ML18078B027

Annual Rept 1978.

ML18078B027
Person / Time
Site:	Salem
Issue date:	12/31/1978
From:	DELMARVA POWER & LIGHT CO.
To:
Shared Package
ML18078B026	List: ML18078B025 ML18078B027 ML18078B028 ML18078B029 ML19282B822
References
NUDOCS 7903160228
Download: ML18078B027 (40)

Text

Delmarva Power & Light Company 1978 Annual Report 190316 0 ~;?$

I I

/MASSACHUSETTS

- *- * -* - * - _ ____ _,...*'\..) \. NEW YORK

"'! ~artford *

\. I

'*""*" * /

r...' ......... .

PENNSYLVANIA I NEW

/JERSEY

\.

Philadelphia~,//

I

.1~ .../'"

I

" VIRGINIA

(

./

/

I

..)

• - *- - *- *- -*- - *- *- *- -..J

1 Financial Highlights Percent Increase 1978 1977 (Decrease)

Revenues $378.7 million $337.8 million 12.1 Net Income $ 47.4 million $ 39.3 million 20.6 Earnings Per Share $ 1.85 $ 1.65 12.1 Dividends Declared $ 1.30 1/2 $ 1.22 7.0 Common Stock Outstanding (Average Shares) 21,581,575 19,403,032 11 .2 Common Stock Book Value $ 15.77 $ 15.27 3.3 Construction Expenditures $130.3 million $130.4 million Financing Completed $ 75.3 million $ 31.9 million 136.1 Electric Sales 7.25 billion kwh 6.91 billion kwh 5.0 Electric Customers (Average) 266,042 262,646 1.3 Average Residential Usage 8,406 kwh 8,285 kwh 1.5 Gas Sales 13.17 million met 12.10 million met 8.9 Gas Customers (Average) 71,416 71 ,289 Average Residential Usage 102.8 met 100.2 met 2.6 Annual Meeting Contents The map to the left shows the Will be held on Letter to Stockholders 2 Delmarva Peninsula, our service April 17, 1979 Financial Review 4 area. It is located in the center of 12:30 p.m ., in the Administrative and Staff the Atlantic Flyway, an airway for Services 6 the migratory waterfowl such as the Grand Opera House Electric and Gas Production 8 Canada geese shown on the cover. 818 Market Street Mall Engineering and Operations 10 Wilmington , Delaware Financial Section 12 Delmarva Power provides electric Senior Management and Staff 30 service throughout most of the Board of Directors 32

,700 square-mile Delmarva Pen insula. This area includes the tate of Delaware, portions of nine astern Shore counties of aryland and the two Eastern hore counties of Virginia. In ddition, the Company distributes atural gas in a 270 square-mile rea in Northern Delaware.

ocations of the Company's major enerating stations on the eninsula are at Edge Moor, elaware City and Indian River in elaware and at Vienna in Maryland.

n addition, the Company receives eneration from two coal-burning

• tations in Western Pennsylvania nd from the Peach Bottom ,

ennsylvania, and Salem , New ersey, nuclear power stations.

To Our Stockholders:

We are pleased to report that Though not insensitive to public with the 1979 Presidential encouraging progress was made opinion, and well aware that wage/price guidelines in order to last year toward attaining our vital regulatory authorities are under continue to maintain the financial objective of improving the increasing political and consumer integrity of the Company. Stock-Company's financial integrity. This pressures to " hold the line" on holder support in rate proceedings was achieved partly through rate increases, the Company felt woul d be greatly appreciated . The continued effective cost control obligated to take aggressive regulatory comm issions are always measures and partly as a result of action in seeking rate relief in all pleased to hear from all interested higher sales coupled with jurisdictions in order to continue parties during rate proceedings.

aggressive efforts to price our providing a good quality of utility services more closely in line with service and to maintain our Though there has been a reduction continually rising costs. financial credit ratings. in the rate of growth of electrical usage compared to the early 1970's, Earnings per share of common For the first time, rate filings were we project an average annual stock were $1 .85 in 1978, a made almost concurrently in all growth of 5% during the next ten 12.1 % increase over the $1 .65 four jurisdictions of the Com- years. Our service area, particularly earned in 1977. The financial pany's service territory. Ap- the lower peninsula, is a growing improvement is discussed more plications were filed for total area.

fully in the following financial additional retail revenues of $49.1 section and in detail in the million in Delaware, Maryland and A marked improvement has been Management Review of Virginia and $7.9 million in the made in our gas supply situation .

Operations, pages 13 and 14 wholesale area. A total of $11.4 mil- An increased allocation of natural of this report. lion was granted in the three states. gas during the past year has made On December 1, 1978, $7.9 million it possible for the Company to Reflecting the improvement in was permitted to go into effect in add a limited number of new earnings, the Board of Directors the wholesale service area, under customers, in contrast with our on December 27, 1978 voted a bond and subject to refund , pend- experience in 1977 when general quarterly increase of 2.5¢ per ing final order by the Federal Ener- shortages of natural gas made it share on common stock gy Regulatory Commission (FERC). necessary for the Company to dividends, raising the equivalent restrict supplies to our customers.

annual rate from $1.28 to $1.38 per Though disappointing in terms of share. The Company fully the ratio of increases granted to During the past several years, an recognizes its obligation to those applied for, the Company understandable concern about the provide a reasonable return to its was authorized to improve the company's operating efficiency has investors and will continue to quality of its earnings by utilizing developed. This has been caused make every effort, consistent with certain accounting procedures. by inflation and rising prices and sound fiscal policy, to press This will increase the Company's the fact that we must continue the vigorously to fulf ill this obligation. cash flow and help moderate the construction of new generating need for future financing. facilities to meet future needs even At year end in 1977, it became though we now have a large gener-clear that even the Company's While the costs of electricity and ating reserve. In recognition of most stringent cost control gas have increased in recent years, these concerns, the Delaware measures would be inadequate to they have not increased as fast as Public Service Commission in 1978 offset rising operating expenses. the Consumer Price Index over the instituted a general management past 20 years. Looking to the future ,

we must continue to take ap-propriate rate action , consistent

efficiency audit of Delmarva Power The framework for the We feel fortunate to have as a by the nationally known manage- reorganization was largely com- member of this team, Senior Vice ment consulting firm of Theodore pleted during 1978. The process is President and Chief Financial Barry & Associates. to consolidate systemwide func- Officer Nevius M. Curtis who tions from a number of segmented came to our Company in October The result of this audit confirmed operating components into four 1978 after having served as our contention that the Company major areas, each reporting to a Financial Vice President for the is managed efficiently. We believe senior vice president. Detroit Edison Company. Mr.

the conclusions reached by the Curtis brings to Delmarva 22 years audit firm were objective and well These senior officers are identified of utility finance and accounting balanced and we concur in its on the following pages of this experience, having served in these summary assessment of Delmarva report as they relate results of capacities with other utilities prior Power as " a company in tran- their individual responsibilities to joining Detroit Edison.

sition " . during the past year. They provide a proven professional and ag- We acknowledge our great in-The major elements in the Com- gressive management team to debtedness to our employees for pany's operations which led to guide the Company through the their loyalty and understanding as this conclusion were the system- difficult years ahead. we mold the Company into a wide reorganization and the plans unified and progressive entity, and to merge Delmarva's Maryland and to our stockholders for their Virginia subsidiaries into the parent continued support and confidence.

corporation. The reorganization was undertaken to reflect the Sincerely, changing management responsi-bilities that have resulted from the Company's growth in recent years.

The merger has been approved by the Delaware and Virginia regu- Thomas C. Roe latory authorities and by the Chairman of the Board FERG and is pending before the Maryland Public Service Commis-sion. RN~

Robert D. Weimer President and Chief Executive Officer February 20, 1979 Thomas C. Roe

Financial Review Financial Results found " fair and reasonable " by all market in order to provide funds As you have read in the of Delmarva Power's regulatory for its construction program. Total President's letter, 1978 was a year authorities. Even though this was a capital requirements for the year of financial progress for Delmarva significant increase over the aver- amounted to $130.3 million of which Power & Light Company. Earnings age return of 10.8% in 1977, efforts $75.3 million was raised from the have increased and the dividend must continue to bring earnings up public market.

rate was raised in December. to the authorized level in order to Coverage of fixed charges in- raise capital at the lowest In June, a $50 million offering of creased from 2.36 times in 1977 economic cost. 9Y8 % First Mortgage and to 2.79 times in 1978. Collateral Trust Bonds was Sales and Revenues completed. In November, Despite these significant financial Electricity sales in 1978 amounted Delmarva Power raised $20 million improvements, the return on to 7.25 billion kwh , an increase of through the sale of 200,000 shares average common equity in 1978 5.0% over those in 1977 and sales of 9% $100 par cumulative was 11 .8%, still well below that of natural gas totaled 13.17 million preferred stock. This issue has a mcf in 1978, increasing 8.9% over 4% sinking fund starting in 1984.

1977 sales. These increases Construction Expenditure resulted from greater usage by In addition to these two issues,

& Internal Financing residential and industrial the Company raised $5.3 million (Dollars in Millions) customers, partly due to colder through the sale of 391 ,596 shares 140 - - - - - - - - - - - than normal weather last winter and partly reflecting an improved economy.

Electric operating revenues of

$318.1 million were 9.1 % higher in 1978 than in 1977, while gas revenues of $49.6 million were 37.0% greater than those in 1977.

Both increases were primarily at-tributable to greater sales and higher base rates.

Operating Expenses Operation and maintenance ex-penses increased during 1978 by

$14.7 million to $237.7 million. This 6.6% increase reflects the Com-pany's stringent cost control

~

74 75 Construction Expenditure 76

- 77 78 Internal Financing measures. Taxes, however, in-creased 53.8 % to $38.0 million.

Financing and Capitalization During 1978, the Company con-tinued financing in the public Nevius M. Cu Sen ior Vice President Chie f Financial Ollie

of common stock through the Rate Matters Sources of Revenue Dividend Reinvestment and The table below shows the in- by Regulatory Jurisdiction Common Share Purchase Plan. creases granted in 1978. Rate (Percent) increases for each type of service At the end of 1978, Delmarva's have generally been applied capitalization consisted of across the board . Changes in rate 50.6% debt, 13.2% preferred design are actively being studied stock and 36.2 % common in Delaware and Maryland. All fuel equity. This is a significant im- related costs are covered by fuel provement over the capital clauses or fuel rates in all jurisdic-structure existing 10 years ago <llil Delaware tions.

which was 55.9 %, 10.7% and 65%

33.4%, respectively. Reducing the Organization debt component and increasing The financial area encompasses the equity component provides rate, accounting , treasury, tax and better protection to those who investor relations matters. Con-loan funds to the business, tend- tinued effort is being made to ing to improve our ratings and to ensure that these groups are able reduce the costs of capital. to meet the increasingly complex <llil Maryland demands placed on them by the Construction and Capital 18%

regulatory process. This takes the Needs form of more sophisticated use of The improvement in capitalization computerization and continued 1---.c:-**: , - -

... ""- -1 <llil FERG provides a strong base to meet consolidation of functions in the 10%

- *-**---1 ~ Virginia the financial requirements related corporate headquarters. 1 - - - -- 3%

to the construction program. Other 4%

Capital needs are expected to peak in 1979, reflecting the financial re- 1978 quirements for completing the Salem No. 2 nuclear plant in 1979, STATUS OF 1978 RATE CASES Indian River No. 4 in 1980 and the (Dollars in Millions) 1979 refunding of the 2'la% Series of Requested Granted First Mortgage Bonds. Jurisdiction Amount Date Amount Date Virginia $ 1.9 12/15/77 $1 .5 10/1/78 Financing requirements, amount- Delaware 33.7 2128178 8.0 9/29/78 ing to $110 million in 1979, will Maryland 13.5 5/31/78 1.9 12/28/78 also peak in that year. The exact FERG 7.9 5/31/78 7.9* 12/1/78 type and timing of the issues to

• Under bond, subject to refund.

meet those requirements has not been determined at this time, but they are expected to include mortgage bonds and both preferred and common stock.

Administrative and Staff Services Management Efficiency Audit these savings are at " the low end of Average Annual As a condition of its order the scale of the types of savings we Residential Electric Usage granting a rate increase to the have found " at other utilities. Per Customer Company in August 1977, the (Kilowatt Hours)

Delaware Public Service Com- The Company is giving close mission instituted proceedings attention to these recom-whereby Delmarva Power would mendations, some of which are undergo a management efficiency already being implemented. ~06 audit. The audit conducted by Others will be carefully studied

~-ri 8,285 Theodore Barry & Associates (TB&A) began in February 1978 from a cost-benefit standpoint and will be adopted as warranted . I 7,645 7,953 and findings were presented to 7,01<:::

the Commission in September Marketing 1978. Marketing 's traditional role of promoting increased use of The overall assessment by TB&A electricity and gas has been was that the Company " appears redirected toward a load to be developing an effective top management concept. The main management organization thrust is now in leveling seasonal characterized by high levels of and daily peak uses while at the communication , a problem solving same time helping customers focus , and excellent policy make more efficient use of energy. 74 75 76 77 78 development. " In this manner, maximum em-phasis is placed upon efficient Although favorable, the report use of capacity and invested noted that " there are numerous capital.

challenges remaining ," as there Public Relations The necessity of filing rate in-would be with any large company. During the year, the Company crease applications in four .

The audit identified potential participated with the University of jurisdictions within the space of savings of $4.8 to $6.3 million. To Delaware in " Project Conserve," a six months thrust the Company put these figures in perspective, a computerized energy audit into the public arena and created

$6.3 million saving represents program designed to aid vocal opposition by customers only about 2% of the Company's homeowners in assessing their which was at times fanned by the total operating revenues. Moreover, energy use efficiency.

news media. Many of the rate according to TB&A's audit director, increase issues were technical and complex and difficult to convey in layman 's terms.

I I

I

To dispel rumors and clear up dealing with salary administration ,

Total Electric Sales benefits, performance appraisal (Years Growth Rate-%) misunderstandings about the reasons for the increase ap- and management by objectives plications, the Company created approaches.

community contact teams which made personal appearances at General Services well-publicized meetings at various New efforts were instituted to locations. In addition, a speakers coordinate and control systems bureau was established to development through the use of communicate with service clubs data processing as a central and other community groups. service. Under the guidance of the firm of Booz, Allen & Hamilton, As a part of the drive to improve Inc., a thorough review of the management techniques, the information needs of the Company Chicago-based firm of Hill and is in progress.

Knowlton , Inc. was engaged to conduct a thorough review of past As another consolidation step, and present public relations newly centralized management of practices, assessing our strengths purchasing and transportation will and weaknesses. Their report is allow additional economies of 74 75 76 77 78 scale as well as standardization of expected to provide recom-mendations and guidelines for inventories.

future courses of action.

Personnel and Industrial Relations The personnel function has under-gone considerable changes in recent years, culminating in combining the formerly separate Northern and Southern functions in one department.

Modern management methods have been applied to encourage and retain good employees. These include motivational programs H. Ray Landon Senior Vice President

Electric and Gas Production Gas exploration efforts by the Company's wholly-owned sub-sidiary, the Delmarva Energy Company, resulted in the supply of approximately 30,000 mcf of gas.

Current Generating Construction Construction continued during the year on the 400 megawatt coal-f ired Unit No. 4 at Indian River with operation still targeted for 1980. The projected cost is

$578/kw. The total cost is estimated to be $231 million.

The Company expects to begin receiving in 1979 its 80 Megawatt share of the Salem No. 2 nuclear unit located near Salem , New Jersey.

Electric and Gas Supply This past summer was relatively During the past year the Company cool as compared to the previous did not have to curtail electric year. Thus, the 1978 annual peak sales to our customers as a result of 1476 kw was lower than the of the national coal strike. This 1977 annual peak of 1499 kw.

was made possible because of However, based on normalized sufficient reserve capacity and the temperature and humidity con-ability of the Company to sub- ditions, the summertime peak stitute oil-fired generation for coal. demand would have increased This situation permitted the 5.1 % over1977, continuing the Company to sell significant upward growth partially due to amounts of electricity to the 4,819 new residential customers Pennsylvania-New Jersey-Maryland added to our system during the (PJM) power pool. Conversely, this year.

power pool arrangement allows Delmarva the security of being able Despite a severe winter, it was not to purchase power from other com- necessary to curtail gas supply to panies when the need arises. our customers. Both supply and storage capabilities improved in In March 1978 the Company 1978 with the result that the applied for full membership in the Company was able to add ap- William G. Price PJM . This is expected to take proximately 200 new gas Senior Vice President about two years to accomplish customers.

and will enable Delmarva Power to effect additional savings in in-terchange energy costs.

Ten-Year Generation Plan Environmental Matters Company is installing a new Early in the year, the Company The Company completed con- computerized energy control filed a 10-year future generation struction of a $3 million system. This system will utilize construction plan with the Public wastewater treatment facility at the most advanced equipment Service Commissions of Delaware the Edge Moor Power Station. A available for monitoring and and Maryland and with the similar $5 million facility is being dispatching bulk power throughout Virginia State Corporation built at the Indian River Power the entire service area and will Commission. The plan can be Station. In addition, as part of coordinate with the Pennsylvania-separated into three general the $29 million environmental New Jersey-Maryland power pool. It components: protection system at Indian River, will also provide the capability to

1) Construction of a 400 to 600 a cooling tower (see picture) determine on a minute-by-minute megawatt coal-fired plant at is nearing completion. The $29 basis which of Delmarva Power's Vienna, MD to be on line in million cost represents about generating stations is operating at 1987. 12.5% of the estimated total cost the greatest efficiency in order to

2) Installation of combustion tur- of the new generating unit. dispatch to our customers the bine peaking units, if needed lowest cost power available at any in the interim. Energy Control System given moment.

3) Continuing work on site quali- As an integral part of the new fication for capacity beyond Northern Division General Office Reorganization 1987. being built at Christiana, DE, the As a part of the reorganization process, the Production Depart-s shown on the graph below, the ment is being structured to orporate objective is to reduce the Fuel Costs provide for more centralized mount of electricity generated (Cents per Million BTU) control and uniformity in rom oil. Besides the need for less 250 ~~~~~~~~~~~

monitoring and directing the ependence on oil, which is in operation, performance and eeping with national policy, the maintenance of the Company's rice of coal and nuclear is much 200 power production facilities.

ess than the price of oil.

150 Generation Output by Fuel Source (Percent)

Coal 00 '--~'--~~~~~~~~

100 Nuclear 50 Coal Nuclear 0

1978 40 0

0 76 77 78 79 80 L_Projected----1

10 Engineering and Operations Consolidation of Functions All systemwide functions involving engineering and operating responsibilities were consolidated during the year. A major benefit was the ability to select and implement the most efficient methods of operation from the parent and subsidiary companies and to incorporate these into a new Division Operations structure.

For operating purposes, the Company is now divided into a Northern and Southern Division with the geographic dividing line roughly bisecting the Delmarva Northern Division Office, Christiana, Delaware.

Peninsula. Each division has a an invaluable tool. The complexity general office headquarters: the of the system created problems Southern Division's remaining at during its initial implementation, Salisbury, MD, and the Northern which began in November 1977, Division's to be housed in a new but a year of experience has building complex nearing com- eliminated most of the pletion at Christiana, DE. troublesome problems. We are now able to access customer Each division is comprised of a information quickly and efficiently number of districts, the operating while the computerized control of structure which has existed in the record-keeping and customer Southern portion of the Company billing has greatly reduced the for many years. The localized possibility of human error.

district system permits quick response to trouble calls and Combining Southern and Northern customer problems, thus providing engineering functions has also per-the ability for prompt service as mitted incorporation of the best the number of customers continues procedures of each. The consolida-J. Kenneth Wiley to grow. tion of the two functions will im-Senior Vice President prove efficiency, reduce waste and Customer service remains our generally eliminate overlap and paramount concern . In this regard , duplication of work.

our computerized Customer In-formation System (CIS) has proved

Transmission and Distribution 12,000 volts to 25,000 volts with the rebuilt for 230 kV and a new 230 Construction completion of work at Townsend kV line will be built between In-The Engineering Department is and Cedar Creek Substations. Go- dian River and Milford. These lines standardizing the design of the ing to a higher distribution voltage will support the 138 kV and 69 kV Company's distribution system in results in economies in the con- transmission systems and deliver line with the systemwide objective struction and operation of the the system generation to the load of unified operations. When fully distribution system. centers more efficiently.

implemented, these standards will ensure a consistent design During the year, preparations were In an ongoing effort to provide the philosophy throughout the made in the Southern Division for most efficient transmission Company. future 230 kV transmission in facilities, while ensuring that they anticipation of the scheduled are aesthetically and environ-As an illustration of this approach, addition of Indian River Unit No. 4 mentally acceptable, the Company the distribution systems in por- to the generating system. The 26- is making increased use of 138 kV tions of Southern New Castle mile line from Indian River to underground cable. Two sections County, DE, were converted from Piney Grove in Delaware was will be installed to supply the Brandywine Substation in the City of Wilmington and a third section under the Assawoman Bay to better serve the growing seaside resort of Ocean City, MD.

outhern Division Office, Salisbu ry, Maryland.

Financial Section First Mortgage And Collateral Regulatory Commissions Corporate Address Trust Bonds-Trustee, Chem ical Bank, New York, N.Y. Federal Energy Regulatory Delmarva Power Commission 800 King Street Pollution Control Revenue 825 North Capitol Street, N.E. P.O. Box 231 Bonds- Trustees, Farmers Bank Washington, D.C. 20426 Wilmington, DE 19899 of the State of Delaware, Telephone (302) 429-3011 Wilmington , DE, and Bank of Delaware Public Service Delaware, Wilmington, DE. Commission 1560 S. DuPont Highway Preferred Stock-Transfer Agent, To supplement information in Dover, DE 19901 Wilmington Trust Company, Wil- this Annual Report, a statistical mington, DE, Registrar-Delaware review, 1968-1978, and the Form Maryland Public Service Trust Company, Wilmington , DE. 10-K are available upon request.

Commission Please write to Stockholders Rela-301 W. Preston Street Common Stock-Stock symbol , tions, Delmarva Power, 800 King Baltimore, MD 21201 DEW, Listed on the New York and Street, P.O. Box 231, Wilmington ,

Philadelphia Stock Exchanges. DE 19899 Virginia State Corporation Transfer Agents-Wilmington Commission Trust Company, Wilmington, DE, P.O. Box 1197 and Irving Trust Company, New Richmond, VA 23209 York, N.Y.

Registrars-Delaware Trust Company, Wilmington , DE, and Irving Trust Company, New York, N.Y.

Quarterly Common Stock Dividends and Price Ranges The Company's common stock is listed on the New York and Philadelphia Stock Exchanges and has unlisted trading privileges on the Midwest and Pacific Exchanges.

1978 1977 Dividend Price Dividend Price Declared High Low Declared High Low First Quarter $.32 14% 13% First Quarter $.30 14% 13 Second Quarter .32 14Ya 13% Second Quarter .30 15 13 Third Quarter .32 14% 13% Third Quarter .30 14% 13%

Fourth Quarter .34 112 14Ya 12rs Fourth Quarter .32 14rs 13%

Management Review of Operations Consolidated Summary of Earnings (Dollars in Thousands) 1978 1977 1976 1975 1974 1973 Operating Revenues ... .. ........ $378,702 $337,818 $286,388 $276,026 $261 ,494 $188,359 Operating Expenses Operation .. . ... . . . ... ... . .. .. 212,498 198,020 167,215 165,165 153,494 99,323 Maintenance . ..... ..... .... . . 25,214 24,989 21 ,596 17,769 16,289 13,715 Depreciation .......... ... . ... 31 ,383 28,046 25,367 24,579 21 ,656 18,278 Taxes . . . . . .. .. ....... . . . . .. . 38,044 24,736 17,857 16,689 18,684 15,545 Total operating expenses .. . 307,139 275,791 232,035 224,202 210,123 146,861 Operating Income .. ........ .. ... . 71 ,563 62,027 54,353 51 ,824 51 ,371 41,498 Other Income .. . ... ........... .. . 8,044 8,069 8,519 6,203 6,585 7,947 Income Before Interest Charges . .. 79,607 70,096 62,872 58,027 57,956 49,445 Interest Charges . ........ ... ... . . 32,159 30,768 26,437 26,488 25,223 18,783 Net Income .. . .. ..... ... ........ 47,448 39,328 36,435 31 ,539 32,733 30,662 Dividends on Preferred Stock ... ... 7,474 7,250 7,250 7,250 7,250 6,360 Earnings Applicable to Common Stock .. ...... .. . . . ... 39,974 32,078 29,185 24,289 25,483 24,302 Dividends on Common Stock .. ... . . ... .... .. 28,189 24,127 22,618 21 ,107 17,995 15,851 Addition to Retained Earnings ... .. $ 11 ,785 $ 7,951 $ 6,567 $ 3,182 $ 7,488 $ 8,451 Common Stock Average shares outstanding (thousands) . .... ... ...... .. 21 ,582 19,403 18,821 17,580 14,862 13,547 Earnings per share . . . .. . . .. .... $1.85 $1.65 $1.55 $1 .38 $1 .72 $1 .79 Divideods declared per share . . . . $1.30 112 $1 .22 $1 .20 $1.20 $1.20 $1.17

Management's Review of Operations, continued Operating Revenues prolonged overhauls and extensive maintenance at the Operating revenues were up 12.1% in1978 and 18.0% Company's generating facilities.

in 1977 because of the following:

Revenue Increase Depreciation (Decrease) from Depreciation expense increased due to the placing in the Prior Year service of the Salem 1 nuclear plant in June, 1977 and (in millions) other additions to depreciable plant.

Cause 1978 1977 Electric Taxes Changes in- Taxes on income increased primarily due to substantial Base rates due to rate increases $17.6 $21.8 increases in taxable income. Taxes other than income Increased sales 8.6 6.5 increased primarily due to increased tax rates and higher Recovery of fuel costs (1.4) 18.7 gross receipts taxes which are based upon operating Other electric revenues 1.8 2.3 revenues.

$26.6 $49.3 Other Income Gas Other income decreased in each of the comparable Changes in- years due mainly to lower interest income which was Base rates due to rate increases $ 3.0 $ 2.9 partially offset by increases in Allowance for Other Increased sales 1.9 (1 .8) Funds Used During Construction.

Recovery of purchased gas costs 8.5 2.9 Interest Charges

$13.4 $4.0 The higher interest charges of $1.4 million in 1978 reflect the sale of additional first mortgage bonds in June, 1978, partially offset by a larger AFUDC credit.

Electric sales increased 5.b % in 1978, reflecting in- The 1977 increase reflects the sale of pollution control creased usage by all classes of customers, and 3.7 % in notes issued in December, 1976, along with the incur-1977, primarily due to increased residential and com- rence of short-term debt in the latter part of 1977.

mercial usage. Gas sales increased 8.9% in 1978, primarily due to increased commercial and industrial Net Income and Earnings per Share sales, whereas in 1977 sales decreased by 12.2% due to Net income increased $8.1 million in 1978 and $2.9 curtailments by the Company's pipeline suppliers million in 1977 due primarily to the fact that rate in-which were necessitated by the severe winter weather. creases and higher electric sales increased revenues faster than expenses. However, the increase in net Operation and Maintenance income for 1978 over that for 1977 was proportion-Operation expense (which includes fuel for electric ately greater than the increase in earnings per share generation , energy interchange, gas purchased and of common stock due to the dilutive effect of the in-other operation costs) and maintenance increased creased average number of shares outstanding result-

$14.7 million and $34.2 million during the years 1978 ing from the sale of 2,000,000 shares in November, 1977.

and 1977, respectively. The increase in 1978 results from greater generation of electricity and higher costs of gas purchased, labor and operating supplies. Partial-ly offsetting these increases was a decrease in the price of fuel and greater sales to the PJM pool as a result of the coal strike in early 1978. The larger ex-penses in 1977 reflect higher coal, oil and gas costs as well as a decrease in sales to the PJM pool because of

Consolidated Statements of Income Delmarva Power & Light Company and Subsidiary Companies For the years ended December 31 (Dollars in Thousands) 1978 1977 Operating Revenues Electric ....... .... . .. ... . ..... .. . .... ..... .. ............ . $318,106 $291 ,568 Gas .. ... .. .... . ................... ......... ........... . 49,640 36,233 Steam . ... ...... .... . .. . . ............... .. ... . ...... . . . . 10,956 10,017 378,702 337,818 Operating Expenses Operation:

Fuel for electric generation . ... . . . . ...... .......... ....... . 155,461 137,066 Energy interchange, net .... ... ... ... .. .... .. .......... .. . (32,701) (12,902)

Gas purchased . .. . ... . .. . ........ .. .. ... ... . .. ...... .. . 31,135 20,429 Other operation ........... ... .. .. ......... . ........ . . .. . 58,603 53,427 Maintenance . ..... . .. ...... .. . .. ..... ... . ..... .......... . 25,214 24,989 Depreciation ............ . .. .. ...... ... .......... .. ..... . . 31,383 28,046 Taxes on income ...... . .. .. ... .... .... ........... . ...... . . 18,858 7,662 Taxes other than income ..... .... . .. .. ... . ..... .. ... ...... . . 19,186 17,074 307,139 275,791 Operating Income 71,563 62,027 Other Income Allowance for other funds used during construction ..... ...... .. . 7,916 7,139 Other, net of taxes . .... ........ . .. . . ..... . ...... . .... .... . 128 930 8,044 8,069 Income Before Interest Charges ...... ... . ...... . ........... . 79,607 70,096 Interest Charges Long-term debt .......... . .. ... .. .. . ..... . ...... ... . ..... . 33,506 31,601 Short-term debt and other .. .. .... ..... ............. ... . . ... . 1,585 1,814 Allowance for borrowed funds used during construction ... . . .. ... . (2,932) (2,647) 32,159 30,768 Net Income . ..... .. .. . . ....................... . . . ....... . . 47,448 39,328 Dividends on Preferred Stock . . ........ . ....... ... ....... ... . 7,474 7,250 Earnings Applicable to Common Stock .. ................. ... . $ 39,974 $ 32,078 Common Stock Average shares outstanding (thousands) . ....... ... ..... . . .. .. . 21,582 19,403 Earnings per average share .. .......... ..... .. ... ....... .... . $1.85 $1.65 Dividends declared per share .......... ... .. .... ..... .. ..... . $1.30V2 $1.22 See accompanying Notes to Consolidated Financial Statements.

Consolidated Balance Sheets Delmarva Power & Light Company and Subsidiary Compan ies As of December 31 (Dollars in Thousands) 1978 1977 Assets Utility Plant-at original cost Electric . .. .. . ........ . .... .. .. . ... .... ....... . .......... . $ 912,366 $ 875,445 Gas ... . .. .. .. . ... .. .. . ... . .. ... . ... . . .... . .. . ..... . . . . . 58,884 56,462 Steam .. . .. . ...... .. ......... . ... ... . . .. . . .. . . ..... . .. . . 22,322 22,273 Common ....... . ... . .. ... . .. ...... . .. . .. ... .. . .. . .. . ... . 18,176 18,179 1,011,748 972,359 Less: accumu lated depreciation . ..... . ....... . . .. ... . ....... . 270,756 244,611 Net utility plant in service ... ..... . . . .. ... . ...... . .... ..... . . 740,992 727,748 Construction work in progress . ... ..... . .. . ... . . ... . . ....... . 252,266 158,685 Nuclear fuel , at amortized cost . ... ......... . . ........ ....... . 8,910 6,982 1,002,168 893,415 Nonutility Property and Other Investments .. .. . .. .. . ........ . . 4,620 4,008 Current Assets Cash . .. . .............. ... . . ... . .... .. . .. .. . .... . ... . ... . 16,845 15,317 Special deposit tor pol lution equipment . . . .. ... . . . .... .. .. . ... . 1,432 11 ,857 Accounts rece ivable ........ .. ...... . .... . .......... .. .. . . . 33,637 30,470 Deterred fue l costs . ................ . . . . .. .. .. ... .. .. . .. . . (2,290) 8,084 Materials and suppl ies, at average cost:

Fuel (coal, oil and gas) . . ..... ... . .......... . .. . .. . ...... . . 28,061 26,179 Operation and construction .. ... . .. . .. . . ........... ...... . 14,599 15,432 Prepayments .... . ... . .. ..... ... . . .. .... . . . . .. . . . . ... . ... . 3,013 3,118 95,297 110,457 Deferred Debits Preliminary survey and investigation charges . ........ . .... .. . . . 2,676 11 ,481 Deterred income taxes relat ing to the credit arising from sale of contracts (Note 7) . ... . . . ....... ... . . . . .. . 9,888 5,958*

Other ..... . ........... . ... . .. . .. .. .. . .... .. ............ . 5,656 8,059 18,220 25,498 Total ...... . ...... . .... . ... . ... . . . . . ...... . . .. . . ... . ..... . $1,120,305 $1 ,033,378

• Rec lassified for com parative purposes.

See accompanying Notes to Consolidated Financial Statements.

ividend einvestment &

ommonShare urchase Pia

For more than 4 years, the Company has offered the owners of Common Stock the opportunity to reinvest cash dividends and/or invest additional cash monthly in amounts from $25 up to $3,000 per quarter to purchase additional shares of Common Stock without paying any brokerage or service charges. More than 11d400 of the common sharehol ers are participating in the Plan . They have invested their dividends and/or optional cash payments amounting to more than $14.5 million to purchase 1, 170,000 new shares of the Company's Common Stock.

If you are not participating, you may want to consider the benefits of joining the Plan. To receive a Summary Prospectus containing details of the Pfan, please complete and mail the attached form to the Company.

Yes, please send me additional information about the dividend reinvestment plan.

Name Address City State Zip Code

Please Affix 10¢ Postage DelmoNo Power Attention: Stockholders Relations P. 0. Box 231 Wilm ington, DE 19899

1978 1977 Liabilities Capitalization (see accompanying statements)

Common stock . ... ........ . ........ .... . .. . .......... .. . . $ 73,407 $ 72,085 Additional paid-in capital . ........ .... .... . .. . . .... . . ... . .. . 150,283 146,521 Retained earnings . .. ..... .... ......... ..... .. . . . ... . .... . . 119,392 107,607 Total common stockholders' equity .. .......... ... ... ... . .. . 343,082 326,213 Preferred stock . ... ....... ... .. ........ ... .... . .... . ... . . . 125,175 105,226 Long-term debt ... ... ... . .. ..... .. .... ........ . . .. .. . .. . . . 468,955 428,905 Total capitalization ... .. ...... ... ...... . . ...... .. .... . .. . 937,212 860,344 Current Liabilities Short-term debt . . ... ... ..... . ...... ..... .... ..... . .. . .... . 32,100 Current maturity of long-term debt . . ... ..... ... ..... .. ....... . 10,000 Accounts payable .... . . . .. .. ... .. .... ....... ... .......... . 13,261 8,180 Taxes:

Accrued . ................... . ....... . . .. ..... ... ...... . 18,284 4,877 Deferred (fuel costs) . .. . . .. ..... .... .. . . .. . ... . .. ....... . (1,270) 4,118 Interest accrued ........ .... .. . .......... . . .... .. .. . .. . . . . . 11,303 8,910 Dividends declared .. . .. . .... . .. .......... ... .. .. ..... .. .. . 7,504 6,835 Other .... . ........ . .. . .... .. ............ ... .... . .... ... . 3,477 3,184 62,559 68,204 Deferred Credits Credit arising from sale of contracts (Note 7) .... .. . .... ........ . 77,383 77,383*

Accumulated deferred income taxes .... . . .. . .. ........ ... ... . 15,490 11 ,530 Accumulated deferred investment tax credits ... .. .. . . ... ..... . . 24,772 15,071

• Other ........ ... ..... .. .... . . ......... . . .... . . . .. . ..... . 2,889 846 120,534 104,830 Commitments (Note 10) and Contingencies (Note 11)

Total ... . . ... .................. .. ... . ....... .. . .... .. .. . . . $1,120,305 $1 ,033,378

• Reclassified for comparative purposes.

See accompanying Notes to Consol idated Financial Statements.

18 Consolidated Statements of Sources of Funds for Construction Expenditures De lmarva Power & Light Company and Subsidiary Companies For the years ended December 31 (Dollars in Thousands) 1978 1977 Sources of Funds Internally generated:

Net income ... .. . . . . . ... . .. .. .... . . .. . .. . . ... ... . .... . . $ 47,448 $ 39,328 Items not requiring (providing) funds:

Depreciation . .... .. . .. . .. ... ..... . . . ...... . . ... . .... . 31,383 28,046 Amortization of nuclear fuel .. . .. ................ .... . . . . 1,307 605 Allowance for funds used during construction . ... ... . . . .... . (10,848) (9,786)

Investment tax credit adjustments, net. .. . ... ..... ........ . 9,701 164 Deferred income taxes, net ..... .............. . . .. ...... . (1,428) 6,404 Funds from operations . ............ .. ... .. .. . . . ... . . . 77,563 64,761 Less: Dividends on common and preferred stock . ... ... . ..... . . 35,663 31,377 Internally generated funds .......... .. .. ........ . ... . . 41,900 33,384 External financing :

Net proceeds from sale of:

Long-term debt ... . . ............ .. ... ............ .... . 49,620 Common stock ..... . .. .... ...... ...... .... .......... . 5,084 30,870 Preferred stock ... . ........ . .. . ........ .. . .. .. .... ... . 19,949 Change in short-term debt. ..... ...... .. .......... .. ...... . (32,100) 32,1 00 Redemption of long-term debt . ...... . ... . .... .. .... .. .... . (11,950)

Externally financed funds .. . ....... ... .. ... . . ....... . . 42,553 51 ,020 Other sources:

Decrease in working capital* .. ..... ... .. ............... .. . 36,962 44,708 Other, net . . . . ... ... . .. .. ... ... . .......... ... .. . . ...... . 8,857 1,259 Other funds .. .. .. .. ... .. ......... ................. . 45,819 45,967 Construction Expenditures (excluding allowance for funds used during construction) . ... ...... . . . . . ........... . $130,272 $130,371

• Other than short-term debt, current maturity of long-term debt and current deferred income taxes.

See accompanying Notes to Consolidated Financial Statements.

Consolidated Statements of Capitalization Delmarva Power & Light Company and Subsidiary Companies As of December 31 (Dollars in Thousands) 1978 1977 Common Stockholders' Equity Common stock, par value $3.375 authorized-35,000,000 and 25,000,000 shares outstanding-21,750,139 and 21 ,358,543 shares ...... . ........ . ............ . $ 73,407 $ 72,085 Additional paid-in c apital ..... . ....... . .................. . . .......... ... . . 150,283 146,521 Retained earnings . .. . . ... .... . ...... . ... . ................. . ........ . . . . . 119,392 107,607 Total Common Stockholders' Equity .. . . . . .... . ... . . . .. . .. ..... . . . $343,082 36% $326,21 3 38 %

Cumulative Preferred Stock Par value $25 per share, 3,000,000 shares authorized , none outstanding Par value $100 per share, 1,800,000 shares authorized:

4.00 % Series-outstanding 40,000 shares .. . ... . .. . .. . . . . ... . . . ..... . . ... . $ 4,000 $ 4,000 3.70 % Series-outstanding 50,000 shares ............ . ......... .. .. .... . . . 5,000 5,000 4.28 % Series-outstanding 50,000 shares ... . . . ....... . ......... . .. . . .... . 5,000 5,000 4.56 % Series-outstanding 50,000 shares .. . .......... . . . .......... ... . .. . 5,000 5,000 4.20 % Series-outstanding 50,000 shares ......... . . . ..... . . . .. . ... . .. .. . . 5,000 5,000 5.00 % Series-outstanding 80,000 shares ............ . .................. . . 8,000 8,000 7.84 % Series-outstanding 100,000 shares .... . . . ............. . .. .. .. . . . . . . 10,000 10,000 8.96 % Series-outstanding 130,000 shares ........ . . . . . ................ ... . 13,000 13,000 7.52 % Series-outstanding 150,000 shares .......... . . . ......... . ...... . .. . 15,000 15,000 7.88 % Series-outstanding 200,000 shares .. .... .. .... ..... . . ...... . ...... . 20,000 20,000 8.00 % Series-outstand ing 150,000 shares ...... . ......... . . .. ....... . .... . 15,000 15,000 9.00 % Series-outstanding 200,000 shares (with mandatory redempt ion) .... . ... . 20,000 125,000 105,000 Premium ..... . ... . . . .. .. . .. .. . . .. . .. ....... .. ... . .. ... .. . . .. ...... .. . . 175 226 Total Preferred Stock .. .. . .... . ..... . ..... . .......... . . . . . .. . . . $125,175 13% $105,226 12%

Long-Term Debt First Mortgage and Collateral Trust Bonds:

2J8 °/o Series-issued 7/7/49, due 7/1/79 ....... .. ............ .... ..... . . . . $ 10,000 $ 10,000 2%% Series-issued 10/6/50, due 9/1/80 ....... .. .. .. .. .. .... . . . ......... . 12,000 12,000 9Y8 °/o Series-issued 1/14/75, due 1/1/83 . ............ . ..... . ..... . .. . .... . 30,000 30,000 3Y8 °/o Series-issued 5/11 /54, due 5/1/84 ....... . .. . . . . ... . . . .... . ... . .. .. . 10,000 10,000 3%% Series-issued 12/20/55, due 12/1 /85 ....... . . . . . ....... . ............. . 10,000 10,000 3%% Series-issued 6/17/58, due 6/1/88 .... . . .. . . . . ....... .. .. ... . . .. ... . 25,000 25,000 4r8 °/o Series-issued 9/22/64, due 10/1/94 .. . . . .... . ...... . ................ . 25,000 25,000 6%% Series-issued 9/13/67, due 9/1/97 . .. ..... . .......... . . .. . .. . .... . . . 25,000 25,000 7 % Series-issued 10/28/68, due 11 /1/98 ... .. . .. ... ... .... ..... ... . . .. ... . 25,000 25,000 8Y4 % Series-issued 1/12/70, due 1/1/00 .. .. . . ...... . .. . ........ ... . . .. .. . 30,000 30,000 8%% Series-issued 11/30/70, due 12/1/00 .... ...... .... . . . ... . .... .. .. .. .. . 30,000 30,000 7r8 °/o Series- issued 11 /30/71 , due 12/1/01 ................. . . . . . .......... . . 35,000 35,000 7Y2 °/o Series-issued 8/3/72, due 8/1/02 . .... . . .. . .... .. .. .... . . . .. . .. . .. . 30,000 30,000 8 % Series- issued 6/27/73, due 7/1/03 ..... . ............... .. ...... . ... . 25,000 25,000 10 % Series-issued 6/13/74, due 6/1/04 .... . . . ............. . ... .. . . . .... . 33,950 33,950 11 % Series-issued 7/2/75, due 6/1/05 . . . . ...... ... .. . ...... . . .. ....... . 29,100 29,100 9r8 °/o Series-issued 6/22/78, due 7/1/08 . . ....... ..... .. . . .. ... . . . .. . . .. . . 50,000 435,050 385,050 Pollution Control Notes:

Series 1973, 5.9% effective rate, due 1983-1998 . . . .. ..... . ... .. .... ... . . . .. . 8,000 8,000 Series 1975, 7.3% effective rate, due 1992-2006 ............. . ....... . ...... . 34,500 34,500 42,500 42,500 Unamortized premium and discount on debt, net . ...... .. .... . . . .. . .. . . 1,405 1,355 478,955 51% 428,905 50%

Current maturity of long-term debt .... .. . .... ..... .. . ....... . ....... . (10,000)

Total Long-Term Debt ................. . . . . . ... ... . . ...... . . .. . . $468,955 $428,905 Total Capitalization . ..... .. ...... . . . ...... . . . .. . . ..... . . . ... .. . $937,212 100% $860,344 100%

See accompanying Notes to Consolidated Financ ial Statements.

Consolidated Statement of Changes in Common Stockholders' Equity Delmarva Power & Light Company and Subsid iary Companies For the Two Years Ended December 31 , 1978 (Dollars in Thousands)

Additional Paid-in Retained Shares Par Value Capital Earnings Total Balance-January 1, 1977 19,076,019 $64,382 $123,354 $ 99,656 $287,392 Net Income 39,328 39,328 Cash dividends declared :

Common stock (24,127) (24,127)

Preferred stock (7,250) (7,250)

Sale of Common Stock-November22 2,000,000 6,750 20,330 27,080 Issuance of common stock under dividend reinvestment plan 282,524 953 2,837 3,790 Balance-December 31, 1977 21 ,358,543 72,085 146,521 107,607 326,213 Net income 47,448 47,448 Cash dividends declared:

Common stock (28,189) (28,189)

Preferred stock (7,474) (7,474)

Issuance of common stock under dividend reinvestment plan 391 ,596 1,322 3,762 5,084 Balance-December 31, 1978 21 ,750,139 $73,407 $150,283 $119,392 $343,082 See accompanying Notes to Consolidated Financial Statements.

Notes to Consolidated Financial Statements

1. Significant Accounting Policies Allowance for Funds Used During Construction:

Financial Statements: Allowance for funds used during construction The consolidated financial statements include the (AFUDC) is a noncash item and is defined in the accounts of the Company and its subsidiary com- regulatory system of accounts as "the net cost for panies, all of which are totally held. Accounting the period of construction of borrowed funds used policies are in accordance with those prescribed by for construction purposes and a reasonable rate on the regulatory commissions having jurisdiction with other funds so used." AFUDC is segregated into two respect to accounting matters. components: (1) the interest on debt component

(" allowance for borrowed funds used during con-Revenue: struction "), which is net of taxes and classified as a Revenues are billed to customers on a monthly cy- credit to interest charges, and (2) the common stock cle basis and include rate increases permitted to be equity and preferred dividend component (" allow-billed subject to refund pending final approval. At the ance for other funds used during construction " ),

end of each month , there is an amount of unbilled which is classified as an item of other income.

electric and gas service which has been rendered AFUDC is considered a cost of utility plant with a from the last meter reading to the month end. concurrent credit to income. It is excluded from taxable income for income tax purposes. The rate Fuel Costs: used in determining AFUDC was 7.4 % in 1978 and Fuel costs (electric and gas) are deferred and 1977.

charged to operations on the basis of fuel costs in-cluded in customer billings under the Company's Pension Plan:

tariffs, which are subject to periodic regulatory The Company and subsidiaries have a trusteed review and approval. noncontributory pension plan covering all of their The Company's share of nuclear fuel costs relat- regular employees. Pension contributions were ing to jointly-owned nuclear generating stations (in- $6,619,000 in 1978 and $5,807,000 in 1977, including cluding estimated costs of storing spent fue l) is $1 ,221 ,000 and $944,000 charged to construction, charged to fuel expense on a unit of production respectively. The contributions provide for normal basis. cost and amortization of prior service costs over a period of approximately twenty years. At December Depreciation and Maintenance: 31 , 1978, the prior service costs exceeded the market The annual provision for depreciation is computed value of the assets in the retirement fund by approx-on the straight-line basis using composite rates by imately $14,800,000. As of the same date, the market classes of depreciable property. For the years 1978 value of the fund assets exceeded the actuarially and 1977, the annual provisions expressed as a per- computed value of vested benefits.

cent of average depreciable utility plant in service were 3.4 % and 3.3 %, respectively. Provision for Income Taxes:

decommissioning costs relating to jointly-owned The Company and its subsidiaries file a con-nuclear generating units is made to the extent of the solidated federal income tax return . Federal income net cost of removal allowed for rate purposes (ap- tax returns have been settled through 1973; the proximately 20 % of the plant cost). returns for 1974 through 1976 are in the process of The cost of maintenance and repairs , includ ing being examined by the Internal Revenue Service.

renewals of minor items of property, is charged to operating expenses. A replacement of a unit of prop-erty is accounted for as an addition to and a retire-ment from the utility plant account. The original cost of the property retired is charged to accumulated depreciation together with the net cost of remova l.

For income tax purposes the cost of removing retired property is deducted as an expense.

Notes, continued Deferred income taxes result from timing dif- Maryland:

ferences in the recognition of certain expenses for The Maryland Commission also authorized the tax and financial accounting purposes. The principal deferral of the tax benefit of construction over-items accounting for deferred income taxes are: head costs discussed above. In addition, the Com-(1) use of accelerated depreciation methods for in- mission approved the recovery , over thirty months, come tax purposes and the straight-line method for of the deferred fuel costs of $1,700,000 at October financial accounting purposes, (2) unbilled fuel and 1, 1978, when a new fuel rate became effective.

gas purchased costs are deferred for financial ac-counting purposes, but deducted currently for in- Virginia:

come tax purposes, and (3) other timing differences The Virginia Commission approved the deferral involving rate refunds , spent nuclear fuel storage of the tax benefit of the construction overhead costs, and certain taxes and construction costs. costs and the change in investment tax credit Investment tax credits utilized to reduce federal in- amortization from five years to service life.

come taxes are deferred for financial accounting pur-poses. Substantially all credits utilized prior to 1978 FERC:

are being amortized to income over subsequent five- On the basis of a settlement agreement be-year periods (ten years in Delaware jurisdiction effec- tween the Company and certain resale customers, tive in 1978). Substantially all credits utilized after the Company is only recognizing approximately 1977 will be amortized over the useful lives of the re- 65% of the requested rate increase in revenues, lated utility plant, except in the Maryland jurisdiction subject to final FERG approval. The amount so in-which will continue to use five-year amortization. cluded in 1978 revenues is not material.

3. Taxes on Income 1978 ($000) 1977

2. Rate Matters Operations:

Reference is made to " Financial Review-Rate Current:

Matters" in the accompanying text for information Federal . . ..... . ... . $ 6,849 $ (35) concerning the status of 1978 rate increases. Other State ...... ..... .. . 3,736 1,129 matters relating to the 1978 rate proceedings are as follows : Deferred , net:

Federal .... . .. ... . . (1 ,105) 5,620 Delaware: State .. . .. .... .... . (323) 784 A cash return was allowed on approximately Investment tax credit

$27 million of construction work in progress which reduces the noncash AFUDC. In addition, the adjustments, net .... 9,701

- -164 18,858 7,662 Delaware Commission authorized the Company to Other income .. .. . .. ... . . 452 1,050 increase its depreciation rates; defer the tax benefit of certain construction overhead costs $19,310 $8,712 (largely payroll taxes and employee benefits) which are capitalized for accounting purposes and deducted for tax purposes; and change the period over which investment tax credits utilized are amortized to income from five years to service life of the property generating the credit (ten years for credits utilized prior to 1978).

Notes, continued The following is a reconciliation of the difference 4. Taxes Other Than Income between income tax expense and the amount com- 1978 ($000) 1977 puted by multiplying income before tax by the federal $ 6,238 Delaware utility ... . . . ... . $ 7,088 statutory rate: 4,896 Property . . . . . . . . . . . . . . . . 5,113 1978 ($000) 1977 Pennsylvania gross receipts . . . . . . . . . . . . . . 1,400 1,045 Amount Rate Amount Rate Other gross receipts . . . . . . 1,843 1,623 Statutory income tax Social security . . . . . . . . . . . 1,942 1,681 expense $32,044 48 % $23,059 48 % Franchise and other . . . . . . . 1,800 1,591 Reduction in taxes $17,074

$19,186 resulting from:

Excess of tax depre- 5. Capitalization ciation over book Common Stock:

depreciation not At December 31 , 1978 there were 393,530 shares of normalized. . . . . . (3,329) (5) (5,141) (11) common stock reserved tor issuance under the Divi-Exclusion of AFUDC dend Reinvestment and Common Share Purchase tor income tax pur- Plan.

poses . . . . . . . . . . (5,207) (8) (4,697) (10) Retained Earnings:

Investment tax The current supplemental indenture restricts the credits amortized amount of consolidated retained earnings available to income . . . . . . . (4,196) (6) (3,560) (7)

Other, net. . . . . . . . . ~ -=- (949) ~

tor cash dividend payments on common stock to

$35,000,000 plus accumulations after June 30, 1978, Income tax expense . . . $19,310 29 % $8,712 18% which available amount at December 31 , 1978 was approximately $40,000,000.

Preferred Stock:

Investment tax credits utilized to reduce federal in- (1) On November 9, 1978, the Company sold come taxes payable amounted to approximately 200,000 shares of 9% preferred stock. On Decemb~r

$13,900,000 tor 1978 and $7,300,000 in 1977. The 31 , 1984, and annually thereafter, 8,000 shares of this amount tor 1978 includes approximately $4,200,000 series will be redeemed through the operation of a of investment tax credit carryforward from 1977. mandatory sinking fund at a redemption price of $100 The components of deterred income taxes relate per share. At the option of the Company, an addi-to the following tax effects of timing differences be-tional 8,000 shares may be redeemed on any sinking tween book and tax income: fund date, without premium . (2) Any series of prefer-1978 ($000) 1977 red stock outstanding may be redeemed at the op-Depreciation . ... . ..... . .. $ 5,379 $4,835 tion of the Company at any time, in whole or in part, Deterred fuel costs (5,254) (514) at the various redemption prices fixed tor each Rate refunds. . . . . . . . . . . . . (240) 2,632 series. (3) The annual preferred dividend re-Other . . . . . . . . . . . . . . . . . . . (1 ,313) (549) quirements on the outstanding preferred stock at

$(1 ,428) $6,404 December 31 , 1978 are $9,050,000.

Capital Stock Expenses:

The premiums on preferred and common stock are stated net of the expenses related to the issuance of such stock.

Long-term Debt:

(1) Substantially all utility plant of the Company now or hereafter owned and all securities issued by its subsidiaries are subject to the lien of the related Mortgage and Deed of Trust. (2) The annual interest requirements on the outstanding indebtedness at December 31 , 1978 are $35,979,000.

Notes, continued

6. Short-term Debt and Lines of Credit federal and state income tax purposes. Accordingly, Information regarding short-term borrowings (all the tax basis of the Company's depreciable property commercial paper) is as follows: was reduced by the amount of the net proceeds. The 1978 1977 annual tax effect of the resulting decrease in tax Short-term debt out- depreciation is being recorded in a deferred income standing at year end $ $32,100,000 tax account with a corresponding direct credit to cur-Average rate of interest rent taxes accrued. If this transaction is ultimately on debt outstanding considered taxable, additional taxes payable at at end of period - % 6.7 % December 31 , 1978 would approximate between $28 Average short-term million and $17 million and would be charged to the debt outstanding deferred tax account.

during period $17,700,000 $25,100,000 Average rate of interest 8. Jointly-Owned Utility Plants on short-term debt In addition to nuclear fuel , utility plant in the ac-outstanding during companying balance sheet as of December 31 , 1978 period 7.2 % 6.4% includes the Company's interests in jointly-owned Maximum short-term plants, as follows:

borrowing during ($000) period $36,000,000 $45,000,000 Propor* Plant in Accumu* Construction tionate Service lated Work in As of January 1, 1979, the Company had estab- Share Depreciation Progress lished but unused bank lines of credit of $75,750,000. Nuclear The Company is required to pay commitment fees or Peach maintain 10% compensating balances on these Bottom lines. 2and 3 7.51 % $ 60,017 $ 9,482 $ 1,080

7. Sale of Contracts for Nuclear Plant Salem 1 The proceeds received by the Company for the and 2 7.41 68,994 4,152 43,381 sale, in 1975, of the contracts for a nuclear steam supply system and related fuel , net of plant expen- Coal-Fired ditures which were considered of no future value to Key-the Company, are classified as a deferred credit in stone 3.70 8,005 2,443 108 the balance sheet. It is the intention of the Company to reduce the cost of subsequent replacement plant Cone-capacity by the amount of the net proceeds. ma ugh 3.72 11 ,279 2,821 844 The Company, under advice of Counsel , did not Total $148,295 $18,898 $45,413 treat the sale of these contracts as taxable for The Company finances its share of construction of jointly-owned projects. In addition, the Company is a joint guarantor of loans ($1,887,000 proportionate share) advanced for operation of the coal mines that supply the Keystone plant. The Company's share of operating expenses of the jointly-owned plants is in-cluded in the corresponding operating expenses on the accompanying statements of income.

Notes, continued

9. Segment Information Operating income by segments is reported in ac-Segment information is as follows: cordance with generally accepted accounting and 1978 rate-making practices within the utility industry and ,

accordingly, includes each segment's proportionate

($000)

Electric Gas Steam Total share of taxes on income and general corporate ex-

--- --- --- - --- penses. Construction expenditures in 1978 and 1977 Operating for other than electric facilities were not significant.

revenues . ... ... $318,106 $49,640 $10,956 $ 378,702 Operating expenses: 10. Commitments Depreciation . .. . . . 28,513 2,118 752 31,383 The Company estimates that approximately Other . .. ..... . . . 223,336 43,141 9,279 275,756 $127,000,000, excluding AFUDC, will be expended for construction purposes in 1979, in connection with 251 ,849 45,259 10,031 307,139

- - - -- -- which substantial commitments have been incurred.

Operating Income .... $ 66,257 $ 4,381 $ 925 $ 71 ,563 The Co * :pany also has commitments under long-Assets at term fue1supply contracts.

December 31, 1978: Minimum rental commitments as of December 31 ,

Net utility plant .. . ... $701 ,024 $42,886 $ 5,992 749,902 1978 under all noncancelable lease agreements are Construction work as follows :

in progress.. ...... 250,616 352 1,298 252,266 1979 . .... ... . .. .. .. . .. . . . . . $ 6,222,000 1980 . . . . . . . . . . . . . . . . . . . . . . . 5,965,000 Total utility 1981 . . . . . . . . . . . . . . . . . . . . . . . 5,647,000 plant . . . . . . . . 951 ,640 43,238 7,290 1,002,168 1982 . ...... .. . ... . . . . . . . . . . 5,261 ,000 Other identifiable 1983 . . . . . . . . . . . . . . . . . . . . . . . 2,500,000 assets . . . . . . . . . 36,304 5,206 292 41 ,802 Remainder . . . . . . . . . . . . . . . . . . 20,720,000

$987,944 $48,444 $ 7,582 1,043,970 Total. . ... . . ........ ... . $46,315,000 Unallocated assets . . . 76,335 Total assets .. ... . . $1 ,120,305 The total minimum rental commitments are ap-plicable to the following types of property: Com-pany's share of Peach Bottom nuclear fuel ,

1977

$10,333,000 (estimated to be charged to operations

($000) over a four-year period); fuel storage and pipeline Electric Gas Steam Total facil ities, $29,172,000; railroad coal cars, $3,464,000; Operating other, principally computer equipment, $3,346,000.

revenues . .. . .. . $291 ,568 $36,233 $10,017 $337,818 Rentals charged to operating expenses aggregated Operating $10,385,000 in 1978 and $6,977,000 in 1977, including expenses: $5,460,000 and $2,277,000 for nuclear fuel, respective-Depreciation . ..... 25,611 1,683 752 28,046 ly.

Other .. . . . . . ... . . 208,519 30,884 8,342 247,745 The aforementioned leases are generally operat-234,130 32,567 9,094 275,791 ing leases as defined by Statement of Financial Ac-Operating income . . . . $ 57,438 $ 3,666 $ 923 $ 62,027 counting Standards No. 13. Those leases that meet the criteria of capital leases are not accounted for as Assets at such in the rate-making process, and , if capitalized ,

December31 , 1977: would not have a significant effect on assets, Net utility plant . .. . . . $686,271 $41 ,800 $ 6,659 $734,730 liabil ities or expenses.

Construction work in progress .. .. . . . . 157,888 200 597 158,685 Total utility plant .. ... . . . 844,159 42,000 7,256 893,415 Other identifiable assets . . . . .. . . . 51 ,591 9,652 309 61 ,552

$895,750 $51 ,652 $ 7,565 954,967 Unallocated assets .. . 78,411 Total assets . . .... . $1 ,033,378

Notes, continued

11. Contingencies The Company is involved in certain other legal and See Note 7 for possible payment of income taxes administrative proceedings before various courts relating to the sale of contracts. and governmental agencies concerning rates , en-The Company is a defendant in two anti-trust suits vironmental issues, taxes, licensing and other mat-filed in 1977 in the U.S. District Court for Delaware by ters. In the opinion of management, the ultimate four Delaware municipal electric wholesale disposition of these proceedings will not have a customers of the company, seeking declaratory, in- material effect on the financial position or results of junctive, and treble damage relief under the Sherman operations of the Company.

and Clayton Acts. Plaintiffs allege that the Company The Price-Anderson Act places a limit of liability of has prevented them from competing for customers in $560 million on each nuclear generating facility for their respective service areas by charging public liability claims that could arise from a nuclear discriminatory and unreasonably high wholesale incident. Public liability insurance on the nuclear electric rates, monopolizing production , transmis- generating units in which the Company has an sion and sale of bulk power, and engaging in other ownership participation is currently provided by a such restraints of trade. The Company has filed combination of private insurance and indemnity answers denying the material allegations of the com- agreements with the Nuclear Regulatory Commis-plaints, asserting affirmative defenses and setting sion (NRC). Since August 1977, however, the indem-forth counterclaims. On January 8, 1979, the Court nity by the NRC has decreased and, in the event of a ruled that plaintiffs could not recover damages for nuclear incident involving any facility covered by alleged "price-squeeze" violations. These actions are government indemnification, the Company could be in their earliest stages and, until plaintiffs have ar- assessed up to a maximum of $3 million in any one ticulated a theory of damages for their remaining year. For property damage to the nuclear plant allegations, it is not possible to quantify the Com- facilities, the Company and its co-owners have pany's exposure to liability, if any, or to comment on private insurance up to $175 million for the Salem the validity, as a matter of law, of the damage claims. Station and $220 million for the Peach Bottom Sta-The Company believes the suits to be without merit tion. The Company is a self-insurer, to the extent of and legal counsel believes the Company has ma- its ownership interest, for any property loss in excess terial substantive defenses available to it. of the aforementioned amounts.

12. Quarterly Financial Information (Unaudited)

The quarterly data presented below reflect all adjustments necessary in the opinion of the Company for a fair presentation of the results of operations.

Earnings Earnings Applicable Average per Operating Operating Net to Common Shares Average Revenue Income Income Stock Outstanding Share Quarter Ended (000) (000) (000) (000) (000) (Dollars) 1977:

March 31 $ 87,118 $14,896 $ 9,546 $ 7,734 19,130 $ .40 June 30 78,412 13,889 7,918 6,105 19,203 .32 September 30 92,633 17,996 12,198 10,386 19,269 .54 December31 79,655 15,246 9,666 7,853 20,009 .39

$337,818 $62,027 $39,328 $32,078 19,403 $1.65 1978:

March 31 $105,172 $20,494 $14,663 $12,851 21 ,433 $ .60 June 30 84,617 14,929 9,441 7,628 21 ,530 .35 September 30 96,716 19,773 13,881 12,069 21 ,627 .56 December 31 92,197 16,367 9,463 7,426 21 ,736 --

.34

$378,702 $71,563 $47,448 $39,974 21 ,582 $1 .85 Quarterly data normally vary seasonably with temperature variations, the timing of rate in-creases and the scheduled down-time and maintenance of electric generating units.

Notes, continued

13. Replacement Cost Data (Unaudited)

The impact of inflation experienced in recent years has resulted in replacement costs of productive capacity that are significantly greater than the historical costs of such assets reported in the Company's financial statements. In compliance with reporting requirements , estimated replacement cost information will be available in the Company's annual report to the Securities and Exchange Commission on Form 10-K.

Report of Independent Certified Public Accountants To the Board of Directors and Stockholders Delmarva Power & Light Company Wilmington, Delaware We have examined the consolidated balance sheets and statements of capital ization of Delmarva Power & Light Company and subsidiary companies as of December 31 , 1978 and 1977, and the related consolidated statements of in-come, changes in common stockholders' equity and sources of funds for construction expenditures for the years then ended. Our examinations were made in accordance with generally accepted auditing standards and , accordingly, in-cluded such tests of the accounting records and such other auditing procedures as we considered necessary in the cir-cumstances.

In our opinion , the financial statements referred to above present fairly the consolidated financial position of Del-marva Power & Light Company and subsidiary companies at December 31 , 1978 and 1977, and the consolidated results of their operations and sources of funds for construction expenditures for the years then ended , in conformity with generally accepted accounting principles applied on a consistent basis.

COOPERS & LYBRAND 1900 Three Girard Plaza Philadelphia, Pennsylvania February 9, 1979

28 Consolidated Statistics 10 Years of Review ... 1968-1978 1978 1977 1976 1975 1974 Electric Revenues (thousands): Residential. ... .... . .. $105,237 $ 97,691 $ 80,416 $ 77,069 $ 68,7 Commercial ..... ..... 82,796 74,641 60,111 58,169 51 ,1 Industrial . . .. ........ 83,972 76,801 64,458 64,141 66,3 Other utilities, etc ...... 40,840 38,974 34,896 35,606 32,9 Miscellaneous revenues ... . .. . .. 5,261 3,461 2,398 4,370 9,1 Total electric revenues .. . ...... $318,106 $291,568 $242,279 $239,355 $228,4 Electric Sales (1,000 kilowatt-hours): Residential. .. . . ...... 1,979,624 1,924,723 1,787,663 1,672,180 1,597,4 Commercial .... ...... 1,568,600 1,495,796 1,412,259 1,359,673 1,303,0 Industrial ........ . .. . 2,418,527 2,277,630 2,260,661 2, 142,151 2,461 ,3 Other utilities, etc .. .... 1,281,498 1,207,941 1,199,155 1,218,785 1,230,5 Total electric sales .. . 7,248,249 6,906,090 6,659,738 6,392,789 6,592,3 Electric Customers (end of period): Residential .. ... . .... . 237,925 233,106 230,579 221 ,780 215,E Commercial ... . ...... 28,421 29,648 28,345 27,345 27,1 Industrial ............ 858 921 1,002 923 E Other utilities, etc .... .. 480 561 550 545 E Total electric customers ....... 267,684 264,236 260,476 250,593 244,C Gas Revenues (thousands): Residential ....... .... $28,370 $21,829 $18,826 $15,365 $14,~

Commercial ......... . 10,154 7,1 33 6,062 4,676 4,~

Industrial ............ 10,191 6,950 5,984 4,343 3,i Interruptible .......... 716 169 1,301 1,211 1,!:

Other utilities, etc ..... . 93 49 44 33 Miscellaneous revenues .... .. ... 116 103 31 45 Total gas revenues ... $49,640 $36,233 $32,248 $25,673 $23,!

Gas Sales (million cubic feet): Residential. ... .. ... . . 6,941 6,751 6,956 6,540 6,!

Commercial .. . .... ... 2,593 2,439 2,586 2,429 2' Industrial . . ........ .. 3,290 2,811 3,264 2,849 3,,'

Interruptible ... ..... .. 319 81 953 1,073 2,:

Other utilities, etc ..... . 29 17 20 18 Total gas sales . ..... 13,172 12,099 13,779 12,909 14, Gas Customers (end of period): Residential. . ..... . . . . 67,550 67,400 68,978 69,418 69, 1 Commercial ...... .... 3,773 3,738 4,154 4,189 4, Industrial .. .... ...... 163 163 198 198 Interruptible .... . .. ... 21 21 21 21 Other utilities, etc ..... 1 1 1 1 Total gas customers . 71,508 71 ,323 73,352 73,827 74, Refinery Service Electricity delivered ... . 270,006 289,049 318,389 297,282 350,1 (1,000 kilowatt-hours)

Steam delivered . . .. .. . 6,251,194 4,888,366 5,301,421 5,517,000 5,921,1 (1,000 pounds)

Average Annual Compound %

1973 1972 1971 1970 1969 1968 Rate of Growth Electric Revenues 51,799 $ 43,878 $ 36,198 $30,992 $27,857 $25,487 15.24 Residential 37,888 31 ,810 25,468 21,430 19,333 17,754 16.65 Commercial 41 ,284 35,962 28,903 24,069 22,483 20,120 15.36 Industrial 21,518 16,833 12,964 10,175 8,936 7,962 17.76 Other utilities, etc.

5,287 2,857 1,209 530 513 504 26.43 Miscellaneous revenues 157,776 $131,340 $104,742 $87,196 $79,122 $71 ,827 16.05 Total electric revenues Electric Sales 29,641 1,463,821 1,380,763 1,280,420 1,151 ,108 1,037,223 6.68 Residential 60,216 1,227,230 1,099,897 1,009,488 923,064 856,258 6.24 Commercial 12,877 2,412,239 2,252,219 2,264,084 2,217,655 2,048,776 1.67 Industrial 52,977 1, 137,272 1,014,972 885,720 792,151 708,899 6.10 Other utilities, etc.

55,711 6,240,562 5,747,851 5,439,712 5,083,978 4,651 ,156 4.54 Total electric sales Electric Customers 08,073 200,595 193,282 187,683 183,458 178,948 2.89 Residential 26,708 25,856 25,139 24,383 24,058 23,474 1.93 Commercial 867 869 810 834 815 806 0.63 Industrial 506 496 460 375 283 281 5.50 Other utilities, etc.

36,154 227,816 219,691 213,275 208,614 203,509 2.78 Total electric customers Gas Revenues 13,018 $12,944 $11 ,948 $11 ,283 $10,708 $10,290 10.67 Residential 3,715 3,532 3,126 2,861 2,555 2,207 16.49 Commercial 3,505 3,265 2,998 2,618 2,641 2,536 14.92 Industrial 1,363 1,035 1,153 1,340 1,222 1,155 (4.67) Interru pti ble 30 25 16 10 7 8 27.80 Other utilities, etc.

22 18 39 225 251 215 (5.98) Miscellaneous revenues 21 ,653 $20,819 $19,280 $18,337 $17,384 $16,411 11.70 Total gas revenues Gas Sales 7,134 7,737 7,583 7,406 6,942 6,601 0.50 Residential 2,614 2,696 2,534 2,384 2,097 1,770 3.89 Commercial 3,653 3,875 3,797 3,549 3,700 3,455 (0.49) Industrial 2,346 2,134 2,708 3,423 3,263 3,089 (20.31) Interruptible 23 20 13 8 6 6 17.06 Other utilities, etc.

15,770 16,462 16,635 16,770 16,008 14,921 (1 .24) Total gas sales Gas Customers 9,833 69,891 69,604 68,614 68,074 67,270 0.04 Residential 4,418 4,407 4,426 4,444 4,423 4,341 (1.39) Commercial 197 195 204 206 103 93 5.77 Industrial 21 21 21 21 19 19 1.01 Interruptible 1 1 1 1 1 1 Other utilities 4,470 74,515 74,256 73,286 72,620 71 ,724 (0.03) Total gas customers Refinery Service 1,700 295,236 272,649 244,614 281 ,120 265,824 0.16 Electricity delivered (1,000 kilowatt-hours) 6,000 7,261 ,000 7,564,000 7,779,000 7,536,000 7,296,000 (1.53) Steam delivered (1,000 pounds)

Senior Management and Staff (Above, Left to Right) Robert D. Weimer, President & Chief Executive Officer; Thomas C. Roe, Chairman of the Board .

(Left, Left to Right) Howard E. Cosgrove ,

Jr., Manager of Finance; William E. Rossell, Sr., Comptroller; Alfred C. Thawley, Jr. ,

Secretary & Treasurer; Nevius M. Curtis, Senior Vice President & Chief Financial Officer; Earl D. Krapf, Vice President, Regulatory Practices.

31 (Above, Clockwise) Edward F. Spear, Vice President, Public Relations; Kent A Williams, General Manager, Personnel &

Industrial Relations ; George J. Pinto, Vice President, Administrative Services; H. Ray Landon, Senior Vice President ;

Hudson P. Hoen, Ill , General Manager, Marketing.

(Right, Left to Right) Robert F. Molzahn, Manager, Environmental Affairs; James A Clark, Jr., Vice President, System Opera-tion & Energy Supply; Frank A Cook, Vice President, Production; William G. Price, Senior Vice President; James I. Owens, Manager of Production Engineering and Construction.

(Left , Left to Right) J. Edwin Hobbs, Divi-sion Vice President , Southern Division; J.

Kenneth Wiley, Senior Vice President; Harland M. Wakefield, Jr., Division Vice President, Northern Division; Elwood R.

Thompson, General Manager Enginee ring.

32 Board of Directors Werner C. Brown Chairman of the Board of Hercules Incorporated (chemical manufacturer)

Wilmington , Delaware Mrs. Henry P. Cannon, II Director of H.P. Cannon & Son, Inc. (food processing firm) Bridgeville, Delaware Oscar L. Carey President and Director of Larmar Corporation (general real estate and home builders) Salisbury, Maryland lrenee du Pont, Jr. Director and Retired Senior Vice President of E.I. du Pont de Nemours & Company (chemical manufacturer) Wilmington, Delaware Sally V. Hawkins Director and President of Delaware Broadcasting Company and General Manager of Station WILM (radio broad-casting), Wilmington , Delaware Dr. Earl C. Jackson, Sr. Retired Superintendent of the Wilmington Public Schools Wilmington, Delaware William G. Price Senior Vice President of the Company Thomas C. Roe Chairman of the Board of the Company Dr. E. Arthur Trabant President of the University of Delaware Newark, Delaware James M. Tunnell, Jr. Partner of Morris, Nichols, A rs ht &

Tunnell, attorneys Wilmington, Delaware Robert D. Weimer President and Chief Executive Officer of the Company Executive Committee Werner c. Brown , Chairman; lrenee du Pont, Jr.; Thomas C. Roe; James M.

Tunnell, Jr.; Robert D. Weimer Audit Committee James M. Tunnell, Jr., Chairman; Werner C. Brown; Oscar L. Carey Nominating Committee lrenee du Pont, Jr., Chairman; Dr. E. ArthurTrabant; Robert D. Weimer In Memory The Board of Directors and the Company record with deep regret the passing of Austin T. Gardner, Retired President and Chief Executive Officer and Chairman of the Board, on December 22, 1978. Mr. Gard-ner served the Company with notable distinction in these capacities for various lengths of time between 1960 and 1976. He was a member of the Board at the time of his death.

<O I CX> lC)"

<O

<O

r n0 3

-0 0

NOTICE TH E ATTACHED FILES ARE OFFICIAL RECORDS OF THE DIVISION OF DOCUMENT CONTROL. THEY HAVE BEEN CHARGED TO YOU FOR A LIMITED TIME PERIOD AND MUST BE RETURNED TO THE RECORDS FACILITY BRANCH 016. PLEASE DO NOT SEND DOCUMENTS CHARGED OUT THROUGH THE MAIL. REMOVAL OF ANY PAGE (S) FROM DOCUMENT FOR REPRODUCTION MUST BE REFERRED TO FILE PERSONNEL.

RECORDS FACILITY BRANCH