Central and South West Corp. of Dallas filed with the PublicUtility Commission of Texas (PUCT) its business separation planrequired by Texas Senate Bill 7 on Electric Restructuring. The plandescribes the approach proposed by CSW to unbundle the activitiesof each of its Texas electric operating companies into threeentities. While the plan is directed to meet the requirements ofthe Texas restructuring legislation, the separation plan shouldalso meet restructuring requirements anticipated in Arkansas,Louisiana and Oklahoma, the company said.

CSW is the parent company of Central Power and Light (CPL), WestTexas Utilities (WTU), Southwestern Electric Power (SWEPCO) andPublic Service Company of Oklahoma (PSO). CPL and WTU operate inTexas. SWEPCO operates in portions of Texas, Louisiana andArkansas. PSO operates in Oklahoma.

By Jan. 1, 2002, Texas utilities must separate their operationsinto three basic units: a retail electric provider (REP), whichwill sell electric service to retail customers; a power generationcompany, which will produce the electricity; and an energy deliverycompany (transmission and distribution, or T&D), which willdeliver electricity to the customer.

Judging from the experiences of other utilities in other states,the total cost to restructure the entire CSW system to implementretail competition in states where it operates could range from$100 million to $200 million.

The CSW plan envisions a two-stage structural separation. Thefirst stage will be the structural separation of the management andcontrol of the transmission and distribution areas from thegeneration areas of the corporation and the creation of a separateretail electric provider. This would occur on or before the Jan. 1,2002. The second stage would occur after a transition period of upto six years following the start date. By Jan. 1, 2008, CSW willhave resolved existing contracts that restrict transfers of assetownership and would have transferred legal ownership of generatingand T&D assets to the new entities.

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