STP News Release

November 15, 1997 -FOR IMMEDIATE RELEASE

  STP NUCLEAR OPERATING COMPANY ASSUMES
   MANAGEMENT OF SOUTH TEXAS PROJECT

Nov. 15, 1997 -- Bay City, TX--The STP Nuclear Operating Company officially assumed management of the South Texas Project Electric Generating Station yesterday, Nov. 14, completing a nearly two-year transition. The four plant co-owners–Houston Lighting & Power Company (30.8 percent ownership), Central Power and Light Company (25.2 percent), City Public Service of San Antonio (28 percent), and the City of Austin (16 percent)–late yesterday afternoon signed and approved a new participation agreement among themselves and an operating agreement with the STP Nuclear Operating Company. Until now, HL&P has served as the project manager of the facility for the four co-owners.

The U.S. Nuclear Regulatory Commission issued an order in April 1997 authorizing the transfer of operating control from HL&P to the STP Nuclear Operating Company for STP Units 1 and 2. STP is a 2,500 megawatt-electric nuclear energy plant located 12 miles southwest of Bay City, Texas. Unit 1 entered commercial operation in 1988, Unit 2 in 1989.

"With the completion of this transition, we have taken a large step toward ensuring the future viability of the STP units, and in turn the opportunities for the STP work force," said STP Nuclear Operating Company President and Chief Executive Officer Bill Cottle. "This transition places the South Texas Project and our owners in the best possible position to meet future challenges, specifically electric utility deregulation and competition."

Cottle has served as the senior officer overseeing STP operations for HL&P since 1993. The other five STP Nuclear Operating Company officers are: John Groth, Nuclear Generation vice president; Ted Cloninger, Nuclear Engineering vice president; Florence Mangan, Plant Services vice president; Lawrence Martin, Nuclear Assurance & Licensing vice president; Joe Sheppard, Business Systems vice president.

The Board of Directors for STP Nuclear Operating Company is comprised of one member from each of the four co-owners and one from the operating company. Board members are: Gerald Vaughn, vice president of Nuclear, Central Power and Light Company; William Gunst, Production department senior manager, City Public Service of San Antonio; James Lanier, director of Nuclear, City of Austin Electric Utility Department; Charles Crisp, senior vice president, Houston Industries (parent company for HL&P); and Bill Cottle, STPNOC president.

STP Nuclear Operating Company is incorporated in the State of Texas as a non-profit corporation formed by the owners of the South Texas Project in proportion to their ownership of the facility. STP Nuclear Operating Company is reimbursed for all costs associated with the operation and maintenance of the STP facility by the owners.

The most notable reasons for creating the operating company, said Cottle, are:

• It allows STP’s employee team to focus exclusively on the safe, reliable and efficient operation of the two units.
• It removes most of the probability of disputes between the four co-owners over the operation of STP.
• It removes much of the potential liability from HL&P who has served as the uncompensated Project Manager. This allows Houston Industries to focus on its own competitive initiatives.

"We’ve enjoyed serving as a member of the HL&P team these past years," said Cottle. "Some of our employees at STP have worked for HL&P their entire career. But we’re also excited about this new opportunity and will seize it with the focus, energy and teamwork that are the hallmark of the South Texas Project."

Transition activities have been underway for nearly two years. "We moved the nuclear accounting functions on-site, established the necessary treasury and payroll functions, and increased the capability of our human resources group to handle the needs of our employees," said Cottle. "We are now able to accomplish these functions faster and more efficiently than before. We’ll continue to look for improvements such as these to help us stay in the forefront as we move into the competitive arena."

STP Units 1 and 2 ranked third and second, respectively, in the U.S. nuclear industry in 1996 for total net electrical generation, according to the Utility Data Institute. In comparison with all U.S. steam-electric plants (including fossil-fueled plants), UDI reports STP ranked fourth for total net generation in 1996. STP also ranked in the top 10 in the U.S. nuclear industry for least-expensive production costs (annual operations and maintenance costs plus fuel costs divided by actual net generation) in 1996, according to UDI.