ML17334A439
| ML17334A439 | |
| Person / Time | |
|---|---|
| Site: | Cook  |
| Issue date: | 10/04/1982 |
| From: | AMERICAN ELECTRIC POWER SERVICE CORP., INDIANA MICHIGAN POWER CO. (FORMERLY INDIANA & MICHIG |
| To: | |
| Shared Package | |
| ML17334A438 | List: |
| References | |
| NUDOCS 8210070286 | |
| Download: ML17334A439 (32) | |
Text
'821007028b 82i004 PDR ADOCK 08000315 PDR ID ANNUALREPORT 1981 AMERlCANELECTRlC POWER SYSTEM M07ICE THE ATTACHED FILES ARE OFFICIAL RECORDS OF THE DIVISION OF DOCUMENT CONTROL.
THEY HAVE BEEN CHARGED TO YOU FOR A LIMITED TIME PERIOD AND MUST BE RETURNED TO THE RECORDS FACILITY BRANCH 016.
PLEASE DO NOT SEND DOCUMENTS CHARGED OUT THROUGH THE MAIL. REMOVALOF ANY PAGEOS)
FROM DOCUMENT FOR REPRODUCTION MUST BE REFERRED TO FILE PERSONNEL.
g Qj~
ldllp rd 7d DEADLINE RETURN DATE RECORDS FACILITYBRANCH
Contents Background of the Company Directors and Ortcers of the Company Selected Financial Data Management's Discussion and Analysis of Results of Operations and Financial Condition Auditors'pinion Consolidated Statements of Income Consolidated Balance Sheets Consolidated Statements of Sources and Applications of Funds Consolidated Statements of Retained Earnings Notes to Consolidated Financial Statements Operating Statistics Price Range of Cumulative Preferred Stock 10-11 12 13 13-25 26-27 28
INDIANA8 MICHIGANELECTRIC COMPANY One Summit Square, P.O. Box 60, I'ort 1Vayne, Indiana 46801 Background of the Company INDIANA& MlcHIGAN ELEGTRlc CQMPANY (the Company),
a subsidiary of American Electric Power Company, Inc. (AEP) is engaged in the generation, purchase, transmission and distribution ofelectric power. The Company was organized under the laws ofIndiana on February 21, 1925, and is also authorized to transact business in Michigan and West Virginia. Its principal executive offices are in Fort Wayne, Indiana.
The Company has two wholly owned subsidiaries; they are Blackhawk Coal Company, which owns coal mines and related mining assets, and Price River Coal Company, which mines coal from land owned by Blackhawk that is purchased largely by the Company.
The Company serves approximately 446,000 customers in northern and eastern Indiana and a portion ofsouthwestern Michigan. Among the principal industries served are stone, clay, glass and concrete products, primary metals, fabricated metal products, electrical and electronic machinery and transportation equipment. In addition, the Company supplies wholesale electric power to other electric utilities, municipalities and cooperatives.
The Company's generating plants and important load centers are interconnected by a high-voltage transmission network. This network in turn is interconnected either directly or indirectly with the following other AEP System companies to form a single integrated power system: Appa-lachian Power Company, Columbus and Southern Ohio Electric Company, Kentucky Power Company, Kingsport Power Company, Michigan Power Company, Ohio Power Company and Wheeling Electric Company. The Company is also interconnected with the followingother utilities:
Central IllinoisPublic Service Company, The Cincinnati Gas &Electric Company, Commonwealth Edison Company, Consumers Power Company, IllinoisPower Company, Indiana-Kentucky Elec-tric Corporation (a subsidiary of Ohio Valley Electric Corporation), Indianapolis Power &, Light Company, Northern Indiana Public Service Company and Public Service Company ofIndiana, Inc.
Directors FRANK N. BIEN W. A. BLACK.
LAWRENCE R. BRUNKE (a)
RICHARD E. DISBROW JOHN E. DOLAN G. E. LEMASTERS Officers GERALD P. MALONEY RICHARD C. MENGE C. W. ROAHRIG J. F. STARK BEVERLY I. STEARS (b)
W. S. WHITE, JR.
W. S. WIHTE, JR.
Chairman ofthe Board and Chief Executive Officer W. A. BI.AcK President and Chief Operating Officer J. F. STARK Senior Vice President FRANK N. BIEN Vice President RICHARD E. DISBROW
. Vice President JOHN E. DOLAN Vice President A. JOSEPH DOWD Vice President RICHARD F. HERING (C)
Vice President ROBERT S. HUNTER Vice President GERALD P. MALONEY Vice President RICHARD C. MENGE Vice President BEVERLY I. STEARS Vice President PETER J. DEMARIA Treasurer 0
JOHN R. BURTON Secretary ALLEN H. STUHLMANN Assistant Secretary and Assistant Treasurer RICHARD P. BOURGERIE (d)
Assistant Secretary JOHN F. DILORENZO, JR.
Assistant Secretary CARL J. MOOS Assistant Secretary WILLIAME. OLSON Assistant Secretary WILLIAMJ. PROCHASKA Assistant Secretary JOAN ST. JAMES (e)
Assistant Secretary LEONARD V. ASSANTE Assistant Treasurer BRUcE M. BARBER (f)
Assistant Treasurer WILLIAMN. D'ONOFRIO Assistant Treasurer GERALD R. KNORR Assistant Treasurer Tlie principal occupation ofeach ofthe above directors and officers ofIndiana &
Michigan Electric Company, with eight exceptions, is as an employee ofAmerican Electric Power Service Corporation. Tlie exceptions are IV.A.Black, G.E. LeMas-ters, Ricltard C. Menge, Carl J. Moos, C. IV. Roahrig, J.'F. Stark, Beverly I.
Stears, and Allen H. Stnhhnann whose principal occnpations.arc as officers or employees ofIndiana & Michigan Electric Company.
(a) Resigned April 28, 1981 (b) Elected April 28, 1981 (c) Elected October 29, 1981 (d) Resigned October 30, 1981 (e) Elected February I, 1982 (1) Elected February 26, 1981 4
INDIANAd'; MICHIGANELECTRIC COMPANY AND SUBSIDIARIES
~-
Selected Financial Data Year Ended December 31, 1981 1980 1979 (in thousands) 1978 1977 INCOME STATEMENTS DATA:
OPERATING REVENUES ELECTRIC TOTAL OPERATING EXPENSES OPERATING INCOME TOTAL OTHER INCOME AND DEDUCI'IONS INCOME BEFORE INTEREST CHARGES NET INTEREST CHARGES CoNsoLIDATED NET INcohIE before preferred stock dividend requirements...
PREFERRED STOCK DIVIDENDREQUIREMENTS EARNINGS APPLICABLETo COhjMON STOCK
$812,149 634 209 177,940 29 713 207,653 104 313
$742,683 577,502 165,181 30,541 195,722 99,151
$683,013 524,800 158,213 29,042 187,255 91,475
$596,678 439,516 157,162 29,750 186,912 74,300
$505,591 377,849 127,742 28,346 156,088 61 241 103,340 23 624 96,571 23,242 95,780 19,995 112,612 18,357 94,847 14,041
$ 79 716
$ 73,329
$ 75,785
$ 94,255
$ 80,806 1981 1980 December 31, 1979 (in thousands) 1978 1977 BALANCESHEETS DATA; ELECTRIC UTILITYPLANT ACCUMULATEDPROVISIONS FOR DEPRECIATION, DEPLETION AND AMORTIZATION NET ELECTRIC UTILITYPLANT TOTAL,ASSETS 611 699 561,773 2,745,288 2,555,608 3,034,290 2,826,172 475,643 410,520 2,182,287 1,986,725 2,616,996 2,360,813 358,826 1,748,206 2,130,899
$3,356,987
$3,117,381
$2,657,930
$2,397,245
$2,107,032 COMMON STOCK, PREMIUMS ON CAPITAL STOCK AND OTHER PAID-IN CAPITAL RETAINED EARNINGS CUhIULATIVEPREFERRED STOCK:
NOT SUBJECf To MANDATORYREDEhIPTION SUBJEcr To MANDATGRYREDEhIPrloN (a)
LQNG-TERM DEBT (a) 727,652 101,725 197,000 105,509 1,404,044 637,287 116,050 197,000 68,348 1,264,673 587,193 132,035 197,000 70,000 1,124,255 527,193 134,612 197,000 30,000 1,050,626 467,193 104,562 157,000 30,000
',038,483 (a) Including portion due within one year.
Management's Discussion and Analysis of Results of Operations and Financial Condition The followingare the more significant factors bearing on the financial condition of Indiana'& Michigan Elec-tric Company and its subsidiaries as reflected in the consolidated results of operations. This discussion re-fers to the consolidated financial statements appearing on the following pages.
Operating Revenues and Expenses
~ Consolidated operating revenues increased 9.4% in 1981 and 8.7% in 1980 as energy sales decreased by 1.7% in 1981 and increased by 4.9% in 1980. The in-creases recorded in operating revenues were largely because of higher retail and wholesale rates, which went into effect during the three year period, and higher fuel and purchased power costs, a portion of which is
.passed on to customers through fuel adjustment charges.
Revenues from retail customers (residential, com-mercial and industrial) were up 11.1% in 1981 on a 0.6%
increase in kilowatt-hour sales and decreased 1.6% in 1980 on a 3% decline in kilowatt-hour sales.
The Company shared in the AEP System's ability to take advantage of its high generating availability, low operating costs and efficient transmission system to increase its opportunity sales to neighboring utilities.
Wholesale revenues increased 3.9% in 1981 despite a decrease of 3.6% in kilowatt-hour sales and increased 23.5% in 1980 on a 12.4% increase in kilowatt-hour sales.
Wholesale sales to municipalities, electric cooperatives and other electric utilities are expected to continue to be significant during the next few years as well; however, the national economic picture could cause lower levels than those experienced in 1981.
The increase in purchased and interchange power expenses of8.1% in 1981 resulted from a higher cost per unit purchased, which more than offset a 5% decrease in kilowatt-hours purchased.
In 1980 the gain in wholesale sales was responsible for increased pur-chased and interchange power expenses of 5.7% Be-cause ofAEP's powerful interconnection and transmis-sion capacity, during periods of peak demand which exceeded the AEP System's then-available generating capacity, wholesale customers'equirements were able to be met by purchasing power from neighboring utilities for resale to others.
Fuel expenses increased by 2.4% in 1981 and 18% in 1980, mainly due to the increased cost offuel forgener-ation, with the result that total operating expenses in-creased in line with operating revenues (9.8% in '1981 and 10% in 1980). Future fuel expenses willbe affected by a new contract between the coal industry and the United Mine Workers of America, increasing foreign purchases of United States coal, and the possibility of yet more stringent environmental "restrictions on burn-ing certain types of coal. Whether or not continued increases in fuel costs willadversely affect earnings will depend on the Company's continued ability to recover those costs promptly in the face ofefforts by consumer groups and others to delay or reduce rate increases and to eliminate or reduce the extent of coverage of fuel adjustment clauses.
Construction and Financing Program Expenditures for the Company's construction pro-gram over the three-year period 1982-1984 are esti-mated to be approximately
$633 million. Substantial additional expenditures may be required if existing generating plants require modification or additional facilities to comply with present and future environ mental quality standards. In recent years, the construc-tion program has been affected by substantial increases in construction costs and difficultiesin obtaining finan-cin for the program due to high costs of capital. The construction program is reviewed continuously and re-vised from time to time in response to revised projec-tions of load growth and changes in the cost and avail-ability of capital. In recent years, these reviews have resulted in extending construction schedules ofa num-ber ofprojects withthe objective ofreducing the level of annual construction expenditures. However, deferrals ofconstruction projects may have an adverse effect on the quality ofthe Company's service to its customers in the future, and any resulting reductions in current con-struction costs may, in the long run, be at least partially offset by cancellation charges and general inflationary trends. In addition, when the completion date ofa proj-ect under construction is substantially'delayed, it be-comes more expensive, both because of the foregoing factors and because certain costs, such as allowances for funds used during construction (AFUDC)and other overheads, continue to accrue until the facilityis placed in commercial operation.
It is estimated that approximately 15% of the Com-pany's projected construction expenditures for 1982-
'1984 will be financed with internally-generated funds.
The additional amounts needed will have to be raised externally, as in the past, through sales ofsecurities and investments in the Company's common equity by AEP.
The Company initially finances current construction expenditures in excess ofavailable internally-generated funds by issuing unsecured short-term debt (commer-cial paper and bank loans) and then periodically reduces
INDIANA& MICHIGANELECTRIC COMPANY AND SUBSIDIARIES short-term debt with the proceeds from sales of long-term securities and preferred stock and with invest-ments in the Company's common equity by AEP.
The amounts ofshort-term debt which the Company may issue are limited by regulatory restrictions under the Public UtilityHolding Company Actof 1935 and by restr'ictions in its charter and in certain debt instru-ments. At December 31, 1981, the Company had re-ceived authorizations from the Securities and Ex-change Commission to issue a total of approximately
$200,000,000 of short-term debt. Note 7 of Notes to Consolidated Financial Statements contains informa-tion on the Company's short-term bank lines of credit and revolving credit agreements.
Bank lines of credit'ay be withdrawn by the banks extending them at any time and in most cases the banks require the mainte-nance ofcompensating deposit balances or the payment of fees in lieu of deposits.
In order for the Company to issue additional long-term debt and preferred stock, it is necessary for it to comply with earnings coverage requirements contained in its mortgage bond and debenture indentures'and in its charter. In order to issue additional long-term debt (ex-cept to refund maturing long-term debt), the Company must have pre-tax earnings equal to at least twice the annual interest charges on long-term debt, giving effect to the issuance of the new debt, for a period of 12 consecutive months within the 15 months immediately preceding the date ofthe new issue. To issue additional preferred stock, the Company must have after-tax gross income at least equal to one and one-half times annual interest charges and preferred dividends, giving effect to the issuance ofthe new preferred stock, for the same period. These provisions do not prevent certain types of pollution control revenue bond financings by public bodies on behalf of the Company, but the levels of coverage under them may'affect the cost and marketa-bilityof such bonds. At December 31, 1981, the cover-ages. of the Company under these provisions were at least 1.98 for long-term debt and 1.46 for preferred stock.
In view of these restrictions on the issuance ofaddi-tional debt securities and preferred stock, the Company believes that it will be possible to meet the capital requirements of its construction program only if the Company receives rate increases over the next several years sufficient to meet the earnings levels required to issue the necessary amounts oflong-term debt and pre-ferred stock and to provide an appropriate return on new equity investment.
Net Income Consolidated net income before preferred dividend requirements increased by 7% in 1981 and 0.8% in 1980.
These changes in net income were accompanied by an increase in the total proportion ofAFUDC reflected in net. income, 77.3% in 1981, 52% in 1980 and 39.1% in 1979, as a result of the increasing investment in the Rockport Plant now under construction. AFUDC does not represent cash income or a reduction in actual inter-est expense, but is an accounting convention required by regulatory systems of accounts.
The net cost of borrowed funds used for construction and a reasonable rate ofreturn on other funds when so used is capitalized as a cost of construction projects with a concurrent credit to the Income Statement. The amount capitalized is generally included in the plant investment base for setting rates and recovered through depreciation charges included in rates after the project is placed in commercial operation.
Effects of Inflation The high rates ofinflation in recent years have had a drastic effect on the Company's consolidated revenues, expenses and net income that is not readily evident in conventional financial statements.
For additional in-formation on the effects ofinflation, refer to Note 12 of the Notes to Consolidated Financial Statements, which presents a consolidated statement of income for 1981, adjusted for effects of inflation, and a comparison of selected supplementary data for a three-year period, similarly adjusted.
Auditors'pinion Oeleitte Haskies+Sells 155 East Broad Street Cotumbus, Ohio 43215 (6141 221 1000 Cable DEHANDS To the Shareowners and the Board of Directors of Indiana
& Michigan Electric Company:
February 23, 1982 We have examined the consolidated balance sheets of Indiana Michigan Electric Company and its subsidiaries as of December 31, 1981 and 1980 and the related consolidated state-ments of income, retained earnings and sources and applications of funds for each of the three years in the period ended December 31, 1981.
Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our report dated February 24,
- 1981, our opinion on the finan-cial statements was qualified as being sub)ect to the effects of such ad)ustments, if any, as might have been required had the outcome been known of the uncertainties concerning:
(1) a court decision reversed in part and remanded back to the Public Service Commission of Indiana a 1978 Indiana retail rate order; and (2) the Company was collecting certain wholesale revenues subJect to reEund and was involved in anti-trust matters with certain wholesale customers.
As discussed in Note 2 of Notes to Consolidated Financial Statements, manage-ment'as assessed the effects of any ad)ustments that would be required in the event of any adverse resolution of the 1978 Indiana retail rate order and have concluded that such effects would not be material to the Einancial statements of the Company.
Also, as explained in Note 9 of Notes to Consolidated Financial Statements, the Company settled the wholesale rate and anti-trust matters for 1980 and prior years, which has been reflected in the accompanying consolidated financial statements.
Accordingly, our present opinion on the 1980 and 1979 consolidated Einancial statements, as expressed
- herein, is different from that expressed in our previous report.
In our opinion, such consolidated financial statements present fairly the financial position of the Company and its subsid-iaries at December 31, 1981 and 1980 and the results of their operations and their sources and applications of funds Eor each of the three years in the period ended December 31, 1981, in conformity with generally accepted accounting principles applied on a consistent basis.
INDIANAd': MICHIGANELECTRIC COMPANY AND S UBSIDIARIES Consolidated Statements of Income Year Ended December 31, OPERATING REVENUES ELECTRIC OPERATING EXPENSES:
Operation:
Fuel for Electric Gener4ation Purchased and Interchange Power (net)
Other Maintenance Depreciation, Depletion and Amortization Taxes Other Than Federal Income Taxes Federal Income Taxes Total Operating Expenses OPERATING INCOME OTHER INCOME AND DEDUCTIONS:
Allowance for Other Funds Used During Construction Miscellaneous Nonoperating Income Less Deductions Total Other Income and Deductions INCOME BEFORE INTEREST CHARGES 1981
$812 149 176,074 139,119 101,792 48,895 81,458 32,698 54 173 634 209 177 940 32,885 3 172) 29 713 207 653 1980 (in thousands)
$742,683 171,943 128,645 79,788 41,377 77,668 26,296 51,785 577,502 165,181 18,438 12,103 30,541 195,722 1979
$683,013 145,743 121,706 70,184 37,624 74,099 28,705 46,739 524,800 158,213 17,365 11,677 29,042 187,255 INTEREST CHARGES:
Interest on Long-term Debt Interest on Short-term Debt Miscellaneous Interest Charges Total Interest Charges Allowance for Borrowed Funds Used During Construction (credit)
Net Interest Charges 129,023 18,042 4 228 151,293 109,138 18,847 2,993 130,978
~46 980)
~3),827) 99,151 104 313 96,127 13,787 1,638 111,552 (20,077) 91,475 CGNsoLIDATED NET INcoh1E before preferred stock dividend requirements PREFERRED STOCK DIVIDENDREQUIREMENTS EARNINGS APPLICABLETo COMMON STOCK 103,340 23 624
$ 79 716 96,571 95,780 23,242 19,995
$ 73,329
$ 75,785 See Holes to Consolidaied Financial Siatements.
Consolidated Balance Sheets ASSETS December 31, 1981 1980 (in thousands)
ELECTRIC UTILITYPLANT:
Production Transmission Distribution General and Miscellaneous (includes nuclear fuel and mining plant)
Construction Work in Progress Total Electric UtilityPlant Less Accumulated Provisions for Depreciation, Depletion and Amortization Electric UtilityPlant Less Provisions
$195129548 438,849
, 296,677 194,177 914 736 3,356,987 611 699 2 745 288
$ 1,501,750 433,653 283,153 195,140 703,685 3,117,381 561,773 2,555,608 OTHER PROPERTY AND INVESTMENTS
'4 838 27,409 CURRENT AssETs:
Cash Special Deposits and Working Funds Accounts Receivable:
Customers Associated Companies Miscellaneous Accumulated Provision for Uncollectible Accounts Materials and Supplies (at average cost or less):
Fuel Construction and Operation Materials and Supplies Accrued UtilityRevenues Prepayments and Other Current Assets Total Current Assets 7,486 18,574 73,978 9,995 9,037 (375) 48,644 19,947 19,994 5 076 212 356 10,665 3,630 62,216 23,066 5,319 (371)
'5,586
~ 19,510 11,796 4,795 206,212 DEFERRED DEBITs:
Unamortized Debt Expense Property Taxes Deferred Collection of Fuel Costs Deferred Strike Costs Other Work in Progress Other Deferred Debits Total Deferred Debits....
Total See Notes to Consolidated Financial Statements.
3,715 1,729 502 3,791 6,048 36 023 51 808 3,520 1,473 789 10,696 20,465 36,943
$3 034 290
$2,826,172 10
INDIANA& MICHIGANELECTRIC COMPANY AND SUBSIDIARIES CAPITALIZATIONAND LIABILITIES December 31, 1981 1980 (in thousands)
CAPITALIZATION:
Common Stock, No Par Value:
Authorized 2,500,000 Shares Outstanding 1,400,000 Shares Premiums on Capital Stock Other Paid-in Capital Retained Earnings Total Common Shareowner's Equity...............
Cumulative Preferred Stock:
Not Subject to Mandatory Redemption Subject to Mandatory Redemption (less sinking fund requirements due within one year)
Long-term Debt (less portion due within one year)
Total Capitalization (less amounts due withinone year).
569584 381 670,687 101 725 8299377 197,000 105,500 1 298 502 2 430 379 56,584 381 580,322 116,050 753,337 197,000 67,000 1,245,403 2,262,740 CURRENT LIABILITIES:
Cumulative Preferred Stock Sinking Fund Requirements Due Within One Year Long-term Debt Due Within One Year Short-term Debt:
Notes Payable to Banks Commercial Paper Accounts Payable:
General Associated Companies Dividends Declared:
Common Stock Cumulative Preferred Stock Customer Deposits Taxes Accrued Interest Accrued Revenue Refunds Accrued Other Current Liabilities Total Current Liabilities 9
105,542 15,500 38,100 38,440 9,377 1,124 6,303 2,483 29,943 31,583 20,216 33 182 331 802 1,348 19,270 104,550 41,975 41,701 13,052 11,500 5,805 2,202 23,804 27,467 35,337 24,136 352,147 CohthIIThIENTs AND CoNTINGENclEs (Note 9)
DEFERRED CREDITs AND OPERATING REsERvEs:
Deferred Income Taxes Deferred Investment Tax Credits Other Deferred Credits and Operating Reserves.........
Total Deferred Credits and Operating Reserves Q
Total I
230,223 22,907 18 979 190,475 12,316 8,494 272 109 211 285 83 034 290
$2,826,172
Consolidated Statements of Sources and Applications of Funds Year Ended December 31, 1981 1980 1979 (in thousands)
SQURcEs oF FUNDs:
Funds from Operations:
Consolidated Net Income Principal Non-fund Charges (Credits) to Income:
Depreciation, Depletion and Amortization Provision for Deferred Income Taxes (net)
Deferred Investment Tax Credits (net)
Amortization of Deferred Strike Costs Amortization of Deferred Collection of Fuel Costs Allowance for Other Funds Used During Construction Other (net)
Total Funds from Operations Funds from Contributions and Financings:
Contributions and Financings:
Capital Contributions from Parent Company Cumulative Preferred Stock Long-term Debt Short-term Debt (net)
Total Less Retirements of Cumulative Preferred Stock and Long-term Debt Net Funds from Contributions and Financings Sales of Property Total Sources of Funds APPLICATIONS OF FUNDS:
'lant and Property Additions:
Gross Additions to UtilityPlant Gross Other Additions Total Gross Additions Allowance for Other Funds Used During Construction Net Plant and Property Additions Dividends on Common Stock Dividends on Cumulative Preferred Stock Deferred Strike Costs Other Changes (net)
Increase in Working Capital (a)
Total Applications of Funds (a) Excludes Cumulative Preferred Stock Sinking Fund Requirements Due Within One Year, Long-term Debt Due Within One Year and Short-term Debt and is represented by increase (decrease) as follows:
Cash and Cash Items ccounts Receivable aterials and Supplies Accrued UtilityRevenues Accounts Payable Dividends Declared on Common Stock Revenue Refunds Accrued Taxes Accrued Other (net)
$103,340 85,978 36,082 9,247 3,195 287 (32,885) 710 205 954 90,000 38,734 158,922
~92 925 194,731 22 019 172 712 40 845
$419 511
$307,672 578 308,250
~32 885 275,365 92,624 23,624 6,986 2,415 18 497
$419 511
$ 11,765 2,405 (16,505) 8,198 6,936 10,376 15,121 (6,139)
~13 660
$ 96,571 83,393 34,840 11,124 508 (18,438) 767 208,765 50,000 177,021 (2,770) 224,251 38,149 186,102 50,673
$445,540
$304,678 6,013 310,691 (18,438) 292,253 89,320 23,242 11,117 29,608
$445,540 5,707 9,334 18,503 (8,308) 6,933 18,630 (10,038)
(3,670)
(7,483)
$ 95,780 77,746 35,281 8,460 287 (17,365) 1,093 201,282 60,000 38,708 164,069 24,355 287,132 90,692 196,440 57,898
$455 620
$321,405 47,028 368,433
~17,365) 351,068 77,070 19,995 1,953 5,534
$455,620
$ (19,426) 12,059 37,698 6,293 4,079 (15,878)
(9,803)
(129)
(9,359)
See Notes to Corisolidated Financial Statements.
$ 18 497
$ 29 608 5,534
INDIANAd'; MICHIGANELECTRIC COMPANY AND SUBSIDIARIES Consolidated Statements of Retained Earnings Year Ended December 31, Balance at Beginning of Year:
As Previously Reported Restatement (Note 2)
As Restated Consolidated Net Income Total 1981
$124,318
~8268) 116,050 103 340 219 390 1980 (in thousands)
$ 136,802 (4,767) 132,035 96,571 228,606 1979
$ 136,072 (1,460) 134,612 95,780 230,392 Deductions:
Cash Dividends Declared:
Common Stock Cumulative Preferred Stock:
4Ve %Series 4.56% Series 4.12% Series 7.08% Series 7.76% Series 8.68% Series 12
%Series
$2.15 Series
$2.25 Series
$2.75 Series
$3.63 Series Total Cash Dividends Declared Capital Stock Expense Total Deductions Balance at End of Year 92,624 495 273 165 2,124 2,716 2,604 3,226 3,440 3,600 4,400 581 116,248 1 417 117 665 8101 725 89,320 495 273 165 2,124 2,716 2,604 3,425 3,440 3,600 4,400 112,562
~6) 112 556
$ 116,050 77,070 495 273 165 2,124 2,716 2,604 3,600 3,440 3,600 978 97,065 1 292 98,357 5132 035 See Notes to Consolidated Financial Statements.
Notes to Consolidated Financial Statements 1.. Significant Accounting Policies:
The common stock ofthe Company is wholly owned by American Electric Power Company, Inc. (AEP).
A wholly owned subsidiary, Indiana & Michigan
~
Power Company (the Generating Subsidiary) was merged into the Company on November 30, 1979, at which time the Company assumed the obligations ofthe Generating Subsidiary.
The accounting and rates ofthe Company are subject in certain respects to the requirements of state regula-tory bodies and in certain respects to the requirements of the Federal Energy Regulatory Commission (FERC).
The consolidated financial statements include the ac-counts of the Company and two wholly owned sub-sidiaries engaged in coal mining. Significant inter-company items have been eliminated in consolidation.
The consolidated financial statements have been pre-pared on the basis ofthe accounts which are maintained for FERC purposes.
13
NOTES TO CONSOLIDATED FINANCIALSTATEMENTS (Continued)
Electric UtilityPlant; OtlierProperty and Investinents; Depreciation, Depletion and Atnortization Electric utilityplant is stated at original cost. Gener-ally, the plant of the Companyis subject to first mortgage liens.
The Company capitalizes, as a construction cost, an allowance for funds used during construction, an item not representing cash income, which is defined in the applicable regulatory systems of accounts as the net cost ofborrowed funds used for construction purposes and a reasonable rate on other funds when so used. The composite rates used by the Company were 12%
applied on a semi-annual compound basis during 1981 and 10.75% in 1980 and 1979, (the Generating Sub-sidiary used 10.5% during 1979 applied on a semi-annual compound basis).
The Company provides for depreciation on a straight-line basis over the estimated useful lives of the property. The current provisions are determined largely with the use of functional composite rates as follows:
Functional Composite Class of Annual
~Pfo clip Rates Production:
Steam Nuclear 4.0%
Steam Fossil. fired 3.7%
Transmission 2.1%
Distribution 3.7%
General 2.8%
Depreciation, depletion and amortization of coal-mining property are provided in amounts estimated to be sufficient to amortize the costs of the related assets, less any estimated salvage (which is not significant),
over their useful lives and are calculated by use of the following methods:
Description Method Mining Structures and Straight-line method (original lives Equipment range from 2 to 30 years)
Coal Intcrcsts and Mine Units-of-production method Development Costs (based on estimated recoverable tonnages; current rate averages
$ 1.07 per ton)
Substantially all of the amount of the provisions for depreciation, depletion and amortization ofcoal-mining property is classified in the Consolidated Statements of Income as fuel for electric generation.
Operating expenses are charged with the costs of-labor, materials, supervision and other costs incurred in maintaining the properties.
Property accounts are charged with costs of betterments and major replace-ments of property and the accumulated provisions for depreciation are charged with retirements, together with removal costs less salvage.
Other property and investments are generally stated at cost.
Income Taxes Deferred Federal income taxes, reduced where applicable by investment tax credits, are provided by the Company generally to the extent that such amounts are allowed for rate-making purposes.
The Company normalizes the effect oftax reductions resulting from investment tax credits recognized in connection with accruals of current income taxes and provisions for certain deferred Federal income taxes, consistent with rate-making policies. The deferred in-vestment tax credits applicable to current Federal in-come taxes payable are amortized over 30 years.
The consolidated coal subsidiaries generally use the "flow-through" method of accounting for investment tax credits.
Actuarial present value of accumulated plan benefits Vested Nonvested
$46,410
$44,567 5,030 2,561
$51,440
$47,128 Nct assets available for bcncfits......
$77,283
$66,615 The assumed rate of return used by the actuary in determining the actuarial present value of accrued benefits was 8% at each valuation date.
Under a contract with the UMWA, a subsidiary is required to make payments into two multi-employer pension plans based on coal production and hours worked. The cost of the plans was approximately
$ 1,700,000 in 1981 and $ 1,690,000 in 1980. As of June 30, 1981, the Company's actuary estimates, based on information that is available, that the subsidiary's share ofthe unfunded vested liabilitiesofthe UMWApension plans approximates
$8,600,000.
Pension Plans The companies participate with other companies in the AEP System in a non-contributory trusteed plan to provide pensions for all their employees who are not participants in pension plans ofthe United Mine Work-ers of America (UMWA),subject to certain eligibility requirements.
Pension costs forthe years ended December 31, 1981, 1980 and 1979 were approximately
$3,201,000,
$3,416,000 and $3,117,000, respectively. The amounts cover the costs ofcurrently accruing benefits and amor-tization of, and interest on, unfunded prior-service costs, which are being amortized over 30 years.
Acomparison ofthe plan's accumulated benefits and nct assets as of January 1, 1981, the date of the most recent actuarial study, is presented below:
January I, 1981 1980 (in thousands) 14
INDIANA& MICHIGANELECTRIC COMPANY AND S UBSIDIARIES Black Lung Benefits The coal-mining subsidiaries are liable under the Federal Coal Mine Health and Safety Actof 1969 (Act),
as amended, to pay certain black lung benefits to eligi-ble present and former employees.
The subsidiaries provide self-insurance accruals sufficient to amortize the actuarially computed present and future liabilities for such benefits over the average remaining life ofthe mines. Such provisions were approximately $398,000 and $391,000 in 1981 and 1980, respectively. A Black Lung Benefits Trust is maintained under Section 501(c)(21) ofthe Internal Revenue Code. As ofJanuary 1, 1981 (the latest valuation date), the companies'ctu-ary estimates the unfunded actuarial value of medical and liabilitybenefits under the Act, as well as compara-ble state legislation, was approximately $6,000,000. In 1980, the companies began funding the actuarially de-termined liabilities, including a provision for the previ-ously accrued but unfunded liabilities, at a level which currently approximates the recorded expense provi-sions.
Other The Company accrues unbilled revenues for electric service rendered subsequent to the last billing cycle through month-end.
Miscellaneous nonoperating income for the years ended December 31, 1981, 1980 and 1979 includes gains amounting to $489,000, $397,000 and $ 147,000, respec-tively, on certain long-term debt reacquired.
Debt discount or premium and debt expenses are being amortized over the lives ofthe related debt issues and the amortization thereof is included within miscel-laneous interest charges.
- 2. Restatements, Operating Revenues and Operating Expenses:
The 1980 and 1979 financial statements have been restated as explained in Note 9 to reflect the effects of certain revenue refunds as ordered by Federal and state regulatory commissions in 1981. The effects of such restatements are as follows:
Prior Increase (Decrease) in:
1980 l979 to 1979 (in thousands)
Operating Revenues...........
$(5,997)
$(6,053)
$(2,704)
Operating Expense:
Federal Income Tax........
(2,982)
(2,817)
(l,244)
Miscellaneous Interest Charges 486 7l Consolidated Nct Income......
$(3,50l)
$(3,307)
$(l,460)
The Company has collected retail revenues under inal orders of the Public Service Commission of In-a (PSCI) which became effective in February 1977 I
-.tember 1978. In November 1979, a Court of Appeals reversed the 1977 increase granted by the PSCI
($41,800,000 on an annual basis),
and remanded the matter to PSCI for further hearings on the Company's Federal income tax allowance. The Company appealed the ruling to the Supreme Court of Indiana. The Com-pany's petition to the Supreme, Court of Indiana for review of this decision was denied on April 29, 1980.
Hearings were held before the PSCI on October 30, 1980. On January 21, 1981, the PSCI issued an order requiring the Company to refund to its Indiana retail customers $9,315,000, including interest of$ 1,215,000.
Prior periods were restated in 1980 to give effect to the refunds which were made during 1981. Further appeals were filed by intervenors in the case and on October 27, 1981 the Court ofAppeals again returned the case to the PSCI concerning the lack of evidence regarding the calculation ofthe refund. Further hearings were held on this matter before the PSCI on February 22, 1982. An order by the PSCI is pending. In a separate proceeding before the Court of Appeals, certain petitioners have similarly challenged. the tax provision allowed in the 1978 increase ($43,000,000 on an annual basis) granted by the PSCI. On February 5, 1981, the Court ofAppeals of Indiana affirmed, in part, and reversed, in part, the PSCI decision, relating to the 1978 increase and re-manded the m'atter to the PSCI for further proceedings with respect to certain issues, including the issue relat-ing to Federal income tax expense.
Additional tes-timony has been filed in this case, and hearings were held in early 1982. The Company cannot predict the outcome ofthese matters but has determined the effects ofany adjustments that would be required in the event of any adverse resolution would not be material to the financial statements of the Company.
Three industrial customers filed a complaint with a Circuit Court in Michigan appealing an order of the Michigan Public Service Commission (MPSC) allowing the Company a $ 10,800,000 annual rate increase in 1979, seeking a summary judgment in connection with the tax provision allowed in the rate increase. As part of a settlement agreement reached in a subsequent rate proceeding, the Company and the three industrial cus-tomers agreed to drop their appeals.
Although the Michigan Attorney General, an intervenor in the court appeal, failed to sign a stipulation dismissing the ap-
- peals, the Circuit Court subsequently dismissed the complaint.
Operating revenues derived from a certain wholesale customer represent approximately 9% of total operat-ing revenues for 1981 and 1980 and 10% for 1979.
In 1978, the Company received approval ofthe PSCI to collect, over a five-year period ending in 1983, sub-stantially all of its deferred fuel costs.
15
NOTES TO CONSOLIDATED FINANCIALSTATEMENTS (Continued)
- 3. Federal Income Taxes:
The details of Federal income taxes as reported are as follows:
Year Ended December 31, 1981 1980 1979 (in thousands)
Charged to Operating Expenses:
Current (net)
Deferred (net)
Dcferrcd Investment Tax Credits (net)
Total Charged (Credited) to Other Income and Deductions:
Current (net)
Deferred (net)
Total Total Federal Income Taxes as Reported The following is a reconciliation of the difference between the amount multiplying book income before Federal income taxes by the statutory tax taxes reported in the Consolidated Statements of Income.
$ 8,672 36,254 9,247 54,173
$ 6,984 33,677 11,124 51,785
$ 5,293 32,986 8,460 46,739 Year Ended December 31, 1,525 (1,297) 1,163 2,295 2,688 998
$54,473
$47,737 of Federal Income taxes computed, by rate, and the amount of Federal income 1981 1980 1979 (in thousands)
Consolidated Net Income Before Preferred Stock Dividend Requirements Federal Income Taxes Pre-tax Book Income
$ 103,340 52,013
$ 155,353
$ 96,571 54,473
$ 151,044
$ 95,780 47,737
$ 143,517 Federal Income Taxes on Pre-tax Book Income at Statutory Rate (46%)
Increase (Decrease) in Federal Income Taxes Resulting From the Following Items on Which Deferred Taxes Are Not Provided:
Allowance for Funds Used During Construction and Miscellaneous Items Capitalized on the Books but Deducted for Tax Purposes Investment Tax Credits Not Deferred Amortization of Prior Years Deferred Investment Tax Credits Other Total Federal Income Taxes as Reported (19,658)
(1,799)
(327) 2,335
$ 52,013 (11,203)
(409)
(641)
(2,754)
$ 54,473 (9,434)
(209)
(8,638)
$ 47,737
$ 71,462
$ 69,480
$ 66,018 Effective Federal Income Tax Rate
~
33.5%
The following are the principal components of Federal income taxes as reported:
36.1%
33.3%
Year Ended December 31, Current:
Federal Income Taxes Investment Tax Credit Total Current Federal Income Taxes (net)
Deferred:
Depreciation (liberalized, ADR and ACRS)
Allowance forBorrowed Funds Used During Construction and htiscellaneous Items Capitalized Unbilled Revenues Adjustments for Revenue Refunds Amortization of Pollution Control Equipment Percentage Repair Allowance Other Investment Tax Credit Applicable to Certain Deferred Income Taxes Total Deferred Federal Income Taxes (net)
Total Deferred Investment Tax Credits (net)
Total Federal Income Taxes as Reported 1981
$ 11,598 (4,914) 6,684 13,440 18,465 3,660 3,134 2,874 1,315 (347)
(6,459) 36,082 9,247
$52,013 1980 (in thousands)
$ 28,299 (19,790) 8,509 16,689 13,330 (3,822)
(5,469) 3,767 5,005 (2,276) 7,616 34.840 11,124
$ 54,473 1979
$ 16,066 (12,070) 3,996 20,513 8,904 2,590
~
(3,589) 3,719 1,894 (2,151) 3,401 35,281 8,460
$ 47,737 16
INDIANA8 MICHIGANELECTRIC COMPANY AND S UBSIDIARIES The companies join in the filing of a consolidated Federal income tax return with their affiliated com-panies in the AEP System. The allocation of the AEP System's consolidated Federal income tax to the Sys-tem companies is in accordance with Securities and Exchange Commission (SEC) rules under the Public UtilityHoldihg Company Actof 1935. In 1981, the SEC amended its rules to permit the allocation ofthe benefit of current tax losses to the System companies giving rise to such losses in determining taxes currently pay-able. In prior years, in order to be consistent with rate-making, the benefits of these tax losses, without affecting taxes payable, were reallocated to the AEP System companies giving rise to such losses in deter-mining each System company's Federal income tax expense. The tax loss of the System parent company, American Electric Power Company, Inc., continues to be allocated to its subsidiaries with taxable income.
With the exception of the loss of the parent company, the new method of allocation approximates a separate return result for each company in the consolidated group. Consolidated investment tax credits utilized are generally allocated to the System companies giving rise to them.
Unused System investment tax credits at December 31, 1981, aggregated approximately
$260,000,000, of which $81,000,000, generated by the companies are available for their future utilization. Ofthe companies'nvestment tax credit carryforwards, approximately
$600,000 has been applied as a reduction of deferred income taxes prior to December 31, 1981 and willnot be reflected in net income when realized in future years except as affected by changes in deferred income taxes.
The System's consolidated Federal income tax re-turns for the years prior to 1970 have been settled. The returns for the years 1970 through 1976 have been re-viewed by the Internal Revenue Service and additional taxes for those years have been proposed, some of which the System companies have protested.
In the opinion of the System companies, adequate provision has been made for such additional taxes.
- 4. Common Stock, Premiums on Capital Stock and Other Paid-in Capital:
The Company received from its parent cash capital contributions of $90,000,000 in 1981,
$50,000,000 in
.1980 and $60,000,000 in 1979. In 1981 and 1980 a credit to other paid-in capital of$365,000 and $94,000, respec-tively, represented the excess ofpar value over cost of cumulative preferred stock reacquired by the Company to meet sinking fund requirements. There were no other changes in any ofthe aforementioned accounts in 1981, 1980 or 1979.
- 5. Retained Earnings:
Various restrictions on the use of retained earnings for cash dividends on common stock and other pur-poses are contained in or result from covenants in mortgage indentures, debenture and bank loan agree-ments, charter provisions, and orders ofregulatory au-thorities. Approximately $48,400,000 at December 31, 1981, was so restricted.
- 6. Cumulative Preferred Stock:
At December 31, 1981, authorized shares of cumulative preferred stock were as follows:
Par Value Shares Authorized
$ 100 2,250,000 25 11,200,000 The cumulative preferred stock is callable at the option ofthe Company at the price indicated plus accrued dividends.
The involuntary liquidation preference is par value. Unissued shares ofthe cumulative preferred stock may or may not possess mandatory redemption characteristics upon issuance. The Company issued and sold 1,600,000 shares of
$2.75 series in 1979; and 1,600,000 shares of the $3.63 series in 1981.
17
NOTES TO CONSOLIDATED FINANCIALSTATEMENTS (Continued)
A. Cumulative Preferred Stock Not Subject to Mandatory Redemption:
Series Current Call Price Redemption Restricted Prior to Par Value Shares Outstanding Amount December 31, 1981 1980 (in thousands) 414i%
4.56%
4.12%
7.08%
7.76%
8.68%
$2.15
$2.25
$ 106.125 102 102.728 104.68 105.38 107.44 27.15 27.25 5/I/82 3/I/83
$ 100 100 100 100 100 100 25 25 120,000 60,000 40,000 300,000 350,000 300,000 1,600,000 1,600,000
$ 12,000 6,000 4,000 30,000 35,000 30,000 40,000 40,000
$ 197,000
$ 12,000 6,000 4,000 30,000 35,000 30,000 40,000 40,000
$ 197,000 B. Cumulative Preferred Stock Subject To Mandatory Redemption:
Series (a)
Current Call Price Redemption Restricted Prior to Par Value Shares Outstanding Amount December 31, 1981 1980 (in thousands)
$ 28,348 40,000 12% (b)
$2.75 (c)
$3.63 (d)
$ 112 27.75 28.63
$ 100 25 25 255,0&5 1,600,000 1,600,000 68,348 1,348
$ 67,000
$ 25,509 10/I/84 40,000 11/I/86 40,000 105,509 Less Sinking Fund Requirements Due Within One Year 9
$ 105,500 (a) The minimum sinking fund provisions ofthc series subject to mandatory redemption aggregate $ 1,500,000 in the years 1982 and 1983, and
$3,500,000 in 1984, 1985 and 1986.
(b) A sinking fund for the 12% series requires the Company to provide, on or before October I ofeach year, 15,000 shares ofsuch series. This provision may be satisfied through shares previously purchased or by r'edemption at $ 100 a share. Thc Company has the right, on each sinking fund date, to rcdecm an additional 15,000 shares. At December 31, 1981 the Company had reacquired 14,915 shares in anticipation of sinking fund requirements.
Unless all sinking fund provisions have been met, no distribution may bc made on the common stock.
(c) Acumulative sinking fund forthe $2.75 series requires the Company to redeem 80,000 shares on each October I commencing on October I, 1984. Thc Company has the option to credit shares purchased or otherwise acquired in lieu ofredeeming shares for the sinking fund and has the noncumulative option to double thc number of shares to be redeemed in any year on and aAer October I, 1984.
(d) Acumulative sinking fund forthe $3.63 series requires the Company to redeem 80,000 shares on each January I commencing on January I, 1987. The Company has the option to credit shares purchased or otherwise acquired in lieu ofredeeming shares for the sinking fund and has the noncumulative option to double the number of shares to be redeemed in any year on and after January I, 1987.
INDIANA4 MICHIGANELECTRIC COMPANY AND S UBSIDIARIES First Mortgage Bonds Sinking Fund Debentures Installment Purchase Contracts...
Other Long-term Debt Total (less portion due within one year)
$ 1,103,101 21,930 158,936 14,535
$ 1,044,369 22,705 158,799 19,530
$ 1,298,502
$ 1,245,403 First mortgage bonds outstanding were as follows:
December 31, 1981 1980 (in thousands)
% Rate Duc 3Y~
1982 January I
IOY4 1982 Junc I 35k 1983 September I
11 1983 September I
3'984 October I ION 1984 Dec. I (c)(d)(e) 10 1985 March I (e)
IOY4 1987 January I
I3N 1987 February I
376 1988 February I
4N 1988 November I I4Y4 1989 March I (a) 11%
1990 June I
15K 1991 November I (b) 4%
1993 August I 7
1998 May I 876 2000 April I 9Yi 2003 June I (d)(e) 8Ys 2003 December I
9'008 March I Unamortized Discount (net).......
16,046 70,000 13,762 60,000 15,082 59,250 11,250 80,000 55,000 22,974 17,557 120,000 80,000 40,000, 42,902 35,000 50,000 277,000 40,000 100,000 (2,175) 16,046 70,000 13,762
'0,000 15,082 61,500 12,000 80,000 55,000 22,974 17,557 80,000 42,902 35,000 50,000 288,500 40,000 100,000 (1,454)
Less Portion Due Within One Year Total 1,203,648 100,547 1,058,869 14,500
$ 1,103,101
$ 1,044,369 (a) Issued by the Company in March 1981.
(b) Issued by the Company in November 1981.
(c) Guaranteed by American Electric Power Company, Inc.
(d) On November 30, 1979, the Company assumed the obligation ofthe Generating Subsidiary to pay the principal ofand interest on these bonds, which are secured by a first mortgage lien on the Nuclear Plant.
(e) Sinking fund payments arc required as follows:
10% series due 1985 $750,000 annually on March I.
107(i% series due 1984 $2,250,000 annually on December I, through 1983, with the noncumulative election to redeem an additional $2,250,000 in each year.
9'%eries due 2003 $ 11,500,000 annually on June I, through 1991 and $ 13,500,000 annually on June 1,1992 through 2002 with the noncumulative option to redeem an additional amount in each ofthe specified years from a minimum of$ 100,000 to a maximum equal to the scheduled requirement for each year, but with a maximum optional redemption, as to all years in the aggregate, of $75,000,000.
- 7. Long-term Debt, Lines of Credit, and Compensating Balances:
Long-term debt by major category was outstanding as follows (less portion due within one year):
December 31, 1981 1980 (in thousands)
The indentures relating to the first mortgage bonds contain improvement, maintenance and replacement provisions requiring the deposit of cash or bonds with the trustee, or in lieu thereof, certification ofunfunded property additions. The Company has elected to use unfunded property additions to meet these provisions in the past.
Sinking fund debentures outstanding were as. follows:
December 31, 1981 1980 (in thousands)
$ 10,690
$ 11,266 11,201 11,390 39 49
$21,930
$22,705 Installment purchase contracts have been entered into by the Company in connection with the issuance of pollution control revenue bonds by governmental authorities as follows:
516% Duc 1986 June I
7Y4% Due 1998 May I Unamortized Premium Total December 31 1981 1980 (in thousands)
$ 25,000 40,000 12,000 Coal Reserve Obligations Payable in Equal Annual Installments Through 1985 with Interest at 8%
Notes Payable due 1981 Through
- 1985, 6%%uo-7%
$ 18,950
$23,688 612 24,300 4,770
$ 19,530 580 19,530 4,995
$ 14.535 Less Portion Due Within One Year Total
% Rate Date City of Lawrenccburg, Indiana:
8Yi 2006 July I
$ 25,000 7
2006 May I 40,000 636 2006 May I 12,000 City of Rockport, Indiana:
962005 June I............
6,500 6,500 9Y4 2010 Junc I............
33,500 33,500 City of Sullivan, Indiana:
7%
2004 May I............
7,000 7,000 676 2006 May I............
25,000 25,000 7Yi 2009 May I............
13,000 13,000 Unamortized Discount..............
(3.064)
(3,201)
Total.....................
$ 158,936
$ 158,799 Under the terms ofcertain installment purchase con-tracts, the Company is required to pay purchase price installments in amounts sufficient to enable the cities to pay interest on and the principal (at stated maturities and upon mandatory redemption) of related pollution control revenue bonds issued to finance the construc-tion of pollution control facilities at certain generating plants of the Company.
Other long-term debt outstanding consisted of:
December 31, 1981 1980 (in thousands) 19
NOTES TO CONSOLIDATED FINANCIALSTATEMENTS (Continued)
Long-term debt, excluding premium or discount, outstanding at December 31, 1981 is due as follows:
Principal Amount (in thousands) 1982 105,542 1983 93,222 1984 87,352 1985 26,097 1986 20,490 Later Years 1,076,541
. Total
$ 1,409,244 At December 31, 1981 and 1980, the principal amounts of debentures reacquired in anticipation of sinking fund requirements were
$ 1,909,000 and
$ 1,944,000, respectively. The Company may make ad-ditional debenture or first mortgage bond sinking fund payments of up to $ 14,550,000 annually.
At December 31, 1981, the Company had an unused revolving line of credit with various banks of
$ 100,000,000. The line ofcredit requires a commitment fee of 4 of 1% per annum of unused credit through December 31, 1981 and Ye of 1% thereafter.
The Company had unused short-term bank lines of credit ofapproximately $387,000,000 and $ 195,000,000 at December 31, 1981 and 1980, respectively, under which notes could be issued with no maturity more than 270 days. The available lines of credit are subject to withdrawal at the banks'ption, and $334,000,000 and
$ 181,000,000 at December 31, 1981 and 1980, respec-tively, of such lines are shared with other AEP System companies.
In accordance with informal agreements with the banks, compensating balance deposits ofup to 10% or equivalent fees are required to maintain the lines ofcredit and on any amounts actually borrowed, gener-ally either additional compensating balance deposits of up to 10% are maintained or adjustments in interest rates are made.
Substantially all bank balances are maintained by the Company to compensate the banks for services and for the Company's share ofboth used and available lines of credit.
- 8. Supplementary Income Statement Information and Related-Party Transactions:
Electric operating revenues shown in the Consoli-dated Statemerits of Income include sales of energy to AEP System companies ofapproximately $ 19,100,000,
$ 17,400,000 and $ 17,000,000 for the years ended De-cember 31, 1981, 1980 and 1979, respectively.
Operating expenses shown in the Consolidated Purchased Power (a)
Interchange Power (net):
AEP System Electric Utilities Other Companies (b)
Taxes Other Than Federal Income Taxes:
Real and Personal Property Taxes..'..............
State Gross Sales, Excise and Franchise Taxes and Miscellaneous State and Local Taxes State Income Taxes Social Security Taxcs-Federal and State 1981 1980 1979 (in thousands)
$ 38,557
$ 42,147
$ 16,485 100,960 87,111 105,606 (398)
(613)
(385)
$ 139,119
$ 128,645
$ 121,706
$ 18,958
$ 16,193
$ 15,230 9,399 1,074 3,267
$32,698 7,309 165 2,629
$26,296 9,501 1,529 2,445
$28,705 Fuel for Electric Generation includes charges relating to mining operations, as follows:
Maintenance
$3,778
$5,680
$3,787 Depreciation, Dcplction and Amortization.....
4,434 5,653 3,643 Taxes Other Than Federal Income Taxes........
1,336 1,061 686 (a) Includes power purchased from Ohio Valley Electric Corpora-tion (OVEC) of approximately $ 15,066,000 in 1981, $ 15,837,000 in 1980 and $4,205,000 in 1979.
(b) Includes interchange power sold to OVEC of approximately
$ 186,000 in 1981, $386,000 in 1980 and $ 1,367,000 in 1979.
Charges to operating expenses for royalties and for advertising are less than 1% of gross revenues in each year.
Sales and purchases ofenergy and interchange power transactions are regulated by the various commissions having jurisdiction.
American Electric Power Service Corporation pro-vides certain services to the Company and the affiliated companies in the AEP System. The costs ofthe services are determined by the service company on a direct charge basis to the extent practicable and on reasonable bases of proration for indirect costs. The charges for services are made on a cost basis and include no com-pensation for the use of equity capital, all of which is furnished to the service company by AEP. The service comphny is subject to the regulation ofthe SEC under the Public UtilityHolding Company Act of 1935.
Statements of Income include certain items not shown separately, as follows:
Year Ended December 31, 20
INDIANA& MICHIGANELECTRIC COMPANY AND S UBSIDIARIES
- 9. Commitments and Contingencies:
The construction budget of the companies for the year 1982 is estimated at $279,000,000 and, in connec-tion therewith, commitments have been made.
The Company participates with its parent, three as-sociated utility companies, several unaffiliated utility companies and OVEC in supplying the U.S. Depart-ment ofEnergy (DOE) with the power requirements of its plant near Portsmouth, Ohio. The proceeds from the sales of power by OVEC are designed to be sufficient for OVEC to meet its 'operating expenses and fixed costs and to provide for a return on its equity capital.
The Company, as a participant, is entitled to receive from OVEC, and is obligated to pay for, 7.6% of the power not required by DOE. In addition, the participat-ing utilities are obligated to purchase, in proportion to their equity-participation
- ratio, an additional
$ 10,000,000 of OVEC common stock in the event out-standing demand notes are called and are obligated to provide any additional capital required by OVEC, not available from other sources.
The power agreement terminates by its terms, in 1992.
In 1981, the Company, its parent and American Elec-tric Power Service Corporation entered into settlement agreements with 14 municipal wholesale customers settling certain antitrust litigation and proceedings be-fore the FERC. The settlement agreements provide generally (i) for the termination ofcertain proceedings before the FERC which relate to, among other issues, the Company's wholesale rates and alleged practices of the Company which the municipal systems challenged, and (ii)that, upon approval by the FERC ofthe terms of these agreements, which include provisions for pay-ments by the Company related to or arising out of the FERC proceedings of approximately $ 15,000,000, the antitrust litigation willbe dismissed with prejudice and the FERC proceedings terminated.
The FERC ap-proved the settlement agreements on January 19, 1982, and they. have been substantially implemented.
The Company, as provided in the FERC Uniform System of Accounts, recorded on its books in November 1981 a provision for refund, restated to the years of prior col-lection.
Two contractors, United Nuclear Corporation (UNC) and General Atomic Company (GAC), the latter a partnership formed by GulfOil Corporation and Scal-lop Nuclear, Inc., each instituted actions against the Company regarding the obligation of these contractors to supply the Company with 3.4 million pounds of uranium concentrates and six fabricated nuclear fuel reloads for the Donald C. Cook Nuclear Plant (Nuclear Plant). The UNC suit is pending in the United States District Court for the District of New Mexico, but has been stayed temporarily by stipulation and court order.
The GAC suit (to which UNC also was a party) was brought in the New Mexico State District Court in Santa Fe and was settled pursuant to a settlement agreement dated October 22, 1981. GAC claimed, among other things, that it was not obligated to make deliveries of uranium concentrates or fabricated nu-clear fuel reloads not theretofore made, or that it was entitled to a price higher than that specified in its con-tract with the Company with respect to any such de-liveries. The settlement agreement provides generally that: (i) GAC willperform at the contract price, without penalty for delay or late delivery, the balance of the contract remaining to be performed, namely, delivery of the fabricated nuclear fuel reloads for Batch 9 for Unit No.
1 of the Nuclear Plant and approximately 655,000 pounds ofuranium for the Nuclear Plant, such performance to be guaranteed by Gulf;(ii)the Company willwaive its claim against GAC for money damages in the principal amount of$ 15,179,000 incurred in connec-tion with the purchase by the Company of fabricated nuclear fuel reloads in 1976 and 1977 during the pen-dency of the litigation; (iii)GAC willwaive any bonus that may be due it under the contract on account ofthe actual performance ofthe fuel reloads; and (iv)the GAC suit will be dismissed with prejudice and GAC will withdraw its motion to intervene in the UNC suit in contemplation of the termination of that litigation.
In 1978, a retail customer of the Company com-menced an action, individuallyand as representative of an alleged class, in the U.S. DistrictCourt, alleging that the Company's lease of electric utilityassets from the City of Fort Wayne is in violation of Federal antitrust laws. The complaint seeks to have the lease declared null and void, asks that the Company be restrained from charging excessive prices for the purchase of electric power, seeks treble damages in an unspecified amount in respect ofallegedly excessive charges to residents of the City ofFort Wayne and seeks to restore the control of the electric utility assets in, question to the City of Fort Wayne. In May, June and July, 1979 the court granted in part and denied in part the Company's mo-tion to dismiss or for summary judgment. The Court dismissed plaintifFs allegations concerning abuse of a legally acquired monopoly but ruled that plaintiffs could continue to assert other theories of violation of Federal antitrust laws and certified a class ofresidential customers who may maintain the action.
21
NOTES TO CONSOLIDATED FINANCIALSTATEMENTS (Continued)
In 1975, the Federal Power Commission issued an order instituting an investigation under the Federal Power Act concerning the reasonableness and pru-dence of the coal purchasing policies and practices of members ofthe System, the manner in which wholesale fuel adjustment clauses are implemented by System members, and related matters. Acomplainant and eight intervenors are also participating in the proceeding. In 1978, the FERC staff issued a preliminary report which alleged overcharges on the part of the entire System, and of which only a portion relates to the Company's operations. The report also questioned certain aspects of the System's fuel policies, including the AEP Sys-tem's decision to expand its use of coal from mines owned by affiliates and its use of Western coal. In November 1979, the FERC staff submitted its final recommendations to the administrative lawjudge. The final recommendations urge refunds of alleged over-charges, corrections of alleged improper coal account-ing and pricing practices, disallowances of certain fuel costs associated with Western coal acquisitions, revi-sion of FERC regulations regarding affiliate fuel costs and establishment ofhearing procedures to resolve cer-tain of the issues and that a separate investigation be instituted concerning System administration of long-term fuel supply contracts.
The System companies have submitted a written response supporting the deci-sions previously made by the System companies.
On February 14, 1980, FERC issued an order directing the administrative law judge immediately to certify to FERC the entire record in the proceeding for review by the Commission and ordered that the procedural
, schedule be placed in abeyance, pending a further di-rective. On March 18, 1980, FERC ordered a new inves-tigation into the System's administration of certain long-term coal supply contracts with non-affiliated suppliers. On June 10, 1981 and July 29, 1981, FERC issued orders which included termination of certain portions of the original investigations, the referral of other portions to the Chief Accountant of FERC for resolution and the ordering of a hearing, which is cur-rently in its discovery phase, relating to the procure-ment of Western coal from mines operated by the Sys-tem and from non-affiliated sources in the light of the possible availability of coal from other sources.
The Company cannot assess the outcome or significance of this proceeding.
The Company has filed a petition with the PSCI re-questing recovery of nuclear decommissioning costs associated with its nuclear plant through the inclusion ofsuch costs in its base rates. An independent consult-ing firm employed by the Company for the purposes of this rate proceeding has estimated the cost of decom-missioning this plant to be in excess of $ 170,000,000 in 1982 dollars.
The Price-Anderson Actlimitsthe public liabilityofa licensee of a nuclear plant to $560,000,000 for a single nuclear incident, to be covered in part by private insur-ance with the balance to be covered by agreements of indemnity with'the Nuclear Regulatory Commission.
The Company has purchased private insurance in the maximum available amount of $ 160,000,000.
In the event of a nuclear ittcident involving any commercial nuclear facility in the country, the Company, together with other licensees, could be individually assessed
$5,000,000 per incident foreach reactor owned (subject to a maximum of$ 10,000,000 in any year in the event of more than one incident). The Price-Anderson indemni-ties have been decreased by'the aggregate amount which is assessable against existing licensees and will continue to decrease as new operating units are licensed.
I&Mhas procured property insurance in the amount of$300,000,000 fordamage to its nuclear plant facilities and is a self-insurer for any property loss in excess of that amount. The Company has arranged for this prop-erty insurance coverage to increase to an amount of
$450,000,000.
The Company also has obtained membership in Nu-clear Electric Insurance Limited (NEIL), which pro-vides its members with insurance to cover extra costs of replacement power resulting from a prolonged acci-dental outage of a nuclear unit. The Company's policy insures against such increased costs up to $2,300,000 per week (starting 26 weeks after the outage) for one year and $ 1,150,000 per week for the second year, or 80% ofthose amounts per unit ifboth are down for the same reason. The Company would be subject to a re-trospective premium of up to $8,200,000 per unit (five times the annual premium) ifNEIL's losses exceed its accumulated funds.
- 10. Leases:
The Company, as part ofits operations, leases prop-erty, plant and equipment under leases ranging in length from 1 to 35 years. Most ofthe leases require the Com-pany to pay related property taxes, maintenance costs and other costs of operation. The Company expects that in the normal course ofbusiness, leases willgener-ally be renewed or replaced by other leases. The m@or-ity of the various rentals are included in leases having purchase options or renewal optioris for substantially all of the economic lives of the properties.
22
INDIANAck MICHIGANELECTRIC COMPANY AND S UBSIDIARIES Rentals are analyzed as follows:
Year Ended December 31, 1981 1980 1979 (in thousands)
Gross Rentals Less Rental Recoveries (including sublease rentals) (a)
Net Rentals (b)
$95,000
$88,000
$70,000 3,000 3,000 2,000
$92,000
$85,000
$68,000 (a) Includes amounts paid for or reimbursed by associated companies.
(b) Classified as:
Operating Expenses Clearing and Miscellaneous Accounts (portions of which are charged to income)
$87,000
$82,000
$62,000 Capital Operating Leases (a)
Leases (in thousands)
S 11,000 11,000 11,000 12,000 12,000 203,000
$260,000 1982 1983 1984 1985 1986 Later Years Total Future MinimumLease Payments Less Estimated Interest Element Included Therein (b)..............
55,000 Estimated Present Value of Future Minimum Lease Payments.........
$43,000 (a) Excludes leases ofnuclear fuel, all ofwhich are capital leases.
Nuclear fuel rentals comprise the unamortized balance ofthe lessor's cost (approximately $ 108,000,000 at December 31, 1981), less salvage value, ifany, to be paid in proportion to heat produced, and carrying charges on the lessor's unrecovered cost. It is contcmplatcd that portions ofthe presently leased material willbc replenished by addi-tional leased material.
(b) Interest rates used range from 4.9% to 21.9%%uo.
5,000 3,000 6,000
$92,000
$85,000
$68,000 Future minimum lease payments, by year and in the aggregate, ofthe Company's capital leases and noncan-celable operating leases consisted of the following at December 31, 1981:
The following is a pro forma analysis of properties under capital leases and related obligations assuming that such leases are capitalized:
December 31, 1981 1980 (in thousands)
Nuclear Fuel
$203,000
$214,000 Coal. mining and Coal-transportation Equipment '...............
14,000 14,000 Other Transportation Equipment....:..
14,000 11,000 Real Estate.:.............
13,000 13,000 Electric Distribution System Property...
13,000 13,000 Gross Properties under Capital Leases 257,000 265,000 Less Accumulated Provision for Amortization 113,000 104,000 Net Properties under Capital Leases
$ 144,000
$ 161,000 Obligations under Capital Leases (a)....
$ 151,000
$ 167,000 (a) Including an estimated
$56,000,000 and $44,000,000 at De-cember 31, 1981 and 1980, respectively, due within one year.
Had capital leases been capitalized, any additional net expense foreach ofthe three years ended December 31, 1981 would have been insigniTicant. The above pro forma analysis does not give recognition to offsetting adjustments in allowable revenues that the Company believes would normally be expected to occur through the regulatory rate-making process, ifthe related leases had been capitalized.
Included in the above analysis of future minimum lease payments and of properties under capital leases and related obligations are certain leases as to which portion ofthe related rentals are paid for or reimbursed by associated companies in the AEP System based on their usage of the leased property. The Company can-not predict the extent to which or proportion in which the associated companies will utilize the properties under such leases in the future.
23
NOTES TO CONSOLIDATED FINANCIALSTATEMENTS (Concluded)
- 11. Unaudited Quarterly Financial Information:
The following restated consolidated quarterly finan-cial information is unaudited but, in the opinion of the Company, includes all adjustments (consisting of only normal recurring accruals) necessary for a fair presen-tation of the amounts shown:
Quarterly Periods Operating Operating Net Ended Revenues Income Income'in thousands) 1981 Mar. 31...............
$202,158
$48,607
$26,858 June 30,...............
209,533 40,347 21,799 Sept. 30..............
203,816 44,099 27,162 Dec. 31...............
196,642 44,887 27,521 1980 Mar. 31...............
203,877 47,642 32,044 June 30...............
162,107 32,425 16,553 Sept. 30............;
185,599 40,156 22,226 Dec. 31...............
191,100 44,958 25,748 1979 Mar. 31...............
169,344 46,780 29,890 June 30...............
172,006 32,520 19,176 Sept. 30..............
168,302 41,029 25,388 Dec. 31...............
173,361 37,884 21,326
'Before preferred stock dividend requirements.
- 12. Unaudited Information On Inflation and Changing Prices:
The supplementary information in the statements below is presented in compliance with the requirements ofthe Financial Accounting Standards Board (FASB).
The information is intended to disclose the effects of both general inflation and changing prices; however, the amounts should be considered approximations of such effects rather than precise measures since a num-ber of subjective judgments and estimating techniques were employed in developing the information.
Constant dollar amounts represent historical costs stated in terms ofdollars of equal purchasing power as measured by the average level of the 1981 Consumer Price Index for All Urban Customers (CPI-U).
Current cost amounts reflect the changes in specific prices of property, plant and equipment from the date such assets were acquired.to the present, and differ from constant dollar amounts to the extent that specific prices have risen at a different rate than the general inflation rate as measured by the CPI-U. The current cost of property, plant and equipment represents the approximate cost of replacing such resources and in-cludes utility plant in service, construction work in progress, land, land rights and other property and in-vestments.
Current cost amounts were determined primarily by applying appropriate indexes from the Handy-Whitman Index of Public UtilityConstruction Costs.
Year Ended Dccembcr 31, 1981 Operating Revenues Operating Expenses:
Operation:
Fuel for Electric Generation (a)
Purchased and Interchange Power (net)
Other Maintenance Depreciation, Depletion and Amortization (a)
Taxes Other Than Fcdcral Income Taxes.....
Federal Income Taxes Total Operating Expenses Operating Income Other Income and Deductions Nct Interest Charges Preferred Stock Dividend Requirements Earnings Applicable to Common Stock (b)
Consolidated Statement of Income Adjusted for Effects of Changing Prices As Stated in the Primary Financial Statements
$ 812,149 176,074 139,119 101,792 48,895 81,458 32,698 54,173 634,209 177,940 29,713 (104,313)
(23,624) 79,716 Adjusted for General Inflation (constant dollar)
(in thousands)
S 812,000 177,000 139,000 102,000 49,000 179,000 33,000 54,000 733,000 79,000 30,000 (104,000)
(24,000)
$ (19,000)
Adjusted for Changes in Specific Prices (current cost)
$ 812,000 177,000 139,000 102,000 49,000 179,000 33,000 54,000 733,000 79,000 30,000 (104,000)
(24,000)
$ (19,000)
Increase in Specific Prices (current cost) of Property, Plant and Equipment Held During the Year (c)..............
Reduction to Net Recoverable Cost (d)
Effect of Increase in General Price Level.....'................
Excess ofIncrease in General Price Level over Increase in SpeciTic Prices After Reduction to Net Recoverable Cost Gain from Decline in Purchasing Power ofNet Amounts Owed (e).
Net
$(131,000) 144,000 13,000 S 407,000 (99,000)
(423,000)
(115,000) 144,000 29,000 24
INDIANA& MICHIGANELECTRIC COMPANY
~
ANDSUBSIDIARIES (a) As prescribed by the FASH, the items in the Consolidated Statement of Income that have been adjusted are depreciation, depletion and amortization (including portions classified as fuel for electric generation and other income and deductions).
Depreciation, depletion and amortization charges were computed by applying current accrual rates to the various plant accounts (production, transmission, distribution, general and miscellaneous) after adjusting such accounts for the effects of changing prices.
(b) Including the reduction to net recoverable cost, the loss from operations on a constant dollar basis and current cost basis would have been
$ 150,000,000 and $ 118,000,000, respectively.
(c) At December 31, 1981, current cost of property, plant and equipment net of accumulated depreciation, depletion and amortization was
$5,202,000,000 while historical cost or net cost recoverable through depreciation, depletion and amortization was $2,746,000,000.
(d) The reduction to net recoverable cost ofproperty, plant and equipment (as expressed in terms ofinflation.adjusted cost) to historical cost recognized that the rate-making process limits the Company to recovery of the historical cost of thc subject assets.
(c) To reflect properly the economics ofrate regulation in the Consolidated Statement ofIncome Adjusted for Effects ofChanging Prices, the reduction to net recoverable cost should be offset by the gain that results from the decline in purchasing power ofthe net amounts owed by the Company. During a period ofinAation, holders ofmonetary assets such as cash and receivables suffer a loss ofgeneral purchasing power while holders ofmonetary liabilities, generally long-term debt, experience a gain (because debt willbe repaid in dollars having less purchasing power).
The Company's gain from the decline in purchasing power ofits net amounts owed is primarilyattributable to the substantial amount ofdebt and cumulative preferred stock subject to mandatory redemption which has been used to finance utility plant.
Five-Year Comparison of Selected Supplementary Data Adjusted for Effects of Changing Prices
~
(dollar. amounts arc exprcsscd in terms of average 1981 dollars)
Year Ended December 31, 1977 1980 1979 1978 (in thousands, except index data)
$819,000
$855,000
$831,000 1981
$812,000
$758,000
$8,000
$(17,000)
$(298,000)
$(239,000)
$992,000
$ 1,001,000
$ 1,084,000
$ 144,000 272.1 195.4 Operating Revenues Historical Cost IitformationA4'ttstcdforGeneral Inflation Income (Loss) from Operations (excluding reduction to net recoverable cost)
$(19,000)
$(5,000)
$25,000 Net Assets at Year-end at Net Recoverable Cost....
$992,000
$ 1,001,000
$ 1,084,000 Carrent Cost Information Income (Loss) from Operations (excluding reduction to net recoverable cost)
$(19,000)
$(9,000)
Excess ofIncrease in General Price Level over Increase in Specilic Prices a(ter Reduction to Nct Recoverable Cost Nct Assets at Year-cnd at Net Recoverable Cost....
- General Financial Data Gain from Decline in Purchasing Power of Net Amounts Owed
$200,000
$216,000 Average Consumer Price Index 246.8 217.5 181.5 General Iitforntation on Mining Operations Proven and Probable Coal Reserves at End of Year (thousands of tons) (Note) 412,546 413,964 415,023 c
Tons of Coal Mined (thousands)...................
779 1,059 669 Average Market Price (at current cost per ton)......
$60.14
$58.16
$57.55 Note: Proven reserves The estimated quantities of commercially. recoverable reserves that, on the basis of geological, geophysical and engineering data, can be demonstrated with a reasonably high degree ofcertainty to be recoverable in the future from known mineral deposits by either primary or improved methods.
Probable reserves The estimated quantities ofcommercially recoverable reserves that are less welldefined than proven reserves and that may be estimated or indicated to exist on the basis ofgeological, geophysical and engineering data.
25
Operating Statistics 1981 1980 1979 1978
'977 ELEcTRIc OPERATING REYENUEs (in thousands):
From Kilowatt-hour Sales:
Residential:
Without Electric Heating With Electric Heating Total Residential....
Commercial Industrial Sales for Resale:
Municipalities Cooperatives Other Electric Utilities Total Sales for Resale Miscellaneous Total from Kilowatt-hour Sales....
Other Operating Revenues..............
Total Electric Operating Revenues
$116,340 59 826 176 166 117 725 134 519
$ 106,488 54,277 160,765 108,764 116,165
$ 102,543 55,458 158,001 106,151 127,815
$ 95,676 53,557 149,233 95,423 120,180
$ 89,675 46,324 135,999 91,153 107,931 42,839 21,929 295 328 37,754 20,196 288,563 37,505 20,646 222,488 36,014 17,732 166,391 41,313 15,619 103,517 360 096 346,513 280,639 220 137 160,449 6,150 6 953 5,974 6,099 7,655 738,357 4,326 678,705 4,308 592,628 4,050 795,459 16 690 501,506 4,085
$812 149
$742,683
$683 013
$596,678
$505 591 SQURcEs AND SALEs oF ENERGY (in millions of kilowatt-hours):
Sources:
Net Generated Steam:
Fossil Fuel..
Nuclear Fuel Net Generated Hydroelectric...
Subtotal Purchased Net Interchange Total Sources Less: Losses, Company Use, Etc..
Net Sources Sales:
Residential:
Without Electric Heating With Electric Heating Total Residential.......
Commercial Industrial Sales for Resale:
Municipalities Cooperatives Other Electric Utilities Total Sales for Resale Miscellaneous Total Sales 6,373 13,167 98 19,638 1,570
~3704 24,912
~1239
~23 673 2,467
~1513
~3980
~2748
~4021 1,535 802
~10 388 12 725
'199
~23 673 6,719 13,153 85 19,957 1,883 3,669 25,509 1,426 24,083 2,493 1,549 4,042 2,716 3,932 1,541 803 10,854 13,198 195 24,083 6,443 11,614 79 18,136 811 5,389 24,336 1,386 22,950 2,389 1,619 4,008 2,629 4,380 1,534 819 9,386 11,739 194 22,950 7,231 10,101 (a) 75 17,407 301 4,475 22,183 1,340 20,843 2,352 1,622 3,974 2,498 4,319 1,585 814 7,468 9,867 185 20,843 7,317 4,786 68 12,171 182 7,922 20,275 1,270 19,005 2,456 1,605 4,061 2 671 4,473 1,642 786 5,195 7,623 177 19,005 (a) Includes 69l millionkilowatt-hours aS test generation. The fuel cost associated with such generation is charged to other operating expense.
26
OPERATING STATISTICS (Concluded) 1981 1980 1979 1978 1977 ANNUALCGSTQF FUEL CGNsUMED (in cents): (a)
Cents per MillionBtu:
Coal Nuclear Overall Cents per Kilowatt-hour Generated:
Coal Nuclear Overall 1.81
.54
.95 1.59
.52
.89 187.13 164.49 49.90 48.44 91,35 84.95 151.91 37.82 76.25 1.52
.41
.81 109.68 34.65 71.16 1.11
.38
.75 74.96 29.72 59.12
.73
.33
.61 RESIDENTIAL SERvlcE AYERAGEs:
Annual Kwh Use per Customer:
Total With Electric Heating Annual Electric Bill:
Total With Electric Heating Price per Kwh (in cents):
Total With Electric Heating 109008 197866 10,206 20,584
$443
$406
$785
$721 4.43 3.98 3.95 3.50 10,210 21,611
$402
$740 3.94 3.43 10,260 22,067
$389
$736 3.79 3.34 10,641 22,830
$361
$668 3.39 2.93 NUMBER OF ELECTRIC CUSTOMERS:
Year-End:
Residential:
Without Electric Heating With Electric Heating Total Residential Commercial Industrial Sales for Resale:
Municipalities Cooperatives Other Electric Utilities Total Sales for Resale Miscellaneous Total Electric Customers 32I,850 77 002 398 852 42 957 2 873 23 65 16 104 2 440 446 226 321,432 75,618 397,050 42,758 2,802 23 65 17 105 1,424 444,139 319,477 75,606 395,083 42,563 2,748 23 65 15 103 1,373 441,870 315,472 74,900 390,372 42,106 2,689 23 64 20 107 1,331 436,605 313,085 72,059 385,144 41,907 2,500 23 61 16 100 1,304 430,955 (a) Excludes effect of deferred collection of fuel costs.
27
Price Range of Cumulative Preferred Stock By Quarters (1981 and 1980)
Cumulative Pre erred Stock 1981 uarters 1st 2nd 3rd 4th 1980 uarters 1st 2nd 3rd 4th
($ 100 Par Value) 4Ve% Series Dividends Paid Per Share Market Price $ Per Share (OTC)
Ask (high/low)
Bid (high/low) 4.56Fo Series Dividends Paid Per Share Market Price $ Per Share (OTC)
Ask (high/low)
Bid (high/low) 4.12% Series Dividends Paid Per Share Market Price $ Per Share (OTC)
Ask (high/low)
Bid (high/low) 7.08% Series Dividends Paid Per Share Market Price $ Per Share (NYSE) High Low 7.76% Series Dividends Paid Per Share Market Price $ Per Share (NYSE) High Low 8.68%%uo Series Dividends Paid Per Share Market Price $ Per Share (NYSE) High Low 12% Series Dividends Paid Per Share Market Price $ Per Share (NYSE) High Low
($25 Par Value)
$2.15 Series Dividends Paid Per Share Market Price $ Per Share (NYSE) High Low
$2.25 Series Dividends Paid Per Share Market Price $ Per Share (NYSE) High Low
$2.75 Series Dividends Paid Per Share Market Price $ Per Share (NYSE) High Low
$3.63 Series*
Dividends Paid Per Sharc Market Price $ Per Share (NYSE) High Low
$ 1.14
$ 1.14
$ 1.14
$ 1.14
$ 1.14
$ 1.14
$ 1.14
$ 1.14
$ 1.03
$ 1.03
$ 1.03
$ 1.03
$ 1.03
$ 1.03
$ 1.03
$ 1.03
$ 1.77
$ 1.77
$ 1.77
$ 1.77 496 46
$ 1.94 54 51Ye 47K 44
$ 1.94 53'8'A 46 42
$ 1.94 50 48 478 41N
$ 1.94 51V4 45
$2.17
$2.17
$2.17
$2.17 61 55Ve
$3.00
'56'8 54 58 55 56 50Yi
$3.00
$3.00
$3.00 93'5 91 88N 88Yt 78 84 78Ve
$ 1.77
$ 1.77
$ 1.77
$ 1.77 56V't 59 58Ye 518 47 48 51 44Y2
$ 1.94
$ 1.94
$ 1.94
$ 1.94 64Ye 67K 64%
55 48 52 55 46N
$2.17
$2.17
$2.17
$2.17 70YR 72 74 64 60 59 65 55)A
$3.00
$3.00
$3.00
$3.00 103'8 104 102 100 868 87k 95 83Vs
$0.5375
$0.5375
$0.5375
$0.5375
$0.5375
$0.5375
$0.5375
$0.5375 15Y't 13N 14N 13N 14%
126 1SV4 12N 174 13Ys 18N 14Ys 18 14N 15N 13Y't
$0.5625
$0.5625
$0.5625
$0.5625
$0.5625
$0.5625
$0.5625
$0.5625 16 14V't 16 13%
15 13%
16 13 18V4 14V4 19V4 15 18Fa 16 17
~
14
$0.6875
$0.6875
$0.6875
$0.6875
$0.6875
$0.6875
$0.6875
$0.6875 20 ISYt 22Y't 19N 22 17 18%
18 25 22N 24K 22 23%
22 216 18V4
$ 1.03125
$ 1.03125
$ 1.03125
$ 1.03125
$ 1.03125
$ 1.03125
$ 1.03125
$ 1.03125 OTC Over-the-Counter NYSE New York Stock Exchange
'Issued in November 1981 Note The above bid and asked quotations represent prices between dealers and do not represent actual transactions.
Market quotations provided by National Quotation Bureau, Inc.
Dash indicates quotation not available.
28
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- I-2
The Company's Annual Report (Form 10-K) to the Securities and Exchange Commission willbe available on or about March 31, 1982 to shareowners upon written request and at no cost. Please address such requests to: Mr. H. D. Post Assistant Treasurer American Electric Power Service Corporation 180 East Broad Street Columbus, Ohio 43215 Transfer Agent and Registrar of Cumulative Preferred Stock Morgan Guaranty Trust Company of New York 30 West Broadway, New York, N.Y. 10007 Enclosure 2 To AEP: NRC: 0740 1982 Internal Cash Flow Projection for Donald C. Cook Nuclear Plant (Millions) Actual 1981 Projected 1982 Net income after taxes Less dividends paid Retained earnings Adjus tments: Depreciation and amortization Deferred income taxes and investment tax credits .AFUDC Total adjustments Internal cash flow 103.3 116.2 (12.9) 86.0
- 45. 3 (79.9) 51.4 38.5 131. 0 129.0 2 ~ 0 88.0 54.0 (106')
36.0 38-0 Average quarterly cash flow Average cash balances and cash items 9.6 20.1 9.5 18.0 Total 29.7 27.5 Ownership in all operating nuclear units: Unit 1 and Unit 2 100% Maximum Total Contingent Liability $ 20.0 million (2 units) ti I