ML17341A506
| ML17341A506 | |
| Person / Time | |
|---|---|
| Site: | Saint Lucie, Turkey Point  |
| Issue date: | 02/13/1981 |
| From: | FLORIDA POWER & LIGHT CO. |
| To: | |
| Shared Package | |
| ML17212A688 | List: |
| References | |
| NUDOCS 8109090122 | |
| Download: ML17341A506 (42) | |
Text
0 0
~
n Q
0 Q
~
o MOTICE 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 PAGE(S)
FROM DOCUMENT FOR REPRODUCTION MUST BE REFERRED TO FILE PERSONNEL.
Deokett >-
<+o Contrli 4 8 l 0909d t('f DEADLINE RETURN DATE Date+=>~LE Docnmen REGULATORY DOCKET F)LE RECORDS FACILITYBRANCH IKSISNKD FOR WAIST WIK UYINS Si09090122 Si0902'I PDR ADQCK 05000250 PDR
In Our Report 4 Chairman's Letter 6 Energy Plan for the Eighties 10 Year in Review 17 Selected Financial and Operating Data 18 Management's Discussion and Analysis 21 Management's Report and Accountants'pinion 22 Financial Statements 38 Corporate Leadership 40 Information for Investors
Our Growing Business Florida Power &Light Company, incorporated in 1925 followingacquisition ofa number ofsmall and widely scattered businesses engaged in the sale or use ofelectricity, has grown into the fifthlargest investor-owned electric utilityin the nation.
The state of Florida has long been one ofthe fastest growing states in the nation. In 1970, Florida ranked ninth in population; by 1980, itmoved up to seventh; by 1990, it is expected to be ranked fourth.
As Florida grows, the population in the area we serve grows.
As the map below illustrates, our service territory covers approximately 27,650 square miles.
Itincludes all or part of35 Florida counties (approximately half the state) comprising about 700 communities. At the end of 1980 the population of our service territory was estimated at 5,000,000 people.
Power and Distribution
.Providing power to this large area, the Company operates llgenerating plants, including three nuclear units. Total capability ofthese 11 plants is 11,738 Mw. Two more plants on reserve have a total capability of304 Mw.
There are interconnections with 10 Florida utilities and Georgia Po1ver Company.
Delivering power to its service area, FPL operates a system ofmore than 42,000 miles of transmission and distribution lines and more than 400 substations.
Serving People Some 2.2 millioncustomers are now served by FPL's 11,000 employees. Service is provided through 67 Service Centers and Satellites and 31 District Offices throughout the state.
On Our Cover Watt-Wise Livinfya'omes are featured at Arvida Corporation's Country Walk development in Dade County. Arvida is one of more than 1,800 Florida builders and developers participating in construction of energy-saving homes
~
in adherence to standards prescribed by FPL's Watt-Wise program.
~ Daytona Beach FPL Service Area Q Northeastern Division G Eastern Division Q Southeastern Division Q Southern Division C3 Western Division
~ Dlvlsfon Offices Power Plants 1 Manatee 2 Fort Myers 3 fttrkey Point
<<4 Cutler 5 Lauderdale 6 Port Everglades 7 Riviera 8 Marlin 9 St.Lucie 10 Cape Canaveral 11 Sanford
>>12 Palatka.
13 Pulnam I rruclear e On Reserve
~ Sarasota
~
West Palm Beach Fl, t.auderdale Q ~
Miami FPL/1
The FPL Dollar / Where It Comes From 1980 1979 Residential 50tf 504 Residential Commercial 35$
35II Commercial Industrial 6'ther9II 6II Industrial 9g Other The FPL Dollar /Where It Goes Fuel 44II 41'uel Taxes 13tf Payroll and Benefits 11'epreciation7g Interest 6d Dividends 6'etained Earnings 2'ther114 15/
Taxes 11ft Payroll and Benefits SII Depreciation 7'nterest 6II Dividends 4C Retained Earnings 6II Other 2/FPL
Financial Highlights (Thousands Except Per Share Data)
Operating Revenues Fuel and Net Interchange......
Total Operating Expenses.
Operating Income............
Net Income Common Shares Outstanding Average....
Earnings Per Share Dividends Paid PerShare................
Total UtilityPlant Capital Expenditures External Funds Book Value Per Share Market Price Per Share (High).
Market Price Per Share (Low).
Statistical Highlights Cost ofOil Burned (Per Barrel)
Customers Year End KwHSales (Thousands)
KwHUse Per Customer Residential....
Revenue per KwHResidential (Cents)...
Employees Year End.
Mw Capability at Time ofSummer Peak....
MwPeak LoadSummer..
MwPeak. LoadWinter Percent of Energy:
Oil..............
Natural Gas Nuclear CoaVOil MxTest Interchange 1980
$2,347,278
$1,106,909
$2,037,723
$309,555
$198,318 41,281
$3.94
$2.64
$6,082,682
$655,098
$371,657
$34.90 28/8 197/8
$23.26 2,247,688 44,70?,613 11,473 5.31 11,084 10,955 9,623 9,732 49.6 17.9 27.7 0.9 3.9 1979
$1,933,937
$817,141
$1,632, 133
$301,804
$204,668 40,524
$4.22
$2.32
$5,458,512
$574,825
$249,220
$34.31 28~/s 24V8
$17.47 2,140,587 41,965,810 11,354 4.66 10,337 10,955 8,650 8,791 54.6 18.5 25.6 1.3 Percentage Change 21 35 25 3
(3) 2 (7) 14 11 14 49 2
33 5
7 1
14 7
FPL/3
My Fellow Shareholders:
By all rights, we who manage Florida Power 8i. Light Company in your interest should be able to present tins report on 1980 operations with unqualified satisfaction. It was a year in which FPL continued in our tradition ofoutstanding service and met the challenge ofextending that service to more than 100,000 new customers.
Itwas a year in which we confirmed our technological leadership. We have been adapting new ways to squeeze more energy out of plants and fuel, testing new fuel mixes to reduce our dependence on imported oil.
Itwas a year in which the working people of FPL demonstrated again and again their abiTity and dedication.
And yet itwas the year in wlfichdeclining earnings finallymade a request for increased rates unavoidable. Believe me, there is no satisfaction in having to tell almost 2'dlion customers they must pay more for the electricity so vital to their lives and livelihoods.
How could this happen? How can a company nationally recognized as one ofAmerica's best-run electric utilities show smaller earnings in spite of greater revenues? In spite ofcontinuing, intensified and successful efforts to cut costs and multiply efficiencies?
The answer is, in a word, inflation.
So important is this subject so harmful has been the effect ofinflation upon our Company and our
'countrythat I ask you to join me in stepping back for a broader view ofthe inflation problem. You may wonder what new or striking observations I can hope to make about this subject. Inflation is already the almost universal topic of the times.
What I hope to convey, however, is the ultimate tlueat posed by continuing high rates ofinflation a
threat so grave that it should move every American tojoin our country's new administration in making the control and reversing ofinflation our first priority.
Before defining this grave and ultimate threat, let me say that I do not in any way minimize the more immediate harm done by inflation. Even though bloated price tags are really no more than symptoms ofthe inflationary cancer, we must never be insensitive to the daily pain ofa homemaker whose food budget can't keep up with food prices. We must share the anguish ofour young couples who cannot afford that important firsthome. And we must not forget the fear gnawing at older men and women who see their prudent plans for comfortable retirement shattered by rising food prices, higher rents andyesbigger electric bills.
Beyond these bitter personal pains, there are the deeper and more broadly damaging effects of inflation. Among these is the disastrous impact inflation has upon our nation's productivity.
(~%jp 9
D~
~VW Pg lf By distorting capital markets, inflation makes it impossible or imprudent for business and industry to invest in new, efficient facilities to make their products better or serve their customers better.
Inflation eats up money that should go into research and development. As we see all too clearly in our industry, inflation shakes reason and order out of the funding markets in which we must raise capital. It isn't easy to sell a 30-year bond when the investor can get high yields on short-term notes, and maybe even higher yields in a few months.
Individual savings should provide a solid base of capital that our economy can put to work. But why should an individual save, when the interest paid on those savings won't match the rate of inflation... and the deferred purchase willonly cost more next year?
Save a dollar today and next year you may have the equivalent of 93 cents. It seems like follyto save when inflation makes a virtue out of spending and borrowing.
We pay the price ofinflation by losing our ability to compete in domestic and world markets. Already we have fallen from leadership in fields we once ruled proudlysteel, automobiles and shipbuilding spring to mind as examples. And the price is measured in millions ofAmerican jobs.
But there is still something more that must be said about inflation, something so fearsome that it is seldom discussed.
When discussed, it is often mentioned in vague or softened terms as ifthe very mention of this demon might be enough to bring itupon us.
I refer to the very real possibility that continued high rates ofinflation can lead to radical changes in American lifedrastic changes in political FPL Chairman Marshall McDonald confers with Energy Auditor Rita Lynn on field operation ofthe Company's Residential Conservation Service program.
4/FPL
institutions, economic expectations and personal living. Before we say, "Itcan't happen here," we should remember that governinents have fallen over inflation. Mobs have taken up arms over inflation. In the lifetimes ofmany of us, the terror of Nazism was launched upon a lugh tide ofinflation and floated long enough to devastate a continent and change the course of world history.
Inflation poses this shattering potential for destruction because a nation like ours is really held together by shared ideals and assumptions rather than by force or physical bonds. One ofthe most important of these shared ideals is the belief that there can come a "someday", after the hard work is done, when the rewards can be savored.
This faith keeps Americans working... and working together. This faith persuades us to accept the constraints ofgovernment. This faith forms an essential part ofwhat keeps us civilized. Today, this faith trembles in the shadow ofcontinuing inflation. If this faith dies, the American Way cannot long survive. Allelse depends on stopping and reversing the inflationary tide.
But why should this task be difficult? Many have called inflation the "product ofgovernment." And we have just made a major change in government.
We have a national administration which clearly defines controlling inflation as its first order of business.
We have even changed the complexion ofour Congress.
We replaced many whom we identified with the causes ofinflation by electing candidates who campaigned against inflation. Have we not now done our part? Can we not now depend on government to handle the inflation problem?
No.
We have only begun our part ofthe job. You see, it is true that inflation is a product ofgovernment. But, in manufacturing inflation, government has to a great degree been responding to our wishes.
Itis not that we have specifically wanted inflation.
But we each seem to have an endless list ofspecific wants. And when we ask government to satisfy all these wants, we are asking for inflation. Nothing if not responsive, Wasliington has answered by establishing agencies and programs, funding grants and activities, making laws and regulations.
Who has been paying for all these agencies and programs, these grants and activities, these laws and regulations? We have. We pay through a combination ofonerous taxationmagnified by the bracket-jumping effects ofinflation itself and by allowing government to run huge deficits. Tlus swells the national supply ofmoney and credit while our national productivity stands at a virtual halt.
Before we can reverse this march toward disaster, we must persuade ourselves and convince our government that we can stand the pain ofnot getting everything we want.
The trouble is that all the things we wantare, in themselves, good. We want to help the poor, to provide security for the old, to ease the way for the handicapped, to protect industry, to broaden education, to spread health care more equally, to revamp the inner-city, to protect crops and prices for agriculture, to preserve animal species, to reduce every risk in human lifethe litany is endless. And there isn't a cause in the carload that isn't worthy.
The point is that we can't have them all, and all right now.
Instead oflining up to implore Washington, saying "Help me," we must learn to say, "Ican't afford what you are doing for me." We must do more for ourselves, do more at the level of the individual, the local neighborhood, the town and the county. We just can't afford to accept so many "gifts"from Washington.
)Vhether we succeed in reversing inflation, whether we succeed as a nation with the ideals and potentials that made us great, willdepend on whether we have the courage to deliver this "do less" message to Washington. Already the crusaders for government spending have descended on the capital. Afraid the new administration means what it has said, they are crying, "Cut ifyou must, but don' cut mine."
More than 200 mayors rushed to Washington at inaugural time to fight for their cities'hares. The AFI CIO wants to revive a coalition of150 special interest groups to oppose cuts and reforms in social programs. Entrenched groups in the State Department tried to sabotage cuts in overseas Spelldlilg.
Now we must raise the voice of reason and self-restraint. We must, individually and through the clubs, groups and companies we participate in, tell our legislators and our President that we want them to do less because we want to end up with more. We must persuade our fellowcitizens to jump offthe gravy train and climb on the anti-inflation bandwagon.
Itwon't be an easy task. And it won't be finished quickly orin one climactic battle. But the rewards willbe great, for each ofus individually, for our nation and for our children and our children' children.
What is at stake is nothing less than the very essence ofthe unique American experiment in personal freedom. We dare not fail.
Marshall McDonald Chairman ofthe Board February 13, 1981 FPL/5
FPL: Energy Plan forthe Eighties FPL recognizes the important role that energy conservation plays in reducing the need for future energy resources and in prolonging the life expectancy ofcurrent supplies.
To get the vital conservation job done requires motivation among energy users and within the Company. FPL must strive to motivate customers to use energy more efficiently. Atthe same time, th' Company's charge must be to develop more efficient ways to serve these customers both in the mode ofoperation and in the types offuel used for power generation.
These are not new charges to FPL. They do require a new vigor, and willbe met with the same enthusiasm that historically has characterized the Company's operations.
Traditionally, FPL and its people have been dedicated to the best possible service to customers.
Company-initiated efficiencies for several decades kept electric rates down. In addition, through district office and field representative contacts, customers were being advised how to use energy more efficientlyand economically with the assistance ofan array of FPL-produced customer information publications.
But as the decade of the 1960's came to a close, major changes were taking place in the electric utilityindustry. As economies of scale attributable to larger generating units disappeared and inflation took its unshakable hold, the cost of electric service began to rise. These increases were to be further impacted by the 1973 oil embargo which set the stage for a continuing escalation offuel costs.
Abundant, cheap energy no longer could be taken for granted.
To help counter these changes, FPL's customer information program took on a new dimension. Wise energy management became the keynote.
Customers were advised that they had ultimate control over their usage patterns. They were encouraged to use various options at their disposal to reduce consumption.
ALandmark Commitment In the meantime, an even broader spectrum of energy conservation programs has been implemented by FPL, including the landmark establishment in 1978 ofthe Marketing and Energy Conservation Department. Staffing of this Department in each operating division was devoted exclusively to the energy conservation effort. This major conservation commitment received additional support through the simultaneous expansion of Consumer Research and Load Management functions, and an amplified communications thrust.
The foundation ofthis on-going communications program is the local FPL office, where energy saving techniques and suggestions are delivered to customers either in person or by telephone. But many other tools are utilized in the dissemination of this beneficial information: A popular speakers'ureau; monthly newspaper columns; billinserts; news stories; news letters; visual displays; brochures; a vigorous paid communications program involving radio, television and newspapers; the Company's Energy Conservation Van (a mobile walk-through exhibit which demonstrates to customer-visitors the basics ofconservation).
Beyond intensifying the communications effort, several comprehensive marketing programs have been developed to carry the concept ofconservation 3.10 Projected 1985 1980 1975 1.74 2.18 2.65 Projected 1970 1.25 CuStOmerS AVerage t5jm'Its>
Avolunteer in one of FPL'8 residential load management studies is Miamihomeowner Walter Kichefski (right). Operation of special metering device required for this pro-gram is explained by Company Engineer Juan Gonzalez.
1985 1980 1975 1970 KWh SaleS <jj5jjotts) 23.12 34.11 44.71 t
~i
~t
~t
~i 67.34 Projected 55.53 Projected r'
. iii i'
,8'r w
V,
'i/
20 40 60 80
~,I" e g/
6/FFL
from acceptance to implementation. Foremost among these are FPLs Watt-)fisc Living't-'i'program, which establishes energy-saving standards for new home construction, and a Residential Conservation Service that offers high-use customers on-site energy audits of their homes.
The Watt-Wise Livingprogram recognizes that conservation goals can be achieved more readily through energy-efficient home design. Itgives builders and buyers alike clear-cut guidelines for selecting energy-saving options. And at the same time, it helps decrease energy usage and the growth rate ofpeak demand.
New Watt-Wise homes are now being offered to the public by more than 1,800 Florida builders and developers. And in 1981 the Watt-Wise program willexpand to include high-rise buildings and mobile homes.
The second major program, Residential Conservation Service (RCS), was introduced last March to assist customers in making energy-saving decisions in existing dwellings.
During scheduled visits to customers'omes, trained RCS auditors conduct a thorough analysis of energy use. Evaluated are such components as occupants'nergy use habits; heating and cooling systems; fuel bills for gas and oil appliances; water heating options; construction type and condition of walls, ceilings, Iloors, windows and doors.
Upon conclusion ofthe analysis, auditors recommend ways to increase energy efficiency.
They also provide cost estimates for suggested improvements and quote probable savings which might be realized through their implementation.
Along similar lines in the commercial and industrial areas, trained representatives in each ofthe Company's five operating divisions offer energy management assistance to local business, generally through individual consultation. Supplemental printed materials have been developed to spell out the advantages ofenergy-efficient design and construction ofcommercial structures and to familiarize customers with waste heat recovery and efficient security lighting systems.
Corporate Functions Consolidated In another move to coordinate conservation efforts throughout the FPL service area, the Company last year formed a new Energy Management Department. This involved consolidation ofseveral corporate functions, including Marketing and Energy Conservation, Load Management, Consumer and Load Research, and Rates.
Through this new department, the Company's intensive commitment to conservation quickly culminated in development of an Energy Management Plan for the '80s. The overall goal of this plan is to increase the energy efficiency ofthe entire FPL electrics system from the generation ofelectricity to its end use by customers and reduce reliance on the use ofimported oil.
Functioning within the framework ofFlorida Public Service Commission conservation goals, the enterprising plan is designed to meet within 10 years these six targeted objectives:
~ To reduce system peak and total energy consuinplion by encouraging greater efficiencyin end-itse electrical systeins. This would be accomplished through such activities as residential, commercial and industrial energy audits; cost incentives to customers to encourage installation ofresidential ceiling insulation and reflective window film;customer rebates for purchase ofenergy-efficient appliances.
~ To shif? custoiiier usage ofelectricity from peak to offpeak hours and, ivhenever feasible, to reduce overall energy consumption. Proposed for achievement ofthis goal are adoption ofboth voluntary and mandatory time-of-use rates as appropriate for specific classes ofcustomers; a
revision in existing rate schedules to permit reliance on customer curtailments as substitutes for generation; implementation ofresidential load control.
~ To increase llieefficiencyoflhe Power system in both the generalion and delivery ofpoiver. Programs outlined include redesigning low pressure turbine blades installed at Manatee Unit No. 1; installing more efficient oil burners which are capable of burning cheaper oil cleanly; as overhaul schedules permit, retubing condensers with new alloys to provide greater long-term reliability.
~ To increase ciistomer awareness ofthe need to conserve energg and to sliorv them lioivconservalion can be achieved. This objective would utilize such traditional FPL communications vehicles as public presentations, literature, media messages.
Additionally, itproposes a toll-free telephone "hotline" for information access.
~ To develoP and imPlement Prograins during llie 1980-1985 liineframe that reduce the use ofoilas a generating firelto the greatest Practicable and cost-effective extent. FPL's program for oil reduction essentially is a plan for systematically narrowing the areas ofuncertainty while concurrently increasing the range ofoilreduction alternatives under consideration. Involved are the potentials for purchase ofpower from other utilities; conversion ofexisting oil-firedunits to another fuel source; construction ofnew generating capacity using alternative fuels.
~ To identifyother areas that could result in energy, Peak de>nand, oroilconservalion; then to make Preliminary evaluations as to lhe Potential costs and savings in each oflliese areas.
With respect to these six target objectives, all areas of Company operations and customer use have been analyzed from the standpoint ofcost effectiveness, feasibility, potential savings and numerous other qualitative factors. Based upon this assessment, FPL is concentrating on 36 programs that seem to offer the most promise ofworking toward achievement ofconservation.
Several ofthese programs represent a distinct departure from historical FPL activities. Several programs incorporate new and developing technology in order to achieve results. And overall results are dependent upon a positive response from customers, developing technology, and aggressive action on the part ofFPL to implement the programs.
FPL/7
But ifthe required conditions are realized, the plan has the potential ofreducing FPL's summer peak demand by an estimated 2.1million kilowatts and its annual generation by approximately 5.7 billion kilowatt-hours.
Efficiency a Tradition As the Company moves resolutely toward fulfillmentofthis ambitious new commitment, it does so on an already-established base of sound, innovative efficiency achievements.
Significant gains in efficiency have been accomplished through power generation productivity programs which involved: reducing boiler steain pressure at 15 large fossil steam units during periods oflow electricity usage; using small sponge rubber balls to'continuously clean nuclear condensers; establishing, whenever possible, longer refueling cycles at nuclear plants, thus reducing reliance upon oil-burning units.
The Company is constantly on the lookout for alternative sources offuel to produce electricity.
During 1980 FPL began testing a mixture of pulverized coal and fuel oil as a boiler fuel at Sanford Unit No. 4. Inasmuch as this is the first test of a coal-oil mixture (COM) in a large unit designed to burn oil, the experiment is attracting widespread interest within the electric utilityindustry.
To reduce oil consumption through "cogeneration," FPL is receiving electricity produced by the burning of bagasse, a sugar cane by-product, at the U.S. Sugar Corp. refinery near Pahokee.
The Company is scheduled in 1981 to begin utilizingpower generated by the Dade County Resource Recovery Plant now under construction.
There, steam produced by the burning of solid waste would provide enough electric power to supply an estimated 40,000 homes.
Future plans for power from cogeneration and small power production facilities call for promoting installation of310 Mwofpower from these two sources by 1990.
In another oil-reduction move, FPL is purchasing less expensive, coal-generated energy from other utilities. The Company is now receiving 100 Mwof coal-fired power from the Southern Companies under a contract which runs through 1986.
Agreement has been reached to expand this "coal-by-wire" arrangement.
Unless certain conditions occur, FPL anticipates receiving additional coal power, ranging from 200 Mwto 1,000 Mw in the years 1982 through 1992.
Yet another contract, this one withTampa Electric Company (TECO), willprovide FPL with coal power in the middle of the decade. FPL expects to receive 292 Mw, 208 Mwand 104 Mwrespectively from TECO in 1985, 1986 and 1987.
Energy Interchange Cuts Costs Stillother savings are accruing f'rom the economy interchange of energy with the 14 other generating utilities which participate in Florida's Energy Broker System. This automated exchange system works to the ultimate benefit ofconsumers by enabling participating utilities to take advantage of the most economical available generation.
Economy generation is but one of the programs made more efficient and easier to manage by FPL's 1985 1980 1975 1970 MwCapabilityYear End tTj ussas>
15 40 Projected 13.74 Projected 11.74
- 8. 93 5.31 10 15 20 Left: Miamarina Manager George Oestreich (ieft) accompanies FPL Energy Management Specialist Lance Balfour as he conducts comprehensive commercial conservation audit of the marina's bayfront restaurant in Miami.
1985 1l.08 Projected 1980 1975 7.08 1970 10 15 20
'Projected capabilities exclude additional power purchases from the Southern Companies MwPeak LoadSummer tThoussttds) 12.85 Projected Opposite Page: Esteiia Moran, sixth grade teacher at Hialeah John G. Dupuis Elementary, generates interest in efficient use of electricity with a
)Vatt-Counter provided by FPL.
The unit immediately determines consumption and cost ofelectricity for various appliances.
ajFPL
new System Control Center in Miami. Ithouses the "brains" behind the Company's entire generation and transmission network a highly sophisticated computer with the ability to monitor and control the output of FPL's generating units.
EVhile making possible increased reliabilityand quicker service restoration, the computer allows FPL to obtain maximum fuel economy from available generating units and fuel sources.
To reduce energy losses on its distribution system, FPL is now buying newly-developed lower-loss transformers for service additions and normal replacements.
Research Programs Intensified The Company also is engaged in a program to convert incandescent and mercury-vapor street lights now in use to much more efficient high-pressure sodium vapor lights.
Meanwhile, Company research and development programs continue with even greater intensity to concentrate on conservation.
FPL is examining the feasibility ofsolar power as an alternative energy source in on-going studies of photovoltaic cells, solar water heaters and air-conditioning systems.
One such installation is a commercial solar air conditioner at the Company's Perrine Service Center, jointlyfunded by the Electric Power Research Institute.
Assistance also is being given to the Florida Solar Energy Center at Cape Canaveral in the operation of its experimental solar house. The Company is providing photovoltaic cells along with instrumentation and technical data necessary to simulate load for a typical residence.
The Company has a regular program oftesting energy-efficient appliances. Ofparticular interest to Floridians are performance studies ofresidential heat pump water heaters and commercial and residential air-conditioning waste heat recovery/water heating systems. In addition, FPL has encouraged manufacturers and distributors of efficient appliances to participate in government rule-making that would provide tax incentives for use of the more efficient products.
Two major residential load management studies in progress allow remote control ofresidential electric central air conditioning systems as well as electric water heaters. The studies are designed to determine the technical feasibility of, and customer response to, different types ofload management techniques.
Both use bi-directional communication with customers'omes-one over conventional phone lines, the other over the Company's own power lines.
In the area ofcommercial load management, a
radio system is being employed to control the space conditioning equipment ofa sampling of small commercial customers.
In its testing program, the Company is taking an extremely close look at technical feasibility, installation problems and customer reaction. The latter is a key item, for to gain any measure of success through conservation activities, consumers must think consciously and conscientiously about the practical merits ofenergy efficiency.
Toward this end ofwinning customer confidence and acceptance, FPL through its various energy management activities is steadfastly committed to providing leadership. And positive results.
SO I
x FPL/9
The Year In Review Florida Power &Light Company's long term goal of holding down rates in the face ofrising costs continued to be tested in 1980.
There were "positives" in 1980energy sales increased, and the new fuel clause enabled the Company to better recoup fuel and purchased power expenses.
But unrelenting inflation took its tollon FPL's operations. Double-digit inflation, combined with higher interest rates and greater operating and maintenance costs, forced the Company late in the year to begin the process ofobtaining a rate increase.
For years, conservation and efficiency programs adopted by FPL helped to hold the line on rates.
Now they took on a new meaning and dimension as increased concerns over world oil supplies entered the picture.
The Company's response was a commitment to redouble its own efforts at conservation and efficiency while encouraging stillgreater cooperation from its customers.
World-wide attention was focused on a test aimed at oil use reductionthe burning ofa mixture of pulverized coal and oil (COM) in a previously oil-fired unit at the Sanford Plant. Cogeneration arrangements saw the burning of sugar cane waste to produce electricity and plans are to use solid waste as a fuel sometime in 1981.
The commitment to efficiency was carried through to small matters as well. With more than 107,000 customers added to the system in 1980, FPL and its people searched for ways to work smarter and serve better.
FPL employees kept the system operating efficiently, providing dependable power at the lowest possible cost to the consumer in the face of mounting challenges.
Earnings FPL's emphasis on operating efficiencies and cost controls helped offset the impact ofinflation on operating expenses.
However, continued double-digit inflation adversely affected the Company's earnings in 1980, as operating expenses climbed to more than $2 billion. The cost of borrowing money reached all-time lughs.
Responding to Nuclear Regulatory Commission (NRC) regulations issued as a result ofthe Three-Mile Island incident in Pennsylvania added to FPL's operating and maintenance costs. These were the primary factors contributing to the overall reduction in earnings per share from $4.22 in 1979 to
$3. 94 in 1980.
FPL recognizes that, because ofcontinued inflation, its financial condition cannot be sustained withouta rate increase. Accordingly, the Company has filed with the Florida Public Service Commission (FPSC) for a rate increase.
I(ates Seeking additional annual revenues ofapproximately
$476 million, the Company's petition for a rate increase was filed with the FPSC on January 16, 1981.
This action marks only the fourth time in FPL's 56-year history that it has sought an increase in base rates. Arequest for interim rate relief of approximately $211 million, based on the minimum aHowed rate ofreturn set in FPL's last rate case, was filed in February 1981. Ifinterim rate relief is granted, itwillbe subject to refund, pending the FPSC's final decision.
The requested rate revision would increase the typical 1,000 KwHresidential billabout 23 percent about half the 45 percent rate ofinflation since 1976. Current rates, based on 1976 operating costs, went into effect more than 3'ears ago.
The $476 millionrequest is based on the use ofa projected 1981 test year. FPL is asking the FPSC to include an additional $500 millionof Construction
'iVorkin Progress (CWIP) investment and $22 millionofnuclear fuel investment in the rate base.
The Company's petition asks the FPSC to increase the allowed return on equity to 16.75 percent, froin the presently allowed range of 13.50 percent to 14. 00 percent. This would result in an overall rate ofreturn of 10.23 percent. An attrition adjustment of$69 millionis also requested to help offset the continuing impact of inflation.
A special adjustment for an additional $200 million of CWIP investment and $75 millionofnuclear fuel investment to be included in the rate base, effective September 1982, is also part ofthe filing. The $44 millionrevenue requirement for this special adjustment is not included in the $476 million.
Under Florida law, new rates go into effect automatically, subject to refund with interest, eight months after filingifthe FPSC has not acted. Public hearings willbe held by the FPSC before it issues a final decision on the rate increase request.
Operating Revenues The Company's operating revenues reached the
$2.3 billionmark in 1980.
Ofthe 21 percent increase, approximately 15 percent was attributable to increased fuel adjustment revenue and 6. 5 percent to higher sales.
Fuel and Interchange As contract prices reached record levels, fuel and net interchange rose to more than $1.1 billion. The trend of rising oil prices extended into 1981. On February 1, 1981, contract prices at Port Everglades were $36.39 per barrel for one percent sulfur oil and 1
h Opposite Page:
Operations Coordinator Kevin washington inspects new low-pressure turbine blades prior to installation at Manatee Plant. Use of these replacement blades at various FPL power plants increases turbine efficiency, resulting in significant reduction in oil con-sumption.
Left: Progress on Dade County's re-source recovery plant is checked by Leonard Averett (right), FPL project construction supervisor, and Tom Henderson, chief of the County's Solid IVaste Division. Steam pro-duced by the burning of solid waste willbe pur-chased by FPL for the generation of electricity.
10/FPL
0 hE Q' tt %
wl
< IML
,h t
1 h
FPL/11
$32. 16 per barrel for 2. 5 percent sulfur oil. These compare to prices of$28.40 and $22.02 one year earlier.
The higher oil prices in 1980 added $226 millionto fuel expense for the year. With more power provided by the nuclear units, and with purchases of coal-fired power from other utilities, FPL burned slightly less oil in 1980.
Nuclear power provided 28 percent ofthe energy to meet demand for electricity in 1980 and power purchases provided four percent. Other sources of energy were: oil, 49 percent; natural gas, 18 percent; and coal/oil mixture test, one percent.
Fuel Adjustment In lightofthe oil price increases, the FPSC's adoption ofa new fuel cost recovery clause in iMarch 1980 is particularly significant. The fuel cost recovery clause makes possible timely collection of fuel costs on retail sales. Iteliminates the problem of under-or over-recovery offuel costs that occurred under the prior fuel clause.
Effective with April1980 billings, the monthly fuel adjustment charge is based on six-month projections of fuel costs and sales. The net under-or over-recovery offuel costs during a projection period is deferred and refunded to or collected from customers, along with interest, tluough a "true-up" feature. An incentive factor based on generating performance became a part of the clause in October.
Under the clause's provisions, the FPSC authorized increases in the approved fuel adjustment factor after oil prices were raised dramatically.
These increases in the fuel adjustment charge allowed the Company to collect increased fuel costs on a timely basis instead ofdeferring them to later periods.
The FPSC ordered a transition adjustment to permit FPL to collect approximately $59 millionof fuel costs which were not recovered in the transition from one clause to the other. Florida's Public Counsel challenged this adjustment, and the matter has been argued before the Florida Supreme Court.
FPL has agreed not to collect the transition amount pending resolution of the appeal.
Energy Sales Kilowatthour sales totaled 44.7 billionin 1980. This gain resulted from a five percent rise in the number ofcustomers served and a one percent increase in use per customer. Use per residential customer in 1980 was 11,473 KwH, compared with 11,354 KwH in 1979.
Customers Florida's rapidly growing population continues to be reflected in the increasing number ofcustomers served by FPL. More than 107,000 customers were added to the system in 1980, for a total of 2.2 million customers served at year-end.
Employees Responding both to the service needs ofmore customers and to government regulations resulted in a seven percent increase in FPL's total employment. Atyear-end the Company's employees numbered approximately 11,000.
The International Brotherhood of Electrical Workers (IBEW)represents approximately 41 1,'0=
Left: The familiar electric meter would be replaced by a new and more complicated device in implementing various Time-of-Use rates. Joe Ratliff, meter shop supervisor, demonstrates three types ofTOU meters under consideration.
Opposite Page:
Energy savings ofup to 55 percent are anticipated by FPL through systemwide conversion ofexisting incandescent and mercury vapor street lights to high pressure sodium vapor lamps.
12/FPL
percent of FPL employees. Negotiations lasting nearly five months between Company officials and representatives ofIBEW produced a two-year contract increasing wages and other benefits for members. Retroactive to November 1, 1979, the contract is effective through October 31, 1981.
Management In June, FPL Chairman and Chief Executive Officer Marshall McDonald began a year-long term as Chairman of the Edison Electric Institute, the association ofAmerica's investor-owned electric utilities which acts as industry spokesman on subjects ofnational importance. During the year he was also elected to a two-year term as a member of the Conference Board, an independent research institution with facilities in the U.S., Canada and Europe.
Three new vice presidents also were elected in 1980: in January, L.C. Hauck was named Vice President, Law; in October, W.H. Brunetti was elected Vice President, Energy Management and J.C. Collier Jr., Vice President, Divisions.
Retiring after 42 years ofservice to the Company was Senior Vice President J.G. Spencer Jr.
Dividends Dividends on Common Stock were raised to a quarterly rate of 68 cents per share from 60 cents (an effective annual rate of$2.72, up from $2.40) beginning with the June 15, 1980 quarterly payment.
For 1980, the total dividend payment was $2.64 per share, compared with $2.32 in 1979.
p The Company's dividends have grown over the last decade at a compound annual rate of10 percent.
FPL has maintained a record ofconsecutive quarterly dividend payments since 1946.
In 1980, the Company inaugurated its Dividend Reinvestment and Common Share Purchase Plan (DRP). Holders of Common and Preferred Stock may have cash dividends on all or some of their shares automatically reinvested in additional shares of Common Stock. Dividends on Common Stock are reinvested at a five percent discount I'rom the current market price. Allparticipants have the option to invest additional cash payments each quarter to purchase Common shares at market prices. There are no brokerage commissions or service fees charged to participants.
Service Area Economy The general economic downturn experienced in many areas ofthe United States in 1980 produced only ripples in Florida, but a moderate decline is expected in 1981.
Population continued its steady climb upwards.
By the year's end, the U.S. Census Bureau announced that Florida now ranks seventh in population among the 50 states withan increase of 43.4 percent since 1970. Population stood at 9,740,000 on April1, 1980, a compound annual growth rate of 3.67 percent through the decade.
While domestic tourism slowed because ofthe uncertain national economy, there was a heavy influx ofBritish, German and Latin American tourists.
In South Florida the cruise ship business continued to thrive and free trade zone commerce grew. Miami's role as a monetary and international banking center expanded.
Unemployment in Florida increased to 5.9 percent, but was stillfar below the national average of 7.1 percent.
Housing construction, hampered by high interest rates, continued at a reduced level, but commercial building remained strong in many areas of the State.
Regulation Two new Commissioners were recently appointed to the five-member Florida Public Service Commission. Katie C. Nichols was appointed to a four-year term, expiring in January 1985, to replace WilliamT. Mayo, who retired.
Withone year ofhis term remaining, Chairman Robert T. Mann resigned from the Commission.
Joseph P. Cresse, who has served on the FPSC since January 1979, was elected the new Chairman.
Susan Leisner was appointed to serve the remaining year of Mann's term.
In June 1980, the Florida Legislature adopted the Florida Energy Efficiency and Conservation Act (Conservation Act) which designates the FPSC as the agency to establish goals for increasing the efficiency ofenergy consumption.
FPL/13
Movingquickly, the FPSC established conservation goals for electric and natural gas utilities and ordered that each state utilitysubmit a detailed plan designed to meet them. Specifically included are goals for increasing the conservation of expensive resources such as petroleum fuels, reducing the growth rates ofelectric consumption and lowering weather-sensitive peak demand.
The Conservation Act also provides for a conservation adjustment clause. Through this clause, each utilitywiH estimate its costs for conservation programs for six-month periods, with such costs added to the utility's rates after approval by the FPSC. Anyunder-or over-recovery of such costs during a projection period willbe deferred and collected Rom or refunded to customers through a "true-up" provision.
The Conservation Actgives the FPSC exclusive authority to determine the need for new power plants under the Florida Electrical Power Plant Siting Act. Under the Transmission Line Siting Act the FPSC willdetermine the need for bulk transmission lines which cross county lines.
In other actions during 1980, the FPSC:
~ Established alternatives to cash deposits and new standards for refunding deposits to residential customers with records ofsatisfactory payment.
~ Increased the interest paid on deposits from six percent to eight percent.
~ Ordered Florida's four large, investor-owned utilities to offer Time-of-Use rates to customers, effective January 1, 1981. These optional rates are subject to the availability ofspecial meters.
C1" IQMc~~
~~ill~~~~
Peak Demand Allprevious generation records were broken on January 13, 1981 when a surge ofcold arctic air produced record low temperatures throughout most of Florida.
Anew peak of 10,738 Mwwas recorded that morning, surpassing the previous record of9,732 Mwestablished in the winter of 1980.
Arecord summer peak was established on July 14, 1980 when soaring temperatures sent air conditioners whirling. On that date a net demand of 9,623 Mwwas recorded, surpassing the 1979 suinmer record of8,650 Mwbyllpercent.
Growth projections for FPL through 1990 reflect the anticipated effect ofenergy management and conservation programs. The Company expects the most probable compound annual growth rates in customers, KwHsales and summer peak load will range from three percent to four percent through the decade.
Generation Expansion Flan Designed to meet anticipated demand through the 1980's, FPL's generation expansion plan incorporates units under construction or planned and contracts and negotiations for purchased power.
Significant generating capability was added to the system when the firstofMartin Plant's twin 783 Mw oil-firedunits went into commercial operation in December. Construction cost, including cost of the cooling reservoir and the fuel handling system, was approximately $469 million.
Scheduled for earlier operation, Unit 1's start-up was delayed when a break occurred in the Opposite Page: More than 106,000 persens throughout FPL's service area visited the Company's Energy Conservation Van at fairs, schoolgrounds and shopping centers in 1980 to obtain practical conservation tips.
Below: FPL Energy AuditorJoseph Settlemyre tabulates results of Residential Conservation Service audit conducted at Ft. Lauderdale home ofMrs. Barbara J.
Grider. Auditdata is relayed immediately by portable terminal to a central computer for evaluation.
Left: "Brains" behind the FPL System Control Center is a computer located in Miami. )Vayne Snowden, assistant power coordinator, can instantaneously decide best method of generation, distribution and power exchanges.
14/FPL
embankment of the plant's cooling reservoir. As many as 1,000 construction personnel, utilizingup to 600 pieces ofearth-moving equipment, worked around the clock to expedite repairs and modifications.
Martin UnitNo. 2, the second 783 Mwunit at Martin Plant, is scheduled for completion in mid-1981.
Planned for the late 1980's or early 1990's, Martin Units 3 and 4 willbe FPL's firstcoal-burning units.
Both units willbe in the 700 Mwsize range.
The "coal-by-wire" contracts withTECO and the Southern Companies, discussed in "Energy Plan for the Eighties" (see page 8), are expected to provide varying amounts ofcoal power through 1992.
Negotiations are also underway withSeminole Electric Cooperative for the possible purchase of power I'rom two coal-fred units scheduled for the mid-1980s.
FPL is planning to expand its coal use in still another waythrough joint ownership.
The Company has signed a letter ofintent with the Jacksonville Electric Authorityforjoint construction and ownership of a two-unit coal plant.
The plant willbe builtin northeast Florida for service in the late 1980s.
On cold standby since 1976, oil and natural gas-fred Cutler Power Plant on Biscayne Bay willbe reactivated. Certain regulatory approvals willbe required. Cutler Units 5 and 6 are expected to be returned to operation in mid-1982, providing 197 Mw ofadditional power. Unit No. 4 has been retired.
Dade County's Resource Recovery unit incorporating a generator powered by steam obtained through burning ofsolid waste is
~w~w,ig//.
expected to provide 60 Mwofpower.
During 1980, construction on St. Lucie nuclear i(nitNo. 2 passed the 50 percent milestone. Now more than 59 percent complete, UnitNo. 2 is scheduled for service in 1983.
In September 1980, the U.S. Department of Justice, the NRC Staff and the Company Gled a joint motion requesting an AtomicSafety and Licensing Board to make effective licensing conditions accepted by the Company as part of a settlement agreement between the parties.
Under the proposed agreement, the Company has consented to offer to sell approximately15 percent of St. Lucie No. 2 to certain municipalities and cooperatives. In January 1981 approximately six percent ofthe unit was sold to the Orlando Utilities Commission.
In addition to the 15 percent ofthe unit offered for sale under the settlement agreement, FPL has separately offered approximately six percent to Seminole Electric Cooperative.
Other municipalities have Gled an opposition to the joint motion and requested antitrust hearings. The matter is pending.
Certain municipalities have appealed a decision by the NRC not to institute, at this time, a proceeding to review the licenses of FPL's operating nuclear units and the construction permit for St. Lucie No.2.
The matter is pending.
Construction Budget New construction, principally for electric generation, transmission and distribution facilities, totaled approximately $655 millionin 1980.
The Company estimates that its 1981-83 construction program willtotal an estimated $2.2 billion. Capital expenditures for 1981 are budgeted at
$688 million.
Financing To finance its construction program, FPL raised
$371 millionfrom external sources in 1980.
Approximately $301 miHion were raised through sale of first mortgage bonds in March and May and pollution control revenue bonds in October. An additional $28 millionwere raised through Common Stock issued in connection with the employee benefit plans and the dividend reinvestment plan.
Early in December the Company raised $42 millionby selling 1,750,000 shares ofCommon Stock. This was FPL's first public sale of Common Stock in more than four years.
The balance ofthe funds for the Company's capital expenditures was provided by internally generated funds. Atyear-end short-term debt outstanding totaled $77 million.
The planned sale of$125 millionoffirst mortgage bonds in early March willbegin the 1981 financing program. The Company willalso continue to issue FPL/15
Common Stock in connection with employee benefit plans and the dividend reinvestment plan. Total external financing needs for 1981 are estimated at
$500 million. However, the amount needed is dependent on the amount and timing ofrate relief.
The Company's ability to issue additional shares of Preferred Stock is also dependent on the amount and timing ofrate relief.
Nuclear Power In September 1980 FPL became a member of Nuclear Electric Insurance Limited (NEIL), which was organized by the nuclear electric utilityindustry.
NEILprovides insurance coverage for a portion of replacement power costs that might be incurred during an extended outage ofa nuclear unit caused by accidental physical damage.
During 1980 the Company continued to make certain modifications to its three operating nuclear units in response to NRC regulations developed as a result ofthe incident at Tluee MileIsland.
Whenever possible these modifications are made when the units are operating or during scheduled refueling and maintenance outages in order to minimize down-time.
Atthe Turkey Point Plant, FPL has experienced problems with the steam generators ofnuclear Units Nos. 3 and 4 and has plugged certain pressurized water circulation tubes. Presently 20.4 percent of the tubes in Unit No. 3and 23.8percentof the tubes in Unit No. 4 have been plugged. The NRC lias approved plugging up to 25 percent ofthe tubes in each unit without reducing the thermal output.
Should more than 25 percent of the tubes in either Unit No. 3 or Unit No. 4 require plugging, a new emergency core cooling system analysis willhave to be submitted to and approved by the NRC before that unit may be returned to service.
Unless an extension is granted, each unit must be shut down and the steam generator's inspected once every six months. Before the unit is returned to service, NRC approval must be obtained. Under certain circumstances, a hearing may be required.
Permanent repairs willrequire that each unit be out of service for approximately nine to twelve months. New steam generators have been delivered and the cost ofthe repairs has been estimated at
$136 million.
Permanent repair of UnitNo. 4's steam generators is now scheduled to begin in October 1981, with Unit No. 3 scheduled for permanent repair in October 1982. These dates may have to be rescheduled because of delays in the licensing process.
An amendment to each unit's operating license is required before work may begin. A draft environmental impact statement has been issued. In 1979 the NRC allowed a petition for late intervention and indicated public hearings on the amendments to the licenses must be held. Metropolitan Dade County has also received approval to participate in the hearings, which have not yet been scheduled.
Fuel Supplies First delivery to FPL of Florida-produced uranium fuel was made in June under contracts with International Minerals and Chemicals Corporation (IMC). Florida uranium is extracted as a by-product in the manufacture of phosphate fertilizer.
The agreements call for supplying approximately one millionpounds ofuranium per year from 1981 through 1992 for the nuclear units at Turkey Point and St. Lucie. In 1980, FPL received 216,000 pounds from IMC.
FPL has several other contracts which cover the majority ofits uranium needs through 1992.
The main supplier offuel oil is Exxon Company, U.S.A. under a contract to provide residual oil and distillate fuel through 1982. The contract will continue year-to-year thereafter until cancelled by either party. Ifeither party elects to cancel by giving notice in 1981 or in any later year, the contract will continue at fullquantity through the subsequent calendar year and then be phased out over a three-year period at reduced quantities.
During 1980, I'PL's allocations oflow sulfur oil under Exxon's allocation program ranged between 60 percent and 100 percent of the contract quantity.
The Company has two additional contracts that supplied much ofthe balance ofits oil requirements.
Additional oilrequired to meet generation needs was obtained on the open market.
Natural gas is supplied to FPL under a firmsupply contract with Amoco Production Company.
Through June 1983, FPL wiHreceive 200 million cubic feet (MMCF)per day. After that date, gas supplied to June 1988 willbe limited to gas from certain wells that were supplying the Company in 1983, but no greater than 200 MMCFper day.
Interruptible supplies ofnatural gas are provided by two contracts: one expiring in April1989 and one expiring in December 1981. Deliveries are subject to gas and pipeline availability and continuance of federal permits.
FPL has received 58 temporary public interest exemptions from the Fuel Use Act which allow the burning ofnatural gas in excess ofstatutory limits.
Twenty-two ofthe exemptions expire in late 1981 and thirty-six expire in late 1984.
Looking Back...
1980 held challenge; it also held promise. The promise to promote the vital conservation effort, through leadersliip and example, is a renewed cominitment. That's FPL's commitment to the present and to the future.
16/FPL
Florida Power &Light Company arid Subsidiaries Summary of Selected Financial and Operating Data Selected Financial Statistics (Thousands)
Operating Revenues Fuel and Net Interchange Total Operating Expenses Net Income Total UtilityPlant Total Assets Long-Term Debt, excluding current maturities...
Preferred Stock ivithsinking fund requirements, excluding current maturities................
Preferred Stock without sinking fund requirements Capital Expenditures (including nuclear fuel and AFUDC)
External Funds Common Stock Data Net Income Applicable to Common Stock Thousands Average Shares Outstanding Thousands......
Earnings Per Share of Common Stock..........
Dividends Paid Per Share Dividend Rate Year End.
Dividend Payout Percentage.................
Shares Outstanding, Year EndThousands.....
Price/Earnings RatioYear End..............
Book Value Per Share Year End.............
Market Price Per Share (High)................
Market Price Per Share (Low)................
Selected Operating Statistics Customers Year End.
KwHper Customer Residential.............
KwHSales Thousands Revenue per KwHResidential..............
Employees Year End Net Warm Weather Capability, Kw Year End...
Peak Load, Winter, Kw60-minute...........
Peak Load, Summer, Kw60-minute.........
Reserve Capability Percentage at Time ofSummer Peak Cost of Oil Burned (Per Barrel)...............
Percent ofEnergy:
Oil.
Natural Gas.
Nuclear Coal/Oil MxTest Interchange 1980
$2,347,278
$1,106,909
$2,037,723
$198,318
$6,082,682
$5,492,058
$2,000,312
$117,500
$311,250
$655,098
$871,657
$162,463 41,281
$3.94
$2.64
$2.72 67.0 43,676 6.6
$34.90 28'/s 19~/s 2,247,688 11,473 44,707,613 5.3lg 11,084 11,738,000 9,732,000 9,623,000 13,8
$23.26 49.6 17.9 27.7 0.9 3.9 1979
$1,933,937
$817, 141
$1,632, 133
$204,668
$5,458,512
$4,847,532
$1,838,426
$121,250
$311,250
$574,825
$249,220
$170,957 40,524
$4.22
$2.32
$2.40 55.0 40,819 5.9
$34.31 28~/s 24Vs 2,140,587 11,354 41,965,810 4.66/
10,337 10,955,000 8,791,000 8,650,000 26.7
$17.47 54.6 18.5 25.6 1.3 1978
$1,647,226
$532,779
$1,328,529
$211,241
$4,983,794
$4,460,145
$1,766,861
$75,000
$311,250
$472,830
$151,866
$182,103 40,120
$4.54
$2.00
$2.08 44.1 40,315 5.8
$32.49 29%
23'/s 2,032,298 11,790 40,602,076 4.10',750 10,941,000 8,617,000 8,345,000 30.4
$12.33 51.7 19.6 30.4 (1.7) 1977
$1,464,584
$483,243
$1,165,676
$180,438
$4,525,916
$4,071,302
$1,744,243
$75,000
$261,250
$375,360
$33,240
$152,785 40,050
$3.81
$1.66
$1.76 43.6 40,050 7.1
$29.97 28/s 21',927,668 11,370 37,529,397 3.960 9,415 10,644,000 8,606,000 7,841,000 23.0
$12.94 48.2 19.9 33.0 (1. 1) 1976
$1,189,680
$472,237
$998,467
$116,845
$4,181,839
$3,865,993
$1,779,771
$75,000
$261,250
$460,750
$272,540
$94,467 39,542
$2.39
$1.56
$1.56 65.3 40,050 11.6
$27.81 28~/s 20'/4 1,840,043 10,968 34,929,541 3.50',865 9,740,000 7,287,000 7,598,000 13.8
$11.62 55.9 22.3 22.8 00)
FPL/17
Management's Discussion and Analysis of Financial Condition and Results of Operations President John J. Hudiburg Financial Condition The Company's financial condition at the end of 1980, as disclosed in its consolidated financial statements, reflected a rate increase in 1977, a revised fuel ad-justment clause in 1980, arid a healthy Florida econ-omy over the past several years. However, with the current continued double-digit inflation, the Com-pany is not able to sustain its financial condition without a rate increase. Apetition for a retail rate increase designed to produce annual revenues of approximately $476 millionwas filed with the FPSC in January 1981. In February 1981 the Company filed a petition for an interim rate increase of$211million, representing a portion ofthe $476 millionrequested in January 1981.
The Company last filed for a retail rate increase in October 1976 and obtained approval to increase rates in June 1977. Emphasis on operating efficien-cies and cost controls helped to offset the impact of inflation on operating expenses.
Growth in the number ofcustomers and the resulting increased KwHsales contributed to the Company's abiTity to partially offset the effects ofinflation.
The growth in customers, sales and peak load ex-perienced in recent years is expected to continue for the foreseeable future. The Company expects the most probable compound annual growth rates in cus-tomers, KwHsales and the peak load willrange from three to four percent through the mid-1980's.
These growth rates take into consideration programs designed to meet statewide energy efficiency goals mandated by the FPSC.
To meet these anticipated service requirements, the Company maintains a substantial construction program. Construction expenditures including net nuclear fuel additions and AFUDCin 1978 through 1980 aggregated SL6 billionand are expected to be
$2.2 billionin 1981 through 1983.
The construction program has been financed with a long-range capital structure goal in mind. The Company's long-term objective is to achieve and maintain a mix ofabout 50-52 percent long-term debt, 38-42 percent common equity and about 8-10 percent preferred stock. The increases in the Com-pany's capitalization from the issuance ofdebt and equity securities over the past three years reflect this strategy and the Company's response to chang-ing economic conditions.
I 1
I WW Left: Banks of solar panels combine to power the commercial air conditioning unit under study at the FPL Perrine Service Center: Hugh Arvin, left project engineer forAndover Controls Co. which installed instrumentation, and M.A.Johanneman, assistant supervisor at the center.
Right: Mixture of pulverized coal and oil (COM) is burned experimentally in an oil-firedunit at the Sanford Plant.
Harry Lane, left, representative of Bechtel Power Corp.
which built supporting equipment, and Odis Smith, plant manager.
18/FPL
1980 Earnings Per Share 3.94 1979 4,22 1978 1977 3.81 1976 1970 1.97 4
55 The Company was able to support much ofits 1978 through 1980 capital requirements with $1. 4 bil-lion ofinternally generated funds. External financ-ings in the same period aggregated $712 million, consisting of $471 millionof First Mortgage Bonds,
$50 millionofother long-term debt, $100 millionof Preferred Stock and $91 millionraised through the sale of Common Stock, including stock issued in connection with certain employee benefit plans and the DRP. An additional $90 millionwas obtained through the sale ofnuclear fuel materials. These combined amounts enabled the Company to meet its construction commitments and retire $135 millionof maturing debt and Preferred Stock in the period.
The portion of the Company's capital require-ments for 1981 through 1983 that willbe generated internally willdepend upon the FPSC's action on the requests for rate increases.
Funds from external sources are expected to be obtained from the same sources as in the past three years. The mix willbe varied as required in light ofmarket conditions and the capital structure objective ofthe Company.
There are no significant current limitations on the amount ofdebt securities that can be issued under the Company's mortgage indenture or Charter. The Company is not presently able to issue additional Preferred Stock due to its inabilityto meet an earnings test under the Charter.
Temporary cash requirements are met, in part, through short-term borrowings. The FPSC limits the Company's use of unsecured short-term debt to approximately $600 million. The Company's working capital deficit is not unusual in the electric utilityin-dustry and results from accounting conventions set by the FPSC and the cash management policies fol-lowed by the Company to control borrowing costs.
Results ofOperations Afterpeaking in 1978, net income declined in 1979 and 1980, the combined result of a trend ofrising operating, maintenance, and interest costs that were not fullycompensated for by the growth in reve-nues. The Company also experienced underrecov-ery offuel costs in 19?8, 1979 and the first quarter of 1980. Rapidly rising fuel costs in 1978 and 1979 were not fullyrecovered due to a two-month lag in the fuel adjustment clause in effect at that time. Under a new fuel cost recovery clause adopted by the FPSC in March 1980, the monthly adjustment factor is based on projected fuel costs and KwHsales, which leads to more timely and fullrecovery offuel costs. The underrecovery offuel costs was $47.5 million($0.60 per share) in 1979 as compared to $3.9 millionin 1978. The change to the projected fuel cost re-covery clause limited the underrecovery in 1980 to
$23 million.
OPerating Revenues Increases in operating revenues were due to the fol-lowing factors:
% Increase in Operating Revenues 1980 1979 1978 KwHsales G.5%
3.4%
8.2%
Fuel adjustment and rate changes 14.7 13.9 4.2 Other 0.2 0.1 0.1 Total 21.4'7o 17.4%
12.5%
KwHsales increased primarily as a result of growth in the average number ofcustomers of 5.3%
in 1980, 5.4% in 1979 and 4.9% in 1978. Energy usage per customer increased 1.1% in 1980, but de-clined 2.0% in 1979, followinga 3.3% increase in 1978.
Fuel adjustment revenues in 1980 were $549.8 million, up $288.9 million, or over 111% of the 1979 total; in 1979 fuel adjustment revenues were $260.9 million, up $224.1 million, or over 600% ofthe 1978 total of$36.8 million. These increases accounted for 14.1% ofthe increase in 1980 operating revenues and 13.5% ofthe increase in 1979 operating reve-nues and reflect the rapid escalation in fuel costs in 1979 and 1980.
Dividends Paid Per Share Bock Value <vear End) 1980 1979 1978 1977 1976 1970 1.015 1980 1979 1978 1977 1976 1970 10 17.05 20 34,31 32.49 29.97
- 27. 81 30 540 FPU19
Fuel and¹t Interchange Fuel and net interchange expense consisted of the following(in thousands):
1980 1979 1978 Fuel expense
$1,059,725
$812,898
$551,376 Netinterchange 51,172 4,243 (18,597)
Deferred fuel costs (3,988)
Total
$1,106,909
$817, 141
$532,779 The oilportion offuel expense increased by
$216.1 million, or 31.3%, in 1980 and by $241.6 mil-lion, or 53.8%, in 1979. The average cost per barrel ofoil consumed in 1980 increased by 33.2% over 1979 levels and accounted for $226.1million of the increase in fuel expense. However, tVis amount was partially offset by a decline in the quantity ofoil can-sumed. A41.6% increase in the average cost per barrel ofoil consumed accounted for $203.2 million of the 1979 increase.
Net interchange purchases reflect an increase in economy interchange purchases, resulting fram par-ticipation in a new statewide interchange system and the "coal by wire" purchases under a new cantract withThe Southern Company system. Approxi-mately $19 millionof power was purchased in 1980 under this contract.
Other OPeration and Maintenance ExPenses These expenses increased due to higher payroll and related employee benefits costs, increases in the number ofcustomers served and the amount of elec-tricitygenerated, and the maintenance of nuclear units. An extended outage to repair the turbine rotor at Turkey Paint Unit No. 3 and expenditures for safety reviews, investigatians and regulations result-
)
r ing fram the Three Mile Island incident are reflected in 1979 expenses.
Additional expenditures to meet Three MileIsland-related Nuclear Regulatory Commission (NRC) requirements, turbine rotor re-placement at Turkey Point Unit No. 4, reactor cool-ant seals replacement at St. Lucie Unit No. 1, the experimental use ofa coal-oil fuel mixture and a system-wide increase in tree trimming and line maintenance increased 1980 expenses.
AllowanceforFunds Used Duri)rg Conslruction (AFUDC)
Total AFUDC increased as a result af Nigher CWIP balances. The investment in Martin Unit No. 1 amounted to $447 million, an increase of$113 million over the previous year. This unit was placed in commercial operation in December 1980. At De-cember 31, 1980 the investment in St. Lucie Unit No. 2 and Martin Unit No. 2 included in CWIP aggregated $844 million, up $246 millionfrom a year earlier. AFUDC willbe reduced significantly as these units are placed in cammercial service. This willre-sult in a reduction in net incame unless operating revenues and rate relief provide sufficient additional revenues to fullyoffset the reduction in AFUDC and increases in depreciation and other operating ex-penses related to these units.
Effects ofInflation Changing prices have impacted the Company in all aspects ofits operations, including construction costs, operating expenses and the cost of capital.
The Company has estimated the effects of changing prices on its operations on the basis prescribed by the Financial Accounting Standards Board. See "Ef-fects of Changing Prices."
(
(
4+ xii+ ~
Left: Arthur Litka, project manager at the Florida Solar Energy Center, measures electricity produced directly by the sun beaming on banks of phatovaltaic cells mnunted nn rnnfnf experimental house.
FPL is a cantributar to this project at Cape Canaveral.
20/FPL
Report of Management The management ofFlorida Power &Light Company is responsible for the integrity and objectivity of the financial information and representations contained in the consolidated financial statements and other sections ofthis Annual Report. The consolidated financial statements, which in part are based on informed judgments and estimates made by the management, have been prepared in conformity with generally accepted accounting principles applied on a consistent basis.
To aid itin carrying out this responsibility, management maintains a system ofinternal accounting control, which is established after weighing the cost ofsuch controls against the benefits derived.
In the opinion ofmanagement, this system provides reasonable assurance that the assets ofthe Company are safeguarded and transactions are executed in accordance with management's authorization and are recorded properly for the preparation offinancial statements.
In addition, management believes the Company's system ofinternal accounting control provides reasonable assurance that material errors or irregularities would be prevented or detected on a timely basis by employees in the normal course oftheir duties. Due to the inherent limitations ofthe effectiveness ofany system ofinternal accounting control, management cannot provide absolute assurance that the objectives ofinternal accounting control willbe met. The system ofinternal accounting control is supported by written policies and guidelines, the selection and training ofqualified employees, an organizational structure that provides an appropriate division ofresponsibility and a program of internal auditing. To further enhance the internal accounting control environment the Company has a Conflict of Interests Policy and an Ethical Policy Statement.
The Company's independent accountants, Deloitte Haskins &Sells, are engaged to express an opinion of the Company's financial statements. Their opinion is based on procedures believed by them to be sufficient to support such an opinion. The Board ofDirectors pursues its oversight responsibiTity for financial reporting and accounting through its Audit Committee. This Committee, which is comprised entirely ofoutside directors, meets periodically with management, the internal auditors and the independent accountants to make inquiries as to the manner in which the responsibilities of each are being discharged. The independent accountants and the internal audit staff have free access to the Committee without management's presence to discuss auditing, internal accounting control and financial reporting matters.
Opinion of Independent Certified Public Accountants To the Board ofDirectors and Shareholders, Florida Power &Light Company:
We have examined the consolidated balance sheets and statements ofcapitalization of Florida Power &Light Company and subsidiaries as of December 31, 1980 and 1979 and the related consolidated statements of income, retained earnings and changes in financial position for each of the three years in the period ended December 31, 1980.
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 financial statements present fairlythe financial position of the Company and its subsidiaries at December 31, 1980 and 1979 and the results of their operations and the changes in their financial position for each ofthe three years in the period ended December 31, 1980, in conformity withgenerally accepted accounting principles applied on a consistent basis.
DELOITTEHASKINS&SELLS Miami, Florida February 12, 1981 Financial Statements Contents 22 Balance Sheets 24 Statements of Capitalization 25 Statements of Income 26 Statements of Retained Earnings 27 Statements of Changes in Financial Position 28 Schedule ofTaxes 30 Schedule of Allowance for Funds Used During Construction 31 Notesto Consolidated Financial Statements FPL/21
Florida Power &Light Company and Subsidiaries
'onsolidated Balance Sheets, December 31, 1980 and 1979 (Thousands of Dollars)
Assets ELECTRIC UTILITYPLANT(Notes 1 and 7):
Atorigirial cost Less accumulated depreciation Net Construction work in progress Nuclear fuel (less accumulated amortization of $42,284 at December 31, 1980 and $33,300 at December 31, 1979)
Electric utilityplantnet INVESTMENTS:
'torm and property insurance reserve fund (Note 1)
Other.
Total investments
,CURRENT ASSETS:
I Cash (Note 3).
Temporary investments (at cost, winch approximates market)
Accounts receivable:
Customers (less allowance for uncollectible accounts of $4, 191 at December 31, 1980 and $3,978 at December 31, 1979)
Employees and miscellaneous.....
Income tax refunds Materials and supplies at average cost Fossil fuel stockat average cost Prepaid expenses
~ Other Total current assets DEFERRED DEBITS:
Accumulated deferred income taxes (Note 1).........
Unamortized cancelled project costs (Note 7).
Unamortized debt expense and loss on reacquired debt Deferred fuel costs (Note 1)
Other Total deferred debits Total 1980
$4,968,387 1,137,070 3,831,317 1,009,377 62,634 4 303,323 12,911 28,550 41,461 2,975 19,271 139,657 10,861 14,827 95,262 181,925 26,019 8,337 499,134 18,550 5,708 7,747 3,988 12,137 48,130
$5,492,053 1979
$4,237,288 1,003,365 3,233,923 1,119,820 68,104 4,421,847 9,562 2,499 12,061 6,663 109,552 20,640 74,906 142,681 20,864 5,846 381,152 8,808 10,275 5,402 7,987 32,472
$4,847,532
.The accompanying Schedules and Notes to Consolidated Financial Statements are an integral part of these statements.
22/FPL
(Thousands ofDollars)
Liabilities CAPITALIZATION(See Consolidated Statements of Capitalization):
Common shareholders'quity Preferred stock without sinking fund requirements Preferred stock with sinking fund requirements Long-term debt Total capitalization CURRENT LIABILITIES:
Current maturities oflong-term debt and preferred stock Notes payable commercial paper (Note 3)
Accounts payable trade....
Customers'eposits Income taxes (Notes 1 and 7)
Other taxes Interest accrued Pension cost accrued (Note 6).
Tax collections payable Other Total current liabilities 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).
Other Total reserves COMMITMENTSANDCONTINGENCIES (Notes 7 and 8) 1980 81,524,285 311,250 117,500 2,000,312 3,953 847 135,644 77,490 124,080 99,324 8,663 73,305 50,802 29,199 18,016 54,801 671,324 549,468 276,365 17,931 843,764 12,911 10,70?
23,618 1979
$1,400,395 311,250 121,250 1,838,426 3,671,321 55,200 32,000 62,761 89,986 12,623 72,700 40,520 27,666 15,533 54,626 463,615 448,215 229,608 13,354 691,177 9,562 11,857 21,419 Total 55,492 958 34,847,532 FPL/23
Florida Power &Light Company and Subsidiaries Consolidated Statements of Capitalization, December 31, 1980 and 1979 (Thousands of Dollars) 1980 1979 COMMONSHAREHOLDERS'QUITY:
Common Stock, no par value, authorized 100,000,000 shares; outstanding 43,676, 193 shares in 1980 and 40,819,178 shares in 1979 (Note 4)
Capital stock premium and expense Retained earnings Total common shareholders'quity 840,707 (4,182) 687,760 1 524,235 770,350 (4,038) 634,083 1,400,395 PREFERRED STOCKCumulative, $100 Par Value, authorized 20,112,500 shares at December 31, 1980 and 5,000,000 shares at December 31, 1979 (Note 4):
Shares Outstanding Redemption Price December 31 ~ 1980 Preferred stock without sinking fund requirements:
44/2% Series 41/2% Series A 4142% Series 8 4/2% Series C 4.32% Series D 4.35% Series E 7.28% Series F.
7.40% Series G 9.25% Series 11 8.70% Series K 8.84% Series L........
Total.
Preferred stock with sinking fund requirements:
10.08% Series J.
8.70% Series M Less current maturities Total.
100,000 50,000 50,000 62,500 50,000 50,000 600,000 400,000 500,000 750,000 500,000 675,000 500,000
$10LOO 101.00 101.00 103.00 103.50 102.00 106.57 106.23 107.00 109.85 109.84 111.50 108.29 10,000 5,000 5,000 6,250 5,000 5,000 60,000 40,000 50,000 75)000 50,000 311,250 67,500 50,000 117,500 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 LONG-TERMDEBT (Notes 1 and 4):
First Mortgage Bonds:
Maturing through 1985 82/s% Due August 1980 3Vs% Due November 1981 87/s% Due May 1982 37/s% Due April1983 9'/s% Due May 1984 3/s% Due November 1984 Maturing 1986 through 1995 3s/s% to 5%
Maturing 1996 through 20056% to 10Vs%
Maturing 2006 through 2010 92/s% to 12/s%
Pollution Control Series A, 6.10% Due January 2008 Pollution Control Series B (Note 4).
10%% Notes Due November 1981 Bank Notes (under term loan agreement) Due March 1982 Installment Purchase and Security Contracts 5.40% to 6.15% Due 2004 through 2007 Promissory Notes 6% to 9a/4% Due Various Dates to January 2020 Unamortized Premium and Discountnet.
Total long-term debt Less current maturities Long-term debt excluding current maturities Total capitalization 10,000 100,000 15,000 100,000 10,000 230,000 796,289 500,000 19,400 76,300 125,000 50,000 92,090 11,057 820 2,135,956 (135,644) 2 000,312
$3,953,347 50,000 10,000 100,000 15,000 100,000 10,000 230,000 796,289 275,000 19,400 125,000 50,000 92,090 14,233 3,464 1,890,476 (52,050) 1,838,426
$3,671,321 The accompanying Schedules and Notes to Consolidated Financial Statements are an integral part of these statements.
24/FPL
Florida Power &Light Company and Subsidiaries Consolidated Statements of Income forthe years ended December 31, 1980, 1979 and 1978 (Thousands of Dollars, except per share amounts) 1980 1979 1978 OPERATING REVENUES (Notes 1 and 5).
82 347,278
$1.933,937
$1,647,226 OPERATING EXPENSES:
Operations:
Fuel and net interchange (Note 1).
Other production Transmission and distribution Customers Administrative and general Maintenance Depreciation (Note 1)
Income taxes (Notes 1 and 6)
Taxes other than income taxes Total operating expenses OPERATING INCOME OTHER INCOME (DEDUCTIONS):
Allowance forother funds used during construction (Note 1)..
Income taxes (Note 1).
Othernet Other incomenet.
INCOME BEFORE INTEREST CHARGES 1,106,909 63,169 61,252 59,129 130,685 141,789 159,964 1I0,840 173 986 2 037,723 309,555 38,056 (1,841) 3,292 39,507 349,062 817, 141 42,891 50,910 49,660 116,028 99,490 150,195 156,044 149,774 1,632,133 301,804 30,006 (34) 1,209 31,181 332,985 532,779 35,628 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 INTEREST CHARGES:
Interest on first mortgage bonds Interest on other long-term debt.
Other interest Allowance for borrowed funds used during construction (Note 1)
Interest charges net NET INCOME..........................
PREFERRED STOCK DIVIDENDREQUIREMENTS NET INCOMEAPPLICABLETO COMMONSTOCK 116,446 24,031 5,619 (14,112) 147,239 27,578 14,912 (38,985) 117,715 27,163 12,280 (28,841) 150 744 131,984 128,317 198,318 35 855 211,241 29,138 204,668 33,711 8
162 463 170,957 182,103 Average number ofcommon shares outstanding (in thousands)..
Earnings per share of Common Stock Dividends per share of Common Stock 41,281
$3.94
$2.64 40,524
$4.22
$2.32 40,120
$4.54
$2.00 The accompanying Schedules and Notes to Consolidated Financial Statements are an integral part of these statements.
FPL/25
Florida Power & Light Company and Subsidiaries Consolidated Statements of Retained Earnings forthe years ended December 31, 1980, 1979 and 1978 (Thousands of Dollars) 1980 1979 1978 BALANCEATBEGINNINGOF YEAR NET INCOME Total
$634,083
$556,772 108 818 204 668 832,401 761,440
$454,529 211,241 665,770 DEDUCT:
Cash dividends:
Preferred Stock:
4'%eries ($4.50 a share) 4'/2% Series A ($4.50 a share) 4i/2% Series B ($4.50 a share) 4'%eries C ($4.50 a share) 4.32% Series D ($4.32 a share) 4.35/o Series E ($4.35 a share) 7.28% Series F ($7.28 a share) 7.40% Series G ($7.40 a share) 9.25% Series H ($9.25 a share) 10.08% Series J ($10.08 a share) 8.70% Series K ($8.70 a share) 8.84% Series L ($8.84 a share) 8.70% Series M ($8.70 a share)
Common Stock Total dividends Preferred Stock redemption costs BALANCEAT END OF YEAR 450 225 225 281 216 218 4,368 2,960 4,G25 7,051 G,525 4,420 4,350 108 610 144 524 117 8687 760 450 225 225 281 216 218 4,368 2,960 4,625 7,560 6,525 4,420 1,281 94,002 127,356
$634,083 450 225 225 281 216 218 4,368 2,960 4,625 7,560 6,525 1,117 80,228 108,998
$556,772 Dividend Itestrictions. The Charter, Mortgage and Deed of Trust and 10'/4% Note Indenture contain provisions ivhich, under certain conditions, restrict the payment of dividends and other distributions to common shareholders.
Under the most restrictive of these provisions approximately $593 million of retained earnings was available for payment of dividends on Common Stock at December 31, 1980.
The accompanying Schedules and Notes to Consolidated Financial'Statements are an integral part of these statements.
26/FPL
Florida Power & Light Company and Subsidiaries Consolidated Statements of Changes in Financial Position forthe years ended December 31, 1980, 1979 and 1978 (Thousands of Dollars)
SOURCE OF FUNDS:
Operations:
Net income Depreciation Amortization ofnuclear fuel assemblies Deferred investment tax creditnet Deferred income taxes Deferred fuel costs Allowance forother funds used during construction...
Total Sale offirst mortgage bonds Reimbursement by trustee from pollution control financings for construction expenditures.
Issuance ofother long-term debt Issuance of Common Stock Sale ofPreferred Stock Sale ofnuclear fuel Proceeds from nuclear fuel suit Other sources Decrease in working capitA Total APPLICATIONOF FUNDS:
Construction expenditures*
Nuclear fuel'etirement, redemption and current maturity oflong-term debt and Preferred Stock Dividends Other applications Increase in working capital Total 1980
$198,318 159,964 9,766 46,757 91,511 (3,988)
(38,056) 464,272 222,607 58,153 1,899 70,357 29,718 7,595 89,727 8944 328
$613,529 33,231 142,417 144,524 10,62?
8944 328 1979
$204,668 150,195 11,992 52,725 77,075 (30,006) 466,649 73,895 50,081 13,508 49,825 60,712 26,000 22,462
$763,132
$509,627 35,556 55,810 127,356 24,112 10,671
$763,132 1978
$211,241 144,267 11,081 35,646 67,695 (20,319) 449,611 75,202 18,476 d
7,466 50,134 20,825 14,164
$635,878
$432,586 19,925 71,617 108,998 2,752
$635,878 CHANGE IN WORKINGCAPITALEFFECTED BY:
Increase (Decrease) in current assets:
Cash and temporary investments Accounts receivable Fossil fuel stock Materials and supplies Other changes net Decrease (Increase) in current liabilities:
Notes payable and current maturities oflong-term debt and Preferred Stock
'e Accounts payable Customers'eposits Income taxes.
Other changes net INCREASE (DECREASE) IN WORKINGCAPITAL.
$ 15,583 20,326 39,244 20,356 22,473
$ (26,990) 29,900 57,536 13,141 (9,503)
(125,934)
(61,319)
(9,338) 3,960 (15 028)
(24,582)
(16,281)
(10,866) 44,634 (46,318)
$ (89,727) 10,671
$ 29,829
'13,990 19,063 (4,897) 22,004 (49,925)
(6,972) 5,387 (12,383)
(30,260)
$ (14,164)
'Excluding Allowance for other funds used during construction.
The accompanying Schedules and Notes to Consolidated Financial Statements are an integral part of these statements.
FPL/27
Florida Power &LightCompany and Subsidiaries Schedule ofTaxes forthe years ended December 31, 1980, 1979 and 1978 (Thousands of Dollars)
Income Taxes FEDERAL:
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 aHowance Estimated revenue refunds Other.
Deferred investment tm credit.
Amortization of investment tax credit Total Charged to other income:
Current Deferrednet Total federal.
STATE:
Charged to operating expenses:
Current Deferred Accelerated depreciation DebtcomponentofAFUDC Repair allowance Estimated revenue refunds Other.
Deferred in prior years Accelerated depreciation.
Debt component ofAFUDC.
Repair allowance Estimated revenue refunds Other Total Charged to other income:
Current Deferrednet Total state Total income taxes 1980
$ (10,795) 69,305 14,185 12,715 (13,140)
(4,508)
(777)
(920) 277 4,770 60,880 (G,302) 125,G90 1,347 235 12?,272 5,824 7,7G9 1,618 1,455 (1,392)
(414)
(87)
(102) 32 447 15,150 216 43 15,409
$142,681 1979 8,887 52,429 10,276 4,863 (188) 6,915 (2,879)
(770)
(1,078) 765 (1,428) 66,790 (5,291) 139,291 (33) 42 139,300 8,629 6,113 1,176 561 (22) 784 (310)
(86)
(119)
(57) 16,753 21 4
16,778
$156,078 1978
$ 73,659 53,220 6,405 5,117 (854)
(763)
(1,934)
(662)
(931) 2,002 47,535 (4,695) 178,099 (212)
(585) 177,302 13,320 5,835 702 561 (94)
(84)
(198)
(73)
(102) 197 20,064 34 (64) 20,034
$197,336 28/FPL
Total income taxes differ from the amount computed by applying the statutory federal income tax rate to income before income taxes. The reasons for the differences are as follows:
1980 1979 1978 Computed at statutory rate........
Increases (Reductions) in income taxes resulting from:
Allowance for other funds used during construction...
State income taxes net of federal income tax benefits Other net Total income taxes 4/o of 4/o of Pre-tax Pre-tax Amount Income Amount Income
$156,860 46.0%%uo
$165,943 46.0%%uo (20,842)
(6.1)
(16,252)
(4.5) 8,321 2.4 9,060 2.5 (1,658)
(0.5)
(2,673)
(0.7)
$142,681 41.8lo
$156,078 43.3%
10,418 554
$197,336 2.6 0.1 48.3%
'/o of Pre-tax Amount Income
$196, 117 48.0%%uo (9,753)
(2.4)
Other 11txes Taxes other than federal and state income taxes:
Federal and state payroll Real and personal property.
State gross receipts Francluse charges iiliscellaneous 1980
$ 15,220 44,269 33,785 81,420 16,894 1979
$ 13,928 41,705 27,981 66,866 17,229 1978
$ 11,343 41,308 23,955 55,862 14.907 Total other taxes
$191,588
$167,709
$147,375 Charged to:
Operating expenses other taxes UtiTity plant and other accounts Total
$173,986 17,602
$149,774 17,935
$132,205 15,170
$191,588
$167,709
$147,375 FPL/29
Florida Power &Light Company and Subsidiaries Schedule of Allowance for Funds Used During Construction (AFUDC) forthe years ended December 31, 1980, 1979 and 1978 (Millionsof Dollars) 1980 1979 1978 Monthly average construction work in progress (CWIP)
Less:
Fixed amount included in rate base AFUDC previously capitalized and included in monthly average CWIP..
Other CWIP base for computing AFUDC.
Nuclear 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)
$1,238.0 200.0 152.9 44.0 841.1 841.1 9.16 lo 77.0 39.0 S
38.0 200.0 97.9 53.2 619.0 30.5 649.5 9.06%
58.8 28.8
$ 30.0 200.0 60.9 76.9 332.1 46.3 378.4 9.10%
34.4 14.1
$ 20.3
$970. 1
$669.9 (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 of capital 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) for computing 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 of total AFUDC between borrowed funds and other funds was based on the respective proportions of the borrowed funds component and the other funds component ofthe total AFUDCamount determined by using the formula set by the FPSC. In 1979, as a result of a FERC directive, the Company began aHocating total AFUDC between borrowed funds and other funds by computing the borrowed funds component using the FERC formula, withthe residual AFUDCbeing reported as the other funds portion; thus, while the FPSC formula is stillutilized to compute, the total amount ofAFUDC, the borrowed funds portion in 1980 and 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 first 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.
30/FPL
Florida Power &Light Company and Subsidiaries Notes to Consolidated Financial Statements forthe years ended December 31,1980,1979 and1978
- 1. Summary Qf Significant Accounting And Reporting Policies Regulation: Accounting and reporting policies of the Company are subject to regulation by the Florida Public Service Commission (FPSC) and the Federal En-ergy Regulatory Commission (FERC).
The followingsummarizes the more sig-nificant of these policies.
Basis ofConsolidation: The consoli-dated financial statements include the ac-counts of the Company and its wholly-owned subsidiaries. Allsignificant inter-company balances and transactions have been eliminated.
Revenues and Fuel Costs: Revenues are recognized based on monthly cycle billings to customers. Retail and wholesale rate schedules are approved by the FPSC and FERC, respectively. The rate schedules contain a fuel adjustment clause which gives effect to changes in ef-ficiency, the cost offuel as well as the fuel component of purchased power, the total energy cost ofeconomy interchange and the generation mix offossil and nuclear fuels.
Through March 1980 changes in fuel costs were reflected in customer billings, after a two-month lag, through a fuel ad-justment clause. In March 1980 the FPSC adopted a projected fuel cost recovery clause which is designed to permit fullre-covery offuel costs. Effective with April billings, the monthly fuel adjustment fac-tor is a levelized rate based on projected fuel costs and KwHsales over each ensu-ing six-month period. The net under or over recovery offuel costs during a pro-jection period, plus interest, is deferred and collected I'rom or refunded to cus-tomers during the last four months ol the succeeding six-month projection period.
At December 31, 1980 the Company had deferred approximately $4 millionoffuel costs in excess ofrelated revenues.
Effective in 1980 the Company has combined net interchange with fuel ex-pense in order to present the costs re-covered under the fuel cost recovery clause. Net interchange amounts forprior periods, which were combined with other production costs, have been reclassified to conform with the 1980 presentation.
Electric UtilityPlant, Depreciation and Amortization: The cost ofad-ditions, replacements and renewals of units ofproperty is added to utilityplant.
The cost (estimated, ifnot known) of units ofproperty retired, less net salvage, is charged to accumulated depreciation.
Maintenance and repairs ofproperty, and replacements and renewals ofitems de-termined to be less than units ofproperty, 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. The weighted annual composite depreciation rate was approximately 3.7% in 1980. Nu-clear production plantrates include esti-mated negative salvage values for certain components, reflecting estimated de-commissioning costs. Transmission and distribution plant rates also include nega-tive salvage values, The cost ofnuclear fuel is amortized to fuel expense on a unit ofproduction method. No provision for estimated fu-ture spent fuel storage, transportation or disposal costs is presently included in fuel expense.
Substantially all utilityplant is subject to the lien ofthe Mortgage and Deed of Trust (as supplemented) securing the First Mortgage Bonds.
Allowance for Funds Used During Construction (AFUDC):The Com-pany capitalizes as an additional cost of property an allowance for funds used dur-ing construction (a non-cash item) which represents the allowed cost ofcapital used to finance a portion ofconstruction work in progress and nuclear fuel. The portion ofAFUDCattributable to bor-rowed funds is recorded as a reduction of Interest charges and the portion attribut-able to other funds as Other income. See the Schedule ofAFUDCfor detailed in-formation.
Storm and Property Insurance Re-serve and Related Fund: The storm and property insurance reserve fund is maintained at an amount equivalent to the reserve. The reserve provides coverage toward storm damage costs and possible public liabilitylosses stemming from a nu-clear incident. Earnings from the fund, net of taxes, are reinvested in the fund.
Securities held in the fund are recorded at cost.
Income Taxes: Deferred income taxes are provided on all significant book-tax timing differences as permitted for rate-making purposes by the FPSC. Invest-ment tax credits used to reduce current federal income taxes are deferred and
. amortized to income at a rate approximat-ing the lives of the related property. See the Schedule ofTaxes.
- 2. Subsidiaries The Company's wholly-owned sub-sidiaries, Fuel Supply Service, Inc. (FSS) and Land Resources Investment Co.
(LRIC), are engaged in activities com-plementary to those ofthe Company. FSS is engaged in fuel exploration ventures and proprietary fuel research and de-velopment 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 ofincreasing financing op-tions beyond those permitted by the Company's Mortgage and Deed ofTrust.
- 3. Short-Term Oebt Unused available bank credit aggregated approximately $227 millionat December 31, 1980, 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.
FPU31
Florida Power 8 Light Company and Subsidiaries Notes to Consolidated Financial Statements (continued)
- 4. Capitalization Common Stock: The Company has reserved 3 millionshares of Common Stock for issuance under the Employee ThriftPlan (ThriftPlan) and Employee Stock Ownership Plan (ESOP) and one millionshares ofCommon Stock for issuance under the Dividend Reinvestment and Common Share Purchase Plan (DRP). AtDecember 31, 1980 the Company had issued 1,390,846 ofthe reserved shares under the ThriftPlan and the ESOP and 485,347 ofthe reserved shares under the DRP.
In December 1980 the Company issued 1,750,000 shares of Common Stock by an underwritten public offering for $42 million.
Preferred Stock WithSinking Fund Requirements: The 10.08% Series J Preferred Stock is entitled to a sinking fund to retire a minimum of37,500 shares and a maximum of75,000 shares annually through 1999 at $101.50 per share, plus accrued dividends.
The 8.70% Series M Preferred Stock is entitled to a sinking fund to retire a minimum of 18,000 shares and a maximum of45,000 shares annually f'rom 1985 through 1999, and a minimum of46,000 shares and a maximum of 115,000 shares annually from 2000 through 2004 at $100 per share, plus accrued dividends.
Minimumannual sinking fund requirements are approximately $3.8 millionfor 1981 through 1984 and $5.6 millionin 1985. In 1979 the Company purchased and retired 6,000 shares ofthe 10.08% Series J Preferred Stock in anticipation ofthe 1980 sinking fund requirement, and in early 1980 the remainder ofthat requirement was met through the purchase and retirement of 31,500 shares. The 1981 sinking fund requirement was met by purchasing and retiring 37,500 shares during 1980. In the event that the Company should be in arrears on its sinking fund obligations, the Company may not pay dividends on Common Stock.
The changes in each series ofPreferred Stock WithSinking Fund Requirements for 1978, 1979 and 1980 are shown below (in thousands):
10.08% Series J 8.70% Series M Snar s
Ame 1
Shares Balances, January 1, and D ca macr 31, 1975..
750 S75,000 Sale in 1979.
500 Current maturity in 1979..................
(37)
(3,750)
Balances, December 31, 1979..............
713 71,250 500 Current maturity in 1980..................
(38)
(3,750)
Balances, December 31, 1980..............
675
$67,500 500 Amount
$50,000 so,ooo
$50,000 Long-'Iform Debt: Certain series ofthe Company's First Mortgage Bonds have sink-ing fund requirements through 1995 which may be satisfied by certification ofproperty additions at the rate of167% of such requirements.
Such requirements are approxi-mately $4 millionfor each ofthe next three years and approximately $3 millionfor 1984 and 1985. Annual maturities oflong-term debt are approximately $136 millionin 1981,
$151 millionin 1982, $16 millionin 1983, $111 millionin 1984 and $1 millionin 1985.
The Pollution Control Series B First Mortgage Bonds consist of$26,300,000 of 9.60% bonds due October 1, 2000, and $50,000,000 of9.90% bonds due October 1, 2015.
The Company's Charter authorizes the issuance of10 millionshares ofPreferred Stock, no par value. Italso authorizes the issuance of 5 millionshares of Subordinated Preferred Stock, no par value, to be known as "Preference Stock."
None ofthese shares is outstanding.
Changes in Capital Accounts: The changes in Common Stock, Preferred Stock Without Sinking Fund Requirements and Capitd Stock Premium and Expense for 1978, 1979 and 1980 are shown below (in thousands):
Preferred Stock CaPital Without Sinking Fund Stock Common Stock Requirements Premium and Shares Amount Shares Amount Expense Balances, January 1, 1978..............
40,050
$749,375 2,612
$261,250
$(3,715)
Sale in 1978.
500 50,000 (30)
Issued to benefit plans in 1978...........
265 7,466
(6)
Balances, December 31, 1978...........
40,315 756,841 3,112 311,250 (3,751)
Sale in 1979.
(287)
Issued to benefit plans in 1979...........
504 13,509 (1)
Preferred stock redemption.............
1 Balances, December 31, 1979...........
40,819 770,350 3,112 311,250 (4,038)
Sale in 1980.
1,750 42,306 (62)
Issued to benefit plans in 1980...........
622 16,409 Issued under DRP in 1980.............
~
485 11,642 (96)
Preferred stock rcdcm tion.........,...
P
~
~
~
~
~
~
~
~
~
14 Balances, December 31, 1980...........
43,676
$840,707 3,112
$311.250
$(4.182) 32/FPL
- 5. Revenues In connection with the adoption of the fuel cost recovery clause in 1980, the FPSC ordered a transition adjustment to re-cover, over a twelve-month period, ap-proximately $59 millionoffuel costs which the Company would have had the oppor-tunity to recover tinough the prior fuel ad-justment clause. The transition adjust-ment was appealed to the Supreme Court of Florida and the Company has agreed not to collect the transition adjustment amount pending resolution of the appeal.
Apetition for a retail rate increase de-signed to produce annual revenues of ap-proximately $476 millionwas filed with the FPSC in January 1981. The petition is based on projected 1981 costs and seeks an increased rate ofreturn on projected average 1981 rate base. The Company has also requested that more construction work in progress be included in the rate base. In February 1981 the Company Qed a petition for an interim rate increase of
$211million, representing a portion of the
$476 millionrequested in January 1981.
- 6. Employee Benefit Plans The Company has a non-contributory employees'ension plan covering sub-stantially all employees. The Company's policy is to fund each year's accrued pen-sion costs, including amortization ofthe estimated unfunded prior service costs over 10 years. Pension costs for the years 1980, 1979 and 1978 were $29.2 million,
$27.7 millionand $26.2 million, respectively. The estimated unfunded prior service cost of the pension plan at January 1, 1980 was approximately $92.4 millionusing the entry age normal cost method. The amounts of accumulated plan benefits and plan net assets for the Company's pension plan for the two most recent years are presented below. The amounts of accumulated plan benefits do not anticipate benefits related to future salary increases, and therefore do not rep-resent the total eventual obligations for pension benefits to be met by the plan.
Actuarial present value of accumuhted plan benefits (assumed five percent rate ofreturn):
Vested............
Nonvested..........
Total.............
Net assets available forbenefits.......
January 1,
1980 1979
$ 124.5
$106.3 10.5 7.9
$ 135.0
$ 114.2
$281.1
$229.3 The Employee T/triftPlan provides for basic contributions by eligible employees of up to 6% oftheir base salaries, which are matched 50% by the Company. The Company matclnng contributions for 1980, 1979 and 1978 were $2.3 million,
$2.1 millionand $2.0 million, respectively.
The Company has an Employee Stock Ownerslfip Plan (ESOP) through which it is permitted to claim up to an additional 1k% investment tax credit. An amount equal to such additional credit must be contributed to the ESOP to provide Com-pany Common Stock for the benefit of employees.
Since the contributions to the Plan are in lieu of income tax payments, there is no effect on net income. Provi-sions for Compaiiy contributions to the ESOP were $7.8 million, $8.8 millionand
$7.2 millionin 1980, 1979 and 1978, re-spectively.
- 7. Commitments And Contingencies Construction Program: Commitments in connection with the construction pro-gram for electric generating units and re-lated faciTities approximated $1.0 billionat December 31, 1980 including $300 million for nuclear fuel. These are estimates based on the presently proposed con-struction program and are not necessarily contractual obligations. Certain of these commitments are also subject to escala-tion for increases in labor, services and material costs.
In 1977 the Company cancelled two nu-clear units previously proposed for a South Dade Site. Under authorization from the FPSC, the Company deferred project costs and cancellation penalties to-talling approximately $22.8 millionand is amortizing the amount over a five-year period.
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 offuel including a contract for nu-clear fuel services for its two Turkey Point nuclear units. Expenses under the nuclear fuel services contract for 1980, 1979 and 1978 which were charged to operating expenses were $19.1 million,
$14.9 millionand $15.4 million, respec-tively. The Company is committed to pay a minimum annual charge per nuclear unit of$1,260,000 under the Turkey Point nu-clear fuel services contract; however, an-nual charges on a usage basis may be sub-stantially in excess of the minimum charge and are subject to escalation for increases in certain costs to the supplier.
The present value of the minimum lease commitments, including the nuclear fuel services contract, and the impact on net income ifcertain leases and the nu-clear fuel services contract had been capitalized, are not material and, there-fore, not presented.
The Company also has a lease ar-rangement for a portion ofthe nuclear fuel for St. Lucie Unit No. 1, under which the Company may sell nuclear fuel materials to the lessor for subsequent leaseback.
Such sales totalled approximately $30 millionin 1980 and $60 millionin 1979. Lease payments are based on energy production. The Company continues to have fullresponsibility for management of the fuel. The FPSC has approved classification ofthis lease as an operating lease for financial accounting purposes. If the lease had been treated as a capital lease, the Company's balance sheet at December 31, 1980 would have reflected additional nuclear fuel ofapproximately
$58 millionwith a corresponding capitalized lease obligation. Under certain conditions of termination, the Company willbe required to purchase, within270 days, all nuclear fuel (in whatever form)
FPL/33
Florida Power & Light Company and Subsidiaries
'OteS tO COnSOlidated FinanCial StatementS (Concluded) then existing under the lease arrangement at a price that willallow the lessor to recover its net investment cost (approximately $115 millionat December 31, 1980).
Nuclear Insurance: The Company is a member ofNuclear Mutual Limited, which provides insurance coverage against property damage to members'u-clear generating faciTities. The Company could be subject to a maximum assess-ment ofapproximately $69 million, based on current premiums, in the event losses occur at a nuclear plant of a member util-ity, and is self-insured for any such loss at any one ofits nuclear plants (including any "clean-up" cost itwould incur as a result of a nuclear incident) in excess of $375 million.
In September 1980 the Company be-came a member ofNuclear Electric Insur-ance Limited, which provides insurance coverage for extra expenses incurred in obtaining replacement power during pro-longed outages ofnuclear units caused by radioactive contamination or other specified damage. Based on current pre-miums, the Company could be subject to maximum assessment ofapproximately
$25 millionfor each policy year in which losses to member utilities occur.
The Company maintains private insur-ance and agreements ofindemnity with the Nuclear Regulatory Commission (NRC) to cover third-party liabilityarising from a nuclear incident which might occur at the Company's nuclear power plants. In the event a public liabilityloss arising from a nuclear incident at a facilitycurrently covered by government indemnification exceeds $160 million, under the Price-Anderson Act, the Company willbe obli-gated to pay a deferred premium of up to
$5 millionper 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 4Atits Turkey Point Plant the Company has been experiencing an ongoing problem withthe steam generators in its two nuclear units, Units Nos. 3 and 4, and has had to plug in excess of 20% of the pressurized water circulation tubes in the steam generators of each unit.
Unless an extension is granted, each unit is required to be shut down and the steam generators inspected once every six months. NRC approval must be ob-tained foHowing each inspection before the units may be returned to service. In the event that more than 25% of the tubes in either unit are required to be plugged, a new analysis of the emergency core cool-ing system must be approved by the NRC before the unit can be returned to service.
The Company has acquired new steam generator tube bundles for both units which incorporate different materials and design. The combined cost to replace the tube bundles in both units is estimated at approximately $136 million, ofwhich $50 millionhas been expended through De-cember 31, 1980. Permanent repair of the steam generators willrequire each unit to be out ofservice for approximately nine to twelve months. Repair work on Unit No.
4 is scheduled to begin in late 1981 and on UnitNo. 3 in late 1982. Various licensing proceedings are required which may cause the repair work to be delayed.
Power resources could be inadequate and the southern part of the Company's sys-tem could be without adequate power I'rom time to time during any period that both units were simultaneously out of service. The Company's Gnancial position could be adversely affected. The Com-pany has Gled suit for damages against Westinghouse Electric Corporation, the supplier of the steam generators, seeking reimbursement of the repair costs as well as the cost ofreplacement power.
St. Lucie U>iitNo. 1 Mnor corrosion has been detected in the steam generators at St. Lucie Unit No. 1. The Company has been engaged in a program designed to mitigate the corrosion, and no additional corrective action is called forat this time.
St. Lucie UnitNo. 2The Company has undertaken to sell, under certain condi-tions, approximately 21% of St. Lucie UnitNo. 2 to certain cooperatives and municipalities. The combined ownership costs to be shared are expected to include
$1.1 billionofconstruction costs for Unit No. 2, plus the value ofcertain facilities common to both Units Nos. 1 and 2. In January 1981 the Company sold an approx-imate 6% undivided interest in this unit.
Spent Nuclear Fuel: Suppliers of the nuclear fuel are under contract to provide spent fuel removal but have refused to honor their commitments. The Company filed suit against one ofthe suppliers and is negotiating with the other in an attempt to resolve the issue. The case has been tried but a decision has not been made.
The Company has expanded its spent nu-clear fuel storage facilities and has ade-quate facilities for storage of spent fuel until the mid-1980's under normal refuel-ing conditions.
Currently, there are no spent nuclear fuel reprocessing plants in commercial operation in the United States and actions by the government have removed tlfisal-ternative indefinitely. The only alternative at the present time is storage and disposal under a government proposed program.
Using the federal government's cost data, the Company estimates that at December 31, 1980, the cost oftransportation, stor-age and disposal ofits spent fuel would be
$120 million.
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 $22.1 million.
The principal issue is the taxability ofcus-tomer deposits. The Company is attempt-ing to reach a favorable settlement with the IRS. Should this fail, the Company will pursue all legal remedies which may in-clude paying the taxes plus interest ($8.1 millionat December 31, 1980) and flinga lawsuit seeking recovery of the amounts paid. In the opinion oflegal counsel, cus-tomer deposits are not includable in taxa-ble income and itis probable that a deci-sion to this effect would be obtained in federal court.
34/FPL
- 8. Legal Proceedings The Company is adefendant in an antitrust suit which seeks damages ofapproxi-mately $12 millionbefore trebling, result-ing from failure to provide an interconnec-tion with the Gainesville Public Utilities Department (Gainesville). Ajury verdict for the Company was appealed and retrial ofthe suit has been ordered to determine whether an agreement, understanding or concert of action, to which the appellate court found the Company a party, was a substantial factor in Gainesville's failure to obtain an interconnection.
In addition, the Company is defendant in an antitrust suit by a group ofFlorida municipalities which seeks damages in sub-stantial, but not yet fullydetermined, amounts together withaccess to the Company's nuclear units.
The Company is unable to predict the ultimate outcome of these matters; how-ever, based on discussions with its vari-ous counsel, the Company is ofthe opin-ion that these actions willnot have a ma-terial adverse effect on its consolidated fi-nancial position.
- 9. Quarterly Data (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:
Quarter Ended Operating Operating Net Revenues Income Income (Thousands of Dollars)
Earnings per share of Common Stock March31, 1978..........
June30, 1978............
September 30, 1978......
December 31, 1978.......
March 31, 1979..........
June30, 1979............
September 30, 1979......
December31, 1979.......
March 31, 1980..........
June30, 1980............
September 30, 1980......
December 31, 1980.......
$371,901 371,185 496,785 407,355 377,089 440,003 614,964 501,881 476,022 566,069 707,197 597,990
$ 74,555 57,241 104,304 82,597 62,445 41,966 109,678 87,715 60,372 71,282 102,830 75,071
$48,679 29,594 76,774 56,194 39,261 17,062 84,208 64,137 35,355 42,870 74,776 45,317
$1.04 0.57 1.73 1.20 0.77 0.22 1.87 1.35 0.64 0.83 1.60 0.87 In the opinion of the 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 of the results ofoperations due to the implementation of the fuel cost recovery clause and because the revenues and expenses of the Company are subject to periodic fluctuations due to changes in weather conditions, customer usage, number ofcustomers and the proportion ofgeneration by various fuels.
FPL/35
Effects of Changing Prices The accompanying information is pre-sented in accordance with the require-ments of Financial Accounting Standards Board Statement No. 33, "Financial Re-porting and Changing Prices" (State-ment).
The two methods prescribed by the Statement for measuring the effects of changing prices were used in calculating the information which follows. The flrst method, the constant dollar method, pro-vides data adjusted for "general inflation" using the Consumer Price Index for All Urban Consumers (CPI-U) as the broad-based measure ofgeneral inflation. The objective ofthis approach is to provide fi-nancial information in dollars ofequivalent value or purchasing power (constant dol-lars). Financial data are made more com-parable by reporting the amounts in terms of a common unit ofpurchasing power.
The current cost method adjusts for "changes in specific prices." The objective ofthis method is to reflect the effects of changes in the specific prices (also re-ferred to as "current costs") of the re-sources used in the Company's opera-tions. Measures of these resources and their consumption reflect the current cost ofreplacing these resources, rather than the historical cost amounts expended to acquire them.
Both of these methods inherently in-volve the use ofassumptions, approxima-tions, and estimates, and therefore, the resulting measurements should be viewed in that context and not as precise or com-prehensive indicators of the effects of in-flation on the Company.
Fuel inventories and the cost offuel used in generation have not been restated because regulation limitsrecovery of these costs to actual costs. Likewise, ma-terials and supplies have not been restated since they are used principally in utility plant construction and do not give rise to cost of sales.
The accompanying supplementary in-formation is presented in response to the Statement and is not intended to replace historical cost information.
36/FPL Substantially all electric utilityplant (which consists of electric utilityplant in service including land and intangibles, CWIP, and nuclear fuel) was restated to dollars having equal purchasing power (constant dollars) using the CPI-U applied to the historical cost by vintage year. Cur-rent cost ofelectric utilityplant was re-stated by applying the Handy Whitman Index of Public UtilityConstruction Costs or other appropriate indexes to substan-tiallyall electric utilityplant excluding production plant. Current cost ofproduc-tion plant was restated by applying the es-timated construction cost per megawatt of each fuel type ofproduction faciTities to the number ofmegawatts of each fuel type in the Company's present generation mix. Refinements in engineering estimates ofproduction plant construction costs are reflected in the increase in current cost ofelectric utilityplant during 1980.
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 of the historical cost ofelectric utilityplant. Therefore, the excess ofrestated value ofelectric utilityplant over historical cost is not presently recoverable in rates as depre-ciation, and is reflected as the reduction to net recoverable amount.
As prescribed by the Statement, in-come taxes were not adjusted. This treatment is consistent with federal in-come tax policy which ignores the effect ofinflation in measuring taxable income.
The Company's effective tax rate for 1980, when adjusted for inflation, is 79.9% under constant dollar accounting and 355% under current cost accounting.
Each of these effective tax rates exceeds the reported effective tax rate of41.8%
Operating expenses excluding depreciation Depreciation Operating income Other income net Interest charges.............
Income Qoss) from continuing operations (excluding reduction to net recoverable amount)'ncrease in current cost ofelectric utilityplant during 1980"'...........
Reduction to net recoverable amount.....
Effect ofincrease in general price level....
Excess of increase in general price level over increase in current cost after reduction to net recoverable amount...
Gain from decline in purchasing power ofnet amounts owed Net.
1,877,759 159.964 309,555 39,507 150,744 1,877,759 322.347 147,172 39,507 150,744 1,877,759 460.773 8,746 39,507 150.744 198,318 S
35.935 S
(102,491)
$ 2,114,173
$ (377,941)
(1, 186,003)
(1 ~ 167,685)
(239,515) 373,792 373,792 (4, 149)
S 134.277
'Including the reduction to net recoverable amount, the loss from continuing opera-tions on a constant dollar basis would have been $342,006 for 1980.
- 'AtDecember 31, 1980, current cost ofelectric utilityplant, net of accumulated de-preciation, was $11,284,000, while net historical cost recoverable through deprecia-tion was $4,903,000.
SUPPLEMENTARY STATEMENTOF INCOMEADJUSTED FOR EFFECTS OF CHANGINGPRICES For the year ended December 31, 1980 (Thousands of Dollars)
Constant Current Conventional Dollar Cost Historica!
(Average (Average Cost 1980 Dollars) 1980 Dollars)
$2,347,278
$ 2,347,278
$ 2,347,278 Operating revenues
and the statutory rate of46%.
The gain from the decline in purchasing power ofnet amounts owed represents the net effect on the Company ofholding monetary assets and liabilities. During periods ofinflation, monetary assets such as cash and claims to cash lose purchasing power because they willbe able to pur-chase less goods and services at a future date, while monetary liabilities, primarily long-term debt, willbe paid with dollars having less purchasing power. Since the Company has more monetary liabilities than monetary assets, it has a net mone-tary gain. This gain is not realizable by the Company but is simply an estimate of the effect on the Company ofholding mone-tary items.
Increases in construction costs, operat-ing expenses and the cost ofcapital due to inflation have resulted in increases in the unit cost ofproviding service while unit base rates have remained Gxed. The Company's fuel cost recovery clause permits the fuel adjustment factor to be changed to the extent that fuel costs change, but all other rates are Gxed until adjusted in formal rate proceedings. As a result, while revenues I'rom base rates have grown withincreased KwHsales, the cost ofproviding the additional service (excluding fuel) has exceeded the growth in revenue.
Inflationincreases the construction cost ofnew plant over the average historical cost which causes the Company to need larger amounts ofexternal Gnancing. In spite of the Company's efforts to control costs, inIIation pushes up operating costs while base revenues are Gxed between rate cases, thus reducing internal sources offunds. The preceding factors make it necessary for the Company to obtain ad-ditional external financing at higher costs, which further reduce the Company's abil-ityto earn an adequate return.
FIVE-YEARCOMPARISON OF SELECTED SUPPLEMENTARY FINANCIALDATA ADJUSTED FOR EFFECTS OF CHANGINGPRICES (Thousands ofAverage 1980 Dollars, except per share amounts)
Historical cost information a@usted forgeneral inflation:
Operating revenues............
1980 Years ended December 31, 1979 1978 1977 1976
$2,347,278
$2,204,688
$2,075,505
$1,991,834
$1,725,036 Income from continuing operations (excluding reduction to net recoverable amount).........
35,935 104,839 Income per common share (excluding reduction to net recoverable amount)......
Net assets at year-end at net recoverable amount Current cost information:
Income goss) from continuing operations...............
Income (loss) per common share Nil
$1.64
$1,455,860
$1,509,650
$ (102,491)
(37,592)
$(3.35)
'(1.88)
Excess ofincrease in general price leveloverincrease in current cost after reduction to net recoverable amount..........
239,515 595,586 Net assets at year-end at net recoverable amount.......
$1,455,860
$1,509,650 General information:
Gain from decline in purchasing powerofnetamountsowed 373,792 413,939 Cash dividends per common share Market price per common share at year.end...................
Average consumer price index
$2.64 26'46.8
$28%
217.4
$2.52
$33 195.4
$2.26
$36'h 181.5
$2.26
$40 170.5 FPL/37
M. P. Anthony George E Bennett David Blumberg Jean McArthur Davis
)(
F/ +jw John J. Hudiburg Robert B. Knight John M. McCarty Marshall McDonald Edgar H. Price Jr.
Lewis E. Wadsworth Gene A. Whiddon 38/FPL
Directors
'i>I. P. Anthony IVest Palm Beach, Fla. President, Anthony',
Inc., a chain ofladies apparel retail stores.
Serving since 1977.
tGcorge F. Bcnnctt Boston, Mass. President and Chief Executive Oflicer ofState Street Investment Corporation and ofFederal Street Fund, Inc., investment companies; Managing Partner ofState Street Research and Management Company; Chairman, Managing General Partners, State Street Exchange Fund. Serving since 1970.
'David Blumberg Mami, Fla. President, Planned Development Corp., a building and development firm. Serving since 1973.
Jean illcArthurDavis Miami, Fla. President, McArthur Dairy, Inc.,
engaged in the production and distribution of dairy products. Serving since 1977.
)John J. Hudiburg Mami, Fla. President ofthe Company.
Serving since January 1979.
Robert B. Knight Coral Gables, Fla. Chairman, National Food Services, Inc., a restaurant management company. Serving since 1977.
John ill.McCarty Fort Pierce, Fla. Attorney and citrus grower.
Serving since 1973.
fMarshall McDonald Miami, Fla. Chairman of the Board of Directors. Serving since 1971.
'IEdgar H. Price Jr.
Bradenton, Fla. Chairman of the Board and President ofThe Price Company, Inc.,
a consulting firm. Serving since 1972.
lewis E. 1Vadsworth Bunnell, Fla. Engaged in timber and cattle businesses.
Serving since 1970.
Gcnc A. Whiddon Fort Lauderdale, Fla. President, Causeway Lumber Company, Inc., engaged in the sale oflumber and building materials.
Serving since January 1979.
fExecutive Committee
'Audit Committee Principal Officers Marshall McDonald Chairman of the Board and Cluef Executive Officer John J. Hudiburg President and Chief Operating Ofhcer E. A. Adomat Executive Vice President R. E. Talion Executive Vice President H. L. Allen Senior Vice President L. C. Hunter Senior Vice President R. lV. IVallJr.
Senior Vice President and Assistant Secretary D. K. Baldwin Vice President, Corporate Services E. L. Bivans Vice President, System Planning lV. H. Brunetti Vice President, Energy Management J. C. Collier Jr.
Vice President, Divisions i%I. C. Cook Vice President, Fuel Resources and Corporate Development B. L. Dady Vice President, Management Control and Services, and Assistant Secretary H. J. Dager Jr.
Vice President, Engineering, Projects and Construction T. E. Danese Vice President, Governmental Affairs J. H. Francis Jr.
Vice President, Corporate Communications R. J. Gardner Vice President, Strategic Planning L. C. Hauck Vice President, Law J. L. Howard Vice President-Treasurer, Financial lV. 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. williams Jr.
Comptroller FPL/39
Information for Investors FirstQuarter..............
25%/19~/8 Second Quarter............
277/s/23%
ThirdQuarter..............
28$ /26 Fourth Quarter.............
27~/8/23V4 Transfer Agent The registrar, stock transfer 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 617/434-6562 40/FPL Annual Meeting The 1981 Annual Meeting ofFPL Shareholders will be held in Sanford, Fla., on Tuesday, April14, at the Sanford Civic Center. Formal notice ofthe meeting, together with a proxy statement and form ofproxy, willbe mailed to Shareholders on or about March 12, at which time proxies willbe requested by management.
The 1980 meeting in Ft. Myers was attended by more than 300 persons. Atthe meeting shareholders
~ Elected the 11 directors currently serving
~ Ratified and approved appointment ofDeloitte Haskins &SeHs as auditors
~ Updated the Company Charter and made certain other changes and revisions
~ Passed a Charter amendment increasing the authorized number ofPreferred Shares to 20 million
~ RatiGed an amendment to the Company's Charter to change certain provisions with respect to the manner ofeffecting redemptions of Preferred Stock
~ Rejected a shareholder proposal relating to cumulative voting in the election ofdirectors.
More than 81 percent ofoutstanding shares of Common Stock were voted.
Form 10-K for 1980 Acopy ofthe Company's Annual Report on Form 10-K, Gled with the Securities and Exchange Commission, is available, without charge, to stockholders by writingto J.E. Moore, Director of Stockholder Information, Florida Power &
Light'ompany, P.O. Box 529100, Miami, Fla. 33152.
Company Ownership By the end of1980, the Company had 43,676,193 shares of Common Stock outstanding, owned by 45,441 holders ofrecord. Shareholders include individuals and institutions such as foundations, insurance companies and pension funds. These, in turn, hold large blocks ofstock on behalf ofother individuals.
VirtuallyaH employees, through acquisition of shares in FPL Thriftand Employee Stock Ownership Plans, maintain ownership in and therefore have a direct interest in the Company.
Common Stock Data The New York Stock Exchange is the principal market for FPL Common Stock. The Company's ticker symbol is FPL. Newspaper listings generally use FlaPL.
The followingtable indicates the range (high/low) oftrading prices for the past two years:
1980 1979 28~/8/26 Vs 28Ve/26 28VS/25%
265/24 VS Dividends On February 17, 1981, the Board ofDirectors declared a regular quarterly dividend of$.68 per share, the Company's 141st consecutive quarterly dividend. Itis payable March 16 to holders of record as ofMarch 2.
The followingtable indicates dividends paid previously on Common Stock:
1980 1979 First Quarter
$0.60
$0.52 Second Quarter.
$0.68
$0.60 Third Quarter
$0.68
$0.60 Fourth Quarter
$0.68
$0.60 Dividend Reinvestment In 1980, the Company inaugurated a Dividend Reinvestment and Common Share Purchase Plan.
Holders ofCommon and Preferred Stock may have cash dividends on aH or some oftheir shares automatically reinvested in additional shares of Common Stock. Dividends on Common Stock are reinvested at a Gve percent discount f'rom the current market price; dividends on Preferred, at the market price. The Plan also has a supplemental payment feature which permits aH participants to invest optional cash payments each quarter to purchase Common Shares at market price. There are no brokerage commissions or service fees charged to participants.
As ofthe December 1980 dividend payment, some 8,000 shareholders representing 19 percent ofthe Company's outstanding shares of Common were enrolled in the Plan. Using this convenient method ofadding to their FPL holdings, shareholders invested an additional $11.6 million during the last two quarters of 1980.
A Prospectus and Authorization Card may be obtained by writingto either FPL's Stockholder Information Department or the Plan's Agent, The First National Bank ofBoston, Florida Power &
Light Company Dividend Reinvestment, Post Office Box 1681, Boston, Mass. 02105.
Investor Communications Anewsletter, Florida Hi-Lights, is prepared several times a year especially for common and preferred stockholders. A similar publication is sent periodically to bondholders.
The Financial and Statistical Report containing comprehensive data for the years 1970-80 is distributed to professionals in the investment community and is available to others as a supplement to this report.
AHinquiries concerning the Company's activities and requests for publications including Quarterly Consolidated Financial Statements should be addressed to the FPL Stockholder Information Dept. (Telephone 305/552-4046) in care ofthe Principal Company Offices.
Principal Auditors Company Offices Deloitte Haskins &SeHs Florida Power CertiGed Public Accountants
&Light Company 1 Southeast Third Avenue 9250 West Flagler St.
Miami, Fla. 33131
'O.
Box 529100 General Counsel Miam, Fla. 33152 Steel Hector &Davis Telephone:
Southeast First National 305/552-3552 Bank Building Miami, Fla. 33131