Administrative Law Judges Issue Recommendations Regarding CPL Request for Base Rate Relief.

DALLAS--(BUSINESS WIRE)--Jan. 22, 1997--Central and South West Corporation (NYSE:CSR) said that administrative law judges for the State Office of Administrative Hearings (SOAH) on Tuesday issued a Proposal for Decision (PFD) on Central Power and Light Company's request for $71 million in rate relief, which has been pending since November 1995.

If the proposal is approved by the Public Utility Commission of Texas, CPL's annual revenues will increase by $7.2 million, the net result of a recommendation base rate reduction of $5.2 million plus increased revenues collected through two surcharges.

The $7.2 million revenue rate change 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.

CPL is continuing to analyze the recommendations. A factor contributing significantly to the difference between the $71 million retail base rate increase that CPL originally requested and the administrative law judges' proposal included the recommended 10.9 percent return on equity. Reducing the return from CPL's requested level of 12.25 percent to 10.9 percent resulted in a reduction of $30 million in the recommended base rate increase.

Another factor involves the capitalized costs associated with the South Texas Nuclear Project (STP). The judges suggested the Commissioners reject CPL's request to change the method of recovering STP deferred accounting costs from a mortgage methodology to a straight-line recovery, although the PUCT staff had supported CPL's request for a change. Rejection of this request reduced CPL's request for rate relief by $14 million. The judges also recommended that CPL's current depreciation rates be decreased by $8.8 million a year. Additionally, the judges recommended that the Commissioners deny CPL's requested $3.6 million increase for its reserve for catastrophe. Most of these recommendations not only reduce the recommended base rate increase but also reduce the expense CPL will record.

"Obviously, we are extremely disappointed with the judges' proposal," said CSW Chairman, President and Chief Executive Officer Dick Brooks. "The proposal ignores the opportunity to take any innovative steps to better prepare CPL for a competitive future. In fact, the proposal moves in the opposite direction by reducing the depreciation primarily for CPL's generating plants.

"We intend to work diligently to convince the Commission to implement rates to provide an adequate return and timely recovery of the reasonable investments made to serve our customers," Brooks continued. "We are currently analyzing the effect these recommendations will gave on 1996 earnings and anticipate releasing preliminary earnings on Thursday, Jan. 23."

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 and the rate levels ultimately approved by the PUCT Commissioners in March is subject to refund to customers with interest.

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.

CONTACT: Central and South West Corporation

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Larry Jones, senior communication consultant

214/683-3703,

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Sharon R. Peavy, director, investor relations 

214/777-1277,

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