SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 7, 1997
COMMISSION REGISTRANT, STATE OF INCORPORATION, I.R.S. EMPLOYER
FILE NUMBER ADDRESS AND TELEPHONE NUMBER IDENTIFICATION NO.
1-1443 CENTRAL AND SOUTH WEST CORPORATION 51-0007707
(A Delaware Corporation)
1616 Woodall Rodgers Freeway
Dallas, TX 75202-1234
(214) 777-1000
0-346 CENTRAL POWER AND LIGHT COMPANY 74-0550600
(A Texas Corporation)
539 North Carancahua Street
Corpus Christi, TX 78401-2802
(512) 881-5300
1-3146 SOUTHWESTERN ELECTRIC POWER COMPANY 72-0323455
(A Delaware Corporation)
428 Travis Street
Shreveport, Louisiana 71156-0001
(318) 222-2141
This combined Form 8-K is separately filed by Central and South
West Corporation, Central Power and Light Company and Southwestern Electric
Power Company. Information contained herein relating to any individual
Registrant is filed by such Registrant on its own behalf. Each other Registrant
makes no representation as to information relating to other Registrants.
ITEM 5. OTHER EVENTS
CENTRAL AND SOUTH WEST CORPORATION (CSW) COMMON STOCK DIVIDEND
On January 23, 1997, CSW's board of directors announced that CSW's
quarterly dividend on its common stock will be maintained at its current level
of $.435 per share for 1997, indicating an annual dividend rate of $1.74 per
share. The next quarterly dividend is payable on February 28, 1997 to
shareholders of record on February 7, 1997.
The decision to maintain the dividend at its current level is based
upon several factors including CSW's goal to achieve a 75 percent dividend
payout ratio and increased regulatory uncertainty facing both CSW and the
electric utility industry. Two of CSW's U.S. electric utility subsidiaries
currently are in rate proceedings before state regulatory commissions. The
status of the Central Power and Light Company (CPL) rate case is set forth
below. The decision to retain more earnings is expected to permit CSW to further
strengthen its cash flow in order to fund utility and non-utility investments
and support growing non-utility businesses.
CPL RATE REVIEW DOCKET NO. 14965
On January 21, 1997, administrative law judges (the ALJs) for the State
Office of Administrative Hearings issued a Proposal for Decision on the CPL
request for $71 million in rate relief. If the ALJs' proposal is approved by the
Public Utility Commission of Texas (Texas Commission), CPL's annual revenues
will increase by approximately $7.2 million, the net result of a recommended
base rate reduction of $5.2 million and increased revenue collections through
two surcharges. The $7.2 million recommended revenue increase is made up of the
following components:
* A $10.3 million reduction in kilowatt-hour-related revenues,
* An increase of $5.1 million in miscellaneous revenues
(customer connect charges, insufficient check charges and other fees),
* A $4.3 million annual surcharge applied over three years to
recover rate case expenses, and
* Annual recovery of $8.1 million for demand-side management
expenditures through a separate surcharge.
A factor contributing significantly to the difference between the $71
million retail base rate increase originally requested by CPL and the ALJs'
proposal is the recommended reduction in CPL's requested return on equity from
12.25 percent to 10.9 percent which would result in a reduction of $31 million
in CPL's requested base rate increase.
The ALJs' decision also recommends no change in the method used by CPL
to recover the capitalized costs associated with CPL's 25.2% ownership interest
in the South Texas Nuclear Project (STP). The ALJs recommended that the Texas
Commission reject CPL's request to change the method of recovering STP deferred
accounting costs from a mortgage amortization to a straight-line recovery
methodology. Adoption of this recommendation would reduce CPL's request for rate
relief by $14 million. The ALJs also recommended that CPL's current depreciation
rates be decreased by $8.8 million a year and that the Texas Commission deny
CPL's requested $3.6 million increase for its catastrophe reserve.
A final order from the Texas Commission is expected in March 1997. CPL
is continuing to analyze the ALJs' Proposal for Decision. Although CPL's
management cannot predict the ultimate outcome of CPL's rate case, management
believes that the ultimate resolution will not have a material adverse effect on
CPL's or CSW's results of operations or financial condition. However, if CPL
ultimately is unsuccessful in obtaining adequate rate relief, CPL and CSW could
experience a material adverse effect on their results of operations and
financial condition.
CAJUN ASSET PURCHASE PROPOSAL
As previously reported, Cajun Electric Power Cooperative, Inc. (Cajun)
filed a petition for reorganization under Chapter 11 of the United States
Bankruptcy Code on December 21, 1994 and is currently operating under the
supervision of the United States Bankruptcy Court (Bankruptcy Court) for the
Middle District of Louisiana.
On October 26, 1996, Southwestern Electric Power Company (SWEPCO), a
wholly-owned subsidiary of CSW, together with Entergy Gulf States Utilities,
Inc. and the members committee of Cajun (Members Committee), which currently
represents 8 of the 12 Louisiana member distribution cooperatives that are
served by Cajun filed a second amended reorganization plan (Second Amended
SWEPCO Plan) in the Bankruptcy Court.
Confirmation hearings in Cajun's bankruptcy case have been postponed
until March 10, 1997 because a Bankruptcy Court ruling on January 7, 1997
disqualified the law firm representing the Members Committee due to an
irreconcilable conflict between the firm's representation of both the Members
Committee and Southwest Louisiana Electric Membership Corporation . The
Bankruptcy Court postponed the confirmation hearings to allow the Members
Committee time to obtain new counsel. A status conference will be held February
24, 1997 for the Bankruptcy Court to determine if a further extension is
required.
See CSW's and SWEPCO's Combined Annual Report on Form 10-K for the year
ended December 31, 1995, Combined Quarterly Reports on Form 10-Q for the
quarters ended March 31, June 30 and September 30, 1996 and Combined Current
Reports on Form 8-K dated April 19 and September 30, 1996 for additional
information related to the SWEPCO Cajun asset proposal.
EL PASO ELECTRIC COMPANY (EL PASO) MERGER LITIGATION
As previously reported, CSW and El Paso are involved in litigation
arising from the termination of a merger agreement between CSW and El Paso. A
trial before the United States Bankruptcy Court for the Western District of
Texas, Austin Division was completed on January 30, 1997. A decision is expected
in the case in approximately 30 days.
See CSW's Combined Annual Report on Form 10-K for the year ended
December 31, 1995 and Combined Quarterly Reports on Form 10-Q for the quarters
ended March 31, June 30 and September 30, 1996 for additional information
related to the El Paso litigation.
TELECOMMUNICATIONS PARTNERSHIP
On January 14, 1997 CSW and ICG Communications, Inc. announced a joint
venture limited partnership to market telecommunications services. The
partnership will combine the resources of CSW Communications, Inc. (CSW
Communications), a wholly owned non-utility subsidiary of CSW, and ICG Telecom
Group, a subsidiary of ICG Communications. The new partnership, CSW/ICG
ChoiceCom(TM), L.P. (ChoiceCom(TM)), will be based in Austin, Texas and will
develop and market telecommunications services in the four-state region of
Texas, Oklahoma, Louisiana, and Arkansas. The partnership is equally owned by
CSW Communications and ICG. ChoiceCom(TM) initially plans to serve Austin and
Corpus Christi, Texas, with local telephone, long distance and data services.
At the same time, ChoiceCom(TM) will seek to develop business
opportunities in other cities in the four-state region. In addition to offering
local exchange, long distance and data transmission services, ChoiceCom(TM) may
expand CSW Communications' existing city-to-city fiber network business
depending on market conditions. ChoiceCom(TM) may also seek to develop
full-service, interactive networks using hybrid fiber/coaxial technology. CSW
Communications currently has franchises in Austin and Corpus Christi, Texas to
build fiber networks and provide telecommunications services.
ChoiceCom(TM) must obtain regulatory approvals and negotiate business
agreements with existing telecommunications providers before it can begin
offering telecommunications services in competition with established
telecommunications providers. ChoiceCom(TM) currently plans to begin offering
telecommunications services as soon as appropriate agreements and approvals have
been obtained. Other factors that could impact the business operations and
results of ChoiceCom(TM) are set out below.
FACTORS IMPACTING BUSINESS OPERATIONS AND RESULTS
This Form 8-K includes forward-looking statements relating to the
Registrants' current operations and future prospects. Although CSW, CPL and
SWEPCO believe their expectations are based on reasonable assumptions, they can
give no assurance that their expectations will be achieved. For further
information, please refer to their reports filed with the Securities and
Exchange Commission. These documents address company business, industry issues
and other factors that could cause actual results to differ materially from
those indicated in this Form 8-K.
Important factors that could cause actual results to differ materially
from those in the forward-looking statements in CSW's electric utility business
include the pace of deregulation of the electric utility industry, federal and
state regulatory developments, electric load and customer growth, abnormal
weather conditions, available sources and cost of fuel and generating capacity,
the performance of electric generation and distribution facilities, delays in
regulatory hearings, adequacy of rate relief, decommissioning costs associated
with nuclear generating facilities, and the timing and success of efforts to
develop domestic and international power projects. In CSW's non-electric utility
business, including the telecommunications business, such factors include the
ability to compete effectively in new areas, federal and state regulatory
developments, the timing and success of efforts to develop telecommunications
projects, the ability to connect with third party networks and facilities, the
market impact and pace of development and the availability of competing
technologies, and the ability to obtain appropriate regulatory approvals and
licenses.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
Exhibit 99.1 CSW News Release dated January 23, 1997 announcing CSW's
Quarterly Dividend.
Exhibit 99.2 CSW News Release dated January 24, 1997 relating to
correction of the dividend record date.
Exhibit 99.3 CSW Earnings Release dated January 23, 1997.
Exhibit 99.4 CSW News Release dated January 14, 1997 relating to a new
telecommunications limited partnership.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CENTRAL AND SOUTH WEST CORPORATION
Date: January 31, 1997
By: /S/ LAWRENCE B. CONNORS
Lawrence B. Connors
Controller
CENTRAL POWER AND LIGHT COMPANY
SOUTHWESTERN ELECTRIC POWER COMPANY
Date: January 31, 1997
By: /S/ R. RUSSELL DAVIS
R. Russell Davis
Controller