulatory costs. In January 1999 the board of
directors declared a regular quarterly dividend of 43.5 cents a share. We expect
to continue paying dividends at this level until the merger with AEP is
completed, subject to quarterly board review of CSW's financial condition and
operating performance.
We are proud of the significant improvement over 1997. Summertime weather,
which was hotter than we had experienced in the past several years, was an
important factor. However, the results also reflect our dedication to containing
costs and expanding services, the economic growth occurring in the areas we
serve and the extraordinary commitment of our 11,000 employees. Despite the
4
<PAGE>
[BAR GRAPH]
EARNINGS AND DIVIDENDS PER SHARE
Dollars

Reported
Dividends One-Time Items Earnings
1994 $1.70 $2.08
1995 1.72 2.10
1996 1.74 2.07
1997 1.74 $1.16 0.72
1998 1.74 2.07

[BAR GRAPH]
RETURN ON AVERAGE
COMMON EQUITY
Percent

1994 0.134
1995 0.131
1996 0.121
1997 0.042
1998 0.124

pressures of tighter budgets, uncertainties about effects of the pending merger,
floods and other weather emergencies, they met our high expectations in terms of
reliability, quality and customer satisfaction. I am proud of them for all their
fine work.

COMPLETING THE MERGER
Our proposed merger with AEP continues to undergo state and federal
regulatory review. As a result of the schedules set for formal hearings, we have
revised the merger's expected completion date to late 1999. Merging the two
companies to form a new AEP will create America's premier electric power company
and will offer substantial benefits to our shareholders, customers and
employees.
In 1998 we received strong endorsements of the merger from the shareholders
of both companies. We also received approval from the U.S. Nuclear Regulatory
Commission and a conditional approval from the Arkansas Public Service
Commission. We expect approvals during 1999 from the other states we serve.
The Federal Energy Regulatory Commission has set hearings on the merger to
begin in June 1999. We have filed our request for approval by the Securities and
Exchange Commission and are preparing filings to be made soon at the Federal
Communications Commission and the U.S. Department of Justice.
Although we are confident we will eventually gain the approval of each
regulatory body reviewing our merger, we are aware of how difficult it is--how
uniquely difficult--for electric utilities to merge. We estimate it will take
approximately two years altogether to receive all the required regulatory
approvals.
Unfortunately, this timetable is typical for large electric utility mergers
and is far longer than for mergers of larger companies in other industries.
If we are to have a competitive electric power industry, the regulatory
process must be streamlined to allow utility companies to move much faster to
capture efficiency and productivity improvements.
5
<PAGE>

THE YEAR 2000 ISSUE
Around the world, organizations and governments now are testing and updating
their data systems so that they will operate properly in the new century. Since
1996, CSW has been working to ensure that all our computer systems will function
accurately and without interruption before, during and after January 1, 2000.
Our Year 2000 readiness is a top priority. More than 30 Readiness Teams are
in various phases of the project and represent the equivalent of about 90
full-time employee positions working on the issue.
We estimate that the total cost of this work will approach $38 million.
Through the end of 1998, we had spent approximately $10 million on the project.
The corrective and certification measures are well under way for all our
systems, and completion is expected by the end of the second quarter of 1999.
Although we cannot guarantee that service interruptions will not occur, we
are making every reasonable effort to provide a smooth transition into 2000 and
beyond.

PREPARING FOR THE FUTURE
The coming millennium holds great promise for our company and our industry.
In particular, we are most optimistic about our merger with AEP. While the
merger is progressing, we are continuing to operate CSW to offer maximum value
to our customers, shareholders and communities. Because our strategic plan is so
similar to AEP's, we believe that our present efforts will contribute added
value to the merger and be consistent with our obligations under the merger
agreement.
As a result of initiatives taken during the past few years, we now receive
more than one-third of our revenues from operations other than our four
regulated U.S. electric utilities. We are pleased by the performance of our
electric utility interests in England and Brazil. Based on their results, we
continue to seek additional investment opportunities in countries that have
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<PAGE>

[GRAPHIC OMITTED - IMAGE OF A RACE]
Competition
The race to compete in the electric power business already is under way,
and CSW's path to success is through offering low-cost energy and excellent
service.

favorable growth rates and relatively stable economies. At the same time, we are
mindful of the economic volatility in South America and other regions of the
world.
Our principal nonutility activity--building and operating independent power
plants--achieved a milestone year in 1998. We completed two large projects early
in the year and began developing two major new projects. This progress
strengthened our position in the highly competitive and growing independent
power market.

________________________________________________________________________________
BENEFITS OF THE AEP-CSW MERGER
________________________________________________________________________________

The merger between Central and South West and American Electric Power will
combine two of the country's largest and best electric power systems and will
offer substantial benefits to their shareholders, customers and employees.

The merger will yield an estimated $2 billion in savings over 10 years
through the elimination of duplicate corporate and administrative programs
and through greater efficiencies in operations and purchasing.

The new AEP will be the foremost electric utility in the U.S. in terms of
generating capacity, total customers and amount of power sold in wholesale
and retail markets.

It will serve nearly 9 million electric customers, 4.7 million in 11 U.S.
states and more than 4 million in other countries.

Although the new AEP will not be the largest utility in any state it
serves, it will be competitive in all 11.

Both AEP and CSW are ranked today among the very best in customer service
and operating efficiency; the new AEP will be able to capitalize on these
strengths to become America's premier diversified low-cost utility.
________________________________________________________________________________
7
<PAGE>
[PIE CHART]
1998 REVENUES

U.S. Electric 64%
SEEBOARD 32%
Other 4%

To improve our understanding of competitive energy markets, we expanded our
power trading operations, which currently are conducted by our four regulated
utilities; we won major customers for energy services and consulting by our
EnerShop subsidiary; and we gained full certification in the competitive
California meter data market.
Along with our expansions, we sold activities that did not capitalize on our
principal strengths. Our SEEBOARD subsidiary sold its 41 retail appliance
superstores, and our C3 Communications unit sold its retail telephone operation
to concentrate on developing city-to-city fiber optic networks.
We believe all of these steps are on the right track for success in a more
competitive business.

INDUSTRY RESTRUCTURING
Restructuring the U.S. electric power industry to let customers choose their
electric suppliers is an unpredictable process--some states are moving quickly,
others are hardly moving at all, and the federal government is still considering
legislation.
The State of Oklahoma has enacted a restructuring law, but most of its
details are still to be worked out. The Texas Legislature is now considering
legislation that would open the industry to new competition. The legislatures in
Arkansas and Louisiana also are discussing the issue, but it is too early to
know whether they will act on restructuring legislation in 1999. In all four
states, we are encouraging lawmakers to speed up the process and eliminate the
uncertainty that now surrounds electric restructuring in our region.
Although timely action is important, revamping an industry as large and as
crucial as electric power must be done with great care. We continue to remind
policymakers that new rules for electric companies must not favor one customer
over another; they must safeguard the reliability and quality of electric
service; and they must allow utilities to recover any stranded investments that
were prudently incurred and approved by regulators.
8
<PAGE>
[PHOTOGRAPH OF E.R. BROOKS - OMITTED]
E.R. Brooks
Chairman and Chief Executive Officer

Several restructuring plans in other states have met these criteria. We are
confident that they can be achieved in our four states as well.
In the U.K., SEEBOARD is competing nationally for both electric and gas
customers as a result of the phased opening of the retail marketplace that
started in September 1998. Deregulation of U.K. power suppliers has increased
competition based on price and has led to some customers to change suppliers.
However, SEEBOARD is competing strongly on both price and service in its own
area and in neighboring regions. In particular, it is adding many new dual-fuel
customers, who buy both their electricity and natural gas from the company.

LOOKING AHEAD
1999 probably will be my last year as chairman and chief executive officer of
CSW. I will retire from active management upon completion of the merger and then
will join the board of directors of the new AEP. The new company will be led by
my friend and colleague, Dr. E. Linn Draper, Jr., who is currently chairman,
president and chief executive officer of AEP.
I have mixed feelings about stepping down at this exciting time in the
history of the company. However, I am pleased that CSW will become part of the
largest and best-positioned electric power company in the U.S., which will be
very capable of competing successfully in the global power business.
I am pleased, too, that it will be in the hands of excellent management and
employees, which is the strongest reason the new company will be successful in
the future.

/s/E.R. Brooks
E. R. Brooks
Chairman and Chief Executive Officer
February 12, 1999
9
<PAGE>

U.S. Electric Utilities

Focus on...
Low Prices and Quality Service

Our four electric utilities in the U.S. not only met their financial goals
for 1998, but also overcame the elements.
Weather extremes of floods, tornadoes, ice storms and one of the most intense
heat waves in history besieged our service areas. Victoria, Texas, was hit by
the worst flood ever recorded there when the Guadalupe River rose 11 feet above
flood stage. Abilene endured 37 days of temperatures over 100 degrees.
Shreveport suffered an ice storm on Christmas Eve that plunged the city into a
deep freeze for most of the following week. Because of their dedication, many of
our employees were honored for helping their neighbors cope with the severe
weather and for their community service.
During June, many utilities across the country had to purchase electric power
on the spot market at record high prices, while others were unable to meet the
needs of their system and experienced blackouts. Our system was able to meet our
customers' demands and to deliver the reliable service that customers have grown
to expect. CSW also was able to sell power to other utilities that needed it.
Partly because of the weather, our U.S. utilities sold a record amount of
electricity in 1998--up 5 percent from 1997--and produced a record $3.5 billion
in revenues.

PREPARING FOR COMPETITION
Our strategy for serving customers once they have the opportunity to choose
their electric supplier is simple: offer them low prices and excellent service.
In 1998, we continued work on these two goals.
For the fifth consecutive year, we held operations and maintenance costs of
our utility system essentially flat. If those costs had been increasing at the
rate of inflation, we would have spent an additional $21 million in 1998 on O&M.
In September CSW was named the sixth-most-efficient electric utility in the
country in a study conducted by Public Utilities Fortnightly. The study was
based on the top 100 utilities' cost of fuel, O&M costs, capital and labor.
10
<PAGE>
[GRAPHIC OMITTED - SILOUETTE PRUNING TREE]
Environment
CSW has had a long commitment to environmental stewardship, which underlies our
many programs and awards to protect the land and living things.

We continued helping our communities maintain a healthy level of growth
through our economic development programs. In 1998 our U.S. utilities played key
roles in attracting 155 companies to build or expand facilities in our service
areas, providing $561 million in investments and 10,950 new jobs.

YEAR 2000 READINESS
Assuring that our data and information systems will operate properly into the
new millennium is a top priority for us. It is one we have been working on since
1996.
The problem goes back to the early days of computers. To conserve costly
memory, programs used only the last two digits for the year. As a result, the
year 2000 might be interpreted by some older computer systems as 1900.
At CSW, the span of these data systems is far-reaching. They include power
plants, transmission, distribution and substations, management information
systems for customer billing, payroll, inventory, maintenance,
telecommunications, building environmental controls, metering devices--even some
of our line trucks. We expect to complete the corrective and certification
measures for all systems by the end of the second quarter of 1999. We also are
completing contingency plans in case they are needed. We are making every
reasonable effort to provide a smooth transition into 2000 and beyond.

ENVIRONMENTAL PROGRAMS
In 1998 CSW joined Texas Governor George W. Bush's statewide clean-air
campaign by voluntarily committing to further reduce emissions from our electric
generating plants. We plan to lower nitrogen oxides emissions by 3,000 tons over
two years.
We also developed plans to file reports with the U.S. Environmental
Protection Agency specifying the amount of certain chemicals released by our
11
<PAGE>

[PIE CHART]
U.S. UTILITIES
1998 ENERGY SOURCES
Coal 39%
Natural Gas 38%
Lignite 8%
Purchases 8%
Nuclear 7%

________________________________________________________________________________
HIGHLIGHTS OF CSW'S YEAR 2000 READINESS
________________________________________________________________________________

Power Plants
-We have found no Year 2000 defect so far that would have caused a power
plant to stop operating.

-Half of our power plant controls use systems in which Year 2000 is not an
issue.

Transmission and Distribution
-Electric delivery equipment consists mainly of poles, wires, transformers,
switches and fuses in which Year 2000 is not an issue.

-Less than 15 percent of the control systems for operating our transmission
and distribution equipment are microprocessor-based, and 95 percent of
these systems process Year 2000 dates correctly. The other 5 percent are
being tested and corrected.

-The standard residential meter is not affected; however, about one in 10 of
our industrial and large commercial meters uses microprocessors; so far,
our testing has shown that 90 percent of these meters process dates
correctly. Work is under way on those that potentially could fail.

Business Systems
-The areas requiring the most work are the computers that handle customer
billing, accounting and other business systems.

-We are on track to resolve Year 2000 issues in these business systems by
the summer of 1999.

Suppliers
-We have contacted more than 6,000 suppliers to determine their readiness;
70 percent have responded.

-Contingency plans have been in place for years to deal with the effects of
tornadoes, hurricanes, ice storms and outages; these plans are being
updated to include Year 2000 issues.

-We are working with the North American Electric Reliability Council on
readiness of the interconnected national electric delivery system.

-We are working through our regional reliability councils with neighboring
electric companies on Year 2000 readiness.

This is a "Year 2000 Readiness Disclosure" within the meaning of the Year 2000
Information and Readiness Disclosure Act. This disclosure is notice of the Year
2000 problem and is in accordance with the Year 2000 Information and Readiness
Disclosure Act (P.L. 105-271).
________________________________________________________________________________
12
<PAGE>
[BAR GRAPH]

U.S. UTILITIES
AVERAGE FUEL COSTS
Dollars per Million Btu

1994 $1.82
1995 1.58
1996 1.81
1997 1.83
1998 1.67

[BAR GRAPH]
U.S. UTILITIES
REVENUES
Dollars in Millions

1994 $3,065
1995 2,883
1996 3,248
1997 3,321
1998 3,488

coal-fired power plants. The EPA is requiring electric utilities to report these
releases for the first time on July 1, 1999, under its Toxic Release Inventory
initiative.
The TRI regulations currently require nearly 30,000 facilities nationwide to
report their annual emissions of certain chemicals. TRI allows members of the
public to access this information on the types and quantities of listed
chemicals that are released. TRI requires reports on the amounts of materials
disposed of, transferred offsite, recovered and recycled.
CSW has a long history of environmental stewardship and a commitment to help
customers and shareholders understand environmental issues. To ensure that we
minimize our effect on the environment, we spend more than $50 million a year on
environmental compliance, control and stewardship activities throughout our
system. We also continually audit our facilities to evaluate and improve their
environmental performance. TRI will give us yet another tool to inform the
public about our environmental performance.

RENEWABLE ENERGY
We are committed to using renewable and other forms of energy that have a
minimal effect on the environment. In 1998 our pioneering renewable energy
project in the Davis Mountains of West Texas won the Texas Environmental
Excellence Award from the Texas Natural Resource Conservation Commission. The
75-acre energy project includes twelve 550-kilowatt wind turbines, three large
solar arrays connected to our power grid producing 205 kilowatts, and five
2-kilowatt rooftop photovoltaic systems on commercial buildings and residences.
In 1998 we announced plans to purchase an additional 75,000 kilowatts of
renewable energy from a proposed wind generation facility in McCamey, Texas. The
wind farm will contain 100 wind turbines, each generating 750 kilowatts. It is
expected to begin operating in the summer of 1999.
13
<PAGE>
THE CSW SYSTEM
[MAP - Arkansas, Louisiana, Oklahoma and Texas - Highlighting the
U.S. Electric Utilities' operating territory]

In November, the Public Utility Commission of Texas approved a contract for
CSW to install 19 solar photovoltaic systems on public schools in the service
areas of our three electric companies that operate in Texas. These solar
installations are expected to be completed in the fall of 1999. The project also
will include an educational program about alternative energy sources.

TREE LINE USA UTILITIES
Another environmental program our electric utilities have supported is the
protection and improvement of trees in our communities. By properly pruning
trees, planting appropriate new species and educating the public, we are working
to both beautify our communities and reduce the interference of tree limbs with
our power lines.
In recognition of this work, two of our companies, Central Power and Light
Company and Public Service Company of Oklahoma, were among the 38 utilities
honored as 1999 Tree Line USA Utilities. The National Arbor Day Foundation award
recognizes the companies for their proper pruning techniques and urban forestry
programs.

________________________________________________________________________________
CSW U.S. ELECTRIC UTILITIES
________________________________________________________________________________

COMPANY___________ Central Power and Light Company
HEADQUARTERS______ Corpus Christi, Texas
CUSTOMERS_________ 642,000

Public Service Company of Oklahoma
Tulsa, Oklahoma
486,000

Southwestern Electric Power Company
Shreveport, Louisiana
419,000

West Texas Utilities Company
Abilene, Texas
188,000

________________________________________________________________________________
14
<PAGE>

International Utilities

Focus on...
Markets for Growth

CSW has more electricity customers outside the United States--in England and
Brazil--than we do at home. Notwithstanding the ongoing economic problems in
many world regions, we remain optimistic about future growth opportunities
abroad as other countries privatize their utility systems and as developing
countries expand their economies faster than mature economies like that of the
U.S.

UNITED KINGDOM
In 1998 the electricity market in the U.K. began a phased opening up to
competition, allowing domestic and small business customers in selected areas to
choose their electric suppliers. During 1999, competition will be extended to
the entire country.
Our U.K. subsidiary, SEEBOARD, became one of the first regional electricity
companies to compete in the open marketplace, with part of its service area
being opened to competition in October. SEEBOARD is actively competing to retain
its existing customers and win new customers in other regions.
SEEBOARD is well positioned for the competitive marketplace. Like our U.S.
utilities, it has been focusing for many years on lowering costs and providing
excellent customer service. Since 1991, typical SEEBOARD customers have seen
their electric power costs drop by more than 30 percent in real terms, making
SEEBOARD one of the lowest-cost utilities in England. Customers can save even
more money by also buying their natural gas from Beacon Gas, a SEEBOARD
partnership with BP Amoco.
SEEBOARD's customer service consistently has been rated among the best in the
country and has been recognized by the government's electric utility regulator
as the best overall customer service.
In 1998 SEEBOARD streamlined its business by selling its 41 retail appliance
superstores to the Dixons Stores Group for about $30 million. We recognized that
SEEBOARD's retail business would not be able to compete successfully over the
long term with the larger national chains.
15
<PAGE>
In a joint venture, SEEBOARD Powerlink won a 30-year contract worth about
$1.6 billion to operate, maintain, finance and renew the high-voltage power
distribution network of the London Underground, the largest metro rail system in
the world.
SEEBOARD Powerlink will be responsible for distributing high-voltage
electricity supplies to all 270 Underground stations and to some 250 miles of
the rail system's track. SEEBOARD's partners in the Powerlink consortium are the
international electrical engineering group ABB and the international cable and
construction group BICC.

________________________________________________________________________________
SEEBOARD VALE
________________________________________________________________________________

Headquarters Headquarters
Crawley, West Sussex, U.K. Sao Paulo, Sao Paulo, Brazil

Services Services
-Electricity distribution -Electricity distribution
-Electric power supply -Hydroelectric generation
-Natural gas supply by Beacon Gas, -Electric power supply
a joint venture with BP Amoco -Equity in seven other Brazilian
-Contracting and consulting services electric systems

Operations Operations
Southeast England, including much of Brazilian states of Sao Paulo,
Surrey and West Sussex, all of East Parana, Tocantins, Minas Gerais,
Sussex and most of Kent; supply Mato Grosso and Para
nationally

Customers Customers
2 million electric customers; 1.9 million electric customers
170,000 Beacon Gas customers

________________________________________________________________________________
16
<PAGE>
[GRAPHIC OMITTED - LATIN AMERICAN IMAGE]
International
We are optimistic about international opportunities for future growth as other
countries privatize their utility systems and seek new investment partners.

SOUTH AMERICA
Our investment in a major Brazilian utility group continues to show potential
for considerable growth. Over the past several years, we have invested $180
million in Empresa de Eletricidade Vale Paranapanema S.A. (Vale), including $100
million of convertible securities during 1998.
Vale is a private Brazilian electric distribution company with holdings in
seven additional electric distribution systems. Operations are in the states of
Sao Paulo, Parana, Tocantins, Minas Gerais, Mato Grosso and Para, serving about
1.9 million customers.
Because of the devaluation of the Brazilian real and slowed investments in
the country, we are monitoring events there closely. Nevertheless, we remain
confident about the long-term potential of our Brazilian investment. With a
population of 160 million people, largely well-educated, Brazil is the growth
engine for much of South America. Vale's increase in electric power demand--some
10 percent in 1998--offers the opportunity for future growth.
CSW also has a strategic investment in stock of a Chilean electric company.
Chile has encountered economic and monetary problems since we began investing
there. Despite potential volatility in the short term, we believe the prospects
for our Chilean investment offer long-term value.

YEAR 2000 READINESS
Programs to ensure the proper operations of data and information systems
after the turn of the millennium are being pursued at SEEBOARD and Vale. As with
our Year 2000 readiness program in the U.S., we believe reasonable efforts and
proper management attention are being devoted to these programs to provide
reliable operations.
17
<PAGE>

Independent Power Plants

Focus on...
Nonutility Power Supplies

CSW Energy and CSW International, our business units that develop, acquire,
build and operate independent power plants in the U.S. and other countries,
achieved a milestone year in 1998. Early in the year, we began operating two new
generating facilities that we had built in Texas and Mexico. Later in the year,
we announced plans for two more major power plants, one in Texas and one in
England.
Our growing and diverse portfolio of successful projects, totaling 1,762
megawatts of capacity now in operation, has improved our position in the
worldwide IPP industry. In addition, the intrinsic value of our IPP business has
grown well beyond our initial equity investments.

NEW PROJECTS
Our new Frontera project, currently under construction in Texas, will be a
500-megawatt natural-gas-fired, combined-cycle facility near the city of Mission
in Hidalgo County. It is expected to cost about $200 million and to begin
generating power in mid-1999, with full operation expected by the end of the
year.
Frontera is our third Texas merchant plant--that is, an electric generating
station designed to sell its power on the open market. Our first two are the
Sweeny Cogeneration Facility, which we began operating in early 1998, and
Newgulf, which began service in 1997.
We also began constructing a 400-megawatt combined-cycle gas-turbine station
at Shoreham Harbor in West Sussex, England. Our partner in the joint venture,
named South Coast Power Limited, is Scottish Power plc. The plant is expected to
cost about $320 million and to begin operation by the winter of 2000. Its
electricity will be sold in the U.K. power pool.

NEW STARTUPS
In early 1998 we began operating two power plants we had constructed in Texas
and in Mexico.
18
<PAGE>

[GRAPHIC OMITTED - FOUR ARROWS RADIATING FROM HUMAN FIGURE]
Power Supplies
Our growing and diverse portfolio of nonutility power plants gives us a strong
position in the worldwide independent power plant industry.

________________________________________________________________________________
CSW ENERGY AND CSW INTERNATIONAL PROJECTS
Total Capacity and CSW's Ownership Interest
________________________________________________________________________________

-Brush II -Newgulf -Frontera
Brush, Colorado Near Boling, Texas Mission, Texas
68 megawatts 85 megawatts 500 megawatts*
47% interest 100% interest

-Fort Lupton -Sweeny Cogeneration -South Coast
Fort Lupton, Colorado Old Ocean, Texas Power Limited
272 megawatts 330 megawatts Shoreham Harbor,
50% interest 50% interest West Sussex, U.K.
400 megawatts
-Mulberry Cogeneration -Medway Power Station 50% interest
Bartow, Florida Isle of Grain, Kent, U.K.
120 megawatts 675 megawatts
50% interest 37.5% interest

-Orange Cogeneration -Altamira
Bartow, Florida Altamira, Tamaulipas, Mexico
103 megawatts 109 megawatts
50% interest 50% interest

* CSW has filed a proposed settlement with the Federal Energy Regulatory
Commission to sell 250 megawatts of capacity in the Frontera Power Plant two
years after the AEP-CSW merger closes to respond to market-power issues raised
in the FERC proceeding.
________________________________________________________________________________
19
<PAGE>

The Sweeny Cogeneration Facility in Old Ocean, Texas, is the first large
power plant built to operate as a merchant plant in the Texas market. It
provides steam and 90 megawatts of electricity to Phillips Petroleum Company's
adjacent refining and petrochemicals complex. The balance of the plant's
330-megawatt capacity is sold to electric utilities and power marketers on a
merchant basis. During 1998, we sold 50 percent of the equity in the plant to
an outside investor group, consistent with our plans when we started building
the Sweeny project.
The Altamira Project, located near Tampico, is the first major cogeneration
project built under Mexico's new legal framework. It also is the first project
to have long-term contractual commitments with Comision Federal de Electricidad
for the interconnection, backup and transmission of energy and with Petroleos
Mexicanos for natural gas to fuel the plant. Our partner in the project is
Alpek, S.A. de C.V., a subsidiary of the ALFA Group. We have contractual
commitments for the steam produced by the plant and its 109 megawatts of
electric power.
20
<PAGE>

Other Nonutility Services

Focus on...
Expanding Our Customer Base

ENERSHOP(R)
Our EnerShop subsidiary helps commercial and governmental customers manage
and use energy more efficiently. By working with large customers of other
utilities, we are building relationships that should pay dividends when the
marketplace opens and we can compete for their electric power supply.
In 1998 we emphasized our unique Energy Aggregation and Control Technology,
or EnerACT, which is a state-of-the-art energy information and management
service. It helps clients track "real-time" energy usage and costs to make
informed decisions about how to save energy costs.

CITY-TO-CITY FIBER NETWORKS
Our telecommunications subsidiary, C3 Communications, Inc., sold its interest
in a local-exchange and long-distance telephone company to its former partner in
the enterprise, ICG Communications. We received $56 million for the sale and
retained ownership of all the partnership's city-to-city fiber network, which
delivers optical networking to the telecommunications wholesale market.
C3 intends to develop new fiber optic routes in Texas, Oklahoma, Louisiana
and Arkansas. These services will offer synergies with our other nonutility
energy and telecommunications services.

AUTOMATED METER READING
As the electric power industry is restructured, one of the services that is
being opened to competition in some states is utility meter-reading and the
management of metering data. C3 Communications is looking at the advantages of
that competitive opportunity.
In 1998 C3 was approved by California's three major utility distribution
companies as a qualified provider to manage meter data for the deregulated
21
<PAGE>

[GRAPHIC OMITTED - SALESMAN FORGING INTO NEW MARKETS]
We are exploring products and services in energy efficiency, telecommunications
and electric vehicles to complement our electric power business.

electricity market. C3 Communications is able to read meters; validate, edit and
estimate meter-reading data; and publish and archive meter data throughout the
state. C3 is considering offering similar meter data services to other customers
requiring detailed meter data.

ELECTRIC VEHICLES
Because electric cars and trucks are more environmentally friendly than
conventional vehicles with internal-combustion engines, we have worked to
encourage EV-technology development.
We were the first utility to take delivery of the Chevrolet S-10 Electric
pickup truck. We also have worked closely with city governments and
transportation authorities to help them acquire and use electric buses, electric
baggage-handling equipment and other electric vehicle technologies.
In 1998 our electric vehicle arm, CSW Total EV(TM), began marketing electric
bicycles and scooters manufactured by Currie Technologies and ZAP Power Systems.
22
<PAGE>

Condensed Consolidated Statements of Income
Central and South West Corporation

For the years ended December 31, 1998 1997 1996

In millions, except
per share amounts
________________________________________________________________________________
revenues

U.S. Electric $3,488 $3,321 $3,248
United Kingdom 1,769 1,870 1,848
Other Diversified 225 77 59
________________________________________________________________________________
5,482 5,268 5,155
__________________________
________________________________________________________________________________
expenses and other

U.S. Electric Fuel and Purchased Power 1,301 1,266 1,228
United Kingdom cost of Sales 1,204 1,291 1,331
Operations and Maintenance 1,198 1,133 935
Depreciation and Amortization 521 497 464
Taxes 392 346 402
________________________________________________________________________________
4,616 4,533 4,360
__________________________
Operating Income 866 735 795
________________________________________________________________________________

Other Income(Expense) 42 32 (61)
Interest and Other Charges (468) (438) (437)
________________________________________________________________________________
Income from Continuing Operations 440 329 297
________________________________________________________________________________

Income from Discontinued Operations - - 12
Gain on Sale of Discontinued Operations - - 120
________________________________________________________________________________
Income Before Extraordinary Item 440 329 429
Extraordinary Item - U.K. Windfall Profits Tax - (176) -
________________________________________________________________________________
Net Income for Common Stock $ 440 $ 153 $ 429
================================================================================

Average Common Shares 212.4 212.1 207.5

Basic and Diluted Earnings per Share $2.07 $0.72 $2.07

Dividends Paid per Share of Common Stock $1.74 $1.74 $1.74

Condensed Consolidated Statements of Cash Flows
Central and South West Corporation

For the years ended December 31, 1998 1997 1996

In millions
________________________________________________________________________________
operating activities

Net Income for Common Stock $440 $153 $429
Depreciation and Amortization 552 529 521
Other Adjustments to Net Income and
Changes in Assets and Liabilities (50) 44 (75)
________________________________________________________________________________
942 726 875
_________________________
________________________________________________________________________________
investing activities

Construction Expenditures (492) (507) (521)
Acquisition Expenditures - - (1,394)
CSW Energy/CSW International Projects (184) (382) (124)
Cash Proceeds from Sale of Investments 56 - 690
Other (15) (15) 63
________________________________________________________________________________
(635) (904) (1,286)
_________________________
________________________________________________________________________________
financing activities

Common Stock Sold 11 20 477
Trust Preferred Securities Sold - 323 -
Change in Debt and Preferred Stock 142 44 219
Payment of Dividends (378) (383) (376)
________________________________________________________________________________
(225) 4 320
_________________________

Effect of Exchange Rate Changes on Cash - (5) (56)

Net Change in Cash and Cash Equivalents 82 (179) (147)
================================================================================
Cash and Cash Equivalents - January 1 75 254 401
================================================================================
Cash and Cash Equivalents - December 31 $157 $75 $254
================================================================================

24
<PAGE>

Condensed Consolidated Balance Sheets
Central and South West Corporation

As of December 31, 1998 1997

In millions
________________________________________________________________________________
assets

Electric $13,915 $13,596
Other Diversified 333 250
Accumulated Depreciation (5,652) (5,264)
________________________________________________________________________________
Fixed Assets 8,596 8,582

Current Assets 1,751 1,390
Goodwill 1,402 1,428
Other 1,995 2,051
________________________________________________________________________________
$13,744 $13,451
======================

________________________________________________________________________________
capitalization and liabilities

Common Stock $ 3,624 $ 3,556
Preferred Stock 176 202
Trust Preferred Securities 335 335
Long-Term Debt 3,785 3,898
________________________________________________________________________________
Total Capitalization 7,920 7,991

Current Liabilities 2,877 2,514
Deferred Credits 2,947 2,946
________________________________________________________________________________
$13,744 $13,451
======================

25
<PAGE>

Condensed Consolidated Statements of Stockholders' Equity
Central and South West Corporation

Accumulated
Additional Other
Common Paid-in Retained Comprehensive
In millions Stock Capital Earnings Income (Loss) Total
<S> <C> <C> <C> <C> <C>
____________________________________________________________________________________________________
1996 Balance at January 1 $675 $610 $1,893 $(4) $3,174
Sale of common stock 65 412 - - 477
Common stock dividends - - (358) - (358)
Other - - 3 - 3
____________________________________________________________________________________________________
3,296

Comprehensive Income - - - 77 77
Net Income - - 429 - 429
______
Total comprehensive income 506
______

____________________________________________________________________________________________________
1997 Balance at January 1 740 1,022 1,967 73 3,802
Sale of common stock 3 17 - - 20
Common stock dividends - - (369) - (369)
____________________________________________________________________________________________________
3,453

Comprehensive Income - - - (50) (50)
Net Income - - 153 - 153
______
Total comprehensive income 103
______

____________________________________________________________________________________________________
1998 Balance at January 1 743 1,039 1,751 23 $3,556
Sale of common stock 1 10 - - 11
Common stock dividends - - (370) - (370)
Other - - 2 - 2
____________________________________________________________________________________________________
3,199

Comprehensive Income - - - (15) (15)
Net Income - - 440 - 440
______
Total comprehensive income 425
______

____________________________________________________________________________________________________
1998 Balance at December 31 $744 $1,049 $1,823 $ 8 $3,624
____________________________________________________________________________________________________

</TABLE>

Report of Independent Public Accountants

To the Shareholders and Board of Directors
of Central and South West Corporation:

We have audited, in accordance with generally accepted auditing standards, the
consolidated balance sheets of Central and South West Corporation (a Delaware
corporation) and subsidiary companies as of December 31, 1998 and 1997, and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the three years in the period ended December 31, 1998, appearing in
the Central and South West Corporation 1998 Financial Report for the 1999 annual
meeting of shareholders of the Corporation (not presented herein). Our report
dated February 12, 1999, also appearing in the Central and South West
Corporation 1998 Financial Report, contained an explanatory sentence calling
attention to the fact that we did not audit the financial statements of CSW UK
Finance Company (1998 and 1997 - which includes CSW Investments) and CSW
Investments (1996) which statements reflect total assets and revenues of 22
percent and 32 percent in 1998, 22 percent and 35 percent in 1997 and 23 percent
and 36 percent in 1996, respectively, of the consolidated totals. Those
statements were audited by other auditors whose reports have been furnished to
us and our opinion, insofar as it relates to the amounts included for those
entities, is based solely on the report of the other auditors.

In our opinion, based on our audits and the reports of other auditors, the
information set forth in the accompanying condensed consolidated balance sheets
as of December 31, 1998 and 1997, and the related condensed consolidated
statements of income, stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1998, is fairly stated, in all material
respects, in relation to the consolidated financial statements from which it has
been derived.

/s/ Arthur Andersen LLP
Arthur Andersen LLP
Dallas, Texas
February 12, 1999

Report of Management

The condensed consolidated financial statements in this summary annual report
were derived from the consolidated financial statements that appear in the
Central and South West Corporation 1998 Financial Report for the 1999 annual
meeting of shareholders. Management is responsible for preparing the
consolidated financial statements, in accordance with generally accepted
accounting principles appropriate in the circumstances, and for maintaining the
Corporation's systems of internal accounting controls.

A description of these controls, along with management's opinion about their
overall effectiveness, is contained within the Report of Management included in
the Central and South West Corporation 1998 Financial Report for the 1999 annual
meeting of shareholders. The consolidated financial statements were audited by
the Corporation's independent public accountants, whose report on the condensed
consolidated financial statements appears above.

/s/ E.R. Brooks /s/ Lawrence B. Connors
E.R. Brooks Lawrence B. Connors
Chairman and Chief Executive Officer Controller

/s/ Glenn D. Rosilier
Glenn D. Rosilier
Executive Vice President and Chief Financial Officer
27
<PAGE>

Comparative Statistical and Financial Record
Central and South West Corporation

U.S. Utilities
For the Years Ended December 31, 1998 1997 1996 1995 1994

In millions
________________________________________________________________________________
electric revenues

Residential $1,305 $1,253 $1,243 $1,138 $1,156
Commercial 888 892 872 810 836
Industrial 777 813 781 702 733
Sales for Resale 263 243 255 224 204
Other 255 120 97 9 136
________________________________________________________________________________
$3,488 $3,321 $3,248 $2,883 $3,065
___________________________________________

In millions
________________________________________________________________________________
kilowatt-hour sales

Residential 19,757 17,995 17,883 16,872 16,368
Commercial 15,554 14,546 14,256 13,755 13,463
Industrial 21,482 21,087 20,266 19,321 18,869
Sales for Resale 8,297 7,824 8,428 8,468 7,133
Other 1,904 1,705 1,592 1,518 1,501
________________________________________________________________________________
66,994 63,157 62,425 59,934 57,334
___________________________________________

In thousands
________________________________________________________________________________
average number of customers

Residential 1,480 1,462 1,443 1,425 1,403
Commercial 218 214 209 207 203
Industrial 22 23 24 24 24
Other 15 13 14 13 13
________________________________________________________________________________
1,735 1,712 1,690 1,669 1,643
___________________________________________

In thousands
________________________________________________________________________________
number of customers

End of Period 1,752 1,724 1,704 1,683 1,661

Certain matters discussed in this summary annual report are forward-looking
statements intended to qualify for the safe harbor from liability established by
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements can generally be identified as such because the context of the
statement will include words such as CSW "believes," "anticipates" or "expects,"
or words of similar import. Similarly, statements that describe CSW's future
plans, objectives and goals also are forward-looking statements. Such statements
address future events and conditions concerning capital expenditures, earnings,
litigation, rate and other regulatory matters, liquidity and capital resources,
and accounting matters. Actual results in each case may differ materially from
those currently anticipated in such statements, by reason of factors such as
electric utility industry restructuring, including ongoing state and federal
legislative and regulatory activities; future economic conditions; developments
in the domestic and international markets in which CSW and its subsidiaries
operate; effects of state and federal regulatory approvals or proceedings and
other conditions precedent to the proposed merger with AEP, which may or may not
be satisfied; and other circumstances affecting anticipated business activities,
revenues and costs.
28
<PAGE>

Comparative Statistical and Financial Record
Central and South West Corporation

U.S. Utilities
For the Years Ended December 31, 1998 1997 1996 1995 1994

________________________________________________________________________________
residential sales average

Kilowatt-Hours per Customers 13,354 12,310 12,392 11,840 11,665
Revenue per Customer $882 $857 $861 $799 $824
Revenue per Kilowatt-Hour (cents) 6.60 6.96 6.95 6.75 7.06
________________________________________________________________________________
total electric revenue per
kilowatt-hour (cents) 5.21 5.26 5.20 4.81 5.35
________________________________________________________________________________
system peak
demand in megawatts 13,718 13,105 12,613 12,314 11,434
________________________________________________________________________________
fuel data

Average Btu per Net Kilowatt-Hour 10,514 10,405 10,440 10,299 10,344
Cost per Million Btu $1.67 $1.83 $1.81 $1.58 $1.82
Cost per Kilowatt-Hour
Generated (mills) 17.53 19.02 18.86 16.30 18.80

________________________________________________________________________________
CSW system in millions

Total Plant Cost $14,248 $13,846 $13,421 $13,778 $11,868
Annual Additions 595 675 583 1,933 616
Accumulated Depreciation 5,652 5,218 4,940 4,761 3,870

________________________________________________________________________________
capitalization

Common Stock $3,624 $3,556 $3,802 $3,178 $3,052
Preferred Stock 176 202 325 326 327
Trust Preferred Securities 335 335 - - -
Long-Term Debt 3,785 3,898 4,024 3,914 2,940

Board of Directors

Molly Shi Boren
Attorney
Norman, Oklahoma

E. R. Brooks
Chairman and Chief Executive Officer
Central and South West Corporation
Dallas, Texas

Donald M. Carlton, Ph.D.
Retired President and
Chief Executive Officer
Radian International LLC
Austin, Texas

T. J. Ellis, CBE
Chairman and Chief Executive
SEEBOARD plc
Crawley, West Sussex, United Kingdom

Joe H. Foy
Retired Partner
Bracewell and Patterson
Kerrville, Texas

William R. Howell
Chairman Emeritus
J. C. Penney Company, Inc.
Dallas, Texas

Robert W. Lawless, Ph.D.
President
The University of Tulsa
Tulsa, Oklahoma

James L. Powell
Ranching and Investments
Fort McKavett, Texas

Richard L. Sandor, Ph.D.
Chairman and Chief Executive Officer
Environmental Financial Products Limited
Chicago, Illinois

Thomas V. Shockley, III
President and Chief Operating Officer
Central and South West Corporation
Dallas, Texas

Committees of the Board of Directors

1. The Audit Committee recommends to the board of directors the independent
public accountants to be appointed, subject to shareholder approval. The Audit
Committee reviews with the independent public accountants and the Corporation's
internal auditors the scope of external and internal audits and the adequacy of,
and the compliance with, the Corporation's system of internal accounting
controls.
2. The Executive Compensation Committee reviews benefit programs and
management-succession programs and determines the compensation of executive
officers.
3. The Nominating Committee reviews and recommends candidates for election to
the board of directors.
4. The Policy Committee reviews and makes recommendations to the board of
directors concerning major policy issues; considers on a continuing basis the
composition, structure and functions of the board of directors and its
committees; and reviews existing corporate policies and recommends changes when
appropriate. The Policy Committee has authority to act in place of the board of
directors when the board is not in session, to the extent permitted by law.

The membership of these committees is as follows: Molly Shi Boren (1) (2); E. R.
Brooks, chairman of the Policy Committee (4); Donald M. Carlton (1) (3); Joe H.
Foy, chairman of the Executive Compensation Committee (2) (3) (4); William R.
Howell (2) (3); Robert W. Lawless, chairman of the Audit Committee (1) (2) (4);
James L. Powell, chairman of the Nominating Committee (1) (3) (4); and Richard
L. Sandor (1) (2).

30
<PAGE>

Officers

CENTRAL AND SOUTH WEST CORPORATION
E. R. Brooks
Chairman and Chief Executive Officer

Thomas V. Shockley, III
President and Chief Operating Officer

Ferd. C. Meyer, Jr.
Executive Vice President and General Counsel

Glenn D. Rosilier
Executive Vice President and
Chief Financial Officer

Glenn Files
Senior Vice President, Electric Operations

Thomas M. Hagan
Senior Vice President, External Affairs

Venita McCellon-Allen
Senior Vice President, Customer Relations
and Corporate Development, and
Assistant Corporate Secretary

Stephen J. McDonnell
Vice President, AEP Merger

Kenneth C. Raney, Jr.
Vice President, Associate General Counsel
and Corporate Secretary

Michael D. Smith
Vice President, Business Opportunities

Lawrence B. Connors
Controller

Wendy G. Hargus
Treasurer

CENTRAL AND SOUTH WEST SERVICES, INC.
Richard H. Bremer
President, Energy Services

Richard P. Verret
President, Production

Robert L. Zemanek
President, Energy Delivery

M. Bruce Evans
Vice President, Customer Relations
30
<PAGE>

Lana L. Hillebrand
Vice President, Human Resources

Mark W. Menezes
Vice President, Governmental Affairs

Mark D. Roberson
Vice President, Regulatory Affairs

SEEBOARD PLC
T. J. Ellis, CBE
Chairman and Chief Executive

CSW TEXAS
Alphonso R. Jackson
President

CENTRAL POWER AND LIGHT COMPANY
J. Gonzalo Sandoval
General Manager-President

PUBLIC SERVICE COMPANY OF OKLAHOMA
T. D. Churchwell
President

SOUTHWESTERN ELECTRIC POWER COMPANY
Michael H. Madison
President

WEST TEXAS UTILITIES COMPANY
Paul J. Brower
General Manager-President

CSW ENERGY, INC.
Terry D. Dennis
President and Chief Executive Officer

CSW INTERNATIONAL, INC.
Terry D. Dennis
President and Chief Executive Officer

C3 COMMUNICATIONS, INC.
Richard H. Bremer
President

ENERSHOP INC.
Richard H. Bremer
President

CSW CREDIT, INC.
Glenn D. Rosilier
President

CSW LEASING, INC.
Glenn D. Rosilier
President
30
<PAGE>

Shareholder Information

COMMON STOCK LISTING
Central and South West Corporation's common stock is traded under the ticker
symbol CSR and is listed on the New York and the Chicago stock exchanges. You
can obtain stock quotations from the New York Stock Exchange report in most
daily newspapers.

COMMON STOCK DIVIDENDS
Dividends of 43.5 cents a share were paid in each quarter of 1998. All
dividends paid by the Corporation represent taxable income to shareholders for
federal income tax purposes.
In January 1999 the Corporation's board of directors maintained the quarterly
dividend rate of 43.5 cents a share. Traditionally, the board of directors has
declared dividends to be payable on the last business day of February, May,
August and November. Future cash dividends will be dependent upon decisions of
the board of directors based upon the Corporation's earnings, financial
condition and other factors.

LOST DIVIDEND CHECK OR STOCK CERTIFICATE
If you do not receive your dividend check or stock certificate, or if either
is lost, destroyed or stolen, please contact our Investor Services Department
immediately.

STOCK TRANSFER
Central and South West Services, Inc., is the transfer agent and registrar
for Central and South West Corporation's common stock and for the preferred
stocks of the Corporation's subsidiaries.
To transfer your stock to another name, write the new name, address and tax
identification number on the back of the certificate and sign your name exactly
as it appears on the front. Then have your signature Medallion-guaranteed by a
commercial bank or stockbroker. Signatures cannot be Medallion-guaranteed by a
notary public.
Your stock certificate should be sent to our Investor Services Department by
registered or certified mail. If you have questions about transferring your
shares, you can contact our Investor Services Department.

TAXPAYER ID NUMBER
Federal law requires each shareholder to provide a taxpayer identification
number for all shareholder accounts. For individual shareholders, your ID number
is your Social Security number.
You must provide your ID number when opening a new account in our stock, even
if you already own stock in existing accounts in your name. If you do not
provide the ID number, the Corporation is required to withhold 31 percent
federal income tax from your dividends.
If your stock is registered in a joint account, it is important to tell us
the taxpayer ID number of the primary owner you designate. If you are custodian
for a minor or act as a trustee on an account, please provide the beneficial
owner's tax identification number. This will ensure that your dividends are
reported under the correct name, address and taxpayer ID number.
If you have not yet given us your taxpayer ID number, please contact our
Investor Services Department to request a W-9 form. Complete, sign and return
the form as soon as possible.

DUPLICATE ANNUAL REPORT MAILINGS
We are required to mail an annual report to all of our shareholders. You will
receive duplicate mailings from us if there are two or more shareholders at the
same address or if your shares are registered in different but similar names.

DIRECT DEPOSIT OF DIVIDENDS
We are pleased to offer direct deposit of dividend payments to your checking,
savings or credit union account at any financial institution that accepts direct
electronic deposits. Direct deposit eliminates the possibility of your check
being lost or stolen, and the funds are credited to your account on the dividend
payment date. If you would like an enrollment card, please contact our Investor
Services Department.
31
<PAGE>

PROXY AND DIVIDEND MAILINGS
Duplicate mailings of proxies and dividend checks cannot be eliminated unless
the registration is the same name for all of your accounts.
If your account registrations are identical, notify our Investor Services
Department that you want to combine your accounts.
If your account registrations are different and you want to combine your
accounts, all certificates must be issued in the one registration you prefer.
To have your certificates reissued, please follow the instructions under Stock
Transfer.

1999 ANNUAL MEETING
The 1999 annual meeting of shareholders is scheduled for April 22. It will be
held at the Fairmont Hotel, 1717 North Akard Street, Dallas, Texas 75201. The
meeting will begin at 10:30 a.m. Central time.
If you will not be attending the meeting, please vote your shares in any one
of the following ways:
-Vote by mail. Complete, sign and mail your proxy card as soon as possible.
-Vote by telephone. Call 1-800-575-6656 toll-free 24 hours a day, seven
days a week from anywhere in the U.S. or Canada.
-Vote over the Internet. Access the voting site at
https://proxy.shareholder.com/csr 24 hours a day, seven days a week.

If you vote by telephone or the Internet, please have your proxy card
available. You will be asked to provide your control number, which is printed
on the face of the proxy card. Voting by telephone or the Internet authorizes
the named proxies in the same manner as if you marked, signed and returned your
proxy card. If you vote by telephone or the Internet, please do not mail your
proxy card.

ADDITIONAL INFORMATION
We will be pleased to send you additional copies of this Summary Annual
Report. Also available are the 1998 Financial Report that accompanies the Proxy
Statement for the 1999 Annual Meeting of Shareholders, CSW's 1998 Annual Report
on Form 10-K, a preliminary quarterly financial report, a Five-Year Financial
and Statistical Review of the Central and South West System and our latest
Environmental Report of the Central and South West System.
The Corporation is subject to the informational and reporting requirements of
the Securities Exchange Act of 1934 and files reports and other information
statements with the Securities and Exchange Commission. These reports may be
inspected at the SEC's offices and on its Internet site as well as at the New
York and Chicago stock exchanges.
We will provide copies of these reports without charge to any Central and
South West shareholder. If you would like to receive a report, please contact
our Investor Services Department.

INVESTOR SERVICES
Our Investor Services staff is available Monday through Friday from 9 a.m. to
4 p.m. Central time to answer your questions. Our address and telephone number
are:
Central and South West Corporation
Investor Services Department
P. O. Box 660164
Dallas, Texas 75266-0164
1-800-527-5797
E-mail: [email protected]

INVESTOR RELATIONS
Security analysts should contact:
Becky Hall
Director of Investor Relations
Central and South West Corporation
214-777-1277

If you would like to be added to our mailing list to receive our news
releases and other information, please contact our Investor Services Department.

32
<PAGE>

Inside Back Cover

POWERSHARE (R) DIVIDEND REINVESTMENT
AND STOCK PURCHASE PLAN

The Central and South West Corporation (Corporation) PowerShare Dividend
Reinvestment and Stock Purchase Plan (Plan) provides a convenient and
inexpensive way to reinvest dividends and purchase shares of the Corporation's
common stock, $3.50 par value per share (Common Stock).
Nonshareholders of legal age who are residents of the 50 states of the United
States or the District of Columbia may enroll in the Plan by making an initial
cash investment of $250. Employees and eligible retirees of the Corporation and
its subsidiaries may elect to purchase Common Stock through automatic payroll or
pension deductions, with a minimum of $10 per pay period.

ABOUT POWERSHARE
-Easy Enrollment.
-$25 Minimum Additional Investments. After an initial investment of $250
has been made, a minimum additional investment of $25 or optional cash
purchases of up to $100,000 per calendar year can be made in CSW Common
Stock.
-Dividend Reinvestment and Payment Options. Participants may elect to have
cash dividends on all or any portion of their shares of Common Stock
automatically reinvested in CSW Common Stock. Cash dividend payments not
reinvested will be paid to participants by check or through electronic
direct deposit.
-Safekeeping Service for CSW Common Stock Certificates. PowerShare
participants may deposit certificates for CSW Common Stock with CSW's
Investor Services Department for safekeeping, and the shares will be
credited to those participants' PowerShare accounts.
-Weekly Purchases of Shares.

FOR MORE INFORMATION AND A PROSPECTUS
The more information you have, the better your ability to make sound
investment decisions. The CSW PowerShare prospectus provides more details about
the Plan and about Central and South West Corporation. We encourage you to read
this information before deciding whether to enroll in the Plan or to send any
money.
If you have any questions, please call CSW's Investor Services Department
toll-free at 1-800-527-5797 weekdays between 9 a.m. and 4 p.m. Central time.

CSW Total EV(TM) is a trademark of Central and South West Corporation.
EnerShop(TM) and PowerShare(TM) are service marks of Central and South West
Corporation.
EnerACT(SM) is a service mark of EnerShop Inc., a subsidiary of Central and
South West Corporation.
American Electric Power(R) is a registered trademark of American Electric Power
Company, Inc.
Design: Walsh Associates
Photography: Phillip Radcliffe
Illustrations: Beppe Giacobbe
Printed on recycled paper

<PAGE>
(Landscape print)
[FRONT OF CARD]

NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES

BUSINESS REPLY MAIL
FIRST-CLASS MAIL PERMIT NO. 2551 DALLAS TX

POSTAGE WILL BE PAID BY ADDRESSEE

INVESTOR SERVICES
CENTRAL AND SOUTH WEST CORPORATION
PO BOX 660164
DALLAS TX 75266-9874

<PAGE>
[BACK OF CARD]
PowerShare (TRM)

(Landscape print)

PowerShare (TRM)
________________________________________________________________________________

Yes! I want more information about PowerShare (TRM).

Please type or print clearly and mail this
completed form to:

Central and South West Corporation
Investor Services Department
P.O. Box 660164
Dallas, Texas 75266-0164

________________________________________________________________________________
Last Name First Name Middle Initial

________________________________________________________________________________
Address

________________________________________________________________________________

________________________________________________________________________________
City State Zip

This does not constitute an offer to sell or a solicitation of an offer to buy
securities. Such offers and solicitations are made by way of prospectus only,
and no sales of common stock under the plan will be made or commitment to
purchase accepted unless a copy of the prospectus is delivered. There is no
obligation to participate in the plan, and these materials do not constitute the
Corporation's recommendation to participate in the plan.
<PAGE>

BACK OUTSIDE COVER:
Central and South West Corporation
1616 Woodall Rodgers Freeway
P. O. Box 660164
Dallas, Texas 75266-0164
Visit us on the Internet at http://csw.com

[document control code printed on bottom left]
Printed in U.S.A.
CSWAR98 240