3. Request

In its application, Southwest seeks authorization to issue up to $200 million of Debt Securities in addition to previously-authorized amounts, until the aggregate principal amount authorized has been fully utilized to meet its future financing needs based on a long-term forecast covering the three-year period 2010 through 2012. The principal amount, form, terms, and conditions of each series of Debt Securities will be determined by Southwest according to market conditions at the time of sale or issuance. In general, each series of medium-and long-term Debt Securities are expected to have a maturity of between five and
40 years, while some notes will have a term of between nine months and
15 years. Southwest states that its use of nine months as a floor for the term of its notes is designed to parallel requirement of the Securities and Exchange Commission (SEC) requirements that debt instruments with a maturity of greater than 270 days must be registered with the SEC. In its response to follow-up questions, Southwest states that it does not plan to issue debt requested in the current application for less than one year.

Southwest indicates that it intends to issue, without limitation, Debt Securities directly as: debentures; notes; bonds; loans; commercial paper programs; extendible commercial notes; bank loans; capital leases; accounts receivable financing; private placements with insurance companies or other lenders; bankers acceptances; floating rate debt; or other evidences of indebtedness; using variable or fixed rates; issuing such indebtedness as secured, unsecured, senior, subordinate, or with warrants or rights; in domestic or foreign markets.

Southwest proposes to use its new financing authority to: a) acquire property; b) construct, complete, extend, or improve its facilities; c) refund maturing debt and preferred securities; d) fund payments or redemption requirements of debt and preferred securities (including any premiums required in connection therewith); e) retire, refinance, or exchange existing preferred securities and short-and long-term debt (including any premiums required in connection therewith); and/or f) reimburse its treasury for monies actually expended from income or from any other money in its treasury not secured by or obtained from the issue of stocks or stock certificates or other evidence of interest or ownership, or bonds, notes, or other evidence of indebtedness for expansion and betterment of its facilities, with the amounts so reimbursed becoming part of Applicant's general treasury funds.

Southwest seeks authorization to encumber utility property, including but not limited to accounts receivables and capital leases to secure Debt Securities authorized herein. Southwest also seeks authorization to guarantee the Debt Securities and obligations of its regulated subsidiaries or regulated affiliates, governmental entities, or quasi-governmental entities that issue securities on behalf of Southwest. In order to manage interest rate risk, Southwest proposes to utilize debt enhancement features, including put options, call options, credit enhancement arrangements, interest rate swap agreements, interest rate cap agreements, interest rate floor agreements, interest rate collar agreements, special-purpose entity transactions, hedges, treasury locks, caps, and collar agreements, subject to specific conditions. Additionally, Southwest seeks exemption from the Commission's Competitive Bidding Rule.