AECM-82-284, Forwards Annual Financial Repts 1981 for South Ms Electric Power Association & Ms Power & Light Co.Middle South Energy, Inc Financial Statements for 1980 & 1981 & Auditors Opinion Encl
| ML20054L348 | |
| Person / Time | |
|---|---|
| Site: | Grand Gulf  |
| Issue date: | 06/28/1982 |
| From: | Dale L MISSISSIPPI POWER & LIGHT CO. |
| To: | Harold Denton Office of Nuclear Reactor Regulation |
| Shared Package | |
| ML20042C738 | List: |
| References | |
| AECM-82-284, NUDOCS 8207070433 | |
| Download: ML20054L348 (13) | |
Text
{{#Wiki_filter:- r MISSISSIPPI POWER & LIGHT COMPANY llelping fluild Afississippi P. O. H O X 1040 J AC K S ON. MIS SIS SIPPI 30205
.hme 2 tl . 14ti2 M M 4 $ An Pnil(4JCiloN (18 l'An1Mt NT 11 S. Nuclear Regulatory Comminnion 01ftee of Nucten Renctor Itegulnt ton Wanhington. D.C. 205 %
Attcution: tir , llat olit R. Denton. Diicetor
Dear tir. Denton:
SitD.ll:CT: Ctanil Cult Nuctent Station Units I nuil ? Docket Non. 50-416 anil 50-41/ F1Ic 01tiO / I ti% 1 Financial Repostn Al{CM-H 2 / 2 tl4 The annual Iinancial reporto for 14til of ti tihl t e South l'ncrgy. Inc. nnel South Minninnippt 1:lec t i le Power Annociation, ownern of nnel Minntontppt Powc A 1. l gh t Conpany, operator of Granil Citif Nuclear St at ion. ntc hetcin nulimtttcil in tenponne to the capi t i eme n t of 10 CFR 50.71(b). Youtn tiuly.
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(m c/O w W, C* f<Aa -sc? / I.. F. Dale Manager of Nuclear Servicen p.lR /.t Dlt : ile At t achment n ! cc: ftr. N. l.. Stampley (w/o) tit . 11 11 ftcGehec (w/o) l tir. T. IL . Conner (w/o) Mt. G. it . Taylor (w/o) Mr. It t eluis it C. DeYoung. 01 cetor (w/a) Offtee of Innpcetton & Isntorcement U. S. Nuclear Regulatory Comminnion Wanh t ngt on , D. C. 205 % tit . .l . P. O'Reilly. Regional Ailmintnttator (w/n) Office of Innpcetton anil F.nforcement U.S. Nuclear Mcgtilatory Cotnminnton lleg ion ii 101 Maitetta St.. N.W., Suite 1100 At latit a. (. cot gl a ~10 'l0 'l L F207070433 020620 PDR ADOCK 03000416 \ 1 PDH anibur Mithlin South litilation Syntuiti
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Deloitte Haskins+ Sells MIDDLE SOUTH ENERGY, INC. Financial Statements for the Years Ended December 31, 1981 and 1980 and Auditors' Opinion i
Deloitte Haskins+ Sells 39th Floor ) One Shell Square New Orleans. Louisiana 70139 (504) 581-2727 Cable DEHANDS D AUDITORS' OPINION Middle South Energy, Inc.: We have examined the balance sheets of Middle South Energy, Inc. as of December 31, 1981 and 1980 and the related state-ments of income, stockholder's equity, and changes in financial position for the years then ended. Our examinations were made )- in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. g In our opinion, the above-mentioned financial statements present fairly the financial position of the Company at December 31, 1981 and 1980 and the results of its operations and changes in its financial position for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis. 9 February 12, 1982 9 e O O
$19nLE 900T54 ENERCY . IL {
1 BALANCE THEETS, DECEMBER ll, 1981 AND 1980 1981 1980 1981 1980
-- L l A B 1 L l T I E S -- (in thousands)
-- A S S E T S --
(in thousands) l CAPITALIZATION: UTILITY PLANT - Construction work in . $2.184,343 $1,784,151 Common stock - no par value; authortred progress, at cost (Notes 1-D. 2 and 4). 1.000.000 shares; issued and outstanding 491.900 shares in 1981 and 443.600 .shares . . . $ 491.900 $ 443.600 , CURRENT ASSETS: 35,400 in 1980....... .... .... . 292,039 196,240 ( Cash and special deposits (Note 2).... ... 1.735 Retained earnings (Note 3). .... . . . .. I 2.370 7 M ,9 N 6 3 7, 8 '.a Working f unds advanced for construction.. ... 8,437 Tot al stockholder's equity . . . . . . ....
.. . ... .. 7.99? Long-term debt (Nnte 2):
Recoverable income taxes........ 871 8 941.000 671,000 Other.. . .. .... ... . ....... ............. Promissory notes - banks.. .. ... . .... . 498,500 498,500 41,845 First mortgage bonds......... .. .. ... .. 1,167,500 12,968 Total long-term debt... .. . . .. .. 1,4 w,500 Total. ................. ... 2,223,439 1,809.340 Total. . . ........ . ... . DEFERRED DEBITS: 189,759 125.220 Recoverable Federal income taxes (Note 1-C). 26 3.666 Other........ .. ... . . ...... .. ... ... CURRENT LIAdlLITIES: 92.375 78.151 189,785 128.886 Notes payable (Note 2).... .... .. . ... Total. ............. ... ... . Accounts payable: 1,653 2,877 Contractor)* retentions. ... ..... .... 148 147 Associated companies.. . .. ..... . ... 441 l Other. ....... .. . . . . .... . 5.062 8,680 7.021 l Taxes accrued.... . ... .. .............. ... . 25.670 26,424 i Interest accrued. .. . . . 133,588 115,061 Total. DEFERRED CREDITS: Accumulated deferred investment tax 12,469 18,797 credits (Note 1-C).... . ... . ............ 17,600 13,884 Accumulated deferred income taxes (Note 1-C).
. . 30.069 32,681 Total.... . . . . .
COMMITMENTS AND CONTINGENCIES (Note 2) TOTAL. . .. . .. .. $2.387.096 $1.957.042 TOTAL.... . . .. . ),2.387_.096 $1.957.08g See Notes to Financial Statements. ) ) MIDDLE SOUTH ENERGY. INC. STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1981 AND 1980
)
1981 1980 (in thousands) INCOME: ,
) Operating revenues........................... None None
[ Interest income.............................. $ 34 $ 17 Tota 1....................... 34 17 EXPENSES:
) Interest expense............................. 237,496 161,928 Taxes (Note 1-C)-
Federal income taxes....................... (103,877) (79,138) State income taxes......................... (2,563) (2,993) Deferred income taxes and investment tax credit adjustments - net............. (2,612) 4,471
)
Total....................... 128,444 84,268 LOSS BEFORE ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION.......................... (128,410) (84,251)
) ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (Note 1-D):
Equity funds................................. 95,799 66,991 Borrowed funds............................... 128,410 84,251 Tota 1....................... 224,209 151,242
)
NET INC0ME..................................... $ 95.799 $ 66.991 See Notes to Financial Statements.
) )
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O MIDDLE \ FOR STATE SOUTH \ THE C YEARS MENTS OF ENDED ST NFh DECEMBEROCKHOLDER E 'S
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OMMON g) BalancST OCK: 31, 1981QUITY \ e \ 3 \ Sale of AND n ing of 1980 \ a begin shar es 48,300 1981 shar .in 1980shar ye Bala e . . . . . . . of co es in 1981ar....... in thou s 1980 nce- ......mm on s n ad ands RET end of
. . . . . .to k a 57,900...........
c AINED ye Bala c e EA Add n r
......t. .$1,0
. . . 00
$443,600 Balan ce-nt e
RNINGS (Note begin in c e n ing of 3)a ....
............. .......48,300 $385,7 00 om . . . . . . . ye:a r . . ...
TOTAL end of ye ....... 491, 90 0 57,900 STOCKHOLDER' S E ar........
.L ...........
............ _4433 600
. 196 Se QUITY...... ............ ....
M,240 129 e Note s to F in a 292,039 _M,249 c n ial M 19 6 3 240 State ments. M 4 eX
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MIDDLE SOUTH ENERCY. INC, STATEMENTS OF CHANGES IN FINANCIAL POSITION FOR THE YEARS ENDED DECEMBER 31, 1981 AND 1980 1981 1980 (in thousands) FUNDS PROVIDED BY: Operations: Net income........................................................ $ 95,799 $ 66,991 Deferred income taxes and investment tax credits adjustments - net............................................... (2,612) 4,471 Allowance for funds used during construction...................... (224,209) (151,242) Total funds provided from operations.................. (131,022) (79.780) Other: Allowance for funds used during construction...................... 224,209 151,242 Decrease in working capita 1*...................................... 35,180 Miscellaneous - net............................................... 3,640 Total funds provided excluding financing.............. 132,007 71,462 Financing transactions: Common stock...................................................... 48,300 57,900 Mortgage bonds.................................................... 98,500 Long-term notes payable - banks................................... 270,000 124,000 Short-term securities - net....................................... 14,224 82,251 Total funds provided from financing................... 332,524 362,651 TOTAL FUNDS PR0VIDED.................................................. $ 464.531 $ 434.113 FUNDS APPLIED TO: Utility plant additions: Construction expenditures (includes allowance for funds used during construction)............................................ $ 399,992 5 364,922 Other: Deferral of recoverable Federal income taxes..... ......... ...... 64,539 55,806 Increase in working capital *...................................... 9,626 Miscellaneous - net............................................... 3,759 TOTAL FUNDS APPLIED................................................... $ 464.531 $434.113
- Decrease (increase) in working capital (excluding short-term securities):
Cash and special deposits.......................................... $ 33,665 $ (3,580) Working funds advanced for construction............................ (2,370) 6,007 Recoverable income taxes........................................... 445 (8,437) Accounts payable................................................... 3,398 (4,700) Taxes accrued...................................................... 1,659 (6,746) Other - net........................................................ (1,617) 7,830 T0TAL................................................................. $ 35.180 $ (9.626) See Notes to Financial Statements.
) MIDDLE SOUTH ENERGY. INC0 NOTES TO FINANCIAL STATEMENTS ' FOR THE YEARS ENDED DECEMBER 31, 1981 AND 1980 )
- 1.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES A. Organization The Company is authorized to conduct business as a wholly-owned subsidiary of Middle South Utilities, Inc. to provide financing and ownership of certain future base-load electric generating units within the Middle South Utilities System (System). E. System of Accounts
)
The accounts of the Company are maintained in accordance with the system of accounts prescribed by the Federal Energy Regulatory Commission (FERC). C. Income Taxes
)
The Company joins its parent in the filing of a consolidated Federal income tax return. In addition, the Company files a consolidated Mississippi state income tax return with certain other System companies.
) The Company's interest expense and capitalized taxes are deducted currently for tax return purposes. Deferred Federal income taxes are provided for the incone tax effect of such taxes capitalized for book purposes. The allowance for funds used during construction is excluded for purposes of determining taxable income. )
Non-current recoverable Federal income taxes represent the tax benefit of the Company's portion of the consolidated Federal tax losses which is expected to be realized during the loss carryforward period.
) Investment tax credits allocated to the Company are deferred and will be amortized, based upon the average useful life of the related property, beginning with the year allowed in the consolidated tax return. Unused investment tax credits at December 31, 1981 amounted to $133,768,000, of which $909,000 may be carried forward through 1991, $19,952,000 through 1992,
) $30,556,000 through 1993, $44,210,000 through 1994, $20,563,000 through 1995, and $17,578,000 through 1996.
)
)
Cons t r uc t lin, p- ..as constructim, _ sta-. in is placeo the same manner these credits to the After income the propertyrecoverable non-cash items, cash earnings. construction costs is included in rates effect on current charged to pr ov i s ions its accrual service, the AFDC through depreciationConpany determinesof related incone The from customers service. cost, net common equity as charged for utility actual interest on average e rate for nlus AFDC based stated on rate of return The Company accrued the ll, taxes, a authorities. through October used was allowed by regulatorvof AFDF at a 11.6L 1980, rate the rate of return approvalapplied A equity conponent Beginning November 1, final regulatory 1980. 13.7'; , subject to approved in Tulv 1981 and uas increased to of 1 61 was S rate of return to November 198u. retroactively
- 2. COT 11TS1ENTS AND FIN ANCING Proaran contemplates ConstrucLion
$ Company's construction program AFDC) for $419.3the Grand Gulf The million, expenditures (includingapproximatelv of in 1982, 1983, and 1984, in constructionStation (nuclear) 87.52: interest Generating and $298.5 commercial
$216.1 mi11 ion, Based upon nilits1ionanticipated February 1983 and a total cost in Note 4, respectivelv Grand Gulf,date, as discussedCompany presently projects approximately dependent $2.1 operation the fuel) for (In ioft No. the of two units 1 operating to be is 1icenses from (excluding nuclearConnercial operation ll, 19M1, billion. the other things, ission. receint Through Decemberthe Grand Gulf Plant.
upon, among in allocation the Nuclear Regulatory Conninvested $2,184 million of the 1,cost that of this 9 the Company had pending final revieu of Unit No. 1 and $461 nillion The Company estimates, the two units was upon investedcompletioninNo.Unit 2 has been and halted between total, $1,723 millionConstruction on Unit No. 1, The schedule other in Unit No. 2. of Unit No. unon, among commercial operation 2 will be dependent 1. pending complete Unit No. of IJnit No. e cost to the comnercial operation things, O
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I Construction of accou.as, for Funds Used Duringregulatory cost systemof Under utility plant, D. Allowance with theappropriate tion (AFDC). work on in progresscredit
, In accordanceitalizes, as an is the Company cap ds used duringincome construcctice, statementof construction borrowed funds an allowance for funutility industry pracharged funds and theinterest co this sheet is net composite equity remove the balanceapproximate return on theis intended to s in for the a reasonable This procedure cost of financing theting As the AFDC and for have no the construction. statement effect of theand income results statement isinplaced treaandin mate as construction labor the propertyrecoverable income construction program manner these credits to theAfter rates C the same items, cash earnings. construction costs isincludedits in accrual me non-cash current d to depreciation determines provisions cost, net of related inco effect on the AFDC charge The Company equity as service, common from customers throughutility service. actual interest a verage onThe Company accrued theOctobe of return h used was charged forrate a for AFDC based the rate onstated of return ratey A authoritie approval. applied taxes, plusallowed by regulatorof AFDC at 1, 1980,to final regulatory 1981 and uns equity 1980.
componentBeginning Novemberbjectapproved in July increased to 13.7 5%, suof 14% wasber 1980. rate of return retroactively to Novem FINANCING COMMITMENTS AND contemplates 2 Construction Pro:ranconstruction AFDC)tely for the program Grand
$419.3 mill i
84,on, Gulf luding The Company's t in expenditures (inc(nuclear) in 1982, 1983, and 19i a of approxima constructionGenerating and Station
$298.5 and a Februnty millionBased 4, :otal 198 upon cost its antic p
$216.1 million, d in Note tly projects aporoximately $2.1 respectively. Grandl)Gulf, as of No. 1 to be discussethe ur itsCompany is dependent'icenses presen for Unit the two 31, 1981, operation date,(excluding the receipt nuclear of fueCommercial operatir.Through Dece ah operatio Gulf Plant.
allocatfor in the Grandcost latory Commission. of the$2,184 1, that ofmillionf this billion.among upon, the Nuclear Regu other things, invested pendingcompletion of Unit No. No.No.1 2 has and been
$46 ha the Company units hadThe upon Company was invested estimates, in Unit The schedule and mong other llion on Unit 1 between the twototal, ration$1,723 of Unitmi Construction No.ill be1 dependent upon, a in Unit No. 2 of Unit No.
pendingcomplete commercial ope Unit No. 2 wcommercial operation cost to the things, 7
E J Allowance for Funds Used During Construction D. In accordance with the regulatory system of accounts, the Company capitalizes, as an appropriate cost of utilityUnder plant, an allowance for funds used during construction (AFDC). O this utility industry practice, construction vork in progress on the balance sheet is charged and the income statement is credited for the approximate net composite interest cost of borrowed funds and for a reasonable return on the equity funds used for construction. This procedure is intended to remove from the income statement the effect of the cost of financing the O construction program and results in treating the AFDC charges in As the same manner as construction labor and material costs. non-cash items, these credits to the income statement have no effect on current cash earnings. After the property is placed in service, the AFDC charged to construction costs is recoverable from customers through depreciation provisions included in rates charged for utility service. The Company determines its accrual O rate for AFDC based on actual interest cost, net of related income taxes, plus a stated rate of return on average common equity as allowed by regulatory authorities. The Company accrued the equity component of AFDC at a 11.6% rate through October 31, 1980. Beginning November 1, 1980, the rate of return used was O increased to 13.75%, subject to final regulatory approval. A rate of return of 14% was approved in July 1981 and was applied retroactively to November 1980.
- 2. CO.T tITMENTS AND FINANCING Construction Program O
The Company's construction program contemplates construction expenditures (including AFDC) for the Grand Gulf Generating Station (nuclear) of approximately $419.3 million,
$216.1 million, and $298.5 million in 1982, 1983, and 1984, O respectively. Based upon its anticipated 87.52% interest in Grand Gulf, as discussed in Note 4, and a February 1983 commercial _
operation date, the Company presently projects total cost (excluding nuclear fuel) for Unit No. 1 to be approximately $2.1 billion. Commercial operation of the two units is dependent upon, among other things, the receiptThrough of operating licenses December from 31, 1981, 0 the Nuclear Regulatory Commission. - the Company had invested $2,184 million in the Grand Gulf Plant. The Company estimates, pending final review of the cost allocation , between the two units upon completion of Unit No. 1, that of this total, $1,723 million was invested in Unit No. 1 and $461 million in Unit No. 2. Construction on Unit No. 2 has been halted pending commercial operation of Unit No. 1. The schedule and O cost to complete Unit No. 2 will be dependent upon, among other things, the commercial operation of Unit No. 1. O
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Revolving Credit Agreenents At December 31, 1980, the Company had issued $671 million of promissory notes under a revolving credit agreement of
$808 million with a number of banks bearing interest at 110% of the sum of the prime rate of a specified New York bank and 3/4 of 1%. Under this agreement, the Company paid a fee on the unused portion of the commitment and was required to maintain a 5% {
compensating balance on the amount outstanding. Effective June l 15, 1981, the agreement was anended and restated, increasing the ' commitment to $1.311 billion. i At December 31, 1981, the Company had issued $941 million of promissory notes under the restated agreement. Thd.a agreement terminates on the earlier of the date the first unit is placed in commercial operation or December 31, 1983 at which time the outstanding principal can be converted to term loans with the banks. Such term loans vould mature December 31, 1986 subject to i mandatory prepayments of $100 million per year plus interest l commencing with the year following the termination date. The l promissory notes bear interest at 110% of the sum of the prime l rate of a specified New York bank and 1.3%. The Company pays a fee on the unused portion of the connitment. No compensating balances are required. During 1981 and 1980, the average interest rate on borrowings under these agreements was 22% and 18%, respectively. Subsequent to year-end the Company negotiated a $315 million loan agreement with a group of foreign banks to supplement its existing credit facilities.
,First Mortgage Bonds The Company placed $400 million of 9.25% First Mortgage Bonds due July 1, 1999 and $98.5 million of 12.50% First Mortgage Bonds due January 1, 2000 with a limited number of institutional investors in 1977 and 1980, respectively. Bonds of the 9.25%
Series are redeemable through nandatory sinking fund payments totaling $328 million, with annual requirements ranging from $32 million to $56 million beginning in 1982 through 1988. Bonds of the 12.50% Series are redeemable through mandatory sinking fund payments totaling $93,525,750, with an annual requirement of
$6,235,050 beginning in 1985 through 1999. Substantially all of the Company's utility plant is subject to the lien of its first mortgage bond indentures. The $32 million sinking fund payment due in 1982 has not been classified with current liabilities as the Company intends to refinance this obligation on a long-term basis through existing credit facilities.
4 The Company has covenanted with the bondholders that it will complete the first unit of the generating plant no later than December 31, 1984 and the second unit no later than December 31, 1988. In the event either of these covenants is not fulfilled or the Company defaults with respect to either the honds or the bank a borrowings, the bonds and the bank borrowings will become due and payable unless extensions ?f time can be arranged. In these cases, Middle South Utilities, Inc. would be required to provide the Company with sufficient funds, to the extent not obtained from other sources, to meet these obligations. O Anreements with Middle South System Operating Companies The Company and the System operating companies have entered into a series of agreements (collectively, Availability Agreement) whereby (i) the Company has agreed to sell the power available to it from the Grand Gulf Plant to the operating O, companies and (ii) the operating companies have agreed to make payments or subordinated advances adequate to cover (to the extent not covered by amounts paid for power purchases) all of the operating expenses and certain of the capital costs of the Company. Under certain circumstances, payments under (ii) above may be required to be made commencing December 31, 1984 if the U first unit of the plant is not in commercial operation by that date. The Company has assigned its rights to payments from the System operating companies under the Availability Agreement to secure the first mortgage bonds and the borrowings under the revolving credit agreements described above. O In addition, the Company and the System operating companies, in June 1981, entered into an agreement whereby the operating companies are obligated, if the first unit of the plant is not in commercial operation by December 31, 1983, to make advance payments for power purchases to the Company which in the aggregate total $12.5 million per month, such payments commencing U, January 2, 1984 and continuing until commercial operation of the first unit or December 31, 1984, whichever occurs earlier. Short-Term Borrowings The Company has obtained short-term borrouings both V through lines of credit established with various banks and through the issuance of unsecured short-term notes with several additional banks. Borrowings under the lines of credit mature on March 31, 1982 and bear interest rates based on the prime rate of a New York on the unsecured notes are based primarily bank. Interest on the Federal funds rate. O o %/ O
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orrouings under these arrangements were as follous: December 31, December 31, 1981 1980 (In thousands) Lines of credit...................... $72.600 160.000 Outstanding borrowings under lines of credit.......................... $62,375 $38,151 Other short-term borrowings.......... 30,000 40,000 Total short-term horrouings.......... 142,l" $7_S.151 Average borrouing: Lines of credit.................. $37,124 1 0ther............................. 0 20,428 l Total average horrowing.............. 111,839 $57.552 l Average interest rate: Lines of credit.................... 19.3% 16.1% 0ther.............................. 17.6% 14.4% Combined........................... 18.4% 15.7% Compensating balances (restricted as to uithdrawal at December 31, 1981) $ 1.715 S 1.800 Nuclear Fuel Lease As of December 31 1981 the Company has a nuclear fuel lease permitting a maximum of $110 million in nuclear fuel. Lease payments, based upon nuclear fuel use, will be treated as cost of fuel. The lease, unless sooner terminated by one of the parties, vill continue through October 15, 2029. The unrecovered cost base of the lease at December 31, 1981 and 1980 was
$92,173,000 and $55,211,000, respectively.
- 3. RETAINED EARNINGS The provisions of the Company's bank loan agreement and first mortgage bond indentures restrict the amount of retained earnings available for cash dividends on common stock. As of December 31, 1981, none of the retained earnings were available for cash dividends.
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orrouings under these arrangeme.ats were as follous: December 31, December 31, 1981 1980 (In thousands) Lines of credit...................... 1 7 ,2 R R OM Outstanding borrowings under lines l of credit.......................... $62,375 $38,151 l Other short-term borrowings.......... 30,000 40,000 Total short-term horrowings.......... 192x375 $78.151 Average borrouing: f Lines of credit.................... $37,099 $37,124 l 0ther.............................. 40,740 20,428 ! Total average borrouing.............. $77.839 $57.552 ( f Average interest rate: Lines of credit.................... 19.3% 16.1% 0ther.............................. 17.6% 14.4% Combined........................... 18.4% 15.7% Compensating balances (restricted as to withdrawal at December 31, 1981) $ 1.715 S 1.800 Nuclear Fuel Lease ! l As of December 31, 1981 the Company has a nuclear fuel lease permitting a maximum of $110 million in nuclear fuel. [ Lease payments, based upon nuclear fuel use, vill be treated as cost of fuel. The lease, unless sooner terminated by one of the parties, vill continue through October 15, 2029. The unrecovered cost base of the lease at December 31, 1981 and 1980 was '
$92,173,000 and $55,211,000, respectively.
- 3. RETAINED EARNINGS The provisions o the Company's bank loan agreement and first mortgage bond indent Aes restrict the amount of retained earnings available for cash dividends on common stock. As of December 31, 1981, none of the retained earnings were available for cash dividends.
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- 4. ACQUISITION OF UNDIVIDED INTEREST During 1980, the Company entered into a " Joint Construction, Acquisition and Ownership Agreement" with South g- Mississippi Electric Power Association (SMEPA) which provides for the acquisition by SMEPA of a 10% undivided interest in the generating units being constructed.
Under this Agreement, SMEPA advanced, from November 1980 through June 1981, 1007, of the cost of construction until such time s their advances aggregated 10% of the total cost of O construction after giving consideration to the allouances for funds used during construction accrued by SMEPA and by the Company. Thereafter, the Company and SMEPA fund the cost of construction in their respective ownership percentages. g Negotiations are also currently being conducted for the acquisition, by a third party, of an additional 2.48% undivided interest in the generating units being constructed.
- 5. RATE MATTERS The Availability Agreement requires the Company to sell 9 all of the power available from its share of the Grand Gulf Plant to the System operating companies. Such sales will be made l either under a power purchase agreement or under the System Agreement. Rates for such sales must be filed with the FERC.
The Company presently contemplates that it will tender such rates n for filing with the FERC between 120 and 60 days prior to the date ?' upon which electric service of Unit No. 1 is to commence, as provided in current FERC regulations. Once filed, such rates will be subject to FERC review as to their justness and reasonableness and may be nodified by the FERC. O O O 0 C)}}