EXHIBIT 99.2
AEP CSW
AMERICAN ==================================
ELECTRIC CENTRAL AND SOUTH WEST CORPORATION
POWER ==================================
Contact for American Electric Power:
Pam Hemlepp 614/223-1620
Contact for Central and South West:
Larry Jones 214/777-1276
ARKANSAS PUBLIC SERVICE COMMISSION APPROVES MERGER
BETWEEN AMERICAN ELECTRIC POWER AND CENTRAL AND SOUTH WEST
Columbus, Ohio, and Dallas, Texas (August 17, 1998) -- The Arkansas Public
Service Commission (APSC) on Thursday issued an order approving the proposed
merger between American Electric Power Company, Inc. (NYSE: AEP) and Central and
South West Corporation (NYSE: CSR).
CSW is the parent company of Southwestern Electric Power Company (SWEPCO).
SWEPCO serves portions of East Texas, Northwest Louisiana and West Arkansas,
including Fayetteville, Booneville, Rogers and Eureka Springs.
The commission's approval is subject to the findings issued when the commission
reviews the proposed regulatory plan associated with the merger. Hearings on the
regulatory proposals are scheduled to begin Nov. 10.
Approval also is subject to acceptance by AEP and CSW of certain conditions
including:
- Commitment to comply with prior agreements between CSW/SWEPCO and the
APSC;
- Agreement that the combined company would not withdraw from the Southwest
Power Pool (SPP) without prior approval from the commission;
- Clarification of federal and state jurisdictional issues; and
- Agreement to notify the commission of filings in other jurisdictions
relative to the merger.
The ASPC order marks the first approval of the merger by a state utility
commission. AEP and CSW jointly filed the request for approval June 12.
Testimony submitted in that filing outlines the expected combined company
benefits of the merger to AEP and CSW customers and shareholders, which include:
- $2 billion in net non-fuel cost savings over 10 years;
- $98 million in net fuel savings over 10 years;
- Improved capital structure and increased financial strength;
- Increased diversity in customer base, generating resources and
service territory;
- Optimization of business practices and continued high-quality
service;
- Support for restructuring of retail electric markets; and
- Support for an independent system operator.
AEP and CSW have proposed a regulatory plan in Arkansas that provides for:
- Approximately $1.8 million in fuel cost savings to Arkansas
customers of CSW's Southwestern Electric Power Company (SWEPCO)
subsidiary during the 10 years following completion of the merger;
- A commitment not to raise base rates above current levels prior to
Jan. 1, 2002, for SWEPCO customers in Arkansas and to share
approximately one-half of the savings from synergies created by the
merger during the first 10 years following the merger. Under this
plan, approximately $16.9 million of these non-fuel merger-related
savings will be used to reduce future costs to SWEPCO's Arkansas
retail customers; and
- A commitment to continue the current high level of customer service
and to identify opportunities and implement measures to further
improve service quality.
The Arkansas filing provides that there will be minimal job reductions among
employees having direct contact with customers. CSW's work force currently
totals about 7,000 employees, and AEP's work force totals about 18,000
employees. AEP and CSW intend to use a combination of reduced hiring and
attrition to the maximum extent possible to minimize the need for employee
separations.
As previously reported, on April 30, CSW and AEP submitted filings to the Public
Utility Commission of Texas and the Federal Energy Regulatory Commission seeking
favorable rulings relating to the proposed merger. On May 15, the companies
submitted an application for approval of the proposed merger to the Louisiana
Public Service Commission. CSW and AEP on August 14 filed an application for
approval with the Oklahoma Corporation Commission.
In addition CSW subsidiary Central Power and Light Company (CPL) on June 19
filed a license transfer application with the Nuclear Regulatory Commission
(NRC) in connection with the proposed merger. The application requests the NRC's
consent to the indirect transfer of control of CPL's interests in the NRC
licenses issued with respect to the South Texas Project (STP) nuclear power
plant to AEP. The parties plan to make other required federal filings with the
Securities and Exchange Commission, the Federal Communications Commission, the
Department of Justice and the Federal Trade Commission later this year. However,
there can be no assurance that AEP and CSW will obtain all necessary regulatory
approvals, or when such approvals will be obtained. Central and South West
Corporation is a Dallas-based public utility holding company that owns four U.S.
electric utility subsidiaries with 1.7 million customers, a regional electricity
company serving 2 million customers in the United Kingdom, and nonutility
subsidiaries involved in energy-related investments as well as subsidiaries that
offer telecommunications, energy efficiency and financial transactions. On
December 22, 1997, CSW announced a definitive merger agreement for a tax-free,
stock-for-stock transaction with AEP.
American Electric Power Company, Inc., a global energy company, is one of the
United States' largest investor-owned utilities, providing energy to 3 million
customers in Indiana, Kentucky, Michigan, Ohio, Tennessee, Virginia and West
Virginia. AEP has holdings in the United States, the United Kingdom, China and
Australia. Wholly owned subsidiaries provide power engineering, energy
consulting and energy management services around the world. The company is based
in Columbus, Ohio.
This news release includes forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements reflect numerous assumptions and involve a number of risks and
uncertainties. Among the factors that could cause actual results to differ
materially are: whether or not the proposed merger of AEP and CSW ultimately is
consummated, the timing of consummation and the effects of any conditions
imposed by regulators on the merged companies; electric load and customer
growth; abnormal weather conditions; available sources and cost of fuel and
generating capacity; the speed and degree to which competition enters the power
generation, wholesale and retail sectors of the electric utility industry; state
and federal legislative and regulatory initiatives that, among other things,
increase competition, threaten cost and investment recovery and affect rate
structures; the ability of the combined company to successfully reduce its cost
structure; the degree to which the combined company develops nonregulated
business ventures; the economic climate and growth in the service territories of
the two companies; the amount of savings generated by the merger; the
inflationary trends and interest rates and the other risks detailed from time to
time in the two companies' SEC reports.
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