ML17208A445

Annual Financial Rept 1979

ML17208A445
Person / Time
Site:	Saint Lucie, Turkey Point
Issue date:	02/08/1980
From:	FLORIDA POWER & LIGHT CO.
To:
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ML17208A444	List: L-80-116, Forwards Annual Financial Rept 1979 ML17208A445
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NUDOCS 8004150411
Download: ML17208A445 (54)

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About Our Business Of Our Future Florida Power 5 Light Company (FPL) has been engaged in the electric utility business since Dec. 28, 1925, the date of its incorporation under laws ofthe State of Florida. The formation brought under one banner an unlikely grouping of small businesses electric generating plants, ice houses, street car systems.

a steam laundry and even an ice cream factory.

Acrazy-quilt realm of 58 assorted enterprises, the new Grm began delivering electricity that Grst year to some 86,500 scattered customers. At the time, total generating capacity was 156 Megawatts (Mw), and average price for residential service was 8.01 cents per Kilowatt Hour (KwH).

From that modest beginning, FPL has emerged as one of America's foremost investor-owned electric utilities.

Today. the Company supplies service to more than 2.1 millioncustomers who live and work in FPL's 27. 650-square-mile service area. Total capability ofthe 10 operating plants and two plants on reserve is 11,328 Mw. The average price per KwHfor residential service in 1979 was 4.66 cents, indicative ofmany economies introduced over the years.

It is this demonstr'able effort to provide the public with the best possible sernce at the lowest feasible cost that keeps FPL always on the lookout foe better and more efGcient ways to produce electricity in the decades ahead.

Ifthis brief history shows anything at all. it is that the 1980s. once they arrive, are apt'to be as different from the '70s as the Depression-ridden '30s were from the Roaring '20s. Maybe better, maybe worse, but certainly not without challenge and opportunity.

There is a saying in the electric utility industry: "Today's power is yesterday' foresight."

EVith lead times for the planning and construction ofnew generating facilities running up to 12 years. with regulation and inQation making new capacity almost prohibitively expensive and with fuel sources a matter of growing worldwide concern. that statement never has been more axiomatic than it is right now.

Amidthat backdrop of unpleasant current events, FPL is pressing foward in its public responsibility ofanticipating and meeting tomorrow's energy needs.

To this visionary task. FPL pledges its continuing invesunent ofthe time, the talents and the energies ofthe Company's employees, ofGcers and directors. For more about these concerted effor.s, please turn to page 4.

ln Our Report; 2 Chairman's Letter 4 Preidevn FPL Enters the Eighties 8 Review: The Year 19r9 17 Five-Year Summary of Operations 1S Discussion ofOperatmg Resuks

"'9 Opinion ofAccountants 19 Finance Section Contents 36 Information for Investors Corporate Leadership irrsidc frrtcfrcover Concerning Our Photography Throughout dus report. the Corporate character of FPL is embodied in the theme.

Generatmg Faith in the Future." To illustrate the magnitude ofthe building done m the past by those who created our present. photos ofeach plant in the Company's generating system are presented on pages 8-15.

Then. to augment that pictor'eries. another set of photos on pages 5 and 7 shows some ofthe groundwork bemg laid at FPL today by those who are planning and building our future.

On Our Cover Asplendid new day dawns over Fort Myers Power Plant on the Caloosahatchee River in Florida's prospetmg southwest tegion.

Here's Our Address Florida Power gt Ught Company 9250 w. Ragler St.

P.O. Box 529100 Miami. Fla. 33152 Te!ephonet 305/5524552

I

Financial Highlights (Thousands Except Per Share Data)

Operating Revenues..........

Fuel Expenses Total Operating Expenses..............

Operating Income i%et Income Common Shares Outstanding Average..

Earnings Per Share Dividends Paid Per Share..............

Total UtiTityPlant.

Capital Expenditures External Funds Book Value Per Share tvlarket Price Per Share (High)..........

iVIarket Price Per Share (Low)..........

Statistical Highlights Cost of Oil Burned (Per Barrel).........

Customers Year End KwHSales (Thousands)...............

KwH Use Per Customer Residential...

Revenue per KwHResidential (Cents)

Employees Year End MwCapabiTity at Time ofSummer Peak..

Mw Peak LoadSummer.............

Mw Peak Load)Vinter..............

Percentage OilGeneration.............

Percentage Nuclear Generation.........

Percentage iVatural Gas Generation.....

1979

$1,933,937

$812,S98

$1,632,133

%01,S04

$204.668 40,524

$2.32

$o,458,513

$574,S25

$249,220

$34.31 7/S 24 1/8

$17.47 2.140.587 41,965,810 11,354 4.66 10,337 10,957 S,6o0 S,791 OOO 26.0 18.8 1978

$1.647,226

$551,3r 6

$ 1.328. 529

$318,697

$211,241 40.120

$4.54

$2.00

$4,983.794

$472,S30

$151,866

$32.49 29 3/8 23 5/8

$ 12.33 2.032,298 40,602.076 11.790

4. 10 9.750 10.886 8.345 8.617 50.8 29.9 19.3 Percentage

~Chan e

17 47 23 (5)

(3) 1 (r) 16 10 22 64 6

42 3

(4) 14 6

1 2

1979 The FPL Dollar / Where It Comes Fram 1978 Residential 50c 5i c Residential Commercial 35c ssc Comm erciai Indusatal sc Other 9c 6c Industrial 8c Other The FPL Dollar / Where ltGoes ate a+

aae F el Taxes 15c Payroa and Benettts 11c Oepreciation 8c Interest Tc Civadencs 6c Retained Sam<ngs 4c Other 8c 19c Taxes tac Payroll and Senefiex 9c Oepreclatlon 8c Interest 6c Oividencs sc Retained Earnings Tc Other tlFPL

My Fellow Investors Looking back on 1979, we can see ample evidence that FPL continued to operate soundly and the Florida economy remained healthy. That's the good news.

However, there is bad news too. The present fuel adjustment dause prevents our Company from recovering millions of dollars offuel price increases. This is largely due to the lag in application ofthe fuel adjustment. In theory, recovery would come with a corresponding decline in fuel costs to pre-1979 levels. But I haven't heard one rational observer predict such a decline.

You wtli6nd details ofour stewardship over your investment in the following pages ofthis 1979 Annual Report. But as you read, remember that your Company's operations and results are often more greatly inQuenced by political opportunists and bureaucratic diktat than by management analysis and decision. In your own enlightened self-interest you should participate actively with us in the political process.

Nowhere is this need for cooperative and coordinated activity greater than in the political processes that, affect fuel decisions. Last year we reported fuel costs that represented about n;le-third of the outgoing FPL dollar. Today that Ggure is over 40 percent.

In the past, FPL's fuel phnning was generally dictated by geography and our desire to hold down the rates paid by customers. Geography preduded coaL And since imported oil used to be a bargain. it was economical for us to build for imported oi1 as our primary fue!.

Economics and foresight also led to our diversified fuel mix. Currently we use 55 percent oiL 26 percent nuclear and 19 percent natural gas. This has consistently produced for our residential customers electric rates that run at or below the national average. Compared with other Florida utilities, our rates have consistently ranked among the lowest one-third.

Now, however, circumstances threaten the adequate, reliable and economical electric service we'e long delivered to our customers. These circumstances are largely political.

statutory and regulatory. And they seem to penalize us for the very same policies we adopted to beneGt our customers.

For example. we could have had national legislation to encourage exploration for and production of domesuc oiL Instead, we have legislation the s~ed "windfallproGts tax" that willactually strengthen OPEC.

We could have had legislation and regulation designed to expedite the approval and construction ofnuclear plants. Instead, we have legishtion that encourages frivolous intervenor delays by offering to pay the intervenors'xpenses out oftaxpayer money. And we have Administration spokesmen who damn the nuclear option with faint praise.

No wonder construction ofadditional nuclear plants is considered an unacceptable 6nancial risk by almost all American utilities today.

This brings us to coaL And we are told U.S. coal resources may equal a 400-year supply. We at FPL have planned that plants we start in the 1980s wiG be coal-Gred. But there are several major concerns about heavy reUance on coaL

~ First, the Administranon is a house divided. While DOE pushes forward on coal, EPA and OSHA hold back.

Excessively restricting safety and environmental regulations hobble the increased use ofcoaL

~ Between coal in the ground and coal in the hopper car comes the miner.

And a union tom by charges ofpast FPL Chairman htatshail McDonald taking Grsthand look at Tampa E~

Company's Big Bend coal plant.

Bpeciai credit is extended to Tampa E!echoic Co.

for its cooperation.

2/FPL

corruption and present weakness.

"WQdcat" strikes have been commonplace. And in dealing with labor. the Washington Administrauon has shown little sign ofspine.

~ Ifthe coal does get mined, itmust be transported on railroad faciTities and equipment that are already creaking and groaning. Can railroads raise capital needed for construction and improvement? Can they do itin time?

~ Coal can be burned only under environmental restrictions so excessive that they cause staggering increases in capital and operating costs. These increases fuel inffation and swell bills paid by ultimate customers.

~ These same excessive requirements raise physical and chemical

obstades, too. As a result. new coal plants are often avaihble for service less than 60 percent ofthe time.

~ There is opposition to coal-Gred plants that is just as weilorganized and unreasoning as the opposition to nudear plants. Itusually involves the very same people. Their obvious goal isn't really a "dean-energy" nation; their goal is a "no-energy" nation, to match their no-growth, back-to-the-1800s ptulosophy.

~ The Interstate Commerce Commission indicates Qmt railroad tariffs should make the delivered cost of coal equal the delivered cost ofoilat the same destination. Add the cost ofover-regulation and coal won't give utiTitycustomers any bargains.

The very nature ofthe utilitybusiness and today's fuel crises underscore the importance ofcareful phnning. But the

~ government. which should be hcilitating the process, keeps getting in the way of sound planning and productive action.

One recent Administration proposai would have forced utiEties like FPL to reduce our oil use 50 percent by 1990.

Otherwise we would have faced a harsh choice: generate less electricity than our customers need, or use more oilthan the limit. The Grst course would leave many customers out of work and in the dark.

The second ivould incur hundreds of millions of dolhrs in penalties. an added cost that would burden customers with much higher bills.

We must plan with the possibility ever before us that such proposals can become law. How, for example. could we meet this 1990 deadline? Must we just write offsomething like $L5 billionof undepreciated investment in oil-Gred plants? Must we rush to build new coal units at an estimated cost of $10 billion?

When we consider Florida's growth, the linkbetween electricity and living standards, and the capital and resource requirements for such a program. it is only honest to say, "We just can't get there from here."

Still, we must do what we can. We'e rising to the challenge in several innovative ways. One way is by testing a technology to modify our oil-burning units to burn a mme ofGnely powdered coal suspended in oiL We'e pioneering with coalwil proportions well beyond those tried before. We'H invest more than $14 millionon this test. but it could save our customers as much as $87 millionper year. And our dependence on imported oil.could be reduced by 16 millionbarrels a year.

One way the customer can help is energy conservation. Our campaigns directed at builders and customers are showaig measurable effects. We hope to achieve a sufffcient reduction by 1990 to equal the production oftwo generating plants. By not having to build those plants. the company's capital burdens will be eased... and so willour customers'uture bills.

However, we must not delude ourselves into thinking our countryor our state can conserve its way out of the energy crisis. Population grows.

'emand grows. Dedining oil supplies willactuallyincrease demand for electricity. Voluntary conservation can only moderate the increasing need.

Mandatory conservation might do somewhat better. But the price would be an intolerable erosion ofpersonal liberty, and a cruel drop in the quality oflife.

Allthis clearly hdicates that our nation sh'll does not have what it really needs-a policy that focuses on energy production. A policy that coordinates regulatory actions. and measures them by cost/beneGt standards. A policy that replaces exotic energy fantasies with the here-and-now realities of coal and nudear energy. A policy that allows Americans to make their own f'ree choices in a market environment. where energy prices truly reQect energy costs.

How can we get such a positive policy?

The answer lies in one fortunate fact:

this is a nauonal election year.

This gives you, as an individual, an opportunity to move our government toward a sane energy policy.

You can demand ofincumbent officeholders ~hat oppressive and costly restrictions which hobble energy production be removed.

You can ask each candidate for offfce how he stands on energy matters. Press for specifics. Don't swallow the usual campaign generalities. Listen for key words and phrases that simply camouQage new taxes, new reguhtions, new subsidies and new bureaucracies to administer them.

Then. vote your convictions. Ifenergy is not important enough to your personal life. to your economic weil-bein, for you to express concern about it to candidates for ofGce. you can only expect more of the muddle-headed fumbling thus hr displayed by our political establishment.

Marshall McDonald Chairman ofthe Board February 8, 1980 FPL/3

Charting a Course into the Eighties Building for the future is a ticklish business.

It always has been and probably always willbe.

Because it takes foresight and fortitudetwo decidedly uncommon

~mues, rarely found in combination plus lots oi planning, a little luck and.

usually, a substanual bit ofteamwork.

Together, these are what have made America dick.

'ertainly, it took just such a nLmue to get FPL humming back in 1925 when the new Company unified a collecuon of properties described by one observer as "held together with wire and rust."

The venture entailed obvious risk.

Uncertainty, then as now, was imposing, know-how, lacking, lights, Qickering, and the work itself, as mind-boggEng as it was back-breaking.

Still, the outlook was considered downright promising. An air ofoptimism overshadowed everything else.

Manifest Destiny Afterall, wasn't the purpose ofthe new Company to provide reliable power and light service to an area so geographically blessed that its destiny was manifest?

It was precisely the kind ofchallenge which would lead America to become the most productive nation on earth and Americans to enjoy the highest standard of Eving anywhere in the world.

Driven by hopes forbrighter days ahead. the early-day FPL pioneers persisted in dreaming their impossib/e dreams. And. just as waves ofsettlers had done years earlier along a succession of westward-moving I'ronuers, they succeeded in turning those Great American dreams of a better tomorrow into a self-fuifillingprophecy.

Sure. there were to be problems along the way. There always are. And solutions would be neither easy nor painless. They never are.

Yet, through it all, the fruitofthose labors stillendures today, as does the FPL goal unchanged after 54 years-of finding improved ways to produce electricity for a growing population.

Only the times somehow have changed.

Many Challenges Remain

)Vhile we still face challenges plenty ofthem, in hctwe as a people seem to have lost sight ofhow "pioneermg spirit" once coped with adversity.

EssentiaHy. the farsighted vision America had ofits future at one time has been reduced to tunnel vision, a view narrow enough to reveal just that which is politicallyfashionable and expedient for the short term.

For example, it has become politically chic forbusinesses, FPL among them. to be attacked for being "too profitable."

'l%tlat's overlooked is that profit remains after all expenses are paid. It not only is the return to those who invest money in the Company, but also provides the means formodernizing and expanding faciTities, investing in new technology and equipment and, ultimately, providing more jobs and ensuring greater future productivity.

Moreover. the wise use of business profits benefits everyone in American society stockholders, employees, consumers, producers and, yes, even government by providing income for pension and insurance funds and tax revenue for'our Federal Government.

For ail the criticism of profit nowadays. the country needs more, not

'ess. because more profit means more employment and more productiinty which. in turn, means less inQation.

As all oius know only too well, there' an enormous inilation problem in our land. President Carter acknowledged that in his 1979 economic message to

Congress, saying, "The corrosive effects ofinilation eat away at the ues that bind us together as a people."

That notwithstanding, it remains in high political style for the American citizenry, stung by progressively bigger bites of inQation, to demand greater governmental "safeguards" and for government to respond by passing regulations to "protect" general welfare.

The regulatory decrees which invariably follow, inei~tabiy take money which otherwise cou!d be spent on new plants. on new research and, in the long run, on the cmation oinew jobs.

Or, on building for he future....

Costly Tradeoff This tradeoff has not been beneficiaL Owing hrgely to such exercises in political expediency, a major portion of what we as a nation save and invest in the future has been lost. And with it, many ofour ambitions and aspirations.

Customers Average iiHh05)

KwHSales iBS!1005) 1.50 1.58 8,17 SOT 1.9T 50 l9. 37 43,n uXSO" ~

Sr.53 34 93 30

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FPL at work generatmg hith ht the future. Above:

fn the futurisnc settmg of FP L's System Control Center. which became operational late m 1979.

power dispatchers have at their Gngertfps instantaneous control ofthe Company's eieazical system. The center's computerized energy management system promises to increase the economy ofoperations by opthnizing operating efGcfency. Below: Bird'snye viewofprogress on St. Lucie Nuclear Unit Vo. 2. yyhen completed in 1983, the 802-Mw unit on Hutchinson island wig produce addinonal fuel cost savings and further reduce FPL's og dependency.

Speaal credtt ts extnded to Tbe Hearst Corp. for sharing copyrighted materials used in this section.

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Clearly, our nation desperately needs to reverse the tide of inQation, to re-establish "the ties that bind us together as a people," to refresh our downtrodden spirits and to revive the American vision ofgreat expectations.

Somewhere along the line since FPL's founding in 1925, self-fulGllingdreams have been shunted out ofthe mainstream ofAmerican thought. only to be replaced by near-gleeful forecasts ofgloom.

Every day, itseems, someone else conducts a survey, predicts a downturn in the economy and then proudly announces that the public is losing faith in the future.

A self defeating activity, ifever there were one....

Problems are ofthe lfind As The Hearst Corp., paying all due respect to the profession ofeconomic forecasting, recently pointed out.

"We'e notfacing a recession. We'e creating one.

"Sure we have an energy problem.

And solving it is going to take a lotof work and more than a little pain.

"Sure we have an inthtion problem.

And there's no way to lickitwithout giving up something. But we don't have to give up anything really important....

Allwe really have to give up is wasting, whether it's in overheated homes, overcomplicated regulations or overblown bureaucracies.

"Our problems are not the soul-searmg ones that beset so much of mankind: the ravages ofwar, starvation, homelessness, lack ofbasic resources.

Ours are mostly in the mind. timidityand an uncertain sense ofnational purpose."

What's needed, the Hearst publishing organization contends and FPL concurs, is for us Americans to stop wringing our hands and instead concentrate on all the things we have going for us. Because, plainly, we must, as a nation. restore our perspective and, with it, our conGdence in the future.

The sooner, the better!

Positive Look at '80s So, for a refreshing change, let' examine a few ofFPL's many positive points as the brand new decade ofthe Eighties dawns.

Arepresentative sampling might ulclude:

~ a modern, integrated system of electric generation, transmission and distribution faclTlties, including 10 power plants in service and two others on reserve...

~ a construction program supported by internal cash generation which helps avoid excessive reliance on capital markets...

e a service territory universally perceived as a desirable place to be...

~ a growing base ofcustomers...

~ a declining pattern ofper~pita energy consumption. a sign that residential customers are responding to the Company's 9-year conservation program..

~

~ a generating capacity ample to meet peak demand which is growing at a rate slower than previously anticipated, again indicating that consumers are conserving energy...

~ a diversity of fuelsresidual oil, distillate oiL natural gas and nuclear about to be bolstered by the addition ofcoal...

~ a management fullycommitted to sound Gscal policy and guided by objectives for which accountability is maintained by a governing Board of Directors...

~ a Corporate reputation for Gnancial integrity. backed by investment grade bond ratings...

~ a level ofoperating performance which has generated dividend growth...

~ a healthy, and thus hr productive, involvement in research and development aimed at expanding and optimizing energy resources...

~ a determination to solve problems, thereby creating opportunity for stockholders and economical energy for customers...

~ a veriGable!hir for innovation in the never-ending search for better ways to do things...

~ and human resources that won't quit!

Add to these assets some ofour many other blessings as a nation. and any rational person has to wonder what all the crying is about.

Obviously, what's needed is for us to stop singing the blues and get on with the work at hand.

And that's exactly what we'e doing at FPL Take the monumental oil problem in our country, for instance.

FPL is trying to help solve the problem, wordng to cut down on the use ofoil, by:

~ completing the Company's fourth nuclear unit, St. Lucie IVo. 2...

~ purchasing, beginning in 1980, Opposite Page: The shimmery moon offers a Mw CapabilityYear End poignant reminder ofthe ebb and flowof fuel cydes. These two oil units at Mama Plant east of

'ake Okeechobee near fndiantown were started in Mw Peak LoadSummer lThousand9) 1973 and wiDadd L550 Mwofcapabilhy when they enter service in 1980 and 198L However. FPL has a commitment to coal that is destined to take shape in the formoftwo coal-Gred units to be built'djacent to the nearly completed oilunits.

Scheduled for 1987 and 1989, the coal units willbe in the 700 Mwshe range.

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uranium extracted from phosphates as the by-product of a fertiiizer-processing plant at Mulberry, Fla....

~ announcing plans to build two coal-Gred units, scheduled for 1987 and 1989 completion, at Martin Plant...

~ undertaking experiments aimed at Qnding the most economical way to use coal, including a test project at Sanford Plant to determine ifit is economical and technicaQy feasible to use a high proportion ofpulverized coal mixed with oB as boiler fuel in generating station units designed to burn oil...

~ conducing research into a number of other energy sources, including solar and wind...

~ contracting to buy coal power from Tampa Electric Co., starting in 1985...

~ discussing, with the Jacksonville Ele~c Authority, possible joint ownership oftwo'coal units planned for late in the decade...

~ exchanging power through the Company's 6rst direct interconnecion with Georgia...

~ utilizinga new System Operations Control Facility, a nerve center employing the latest computer technology to monitor and maximize generation, transmission and distribuuon economies...

~ using all the natural gas available to the Company...

~ cooperating with Dade County, in the development of a solid waste disposal faaTity which, when completed in 198L willsave money for taxpayers by furnishing steam forelectricity production at competiive costs without subsidization...

~ obtaining e!ectricity produced as a secondary product of sugar cane re6ning operations of United States Sugar Corp.

in south central Florida under a co-generation agreement believed to be

,the tirst ofits kind in the state...

~ maintaining a leadership role in industry-wide efforts to encourage the conscious, conscienuous and widespread practice ofconservation...

~ and showing, in the process, that the energy dilemma has answers.

Because there must be. Otherwise, there'd be no future to build for.

Yes, FPL is working... and working hard... not only to continue to provide dependable electric power. but also to manage the course of change in such a manner that it willinstillconfidence in those whose lives we touch.

Generating faith in the future. we call it.

FPL at work zecaptur'ng visions ofyesterday which paved pathways ofprogress to the present.

Photos throughout this secnon feature each of FPL's generaring phnts. caDing attennon to the adage.

Today's power is yesterday's foresight.

Ahoy Sanford Phnt (861 hfw) has thtee fossil units (1959, 1972, 1973) located along the St. John' River five mges northwest ofthe CityofSanford.

Below: St. Luae Plant (777 lvfw)rises above the mangrove swamps ofHutchinson Island midway between Fort Pierce and Stuart. Itconsists of

>Vudear Unit Vo. 1(1976) and a second unit (right) under construction. Opposite Page: 1brkey Pomt Plant (2.079.5 hfw) with its two fossil units (1967.

1968) and two nudear units (1972. 1973) is silhouetted by the eariy-morning sun over Biscayne Bay 25 mdes south ofhami 8/FPL

Applying Finishing Touches to the Seventies The ability to face problems and still function effectively requires a positive attitude. Without it. there'd be little alternauve but to quit.

With Iran, Soviet adventurism and over-adoHar-a-gaHon gasoline dominating news headlines. it would be understandable for people simply to give up out'of frustration.

But that's not the way most people work. Most people keep on trying.

Within FPL ranks, at least, that is considered the acceptable way to deal

, with problems.

FPL President John J. Hudiburg said as much in his inaugural address to stockholders at the Company's 1979 Annual Meeting.-

"For us. coming to work is like going to the supermarket." he noted. "Every time you do it. you encounter a whole new set ofhigher prices. It becomes more and more difficultto find new places to save."

StilL he assured the audience. "FPL

'ever stops trying."

Those words not only heralded FPL';

entry into the 1980s. as described on pages 4-7, but also set the tone for the closing ofthe '70s. a chapter in American history dominated by economic uncertainties and shrunken dreams.

Performance Goals In keeping with the perpetual quest to enhance the Company's business capabilities and the value ofits services to the public, Corporate objectives for 1979 were three-fold:

~ to keep increases, ifany. in cost of service per customer in line with increases in the Consumer Price Index...

~ to avoid having to seH common stock under unfavorable market conditions...

~ and to show a measurable increase in the number ofcustomers who regard FPL responsive to their service needs.

Year-end performance appraisal showed progress was made on aH three fronts. Strict Hmitations on spending satisfied the first two objectives. while customers responding to a random

, attitude survey adjudged FPL service to be "good" on the whole.

Responsiveness FPL had its work cut out for it in 1979 as torrential rains, a major hurricane and a flood tested the Company's abiTity to respond in emergencies.

The first stern test came on April25 when record rains feH over extensive portions ofSouth Florida, including 17 inches in Miami within a 24-hour period.

Some 125 FPL workers from as far away as Sarasota were rushed to the storm-stricken area to assist local crews.

and virtuaHy aH service was restored by the next morning.

Hurricane David's trek up the peninsula over the Labor Day weekend was no less challenging. During the storm, more than 300.000 customers were without service in the Company's four East Coast divisions. In order to repair damage and restore service, FPL called in every avaihble crew from the unaf'fected Western Division and then added 370 wori'ers f'rom neighboring utilities and 290 more from local contractors. Despite the prolonged period ofthe storm's impact. felt along aH 375 miles of Florida's Atlanuc Coast.

most outages were restored within 12-24 hours and virtually aH but the most serious shortly thereafter.

F PL employees again worked around the clock to aid families displaced from their homes October 31 when water pouring I'rom a break in the Martin Plant reservoir flooded portions ofthe surrounding countryside. In addition to providing emergency financial aid, the Company undertook efforts to provide medicine, to replace lost or broken eyeghsses.

to make special garbage pickups, to provide sanitary facilities and. in general. to settle damage claims promptly and courteously.

FPL affirmed its commitment to serve in numerous little ways. as welL For example. when Ward Robinson, a Delray Beach customer. said he could not read a portion of his electric billand suggested the use ofdarker lettering, FPL listened. As things turned out, the light lettering had been required by computer billingequipment which would have been "confused" by bold lettering.

But new equipment had been instaHed.

and it could accommodate the change. As a result. it was no problem to insutute the change and make bills more readable.

Another example ofthe Company's readiness to respond to customer needs was seen in the elimination ofthe service charge for changing a name following marriage or divorce.

While these particular changes may seem minor. their underlying meaning is ofmajor significance. for they offer a solid demonstration of FPL's goal to increase responsiveness.

Earnings The dramatic increase in the price ofoil had a pronounced negative ef'feet on earnings per share in 1979. Earnings per share slipped 7 percent to 84.22 Rom

$4.54 in 1978.

Although increased fuel costs are refiected in the Company's fuel adjustment charge, there is a 2-month lag between the use ofincreasingly expensive fuel and the Company's ability to recover costs from.consumers.

Fuel adjustment revenues thus failto keep FPL,9

pace'with current hei expenses.

In 1979, this mismatch led to unrecovered fuel costs of $47.5 million.

The Florida Public Service Commission (FPSC) has scheduled hearings in February 1980 for consideration ofits proposed retnsions to the fuel adjustment clause. Under the proposed revisions. the monthly fuel adjustment charge would be based on 6-month projections, contain an incentive factor based on generating performance and include a "true-up" feature to eHminate the over-or under-recovery of fue! expense. FPL has supported similar concepts in past hearings before the FPSC and is hopeful a new method can be implemented soon.

Fuel Expense Fuel expense cHmbed to $813 mlHon. a figure representing one-half of.total operating expenses.

Primary culprit was increased cost ofoH. coupled with greater use ofoilto meet growing system demand and to replace nuclear generation during reiueHng and maintenance outages of nuclear units.

On Dec. 31. 1979. contract price at Port Everglades Terminal for low sulfur residual oil was $26.69 per barreL.

Higher sulfur oil was $2L21. The corresponding amounts one year eariier were $14. 13 and $11.06. Prices on February 1. 1980 were $28.40 for low sulfur otl and $22.02 for higher sulfur oB.

One rehtively bright spot in this otherwise bleak fuel picture was the performance of the Company's nuclear units, which generated 1L6 billion KwH.

It would have taken 18 millionbarrels of oil at an increased cost of $284 millionto produce an equivalent amount ofpotver.

Still. the proportion ofnuclear generation fell to 26 percent I'rom 30 percent the year before. a figure refiective of refueHng and maintenance schedules.

OH provided 55 percent of generation; natural gas, 19 percent.

Since FPL first began nuclear generation in 1972, fuel savings of $L2 billionhave been realized through nuclear contributions.

Regulation Retail rates. which provide approximateiy 96 percent of FPL revenues, are regulated by the FPSC which on Jan. 2. 1979. was expanded to

~

five members and became an appointed.

rather than e!ected. panel. The commissioners have staggered terms of office. The term of one member expires in January 1981. two terms expire in January 1982 and two in January 1983.

FPL does not have a request for a rate increase pending before the FPSC.

In looking at future needs for rate increases, the Company wiHstrive to achieve its long-ter n goal ofkeeping increases in base rates at or below the rate ofinQation.

The timing oi FPL's next rate case hinges on such factors as KwHsales growth. inQation and the in-service date oithe first unit at Martin Phnt.

Dividends Dividends on common stock were raised to a quarterly rate of60 cents per share from 52 cents (an effective annual rate of

$2.40.

horn

$2.08). commencing tvith the June 15. 1979, quarterly payment.

Total dindend payments tvere $2.32 per share in 1979. compared with $2.00 the premous year.

For the past o-and 10-year periods.

the Company's dividend growth rate ranks among the fastest in the industry.

FPI3 dividend increases in 1978 and 1979 recognize the growing investment by common shareholders through the reinvestment of a large portion of earnings. Increases not only provide a return on this additional investment. but also reQect the Company's desire to move closer to the industry ratio of dividends to earnings.

Financial Strategy An attractive dividend policy and a sound capital structure are key elements in the Company's long-range plans for further Above: Rivdera Pmt (653 Mw). on the western shore of Lake Worth in suburban West Palm Beach.

has four fossil units (1946. 1953. 1962. 1963).

Below: Putnam Plant (446 Mw). the Company's newest. h in a heavily wooded area tianking ().S.

Highway 17 near Palatka. The plant features twin combined~gde fossil units (1977. Hii3). Opposite Page: Day breaks over the Fort Myers Phnt (L176 Mw)with two fossil units (1958. 1969) and 12 gas turbines (1974) on the Caloosahatchee River eight mlles east ofFort Myers.

v v~~<g~.~%+~ ~~jg~cii~cwjYppp i 4~,

A'L 1W FPL

strengthening its Gnancial base.

Capitalization ratios at year's end were 50 percent long-term debt. 38 percent common equity, 3 percent preferred stock with sinking funds and 9 percent preferred stock without sinking funds.

FPL's long-term goal is a mix of 50-52 percent long-term debt. 38-42 percent common equity and approximately 10 percent preferred stock.

While not wishing to publicly sell common stock at current belov:-book market prces, the Company is. in President Hudiburg's words. "looking at the question with more open-mindedness." The decision willbe inQuenced by market conditions. by interest rates and by capital requirements.

Operating Revenues Revenues passed the SL9 billionmark in 1979. rising 17 percent over.the preceding year. Ofthe increase, about

13. 5 percent could be traced to increased fuel adjustment revenue and 3.4 percent to increased sales resulting primarily from new customers.

Energy Sales KwHsales rose to 4L97 billion in 1979.

The increase resulted from a 5 percent increase in the total number of customers and a 2 percent decline in use per customer. Use per residenual customer declined 4 percent to 11.354 KwH. compared to hst year's 11.790.

Customers More Floridians than ever before are being served by FPI The Company added over 108,000 customers in 1979, bringing the total to 2.1 million.

Employees At year end 1979, the Company was serving 367,000 more customers with approximately the same number of employees as in mid-1976. Total employment was 10.337. about 40 percent of whom were represented by the International Brotherhood of Electrical Workers (IBEEV).

Anew collective bargaining agreement with the IBEW was ratted by the member-ship on February 15, 1980. The two-year agreement. effective november L 1979. calls for increased wages and improved benents.

In the year ahead. overail employment is expected to rise slightly in response to government regulation and to the service needs ofmore customers.

Included among Corporate objectives for 1980 is a limitin the net growth of certain staff positions which have been

identified as being "not directly affected by customer growth or mandated by a legal requirement."

>Ianagement Several key management changes were made in the past year.

In January 1979, directors named Marshall McDonald as Chairman ofthe Board and Chief Executive Officer. At the same time, John J. Hudiburg, an FPL veteran of 28 years, was elected President, Chief Operating Of6cer and member ofthe Board.

EVith the election of Hudiburg and Gene A. Whiddon. Fort Lauderdale business executive, Board membership grew to 11 directors. all but one ofwhom live in the FPL service area.

In May, Vice President R.E. Talion was elected Group Vice President.

In June, Executive Vice President F.E. "Gene" Autrey left FPL after accepting the position of President of Middle South Utilities Inc.. a major electric utiTityholding company based in llaw Orleans.

Also in June, McDonald began a year-long term as Vice Chairman of Edison Electric Institute (EED. the association of America's investorwwned electrc utilities whose of6cers act as industry spokesmen on subjects of national importance.

In October. B.L Dady was named Vice President of Management Control and Services and Assistant Secretary.

Promoted to Vice President-Treasurer in December was J.L Howard, who also was named the Company's Chief Finance Oficer.

At the Board of Directors meeting in January 1980. LC. Hauck was e!ected Vice President. Legal Affairs.

Service Area Economy One constant in the changing economic scene is Florida's appeal as a place to cail home. Another is its desirability as a tourist destination.

In 1979. people continued to move into. and to tour. the State in signi6cant numbers.

Tourism. long a staple in the Florida economy, registered a gain of4 percent.

State tourism of6cials phced the number ofamvals at 35.5 million.

The oil situation had an impact on tourism. especially amvals by car. but there was an increase m the number nt tourists arriving by air.

Per-capita spending rose. as weiL and the South Florida area. parucularly, bene6ted from a heavy inQux of Latin American visitors.

Southeast Florida continues to gain stature as an international trade center.

Miami now has a Free Trade Zone in operation which is expected to generate substantial overseas business.

For new residents, there were more job opportunities. Light manufacturing and agriculture two other major segments ofthe state economy continued to make strong contributions.

Population ofthe state increased to 9.25 million, a gain of3.1 percent over 1978.

Meanwhile, estimated population of FPL's service temtory climbed to 4.8 million, a hike of4.5 percent over 1978.

Accompanying the increase in new residents was stepped-up demand for housing. Florida housing starts were running 21 percent ahead oflast year.

Florida currently appears to be in much better position to weather bad times than it was when substantial speculation and overbudding led to the Florida recession of 1974-75. That situation does not exis: today, because the hoQsing construction industry has been much more cautious and construction appears t: be in line with the healthy demand.

Thus, it appears any slowdown Florida might experience willbe prompted by-national events, not by problems within the Florida construction industry.

Peak Demand Because ofheavy airwonditioning requirements, FPL continues to build for summer peak projections.

Last summer. peak demand of8,650 Mwwas reached July 19. It was 3. 7 percent greater than the 1978 summer peak of8,345 Mw.

Arecord peak. a wintertime demand of9.217 Mw, was established on Feb. 4, 1980.

Load Forecast In its forecasting, FPL projects growth rates in high, low and most probable ranges.

In iVovember 1979, these 6gures were revised downward slightly.

In terms ofthe "most probable."

summer peak load through 1990 is expected to grow at a compound annual rate of3.8 percent. con.pared to previous estimates of 4.1 percent.

The reduction indicates the Company's various energy conse~ ation programs are contributing to increased saturation ofenergy-ei6cient homes and appliances.

Growth projections for customers and KwHsales remain about the same as before 3.2 percent for customers and 3.6 percent for sales.

Energy Conservation Amajor aspect of the Company's program to lessen oil dependence is the promotion ofconservation. Simply put, what the Company does not have to generate avoids the use offuel oil.

Activities initiated by FPL in load management and energy conservation include promotion ofWatt-Wise Living homes, new ef6cient "energy code" homes. homes "retro6tted" through an FPL energy audit and energy-ef6cient appliances.

The Company estimates that most major appliances sucn as air conditioners and water heaters are replaced every 10 years. >Vithmandatory federal ef6ciency codes taking effect, replacement appliances. even at the lower end ofthe price scale, willbe higher in ef6ciency than the appliances being replaced.

In another'conservation venture, FPL in 1979 introduced its energy van. a mobile unit showing people many things they can do to save energy.

The goal ofall these conservauon efforts is to reduce growth in energy demand. thereby lessening the nation's dependence on toreign oiland delaying the need to build new power plants.

Generating Capacity At year's end, system capability of FPL's 12/FPL

Above: Cape Canaveral Plant (729 Mw). situated across the fndian River iom the Kennedy Space Center where.iunerica raced to the stars. has a offossil units (1965. Lo69). Below: Stacks of ort Everglades P~t (L58L5 Mw)dwart a commercial jedmer takmg oiffrom nearby Fort Lauderdale-Hoilywood lnternauonal Airport. The plant. named after its homesite at Florida's (argest deepwater port. has four fossil units (Lo60. 196L 1964. 1965) and 12 gas turbines (1971). Opposite Page: Four miles inland from Port Everg(aden is Lauderdale Plant (1.126 Mw)where two fossil units (1957. 1958) and 24 gas turbines (1970. 1972) are in operation. The enc!osed portion ofthe plant dates back to 1926.

FPL/13

10 operational plants stood at 10,957 Mw.

Another 371 Mwwas available at two plants on cold standby status. Should circumstances warrant and necessary permits be obtained, they could be acuvated in 6-12 months.

System capability is expected to rise to 11,732 iMwby year-end 1980 with completion ofMartin Unit Vio. L Construction Construction aimed at providing additional generation to meet anticipated demand in the eariy 1980s is proceeding at Martin Plant and on the Company's fourth nuclear unit, St. Lucie Vo. 2.

The Martin project consists oftwo oil-burning units of 775 ibiw each with planned in-service dates oflate-1980 and mid-198L A rupture in the bank ofthe 6.700-acre reservoir at the site in October resulted in loss ofthe cooling water. Cause ofthe break is not deGnitely known. Resulting design modiGcations, repair ofthe dike and reGlling the hke have delayed by several months the planned in-service date ofthe Grst unit.

Cost ofboth Martin units is estimated to be $645 million, including necessary design modiGcations to the reservoir.

AtSt. Lucie, estimated cost ofthe 802 iMwnuclear unit scheduled.'or 1983 has, been revised upward from $925 million to $L1 billion. The new cost Ggure reGects escalation and "scope" changes.

There are continuing negotiations with various municipal utilities and cooperatives over the sale ofa portion of the unit. An approximate 13 percent interest in the unit is the minimum expected to be sold.

The Vuciear Regulatory Commission has held hearings on grid stability and indicated itwillconduct hearings on antitrust issues rehted to the unit.

Partly as a result ofrevised growth projections, the Company has amended its construction plans, deferring for two years scheduled completion dates for twin 700 Mwcoal units planned for the Martin Phnt site. They now are scheduled for 1987 and 1989.

Another factor in the deferral was a contract signed withTampa Electric Co.

to purchase output from a coal unit now under construction at Tampa's Big Bend Plant. The agreement covers purchase of 292 Mw, 208 Mwand 104 Mwin 1985.

1986 and 1987. respectively.

Also. discussions are proceeding with the Jacksonville Electric Authority concerning joint ownership oftwo coal units in northeast Florida with a possible in-service date in the late 1980s.

Thus. plans are to introduce coal into the FPL generation mix in three ways-via purchase. partnership and sole ownership. Perhaps four ways....

The Company also is experimenting with a mixture ofoil and coal (see Chairman's Letter. pages 2-3). Ifthe testing at Sanford Phnt goes welL the mixture.

consisting of perhaps as much as 50 percent pulverized coal. might be suitable for use in other units. That would enable the Company to substitute coal for expensive imported oil.

In another area, FPL has begun preliminary discussions with Georgia Power Co. regarding possible purchase ofup to a 200 iMwinterest in each oftwo nuclear units that Grm has under construction at the Vogtle Plant near Waynesboro. Ga The units are scheduled to be in commercial operation by 1984 and 1987.

Construction Budget The Company estimates expenditures under its 1980-82 construction program willapproximate $2 billion. excluding amounts related to the discussions with Georgia Power Co. which stillare in an early stage. Capital expenditures are

~ budgeted for$620 millionin 1980.

In 1979. $575 millionwas invested in new faciTities.

As with all forecasts. the construction budget is subject to continuing scrutiny and adjustment.

Financing Throughout the course of 1979, $188.5 millionwas raised through the issuance ofnew securities. Involved were 30-year Grst mortgage bonds with 12'ercent interest rate ($75 million), a privately placed issue of8.70 percent preferred stock ($50 million). a 3-year term loan from three major iVew York banks ($50 million)and issuance ofcommon stock in connection with employee benent plans

($13.5 million).

In addition, approximately $61 million was received f'rom sale ofnuclear fuel to the St. Lucie Fuel Co. to implement a lease arrangement providing nuclear fuel for St. Lucie Unit Vo. L In the period 1975-79. 62 percent of I

funds needed for construction were derived I'rom operations.

External financing needs willincrease sharply in 1980. FPL estimates such needs to be $450 million. including the repayment of$32 millionofshort-term debt outstanding at year end 1979 and the retirement ofa $50 million8V8 percent bond issue maturing in August 1980.

A portion of 1980 Gnancing will involve the planned sale of$125 millionof Grst mortgage bonds in early 5 Iarch.

The Company also intends to raise equity capital by issuing common stock in connection with employee beneGt plans.

Oil Supplies The Company has a contract with Exxon Co. U.S.A. that is intended to provide a substantial portion ofresidual oil requirements through 198L The contract continues year-to-year thereafter. until cancelled by either party. Ifeither party elects to cancel by giving notice in 1980 or in any later year. the contract would continue at fullquantity through the subsequent calendar year and then be phased out over a 3-year period at reduced quantities.

As a result ofthe worldwide oil situation. Exxon in March 1979 began aHocating deliveries oflow sulfur residual oil. From Aprilthrough July, Exxon also allocated total deHveries.

During the year, allocations oflow sulfur oilranged from SM5 percent of contract quantity. Total deliveries, induding higher sulfur oildelivered in lieu oflow sulfur oiL ranged between 93 and 95 percent from Aprilthrough July and 14/FPL

were 100 percent thereafter. The balance ofresidual oil requirements was obtained on the open market..

In order to burn the higher sulfur oil in some plants, it was necessary to obtain authorization from regulatory authorities to exceed emission standards.

In August. the Florid Environmental Regulatory Commission approved a petition by the Florida Electric Power Coordinating Group. ofwhich the Company is a member, to permanently rehx the State's opacity standards.

FPL also was granted a variance I'rom ezisting opacity, particulate and sulfur dioxide emission standards.

In both cases. public health standards were unaffected.

Both the change in opacity standards and the variance must be approved by the Environmental Protection Agency (EPA). Unless or until EPA approval is obtained, the Company may be unable to use higher sulfur oiland comply with emission standards at certain units at certain times, and unless the Company is able to obtain adequate supplies oflow sulfur oil, it willhave to remove these units i'rom service for inde6nite periods oftime or be subjected to substantial civil and criminal penalties.

New oilbwners which, because of their greater ef6ciency, reduce opacity and'particulate emissions are already in place'on seven units at four plants.

In the year ahead. more high-ef6ciency burners are scheduled for installation at Turkey Point, Port Everglades, and Riviera plants.

FPL's contract with Belcher OilCo. for distillate fuel oil for the gas turbine units expired in February 1980. A substantial portion ofdistillate requirements willbe supplied under provisions ofthe residual

'ilcontract with Exxon.

Remaining oil requirements willbe acquired through competitive open-market purchases or new contracts.

tVatural Gas Deliveries Gas, a sulfur-free and clean-burning fuel, is playing an important role in Company efforts to reduce oilconsumption and to increase reliance on domestic resources.

The primary source for natural gas is a contract with Amoco Production Co. that is providing 200 millioncubic feet (MlVICF)per day of6rm gas delivery.

Of particular signi6cance to FPL in 1979 was a 10-year interruptibie gas supply contract signed with Florida Gas Transmission Co. followingezpiration ofthe Company's 6rm contract with Sun Oil Co.

Under the new pact, deliveries averaging 51 i>liXICFper day were made in the hst halfof 1979 on an interruptible basis.

The Company in December 1979 began receiving natural gas under an interruptible contract with Consumers Power Co. Under the contract.

deliveries are subject to gas and pipeline availabirity and continuance ofFederal permits.

The Company has obtained exemptions under the Fuel Use Act which allow the burning of natural gas in gas turbine units; however, exemptions sought forfossil units are pending.

Vuclear Fueled Power In 1979, a portion of a lawsuit was settled with Westinghouse Electric Corp. in connection with the fuel supply and escalation portions of a contract for both Turkey Point nuclear units. Under the settlement. Westinghouse paid FPL

$26 millionin cash and agreed to provide goods and services on favorable terms

=

through 1994. The compensation ultimately willbe passed on to customers in the form oflower costs.

FPL's dispute with Westinghouse over spent fuel removal I'rom Turkey Point has been tried and a decision ofthe court is pending.

The 6rst and second nuclear fuel cores (approximately a 5-year fuel supply through the 1981 reload) for St. Lucie Unit No. 1are under contract with Combustion Engineering Inc. The Company is negotiating with Combustion Engineering for a nuclear fuel contract for St. Lucie Unit sVo. 2.

Additionally, there are uranium contracts with three other suppliers International lvtinerals and Chemical Corp. (which willprovide uranium extracted from phosphates),

United States Steel Corp. and Caithness Corp.

The Company also has a lease arrangement for a portion of the nuclear fuel for St. Lucie Unit No. 1.

Atyear end, the Company's inventory ofuranium was approximately 800.000 pounds.

The Turkey Point steam generators have been experiencing problems. A program ofpreventative plugging of the steam generators has kept the units in

~~ m~C ~t p

L

~Qii 4 g

~t

'pat Opposite Page: Being inaintained on cold standby status is Cutler Pim! (264 Mw)which. when built.

had only trees for neighbors.!4ow located in the heart of suburbia about 15 miles south ofdowntown Miami the plant's three fossil units (1952. 1954.

1955) have been painted shades ofblue and green to blend esthetically with natural surroundmgs.

This Page: Union gunboats once plied the St. Jolm's River at the vicimtyof PaJat)ta Phnt (107 Mw) where FPL also is holding two fossil units (1951.

1956) on reserve. (t is directly across the highway from Pumam Plant.

FPL/15

service with only brieflimitations placed on output due to the steam generators.

To date, 19.4 percent ofthe tubes in Unit No. 3 and 20.6 percent ofthe tubes in Unit No. 4 have been plugged. The Company has been authorized to plug up to 25 percent ofthe tubes in each unit.

The Company has established a planning date ofhte 1980 to begin making permanent repairs to Unit No. 4, although no Grm decision has been made.

Replacement parts for one unit are already on site. Parts for the other unit are scheduled fordelivery in the Grst quarter of 1980. The work willtake an estimated 6-9 months and cost $61 millionper unit. Amendments to the operating licenses willbe required.

In 1979, the Nuclear Regulatory, Commission (NRC) allowed a petition for intervention by one individual in the matter of steam generator repairs.

Hearings willbe held but have not been scheduled yet.

Asuit fordamages was Gled in 1978 against, Westinghouse, the supplier ofthe steam generators.

As a result ofthe accident at Three Mile Island Plant in Pennsylvania and consequent NRC safety reviews, investigations and regulations. FPI. is makhig certain modiGcations to its nuclear units, increasing personnel and intensifying personnel training.

In Retrospect...

It was a trying year...

... and a year of trying...

...a year oftackling problems head on...

...a year oftryingto increase efGciency by working...'..by working smarter. using time more wisely and improving ways of doing things...

...so that brighter days may lie

'head in the decade before us.

That's important. Because, historically. big challenges have resulted in big progress.

Overcoming our present problems wiH do no less.

The afternoon sun sinks behind Manatee Plant (LS28 Mwh 17 mica northeast of Bradenton.

The plant has two fossil units (1976. 1977).

and the man.made reservoir in the foreground covers 4.400 acres at an'average de pth of 12 feet.

16I FPL

Florida Power 8 Light Company and Subsidiaries Consolidated Summary of Operations, The Past Five Years (Thousands of Dollars Except Per Share Data) 1979 1978 1977 1976 1975 OPERATING REVENUES OPERATING EXPEi USES:

Fuel.

Other Operation Maintenance Depreciation

'ncome Taxes Taxes Other Than Income Taxes........ ~.....

Total Operating Expenses.................

OPERATING INCOME.

OTHER INCOME (DEDUCTIONS):

Allowance for Funds Used During Construction..

AHowance for Other Funds Used During Construction.

income Taxes OtherNet.

Other IncomeNet IVCOMEBEFORE hVTEREST CHARGES......

INTEREST CHARGES:

Interest E~nse Allowance for Borrowed Funds Used During Construction.

Interest Charges Net.

NET LVCOME.'"

EFERRED DIVIDENDREQUIREMElVTS....

iVETINCOMEAPPLICABLETO COiWIMON STOCK.

Average Number of Coinmon Shares Outstanding (in Thousands)

Earnings Per Share of Common Stock...........

Common Stock Data Shares Outstanding, Year End Thousands....

Dividends Paid Per Share Dividend Rate Year End Dividend Payout Percentage.................

Price/Earnings Ratio Year End.............

Book Value Per Share Year End............

Operating and Rnanclal Statfstlcs KwHSales Thousands Customers Year End

~.

Revenue per KwHResidential.............

KwHpei Customer Residential............

iVet Warm Weather Capability, Kw-Year End Peak Load, Summer. Kw60-minute.........

Peak Load. Winter, Kw60-minute..........

Reserve CapabiTity Percentage-at Time ofSuminer Peak Nuclear Generation, KwH Thousands.......

Total Uti1ityPlant Thousands..............

Capital Expendime=!including nuclear fuel and AFUDC)

Thousands.

External Funds Thousands..... ~..........

Employees Year End

$1.933.937

$1.647.226

$1.464.584

$ 1. 189.680

$ 1. 182.644 812,898 263,?32 99,490 150,195 lo6,044 149.774 551.376 216,653 85.865 144,267 198,163 132,205 497,015 187,011 67,579 125,166 171,098 117.807 482,347 178,127 67,062 88,591 85,368 96.972 461,335 160,151 59,646 82,322 114.822 87.558 1,632.133 1,32S,529

l. 165,676 301.804 298,908 318.697 998.467 191.213 65,497 965.834 216.810 48,486 30,006 (34) 1.209 31.181 332.985 15?,158 (2S,S41) 128,317 204,668 33.711 20,319 827 3,382 24.528 343.225 146,096 (14.112) 131.984 211.241

'9.

138 16,009 (1,558)

(1.731) 12,720 311.628 144,083 (12.893) 131, 190 180,438 27.653 (298) 1.005 66.204 257.417

'140,572 140,572 116.845 22.378 5.350 (850) 52.986 269.796 124,575 124.575 145,221 20.066 S

1?0,95?

8 182.103 8

152.785 8

94.467 8

125.155 40,524

$4.22 40.120

$4.54 40.050

$3.81 39.542

$2.39 35.940

$3.48 40,819

$2.32

$2.40 5o.o 5.9

$34.31 40,315

$2.00

$2.08 44.1 5.8

$32.49 40,050

$1.66.

$1.76 43.6 7.1

$29.97 40,050

$1.56 81.56 65.3 11.6 827.81 37.050

$1.435

81. (6 41.2 7.7 827.21 10,95?,000 8,650.000 8,?91.000 26.?

11,615,095

$5,458,513

$574,825

$249,220 10,337 10,941,000 8,345,000 8,617,000 30.4 13,273,383

$4.983,794

$472.830

$151,866 9,750 10,644,000 7.841,000 8,606,000 o&.0 13,452,2/6

$4,525.916

$3/5.360 833.240 9.415 9,740.000 7,598,000 7,287,000 13.8 8,647,474

$4,181.839 8469.750

$272.540 9,865 8,927,000 7.076,000 5,807,000

27. 4 8,369.810 83,724.270 8497,233

$418.925 9,911 41,965,810 40,602,076 37.529.397 34,929,541 34.110,898 2,140,58?

2,032,298 1,927,668 1.840,043 1.772.304 4.66e

4. 10e 3.96e 3.50e 3.53'1,354 11,790 11.370 10.968 11,127 FPL/1?

Management's Discussion and Analysis of Operating Results President John J. Hudiburg Despite substantial underrecovery of fuel costs in 1979, earnings per share were $4.22, as compared to $4.54 for 1978. Growth in KwHsales and the rate relief granted in 1977 were primarily responsible for the improved earnings in 1978. The foUotving discussion focuses on factors that have signincantly affected the Company's results ofoperations for 1979 and 1978 when compared to the preceding year.

Operating Revenues Increases in operating revenues are due to the followinghctors:

% Increase in 0

rating Revenues 1979 1978 KwHsales 3.4%

8.2%

Fuel adjusunent and rate changes 13,9 4.2 Other '.1 0.1 Total 17.4%

12.5%

J KwHsales increased primarily as a result ofgrowth in the number of customers of 5.4~c in 1979 and 4.9% in 1978. KwHusage per customer dedined

2. 1% in 1979, reQecting conservation effortsofcustomers.

foUowinga3.3'ncrease in per customer usage in 1978.

Residential customers used 3.7% les",

enemy; rn 1979.

Fuei adjustment revenues in 1979 were $260.9 miilion, up $224.1 miUion.

'r over 600% ofthe 1978 total of$36.8 million. These increases accounted for 18/FPL 13.5'f the increase in 1979 operating revenues and reflect the rapid escalation in fuel costs in 1979.

Average revenue per KwH. including fuel adjustment revenue, for total customers rose to 4.57 cents in 1979.

This compares to 4.02 cents in 197S. the Grst fullyear the present rates were in effect, and to 3.87 cents in 1977.

Operating Expenses Total operating expenses increased by

$304 million. or 23~o, in 1979 and by

$163 mUIIon, or 14%, in 1978. The increases were primarily in fuel, other production including net interchange, maintenance.

depreciation and other tax expenses.

Fuel Expense The greater use ofmore expensive oil-Gred generation to meet the growing system demand and to replace generation during the refueling outages ofthe Company's three nudear units resulted in a 47.4% increase in fuel expense in 1979 followingan llano increase in 1978.

The oil portion of fuel expense increased by $241.6 million, or 53.8%, in 1979. A3.1 millionbarrel (8.5~o) increase in consumption accounted for

$38.4 millionofthis increase, while

$203.2 millionwas due to a 41.6~o increase in the average price ofoil burned. In 1978 the oU portion of fuel expense was $39 millionhigher than in 1977. The amount ofoilconsumed was up 4.7 millionbarrels (15%), but was partially offset by a temporary drop in the price ofoilburned.

Higher unit prices fornatural gas added $13.3 millionand $ 12 million.

respectively, to fuel expense in 19r 9 and 1978. A new interruptible natural gas supply contract was entered into in April 1979 at rates substantially higher than those under an expired contract, but less than equivalent oil prices.

The monthly fuel adjustment charge is based on the cost of fuel used for generation in the second previous month. This mismatch led to an underrecovery offuel costs of$47.5 million($0.60 per share) in 1979. as compared to $3.9 miUion in 1978.

Other Operation and

>Iaintenance Expenses These expenses increased due to higher payroU and related employee beneGts costs. increases in the number of customers and the amount ofelectricity generated.

and the maintenance of new property additions. The increase in maintenance expense in 1978 reQects the Grst annual refueling, overhaul and inspection of St. Lucie Unit Vo. 1. An extended outage to repair the turbine rotor at Turkey Point Unit Vo. 3 and additional expenditures for safety reviews, investigations and regulations resulting from the Three XIileIsland incident are reQected in 1979 expenses.

iVet interchange power purchases were

$4.2 millionin 1979, while in 197S interchange deliveries, which are recorded as a reduction ofother production expenses, were $18.6 million.

Depreciation Increases in depreciation expense reQect new properties placed in service.

Depreciation expense in 1979 and 1978 includes $4.6 millionand $5.8 million, respectively, ofamortization of the canceUed South Dade project costs described in iVote 6Construction Program.

Taxes Fluctuations in total income taxes are generally related to changes in income excluding income taxes and the allowance forother funds used during construction. Income tax provisions were also affected by the reduction in the federal corporate income tax rate from 48~o to 46% effective in 1979. Taxes other than income taxes have increased primarily as a result ofincreased revenues and additions to property.

Allowance for Funds L'sed During Construction (AFUDC)

Total AFUDC increased in 1979 and 197S as a result ofhigher amounts of construction work in progress (CAVIP).

At December 31, 1979 the investment in St. Lucie Unit Vo. 2 and WIarun Units

.Vos.1 and 2 included in CWIP aggregated

$932 million. up $256 millionover a year ago. In addition, beginning in 1978 AFUDC was capitalized on nuclear fuel.

Interest Charges and Preferred Dividend Requirements Sales ofiong-term debt and preferred stock in 1979 and 1978. to Gnance a portion ofthe Company's construction program. resulted in higher interest expense and preferred dividend requirements.

portions of which were capitalized through AFUDC. Interest charges in 1977, 197S and 1979 were-affected by a change in the method of recording AFUDC.

1

Florida Power & Light Company Financial Statements Earnings Per Share

'L969

.8

>6

~ >

'T8

>9 Dividends Paid Per Share Contents 20 Balance Sheets 22 Statements of Capitalization 23 Statements of Income 24 Statements of Retained Earnings 25 Statements of Changes in Financial Position 26 Schedule ofTaxes 26 Schedule ofAllowance for Funds Used Durmg Construction 29 Notes to Consolidated Financial Statements The Consolidated 5-Year Summary of Operanona appears on page 1>.

immeiiateiy precedmg lfanagement'8 Discuaaion and Analysis of Operating Results.

8>><<

Opinion of Independent Certified Public Accountants

!969 Ia

>6

~ T

>8

~ 9 To the Board of Directors and Shareholders, Florida Power &Light Company:

Fuel Expense C>HS006)

~

$900 600 680

" 300 We have examined the consolidated balance sheets and statements ofcapitalization of Florida Power &Light Company and subsidiaries as ofDecember 31, 1979 and 1978 and the rehted consolidated statements ofincome, retained eariungs and changes in Gnancial position for the years then ended. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests ofthe accounting records and such other auditing procedures as we.

considered necessary in the circumstances.

In our opinion, such consolidated Gnancial statements present fairlythe GnancA position ofthe Company and its subsidiaries as ofDecember 3L 1979 and 1978 and the results oftheir operations and the changes in their Gnancial position for the years then ended. in conformity withgenerally accepted accountmg principles applied on a consistent basis.

!80

969

'95 6

.8

':9 DELOITTE HASKINS &SELLS

%Hami. Florida Februarv8 lagP Fpf./19

l

'k

Florida Power 8 Light Company and Subsidiaries Consolidated Balance Sheets, December 31, 1979 and )978 (Thousands ofDollars)

Assets ELECTRIC UTILITYPLANT(Notes 1 and 6):

Atoriginal cost Less accumuhted deprecation.

ilet.

Construction work in progress Nuclear fuel gess accumulated amortization of$33,300 at December 31, 1979 and $21,673 at December 31, 1978) (Note 7)

Electric utiHtyplantnet.

INVESTVEiVSS:

Storm and property insurance reserve fund (Note 1)

Other Total invest ments CURREiVI'SSETS:

Cash(Note3)

Temporary investments (at cost, which approximates market).

Accounts receivable:

Customers ass allowance foruncollectible accounts of$3,978 at December 31, 1979 and $3,478 at December 31, 1978)

Employees and miscelhneous..

Materials and supplies at average cost Fossil fuel stockat average cost.

Prepaid expenses Other

~

~

~ \\

Total current assets.

DEFERRED DEBH'S:

Unamornzed cancelled project costs (Note 6)

Accumulated deferred income taxes (Note 1)

Unamortized debt expense and loss on reacquired debt Other Totaldeferreddebits Total 1979

$4,237,288 1.003,365 3,233,923 1,119,S20 68.104 4.421.S47 9,562 2.499 12.061 6,663 109,552 20,640.

74,906 142.681 20,864 5,846 381.152 10,275 8,808 5,402 7,987 32,472

$4,S47,532 1978

$4,025,649 869.887 3,155,762 806,471 130.001 4.092.234 15,099 6,354 21.453 4,952 28,-701 93,454 6,838 61,(65 85.145 21,471 14.742 317.068 14,842 7,997 5,653 898 29,390

$4.460. 145 The accompanying Schedules and ¹tes to Consolidated Financial Statements are an integral part ofthese statements.

20/FPL

Rorida Power & Light Company and Subsidiaries Consolidated Balance Sheets, December 31, 5979 and 1978 (Thousands of Dollars)

Liabilities CAPITALIZATION(See Statements ofCapitaiization):

Common shareholders'quity Preferred stock without sinking fund requirements Preferred stock with sinking fund requirements Long-termdebt Total capitalization CURREVT LIABILITIES:

Current maturities oflong-term debt and preferred stock iVotes payable commercial paper (iVote 3)

Accounts payable trade Customers'eposits Income taxes (Notes 1 and 6).

Other taxes Interest accrued Pension cost accrued (Note 1)

Tax collections payable Other.

Total current liabiTities.

DEFERRED CREDITS:

Accumulated deferred income taxes (Note 1).

Unamortized investment tax credit (Note 1).

Other.

Total deferred credits RESERVES:

Storm and property insurance (Note 1).

Injuries and damages and other Total reserves COhQrIITMEVTSAiVDCONTINGEiVCIES (Notes 6 and 7) 1979

$1,400,395 311,250 121.250 1.S38.426 3,671.321 55,200 32,000 62,761 S9,986 12,623 72,700 40,520 27,666 15,533 54,626 463.615 448,215 229.60S 13.354 691,177 9,562..

11.857 21.419 1978

$1.309.862 311,250 75.000

1. 766. 861

3. 462. 973 62.618 46.480

79. 120 5 r,257 35.118 39.055 31.919 13,882 44.753 410,202 370,329 176.883 14.939 562.'51 15,099 9.720 24.819 Total

$4.847,532

$4.460. 145 The accompanying Schedules and Notes to Consolidated Financial Statements are an integral part ofthese statements.

FpLrz1

Florida Power & Light Company and SUbsidiaries Consolidated Statements of Capitalization, December 31, 1979 and 1978 (Thousands of Dollars) 1978; Sttsres Outstsndintr 100.000 50.000 50.000 62.500 50.000 50.000 600.000 400.000 500.000 750.000 500.000 111.50 108.70 LONG-TER"rIDEBT (Notes 1 and 4):

First Mortgage Bonds:

.'rlaturing through 1984 3% Due june 1979.

SVs% Due August 1980.

3Vs% Due November 1981 8/so/o Due irfay 1982 3/so/o Due April1983 9Vso/o Due May 1984.

3Vs% Due November 1984 Maturing 1985 through 1994 3%% to 5%

Maturing 1995 through 2004 4sit% to SV4%.

Maturing 2005 through 2009 9Vs% to 12Vs%...

Pollution Control Series A. 6. 10% Due January 2008 10 /4% iNotes Due November 1981 iVote, 1%o over Prime Due February 1982 Bank Notes (under term loan agreement) Due iVIarch 1982 Bank Notes (under term loan agreement)

Due June 1979 Installment Purchase and Security Contracts

5. 40% to 6. 15% due 2004 through 2007...

Promissory Notes 6% to SV4% Due Various to September 1987 Unamortized Premium and Discount Promissory Notes ofSubsidiaries 7V"%o to 9Vs% Due Various to December 1995.......

Total long-term debt Less current maturities Long-term debt exduding current maturities Total capitalization COMMONSHAREHOLDERS'QUITY:

Common Stock, no par. authorized 100.000,000 shares in 1979 and 50,000,000 shares in outstanding 40,819, 178 shares in 1979 and 40,314,552 shares in 1978 (Note 4).......

Capital stock premium and expense Retained earnings Total common shareholders'quity PREFERRED STOCK$100 Par Value, authorized December 31 ~ 1979

5. 000. 000 shares (Note 4):

Redemprion Prxe Preferred stock without sinking fund requirements:

4'%eries...

SIOLQO 4V.% Series A.

~

~

~

~

~ ~

101.00 4'%eries S 101.00 4'6% Series C 103.00 4.32% Series D

~

103.50 4.35% Series E 102.00 7,28% Series F ~

106.57 7.40% Series G

~ ~ ~

106. 23 9.25% Series H.

107.QO 8.70% Series K 109.85 8.84% Series L.

~

~

109.84 Total...

Preferred stock with sinking fund requirements:

10.08% Series I.

744,000 8.70% Series M.

50Q,QOO Less current maturities Total 1 979 5

770,350 (4,038) 634.083 1.400,395 10.000 5,000 5,000 6,250 5,000 5.000 60.000 40,000 50,000 75,000 50.000 311.250 74.400 50.000 (3.150) 121.250 50,000 10,000 100,000 15,000 100,000 10.000 150,000 765,000 386,289 19,400 125,000 4,536 50,000 92,090 3,294 3,464 6.403 1,890,476 (52.050) 1.838.426 83.671,321 1 978 756,841 (3, 751) 5 56.772

1. 309. 862 10.000 5 000 5.000 6.250 5.000 5.000 60.000 40.000 50.000 75 000 50.000 311. 250 75.000

75. 000

10. 000

50. 000 10,000 100. 000 15,000 100. 000 10,000 150,000 765. 000 311,289 19,400 125,000

6. 048 50,000 92,090

4. 145

4. 922

6. 585 1.829.4r9 (62. 618)

1. 766. 861

83. 462. 973

~

221FFL The accompanying Schedules and Notes to Consolidated Financial Statements are an integral part ofthese statements.

0 Florida Power 5. Light Company and Subsidiaries Consolidated Statements of income forthe years ended December 31, 1979 and 1978

{Thousands ofDollars. except per share amounts)

OPERATLVG REVEiVUES (Notes 1 and 5) 1979 1978

$1,933.937

$1.647.226 OPERATING EXPENSES:

Operations:

Fue!

Other production including net interchange Transmission and distribution Customers Administrative and general.

Maintenance Depreciation (i bootes I and 6)

Income taxes (Viote 1)

Taxes other than income taxes Total operating expenses..

OPERATING INCOME..

OTHER INCOME (DEDUCTIONS):

Allowance forother funds used during construction (iVote 1)

Income taxes (Note 1)

Othernet Otherincome net....................................

INCOME BEFORE INTEREST CHARGES liVTEREST CHARGES:

Interest on first mortgage bonds Interest on other long-tenn debt Other interest Allowance for borrowed funds used during construction (Note 1)

Interest charges net NET INCOME.

PREFERRED DIVIDENVDREQUIREMEVi TS NET hVCOME APPLICABLETO COMMONSTOCK....

Avenge number ofcommon shares outstanding (in thousands)

Earnings per share of Common Stock Dividends per share of Common Stock 812,898 47,134 50,910 49,660 116,028 99,490 150,195 156,044 149.774 1.632.133 301.804 30,006 (34) 1.209 31.181 332.985 117,715 27,163 12,280 (2S.S41) 128,317 204,668 33.711 170,957 40,524

$4.22

$2 32 551,376 17,031 46,176 42,839 110,607 85,865 144,267 198.163 132.205 1.328.529 318.697 20,319 827 3.382 24.528 343.225 116.446 24.031 5,619 (14.112) 131.984 211,241

29. 13S 182,103 40, 120

$4.54

$2.00 The accompanying Schedules and iVotes to Consolidated Financial Statements are an integral part ofthese statements.

Fiorida Power & Light Company and Subsidiaries Consolidated Statements of Retained Earnings forthe years ended December 31, 1979 and 1978 (Thousands of Dollars)

BALAiVCEAT BEGLViVINGOF YEAR iVETBECOME Total.

DEDUCT:

Cashdividends:

Preferred stock:

4K'eries ($4.50ashare).....

4'%eries A($4.50 a share) 4Vito Series B ($4.50 a share) 4' Series C ($4.50 a share) 4.32,o Series D ($4.32 a share) 4.35~o Series E ($4.35 a share) 7.287o Series F ($7.28 a share) 7.40",o Series G ($7.40 a share) 9.25% Series H ($9.25 a share);...

10.08'7o Series J ($10.08 a share) 8.70'7c Series K ($8.70 a share) 8.84/o Series L($8.84 a share) 8.70% Series M ($2.562 a share)

Common stock Total dividends............

Preferred stock redemption costs BALAiVCEAT EiVD OF YEAR 1979

$556,772 204,668 761.440 450 225 225 281 216 218 4,368 2,960 4,625 7,560 6,525 4,420 1,Ãl 94,002 127,356

$634.083 1978

$454.529 211.241 665.770 450 225 225 281 216 218 4.368 2 960 4,625 7.560 6,525 1.117 8i).228 108.998

$55'.772 Dividend Restrictions The Charter,'ortgage and Deed of Trust and 10Ã4~o Vote Indenture contain provisions which, under certain conditions, restrict the payment ofdividends and other distributions to common shareholders.

Under the most restrictive of these provisions approximately $532 million of retained earnings was avaihble for payment of dividends on Common Stock at December 31, 1979. In the event that the Company should be in arrears on its sinking fund oMgations, commencing in 1980 for the 10.08% Series j Preferred Stock and in 1985 for the 8.70~o Series M Preferred Stock, the Company may not pay dividends on Common Stock.

The accompanying Schedules and iVotes to Consolidated Financial Statements are an integral part ofthese statements.-

0 Florida Power 8 Light Company and Subsidiaries Consolidated Statements of Changes in Rnanciai Position for the years ended December 31, 1979 and 1978 (Thousands of Dollars)

SOURCE OF FUNDS:

Current operations:

Net income Depreciation Amortization ofnuclear fuel assemblies Deferred investment tax creditnet Deferred income taxes Allowance forother funds used during construction Total.

Sale of Grst mortgage bonds Reimbursement by trustee from pollution control and industrial development 6nancings for construction expenditures Issuance ofother long-term debt

. Issuanceofcommonstock Sale ofpreferred stock Proceeds from nuclear fuel suit Sale ofnuclear fuel Other sources Decrease in working capital Total.

1979

$204,668 150,195 11,992 52,725 77,075 (30,006) 466.649 73,895 o0,081 13,008 49.825 26,000 60,712 22,462

$763,132 1978

$211,241 144.267 11.081 35,646 67,695 (20.319) 449.611 75,202 18.476

(.466 50, 134 20,825 14,164

$635.878 APPLICATIONOF FUNDS:

Construction expenditures'uclear fuel'etirement. redemption and current maturity oflong-term debt and preferred stock Dividends.

Other applications Increase in working capital Total CHANGE IN WORKING CAPITALEFFECTED BY:

Increase (Decrease) in current assets:

Cash and temporary investments Accounts receivable Fossil fuel stock Other changes net Decrease (Increase) in current liabilities:

Notes payable and current maturities oflong-term debt and preferred stock............

Accounts payable Customers'eposits hcome taxes Other changes net BlCREASE (DECREASE) Bf WORKINGCAPITAL

$509,627 35.5o6

$432,586 19.925 55,S10 127.356 24.112 10.671 71,617 108.998 2,752

$763ll32 l

$635.878

$ (26,990) 29,900 57,536 3,638

$ 29,829 13.990 19,063 17, 107 (24,582)

(16,281)

(10,866) 44,634 (46.318)

(49,925)

(6,972) 5,387 (12,383)

(30.260) 10.671

$ (14. 164)

'Excluding Allowance for other funds used during construction.

~i The accompanying Schedules and Notes to Consolidated Financial Statements are an integral part of these statements.

FPL/25

Rorida Power 8 Light Company and Subsidiaries Schedule ofTaxes forthe years ended December 31, 1979 and 1978 (Thousands of DoHars)

Income Taxes FEDERAL:

Charged to operating expenses:

Current Deferred Accelerated depreciation Debt component ofAFUDC.................

Repair aHowance Estimated revenue refunds....

Deferred in prior years Accelerated depreciation Debt component ofAFUDC

, Repair allowance Estimated revenue refunds.

Other Deferred investment tax credit Amortization ofinvestment tax credit Charged to other income:

Current Deferrednet Total federal STATE:

Charged to operating expenses:

Current Deferred Accelerated depreciation..

Debt component ofAFUDC.

Repair allowance Estimated revenue refunds..

Other Deferred in prior years Accelerated depreciation Debt component ofAFUDC Repair allowance...

Estimated revenue refunds.

Other 1979 S.887 52,429 10,276 4,863 (188) 6,915 (2,879)

(I (0)

(1,078)

(I,428) 66,790 (5.291) 139,291 (33) 42 139,300 8,629 6,113 1,176 561 (22) 784 (310)

(86)

(II9) 84 (57) 1978 S 73.659 53,220 6.405 5, 117 (854)

(763)

(1,934)

(662)

(a31) 2,002 47,535 (4.695) 17S,099 (212)

(585) 177.302 13.320 5,835 702 561 (94)

(S4)

(198)

'(73 (102) 197 Total e

~ ~ ~

~ ~

~

Charged to other income:

Current Deferrednet..

~

Total state Total income taxes.

~ ~

\\

~

~

~

16,753, 21 4

16.778 8156.078 20,064 34 (64) 20,034

$197.336 26/FPL

Fiorida Power 8t Light Company and Subsidiaries SChedule Of TaXeS (Concluded)

Total income taxes differfrom the amount computed by applying the statutory federal income tax rate to income before income taxes. The reasons for the differences are as follows:

Computed at statutory rate Increases (Reductions) in income taxes resulting from:

AHowance for other funds used during construction.......

State income taxes net of federal income tax benetits....

Othernet Total income taxes 1979 Amount

$165,943 (16,252) 9,060 (2.673)

$156,078

% of Pre-tax Income 46.o (4.5) 2.5 (0.7) 43.3%

Amount

$196, 117 (9,753) 10,418 554

$197,336 1978

% of Pre-tax Income

48. IFo (2.4) 2.6 0.1 48.3%

Other Yaxes Taxes other than federal and state income taxes:

Federal and state payroll Real and personal property State gross receipts Franchise charges 5GsceHaneous Total other taxes.

1979 S 13,928 41.705 27,981 66,866 17,229

$167.709 1978

$ 11.343 41.308 23,955 55.862 14.907

$147.375 Charged to:

Operating expenses other taxes UtiTityplant and other accounts Total

$149,774 17.935

$167.709

$132,205 15.170

$147.375

Rorida Power 8 Light Company and Subsidiaries Schedule of Allowance for Funds Used During Construction (AFUDC) forthe years ended December 31, 1979 and 1978 (Wlillionsof DoHars) 1979 1978 Monthly average Construction work in progress (CIVIP).

Less:

Fixed amount included in rate base AFUDC previously capitalized and included in monthly average CEVIP Other CEVIP base forcomputingAFUDC

'uclear fuel base for computing AFUDC.

Total base for computing AFUDC Capitalization rate (1).

Total AFUDC charged to CWIP and nuclear fuel Amounts credited to interest charges (2)

Amounts credited to other income (2)

S970.1 200.0 97.9 0302 619.0 30.o'49.5 9.06%%uo 58.8 28.8 S 30.0 8669.9 200.0 60.9 76.9 332.1 46.3 378.4 9.1No 34.4 14.1 S 20.3 (1) The AFUDC rate is determined by a formula set by the Florida Public Service Commission (FPSC). The rate is calculated by applying the capital ratio of each component ofcapital to its current embedded cost, except common equity, for which the rate allowed in the Company's last retail rate case is used as its embedded cost. The debt component is not reduced by the applicable income taxes. A formula is also provided by the Federal Energy Regulatory Commission (FERC) forcomputing the maximum AFUDC rate. The rate used by the Company to compute AFUDC does not exceed the maximum established by FERC.

(2) In 1978 the allocation oftotal AFUDCbetween borrowed funds and other funds was based on the respective proportions ofthe borrowed funds component and the other funds component ofthe total AFUDC amount determined by using the formula set by the FPSC. In 1979, as a resultofa FERC directive, the Company began allocating total AFUDC between borrowed funds and other funds by computing the borrowed funds component using the FERC formula. with the residual AFUDCbeing reported as the other funds portion; thus, while the FPSC formula is still utilized to compute the total amount of AFUDC, the borrowed funds portion in 1979 is identical to that which would be reported ifthe FERC formula were being used. The FERC formula differs from the FPSC formula in that it includes short-term borrowings and assumes that such borrowings are the Grst source of funds for construction, but excludes accumulated deferred income taxes. The Company has continued to provide deferred income taxes on the borrowed funds portion of AFUDC determined by the FPSC formula.

zsi FFL

Rorida Power & Light Company and Subsidiaries Notes to Consolidated Financial Statements forthe years ended December 31,1979 and1978

1. Summary of Significant Accounting and Re porting Policies Regulation: Accounting and reporting policies of the Company are subject to regulation by the Florida Public Service Commission (FPSC) and the Federal Energy Regulatory Commission (FERC). The followingsununarizes the more signiGcant ofthese policies.

Basis ofConsolidation: The consolidated Gnancial statements include the accounts ofthe Company and its wholly-owned subsidiaries.

AHsigniGcant intercompany balances and transactions have been eHminatecL Rates and Revenues: Revenues are recognized based on monthly cycle billings to customers. Retail and wholesale rate schedules are approved by the FPSC and the FERC, respectively. The rate schedules contain a fuel adjustment clause which gives effect to changes in efGciency, the cost of fuel as weH as the fuel component of purchased power, the total energy cost ofeconomy interchange and the generation mixoffossil and nuclear fuels.

GeneraHy, the changes are reQected in customer billings about two months after they occur.

Electric UtilityPlant and Depreciation: The cost ofadditions, replacerrents and renewals ofunits of property is added to utiTityplant. The cost (estimated. ifnot known) ofunits of property retired, fess net salvage, is charged to accumulated depreciation.

iVnntenance and repairs ofproperty, and replacements and renewals ofitems determined to be less than units of property, are charged to operating expenses maintenance.

Book depreciation is provided on a straight-line service-life basis by primary accounts as directed by the FPSC using the foHowing rates:

Steam production phnt.......

3.2%-46%

Nuclear produc>>on phut......

3.2%4.2%

Other producuon plant........

5.0%~.5%

Transmission phnt'...........

1.5%-3.3%

Distribution plant............

2.0%4.6%

General plant........... ~...

2.1%-7.8%

Trans portadon equipment.....

9.0%

The weighted annual composite depreciation rate was approximately 3.7% in 1979. The nuclear production plant rates include estimated negative net salvage values ofapproximately 20%

for certain components, reQecting estimated decommissioning costs. The transmission and distribution plant rates include negative net salvage values.

SubstantiaHy aH utilityplant is subject to the lien ofthe 5fortgage and Deed of Trust (as supplemented) securing the First Mortgage Bonds.

Amortization ofifuclear Fuel: The cost ofnuc!ear fuel is amortized to fuel expense on a unit ofproduction method.

No provision for estimated future spent fuel storage or disposal costs is presently inc!uded in fuel expense. The suppliers ofthe nuclear fuel are under contract to provide spent fuel removaL The suppliers have refused to honor their

'commitments. The Company has expanded its spent nuclear fuel storage faciTities and has adequate hciTities for storage of spent fuel until the mid-1980's under normal refuehng conditions.

Allowance for Funds Used During Construction: The Company capitalizes as an additional cost of property an aHowance forfunds used during construction (a non~h item) which represents the allowed cost of capital used to Gnance a portion ofCWIP and nuclear fueL The portion ofAFUDC attributabie to borrowed funds is recorded as a reduction ofInterest charges and the portion attributable to other funds as Other income. See the Schedule ofAFUDC fordetailed information.

Storm and Property Insurance Reserve and Related Fund: The storm and property insurance reserve fund is maintained at an amount equivalent to the reserve. The reserve provides coverage ofstorm damage costs and possible public HabiTity losses stemming from a nuclear incident.

Earnings I'rom the fund, net oi taxes, are rehivested in the fund. Securities held in the fund are recorded at cost which approximates market value.

Storm damage and service restoration costs related to Hurricane David aggregating $6.8 million were paid I'rom the fund in 1979 and charged to the reserve. Income tax beneGts rehted to the costs willbe restored to the fund ivhen realized.

Employee Benefit Plans: The Company has a noncontributory employees'ension plan covering substantiaHy aH employees. The Company's policy is to fund each year' accrued pension costs. including amortizauon ofthe estimated unfunded prior service costs. Pension costs for 1979 and 1978 were $27.7 millionand

$26,2 million, respectively. The estimated unfunded prior service cost of the pension plan at January L 1979 was approximately $9L5 millionusing the entry age normal cost method. There was no excess ofvested beneGts over the fund balance as ofJanuary L 1979.

The Employee ThriftPlan provides for basic contributions by eligible employees ofup to 6% oftheir base salaries, which are matched 50% by the Company.

Supplemental contributions by employees may be made up to an additional 6%. The Company matching contributions for 1979 and 1978 were

$2.1 miHion and $2.0 million, respectively.

In 1976 an Employee Stock Ownership Phn (ESOP) was adopted pursuant to the Tax Reduction Actof1975. The Act permits the Company to chim an additional 1% investment tax credit, provided that the entire amount ofthe credit is contributed to an employee stock ownership plan and invested in Company Common Stock for the beneGt ofemployees. In 1978 the Board of Directors amended the ESOP to enable the Company to chim a further investment tax nedit up to K% to the extent that the Vi% credit is matched by voluntary contr>utions by participating employees pursuant to the Tax Reform Actof 1976. Since the payments to the

Rorida Power & Light Company and Subsidiaries Notes to Consoiidated Financial Statements (continued) 0 Plan are in lieu ofincome tax payments, there is no effect on net income.

Provisions for Company contributions to the ESOP were $8.8 millionand $7.2 millionin 1979 and 1978, respectively.

Income Taxes: Deferred incoine taxes are provided on all significant book-tax timing differences as permitted for rate-making purposes by the FPSC.

Investment tax credits used to reduce current federal income taxes are deferred and amortized to income at a rate approximating the lives ofthe rehted property. See the Schedule of Taxes.

2. Subsidiaries The Company's wholly-owned subsidiaries, Fuel Supply Service, Inc.

(FSS) and Land Resources investment Co. (LRIC), are engaged in activities complementary to those ofthe Company. FSS is engaged in fuel exploration ventures and proprietary fuel research and development projects. FSS is not subject to regulation by the FPSC or FERC. LRIC holds real properties used or to be used by the Company in its utilityoperations for the purpose of increasing financing options beyond those permitted by the Company'su Mortgage and Deed ofTrust.

Bbsres Amounr Balances. January 1. 1978..............

Sales in 1979 Current maturity in 1979...............

Balances, December 31, 1979... ~.......

4. CapitaHzatlon Common Stock: The Company has reserved 1 millionshares of Common Stock for issuance in connection with the Employee ThriftPlan and Employee Stock Ownership Plan. In 1979 the Company issued 152.900 shares for $4.1 million under the ThriftPlan and 351,726 shares for $9.4 millionunder the ESOP. In 1978 the Company issued 49,600 shares for $L4 millionunder the ThriftPlan and 214,952 shares for $6.1 millionunder the ESOP.

In April1979 the number ofauthorized shares was increased I'rom 50 million shares to 100 millionshares.

Preferred Stock WithSinking Fund Requirements: The 10.08% Series J Preferred Stock is entitled to a sinking fund to retire beginning April1, 1980 through AprilL 1999 a minimum of37,500 shares and a maximum of75,000 shares annually at $10L50 per share, plus accrued dividends.

The 8.70% Series M Preferred Stock is enutled to a sinking fund to retire beginning April1, 1985 through AprilL 1999 a minimum of 18,000 shares and a maximum of45,000 shares annually, and beginning April1, 2000 through April1, 2004 a minimum of 46,000 shares and a maximum of115,000 shares annually at

$100 per share, plus accrued dividends.

Minimumannual sinking fund requirements are approximately $3.8 millionfor each of the next Gve years. In 1979, 6,000 shares ofthe 10.08% Series J Preferred Stock were purchased and retired in anticipation ofthe 1980 sinking fund requirement.

The changes in each series of Preferred Stock With Sinking Fund Requirements for 1978 and 1979 are shown below (in thousands):

10.08% Series J 8.70% Series M bares Amounr 750

$75.000 500

$50.000 (37)

(3.750) 713

$71.250 500

$50.000 Average aggregate borrowings Maximum mouthed balances Weighted daily average kiterest rate...

Weighted average interest rate on an:ounts outstandhig at end ofyear..

13.5%

Maximum coinbined borrowings at any mouthed

$199.050

3. Short-Term Debt Unused avaihble bank credit aggregated approximately $227.3 millionat December 31, 1979, and is based on informal arrangements which are subject to cancellation without notice. Compensating balances maintained in connection with these credits arise in the normal course ofbusiness and are not material to the Company's financial position and borrowing costs.

Additionalinformation regarding short-term borrowing for the years ended December 31, 1979 and 1978 is shown below:

1979 1978 fThousands of DoHars)

Commercial Bank Commercial Bank

~Ps

~Barrowin Bsoer

~Borrowin 5 46.522 520.405 5 4.666 5 500

$107.050

$92.000

$37.XO 10.7%

11.7%

7.7%

7.6%

Long-'Ibrm Debt: Certain series ofthe Company's First iVIortgage Bonds have sinking fund requirements through 1995 which may be satisfied by certification of property additions at the rate of 167% of such requirements.

Such requirements are approximately $4 millionforeach of the next five years. Annual maturities of long-term debt are approximately $52 millionin 1980, $137 millionin 1981,

$152 millionin 1982, $16 millionin 1983 and $111 milHon in 1984.

Interest. on the Bank Notes due June 1979 was based on the current commercial loan interest rate up to a maximum average interest rate ofTV4%

over the term ofthe loan. Interest on the Bank Notes due March 1982 is based on the current commercial loan interest, rate.

30/FPL

5. Revenues Arequest for a rate increase on sales to customers forresale Gled with FERC in 1977 was placed in effect March L 1978 subject to refund with interest. Arate settlement with the Company's wholesale customers has been approved by FERC, under which the Company will receive increased annual revenues of approximately 83.7 milHon. Adequate provision has been made forrefunds which are required to effect Gnai settlement,

6. Commitments and Contingencies Construction Program:

Commitments in connection withthe construction program for electric utility phnts, generating units and rehted hcHities were estimated at approximately $L3 billionat December 3L 1979 induding 8350 millionfor nuclear fueL These estimates are based on the presently proposed construction program and are not necessarily contractual obligations. Certain ofthese commitments are also subject to escalation for increases in hbor. services and material costs.

In 1977 the Company cancelled the two nudear units previously proposed for a South Dade Site and deferred the costs, induding canceHation penalties, of the project ofapproximately 814.9 million before income taxes. The Company obtained authorization I'rom the FPSC to amortize these amounts over a Gve-year period. In 1978 an additional 87.9 million ofcosts related to the project were determined to be not recoverable. These costs were added to the original amount ofcanceHed project costs and are being amortized over the same Gve-year amortization period. Depreciation expense in 1979 and 1978 inriudes $4;6 millionand $5.8 million. respectively, of amortization ofthese costs.

Rental and nuclear Fuel Expense:

The annual lease expense and the

'minimum rental commitments under real property and equipment leases are not materiaL The Company has various contracts for supplies ofhei induding a contract for nuclear fuel services forits two Turkey Point Plant nuclear units. Expenses under the nuclear fuel services contract for 1979 and 1978 which were charged to Changes in Capital Accounts: The changes in Common Stock, Preferred Stock without Sinking Fund Requirements and Capital Stock Premium and Expense for 1978 and 1979 are shown below (in thousands):

Preferred Stock Without Capital Sinking Fund Common Stock Requirements Shares Amount Shares Amount Expense Balances. January 1, 1978..............

40.050 S749.375 2.612 5261.~~

S(3,715)

Sales in 1978.

500 50,000 (30) issued to bene5t s in 1978...........

265 7.466 plan (6)

Balances. December 31. 1Fii3...........

40.315 756,841 3,112 311.250 (3,751)

Sales in 1979.

(287) issued to bene5t plans in 1979...........

504 13.509 (1)

Preferred stock redem tion.............

p

. ~ ~ ~

1 Balances. December 31. 1979...........

40.819 STiik350 3.112 5311.250 S(4.038)

The Company's Charter authorizes the issuance of 10 millionshares of Preferred Stock, no par value, and 5 millionshares ofSubordinated Preferred Stock. no par value, to be known as "Preference Stock.

iVone ofthese shares is outstanding.

operating expenses were 814.9 million and $15.4 million. respectively. The Company is committed to pay a minimum annual charge per nudear unit of

$1.260,000 under the Turkey Point nuclear fuel services contract; however, annual charges on a usage basis may be substantially in excess ofthe minimum charge and are subject to escahtion for increases in certain costs to the supplier.

The present value ofthe minimum lease commitments, induding the nudear fuel services contract. and the impact on net income ifcertain leases and the nudear fuel services contract had been capitalized, are not material and, therefore, not presented.

In June 197 9 the Company completed a lease arrangement with a non-affiliated lessor to provide a portion ofthe nuclear fuel for St. Lucie Unit No. 1. At the commencement ofthis arrangement the Company sold to the lessor and subsequently leased back 827.4 millionof nudear fuel loaded in the spring 1979 refueling ofthis unit. In the second halfof 1979 the Company sold to the lessor an addiuonal 833.3 millionofnuclear fuel in various stages ofenrichment for eventual leaseback to the Company. The FPSC has approved classiGcation ofthis lease as an operating lease for Gnancial accounting purposes. Ifthe lease had been treated as a capital lease the Company's balance sheet at December 31, 1979 would have reGected additional nudear fuel ofapproximately $24 million with a corresponding capitalized lease obligation. Quarterly lease payments consistof a burn-up factor computed on the basis ofenergy production plus the lessor's Gnancing costs and certain administrative expenses. The Company wiHcontinue to have fullresponsibility formanagement ofthe fuel and will maintain property and liabilityinsurance.

The lease arrangement e~ires in 2029 but may be terminated earlier by the lessor upon the occurrence ofcertain events and. upon Jtree years prior notice, may be terminated in 1984 or in any hter year. The Company may FPL/31

Florida Power 8t Light Company and Subsidiaries Notes to Consolidated Financial Statements (continued) terminate the lease arrangeinent at any time. Under certain conditions of termination, the Company willbe required to purchase, within270 days, ail nudear fuel (in whatever form) then existing under the lease arrangement at.

a price that wiHallow the lessor to recoverits netinvestmentcost (approximately $65 millionat December 31, 1979).

Vuclear Insurance: The Company is a member ofNudear Mutual Limited, which provides insunnce coverage against property damage to members'udear generating facilities. The Company could be subject to a maximum assessment ofapproximately $58 million, based on current premiums, in the event losses occur at anudear phnt ofa member udTity, and is self-insured for any such loss at any one ofits nudear plants in excess of$300 million.

The Company maintains private insurance and agreements ofindemnity with the iVudear Regulatory Commission (NRC) to cover third-party liabilityarising,from a nuclear incident which might occur at the Company's nudear power plants. In the event a public liabilityloss arising Rom a nudear incident at a taciTitycurrently covered by government indemni6cation exceeds

$160 mKon, under the Price-Anderson Act the Company willbe obligated to pay a deferred premium ofup to $5 million per incident for each ofits three licensed reactors but not more than $10 millionin a calendar year for each ofits three licensed reactors. The Company could be assessed up to approximately $30 millionin a year.

Nuclear Units:

Turkey Point Units Nos. 3 and 4At its Turkey Point Plant the Company has been experiencing forsevenl years and continues to experience problems with the steam genentors in its two nuc!ear units, Units Nos. 3 and 4, and has had to plug approvmateiy 19.4~c ofthe pressurized water circulation tubes in the steam generators in Unit Vo. 3 and approximately 20.6 7o in Unit No. 4. The Company has NRC approval to plug up to 25 lo ofthe tubes in ea'ch unit without reducing their output. However, pending a reevaluation of the emergency core cooling systems, output may be limited forbriefperiods from time to time to 93~o and 94~o ofcapacity for Units Nos.

3 and 4, respectively. Unless an extension is granted, each unit is required to be shut down and the steam generators inspected once every six months. iVRC approval must be obtained before the unit may be returned to service followingeach inspection. Unit No. 4's next inspection is required by hte AIarch 1980, unless a request foran extension to April1980, the unit's next

- scheduled outage, is approved and Unit No. 3's is required by July 1980. Ifa signiGcant pattern ofleaks occurs in a steam generator ofeither unit, an inspection must be performed. Unit No.

3's next scheduled refueling date is early 1981 and Unit iVo. 4's is late 1980.

The Company has contracted for new steam generator tube bundles. Delivery ofnew tube bundles for one unit was made in July 1979, with deiivery oftube bundles for the other unit anticipated in the Grst quarter of1980. The net steam generator tube bundles incorpora:e dii'ferent materials and design which the Company anticipates willprevent a recurrence ofthe present problems. The planning date for the repair ofUnit No. 4 is late 1980, but no 6rm decision has been made as to the timingofthe repair. The cost to replace the tube bundles is estimated at approximately

$61 millionper unit ofwhich an aggregate of$37 mHlion has been expended through December 3L 1979. The balance ofthese costs has been included in the construction program commitments.

Repair ofthe steam generators will require each unit to be out ofservice for abo ': six to nine months and the iVRC has stated that amendments to the operating license for each ofthe Turkey Point units willbe requited. An environmental impact statement could also be required. In August 1979 the NRC allowed a petition for intervention by one individual and indicated that public hearings would be held. Itis impossible to determine the length ofthese hearings. Power resources could be inadequate and the southern part ofthe Company's system could be without adequate power f'rom time to time during any period that both units were simultaneously out ofservice. The Company's Gnancial position could be adversely affected.

In May 197 8 the Company 6led suit for damages in the U.S. District Court for the Southern District of Florida against Westinghouse Electric Corporation (Westinghouse), the supplier ofthe above steam generators.

Westinghouse's motion to discuss the suit was denied.

The matter is pending.

SE. Lueie No. IDuring routine inspection at the spring 1978 refueling of this unit, corrosion 'vas detected in the steam generators.

During the spring 1979 refueling outage work was done to minimize future corrosion. The Company has approved an expenditure of $15 millionfor a program designed to mitigate the corrosion. Portions of this work are scheduled to be performed at the unit's next refueling outage scheduled for spring 1980.

SE. LueieNo. 2The Company has undertaken to sell, under certain conditions, to certain cooperatives and municipalities a minimum of 13% of St.

Lucie Unit No. 2. Other municipalities have demanded the right to purchase a signiGcant portion of.his unit.

Spent Nuclear Fuel: Currently, there are no spent nudear fuel reprocessing plants in commercial operadon in the United States. The President ofthe United States has announced that the Administration proposes that commercial reprocessing be deferred indeGnitely. In a sepante announcement the Department of Energy has proposed that the U.S. government take title to and possession ofspent nuc!ear fuel for a fee.

~

32/FPL

In the event the government's plan does not materialize, the Company willbe forced to seek other arrangements for long-term storage of spent nuclear fuel.

Federal Income Taxes: The Internal Revenue Service (IRS) has examined the Company's income tax returns for 1971, 1972 and 1973 and has proposed additional income taxes aggregating

$22.1miHion, exdusive ofinterest. The principal issue is the tactility of customer deposits. Ifthe Company is unable to reach a hvorable settlement with the AppeHate Divisionofthe IRS, the Company wiHpursue aH administrative and legal remedies. These include paying taxes and interest aggregating approximately $27.5 miHion, 6ling a chim for refund and. ifsuch claim is rejected, filinga lawsuit seeking recovery ofthe amounts paid. In the opinion oflegal counsel. customer deposits are not includable in taxable income and it is probable that a decision to this effect willbe obtained in federal court.

7. Legal Proceedings Nuclear Fuel Suit: In November 1979 a settlement between the Company and Westinghouse resolved the uranium supply and escalation issues that had been the subject ofa suit rehted to the Company's nuclear fuel services contract forits two Turkey Point nuclear units. A cash payment of$26 millionwas received in December 1979 and applied as a reduction ofthe Company's investment in nuclear fueL The Company's dispute with Westinghouse over spent fuel removal has been tried but the trialcourt has not yet made a decision.

Gainesville Antitrust.Suit: Atreble damage suit was brought in 1968 against the Company, seeking damages of approximately $12 million, before trebling. The case was tried in 1975 and, resulted in a jury verdict for the Company. Phintiiis appealed to the U.S.

Court oiAppeals ior the Fifth Circuit. In

%lay 1978 the Court ofAppeals ruled that certain matters pertaining to the case should be re-tried by the District Court.

At issue in the case on remand is whether an agreement, understanding or concert ofaction, to which the Court of Appeals found the Company was a party, was a substantial hctor in phintiffs'ailure to obtain an interconnection. Ifthe jury should Gnd in favor ofplaintiffs, it willthen have to assess what damages, if any, plaintiffs sustained.

The Company has been advised by its counsel that it is impossible to predict the outcome ofthis litigation at the present time because.

among other things, ofthe ambiguities in the opinion ofthe Court ofAppeals and the uncertainty as to how the trialjudge will interpret the law m charging the jury.

However, based on the facts as itknows them at this time and on its discussions with its counsel, the Company does not believe that it willincur a liabiTitythat wiH be material in rehtion to its consolidated Gnancial position.

Alleged Antitrust Violations: On October 31, 1979 Gfteen Florida municipalities 61ed a suit against the Company in the United States District Court for the Southern District of Florida, alleging violation ofthe antitrust laws and certain other laws. The complaint seeks damages in amounts not yet determined. but in excess of$1 millionand $15,000 per municipality, and additionally seeks various forms of equitable reHef, including access to the Company's nudear units. The Company is unable to predict the ultimate outcome ofthis matter but believes that it has acted in compliance with the law, and intends to defend this action vigorously.

Based on its discussions with its various counsel, the Company is ofthe opinion that the ultimate outcome ofthis matter willnot have a material adverse effect on its consolidated Gnancial position.

Quatter Ended March31, 1Ki8..........

lune 30, 1978...,........

September 30, 1978......

December 31, 1978.......

March 31. 1979..........

lune 30, 1979....~.......

September 30. 1979......

December 31. 1979.......

Operating Revenues 5371.901 371.185 496.785 4¹355 377.089 440.003 614.964 501. 881 Opetatmg fncome (Thousands of Dooars) 5 74.555 57.241 104,304 82.597 62.445 41.966 109.678 87.715 iVet fncome 548.679 29,594 76.774 56.194 39.261 17,062'4.208

'64. 137 Eanungs per share of Common Stock 51.04 0.57 L73 L20 0.77 0.22 1.87 L35 In the opinion ofthe Company aH adjustments (consisting ofonly normal recurring accruals) necessary to present a fair statement of such amounts for such periods have been made.

The Company is ofthe opinion that quarterly comparisons may not give a true indication ofoverall trends and changes in the Company's operations and may be misleading to an understanding ofthe results ofoperations as the revenues and expenses ofthe Company are subject to periodic fluctuations due to changes in weather conditions, customer usage, number ofcustomers and the proportion of

'eneration by var'ous fuels.

8.. Quarterly Oata (Unaudited)

For the periods shown below, the Operating Revenues, Operating Income. Net Income and Earnings per share of Common Stock (after dividend requirements on Preferred Stock) are as follows:

FPL.'33

0 Fiorida Power S. Light Company and Subsidiaries NOteS tO COnSOlidated FinanCiai StatementS (Conduded)

9. Effects of Changing Prices (Unaudited)

The Company has estimated the effects of changing prices on its operations on the basis prescribed in Financial Accounting Standards Board Statement No. 33, "Financial Reporting and Changing Prices" (Statement).

The two different methods prescribed by the Statement for measuring the effects ofchanging prices were used in calculating the information which follows.

The Grst method provides data adjusted for"general inQation" using the Consumer Price Index for AH Urban Consumers as the broad-based measure ofthe general inQation rate. The objective ofthis approach is to provide Gnancial information in dollars of equivalent value or purchasing power (constant dollars). Financial data are made more comparable by reporting the amounts in terms ofa common unit of measure of purchasing power.

The second method ofmeasurement adjusts for "changes in speciGc prices."

The objective ofthis method is to reQect the effects ofchanges in the speciGc prices (also referred to as "current costs") ofthe resources actually used in the Company's operations. iVIeasures of these resources and their consumption reQect the current cost ofreplacing these resources, rather than the historical cost amounts actually expended to acquire them.

Both ofthese methods inherently involve the use ofassumptions, approximations, and estimates, and therefore, the resulting measurements should be viewed in that context and not as precise indicators of the effects of inQation.

Fuel inventories, the cost offuel used in generation. and materials and supplies have not been restated from their historical cost in nominal dollars.

Regulation limits the recovery offuel costs to actual costs. 5>hterials and supplies are not held for sale and do not give rise to a cost ofgoods sold, but are used principally in utilityplant construction. For these reasons inventories were treated as monetary assets.

The supplementary data below are presented in response to the Statement and are not intended to replace historical cost information.

SUPPLEidEiVTARYSTATEMEiVTOF IiVCOiMEADJUSTED FOR EFFECTS OF CHAiVGINGPRICES For the year ended December 31, 1979 (Thousands of Dollars)

Constant Current Conventional Dolhr Cost IIiatorical (Avenge (Avenge Cost IKr9Oolhrs) 15r55) Oolhrs)

Opentmg revenues Opcnting expenses exdudmg depreciation Deptuciation Opcntmg income.

Other income nct Interest charges net Income goss) (turn continuing Opcnnnna (cxctudmg redden to nct rect)venbh amount)

Reducrion tn nct rccovenble amosmt.....

Increase in current cost ofelectric unTityphnt during 1979'ffect ofincrease in general price level....

Excess ofincrease in general price level overincrease in cutrcnt cost......

Gain from decbne in purchasing power ofnct amounta owed.

Sfet S1.933,937 CS 1.933,937 CS 1,933.937 1.481,938 150.195 301.804 31, 181 128.317 1.481,938 282. 899 189,100 31.181 (28.312 1,481.938 382 S38.

64.161 31.181 128.312 S

204.668 CS 91.964 'S (32.975)

CS (415,350)

CS 563.380 (1.085.824)

(522.444)

MS.(04 MS.)04 CS (5324(9 CS (159.340)

C$ ~ average 1979 doHars.

'Including the reduction to net recoverable amount, the loss from continuing operations otta.constant doHar basis would have been $323,386 for 1979.

"AtDecember 31, 1979, current cost ofelectric utiTityphnt, net, ofaccumulated depreciation, was $8,994,000, while historical cost recoverable through depreciation was $4,422,000.

34/FPL

FIVE-YEARCOMPARISON OF SELECTED SUPPLEibIENTARY FWAiVCIALDATA ADJUSTED FOR EFFECTS OF CHANGINGPRICES (Thousands ofAverage 1979 Dollars, except per share amounts),

Years ended December 31.

1979 1978 1977 1976 1975 General informadom Gam Rom decLne m purchasuig.

power ofnet amounts owed CS 363.104 Cash dividends per coaunon share...................

CS2.32 C$ 1.99 C$ 1.98 C$1.94 Market price per common share at year~d.......

Average consumer price index CS ~ average 1979 dogars.

C$24%

217.4 195.4 C$32)4 1S1.5 CS35 C$20 ih 170.5 161.2 Substantially all electric utiTityplant (which consists ofelectric utiTityplant in service and construction workin progress, inciuding land and mtangibles, and nuclear fuel) was restated to dollars having equal purchasing power (constant dollars) using the Consumer Price Index for AllUrban Consumers applied to the historical cost ofplant by vintage year.

Current cost ofelectric utiTityplant was restated by applying the Handy%hitman Index ofPublic UtilityConstruction Costs or other appropriate indexes to substantially all electric utilityplant exciudmg production phnt. Current cost ofproduction plant was restated by applying the estimated construction cost per megawatt ofeach fuel type of Historical cost informauon adjusted for eneral infhtiom Operating revenues........

C$1.933.937 C$ 1.S2S.421 CSI.757.501 CS1.510.894 C$1.596.569 Income from continuing operauons (excludlGg reduction to nec recoverable amount)................

CS 9L9&t income per common share (exduding reduction to net recoverable amount)......

Net assets at year~d at net recoverable amount.......

C$1.324.254 Current cost information:

Income goss) from continuing operations..............

CS (32.975)

Income Ooss) per coaunon share...................

CS(1.6o1 Excess o(increase in general price level over uicrease in current cost.............

CS 522.444 Net assets at year~d at aet recoverable amount.......

CS1.324.254 production faciTities to the number of, megawatts of each fuel type in the Company's present generation mia Under both methods the adjustment for depreciation was calculated by applying the rates and methods used for computing book depreciation to the restated plant amounts.

The rate regulatory process limits the Company to recovery ofthe historical cost ofelectric utilityplant. Therefore, the excess ofrestated value ofelectric utiTityplant over historical cost is not presently recoverable in rates as depredation, and is reQected as the reduction to net recoverable amount.

As prescribed by the Statement, income taxes were not adjustetL The gain from the decline h purchasing power ofnet amounts owed represents the net effect on the Company ofholding monetary assets and liabilities. During periods of inQation

'onetary assets such as cash and claims to cash lose purchasing power because they wil!be able to purchase less at a future date; while monetary liabiTities, primarily long-term debt, wiiibe paid with dollars having less purchasing power. Since the Company has more monetary liabiTities than monetary assets ithas a net monetary gain. This gain is not realizable by the Company but is simply an estimate ofthe effect on the Company ofholding monetary items.

The primary effect ofgeneral inQation on the Company is reQected in the rapidly increasing cost ofconstructing, electric plant. This negative effect is offset by the fact that the Company will pay its long-term debt withdollars having declining purchasing power and rehtively less ofthe Company's resources willbe required infuture years to retire long-term debt.

FPLl35

0 Information for Investors Annual Meeting The 1980 Annual Meeting of FPL shareholders willbe in Fort Myers, Fla.,

on Tues.. April15. Formal notice ofthe meeting, together with a proxy statement and form of proxy, willbe mailed to shareholders on or about March 13. at which time proxies willbe requested by management.

The 1979 session at Sandpiper Bay Conference Center in Port St. Lucie attracted an estimated 500 persons, the largest turnout in a decade. During the meeting, stockholders elected the 11 directors currently serving, ratified the appointment of Deloitte Haskins 8t Sells as auditors, approved a charter amendment doubling to 100 millionthe authorized shares ofcommon stock and defeated a shareholder proposal on cumulative voting.

More than 86 percent ofoutstanding shares ofcommon stock were voted.

Form 10-Kfor 1979 Acopy of FPLs Annual Report on Form 10-K filed with the Securities and Exchange Commission is available, without charge, to interested stockholders. Requests must be in writingand should be addressed to J.E.

Wloore. Director ofStockholder Information, Florida Power 5 Light Company, P.O. Box 529100, Wliami, Fla.

33152.

Company Ownership Atthe end of 1979, the Company had 40,819. 178 shares ofcommon stock outstanding, owned by 35,425 holders of record. These shareholders include individuals and institutions, such as foundations, insurance companies and pension funds, which in turn hold large blocks ofstock on behalf of stillmore individuals.

Through acquisition of shares in the FPL Thriftand Employee Stock Ownership Plans. virtuallyall employees maintain ownership in, and therefore have direct interest in, the Company.

Common Stock Data Principal market for FPL common stock is the New York Stock Exchange. Ticker symbol is FPL. Newspaper listings generally use F!aPL.

The followingtable indicates the range (high/!ow) oftrading prices for the past two vears:

19/S First Quarter

~Dna/26Ya 27Y4/23Fs Second Quarter 2SYa/26 27%/24Yz Third Quarter

~AYa/25%

29%/26/a Fourth Quarter 26%/24$

2S P'z/25Vi 36lFPL Transfer Agent Transfer agent. registrar and dividend disbursing agent for FPL stock is:

The First National Bank of Boston Shareholder Services Division P.O. Box 644 Boston. Mass. 02102 Telephone 617/4344562 Dividends On Feb. 11, 1980, the Board of Directors declared a regular quarterly dividend of 60 cents. the Company's 137th consecutive quarterly dividend. It is payable March 17 to holders ofrecord as of February 29.

The followingtable indicates dividends paid previously on common stock:

1979 1978 First Quarter

$0.52

$0.44 Second Quarter

$0.60

$0.52 Third Quarter

$0.60

$0.52 Fourth Quarter

$0.60

$0.52 Dividend Reinvestment Plan Shareholders may elect to have their dividends automatically reinvested in additional FPL shares through a low-cost Automatic Dividend Reinvestment Service offered by The First National Bank of Boston. Participants in the plan also have the option of making supplemental cash deposits ofup to

$3,000 per quarter for investment.

Shareholders, using this convenient method ofincreasing their FPL holdings, invested an additional $629,000 during the past yean Information and enrollment cards may be obtained by writingthe bank's Automatic Dividend Reinvestment and Cash Stock Purchase Plan. P.O. Box 1681, Boston, Mass. 02102.

Investor Communicntions Flonda Hi-Ligh/s, a newsletter prepared especially for holders ofcommon and preferred stock. is published several times each year.

Asimilar publication is sent periodically to bondholders.

Also, a Financial and Statistical Report containing comprehensive data for the years 1969-79 is distributed to professionals in the investment community and is available to others as a supplement to this report.

Inquiries concerning the Company's activities and requests for publications.

including Quarterly Consolidated Financial Statements, should be directed to the FPL Stockholder Information Dept. (Telephone 305/5521046) in care ofthe Principal Company Ofnces.

Sandpiper Bay Coufereace Center ac Port SL Lucie was site ofthe 1979 Annual Meeting of Stockholders. Aftezward. stockholders took a sightseeing tour of FPLa St. Lucie Plant. which fa visA>le on the horizon.

Annual Report The Company's 1978 Annual Report to Stockholders was adjudged to be the best among investorwwned electric utilities ha~kg operating revenues in excess of$600 millionannually. The competition, sponsored by Reddy Communications Inc.. cited FPL for "covering all the bases in a dear and concise manner" and for producing the report "at a unit cost about halfthe national average for all industry."

Auditors Deioitte Haskins Zr. Sells Certi6ed Public Accountants 1 Southeast Third Ave.

Miami Ha. 33131 General Counsel Steel Hector 8z Davis Southeast First National Bank Bui1ding Miami Ra. 33131 Principal Company Offices Florida Power Jc LigiitCompany 9250 1V. Fiagier St.

P.O. Box 529100 Miami. F!a. 33152 Telephone 305/552-3552

Principal Officers Directors Marshall McDonald Chairman ofthe Board and Chief Executive Officer John J. Hudiburg President and Chief Operating Officer E.A. Adomat Executive Vice President H.L. Allen Senior Vice President L.C. Hunter Senior Vice President J.G. Spencer Jr.

Senior Vice President R.lV. )VailJr.

Senior Vice President and Assistant Secretary R.E. 'Ihllon Group Vice President D.K. Baldwin Vice President. Corporate Services E.L. Bivans Vice President. System Phnning M.C. Cook Vice President, Fuel Resources and Corporate Develo pment B.L. Dady Vice President. Management Control and Services. and Assistant Secretary H.J. Dager Jr.

Vice President, Engineering, Proiects and Construction T.E. Danese Vice President. Public Affairs J.H. Francis Jr.

Vice President. Corporate Communications ILJ. Gardner Vice President. Strategic Planning LC. Hauck Vice President. Legal Affairs J.L. Howaai Vice President-Treasurer.

Financial 5V.M. Klein Vice President. Economic Development A. D. Schmidt Vice President, Power Resources R. E. Uhrig Vice President. Advanced Systems and Technology Astrid E. Pfeiffer Secretary H.P. WilliamsJr.

Comptroller

'M.P. Anthony Fest Palm Beach, Fla. President, Anthony's Inc.. a ciiain ofladies apparel retail stores. Senmg since 1977.

>George F. Bennett Boston. Mass. President and Chief Executive Ofricer ofSmte Street Investment Corp. and of Federal Street Fund Inc., investment companies; Managing Partner ofState Street Research and NIanagement Co.: Chairman.

Managing General Partner. State Street Exchange Fund. Serving since 1970.

'David Blumberg Miami. Fia. President. Planned Deveiopment Corp., a building and development firm. Serving since 1973.

Jean McArthurDavis Mami. Fh. President. McArthur Dairy Inc. and McArthurFarms Inc.. engaged in the production and distriburion ofdairy products. Serving since 1977.

tJohn J; Hudiburg.

Miami. Fh. President ofthe Company since Jan. 1S. 1979. Formerly Executive Vice President. Finance. Serving since January 1979.

Robert B. Knight Coral Gables. Fia Chairman.

Iauonai Food Services Inc.. a restaurant management company. Seeing since 1977.

John M. McCarty Fort Pierce. Fta. Attorney. Serving since 1973.

Marshall McDonald Miami. Fh. Chairman ofthe Board of Directors ofthe Company since Jan. 15.

19r 9. Formerly President and Chairman of hleetings ofthe Board. Sev~g since 197L

'Edgar H. Price Jr.

Bradenton. Fla. Chairman ofthe Board and President ofThe Price Co. Inc.. a consulting firm. Serving since 1972.

tLewis E. IVadsworth Bunneli. Fh. Engaged in timber and cattle businesses.

Serving since 19r 0.

Gene.4. Whiddon Fort Lauderdale.

Fia. President.

Causeway Lumber Co. Inc.. engaged in the sale oflumber and building materials.

Serving since January 19r 9.

tBxecudve Committee

'AuditCommittee I

e Pictured recently at a regular monthly meeting ofihe Florida Power 4 Light Company Board of Directors were (dockwise. from foreground) Chairman McDonald and Directors Dam, Knight. )Vhiddon. McCany.

Hudlburg. Wadsworth. Price. Anihony. Blumberg and Benneit.

AWK~

SLCACA KNArER4 iioiiT COMPANY 9250 N'. Fhger St.

P.O. Box 529100 Nfiari. FIa 33152 Telephone 305/552-3552 0

BULKRATE U.S. POSTAGE PAID MIAMI.FL PERMT VO. )5

EXHIBIT 2 Florida Power Er Light Company Consolidated Financial Statements June 1980 (Unaudited)

HIGHL'IGHTSDetails oa Pages 4 and 5'perating Results

~ Earnings per share increase.

<<New summer peak reached.

Construct foe Progrant

~ Sales and customer growth forecast revisetL

~ Modifications. to embankment. of'artin Phnt reservoir underway.

~ Portion ofSt. Lucre nuclear UnitNo. 2 sold.

FueL Supply.

~ Two new oil.supply contracts signed.

~ Uranium received.

fronr-iMC plant in

.. Horida.

Operating Nuclear Units:

~ Repair dates forsteam generators of Turkey-Point units now scheduled.

Regufatitm

~ Harida Energy Efficiency and Conservation

, Actado ptetf H?I'.

P.O. Box 529IOO iMiamf,Horfda33I52 J. LHoward Wce President-Treasurer (305) ~73-The informatfou furnished herein concerning the Company fs not in connection with any sale, or offer forsale, or soffcftatfon ofan offerto.buy, any securitfes July 23, 19go

Page I CONDENSED CONSOLIDATEDSTATEi>IENTS OF liVCOit)'IE Increase Thousands of Dollars QUARTER El)IDED OPERATING REVENUES.

Operating expenses:

Fuel and net interchange Other operations.

Maintcnancc Depreciation income taxes Taxes other than income taxes Total operating expenses................

OPERATING INCOME Allowance for other funds used during construction.......

Other income and deductions INCOME BEFORE INTEREST CHARGES............

Interest charges Allowance for borrowed funds used during construction...

NET INCOME Preferred dividend requirancnts.

NET INCOMEAPPLICABLETO COMMONSTOCK..

Average number ofcommon shares outstanding (000).....

Earnings per share ofCommon Stock.....................

Dividends per share ofCommon Stock...................

YEAR-TO-DATE OPERATING REVENUES.

Operating expcnscs:

Fuel and nct imcrchangc Other operations.

Maintcnancc Depreciation Income taxes Taxes other than income taxes Total operating expenses.

OPERATING INCOME Allowance for other funds used during construction.......

Other income and deductions..........................

INCOME BEFORE INTEREST CHARGES............

Interest charges Allowance for borrowed funds used during construaion...

NET INCOME Preferred dividend rcquiremcnts.

NETINCOMEAPPLICABLETOCOMMONSTOCK..

Average number ofcommon shares outstanding (000).....

Earnings per sharc ofCommon Stock.....................

Dividends per share ofCommon Stock...................

12 MONTHS EiNDED OPERATING REVENUES Operating cxpcnscs:

Fuel and nct interchange.............v...............

Other operations.

iMaintcnancc Depreciation Income tax Taxes other than income taxes.

Total operating expenses.

OPERATING INCOME Allowance forother funds used during construction........

Other income and deductions INCOME BEFORE INTEREST CHARGES.............

Interest charges Allowance for borrowed funds used during construction....

i4ET INCOME Preferred dividend requirancnts.

NET 11$ $COME APPI ICABLETO COMMONSTOCK...

Average number ofcommon shares outstanding 1000)......

Earnings per sharc ofCommon Stock......................

Dividends per share ofCommon Stock....................

$566.069 274,109 75,196 34.240 39394 29,569 42.376 494,787 71,282 9,544

~88) 80,737 47,327

~9.460) 42.810 9.005

$ 33.864 40,957 50.83

$0.68

$ 1.042.091 489,612 142.951 66.528 78,084 52.370

$0.!W 9 10.437 131,$ 33 11,743 402 I49.800 90.426

~1$.$$ 1) 78,225 17.990 60.234

~lH22 SIA7

$ 1.28

$2.158.935

. 941.616 280,339 119,675 154, 149 172.809 161.297 1.829.888 329,047 33,095 I 0$9 363~2 171,462 (34.800) 226871

!3.443 5

190.905 40,790

$4.68 S2.48 5440,003 230.575 64,096 23.462 37,255 6,961 32.6$ 3 9$.037 41.965 7.796 (122) 49,640 39.437 (6.858) 17.062 8.018 9.043 40.408 50.22 50.60

$817.091 365.137 1~~101 46.341 74.129 35.603 69.366 71" 681 104,410 14.654 487 119,552 (12.891) 56,322 16,036 5

40.285 4UV

$ 1.00 51.12

$ 1.721.232 651.237 241.971 89.&~I 150,178 159~

138.035 1.429.920 291.311 25,203 1$

318.733 1(0.-19) 189.291 31.3 8

5 157.942 40.286 53.92 52.16 5126.066 43.533 11.099 10,778 2,039 22,601 6.691 96.749 29,316 1,747 33 31.097 7,890 (2.601) 25.808 9$

5 24.821 549 50.61 50.08 5224.999 124.475 20 850 20.186 3,954 16,766 11.523 197.755 27,243 3.089 I 8 St 30,247 (5.959) 21,903 1.954 5 19.948 50.47 50.16

$437.703 290.378 38,368 30,424 3,970 13,563 23.262 399,947 37,735 7,892

~112$

44,499 (I4.581) 37.280 4.31$

3 32.943 504

$0.76 50.32 29 19 17 46 5

19 24 70 22 27 63 20 38 12 I

13 28 34 17 5

47 17 28 26 21 (18) 25 19 39 12 SO I

47 14 45 16 34 3

9 17 28 13 31 (Sl) 15 72 00 14 21 I

19 15 SHundreds dropped: detail docs not necessarily add to total.

This rcport is not complete without reference to the iNotcs to Consolidated Financial Statements appearing in the Company's 1979 Annual Report to Sharcholdcrs.

1

Page 2 CONDENSED CONSOLIDATEDBALANCESHEETS June 30, 1980 1979 Thousands ofDollars ELECTRIC UTILITYPLAV4T:

Atoriginal cost..

Less accumulated depreciation..

iVet Construction work in progress..

Unamortized nuclear fuel...........................

Electric utilityplant OTHER PROPERTY ANDINVESTMENTS...

CURRENT ASSETS:

Cash and temporary investments..

Customer accounts rcceivablc.

Income tax benefits accrued.

Material and supplies..

Fossil fuel stock.

Other.

Total current assets.

DEFERRED DEBITS:

Accumulated deferred income taxes.

Dcfcrrcd fuel costs.

Other.

Total deferred debits.

TOTAL

$4.352,406 1.074.566 3.277,840 1,298,556 49.303 4,625.700 14.816

$4.112,S93 937.746 3,174,847 975,771 121. 121 4.27 1.740 20,425 9.464 138,975 33.121 83,934 11$,465 40019 426,171 5,039 123,688 34.988 67,284 85,637 SL434 368,073 8,021 9,185 31.814 49.021 13410

~d.000 38.211

~35 I 710 S4 6911 450 LIABILITIES CAPITALIZATION:

Common stock.

Retained earnings.

Total common equity.

Preferred stock without sinking fund requirements..

Preferred stock with sinking fund requirements.

Long-term debt.

Total capitalization..

CURRENT LIABILITIES:

Current maturiues ofIong-term debt and preferred stocit.

iVotes payable Accounts payable trade.

'ustomers'eposits..

Taxes accrued..

Interest accrued Pension cost accrued..............

Other Total current liabilities.

DEFERRED CREDITS:

Accumuhted deferred income taxes.

Unamortized investment credit.

Other.

Total dcfened credits..

RESERVES:

Storm and property insurance Total reserves TOTAL 730.596 641.794 1,412.390 311.250 117.500

-.059.'87 756.015 SSI.S25 1,307.841 311.250 71,2SO L815.2M 3.900.527 3.505.541 53.888 11.500 59.794 93,$ 29 69.920

47. 192 42.265

16. 63 6,371 199,050 53,878 83,454 66,730 41.055 19.848 64.369 435.159 534.758 493.989 247,44S 16 114 413,749 203,920 11.635 757.5.0 629..05 12.488 9.984 15,462 13 382 28 845 22 473 53.115.710 S4.698.450 SHundrcds dropped; detail does not necessarily add to total.

This report is not complete without reference to the Notes to Consolidated Financial Statements appearing in the Company's 1979 Annual Rcport to Shareholders.

Page 3 CONDEiNSED CONSOLIDATEDSTATEWIE~iS OF CHANGES liN FINANCIALPOSITION 12 Months Ended June 30, 1980 1979 Thousands of Dollars

-term debt and preferred stock..

SOURCE OF FUNDS:

Net income Depreciauon Amortization ofnuclear fuel assemblics Deferred invatmcnt tax credit net.

Deferred taxes Dcferrcd fuel costs Allowance for other funds used during construcuon.

Total from current operations.

issuance ol'debt issuance ofcommon stock Sale ofpreferred stock Sale ofnuclear fuel.

Proceeds from nuclear fud suit Other sources Decrease in working capital Total APPLICATIONOF FUNDS:

Construction cxpcnditures iVucicar fuel Retirement redemption and current maturity oflong Dividends....

Other applications Incrcasc in working capital Total 5226,571 154, 149 12,405 43,525 85,429 (9,185)

.(33.095) 479.$ 00 298.401 14,860 49,825 62,727 31,049 11,565 5948.229 5543.955 34,247 57,652 136.485 18,191 157.696 5948229 5189,291 150.178 11,267 39.066

$0,$20 (25.203) 445,419 S0,000 10,390 50,134 27,448 L3,059

~55 769 5652.221 5488,124 37,801 6,289 117,991 2,013 S652.221 SHundrcds dropped: detail docs not neccsurily add to total.

This rcport Is not complete without reference to the Notes to Consolidated Financial Statements appearing in the Company's 1979 Annual Report to Shareholders.

FINANCIALANDOPERATING DATA TIMES LONG-TERSI DEBT INiTEREST EARNED-AfterTax FIXEDCHARGES COVERAGE(SEC Basis)

COMMONSHARES OUTSTANDINGEnd ol'eriod (000).

BOOK VALUEPER SHARE-End ofPeriod.

2.31 3.25 40,991 534.46

2. 4 3,:0 40,423 S32.35 Quarter Ended June 30.

1980 12 Months Ended June 30, KWHSales (Millions)

Residential Commercial industrial.

OtherTotal...........

Customers (000).

KWHsales per Rcsidenual Customer.............

KWHsala per Total Customer..................

Revenue pcr KWHResidential.................

Revenue per KWHTotal Sales.................

Generation by Fud Type-%

Oil Natural gas.

Vuclear.

Coal/oil mix test.

iVa interchange....

Fuel CostMillspcr KWH Steam oil.

Stcam-gas.

Nudear Gas turbine Combined cydc Coal/oil mix test Allfuels.

'End ofPeriod stAvcragc 4,930 3.740 848 883 10.401 4159~

2,540 4,793 S.52c 5.40c

'8 18 20 I

3 33.81 11.03 3.51 32.47 48.74 31.$ 5 23.90 4,647 3,566 810 813 9.836 2.049 2.527 4,780 4.55c 4.44c 72 17Il Nil 25.57 8.44 3.02 28.70 37.67 21.02 6

5 5

9 6

5 I

21 22 32 31 16 13 14 21,742 14.646 3M~

3.524 43.134 2,130 st 11,411 20,252 5.04c 4.97C 49 18 29 iVil 4

32.84 10.66 3.24 31.38 47.76 31.85 JLI3 20.512 14,114 3,101 3.278 4~1005

~ 021 st 11.352 20.288 4.24c 4.16c 57 19 25 (I) 22.08 8.69 2.10 24.43 30.48 15.06 6

4 7

5 5

I 19 19 49 23 54 28 57 34

Page 4 Operating Results In thc following discussion of factors which had a

signiflcant effect on the Company's results of operations, all comparisons are with the corresponding period for thc prior year.

The improvement in net income for the second quarter was principally thc result of a better matching of fuel costs and related revenues as a result of thc implementation of thc ncw projected fuel cost recovery clause described under "Regulation." A small underrecovery of fuel costs may still occur as the new clause does not apply to sales for resale.

Approximately 59.2 million of fuel costs in excess of related billings were deferred in the second quarter.

The fuel adjustmcnt chusc in effect through March 1980 had a two month lag. As a result of this lag, fuel costs exceeded fuel related revenues by approximately S63.3 million in thc second quarter of 1979 and S80.5 million in the flrst half of 1979. In the transition from the prior fuel adjustment

clause, the Company has agreed not to collect approximately $59 million of fuel costs incurred in the period, pending resolution of an appeal to the Florida Supreme Court with respect to thc legality of their recovery.

Growth in the number of customers continued at about 5.4% in 1980. Energy usage pcr customer increased slightly in 1980.

Unusual weather conditions producing record peak energy demand occurred in February, March and June 1980.

A new summer peak of9.623 MWwas set on July 14.

Fuel adjustment revenues were S97.9 million, $ 169.8 million and $335.8 million higher in thc quarter, year to date and twelve months ended Junc 30, 1980, respectively. These increases reflect thc substantial escalation in fuel costs.

Fuel and net interchange was higher in all periods presented primarily as a result of oil price increases.

For thc twelve months ended Junc 30, 1980, the average cost per barrel of oil consumed in the period rose by 50% and accounted for approximately 5192.4 million of the 5231.3 million increase in fuel used in generation.

Net interchange purchases werc

$7.7 million, $26.6 million and $45.6 million in the quarter, year to date and twelve months ended June 30, 1980. Since FPL was previously a net seller of power, these amounts represent ncs increases of

$ 172 million, $41.3 million and $68.Z million over thc prior year.

Under a new contract with the Southern Company system, "coal by wire" purchases werc $7.6 million in thc first six months of 1980.

interest charges werc 58.4 million and $ 12 million higher for thc quarter and year to date as a result of sales of first mortgage bonds.

Higher interest rates on short-term borrowings also contributed to higher interest charges. Thc 33% increase in construction work in progress over a year ago has led to thc higher levels ofAFUDC.

Construction Program Due to unusual weather conditions, thc recent influx of refugees and the continued strength of thc FIorida economy, thc Company's forecast of customer and sales growth through next year has been revisciL Sales are now expected to increase 6.0% in 1980 and 4.2% in 1981. The projected increase in the average number of customers is 5.2% for 1980 and 5.0% for 1981. The forecast of summer peak load remains unchanged.

Thc repairs to the cooling reservoir at thc Martin Plant site have been completed and design modifications arc now underway. Thc total cost of thc cooling system is presently estimated to be approximately

$ 119 million. The estimated completion date for Martin Unit iVo. I is currently late 1980 or early 1981. Work on Unit iVo. 2, which is sct for completion in mid-1981, continues to be on schedule.

Certain modifications to the cooling reservoirs at FPL's Manatee and Sanford Plants will be made as a result of the reservoir break at the Martin site. Total cost of the modiflcations is estimated to be approximately

$6 million.

Both plants can remain in service during the modifications.

Construction of St. Lucie nuclear Unit No. 2, which is planned for service in 1983, is presently 44% complctc. The Company has signed a Participation Agreement to scil and transfer to the City of Orlando and thc Orlando Utilities Commission an approximate 6% undivided interest in St.

Lucie No. 2. This 6% interest is included in the total of approximately 14% to 22% of the unit which is expected to be sold to various cooperatives and municipalities. The combined ownership costs to be shared are expected to include 51.1 billion of construction costs for Unit No. 2. plus the value ol'ertain facilities common to both Units Nos. I and 2.

FPL has signed an interchange agreement to purchase 50 MW of coal-Ared power from Southern Company Services, Inc. through 1986. This power is in addition to the 50 MW already being purchased under an agreement signed in the first quarter.

The Company's capital expenditures for 1980 are ex-pected to total 5630 million, including S32 million I'or nuclear fuel. Expenditures for 1981 and 1982 are estimated at $704 millionand 5718 million, respectively, for a three year total of approximately $2.1 billion.

Financing Financing needs for 1980 are expected to total approximately 5450 million. To date, $225 miflion have been raised through the saic of First Mortgage Bonds, including the May sale of5100 millionof 11.30% First Mortgage Bonds. The issuance of common stock in connection with employee benefit plans provided 54.3 million in the tirst half of 1980, with the year's total estimated at $ 17 million. An additional 529.5 million were received from the sale of nuclear fuel to the St.

Lucic Fuel Company under a

nuclear fuel lease arrangement.

A sale of pollution control bonds and possibly the sale of common or preferred equity are planned for thc last quarter of the year. The Company's new dividend reinvestment plan will be implemented with the third quarter dividends. This on-going source of equity is expected to provide the Company with approximately 55 millionin 1980 and $ 17 millioniii 1981.

Fael Sapply Oils Two additional fuel oil supply contracts werc re-cently signed by the Company.

Under a contract effective April 1980, Scallop Petroleum Company willprovide 2 million barrels of residual oil per contract year. The 2 million barrels willbe evenly divided between low sulfur oil and higher sulfur oil. The contract has a minimum term of onc year and will remain in effect indefinitely until cancelled by either party according to contract terms.

Four million barrels of low sulfur oil per contract year willbe supplied by New England Petroleum Corporation. This contract, which was effectiv July 1980, will remain in effect for 3 years. It is renewable thereafter ifboth parties so aaree.

The Company's contract with its principal supplier ofoil, Exxon Company, U.S.A. (Exxon), specifies a base quantity of both low sulfur oil and higher sulfur oil. Deliveries of higher sulfur oil under this contract have been 100% of )he contract

Page 5 quantity, but Exxon is continuing its allocation program for low sulfur oil. From April 1980 through July 1980, FPL's allocations oflow sulfur oil were 85% ofthc contract quantity.

Exxon's estimate of allocations of low sulfur oil for August 1980 through October 1980 is 100% of the contract quantity.

Exxon has informed the Company that it willno longer make available higher suifur oil in lieu oflow sulfur oil not delivered because of allocation. Thc Company anticipates that any additional oil required to meet generation needs will bc obtained on the open market or through additional contracts.

On July 19, 1980 Exxon contract prices at Port Everglades, including entitlcments, were $24.34 per banel for 1% sulfur oil and $20.71 per barrel for 2.5% sulfur oil.

Nuclear Fuels The first delivery of uranium from International Minerals and Chemical Corporation (IMC)took place in late May. The uranium is extracted from phosphatcs as a by-product of fertilizer production at a plant on Florid's west coast.

In 1980 approximately 260,000 pounds will be supplied under the twa IMC contracts.

In the years 1981 through

1992, the contracts call for IMC to provide approximately I millionpounds annually.

In addiYion to thc IMC contracts, FPL has several other uranium supply contracts.

The majority of the Company's uranium needs thraugh thc early 1990's is under contract.

Coal/Ofi MlxutreTest The Company is continuing its test of a coal/oif mixture (COM) as a boiler fuel in a 400 MWunit originally designed to burn oil. Since the first test burn in late April, 243 hours0.00281 days <br />0.0675 hours <br />4.017857e-4 weeks <br />9.24615e-5 months <br /> of operation while burning COM have been recorded for Sanford Unit Vio. 4. During this period over 125,000 barrels of COM have been consumed using various percentages, up to 30%, of coal by weight. Additional modifications to Unit No. 4 were made in early July. FPL began testing 40% COM in Unit No. 4 in mid-July.

Operatfng iVucfear Units St. Lucie Unit Na. I's steam generators were inspected during its spring 1980 refueling outage. The inspection showed that there had been a slight increase in the level of corrosion since the spring 1979 inspection. No additional corrective acuon is called forat this time.

Thc steam turbine rotors in Turkey Point Unit No. 4 were rephced in May, when the unit was down for stcam generator inspection.

During the outage, additional steam generator tubes werc plugged. Presently 19.4% of the tubes in Turkey Point Unit No. 3 and 22.4% of the tubes in Unit No. 4 have been plugged. FPL has authorization to plug up to 25% of the tubes in exch unit without reducing output.

Permanent repair of Unit-No. 4's steam generators is scheduled to begin in October 1981. The repair af Unit No. 3's steam generators will follow that of Unit No. 4, and is currently scheduled to bey'n in October 1982. The repairs, at an approximate cost of $68 million pcr unit, are expected to take approximately 9 months pcr unit.

An Environmental impact Statement and an amendment to each unit's operating license are required by the iVuclcar Regulatory Commission (NRC) before repairs can commence.

Public hearings on the amendments to thc licenses willbe held, but no hearing dates hav>> been set.

Thc NRC has issued a policy statement in thc form of an "Action Plan" developed as a result of the incident at the Three Mile Isla'nd nuclear generating unit. The Plan calls for modifications to thc Company's nuclear units. The cost of complying with the plan in its present form would be material and could require that the Company's operating nuclear units be removed from service for indefinite periods of time to accomplish the modifications.

The NRC has published for public comment a proposed amendment to its fire reguhtions for nuclear generating plants. If adopted in its proposed form, the Company estimates that the capital cost of compliance therewith could approximate

$89 million and additional annual operating costs could approximate $3 million.

The Company exnnot predict the ultimate requirements of'he final fire regulations or which of the provisions of the Action Plan willbe ultimately required, and therefore cannot predict thc ultimate cost ofcomplying therewith.

Regafatfoa The projected fuel cost recovery clause adopted by the Florid Public Service Commission (FPSC) became eff'ective with April billings. The new clause is designed to permit full recovery of fuel costs on retail sales.

The monthly fuel adjustmcnt factor is now a lcvelizcd rate based on projected fuel costs and KWH sales over six-month periods. The net under ar aver recovery af fuel costs during a projection period.

plus interest, are deferred and collected from or refunded to customers during the last four months of the succeeding six-month projection period.

The FPSC held hearings in May 1980 concerning the incenuve features to bc considered for incorporation in the ncw chusc. An incenuve feature is expected to bc incorporated in the projected. fuel cast recovery chusc prior to the next projection period, which begins October I, 1980.

Two important actions werc taken by the FPSC recently.

In a rate proceeding involving another electric utility, the FPSC granted interim rate relief subject to refund without hearings.

This action has effectively shortened the time required to obtain interim relief from four months to onc month.

In an action involving another electric utility, thc FPSC allowed the usc of a projected test year. It subsequently granted the utiTityinterim rate reliefsubject to refund based on thc projected test year, without holding public hearings.

In May 1980 thc FPSC ordered that ume-of-day rates with cost related rate differentials bc offered ta all customer classes on a voluntary basis subject to meter availability. Thc FPSC subsequently ordered that timcwf-day rate tariffs be filed by July 21, 1980. The matter is pending.

Under Florida's Sunset legislation,,

thc statutory authority of. the FPSC was reviewed this year by thc state ley'sfature.

The law relating to the FPSC's authority to regulate electric utilities has been reenactcd by the legislature.

The recently enacted Rorida Energy Efficiency and Conservation Act authorizes the FPSC to adopt goals for increasing energy efficiency and for reducing the growth rates of electric consumption, specifically peak demand. The FPSC must establish 5 year goals no later than September 1980. Each utility is to submit a plan to meet the overall goals by November 1980, with approved plans to be implemented by January 1981.

EXHIBIT 3 REB 8/5/80 FLORIDA POWER 6 LIGHT COMPANY INTERNAL CASH FLOW PROJECTION EXCLUDING RETAINED EARNINGS 12 Months Ended June 30 1980

$ Millions Projected 12 Months Ended June 30 1980

$ 6611ions Deprecia~n and Amortization Dezerred

-c~e Taxes and Inves Tax Credits

$166.6 129.0

$188.9 113.0 Internal Cash Flow Excluding Retained Ea~ngs Applied Toward Re u'ments

$295.6

$303.9 Average Q. rterly Cash Flow Excluding Retained Earnings (1)

$ 73.9

$ 76. 0 Percentage Ownership in All Operating Nuclear Units:

Turkey Point 83 100X Turkey Point 84.100X St. Lucie 81 100X Maximum Total Contingent Liability

$30 Million Certified By:

. L.

oward Vice President-Treasurer (1)

Cash flow per quarter is shown as an average.

Under actual conditions, the amount available is greater in the third and fourth quarters.

(Retained earnings in the period July 1979 through June 1980 averaged

$22.5 million per quarter.)