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) | |
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Deokett >- <+o Contrli 4 8 l 0909d t('f DEADLINE RETURN DATE Date+=>~LE Docnmen REGULATORY DOCKET F)LE IKSISNKD FOR WAIST WIK UYINS RECORDS FACILITYBRANCH Si09090122 05000250 Si0902'I PDR ADQCK 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 Power and Distribution 1925 following acquisition of a number of small and .Providing power to this large area, the Company widely scattered businesses engaged in the sale or use of electricity, has grown into the fifthlargest operates ll generating plants, including three nuclear units. Total capability of these 11 plants is investor-owned electric utility in the nation. 11,738 Mw. Two more plants on reserve have a total The state of Florida has long been one of the capability of 304 Mw.
fastest growing states in the nation. In 1970, Florida There are interconnections with 10 Florida utilities ranked ninth in population; by 1980, it moved up to and Georgia Po1ver Company.
seventh; by 1990, it is expected to be ranked fourth. Delivering power to its service area, FPL As Florida grows, the population in the area we operates a system of more than 42,000 miles of serve grows. transmission and distribution lines and more than As the map below illustrates, our service 400 substations.
territory covers approximately 27,650 square miles.
It includes all or part of 35 Florida counties Serving People (approximately half the state) comprising about 700 Some 2.2 million customers are now served by communities. At the end of 1980 the population of FPL's 11,000 employees. Service is provided our service territory was estimated at 5,000,000 through 67 Service Centers and Satellites and 31 people. 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 ~ Daytona Beach energy-saving homes
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in adherence to standards prescribed by FPL's Watt-Wise program.
FPL Service Area Q Northeastern Division G Eastern Division ~ Sarasota Q Southeastern Division Q Southern Division ~ West Palm Beach C3 Western Division
~ Dlvlsfon Offices Fl, t.auderdale Power Plants 1 Manatee ~ Miami 2 Fort Myers Q 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 FPL/1
The FPL Dollar / Where It Comes From 1980 1979 Residential 50tf 504 Residential Commercial 35$ 35II Commercial Industrial 6II Industrial 6'ther 9II 9g Other The FPL Dollar /Where It Goes Fuel 44II 41'uel 15/ Taxes Taxes 13tf Payroll and Benefits 11ft Payroll and Benefits 7g 11'epreciation SII Depreciation Interest 6d 7'nterest Dividends 6II Dividends Earnings 6'etained 4C Retained Earnings 114 2'ther 6II Other 2/FPL
Financial Highlights Percentage (Thousands Except Per Share Data) 1980 1979 Change Operating Revenues . $ 2,347,278 $ 1,933,937 21 Fuel and Net Interchange ...... $ 1,106,909 $ 817,141 35 Total Operating Expenses. $ 2,037,723 $ 1,632, 133 25 Operating Income............ $ 309,555 $ 301,804 3 Net Income $ 198,318 $ 204,668 Common Shares Outstanding Average.... 41,281 40,524 (3) 2 Earnings Per Share $ 3.94 $ 4.22 (7)
Dividends Paid PerShare ................ $ 2.64 $ 2.32 14 Total UtilityPlant $ 6,082,682 $ 5,458,512 11 Capital Expenditures . $ 655,098 $ 574,825 14 External Funds . $ 371,657 $ 249,220 49 Book Value Per Share $ 34.90 $ 34.31 2 Market Price Per Share (High) . 28/8 28~/s Market Price Per Share (Low) . 197/8 24V8 Statistical Highlights Cost of Oil Burned (Per Barrel) $ 23.26 $ 17.47 33 Customers Year End 2,247,688 2,140,587 5 KwH Sales (Thousands) 44,70?,613 41,965,810 KwH Use Per Customer Residential .... 11,473 11,354 7
Revenue per KwH Residential (Cents)... 5.31 4.66 14 1
Employees Year End . 11,084 10,337 7 Mw Capability at Time of Summer Peak.... 10,955 10,955 Mw Peak Load Summer .. 9,623 8,650 Mw Peak. Load Winter 9,732 8,791 Percent of Energy:
Oil .............. 49.6 54.6 Natural Gas . 17.9 18.5 Nuclear 27.7 25.6 CoaVOil Mx Test 0.9 Interchange 3.9 1.3 FPL/3
My Fellow Shareholders:
By all rights, we who manage Florida Power 8i. Light By distorting capital markets, inflation makes it Company in your interest should be able to present impossible or imprudent for business and industry to tins report on 1980 operations with unqualified invest in new, efficient facilities to make their satisfaction. It was a year in which FPL continued in products better or serve their customers better.
our tradition of outstanding service and met the Inflation eats up money that should go into research challenge of extending that service to more than and development. As we see all too clearly in our 100,000 new customers. industry, inflation shakes reason and order out of the It was a year in which we confirmed our funding markets in which we must raise capital. It technological leadership. We have been adapting isn't easy to sell a 30-year bond when the investor new ways to squeeze more energy out of plants and can get high yields on short-term notes, and maybe fuel, testing new fuel mixes to reduce our even higher yields in a few months.
dependence on imported oil. Individual savings should provide a solid base of It was a year in which the working people of FPL capital that our economy can put to work. But why demonstrated again and again their abiTity and should an individual save, when the interest paid on dedication. those savings won't match the rate of inflation... and And yet it was the year in wlfich declining the deferred purchase will only cost more next year?
earnings finally made a request for increased rates Save a dollar today and next year you may have the unavoidable. Believe me, there is no satisfaction in equivalent of 93 cents. It seems like folly to save having to tell almost 2'dlion customers they must when inflation makes a virtue out of spending and pay more for the electricity so vital to their lives and borrowing.
livelihoods. We pay the price of inflation by losing our ability to How could this happen? How can a company compete in domestic and world markets. Already we nationally recognized as one of America's best-run have fallen from leadership in fields we once ruled electric utilities show smaller earnings in spite of proudly steel, automobiles and shipbuilding spring greater revenues? In spite of continuing, intensified to mind as examples. And the price is measured in and successful efforts to cut costs and multiply millions of American jobs.
efficiencies? But there is still something more that must be said The answer is, in a word, inflation. about inflation, something so fearsome that it is So important is this subject so harmful has been seldom discussed. When discussed, it is often the effect of inflation upon our Company and our mentioned in vague or softened terms as if the
'country that I ask you to join me in stepping back very mention of this demon might be enough to for a broader view of the inflation problem. You may bring it upon us.
wonder what new or striking observations I can I refer to the very real possibility that continued hope to make about this subject. Inflation is already high rates of inflation can lead to radical changes in the almost universal topic of the times.
American life drastic changes in political What I hope to convey, however, is the ultimate tlueat posed by continuing high rates of inflation a FPL Chairman Marshall McDonald threat so grave that it should move every American confers with Energy to join our country's new administration in making Auditor Rita Lynn on the control and reversing of inflation our first field operation of the priority. Company's Residential Before defining this grave and ultimate threat, let Conservation Service me say that I do not in any way minimize the more program.
immediate harm done by inflation. Even though bloated price tags are really no more than symptoms of the inflationary cancer, we must never be insensitive to the daily pain of a homemaker whose food budget can't keep up with food prices. We must share the anguish of our young couples who cannot afford that important first home. 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 and yes bigger 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 Pg lf 9
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institutions, economic expectations and personal The trouble is that all the things we wantare, in living. Before we say, "Itcan't happen here," we themselves, good. We want to help the poor, to should remember that governinents have fallen over provide security for the old, to ease the way for the inflation. Mobs have taken up arms over inflation. In handicapped, to protect industry, to broaden the lifetimes of many of us, the terror of Nazism was education, to spread health care more equally, to launched upon a lugh tide of inflation and floated long revamp the inner-city, to protect crops and prices enough to devastate a continent and change the for agriculture, to preserve animal species, to reduce course of world history.
every risk in human life the litany is endless. And Inflation poses this shattering potential for there isn't a cause in the carload that isn't worthy.
destruction because a nation like ours is really held The point is that we can't have them all, and all right together by shared ideals and assumptions rather now.
than by force or physical bonds. One of the most Instead of lining up to implore Washington, saying important of these shared ideals is the belief that "Help me," we must learn to say, "I can't afford what there can come a "someday", after the hard work is you are doing for me." We must do more for done, when the rewards can be savored. ourselves, do more at the level of the individual, the This faith keeps Americans working... and local neighborhood, the town and the county. We working together. This faith persuades us to accept just can't afford to accept so many "gifts" from the constraints of government. This faith forms an Washington.
essential part of what keeps us civilized. Today, this )Vhether we succeed in reversing inflation, faith trembles in the shadow of continuing inflation. If whether we succeed as a nation with the ideals and this faith dies, the American Way cannot long potentials that made us great, will depend on survive. All else depends on stopping and reversing whether we have the courage to deliver this "do the inflationary tide. less" message to Washington. Already the crusaders But why should this task be difficult? Many have for government spending have descended on the called inflation the "product of government." And we capital. Afraid the new administration means what it have just made a major change in government. We has said, they are crying, "Cut ifyou must, but don' have a national administration which clearly defines cut mine."
controlling inflation as its first order of business. We More than 200 mayors rushed to Washington at have even changed the complexion of our Congress. inaugural time to fight for their cities'hares. The We replaced many whom we identified with the AFI CIO wants to revive a coalition of 150 special causes of inflation by electing candidates who interest groups to oppose cuts and reforms in social campaigned against inflation. Have we not now done programs. Entrenched groups in the State our part? Can we not now depend on government to Department tried to sabotage cuts in overseas handle the inflation problem? Spelldlilg.
No. Now we must raise the voice of reason and We have only begun our part of the job. You see, it self-restraint. We must, individually and through the is true that inflation is a product of government. But, clubs, groups and companies we participate in, tell in manufacturing inflation, government has to a great our legislators and our President that we want them degree been responding to our wishes. to do less because we want to end up with more. We It is not that we have specifically wanted inflation. must persuade our fellow citizens to jump off the But we each seem to have an endless list of specific gravy train and climb on the anti-inflation wants. And when we ask government to satisfy all bandwagon.
these wants, we are asking for inflation. Nothing if It won't be an easy task. And it won't be finished not responsive, Wasliington has answered by quickly or in one climactic battle. But the rewards establishing agencies and programs, funding grants will be great, for each of us individually, for our and activities, making laws and regulations. nation and for our children and our children' Who has been paying for all these agencies and children.
programs, these grants and activities, these laws What is at stake is nothing less than the very and regulations? We have. We pay through a essence of the unique American experiment in combination of onerous taxation magnified by the personal freedom. We dare not fail.
bracket-jumping effects of inflation itself and by allowing government to run huge deficits. Tlus swells the national supply of money and credit while our national productivity stands at a virtual halt.
Before we can reverse this march toward Marshall McDonald disaster, we must persuade ourselves and convince Chairman of the Board our government that we can stand the pain of not February 13, 1981 getting everything we want.
FPL/5
FPL: Energy Plan for the Eighties FPL recognizes the important role that energy To help counter these changes, FPL's customer conservation plays in reducing the need for future information program took on a new dimension. Wise energy resources and in prolonging the life energy management became the keynote.
expectancy of current supplies. Customers were advised that they had ultimate To get the vital conservation job done requires control over their usage patterns. They were motivation among energy users and within the encouraged to use various options at their disposal Company. FPL must strive to motivate customers to reduce consumption.
to use energy more efficiently. At the same time, th' A Landmark Commitment Company's charge must be to develop more efficient In the meantime, an even broader spectrum of ways to serve these customers both in the mode energy conservation programs has been of operation and in the types of fuel used for power implemented by FPL, including the landmark generation. establishment in 1978 of the Marketing and Energy These are not new charges to FPL. They do Conservation Department. Staffing of this require a new vigor, and willbe met with the same Department in each operating division was devoted enthusiasm that historically has characterized the exclusively to the energy conservation effort. This Company's operations. major conservation commitment received additional Traditionally, FPL and its people have been support through the simultaneous expansion of dedicated to the best possible service to customers. Consumer Research and Load Management Company-initiated efficiencies for several decades functions, and an amplified communications thrust.
kept electric rates down. In addition, through The foundation of this on-going communications district office and field representative contacts, program is the local FPL office, where energy customers were being advised how to use energy saving techniques and suggestions are delivered to more efficiently and economically with the assistance customers either in person or by telephone. But of an array of FPL-produced customer information many other tools are utilized in the dissemination of publications. this beneficial information: A popular speakers'ureau; But as the decade of the 1960's came to a close, monthly newspaper columns; bill inserts; major changes were taking place in the electric news stories; news letters; visual displays; utility industry. As economies of scale attributable to brochures; a vigorous paid communications program larger generating units disappeared and inflation took involving radio, television and newspapers; the its unshakable hold, the cost of electric service Company's Energy Conservation Van (a mobile began to rise. These increases were to be further walk-through exhibit which demonstrates to impacted by the 1973 oil embargo which set the customer-visitors the basics of conservation).
stage for a continuing escalation of fuel costs. Beyond intensifying the communications effort, Abundant, cheap energy no longer could be taken several comprehensive marketing programs have for granted. been developed to carry the concept of conservation CuStOmerS AVerage t5jm'Its> A volunteer in one of FPL'8 residential load 3.10 Projected management studies is Miami homeowner 2.65 Projected 1985 Walter Kichefski 2.18 (right). Operation of 1980 special metering device 1.74 required for this pro-1975 gram is explained by 1970 1.25 Company Engineer Juan Gonzalez.
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~t KWh SaleS <jj5jjotts) ~i 67.34 Projected 1985 55.53 Projected 1980 44.71 1975 34.11 r' w V,
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from acceptance to implementation. Foremost these six targeted objectives:
among these are FPLs Watt-)fisc Living't-'i'program, ~ To reduce system peak and total energy consuinplion which establishes energy-saving standards for new by encouraging greater efficiencyin end-itse home construction, and a Residential Conservation electrical systeins. This would be accomplished Service that offers high-use customers on-site through such activities as residential, commercial energy audits of their homes. and industrial energy audits; cost incentives to The Watt-Wise Living program recognizes that customers to encourage installation of residential conservation goals can be achieved more readily ceiling insulation and reflective window film;customer through energy-efficient home design. It gives rebates for purchase of energy-efficient appliances.
builders and buyers alike clear-cut guidelines for ~ To shif? custoiiier usage ofelectricity from peak to selecting energy-saving options. And at the same offpeak hours and, ivhenever feasible, to reduce time, it helps decrease energy usage and the growth overall energy consumption. Proposed for rate of peak demand. achievement of this goal are adoption of both New Watt-Wise homes are now being offered to voluntary and mandatory time-of-use rates as the public by more than 1,800 Florida builders and appropriate for specific classes of customers; a developers. And in 1981 the Watt-Wise program revision in existing rate schedules to permit will expand to include high-rise buildings and mobile reliance on customer curtailments as substitutes homes. for generation; implementation of residential load The second major program, Residential control.
~ To increase llie efficiency oflhe Power system in both Conservation Service (RCS), was introduced last March to assist customers in making energy-saving the generalion and delivery ofpoiver. Programs decisions in existing dwellings. outlined include redesigning low pressure turbine During scheduled visits to customers'omes, blades installed at Manatee Unit No. 1; installing trained RCS auditors conduct a thorough analysis of more efficient oil burners which are capable of energy use. Evaluated are such components as burning cheaper oil cleanly; as overhaul schedules occupants'nergy use habits; heating and cooling permit, retubing condensers with new alloys to systems; fuel bills for gas and oil appliances; water provide greater long-term reliability.
heating options; construction type and condition of ~ To increase ciistomer awareness ofthe need to walls, ceilings, Iloors, windows and doors. conserve energg and to sliorv them lioivconservalion Upon conclusion of the analysis, auditors can be achieved. This objective would utilize such recommend ways to increase energy efficiency. traditional FPL communications vehicles as public They also provide cost estimates for suggested presentations, literature, media messages.
improvements and quote probable savings which Additionally, it proposes a toll-free telephone might be realized through their implementation. "hotline" for information access.
~ To develoP and imPlement Prograins during llie Along similar lines in the commercial and industrial areas, trained representatives in each of the 1980-1985 liineframe that reduce the use ofoil as a Company's five operating divisions offer energy generating firel to the greatest Practicable and management assistance to local business, generally cost-effective extent. FPL's program for oil reduction through individual consultation. Supplemental essentially is a plan for systematically narrowing printed materials have been developed to spell out the areas of uncertainty while concurrently the advantages of energy-efficient design and increasing the range of oil reduction alternatives construction of commercial structures and to under consideration. Involved are the potentials familiarize customers with waste heat recovery and for purchase of power from other utilities; efficient security lighting systems. conversion of existing oil-fired units to another fuel source; construction of new generating capacity Corporate Functions Consolidated using alternative fuels.
In another move to coordinate conservation ~ To identify other areas that could result in energy, efforts throughout the FPL service area, the Peak de>nand, or oil conservalion; then to make Company last year formed a new Energy Preliminary evaluations as to lhe Potential costs and Management Department. This involved savings in each oflliese areas.
consolidation of several corporate functions, With respect to these six target objectives, all including Marketing and Energy Conservation, Load areas of Company operations and customer use have Management, Consumer and Load Research, and been analyzed from the standpoint of cost Rates. effectiveness, feasibility, potential savings and Through this new department, the Company's numerous other qualitative factors. Based upon this intensive commitment to conservation quickly assessment, FPL is concentrating on 36 programs culminated in development of an Energy that seem to offer the most promise of working Management Plan for the '80s. The overall goal of toward achievement of conservation.
this plan is to increase the energy efficiency of the Several of these programs represent a distinct entire FPL electrics system from the generation departure from historical FPL activities. Several of electricity to its end use by customers and programs incorporate new and developing reduce reliance on the use of imported oil. technology in order to achieve results. And overall Functioning within the framework of Florida results are dependent upon a positive response from Public Service Commission conservation goals, the customers, developing technology, and aggressive enterprising plan is designed to meet within 10 years action on the part of FPL to implement the programs.
FPL/7
But if the required conditions are realized, the plan Resource Recovery Plant now under construction.
has the potential of reducing FPL's summer peak There, steam produced by the burning of solid demand by an estimated 2.1million kilowatts and its waste would provide enough electric power to annual generation by approximately 5.7 billion supply an estimated 40,000 homes.
kilowatt-hours. Future plans for power from cogeneration and Efficiency a Tradition small power production facilities call for promoting installation of 310 Mw of power from these two As the Company moves resolutely toward sources by 1990.
fulfillmentof this ambitious new commitment, it does so on an already-established base of sound, In another oil-reduction move, FPL is purchasing innovative efficiency achievements. less expensive, coal-generated energy from other Significant gains efficiency in have been utilities. The Company is now receiving 100 Mw of accomplished through power generation productivity coal-fired power from the Southern Companies under a contract which runs through 1986.
programs which involved: reducing boiler steain Agreement has been reached to expand this pressure at 15 large fossil steam units during periods "coal-by-wire" arrangement. Unless certain of low electricity usage; using small sponge rubber balls to'continuously clean nuclear condensers; conditions occur, FPL anticipates receiving establishing, whenever possible, longer refueling additional coal power, ranging from 200 Mw to 1,000 cycles at nuclear plants, thus reducing reliance upon Mw in the years 1982 through 1992.
oil-burning units. Yet another contract, this one with Tampa Electric The Company is constantly on the lookout for Company (TECO), will provide FPL with coal power alternative sources of fuel to produce electricity. in the middle of the decade. FPL expects to receive During 1980 FPL began testing a mixture of 292 Mw, 208 Mw and 104 Mw respectively from pulverized coal and fuel oil as a boiler fuel at Sanford TECO in 1985, 1986 and 1987.
Unit No. 4. Inasmuch as this is the first test of a coal-oil mixture (COM) in a large unit designed to Energy Interchange Cuts Costs burn oil, the experiment is attracting widespread Still other savings are accruing f'rom the economy interest within the electric utility industry. interchange of energy with the 14 other generating To reduce oil consumption through utilities which participate in Florida's Energy Broker "cogeneration," FPL is receiving electricity System. This automated exchange system works to of produced by the burning bagasse, a sugar cane the ultimate benefit of consumers by enabling by-product, at the U.S. Sugar Corp. refinery near participating utilities to take advantage of the most Pahokee. economical available generation.
The Company is scheduled in 1981 to begin Economy generation is but one of the programs utilizing power generated by the Dade County made more efficient and easier to manage by FPL's Mw Capability Year End tTj ussas> Left: Miamarina Manager George Oestreich (ieft) 15 40 Projected accompanies FPL 1985 13.74 Projected Energy Management Specialist Lance 1980 11.74 Balfour as he conducts comprehensive 1975 8. 93 commercial conservation audit of 5.31 1970 the marina's bayfront 10 15 20 restaurant in Miami.
'Projected capabilities exclude additional power purchases Opposite Page: Esteiia from the Southern Companies Moran, sixth grade Mw Peak Load Summer tThoussttds) teacher at Hialeah John G. Dupuis 12.85 Projected Elementary, generates interest in 1985 1 l. 08 Projected efficient use of electricity with a 1980 )Vatt-Counter provided by FPL.
7.08 1975 The unit immediately determines 1970 consumption and cost 10 15 20 of electricity for various appliances.
ajFPL
new System Control Center in Miami. It houses the The Company has a regular program of testing "brains" behind the Company's entire generation and energy-efficient appliances. Of particular interest to transmission network a highly sophisticated Floridians are performance studies of residential computer with the ability to monitor and control the heat pump water heaters and commercial and output of FPL's generating units. residential air-conditioning waste heat EVhile making possible increased reliability and recovery/water heating systems. In addition, FPL quicker service restoration, the computer allows has encouraged manufacturers and distributors of FPL to obtain maximum fuel economy from available efficient appliances to participate in government generating units and fuel sources. rule-making that would provide tax incentives for To reduce energy losses on its distribution use of the more efficient products.
system, FPL is now buying newly-developed Two major residential load management studies in lower-loss transformers for service additions and progress allow remote control of residential electric normal replacements. central air conditioning systems as well as electric Research Programs Intensified water heaters. The studies are designed to determine the technical feasibility of, and customer response The Company also is engaged in a program to to, different types of load management techniques.
convert incandescent and mercury-vapor street Both use bi-directional communication with lights now in use to much more efficient customers'omes-one over conventional phone lines, high-pressure sodium vapor lights.
the other over the Company's own power lines.
Meanwhile, Company research and development programs continue with even greater intensity to In the area of commercial load management, a concentrate on conservation. radio system is being employed to control the space FPL is examining the feasibility of solar power as conditioning equipment of a sampling of small an alternative energy source in on-going studies of commercial customers.
photovoltaic cells, solar water heaters and In its testing program, the Company is taking an air-conditioning systems. One such installation is a extremely close look at technical feasibility, commercial solar air conditioner at the Company's installation problems and customer reaction. The Perrine Service Center, jointly funded by the latter is a key item, for to gain any measure of Electric Power Research Institute. success through conservation activities, consumers Assistance also is being given to the Florida Solar must think consciously and conscientiously about the Energy Center at Cape Canaveral in the operation of practical merits of energy efficiency.
its experimental solar house. The Company is Toward this end of winning customer confidence providing photovoltaic cells along with and acceptance, FPL through its various energy instrumentation and technical data necessary to management activities is steadfastly committed to simulate load for a typical residence. providing leadership. And positive results.
SO I
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The Year In Review Florida Power & Light Company's long term goal of approximately $ 211 million, based on the minimum holding down rates in the face of rising costs aHowed rate of return set in FPL's last rate case, continued to be tested in 1980. was filed in February 1981. Ifinterim rate relief is There were "positives" in 1980 energy sales granted, it willbe subject to refund, pending the increased, and the new fuel clause enabled the FPSC's final decision.
Company to better recoup fuel and purchased power The requested rate revision would increase the expenses. But unrelenting inflation took its toll on typical 1,000 KwH residential bill about 23 percent FPL's operations. Double-digit inflation, combined about half the 45 percent rate of inflation since with higher interest rates and greater operating and 1976. Current rates, based on 1976 operating costs, maintenance costs, forced the Company late in the went into effect more than 3'ears ago.
year to begin the process of obtaining a rate The $ 476 million request is based on the use of a increase. projected 1981 test year. FPL is asking the FPSC to For years, conservation and efficiency programs include an additional $ 500 million of Construction adopted by FPL helped to hold the line on rates. 'iVork in Progress (CWIP) investment and $ 22 Now they took on a new meaning and dimension as million of nuclear fuel investment in the rate base.
increased concerns over world oil supplies entered The Company's petition asks the FPSC to the picture. increase the allowed return on equity to 16.75 The Company's response was a commitment to percent, froin the presently allowed range of 13.50 redouble its own efforts at conservation and percent to 14. 00 percent. This would result in an efficiency while encouraging still greater cooperation overall rate of return of 10.23 percent. An attrition from its customers. adjustment of $ 69 million is also requested to help World-wide attention was focused on a test aimed offset the continuing impact of inflation.
at oil use reduction the burning of a mixture of A special adjustment for an additional $ 200 million pulverized coal and oil (COM) in a previously oil-fired of CWIP investment and $ 75 million of nuclear fuel unit at the Sanford Plant. Cogeneration investment to be included in the rate base, effective arrangements saw the burning of sugar cane waste September 1982, is also part of the filing. The $ 44 to produce electricity and plans are to use solid million revenue requirement for this special waste as a fuel sometime in 1981. adjustment is not included in the $ 476 million.
The commitment to efficiency was carried Under Florida law, new rates go into effect through to small matters as well. With more than automatically, subject to refund with interest, eight 107,000 customers added to the system in 1980, months after filing if the FPSC has not acted. Public FPL and its people searched for ways to work hearings willbe held by the FPSC before it issues a smarter and serve better. final decision on the rate increase request.
Opposite Page:
FPL employees kept the system operating Operations efficiently, providing dependable power at the lowest Operating Revenues Coordinator Kevin possible cost to the consumer in the face of The Company's operating revenues reached the washington inspects mounting challenges. $ 2.3 billion mark in 1980. new low-pressure Of the 21 percent increase, approximately 15 turbine blades prior to Earnings percent was attributable to increased fuel installation at Manatee FPL's emphasis on operating efficiencies and cost adjustment revenue and 6. 5 percent to higher sales. Plant. Use of these controls helped offset the impact of inflation on replacement blades at operating expenses. However, continued Fuel and Interchange various FPL power double-digit inflation adversely affected the As contract prices reached record levels, fuel and plants increases Company's earnings in 1980, as operating expenses net interchange rose to more than $ 1.1 billion. The turbine efficiency, climbed to more than $ 2 billion. The cost of trend of rising oil prices extended into 1981. On resulting in significant borrowing money reached all-time lughs. February 1, 1981, contract prices at Port Everglades reduction in oil con-Responding to Nuclear Regulatory Commission were $ 36.39 per barrel for one percent sulfur oil and sumption.
(NRC) regulations issued as a result of the Three-Mile Island incident in Pennsylvania added to Left: Progress on FPL's operating and maintenance costs. These were Dade County's re-the primary factors contributing to the overall source recovery plant reduction in earnings per share from $ 4.22 in 1979 to is checked by Leonard
$ 3. 94 in 1980. Averett (right), FPL FPL recognizes that, because of continued project construction inflation, its financial condition cannot be sustained supervisor, and Tom withouta rate increase. Accordingly, the Company Henderson, chief of the has filed with the Florida Public Service Commission County's Solid IVaste (FPSC) for a rate increase. Division. Steam pro-duced by the burning of I(ates solid waste willbe pur-Seeking additional annual revenues of approximately chased by FPL for the
$ 476 million, the Company's petition for a rate generation of increase was filed with the FPSC on January 16, 1981. electricity.
This action marks only the fourth time in FPL's 56-year history that it has sought an increase in base 1 h
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$ 32. 16 per barrel for 2. 5 percent sulfur oil. These allowed the Company to collect increased fuel costs compare to prices of $ 28.40 and $ 22.02 one year on a timely basis instead of deferring them to later earlier. periods.
The higher oil prices in 1980 added $ 226 million to The FPSC ordered a transition adjustment to fuel expense for the year. With more power permit FPL to collect approximately $ 59 million of provided by the nuclear units, and with purchases of fuel costs which were not recovered in the transition coal-fired power from other utilities, FPL burned from one clause to the other. Florida's Public slightly less oil in 1980. Counsel challenged this adjustment, and the matter Nuclear power provided 28 percent of the energy has been argued before the Florida Supreme Court.
to meet demand for electricity in 1980 and power FPL has agreed not to collect the transition amount purchases provided four percent. Other sources of pending resolution of the appeal.
energy were: oil, 49 percent; natural gas, 18 percent; and coal/oil mixture test, one percent.
Energy Sales Kilowatt hour sales totaled 44.7 billion in 1980. This gain resulted from a five percent rise in the number Fuel Adjustment of customers served and a one percent increase in In light of the oil price increases, the FPSC's use per customer. Use per residential customer in adoption of a new fuel cost recovery clause in iMarch 1980 was 11,473 KwH, compared with 11,354 KwH 1980 is particularly significant. The fuel cost in 1979.
recovery clause makes possible timely collection of fuel costs on retail sales. It eliminates the problem of Customers under- or over-recovery of fuel costs that occurred Florida's rapidly growing population continues to be under the prior fuel clause. reflected in the increasing number of customers Effective with April 1980 billings, the monthly fuel served by FPL. More than 107,000 customers were adjustment charge is based on six-month projections added to the system in 1980, for a total of 2.2 million of fuel costs and sales. The net under- or customers served at year-end.
over-recovery of fuel costs during a projection period is deferred and refunded to or collected from Employees customers, along with interest, tluough a "true-up" Responding both to the service needs of more feature. An incentive factor based on generating customers and to government regulations resulted performance became a part of the clause in October. in a seven percent increase in FPL's total Under the clause's provisions, the FPSC employment. At year-end the Company's employees authorized increases in the approved fuel adjustment numbered approximately 11,000.
factor after oil prices were raised dramatically. The International Brotherhood of Electrical These increases in the fuel adjustment charge Workers (IBEW) represents approximately 41 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 of TOU meters under consideration.
Opposite Page:
Energy savings of up to 55 percent are anticipated by FPL through systemwide 1, conversion of existing
'0= incandescent and mercury vapor street lights to high pressure sodium vapor lamps.
12/FPL
percent of FPL employees. Negotiations lasting The Company's dividends have grown over the nearly five months between Company officials and last decade at a compound annual rate of 10 percent.
representatives of IBEW produced a two-year FPL has maintained a record of consecutive contract increasing wages and other benefits for quarterly dividend payments since 1946.
members. Retroactive to November 1, 1979, the In 1980, the Company inaugurated its Dividend contract is effective through October 31, 1981. Reinvestment and Common Share Purchase Plan (DRP). Holders of Common and Preferred Stock Management may have cash dividends on all or some of their In June, FPL Chairman and Chief Executive Officer shares automatically reinvested in additional shares Marshall McDonald began a year-long term as of Common Stock. Dividends on Common Stock are Chairman of the Edison Electric Institute, the reinvested at a five percent discount I'rom the association of America's investor-owned electric current market price. Allparticipants have the utilities which acts as industry spokesman on option to invest additional cash payments each subjects of national importance. During the year he quarter to purchase Common shares at market was also elected to a two-year term as a member of prices. There are no brokerage commissions or the Conference Board, an independent research service fees charged to participants.
institution with facilities in the U.S., Canada and Europe. Service Area Economy Three new vice presidents also were elected in The general economic downturn experienced in 1980: in January, L.C. Hauck was named Vice many areas of the United States in 1980 produced President, Law; in October, W.H. Brunetti was only ripples in Florida, but a moderate decline is elected Vice President, Energy Management and expected in 1981.
J.C. Collier Jr., Vice President, Divisions. Population continued its steady climb upwards.
Retiring after 42 years of service to the Company By the year's end, the U.S. Census Bureau was Senior Vice President J.G. Spencer Jr. announced that Florida now ranks seventh in population among the 50 states with an increase of Dividends 43.4 percent since 1970. Population stood at Dividends on Common Stock were raised to a 9,740,000 on April 1, 1980, a compound annual quarterly rate of 68 cents per share from 60 cents growth rate of 3.67 percent through the decade.
(an effective annual rate of $2.72, up from $ 2.40) While domestic tourism slowed because of the beginning with the June 15, 1980 quarterly uncertain national economy, there was a heavy influx payment. of British, German and Latin American tourists.
For 1980, the total dividend payment was $ 2.64 In South Florida the cruise ship business per share, compared with $ 2.32 in 1979. 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 still far 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 p Commission. Katie C. Nichols was appointed to a four-year term, expiring in January 1985, to replace William T. Mayo, who retired.
With one year of his 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 of energy consumption.
FPL/13
Moving quickly, the FPSC established Peak Demand conservation goals for electric and natural gas Allprevious generation records were broken on utilities and ordered that each state utilitysubmit a January 13, 1981 when a surge of cold arctic air detailed plan designed to meet them. Specifically produced record low temperatures throughout most included are goals for increasing the conservation of of Florida.
expensive resources such as petroleum fuels, A new peak of 10,738 Mw was recorded that reducing the growth rates of electric consumption morning, surpassing the previous record of 9,732 and lowering weather-sensitive peak demand. Mw established in the winter of 1980.
The Conservation Act also provides for a A record summer peak was established on July conservation adjustment clause. Through this 14, 1980 when soaring temperatures sent air clause, each utility wiH estimate its costs for conditioners whirling. On that date a net demand of conservation programs for six-month periods, with 9,623 Mw was recorded, surpassing the 1979 such costs added to the utility's rates after approval ll suinmer record of 8,650 Mw by percent.
by the FPSC. Any under- or over-recovery of such Growth projections for FPL through 1990 reflect costs during a projection period willbe deferred and the anticipated effect of energy management and collected Rom or refunded to customers through a conservation programs. The Company expects the "true-up" provision. most probable compound annual growth rates in The Conservation Act gives the FPSC exclusive customers, KwH sales and summer peak load will authority to determine the need for new power range from three percent to four percent through plants under the Florida Electrical Power Plant the decade.
Siting Act. Under the Transmission Line Siting Act the FPSC willdetermine the need for bulk Generation Expansion Flan transmission lines which cross county lines. Designed to meet anticipated demand through the 1980's, FPL's generation expansion plan incorporates In other actions during 1980, the FPSC:
~ Established alternatives to cash deposits and units under construction or planned and contracts and negotiations for purchased power.
new standards for refunding deposits to residential Significant generating capability was added to the customers with records of satisfactory payment.
system when the first of Martin Plant's twin 783 Mw
~ Increased the interest paid on deposits from six oil-fired units went into commercial operation in percent to eight percent. December. Construction cost, including cost of the Opposite Page: More
~ Ordered Florida's four large, investor-owned cooling reservoir and the fuel handling system, was than 106,000 persens utilities to offer Time-of-Use rates to customers, approximately $ 469 million. throughout FPL's effective January 1, 1981. These optional rates are Scheduled for earlier operation, Unit 1's start-up service area visited subject to the availability of special meters. was delayed when a break occurred in the the Company's Energy Conservation Van at fairs, schoolgrounds and shopping centers in 1980 to obtain practical conservation tips.
Below: FPL Energy Auditor Joseph Settlemyre tabulates results of Residential Conservation Service audit conducted at Ft. Lauderdale home of Mrs. Barbara J.
C1" IQMc~~ Grider. Audit data is
~~ill~~~~ 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 expected to provide 60 Mw of power.
many as 1,000 construction personnel, utilizing up to During 1980, construction on St. Lucie nuclear 600 pieces of earth-moving equipment, worked i(nit No. 2 passed the 50 percent milestone. Now around the clock to expedite repairs and more than 59 percent complete, Unit No. 2 is modifications. scheduled for service in 1983.
Martin Unit No. 2, the second 783 Mw unit at In September 1980, the U.S. Department of Martin Plant, is scheduled for completion in Justice, the NRC Staff and the Company Gled a joint mid-1981. motion requesting an Atomic Safety and Licensing Planned for the late 1980's or early 1990's, Martin Board to make effective licensing conditions Units 3 and 4 will be FPL's first coal-burning units. accepted by the Company as part of a settlement Both units willbe in the 700 Mw size range. agreement between the parties.
The "coal-by-wire" contracts with TECO and the Under the proposed agreement, the Company has Southern Companies, discussed in "Energy Plan for consented to offer to sell approximately15 percent of the Eighties" (see page 8), are expected to provide St. Lucie No. 2 to certain municipalities and varying amounts of coal power through 1992. cooperatives. In January 1981 approximately six Negotiations are also underway with Seminole percent of the unit was sold to the Orlando Utilities Electric Cooperative for the possible purchase of Commission.
power I'rom two coal-fred units scheduled for the In addition to the 15 percent of the unit offered for mid-1980s. sale under the settlement agreement, FPL has FPL is planning to expand its coal use in still separately offered approximately six percent to another way through joint ownership. Seminole Electric Cooperative.
The Company has signed a letter of intent with Other municipalities have Gled an opposition to the the Jacksonville Electric Authority for joint joint motion and requested antitrust hearings. The construction and ownership of a two-unit coal plant. matter is pending.
The plant willbe built in northeast Florida for service Certain municipalities have appealed a decision by in the late 1980s. the NRC not to institute, at this time, a proceeding On cold standby since 1976, oil and natural to review the licenses of FPL's operating nuclear gas-fred Cutler Power Plant on Biscayne Bay willbe units and the construction permit for St. Lucie No.2.
reactivated. Certain regulatory approvals will be The matter is pending.
required. Cutler Units 5 and 6 are expected to be returned to operation in mid-1982, providing 197 Mw Construction Budget of additional power. Unit No. 4 has been retired. New construction, principally for electric Dade County's Resource Recovery unit generation, transmission and distribution facilities, incorporating a generator powered by steam totaled approximately $ 655 million in 1980.
obtained through burning of solid waste is The Company estimates that its 1981-83 construction program will total an estimated $ 2.2 billion. Capital expenditures for 1981 are budgeted at
$ 688 million.
Financing To finance its construction program, FPL raised
$ 371 million from 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 million were raised through Common Stock issued in connection with the employee benefit plans and the dividend reinvestment plan.
Early in December the Company raised $ 42 million by selling 1,750,000 shares of Common Stock. This was FPL's first public sale of Common Stock in more than four years.
The balance of the funds for the Company's capital expenditures was provided by internally generated
~w~w, ig //. funds. At year-end short-term debt outstanding totaled $ 77 million.
The planned sale of $ 125 million of first 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 and indicated public hearings on the amendments to plans and the dividend reinvestment plan. Total the licenses must be held. Metropolitan Dade external financing needs for 1981 are estimated at County has also received approval to participate in
$ 500 million. However, the amount needed is the hearings, which have not yet been scheduled.
dependent on the amount and timing of rate relief.
The Company's ability to issue additional shares of Fuel Supplies Preferred Stock is also dependent on the amount First delivery to FPL of Florida-produced uranium and timing of rate relief. fuel was made in June under contracts with International Minerals and Chemicals Corporation Nuclear Power (IMC). Florida uranium is extracted as a by-product In September 1980 FPL became a member of in the manufacture of phosphate fertilizer.
Nuclear Electric Insurance Limited (NEIL), which The agreements call for supplying approximately was organized by the nuclear electric utility industry. one million pounds of uranium per year from 1981 NEIL provides insurance coverage for a portion of through 1992 for the nuclear units at Turkey Point replacement power costs that might be incurred and St. Lucie. In 1980, FPL received 216,000 during an extended outage of a nuclear unit caused pounds from IMC.
by accidental physical damage. FPL has several other contracts which cover the During 1980 the Company continued to make majority of its uranium needs through 1992.
certain modifications to its three operating nuclear The main supplier of fuel oil is Exxon Company, units in response to NRC regulations developed as a U.S.A. under a contract to provide residual oil and result of the incident at Tluee Mile Island. distillate fuel through 1982. The contract will Whenever possible these modifications are made continue year-to-year thereafter until cancelled by when the units are operating or during scheduled either party. Ifeither party elects to cancel by giving refueling and maintenance outages in order to notice in 1981 or in any later year, the contract will minimize down-time. continue at full quantity through the subsequent At the Turkey Point Plant, FPL has experienced calendar year and then be phased out over a problems with the steam generators of nuclear Units three-year period at reduced quantities.
Nos. 3 and 4 and has plugged certain pressurized During 1980, I'PL's allocations of low sulfur oil water circulation tubes. Presently 20.4 percent of under Exxon's allocation program ranged between the tubes in Unit No. 3and 23.8percentof the tubes 60 percent and 100 percent of the contract quantity.
in Unit No. 4 have been plugged. The NRC lias The Company has two additional contracts that approved plugging up to 25 percent of the tubes in supplied much of the balance of its oil requirements.
each unit without reducing the thermal output. Additional oil required to meet generation needs was Should more than 25 percent of the tubes in either obtained on the open market.
Unit No. 3 or Unit No. 4 require plugging, a new Natural gas is supplied to FPL under a firm supply emergency core cooling system analysis will have to contract with Amoco Production Company.
be submitted to and approved by the NRC before Through June 1983, FPL wiH receive 200 million that unit may be returned to service. cubic feet (MMCF) per day. After that date, gas Unless an extension is granted, each unit must be supplied to June 1988 willbe limited to gas from shut down and the steam generator's inspected once certain wells that were supplying the Company in every six months. Before the unit is returned to 1983, but no greater than 200 MMCF per day.
service, NRC approval must be obtained. Under Interruptible supplies of natural gas are provided certain circumstances, a hearing may be required. by two contracts: one expiring in April 1989 and one Permanent repairs willrequire that each unit be expiring in December 1981. Deliveries are subject to out of service for approximately nine to twelve gas and pipeline availability and continuance of months. New steam generators have been delivered federal permits.
and the cost of the repairs has been estimated at FPL has received 58 temporary public interest
$ 136 million. exemptions from the Fuel Use Act which allow the Permanent repair of Unit No. 4's steam burning of natural gas in excess of statutory limits.
generators is now scheduled to begin in October Twenty-two of the exemptions expire in late 1981 1981, with Unit No. 3 scheduled for permanent and thirty-six expire in late 1984.
repair in October 1982. These dates may have to be rescheduled because of delays in the licensing Looking Back...
process. 1980 held challenge; it also held promise. The An amendment to each unit's operating license is promise to promote the vital conservation effort, required before work may begin. A draft through leadersliip and example, is a renewed environmental impact statement has been issued. In cominitment. That's FPL's commitment to the 1979 the NRC allowed a petition for late intervention present and to the future.
16/FPL
Florida Power & Light Company arid Subsidiaries Summary of Selected Financial and Operating Data 1980 1979 1978 1977 1976 Selected Financial Statistics (Thousands)
Operating Revenues $ 2,347,278 $ 1,933,937 $ 1,647,226 $ 1,464,584 $ 1,189,680 Fuel and Net Interchange $ 1,106,909 $ 817, 141 $ 532,779 $ 483,243 $ 472,237 Total Operating Expenses . $ 2,037,723 $ 1,632, 133 $ 1,328,529 $ 1,165,676 $ 998,467 Net Income $ 198,318 $ 204,668 $ 211,241 $ 180,438 $ 116,845 Total UtilityPlant . $ 6,082,682 $ 5,458,512 $ 4,983,794 $ 4,525,916 $ 4,181,839 Total Assets . $ 5,492,058 $ 4,847,532 $ 4,460,145 $ 4,071,302 $ 3,865,993 Long-Term Debt, excluding current maturities ... $ 2,000,312 $ 1,838,426 $ 1,766,861 $ 1,744,243 $ 1,779,771 Preferred Stock ivith sinking fund requirements, excluding current maturities................ $ 117,500 $ 121,250 $ 75,000 $ 75,000 $ 75,000 Preferred Stock without sinking fund requirements $ 311,250 $ 311,250 $ 311,250 $ 261,250 $ 261,250 Capital Expenditures (including nuclear fuel and AFUDC) $ 655,098 $ 574,825 $ 472,830 $ 375,360 $ 460,750 External Funds $ 871,657 $ 249,220 $ 151,866 $ 33,240 $ 272,540 Common Stock Data Net Income Applicable to Common Stock Thousands . $ 162,463 $ 170,957 $ 182,103 $ 152,785 $ 94,467 Average Shares Outstanding Thousands ...... 41,281 40,524 40,120 40,050 39,542 Earnings Per Share of Common Stock.......... $ 3.94 $ 4.22 $ 4.54 $ 3.81 $ 2.39 Dividends Paid Per Share $ 2.64 $ 2.32 $ 2.00 $ 1.66 $ 1.56 Dividend Rate Year End . $ 2.72 $ 2.40 $ 2.08 $ 1.76 $ 1.56 Dividend Payout Percentage .................
67.0 55.0 44.1 43.6 65.3 Shares Outstanding, Year End Thousands..... 43,676 40,819 40,315 40,050 40,050 End..............
Price/Earnings Ratio Year 6.6 5.9 5.8 7.1 11.6 Book Value Per Share End.............
Year $ 34.90 $ 34.31 $ 32.49 $ 29.97 $ 27.81 Market Price Per Share (High)................ 28'/s 28~/s 29% 28/s 28~/s Market Price Per Share (Low)................ 19~/s 24Vs 23'/s 20'/4 Selected Operating Statistics Customers Year End . 2,247,688 2,140,587 2,032,298 21',927,668 1,840,043 KwH per Customer Residential ............. 11,473 11,354 11,790 11,370 10,968 KwH Sales Thousands 44,707,613 41,965,810 40,602,076 37,529,397 34,929,541 Revenue per KwH Residential.............. 5.3lg 4.66/ 3.960 Employees Year End . 11,084 10,337 4.10',750 9,415 3.50',865 Net Warm Weather Capability, Kw Year End... 11,738,000 10,955,000 10,941,000 10,644,000 9,740,000 Peak Load, Winter, Kw 60-minute........... 9,732,000 8,791,000 8,617,000 8,606,000 7,287,000 Peak Load, Summer, Kw 60-minute ......... 9,623,000 8,650,000 8,345,000 7,841,000 7,598,000 Reserve Capability Percentage at Time of Summer Peak . 13,8 26.7 30.4 23.0 13.8 Cost of Oil Burned (Per Barrel) ............... $ 23.26 $ 17.47 $ 12.33 $ 12.94 $ 11.62 Percent of Energy:
Oil . 49.6 54.6 51.7 48.2 55.9 Natural Gas . 17.9 18.5 19.6 19.9 22.3 Nuclear . 27.7 25.6 30.4 33.0 22.8 Coal/Oil Mx Test 0.9 Interchange 3.9 1.3 (1.7) (1. 1) 00)
FPL/17
Management's Discussion and Analysis of Financial Condition and Results of Operations 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 of customers and the resulting increased KwH sales contributed to the Company's abiTity to partially offset the effects of inflation.
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, KwH sales 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.
President John J. Hudiburg To meet these anticipated service requirements, Financial Condition the Company maintains a substantial construction The Company's financial condition at the end of 1980, program. Construction expenditures including net as disclosed in its consolidated financial statements, nuclear fuel additions and AFUDC in 1978 through reflected a rate increase in 1977, a revised fuel ad- 1980 aggregated SL6 billion and are expected to be justment clause in 1980, arid a healthy Florida econ- $ 2.2 billion in 1981 through 1983.
omy over the past several years. However, with the The construction program has been financed with current continued double-digit inflation, the Com- a long-range capital structure goal in mind. The pany is not able to sustain its financial condition Company's long-term objective is to achieve and without a rate increase. A petition for a retail rate maintain a mix of about 50-52 percent long-term increase designed to produce annual revenues of debt, 38-42 percent common equity and about 8-10 approximately $ 476 million was filed with the FPSC percent preferred stock. The increases in the Com-in January 1981. In February 1981 the Company filed pany's capitalization from the issuance of debt and a petition for an interim rate increase of $ 211million, equity securities over the past three years reflect representing a portion of the $ 476 millionrequested this strategy and the Company's response to chang-in January 1981. ing economic conditions.
Left: Banks of solar panels combine to power the commercial air conditioning unit under study at the FPL Perrine Service Center: Hugh Arvin, I 1 left project engineer I WW for Andover 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-fired unit at the Sanford Plant.
Harry Lane, left, representative of Bechtel Power Corp.
which built supporting equipment, and Odis Smith, plant manager.
18/FPL
The Company was able to support much of its dustry and results from accounting conventions set 1978 through 1980 capital requirements with $ 1. 4 bil- by the FPSC and the cash management policies fol-lion of internally generated funds. External financ- lowed by the Company to control borrowing costs.
ings in the same period aggregated $ 712 million, consisting of $ 471 million of First Mortgage Bonds, Results of Operations After peaking in 1978, net income declined in 1979
$ 50 million of other long-term debt, $ 100 million of and 1980, the combined result of a trend of rising Preferred Stock and $ 91 million raised through the sale of Common Stock, including stock issued in operating, maintenance, and interest costs that were connection with certain employee benefit plans and not fullycompensated for by the growth in reve-nues. The Company also experienced underrecov-the DRP. An additional $ 90 million was obtained ery of fuel costs in 19?8, 1979 and the first quarter of through the sale of nuclear fuel materials. These 1980. Rapidly rising fuel costs in 1978 and 1979 were combined amounts enabled the Company to meet its not fully recovered due to a two-month lag in the fuel construction commitments and retire $ 135 million of adjustment clause in effect at that time. Under a new maturing debt and Preferred Stock in the period. fuel cost recovery clause adopted by the FPSC in .
The portion of the Company's capital require- March 1980, the monthly adjustment factor is based ments for 1981 through 1983 that willbe generated on projected fuel costs and KwH sales, which leads internally willdepend upon the FPSC's action on the to more timely and full recovery of fuel costs. The requests for rate increases. Funds from external underrecovery of fuel costs was $47.5 million ($ 0.60 sources are expected to be obtained from the same per share) in 1979 as compared to $ 3.9 million in sources as in the past three years. The mix willbe 1978. The change to the projected fuel cost re-varied as required in light of market conditions and covery clause limited the underrecovery in 1980 to the capital structure objective of the Company. $ 23 million.
There are no significant current limitations on the amount of debt securities that can be issued under OPerating Revenues the Company's mortgage indenture or Charter. The Increases in operating revenues were due to the fol-Company is not presently able to issue additional lowing factors:
% Increase in Operating Preferred Stock due to its inability to meet an Revenues earnings test under the Charter. 1980 1979 1978 Temporary cash requirements are met, in part, KwH sales G.5% 3.4% 8.2%
through short-term borrowings. The FPSC limits Fuel adjustment and the Company's use of unsecured short-term debt to rate changes 14.7 13.9 4.2 approximately $ 600 million. The Company's working Other 0.2 0.1 0.1 capital deficit is not unusual in the electric utility in- Total 21.4'7o 17.4% 12.5%
Earnings Per Share KwH sales increased primarily as a result of growth in the average number of customers of 5.3%
1980 3.94 in 1980, 5.4% in 1979 and 4.9% in 1978. Energy usage per customer increased 1.1% in 1980, but de-4,22 1979 clined 2.0% in 1979, following a 3.3% increase in 1978.
1978 Fuel adjustment revenues in 1980 were $ 549.8 million, up $ 288.9 million, or over 111% of the 1979 1977 3.81 total; in 1979 fuel adjustment revenues were $ 260.9 million, up $ 224.1 million, or over 600% of the 1978 1976 total of $ 36.8 million. These increases accounted for 14.1% of the increase in 1980 operating revenues 1970 1.97 and 13.5% of the increase in 1979 operating reve-4 55 nues and reflect the rapid escalation in fuel costs in 1979 and 1980.
Dividends Paid Per Share Bock Value <vear End) 1980 1980 1979 34,31 1979 1978 32.49 1978 1977 29.97 1977 1976 27. 81 1976 1970 1.015 1970 17.05 10 20 30 540 FPU19
Fuel and ¹t Interchange Fuel and net interchange expense consisted of the ing fram the Three Mile Island incident are reflected in 1979 expenses. Additional expenditures to meet following (in thousands): Three Mile Island-related Nuclear Regulatory 1980 1979 1978 Commission (NRC) requirements, turbine rotor re-Fuel expense placement at Turkey Point Unit No. 4, reactor cool-
$ 1,059,725 $ 812,898 $ 551,376 Netinterchange 51,172 4,243 (18,597) ant seals replacement at St. Lucie Unit No. 1, the Deferred fuel costs (3,988) experimental use of a coal-oil fuel mixture and a system-wide increase in tree trimming and line Total $ 1,106,909 $ 817, 141 $ 532,779 maintenance increased 1980 expenses.
The oil portion of fuel expense increased by Allowance for Funds Used Duri) rg Conslruction
$ 216.1 million, or 31.3%, in 1980 and by $ 241.6 mil- (AFUDC) lion, or 53.8%, in 1979. The average cost per barrel Total AFUDC increased as a result af Nigher CWIP of oil consumed in 1980 increased by 33.2% over balances. The investment in Martin Unit No. 1 1979 levels and accounted for $ 226.1million of the amounted to $ 447 million, an increase of $ 113 million increase in fuel expense. However, tVis amount was over the previous year. This unit was placed in partially offset by a decline in the quantity of oil can- commercial operation in December 1980. At De-sumed. A 41.6% increase in the average cost per cember 31, 1980 the investment in St. Lucie Unit barrel of oil consumed accounted for $ 203.2 million No. 2 and Martin Unit No. 2 included in CWIP of the 1979 increase. aggregated $ 844 million, up $ 246 million from a year Net interchange purchases reflect an increase in earlier. AFUDC willbe reduced significantly as these economy interchange purchases, resulting fram par- units are placed in cammercial service. This will re-ticipation in a new statewide interchange system and sult in a reduction in net incame unless operating the "coal by wire" purchases under a new cantract revenues and rate relief provide sufficient additional with The Southern Company system. Approxi- revenues to fully offset the reduction in AFUDC and mately $ 19 million of power was purchased in 1980 increases in depreciation and other operating ex-under this contract. penses related to these units.
Other OPeration and Maintenance ExPenses Effects of Inflation These expenses increased due to higher payroll and Changing prices have impacted the Company in all related employee benefits costs, increases in the aspects of its operations, including construction number of customers served and the amount of elec- costs, operating expenses and the cost of capital.
tricity generated, and the maintenance of nuclear The Company has estimated the effects of changing units. An extended outage to repair the turbine rotor prices on its operations on the basis prescribed by at Turkey Paint Unit No. 3 and expenditures for the Financial Accounting Standards Board. See "Ef-safety reviews, investigatians and regulations result- fects of Changing Prices."
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 r ( Canaveral.
4+ xii+ ~
20/FPL
Report of Management The management of Florida 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 of this 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 it in carrying out this responsibility, management maintains a system of internal accounting control, which is established after weighing the cost of such controls against the benefits derived.
In the opinion of management, this system provides reasonable assurance that the assets of the Company are safeguarded and transactions are executed in accordance with management's authorization and are recorded properly for the preparation of financial statements. In addition, management believes the Company's system of internal 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 of their duties. Due to the inherent limitations of the effectiveness of any system of internal accounting control, management cannot provide absolute assurance that the objectives of internal accounting control will be met. The system of internal accounting control is supported by written policies and guidelines, the selection and training of qualified employees, an organizational structure that provides an appropriate division of responsibility 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 of Directors pursues its oversight responsibiTity for financial reporting and accounting through its Audit Committee. This Committee, which is comprised entirely of outside 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 Financial Statements To the Board of Directors and Shareholders, Contents Florida Power & Light Company:
22 Balance Sheets We have examined the consolidated balance sheets and statements of capitalization of 24 Statements of Capitalization 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 25 Statements of Income financial position for each of the three years in the period ended December 31, 1980. 26 Statements of Our examinations were made in accordance with generally accepted auditing standards Retained Earnings and, accordingly, included such tests of the accounting records and such other auditing 27 Statements of procedures as we considered necessary in the circumstances. Changes in Financial Position In our opinion, such consolidated financial statements present fairly the financial 28 Schedule of Taxes position of the Company and its subsidiaries at December 31, 1980 and 1979 and the 30 Schedule of results of their operations and the changes in their financial position for each of the Allowance for three years in the period ended December 31, 1980, in conformity with generally Funds Used During accepted accounting principles applied on a consistent basis. Construction 31 Notesto Consolidated Financial Statements DELOITTE HASKINS & SELLS Miami, Florida February 12, 1981 FPL/21
Florida Power & Light Company and Subsidiaries Balance Sheets, December 31, 1980 and 1979 'onsolidated (Thousands of Dollars) 1980 1979 Assets ELECTRIC UTILITYPLANT (Notes 1 and 7):
At origirial cost $ 4,968,387 $ 4,237,288 Less accumulated depreciation 1,137,070 1,003,365 Net 3,831,317 3,233,923 Construction work in progress 1,009,377 1,119,820 Nuclear fuel (less accumulated amortization of $ 42,284 at December 31, 1980 and $33,300 at December 31, 1979) 62,634 68,104 Electric utilityplant net 4 303,323 4,421,847 INVESTMENTS:
'torm and property insurance reserve fund (Note 1) 12,911 9,562 Other . 28,550 2,499 Total investments 41,461 12,061 I
,CURRENT ASSETS:
Cash (Note 3) . 2,975 6,663 Temporary investments (at cost, winch approximates market) 19,271 Accounts receivable:
Customers (less allowance for uncollectible accounts of $ 4, 191 at December 31, 1980 and $ 3,978 at December 31, 1979) 139,657 109,552 Employees and miscellaneous..... 10,861 20,640 Income tax refunds 14,827 Materials and supplies at average cost . 95,262 74,906 Fossil fuel stock at average cost 181,925 142,681 Prepaid expenses . 26,019 20,864
~ Other 8,337 5,846 Total current assets 499,134 381,152 DEFERRED DEBITS:
Accumulated deferred income taxes (Note 1) ......... 18,550 8,808 Unamortized cancelled project costs (Note 7) . 5,708 10,275 Unamortized debt expense and loss on reacquired debt 7,747 5,402 Deferred fuel costs (Note 1) . 3,988 Other . 12,137 7,987 Total deferred debits 48,130 32,472 Total $ 5,492,053 $ 4,847,532
.The accompanying Schedules and Notes to Consolidated Financial Statements are an integral part of these statements.
22/FPL
(Thousands of Dollars) 1980 1979 Liabilities CAPITALIZATION(See Consolidated Statements of Capitalization):
Common shareholders'quity 81,524,285 $ 1,400,395 Preferred stock without sinking fund requirements . 311,250 311,250 Preferred stock with sinking fund requirements . 117,500 121,250 Long-term debt 2,000,312 1,838,426 Total capitalization 3,953 847 3,671,321 CURRENT LIABILITIES:
Current maturities of long-term debt and preferred stock 135,644 55,200 Notes payable commercial paper (Note 3) 77,490 32,000 Accounts payable trade .... 124,080 62,761 Customers'eposits . 99,324 89,986 Income taxes (Notes 1 and 7) 8,663 12,623 Other taxes . 73,305 72,700 Interest accrued . 50,802 40,520 Pension cost accrued (Note 6) . 29,199 27,666 Tax collections payable 18,016 15,533 Other 54,801 54,626 Total current liabilities 671,324 463,615 DEFERRED CREDITS:
Accumulated deferred income taxes (Note 1) 549,468 448,215 Unamortized investment tax credit (Note 1) . 276,365 229,608 Other 17,931 13,354 Total deferred credits . 843,764 691,177 RESERVES:
Storm and property insurance (Note 1) . 12,911 9,562 Other 10,70? 11,857 Total reserves 23,618 21,419 COMMITMENTSAND CONTINGENCIES (Notes 7 and 8)
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 COMMON SHAREHOLDERS'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) 840,707 $ 770,350 Capital stock premium and expense (4,182) (4,038)
Retained earnings . 687,760 634,083 Total common shareholders'quity 1 524,235 1,400,395 PREFERRED STOCK Cumulative, $ 100 Par Value, December 31 1980 authorized 20,112,500 shares at December 31, 1980
~
Shares Redemption and 5,000,000 shares at December 31, 1979 (Note 4):
Outstanding Price Preferred stock without sinking fund requirements:
44/2% Series 100,000 $ 10LOO 10,000 10,000 41/2% Series A 50,000 101.00 5,000 5,000 4142% Series 8 50,000 101.00 5,000 5,000 4/2% Series C 62,500 103.00 6,250 6,250 4.32% Series D 50,000 103.50 5,000 5,000 4.35% Series E 50,000 102.00 5,000 5,000 7.28% Series F. 600,000 106.57 60,000 60,000 7.40% Series G 400,000 106.23 40,000 40,000 9.25% Series 11 500,000 107.00 50,000 50,000 8.70% Series K 750,000 109.85 75)000 75,000 8.84% Series L........ 500,000 109.84 50,000 50,000 Total . 311,250 311,250 Preferred stock with sinking fund requirements:
10.08% Series J . 675,000 111.50 67,500 74,400 8.70% Series M 500,000 108.29 50,000 50,000 Less current maturities . (3,150)
Total . 117,500 121,250 LONG-TERM DEBT (Notes 1 and 4):
First Mortgage Bonds:
Maturing through 1985 82/s% Due August 1980 . 50,000 3Vs% Due November 1981 10,000 10,000 87/s% Due May 1982 100,000 100,000 37/s% Due April 1983 15,000 15,000 9'/s% Due May 1984 . 100,000 100,000 3/s% Due November 1984 10,000 10,000 Maturing 1986 through 1995 3s/s% to 5% . 230,000 230,000 Maturing 1996 through 2005 6% to 10Vs% . 796,289 796,289 Maturing 2006 through 2010 92/s% to 12/s% 500,000 275,000 Pollution Control Series A, 6.10% Due January 2008 . 19,400 19,400 Pollution Control Series B (Note 4) . 76,300 10%% Notes Due November 1981 125,000 125,000 Bank Notes (under term loan agreement) Due March 1982 50,000 50,000 Installment Purchase and Security Contracts 5.40% to 6.15% Due 2004 through 2007 . 92,090 92,090 Promissory Notes 6% to 9a/4% Due Various Dates to January 2020 11,057 14,233 Unamortized Premium and Discount net . 820 3,464 Total long-term debt . 2,135,956 1,890,476 Less current maturities (135,644) (52,050)
Long-term debt excluding current maturities 2 000,312 1,838,426 Total capitalization $ 3,953,347 $ 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 for the 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) . 1,106,909 817, 141 532,779 Other production 63,169 42,891 35,628 Transmission and distribution . 61,252 50,910 46, 176 Customers . 59,129 49,660 42,839 Administrative and general 130,685 116,028 110,607 Maintenance . 141,789 99,490 85,865 Depreciation (Note 1) . 159,964 150,195 144,267 Income taxes (Notes 1 and 6) 1I0,840 156,044 198,163 Taxes other than income taxes 173 986 149,774 132,205 Total operating expenses . 2 037,723 1,632,133 1,328,529 OPERATING INCOME 309,555 301,804 318,697 OTHER INCOME (DEDUCTIONS):
Allowance for other funds used during construction (Note 1) .. 38,056 30,006 20,319 Income taxes (Note 1) . (1,841) (34) 827 Other net 3,292 1,209 3,382 Other income net. 39,507 31,181 24,528 INCOME BEFORE INTEREST CHARGES 349,062 332,985 343,225 INTEREST CHARGES:
Interest on first mortgage bonds . 147,239 117,715 116,446 Interest on other long-term debt. 27,578 27,163 24,031 Other interest . 14,912 12,280 5,619 Allowance for borrowed funds used during construction (Note 1) . (38,985) (28,841) (14,112)
Interest charges net 150 744 128,317 131,984 NET INCOME .......................... 198,318 204,668 211,241 PREFERRED STOCK DIVIDENDREQUIREMENTS 35 855 33,711 29,138 NET INCOME APPLICABLETO COMMON STOCK 8 162 463 $ 170,957 $ 182,103 Average number of common shares outstanding (in thousands) .. 41,281 40,524 40,120 Earnings per share of Common Stock $ 3.94 $ 4.22 $ 4.54 Dividends per share of Common Stock $ 2.64 $ 2.32 $ 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 for the years ended December 31, 1980, 1979 and 1978 (Thousands of Dollars) 1980 1979 1978 BALANCEAT BEGINNING OF YEAR $ 634,083 $ 556,772 $ 454,529 NET INCOME 108 818 204 668 211,241 Total . 832,401 761,440 665,770 DEDUCT:
Cash dividends:
Preferred Stock:
4'%eries ($ 4.50 a share) . 450 450 450 4'/2% Series A ($ 4.50 a share) 225 225 225 4i/2% Series B ($ 4.50 a share) 225 225 225 4'%eries C ($ 4.50 a share) 281 281 281 4.32% Series D ($ 4.32 a share) 216 216 216 4.35/o Series E ($ 4.35 a share) 218 218 218 7.28% Series F ($ 7.28 a share) . 4,368 4,368 4,368 7.40% Series G ($ 7.40 a share) 2,960 2,960 2,960 9.25% Series H ($ 9.25 a share) 4,G25 4,625 4,625 10.08% Series J ($ 10.08 a share) 7,051 7,560 7,560 8.70% Series K ($ 8.70 a share) G,525 6,525 6,525 8.84% Series L ($ 8.84 a share) . 4,420 4,420 1,117 8.70% Series M ($ 8.70 a share) 4,350 1,281 Common Stock . 108 610 94,002 80,228 Total dividends 144 524 127,356 108,998 Preferred Stock redemption costs 117 BALANCEAT END OF YEAR 8687 760 $ 634,083 $ 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 for the years ended December 31, 1980, 1979 and 1978 (Thousands of Dollars) 1980 1979 1978 SOURCE OF FUNDS:
Operations:
Net income . $ 198,318 $ 204,668 $ 211,241 Depreciation 159,964 150,195 144,267 Amortization of nuclear fuel assemblies 9,766 11,992 11,081 Deferred investment tax credit net 46,757 52,725 35,646 Deferred income taxes 91,511 77,075 67,695 Deferred fuel costs (3,988)
Allowance for other funds used during construction... (38,056) (30,006) (20,319)
Total . 464,272 466,649 449,611 Sale of first mortgage bonds . 222,607 73,895 75,202 Reimbursement by trustee from pollution control financings for construction expenditures. 58,153 18,476 Issuance of other long-term debt . 1,899 50,081 d Issuance of Common Stock 70,357 13,508 7,466 Sale of Preferred Stock 49,825 50,134 Sale of nuclear fuel . 29,718 60,712 Proceeds from nuclear fuel suit 26,000 Other sources . 7,595 22,462 20,825 Decrease in working capitA . 89,727 14,164 Total 8944 328 $ 763,132 $ 635,878 APPLICATION OF FUNDS:
Construction expenditures* . $ 613,529 $ 509,627 $ 432,586 Nuclear 33,231 35,556 19,925 fuel'etirement, redemption and current maturity of long-term debt and Preferred Stock 142,417 55,810 71,617 Dividends . 144,524 127,356 108,998 Other applications 10,62? 24,112 2,752 Increase in working capital 10,671 Total 8944 328 $ 763,132 $ 635,878 CHANGE IN WORKING CAPITALEFFECTED BY:
Increase (Decrease) in current assets:
Cash and temporary investments $ 15,583 $ (26,990) $ 29,829 Accounts receivable 20,326 29,900 '13,990 Fossil fuel stock . 39,244 57,536 19,063 Materials and supplies 20,356 13,141 (4,897)
Other changes net 22,473 (9,503) 22,004 Decrease (Increase) in current liabilities:
Notes payable and current maturities of long-term debt and Preferred Stock 'e (125,934) (24,582) (49,925)
Accounts payable (61,319) (16,281) (6,972)
Customers'eposits . (9,338) (10,866) 5,387 Income taxes . 3,960 44,634 (12,383)
Other changes net (15 028) (46,318) (30,260)
INCREASE (DECREASE) IN WORKING CAPITAL. $ (89,727) $ 10,671 $ (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 & Light Company and Subsidiaries Schedule of Taxes for the years ended December 31, 1980, 1979 and 1978 (Thousands of Dollars) 1980 1979 1978 Income Taxes FEDERAL:
Charged to operating expenses:
Current $ (10,795) $ 8,887 $ 73,659 Deferred Accelerated depreciation . 69,305 52,429 53,220 Debt component of AFUDC 14,185 10,276 6,405 Repair allowance . 12,715 4,863 5,117 Estimated revenue refunds (188) (854)
Other (13,140) 6,915 (763)
Deferred in prior years Accelerated depreciation . (4,508) (2,879) (1,934)
Debt component of AFUDC (777) (770) (662)
Repair aHowance (920) (1,078) (931)
Estimated revenue refunds 277 765 Other . 4,770 (1,428) 2,002 Deferred investment tm credit . 60,880 66,790 47,535 Amortization of investment tax credit (G,302) (5,291) (4,695)
Total 125,G90 139,291 178,099 Charged to other income:
Current . 1,347 (33) (212)
Deferred net 235 42 (585)
Total federal . 12?,272 139,300 177,302 STATE:
Charged to operating expenses:
Current . 5,824 8,629 13,320 Deferred Accelerated depreciation . 7,7G9 6,113 5,835 DebtcomponentofAFUDC . 1,618 1,176 702 Repair allowance 1,455 561 561 Estimated revenue refunds . (22) (94)
Other . (1,392) 784 (84)
Deferred in prior years Accelerated depreciation . (414) (310) (198)
Debt component of AFUDC . (87) (86) (73)
Repair allowance (102) (119) (102)
Estimated revenue refunds . 32 Other 447 (57) 197 Total 15,150 16,753 20,064 Charged to other income:
Current 216 21 34 Deferred net . 43 4 (64)
Total state . 15,409 16,778 20,034 Total income taxes . $ 142,681 $ 156,078 $ 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 4/o of 4/o of '/o of Pre-tax Pre-tax Pre-tax Amount Income Amount Income Amount Income Computed at statutory rate ........ $ 156,860 46.0%%uo $ 165,943 46.0%%uo $ 196, 117 48.0%%uo Increases (Reductions) in income taxes resulting from:
Allowance for other funds used during construction... (20,842) (6.1) (16,252) (4.5) (9,753) (2.4)
State income taxes net of federal income tax benefits . 8,321 2.4 9,060 2.5 10,418 2.6 Other net (1,658) (0.5) (2,673) (0.7) 554 0.1 Total income taxes $ 142,681 41.8lo $ 156,078 43.3% $ 197,336 48.3%
Other 11txes Taxes other than federal and state income taxes: 1980 1979 1978 Federal and state payroll $ 15,220 $ 13,928 $ 11,343 Real and personal property. 44,269 41,705 41,308 State gross receipts 33,785 27,981 23,955 Francluse charges . 81,420 66,866 55,862 iiliscellaneous . 16,894 17,229 14.907 Total other taxes $ 191,588 $ 167,709 $ 147,375 Charged to:
Operating expenses other taxes $ 173,986 $ 149,774 $ 132,205 UtiTity plant and other accounts 17,602 17,935 15,170 Total $ 191,588 $ 167,709 $ 147,375 FPL/29
Florida Power & Light Company and Subsidiaries Schedule of Allowance for Funds Used During Construction (AFUDC) for the years ended December 31, 1980, 1979 and 1978 (Millions of Dollars) 1980 1979 1978 Monthly average construction work in progress (CWIP) $ 1,238.0 $ 970. 1 $ 669.9 Less:
Fixed amount included in rate base 200.0 200.0 200.0 AFUDC previously capitalized and included in monthly average CWIP .. 152.9 97.9 60.9 Other 44.0 53.2 76.9 CWIP base for computing AFUDC . 841.1 619.0 332.1 Nuclear fuel base for computing AFUDC 30.5 46.3 Total base for computing AFUDC . 841.1 649.5 378.4 Capitalization rate (1) 9.16 lo 9.06% 9.10%
Total AFUDC charged to CWIP and nuclear fuel 77.0 58.8 34.4 Amounts credited to interest charges (2) 39.0 28.8 14.1 Amounts credited to other income (2) . S 38.0 $ 30.0 $ 20.3 (1) The AFUDC rate is determined by a formula set by the Florida Public Service Commission (FPSC). The rate is calculated by applying the capital ratio of each component 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 of the total AFUDC amount 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, with the residual AFUDC being reported as the other funds portion; thus, while the FPSC formula is still utilized to compute, the total amount of AFUDC, the borrowed funds portion in 1980 and 1979 is identical to that which would be reported if the 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 for the years ended December 31,1980,1979 and1978
- 1. Summary Qf Significant clause. Net interchange amounts for prior Storm and Property Insurance Re-Accounting And Reporting Policies periods, which were combined with other serve and Related Fund: The storm production costs, have been reclassified and property insurance reserve fund is Regulation: Accounting and reporting to conform with the 1980 presentation. maintained at an amount equivalent to the policies of the Company are subject to reserve. The reserve provides coverage regulation by the Florida Public Service Electric UtilityPlant, Depreciation toward storm damage costs and possible Commission (FPSC) and the Federal En- and Amortization: The cost of ad-public liabilitylosses stemming from a nu-ergy Regulatory Commission (FERC). ditions, replacements and renewals of units of property is added to utilityplant. clear incident. Earnings from the fund, The following summarizes the more sig-net of taxes, are reinvested in the fund.
nificant of these policies. The cost (estimated, if not known) of Securities held in the fund are recorded at units of property retired, less net salvage, Basis of Consolidation: The consoli- is charged to accumulated depreciation.
cost.
dated financial statements include the ac-Maintenance and repairs of property, and Income Taxes: Deferred income taxes counts of the Company and its wholly-replacements and renewals of items de- are provided on all significant book-tax owned subsidiaries. Allsignificant inter-termined to be less than units of property, timing differences as permitted for rate-company balances and transactions have are charged to operating expenses making purposes by the FPSC. Invest-been eliminated.
maintenance. ment tax credits used to reduce current Revenues and Fuel Costs: Revenues Book depreciation is provided on a federal income taxes are deferred and are recognized based on monthly cycle straight-line service-life basis by primary . amortized to income at a rate approximat-billings to customers. Retail and accounts as directed by the FPSC. The ing the lives of the related property. See wholesale rate schedules are approved by weighted annual composite depreciation the Schedule of Taxes.
the FPSC and FERC, respectively. The rate was approximately 3.7% in 1980. Nu-rate schedules contain a fuel adjustment clear production plantrates include esti- 2. Subsidiaries clause which gives effect to changes in ef- mated negative salvage values for certain ficiency, the cost of fuel as well as the fuel components, reflecting estimated de- The Company's wholly-owned sub-component of purchased power, the total commissioning costs. Transmission and sidiaries, Fuel Supply Service, Inc. (FSS) distribution plant rates also include nega- and Land Resources Investment Co.
energy cost of economy interchange and the generation mix of fossil and nuclear tive salvage values, (LRIC), are engaged in activities com-fuels. The cost of nuclear fuel is amortized to plementary to those of the Company. FSS Through March 1980 changes in fuel fuel expense on a unit of production is engaged in fuel exploration ventures method. No provision for estimated fu- and proprietary fuel research and de-costs were reflected in customer billings, after a two-month lag, through a fuel ad- ture spent fuel storage, transportation or velopment projects. FSS is not subject to justment clause. In March 1980 the FPSC disposal costs is presently included in fuel regulation by the FPSC or FERC. LRIC expense. holds real properties used or to be used adopted a projected fuel cost recovery clause which is designed to permit full re- Substantially all utility plant is subject to by the Company in its utilityoperations covery of fuel costs. Effective with April the lien of the Mortgage and Deed of for the purpose of increasing financing op-billings, the monthly fuel adjustment fac- Trust (as supplemented) securing the tions beyond those permitted by the tor is a levelized rate based on projected First Mortgage Bonds. Company's Mortgage and Deed of Trust.
fuel costs and KwH sales over each ensu-Allowance for Funds Used During 3. Short-Term Oebt ing six-month period. The net under or over recovery of fuel costs during a pro-Construction (AFUDC): The Com-Unused available bank credit aggregated pany capitalizes as an additional cost of jection period, plus interest, is deferred approximately $ 227 million at property an allowance for funds used dur-and collected I'rom or refunded to cus- December 31, 1980, and is based on ing construction (a non-cash item) which tomers during the last four months ol the informal arrangements which are subject represents the allowed cost of capital succeeding six-month projection period. to cancellation without notice.
used to finance a portion of construction At December 31, 1980 the Company had Compensating balances maintained in work in progress and nuclear fuel. The deferred approximately $ 4 million of fuel connection with these credits arise in the portion of AFUDC attributable to bor-costs in excess of related revenues. normal course of business and are not rowed funds is recorded as a reduction of Effective in 1980 the Company has material to the Company's financial Interest charges and the portion attribut-combined net interchange with fuel ex- position and borrowing costs.
able to other funds as Other income. See pense in order to present the costs re-the Schedule of AFUDC for detailed in-covered under the fuel cost recovery formation.
FPU31
Florida Power 8 Light Company and Subsidiaries Notes to Consolidated Financial Statements (continued)
- 4. Capitalization Common Stock: The Company has The changes in each series of Preferred Stock With Sinking Fund Requirements for reserved 3 million shares of Common 1978, 1979 and 1980 are shown below (in thousands):
Stock for issuance under the Employee 10.08% Series J 8.70% Series M Thrift Plan (Thrift Plan) and Employee Snar s Ame 1 Shares Amount Stock Ownership Plan (ESOP) and one .. 750 S75,000 Balances, January 1, and D ca macr 31, 1975 million shares of Common Stock for Sale in 1979 . 500 $ 50,000 issuance under the Dividend Current maturity in 1979 .................. (37) (3,750)
Reinvestment and Common Share Balances, December 31, 1979.............. 713 71,250 500 so,ooo Purchase Plan (DRP). At December 31, Current maturity in 1980 .................. (38) (3,750) 1980 the Company had issued 1,390,846 Balances, December 31, 1980.............. 675 $ 67,500 500 $ 50,000 of the reserved shares under the Thrift Plan and the ESOP and 485,347 Long-'Iform Debt: Certain series of the Company's First Mortgage Bonds have sink-of the reserved shares under the DRP.
ing fund requirements through 1995 which may be satisfied by certification of property In December 1980 the Company issued additions at the rate of 167% of such requirements. Such requirements are approxi-1,750,000 shares of Common Stock by an mately $ 4 million for each of the next three years and approximately $ 3 million for 1984 underwritten public offering for $ 42 and 1985. Annual maturities of long-term debt are approximately $ 136 million in 1981, million.
$ 151 million in 1982, $ 16 million in 1983, $ 111 million in 1984 and $ 1 million in 1985.
Preferred Stock With Sinking Fund The Pollution Control Series B First Mortgage Bonds consist of $ 26,300,000 of Requirements: The 10.08% Series J 9.60% bonds due October 1, 2000, and $ 50,000,000 of 9.90% bonds due October 1, Preferred Stock is entitled to a sinking 2015.
fund to retire a minimum of 37,500 shares and a maximum of 75,000 shares annually Changes in Capital Accounts: The changes in Common Stock, Preferred Stock through 1999 at $ 101.50 per share, plus Without Sinking Fund Requirements and Capitd Stock Premium and Expense for 1978, accrued dividends. 1979 and 1980 are shown below (in thousands): Preferred Stock CaPital Stock The 8.70% Series M Preferred Stock is Without Sinking Fund Premium entitled to a sinking fund to retire a Common Stock Requirements and minimum of 18,000 shares and a maximum Shares Amount Shares Amount Expense of 45,000 shares annually f'rom 1985 Balances, January 1, 1978 .............. 40,050 $ 749,375 2,612 $ 261,250 $ (3,715) through 1999, and a minimum of 46,000 Sale in 1978 . 500 50,000 (30) shares and a maximum of 115,000 shares Issued to benefit plans in 1978 ........... 265 7,466 (6) annually from 2000 through 2004 at $ 100 Balances, December 31, 1978........... 40,315 756,841 3,112 311,250 (3,751)
Sale in 1979 . (287) per share, plus accrued dividends.
Issued to benefit plans in 1979 ........... 504 13,509 (1)
Minimum annual sinking fund Preferred stock redemption ............. 1 requirements are approximately $ 3.8 Balances, December 31, 1979........... 40,819 770,350 3,112 311,250 (4,038) million for 1981 through 1984 and $ 5.6 Sale in 1980 . 1,750 42,306 (62) million in 1985. In 1979 the Company Issued to benefit plans in 1980 ........... 622 16,409 purchased and retired 6,000 shares of the Issued under DRP in 1980 ............. ~ 485 11,642 (96) 10.08% Series J Preferred Stock in Preferred stock rcdcm P tion.........,...
~ ~ ~ ~ ~ ~ ~ ~ ~ 14 anticipation of the 1980 sinking fund Balances, December 31, 1980 ........... 43,676 $ 840,707 3,112 $ 311.250 $ (4.182) requirement, and in early 1980 the remainder of that requirement was met The Company's Charter authorizes the issuance of 10 million shares of Preferred through the purchase and retirement of Stock, no par value. It also authorizes the issuance of 5 million shares of 31,500 shares. The 1981 sinking fund Subordinated Preferred Stock, no par value, to be known as "Preference Stock."
requirement was met by purchasing and None of these shares is outstanding.
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.
32/FPL
- 5. Revenues January 1, In connection with the adoption of the fuel Actuarial present value of 1980 1979 Rental and Nuclear Fuel Expense:
cost recovery clause in 1980, the FPSC accumuhted plan benefits The annual lease expense and the (assumed five percent ordered a transition adjustment to re- minimum rental commitments under real rate ofreturn):
cover, over a twelve-month period, ap- Vested ............ $ 124.5 $ 106.3 property and equipment leases are not proximately $ 59 million of fuel costs which Nonvested .......... 10.5 7.9 material.
the Company would have had the oppor- Total ............. $ 135.0 $ 114.2 The Company has various contracts for tunity to recover tin ough the prior fuel ad- supplies of fuel including a contract for nu-Net assets available justment clause. The transition adjust- for benefits....... $ 281.1 $ 229.3 clear fuel services for its two Turkey ment was appealed to the Supreme Court Point nuclear units. Expenses under the of Florida and the Company has agreed The Employee T/triftPlan provides for nuclear fuel services contract for 1980, not to collect the transition adjustment basic contributions by eligible employees 1979 and 1978 which were charged to amount pending resolution of the appeal. of up to 6% of their base salaries, which operating expenses were $ 19.1 million, A petition for a retail rate increase de- are matched 50% by the Company. The $ 14.9 million and $ 15.4 million, respec-signed to produce annual revenues of ap- Company matclnng contributions for tively. The Company is committed to pay proximately $ 476 million was filed with 1980, 1979 and 1978 were $ 2.3 million, a minimum annual charge per nuclear unit the FPSC in January 1981. The petition is $ 2.1 million and $ 2.0 million, respectively. of $ 1,260,000 under the Turkey Point nu-based on projected 1981 costs and seeks The Company has an Employee Stock clear fuel services contract; however, an-an increased rate of return on projected Ownerslfip Plan (ESOP) through which it nual charges on a usage basis may be sub-average 1981 rate base. The Company is permitted to claim up to an additional stantially in excess of the minimum charge has also requested that more construction 1k% investment tax credit. An amount and are subject to escalation for increases work in progress be included in the rate equal to such additional credit must be in certain costs to the supplier.
base. In February 1981 the Company Qed contributed to the ESOP to provide Com- The present value of the minimum a petition for an interim rate increase of pany Common Stock for the benefit of lease commitments, including the nuclear
$ 211million, representing a portion of the employees. Since the contributions to the fuel services contract, and the impact on
$ 476 million requested in January 1981. Plan are in lieu of income tax payments, net income if certain leases and the nu-there is no effect on net income. Provi- clear fuel services contract had been
- 6. Employee Benefit Plans sions for Compaiiy contributions to the capitalized, are not material and, there-ESOP were $ 7.8 million, $ 8.8 million and fore, not presented.
The Company has a non-contributory
$ 7.2 million in 1980, 1979 and 1978, re- The Company also has a lease ar-employees'ension plan covering sub-spectively. rangement for a portion of the nuclear fuel stantially all employees. The Company's for St. Lucie Unit No. 1, under which the policy is to fund each year's accrued pen-
- 7. Commitments And Contingencies Company may sell nuclear fuel materials to sion costs, including amortization of the the lessor for subsequent leaseback. Such estimated unfunded prior service costs Construction Program: Commitments sales totalled approximately $ 30 million in over 10 years. Pension costs for the years in connection with the construction pro- 1980 and $ 60 million in 1979. Lease 1980, 1979 and 1978 were $ 29.2 million, gram for electric generating units and re- payments are based on energy
$ 27.7 million and $ 26.2 million, lated faciTities approximated $ 1.0 billion at production. The Company continues to have respectively. The estimated unfunded December 31, 1980 including $ 300 million full responsibility for management of the prior service cost of the pension plan at for nuclear fuel. These are estimates fuel. The FPSC has approved January 1, 1980 was approximately $ 92.4 based on the presently proposed con-classification of this lease as an operating million using the entry age normal cost struction program and are not necessarily lease for financial accounting purposes. If method. The amounts of accumulated contractual obligations. Certain of these the lease had been treated as a capital plan benefits and plan net assets for the commitments are also subject to escala-lease, the Company's balance sheet at Company's pension plan for the two most tion for increases in labor, services and December 31, 1980 would have reflected recent years are presented below. The material costs.
additional nuclear fuel of approximately amounts of accumulated plan benefits do In 1977 the Company cancelled two nu-
$ 58 million with a corresponding not anticipate benefits related to future clear units previously proposed for a capitalized lease obligation. Under certain salary increases, and therefore do not rep- South Dade Site. Under authorization conditions of termination, the Company resent the total eventual obligations for from the FPSC, the Company deferred willbe required to purchase, within 270 pension benefits to be met by the plan. project costs and cancellation penalties to-days, all nuclear fuel (in whatever form) talling approximately $ 22.8 million and is amortizing the amount over a five-year period.
FPL/33
Florida Power & Light Company and Subsidiaries tO COnSOlidated FinanCial StatementS (Concluded) 'OteS then existing under the lease steam generators in its two nuclear units, tions, approximately 21% of St. Lucie arrangement at a price that willallow the Units Nos. 3 and 4, and has had to plug in Unit No. 2 to certain cooperatives and lessor to recover its net investment cost excess of 20% of the pressurized water municipalities. The combined ownership (approximately $ 115 million at December circulation tubes in the steam generators costs to be shared are expected to include 31, 1980). of each unit. $ 1.1 billion of construction costs for Unit Unless an extension is granted, each No. 2, plus the value of certain facilities Nuclear Insurance: The Company is a member of Nuclear Mutual Limited, unit is required to be shut down and the common to both Units Nos. 1 and 2. In which provides insurance coverage steam generators inspected once every January 1981 the Company sold an approx-six months. NRC approval must be ob- imate 6% undivided interest in this unit.
against property damage to members'u-clear generating faciTities. The Company tained foHowing each inspection before Spent Nuclear Fuel: Suppliers of the could be subject to a maximum assess- the units may be returned to service. In nuclear fuel are under contract to provide ment of approximately $ 69 million, based the event that more than 25% of the tubes spent fuel removal but have refused to on current premiums, in the event losses in either unit are required to be plugged, a honor their commitments. The Company occur at a nuclear plant of a member util- new analysis of the emergency core cool- filed suit against one of the suppliers and ity, and is self-insured for any such loss at ing system must be approved by the NRC is negotiating with the other in an attempt before the unit can be returned to service. to resolve the issue. The case has been any one of its nuclear plants (including any "clean-up" cost it would incur as a result The Company has acquired new steam tried but a decision has not been made.
of a nuclear incident) in excess of $ 375 generator tube bundles for both units The Company has expanded its spent nu-million. which incorporate different materials and clear fuel storage facilities and has ade-In September 1980 the Company be- design. The combined cost to replace the quate facilities for storage of spent fuel came a member of Nuclear Electric Insur-tube bundles in both units is estimated at until the mid-1980's under normal refuel-ance Limited, which provides insurance approximately $ 136 million, of which $ 50 ing conditions.
coverage for extra expenses incurred in million has been expended through De- Currently, there are no spent nuclear obtaining replacement power during pro- cember 31, 1980. Permanent repair of the fuel reprocessing plants in commercial steam generators willrequire each unit to operation in the United States and actions longed outages of nuclear units caused by radioactive contamination or other be out of service for approximately nine to by the government have removed tlfis al-specified damage. Based on current pre- twelve months. Repair work on Unit No. ternative indefinitely. The only alternative miums, the Company could be subject to 4 is scheduled to begin in late 1981 and on at the present time is storage and disposal maximum assessment of approximately Unit No. 3 in late 1982. Various licensing under a government proposed program.
proceedings are required which may Using the federal government's cost data,
$ 25 million for each policy year in which losses to member utilities occur. cause the repair work to be delayed. the Company estimates that at December The Company maintains private insur- Power resources could be inadequate and 31, 1980, the cost of transportation, stor-ance and agreements of indemnity with the southern part of the Company's sys- age and disposal of its spent fuel would be the Nuclear Regulatory Commission tem could be without adequate power $ 120 million.
I'rom time to time during any period that (NRC) to cover third-party liabilityarising Federal Income Taxes: The Internal from a nuclear incident which might occur both units were simultaneously out of Revenue Service (IRS) has examined the at the Company's nuclear power plants. In service. The Company's Gnancial position Company's income tax returns for 1971, the event a public liabilityloss arising from could be adversely affected. The Com- 1972 and 1973 and has proposed additional a nuclear incident at a facility currently pany has Gled suit for damages against income taxes aggregating $ 22.1 million.
covered by government indemnification Westinghouse Electric Corporation, the The principal issue is the taxability of cus-exceeds $ 160 million, under the Price- supplier of the steam generators, seeking tomer deposits. The Company is attempt-Anderson Act, the Company willbe obli- reimbursement of the repair costs as well ing to reach a favorable settlement with gated to pay a deferred premium of up to as the cost of replacement power.
the IRS. Should this fail, the Company will
$ 5 million per incident for each of its three pursue all legal remedies which may in-licensed reactors but not more than $ 10 St. Lucie U>iitNo. 1 Mnor corrosion clude paying the taxes plus interest ($ 8.1 million in a calendar year for each of its has been detected in the steam million at December 31, 1980) and fling a three licensed reactors. The Company generators at St. Lucie Unit No. 1. The lawsuit seeking recovery of the amounts could be assessed up to approximately Company has been engaged in a program paid. In the opinion of legal counsel, cus-designed to mitigate the corrosion, and no tomer deposits are not includable in taxa-
$ 30 million in a year.
additional corrective action is called for at ble income and it is probable that a deci-Nuclear Units:
Turkey Point Units Nos. 3 and 4 At its this time. sion to this effect would be obtained in Turkey Point Plant the Company has been St. Lucie Unit No. 2 The Company has federal court.
experiencing an ongoing problem with the undertaken to sell, under certain condi-34/FPL
- 8. Legal Proceedings 9. Quarterly Data (Unaudited)
The Company is adefendant in an antitrust For the periods shown below, the Operating Revenues, Operating Income, Net suit which seeks damages of approxi- Income and Earnings per share of Common Stock (after dividend requirements on mately $ 12 million before trebling, result- Preferred Stock) are as follows:
ing from failure to provide an interconnec- Earnings per Operating Operating Net share of tion with the Gainesville Public Utilities Quarter Ended Revenues Income Income Common Stock Department (Gainesville). A jury verdict (Thousands of Dollars) for the Company was appealed and retrial of the suit has been ordered to determine March31, 1978 .......... $ 371,901 $ 74,555 $ 48,679 $ 1.04 June30, 1978............ 371,185 57,241 29,594 0.57 whether an agreement, understanding or September 30, 1978 ...... 496,785 104,304 76,774 1.73 concert of action, to which the appellate December 31, 1978....... 407,355 82,597 56,194 1.20 court found the Company a party, was a March 31, 1979 .......... 377,089 62,445 39,261 0.77 substantial factor in Gainesville's failure to June30, 1979............ 440,003 41,966 17,062 0.22 obtain an interconnection.
September 30, 1979 ...... 614,964 109,678 84,208 1.87 December31, 1979....... 501,881 87,715 64,137 1.35 In addition, the Company is defendant March 31, 1980 .......... 476,022 60,372 35,355 0.64 in an antitrust suit by a group of Florida June30, 1980............ 566,069 71,282 42,870 0.83 municipalities which seeks damages in sub- September 30, 1980 ...... 707,197 102,830 74,776 1.60 stantial, but not yet fully determined, December 31, 1980....... 597,990 75,071 45,317 0.87 amounts together with access to the In the opinion of the Company aH adjustments (consisting of only normal recurring Company's nuclear units. accruals) necessary to present a fair statement of such amounts for such periods have The Company is unable to predict the been made.
ultimate outcome of these matters; how- The Company is of the opinion that quarterly comparisons may not give a true ever, based on discussions with its vari- indication of overall trends and changes in the Company's operations and may be ous counsel, the Company is of the opin- misleading to an understanding of the results of operations due to the implementation of ion that these actions will not have a ma- the fuel cost recovery clause and because the revenues and expenses of the Company terial adverse effect on its consolidated fi- are subject to periodic fluctuations due to changes in weather conditions, customer nancial position. usage, number of customers and the proportion of generation by various fuels.
FPL/35
Effects of Changing Prices The accompanying information is pre- Substantially all electric utilityplant Under both methods the adjustment for sented in accordance with the require- (which consists of electric utility plant in depreciation was calculated by applying the ments of Financial Accounting Standards service including land and intangibles, rates and methods used for computing book Board Statement No. 33, "Financial Re- CWIP, and nuclear fuel) was restated to depreciation to the restated plant amounts.
porting and Changing Prices" (State- dollars having equal purchasing power The rate regulatory process limits the ment). (constant dollars) using the CPI-U applied Company to recovery of the historical The two methods prescribed by the to the historical cost by vintage year. Cur- cost of electric utility plant. Therefore, Statement for measuring the effects of rent cost of electric utilityplant was re- the excess of restated value of electric changing prices were used in calculating stated by applying the Handy Whitman utilityplant over historical cost is not the information which follows. The flrst Index of Public UtilityConstruction Costs presently recoverable in rates as depre-method, the constant dollar method, pro- or other appropriate indexes to substan- ciation, and is reflected as the reduction to vides data adjusted for "general inflation" tially all electric utility plant excluding net recoverable amount.
using the Consumer Price Index for All production plant. Current cost of produc- As prescribed by the Statement, in-Urban Consumers (CPI-U) as the broad- tion plant was restated by applying the es- come taxes were not adjusted. This based measure of general inflation. The timated construction cost per megawatt treatment is consistent with federal in-objective of this approach is to provide fi- of each fuel type of production faciTities to come tax policy which ignores the effect nancial information in dollars of equivalent the number of megawatts of each fuel of inflation in measuring taxable income.
value or purchasing power (constant dol- type in the Company's present generation The Company's effective tax rate for lars). Financial data are made more com- mix. Refinements in engineering 1980, when adjusted for inflation, is parable by reporting the amounts in terms estimates of production plant construction 79.9% under constant dollar accounting of a common unit of purchasing power. costs are reflected in the increase in and 355% under current cost accounting.
The current cost method adjusts for current cost of electric utility plant Each of these effective tax rates exceeds "changes in specific prices." The objective during 1980. the reported effective tax rate of 41.8%
of this method is to reflect the effects of changes in the specific prices (also re-SUPPLEMENTARY STATEMENT OF INCOME ADJUSTED FOR EFFECTS ferred to as "current costs") of the re-OF CHANGING PRICES sources used in the Company's opera- For the year ended December 31, 1980 tions. Measures of these resources and (Thousands of Dollars) Constant Current their consumption reflect the current cost Conventional Dollar Cost of replacing these resources, rather than Historica! (Average (Average the historical cost amounts expended to Cost 1980 Dollars) 1980 Dollars) acquire them. Operating revenues $ 2,347,278 $ 2,347,278 $ 2,347,278 Both of these methods inherently in-Operating expenses excluding depreciation 1,877,759 1,877,759 1,877,759 volve the use of assumptions, approxima-tions, and estimates, and therefore, the Depreciation . 159.964 322.347 460.773 resulting measurements should be viewed Operating income 309,555 147,172 8,746 in that context and not as precise or com- Other income net 39,507 39,507 39,507 prehensive indicators of the effects of in- Interest charges ............. 150,744 150,744 150.744 flation on the Company. Income Qoss) from continuing Fuel inventories and the cost of fuel operations (excluding reduction to net recoverable $ 198,318 S 35.935 S (102,491) used in generation have not been restated amount)'ncrease because regulation limits recovery of in current cost of electric these costs to actual costs. Likewise, ma- utilityplant during 1980" '........... $ 2,114,173 terials and supplies have not been restated Reduction to net recoverable amount ..... $ (377,941) (1, 186,003)
Effect of increase in general price level .... (1 167,685)
~
since they are used principally in utility Excess of increase in general price plant construction and do not give rise to level over increase in current cost after cost of sales. reduction to net recoverable amount ... (239,515)
The accompanying supplementary in- Gain from decline in purchasing power formation is presented in response to the of net amounts owed 373,792 373,792 Statement and is not intended to replace Net. $ (4, 149) S 134.277 historical cost information.
'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 of electric utilityplant, net of accumulated de-preciation, was $ 11,284,000, while net historical cost recoverable through deprecia-tion was $ 4,903,000.
36/FPL
and the statutory rate of 46%. Company's fuel cost recovery clause The gain from the decline in purchasing permits the fuel adjustment factor to be power of net amounts owed represents changed to the extent that fuel costs the net effect on the Company of holding change, but all other rates are Gxed until monetary assets and liabilities. During adjusted in formal rate proceedings. As a periods of inflation, monetary assets such result, while revenues I'rom base rates as cash and claims to cash lose purchasing have grown with increased KwHsales, power because they willbe able to pur- the cost of providing the additional service chase less goods and services at a future (excluding fuel) has exceeded the growth date, while monetary liabilities, primarily in revenue.
long-term debt, willbe paid with dollars Inflation increases the construction cost having less purchasing power. Since the of new plant over the average historical Company has more monetary liabilities cost which causes the Company to need than monetary assets, it has a net mone- larger amounts of external Gnancing. In tary gain. This gain is not realizable by the spite of the Company's efforts to control Company but is simply an estimate of the costs, inIIation pushes up operating costs effect on the Company of holding mone- while base revenues are Gxed between tary items. rate cases, thus reducing internal sources Increases in construction costs, operat- of funds. The preceding factors make it ing expenses and the cost of capital due to necessary for the Company to obtain ad-inflation have resulted in increases in the ditional external financing at higher costs, unit cost of providing service while unit which further reduce the Company's abil-base rates have remained Gxed. The ity to earn an adequate return.
FIVE-YEARCOMPARISON OF SELECTED SUPPLEMENTARY FINANCIALDATA ADJUSTED FOR EFFECTS OF CHANGING PRICES (Thousands of Average 1980 Dollars, except per share amounts)
Years ended December 31, Historical cost information a@usted for general inflation: 1980 1979 1978 1977 1976 Operating revenues............ $ 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) ...... Nil $ 1.64 Net assets at year-end at net recoverable amount $ 1,455,860 $ 1,509,650 Current cost information:
Income goss) from continuing operations ............... $ (102,491) $ (37,592)
Income (loss) per common share $ (3.35) '(1.88)
Excess of increase 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 $ 2.64 $ 2.52 $ 2.26 $ 2.26 Market price per common share at year.end................... $ $ 28% $ 33 $ 36'h $ 40 26'46.8 Average consumer price index 217.4 195.4 181.5 170.5 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 Principal Officers
'i>I. P. Anthony Marshall McDonald IVest Palm Beach, Fla. President, Anthony', Chairman of the Board and Inc., a chain of ladies apparel retail stores. Cluef Executive Officer Serving since 1977. John J. Hudiburg tGcorge F. Bcnnctt President and Chief Operating Ofhcer Boston, Mass. President and Chief E. A. Adomat Executive Oflicer of State Street Executive Vice President Investment Corporation and of Federal R. E. Talion Street Fund, Inc., investment companies; Executive Vice President Managing Partner of State Street Research and Management Company; Chairman, H. L. Allen Senior Vice President Managing General Partners, State Street Exchange Fund. Serving since 1970. L. C. Hunter
'David Blumberg Senior Vice President Mami, Fla. President, Planned R. lV. IVall Jr.
Development Corp., a building and Senior Vice President and development firm. Serving since 1973. Assistant Secretary Jean illcArthur Davis D. K. Baldwin Miami, Fla. President, McArthur Dairy, Inc., Vice President, Corporate Services engaged in the production and distribution of E. L. Bivans dairy products. Serving since 1977. Vice President, System Planning
)John J. Hudiburg lV. H. Brunetti Mami, Fla. President of the Company. Vice President, Energy Management Serving since January 1979. J. C. Collier Jr.
Robert B. Knight Vice President, Divisions Coral Gables, Fla. Chairman, National i%I. C. Cook Food Services, Inc., a restaurant Vice President, Fuel Resources and management company. Serving since 1977. Corporate Development John ill. McCarty B. L. Dady Fort Pierce, Fla. Attorney and citrus grower. Vice President, Management Control and Serving since 1973. Services, and Assistant Secretary fMarshall McDonald H. J. Dager Jr.
Miami, Fla. Chairman of the Board of Vice President, Engineering, Projects and Directors. Serving since 1971. Construction
'IEdgar H. Price Jr. T. E. Danese Bradenton, Fla. Chairman of the Board and Vice President, Governmental Affairs President of The Price Company, Inc.,
a consulting firm. Serving since 1972.
J. H. Francis Jr.
Vice President, Corporate Communications lewis E. 1Vadsworth R. J. Gardner Bunnell, Fla. Engaged in timber and cattle Vice President, Strategic Planning businesses. Serving since 1970.
Gcnc A. Whiddon L. C. Hauck Vice President, Law Fort Lauderdale, Fla. President, Causeway Lumber Company, Inc., engaged in J. L. Howard the sale of lumber and building materials. Vice President-Treasurer, Financial Serving since January 1979. lV. M. Klein Vice President, Economic Development fExecutive Committee
'Audit Committee 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 Annual Meeting Dividends The 1981 Annual Meeting of FPL Shareholders will On February 17, 1981, the Board of Directors be held in Sanford, Fla., on Tuesday, April14, at declared a regular quarterly dividend of $ .68 per the Sanford Civic Center. Formal notice of the share, the Company's 141st consecutive quarterly meeting, together with a proxy statement and dividend. Itis payable March 16 to holders of form of proxy, willbe mailed to Shareholders on or record as of March 2.
about March 12, at which time proxies willbe The following table indicates dividends paid requested by management. previously on Common Stock: 1980 1979 The 1980 meeting in Ft. Myers was attended by First Quarter $ 0.60 $ 0.52 more than 300 persons. At the meeting shareholders Second Quarter. $ 0.68 $ 0.60
~ Elected the 11 directors currently serving Third Quarter . $ 0.68 $ 0.60
~ Ratified and approved appointment of Deloitte Fourth Quarter $ 0.68 $ 0.60 Haskins &SeHs as auditors
~ Updated the Company Charter and made Dividend Reinvestment certain other changes and revisions In 1980, the Company inaugurated a Dividend
~ Passed a Charter amendment increasing the Reinvestment and Common Share Purchase Plan.
authorized number of Preferred Shares to 20 million Holders of Common and Preferred Stock may have
~ RatiGed an amendment to the Company's cash dividends on aH or some of their shares Charter to change certain provisions with respect automatically reinvested in additional shares of to the manner of effecting redemptions of Common Stock. Dividends on Common Stock are Preferred Stock reinvested at a Gve percent discount f'rom the
~ Rejected a shareholder proposal relating to current market price; dividends on Preferred, at cumulative voting in the election of directors. the market price. The Plan also has a supplemental More than 81 percent of outstanding shares of payment feature which permits aH participants to Common Stock were voted. invest optional cash payments each quarter to purchase Common Shares at market price. There Form 10-K for 1980 are no brokerage commissions or service fees A copy of the Company's Annual Report on Form charged to participants.
10-K, Gled with the Securities and Exchange As of the December 1980 dividend payment, Commission, is available, without charge, to some 8,000 shareholders representing 19 percent stockholders by writing to J.E. Moore, Director of of the Company's outstanding shares of Common Stockholder Information, Florida Power & were enrolled in the Plan. Using this convenient P.O. Box 529100, Miami, Fla. 33152.
Light'ompany, method of adding to their FPL holdings, Company Ownership shareholders invested an additional $ 11.6 million By the end of 1980, the Company had 43,676,193 during the last two quarters of 1980.
shares of Common Stock outstanding, owned by A Prospectus and Authorization Card may be 45,441 holders of record. Shareholders include obtained by writing to either FPL's Stockholder individuals and institutions such as foundations, Information Department or the Plan's Agent, The insurance companies and pension funds. These, in First National Bank of Boston, Florida Power &
turn, hold large blocks of stock on behalf of other Light Company Dividend Reinvestment, Post individuals. Office Box 1681, Boston, Mass. 02105.
Virtually aH employees, through acquisition of Investor Communications shares in FPL Thrift and Employee Stock A newsletter, Florida Hi-Lights, is prepared Ownership Plans, maintain ownership in and several times a year especially for common and therefore have a direct interest in the Company.
preferred stockholders. A similar publication is Common Stock Data sent periodically to bondholders.
The New York Stock Exchange is the principal The Financial and Statistical Report containing market for FPL Common Stock. The Company's comprehensive data for the years 1970-80 is ticker symbol is FPL. Newspaper listings generally distributed to professionals in the investment use FlaPL. community and is available to others as a The following table indicates the range supplement to this report.
(high/low) of trading prices for the past two years: AH inquiries concerning the Company's activities 1980 1979 and requests for publications including Quarterly FirstQuarter .............. 25%/19~/8 28~/8/26 Vs Consolidated Financial Statements should be addressed to the FPL Stockholder Information Second Quarter ............ 277/s/23% 28Ve/26 Third Quarter.............. 28$ /26 28 VS/25% Dept. (Telephone 305/552-4046) in care of the Principal Company Offices.
Fourth Quarter............. 27~/8/23V4 265/24 VS Principal Auditors Transfer Agent Deloitte Haskins & SeHs The registrar, stock transfer and dividend Company Offices Florida Power CertiGed Public Accountants disbursing agent for FPL stock is: 1 Southeast Third Avenue The First National Bank of Boston
& Light Company Shareholder Services Division 9250 West Flagler St. Miami, Fla. 33131 Box 529100 General Counsel
'O.
P.O. Box 644 Boston, Mass. 02102 Miam, Fla. 33152 Steel Hector & Davis Telephone 617/434-6562 Telephone: Southeast First National 305/552-3552 Bank Building 40/FPL Miami, Fla. 33131