Columbus, Ohio, and Dallas, May 25, 1999 -- American Electric Power (NYSE: AEP) and Central and South West Corporation (NYSE: CSR) have reached a settlement with the Federal Energy Regulatory Commission trial staff resolving competition and rate issues relating to the pending merger of the two companies. In the settlement, which will be submitted to FERC commissioners, the staff supports a finding that the merger will have no adverse effect on competition, which is the principal issue involved in the FERC hearing. "This is great news," said E. Linn Draper Jr., chairman, president and chief executive officer of American Electric Power. "This settlement represents a major step toward expeditious approval of the merger. Since it addresses important issues to the satisfaction of the FERC trial staff, we hope to utilize this settlement's framework to reach agreement with other parties that have intervened. This should help expedite the review process that follows the June 29 FERC hearing. The settlement validates our belief that this merger is beneficial for our customers, employees, shareholders and for competition in general. It adds to the momentum we've gained through recent settlements with states and other parties. "Terms in this agreement also will help shape the future of our industry and federal policy. We've repeatedly stated our commitment to the creation of independent regional transmission organizations, something the FERC has also supported. AEP is putting action to its words by committing prior to the completion of the merger to begin the process to relinquish control of its transmission system. This is a significant commitment on our part and a significant step toward reshaping our industry for the future competitive marketplace," Draper said. Under terms of the settlement, prior to the consummation of the merger AEP will file with the FERC a regional transmission organization (RTO) proposal whereby it would transfer the operation and control of AEP's bulk transmission facilities. The transmission facilities subject to this commitment are located in Indiana, Kentucky, Michigan, Ohio, Tennessee, Virginia and West Virginia. As part of this transfer of operation and control, AEP agrees to transfer functions relating to transmission service, transmission security and control area responsibility to the regional transmission organization. The settlement also covers rates for transmission services and ancillary services and confirms, subject to FERC guidance on certain elements, that the previously announced generation divestiture program will satisfy the market power concerns of the FERC staff. In its merger filing with the FERC, AEP and CSW proposed divesting ownership of 300 megawatts of generation capacity at CSW's Northeastern Power Station Units 3 and 4, located near Oologah, Okla., and 250 megawatts of generation capacity at the Frontera Power Plant, a merchant plant being constructed by a CSW subsidiary near Mission, Texas. AEP and CSW announced their intent to merge on Dec. 22, 1997. The merger has received conditional approval by state regulatory commissions in Arkansas and Oklahoma, two of the four states within CSW's service territory. The Oklahoma order confirmed a settlement recommendation that signatories to the final settlement have agreed to not oppose approval of the merger by the FERC. The companies have a pending merger settlement with key parties in Texas, a third CSW state, that awaits action by the Public Utility Commission of Texas. Hearings have been postponed in Louisiana, the fourth CSW state, as AEP and CSW work with all parties in an attempt to settle all issues in that proceeding. AEP and CSW have also announced settlement agreements with the International Brotherhood of Electrical Workers (IBEW) resulting in the IBEW local unions withdrawing their opposition to completion of the merger; with the Indiana Utility Regulatory Commission (IURC) resulting in Indiana customers receiving merger benefits and including a commitment by the IURC to not oppose the merger during consideration of the merger agreement by the FERC and the Securities and Exchange Commission (SEC); with the Kentucky Attorney General, the Kentucky Industrial Utility Customers Inc. and Kentucky Electric Steel Inc. that is set for consideration at a Kentucky Public Service Commission hearing Friday; and with a variety of wholesale customers that had intervened in federal proceedings. The Nuclear Regulatory Commission has approved a license transfer application related to the merger. The merger requires approval by the FERC, the SEC and the Department of Justice. Once the merger is completed, the new company will be called American Electric Power. Central and South West Corp. is a global, diversified public utility holding company based in Dallas. CSW owns four electric operating subsidiaries serving 1.7 million customers in Texas, Oklahoma, Louisiana and Arkansas; a regional electricity company in the United Kingdom; other international energy operations and non-utility subsidiaries involved in energy-related investments, telecommunications, energy efficiency and financial transactions. AEP, a global energy company, is one of the United States' largest investor-owned utilities, providing energy to 3 million customers in Indiana, Kentucky, Michigan, Ohio, Tennessee, Virginia and West Virginia. AEP has holdings in the United States, the United Kingdom, China and Australia. Wholly owned subsidiaries provide power engineering, energy consulting and energy management services around the world. The company is based in Columbus, Ohio. News releases and other information about CSW can be found on the World Wide Web at http://www.csw.com.