Southwestern Electric Power Company (SWEPCO) Profile ^19,21,44,45

SWEPCO serves approximately 396,000 electric customers in a service area of some 25,000 square miles consisting of five Northwestern Louisiana parishes, Northeast Texas, and Western Arkansas. The company's service area is shown on the map in Figure 5. SWEPCO is headquartered in Shreveport. Its principal business address and telephone number are:

Southwestern Electric Power Company
428 Travis Street
Shreveport, Louisiana 71156-0001
Phone: 318/222-2141

The company's service area is industrially diversified with the chemical, petroleum refining, primary metals, and paper industries the predominant users. Economic growth in SWEPCO's service area has been minimal in recent years and so has the growth in the company's electricity sales. However, 1993 electricity sales were 9.5% higher than in 1992 with only a 4.5% increase in customers. The extremely hot summer of 1993 undoubtedly contributed to the increase.

SWEPCO's 1993 electricity sales by customer sector as a percentage of total sales of 18,383 million KWH were 22.4% residential, 17.7% commercial, 33.3% industrial, and 26.6% other.

In 1993 the fuel sources for power generated by SWEPCO's plants located in its three-state service area were 16% natural gas, 55% coal, and 29% lignite. The company's 1993 system peak demand occurred on August 18 and was 3,651 MW, up 12.8% from 1992. With a total system generating capability of 4,436 MW at the time of the peak, the capacity reserve margin was 17.7%. No generating unit is under construction or planned.

SWEPCO is one of four electric utility operating subsidiaries of Central and South West Corporation (CSW), a Dallas-based public utility holding company. In 1993 the SWEPCO system had 31.5% of the 14,177 MW total generating capability of CSW and accounted for 32.6% of CSW's total system generation of 53,610 million KWH. SWEPCO's Louisiana electricity sales provided 8% of CSW's electric revenues.

The four CSW operating companies provide electric service to 1.6 million customers in a widely diversified area covering 152,000 square miles in Arkansas, Louisiana, Oklahoma, and Texas. This area is one of the largest served by any electric utility system in the nation. CSW's business segments are similar to those of Entergy in that they also include gas operations and non-utility energy businesses. Its business plan to improve and expand its core electric utility business and pursue unregulated power projects in other states and outside the U.S. is also similar to Entergy's business plan. At the present time CSW is confining its foreign ventures to Mexico, where it has done business since 1916. The company recently opened an office in Mexico City. It is presently attempting to acquire the bankrupt El Paso Electric Company, whose service area is contiguous to two of CSW's utility subsidiaries and the Mexican border. However, more than 30 parties have filed motions with FERC to intervene in the merger.⁴⁶ Like Entergy, CSW does not intend to get into businesses unrelated to energy. Additional information on CSW may be obtained as follows:

Central and South West Corporation
Shareholder Services Department
P.O. Box 660164
Dallas, Texas 75266-0164
Phone: 214/777-1000

Electric Generating Facilities

SWEPCO operates and either owns or has an interest in nine generating facilities located within its three state service area with total 1993 net generating capability of 4,464 MW (SWEPCO's share). The company operates eight of the nine facilities. It is the sole owner of six of them and partially owns the other three. According to primary fuel source, the SWEPCO system generating capability is 40.7% natural gas, 40.9% coal, and 18.4 % lignite.

SWEPCO's total Louisiana generating capability is 651 MW This is 14.6% of the total SWEPCO system capability. According to primary fuel source, the Louisiana capability is 59.8% natural gas and 40.2% lignite. The company solely owns two Louisiana gas-fired plants, the 113 MW Arsenal Hill plant and the 276 MW Lieberman plant, and has a 40.3% interest in the 650 MW Dolet Hills lignite fired plant operated by CLECO. The 1992 generating capability of each of these generating stations according to plant owner and primary fuel type is listed in Table 3. The location of each plant is plotted on the map in Figure 1.

SWEPCO's Louisiana generating capability is 4.9% of the total capability of the IOUs Louisiana plants, 3.9% of the total capability of the state's utilities, and 3.4% of the total capability of all generating sources within the state.

In 1992 the 170 million KWH generated by the two Louisiana plants operated by SWEPCO was almost 0.4% of the power generated by the IOUs Louisiana plants. This output was slightly above 0.3% of the total produced by the state's utilities and a little more than 0.2% of all power produced in Louisiana. This is far below the capability of these two gas-fired plants, but since the company's lignite-fueled plants are its lowest cost source of generation, they will be fully utilized before a gas-fired plant will be put on line. The 1992 net generation of each Louisiana generating station according to plant operator and fuel type is listed in Table 1.

SWEPCO bums low-sulfur coal and lignite in its solid-fuel plants or operates with pollution control equipment so its plants are in compliance with limits set by the CAAA.

Recent Developments

In 1993 SWEPCO completed its purchase of the Bossier Electric Membership Corporation (BREMCO), a distribution cooperative which was adjacent to the company's Louisiana service territory. BREMCO served 12,500 customers in a service area covering 1,028 square miles.⁴⁴

In 1993, SWEPCO and another CSW utility subsidiary filed tariffs with the FERC under which the two utilities will generally make available firm and non-firm transmission services for other electric utilities on the combined utilities'transmission systems in the Southwest Power Pool.⁴⁴

As part of CSW's restructuring effort to stay competitive, in March 1994 SWEPCO announced a reduction in its workforce of up to 165 jobs, which is about an 8% reduction. The cuts are to be made either through attrition or early retirement programs.⁴⁷

SWEPCO is presently seeking to provide wholesale power to the city of Minden, which is considering proposals from several potential suppliers.²⁷

History ⁷

The original Southwestern Gas and Electric Company was the product of a merger of three utilities-Shreveport Gas, Electric Light and Power Company, Caddo Gas and Oil Company, and Texarkana Gas and Electric Company. These utilities were owned by three brothers-Rufus, Henry and Charles Dawes. On June 29, 1912, the brothers consolidated their holdings into one company and Southwestern was born. At the time of its formation, the company served only three communities- Shreveport Bossier City, and Texarkana-with a combined population of only 42,000.

The Dawes retained control of Southwestern until 1925, when it was sold to Middle West Utilities, one of the largest groups of utility properties in the U.S. at the time. The largest of Middle West's many holding companies was Central and South West. Southwestern became a part of CSW.

Although the Depression hit four years later, Southwestern prospered because at the same time one of the largest oil fields in the country was discovered in company territory near Henderson, Texas. So while most of the industry was struggling to stay alive, Southwestern was doing all it could to construct new lines to serve the fledgling oil and gas industry.

The company essentially got out of the gas business in 1928 with the sale of its Gulf Cities Division in Mississippi. But through the 1930s and early 1940s, Southwestern was still involved in ice, water, and streetcars. For a while, sales of ice ranked second only to electricity. However, by the mid-1940s all gas, ice, water, and transportation activities were divested.

With Southwestern now solely in the electric business, and with its service territory expanding rapidly, attention turned to building new power plants. The company's three original plants were inadequate to meet the need for electricity that occurred after World War II as consumers gobbled up energy-using appliances on a mass scale. Four plants were built between 1947 and 1954. After they were built, most of these plants added additional generating units as they were needed.

In 1948, after 46 years as Southwestern Gas and Electric Company, a new corporate name was adopted-Southwestern Electric Power Company. The new name more accurately identified the company's operations.

Encouraged by the availability of inexpensive and clean-burning natural gas in the 1960s, SWEPCO, like many utilities, satisfied the need for new capacity by building gas-fired generating plants. The Wilkes plant was completed in 1964 and additional units were added in 1970 and 1971. But by the early 1970s natural gas shortages developed, the price escalated sharply, and long-term contracts could not be obtained. So the search for other generating fuels began. SWEPCO first chose coal and built two coal-fired plants that went on-line in the late 1970s, Welsh in East Texas and Flint Creek in Northwest Arkansas. Later the company began studying the feasibility of using lignite, which was abundantly available in SWEPCO's own service area. While lignite has a much lower heating value than coal, its great advantage over coal is that its transportation cost is essentially zero when compared to low-sulfur Wyoming coal. Subsequently, the company completed the lignite-fueled Pirkey plant in East Texas in 1985 and the Dolet Hills plant in Northwest Louisiana in 1986 in partnership with CLECO. No new generating plant is now under construction and none is expected to be needed for the rest of the decade.

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