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: January 25, 2000
Date of report: February 14, 2000
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
(361) 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) 673-3000
0-340 West Texas Utilities Company 75-0646790
(A Texas Corporation)
301 Cypress Street
Abilene, Texas 79601-5820
(915) 674-7000
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
CPL........................Central Power and Light Company, Corpus Christi,
Texas
CSW........................Central and South West Corporation, Dallas, Texas
CSW System.................CSW and its subsidiaries
Exchange Act...............Securities Exchange Act of 1934, as amended
MMbtu......................Million British thermal units
STP........................South Texas Project nuclear electric generating
station
Texas Commission...........Public Utility Commission of Texas
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 the proposed AEP Merger including any regulatory conditions
imposed on the merger or the inability to consummate the AEP Merger,
- - increased competition and the restructuring of the electric utility
industry 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,
- - 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,
- - 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,
- - decommissioning costs associated with nuclear generating facilities,
- - costs associated with any year 2000 computer related failure(s) within the
CSW System, with the electric grid or with supplier(s) that adversely
affect the CSW System, and
- - risks associated with hedging and other risk management techniques.
ITEM 5. OTHER EVENTS
Proposed AEP Merger United Kingdom Regulatory Action
On January 25, 2000, AEP and CSW announced that the United Kingdom's
Department of Trade and Industry approved the common ownership of United Kingdom
interests resulting from the proposed AEP Merger. This approval is the final
clearance for the merger required in the United Kingdom. The related news
release is attached as Exhibit 99.1 and is incorporated by reference.
Proposed AEP Merger United States Department of Justice Clearance On
February 2, 2000, AEP and CSW announced that the Department of Justice has
completed its investigation in accordance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and has closed the investigation, finding that no
further action is warranted. With this action, antitrust review of the proposed
merger by the Department of Justice is completed. The related news release is
attached as Exhibit 99.2 and is incorporated by reference.
CPL, Securitization Settlement Related to Texas Electric Utility
Restructuring Legislation
On February 10, 2000, the Texas Commission tentatively approved a
settlement, which will permit CPL to securitize approximately $764 million of
regulatory assets. The Texas Commission is expected to grant final approval on
February 28, 2000. The action is in accordance with the implementation of the
Texas Electric Utility Restructuring Legislation.
The settlement calls for CPL to reduce its proposed amount to be
securitized from $1.27 billion to approximately $764 million of regulatory
assets plus an estimated $28 million of other qualified costs. The settlement
also calls for $290 million of the amount originally requested to be included in
the calculation of stranded costs in CPL's April 2000 transmission and
distribution cost filing. This filing will establish stranded costs, of which
75% can be securitized and 25% can be recovered through a competitive transition
charge.
The securitization amount was reduced by an additional $186 million to
reflect customer benefits associated with accumulated deferred income taxes. CPL
previously had proposed to flow these benefits back to customers over a 14-year
transition period.
CPL could issue the transition bonds associated with securitization as
early as March or April 2000, depending on timing of receipt of a financing
order from the Texas Commission and depending on market conditions. A second
phase of securitization could occur later in 2000. CPL's stranded costs are
subject to a final determination by the Texas Commission in 2004.
The related news release is attached as Exhibit 99.3 and is incorporated
by reference.
CPL Financing, Floating Rate Notes
In anticipation of filing a Prospectus Supplement to a Prospectus dated
December 3, 1998, CPL provides the following information.
CPL Results of Operations
CPL's net income for common stock for 1999 was $173.2 million, which was
$18.5 million, or 12% higher than in 1998. Factors contributing to the increase
were higher electric operating revenues and a decrease in income taxes and
interest charges. The increase in net income for common stock was partially
offset by an increase in operating expenses.
Electric operating revenues for 1999 were $1,482.5 million, which was
$76.4 million, or 5% higher than in 1998. The increase consists of the
following: $13.4 million in residential markets, $16.1 million in commercial
markets, $21.1 million in industrial markets, $9.2 million in sales for resale
and $16.6 million in other revenues. Other revenues include adjustments related
to transmission revenues. A major portion of the increase in other revenues
represents increases in fuel related revenues. In addition, there were increases
in non-fuel revenues, which were partially offset by the implementation of lower
base rates as ordered by the Texas Commission.
Operating expenses and taxes for 1999 were $1,187.8 million, which was
$64.6 million higher than in 1998. Fuel and purchased power expense increased by
$46.1 million, or 11% when compared to 1998. The increase in fuel expense is
largely attributable to an increase in average unit fuel costs. Average unit
fuel costs increased from $1.59 per MMbtu in 1998 to $1.72 per MMbtu in 1999 as
a result of higher prices for natural gas purchased on the spot market. The
increase in purchased power expense is due to an increase in economy energy
purchases. Other operating expenses increased by $29.2 million, or 11% when
compared to 1998. This increase is due primarily to increases in transmission,
distribution and outside service expenses. Maintenance expenses for 1999
increased $6.4 million, or 10% when compared to 1998. This change was the result
of scheduled power plant repairs and maintenance including the refueling and
10-year inspection of STP Units 1 and 2.
Depreciation and amortization expenses for 1999 decreased $7.1 million, or
4% when compared to 1998 due primarily to the reclassification of certain
regulatory assets designated for securitization, which was offset in part by the
recognition of accelerated capital recovery of stranded costs under provisions
of the recently enacted Texas legislation.
Taxes, other than income increased $2.9 million to $73.8 million resulting
from increases in franchise taxes for 1999. Income tax expenses associated with
utility operations decreased by $12.9 million, or 11% when compared to 1998 due
to lower taxable income, the reclassification of certain income tax related
regulatory assets designated for securitization consistent with the new Texas
legislation and adjustments related to prior year's taxes, offset in part by the
income tax related portion of the Texas state franchise tax.
Interest charges for 1999 were $114.4 million, a decrease of $7.7 million,
or 6% when compared to 1998. The decrease in interest charges was primarily the
result of the maturity and reacquisition of approximately $261.7 million of
long-term debt during the year. A portion of the long-term debt was replaced
with lower interest rate long-term debt.
Partially offsetting the increase in net income for common stock was a
loss of $2.8 million on the redemption of CPL preferred stock.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
(12) Ratio of Earnings to Fixed Charges
12.1 - CPL, Ratio of Earnings to Fixed Charges
(27) Financial Data Schedule
27.1 - CPL, Financial Data Schedule
(99) Additional Exhibits
99.1 - News release dated January 25, 2000, issued by AEP and CSW related to the
United Kingdom's Department of Trade and Industry's approval of common ownership
of United Kingdom interests resulting from the proposed AEP Merger.
99.2 - News release dated February 2, 2000, issued by AEP and CSW related to
antitrust clearance by the United States Department of Justice of the AEP
Merger.
99.3 - News release dated February 11, 2000, issued by CSW and CPL related to a
tentative settlement with the Texas Commission regarding securitization
associated with the Texas Electric Utility Restructuring Legislation.
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: February 14, 2000
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: February 14, 2000
By: /s/ R. Russell Davis
R. Russell Davis
Controller and Chief Accounting Officer
(Principal Accounting Officer)