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GULF STATES UTILITIES CO. ANNOUNCES RATE SETTLEMENT

 BEAUMONT, Texas, Oct. 15 /PRNewswire/ -- Gulf States Utilities Co. (NYSE: GSU) and a number of Texas Cities served by the electric utility announced Thursday night (Oct. 14) they have reached a settlement on rates.
 A spokesman for the cities said they initiated a rate inquiry because of concerns that, given current economic conditions, Gulf States was overearnings. A consultant for the cities filed testimony indicating GSU was earning $62.5 million more a year than it should. The consultants contended that refinancing had reduced costs and that the return on equity allowed in 1991 was too high in today's market.
 GSU noted that it used good business practices in seeking lower interest costs for debt and that its rates are very competitive with other investor owned utilities in the state.
 All parties worked extremely hard to successfully negotiate a compromise settlement, the spokesmen said.
 Basic terms of the settlement include a one-time refund of $23 million, beginning Dec. 1. There also would be a $22.5 million base rate reduction after Nov. 1. In addition, a $20 million base rate decrease will take effect after Sept. 1, 1994.
 The parties also settled a number of rate-related issues that involve previous cases on appeal, including a resolution of a tax- related rate case appeal.
 Because so many pending issues have been concluded, all parties should see considerable savings in time and resources, the spokesmen said.
 -0- 10/15/93
 /CONTACT: Sharon Englade of Gulf States Utilities Co., 409-839-2814/
 (GSU)


CO: Gulf States Utilities Co. ST: Texas IN: UTI SU:

PS -- NY033 -- 2711 10/15/93 11:42 EDT
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Publication:PR Newswire
Date:Oct 15, 1993
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