CSW
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Central and South West Corporation
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NEWS RELEASE
1616 Woodall Rodgers Freeway
P.O. Box 660164 * Dallas, Texas 75266-0164
Central Power and Light Company, Corpus Christi
Public Service Company of Oklahoma, Tulsa
Southwestern Electric Power Company, Shreveport
West Texas Utilities Company, Abilene
Central and South West Services, Inc., Dallas
and Tulsa
CSW Communications, Inc., Austin
CSW Credit, Inc., Dallas
CSW Energy, Inc., Dallas
CSW International, Inc., Dallas
CSW Leasing, Inc., Dallas
EnerShop Inc., Dallas
SEEBOARD plc, Crawley, West Sussex, U.K.
FOR IMMEDIATE RELEASE
PUCT Expected to Order Rate Decrease
for Central Power and Light Company
Dallas (March 26, 1997) -- Central and South West Corporation (NYSE:
CSR) said that, based on comments and decisions made by the Public Utility
Commission of Texas (PUCT) on March 26, CSW expects the PUCT to order an annual
rate decrease ranging from $20 million to $30 million for its Central Power and
Light Company (CPL) subsidiary on Monday, March 31. The Commission also is
expected to order additional annual rate decreases of approximately $17 million
in 1998 and in 1999.
While the final amount of the rate decrease has not yet been calculated
by the PUCT staff, Commissioners indicated on Wednesday they had decided most
unresolved issues.
Commissioners are expected to designate approximately $859 million of
invested capital associated with the South Texas Project nuclear generation
plant as Excess Cost Over Market, or ECOM. If the PUCT rules as expected, CPL's
ECOM could receive a 7.96 percent return on equity as compared with the 10.9
percent return approved for all other invested capital.
The term, ECOM, has been used to refer to the amount of costs that
potentially would become "stranded" if retail competition were mandated and
prices were set in the market, rather than the cost of investment determined by
current regulatory standards of prudent investment costs. Proposed legislation
calling for retail competition is under consideration by the Texas Legislature
and the U.S. Congress. However, retail competition is not currently permitted
under Texas or federal law.
Commissioners indicated approval of a plan, referred to as a
"glidepath," that could result in additional rate decreases of approximately $17
million each year during 1998 and 1999. If implemented, these subsequent rate
decreases would be based on a decrease in CPL's invested capital based on the
amount of annual depreciation charges.
Commissioners also indicated they will:
* Disallow approximately $21 million of affiliate transactions
* Allow CPL to continue offering interruptible rates to customers now on
the rate but to phase the program out over the next three years and
incorporate approval of future interruptible service into the Integrated
Resource Plan that is now under consideration. During that three-year
transition, the interruptible rate will be increased annually.
* Sever consideration of approximately $14 million in rate case expenses
into a separate docket that will be considered during their April 14
meeting with a final decision anticipated by May 30.
CPL in November 1995 filed a request to increase its retail base rates
by $71 million. The proposed rate increase was put into effect under bond in May
1996. The difference between the bonded rates collected since May 1996 and the
rate levels ultimately approved by the Commissioners is subject to refund to
customers with accrued interest.
As previously reported, CPL will vigorously pursue all legal remedies
available if the final order is issued as proposed. CPL and CSW could experience
a material adverse effect on results of operations if the Commissioners'
proposed order becomes final.
Central and South West Corporation is a public utility holding company
based in Dallas. Central and South West owns four electric operating
subsidiaries in the United States, a regional electricity company in the United
Kingdom, and non-utility subsidiaries that offer independent power production,
telecommunications, energy efficiency and financial transactions.
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Media contact: Larry Jones, senior communications consultant for Central and
South West Corporation, 214 683-3703.
Financial community contact: Becky Hall, director of investor relations for
Central and South West Corporation, 214 777-1277.
Internet inquiries: corpcom @csw.com