SOUTHWESTERN ELECTRIC POWER CO - 10-K Annual Report

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FORM 10-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

[x} ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended December 31, 1993

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from _________________ to
_________________

COMMISSION FILE NUMBER 1-3146

SOUTHWESTERN ELECTRIC POWER COMPANY
(Exact name of registrant as specified in its charter)

DELAWARE 72-0323455
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

428 Travis Street, Shreveport, Louisiana 71156-0001
(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: 318/222-2141

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange
Title of each class on which registered
None None

Securities registered pursuant to Section 12(g) of the Act:

Cumulative Preferred Stock, $100 Par Value
(Title of Class)

Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months and (2) has been subject to such filing requirements
for the past 90 days. Yes X No ____

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein and will not be contained, to the best of the
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K [X].

Number of shares of Common Stock outstanding at December 31, 1993: 7,536,640

(None of such shares are held by non-affiliates.)

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Page

DEFINITIONS 3

PART I

ITEM 1. BUSINESS 4
GENERAL 4
REGULATION AND RATES 5
OPERATIONS 6
OPERATING STATISTICS 8
CONSTRUCTION AND FINANCING 9
FUEL SUPPLY 9
ENVIRONMENTAL MATTERS 10

ITEM 2. PROPERTIES 13

ITEM 3. LEGAL PROCEEDINGS 14

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 14

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS 14

ITEM 6. SELECTED FINANCIAL DATA 15

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 15

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 20

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE 34

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 37

ITEM 11. EXECUTIVE COMPENSATION 40

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 44

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 44

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K 45

DEFINITIONS

The following abbreviations or acronyms used in this text are defined below:

Abbreviation or
Acronym Definition

ADPCE Arkansas Department of Pollution Control and Ecology
AECC Arkansas Electric Cooperative Corporation
AFUDC Allowance for funds used during construction
AMAX AMAX Coal Company
Arkansas Commission Arkansas Public Service Commission
BREMCO Bossier Rural Electric Membership Corporation
Btu British thermal unit
Cajun Cajun Electric Power Cooperative, Inc.
CEO Chief Executive Officer
CERCLA Comprehensive Environment Response, Compensation
and Liability Act of 1980
CLECO Central Louisiana Electric Company
Company Southwestern Electric Power Company, Shreveport, Louisiana
COO Chief Operating Officer
CPL Central Power and Light Company, Corpus Christi, Texas
CSW Central and South West Corporation, Dallas, Texas
CSW System CSW and its subsidiaries
DELHI Delhi Gas Pipeline Corporation
District Court State District Courts of Travis County, Texas
Electric Operating
Companies CPL, PSO, WTU and the Company
Energy Policy Act National Energy Policy Act of 1992
EPA United States Environmental Protection Agency
ERISA Employee Retirement Income Security Act of 1974, as amended
FERC Federal Energy Regulatory Commission
HLP Houston Lighting & Power Company
Holding Company Act Public Utility Holding Company Act of 1935, as amended
HVDC High-voltage direct-current
IBEW The International Brotherhood of Electrical Workers
Kw Kilowatt (1,000 watts)
Kwh Kilowatt-hour
LDEQ Louisiana Department of Environmental Quality
Louisiana Commission Louisiana Public Service Commission
Mcf 1,000 cubic feet
MGP Manufactured gas plant
MW Megawatt (1 million watts)
Named Executive
Officers The CEO and the four other most highly compensated
executive officers of the Company
NTEC Northeast Texas Electric Cooperative, Inc.
Oklahoma Commission Corporation Commission of the State of Oklahoma
PCB Polychlorinated biphenyl
PRP Potentially responsible party
PSO Public Service Company of Oklahoma, Tulsa, Oklahoma
Rayburn Country Rayburn Country Electric Cooperative, Inc.
RCRA Resource Conservation and Recovery Act of 1976, as amended
SAR Stock Appreciation Right
SEC Securities and Exchange Commission
SO2 Sulfur Dioxide
Texas Commission Public Utility Commission of Texas
Tex-La Tex-La Electric Cooperative of Texas, Inc.
TNRCC Texas Natural Resource Conservation Commission
TIEC Texas Industrial Energy Consumers
WTU West Texas Utilities Company, Abilene, Texas

PART I

ITEM 1. BUSINESS
GENERAL

The Company. The Company, a Delaware corporation, is a
public utility engaged in generating, purchasing,
transmitting, distributing and selling electricity in
portions of northeastern Texas, northwestern Louisiana and
western Arkansas. It is a wholly owned subsidiary of CSW,
a registered holding company under the Holding Company Act.

At December 31, 1993, the Company supplied electric
service to approximately 396,000 retail customers in a
25,000 square mile area with an estimated population of
899,000. It supplied at wholesale all or a portion of the
electric energy requirements of two municipalities, nine
rural electric cooperatives and ten other electric
utilities. For the year ended December 31, 1993, the
Company derived 45% of its electric operating revenues,
exclusive of revenues from sales to other utilities, from
customers in Texas, 34% from customers in Louisiana and 21%
from customers in Arkansas. The three largest metropolitan
areas served by the Company are the metropolitan areas which
include the adjoining cities of Shreveport and Bossier City,
Louisiana; Texarkana, Arkansas and Texas; and the city of
Longview, Texas, which have estimated populations of
278,000, 62,000 and 79,000, respectively. The Company owns
certain transmission facilities in Oklahoma but serves no
customers there.

During 1993, Southwestern Electric Power Company
completed its purchase of Bossier Rural Electric Membership
Corporation (BREMCO), which was adjacent to the Company's
southern division in Louisiana. BREMCO customers' cost of
electricity declined from 9.7 cents to the Company's 6.7
cents per kilowatt-hour.

The Company's service territory is industrially
diversified with the chemical processing and petroleum
refining industries accounting for 22.9% of the Company's
industrial revenue during 1993. The oil and gas extraction
industry remains a significant sector in the economy and
contributed 11.3% of the Company's industrial revenue during
the year. The primary metals and paper processing
industries add balance to the Company's industrial base.

Competition. The Company generally has the exclusive
right to sell electric power at retail within its service
area. The Company competes in its service area, however,
with suppliers of alternative forms of energy, such as
natural gas, fuel oil and coal, some of which may be cheaper
than electricity. The Company believes that its rates, the
quality and reliability of its service and the relatively
inelastic demand for electricity for certain end uses places
it in a favorable competitive position in current retail
markets.

Wholesale energy markets, including the market for
wholesale electric power, are extremely competitive, even
more so after enactment of the Energy Policy Act. See
"National Energy Policy Act of 1992," below. The Company
competes with other public utilities, cogenerators and
qualified facilities in other forms, exempt wholesale
generators and others for sales of electric power at
wholesale.

Many competitive forces currently are at work in the
electric utility industry. Various legislative and
regulatory bodies are considering many issues, including the
extent of any deregulation of the electric utility industry
or of any access to an electric utility's transmission
system to make retail sales of power, the pricing of
transmission service on an electric utility's transmission
system, and the role of utilities, independents and
competitive bidding in the construction and operation of new
generation capacity. The Company is unable to predict the
ultimate outcome or impact of these issues or the impact of
further changes in the electric utility industry on the
Company. To the extent that consumers of electric power
approach electric power as a fungible commodity and are
accorded more choices in the future for their power
supplies, the principal factor determining success in retail
and wholesale markets probably would be price, and to a
lesser extent, reliability, availability of capacity, and
customer service. Compared to other electric utilities on a
national and a regional scale, the Company believes it is a
relatively low-cost producer of electric power. Moreover,
the Company is taking steps to enhance its marketing and

customer service, reduce costs, and improve and standardize
business practices in line with the best practices in the
CSW System, in order to position itself for increased
competition in the future. See ITEM 7. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, for a discussion of the restructuring of the
CSW System and certain industry and other challenges.

REGULATION AND RATES

Regulation. The Company, as a subsidiary of CSW, is
subject to the jurisdiction of the SEC under the Holding
Company Act with respect to the issuance, acquisition and
sale of securities, acquisition and sale of certain assets
or any interest in any business, including certain aspects
of fuel exploration and development programs, accounting
practices and other matters. The Company is itself a
holding company by virtue of its 32% ownership of The
Arklahoma Corporation, a corporation owned with Arkansas
Power and Light Company and Oklahoma Gas and Electric
Company. The Arklahoma Corporation owns and maintains a
transmission line running from Boudinot, Oklahoma to Lake
Catherine, Arkansas.

The FERC has jurisdiction under the Federal Power Act
over certain of the Company's electric utility facilities
and operations, wholesale rates, and in certain other
matters.

National Energy Policy Act of 1992. The Energy Policy
Act, adopted in October 1992, significantly changed U. S.
energy policy, including that governing the electric utility
industry. The Energy Policy Act allows the FERC, on a case-
by-case basis and with certain restrictions, to order
wholesale transmission access and to order electric
utilities to enlarge their transmission systems. The Energy
Policy Act does, however, prohibit FERC-ordered retail
wheeling, including "sham" wholesale transactions. Further,
under the Energy Policy Act a FERC transmission order
requiring a transmitting utility to provide wholesale
transmission services must include provisions generally that
permit the utility to recover from the FERC applicant all of
the costs incurred in connection with the transmission
services, any enlargement of the transmission system and
associated services.

In addition, the Energy Policy Act revised the Holding
Company Act to permit utilities, including registered
holding companies, and non-utilities to form "exempt
wholesale generators" without the principal restrictions of
the Holding Company Act. Under prior law, independent power
producers were generally required to adopt inefficient and
complex ownership structures to avoid pervasive regulation
under the Holding Company Act. Management believes that
this Act will make wholesale markets more competitive.
However, the Company is unable to predict the extent to
which the Energy Policy Act will affect its operations.

Rates. The Company is subject to the jurisdiction in
Arkansas of the Arkansas Commission as to rates, accounts,
standards of service, sale or acquisition of certain utility
property and issuance of securities secured by liens on
property located in that state. In Louisiana, the Company
is subject to the jurisdiction of the Louisiana Commission
as to rates, accounts and standards of service, but not as
to the issuance of securities. In Oklahoma, it is subject
to the jurisdiction of the Oklahoma Commission only as to
the issuance of evidences of indebtedness secured by liens
on property located in that state. In Texas, the Texas
Commission has jurisdiction with respect to accounts,
certification of utility service territories, sale or
acquisition of certain utility property, mergers and certain
other matters. The Texas Commission has original
jurisdiction over retail rates in the unincorporated areas
of Texas. The governing bodies of incorporated
municipalities in Texas have such jurisdiction over rates
within their incorporated limits. Municipalities may elect,
and some have elected, to surrender this jurisdiction to the
Texas Commission. The Texas Commission has appellate
jurisdiction over rates set by incorporated municipalities.
Neither the Texas Commission nor the governing bodies of
incorporated municipalities have such jurisdiction over the
issuance of securities.

The Company's retail rates currently in effect in
Louisiana are adjusted based on the Company's cost of fuel
in accordance with a fuel-cost adjustment which is applied
to each billing month based on the second previous month's
average cost of fuel. Provision for any over- or under-
recovery of fuel costs is allowed under an automatic fuel
clause. Under the Company's fuel adjustment rider currently
in effect in Arkansas, the fuel cost adjustment is applied
for each billing month on a basis which permits the Company
to recover the level of fuel cost experienced two months
earlier.

Electric utilities in Texas are not allowed to make
automatic adjustments to recover changes in fuel costs from
retail customers. A utility is allowed to recover its known
or reasonably predictable fuel costs through a fixed fuel
factor. The Texas Commission established procedures which
became effective on May 1, 1993, subject to certain
transition rules, whereby each utility under its
jurisdiction may petition to revise its fuel factors every
six months according to a specified schedule. Fuel factors
may also be revised in the case of emergencies or in a
general rate proceeding. Under the revised procedures a
utility will remain subject to the prior rules until after
its first fuel reconciliation, or in some instances a
general rate proceeding including a fuel reconciliation,
subject to the new rules. Management does not believe that
the new rules substantially change the manner in which the
Company will recover retail fuel costs in Texas. Fuel
factors are in the nature of temporary rates and the
utility's collection of revenues by such is subject to
adjustments at the time of a fuel reconciliation proceeding.
At the utility's semi-annual adjustment date, a utility must
petition the Texas Commission for a surcharge or to make a
refund when it has materially over- or under-collected its
fuel costs and projects that it will continue to materially
over- or under-collect. Material over- or under-collections
including interest are defined as four percent of the most
recent Texas Commission adopted annual estimated fuel cost
for the utility, which is approximately $5.2 million for the
Company. A utility does not have to revise its fuel factor
when requesting a surcharge or refund. An interim emergency
fuel factor order must be issued by the Texas Commission
within 30 days after such petition is filed by the utility.
Final reconciliation of fuel costs are made through a
reconciliation proceeding, which may contain a maximum of
three years and a minimum of one year of reconcilable data,
and must be filed with the Texas Commission no later than
six months after the end of the period to be reconciled. In
addition, a utility must include a reconciliation of fuel
costs in any general rate proceeding regardless of the time
since its last fuel reconciliation proceeding. Any fuel
costs which are determined unreasonably incurred in a
reconciliation proceeding must be refunded to customers.

The Company has agreements, which have been approved by
the FERC, with all of its wholesale customers under which
rates are based upon an agreed cost of service formula.
These rates are adjusted periodically to reflect the actual
cost of providing service. All of the Company's contracts
with its wholesale customers contain FERC approved fuel-
adjustment provisions that permit it to pass actual fuel
costs through to its customers.

In the event that the Company does not recover all of
its fuel costs under the above procedures, such event could
have an adverse impact on its results of operations.

See ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA, Note 9, Litigation and Regulatory Proceedings, for
further information with respect to fuel recovery.

OPERATIONS

Peak Loads and System Capabilities. The following
table sets forth for the last three years the net system
capability of the Company (including the net amounts of
contracted purchases and contracted sales) at the time of
peak demand, the maximum coincident system demand on a one-
hour integrated basis (exclusive of sales to other electric
utilities) and the respective amounts and percentages of
peak demand generated by the Company and net purchases and
sales:

Percent
Net System Maximum Increase
Capability Coincident (Decrease) Net Purchases
at Time of System In Peak Generation at (Sales) at
Peak Demand(1) Demand Time of Peak Time of Peak
Over Prior
Year MW MW Period MW % MW %

1993 4,436 3,651 12.8 3,559 97.5 92 2.5
1992 3,959 3,237 1.2 3,292 101.7 (55) (1.7)
1991 4,094 3,200 (1.6) 3,008 94.0 192 6.0

(1) Maximum system demand occurred on August 18, August 10,
and August 5, in the years 1993, 1992 and 1991,
respectively.

The Company exchanges power on an emergency or economy
basis with various neighboring systems and engages in
economy interchanges with the other Electric Operating
Companies in the CSW System. In addition, it has contracts
with certain systems for the purchase and sale of power on a
system basis. As part of the negotiations to acquire
BREMCO, the Company entered into a long-term purchased power
contract with Cajun, BREMCO's previous full-requirements
wholesale supplier. The contract covers the purchase of
energy at a fixed price for 1993 and 1994, and the purchase
of capacity and energy in subsequent years. The Company is
a member of the Southwest Power Pool and the Western Systems
Power Pool.

The Company furnishes energy at wholesale to two
municipalities and also supplies electric energy at
wholesale to seven electric cooperatives operating in its
territory through NTEC, Tex-LA and Rayburn Country. The
Company also sells power to AECC and Cajun on an as-
available basis.

The CSW System operates on an interstate basis to
facilitate exchanges of power. PSO and WTU are
interconnected through the 200,000 Kw North HVDC Tie. In
August 1992, the Company entered into an agreement with CPL,
HLP and Texas Utilities Electric Company to construct and
operate an East Texas HVDC transmission interconnection
which will facilitate exchanges of power for the CSW System.
The Company has a 25% ownership interest in the project.
This interconnection will consist of a back-to-back HVDC
converter station and 16 miles of 345 kilovolt transmission
line connecting transmission substations at the Company's
Welsh Power Plant and Texas Utilities Electric Company's
Monticello Power Plant. In March, 1993, an application for
a Certificate of Convenience and Necessity for the
transmission interconnection was approved by the Texas
Commission. This 600,000 Kw project is scheduled to be
completed in 1995.

Seasonality. Sales of electricity by the Company tend
to increase during warmer summer months and, to a lesser
extent, cooler winter months, because of higher demand for
cooling and heating power.

Employees. At December 31, 1993, the Company had 2,033
employees. Of such employees, approximately 800 are covered
under a collective bargaining agreement with IBEW. CSW has
announced an early retirement program to be implemented
throughout the CSW System in 1994. The early retirement
program was offered to 181 eligible employees of the Company
and 726 employees on a systemwide basis of which
approximately 78% of the eligible employees of the Company
and 85% of the total systemwide eligible employees elected
the early retirement program. See ITEM 7. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - Restructuring, for a discussion of the
recently announced restructuring of the CSW System and
associated early retirement program and work force
reduction.

SOUTHWESTERN ELECTRIC POWER COMPANY

OPERATING STATISTICS

Year Ended December 31

1993 1992 1991

KILOWATT-HOUR SALES (MILLIONS):
Residential 4,114 3,702 3,841
Commercial 3,249 3,039 3,056
Industrial 6,122 5,862 5,779
Other Retail 390 373 370
------ ------ ------
Sales to retail customers 13,875 12,976 13,046
Sales for resale 4,508 3,854 3,195
------ ------ ------
Total 18,383 16,830 16,241
====== ====== ======
NUMBER OF ELECTRIC CUSTOMERS AT END
OF PERIOD:
Residential 340,379 325,301 321,248
Commercial 46,728 45,185 44,573
Industrial 5,809 5,687 5,657
Other 2,605 2,636 2,641
------- ------- -------
Total 395,521 378,809 374,119
======= ======= =======

RESIDENTIAL SALES AVERAGES:
Kwh per customer 12,357 11,445 12,005
Revenue per customer $822 $770 $791
Revenue per Kwh (cents) 6.65 6.73 6.59

REVENUES PER KWH ON TOTAL SALES
(cents) 4.60 4.62 4.68

FUEL COST DATA:
Average Btu per net Kwh 10,582 10,717 10,797
Cost per million Btu $1.94 $1.93 $1.87
Cost per Kwh generated (cents) 2.05 2.07 2.02
Cost as a percentage of revenue 42.5 43.0 42.4

CONSTRUCTION AND FINANCING

Construction. The estimated total capital
expenditures (including AFUDC) for the years 1994-1996 are
as follows:

1994 1995 1996 Total
(Millions)

Production $ 8 $ 14 $ 12 $ 34
Transmission 43 33 38 114
Distribution 39 41 43 123
Other 35 43 34 112
---- ---- ---- ----
Total $125 $131 $127 $383
==== ==== ==== ====

Information in the foregoing table is subject to change
due to numerous factors, including the rate of load growth,
escalation of construction costs, changes in lead times in
manufacturing, inflation, the availability and pricing of
alternatives to construction or environmental regulation,
delays from regulatory hearings, the adequacy of rate relief
and the availability of necessary external capital. Changes
in these and other factors could cause the Company to defer
or accelerate construction or to sell or buy more power,
which would affect its cash position, revenues and income to
an extent that cannot now be reliably predicted. See ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Construction Program,
for additional information relating to construction.

The Company continues to study alternatives to reduce
or meet future increases in customer demand, including
without limitation demand-side management programs, new and
efficient electric technologies, various architectures for
new and existing generation facilities, and methods to
reduce transmission and distribution losses.

The CSW System facilities plan currently indicates that
the Company will not require additional substantial
additions to its generating capacity until the year 2002 or
beyond.

Financing. See ITEM 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -
Financing and Capital Resources, for information relating to
financing and capital resources.

FUEL SUPPLY

General. The Company's present electric generating
plants showing the type of fuel used are set forth under
ITEM 2. PROPERTIES.

During 1993, approximately 55% of Kwh generation was
from coal, 29% from lignite and 16% from gas. Coal and
lignite requirements were 10.3 million tons and natural gas
consumption was 29.7 million Mcf.

Coal and Lignite. The long-term fuel supply for the
Company's Welsh plant and its 50 percent-owned Flint Creek
plant is provided under a contract with AMAX. The new
contract, executed in December 1993, replaces a prior
contract between the parties as part of a settlement of
litigation concerning the prior contract. The settlement is
expected to result in lower fuel costs now and in the future
to the Welsh and Flint Creek plants. Approximately 86
percent of the total 1993 Flint Creek coal requirements and
100 percent of the total 1993 Welsh coal requirements were
supplied under the AMAX contracts with the balance purchased
on the spot market.

Coal under the AMAX contract is mined near Gillette,
Wyoming, a distance of about 1,500 and 1,100 miles,
respectively, from the Welsh and Flint Creek plants. This
coal is delivered to the plants under a rail carrier
contract with the Company. The Company owns or leases
sufficient cars and spares for operation of twelve unit
trains. At December 31, 1993, the Company had coal
inventories of 922,000 tons at Welsh and 365,000 tons at
Flint Creek.

The Company has acquired lignite leases covering an
aggregate of about 27,000 acres near the Pirkey plant.
Sabine Mining Company is the contract miner of these
reserves. At December 31, 1993, 308,000 tons of lignite
were in inventory at the plant.

Another 25,000 acres are jointly leased in equal
portions by the Company and CLECO in the Dolet Hills area of
Louisiana near the Dolet Hills Power Plant. The Dolet Hills
Mining Venture is the contract miner of these reserves. At
December 31, 1993, the Company had 150,000 tons of lignite
in inventory at the plant.

In the Company's opinion, the acreage under lease in
these areas contains sufficient reserves to cover the
anticipated lignite requirements for the estimated useful
lives of the lignite-fired plants.

Natural Gas. In 1993, the Company purchased
approximately 87% of its gas requirements pursuant to spot
purchase contracts with no take-or-pay obligations. The
remainder of the Company's 1993 gas requirements,
approximately 13%, came from a long-term take-or-pay
contract which was terminated in January 1994. The Company
plans to continue to enter into short-term contracts with
various suppliers to provide gas for peaking purposes.

Governmental Regulation. The price and availability of
each of the foregoing fuel types are significantly affected
by governmental regulation. Any inability in the future to
obtain adequate fuel supplies, or adoption of additional
regulatory measures restricting the use of such fuels for
the generation of electricity, might affect the Company's
ability to meet economically the needs of its customers and
could require it to supplement or replace, prior to normal
retirement, existing generating capability with units using
other fuels. This would be impossible to accomplish
quickly, would require substantial expenditures for
construction and could have a significant adverse effect on
the Company's financial position and results of operations.

Fuel Costs. Additional fuel cost data for the Company
appears under "OPERATING STATISTICS." For 1993, total
average cost of fuel per million Btu was $1.94. Average
costs per million Btu by major fuel type were $2.03 for
coal, $1.27 for lignite and $2.89 for natural gas. Fuel
costs often fluctuate due to various factors and, as a
result, the Company is unable to precisely predict the
future cost of fuel.

ENVIRONMENTAL MATTERS

The Company is subject to regulation with respect to
air and water quality and solid waste standards, along with
other environmental matters, by various federal, state and
local authorities. These authorities have continuing
jurisdiction in most cases to require modifications in the
Company's facilities and operations. Changes in
environmental statutes and regulations could require
substantial additional expenditures to modify the Company's
facilities and operations and could have a significant
adverse effect on the Company's results of operations.
Violations of environmental statutes or regulations can
result in fines and other costs.

Air Quality. Air quality standards and emission
limitations are subject to the jurisdiction of the ADPCE in
Arkansas, the LDEQ in Louisiana and the TNRCC in Texas, with
oversight by the EPA. In accordance with regulations of the
ADPCE, LDEQ and TNRCC, permits are required for all
generating units on which construction is commenced or which
are substantially modified after the effective date of the
applicable regulations. The EPA has approved and may
enforce the air quality standards and limitations adopted by
the ADPCE, LDEQ and TNRCC and has adopted ambient air
quality standards applicable nationally, as well as new
source performance standards for all new or substantially
modified generating units. The Company has not received
notice from any federal or state government agency alleging
that it currently is subject to an enforcement action for a
material violation of existing federal or state air quality
and emission regulations.

In November 1990, the United States Congress passed the
Clean Air Act Amendments of 1990, which place restrictions
on the emission of sulfur dioxide (SO2) and nitrogen oxides
from gas, coal and lignite fired generating plants. Under
the Clean Air Act Amendment, beginning in the year 2000, the
Company will be required to hold allowances in order to emit
SO2. The right to emit SO2 from existing generating plants
has been established on historical operating conditions.
These rights will be controlled through an allowance
program. The Company, based on the CSW System facilities
plan, believes its allowances are adequate to meet its needs
at least through 2008. Public and private markets are
developing for trading of excess allowances. The Company is
not currently engaging in sales or purchases of allowances,
but may seek to do so in the future if market conditions
warrant.

The facilities plan presently includes projected coal
and lignite fired generating plants for which the Company
has invested approximately $37.7 million in prior years for
plant sites, engineering studies and lignite reserves.
During 1993, the Company abandoned certain lignite leases
with a value of $4.2 million. As conditions change, the
Company will continue to evaluate its plans for these plants
as well as the probability of recovery of these investments,
and adjust the balance of the investment appropriately. In
accordance with Clean Air Act requirements, the Company
anticipates spending $5 million for continuous emissions
monitoring equipment through 1995.

Water Quality. The ADPCE, the LDEQ and the TNRCC in
their respective states, and the EPA generally, have
jurisdiction over all waste water discharges into state
waters. These authorities have jurisdiction for
establishing water quality standards and issuing waste
control permits covering discharges which might affect the
quality of state waters. The EPA has jurisdiction over
"point source" discharges through the National Pollutant
Discharge Elimination System provisions of the Clean Water
Act. The Company has not received notice from any federal
or state government agency alleging that it currently is
subject to an enforcement action for a material violation of
existing federal or state wastewater discharge regulations.

Solid Waste Disposal. The RCRA and the Arkansas,
Louisiana and Texas solid waste rules provide for
comprehensive control of all solid wastes from generation to
final disposal. The ADPCE, LDEQ and TNRCC have received
authorization from the EPA to administer the RCRA solid
waste control program for their respective states. The
Company has not received notice from any federal or state
government agency alleging that it currently is subject to
an enforcement action for a material violation of existing
federal or state solid waste regulations.

CERCLA and Related Matters. Under CERCLA, owners or
operators of contaminated sites and transporters and/or
generators of hazardous substances can be held liable for
the cleanup of hazardous substance disposal sites. Similar
liabilities for hazardous substance disposal can arise under
applicable state law. The Company, like other electric
utilities, incurs significant costs for the handling,
transportation, storage and disposal of hazardous, toxic and
non-hazardous waste materials. Unit costs for waste
classified as hazardous or toxic exceed by a substantial
margin unit costs for waste classified as non-hazardous.

The Company produces combustion and other generation by-
products, such as sludge, ash and slag. The Company owns
distribution poles treated with creosote or related
substances. The EPA currently exempts coal combustion by-
products from regulation as hazardous wastes. Distribution
poles treated with creosote or similar substances are not
expected to exhibit characteristics that would cause them to
be hazardous waste. In connection with its operations, the
Company also has used asbestos, PCBs and other materials
classified as hazardous or toxic waste. If additional by-
products or other materials generated or used by the Company
were reclassified as hazardous or toxic wastes, or other new laws
or regulations concerning hazardous or toxic wastes or other
materials were put in effect, the Company's disposal and
remedial costs could increase materially. In 1993, the EPA
made an administrative determination that coal combustion by-
products are non-hazardous. The EPA is expected in the near-
term to issue new regulations stating whether certain other
non-combustion by-products will be classified as hazardous
waste.

In late 1987, the Company signed an administrative
order with the EPA in coordination with several other
companies, for removal of PCB articles and materials stored
at the now defunct EPA-permitted Rose Chemical PCB disposal
site in Missouri. EPA issued an administrative order for
site remediation in 1992 and the Company, along with the
other parties, is complying with the order. The Company's
share of cleaning up the Rose Chemical site is not expected
to have a material adverse effect on the Company's results
of operations.

The Company was named as a PRP at the B&B Salvage site.
This site, located in Missouri, received scrap metal from
the Rose Chemical firm. This site has been remediated and
the Company has settled its liability with other PRPs. The
settlement did not have a material adverse effect on the
Company's results of operations.

See ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA, Note 10, Commitments and Contingent Liabilities, for
information with respect to former MGP sites for which the
Company has potential liability for clean up costs.

From time to time the Company is made aware of various
other environmental issues or is a party to various other
legal claims, actions, complaints and other proceedings
related to environmental matters. Management does not
expect disposition of any such environmental proceedings to
have a material adverse effect on the Company's results of
operations.

See ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS -
Environmental, for certain other information relating to
environmental matters.

ITEM 2. PROPERTIES.

Facilities. At December 31, 1993, the Company owned
the following electric generating plants (or portions
thereof in the cases of the jointly owned plants). See ITEM
1. FUEL SUPPLY.

Net Dependable
Type of Fuel Capability
Plant Name and Location Primary/Secondary MW

Arsenal Hill gas 113
Shreveport, Louisiana

Lieberman gas 56
Mooringsport, Louisiana gas/oil (a) 220

Knox Lee gas 157
Longview, Texas gas/oil (a) 344

Lone Star gas/oil 50
Lone Star, Texas

Wilkes gas/oil (a) 177
Jefferson, Texas gas 702

Welsh coal 1,584
Cason, Texas

Flint Creek (b) coal 240
Gentry, Arkansas

Henry W. Pirkey (b) lignite 559
Hallsville, Texas

Dolet Hills (b) lignite 262
Mansfield, Louisiana -----

Total 4,464
____________________ =====

(a) For extended periods of operation, oil can be used only
in combination with gas. Sustained use of oil in facilities
primarily designed to burn gas results in increased
maintenance expense and a reduction of 5% to 10% in
capability.

(b) Data reflects only the Company's portion of plants
which are jointly owned with non-affiliated parties.

All of the generating plants described above are
located on land owned by the Company or jointly with the
other participants in jointly owned plants. The Company's
electric transmission and distribution facilities are for
the most part located over or under highways, streets and
other public places or property owned by others, for which
permits, grants, easements or licenses (which the Company
believes to be satisfactory, but without examination of
underlying land titles) have been obtained. The principal
plants and properties of the Company are subject to the lien
of the first mortgage indenture under which the Company's
first mortgage bonds are issued.

ITEM 3. LEGAL PROCEEDINGS.

See ITEM 1. REGULATION AND RATES and ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA, Note 9,
Litigation and Regulatory Proceedings, for information
relating to regulatory proceedings.

See ITEM 1. ENVIRONMENTAL MATTERS and ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - Other Matters, for information
relating to environmental proceedings.

The Company is party to various other legal claims,
actions and complaints arising in the normal course of
business. Management does not expect disposition of these
matters to have a material adverse effect on the Company's
results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.

All of the outstanding shares of Common Stock of the
Company are owned by its parent company, CSW.

ITEM 6. SELECTED FINANCIAL DATA.

The following selected financial data for each of the
five years ended December 31 are provided to highlight
significant trends in the financial condition and results of
operations for the Company.

1993 1992 1991 1990 1989
(dollars in thousands)

Electric Operating
Revenues $ 837,192 $ 778,303 $ 760,694 $ 735,217 $ 729,861
Net Income 81,876 94,883 96,624 89,713 97,217
Preferred Stock Dividends 3,362 3,445 3,465 3,528 3,528
Net Income for Common Stock 78,514 91,438 93,159 86,185 93,689
Total Assets 1,968,285 1,927,320 1,851,108 1,869,340 1,880,100
Common Stock Equity 645,731 647,217 645,780 641,554 640,169
Preferred Stock Subject to
Mandatory Redemption 36,028 37,228 38,416 36,422 36,095
Preferred Stock Not Subject
to Mandatory Redemption 16,032 16,032 16,033 14,358 14,309
Long-Term Debt $ 602,065 $ 532,860 $ 573,626 $ 576,095 $ 595,988

Ratio of Earnings to Fixed
Charges (SEC Method) 3.34 3.39 3.51 3.03 3.19

Capitalization Ratios:
Common Stock Equity 49.7% 52.5% 50.7% 50.6% 49.8%
Preferred Stock 4.0 4.3 4.3 4.0 3.9
Long-Term Debt 46.3 43.2 45.0 45.4 46.3

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

Reference is made to the Financial Statements and
related Notes to Financial Statements and Selected Financial
Data. The information contained therein should be read in
conjunction with, and is essential in understanding, the
following discussion and analysis.

OVERVIEW

The Company's return on average common stock equity
decreased 2.4% in 1993 to 12.0% as compared to 14.4% in
1992. A return to normal temperatures in the Company's
service territory contributed to a 6.2% increase in revenues
from sales to retail customers. However, significant
charges associated with restructuring and the adoption of
Statement of Financial Accounting Standard (SFAS) No. 112
more than offset the positive effects of the weather and a
change in accounting for unbilled revenues.

RESTRUCTURING

CSW recently announced a management restructuring and
early retirement program designed to consolidate and
restructure its operations in order to meet the challenges
of the changing electric utility industry and to compete
effectively in the years ahead. The underlying goal of the
restructuring is to enable the Electric Operating Companies
to focus on and be accountable for serving customers.

The initial phase of the restructuring will involve
certain changes at CSWS, the mutual service company that
serves the CSW System. CSWS will be realigned into two
primary units -- Operation Services and Production Services.
Operation Services will provide administrative services that
can be performed centrally to benefit the CSW System,
including the Company. Production Services will focus on
consolidated fuel and generation planning for the Electric
Operating Companies as well as certain other activities.
Certain aspects of the restructuring may be subject to SEC
approval.

To implement the restructuring program, the CSW System
will consolidate and centralize its operation services and
production services. The Company, the other Electric
Operating Companies and CSW are expected to reduce the size
of their work forces and incur costs associated with an
early retirement program, severance packages and relocation.
The early retirement program has been offered to 181
eligible employees of the Company and 726 employees on a
systemwide basis, of which approximately 78% of the eligible
employees of the Company and 85% of the total systemwide
eligible employees elected the early retirement program.
Since the restructuring is not expected to be completed
until the end of 1994, it is not possible at this time for
the Company to predict the number of its employees who will
take the early retirement program, be granted severance
packages or be relocated. The Company's share of the total
cost of the restructuring was estimated to be $25.2 million
before taxes, and was expensed in 1993.

The Company's share of the severance and relocation
costs will be paid from general corporate funds in 1994 and
its share of early retirement costs primarily from pension
and postretirement benefit plan trusts. Savings from the
restructuring are expected to begin in the second half of
1994. By the end of 1995, initial costs should be fully
recovered through operations and maintenance cost savings.

CSW established a Business Improvement Plan in 1991 to
identify, analyze and implement the best business practices
as part of its efforts to align the CSW System strategically
to meet competitive forces. The BIP program will be
incorporated as part of the restructuring. Any additional
costs to the Company are expected to be offset by future
savings from the benefits provided through the
implementation of BIP recommendations.

CONSTRUCTION AND CAPITAL EXPENDITURES

The Company's construction and capital expenditures
increased 70% in 1993, 30.3% in 1992, and 20.9% in 1991.
Included in the expenditures for 1993 was approximately $35
million for the acquisition of BREMCO, a rural electric
cooperative with service territory adjacent to the Company's
service territory in Louisiana. Construction expenditures
during the period 1994-1996 are estimated at $383 million.
These expenditures will consist primarily of expansion and
improvements to transmission and distribution facilities.
The construction program will continue to be reviewed and
adjusted for changes affecting the Company's service area.

FINANCING AND CAPITAL RESOURCES

Internal Generation. Internal sources of funds,
consisting of cash flows from operating activities less
dividends paid, have provided $148.7 million, $75.4 million,
and $104.8 million during 1993, 1992, and 1991. These
amounts represented 85%, 78%, and 142% of the total
construction expenditures during these periods.

Sale of Accounts Receivable. The Company sells its
billed and unbilled accounts receivable to CSW Credit, Inc.,
a wholly owned subsidiary of CSW. These sales provide the
Company with cash immediately and reduce working capital and
revenue requirements. The monthly average and year end
amounts of accounts receivable sold were $64.4 million and
$57.1 million in 1993 as compared to $59.4 million and $54.2
million in 1992.

Short-Term Financing. The Company traditionally uses
short-term debt for interim financing until a marketable
amount can be refinanced with first mortgage bonds or
preferred stock. The Company, together with other members
of the CSW System, has established a System money pool to
coordinate short-term borrowings and to make borrowings
outside the money pool through the issuance of commercial
paper and from bank borrowings. These borrowings are
unsecured demand obligations at rates approximating the CSW
System's commercial paper borrowing costs. The maximum and
minimum amounts of borrowings outstanding at month end
during 1993 were $53.5 million and zero, and the average
amount of borrowings outstanding during the year was $10
million. The weighted average interest rate paid during the
year was 3.2%. The maximum borrowing limit through the
System money pool authorized by the SEC is $150 million.

Long-Term Financing. Long-term financing by the
Company involves the sale of first mortgage bonds and
preferred stock and the receipt of capital contributions
from its parent company or other financing alternatives. The
goal of the Company is to maintain a strong capital
structure. At December 31, 1993, the capitalization ratios
were 50% common stock equity, 4% preferred stock, and 46%
long-term debt. External financing will be required in the
1994-1996 time period; however, the timing, nature and
extent thereof have not been determined. External
financings will be made with capital structure goals and
cost of funds in mind.

Regulatory Matters. Reference is made to Note 9 of the
Notes to Financial Statements for a discussion of regulatory
matters.

New Accounting Standards. Reference is made to Note 1
of the Notes to Financial Statements-New Accounting
Standards for a discussion of SFAS No. 106, Employers'
Accounting for Postretirement Benefits Other Than Pensions,
SFAS No. 109, Accounting for Income Taxes, SFAS No. 112,
Employers' Accounting for Postemployment Benefits, and the
Company's change in accounting for Unbilled Revenues.

RESULTS OF OPERATIONS

Net income for common stockholders decreased 14.1%
during 1993 to $78.5 million from $91.4 million in 1992, due
primarily to restructuring reserves and the adoption of SFAS
112, offset in part by a change in its accounting method of
accounting for unbilled revenues. In 1992, net income
decreased 1.8% from $93.2 million in 1991.

Electric Operating Revenues. Total electric operating
revenues increased 7.6% during 1993, due primarily to higher
energy sales which resulted from favorable weather in the
Company's service territory, and to a gain in the number of
customers served. Approximately 9,400 retail customers were
added with the acquisition of BREMCO, a neighboring electric
cooperative. Also contributing to the higher total revenues
were increased sales of energy for resale, which resulted,
in part, from sales to CPL, an affiliate, during an outage
at their South Texas Project generating facility. The
decline in retail energy sales in 1992 was due to milder
temperatures, offset in part by an increase in the number of
customers served. Industrial kilowatt-hour sales increased
4.5% in 1993, and 5.9% in 1992.

Fuel and Purchased Power. Fuel expense is influenced
primarily by two factors, the average unit cost of fuel
(price) and the quantity of fuel burned (generation). Fuel
expense increased 7.3% in 1993, after increases of 3.9% in
1992 and 6.7% in 1991. The average cost of fuel per million
BTU was $1.94, $1.93, and $1.87 during 1993, 1992, and 1991,
which amounts to an increase of 0.5% during 1993, 3.2%
during 1992, and 2.7% in 1991. The fuel expense increase in
1993 was primarily the result of an 8% increase in
generation.

Purchased power costs increased $6.5 million in 1993,
after an increase of $4.4 million in 1992 and a decrease of
$2.2 million in 1991. The increase in 1993 was largely due
to scheduled and unscheduled maintenance at the Company's
generating facilities and a purchased power contract
negotiated as part of the purchase of BREMCO. The increase
in 1992 was due largely to a higher amount of energy
purchased for resale to neighboring utilities, and the
decrease in 1991 resulted primarily from a lower amount of
energy purchased for resale.

During December 1993 and January 1994, the Company
settled two major disputes involving litigation with fuel
suppliers. One dispute related to a coal supply contract
between the Company and AMAX. The prior contract was
replaced in December 1993 with a new coal supply agreement
with AMAX as part of the settlement. In January 1994, the
Company entered into a settlement of litigation with DELHI
regarding a gas supply contract. The settlement provided
for termination of the existing gas supply contract, which
otherwise would have expired in March 1995, and a new four-
year gas supply contract between the parties. Both
settlements are expected to result in reduced fuel costs now
and in the future, the benefits of which will revert to the
Company's customers through fuel cost adjustment mechanisms.

Expenses and Taxes. Operation and maintenance expenses
increased 41.1% during 1993, primarily the result of
restructuring charges and $4.2 million in reserves for
certain lignite properties. Also contributing to the
increase were higher expenses for outside and legal
services, and higher employee benefit expenses.
Significantly higher than average maintenance expenditures
on the Company's distribution and general facilities
resulted in an increase of 19% in maintenance expense for
1993 compared to 1992. Federal income taxes decreased 12%
or $3.9 million as a result of lower pre-tax income, which
more than offset the increase in the federal income tax rate
from 34% to 35%. Taxes other than federal income were 10.4%
higher during 1993, primarily due to a Texas tax refund
recognized in 1992. The decrease in 1992 was due in part to
this refund, and to lower state income taxes.

Effects of Inflation. Annual inflation rates, as
measured by the national Consumer Price Index, have averaged
approximately 3.3% for the three-year period ending December
31, 1993. Inflation at these levels does not materially
affect the Company's results of operations or financial
condition. Under existing regulatory practice, however,
only the historical cost of plant is recoverable from
customers. As a result, cash flows designed to provide
recovery of historical plant costs may not be adequate to
replace plant in future years.

Interest and Preferred Stock Dividends. Interest on
long-term debt decreased in each of the past three years as
a result of reacquisitions and refinancings of long-term
debt.

OTHER MATTERS

Competition and Industry Challenges. The Company's
business has been, and will continue to be affected by
various challenges that confront the electric utility
industry generally. The Company currently faces competition
for power sales in the wholesale market. In the future, the
Company may face similar competition for retail sales from
other utilities, independent power producers or alternative
sources of electricity or other energy. To date, the
Company has been successful in meeting the competition.

In 1993, the Company and PSO filed with the FERC
tariffs under which they make generally available firm and
non-firm transmission services for other electric utilities
on the combined PSO and SWEPCO transmission systems in the
Southwest Power Pool. The FERC accepted the tariffs for
filing on November 4, 1993. The tariffs will expose the CSW
System to some additional risk of loss of load or reduced
revenue resulting from competition with alternative
suppliers of electric power.

Other industry-wide issues confronting the Company
include current and proposed stringent environmental and
other regulation and deregulation. In addition, the Company
is continuing to manage costs and rates and focus on new
initiatives in order to maintain its financial strength and
reach its financial targets.

Environmental. The operations of the Company, like
those of other electric utilities, generally involve the use
or disposal of substances subject to environmental laws.
CERCLA, the federal "Superfund" law, addresses the cleanup
of sites contaminated by hazardous substances. Superfund
requires that PRPs fund remedial actions regardless of fault
or the legality of past disposal activities. Many states
have similar laws. Theoretically, any one PRP can be held
responsible for the entire cost of a cleanup. Typically,
however, cleanup costs are allocated among PRPs.

The Company has been named as a responsible party under
federal or state remedial laws four times, and has resolved
three of those claims without a material adverse effect on
the Company. The Company does not anticipate that
resolution of the remaining claim will have a material
adverse effect on it. Factors that are the basis for the
expectation are the volume and/or type of waste allegedly
contributed by the Company, the estimated amount of costs
allocated to the Company and the participation of other
parties.

Contaminated former MGPs are a type of site which
utilities, and others, may have to remediate in the future
under Superfund or other federal or state remedial programs.
Gas was manufactured at MGPs from the mid-1800's to the mid-
1900's. In some cases, utilities and others have faced
potential liability for MGPs because they, or their alleged
predecessors, owned or operated the plants. In other cases,
utilities or others may have been subjected to such
liability for MGPs because they acquired MGP sites after gas
production ceases. The Company is investigating
contamination at a suspected MGP in Marshall, Texas.
Although it has not been determined whether a cleanup will
be required at the site, preliminary estimates of potential
responses indicate that such costs would not be material to
the Company. As more information is obtained about the
site, and the Company discusses the site with the TNRCC, the
preliminary estimates may change. If a cleanup is required,
the Company intends to seek contribution from other PRPs.

See ITEM 1. ENVIRONMENTAL MATTERS, for further
discussion of certain Superfund and MGP sites.

The Clean Air Amendments of 1990 direct the EPA to
issue regulations governing nitrogen oxide emissions. In
addition, these amendments require government studies to
determine what controls, if any, should be imposed on
utilities to control air toxic emissions. The impact that
the nitrogen oxide emission regulations, and the air toxics
study, will have on the Company cannot be determined at this
time.

Research is ongoing whether exposure to EMFs may result
in adverse health effects or damage to the environment.
Although a few of the studies to date have suggested certain
associations between EMFs and some types of adverse health
effects, the research to date has not established a cause-
and-effect relationship between EMFs and adverse health
effects. The Company cannot predict the impact on the CSW
System or the electric utility industry if further
investigations or proceedings were to establish that the
present electricity delivery system is contributing to
increased risk or incidence of health problems.

Cumulative Effect of Changes in Accounting Principles.
In 1993, the Company implemented SFAS No. 112, Employers'
Accounting for Post Employment Benefits, SFAS No. 109,
Accounting for Income Taxes and changed the method of
accounting for unbilled revenues. These changes are
presented as a net $3.4 million cumulative effect of changes
in accounting principles.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Statements Of Income
for the years ended December 31

1993 1992 1991
(thousands)
ELECTRIC OPERATING REVENUE
Residential $273 707 $249 182 $253 053
Commercial 175 059 165 836 163 261
Industrial 250 912 243 508 235 299
Sales for resale 65 670 57 619 57 180
Sales for resale affiliated 27 667 21 195 10 980
Other 44 177 40 963 40 921
------- ------- -------
837 192 778 303 760 694
======= ======= =======
OPERATING EXPENSES AND TAXES
Fuel 359 306 334 972 322 272
Purchased power 10 623 5 231 1 050
Purchased power from affiliates 2 522 1 389 1 131
Other operating 122 986 101 220 96 023
Restructuring charges 25 203 - -
Maintenance 50 164 42 191 45 520
Depreciation and amortization 74 385 72 300 68 686
Taxes, other than Federal income 46 942 42 502 44 968
Federal income taxes 27 004 32 771 37 727
------- ------- -------
719 135 632 576 617 377
------- ------- -------
OPERATING INCOME 118 057 145 727 143 317
------- ------- -------
OTHER INCOME AND DEDUCTIONS
Allowance for equity funds
used during construction 1 560 132 550
Other 3 658 537 3 883
------- ------- -------
5 218 669 4 433
------- ------- -------
INCOME BEFORE INTEREST CHARGES 123 275 146 396 147 750
------- ------- -------
INTEREST CHARGES
Interest on long-term debt 40 958 47 490 48 382
Interest on short-term debt
and other 4 866 4 073 3 172
Allowance for borrowed funds
used during construction (1 020) (50) (428)
------- ------- -------
44 804 51 513 51 126
------- ------- -------
Income before Cumulative Effect of
Changes in Accounting Principles 78 471 94 883 96 624
Cumulative Effect of Changes in
Accounting Principles 3 405 - -
------- ------- -------
NET INCOME 81 876 94 883 96 624
Preferred stock dividends 3 362 3 445 3 465
------- ------- -------
NET INCOME FOR COMMON STOCK $ 78 514 $ 91 438 $ 93 159
======= ======= =======

The accompanying notes to financial statements are an
integral part of these statements.

Statements Of Retained Earnings
for the years ended December 31

1993 1992 1991
(thousands)

RETAINED EARNINGS AT BEGINNING
OF YEAR $266 557 $265 120 $260 894
NET INCOME FOR COMMON STOCK 78 514 91 438 93 159
Deduct: Common stock dividends 80 000 90 000 83 000
Preferred stock
redemption costs - 1 5 933
------- ------- -------
RETAINED EARNINGS AT END OF YEAR $265 071 $266 557 $265 120
======= ======= =======

The accompanying notes to financial statements are an
integral part of these statements.

Balance Sheets
as of December 31 1993 1992
(thousands)
ASSETS

ELECTRIC UTILITY
Production $1 392 058 $1 393 961
Transmission 350 625 345 183
Distribution 678 788 595 679
General 188 193 170 474
Construction work in progress 126 258 73 421
--------- ---------
2 735 922 2 578 718
Less - Accumulated depreciation 947 792 875 888
--------- ---------
1 788 130 1 702 830
--------- ---------
CURRENT ASSETS
Cash and temporary cash investments 6 723 1 059
Special deposits for reacquisition
of long-term debt - 53 500
Accounts receivable 24 363 20 811
Materials and supplies, at average
cost 25 218 24 311
Fuel inventory, at average cost 49 487 70 588
Deferred income taxes 3 912 -
Prepayments and other 14 965 14 251
--------- ---------
124 668 184 520
--------- ---------
DEFERRED CHARGES AND OTHER ASSETS 55 487 39 970
--------- ---------
$1 968 285 $1 927 320
========= =========
CAPITALIZATION AND LIABILITIES

CAPITALIZATION
Common stock, $18 par value,
authorized 7,600,000 shares,
issued and outstanding
7,536,640 shares $ 135 660 $ 135 660
Paid-in capital 245 000 245 000
Retained earnings 265 071 266 557
--------- ---------
Total Common Stock Equity 645 731 647 217
Preferred stock
Not subject to mandatory
redemption 16 032 16 032
Subject to mandatory redemption 36 028 37 228
Long-term debt 602 065 532 860
--------- ---------
Total Capitalization 1 299 856 1 233 337
--------- ---------
CURRENT LIABILITIES
Long-term debt/preferred stock
due within twelve months 5 028 86 618
Advances from affiliates 27 864 28 149
Accounts payable 41 598 33 477
Fuel refund due customers 2 358 -
Customers deposits 14 244 13 265
Accrued taxes 27 340 12 879
Accrued interest 17 354 17 123
Accrued restructuring charges 25 203 -
Other 30 499 14 135
--------- ---------
191 488 205 646
--------- ---------
DEFERRED CREDITS
Income taxes 332 522 382 085
Investment tax credits 85 301 90 494
Income tax related regulatory
liabilities - net 52 828 -
Other 6 290 15 758
--------- ---------
476 941 488 337
--------- ---------
$1 968 285 $1 927 320
========= =========

The accompanying notes to financial statements are an
integral part of these statements.

Statements Of Cash Flows
for the years ended December 31
1993 1992 1991
(thousands)
OPERATING ACTIVITIES
Net income $ 81 876 $ 94 883 $ 96 624
Non-cash items included in net income
Depreciation and Amortization 93 120 79 051 75 128
Deferred income taxes and investment
tax credits (4 775) 3 393 628
Restructuring Charges 25 203 - -
Cumulative Effect of Changes in
Accounting Principles (3 405) - -
Allowance for equity funds used during
construction (1 560) (132) (550)
Changes in assets and liabilities
Accounts receivable (3 632) (8 067) 20 230
Fuel inventory 21 101 12 722 14 220
Accounts payable 8 612 5 313 5 506
Accrued taxes 11 561 (5 817) (6 294)
Accrued interest 231 (453) (1 507)
Other 3 766 (12 040) (12 698)
------- ------- -------
232 098 168 853 191 287
------- ------- -------
INVESTING ACTIVITIES
Construction expenditure (138 510) (96 676) (73 313)
Acquisition expenditures (35 333) - -
Allowance for borrowed funds used during
construction (1 020) (50) (428)
Sale of electric utility plant and other (4 113) (2 339) (2 828)
------- ------- -------
(178 976) (99 065) (76 569)
------- ------- -------
FINANCING ACTIVITIES
Proceeds from sale of long-term debt 221 511 221 067 29 415
Redemption of preferred stock - (1 190) (1 080)
Reacquisition of long-term debt (198 962) (176 474) (29 929)
Retirement of long-term debt (39 835) (3 488) (2 830)
Change in short-term debt (286) 28 149 (14 320)
Special deposits for reacquisition of
long-term debt 53 500 (53 500) -
Payment of dividends (83 386) (93 443) (86 485)
------- ------- -------
(47 458) (78 879) (105 229)
NET CHANGE IN CASH AND CASH ------- ------- -------
EQUIVALENTS 5 664 (9 091) 9 489
Cash and Cash Equivalents at Beginning of Year 1 059 10 150 661
------- ------- -------
CASH AND CASH EQUIVALENTS AT END
OF YEAR $ 6 723 $ 1 059 $ 10 150
======= ======= =======
SUPPLEMENTARY INFORMATION
Interest paid net of amount capitalized $ 42 271 $ 53 129 $ 53 221
======= ======= =======
Income taxes paid $ 21 112 $ 37 181 $ 46 777
======= ======= =======

The accompanying notes to financial statements are an
integral part of these statements.

Statements Of Capitalization
as of December 31
1993 1992
(thousands)

COMMON STOCK EQUITY $ 645 731 $ 647 217
PREFERRED STOCK
Cumulative, $100 par value, authorized
1,860,000 shares
Number Current
Series Shares Outstanding Redemption Price
Not subject to mandatory redemption
5.00% 75,000 $109.00 7 500 7 500
4.65% 25,000 102.75 2 500 2 500
4.28% 60,000 103.90 6 000 6 000
Premium 32 32
-------- ---------
16 032 16 032
-------- ---------
Subject to mandatory redemption
6.95% 376,000 104.64 36 400 37 600
Issuance expense (372) (372)
-------- ---------
36 028 37 228
-------- ---------
LONG-TERM DEBT
First mortgage bonds
Series J, 7%, due December 1, 1997 - 20 000
Series L, 7-1/2%, due October 1, 2001 - 23 350
Series T, 8.85%, due May 1, 2016 - 55 500
Series U, 9-1/8%, due November 1, 2019 5 330 50 000
Series V, 7-3/4%, due June 1, 2004 40 000 40 000
Series W, 6-1/8%, due September 1, 1999 40 000 40 000
Series X, 7%, due September 1, 2007 90 000 90 000
Series Y, 6-5/8%, due February 1, 2003 55 000 -
Series Z, 7-1/4%, due July 1, 2023 45 000 -
Series AA, 5-1/4%, due April 1, 2000 45 000 -
Series BB, 6-7/8%, due October 1, 2025 80 000 -
1976 Series A, 6.20%, due November 1, 2006 6 665 6 955
1976 Series B, 6.20%, due November 1, 2006 1 000 1 000
Installment sales agreements -
Pollution control bonds
1978 Series A, 6%, due January 1, 2008 14 420 14 420
Series 1986, 8.2%, due July 1, 2014 81 700 81 700
1991 Series A, 8.2%, due August 1, 2011 17 125 17 125
1991 Series B, 6.9%, due November 1, 2004 12 290 12 290
Series 1992, 7.6%, due January 1, 2019 53 500 53 500
Bank Loan, Variable Rate, due June 15, 1997 50 000 50 000
Railcar lease obligations 17 452 20 657
Unamortized discount and premium (4 034) (6 099)
Unamortized costs of reacquired debt (48 383) (37 538)
-------- --------
602 065 532 860
--------- ---------
TOTAL CAPITALIZATION $1 299 856 $1 233 337
========= =========

The accompanying notes to financial statements are an
integral part of these statements.

Notes to Financial Statements

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Southwestern Electric Power Company is subject to regulation
by the SEC, under the Public Utility Holding Company Act of
1935, and by the FERC, under the Federal Power Act, and
follows the Uniform System of Accounts prescribed by the
FERC. The Company is subject to further regulation for
rates and other matters by the Arkansas Public Service
Commission, Louisiana Public Service Commission and Public
Utility Commission of Texas. For its regulated activities,
the Company follows SFAS No. 71, Accounting for the Effects
of Certain Types of Regulation. The Company, as a member of
the Central and South West System, engages in transactions
and coordinates its activities and operations with other
members of the CSW System. Central and South West Services,
Inc., performs at cost certain accounting, engineering, tax,
legal, financial, electronic data processing, centralized
economic dispatching of electric power and other services
for the Company. The most significant accounting policies
are summarized below.

Electric Utility Plant. Electric utility plant is stated at
the original cost of construction, which includes the cost
of contracted services, direct labor, materials, overhead
items and allowances for borrowed and equity funds used
during construction.

Depreciation. Provisions for depreciation of utility plant
are computed using the straight-line method, generally at
individual rates applied to the various classes of
depreciable property. The annual composite rates averaged
3.2% for each of the years 1993, 1992 and 1991.

Electric Revenues and Fuel. Prior to January 1, 1993,
electric revenues were recorded at the time billings were
made to customers on a cycle-billing basis. Electric
service provided subsequent to billing dates through the end
of each calendar month became part of operating revenues of
the next month. To more closely match revenues with
expenses and to conform with industry practice, the Company
changed its method of accounting to accrue for estimated
unbilled revenues. The effect of this change on 1993 income
was $5.4 million, net of taxes of $2.9 million.

The Company recovers fuel costs in Texas as a fixed
component of rates. The difference between fuel revenues
billed and fuel expense incurred is recorded as an addition
to or a reduction of revenues, with a corresponding entry to
accounts receivable or other current liabilities, as
appropriate. Over-recoveries of fuel are payable to
customers, and under-recoveries may be billed to customers
after Texas Commission approval.

In Louisiana, Arkansas and its wholesale jurisdiction, the
Company passes increases in unit fuel costs on to customers
through the application of fuel adjustment clauses, which
are generally based on fuel costs from prior months.

The Company sells its accounts receivable, without recourse,
to CSW Credit, Inc., a wholly owned subsidiary of CSW.

Statements of Cash Flows. Cash equivalents are considered
to be highly liquid debt instruments purchased with a
maturity of three months or less. Accordingly, temporary
cash investments and advances to affiliates are considered
cash equivalents.

Accounting Changes. The Company adopted in 1993 SFAS No.
106, Employers' Accounting for Postemployment Benefits and
SFAS No. 112, Employers' Accounting for Postemployment
Benefits (See Note 8, Benefit Plans). The Company also
adopted in 1993 SFAS No. 109, Accounting for Income Taxes
(See Note 2, Federal Income Taxes). In addition, the
Company changed its method of accounting for revenues in
1993 (See Electric Revenues and Fuel).

Reclassification. Certain financial statement items for
prior years have been reclassified to conform to the 1993
presentation.

(2) FEDERAL INCOME TAXES

The Company adopted the provisions of SFAS No. 109,
Accounting for Income Taxes, effective January 1, 1993. The
net effect of this change in accounting principle on the
Company's earnings was not significant.

For utility operations, there is no effect of SFAS No. 109
on the Company's earnings. As a result of this change, the
Company recognized additional accumulated deferred income
taxes, and corresponding regulatory assets and liabilities
to ratepayers in amounts equal to future revenues or the
reduction in future revenues required when the income tax
temporary differences reverse and are recovered or settled
in rates. As a result of a favorable earnings history, the
Company did not record any valuation allowance against
deferred tax assets at December 31, 1993.

The Company, together with other members of the CSW System,
files a consolidated Federal income tax return and
participates in a tax sharing agreement.

Components of Federal income taxes are as follows:

1993 1992 1991
(thousands)

Included in Operating Expenses and Taxes
Current $31,779 $29,377 $37,099

Deferred
Depreciation differences 6,115 3,695 7,523
Deferred fuel 21 (1,506) (4,300)
Other (5,718) 8,069 2,343
------ ------ ------
418 10,258 5,566
------ ------ ------
Deferred investment tax credits
Provision - (1,480) -
Amortization (5,193) (5,384) (4,938)
------ ------ ------
(5,193) (6,864) (4,938)
------ ------ ------
27,004 32,771 37,727
------ ------ ------
Included in Other Income and Deductions
Current (1,916) 278 (1,086)
------ ------ ------
Tax Effects of Cumulative Effect of Changes in
Accounting Principles 1,834 - -
------ ------ ------
$26,922 $33,049 $36,641
====== ====== ======

Total income taxes differ from the amounts computed by
applying the statutory Federal income tax rates to income
before taxes. The reasons for the differences are as
follows:

1993 % 1992 % 1991 %
(dollars in thousands)

Tax at statutory rates $38,079 35.0 $43,497 34.0 $45,310 34.0
Differences
Amortization of ITC (5,193) (4.8) (5,384) (4.2) (4,938) (3.7)
Tax benefit of current
year tax settlements - - (3,218) (2.5) - -
Consolidated savings (2,572) (2.4) - - (1,635) (1.2)
Other (3,392) (3.1) (1,846) (1.6) (2,096) (1.6)
------ ---- ------ ---- ------ ----
$26,922 24.7 $33,049 25.7 $36,641 27.5
====== ==== ====== ==== ====== ====

Investment tax credits (ITC) deferred in prior years are
included in income over the lives of the related properties.

The significant components of the net deferred income tax
liability are as follows:

December 31, January 1,
1993 1993
(thousands)
DEFERRED TAX LIABILITIES:
Property related book/tax basis differences $321 590 $299 074
Income Tax related regulatory asset 33 028 32 102
Pension expense 4 615 4 133
Other 34 790 30 104
------- -------
Total Deferred Tax Liabilities 394 023 365 413
------- -------
DEFERRED TAX ASSETS:
Income tax related regulatory liability (52 250) (58 886)
Other (13 163) -
------- -------
Total Deferred Tax Assets (65 413) (58 886)
------- -------
Net accumulated deferred income taxes - total $328 610 $306 527
======= =======
Net accumulated deferred income taxes - noncurrent $332 522 $312 699
Net accumulated deferred income taxes - current (3 912) (6 172)
------- -------
Net accumulated deferred income taxes - total $328 610 $306 527
======= =======
(3) LONG-TERM DEBT AND PREFERRED STOCK

The mortgage indenture, as amended and supplemented,
securing first mortgage bonds issued by the Company,
constitutes a direct first mortgage lien on substantially
all electric utility plant.

Annual Requirements. Certain series of the Company's
outstanding first mortgage bonds have annual sinking fund
requirements which are generally 1% of first mortgage bonds
of each series issued. These requirements may be, and have
historically been, satisfied by the application of net
expenditures for bondable property in an amount equal to 166-
2/3% of the annual requirements.

At December 31, 1993, the annual sinking fund requirements,
exclusive of maturities, and the annual aggregate maturities
including sinking fund requirements of long-term debt are as
follows:

Annual Annual
Sinking Fund Aggregate
Requirements Maturities
(thousands)

1994 $645 $ 3,828
1995 145 3,600
1996 145 3,900
1997 145 52,561
1998 145 2,374

Reacquired Long-term Debt. The Company entered into
agreements with DeSoto Parish, Louisiana and certain
investors which provided that the Company incur obligations
in connection with the issuance, in November 1992, of $53.5
million of 7.6% Pollution Control Revenue Bonds, Series
1992. The Company used the proceeds from the sale to refund
a like amount of 10% Series 1983, Pollution Control Revenue
Bonds on January 1, 1993.

In August 1992, the Company filed with the SEC a
registration statement for the sale of first mortgage bonds
in an aggregate amount up to $320 million.

In January 1993, the Company redeemed $4.55 million of
Series T, 8.85% First Mortgage Bonds due May 1, 2016 and $2
million of Series U, 9-1/8% First Mortgage Bonds due
November 1, 2019. The redemptions were made under terms of
the Company's bond indenture.

In February 1993, the Company issued $55 million of Series
Y, 6 5/8% First Mortgage Bonds due February 1, 2003. The
proceeds of this issue were used to redeem $50.95 million of
Series T, 8.85% First Mortgage Bonds due May 1, 2016 at
106.11% of the principal amount.

On July 15, 1993, the Company issued $45 million of Series
Z, 7-1/4% First Mortgage Bonds due July 1, 2023. The
proceeds of this issue were used to redeem $42.17 million of
Series U, 9-1/8% First Mortgage Bonds due November 1, 2019
which were acquired through a tender offer as follows:
$12.18 million at 112.49% of the principal amount on July
29, 1993; $7.68 million at 112.41% of the principal amount
on July 30, 1993; $3.28 million at 112.36% of the principal
amount on August 2, 1993; $3.5 million at 112.34% of the
principal amount on August 3, 1993; and $15.53 million at
112.33% of the principal amount on August 4, 1993.

On September 16, 1993, the Company filed with the SEC an
amendment to the 1992 registration statement for the sale of
first mortgage bonds in an aggregate amount up to $125
million inclusive of then remaining $90 million first
mortgage bonds covered by the 1992 shelf registration.

On October 13, 1993, the Company issued $45 million of
Series AA, 5-1/4% First Mortgage Bonds due April 1, 2000
and $80 million of Series BB, 6-7/8% First Mortgage
Bonds due October 1, 2025. The proceeds of Series AA and
BB were used to repay the Company's short-term borrowings,
for other corporate purposes and to redeem on November 5,
1993, $20 million of Series J, 7% First Mortgage Bonds due
December 1, 1997 at 101.14% of the principal amount and
$23.35 million of Series L, 7-1/2% First Mortgage Bonds due
October 1, 2001 at 101.82% of the principal amount. The
premium and related redemption costs will be recorded as a
reduction to long-term debt on the balance sheet and will be
amortized over the life of the new issue. The Company may
offer additional securities subject to market conditions and
other factors.

In January 1994, the Company redeemed $500 thousand of
Series U, 9-1/8% First Mortgage Bonds due November 1, 2019.
The redemption was made under the terms of the Company's
bond indenture. Also during January, an additional $1.1
million of Series U bonds was reacquired at a premium. The
premium and related redemption costs associated with these
transactions will be recorded as a reduction to long-term
debt on the balance sheet and will be amortized over the
life of the respective new issues.

(4) SHORT-TERM FINANCING

The Company, together with other members of the CSW System,
has established a money pool to coordinate short-term
borrowings through the issuance of commercial paper. Money
pool balances are shown on the Company's balance sheets as
advances from affiliates. At December 31, 1993, the CSW
System had bank lines of credit aggregating $796.5 million,
including the Company's lines of credit. Short-term cash
surpluses transferred to the money pool receive interest
income in accordance with the money pool arrangement.

(5) FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate
the fair value of each class of financial instruments for
which it is practicable to estimate fair value:

Cash and temporary cash investments. The carrying amount
approximates fair value because of the short maturity of
these instruments.

Short-term debt. The carrying amount approximates fair value
because of the short maturity of these instruments.

Long-term debt. The fair value of the Company's long-term
debt is estimated based on the quoted market prices for the
same or similar issues or on the current rates offered to
the Company for the debt of the same remaining maturities.

Preferred stock subject to mandatory redemption. The fair
value of the Company's preferred stock subject to mandatory
redemption is estimated based on the quoted market prices
for the same or similar issues or on the current rates
offered to the Company for debt on the same remaining
maturities.

The estimated fair values of the Company's financial
instruments are as follows:

1993
(thousands)
Carrying Amount Fair Value

Cash and temporary cash investments $ 6,723 $ 6,723
Short-term debt 32,892 32,892
Long-term debt 602,065 631,153
Preferred stock 36,028 38,038

(6) BENEFIT PLANS

Defined Benefit Pension Plan. The Company, together with
other members of the CSW System, maintains a tax qualified,
non-contributory defined benefit pension plan covering
substantially all of its employees. Participants in the
plan during 1993 included approximately 1900 active
employees, 700 retirees and beneficiaries, and 125
terminated employees with vested benefits. Benefits are
based on employees' years of service, age at retirement, and
final average annual earnings with an offset for the
participant's primary Social Security benefit. The CSW
System's funding policy is based on actuarially determined
contributions, taking into account amounts which are
deductible for income tax purposes and minimum contributions
required by the Employee Retirement Income Security Act of
1974, as amended. Contributions to the plan for the years
ended December 31, 1993, 1992, and 1991 were $6.1 million,
$5.2 million, and $3.8 million, respectively. Pension plan
assets consist primarily of common stocks and short-term and
intermediate-term fixed income investments.

The components of net periodic pension cost and the
assumptions used in accounting for pensions are as follows:

1993 1992 1991
(dollars in thousands)
Net Periodic Pension Cost
Service cost $ 4,239 $ 3,857 $ 3,442

Interest cost on projected benefit
obligation 12,063 10,920 9,610

Actual return on plan assets (14,658) (9,375) (21,322)
Net amortization and deferral 55 (4,253) 9,766
------ ------ ------
$ 1,699 $ 1,149 $ 1,496
====== ====== ======
Assumptions
Discount rate 7.8% 8.5% 8.5%
Long-term compensation increase 5.5 6.0 6.0
Return on plan assets 9.5 9.5 9.5

As of December 31, 1993, 1992, and 1991, the plan's net
assets exceeded the total actuarial present value of
accumulated benefit obligations.

Postretirement Benefits Other Than Pensions. The Company
adopted SFAS No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions, on January 1,
1993. The adoption resulted in an increase in operating
expenses of $3 million for 1993. The Company's accumulated
postretirement benefit obligation was $45 million. The
transition obligation was $39 million and is being amortized
over twenty years. In prior years, the Company accounted
for these benefits on a pay-as-you-go basis. Expenses for
1992 and 1991 were $1.9 million and $1.4 million,
respectively. The CSW System's funding policy is based on
actuarially determined contributions taking into account
amounts which are deductible for income tax purposes. The
Company contributed approximately $8.2 million in 1993. Of
this amount, approximately $4.1 million was placed in a
Voluntary Employee Benefits Association (VEBA) Plan for
union members.

The Texas Commission approved a rule allowing full recovery
of costs related to SFAS No. 106 with the amortization of
the transition obligation over a period of twenty years,
provided the costs are funded and recovery is allowed in
rate base. The rule requires all amounts received in rates
to be held in an external trust.

The Arkansas Commission approved a rule allowing full
recovery of costs related to SFAS No. 106 with amortization
of the transition obligation over a period of twenty years.

The Louisiana Commission voted to remain on a pay-as-you-go
basis.

The components of net periodic postretirement benefit cost
and the assumptions used in accounting for postretirement
benefits are as follows:

December 31, 1993
(dollars in thousands)

Service cost $1,813
Interest cost on accumulated postretirement
benefit 3,782
Actual return on plan assets (230)
Amortization of transition obligation 1,967
Net amortization and deferral (474)
-----
$6,858
Assumptions =====
Discount rate 7.8%
Return on plan assets 9.0%

Health care cost trend rate:
Pre-65 Participants: 1993 Rate of 12.5% grading down
.75% per year to an ultimate rate of 6.5% in 2001.
Post-65 Participants: 1993 Rate of 12.0% grading down
.75% per year to an ultimate rate of 6.0% in 2001.

Increasing the assumed health care cost trend rates by one
percentage point in each year would increase the APBO as of
December 31, 1993 by $1 million and increase the aggregate
of the service and interest cost components of net
postretirement benefits by $6.3 million.

Postemployment Benefits. The Company adopted SFAS No. 112,
Employers' Accounting for Postemployment Benefits, which
establishes accounting and reporting standards for
postemployment benefits paid to former or inactive employees
after employment but before retirement. Postemployment

benefits are all types of benefits provided to these
parties, their beneficiaries, and covered dependents. This
new standard requires that the expected costs of these benefits be
accrued during the period employees render service to
qualify for benefits. In 1993 the Company accrued $3
million of expense associated with adoption of SFAS No. 112,
reflected in cumulative effect of changes in accounting
principles. Continuing application of SFAS No. 112 is not
expected to have a material effect on the Company's results
of operations.

Restructuring Charges. The Company recently announced an
early retirement program as a part of the Company's
restructuring efforts in order to streamline operations and
reduce future costs. It is anticipated that this
restructuring will affect employee benefit costs incurred by
the Company in future periods. Due to the timing of the
implementation of the program, many variables regarding
specific costs cannot be identified until mid-1994. As a
result, no adjustments have been made to the employee
benefit cost data presented above.

(7) JOINTLY OWNED ELECTRIC UTILITY PLANT

The Company is party to various joint ownership arrangements
with other nonaffiliated entities. Such agreements provide
for the joint ownership and operation of generating stations
and related facilities, whereby each participant bears its
share of the project costs. The statements of income
reflect the Company's portion of operating costs associated
with plant in service. At December 31, 1993, the Company
had undivided interest in the generating stations and
related facilities as shown below.

Flint Creek Pirkey Dolet Hills
Coal Plant Lignite Plant Lignite Plant
(dollars in thousands)

Plant in Service $77,581 $428,695 $225,449
Accumulated depreciation $36,838 $120,899 $ 54,922
Plant Capacity - MW 480 650 650
Participation 50.0% 85.9% 40.2%
Share of capacity - MW 240 559 262

(8) RENTAL AND LEASE COMMITMENTS

The Company has entered into various financing arrangements
primarily with respect to coal transportation and related
equipment, which are treated as operating leases for rate-
making purposes. At December 31, 1993, leased assets of
$46.0 million, net of accumulated amortization of $26.8
million, were included in electric plant on the balance
sheet and at December 31, 1992, leased assets were $46.3
million, net of accumulated amortization of $23.5 million.
Total charges to operating expenses for leases were $7.1
million, $6.9 million, and $6.7 million for the years 1993,
1992, and 1991.

As of December 31, 1993, the future minimum rental
commitments of the Company for all non-cancelable leases are
as follows:
Financing Other
Leases Leases Total
(thousands)

1994 $5,163 $ 125 $5,288
1995 5,131 75 5,206
1996 4,421 77 4,498
1997 3,374 79 3,453
1998 3,033 81 3,114
Thereafter 5,907 1,235 7,142

(9) LITIGATION AND REGULATORY PROCEEDINGS

On April 15, 1991, Texas Industrial Energy Consumers (TIEC)
filed suit in the Travis County District Court (District
Court) challenging a Texas Commission's final order on the
Company's fuel reconciliation proceeding. In the Texas
Commission's order, the Company was allowed to recover $12
million of a claimed $14 million fuel cost under-recovery
and related interest. TIEC asserted that aggressive
renegotiation of certain fuel contracts would have reduced
the cost of fuel to the Texas consumer and that the Texas
Commission erred in its order approving the Company's
claimed under-recovery. The Texas Commission determined
that these fuel contracts had been prudently managed by the
Company. This appeal was heard before the District Court in
June 1992, and the Texas Commission final order was upheld.
On October 1, 1992, TIEC made a filing with the Third
District of the Texas Court of Appeals in Austin, Texas
indicating its intent to appeal the decision of the District
Court to the next judicial level. On January 5, 1994, the
Texas Supreme Court rejected TIEC's subsequent request for
an appeal, and that decision is now final.

On March 17, 1994, the Company filed a petition with the
Texas Commission to reconcile fuel costs for the period
November 1989 through December 1993. Total Texas
jurisdictional fuel expenses subject to reconciliation for
this 50-month period were approximately $559 million. The
Company's net under-recovery for the reconciliation period
was approximately $900 thousand. This is the Company's
first reconciliation proceeding under the Texas Commission's
current fuel rule.

The Company is party to various other legal claims, actions
and complaints arising in the normal course of business.
Management does not expect disposition of these matters to
have a material adverse effect on the Company's results of
operations.

See ITEM 6. SELECTED FINANCIAL DATA, Note 10, Commitments
and Contingent Liabilities, for a discussion of certain
environmental matters- regulatory proceedings.

(10) COMMITMENTS AND CONTINGENT LIABILITIES

It is estimated that the Company will spend approximately
$125 million for construction purposes in 1994. Substantial
commitments have been made in connection with the
construction program.

To supply a portion of the fuel requirements of its
generating plants, the Company has entered into various
commitments for the procurement of fuel.

In connection with the lignite mining contract for its Henry
W. Pirkey Power Plant, the Company has agreed, under certain
conditions, to assume the obligations of the mining
contractor. As of December 31, 1993, the maximum amount the
Company would have to assume is $76.3 million. The maximum
amount may vary as the mining contractor's needs for funds
fluctuates. The contractor's actual obligation outstanding
at year-end 1993 is $66.3 million.

The Company owns a suspected former MGP site in Marshall,
Texas. The Company has notified the TNRCC that evidence of
contamination has been found at the site. As a result of
sampling conducted at the end of 1993 and early in 1994, the
Company is evaluating the extent, if any, to which
contamination has impacted soil, groundwater and other
conditions in the area. A final range of clean-up costs has
not yet been determined, but, based on a preliminary
estimate, the Company has accrued approximately $2 million
as a liability for this site on the Company's books as of
December 31, 1993. As more information is obtained about
the site, and SWEPCO discusses the site with the TNRCC, the
preliminary estimate may change.

The Company also owns a suspected former MGP site in
Texarkana, Arkansas. The EPA ordered an initial
investigation of this site, as well as one in Shreveport,
Louisiana, which is no longer owned by the Company. The
contractor who performed the investigations of these two
sites recommended to the EPA that no further action be taken
at this time.

Management does not expect these matters to have a material
effect on the Company's results of operations or financial
position.

(11) QUARTERLY INFORMATION (UNAUDITED)

The following unaudited quarterly information includes, in
the opinion of management, all adjustments necessary for a
fair presentation of such amounts.

Operating Operating Net
Revenues Income Income
(thousands)
Quarter Ended

1993
March 31- Reported $176,486 $ 24,528 13,439
Adjustment (885) (575) 2,830
------- ------- ------
March 31 - Restated 175,601 23,953 16,269
------- ------- ------

June 30 - Reported 190,202 29,989 19,398
Adjustment 3,023 1,965 1,965
------- ------- ------
June 30 - Restated 193,225 31,954 21,363
------- ------- ------

September 30 - Reported 272,825 56,189 45,903
Adjustment 3,769 2,450 2,450
------- ------- ------
September 30 - Restated 276,594 58,639 48,353
------- ------- ------

December 31 - Reported 197,679 7,351 3,136
Adjustment (5,907) (3,840) (7,245)
------- ------- ------
December 31 - Restated 191,772 3,511 (4,109)
------- ------- ------
Total $837,192 $118,057 $ 81,876
======= ======= ======
1992
March 31 $167,633 $ 25,496 $ 13,187
June 30 189,919 32,514 20,125
September 30 234,791 52,588 40,656
December 31 185,960 35,129 20,915
------- ------- -------
$778,303 $145,727 $ 94,883
======= ======= =======

Quarterly information has been restated to reflect the
change in accounting for unbilled revenues and the adoption
of SFAS No. 112, Employers' Accounting For Postemployment
Benefits. These changes were made in December 1993, but are
effective January 1, 1993.

Information for quarterly periods is affected by seasonal
variations in sales, rate changes, timing of fuel expense
recovery and other factors.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

Report Of Management

Management is responsible for the preparation, integrity and
objectivity of the financial statements of Southwestern
Electric Power Company as well as all other information
contained in this Annual Report. The financial statements
have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis and, in
some cases, reflect amounts based on the best estimates and
judgments of management, giving due consideration to
materiality. Financial information contained elsewhere in
this Annual Report is consistent with that in the financial
statements.

The Company maintains an adequate system of internal
controls to provide reasonable assurance that transactions
are executed in accordance with management's authorization,
that financial statements are prepared in accordance with
generally accepted accounting principles and that the assets
of the Company are properly safeguarded. The system of
internal controls is documented, evaluated and tested by the
Company's internal auditors on a continuing basis. Due to
the inherent limitations of the effectiveness of internal
controls, no internal control system can provide absolute
assurance that errors and irregularities will not occur.
However, management strives to maintain a balance
recognizing that the cost of such a system should not exceed
the benefits derived. No material internal control
weaknesses were reported to management in 1993.

Arthur Andersen & Co. was engaged to audit the financial
statements of the Company and issue its report thereon.
Their audit was conducted in accordance with generally
accepted auditing standards. Such standards require an
examination of selected transactions and other procedures
sufficient to provide reasonable assurance that the
financial statements are not misleading and do not contain
material errors. The Report of Independent Public
Accountants does not limit the responsibility of management
for information contained in the financial statements and
elsewhere in the Annual Report.

Richard H. Bremer W. J. Googe, Jr. Rox E. Colvin
President and Chief Vice President Administration Controller
Executive Officer

Report Of Audit Committee

The Audit Committee of the Board of Directors is composed of
five outside directors. The members of the Audit Committee
are: James Davision, Al P. Eason, Jr., Chairman, Dr.
Frederick E. Joyce, William C. Peatross and Jack L.
Phillips. The Committee held two meetings during 1993.

The Committee oversees the Company's financial reporting
process on behalf of the Board of Directors. The Committee
discusses with the internal auditors and the independent
public accountants the overall scope and specific plans for
their respective audits. The Committee also discusses the
Company's financial statements and the adequacy of the
Company's internal controls. The Committee meets with the
Company's internal auditors and independent public
accountants to discuss the results of their audits, their
evaluations of the Company's internal controls, and the
overall quality of the Company's financial reporting. The
meetings also are designed to facilitate any private
communication with the Committee desired by the internal
auditors or independent public accountants.

Al P. Eason, Jr.
Chairman, Audit Committee

Report Of Independent Public Accountants
To the Stockholders and Board of Directors of Southwestern
Electric Power Company:

We have audited the accompanying balance sheets and
statements of capitalization of Southwestern Electric Power
Company (a Delaware corporation and wholly owned subsidiary
of Central and South West Corporation) as of December 31,
1993 and 1992, and the related statements of income,
retained earnings and cash flows for each of the three years
in the period ended December 31, 1993. These financial
statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Southwestern Electric Power Company as of
December 31, 1993 and 1992, and the results of its
operations and its cash flows for each of the three years in
the period ended December 31, 1993, in conformity with
generally accepted accounting principles.

In 1993, as discussed in Note 1, Southwestern Electric Power
Company changed its methods of accounting for unbilled
revenues, postretirement benefits other than pensions,
income taxes and postemployment benefits.

ARTHUR ANDERSEN & CO.

Dallas, Texas
February 25, 1994

PART III

CSW common stock amounts in Item 11 and Item 12 have
been adjusted to reflect the two-for-one common stock split,
effected by a 100% common stock dividend paid March 6, 1992
to shareholders of record on February 10, 1992.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

(a) The following is a list of directors of the
Company, together with certain information with respect to
each of them:

Name, Age, Principal Year First
Occupation, Business Experience Became
and Other Directorships Director

RICHARD H. BREMER AGE - 45 1989

President and CEO of the Company
since September 1990. Vice President
of the Company from August 1989 to
September 1990. Regional General
Manager of CPL from 1988 to 1989.
Vice President of CPL from 1980 to
1988. Director of Commercial National
Bank, Shreveport, Louisiana.

E. R. BROOKS AGE - 56 1991

Chairman, President and CEO of
CSW since February 1991. President
of CSW from September 1990 to
February 1991. President and Chief
Operating Officer of CSW from
January 1990 to September 1990.
Executive Vice President of CSW from
June 1987 to December 1989. Director
of each of CSW's subsidiaries. Director
of Hubbell Electric, Inc. Director of
Baylor University Medical Center, Dallas,
Texas.

JAMES E. DAVISON AGE - 56 1993

Sole Proprietor of Paul M. Davison
Petroleum Products. President and
Chief Executive of Davison Transport,
Inc.; Davison Motor Company, Inc.;
Sunshine Oil & Storage, Inc.;
Davison Terminal Services, Inc.;
Davison Insurance Agency, Inc.

Name, Age, Principal Year First
Occupation, Business Experience Became
and Other Directorships Director

AL P. EASON, JR. AGE - 68 1975

Retired as Chairman and CEO of the
First Federal Savings and Loan
Association of Fayetteville in August
1990. President, Eason and Company,
Fayetteville, Arkansas.

W. J. GOOGE, JR. AGE - 51 1990

Vice President of the Company
since 1984.

DR. FREDERICK E. JOYCE AGE - 59 1990

Physician. President of Chappell-
Joyce Pathology Association, P.A.
Texarkana, Texas. President of
Doctors Diagnostic Laboratory, Inc.,
Texarkana, Texas. Director of State
First National Bank and State First
Financial Corporation, Texarkana,
Arkansas.

MICHAEL E. MADISON AGE - 45 1992

Vice President of the Company since
August 1992. Vice President of
Corporate Services of WTU from 1990 to
1992. Eastern Division Manager of
PSO in 1990.

HARRY D. MATTISON AGE - 57 1994

Executive Vice President of CSW since
September 1990 and Chief Executive Officer
of CSWS since December 1993. Chief
Operating Officer of CSW from September
1990 to December 1993. President and
Chief Executive Officer of SWEPCO from
September 1988 to September 1990. Director
of CSW since 1991. Director of each of
CSW's wholly owned subsidiaries.

MARVIN R. McGREGOR AGE - 47 1990

Vice President of the Company since September
1990. Director of Marketing and Economic
Development from 1987 to 1990. Manager of
Industrial Marketing and Technical Services
from 1978 to 1987.

Name, Age, Principal Year First
Occupation, Business Experience Became
and Other Directorships Director

WILLIAM C. PEATROSS AGE - 50 1990

President of Caddo Abstract and
Title Co., Inc.; Partner-Baucum,
Hamilton and Peatross; Partner-
Kernmass-X Oil Company; Partner-
Coastal Land Association; Director
of Commercial National Bank,
Shreveport, Louisiana.

JACK L. PHILLIPS AGE - 69 1986

Owner of Jack L. Phillips Oil & Gas
Exploration and Production,
Gladewater, Texas. Director of
Longview National Bank,
Longview, Texas.

JOHN W. TURK, JR. AGE - 69 1976

Mr. Turk retired as Chairman of
the Company in May 1989. President
and CEO of the Company from 1983 to
1988. Director of Longview National
Bank, Longview, Texas.

All Directors presently serving as executive officers
of the Company have been employed in a managerial or
executive capacity with a member or members of the CSW
System for at least the past five years, and all outside
directors have engaged in their respective principal
occupations listed above for a period of more than five
years, unless otherwise indicated.

(b) The following is a list of the executive officers
who are not directors of the Company, together with certain
information with respect to each of them.

Year First
Elected to
Present
Name Age Present Position Position

A. G. Hammett, III 61 Treasurer 1973
Rox E. Colvin 32 Controller 1993
Elizabeth D. Stephens 38 Secretary 1988

The directors of the Company are elected at the
Company's Annual Meeting held on the second Wednesday in
April of each year, if not a legal holiday, and if a legal
holiday, then on the day following. Executive officers are
elected to hold office until the first meeting of the
Company's Board of Directors following the annual election
of directors. The Annual Meeting will be held on April 13,
1994. Each of the executive officers listed in the table
above has been employed by the Company or an affiliate in
the CSW System in an executive or managerial capacity for at
least the last five years.

ITEM 11. EXECUTIVE COMPENSATION.

Cash and Other Forms of Compensation. The following
table sets forth the aggregate cash and other compensation
for services rendered for the fiscal years of 1993, 1992 and
1991 paid or awarded by the Company to the Named Executive
Officers.

Summary Compensation Table
LongTerm Compensation

Annual Compensation Awards Payouts
Securities
Other Annual CSW Restricted Underlying LTIP All Other
Name and Salary Bonus Compensation Stock Award(s) CSW Options/ Payouts Compensation
Principal Position Year ($) ($)(1) ($)(2)(3) ($)(1)(4) SARs(#) ($) ($)(2)(5)

Richard H. Bremer 1993 263,833 36,017 13,206 36,724 - - 24,088
President and Chief 1992 239,167 51,646 45,720 51,685 12,431 - 24,065
Executive Officer 1991 206,667 21,779 - 23,276 - - -

Dennis M. Sharkey 1993 146,066 7,754 6,097 7,865 - - 3,976
Vice President(6) 1992 127,868 11,542 3,842 11,586 2,916 - 3,836
1991 115,652 9,432 - 10,028 - - -

Marvin R. McGregor 1993 126,620 8,196 5,769 8,319 - - 5,197
Vice President 1992 114,340 10,064 3,815 10,075 3,135 - 5,145
1991 99,531 3,030 - 3,266 - - -

Michael L. Heard 1993 132,512 7,812 26,620 7,956 - - 5,440
Vice President(6) 1992 121,248 10,965 4,058 10,982 3,135 - 5,456
1991 108,952 3,434 - 3,680 - - -

Michael H. Madison 1993 126,215 7,140 30,742 7,260 - - 5,188
Vice President(7) 1992 51,100 852 36,321 - - - 4,983
1991 - - - - - - -

(1) Amounts in this column are paid or awarded in a
calendar year for performance in a preceding year.

(2) The 1991 amounts were omitted pursuant to the
transitional provisions in the revised rules on executive
officer and director compensation disclosure adopted by the
SEC.

(3) Amounts of perquisites or other personal benefits are
included in this column only if they exceed the lesser of
$50,000 or 10% of the total annual salary and bonus
reported. Each item that exceeds 25% of the total amount of
perquisites and other personal benefits reported for each
Named Executive Officer is identified below.

In 1993, Mr. Heard was reimbursed $5,225 for club dues
and Mr. Heard and Mr. Madison were reimbursed $7,627 and
$14,848, respectively, for moving expenses.

In 1992, a portion of Mr. Bremer's use of company
aircraft resulted in taxable income to him. While the value
of such usage cannot be precisely determined, the Company
estimated that such usage by Mr. Bremer resulted in
incremental costs of $4,628. Mr. Bremer was reimbursed
$15,091 for the cost of certain club dues. In 1992, Mr.
Madison was reimbursed $34,697 for moving expenses.

(4) Grants of restricted stock are administered by the
Executive Compensation Committee of CSW's Board of Directors
which has the authority to determine the individuals to whom
and the terms upon which restricted stock grants shall be
made. The awards reflected in this column all have four-
year vesting periods with 20% of the CSW Common Stock
vesting on the first, second and third anniversary dates of
the award and 40% vesting on the fourth such anniversary.
Upon vesting, shares of CSW common stock are issued without
restrictions. The individuals receive dividends and may
vote shares of restricted stock, even before such shares
have vested. The amount reported in the table represents
the market value of the shares at the date of grant. As of
the end of 1993, the aggregate restricted stock holdings of
the Named Executive Officers were:

Restricted Market Value
Stock Held at 12/31/93 at 12/31/93

Richard H. Bremer 3,464 $104,786
Dennis M. Sharkey 892 26,983
Marvin R. McGregor 681 20,600
Michael L. Heard 707 21,387
Michael H. Madison 636 19,239

(5) Amounts shown in this column consist of the annual
employer matching payments to CSW's Thrift Plus Plan. The
1993 amount in this column for Mr. Bremer also includes
$17,013 of insurance premiums representing the average
amount paid per participant under CSW's memorial gift
program. Under this program for certain executive officers,
directors and retired directors from the CSW System, CSW
will make a donation in the participant's name to up to
three organizations of an aggregate of $500,000, payable by
CSW upon the participant's death and funded by term life
insurance coverage. Actual premiums paid are based on
pooled risks for groups of participants.

(6) Mr. Sharkey resigned from the Company and from the
Board of Directors effective December 31, 1993, and is now
employed by WTU, an affiliate of the Company. Mr. Heard
resigned from the Board of Directors effective December 31,
1993, but remains an employee of the Company.

(7) Mr. Madison was employed by WTU, an affiliate of the
Company, during a portion of 1992.

Option/SAR Grants. No grants of CSW stock options or
CSW stock appreciation rights (SARs) were made in 1993.

Option/SAR Exercises and Year-End Value Table. Shown
below is information regarding CSW Common Stock option/SAR
exercises during 1993 and unexercised CSW Common Stock
options/SARs at December 31, 1993 for the Named Executive
Officers.

Aggregated Option/SAR Exercises in 1993
and Year-End CSW Option/SAR Value

Number of CSW Securities Value of Unexercised
Underlying Unexercised in the money
Options/SARs at Fiscal Options/SARs at
Year-End Year-End
(#) ($)
Shares
Acquired Value
on Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable(1)

Richard H. Bremer - - 4,143/ 8,288 2,589/ 5,180

Dennis M. Sharkey - - 7,371/ 1,945 4,607/ 1,216

Marvin R. McGregor - - 1,045/ 2,090 653/ 1,306

Michael L. Heard - - 1,045/ 2,090 653/ 1,306

Michael H. Madison - - 1,045/ 2,090 653/ 1,306

(1) Based on the New York Stock Exchange December 31, 1993
closing price of CSW's Common Stock of $30.25 per share
and an exercise price of $29.625 per share.

Long-Term Incentive Plan Awards Table. The following
table shows information concerning awards made to the Named
Executive Officers during 1993 under the Central and South
West Corporation 1992 Long-Term Incentive Plan (LTIP).

LTIP Awards Made in 1993
Estimated Future Payouts under
Non-Stock Price Based Plans

Performance
or Other
Number of CSW Shares Period Until
Units or Other Rights Maturation Threshold Target Maximum
Name (#) or Payout ($) ($) ($)

Richard H. Bremer 1 2 years 0 137,238 205,857
Dennis M. Sharkey 1 2 years 0 26,137 39,206
Marvin R. McGregor 1 2 years 0 28,105 42,158
Michael L. Heard 1 2 years 0 28,105 42,158
Michael H. Madison 1 2 years 0 28,105 42,158

Payouts of the awards are contingent upon CSW's
achieving a specified level of total shareholder return,
relative to a peer group of utility companies, for the three-
year period ended December 1995. Such return must also
exceed the average six-month treasury bill rate for the same
period in order for any payout to be made. If the Named
Executive Officer's employment is terminated during the
performance period for any reason other than death, total
and permanent disability or retirement, then the award is
generally canceled.

The LTIP contains a provision accelerating awards upon
a change in control of CSW. If a change in control of CSW
occurs, (a) all options and SARs become fully exercisable,
(b) all restrictions, terms and conditions applicable to all
restricted stock are deemed lapsed and satisfied and, (c)
all performance units are deemed to have been fully earned,
as of the date of the change in control. Awards which have
been granted and outstanding for less than six months as of
the date of change in control are not then exercisable,
vested or earned on an accelerated basis. The LTIP also
contains provisions designed to prevent circumvention of the
above acceleration provisions generally through coerced
termination of an employee prior to the change in control of
CSW.

PENSION PLAN TABLE
Annual Benefits After
Specified Years of Credited Service

Average
Compensation 15 20 25 30 or more

$100,000 . . . . $ 25,050 $ 33,333 $ 41,667 $ 50,000
150,000 . . . . 37,575 50,000 62,500 75,000
200,000 . . . . 50,100 66,667 83,333 100,000
250,000 . . . . 62,625 83,333 104,167 125,000
300,000 . . . . 75,150 100,000 125,000 150,000
350,000 . . . . 87,675 116,667 146,833 175,000

Retirement Plans. Executive officers are eligible to
participate in the tax qualified Central and South West
System Pension Plan like other employees of the Company.
Certain executive officers, including the Named Executive
Officers, are also eligible to participate in the Special
Executive Retirement Plan (SERP), a non-qualified ERISA
excess benefit plan. Such Pension benefits depend upon
years of credited service, age at retirement and amount of
covered compensation earned by a participant. The annual
normal retirement benefits payable under the pension and the
SERP are based on 1.67% of "average compensation" times the
number of years of credited service (reduced by (i) no more
than 50% of a participant's age 62 or later Social Security
benefit and (ii) certain other offset benefits).

"Average compensation" is the covered compensation for
the plans and equals the average annual compensation (salary
as reported in the Summary Compensation Table) during the 36
consecutive months of highest pay during the 120 months
prior to retirement. The combined benefit levels in the
table on the following page, which include both pension and
SERP benefits, are based on retirement at age 65, the years
of credited service shown, continued existence of the plans
without substantial change, and payment in the form of a
single life annuity.

Respective years of credited service and ages, as of
December 31, 1993, for the Named Executive Officers are as
follows: Mr. Bremer, 16 and 45; Mr. Sharkey, 15 and 49; Mr.
McGregor, 24 and 47; Mr. Heard, 23 and 47; and Mr. Madison,
22 and 45.

Meetings and Compensation. The Board of Directors held
four meetings during 1993. Directors who are not also
executive officers and employees of the Company or its
affiliates receive annual directors' fees of $6,600 for
serving on the Board, and a fee of $300 plus expenses for
each meeting of the Board or committee attended.

Directors who are not also officers and employees of
the Company may participate in a deferred compensation plan.
Under this plan, directors may elect to defer payment of
annual directors' and meeting fees until they retire from
the Board or as they otherwise direct.

Compensation Committee Interlocks and Insider
Participation. No person serving during 1993 as a member of
the Executive Compensation Committee of the Board of
Directors of CSW served as an officer or employee of the
Company during or prior to 1993. No person serving during
1993 as an executive officer of the Company serves or has
served on the compensation committee or as a director of
another company, one of whose executive officers serves as a
member of the Executive Compensation Committee of CSW or as
a director of the Company.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

All 7,536,640 shares of the Company's outstanding
Common Stock, $8 par value per share, are owned beneficially
and of record by CSW, 1616 Woodall Rodgers Freeway, Dallas,
Texas 75202.

Securities Ownership of Certain Beneficial Owners and
Management. The following table shows securities
beneficially owned as of December 31, 1993 by each director
and nominee, the Named Executive Officers and, as a group,
all directors and executive officers of the Company. CSW
Common Stock share amounts shown in this table include
restricted stock, options exercisable within 60 days after
year-end, shares of CSW common stock credited to Central and
South West Corporation Thrift Plus plan accounts, and all
other shares of CSW common stock beneficially owned by the
listed persons. Each person has sole voting and investment
power with respect to all shares listed in the table below
unless otherwise indicated.

Beneficial Ownership as of December 31, 1993

Name CSW Common Stock SWEPCO Preferred Stock
(1) (1)(2)

Richard H. Bremer 19,267 -
E. R. Brooks 60,959 -
James E. Davison - -
Al P. Eason, Jr. 2,000 22
W. J. Googe, Jr. 7,103 -
Michael L. Heard 3,527 -
Dr. Frederick E. Joyce 2,000 -
Michael E. Madison 2,956 -
Harry D. Mattison 24,675 -
Marvin R. McGregor 3,489 -
William C. Peatross - -
Jack L. Phillips - -
Dennis M. Sharkey 13,988 -
John W. Turk, Jr. 18,506 41

All of the above and other executive
officers as a group 170,787 78

(1) Included in these amounts for Mr. Brooks, Mr. Bremer,
Mr. Sharkey, Mr. McGregor, Mr. Heard, Mr. Madison, Mr.
Mattison, and the directors and other executive officers as
a group include restricted stock of 7,172; 3,464; 892; 681;
707; 636; 4,708; and 19,068, respectively. These
individuals currently have voting power, but not investment
power with respect to these shares. The above shares also
include 9,531; 4,143; 7,371; 1,045; 1,045; 1,045; 6,176; and
31,795 shares underlying immediately exercisable options
held by Mr. Brooks, Mr. Bremer, Mr. Sharkey, Mr. McGregor,
Mr. Heard, Mr. Madison, Mr. Mattison, and the directors and
executive officers as a group, respectively.

(2) All directors' and executive officers' shares owned as
of December 31, 1993 as indicated aggregate less than 1% of
the outstanding shares of such class.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

None.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

Page Reference

(a) Financial Statements (Included under 20
ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA):

Report of Independent Public Accountants. 36

Statements of Income for the years ended 20
December 31, 1993, 1992 and 1991.

Statements of Retained Earnings for the 21
years ended December 31, 1993, 1992 and
1991.

Balance Sheets as of December 31, 1993 22
and 1992.

Statements of Cash Flows for the years ended 23
December 31, 1993, 1992 and 1991.

Statements of Capitalization as of 24
December 31, 1993 and 1992.

Notes to Financial Statements. 25

(b) Reports on Form 8-K: -

No reports were filed on Form 8-K by the
Company during the quarter ended
December 31, 1993.

(c) Exhibits:

3. (a) Restated Certificate of -
Incorporation, as amended, of the
Company (incorporated herein by
reference to Exhibit 3 to the Company's
1980 Form 10-K File No. 1-3146,
Exhibit 2 to Form U-l File No. 70-6819,
Exhibit 3 to Form U-l File No. 70-6924
and Exhibit 4 to Form U-l File
No. 70-7360).

Page Reference

(b) Bylaws, as amended of the Company. -
(Incorporated herein by reference to
Exhibit 3(b) to the Company's 1988
Form 10-K File No. 1-3146).

4. Indenture dated February 1, 1940, as amended
through November 1, 1976, of the Company
(incorporated herein by reference to Exhibit
5.04 in Registration No. 2-60712), the
Supplemental Indenture dated August 1, 1978
incorporated herein by reference to Exhibit
2.02 in Registration No. 2-61943), the
Supplemental Indenture dated January 1, 1980
(incorporated herein by reference to Exhibit
2.02 in Registration No. 2-66033), the Supplemental
Indenture dated April 1, 1981 (incorporated herein by
reference to Exhibit 2.02 in Registration No. 2-71126),
the Supplemental Indenture dated May 1, 1982 (incorporated
herein by reference to Exhibit 2.02 in
Registration No. 2-77165),
the Supplemental Indenture dated
August 1, 1985 (incorporated herein by
reference to Exhibit 4 to Form U-l File
No. 70-7121), the Supplemental Indenture
dated May 1, 1986 (incorporated herein
by reference to Exhibit 3 to Form U-l File
No. 70-7233), the Supplemental Indenture
dated November 1, 1989 (incorporated
herein by reference to Exhibit 3 to Form
U-l File No. 70-7676), the Supplemental
Indenture dated June 1, 1992 (incorporated
herein by reference to Exhibit 10 to Form U-l
File No. 70-7934), the Supplemental Indenture dated
September 1, 1992 (incorporated herein
by reference to Exhibit 10(a) to Form U-l File
No. 70-8041), the Supplemental Indenture
dated February 1, 1993 (incorporated herein by
reference to Exhibit 10(b) to Form U-l File
No. 72-8041), the Supplemental Indenture dated July 1, 1993
(incorporated herein by reference to Exhibit 10(c) to Form U-
1 File No. 70-8041) and the Supplemental Indenture dated
October 1, 1993 (incorporated herein by reference to Exhibit
10(a) to Form U-1 File No. 70-8239).

Page Reference

12. Statement re computation of Ratio of 53
Earnings to Fixed Charges for the five years
ended December 31, 1993.

18. Independent Public Accountant's letter 55
on changes in accounting practices.

(d) Schedules:

V. Property, Plant and Equipment for the years 49
ended December 31, 1993, 1992 and 1991.

VI. Accumulated Depreciation, Depletion and 50
Amortization of Property, Plant and Equipment
for the years ended December 31, 1993, 1992
and 1991.

IX. Short-Term Borrowings for the years ended 51
December 31, 1993, 1992 and 1991.

X. Supplementary Income Statement Information 52
for the years ended December 31, 1993, 1992
and 1991.

All other schedules and exhibits are omitted because of
the absence of the conditions under which they are required
or because the required information is included in the
financial statements and related notes to financial
statements.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on March 25, 1994.

SOUTHWESTERN ELECTRIC POWER COMPANY

By Rox E. Colvin
Controller

Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities indicated on March 25, 1994.

Richard H. Bremer Dr. Frederick E. Joyce
President and Chief Executive Director
Officer and Director
(Principal executive officer)

Rox E. Colvin Michael H. Madison
Controller Director
(Principal financial and accounting officer)

E. R. Brooks Marvin R. McGregor
Director Director

James E. Davison William C. Peatross
Director Director

Al P. Eason, Jr. Jack L. Phillips
Director Director

W. J. Googe, Jr. John W. Turk, Jr.
Director Director

Harry D. Mattison
Director

SCHEDULE V

SOUTHWESTERN ELECTRIC POWER COMPANY
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31

Column A Column B Column C Column D Column E Column F
Balance Other
Beginning Additions Retirements Changes Balance
Classification of Year at Cost at Cost Add/(Deduct) End of Year
(Thousands)

Year 1993
Electric Utility
Plant
Production $1,393,961 $ 6,708 $ 8,611 $ - $1,392,058
Transmission 345,183 6,323 1,244 363 350,625
Distribution 595,679 73,625 6,094 15,578 678,788
General 170,474 24,865 3,271 (3,875) 188,193
Construction Work
in progress 73,421 52,837 - - 126,258
--------- ------ ------ --------- ---------
$2,578,718 $164,358 $19,220 $ 12,066 $2,735,922
========= ======= ====== ========= =========
Year 1992
Electric Utility
Plant
Production $1,387,806 $ 8,250 $ 2,095 $ - $1,393,961
Transmission 333,565 12,754 1,038 (98) 345,183
Distribution 571,635 29,196 5,243 91 595,679
General 157,471 16,143 3,140 - 170,474
Construction Work
in progress 42,900 30,521 - - 73,421
--------- ------ ------ --------- ---------
$2,493,377 $96,864 $11,516 $ (7) $2,578,718
========= ====== ====== ========= =========

Year 1991
Electric Utility
Plant
Production $1,382,758 $ 5,077 $ 29 $ - $1,387,806
Transmission 325,310 9,669 1,460 46 333,565
Distribution 542,840 34,852 6,011 (46) 571,635
General 147,321 12,059 1,909 - 157,471
Construction Work
in progress 30,218 12,682 - - 42,900
--------- ------ ------ --------- ---------
$2,428,447 $74,339 $ 9,409 $ - $2,493,377
========= ====== ====== ========= =========

SCHEDULE VI
SOUTHWESTERN ELECTRIC POWER COMPANY
ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31

Column A Column B Column C Column D Column E Column F
Additions Charged to
Cost and Expenses Other
Balance Changes Balance
Beginning Other Retire- Add/ End of
Classification of Year Depreciation Accounts ments(*) (Deduct) Year
(Thousands)
Year 1993

Electric Utility
Plant
Production $513,683 $ 41,874 $ 3,810 $ 7,334 $ (1,418) $550,615
Transmission 109,771 8,751 - 2,357 376 116,541
Distribution 212,830 22,559 - 9,372 8,358 234,375
General 39,604 2,991 5,154 3,943 2,455 46,261
------- ------- ------- ------- ------- -------
$875,888 $ 76,175 $ 8,964 $ 23,006 $ 9,771 $947,792
======= ======= ======= ======= ======= =======

Year 1992
Electric Utility
Plant
Production $468,898 $ 41,845 $ 4,581 $ 1,641 $ - $513,683
Transmission 102,923 8,510 - 1,662 - 109,771
Distribution 198,906 21,195 - 7,271 - 212,830
General 37,748 2,483 2,145 2,797 25 39,604
------- ------- ------- ------- -------- -------
$808,475 $ 74,033 $ 6,726 $ 13,371 $ 25 $875,888
======= ======= ======= ======= ======== =======

Year 1991
Electric Utility
Plant
Production $423,799 $ 41,668 $ 3,462 $ 31 $ - $468,898
Transmission 97,216 8,233 - 2,526 - 102,923
Distribution 186,585 20,126 - 7,854 49 198,906
General 34,256 2,327 2,980 1,816 1 37,748
------- ------- ------- ------- ------- -------
$741,856 $ 72,354 $ 6,442 $ 12,227 $ 50 $808,475
======= ======= ======= ======= ======= =======

(*) Retirements are at original cost, net of removal costs and salvage.

SCHEDULE IX

SOUTHWESTERN ELECTRIC POWER COMPANY
SHORT-TERM BORROWING
FOR THE YEARS ENDED DECEMBER 31

Column A Column B Column C Column D Column E Column F
Maximum Average Weighted
Category of Balance Weighted amount amount average
aggregate at end average outstanding outstanding interest
short-term of interest at any during rate during
Year Ended borrowings period rate month-end the period the period
(Thousands)

1993 Advances
from
Affiliates $27,864 3.2% $53,477 $ 9,985 3.2%

1992 Advances
from
Affiliates $28,149 3.7% $28,149 $13,700 3.7%

1991 Advances
from
Affiliates - - $30,483 $13,742 6.1%

SCHEDULE X
SOUTHWESTERN ELECTRIC POWER COMPANY
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEAR ENDED DECEMBER 31

1993 1992 1991

Real estate and personal property taxes $23,839 $23,590 $23,153
Municipal gross receipts taxes 7,483 7,114 7,227
Payroll taxes 4,718 4,108 3,969
State income taxes 2,556 1,792 3,714
State gross receipts taxes 3,490 3,040 3,078
Franchise taxes 3,497 1,278 2,393
State utility commission assessments 913 994 902
Other taxes 446 586 532
------ ------ ------
$46,942 $42,502 $44,968
====== ====== ======

The amounts of taxes, depreciation and maintenance
charged to accounts other than income and expense accounts
were not significant. Rents, royalties, advertising, and
research and development costs during these years were not
significant.

INDEX TO EXHIBITS

Exhibit Transmission
Number Exhibit Method

12 Ratio of Earnings to Fixed Charges. Electronic

18 Letter re: Change in Accounting Principles. Electronic