American Electric Power Co. Inc. (AEP) and Central and SouthWest Corp. (CSW) last week sought FERC approval of the merger oftheir operations into one of the largest electric utility companiesin the nation.

The combined company would be the largest utility in nearly allareas – size of territory, amount of generating capacity (37,498MW) and KWh sold – except in revenues, said AEP spokesman PatHemlepp. It also would be the largest consumer of coal in thenation, and the third largest consumer of natural gas, he noted.

The merger would be accomplished in a tax-free, stock-for-stocktransaction, with the successor company, AEP, ending up with equityof $16.5 billion, and debt and preferred stock of $11.6 billion,according to AEP.

AEP, a registered public utility holding company, presently ownsseven domestic utility subsidiaries: Appalachian Power, ColumbusSouthern Power, Indiana Michigan Power, Kentucky Power, KingsportPower, Ohio Power and Wheeling Power. The utilities serve about 3million power customers in portions of Indiana, Kentucky, Michigan,Ohio, Tennessee, Virginia and West Virginia.

CSW, also a public utility holding company, owns Central Powerand Light, Public Service Company of Oklahoma, SouthwesternElectric Power and West Texas Utilities. The four companies serveabout 1.7 million customers in Arkansas, Louisiana, Oklahoma andTexas.

AEP and CSW contend that the merger, after mitigation, won’tpose any market-power concerns. “Since AEP and CSW currently haveno more than a de minimis presence in each other’s markets, alogical expectation is that the merger should not have more than anegligible effect on their combined market share in any relevantmarket,” they told the Commission in their application. Thecompanies asked FERC to approve the merger by no later than Dec. 31of this year so that they could close the deal by March 31, 1999.

“The companies are a good fit. The corporate cultures are verysimilar. They’re (CSW) throughout the Southwest; we are in theMidwest. What that does is it gives us footprints from Canada toMexico,” said Deb Strohmaier, an AEP spokeswoman. “Also the fuelmix is more diverse. This merger gives AEP, whose facilities areprimarily coal fired, more of a market in the gas fuel mix.”

©Copyright 1998 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press,Inc.