<PAGE>
                                                             Filed pursuant
                                                             to Rule 424 (b)(3)
                                                             Registration number
                                                             NO. 333-107204
PROSPECTUS

                                  $225,000,000

                             AEP TEXAS NORTH COMPANY
                              (A TEXAS CORPORATION)

               $225,000,000 5.50% SENIOR NOTES, SERIES B DUE 2013


Offer to exchange all of its outstanding 5.50% Senior Notes, Series A due 2013
(the Notes) for an equal amount of 5.50% Senior Notes, Series B due 2013, which
has been registered under the Securities Act of 1933, (the Exchange Notes).



<TABLE>
<CAPTION>
THE EXCHANGE OFFER                                                  THE EXCHANGE NOTES
<S>                                                                 <C>
-   We will exchange all outstanding Notes that are validly         -   The Exchange Notes are being offered in order to satisfy
    tendered and not validly withdrawn for an equal principal           certain of our obligations under the registration rights
    amount of Exchange Notes that are freely tradeable, except          agreement entered into in connection with the placement of
    in limited circumstances described below.                           the outstanding Notes.

-   You may withdraw tenders of outstanding Notes at any time       -   The terms of the Exchange Notes to be issued in the exchange
    prior to the expiration of the exchange offer.                      offer are substantially identical to the outstanding Notes,
                                                                        except that the Exchange Notes will be freely tradeable,
-   The exchange offer expires at 5:00 p.m., New York City time,        except in limited circumstances described below.
    on September 18, 2003, unless extended. We do not currently
    intend to extend the expiration date.
                                                                    RESALES OF EXCHANGE NOTES

-   The exchange of outstanding Notes for Exchange Notes in the     -   The Exchange Notes may be sold in the over-the-counter
    exchange offer will not be a taxable event for U.S. federal         market, in negotiated transactions or through a combination
    income tax purposes.                                                of such methods. We do not plan to list the Exchange Notes
                                                                        on a national market.
-   We will not receive any proceeds from the exchange offer.
</TABLE>



If you are a broker-dealer and you receive Exchange Notes for your own account,
you must acknowledge that you will deliver a prospectus in connection with any
resale of such Exchange Notes. By making such acknowledgement, you will not be
deemed to admit that you are an "underwriter" under the Securities Act of 1933.
Broker-dealers may use this prospectus in connection with any resale of Exchange
Notes received in exchange for outstanding Notes where the outstanding Notes
were acquired by the broker-dealer as a result of market-making activities or
trading activities. We have agreed to make this prospectus, and any amendment or
supplement thereto, available to any such broker-dealer for use in connection
with any resale of any Exchange Notes for a period of the lesser of 90 days
after the consummation of the exchange offer and the date on which all
broker-dealers have sold all Exchange Notes held by them (unless such exchange
offer period is extended). A broker-dealer may not participate in the exchange
offer with respect to outstanding Notes acquired other than as a result of
market-making activities or trading activities. See PLAN OF DISTRIBUTION.

If you are an affiliate of AEP Texas North Company or are engaged in, or intend
to engage in, or have an agreement or understanding to participate in, a
distribution of the Exchange Notes, you cannot rely on the applicable
interpretations of the Securities and Exchange Commission and you must comply
with the registration requirements of the Securities Act of 1933 in connection
with any resale transaction.

YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 10 OF THIS
PROSPECTUS BEFORE PARTICIPATING IN THE EXCHANGE OFFER.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

                The date of this prospectus is August 19, 2003.



<PAGE>




<TABLE>
<CAPTION>
                                             PAGE                                           PAGE
                                             ----                                           ----
<S>                                          <C>    <C>                                     <C>
About This Prospectus.......................   i    AEP Texas North Company................  30
Special Note Regarding                              The Exchange Offer.....................  34
  Forward-Looking Statements................   i    Description of the Exchange Notes......  44
Where You Can Find More Information.........   1    Exchange Offers and Registration
Prospectus Summary..........................   2      Rights...............................  49
Risk Factors................................  10    Certain United States Federal Income
Ratio of Earnings to Fixed Charges..........  20      Tax Consequences.....................  51
Use of Proceeds.............................  20    Ratings................................  54
Selected Historical Consolidated Financial          Plan of Distribution...................  54
  Information...............................  21    Legal Matters..........................  55
                                                    Experts................................  55
</TABLE>


                             ----------------------

                              ABOUT THIS PROSPECTUS

        In this prospectus, the terms "we," "our," "us," "Company" and "Texas
North" mean AEP Texas North Company including, unless the context otherwise
requires or as expressly stated, our subsidiaries. Unless the context otherwise
requires, "notes" refers to the outstanding Notes and the Exchange Notes.

        You should rely only on the information contained in this document.
Neither Texas North nor the exchange agent has authorized anyone to provide you
with information different from that contained in this document. We are not
offering to exchange, or soliciting any offers to exchange, securities pursuant
to the exchange offer in any jurisdiction in which those offers or exchanges
would not be permitted. The information contained in this document is accurate
only as of the date of this document regardless of the time of delivery of this
document or the time of any exchange of securities in the exchange offer.

        This document incorporates important business and financial information
about us from documents filed with the Securities and Exchange Commission that
have not been included in or delivered with this document. This information is
available without charge upon written or oral request. See WHERE YOU CAN FIND
MORE INFORMATION beginning on page 1.

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus and the documents it incorporates by reference contain
statements that are not historical fact and constitute "forward-looking
statements." When we use words like "believes," "expects," "anticipates,"
"intends," "plans," "estimates," "may," "should" or similar expressions, or when
we discuss our strategy or plans, we are making forward-looking statements.
Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties and assumptions. Our future results may differ materially
from those expressed in these forward-looking statements. Although Texas North
believes that in making any such forward-looking statements its expectations are
based on reasonable assumptions, such forward-looking statements involve
uncertainties and are qualified in their entirety by reference to the following
important factors, among others, that could cause Texas North's actual results
to differ materially from those projected in such forward-looking statements:


                                       i

<PAGE>

    -   Implementation of legislation passed by the Texas legislature to
        restructure the electric utility industry in Texas, including the
        determination of stranded costs for generation-related assets;
    -   Abnormal weather conditions;
    -   Available sources of fuels;
    -   The speed and degree to which competition is implemented in our markets;
    -   New legislation and government regulation, oversight and/or
        investigation of the energy sector or its participants;
    -   Our ability to successfully control our costs;
    -   Availability of generating capacity;
    -   The economic climate and growth in our service territory and changes in
        market demand and demographic patterns;
    -   Inflationary trends;
    -   Changes in electricity and gas market prices;
    -   Changes in interest rates;
    -   Liquidity in the banking, capital and wholesale power markets;
    -   Actions of rating agencies;
    -   Changes in technology, including the increased use of distributed
        generation within our transmission and distribution service territory;
        and
    -   Other risks and unforeseen events.

YOU ARE CAUTIONED NOT TO RELY UNDULY ON ANY FORWARD-LOOKING STATEMENTS. THESE
RISKS AND UNCERTAINTIES ARE DISCUSSED IN MORE DETAIL UNDER RISK FACTORS AND
TEXAS NORTH INCLUDED HEREIN AND "BUSINESS" AND "MANAGEMENT'S DISCUSSION AND
ANALYSIS" IN OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
2002, IN OUR QUARTERLY REPORTS ON FORM 10-Q FOR THE PERIODS ENDED MARCH 31, 2003
AND JUNE 30, 2003, OUR CURRENT REPORT ON FORM 8-K DATED MAY 14, 2003, AND OTHER
DOCUMENTS ON FILE WITH THE SEC. YOU MAY OBTAIN COPIES OF THESE DOCUMENTS AS
DESCRIBED UNDER WHERE YOU CAN FIND MORE INFORMATION.


                                       ii

<PAGE>

                       WHERE YOU CAN FIND MORE INFORMATION

        We file annual, quarterly and special reports and other information with
the SEC. You may read and copy any document we file at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the Public Reference Room.
You may also examine our SEC filings through the SEC's web site at
http://www.sec.gov.

        The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until we sell all the Notes.

        -   Annual Report on Form 10-K for the year ended December 31, 2002 (as
            updated by the Company's Current Report on Form 8-K dated May 14,
            2003);
        -   Quarterly Reports on Form 10-Q for the quarters ended March 31, 2003
            and June 30, 2003; and
        -   Current Report on Form 8-K dated May 14, 2003.

        You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:

        Mr. R. Todd Rimmer
        American Electric Power Service Corporation
        1 Riverside Plaza
        Columbus, Ohio 43215
        614-716-1000

        You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with different information. We are not making an offer of these Notes in any
state where the offer is not permitted. You should not assume that the
information in this prospectus or any supplement is accurate as of any date
other than the date on the front of those documents.

        ANY REQUEST FOR DOCUMENTS SHOULD BE MADE NO LATER THAN SEPTEMBER 11,
2003 TO ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS PRIOR TO THE EXPIRATION DATE OF
THE EXCHANGE OFFER. IN THE EVENT THAT WE EXTEND THE EXCHANGE OFFER, YOU MUST
SUBMIT YOUR REQUEST AT LEAST FIVE BUSINESS DAYS BEFORE THE EXPIRATION DATE, AS
EXTENDED. If you request any such documents from us, we will mail them to you by
first class mail, or another equally prompt means, within one business day after
we receive your request.


                                       1

<PAGE>

                               PROSPECTUS SUMMARY

        This summary highlights selected information contained elsewhere in this
prospectus and does not contain all of the information you need to consider. You
should read carefully this entire prospectus.

                             AEP TEXAS NORTH COMPANY

OVERVIEW

        AEP Texas North Company (Texas North), formerly West Texas Utilities
Company, is a wholly owned subsidiary of AEP engaged in the generation,
transmission and distribution of electricity in the western and central portion
of Texas in the Electric Reliability Council of Texas (ERCOT) and a very small
area of the Southwest Power Pool (SPP) located in the northern portion of Texas
North's service area (approximately 3% of Texas North). ERCOT is an intrastate
network of retail customers, investor and municipally owned electric utilities,
rural electric cooperatives, river authorities, independent generators, power
marketers and retail electric providers (REPs). ERCOT's control area consists of
most but not all of the State of Texas.

        The State of Texas enacted electricity restructuring legislation, Senate
Bill 7 (SB7) which required the legal separation of generation and
retail-related assets from transmission and distribution assets. In May 2000,
Texas North and certain affiliates filed a business separation plan with the
Public Utility Commission of Texas (PUCT), which, after certain revisions, was
subsequently approved by the PUCT and, unless revised by Texas North, will be
implemented upon final regulatory approval by the SEC, which remains pending.

        Currently, Texas North's operations are:

    -   ELECTRIC DISTRIBUTION - Through REPs owned by third parties, Texas North
        provides distribution service to approximately 190,000 retail customers
        in west and central Texas, including the cities of Abilene and San
        Angelo. Texas North's service territory includes 44 counties and covers
        approximately 53,000 square miles. Distribution services are provided
        under tariffs approved by the PUCT.

    -   ELECTRIC TRANSMISSION - Texas North's electric transmission business
        provides non-discriminatory wholesale open access transmission service
        in ERCOT. ERCOT is an independent system operator wholly within the
        State of Texas and subject to the jurisdiction of the PUCT. Texas North
        charges for the use of its transmission system to deliver power under
        tariffs approved by the Federal Energy Regulatory Commission (FERC)
        consistent with the transmission rules of the PUCT.

    -   ELECTRIC GENERATION - Texas North owns 1,392 MW of generating capacity
        including 377 MW of coal-fired generation, 10 MW of diesel generation, 6
        MW of wind generation and 999 MW of natural gas-fired generation. Texas
        North's coal-fired generation assets are jointly owned with third
        parties. Texas North has placed five gas-fired plants (390 MW) in
        long-term storage in response to low market prices in the ERCOT market.
        Three other gas-fired plants are currently operating pursuant to
        contracts with ERCOT that provide for the cost of operating those units.
        ERCOT uses the generation from these contracts to maintain system
        reliability. However, these contracts expire at the end of 2003 and may
        not be extended depending on reliability assessment of the ERCOT
        independent system operator.

        Texas North is subject to regulation by the SEC under the Public Utility
Holding Company Act of 1935 (1935 Act) as a utility owned by an electric holding
company registered under the 1935 Act. Texas North's transmission and
distribution rates and services are regulated by the PUCT and the FERC. In
addition, Texas North is also subject to regulation by various federal, state
and local governmental agencies.

TEXAS RESTRUCTURING

        Signed into law in June of 1999, SB7 substantially amended the
regulatory structure governing electric utilities in Texas in order to allow
retail electric competition for all customers. SB7 gave Texas customers the 


                                       2

<PAGE>

opportunity to choose their REP beginning January 1, 2002, provided a "price
to beat" for residential and small commercial customers and required each
utility to legally separate into a REP, a power generation company, and a
transmission and distribution utility. Under SB7, neither the power generation
company nor the REP is subject to traditional cost of service regulation. The
transmission and distribution utility remains subject to traditional utility
rate regulation by the FERC and the PUCT, respectively.

        Under SB7, a REP obtains its electricity from power generation
companies, exempt wholesale generators and other generating entities and
provides services at generally unregulated rates, except that the prices that
may be charged to residential and small commercial customers by REPs affiliated
with a utility within the affiliated utility's service area are set by the PUCT
until certain conditions in SB7 are met. This set price is referred to as the
"price to beat" rate (PTB).

        The PTB rate was required to be offered by an affiliate REP to all
residential and small commercial customers (with a peak usage of less than 1,000
KW) effective January 1, 2002. The initial PTB was a rate 6% below bundled rates
in effect on January 1, 1999 adjusted for any changes in fuel costs as of
December 31, 2001. The PTB must be offered to residential and small commercial
customers until January 1, 2007. Customers with a peak usage of more than 1,000
KW are not eligible for PTB rates. While customer choice in the non-ERCOT
portion of Texas has been delayed either by legislative mandate or order of the
PUCT, customer choice in ERCOT has demonstrated some success. As of June 2003,
well over 900,000 customers have switched to competitive REPs. In the large
commercial and industrial markets, more than 50% of these customers are
purchasing their power under a competitive contract.

TEXAS NORTH RESTRUCTURING

        SB7 required each Texas utility to submit a plan to legally separate its
business activities into an affiliated REP, a power generation company and a
transmission and distribution utility. Pursuant to SB7, Texas North and certain
affiliates filed a business separation plan (Business Separation Plan) which,
after certain revisions, was approved by the PUCT in February 2002. The Business
Separation Plan, unless revised by Texas North, will be implemented upon final
regulatory approval by the SEC, which is currently pending. The Business
Separation Plan provides for the legal transfer of Texas North's
generation-related assets to an affiliate, the formation of various REPs,
including Mutual Energy WTU, L.P. (Mutual Energy), and the establishment of
Texas North as the transmission and distribution utility. Mutual Energy was sold
in December 2002 to Centrica plc (Centrica).

        We are incorporated in Texas and the address of our principal executive
offices is 1 Riverside Plaza, Columbus, Ohio 43215. Our telephone number is
(614) 716-1000.


                                       3

<PAGE>

                   SUMMARY OF THE TERMS OF THE EXCHANGE OFFER

        On February 18, 2003, we completed the private offering of the
outstanding Notes. References to the "notes" in this prospectus are references
to both the outstanding Notes and the Exchange Notes. This prospectus is part of
a registration statement covering the exchange of the outstanding Notes for the
Exchange Notes.

        The outstanding Notes were issued and the Exchange Notes offered hereby
will be issued under an Indenture dated as of February 1, 2003 between us and
Bank One, N.A., as Trustee, as supplemented and amended by supplemental
indentures or company orders.

        In connection with the private offering, we entered into a registration
rights agreement, dated as of February 1, 2003, with the initial purchasers in
the private offering, or the Registration Rights Agreement, in which we agreed,
among other things, to deliver this prospectus to you as part of the exchange
offer and we agreed to complete the exchange offer within 300 days after the
date of original issuance of the outstanding Notes. You are entitled to exchange
in the exchange offer your outstanding Notes for Exchange Notes, which are
identical in all material respects to the outstanding Notes except:

    -   the Exchange Notes have been registered under the Securities Act;

    -   the Exchange Notes are not entitled to certain registration rights which
        are applicable to the outstanding Notes under the Registration Rights
        Agreement; and

    -   the special interest premium is no longer applicable.

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.

The Exchange Offer....................    We are offering to exchange up to
                                          $225,000,000 aggregate principal
                                          amount of Exchange Notes for up to
                                          $225,000,000 aggregate principal
                                          amount of outstanding Notes.
                                          Outstanding Notes may be exchanged
                                          only in integral multiples of $1,000.

Resale................................    Based on an interpretation by the
                                          staff of the Securities and Exchange
                                          Commission, or the SEC, set forth in
                                          no-action letters issued to third
                                          parties, we believe that the Exchange
                                          Notes issued pursuant to the exchange
                                          offer in exchange for outstanding
                                          Notes may be offered for resale,
                                          resold and otherwise transferred by
                                          you (unless you are an "affiliate" of
                                          Texas North within the meaning of Rule
                                          405 under the Securities Act) without
                                          compliance with the registration and
                                          prospectus delivery provisions of the
                                          Securities Act, provided that you are
                                          acquiring the Exchange Notes in the
                                          ordinary course of your business and
                                          that you have not engaged in, do not
                                          intend to engage in, and have no
                                          arrangement or understanding with any
                                          person to participate in, a
                                          distribution of the Exchange Notes.

                                          Each participating broker-dealer that
                                          receives Exchange Notes for its own
                                          account pursuant to the exchange offer
                                          in exchange for outstanding Notes that
                                          were acquired as a result of
                                          market-making or other trading
                                          activity must acknowledge that it will
                                          deliver a prospectus in connection
                                          with any resale of the Exchange Notes.
                                          See PLAN OF DISTRIBUTION. 

                                          Any holder of outstanding Notes who:

                                          -  is an affiliate of Texas North,


                                       4

<PAGE>

                                          -  does not acquire Exchange Notes in
                                             the ordinary course of its
                                             business, or

                                          -  tenders in the exchange offer with
                                             the intention to participate, or
                                             for the purpose of participating,
                                             in a distribution of Exchange
                                             Notes

                                          cannot rely on the position of the
                                          staff of the SEC enunciated in Exxon
                                          Capital Holdings Corporation, Morgan
                                          Stanley & Co. Incorporated or similar
                                          no-action letters and, in the absence
                                          of an exemption therefrom, must comply
                                          with the registration and prospectus
                                          delivery requirements of the
                                          Securities Act in connection with the
                                          resale of the Exchange Notes.

Expiration Date; Withdrawal
  of Tender...........................    The exchange offer will expire at 5:00
                                          p.m., New York City time, on September
                                          18, 2003, or such later date and time
                                          to which we extend it, which date we
                                          refer to as the "expiration date." We
                                          do not currently intend to extend the
                                          expiration date. A tender of
                                          outstanding Notes pursuant to the
                                          exchange offer may be withdrawn at any
                                          time prior to the expiration date. Any
                                          outstanding Notes not accepted for
                                          exchange for any reason will be
                                          returned without expense to the
                                          tendering holder promptly after the
                                          expiration or termination of the
                                          exchange offer.

Certain Conditions to the Exchange
  Offer...............................    The exchange offer is subject to
                                          customary conditions, which we may
                                          waive. Please read the section of this
                                          prospectus captioned THE EXCHANGE
                                          OFFER - Certain Conditions to the
                                          Exchange Offer for more information
                                          regarding the conditions to the
                                          exchange offer.

Procedures for Tendering
  Outstanding Notes...................    If you wish to participate in the
                                          exchange offer, you must complete,
                                          sign and date the accompanying letter
                                          of transmittal, or a facsimile of the
                                          letter of transmittal according to the
                                          instructions contained in this
                                          prospectus and the letter of
                                          transmittal. You must also mail or
                                          otherwise deliver the letter of
                                          transmittal, or a facsimile of the
                                          letter of transmittal, together with
                                          the outstanding Notes and any other
                                          required documents, to the exchange
                                          agent at the address set forth on the
                                          cover page of the letter of
                                          transmittal. If you hold outstanding
                                          Notes through The Depository Trust
                                          Company, or DTC, and wish to
                                          participate in the exchange offer, you
                                          must comply with the Automated Tender
                                          Offer Program procedures of DTC, by
                                          which you will agree to be bound by
                                          the letter of transmittal. By signing,
                                          or agreeing to be bound by the letter
                                          of transmittal, you will represent to
                                          us that, among other things:

                                          -   any Exchange Notes that you
                                              receive will be acquired in the
                                              ordinary course of your business;

                                          -   you have no arrangement or
                                              understanding with any person or
                                              entity to participate in a
                                              distribution of the Exchange
                                              Notes;

                                          -   if you are a broker-dealer that
                                              will receive Exchange Notes for
                                              your own account in exchange for
                                              outstanding



                                       5

<PAGE>

                                              Notes that were acquired as a
                                              result of market-making
                                              activities, that you will deliver
                                              a prospectus, as required by law,
                                              in connection with any resale of
                                              such Exchange Notes; and

                                          -   you are not an "affiliate," as
                                              defined in Rule 405 of the
                                              Securities Act, of Texas North or,
                                              if you are an affiliate, you will
                                              comply with any applicable
                                              registration and prospectus
                                              delivery requirements of the
                                              Securities Act.

Special Procedures for
  Beneficial Owners...................    If you are a beneficial owner of
                                          outstanding Notes that are registered
                                          in the name of a broker, dealer,
                                          commercial bank, trust company or
                                          other nominee, and you wish to tender
                                          such outstanding Notes in the exchange
                                          offer, you should contact such
                                          registered holder promptly and
                                          instruct such registered holder to
                                          tender on your behalf. If you wish to
                                          tender on your own behalf, you must,
                                          prior to completing and executing the
                                          letter of transmittal and delivering
                                          your outstanding Notes, either make
                                          appropriate arrangements to register
                                          ownership of the outstanding Notes in
                                          your name or obtain a properly
                                          completed bond power from the
                                          registered holder. The transfer of
                                          registered ownership may take
                                          considerable time and may not be able
                                          to be completed prior to the
                                          expiration date.

Guaranteed Delivery Procedures........    If you wish to tender your outstanding
                                          Notes and (i) your outstanding Notes
                                          are not immediately available or (ii)
                                          you cannot deliver your outstanding
                                          Notes, the letter of transmittal or
                                          any other documents required by the
                                          letter of transmittal or (iii) you
                                          cannot comply with the applicable
                                          procedures under DTC's Automated
                                          Tender Offer Program prior to the
                                          expiration date, you must tender your
                                          outstanding Notes according to the
                                          guaranteed delivery procedures set
                                          forth in this prospectus under THE
                                          EXCHANGE OFFER - Guaranteed Delivery
                                          Procedures.

Effect on Holders of Outstanding
  Notes...............................    As a result of the making of, and upon
                                          acceptance for exchange of all validly
                                          tendered outstanding Notes pursuant to
                                          the terms of the exchange offer, we
                                          will have fulfilled a covenant
                                          contained in the Registration Rights
                                          Agreement and, accordingly, there will
                                          be no increase in the interest rate on
                                          the outstanding Notes under the
                                          circumstances described in the
                                          Registration Rights Agreement. If you
                                          are a holder of outstanding Notes and
                                          you do not tender your outstanding
                                          Notes in the exchange offer, you will
                                          continue to hold such outstanding
                                          Notes and you will be entitled to all
                                          the rights and limitations applicable
                                          to the outstanding Notes in the
                                          Indenture, except for any rights under
                                          the Indenture or the Registration
                                          Rights Agreement that by their terms
                                          terminate upon the consummation of the
                                          exchange offer.

                                          To the extent that outstanding Notes
                                          are tendered and accepted in the
                                          exchange offer, the trading market for
                                          outstanding Notes could be adversely
                                          affected.

Consequences of Failure to Exchange...    All untendered outstanding Notes will
                                          continue to be subject to the
                                          restrictions on transfer provided for
                                          in the outstanding



                                       6

<PAGE>

                                          Notes and in the Indenture. In
                                          general, the outstanding Notes may not
                                          be offered or sold, unless registered
                                          under the Securities Act, except
                                          pursuant to an exemption from, or in a
                                          transaction not subject to, the
                                          Securities Act and applicable state
                                          securities laws. We do not currently
                                          anticipate that we will register the
                                          outstanding Notes under the Securities
                                          Act.

Certain Income Tax Considerations.....    The exchange of outstanding Notes for
                                          Exchange Notes in the exchange offer
                                          will not be a taxable event for United
                                          States federal income tax purposes.
                                          See CERTAIN UNITED STATES FEDERAL
                                          INCOME TAX CONSIDERATIONS.

Use of Proceeds.......................    We will not receive any cash proceeds
                                          from the issuance of Exchange Notes
                                          pursuant to the exchange offer.

Exchange Agent........................    Bank One, N.A. is the exchange agent
                                          for the exchange offer. The address
                                          and telephone number of the exchange
                                          agent are set forth in the section of
                                          this prospectus captioned THE EXCHANGE
                                          OFFER - Exchange Agent.



                                       7

<PAGE>

                   SUMMARY OF THE TERMS OF THE EXCHANGE NOTES

Issuer..........................      AEP Texas North Company.

The Exchange Notes..............      $225,000,000 principal amount of 5.50%
                                      Senior Notes, Series B due 2013.

Maturity........................      March 1, 2013.

Interest Rate...................      5.50% per annum.

Interest Payment Dates..........      March 1 and September 1 of each year,
                                      beginning on March 1, 2004.

Legal Separation................      The State of Texas has enacted
                                      restructuring legislation which requires
                                      the legal separation of our
                                      generation-related assets
                                      (Generation-Related Business) from our
                                      electric transmission and
                                      distribution-related assets. The Exchange
                                      Notes will continue to be the obligations
                                      of Texas North even if our
                                      Generation-Related Business is transferred
                                      or sold, whether or not our
                                      Generation-Related Business constitutes
                                      "substantially all" of our total assets.
                                      See DESCRIPTION OF THE EXCHANGE NOTES -
                                      Consolidation, Merger or Sale.

Ranking.........................      The Exchange Notes are unsecured and will
                                      rank equally with all our unsecured and
                                      unsubordinated indebtedness and will be
                                      effectively subordinated to all of our
                                      secured debt, including approximately
                                      $88,000,000 of first mortgage bonds
                                      outstanding as of June 30, 2003.

Ratings.........................      The Exchange Notes are assigned a rating
                                      of Baa1 (stable outlook) by Moody's
                                      Investors Service, Inc. (Moody's), BBB
                                      (stable outlook) by Standard & Poor's
                                      Ratings Service (S&P) and A- (stable
                                      outlook) by Fitch Ratings, Inc. (Fitch).
                                      Ratings from credit agencies are not
                                      recommendations to buy, sell or hold our
                                      securities and may be subject to revision
                                      or withdrawal at any time by the rating
                                      agency and should be evaluated
                                      independently of any other ratings.

Optional Redemption.............      We may redeem the Exchange Notes at any
                                      time, in whole or in part, at a "make
                                      whole" redemption price equal to the
                                      greater of (1) the principal amount being
                                      redeemed or (2) the sum of the present
                                      values of the remaining scheduled payments
                                      of principal and interest on the Notes
                                      being redeemed, discounted to the
                                      redemption date on a semi-annual basis
                                      (assuming a 360-day year consisting of
                                      twelve 30-day months) at the Treasury Rate
                                      (as defined in DESCRIPTION OF THE EXCHANGE
                                      NOTES), plus 25 basis points plus accrued
                                      and unpaid interest to the redemption
                                      date.

Consolidation, Merger or Sale...      We may merge or consolidate with any
                                      corporation or sell all or substantially
                                      all of our assets as an entirety as long
                                      as the successor or purchaser expressly
                                      assumes the payment of principal, premium,
                                      if any, and interest on the Exchange
                                      Notes; provided, however, that if our
                                      Generation-Related Business is transferred
                                      or sold (whether or not the
                                      Generation-Related Business constitutes
                                      "substantially all" of our total assets),
                                      the Exchange Notes will continue to be the
                                      obligations of Texas North. See
                                      DESCRIPTION OF THE EXCHANGE NOTES -
                                      Consolidation, Merger or Sale.



                                       8

<PAGE>

Limitation on Secured Debt......      Subject to certain permitted issuances, so
                                      long as any of the Exchange Notes are
                                      outstanding, we will not create or permit
                                      to be created or to exist or permit any of
                                      our subsidiaries to create or to permit to
                                      exist any additional mortgage, pledge,
                                      security interest, or other lien on any
                                      utility properties or tangible assets now
                                      owned or hereafter acquired by us or our
                                      subsidiaries to secure any indebtedness
                                      for borrowed money, without providing that
                                      the outstanding Notes will be similarly
                                      secured. See DESCRIPTION OF THE EXCHANGE
                                      NOTES - Limitation on Secured Debt.

Use of Proceeds.................      There will be no cash proceeds to us from
                                      the exchange offer.

Form and Denomination...........      The Notes of each series will be issuable
                                      in denominations of $1,000 or any integral
                                      multiples of $1,000 in excess thereof.

Trustee.........................      Bank One, N.A.

Governing Law...................      The Indenture and the Notes will be
                                      governed by, and construed in accordance
                                      with, the laws of the State of New York.



        You should carefully consider the risk factors set forth under the
caption of this "Risk Factors" and the other information included in this
prospectus before tendering your outstanding Notes in the exchange offer.


                                       9

<PAGE>

                                  RISK FACTORS

        You should carefully consider the following factors and other
information contained in this prospectus before deciding to tender outstanding
Notes in the exchange offer. The risk factors set forth below are generally
applicable to the outstanding Notes as well as the Exchange Notes. Any of these
risks could materially adversely affect our business, financial condition and
results of operations, which could in turn materially adversely affect the price
of the bonds.

                       RISKS RELATED TO THE EXCHANGE OFFER

IF YOU CHOOSE NOT TO EXCHANGE YOUR OUTSTANDING NOTES, THE PRESENT TRANSFER
RESTRICTIONS WILL REMAIN IN FORCE AND THE MARKET PRICE OF YOUR OUTSTANDING NOTES
COULD DECLINE.

        If you do not exchange your outstanding Notes for Exchange Notes under
the exchange offer, then you will continue to be subject to the transfer
restrictions on the outstanding Notes as set forth in the offering memorandum
distributed in connection with the private offering of the outstanding Notes. In
general, the outstanding Notes may not be offered or sold unless they are
registered or exempt from registration under the Securities Act and applicable
state securities laws. Except as required by the Registration Rights Agreement,
we do not intend to register resales of the outstanding Notes under the
Securities Act. You should refer to PROSPECTUS SUMMARY - Summary of Terms of the
Exchange Offer and THE EXCHANGE OFFER for information about how to tender your
outstanding Notes.

        The tender of outstanding Notes under the exchange offer will reduce the
principal amount of the outstanding Notes outstanding, which may have an adverse
effect upon, and increase the volatility of, the market price of the outstanding
Notes due to a reduction in liquidity.

YOU MUST FOLLOW THE EXCHANGE OFFER PROCEDURES CAREFULLY IN ORDER TO RECEIVE THE
EXCHANGE NOTES.

        If you do not follow the procedures described herein, you will not
receive the Exchange Notes. The Exchange Notes will be issued to you in exchange
for your outstanding Notes only after timely receipt by the exchange agent of:

    -   a properly completed and executed letter of transmittal and all other
        required documents; or

    -   a book-entry delivery by electronic transmittal of an agent's message
        through DTC.

        If you want to tender your outstanding Notes in exchange for Exchange
Notes, you should allow sufficient time to ensure timely delivery. No one is
under any obligation to give you notification of defects or irregularities with
respect to tenders of outstanding Notes for exchange. For additional
information, please refer to the sections captioned THE EXCHANGE OFFER and PLAN
OF DISTRIBUTION in this prospectus.

         RISKS RELATED TO OUR REGULATED BUSINESS AND EVOLVING REGULATION

WE OPERATE IN A NON-UNIFORM AND FLUID REGULATORY ENVIRONMENT.

        The restructuring legislation of Texas required vertically integrated
utilities to legally separate their generation and retail-related assets from
their transmission and distribution related assets. Accordingly, we submitted a
the Business Separation Plan with the PUCT that was ultimately approved in
February 2002. We have received all necessary regulatory approvals with the
exception of the SEC, which is pending. The Business Separation Plan is based on
the regulatory framework as described under AEP Texas North COMPANY - Texas
Restructuring and assumes that deregulated generation will not be re-regulated.
There can be no assurance that Texas will not reverse such policies. In addition
to the multiple levels of regulation at the state level in which we operate, our
business is subject to extensive federal regulation. There can be no assurance
that recent federal legislative and regulatory initiatives which have generally
facilitated competition in the energy sector will continue or will not be
reversed. Further alteration of the regulatory landscape in which we operate
will impact the


                                       10

<PAGE>

effectiveness of the Business Separation Plan and may, because of the continued
uncertainty, harm our financial condition and results of operations.

THERE IS UNCERTAINTY AS TO OUR RECOVERY OF DEFERRED FUEL BALANCES.

        The PUCT review and reconciliation of retail fuel clause recovery was
eliminated in the ERCOT area of Texas effective January 1, 2002. On June 3, 2002
Texas North filed a final fuel reconciliation with the PUCT to reconcile its
fuel costs for the period July 1, 2000 through December 31, 2001. The ultimate
recovery of approved deferred fuel balances at December 31, 2001 established in
the final fuel reconciliation will be decided as part of PUCT-required true-up
proceeding in 2004 (the 2004 true-up proceeding). If recovery of any or all of
the final under-recovered fuel balances were disallowed, it would harm our
financial condition and diminish our results of operations. In March 2003, the
panel in this proceeding filed a Proposal for Decision (PFD). The PFD
recommended that Texas North's under-recovered retail fuel balance be reduced by
approximately $12.5 million. On May 22, 2003, the PUCT considered the PFD for
approval and issuance of a final order. The Commission upheld most of the
recommendations of the PFD, however, they did reverse the PFD on one issue that
would decrease the proposed reduction by approximately $2.3 million.
Additionally, the Commission ordered that two issues be remanded for further
consideration and withheld a final order pending the resolution of the remand
issues. A final order from the PUCT is now expected in the fourth quarter of
2003. Any under-recovery, plus interest thereon, can be recovered from customers
as a component of the 2004 true-up proceeding.

THE CORPORATE SEPARATION PLANS AEP HAS SUBMITTED TO COMPLY WITH THE TEXAS
UNBUNDLING LAWS MAY NOT BE APPROVED.

        Texas has enacted laws that generally require the legal separation of
previously vertically integrated electric utilities into non-regulated and
regulated components. AEP has filed requests with the FERC and SEC to complete
our corporate separation plan to separate our regulated and non-regulated
businesses. Significant portions of those requests incorporate the separation
plans which have been approved in Texas to bring us into compliance with the
restructuring law. Certain industrial and wholesale customers and state utility
commissions intervened to oppose our corporate separation filings at the FERC. A
settlement agreement was reached and approved by the FERC on September 26, 2002.
SEC approval, however, remains pending. In September 2002, the Arkansas Public
Service Commission intervened at the SEC, which may extend the length of time
needed for the SEC review. We can give no assurance that the SEC (i) will
approve AEP's restructuring application, or (ii) will not impose material
adverse terms as a condition to its approval of AEP's restructuring application.

WE ARE SUBJECT TO ADDITIONAL COSTS DUE TO TRANSMISSION CONGESTION THAT WE CAUSE.

        The ERCOT independent transmission operator imposes transmission
congestion charges when the scheduling of power from our facilities creates
congestion requiring the redispatch of scheduled power flows in ERCOT. Power
schedules are submitted to the ERCOT independent transmission operator on an
hourly basis. When power cannot be delivered as scheduled as a result of
congestion on the transmission network in ERCOT, ERCOT makes payments to
generators in ERCOT to either decrease generation or increase generation. The
resulting payments are assigned to the entities whose scheduled power flows
resulted in congestion on the transmission system. We are subject to financial
risk for the payment of transmission congestion charges imposed by ERCOT.

THE MERGER OF AEP WITH OUR PARENT, CENTRAL AND SOUTH WEST CORPORATION (CSW), MAY
ULTIMATELY BE FOUND TO VIOLATE THE 1935 ACT.

        AEP acquired CSW in a merger completed on June 15, 2000. Among the more
significant assets AEP acquired as a result of the merger were four additional
domestic electric utility companies, including Texas North. On January 18, 2002,
the U.S. Court of Appeals for the District of Columbia ruled that the SEC's June
14, 2000 order approving the merger failed to properly find that the merger
meets the requirements of the 1935 Act and sent the case back to the SEC for
further review. Specifically, the court told the SEC to revisit its conclusion
that the


                                       11

<PAGE>

merger met the 1935 Act requirement that the electric utilities be "physically
interconnected" and confined to a "single area or region."

        We believe that the merger meets the requirements of the 1935 Act and
expect the matter to be resolved favorably. We intend to fully cooperate with
the staff of the SEC in supplementing the record, if necessary, to ensure the
merger complies with the 1935 Act. We can give no assurance, however, that: (i)
the SEC or any applicable court review will find that the merger complies with
the 1935 Act, or (ii) the SEC or any applicable court review will not impose
material adverse conditions on us in order to find that the merger complies with
the 1935 Act. If the merger were ultimately found to violate the 1935 Act, it
may require remedial actions or asset divestitures which may harm our results of
operations or financial condition.

WE ARE OPERATING IN A NEW MARKET ENVIRONMENT WHICH IS CONTINUING TO CHANGE.

        The retail competitive electric market in Texas began in January 2002.
Texas North, the PUCT, ERCOT and other market participants have experienced
numerous operational problems as the new retail competitive market has started.
These difficulties include delays in the switching of some customers from one
REP to another and delays in billing customers. These difficulties create
uncertainty as to the amount of transmission and distribution charges owed by
each REP, which may cause payment of those amounts to be delayed. In addition,
the PUCT has revised rules governing the retail competitive market or is in the
process of reviewing competition rules that could impact our transmission and
distribution operations. To date these difficulties have not been material.
However, these operating difficulties could become material requiring structural
changes to address these difficulties which ultimately could harm our revenues
and results of operations.

          RISKS RELATED TO OUR TRANSMISSION AND DISTRIBUTION BUSINESSES

COLLECTION OF OUR REVENUES IS CONCENTRATED IN A LIMITED NUMBER OF REPS.

        Our revenues from the distribution of electricity are collected from
REPs that supply the electricity we distribute to their customers. Currently, we
do business with approximately 49 REPs. Adverse economic conditions, structural
problems in the new Texas market or financial difficulties of one or more REPs
could impair the ability of these REPs to pay for our services or could cause
them to delay such payments. We depend on these REPs for timely remittance of
payments. Any delay or default in payment could adversely affect the timing and
receipt of our cash flows and thereby have an adverse effect on our liquidity.
We anticipate that more than half of our revenues from REPs for 2002 will come
from Mutual Energy our formerly affiliated REP, that was sold to an affiliate of
Centrica in December 2002.

OUR HISTORICAL FINANCIAL RESULTS AS THE UNINCORPORATED ELECTRIC TRANSMISSION AND
DISTRIBUTION DIVISION OF TEXAS NORTH ARE NOT REPRESENTATIVE OF OUR EXPECTED
FUTURE RESULTS.

        We have limited experience operating as a transmission and distribution
utility in a deregulated electricity market in which we are subject to rate
regulation. The pro forma financial information we have included in this
prospectus does not necessarily reflect what our financial position, results of
operations and cash flows would have been had we been a separate transmission
and distribution subsidiary during the periods presented. Although our
transmission and distribution operations will have had a significant operating
history at the time of the transfer or sale of our generation assets, the pro
forma financial information relating to these operations reflects the
transmission and distribution of electricity as part of an integrated utility in
a regulated electricity market. We may experience significant changes in our
cost structure, funding and operations as a result of the transfer or sale of
our generation assets and/or operating on a legally separated basis, including
increased costs associated with reduced economies of scale.

REGULATION OF TRANSMISSION AND DISTRIBUTION RATES MAY DELAY OR DENY OUR FULL
RECOVERY OF OUR COSTS.

        Our rates are regulated by the PUCT and current approved rates are based
on expenses forecasted for 2002. Thus, the rates we are allowed to charge may or
may not match our expenses at any given time. While rate


                                       12

<PAGE>

regulation in Texas is premised on providing a reasonable opportunity to earn a
reasonable rate of return on invested capital and recovery of reasonable and
necessary operating expenses, there can be no assurance that the PUCT regulatory
process in which rates are determined will always result in rates that will
produce full recovery of our actual costs.

TRANSMISSION AND DISTRIBUTION REVENUES AND RESULTS OF OPERATIONS ARE SEASONAL.

        A portion of our revenues is derived from rates that we collect from
each REP based on the amount of electricity we distribute on behalf of each REP.
Thus, our revenues and results of operations are subject to seasonality, weather
conditions and other changes in electricity usage.

TRANSMISSION AND DISTRIBUTION REVENUES AND RESULTS OF OPERATIONS ARE SUBJECT TO
RISKS THAT ARE BEYOND OUR CONTROL.

        The cost of repairing damage to our facilities due to storms, natural
disasters, wars, terrorist acts and other catastrophic events, in excess of
reserves established for such repairs, may harm our revenues, operating and
capital expenses and results of operations.

TECHNOLOGICAL CHANGE MAY MAKE ALTERNATIVE ENERGY SOURCES MORE ATTRACTIVE AND MAY
ADVERSELY AFFECT OUR REVENUES AND RESULTS OF OPERATIONS.

        The continuous process of technological development may result in the
introduction to retail customers of economically attractive alternatives to
purchasing electricity through our distribution facilities. Manufacturers of
self-generation facilities continue to develop smaller-scale,
more-fuel-efficient generating units that can be cost-effective options for
retail customers with smaller electric energy requirements. Any reduction in the
amount of electric energy we distribute as a result of these technologies may
have an adverse impact on our results of operations and financial condition.

                    RISKS RELATED TO OUR GENERATION BUSINESS

        SB7 requires each Texas utility to submit a plan to legally separate its
business activities into a REP, a power generation company and a transmission
and distribution utility. Pursuant to SB7, Texas North filed the Business
Separation Plan with the PUCT which, after certain revisions, was approved by
the PUCT in February 2002. The Business Separation Plan will be implemented upon
final regulatory approval by the SEC which is currently pending. Upon such
approval and implementation of the Business Separation Plan, Texas North intends
to transfer its Generation-Related Business to an affiliate. The following risk
factors appearing under this subheading should be read in light of these
intentions.

WE MAY NOT BE ABLE TO RESPOND EFFECTIVELY TO COMPETITION.

        We may not be able to respond in a timely or effective manner to the
many changes in the power industry that may occur as a result of regulatory
initiatives to increase competition. These regulatory initiatives may include
changes in the structure of the deregulated electricity market in Texas. To the
extent that competition increases, our profit margins may be negatively
affected. Industry deregulation and privatization may not only continue to
facilitate the current trend toward consolidation in the utility industry but
may also encourage the disaggregation of other vertically integrated utilities
into separate generation, transmission and distribution businesses. As a result,
additional competitors in our industry may be created, and we may not be able to
maintain our revenues and earnings levels.

        While demand for power is generally increasing throughout the United
States, the rate of construction and development of new, more efficient electric
generation facilities has exceeded increases in demand in the ERCOT electric
market. The start-up of new facilities in the ERCOT market in which we have
facilities could increase competition in the wholesale power market in that
region, which could harm our business, results of operations and financial
condition. Texas North has placed five gas plants in long-term storage in
response to low market prices in


                                       13

<PAGE>

the ERCOT market. Three other gas plants are currently operating pursuant to
contracts with ERCOT that provide for the cost of operating those units. ERCOT
uses the generation from these contracts to maintain system reliability.
However, these contracts expire at the end of 2003 and may not be extended
depending on reliability assessment of the ERCOT independent system operator.

WE HAVE LIMITED ABILITY TO PASS ON TO OUR CUSTOMERS OUR COSTS OF PRODUCTION.

        We are exposed to risk from changes in the market prices of coal and
natural gas used to generate power where generation is no longer regulated.
Increases in environmental compliance costs and generating unit outage costs can
only be recovered through competitive market prices. To the extent that we
cannot raise our prices to cover increased costs, our financial condition and
results of operations may be harmed.

CHANGES IN TECHNOLOGY MAY SIGNIFICANTLY AFFECT OUR BUSINESS BY MAKING OUR POWER
PLANTS LESS COMPETITIVE.

        A key element of our business model is that generating power at central
power plants achieves economies of scale and produces power at relatively low
cost. There are other technologies that produce power, most notably fuel cells,
microturbines, windmills and photovoltaic (solar) cells. It is possible that
advances in technology will reduce the cost of alternative methods of producing
power to a level that is competitive with that of most central power station
electric production. If this were to happen and if these technologies achieved
economies of scale, our market share could be eroded, and the value of our power
plants could be reduced. Changes in technology could also alter the channels
through which retail electric customers buy power, thereby harming our results
or operation and financial condition.

CHANGES IN COMMODITY PRICES MAY INCREASE OUR COST OF PRODUCING POWER OR DECREASE
THE AMOUNT WE RECEIVE FROM SELLING POWER, HARMING OUR FINANCIAL PERFORMANCE.

        We are heavily exposed to changes in the price and availability of
natural gas because natural gas-fired facilities comprise approximately 72% of
our generating capacity, which increases our exposure to the more volatile
market prices of natural gas. Coal-fired generating facilities comprise
approximately 27% of our generating capacity increasing our exposure to changes
in coal prices.

        Changes in the cost of coal or natural gas and changes in the
relationship between those costs and the market prices of power will affect our
financial results. Since the price we obtain for electricity may not change at
the same rate as the change in coal or natural gas costs, we may be unable to
pass on the changes in costs to our customers.

        In addition, actual power prices and fuel costs will differ from those
assumed in financial projections used to initially value our trading and
marketing transactions, and those differences may be material. As a result, our
results of operation and financial condition may be harmed may be diminished in
the future as those transactions are marked to market.

AT TIMES, DEMAND FOR POWER COULD EXCEED OUR SUPPLY CAPACITY.

        We are currently obligated to supply power as a result of our contracts
with certain wholesale customers and with Mutual Energy. From time to time the
demand for power required to meet these obligations exceeds our available
generating capacity. When this occurs, we have to buy power on the market. Our
power supply contracts may not always have the ability to pass these costs on to
our customers. Since these situations most often occur during periods of peak
demand, it is possible that the market price for power at that time may be very
high. Utilities that do not own or purchase sufficient available capacity during
such periods incur losses in sourcing incremental power. Even if a supply
shortage was brief, we could suffer substantial losses that could diminish our
results of operations.


                                       14

<PAGE>

OUR COSTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS ARE SIGNIFICANT, AND THE COST OF
COMPLIANCE WITH FUTURE ENVIRONMENTAL LAWS COULD HARM OUR CASH FLOW AND
PROFITABILITY.

        Our operations are subject to extensive federal, state and local
environmental statutes, rules and regulations relating to air quality, water
quality, waste management, natural resources and health and safety. Compliance
with these legal requirements requires us to commit significant capital toward
environmental monitoring, installation of pollution control equipment, emission
fees and permits at all of our facilities. These expenditures have been
significant in the past and we expect that they will increase in the future.
Costs of compliance with environmental regulations could harm our industry, our
business and our results of operations and financial position, especially if
emission and/or discharge limits are tightened, more extensive permitting
requirements are imposed, additional substances become regulated and the number
and types of assets we operate increase.

        Many of our contracts with wholesale customers do not permit us to
recover additional capital and other costs incurred by us to comply with new
environmental regulations. Due to the deregulation of our generation, we cannot
recover through rates additional capital and other costs incurred by us to
comply with new environmental regulations with respect to our generation.

OUR OPERATING RESULTS MAY FLUCTUATE ON A SEASONAL AND QUARTERLY BASIS.

        Electric power generation is generally a seasonal business. The demand
for power in ERCOT peaks during the hot summer months, with market prices also
peaking at that time. As a result, our overall operating results in the future
may fluctuate substantially on a seasonal basis. The pattern of this fluctuation
may change depending on the nature and location of facilities and the terms of
power sale contracts we enter into. In addition, we have historically sold less
power, and consequently earned less income, when weather conditions are milder.
We expect that unusually mild weather in the future could diminish our results
of operations and harm our financial condition.

          RISKS RELATED TO OUR ENERGY TRADING AND WHOLESALE BUSINESSES

        In October 2002 AEP announced its plans to reduce the exposure to energy
trading markets of its subsidiaries that trade power (including us) and to
downsize the trading and wholesale marketing operations conducted on behalf of
such subsidiaries. It is expected that in the future our power trading and
marketing operations will be limited to risk management around our generation
assets and those of our regulated affiliates. Trading and marketing operations
that were not limited to risk management around such assets have contributed to
our wholesale revenues and earnings in the past. Management is unable to predict
the effect this downsizing of our trading operations will have on our future
results of operations and cash flows. The following risk factors appearing under
this subheading should be read in light of the recent announcements discussed in
this paragraph.

OUR REVENUES AND RESULTS OF OPERATIONS ARE SUBJECT TO MARKET RISKS THAT ARE
BEYOND OUR CONTROL.

        We sell power from our generation facilities into the spot market or
other competitive power markets or on a contractual basis. We also enter into
contracts to purchase and sell electricity, natural gas and coal as part of our
power marketing and energy trading operations. With respect to such
transactions, we are not guaranteed any rate of return on our capital
investments through mandated rates, and our revenues and results of operations
are likely to depend, in large part, upon prevailing market prices for power in
our regional market. These market prices may fluctuate substantially over
relatively short periods of time. It is reasonable to expect that trading
margins may erode as markets mature and that there may be diminished
opportunities for gain should volatility decline. In addition, the PUCT, which
has jurisdiction over the wholesale competitive power market in the ERCOT may
impose price limitations, bidding rules and other mechanisms to address some of
the volatility in these markets. Fuel prices may also be volatile, and the price
we can obtain for power sales may not change at the same rate as changes in fuel
costs. These factors could reduce our margins and therefore diminish our
revenues and results of operations.




                                       15

<PAGE>



        Volatility in market prices for fuel and power may result from:

        -       weather conditions;
        -       seasonality;
        -       power usage;
        -       illiquid markets;
        -       transmission or transportation constraints or
                inefficiencies;
        -       availability of competitively priced alternative energy
                sources;
        -       demand for energy commodities;
        -       natural gas, crude oil and refined products, and coal
                production levels;
        -       natural disasters, wars, embargoes and other
                catastrophic events; and
        -       federal, state and foreign energy and environmental
                regulation and legislation.

OUR ENERGY TRADING (INCLUDING FUEL PROCUREMENT AND POWER MARKETING) AND RISK
MANAGEMENT POLICIES CANNOT ELIMINATE THE RISK ASSOCIATED WITH THESE ACTIVITIES.

        Our energy trading (including fuel procurement and power marketing)
activities expose us to risks of commodity price movements. We attempt to manage
our exposure through enforcement of established risk limits and risk management
procedures. These risk limits and risk management procedures may not always be
followed or may not work as planned and cannot eliminate the risks associated
with these activities. As a result, we cannot predict the impact that our energy
trading and risk management decisions may have on our business, operating
results or financial position.

        We routinely have open trading positions in the market, within
established guidelines, resulting from the management of our trading portfolio.
To the extent open trading positions exist, fluctuating commodity prices can
improve or diminish our financial results and financial position.

        Our energy trading and risk management activities, including our power
sales agreements with counterparties, rely on projections that depend heavily on
judgments and assumptions by management of factors such as the future market
prices and demand for power and other energy-related commodities. These factors
become more difficult to predict and the calculations become less reliable the
further into the future these estimates are made. Even when our policies and
procedures are followed and decisions are made based on these estimates, results
of operations may be diminished if the judgments and assumptions underlying
those calculations prove to be wrong or inaccurate. Our policies and procedures
do not typically require us to hedge the multitude of new trading positions
taken daily in these activities.

OUR FINANCIAL PERFORMANCE MAY BE ADVERSELY AFFECTED IF WE ARE UNABLE TO
SUCCESSFULLY OPERATE OUR ELECTRIC GENERATING FACILITIES.

        Our performance depends on the successful operation of our electric
generating facilities. Operating electric generating facilities involves many
risks, including:

-       operator error and breakdown or failure of equipment or processes;

-       operating limitations that may be imposed by environmental or
        other regulatory requirements;

-       labor disputes;

-       fuel supply interruptions; and

-       catastrophic events such as fires, earthquakes, explosions, floods or
        other similar occurrences.

        A decrease or elimination of revenues from power produced by our
electric generating facilities or an increase in the cost of operating the
facilities would adversely affect our results of operations.


                                       16

<PAGE>

PARTIES WITH WHOM WE HAVE CONTRACTS MAY FAIL TO PERFORM THEIR OBLIGATIONS, WHICH
COULD HARM OUR RESULTS OF OPERATIONS.

        We are exposed to the risk that counterparties that owe us money or
energy will breach their obligations. Should the counterparties to these
arrangements fail to perform, we may be forced to enter into alternative hedging
arrangements or honor underlying commitments at then-current market prices that
may exceed our contractual prices, which would cause our financial results to be
diminished and we might incur losses. Although our estimates take into account
the expected probability of default by a counterparty, our actual exposure to a
default by a counterparty may be greater than the estimates predicted, resulting
in a negative impact on our financial performance.

WE DO NOT FULLY HEDGE AGAINST PRICE CHANGES IN COMMODITIES.

        We routinely enter into contracts to purchase and sell electricity,
natural gas and coal as part of our power marketing and energy trading
operations and to procure fuel. In connection with these trading activities, we
routinely enter into financial contracts, including futures and options,
over-the counter options, swaps and other derivative contracts. These activities
expose us to risks from price movements. If the values of the financial
contracts change in a manner we do not anticipate, it could harm our financial
position or reduce the financial contribution of our trading operations.

        We manage our exposure by establishing risk limits and entering into
contracts to offset some of our positions (i.e., to hedge our exposure to
demand, market effects of weather and other changes in commodity prices).
However, we do not always hedge the entire exposure of our operations from
commodity price volatility. To the extent we do not hedge against commodity
price volatility, our results of operations and financial position may be
improved or diminished based upon our success in the market.

WE ARE UNABLE TO PREDICT THE COURSE, RESULTS OR IMPACT, IF ANY, OF CURRENT OR
FUTURE ENERGY MARKET INVESTIGATIONS.

        In February 2002, the FERC issued an order directing its staff to
conduct a fact-finding investigation into whether any entity, including Enron
Corp., manipulated short-term prices in electric energy or natural gas markets
in the West or otherwise exercised undue influence over wholesale prices in the
West, for the period January 1, 2000, forward. In April 2002, AEP furnished
certain information to the FERC in response to their related data request.

        Pursuant to the FERC's February order, on May 8, 2002, the FERC issued
further data requests, including requests for admissions, with respect to
certain trading strategies engaged in by Enron Corp. and, allegedly, traders of
other companies active in the wholesale electricity and ancillary services
markets in the West, particularly California, during the years 2000 and 2001.
This data request was issued to AEP as part of a group of over 100 entities
designated by the FERC as all sellers of wholesale electricity and/or ancillary
services to the California Independent System Operator and/or the California
Power Exchange.

        The May 8, 2002 FERC data request required senior management to conduct
an investigation into AEP's trading activities during 2000 and 2001 and to
provide an affidavit as to whether AEP engaged in certain trading practices that
the FERC characterized in the data request as being potentially manipulative.
AEP's senior management complied with the order and denied its involvement with
those trading practices.

        On May 21, 2002, the FERC issued a further data request with respect to
this matter to AEP and over 100 other market participants requesting information
for the years 2000 and 2001 concerning "wash," "round trip" or "sale/buy back"
trading in the Western System Coordinating Council (WSCC), which involves the
sale of an electricity product to another company together with a simultaneous
purchase of the same product at the same price (collectively, wash sales).
Similarly, on May 22, 2002, the FERC issued an additional data request with
respect to this matter to AEP and other market participants requesting similar
information for the same period with respect to the sale of natural gas products
in the WSCC and Texas. After reviewing its records, AEP responded to the FERC
that it did not participate in any "wash sale" transactions involving power or
gas in the relevant market. AEP further


                                       17

<PAGE>

informed the FERC that certain of its traders did engage in trades on the
Intercontinental Exchange, an electronic electricity trading platform owned by a
group of electricity trading companies, including AEP, on September 21, 2001,
the day on which all brokerage commissions for trades on that exchange were
donated to charities for the victims of the September 11, 2001 terrorist
attacks, which do not meet the FERC criteria for a "wash sale" but do have
certain characteristics in common with such sales.

        The PUCT also issued similar data requests to us and other power
marketers. We responded to such data request by the July 2, 2002 response date.
The U.S. Commodity Futures Trading Commission (CFTC) issued a subpoena to us on
June 17, 2002 requesting information with respect to "wash sale" trading
practices. We responded to the CFTC.

        In August 2002, AEP received an informal data request from the SEC
asking it to voluntarily provide documents related to "round-trip" or "wash"
trades and AEP has provided the requested information to the SEC. In March 2003,
we received a subpoena from the SEC. The subpoena seeks additional information
and is part of the SEC's formal investigative process. We responded to the
subpoena in April 2003. AEP recently completed a review of its trading
activities in the United States for the last three years involving sequential
trades with the same terms and counterparties. The revenue from such trading is
not material to either our financial statements or AEP's. We believe that
substantially all these transactions involve economic substance and risk
transference and do not constitute "wash sales".

        Management is unable to predict the course or outcome of these or any
future energy market investigations or their impact, if any, on power commodity
trading generally or, more specifically, on our trading operations or future
results of operations and cash flows.

DIMINISHED LIQUIDITY IN THE WHOLESALE POWER MARKETS COULD NEGATIVELY IMPACT OUR
EARNINGS

        The Enron Corp. bankruptcy and enhanced regulatory scrutiny have
contributed to more rigorous credit rating review of wholesale power market
participants. Credit downgrades of numerous other market participants have
significantly reduced such participants' participation in the wholesale power
markets. Likewise, numerous market participants have announced material scaling
back of or exit from the wholesale power market business. These events are
causing a decrease in the number of significant participants in the wholesale
power markets, at least temporarily, which has resulted and could continue to
result in a decrease in the volume and liquidity in the wholesale power markets.
We are unable to predict the impact of such developments on our power marketing
and trading business.

UNCERTAINTY REGARDING FERC PROPOSED SECURITY STANDARDS

        In July 2002, the FERC published for comment its proposed security
standards as part of the Standards for Market Design (SMD). These standards are
intended to ensure all market participants have a basic security program that
effectively protects the electric grid and related market activities and require
compliance by January 1, 2004. The impact of these proposed standards is
far-reaching and has significant penalties for non-compliance. These standards
apply to marketers, transmission owners, and power producers, including us.
Compliance with these standards would represent a significant effort that will
impact us. Unless the cost can be recovered from customers, results of
operations and cash flows would be adversely affected.

                 RISKS RELATED TO MARKET OR ECONOMIC VOLATILITY

WE ARE SUBJECT TO RISKS ASSOCIATED WITH A CHANGING ECONOMIC ENVIRONMENT.

        In response to the occurrence of several recent events, including the
September 11, 2001 terrorist attack on the United States, the ongoing war
against terrorism by the United States, and the bankruptcy of Enron Corp., the
financial markets have been disrupted in general, and the availability and cost
of capital for our business and that of our competitors has been at least
temporarily harmed. In addition, following the bankruptcy of Enron Corp., the
credit ratings agencies initiated a thorough review of the capital structure and
earnings power of energy companies,


                                       18

<PAGE>

including us. These events could constrain the capital available to our industry
and could limit our access to funding for our operations. Our business is
capital intensive, and we are dependent upon our ability to access capital at
rates and on terms we determine to be attractive. If our ability to access
capital becomes significantly constrained, our interest costs will likely
increase and our financial condition and future results of operations could be
significantly harmed.

        The insurance industry has also been disrupted by these events. As a
result, the availability of insurance covering risks we and our competitors
typically insure against may decrease. In addition, the insurance we are able to
obtain may have higher deductibles, higher premiums and more restrictive policy
terms.

A DOWNGRADE IN OUR CREDIT RATING OR THAT OF AEP COULD NEGATIVELY AFFECT OUR
ABILITY TO ACCESS CAPITAL AND/OR TO OPERATE OUR POWER TRADING BUSINESSES.

        Standard & Poor's and Moody's rate our senior, unsecured debt at BBB and
Baa1, respectively. If Moody's or Standard & Poor's were to downgrade our
long-term rating, particularly below investment grade, our borrowing costs would
increase, which would diminish our financial results. In addition, we would
likely be required to pay a higher interest rate in future financings, and our
potential pool of investors and funding sources could decrease.

        On February 10, 2003, Moody's downgraded AEP's short-term debt rating to
P-3 (with stable outlook) from P-2. On March 7, 2003, Standard & Poor's affirmed
AEP's short-term rating of A-2 with stable outlook. As a result of the Moody's
downgrade, AEP's access to the commercial paper market may be limited and our
short-term debt borrowing costs may increase because we conduct our short-term
borrowing through AEP and on the same terms available to AEP.

        Our power trading business relies on the investment grade ratings of our
senior, unsecured debt. Most of our counterparties require the creditworthiness
of an investment grade entity to stand behind transactions. If our rating were
to decline below investment grade, our ability to profitably operate our power
trading business would be diminished, because we would likely have to deposit
cash or cash related instruments, which would reduce our profits.

                       RATIO OF EARNINGS TO FIXED CHARGES

        The Ratio of Earnings to Fixed Charges for each of the periods indicated
is as follows:

<Table>
<Caption>
               Twelve Months Period Ended                 Ratio
               --------------------------                 -----
<S>                                                      <C>
               December 31, 1998                           3.32
               December 31, 1999                           2.86
               December 31, 2000                           2.64
               December 31, 2001                           1.71
               December 31, 2002                          (0.17)
               March 31, 2003                              0.04
</Table>

        For purposes of computing this ratio (a) earnings consist of net income
before provision for income taxes and fixed charges and (b) fixed charges
consist of interest expense and amortization of debt expense. For the twelve
months period ended December 31, 2002 and March 31, 2003, the Ratio of Earnings
to Fixed Charges was deficient by $25,780,000 and $20,218,000, respectively.




                                       19

<PAGE>



                                 USE OF PROCEEDS

        The exchange offer is intended to satisfy our obligations under the
Registration Rights Agreement that we entered into in connection with the
private offering of the outstanding Notes. We will not receive any cash proceeds
from the issuance of the Exchange Notes in the exchange offer. In consideration
for issuing the Exchange Notes as contemplated in this prospectus, we will
receive in exchange a like principal amount of outstanding Notes, the terms of
which are identical in all material respects to the Exchange Notes. The
outstanding Notes surrendered in exchange for the Exchange Notes will be retired
and canceled and cannot be reissued. Accordingly, issuance of the Exchange Notes
will not result in any change in our capitalization.

        We received net proceeds of approximately $222 million from the offering
and sale of the outstanding Notes, after deducting discounts, commissions and
other expenses of the offering of the outstanding Notes payable by us.

        The net proceeds from the offering of the outstanding Notes were used
for general corporate purposes relating to our utility business, including the
repayment of advances from our affiliates. Such advances from our affiliates
were used by us to repurchase a portion of our debt. Our affiliates used a
significant portion of the earlier proceeds to repay a significant portion of
AEP's $1.725 billion corporate separation credit facility, of which $1.3 billion
was outstanding as of December 31, 2002.




                                       20

<PAGE>



                    SELECTED HISTORICAL FINANCIAL INFORMATION

        The following selected historical financial information for the years
ended December 31, 2002, 2001, 2000, 1999 and 1998 have been derived from the
audited financial statements of Texas North.

        You should read the following table in conjunction with our
"Management's Narrative Analysis of Results of Operations" and consolidated
financial statements and the related notes that are incorporated by reference in
this prospectus.


<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                         ------------------------------------------------------------------------
                                              2002           2001          2000           1999          1998
                                              ----           ----          ----           ----          ----
                                                                     (in thousands)
<S>                                         <C>             <C>             <C>           <C>           <C>
INCOME STATEMENTS DATA:
  Operating Revenues                           $450,740      $556,458       $571,064      $445,709      $424,953
  Operating Expenses                            442,869       523,068        518,723       391,910       365,677
                                              ----------     --------       --------      --------      --------
  Operating Income                                7,871        33,390         52,341        53,799        59,276
  Nonoperating Items, Net                          (703)        2,195         (1,675)        2,488         2,712
  Interest Charges                               20,845        23,275         23,216        24,420        24,263
                                              ----------     --------       --------      --------      --------
  Income (Loss) Before Extraordinary            
    Item                                        (13,677)       12,310         27,450        31,867        37,725  
  Extraordinary Loss                               -              -             -           (5,461)          -
                                              ----------     --------       --------      --------      --------
  Net Income (Loss)                             (13,677)       12,310         27,450        26,406        37,725
  Preferred Stock Dividend Requirements             104           104            104           104           104
                                              ----------     --------       --------      --------      --------
  Earnings (Loss) Applicable to
   Common Stock                                $(13,781)     $ 12,206       $ 27,346      $ 26,302      $ 37,621
                                              ==========     ========       ========      ========      ========

<Caption>
                                                                 Year Ended December 31,
                                         ------------------------------------------------------------------------
                                              2002           2001          2000           1999          1998
                                              ----           ----          ----           ----          ----
                                                                     (in thousands)
BALANCE SHEETS DATA:
<S>                                        <C>            <C>            <C>           <C>           <C>           
  Electric Utility Plant                     $1,201,747    $1,260,872     $1,229,339    $1,182,544    $1,146,582
  Accumulated Depreciation and
   Amortization                                 521,792       546,162        515,041       495,847       473,503
                                              ----------     --------       --------      --------      --------
  Net Electric Utility Plant                   $679,955      $714,710       $714,298      $686,697      $673,079
                                              ==========     ========       ========      ========      ========

  Total Assets                                 $877,175      $864,875     $1,087,504      $861,205      $819,446
                                              ==========     ========       ========      ========      ========

  Common Stock and Paid-in Capital             $139,565      $139,565       $139,565      $139,565      $139,565
  Accumulated Other Comprehensive
    Income (Loss)                              (30,763)             -              -             -             -
  Retained Earnings                              71,942       105,970        122,588       113,242       114,940
                                              ----------     --------       --------      --------      --------
  Total Common Shareholder's Equity            $180,744      $245,535       $262,153      $252,807      $254,505
                                              ==========     ========       ========      ========      ========

  Cumulative Preferred Stock:
   Not Subject to Mandatory Redemption          $ 2,367       $ 2,367        $ 2,367       $ 2,367       $ 2,368
                                              ==========     ========       ========      ========      ========
  Long-term Debt (a)                           $132,500      $255,967       $255,843      $303,686      $303,518
                                              ==========     ========       ========      ========      ========

  Total Capitalization and Liabilities         $877,175      $864,875     $1,087,504      $861,205      $819,446
                                              ==========     ========       ========      ========      ========

(a) Including portion due within one year.
</TABLE>






                                       21

<PAGE>



                        SELECTED PRO FORMA FINANCIAL DATA

        The following selected unaudited pro forma financial data gives effect
to the proposed legal separation of the Generation-Related Business from Texas
North and the transfer of such assets to another entity as if legal separation
had occurred at the beginning of each period presented. The following data
assumes the transfer of such assets would be accounted for based on their
historical costs. Texas North, after such legal separation, is called "Pro Forma
Texas North Wires" for purposes of the following pro forma financial data and
the notes thereto. The selected unaudited pro forma financial data is not
necessarily indicative of the actual operating outcomes that would have resulted
had the legal separation been consummated on the dates indicated and should not
be construed as necessarily indicative of future operating results or financial
position. Our financial results for the three months ended March 31, 2003 are
not necessarily indicative of the results that may be expected for an entire
year.

                             AEP TEXAS NORTH COMPANY
                     UNAUDITED PRO FORMA STATEMENT OF INCOME
                    FOR THE THREE MONTHS ENDED MARCH 31, 2003


<TABLE>
<CAPTION>
                                                                                    PRO FORMA
                                                                    PRO FORMA      TEXAS NORTH
                                                 HISTORICAL        ADJUSTMENT          WIRES
                                                -----------       ------------     ------------
                                                                  (in thousands)
<S>                                             <C>             <C>                 <C>
OPERATING REVENUES:
  Electric Generation......................      $   80,369       $  (80,369)(a)     $     -
  Electric Transmission and Distribution...          33,124          -       (a)         33,124
  Sales to AEP Affiliates..................           2,769              (44)(a)          2,725
                                                 ----------         --------             ------
   TOTAL OPERATING REVENUES...............          116,262          (80,413)            35,849
                                                 ----------         --------             ------

OPERATING EXPENSES:

  Fuel for Electric Generation.............          17,546          (17,546)(a)           -
  Purchased Electricity for Resale.........          24,778          (24,778)(a)           -
  Purchased Electricity from AEP Affiliates          19,345          (19,345)(a)           -
  Other Operation..........................          20,619           (5,549)(b)         15,070
  Maintenance..............................           4,141           (2,074)(b)          2,067
  Depreciation and Amortization............           9,532           (2,075)(c)          7,457
  Taxes Other Than Income Taxes............           6,033           (2,559)(d)          3,474
  Income Taxes.............................           4,403           (1,767)(e)          2,636
                                                  ----------       ----------         ----------
   TOTAL OPERATING EXPENSES...............          106,397          (75,693)            30,704
                                                  ----------       ----------         ----------

OPERATING INCOME...........................           9,865           (4,720)             5,145
                                                                      
NONOPERATING INCOME........................          13,463           (1,493)(f)         11,970
                                                                        
NONOPERATING EXPENSES......................          11,559             (378)(f)         11,181
                                                                        
NONOPERATING INCOME TAX EXPENSE (CREDIT)...             339             (167)(e)            172
                                                                      
INTEREST CHARGES...........................           4,665           (1,347)(g)          3,318
                                                  ----------       ----------         ----------
NET INCOME BEFORE CUMULATIVE EFFECT OF
  ACCOUNTING CHANGES.......................      $    6,765       $   (4,321)       $     2,444
                                                  =========        ==========         =========
</TABLE>


See accompanying notes.




                                       22

<PAGE>




                             AEP TEXAS NORTH COMPANY
                        UNAUDITED PRO FORMA BALANCE SHEET
                              AS OF MARCH 31, 2003

<TABLE>
<CAPTION>

                                                                                     PRO FORMA
                                                                   PRO FORMA        TEXAS NORTH
                                                 HISTORICAL        ADJUSTMENT          WIRES
                                                 ----------        ----------        ----------
                                                                 (in thousands)
<S>                                             <C>             <C>                 <C>

ASSETS
------
ELECTRIC UTILITY PLANT:
  Production...............................      $  354,117      $  (354,117)(h)      $     -
  Transmission.............................         255,343           (4,152)(i)        251,191
  Distribution.............................         446,150           -      (i)        446,150
  General..................................         109,200          (12,199)(j)         97,001
  Construction Work in Progress............          39,991           (5,755)(j)         34,236
                                                 ----------       ----------            -------
    Total Electric Utility Plant...........       1,204,801         (376,223)           828,578
  Accumulated Depreciation and
    Amortization...........................         518,631         (183,086)(k)        335,545
                                                 ----------       ----------            -------
  NET ELECTRIC UTILITY PLANT...............         686,170         (193,137)           493,033
                                                 ----------       ----------            -------

OTHER PROPERTY AND INVESTMENTS.............           1,065           (1,002)(l)             63
                                                 ----------       ----------            -------

LONG-TERM RISK MANAGEMENT ASSETS...........           4,433           (4,433)(h)            -
                                                 ----------       ----------            -------

CURRENT ASSETS:

  Cash and Cash Equivalents................           4,681              (41)(m)          4,640
  Advances to Affiliates...................           8,460           (8,460)(m)            -
  Accounts Receivable:
    Customers..............................          32,776          (13,355)(n)         19,421
    Affiliated Companies...................          37,796          (11,992)(n)         25,804
    Allowance for Uncollectible Accounts...          (4,728)            -    (n)        (4,728)
  Fuel Inventory...........................           8,916           (8,916)(h)           -
  Materials and Supplies...................          10,029           (5,508)(o)          4,521
  Accrued Utility Revenues.................           5,591             -    (q)          5,591
  Risk Management Assets...................           3,411           (3,411)(h)            -
  Prepayments and Other....................           1,198             (493)(p)            705
                                                 ----------       ----------            -------
    TOTAL CURRENT ASSETS...................         108,130          (52,176)            55,954
                                                 ----------       ----------            -------

REGULATORY ASSETS..........................          44,165           (4,888)(p)         39,277
                                                 ----------       ----------            -------

DEFERRED CHARGES...........................          27,481           (7,416)(r)         20,065
                                                 ----------       ----------            -------

    TOTAL ASSETS...........................      $  871,444      $  (263,052)        $  608,392
                                                 ==========       ==========            =======
</TABLE>


See accompanying notes.




                                       23

<PAGE>



                             AEP TEXAS NORTH COMPANY
                        UNAUDITED PRO FORMA BALANCE SHEET
                              AS OF MARCH 31, 2003


<TABLE>
<CAPTION>
                                                                                     PRO FORMA
                                                                    PRO FORMA       TEXAS NORTH
                                                  HISTORICAL       ADJUSTMENT          WIRES
                                                  ----------       ----------          -----
                                                                 (in thousands)
<S>                                              <C>            <C>                 <C>
CAPITALIZATION AND LIABILITIES
------------------------------
CAPITALIZATION:
  Common Stock - $25 Par Value:
     Authorized - 7,800,000 Shares
     Outstanding - 5,488,560 Shares........      $  137,214      $   (46,823)(m)     $   90,391
  Paid-in Capital..........................           2,351             (802)(m)          1,549
  Accumulated Other Comprehensive
    Income (Loss)..........................         (31,191)          11,426(t)        (19,765)
  Retained Earnings........................          76,782           (3,250)(s)         73,532
                                                 ----------         -----------      ----------
       Total Common Shareholder's Equity...         185,156          (39,449)           145,707
  Cumulative Preferred Stock Not Subject to
    Mandatory Redemption...................           2,367             (807)(m)          1,560
  Long-term Debt...........................         333,473         (104,167)(m)        229,306
                                                 ----------         -----------      ----------
        TOTAL CAPITALIZATION...............         520,996         (144,423)           376,573
                                                 ----------         -----------      ----------

OTHER NONCURRENT LIABILITIES...............          41,859          (23,918)(u)         17,941
                                                 ----------         -----------      ----------

CURRENT LIABILITIES:
  Long-term Debt Due Within One Year.......          24,036           (4,976)(m)         19,060
  Accounts Payable - General...............          17,297          (12,660)(n)          4,637
  Accounts Payable - Affiliated Companies..          37,152          (27,159)(n)          9,993
  Advances from Affiliates.................           -               27,829 (m)         27,829
  Customer Deposits........................             320             (320)(u)           -
  Taxes Accrued............................          25,425          (13,926)(v)         11,499
  Interest Accrued.........................           4,847           (1,430)(w)          3,417
  Risk Management Liabilities..............           4,761           (4,761)(h)            -
  Other....................................           8,237           (2,806)(v)          5,431
                                                 ----------         -----------      ----------
        TOTAL CURRENT LIABILITIES..........         122,075          (40,209)            81,866
                                                 ----------         -----------      ----------

DEFERRED INCOME TAXES......................         113,465          (45,350)(x)         68,115
                                                 ----------                          ----------
DEFERRED INVESTMENT TAX CREDITS............          21,130           (5,440)(x)         15,690
                                                 ----------                          ----------
LONG-TERM RISK MANAGEMENT LIABILITIES......           2,300           (2,300)(h)          -
                                                 ----------         -----------      ----------
REGULATORY LIABILITIES AND DEFERRED CREDITS          49,619           (1,412)(r)         48,207
                                                 ----------          -----------     ----------

      TOTAL CAPITALIZATION AND LIABILITIES       $  871,444         $  (263,052)     $  608,392
                                                 ==========         ===========      ==========
</TABLE>


See accompanying notes.




                                       24




<PAGE>

                             AEP TEXAS NORTH COMPANY
                     UNAUDITED PRO FORMA STATEMENT OF INCOME
                      FOR THE YEAR ENDED DECEMBER 31, 2002


<TABLE>
<CAPTION>
                                                                                     PRO FORMA
                                                                   Pro Forma        Texas North
                                                 HISTORICAL        ADJUSTMENT          WIRES
                                                 ----------       --------------    ----------
                                                                 (in thousands)
<S>                                              <C>              <C>               <C>
OPERATING REVENUES:
  Electric Generation......................      $  136,962       $ (136,962)(a)    $     -
  Electric Transmission and Distribution...          73,353           39,313 (a)       112,666
  Sales to AEP Affiliates..................         240,425         (181,467)(a)        58,958
                                                 ----------       ----------        ----------
    TOTAL OPERATING REVENUES...............         450,740         (279,116)          171,624
                                                 ----------       ----------        ----------
OPERATING EXPENSES:
  Fuel for Electric Generation.............         100,466         (100,466)(a)          -
  Purchased Electricity for Resale.........          80,391          (80,391)(a)          -
  Purchased Electricity from AEP Affiliates          37,582          (37,582)(a)          -
  Other Operation..........................         104,960          (29,328)(b)        75,632
  Asset Impairment.........................          42,898          (42,898)(a)          -
  Maintenance..............................          22,295          (12,776)(b)         9,519
  Depreciation and Amortization............          43,620          (12,460)(c)        31,160
  Taxes Other Than Income Taxes............          22,471           (8,743)(d)        13,728
  Income Tax Expense (Credit)..............         (11,814)          18,590 (e)         6,776
                                                 ----------       ----------        ----------
    TOTAL OPERATING EXPENSES...............         442,869         (306,054)          136,815
                                                 ----------       ----------        ----------

OPERATING INCOME...........................           7,871           26,938            34,809
NONOPERATING INCOME........................          53,763           (1,332)(f)        52,431

NONOPERATING EXPENSES......................          54,755            1,226 (f)        55,981

NONOPERATING INCOME TAX EXPENSE
   (CREDIT)................................            (289)            (837)(e)        (1,126)
INTEREST CHARGES...........................          20,845           (6,065)(g)        14,780
                                                 ----------       ----------        ----------
NET INCOME (LOSS)..........................      $  (13,677)      $   31,282        $   17,605
                                                 ==========       ==========        ==========
</TABLE>
 See accompanying notes.






                                       25

<PAGE>





                             AEP TEXAS NORTH COMPANY
                     UNAUDITED PRO FORMA STATEMENT OF INCOME
                      FOR THE YEAR ENDED DECEMBER 31, 2001


<TABLE>
<CAPTION>

                                                                                     PRO FORMA
                                                                    Pro Forma       TEXAS NORTH
                                                  HISTORICAL       ADJUSTMENT          WIRES
                                                  ----------      -----------       -----------       

                                                                 (in thousands)

<S>                                              <C>             <C>                <C>           
OPERATING REVENUES:
  Electricity Generation...................      $  368,741      $  (368,741)(a)    $       --
  Electricity Transmission and Distribution         169,036          (20,068)(a)       148,968
  Sales to AEP Affiliates..................          18,681          (11,236)(a)         7,445
                                                 ----------      -----------        ----------
      TOTAL OPERATING REVENUES.............         556,458         (400,045)          156,413
                                                 ----------      -----------        ----------
OPERATING EXPENSES:
  Fuel for Electric Generation.............         177,140         (177,140)(a)            --
  Purchased Electricity for Resale.........          70,395          (70,395)(a)            --
  Purchased Electricity from AEP Affiliates          56,656          (56,656)(a)            --
  Other Operation..........................         111,248          (27,338)(b)        83,910
  Maintenance..............................          22,343          (13,758)(b)         8,585
  Depreciation and Amortization............          50,705          (18,785)(c)        31,920
  Taxes Other Than Income Taxes............          28,319          (14,508)(d)        13,811
  Income Taxes.............................           6,262           (6,694)(e)          (432)
                                                 ----------       ----------        ----------
      TOTAL OPERATING EXPENSES.............         523,068         (385,274)         137,794
                                                 ----------       ----------        ----------

OPERATING INCOME...........................          33,390           (14,771)          18,619
NONOPERATING INCOME........................          12,199           (4,643)(f)         7,556
NONOPERATING EXPENSES......................          10,695           (1,422)(f)         9,273
NONOPERATING INCOME TAX EXPENSE
   (CREDIT)................................            (691)            (106)(e)          (797)
INTEREST CHARGES...........................          23,275           (6,440)(g)        16,835
                                                 ----------       ----------        ----------
NET INCOME.................................      $   12,310       $  (11,446)      $       864
                                                 ==========       ==========       ===========
</TABLE>
 
See accompanying notes.






                                       26

<PAGE>


                             AEP TEXAS NORTH COMPANY
                     UNAUDITED PRO FORMA STATEMENT OF INCOME
                      FOR THE YEAR ENDED DECEMBER 31, 2000


<TABLE>
<CAPTION>

                                                                    PRO FORMA        PRO FORMA
                                                                 ---------------    TEXAS NORTH
                                                  HISTORICAL       ADJUSTMENT          WIRES
                                                                 (in thousands)
<S>                                              <C>             <C>                <C>
OPERATING REVENUES:
  Electric Generation......................      $  376,206      $  (376,206)(a)    $       --
  Electric Transmission and Distribution...         176,204          (27,140)(a)       149,064
  Sales to AEP Affiliates..................          18,654           (6,658)(a)        11,996
                                                 ----------      -----------        ----------
      TOTAL OPERATING REVENUES.............         571,064         (410,004)          161,060
                                                 ----------      -----------        ----------

OPERATING EXPENSES:
  Fuel for Electric Generation.............         183,154         (183,154)(a)            --
  Purchased Electricity for Resale.........          68,080          (68,080)(a)            --
  Purchased Electricity from AEP Affiliates          57,773          (57,773)(a)            --
  Other Operation..........................          93,078          (25,088)(b)        67,990
  Maintenance..............................          21,241          (11,733)(b)         9,508
  Depreciation and Amortization............          55,172          (17,564)(c)        37,608
  Taxes Other Than Income Taxes............          25,321          (12,661)(d)        12,660
  Income Taxes.............................          14,904           (9,816)(e)         5,088
                                                 ----------       ----------        ----------
      TOTAL OPERATING EXPENSES.............         518,723          (385,869)         132,854
                                                 ----------       ----------        ----------

OPERATING INCOME...........................          52,341          (24,135)           28,206
NONOPERATING INCOME........................           9,530           (1,546)(f)         7,984
NONOPERATING EXPENSES......................          12,664           (1,298)(f)        11,366
NONOPERATING INCOME TAX EXPENSE (CREDIT)...          (1,459)             152 (e)        (1,307)
INTEREST CHARGES...........................          23,216           (6,535)(g)        16,681
                                                 ----------       ----------        ----------

NET INCOME.................................      $   27,450       $  (18,000)      $     9,450
                                                 ==========       ==========        ==========

</TABLE>

See accompanying notes



                                       27

<PAGE>



              NOTES TO UNAUDITED SELECTED PRO FORMA FINANCIAL DATA

(a)     Electric Generation, Fuel for Electric Generation, Purchased Electricity
        for Resale, Purchased Electricity from AEP Affiliates and Asset
        Impairment have been allocated 100% to the Generation-Related Business,
        as they pertain entirely to that business. Sales to AEP Affiliates which
        pertain to wholesale power sales either within the AEP Power Pool or
        directly to other AEP affiliates who are not pool participants and
        therefore, have been allocated 100% to the Generation-Related Business.
        These revenues and expenses have been eliminated from Pro Forma Texas
        North Wires. The descriptive names for these revenues and expenses were
        changed in the first quarter of 2003.

(b)     Other Operation and Maintenance expenses have been allocated to Pro
        Forma Texas North Wires based on specific identifiable expenses, number
        of employees or assets related to the transmission and distribution
        electric utility assets.

(c)     Depreciation and Amortization expenses have been allocated to Pro Forma
        Texas North Wires based on the respective transmission and distribution
        electric utility assets.

(d)     Taxes Other Than Income Taxes have been allocated to Pro Forma Texas
        North Wires based on number of employees, assets, or revenues related to
        the transmission and distribution electric utility assets.

(e)     Income Taxes and Nonoperating Income Tax Expense (Credit) have been
        allocated to Pro Forma Texas North Wires based on the related income and
        temporary differences.

(f)     Nonoperating Income and Nonoperating Expenses related to merchandising
        have been allocated 100% to Pro Forma Texas North Wires. No power
        trading gains or losses have been allocated to Pro Forma Texas North
        Wires. Allowance for funds used during construction has been allocated
        to Pro Forma Texas North Wire based on the related construction work in
        progress.

(g)     Interest Charges have been allocated to Pro Forma Texas North Wires
        based on the respective allocation of long term and short term debt.

(h)     Electric Utility Plant - Production, Fuel Inventory and Risk Management
        assets and liabilities have been allocated 100% to the
        Generation-Related Business as they pertain entirely to that business.
        These assets and liabilities have been eliminated from Pro Forma Texas
        North Wires.

(i)     Electric Utility Plant - Pro Forma Texas North Wires has been allocated
        100% of the transmission and distribution electric utility assets with
        the exception of the assets related to the generator step-up
        transformers and associated breakers, which relate to and have been
        allocated to the Generation Related Business.

(j)     Electric Utility Plant - General and Construction Work-in-Progress have
        been allocated to Pro Forma Texas North Wires based on the specific use
        of that plant, and the intended in service plant classification,
        respectively.

(k)     Accumulated Depreciation and Amortization has been allocated to Pro
        Forma Texas North Wires based on the respective transmission and
        distribution electric utility assets.

(l)     Other Property and Investments have been allocated to Pro Forma Texas
        North Wires based on the specific use of those investments.

(m)     Cash and Cash Equivalents, Advances to/from Affiliates, Common Stock,
        Paid-in Capital, Preferred Stock and Long-term debt have been allocated
        to Pro Forma Texas North Wires based on retaining the same debt to
        equity ratio that would be calculated on a consolidated basis.

(n)     Accounts Receivable and the related allowances have been allocated to
        Pro Forma Texas North Wires based on the specific identifiable accounts.
        Accounts Payable has been allocated to Pro Forma Texas North Wires based
        on specific identification or nature of the underlying liability. All
        receivables and corresponding allowances and payables that pertain to
        wholesale power sales or trading have been allocated 100% to the
        Generation-Related Business, and therefore, have been eliminated from
        Pro Forma Texas North Wires.


                                       28

<PAGE>


(o)     Materials and Supplies have been allocated based on specific
        identifiable assets of Pro Forma Texas North Wires.

(p)     Prepayments, Other Current Assets and Regulatory Assets have been
        allocated to Pro Forma Texas North Wires based on the specific nature of
        the underlying assets.

(q)     Accrued Utility Revenues are allocated 100% to Pro Forma Texas North 
        Wires.

(r)     Deferred Charges and Deferred Credits are items such as, deferred
        property taxes, customer advances and deferred revenues that are
        allocated to Pro Forma Texas North Wires based on specific
        identification, underlying assets, related revenues or number of
        employees, related to the transmission and distribution electric utility
        assets.

(s)     Retained Earnings has been allocated to Pro Forma Texas North Wires
        based on retaining the same debt to equity ratio that would be
        calculated on a combined basis.

(t)     Accumulated Other Comprehensive Income has been allocated to Pro Forma
        Texas North Wires based on the specific nature of the underlying
        components.

(u)     Other Noncurrent Liabilities and Customer Deposits have been allocated
        to Pro Forma Texas North Wires based on the nature of the liability,
        underlying assets, number of employees or specific identification.

(v)     Taxes Accrued and Other Liabilities have been allocated to Pro Forma
        Texas North Wires based on the nature of the liability, number of
        employees, underlying assets or related revenues related to the
        transmission and distribution electric utility assets.

(w)     Interest Accrued has been allocated to Pro Forma Texas North Wires based
        on the respective allocation of long term and short term debt.

(x)     Deferred Income Taxes and Deferred Investment Tax Credits have been
        allocated to Pro Forma Texas North Wires based on the temporary
        differences associated with Pro Forma Texas North Wires and the
        investment tax credits generated from transmission and distribution
        electric utility assets.



                                       29

<PAGE>



                             AEP TEXAS NORTH COMPANY

OVERVIEW

        AEP Texas North Company (Texas North), formerly West Texas Utilities
Company, is a wholly owned subsidiary of AEP engaged in the generation,
transmission and distribution of electricity in the western and central portion
of Texas in ERCOT and a very small area of Southwest Power Pool (SPP) located in
the northern portion of Texas North's service area (approximately 3% of Texas
North). The State of Texas has enacted electricity restructuring legislation,
SB7, which required the legal separation of generation and retail-related assets
from transmission and distribution assets. In May 2000, Texas North and certain
affiliates filed the Business Separation Plan with the PUCT, which, after
certain revisions, was subsequently approved by the PUCT and, unless revised by
Texas North, will be implemented upon final regulatory approval by the SEC,
which is currently pending. In accordance with the Business Separation Plan and
SB7, Mutual Energy was established prior to the start of retail competition in
January 2002 and was sold in December 2002.

        Currently, Texas North's operations are:

-       ELECTRIC DISTRIBUTION - Through REPs owned by third parties, Texas North
        provides distribution service to approximately 190,000 retail customers
        in west and central Texas, including the cities of Abilene and San
        Angelo. Texas North's service territory includes 44 counties and covers
        approximately 53,000 square miles. Distribution services are provided
        under tariffs approved by the PUCT.

-       ELECTRIC TRANSMISSION - Texas North's electric transmission business
        provides non-discriminatory wholesale open access transmission service
        in ERCOT. ERCOT is an independent system operator wholly within the
        State of Texas and subject to the jurisdiction of the PUCT. Texas North
        charges for the use of its transmission system to deliver power under
        tariffs approved by the FERC consistent with the transmission rules of
        the PUCT.

-       ELECTRIC GENERATION - Texas North owns 1,392 MW of generating capacity
        including 377 MW of coal-fired generation, 10 MW of diesel generation, 6
        MW of wind generation and 999 MW of natural gas-fired generation. Texas
        North's coal-fired generation assets are jointly owned with third
        parties. Texas North has placed five gas plants (390 MW) in long-term
        storage in response to low market prices in the ERCOT market. Three
        other gas plants are currently operating pursuant to contracts with
        ERCOT that provide for the cost of operating those units. ERCOT uses the
        generation from these contracts to maintain system reliability. However,
        these contracts expire at the end of 2003 and may not be extended
        depending on reliability assessment of the ERCOT independent system
        operator.

ERCOT MARKET FRAMEWORK

        Texas North is a member of ERCOT, which is an intrastate network of
retail customers, investor and municipally owned electric utilities, rural
electric cooperatives, river authorities, independent generators, power
marketers and REPs. ERCOT serves as the regional reliability coordinating
council for member electric power systems in Texas. ERCOT's control area
consists of the State of Texas other than a portion of the panhandle and a
portion of the eastern part of the state bordering Louisiana that are in the
SPP. The ERCOT independent system operator is responsible for maintaining
reliable operations of the bulk electric power supply system in the ERCOT
market. Its responsibilities include ensuring that information relating to a
customer's choice of REP is conveyed in a timely manner to anyone needing the
information. It is also responsible for ensuring that electricity production and
delivery are accurately accounted for among the generation resources and
wholesale buyers and sellers in the ERCOT market. Unlike independent systems
operators in other regions of the country, ERCOT is not a centrally dispatched
power pool, and the ERCOT independent system operator does not procure energy on
behalf of its members other than to maintain the reliable operations of the
transmission system. Members are responsible for contracting their energy
requirements bilaterally. ERCOT also serves as agent for procuring ancillary
services for those who elect not to provide their own ancillary service
requirement.

                                       30

<PAGE>


        The ERCOT market operates under the reliability standards set by the
NERC. The PUCT has primary jurisdiction over the ERCOT market to ensure the
adequacy and reliability of electricity across the state's main interconnected
power grid.

        Texas North's electric transmission business contributes financial
support to the operation of the ERCOT independent system operator and all ERCOT
members through the payment of fees and other expenses. The transmission
business has planning, design, construction, operation and maintenance
responsibility for its transmission grid and for its load serving substations.
The transmission business is participating with the ERCOT independent system
operator and other ERCOT utilities to plan, design, obtain regulatory approval
for and construct new transmission lines necessary to increase bulk power
transfer capability and to remove existing limitations on the ERCOT transmission
grid.

        Apart from various rural electric cooperatives and municipalities, there
are no other transmission and distribution utilities in Texas North's service
area. In order for another provider of transmission and distribution services to
provide such services in Texas North's territory, it would be required to obtain
a certificate of convenience and necessity in proceedings before the PUCT. As of
the date of this prospectus, no proceedings have been sought to grant such a
certificate, other than minor boundary changes that arise in the ordinary course
of business.

CUSTOMER BASE

        Texas North provides transmission and distribution and generation
services to municipalities, electric cooperatives, other distribution companies
and approximately 49 REPs, including Mutual Energy, in its certificated service
area. Texas North anticipates that more than half of its revenues from REPs for
2003 will come from Mutual Energy.

CAPITAL EXPENDITURES

        The following table shows our construction expenditures during 2000,
2001 and 2002 and current estimates of 2003 construction expenditures, in each
case including allowance for funds used during construction but excluding assets
acquired under leases.


<TABLE>
<CAPTION>
                                                  
                                                  2000         2001         2002        2003
                                                 ACTUAL       ACTUAL       ACTUAL     ESTIMATE
                                                 ------       ------       ------     --------         
                                                                 (IN MILLIONS)
<S>                                              <C>          <C>          <C>        <C>
Generation.................................       $  19        $   8        $   3       $   9
Transmission...............................          24           19           11          16
Distribution...............................          20           10           28          22
General....................................           2            3            1           0
                                                  -----        -----        -----       -----
    TOTAL..................................       $  65        $  40        $  43       $  47
                                                  =====        =====        =====       =====

</TABLE>


        Our construction program is reviewed continuously and is revised from
time to time in response to changes in estimates of customer demand, business
and economic conditions, the cost and availability of capital, environmental
requirements and other factors. Changes in construction schedules and costs, and
in estimates and projections of needs for additional facilities, as well as
variations from currently anticipated levels of net earnings, federal income and
other taxes, and other factors affecting cash requirements, may increase or
decrease the estimated capital requirements for our construction program.

REGULATION

        Texas North is subject to regulation by the SEC under the 1935 Act as a
utility owned by an electric holding company registered under the 1935 Act. The
1935 Act directs the SEC to regulate, among other things, issuances of
securities, sales or acquisitions of assets, intra-corporate transactions and
permitted lines of business.


                                       31

<PAGE>


        Texas North is subject to regulation by various federal, state and local
governmental agencies. Texas North's transmission and distribution rates and
services are regulated by the PUCT and the FERC. Texas North conducts its
operations pursuant to a certificate of convenience and necessity issued by the
PUCT that covers its present service area and facilities. Texas North holds
non-exclusive franchises from the incorporated municipalities in its service
territory. These franchises give it the right to operate its transmission and
distribution system within the streets and public ways of these municipalities
for the purpose of delivering electric service to the municipality and its
residents and businesses.

        Historically, Texas North paid the incorporated municipalities in its
service territory a franchise fee based on a formula that was usually a
percentage of revenues received from electricity sales for consumption within
each municipality. Since January 1, 2002, Texas North has paid franchise fees
based upon kilowatt-hour sales within the city limits of the incorporated
municipalities. Texas North expects the franchise fees payable to remain
consistent with the fees paid by it prior to January 1, 2002; however, the new
fees could be higher if electricity sales increase. Texas North will only be
able to adjust its rates to recover such an increase through a general rate case
in which all of its expenses and revenues would be subject to review by the
PUCT.

TEXAS RESTRUCTURING

        Signed into law in June of 1999, SB7 substantially amended the
regulatory structure governing electric utilities in Texas in order to allow
retail electric competition for all customers. SB7 gave Texas customers the
opportunity to choose their REP beginning January 1, 2002, provided a "price to
beat" for residential and small commercial customers and required each utility
to legally separate into a REP, a power generation company, and a transmission
and distribution utility. Under SB7, neither the power generation company nor
the REP is subject to traditional cost of service regulation. The transmission
and distribution utility remains subject to traditional utility rate regulation.

        Under SB7, a REP obtains its electricity from power generation
companies, exempt wholesale generators and other generating entities and
provides services at generally unregulated rates, except that the prices that
may be charged to residential and small commercial customers by REPs affiliated
with a utility within the affiliated utility's service area are set by the PUCT
until certain conditions in SB7 are met. This set price is referred to as the
"price to beat" rate (PTB).

        The PTB rate was required to be offered by an affiliate REP to all
residential and small commercial customers (with a peak usage of less than 1,000
KW) effective January 1, 2002. Centrica, as the purchaser of Mutual Energy, has
assumed responsibility for offering the PTB to residential and small commercial
customers in Texas North's ERCOT service territory. The initial PTB was a rate
6% below bundled rates in effect on January 1, 1999 adjusted for any changes in
fuel costs as of December 31, 2001. The PTB must be offered to residential and
small commercial customers until January 1, 2007. Customers with a peak usage of
more than 1,000 KW are not eligible for the PTB.

        While customer choice in the non-ERCOT portion of Texas has been delayed
either by legislative mandate or order of the PUCT, customer choice in ERCOT has
demonstrated some success. As of June 2003, well over 900,000 customers have
switched to competitive REPs. In the large commercial and industrial markets,
more than 50% of these customers are purchasing their power under a competitive
contract.

        In the Texas wholesale market, the current market rules continue to be
modified to enhance market liquidity and transparency, and prevent market
manipulation. One of the more significant issues, the direct assignment of
intra-zonal congestion costs has yet to be resolved. To address this issue, the
PUCT initiated a project to evaluate various alternatives including a change in
market design to focus on the levels of power moving through transmission
substations rather than the current model that focuses on the amount of
congestion between four zones. It is unclear what model the PUCT will adopt. The
PUCT has targeted 2006 as the date for implementation of a modified market
design.


                                       32

<PAGE>


TEXAS NORTH RESTRUCTURING

        SB7 required each Texas utility to submit a plan to legally separate its
business activities into a REP, a power generation company, and a transmission
and distribution utility. Pursuant to SB7, Texas North and certain affiliates
filed the Business Separation Plan in May 2000 that the PUCT approved in October
2001. In November 2001, Texas North and certain affiliates filed to update
portions of the Plan. The PUCT issued a final order approving the modified
Business Separation Plan in February 2002. The Business Separation Plan will be
implemented, unless revised by Texas North, upon final regulatory approval by
the SEC, which is currently pending. With respect to Texas North, the Business
Separation Plan provides for the legal transfer of Texas North's
generation-related assets to an affiliate, the formation of various REPs,
including Mutual Energy, and the establishment of Texas North as the
transmission and distribution utility.

        In October 2001 unbundled transmission and distribution rates were
approved for Texas North through the UCOS Proceeding. As part of the sale of
Mutual Energy to Centrica, Centrica assumed all of the rights and obligations of
an affiliated REP, including the provision of PTB service and the obligation to
provide data necessary for the 2004 true-up proceeding. Texas North has
contracted with Centrica to supply approximately 90% of Mutual Energy's power
requirements for a two year period at costs that are indexed in part to fuel
prices.

2004 TRUE-UP PROCEEDING

        Beginning as early as January 2004, the PUCT will conduct true-up
proceedings for each investor-owned utility, its affiliated REP and affiliated
power generation company. The purpose of the 2004 true-up proceeding is to (i)
quantify and reconcile the amount of stranded costs and generation-related
regulatory assets that have not been securitized; (ii) conduct a true-up of the
PUCT Excess Cost Over Market (ECOM) model for 2002 and 2003 to reflect market
prices determined in required capacity auctions; (iii) establish final fuel
recovery balances and; (iv) determine the PTB clawback component. The 2004
true-up proceeding will generally result in either additional charges or credits
to retail customers through transmission and distribution rates collected by
their REPs and remitted to the utility. Texas North has no stranded costs or any
other regulatory assets associated with the generating assets that will be
considered as part of the 2004 true-up proceeding.

        FUEL UNDER RECOVERY COMPONENT - The amount Texas North recovers in the
2004 true-up proceeding could be reduced by any disallowance of the final fuel
balance approved by the PUCT in the final fuel reconciliation filed on June 3,
2002. Our fuel reconciliation requests approval for $294 million in fuel costs
associated with serving customers for the period beginning July 1, 2000 and
ending December 31, 2001. Our fuel reconciliation filing also reflects a fuel
under-recovery balance, as of December 31, 2001, of $27.5 million, including
interest. In March 2003, the panel in this proceeding filed a Proposal for
Decision (PFD). The PFD recommended that Texas North's under-recovered retail
fuel balance be reduced by approximately $12.5 million. On May 22, 2003, the
PUCT considered the PFD for approval and issuance of a final order. The
Commission upheld most of the recommendations of the PFD, however, they did
reverse the PFD on one issue that would decrease the proposed reduction by
approximately $2.3 million. Additionally, the Commission ordered that two issues
be remanded for further consideration and withheld a final order pending the
resolution of the remand issues. A final order from the PUCT is now expected in
the fourth quarter of 2003. Any under-recovery, plus interest thereon, will be
recovered from customers as a component of the 2004 true-up proceeding.

        PRICE TO BEAT CLAWBACK COMPONENT - The amount Texas North recovers in
the 2004 true-up proceeding could be reduced (or the amount Texas North must
refund could be increased) by the PTB clawback component. If Mutual Energy
(which is no longer affiliated with Texas North) continues to serve 60% or more
of Texas North's PTB load by January 1, 2004 and the PTB (reduced by
non-bypassable wires charges) exceeds the market price of electricity, any
excess must be credited to customers of Texas North in the 2004 true-up
proceeding, by up to $150 per customer, subject to certain adjustments. SB7
provides that Mutual Energy effectively indemnifies Texas North for any PTB
clawback amounts assessed on Texas North. The Mutual Energy sale agreement
provides that Centrica (as purchaser of Mutual Energy WTU) and CSW (the
intermediate parent of Texas North, as seller of Mutual Energy WTU) will share
responsibility for this indemnity. Texas North has reflected on its books the
maximum liability that may come due under the PTB clawback.


                                       33

<PAGE>


RATES

        All REPs in Texas North's service area pay the same rates and other
charges for distribution services. Distribution rates are based on amounts of
energy demanded. All other distribution companies in ERCOT pay Texas North the
same rates and other charges for transmission services. Transmission rates are
based on amounts of energy transmitted under 'postage stamp' rates that do not
vary with the distance the energy is being transmitted.

        The distribution rates that are in effect as of January 1, 2002 are
based on an order issued by the PUCT resulting from the UCOS Proceeding. Texas
North filed for and received approval of wholesale transmission rates determined
in the UCOS Proceeding with the FERC. The UCOS Proceeding set the regulated
rates to be effective when electric competition began. This regulated delivery
charge includes the retail transmission and distribution charge, a system
benefit fund fee and a municipal franchise fee. The rulings of the PUCT in the
UCOS Proceeding related to a rate design issue were appealed to the Travis
County District Court by parties to this proceeding. The District Court upheld
the PUCT rulings and the parties filed an appeal in the Third Court of Appeals
which affirmed the PUCT. This ruling has been appealed to the Texas Supreme
Court.

                               THE EXCHANGE OFFER

GENERAL

        Texas North hereby offers, upon the terms and subject to the conditions
set forth in this prospectus and in the accompanying letters of transmittal
(which together constitute the exchange offer), to exchange up to $225 million
aggregate principal amount of our Notes for a like aggregate principal amount of
our Exchange Notes as properly tendered prior to the expiration date and not
withdrawn as permitted pursuant to the procedures described below. The exchange
offer is being made with respect to all of the outstanding Notes.

        As of the date of this prospectus, $225 million aggregate principal
amount of the Notes is outstanding. This prospectus, together with the letter of
transmittal, is first being sent on or about August 19, 2003, to all holders of
outstanding Notes known to Texas North. Texas North's obligation to accept
outstanding Notes for exchange pursuant to the exchange offer is subject to
certain conditions set forth under Certain Conditions to the Exchange Offer
below. Texas North currently expects that each of the conditions will be
satisfied and that no waivers will be necessary.

PURPOSE AND EFFECT OF THE EXCHANGE OFFER

        We have entered into a Registration Rights Agreement with the initial
purchasers of the outstanding Notes in which we agreed, under some
circumstances, to file a registration statement relating to an offer to exchange
the outstanding Notes for Exchange Notes. We also agreed to use our reasonable
best efforts to cause the exchange offer registration statement to become
effective under the Securities Act within 270 days after the closing date and
keep the exchange offer registration statement effective for not less than 30
calendar days (or longer if required by applicable law). The Exchange Notes will
have terms substantially identical to the outstanding Notes, except that the
Exchange Notes will not contain terms with respect to transfer restrictions,
certain registration rights and additional interest for failure to observe
certain obligations in the Registration Rights Agreement. The outstanding Notes
were issued on February 18, 2003.

        Under the circumstances set forth in the Registration Rights Agreement,
we will use our reasonable best efforts to cause the SEC to declare effective a
shelf registration statement with respect to the resale of the outstanding Notes
and keep the statement effective for up to the earliest of (i) two years from
the date the outstanding Notes were originally issued by us; (ii) the date on
which the outstanding Notes become eligible for resale without volume
limitations pursuant to Rule 144 under the Securities Act; or (iii) for such
shorter period that will terminate when all outstanding Notes covered by the
shelf registration statement have been sold pursuant to the shelf registration
statement or cease to be outstanding or otherwise to be outstanding Notes.

        If we fail to comply with certain obligations under the Registration
Rights Agreement, we will be required to pay additional interest to holders of
the outstanding Notes.


                                       34

<PAGE>


        Each holder of outstanding Notes that wishes to exchange outstanding
Notes for transferable Exchange Notes in the exchange offer will be required to
make the following representations:

-       any Exchange Notes will be acquired in the ordinary course of its
        business;

-       the holder will have no arrangements or understanding with any person to
        participate in the distribution of the outstanding Notes or the Exchange
        Notes within the meaning of the Securities Act;

-       the holder is not an "affiliate," as defined in Rule 405 of the
        Securities Act, of ours or if it is an affiliate, that it will comply
        with applicable registration and prospectus delivery requirements of the
        Securities Act to the extent applicable;

-       if the holder is not a broker-dealer, that it is not engaged in, and
        does not intend to engage in, the distribution of the Exchange Notes;
        and

-       if the holder is a broker-dealer, that it will receive Exchange Notes
        for its own account in exchange for outstanding Notes that were acquired
        as a result of market-making activities or other trading activities and
        that it will be required to acknowledge that it will deliver a
        prospectus in connection with any resale of the Exchange Notes. See PLAN
        OF DISTRIBUTION.


RESALE OF EXCHANGE NOTES

        Based on interpretations of the SEC staff set forth in no-action letters
issued to unrelated third parties, we believe that Exchange Notes issued under
the exchange offer in exchange for outstanding Notes may be offered for resale,
resold and otherwise transferred by any Exchange Noteholder without compliance
with the registration and prospectus delivery provisions of the Securities Act,
if:

-       the holder is not an "affiliate" of ours within the meaning of Rule 405
        under the Securities Act;

-       the Exchange Notes are acquired in the ordinary course of the holder's
        business; and

-       the holder does not intend to participate in the distribution of the
        Exchange Notes.


        Any holder who tenders in the exchange offer with the intention of
participating in any manner in a distribution of the Exchange Notes:

-       cannot rely on the position of the staff of the SEC enunciated in Exxon
        Capital Holdings Corporation or similar interpretive letters; and

-       must comply with the registration and prospectus delivery requirements
        of the Securities Act in connection with a secondary resale transaction.


        This prospectus may be used for an offer to resell, for the resale or
for other retransfer of Exchange Notes only as specifically set forth in this
prospectus. With regard to broker-dealers, only broker-dealers that acquired the
outstanding Notes as a result of market-making activities or other trading
activities may participate in the exchange offer. Each broker-dealer that
receives Exchange Notes for its own account in exchange for outstanding Notes,
where the outstanding Notes were acquired by the broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of the Exchange Notes.
Please read the section captioned PLAN OF DISTRIBUTION for more details
regarding the transfer of Exchange Notes.



                                       35

<PAGE>



TERMS OF THE EXCHANGE OFFER

        Upon the terms and subject to the conditions set forth in this
prospectus and in the accompanying letter of transmittal, we will accept for
exchange any outstanding Notes properly tendered and not withdrawn prior to the
expiration date. We will issue $1,000 principal amount of Exchange Notes in
exchange for each $1,000 principal amount of outstanding Notes surrendered under
the exchange offer. Outstanding Notes may be tendered only in integral multiples
of $1,000.

        The form and terms of the Exchange Notes will be substantially identical
to the form and terms of the outstanding Notes except the Exchange Notes will be
registered under the Securities Act, will not bear legends restricting their
transfer and will not provide for any additional amounts upon our failure to
fulfill certain of our obligations under the Registration Rights Agreement to
file, and cause to be effective, a registration statement. The Exchange Notes
will evidence the same debt as the outstanding Notes. The Exchange Notes will be
issued under and entitled to the benefits of the same Indenture that authorized
the issuance of the outstanding Notes.

        The exchange offer is not conditioned upon any minimum aggregate
principal amount of outstanding Notes being tendered for exchange.

        As of the date of this prospectus, $225 million aggregate principal
amount of the Notes. This prospectus and a letter of transmittal are being sent
to all registered holders of outstanding Notes. There will be no fixed record
date for determining registered holders of outstanding Notes entitled to
participate in the exchange offer.

        We intend to conduct the exchange offer in accordance with the
provisions of the exchange offer and Registration Rights Agreement, the
applicable requirements of the Securities Act and the Securities Exchange Act of
1934 and the rules and regulations of the SEC. Outstanding Notes that are not
tendered for exchange in the exchange offer will remain outstanding and continue
to accrue interest and will be entitled to the rights and benefits the holders
have under the Indenture relating to the outstanding Notes, except for any
rights under the Indenture or the Registration Rights Agreement that by their
terms terminate upon the consummation of the exchange offer.

        We will be deemed to have accepted for exchange properly tendered
outstanding Notes when we have given oral (promptly confirmed in writing) or
written notice of the acceptance to the exchange agent. The exchange agent will
act as agent for the tendering holders for the purposes of receiving the
Exchange Notes from us and delivering Exchange Notes to the holders. Under the
terms of the exchange offer and Registration Rights Agreement, we reserve the
right to amend or terminate the exchange offer, and not to accept for exchange
any outstanding Notes not previously accepted for exchange, upon the occurrence
of any of the conditions specified below under the caption Certain Conditions to
the Exchange Offer.

        Holders who tender outstanding Notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of
outstanding Notes. We will pay all charges and expenses, other than certain
applicable taxes described below, in connection with the exchange offer. It is
important that you read the section labeled Fees and Expenses below for more
details regarding fees and expenses incurred in the exchange offer.

EXPIRATION DATE; EXTENSIONS; AMENDMENTS

        The exchange offer will expire at 5:00 p.m., New York City time on
September 18, 2003, unless in our sole discretion we extend it.

        In order to extend the exchange offer, we will notify the exchange agent
orally (promptly confirmed in writing) or in writing of any extension. We will
notify the registered holders of outstanding Notes of the extension no later
than 9:00 a.m., New York City time, on the business day after the previously
scheduled expiration date.


                                       36

<PAGE>


        We reserve the right, in our sole discretion:

-       to delay accepting for exchange any outstanding Notes;

-       to extend the exchange offer or to terminate the exchange offer and to
        refuse to accept outstanding Notes not previously accepted if any of the
        conditions set forth below under Certain Conditions to the Exchange
        Offer have not been satisfied, by giving oral (promptly confirmed in
        writing) or written notice of the delay, extension or termination to the
        exchange agent; or

-       under the terms of the exchange offer and Registration Rights Agreement,
        to amend the terms of the exchange offer in any manner.

        Any delay in acceptance, extension, termination, or amendment will be
followed as promptly as practicable by oral or written notice to the registered
holders of outstanding Notes. If we amend the exchange offer in a manner that we
determine constitutes a material change, we will promptly disclose the amendment
in a manner reasonably calculated to inform the holder of outstanding Notes of
the amendment.

        Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, extension, termination or amendment of
the exchange offer, we will have no obligation to publish, advertise, or
otherwise communicate any public announcement, other than by making a timely
release to a financial news service.

CERTAIN CONDITIONS TO THE EXCHANGE OFFER

        Despite any other term of the exchange offer, we will not be required to
accept for exchange, or exchange any Exchange Notes for, any outstanding Notes,
and we may terminate the exchange offer as provided in this prospectus before
accepting any outstanding Notes for exchange if in our reasonable judgment:

-       the Exchange Notes to be received will not be tradable by the holder,
        without restriction under the Securities Act, the Securities Exchange
        Act and without material restrictions under the blue sky or securities
        laws of substantially all of the states of the United States;

-       the exchange offer, or the making of any exchange by a holder of
        outstanding Notes, would violate applicable law or any applicable
        interpretation of the staff of the SEC; or

-       any action or proceeding has been instituted or threatened in any court
        or by or before any governmental agency with respect to the exchange
        offer that, in our judgment, would reasonably be expected to impair our
        ability to proceed with the exchange offer.

        In addition, we will not be obligated to accept for exchange the
outstanding Notes of any holder that has not made to us:

-       the representations described under Purpose and Effect of the Exchange
        Offer, Procedures for Tendering and PLAN OF DISTRIBUTION; and

-       such other representations as may be reasonably necessary under
        applicable SEC rules, regulations or interpretations to make available
        to it an appropriate form for registration of the Exchange Notes under
        the Securities Act.

        We expressly reserve the right, at any time or at various times, to
extend the period of time during which the exchange offer is open. Consequently,
we may delay acceptance of any outstanding Notes by giving oral or written
notice of the extension to their holders. During any such extensions, all Notes
previously tendered will remain subject to the exchange offer, and we may accept
them for exchange. We will return any outstanding Notes that we do not accept
for exchange for any reason without expense to their tendering holder as
promptly as practicable after the expiration or termination of the exchange
offer.


                                       37

<PAGE>



        We expressly reserve the right to amend or terminate the exchange offer,
and to reject for exchange any outstanding Notes not previously accepted for
exchange, upon the occurrence of any of the conditions of the exchange offer
specified above. We will give oral or written notice of any extension,
amendment, nonacceptance, or termination to the holders of the outstanding Notes
as promptly as practicable.

        These conditions are for our sole benefit and we may assert them
regardless of the circumstances that may give rise to them or waive them in
whole or in part at any or at various times in our sole discretion. If we fail
at any time to exercise any of the foregoing rights, this failure will not
constitute a waiver of this right. Each right will be deemed an ongoing right
that we may assert at any time or at various times.

        In addition, we will not accept for exchange any outstanding Notes
tendered, and will not issue Exchange Notes in exchange for any outstanding
Notes, if at the time any stop order will be threatened or in effect with
respect to the registration statement of which this prospectus constitutes a
part or the qualification of the Indenture under the Trust Indenture Act.

PROCEDURES FOR TENDERING

        Only a holder of outstanding Notes may tender the outstanding Notes in
the exchange offer. To tender in the exchange offer, a holder must:

-       complete, sign and date the accompanying letter of transmittal, or a
        facsimile of the letter of transmittal; have the signature on the letter
        of transmittal guaranteed if the letter of transmittal so requires; and
        mail or deliver the letter of transmittal or facsimile to the exchange
        agent prior to the expiration date; or

-       comply with DTC's Automated Tender Offer Program procedures described
        below.

    In addition, either:

-       the exchange agent must receive the outstanding Notes along with the
        accompanying letter of transmittal;

-       the exchange agent must receive, prior to the expiration date, a timely
        confirmation of book-entry transfer of the outstanding Notes into the
        exchange agent's account at DTC according to the procedures for
        book-entry transfer described below and a properly transmitted agent's
        message; or

-       the holder must comply with the guaranteed delivery procedures described
        below.

        To be tendered effectively, the exchange agent must receive any physical
delivery of a letter of transmittal and other required documents at the address
set forth below under Exchange Agent prior to the expiration date.

        The tender by a holder that is not withdrawn prior to the expiration
date will constitute an agreement between the holder and us in accordance with
the terms and subject to the conditions set forth in this prospectus and in the
accompanying letter of transmittal.

        The method of delivery of outstanding Notes, the letter of transmittal
and all other required documents to the exchange agent is at the holder's
election and risk. Rather than mail these items, we recommend that holders use
an overnight or hand delivery service. In all cases, holders should allow
sufficient time to assure delivery to the exchange agent before the expiration
date. Holders should not send the letter of transmittal or outstanding Notes to
us. Holders may request their respective brokers, dealers, commercial banks,
trust companies or other nominees to effect the above transactions for them.

        Any beneficial owner whose outstanding Notes are registered in the name
of a broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender should contact the registered holder promptly and instruct it
to tender on the owner's behalf. If the beneficial owner wishes to tender on its
own behalf, it must, prior to completing and executing the accompanying letter
of transmittal and delivering its outstanding Notes either:

-       make appropriate arrangements to register ownership of the outstanding
        Notes in such owner's name; or

-       obtain a properly completed bond power from the registered holder of
        outstanding Notes.


                                       38

<PAGE>


        The transfer of registered ownership may take considerable time and may
not be completed prior to the expiration date.

        Signatures on a letter of transmittal or a notice of withdrawal
described below must be guaranteed by a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or another "eligible guarantor institution" within the meaning of
Rule 17Ad-15 under the Exchange Act, unless the outstanding Notes are tendered:

-       by a registered holder who has not completed the box entitled "Special
        Issuance Instructions" or "Special Delivery Instructions" on the
        accompanying letter of transmittal; or

-       for the account of an eligible guarantor institution.

        If the accompanying letter of transmittal is signed by a person other
than the registered holder of any outstanding Notes listed on the outstanding
Notes, the outstanding Notes must be endorsed or accompanied by a properly
completed bond power. The bond power must be signed by the registered holder as
the registered holder's name appears on the outstanding Notes and an eligible
guarantor institution must guarantee the signature on the bond power.

        If the accompanying letter of transmittal or any outstanding Notes or
bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, these persons should so indicate when signing. Unless
waived by us, they should also submit evidence satisfactory to us of their
authority to deliver the accompanying letter of transmittal.

        The exchange agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may use DTC's Automated Tender Offer
Program to tender. Participants in the program may, instead of physically
completing and signing the accompanying letter of transmittal and delivering it
to the exchange agent, transmit their acceptance of the exchange offer
electronically. They may do so by causing DTC to transfer the outstanding Notes
to the exchange agent in accordance with its procedures for transfer. DTC will
then send an agent's message to the exchange agent. The term "agent's message"
means a message transmitted by DTC, received by the exchange agent and forming
part of the book-entry confirmation, to the effect that:

-       DTC has received an express acknowledgment from a participant in its
        Automated Tender Offer Program that is tendering outstanding Notes that
        are the subject of the book-entry confirmation;

-       the participant has received and agrees to be bound by the terms of the
        accompanying letter of transmittal, or, in the case of an agent's
        message relating to guaranteed delivery, that the participant has
        received and agrees to be bound by the applicable notice of guaranteed
        delivery; and

-       the agreement may be enforced against that participant.

        We will determine in our sole discretion all outstanding questions as to
the validity, form, eligibility, including time of receipt, acceptance of
tendered outstanding Notes and withdrawal of tendered outstanding Notes. Our
determination will be final and binding. We reserve the absolute right to reject
any outstanding Notes not properly tendered or any outstanding Notes the
acceptance of which would, in the opinion of our counsel, be unlawful. We also
reserve the right to waive any defects, irregularities or conditions of tender
as to particular outstanding Notes. Our interpretation of the terms and
conditions of the exchange offer, including the instructions in the accompanying
letter of transmittal, will be final and binding on all parties. Unless waived,
any defects or irregularities in connection with tenders of outstanding Notes
must be cured within such time as we will determine. Although we intend to
notify holders of defects or irregularities with respect to tenders of
outstanding Notes, neither we, the exchange agent nor any other person will
incur any liability for failure to give the notification. Tenders of outstanding
Notes will not be deemed made until any defects or irregularities have been
cured or waived. Any outstanding Notes received by the exchange agent that are
not properly tendered and as to which the defects or irregularities have not
been cured or waived will be returned by the exchange agent without cost to the
tendering holder, unless otherwise provided in the letter of transmittal, as
soon as practicable following the expiration date.


                                       39

<PAGE>

        In all cases, we will issue Exchange Notes for outstanding Notes that we
have accepted for exchange under the exchange offer only after the exchange
agent timely receives:

-       outstanding Notes or a timely book-entry confirmation of the outstanding
        Notes into the exchange agent's account at DTC; and

-       a properly completed and duly executed letter of transmittal and all
        other required documents or a properly transmitted agent's message.

        By signing the accompanying letter of transmittal or authorizing the
transmission of the agent's message, each tendering holder of outstanding Notes
will represent or be deemed to have represented to us that, among other things:

-       any Exchange Notes that the holder receives will be acquired in the
        ordinary course of its business;

-       the holder has no arrangement or understanding with any person or entity
        to participate in the distribution of the Exchange Notes;

-       if the holder is not a broker-dealer, that it is not engaged in and does
        not intend to engage in the distribution of the Exchange Notes;

-       if the holder is a broker-dealer that will receive Exchange Notes for
        its own account in exchange for outstanding Notes that were acquired as
        a result of market-making activities or other trading activities, that
        it will deliver a prospectus, as required by law, in connection with any
        resale of any Exchange Notes. See PLAN OF DISTRIBUTION; and

-       the holder is not an "affiliate," as defined in Rule 405 of the
        Securities Act, of ours or, if the holder is an affiliate, it will
        comply with any applicable registration and prospectus delivery
        requirements of the Securities Act.

BOOK-ENTRY TRANSFER

        The exchange agent will make a request to establish an account with
respect to the outstanding Notes at DTC for purposes of the exchange offer
promptly after the date of this prospectus. Any financial institution
participating in DTC's system may make book-entry delivery of outstanding Notes
by causing DTC to transfer the outstanding Notes into the exchange agent's
account at DTC in accordance with DTC's procedures for transfer. Holders of
outstanding Notes who are unable to deliver confirmation of the book-entry
tender of their outstanding Notes into the exchange agent's account at DTC or
all other documents required by the letter of transmittal to the exchange agent
prior to the expiration date must tender their outstanding Notes according to
the guaranteed delivery procedures described below.

GUARANTEED DELIVERY PROCEDURES

        Holders wishing to tender their outstanding Notes but whose outstanding
Notes are not immediately available or who cannot deliver their outstanding
Notes, the accompanying letter of transmittal or any other required documents to
the exchange agent or comply with the applicable procedures under DTC's
Automated Tender Offer Program prior to the expiration date may tender if:

-       the tender is made through an eligible guarantor institution;

-       prior to the expiration date, the exchange agent receives from the
        eligible guarantor institution either a properly completed and duly
        executed notice of guaranteed delivery, by facsimile transmission, mail
        or hand delivery, or a properly transmitted agent's message relating to
        guaranteed delivery:

        1.      setting forth the name and address of the holder, the registered
                number(s) of the outstanding Notes and the principal amount of
                outstanding Notes tendered;

        2.      stating that the tender is being made thereby; and


                                       40

<PAGE>


        3.      guaranteeing that, within three New York Stock Exchange trading
                days after the expiration date, the accompanying letter of
                transmittal, or facsimile thereof, together with the outstanding
                Notes or a book-entry confirmation, and any other documents
                required by the accompanying letter of transmittal will be
                deposited by the eligible guarantor institution with the
                exchange agent; and

-       the exchange agent receives the properly completed and executed letter
        of transmittal, or facsimile thereof, as well as all tendered
        outstanding Notes in proper form for transfer or a book-entry
        confirmation, and all other documents required by the accompanying
        letter of transmittal, within three New York Stock Exchange trading days
        after the expiration date.

        Upon request to the exchange agent, a notice of guaranteed delivery will
be sent to holders who wish to tender their outstanding Notes according to the
guaranteed delivery procedures set forth above.

WITHDRAWAL OF TENDERS

        Except as otherwise provided in this prospectus, holders of outstanding
Notes may withdraw their tenders at any time prior to the expiration date.

        For a withdrawal to be effective:

-       the exchange agent must receive a written notice of withdrawal, which
        notice may be by telegram, telex, facsimile transmission or letter of
        withdrawal at the address set forth below under Exchange Agent, or

-       holders must comply with the appropriate procedures of DTC's Automated
        Tender Offer Program system.

        Any notice of withdrawal must:

-       specify the name of the person who tendered the outstanding Notes to be
        withdrawn;

-       identify the outstanding Notes to be withdrawn, including the principal
        amount of the outstanding Notes; and

-       where certificates for outstanding Notes have been transmitted, specify
        the name in which the outstanding Notes were registered, if different
        from that of the withdrawing holder.


        If certificates for outstanding Notes have been delivered or otherwise
identified to the exchange agent, then, prior to the release of the
certificates, the withdrawing holder must also submit:

-       the serial numbers of the particular certificates to be withdrawn; and

-       a signed notice of withdrawal with signatures guaranteed by an eligible
        guarantor institution unless the holder is an eligible guarantor
        institution.


        If outstanding Notes have been tendered pursuant to the procedure for
book-entry transfer described above, any notice of withdrawal must specify the
name and number of the account at DTC to be credited with the withdrawn
outstanding Notes and otherwise comply with the procedures of that facility. We
will determine all questions as to the validity, form and eligibility, including
time of receipt, of the notices, and our determination will be final and binding
on all parties. We will deem any outstanding Notes so withdrawn not to have been
validly tendered for exchange for purposes of the exchange offer. Any
outstanding Notes that have been tendered for exchange but that are not
exchanged for any reason will be returned to their holder without cost to the
holder, or, in the case of outstanding Notes tendered by book-entry transfer
into the exchange agent's account at DTC according to the procedures described
above, the outstanding Notes will be credited to an account maintained with DTC
for outstanding Notes, as soon as practicable after withdrawal, rejection of
tender or termination of the exchange offer. Properly withdrawn, outstanding
Notes may be retendered by following one of the procedures described under
Procedures for Tendering above at any time prior to the expiration date.



                                       41

<PAGE>


EXCHANGE AGENT

        Bank One, N.A. has been appointed as exchange agent for the exchange
offer. You should direct questions and requests for assistance, requests for
additional copies of this prospectus or for the letter of transmittal and
requests for the notice of guaranteed delivery to the exchange agent as follows:


<TABLE>
<CAPTION>
                                                                 
<S>                                <C>                           <C>
BY OVERNIGHT COURIER OR HAND:      BY REGULAR, REGISTERED OR     BY FACSIMILE TRANSMISSION
Bank One, N.A.                     CERTIFIED MAIL:               (FOR ELIGIBLE GUARANTOR
1111 Polaris Parkway               Bank One, N.A.                INSTITUTIONS ONLY):
Suite 1N                           P.O. Box 710184               (614) 248-9987, Attention:
Columbus, OH 43240                 Columbus, OH  43240-0184         Corporate Trust Operations
Attention:  Corporate Trust        Attention:  Corporate Trust      Exchange Unit
Operations Exchange Unit           Operations Exchange Unit      TO CONFIRM BY TELEPHONE:
                                                                 (800) 346-5153, Corporate
                                                                 Trust Operations Exchange Unit

</TABLE>



DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY OF THE LETTER OF TRANSMITTAL.

FEES AND EXPENSES

        We will bear the expenses of soliciting tenders. The principal
solicitation is being made by mail; however, we may make additional
solicitations by telephone or in person by our officers and regular employees
and those of our affiliates.

        We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to broker-dealers or others soliciting
acceptance of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and reimburse it for its related
reasonable out-of-pocket expenses.

        We will pay the cash expenses to be incurred in connection with the
exchange offer. The expenses are estimated in the aggregate to be approximately
$297,000. They include:

-       SEC registration fees;

-       fees and expenses of the exchange agent and Trustee;

-       accounting and legal fees and printing costs; and

-       related fees and expenses.


TRANSFER TAXES

        We will pay all transfer taxes, if any, applicable to the exchange of
outstanding Notes under the exchange offer. The tendering holder, however, will
be required to pay any transfer taxes, whether imposed on the registered holder
or any other person, if:

-       certificates representing outstanding Notes for principal amounts not
        tendered or accepted for exchange are to be delivered to, or are to be
        issued in the name of, any person other than the registered holder of
        outstanding Notes tendered;

-       tendered outstanding Notes are registered in the name of any person
        other than the person signing the letter of transmittal; or

-       a transfer tax is imposed for any reason other than the exchange of
        outstanding Notes under the exchange offer.


                                       42

<PAGE>

        If satisfactory evidence of payment of the taxes is not submitted with
the letter of transmittal, the amount of the transfer taxes will be billed to
that tendering holder.

        Holders who tender their outstanding Notes for exchange will not be
required to pay any transfer taxes. However, holders who instruct us to register
Exchange Notes in the name of, or request that outstanding Notes not tendered or
not accepted in the exchange offer be returned to, a person other than the
registered tendering holder will be required to pay any applicable transfer tax.

CONSEQUENCES OF FAILURE TO EXCHANGE

        Holders of outstanding Notes who do not exchange their outstanding Notes
for Exchange Notes under the exchange offer will remain subject to the
restrictions on transfer of the outstanding Notes:

-       as set forth in the legend printed on the outstanding Notes as a
        consequence of the issuance of the outstanding Notes under the exemption
        from, or in transactions not subject to, the registration requirements
        of the Securities Act and applicable state securities laws; and

-       otherwise as set forth in the offering memorandum distributed in
        connection with the private offering of the outstanding Notes.

        In general, you may not offer or sell the outstanding Notes unless they
are registered under the Securities Act, or if the offer or sale is exempt from
registration under the Securities Act and applicable state securities laws.
Except as required by the Registration Rights Agreement, we do not intend to
register resales of the outstanding Notes under the Securities Act. Based on
interpretations of the SEC staff, Exchange Notes issued under the exchange offer
may be offered for resale, resold or otherwise transferred by their holders
(other than any holder that is our "affiliate" within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that the holders
acquired the Exchange Notes in the ordinary course of the holders' business and
the holders have no arrangement or understanding with respect to the
distribution of the Exchange Notes to be acquired in the exchange offer. Any
holder who tenders in the exchange offer for the purpose of participating in a
distribution of the Exchange Notes:

-       cannot rely on the applicable interpretations of the SEC; and

-       must comply with the registration and prospectus delivery requirements
        of the Securities Act in connection with a secondary resale transaction.

ACCOUNTING TREATMENT

        We will record the Exchange Notes in our accounting records at the same
carrying value as the outstanding Notes, which is the aggregate principal
amount, as reflected in our accounting records on the date of exchange.
Accordingly, we will not recognize any gain or loss for accounting purposes in
connection with the exchange offer. We will amortize the expenses of the
exchange offer over the life of the Exchange Notes.

OTHER

        Participation in the exchange offer is voluntary, and you should
carefully consider whether to accept. You are urged to consult your financial
and tax advisors in making your own decision on what action to take.

        We may in the future seek to acquire untendered outstanding Notes in
open market or privately negotiated transactions, through subsequent exchange
offers or otherwise. We have no present plans to acquire any outstanding Notes
that are not tendered in the exchange offer or to file a registration statement
to permit resales of any untendered outstanding Notes.


                                       43

<PAGE>


                        DESCRIPTION OF THE EXCHANGE NOTES

GENERAL

        We will issue the Exchange Notes under an Indenture dated as of February
1, 2003 between us and Bank One, N.A., as trustee, as supplemented by
supplemental indentures or company orders. This prospectus briefly outlines some
provisions of the Indenture. If you would like more information on these
provisions, you should review the Indenture and any supplemental indentures or
company orders that we have on file or will file with the SEC. See WHERE YOU CAN
FIND MORE INFORMATION on how to locate these documents. You may also review
these documents at the Trustee's offices at 1111 Polaris Parkway, Columbus, Ohio
43240.

        The Indenture does not limit the amount of Exchange Notes that may be
issued. The Indenture permits us to issue notes in one or more series or
tranches upon the approval of our board of directors and as provided in one or
more company orders or supplemental indentures. Each series of notes may differ
as to their terms. We may from time to time, without consent of the holders of
the notes, issue additional notes having the same ranking, interest rate,
maturity and other terms as the notes. The Exchange Notes will be a single
series of notes under the Indenture.

        The Exchange Notes are unsecured and will rank equally with all our
senior unsecured unsubordinated debt. Substantially all of our fixed properties
and franchises are subject to the lien of our Indenture, dated August 1, 1943,
as previously supplemented and amended (mortgage indenture), between us and
Harris Trust and Savings Bank, as trustee. In the event of legal separation, we
currently intend to retire or defease our obligations under our mortgage
indenture. For current information on our debt outstanding, see our most recent
Form 10-K and 10-Q. In addition, see WHERE YOU CAN FIND MORE INFORMATION.

        The Exchange Notes will be denominated in U.S. dollars and we will pay
principal and interest in U.S. dollars. The Exchange Notes of each series will
be issuable in denominations of $1,000 or any integral multiples of $1,000 in
excess thereof. The Exchange Notes will not be subject to any conversion,
amortization, or sinking fund.

PRINCIPAL AMOUNT, MATURITY AND INTEREST

        The Exchange Notes will be initially issued in aggregate principal
amount of $225,000,000. The Exchange Notes will mature and become due and
payable, together with any accrued and unpaid interest, on March 1, 2013 and
will bear interest at the rate of 5.50% per annum from the original date of
issuance, or if interest has already been paid, from the date it was most
recently paid, until March 1, 2013. Interest on each Exchange Note will be
payable semi-annually in arrears on each March 1 and September 1 and at
redemption, if any, or maturity. The initial interest payment date is March 1,
2004. Each payment of interest shall include interest accrued through the day
before such interest payment date. Interest on the Notes will be computed on the
basis of a 360-day year consisting of twelve 30-day months.

        We will pay interest on the Exchange Notes (other than interest payable
at redemption, if any, or maturity) in immediately available funds to the owners
of such Exchange Notes as of the Regular Record Date (as defined below) for each
interest payment date. We will pay the principal of the Exchange Notes and any
premium and interest payable at redemption, if any, or maturity in immediately
available funds at the office of the Trustee at 1111 Polaris Parkway, Columbus,
Ohio 43240.

        If any interest payment date, redemption date or the maturity is not a
Business Day (as defined below), we will pay all amounts due on the next
succeeding Business Day and no additional interest will be paid.

        The "Regular Record Date" will be the February 15 or August 15 prior to
the relevant interest payment date.

        "Business Day" means any day that is not a day on which banking
institutions in New York City are authorized or required by law or regulation to
close.


                                       44

<PAGE>

OPTIONAL REDEMPTION

        We may redeem any or all series of the Exchange Notes in whole or in
part by delivering written notice to the noteholders no more than 60, and not
less than 30, days prior to redemption. If we do not redeem all the Exchange
Notes of a series at one time, the Trustee will select the Exchange Notes to be
redeemed in a manner it determines to be fair.

        We may redeem the Exchange Notes at any time at a "make whole"
redemption price equal to the greater of (i) the principal amount of the
Exchange Notes being redeemed and (ii) the sum of the present values of the
remaining scheduled payments of principal and interest on the Exchange Notes
being redeemed (excluding the portion of any such interest accrued to the date
of redemption) discounted (for purposes of determining present value) to the
redemption date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate (as defined below) plus 25 basis
points plus accrued interest thereon to the date of redemption.

        "Treasury Rate," applicable to each series, means, with respect to any
redemption date, the rate per year equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date.

        "Comparable Treasury Issue," applicable to each series, means the United
States Treasury security selected by an Independent Investment Banker as having
a maturity comparable to the remaining term of the Exchange Notes that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Notes.

        "Comparable Treasury Price," applicable to each series, means, with
respect to any redemption date, (1) the average of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) on the third Business Day preceding such redemption date, as
set forth in the daily statistical release (or any successor release) published
by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m.
Quotations for U.S. Government Securities" or (2) if such release (or any
successor release) is not published or does not contain such prices on such
third Business Day, the Reference Treasury Dealer Quotation for such redemption
date.

        "Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by us and reasonably acceptable to the Trustee.

        "Reference Treasury Dealer" means a primary U.S. Government Securities
Dealer selected by us and reasonably acceptable to the Trustee.

        "Reference Treasury Dealer Quotation" means, with respect to the
Reference Treasury Dealer and any redemption date, the average, as determined by
the trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the trustee by such Reference Treasury Dealer at or before 5:00 p.m.,
New York City time, on the third Business Day preceding such redemption date.

CONSOLIDATION, MERGER OR SALE

        We may merge or consolidate with any corporation or sell all or
substantially all of our assets as an entirety as long as the successor or
purchaser of such assets expressly assumes the payment of principal, and
premium, if any, and interest on the Exchange Notes; provided, however, that if
all or substantially all of our Generation-Related Business is transferred to an
affiliated entity pursuant to the Business Separation Plan or sold to an
unaffiliated entity pursuant to the plan of divestiture (whether or not the
Generation-Related Business constitutes "substantially all" of our total
assets), the Exchange Notes will continue to be the obligations of Texas North.
The transfer or sale of all or substantially all of our Generation-Related
Business would not constitute a default with respect to the Exchange Notes nor
would it be deemed a sale or transfer of all or substantially all of our assets
for purposes of the 


                                       45

<PAGE>

Indenture. Additionally, such transfer or sale would not alter the terms of the
Exchange Notes, and the Exchange Notes will continue to be governed by the
Indenture.

LIMITATION ON SECURED DEBT

        So long as any of the Exchange Notes are outstanding, we will not create
or permit to be created or to exist or permit any of our subsidiaries to create
or permit to be created or to exist any additional mortgage, pledge, security
interest, or other lien (collectively, Liens) on any utility properties or
tangible assets now owned or hereafter acquired by us or our subsidiaries to
secure any indebtedness for borrowed money (Secured Debt), without providing
that the outstanding Exchange Notes will be similarly secured. This restriction
does not apply to our existing first mortgage bonds that have previously been
issued under our mortgage indenture or any indenture supplemental thereto;
provided that this restriction will apply to future issuances thereunder (other
than issuances of refunding first mortgage bonds). In addition, this restriction
does not prevent the creation or existence of:

-       Liens on property existing at the time of acquisition or construction of
        such property (or created within one year after completion of such
        acquisition or construction), whether by purchase, merger, construction
        or otherwise, or to secure the payment of all or any part of the
        purchase price or construction cost thereof, including the extension of
        any Liens to repairs, renewals, replacements substitutions, betterments,
        additions, extensions and improvements then or thereafter made on the
        property subject thereto;

-       Financing of our accounts receivable for electric service;

-       Any extensions, renewals or replacements (or successive extensions,
        renewals or replacements), in whole or in part, of Liens permitted by
        the foregoing clauses; and

-       The pledge of any bonds or other securities at any time issued under any
        of the Secured Debt permitted by the above clauses.


        In addition to the permitted issuances above, Secured Debt not otherwise
so permitted may be issued; provided that amount of such Secured Debt that does
not exceed 15% of Net Tangible Assets as defined below.

        "Net Tangible Assets" means the total of all assets (including
revaluations thereof as a result of commercial appraisals, price level
restatement or otherwise) appearing on our balance sheet, net of applicable
reserves and deductions, but excluding goodwill, trade names, trademarks,
patents, unamortized debt discount, energy trading contracts, regulatory assets,
deferred charges and all other like intangible assets (which term shall not be
construed to include such revaluations), less the aggregate of our current
liabilities appearing on such balance sheet.

        This restriction also will not apply to or prevent the creation or
existence of leases (operating or capital) made, or existing on property
acquired, in the ordinary course of business.

BOOK-ENTRY

        We will issue the Exchange Notes in the form of one or more fully
registered global securities. The global securities will be deposited with, or
on behalf of, The Depository Trust Company, or DTC, and will be registered in
the name of DTC or its nominee. Investors may hold their beneficial interests in
a global security directly through DTC or indirectly through organizations which
are participants in the DTC system.

        Unless and until they are exchanged in whole or in part for certificated
securities, the global securities may not be transferred except as a whole by
DTC or its nominee. DTC has advised us as follows:

-       DTC is a limited purpose trust company organized under the laws of the
        State of New York, a "banking organization" within the meaning of the
        New York Banking Law, a member of the Federal Reserve System, a
        "clearing corporation" within the meaning of the Uniform Commercial Code
        and a "clearing agency" registered pursuant to the provisions of Section
        17A of the Exchange Act.

-       DTC was created to hold securities for its participants and to
        facilitate the clearance and settlement of



                                       46

<PAGE>

        securities transactions between participants through electronic
        book-entry changes in accounts of its participants, thereby eliminating
        the need for physical movement of certificates. Participants include
        securities brokers and dealers, banks, trust companies and clearing
        corporations and other organizations. Indirect access to the DTC system
        is available to others, including banks, brokers, dealers and trust
        companies that clear through or maintain a custodial relationship with a
        participant, either directly or indirectly.

        Upon the issuance of the global securities, DTC or its custodian will
credit, on its internal system, the respective principal amounts of the
securities represented by the global securities to the accounts of those persons
who have accounts with DTC designated by the Initial Purchasers. Ownership of
beneficial interests in the global securities will be limited to persons who
have accounts with DTC or persons who hold interests through the persons who
have accounts with DTC. Persons who have accounts with DTC are referred to as
"participants." Ownership of beneficial interests in the global securities will
be shown on, and the transfer of that ownership will be effected only through,
records maintained by DTC or its nominee, with respect to interests of
participants, and the records of participants, with respect to interests of
persons other than participants.

        As long as DTC or its nominee is the registered owner or holder of the
global securities, DTC or the nominee, as the case may be, will be considered
the sole record owner or holder of the securities represented by the global
securities for all purposes under the Indenture and the securities. No
beneficial owners of an interest in the global securities will be able to
transfer that interest except according to DTC's applicable procedures, in
addition to those provided for under the Indenture. Owners of beneficial
interests in the global securities will not:

-       be entitled to have the securities represented by the global securities
        registered in their names,

-       receive or be entitled to receive physical delivery of certificated
        securities in definitive form, and

-       be considered to be the owners or holders of any securities under the
        global securities.


        Accordingly, each person owning a beneficial interest in the global
securities must rely on the procedures of DTC and, if a person is not a
participant, on the procedures of the participant through which that person owns
its interests, to exercise any right of a holder of securities under the global
securities. We understand that under existing industry practice, if an owner of
a beneficial interest in the global securities desires to take any action that
DTC, as the holder of the global securities, is entitled to take, DTC would
authorize the participants to take that action, and that the participants would
authorize beneficial owners owning through the participants to take that action
or would otherwise act upon the instructions of beneficial owners owning through
them.

        Payments of the principal of, premium, if any, and interest on the
securities represented by the global securities will be made by us to the
Trustee and from the Trustee to DTC or its nominee, as the case may be, as the
registered owner of the global securities. Neither we, the Trustee, nor any
paying agent will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the global securities or for maintaining, supervising or reviewing
any records relating to the beneficial ownership interests.

        We expect that DTC or its nominee, upon receipt of any payment of
principal of, premium, if any, or interest on the global securities will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial ownership interests in the principal amount of the global
securities, as shown on the records of DTC or its nominee. We also expect that
payments by participants to owners of beneficial interests in the global
securities held through these participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in the names of nominees for these
customers. These payments will be the responsibility of these participants.

        DTC has advised us that DTC will take any action permitted to be taken
by a holder of securities only at the direction of one or more participants to
whose account the DTC interests in the global securities are credited. Further,
DTC will take any action permitted to be taken by a holder of securities only in
respect of that portion of the aggregate principal amount of securities as to
which the participant or participants has or have given that direction.


                                       47

<PAGE>


        Although DTC has agreed to these procedures in order to facilitate
transfers of interests in the global securities among participants of DTC, it is
under no obligation to perform these procedures, and may discontinue them at any
time. Neither we nor the trustee will have any responsibility for the
performance by DTC or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.

        Beneficial interests in global securities may be exchanged for
certificated securities only if:

-       DTC notifies the Trustee that it is unwilling or unable to continue as a
        depositary for the global securities or DTC ceases to be a clearing
        agency registered under the Exchange Act and, in either case, we fail to
        appoint a successor depositary within 90 days; or

-       we decide at any time not to have the securities represented by global
        securities and so notify the Trustee.

EVENTS OF DEFAULT

        "Event of Default" means any of the following:

        -       failure to pay for three business days the principal of (or
                premium, if any, on) any Exchange Note of a series when due and
                payable;

        -       failure to pay for 30 days any interest on any Exchange Note of
                any series when due and payable;

        -       failure to perform any other requirements in such Exchange
                Notes, or in the Indenture in regard to such Exchange Notes, for
                90 days after notice;

        -       certain events of bankruptcy or insolvency; or

        -       any other event of default specified in a series of Exchange
                Notes.

        An Event of Default for a particular series of Exchange Notes does not
necessarily mean that an Event of Default has occurred for any other series of
Exchange Notes issued under the Indenture. If an Event of Default occurs and
continues, the Trustee or the holders of at least 33% of the principal amount of
the Exchange Notes of the series affected may require us to repay the entire
principal of the Exchange Notes of such series immediately (Repayment
Acceleration). In most instances, the holders of at least a majority in
aggregate principal amount of the Exchange Notes of the affected series may
rescind a previously triggered Repayment Acceleration. However, if we cause an
Event of Default because we have failed to pay (unaccelerated) principal,
premium, if any, or interest, Repayment Acceleration may be rescinded only if we
have first cured our default by depositing with the Trustee enough money to pay
all (unaccelerated) past due amounts and penalties, if any.

        The Trustee must within 90 days after a default occurs, notify the
holders of the Exchange Notes of the series of default unless such default has
been cured or waived. We are required to file an annual certificate with the
Trustee, signed by an officer, concerning any default by us under any provisions
of the Indenture.

        Subject to the provisions of the Indenture relating to its duties in
case of default, the Trustee shall be under no obligation to exercise any of its
rights or powers under the Indenture at the request, order or direction of any
holders unless such holders offer the Trustee reasonable indemnity. Subject to
the provisions for indemnification, the holders of a majority in principal
amount of the Exchange Notes of any series may direct the time, method and place
of conducting any proceedings for any remedy available to, or exercising any
trust or power conferred on, the Trustee with respect to such Exchange Notes.

MODIFICATION OF INDENTURE

        Under the Indenture, our rights and obligations and the rights of the
holders of any Exchange Notes may be changed. Any change affecting the rights of
the holders of any series of Exchange Notes requires the consent of the holders
of not less than a majority in aggregate principal amount of the outstanding
Exchange Notes of all series



                                       48

<PAGE>

affected by the change, voting as one class. However, we cannot change the terms
of payment of principal or interest, or a reduction in the percentage required
for changes or a waiver of default, unless the holder consents. We may issue
additional series of Exchange Notes and take other action that does not affect
the rights of holders of any series by executing supplemental indentures without
the consent of any noteholders.

LEGAL DEFEASANCE

        We will be discharged from our obligations on the Exchange Notes of any
series at any time if:

-       we deposit with the Trustee sufficient cash or government securities to
        pay the principal, interest, any premium and any other sums due to the
        stated maturity date or a redemption date of the Exchange Notes of the
        series, and

-       we deliver to the Trustee an opinion of counsel stating that the United
        States federal income tax obligations of noteholders of that series will
        not change as a result of our performing the action described above,
        with such opinion based upon a ruling of the Internal Revenue Service
        (IRS) issued to us or a change of law or regulation occurring after the
        date hereof.

If this happens, the noteholders of the series will not be entitled to the
benefits of the Indenture except for registration of transfer and exchange of
Exchange Notes and replacement of lost, stolen or mutilated Exchange Notes.

COVENANT DEFEASANCE

        We will be discharged from our obligations under any restrictive
covenant applicable to the Exchange Notes of a particular series if:

-       we deposit with the Trustee cash or government securities sufficient to
        pay the principal, interest and any premium due on or prior to maturity,
        and

-       we deliver to the Trustee an opinion of counsel stating that the United
        States federal income tax obligations of the noteholders will not change
        as a result of the defeasance.

If this happens, any later breach of that particular restrictive covenant will
not result in Repayment Acceleration. If we cause an Event of Default apart from
breaching that restrictive covenant, there may not be sufficient money or
government obligations on deposit with the Trustee to pay all amounts due on the
Exchange Notes of that series. In that instance, we would remain liable for such
amounts.

GOVERNING LAW

        The Indenture and Exchange Notes of all series will be governed by the
laws of the State of New York.

CONCERNING THE TRUSTEE

        We and our affiliates use or will use some of the banking services of
the Trustee and other services of its affiliates in the normal course of
business.

                     EXCHANGE OFFERS AND REGISTRATION RIGHTS

        Texas North and the initial purchasers entered into the Registration
Rights Agreement dated as of February 1, 2003, in contemplation of the Notes
issued on February 18, 2003, which we call the "issue date." We have agreed
pursuant to the Registration Rights Agreement that we will, subject to certain
exceptions,

(1)     prepare and, as soon as practicable but not later than 210 calendar days
        following the issue date, file with the SEC a registration statement
        with respect to a registered offer, or the Registered Exchange Offer, to
        exchange the outstanding Notes for a like principal amount of Exchange
        Notes of Texas North;


                                       49

<PAGE>


(2)     use our reasonable best efforts to cause the registration statement to
        be declared effective under the Securities Act not later than 270
        calendar days following the issue date;

(3)     keep the Registered Exchange Offer open for not less than 30 calendar
        days (or longer if required by applicable law) after the effective date
        of the registration statement containing this prospectus;

(4)     use our reasonable best efforts to cause the exchange offer to be
        consummated within 300 calendar days following the issue date; and

(5)     promptly commence the exchange offer upon the effectiveness of the
        Exchange Offer Registration Statement.

        For each outstanding Note tendered to us pursuant to the Registered
Exchange Offer, we will issue to the holder of such outstanding Note an Exchange
Note having a principal amount equal to that of the surrendered outstanding
Note. Interest on the Exchange Notes will accrue from the most recent interest
payment date to which interest has been paid on the outstanding Exchange Notes
surrendered in exchange therefor or, if no interest has been paid on such
outstanding Exchange Notes, from the date of original issuance.

        Under existing SEC interpretations, the Exchange Notes will be freely
transferable by holders other than our affiliates after the Registered Exchange
Offer without further registration under the Securities Act if the holder of the
Exchange Notes represents to us in the Registered Exchange Offer that it (a) is
not an affiliate of ours within the meaning of Rule 405 under the Securities
Act; (b) is not a broker-dealer tendering outstanding Exchange Notes acquired
directly from us for its own account; (c) acquired the Exchange Notes in the
ordinary course of its business; and (d) has no arrangements or understandings
with any person to participate in the exchange offer for the purpose of
distributing the Exchange Notes); provided, however, that broker-dealers
receiving Exchange Notes in the Registered Exchange Offer will have a prospectus
delivery requirement with respect to resales of such Exchange Notes.

        A holder of outstanding Notes (other than certain specified holders) who
wishes to exchange such outstanding Notes for Exchange Notes in the Registered
Exchange Offer will be required to represent that any Exchange Notes to be
received by it will be acquired in the ordinary course of its business and that
at the time of the commencement of the Registered Exchange Offer it has no
arrangement or understanding with any person to participate in the distribution
(within the meaning of the Securities Act) of the Exchange Notes and that it is
not an "affiliate" of Texas North, as defined in Rule 405 of the Securities Act,
or if it is an affiliate, that it will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.

        If: (i) because of any change in law or in currently prevailing
interpretations of the staff, we are not permitted to effect the Registered
Exchange Offer, (ii) the Registered Exchange Offer is not consummated within 300
calendar days of the issuance of the outstanding Notes, or (iii) any holder of
an outstanding Note notifies us prior to the 20th day following the consummation
of the Registered Exchange Offer that (i) such holder was prohibited by
applicable law or SEC policy from participating in the Registered Exchange
Offer, (ii) that such holder may not resell the Exchange Notes to the public
without delivering a prospectus and that the prospectus contained in the
Exchange offer registration statement is not appropriate or available for such
resale by such holder or (iii) that it is a participating broker-dealer and
holds outstanding Notes acquired directly from us or one of our affiliates, then
in each case, we will (x) promptly deliver to the holders written notice thereof
and (y) at our sole expense (a) as promptly as practicable (but in no event more
than 210 days after so required or requested pursuant to the registration rights
agreement), file a shelf registration statement covering resales of those
outstanding Notes, (b) use our reasonable best efforts to cause the shelf
registration statement to be declared effective under the Securities Act (but in
no event more than 270 days after so required or requested pursuant to the
registration rights agreement or, if later, 300 days after the outstanding Notes
are issued) and (c) use our reasonable best efforts to keep effective the shelf
registration statement until the earlier of two years (or, if Rule 144(k) is
amended to provide a shorter restrictive period, such shorter period) after the
issuance of the Outstanding Notes or such time as all of the applicable
outstanding Notes have been sold under the shelf registration statement.

        We will, if a shelf registration statement is declared effective,
provide to each holder copies of the prospectus that is a part of the shelf
registration statement, notify each such holder when the shelf registration
statement for the Notes has become effective and take any other actions as are
required to permit unrestricted resales of the outstanding Notes. A holder that
sells outstanding Notes pursuant to the shelf registration statement will be


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<PAGE>

required to be named as a selling security holder in the related prospectus, to
provide information related thereto and to deliver that prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with the sales and will be bound by the
provisions of the registration rights agreement that are applicable to such a
holder (including certain indemnification rights and obligations). We will not
have any obligation to include in the shelf registration statement holders who
do not deliver that information to us.

        If we fail to comply with certain provisions of the Registration Rights
Agreement, as described below, then a special interest premium will become
payable in respect of the outstanding Notes.

        If: (i) the exchange offer registration statement is not filed with the
SEC on or before the 210th calendar day after the issuance of the outstanding
Notes, (ii) the exchange offer registration statement is not declared effective
on or before the 270th calendar day after the issuance of the outstanding Notes,
or (iii) the Registered Exchange Offer is not consummated or the shelf
registration statement is not declared effective on or before the 300th calendar
day after the issuance of the outstanding Notes, the special interest premium
will accrue in respect of the outstanding Notes from and including the next
calendar day following each of (a) such 210-day period in the case of clause (i)
above, (b) such 270-day period in the case of clause (ii) above, and (c) such
300-day period in the case of clause (iii) above, in the case of clauses (i) and
(ii) above at a rate equal to 0.25% per annum and in the case of clause (iii) at
a rate equal to 0.50% per annum.

        If the exchange offer registration statement is not declared effective
on or before the 300th calendar day after the issuance of the outstanding Notes
and we request holders of the outstanding Notes to provide the information
called for by the registration rights agreement for inclusion in the shelf
registration statement, the outstanding Notes owned by holders who do not
deliver such information to us when required pursuant to the registration rights
agreement will not be entitled to any such increase in the interest rate for any
day after the 300th day following the issuance of the outstanding Notes. Upon
(1) the filing of an exchange offer registration statement after the 210-day
period described in clause (i) above, (2) the effectiveness of the exchange
offer registration statement after the 270-day period described in clause (ii)
above or (3) the consummation of the Registered Exchange Offer or the
effectiveness of a shelf registration statement, as the case may be, after the
300-day period described in clause (iii) above, the interest rate on the
Outstanding Notes from the day of such filing, effectiveness or consummation, as
the case may be, will be reduced to the original interest rate set forth on the
cover page of this prospectus for the Outstanding Notes.

        If a shelf registration statement is declared effective pursuant to the
foregoing paragraphs, and if such shelf registration statement ceases to be
continuously effective or the prospectus contained in such shelf registration
statement ceases to be usable for resales (x) at any time prior to the earlier
of two years (or if Rule 144(k) is amended to provide a shorter restrictive
period, such shorter period) after the issuance of the outstanding Notes or such
time as all of the applicable outstanding Notes have been sold under the shelf
registration statement or (y) due to corporate developments, public filings with
the SEC or similar events, or because the prospectus contains an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, and such failure continues for more than 90 days (whether or not
consecutive and whether or not arising out of a single or multiple
circumstances) in any twelve-month period (the day, with respect to (x), or the
91st day, with respect to (y), being referred to as the "default day"), then
from the default day until the earlier of (i) the date that the shelf
registration statement and the prospectus are again deemed effective and usable
for resales, respectively, (ii) the date that is the second anniversary of the
issuance of the outstanding Notes (or, if Rule 144(k) is amended to provide a
shorter restrictive period, such shorter period), or (iii) the date as of which
all of the outstanding Notes are sold pursuant to the shelf registration
statement, the special interest premium in respect of the outstanding Notes will
accrue at a rate equal to 0.50% per annum. The aggregate amount of the special
interest premium in respect of the outstanding Notes payable pursuant to the
above provisions will in no event exceed 0.50% per annum.

              CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

EXCHANGE OF NOTES

        The exchange of outstanding Notes for Exchange Notes in the exchange
offer will not constitute a taxable



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<PAGE>

event to holders for United States federal income tax purposes. Consequently, no
gain or loss will be recognized by a holder upon receipt of an Exchange Note,
the holding period of the Exchange Note will include the holding period of the
outstanding Note exchanged therefor and the basis of the Exchange Note will be
the same as the basis of the outstanding Note immediately before the exchange.

        IN ANY EVENT, PERSONS CONSIDERING THE EXCHANGE OF OUTSTANDING NOTES FOR
EXCHANGE NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS
AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING
JURISDICTION.

CONSEQUENCES TO NON-U.S. HOLDERS

        The following summary describes the material United States federal
income tax consequences of the ownership of Exchange Notes by a Non-U.S. Holder
(as defined below) as of the date hereof. Except where noted, the discussion
below only deals with Exchange Notes held as capital assets. This discussion
does not address the consequences of holding outstanding Notes that were not
exchanged for Exchange Notes. Furthermore, the discussion below is based upon
the provisions of the Internal Revenue Code of 1986, as amended (the Code), and
regulations, rulings and judicial decisions thereunder as of the date hereof,
and such authorities may be repealed, revoked or modified so as to result in
United States federal income tax consequences different from those discussed
below. If a partnership holds our Exchange Notes, the tax treatment of a partner
will generally depend upon the status of the partner and the activities of the
partnership. If you are a partner of a partnership holding our Exchange Notes,
you should consult your tax advisors. PERSONS CONSIDERING THE PURCHASE,
OWNERSHIP OR DISPOSITION OF EXCHANGE NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS
CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR
PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY
OTHER TAXING JURISDICTION.

        As used herein, a "U.S. Holder" of a Exchange Note means a holder that
is for United States federal income tax purposes (i) a citizen or resident of
the United States, (ii) a corporation created or organized in or under the laws
of the United States or any political subdivision thereof, (iii) an estate the
income of which is subject to United States federal income taxation regardless
of its source or (iv) a trust if it (x) is subject to the supervision of a court
within the United States and one or more United States persons have the
authority to control all substantial decisions of the trust or (y) has a valid
election in effect under applicable United States Treasury regulations to be
treated as a United States person. A "Non-U.S. Holder" is a holder (other than
an entity treated as a partnership) that is not a U.S. Holder.

        This summary does not represent a detailed description of the United
States federal income tax consequences to investors in light of their particular
circumstances. Special rules may apply to certain Non-U.S. Holders, such as
"controlled foreign corporations," "passive foreign investment companies,"
"foreign personal holding companies" and certain expatriates that are subject to
special treatment under the Code. Such entities should consult their own tax
advisors to determine the United States federal, state, local and other tax
consequences that may be relevant to them.

        Under current United States federal income and estate tax law, and
subject to the discussion below concerning backup withholding:

        (a) no withholding of United States federal income tax will be required
with respect to the payment by us or any paying agent of principal or interest
on a Exchange Note owned by a Non-U.S. Holder under the "portfolio interest"
rule, provided that (i) interest paid on the Exchange Notes is not effectively
connected with the beneficial owner's conduct of a trade of business in the
United States, (ii) the beneficial owner does not actually or constructively own
10% or more of the total combined voting power of all classes of our stock
entitled to vote within the meaning of section 871(h)(3) of the Code and the
regulations thereunder, (iii) the beneficial owner is not a controlled foreign
corporation that is related to us through stock ownership, (iv) the beneficial
owner is not a bank whose receipt of interest on a Exchange Note is described in
section 881(c)(3)(A) of the Code and (v) the beneficial owner satisfies the
statement requirement (described generally below) set forth in section 871(h)
and section 881(c) of the Code and the regulations thereunder.


                                       52

<PAGE>


        (b) no withholding of United States federal income tax generally will be
required with respect to any gain realized by a Non-U.S. Holder upon the sale,
exchange, retirement or other disposition of a Exchange Note; and

        (c) an Exchange Note beneficially owned by an individual who at the time
of death is not a citizen or resident of the United States will not be subject
to United States federal estate tax as a result of such individual's death,
provided that any payment to such holder on the Exchange Note, would be eligible
for exemption from the 30% federal withholding tax under the "portfolio
interest" rule described in paragraph (a) above without regard to the statement
requirement described in (a)(v) above.

        To satisfy the requirement referred to in (a)(v) above, the beneficial
owner of such Exchange Note, or a financial institution holding the Exchange
Note on behalf of such owner, must provide, in accordance with specified
procedures, a paying agent of us with a statement to the effect that the
beneficial owner is not a United States person. Currently, these requirements
will be met if (1) the beneficial owner provides its name and address, and
certifies, under penalties of perjury, that it is not a United States person
(which certification may be made on an IRS Form W-8BEN) or (2) a financial
institution holding the Exchange Note on behalf of the beneficial owner
certifies, under penalties of perjury, that such statement has been received by
it, and furnishes a paying agent with a copy thereof. The statement requirement
referred to in (a)(v) above may also be satisfied with other documentary
evidence with respect to Exchange Notes held through an offshore account or
through certain foreign intermediaries.

        If a Non-U.S. Holder cannot satisfy the requirements of the "portfolio
interest" exception described in (a) above, payments of interest made to such
Non-U.S. Holder will be subject to a 30% withholding tax unless the beneficial
owner of the Exchange Note provides us or any paying agent, as the case may be,
with a properly executed (1) IRS Form W-8BEN claiming an exemption from or
reduction in withholding under the benefit of an applicable income tax treaty or
(2) IRS Form W-8ECI stating that interest paid on the Exchange Note is not
subject to withholding tax because it is effectively connected with the
beneficial owner's conduct of a trade or business in the United States.
Alternative documentation may be applicable in certain situations.

        If a Non-U.S. Holder is engaged in a trade or business in the United
States and interest on the Exchange Note is effectively connected with the
conduct of such trade or business, the non-U.S. Holder, although exempt from the
withholding tax discussed above, will be subject to United States federal income
tax on such interest on a net income basis in the same manner as if it were a
U.S. Holder. In addition, if such holder is a foreign corporation, it may be
subject to a branch profits tax equal to 30% (or a lesser rate under an
applicable income tax treaty) of such amount, subject to adjustments.

        Any gain realized upon the sale, exchange, retirement or other
disposition of a Exchange Note generally will not be subject to United States
federal income tax unless (i) such gain or income is effectively connected with
a trade or business in the United States of the Non-U.S. Holder, or (ii) in the
case of a Non-U.S. Holder who is an individual, such individual is present in
the United States for 183 days or more in the taxable year of such sale,
exchange, retirement or other disposition, and certain other conditions are met.

INFORMATION REPORTING AND BACKUP WITHHOLDING

        Information reporting will generally apply to payments of interest and
the amount of tax, if any, withheld with respect to such payments to Non-U.S.
Holders of the Exchange Notes. Copies of the information returns reporting such
interest payments and any withholding may also be made available to the tax
authorities in the country in which the Non-U.S. Holder resides under the
provisions of an applicable income tax treaty.

        In general, no backup withholding will be required with respect to
payments made by us or any paying agent to Non-U.S. Holders if a statement
described in (a)(v) under "Non-U.S. Holders" has been received (and the payor 
does not have actual knowledge or reason to know that the beneficial owner is a 
United States person).

        In addition, information reporting and, depending on the circumstances,
backup withholding, will apply to the proceeds of the sale of a Exchange Note
within the United States or conducted through United States-related financial
intermediaries unless the statement described in (a)(v) under "Non-U.S. Holders"
has been received (and




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the payor does not have actual knowledge or reason to know that the beneficial 
owner is a U.S. person) or the holder otherwise establishes an exemption.

                                     RATINGS

        The Exchange Notes are assigned a rating of Baa1 (stable outlook) by
Moody's Investors Service, Inc. (Moody's), BBB (stable outlook) by Standard &
Poor's Ratings Service (S&P) and A- (stable outlook) by Fitch Ratings, Inc.
(Fitch). Ratings from credit agencies are not recommendations to buy, sell or
hold our securities and may be subject to revision or withdrawal at any time by
the rating agency and should be evaluated independently of any other ratings.

                              PLAN OF DISTRIBUTION

        Each broker-dealer that receives Exchange Notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of the Exchange Notes. This prospectus,
as it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Notes received in exchange
for outstanding Notes where the outstanding Notes were acquired as a result of
market-making activities or other trading activities. We have agreed that we
will make such prospectus, and any amendment or supplement thereto, available to
any such broker-dealer for use in connection with any resale of any Exchange
Notes for a period of the lesser of 90 days after the consummation of the
Exchange Offer and the date on which all broker-dealers have sold all Exchange
Notes held by them (unless such period is extended pursuant to the terms of the
Registration Rights Agreement). We have also agreed that we will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests such documents in the letter of
transmittal.

        We will not receive any proceeds from any sale of Exchange Notes by
broker-dealers. Exchange Notes received by broker-dealers for their own accounts
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the Exchange Notes or a combination of these methods
of resale, at market prices prevailing at the time of resale, at prices related
to the prevailing market prices or negotiated prices. Any resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any broker-dealer or
the purchasers of any Exchange Notes. Any broker-dealer that resells Exchange
Notes that were received by it for its own account pursuant to the exchange
offer and any broker or dealer that participates in a distribution of the
Exchange Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any resale of Exchange Notes and any
commissions or concessions received by these persons may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.

        We have agreed to pay all expenses incident to the exchange offer,
including the expenses of one counsel for the holders of the outstanding Notes,
other than commissions or concessions of any brokers or dealers and will
indemnify the holders of outstanding Notes, including any broker-dealers,
against certain liabilities, including liabilities under the Securities Act.

        By its acceptance of the exchange offer, any broker-dealer that receives
Exchange Notes pursuant to the exchange offer hereby agrees to notify us prior
to using the prospectus in connection with the sale or transfer of Exchange
Notes, and acknowledges and agrees that, upon receipt of notice from us of the
happening of any event which makes any statement in this prospectus untrue in
any material respect or which requires the making of any changes in this
prospectus in order to make the statements therein not misleading or which may
impose upon us disclosure obligations that may have a material adverse effect on
us (which notice we agree to deliver promptly to such broker-dealer) such
broker-dealer will suspend use of this prospectus until we have notified such
broker-dealer that delivery of this prospectus may resume and have furnished
copies of any amendment or supplement to this prospectus to such broker-dealer.


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                                 LEGAL OPINIONS

        Our counsel, Simpson Thacher & Bartlett LLP, New York, NY, and one of
our lawyers will each issue an opinion about the legality of the Exchange Notes
for us.

                                     EXPERTS

        The financial statements of the Company incorporated in this prospectus
by reference from the Company's Current Report on Form 8-K dated May 14, 2003
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report which is incorporated herein by reference (which report expresses
an unqualified opinion and includes an explanatory paragraph relating to the
realignment of segments for financial reporting purposes).

        The financial statement schedule of the Company incorporated by
reference in this prospectus from the Company's Annual Report on Form 10-K (as
updated by the Company's Current Report on Form 8-K dated May 14, 2003) has been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report appearing herein.

        The aforementioned reports have been so incorporated and included in
reliance upon such firm given their authority as experts in accounting and
auditing.

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