ML18096A645
| ML18096A645 | |
| Person / Time | |
|---|---|
| Site: | Salem, Hope Creek  |
| Issue date: | 12/31/1991 |
| From: | Huggard E, Jo Jacobs ATLANTIC ENERGY, INC. |
| To: | |
| Shared Package | |
| ML18096A644 | List: |
| References | |
| NUDOCS 9204270198 | |
| Download: ML18096A645 (54) | |
Text
ATLANTIC ENEHGY 9204270198 920415 PDR ADOCK 05000272 I PDR
Delivering P.ower at Atlantic Electric, Delivering Heliability, Delivering Affordability, Planning a Smootti Transmission Access-Pandora's Box of the 1990s, **
Sa!Ps to Hcsidential rustomers increased 3.1%. Sales to the twelve hotel-casinos were almost 7% of total sales. Sales to Industrial customers declined slightly.
fl:\A'.\CIAL HIGHUGllTS
%Change %Change 1991 1991-1990 1990 1990-1989 1989 Earnings Per Common Share $ 3.49 15.6 $ 3.02 (19.3) $ 3.74 Dividends Paid Per Common Share $ 2.98 2.1 $ 2.92 3.5 $ 2.82 Book Value Per Common Share $ 29.68 3.3 $ 28.73 0.7 $ 28.54 Return on Average Common Equity 12.10% 14.5 10.57% (22.5) 13.64%
Electric Operating Revenues (000) $ 777,970 8.5 $ 716,779 1.7 $ 705,020 Operating Expenses (000) $ 633,114 6.9 $ 592,217 3.8 $ 570,275 Net Income (000) $ 85,635 24.3 $ 68,879 (14.9) $ 80,964 Utility Cash Construction Expenditures (000) $ 172,425 3.4 $ 166,818 15.0 $ 145,081 Total Assets (000) $2, 151,416 7.2 $2,006,010 7.6 $1,864,461 Sales ofElectricity (KWH) (000) 7,935,600 2.3 7,756,867 1.8 7,617,784 Price Paid Per Kilowatt-hom (All Customers) 9.a12c 5.6 9.288¢ 1.4 9.161¢ Total Electric Customer Accounts (Year-end) 453,100 0.8 449,717 1.3 444,018 Number of Shareholders - Common Stock (Year-end) 43,802 3.6 42,295 (2.5) 43,383 Number of Atlantic Electric Employees (Year-end) 2,032 (1.1) 2,055 1.7 2,021 4 ,,
4.03 3.68 3.74 3.49 3 ,t 3.02 2.92 2.98 2.77 2.82 2.6S 2 <1 l o 40 41.00 38.SO 33.87 32.7S 30 30.62 r*-:*:-!* 'I AT~ANTIC ~NERG Y 1 1 Earnings and Dividends Paid 20 Per Share of Common Stock e EARNINGS e DIVIDENDS Earnings per share of Common Stock is 10 net income divided by the average number of common shares outstanding. Dividends paid per share is the sum of the quarterly dividend payments made in January, April, July and October.
'I ATLANTIC ENERGY Market Price Per Share of Common Stock
- This is the closing price of Atlantic Energy's Common Stock on the last trading date of each year as reported by the New York Stock Exchange Composite Transactions listing.
1J
Overall, they increased only 2.5% over 1990, well below the 3.1 % growth in the consumer ation Inc. (AGI). These provisions price index.
- were the result of a one-time write-off of several small cogenera- Our ability to develop and achieve hen all was said and done, tion projects that were losing meaningful goals is essential to 1991 turned out to be money. AGI is now better able to you and to our customers in
. W another fine year for Atlantic Energy. Per share earnings rebounded to $3.49, a devote its attention to three larger projects with potential for contributing to future earnings.
today's economy. Ideal summer weather has not protected south-ern New Jersey from the effects of 15% improvem'ent over the $3.02 the recession. Housing starts in the In June, your Board of Directors reported in 1990. We have the area a.re at a post World War II low.
increased the quarterly dividend good performance of Atlantic Just over 4,100 new customers on Common Stock by one cent, to Electric to thank. Here's how it were added to Atlantic Electric's 75 cents per share. This is the happened. system in 1991. a drastic drop from 39th consecutive year of increas-the average of 11,300 new cus-We negotiated a $50 million es in cash dividends paid. Even tomers add~d each year since increase in base rates in July though the amount was modest, it 1986. We also felt the effects of to coincide with our peak sales was our way of saying that in spite competition and structural season. In granting the higher of the ups and downs, our core changes in our industry this year.
rates, the New Jersey Board of business is solid and our future In October, our largest industrial Regulatory Commissioners (BRC) holds promise.
customer began generating its own set our allowed return on equity The very nature of our utility busi-at 12.5%.
ness involves making substantial Mother Nature helped out, too. investments in facilities and It was the hottest summer ever equipment. In the next three years, recorded at the Jersey shore. our capital expenditures will reach Kilowatt-hour sales grew 2.3% to almost $500 million. About half of almost eight billion, a record for that is earmarked for improve-Atlantic Electric. The hot temper- ments to our power delivery atures pushed the demand for system. As you look through the energy to new highs. Peak demand pages of this Annual Report, you'll reached 1,911megawatts,10% learn why these are important greater than last year. We are espe- investments. You'll also see how cially pleased to note that many of we protect the environment as we the businesses located along the go about our work. We continue to shore had their best year ever. give high priority to the way we take care of our natural resources.
Our 1991 financial results were weakened by our nonutility There is more good news for 1991.
operations. These businesses By all measures, it was the reported a combined loss of 22 safest year in our history. Other cents per share. Most of that, operational and financial goals about 15 cents, came from provi- were met as well, particularly with sions recorded by Atlantic Gener- respect to controllable expenses.
Looking ahead, Atlantic Electric, We. continue to believe that oppor- the utility business, will remain tunities for growth exist with the our driving.force. Its performance activities of our nonutility busi- will guide the future for Atlantic*
nesses. Our strategy is to direct Energy. We are doing our home-electricity. In the coming years, a resources to investments that work to prepare for a BRC-man-complement Atlantic Electric's dated management audit that is few more of our large customers will follow. goals. Our newest subsidiary, expected to begin in late 1992.
Atlantic Energy Technology, Inc. We intend to get an '/\ on our But our strategic plan can ac- (AET), was formed in 1991. To report card.
comn:iodate a slowed economy date, it has invested in a company and competition. We are com- that ~upplies state-of-the-art, The good news of1991 is tem-mitted to finding ways to replace energy effi,cient heating and pered by the loss of one of Atlantic kilowatt-hour sales lost to com- cooling systems. AET's activities, Electric's most admired and petition. And, we're doing our along with the cogeneration respected employees, Senior Vice share to stimulate the local development investments of AGI, President Brian A. Parent. Brian economy. We have revitalized our will dominate our nonutility acti- died suddenly in July. We miss his economic development efforts to vities. AGI made progress on three humanity, his intellect and his attract new businesses to our large cogeneration projects in 1991. sense of fun . The tribute we have region and to encourage busi- AGI's financial results are expected prepared for Brian on page 5 of nesses already here, to stay. to improve in 1992 when two of this Annual Report only begins to Through our marketing activities the three projects will be com- express our gratitude for the many we keep in closer contact with our pleted. Atlantic Southern Properties contributions he made to this customers and discover ways to and ATE Investment continue to corporation. '
serve them better. These are long manage their existing portfolios . On behalf of the Board of Directors term commitments that will help o new investments are planned of Atlantic Energy, we thank our us be successful in a competitive in the near term for these shareholders for their support and energy marketplace. companies. loyalty. You have our promise that we conduct our business in y_our best interest, adhering to the highest ethical standards and at all times showing respect for cus-tomers, concern for employees and care for our environment.
For the Board of Directors, Ztl/c4~i;;
E.D. Huggard Chairman and Chief Executive Officer J.L. Jacobs President January 31, 1992 Jer ry Jacobs, Doug Huggar d
THE NEWS OF 1991 New Sources of Capacity for Atlantic Electric In May, Atlantic Electric's new 84-megawatt combustion turbine, located in Vineland, New Jersey, went into service in time for the peak summer period. The unit Deepwater's Employee features high performance emis- Involvement Team, the Morale sion and noise control systems Boosters, contributed to this fine Nuclear News and can use natural gas or kero- record. They promoted safety The 1991 capacity factor for sene as a fuel source. It was built through a program to keep the Atlantia- Electric's five jointly- on schedule and at less than green light on the plant's safety owned nuclear units was 66.9%, expected cost. - sign "burning." When the green and as a result, no penalties were light is lit, the station is accident-In September, Atlantic Electric incurred under New Jersey's free. The program has gained began purchasing power from a nuclear performance standard. recognition for the team, placing nonutility power producer located Over 70% of our customers' ener- them in the final round of a in Chester, Pennsylvania under a gy needs were supplied by coal national competition honoring 25-year contract. The generating and nuclear sources, providing a excellence in employee teamwork.
unit is expected to provide up to savings of more than $135 million 75 megawatts of capacity using New Rates in Effect over the use of oil.
municipal solid waste as its On July 3, the New Jersey Board Hope Creek Nuclear Generating energy source. This marks the of Regulatory Commissioners Station received a manufacturer's first time in Atlantic Electric's (BRC) granted Atlantic Electric a award for outstanding perfor- history that capacity and energy $50 million increase in base mance of a boiling water reactor. is being_ provided by a non utility rates. The return on common Hope Creek achieved a lifetime power producer under a long equity was set at 12.5% with an capacity factor of 76 ~9% and a term arrangement. overall return of 10.52% on a test lifetime availability factor of year ending May 31 , 1991. The
' Safety Continues to Shine 82.4%, placing it among the top BRC also made permanent a perfoD?ing boiling water reactors Atlantic Electric proudly completed $41.6 million provisional base in the nation. its second consecutive "safest year rate increase that had been in ever." Workers at B.L. England effect since June 1990. It was Hope Creek also set a record for and Deepwater Stations helped continuous operation. At the end ruled that a Phase II to the make it happen. In early 1992, proceeding was appropriate to of 1991, it had completed 234 both generating stations, as well days (and still counting). This determine the regulatory as the rest of the production treatment of tax benefits. from the record helped establish another: section, recorded over one year The three units on Artificial nonutility affiliates.
without a lost-time accident.
Island-Hope Creek, Salem Unit 1 On August 30, Atlantic Electric and Unit 2-set a record for the filed a Phase II petition with BRC.
island of 84 days of simultaneous Atlantic Electric asserts that no continuous operation. changes in customers' rates should be made as a result of tax Demand Hits New Record benefits from the nonutility On July 23, Atlantic Electric re- affiliates. The petition asked for a corded a record peak demand of Deepwater's Morale Boosters are: $25 .8 million base rate increase 1,911megawatts,a10% increase O to r) J. Sunderhauf, J. Rumaker, to recover the costs associated over 1990. Atlantic Electric's F. Jones, P. Humanick,.T. Harris, with recent changes in New direct load management program, M. Mason, J. Jenkins, T. Donofrio, Jersey's Gross Receipts and M. Kiger, J. Famkopf, J. Thompson, the Summer Savers Club, helped Franchise Tax law. A dec_ision is J. Rhoda, P. Harwood, G. Averiett, to reduce the demand by about K. Drummond and H. Hoover. expected in the second quarter 33 megawatts. Not Pictured: E. Moore of 1992.
14
Marketing Goes Gangbusters, Exceeds Goals Eleven of the fifteen major marketing programs exceeded operating goals in 1991. The B.E.S.T Home program (Built for A LIVING TRIBUTE Energy Saving Tomorrows) signed up over 1,100 homes, exceeding In the Fall of 1992, Atlantic Electric and the citizens the program goal by over 700%!
ofMillville, New Jersey will celebrate the opening of This year, the Summer Savers Club was a hit with commercial the Brian A. Parent Center. The Center is being built customers, gaining over six times adjacent to Atlantic Electrics holly orchard. It will more participation than expected.
The Save-A-Watt efficient lighting replace a farm house that once displayed all forms program achieved more than of holly artifacts and memorabilia. Together with double its target.
the holly orchard, the Cf(nter will renew a South Jersey tra_d ition-the Millville Holly Orchard Tour. Capital News In May, Atlantic Electric The Center is named after senior vice president redeemed its First Mortgage Bonds, 115/s% Pollution Control Brian Parent, the man who spearheaded the holly Series A of 1981 due 2011 with orchard project, who died suddenly last July. The proceeds from the issuance of idea was to create a living memorial in honor of his $38.865 million of First Mortgage Bonds, 6.80% Pollution Contrel many contributions to the Company, its share- . Series A of 1991. The refunding is holders and its employees. . expected to save Atlantic Electric approximately $2 million per year Honoring Brian in this way is fitting for another in interest costs.
reason, one that stems from the kind of man he In May, Atlantic Energy sold a was. Brian believed that.a corporation has an total of 2,000,000 shares of new Common Stock at a price to the obligation to give something back to the commu- public of $34.50. Also in May, nities it serves. He put this belief into practice many . Atlantic Electric sold 700,000 times, but never with as much enthusiasm as with shares of $7.80 No Par Preferred Stock at a price to the public of the holly orchard and visitors, center. $100 per share. Proceeds from the sales of these securities were Thanks to Brian, the citizens of South Jersey will used primarily to fund Atlantic have a special place to view artists* exhibits, learn Electric's on-going construction about their heritage, tour a commercial holly program.
orchard and hold community events. If Brian were Construction expenditures in 1991 totaled $172.4 million in cash, with us today, he would be extremely proud. plus $4.9 million in allowance for funds used during construction.
A VERY SPECIAL DELIVERY SYSTEM DELIVERING POWER AT ATLANTIC ELECTRIC Electricity. We depend on it to be there when we need it. If you're an average Atlantic Electric customer, that's about 99. 99% of the, time. We call that "reliability. and it's a record we're proud to share.
That kind of service requires a very special delivery system. It's called a transmission and distribution system.
Electricity is unique. It is produced and distributed at the very instant it is used. From one second to the next, customers vary the amount of electricity they use. Electrical generators and the transmission and distribution system respond instantaf!.e0!-1-sly to meet t_hese changing conditions. At the heart of it all is our system control center.
From generation to end use, every aspect of our power delivery system is managed from this point. Each day, thousands of details come together there, helping us make decisions that ~eep electricity reliable and affordable .
(Italicized words are defined in the Glossary of Terms. p. 8)
Specialized equipment helps Atlantic Electric keep the power FROM DOOR- A transmission flowing to more TO-DOOR substation may be than one million located right next to people in A generating station a generating station.
southern ~ew converts fuel such Here, a transformer Jersey as coal, oil, natural does the job of in-gas or uranium to creasing-"stepping supply electrical up" the power to energy. Electricity is move it along the generated at a lines more efficiently voltage or pressure too low to be trans-
. ported through conductors effec-tively over long distances 0 ..
ustomer satisfaction and success. You can't have one without the other.
- TRANSMISSION
& DISTRIBUTION It is tradition in the utility business to measure cus-tomer satisfaction with words like "reliability" and
'affordability.,, These are the features of good, sound service that customers expect. But, theres PRODUCTION - -- -
more. Customers tell us that satisfaction is also measured with words like "care," "concern" and Over the next three "protect." They 're tal~ing about our world, and we years, more than half of Atlantic Electric's couldn't agree more.
construction dollars will he used to The system that delivers the power is the most expand, improve and strengthen the visible part of our business. Poles, wires and trans-transmission and !armers are seen on virtually every s_treet served distribution system by an electric utility. At the end of1991, Atlantic Electric had about $850 million invested in its transmission and distribution system. Through 1994, another $260 million. will be invested, over 50% of our expected total capital spending. In An interconnection with a, neighboring utility or a nonutility todays competitive energy market, it.s a sound power producer strategy to invest in the power delivery system.
occurs at higher voltage levels known A well-planned, well-maintained system delivers as transmission energy efficiently. It keeps prices competitive and voltage. Atlantic Electric's system service at its highest level.
transmission voltage is either 230 kV, Our.success depends on earning our customers' 138 kV or 69 kV respect and loyalty. We do that by delivering power safely, continuously, at a reasonable cost, at all times showing respect and concern for our world.
GLOSSARY OF TERMS Conductors wires through which electricity flows readily with little resistance or loss of voltage Current There are many reasons why we make investments in power delivery, a flow of electric charge but none more important than reliability. For customers, reliability is a Distribution feeders simple matter: The lights come on at the flip of a switch. For us, reliabil-conductors that connect the distribution ity is far more complex. We build safeguards*into our system to keep substation to the final transformer before our customers' lights on and 99.99% of the time, we're successful. But, hook-up with the customer ,
severe weather or equipmen~ problems can cause occasional power Generating station the site where fuel is converted to interruptions. We keep those situations to a minimum by making sure electric energy electricity can travel to a customer's door by more than one route. If one Interconnection path is blocked, we can get there -another way. Protective devices, includ-a hook-up between electric utilities ing circuit breakers, are used to isolate problems from the rest of the or nonutility power producers that system. This protects expensive equipment from damage and lets energy allows the transfer of electric energy in either direction 'continue to flow over an alternate path.
kV We look for trouble before it happens. An elaborate ~elecommunications kilovolt: a measure of voltage; i kV= 1,000 volts network links the system. Almost 100 times a day, computer technology Substation scans for potential problems. If something is spotted that's not just right, points of interconnection we can take quick, corrective actions before customers are affected.
for transmission and distribution lines where the voltage level of electricity New customer growth can put heavy demand on parts of the system and is changed and regulated stretch existing equipment to its capacity. When that happens, we make Transformer investments in new equipment or find ways to upgrade existing a device that increases-"steps up" or equipment to keep the lights on.
decreases-"steps down" the voltage level of electrici_ty We've set some tough standards for reliability. Our efforts are paying off.
Transmission and distribution system Except for major storms in 1991, on average, customers were without the delivery network for electricity that ties generating stations to electricity less than once and, when an outage did occur, we restored customers; it consists of land, wires, service in a little over an hour. We think customers should expect that poles, substations and all equipment kind of reliability. It's our job to make it happen.
necessary to transport power Transmission lines conductors that transport Transmission lines This transmission electric energy at higher voltages over transj>ort higher substation houses long distances between substations voltage power over a transformer that long distances to steps down the voltage Volt another transmission to lower, sub-transmis-unit of measure of pressure or force substation sion levels Voltage the level of force applied to electric current in a conductor, measured in volts, generally described as kilovolts
DELIVERl'.\G AFFORIHRILITY Dollar for dollar, the cost of fuel and energy is passed along to Atlantic Electric's customers. That's why it's important to seek out the most economical source of fuel and energy available .
A top-notch system delivers low-cost power*from where it's generated The Cardiff-New to where it's needed, when it's needed. Energy supply is a two-way street. Freedom trans-There are times when Atlantic Electric is able to supply energy to the mission line is the Pennsylvania-New Jersey-Maryland Interconnection (PJM). Other times first link in an im-proved high voltage the PJM, a neighboring utility or a non utility generator supplies us with transmission loop economical power. Any savings are passed along to customers. The point that will serve is that a strong power delivery system lets us make choices for customers southern 'ew Jersey to help .keep their energy costs affordable. into the 21st_century Atlantic Electric is expanding its 230 kV transmission system to make more choices possible. This project is state-of-the-art in terms of long-range planning and construction. For customers, it means improved reliability, affordability and room to grow. Making these improvements to our high voltage transmission system will span several years. In 1988, we finished the first phase:*a 33-mile line that begins in the north central part of our service territory and delivers energy to our fast growing east-ern region. The second phase *will be finished in early 1992. This 21-mile line on the western side of our territory has special importance. It ties three non utility power plants to Atlantic Electric. Both of these lines have used money-saving planning and construction techniques. Addi-tional phases are planned to connect the eastern and western links and complete the project. After the turn of the century, it's expected that customers will continue to be served by an improyed, highly-reliable transmission "loop" within southern New Jersey.
Large industrial customers may be connected to the utility's system at these sub-trans-mission levels
TRANSMISSION ACCESS-PANDORA'S BOX OF Planning a power delivery system mixes sound engineering and practi-cal cost control with thoughtful insight. It begins with questions: Who An impnrtAn::;::cy., b~i""'.
is exchanging energy. In 1990, about 15%
of the energy generated in our nation will our customers be? How much ene~gy will they need? Where will the reached customers as a result of these energy be needed? What new sources of energy will be available? exchanges: 11 % from utilities and 4%
I from nonutilities.
We develop forecasts based on oiir experience and our expectations. Energy is delivered through complex, We study the past, analyze the options and ask more questions: Will new delicately-balanced transmission systems that operate in concert. Utilities depend generating sources have to be built or can we use existing facilities?
- on each other to coordinate those What happens if energy use grows faster than we thought? How much systems and to keep reliability high.
will it cost? The answ~rs help usylan for the future. Recently, regulations have been proposed that could force utilities to In the final analysis, a well-planned power delivery system has certain open their transmission lines to others traditional characteristics. It has room for: growth. It can accommodate for the purpose of delivering energy.
Those in favor say that ultimately, customers' changing use and can keep up with the interchange of energy customers will be served by lower rates.
between utilities, nonµtilities and power pools like tpe PJM. It can with- We disagree. The risks are too great.
stand Mother Nature's bad days or the loss of a generating unit. From our perspective, opening transmission lines threatens reliability.
Atlantic Electric's pl~nning goes *beyond the basics. We have "master Numerous power producers competing for open access to a transmission system plans" for our power delivery system to guide long-range planning, would complicate and impair system
- design, construction and maintenance._What makes these plans sp.ecial operation. Costs would increase. Oper-ating problems would become more is that they provide for the orderly development of a power delivery difficult to detect and service restoration system giving consideration to all the unknowns 'that exist. The princi- far more complicated and expensive.
ples and standards adopted in those pla~s are based on the knowledge We cannot support r egulations that .
- that circumstances change, new technologies emerge, demand for energy would surrender some control of a very complex transmission system. This varies and philosophies shift. To some, it might seem like a whole lot system has been developed over the to keep track of. But not for us, we'r_e ready. years by people experienced in meeting southern New Jersey's energy needs.
At these lower volt- Our shareholders and customers li:ave Distribution line trans-ages, electricity flows paid for that system and our customers formers are located on are entitled to be served by \t. We cannot to a distribution sub- practically every street support rules that would give priority station where it is served by a utility. They to power deliveries that would benefit stepped down even step down the voltage only a few. Rules like this could make more for use by homes to its lowest level (120/240 it impossible to take advantage of and businesses. Each volts) to provide electric economical purchases that could benefit distribution substation service to customers all. Our ability to provide customers with provides electricity to safe, reliable and affordable energy is a local area *by means why we are in business. We oppose any of distribution feeders effort that jeopardizes our obligation to or lines serve customers.
High strength, low "My favorite picture (below, left) shows the maintenance sleet
- past and the future in the same spot. Our new poles are replacing weathering steel poles are next to the lattice towers the familiar gal-we've used for years. Most of the lattice towers still have a lot of service vanized steel lattice towers for higher left in them. But you can bet that as they need replacing, we'll use the
'voltage transmission new steel poles. Y.ou can really see how much better they blend in with .
lines. When exposed the environment. They not only look better but they turned out to be the to the elements, the best choice for an important transmission project.
finish on these high strength poles "A COUJ!le of years ago we added a new 230 kV line to our system to "weathers" to blend bring more energy into the east~rn part of our territory, including the in with the sur- shore. Some of the line had to be built through wetlands and the Jersey
, rounding area. These pinelands. We had to figure out how we could bring it in without harm-poles and lines can ing tliese areas and without spending a fortune.
withstand 100-mile-per-hour winds and a "It turned out to be one of the best projects I've ever worked on. We 1'lz-inch thick coating learned how to install these new poles without building costly access of ice roads. We didn't have to clear as much land because of the poles' special design. We're using a new type of foundation that doesn't need nearly as much concrete carried to the site. We used helicopters to string some of the wires. What's more, we're using many of the same construction techniques on the new 230 kV lines we're building now.
'Tm really proud that Atlantic Electric is doing things this way."
Dave Beckmann is Superintendent of Transmission and Civil.
Atlantic Electric's extensive transmission and distribution system makes sure that power is there when customers need it.
More than 10,000 miles of wire wind tllrough Atlantic Electric's ~. 700 square-m¥e service territory, bringing the power door to door "Once we know where the power is needed, we have to figure out the best way to get it there.
Sometimes, it's a tough job because you have to get A right of way is a from "point A" to "point B," but you can't always go in a straight line. narrow corridor or cleared land that "We have lots of things to consider when we plan a line route. First, we runs on either side or
- try to use rights of way that already exist. Then, we see if we can use industrial areas, roadways or railroad tracks as corridors for new lines.
We try our hardest to keep our transmission lines out of developed resi-dential areas. Sometimes we wind up with a line that has a lot of twists and turns~ but in the end it's the most prudent way to go.
a utility transmission or distribution line.
Narrower rights of way mean more land can be left in its natural state. ew high voltage pole "Our new pole design for higher voltage wires uses a narrower right of designs make this way. Now, they only have to be about half the .width of what we used to possible Part of the job.for George Henry and need for the same line voltage. That means we have less area to clear. Nancy Sullivan or the But when we do have to clear an area, wE)'re very careful about how we Right of Way do it. We clear only the areas that might impact the safety or reliability Depf1.rtment involves discussing plans for of our lines. In environmentally sensitive areas like pinelands or wet-a right of way with lands we are especially careful. We try to leave the low-growth plants customers and smaller trees in the area. We've even re-seeded areas with annual plants and other ground cover that will ~ttract- wildlife like partridges and songbirds. To make things look more pleasing, we'll plant trees or shrubs to act as a screen or buffer, making our facilities less visible.
"Maintenance is a full time job. We try to keep the areas free of debris.
Unfortunately, our rights of way sometimes get used by others as a dump site. When that happens, we'll do our best to barricade the area to stop the problem. Tl;le bottom line is, the area must be clear enough to permit the safe operation of our lines, but remain natural enough to allow plants and wildlife to flourish."
George Henry is Superintendent of Right of Way and Forestry.
A compatible tree is one that works to-gether with a utility's distribution lines.
These trees, like dog-wood or cherry, grow at a slower rate and mature at ll smaller height, keeping their branches at a safer distance from power lines.
"Keeping the power flowing means we have to keep all of our lines free and clear. With transmis-sion lines, our job is a bit easier because they are located in wider rights of way. When it comes to distribution lines, like the ones you see in front of your house, we sometimes have a tough time. Our biggest challenge is trees. You get one good ice or wind storm ap.d the next thing you know, tree limbs are down all over power lines and our customers are out of service. It hurts our reliability and it can cause soine serious safety problems.
"That means we have to trim the trees near our power lines. It's my job to see that the health of the tree gets proper attention. We use a method called 'directional trimming' researched by the US Forest Service. This kind of trimming encourages the tree to grow away from the lines. Over a period of years, *we won't have to trim as often and that's healthier for the tree. Directional trimming (depicted above)
"Sometimes we find a tree that can't be saved. It may be unsafe or haz- maintains the health ardous to our lines. When that happens, we ha.ve to recommend to the of the tree and the property owner that the tree be removed. In the not too distant future, safety of power lines we'll be able to replace a lost tree with a 'compatible tree: one that grows a bit slower and matures a bit shorter. These trees fit in well with our lines while still providing shade and beauty for the community. We've Mike eal Oeft) and tested the program in a few communities and it's been very successful. Matt Simons, Forestry Department, "You might wonder where we get these trees from. Well, we're starting examine the growth to grow our own. A few years ago, Atlantic Electric began fixing up a of newly planted holly orchard in Millville, New Jersey. I'm real proud of the way it has holly seedlings come along. We have over 50 acres of orchard and nursery With just about ever:y type of American holly tree you could imagine. We've also planted an area for our "co_mpatible trees." Once they'r_e ready, they will be the source for replacement trees in our communities. We'll also use trees from this farm to landscape areas around our facilities.
"It's nice to know that the work we do gives something b~ck to our community and our world."
Matt Simons is Superuisor of Forestry.
I "Today the most complex issue facing us is electric .
and magnetic fields_:known as EMFs-and the public's interest in their possible health effects.
Customers are as concerned about this as anything in recent history.
That's why it's my job to make sure that our company knows as much as possible about this issue. That way, we can respond knowledg_eably to our customers' and employees' questions.
"What makes this difficult is that there are no simple answers. But, that doesn't mean we are ignoring the questions. So far, almost 50 scientific studies have been published examining possible relationships between .
EMFs and health. The results may appear confusing and contradictory.
However, there-has been no sufficient scientific evidence to conclude that exposure to EMFs causes any illness or disease. There's more research going on today, but it will be several years before it's completed.
"The way I see it, there are three ways to deal with public concern about EMPs now. First, we could ignore it and hope it goes away. That's just not acceptable at Atlantic Electric. Second, we could start spending a lot of money on procedures that could significantly reduce, but not eliminate EMFs. That's not very wise ~ither since the cost would be astronomical and not really justified.
Electric Field only (no current)
"I think we've chosen the most prudent course of action for now. We're managing EMFs through careful placement and layo'ut of our new trans-mission and distribution lines and substation facilities. If customers ask, we'll go to their homes and businesses and measure the level of EMFs.
Where we can reduce the level of EMFs through modest costs, we're doing so. We're supporting scientific research at the academic and pro-fessional levels. W~'re out talking to citizens who have raised concerns Electric and Magnetic Fields (with current) about the health effects of EMFs. We've even involved those citizens in our plans to provide future service. And, we're continuing to dedicate a small group of people, myself included, to study and learn from information supplied by outside medical, technical and _other experts.
"Like I said, we _don't have all the answers today. But we're asking the Electric and Magnetic Fields right questions."
(EMFs) are invisible lines of force that Mike Picucci is Coordinator of the occur whenever an EMF Management Seruices Team.
electric charge is present and moving.
Electric fields are invisible fields of force created by the pressure (voltage) of an electric charge. -
- Magnetic fields are Agaussmeter is an invisible fields of instrument used to force created by the measure the level motion (amperage) of ar electric charge ofEMFs
Residential Customers Sales to Residential customers increased 3.1 % in i 991 because of hotter weather during the sumnier months. More than 3,300 new Residential customers were added to the system during the year.
%Annual Est.%Annual For the Growth Rate Est. Growth Rate ten-year period 1986-1996: 1986 1991 '86-'91 1996 '91-'96 Sales (billion kwh) 2.839 3.370 3.5% 3.631 1.5%
% of Total Sales 43 42 43 Average Use (kwh) 7,982 8,440 1.1% 8,424 (0.4)%
Peak (Mw) . 786 1,086 6.7% 998 (1.7)%
Commercial Customers Sales to Commercial customers grew 2.8% as a result of a modest increase in the number of new customers and higher average use per customer. Sales to Atlantic Electric
, 12 hotel-casinos increased 3.5%, and comprise 6.9% of total sales. serves more than
%Annual Est.%Annual 450,000 customers in For the Growth Rate Est. Growth Rate ten-year period 1986-1996: 1986 1991 '86-'91 1996 '91-'96 a 2, 700 square-mile Sales (billion kwh) 2.401 3.147 5.6% 3.497 2.1% area in the southern
% of Total Sales 37 40 41 one-third of ew Average Use (kwh) 52,938 61,619 3.1% 59,872 (0.6)% Jersey. Peak load has Peak (Mw) 528 622 3.3% 659 1.2% occurred during the summer months.
Industrial & Other Customers _ Major businesses include gaming, Sales to Industrial & Other customers decreased by 0.6% in 1991. During the fourth quarter, ACE's largest industrial customer became a self-generator and stone, clay, glass, will now supply virtually all its own f)nergy needs. chemical, petroleum,
%Annual Est.% Annual rubber and food For the Growth Rate Est. Growth Rate processing
- ten-year period 1986-1996: 1986 1991 '86-'91 ' 1996 '91-'96 Sales (billion kwh) 1.281 1.418 2.1% 1.333 (1.2)% ~--
% of Total Sales 20 18 16 Average Use (000 kwh)* 1196.7 1371.1 2.8o/o 1249.5 (1.8)%
Peak (Mw) 145 203 7.0% 154 (5.4)%
- Industrial customers only 8
1426 1418 1.435 7
1.395 1.382 3.147 6 2.917 3.063 2.742 2.592 5
The growth in 4
kilowatt-hour sales is determined by how 3.213 3.266 3.268 3.370 many new customers 3 3.040 are added, how much electricity each 2
customer uses and weather conditions.
1 Since 1986, kilowatt-hour sales have increased an
'I average of 4.0% each year as a result of ATLANTIC ELECTRIC customer additions Energy Sales by Customer Class and increased usage RESIDE TIAL e COMMERCIAL per customer.
e I DUSTRIAL AND OTHER
- CONTENTS Report of Management Report of The Audit Committee Independent Auditors' Report CD Consolidated Statement of Income
- e Consolidated Statement of Cash Flows Consolidated Balance Sheet Consolidated Statement of Changes in Common Shareholders' Equity e
Notes to Consolidated Financial Statements Management's Discussion and Analysis of Financial Condition and Results of Operation
- G Summary Financial and Statistical Review
Atlantic Energy, Inc. and Subsidiaries HEPORT OF '.\L\\AGE'.\1E\T The management of Atlantic Energy, Inc. and its subsidi-aries (the Company) is responsible for the preparation of.
the financial statements presented in this Annual Report.
The financial statements have been prepared in conform-ity with generally accepted accounting principles. In preparing the financial statements, management made informed judgments and estimates, as necessary, relating to events and transactions reported. Management is also responsible for the preparation of other financial informa-tion included elsewhere in this Annual Report.
Management has established a system of internal account-ing and financial controls and procedures designed to provide reasonable assurance as to the integrity and reli-ability of financial reporting. This system is examined by management on a continuing basis for effectiveness and efficiency. Management believes that, as of December 31, 1991, the system of internal accounting and financial con-trols is adequate to accomplish its objectives. Management also recognizes its responsibility for fostering a strong ethical climate in which the Company's affairs are con-ducted according to the highest standards of corporate conduct. This responsibility is characterized and re-flected in the Company's code of ethics and business conduct policy.
The financial statements have been audited by Deloitte &
Touche, Certified Public Accountants. The auditors provi.de an objective, independent review as to management's di.
charge of its responsibilities insofar as they relate to the fairness ofreported operating results and financial condi-tion. Their audits are based on procedures believed by them to provide reasonable assurance that the financial statements are not misleading and include a review of the Company's internal control structure and tests of transactions.
The internal auditing function conducts audits and ap-praisals of the Company's accounting and other opera-tions, and evaluates the financial and operational control procedures which have been established and compliance with those procedures. Both Deloitte & Touche and the internal auditors periodically make recommendations concerning the Company's internal control structure, and management responds to such recommendations as appropriate in the circumstances. None of the recom-mendations made for the year ended December 31, 1991 represented significant deficiencies in the design or opera-
- tion of the Company's internal control structure.
9-/
J. L. Jacobs President J. G. Salomone Vice President and Treasurer
Atlantic t:nergy, Inc. and Subsidiaries Certified Public Accountants Deloitte& Two Hilton Court, P.O. Box 319 Touche Parsippany, New Jersey 07054-0319 Atlantic Energy, Inc. and Subsidiaries To the Shareholders and the Board of Directors of Atlantic Energy, Inc.:
The Audit Committee of the Board of Directors is com-rised s?lely of~dependent directors. The members of We have audited the accompanying consolidated balance e Audit Committee are: Matthew Holden, Jr., Chairman, sheets of Atlantic Energy, Inc. and subsidiaries as of
~ os. Michael Galvin, Jr., Gerald A. Hale, Madeline H.
December 31, 1991 and 1990 and the related consolidated McWhinney and Harold J. Raveche. The Committee held statements of income, changes in common shareholders'
- six meetings during fiscal year 1991 . equity, and of cash flows for each of the three years in the period ended December 31, 1991. These financial state-The Audit Committee oversees the Company's financial ments are the responsibility of the Company's manage-reporting process on behalf of the Board of Directors. In ment. Our responsibility is to express an opinion on these fulfilling its responsibility, the Committee recommended financial statements based on our audits.
to the Board of Directors, subject to shareholder ratifica-tion, the selection of the Company's independent public We conducted our audits in accordance with generally accountants. The Audit Committee discussed with the accepted auditing standards. Those standards require that internal auditors and the independent public accountants we plan and perform the audit to obtain reasonable assur-the overall scope and specific plans for their respective ance about whether the financial statements are free of audits. The Committee also discussed the Company's material misstatement. An audit includes examining, on consolidated financial statements and the adequacy of the a test basis, evidence supporting the amounts and disclo-Company's internal control structure with the independent sures in the financial statements. An audit also includes public accountants. The Committee met regularly with the assessing the accounting principles used and significant Company's internal auditors and independent public estimates made by management, as well as evaluating the accountants, without management present, to discuss the overall financial statement presentation. We believe that results of their examinations, their evaluations of the our audits provide a reasonable basis for our opinion.
Company's internal control structure and the overall qual- In our opinion, such consolidated financial statements ity of the Company's financial reporting. The meetings also present fairly, in all material respects, the financial posi-were designed to facilitate any private communication tion of Atlantic Energy, Inc. and its subsidiaries at Decem-with the Committee desired by the internal auditors or ber 31 , 1991 and 1990 and the results of their operations independent public accountants. and their cash flows for each of the three years in the period ended December 31, 1991 in conformity with I *-4dtMJ J4ttl~ Jr.
Matthew Holden, Jr.
I generally accepted accounting principles.
Chairman, Audit Committee January 31, 1992
Allanlic Energy, Inc. and Subsidiaries CONSOLIDATED STATEME:\T OF INCOME (fhousands ofDollars) For the Years Ended December 31
- ** **************** ***** ******************************************************************************************************************** l m l******************llmll******************llml*******
9.P~r.~t~~~~~~:'1~~8.~~l~~t.r.~~*** $777,970 $716,779 $705,020 Operating Expenses:
Energy Costs 156,718 161,428 173,724 Operations 221,712 190,951 167,435 Maintenance 51,960 52,351 55,203 Depreciation and Amortization 66,023 62,141 58,485 Gross Receipts and Franchise Taxes Federal Income Taxes Other Taxes
!.?~c:t:19.P.~r.<L?..£1~ ~~P.~.£15.~5. .
9.P~r.~ti1,J:~~~.()~~***
Other Income:
88,932 36,244 11,525 633,114 144,856 87,314 26,917 11 ,115 592,217 124,562 83,396 22,865 570,275 134,745 9,167 Allowance for Equity Funds Used During Construction 1,814 1,727 Other Income-Net 7,043 7,585 5,450 Total Other Income 8,857 9,312 5,450
~~~()~'-'.. ~'-'.~?.r.'-'.~~1.'-'.r.es.~ C.~~r.~'-'.5. . . 153,713 133,874 140,195 Interest Charges:
Interest on Long Term Debt 51,601 54,803 47,131 Interest on Short Term Debt 1,946 1,510 5,231 Other Interest Expense 1,179 109 909 Total Interest Charges 54,726 56,422 53,271
~?.~.<l.1:1~.~. ~?r..~<>rr.<>~~?.Y11.r:i?.s.. ~5..~ct. .~l:lr.i.£1~.C.?.:'15.~~~~~<>.£1 ... (3,059)
(2,226) (2,805)
~~~.~.£l~~r.~s.t91~r.~~5. ..... 51,667 54,196 50,466 f'.r.~~~1!'-'.~. S.t.<>.~~.J?i~~~.£1~. ~~~'-'.~~.£11.5.()~~~5.i~~9' ... (16,411) (10,799) (8, 765)
Net Income $ 85,635 $ 68,879 $ 80,964
- : ************************:t:::**::::::::::: ::;:: ::::::;::::::::::::::::::: :::::::::::::::::::::::::::::::;;:;;::::::::***
Average Number of Shares of Common Stock Outstanding (in thousands) 24,504 22,795 21,634 Per Common Share:
~,~7,~~gs ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ... $3.49 .......................$3.02
,,,,,,,,.,,,,,,,,.,,,,,,,,,,,,,,,,,,,,,...$3.74 "'*
Dividends Declared $2.99 $2.94 $2.85
- ****:::::::::::**::**** ************************************************::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::1'f::::::::::***
Dividends Paid $2.98 $2.92 $2.82 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
Atlantic Energy, Inc. and Subsidiaries (Thousands ofDollars) For the Years Ended December 31
- ********************************************************************lml******************lllllDl******************lllm ** *****
Cash Flows Of Operating Activities:
Net Income $ 85,635 $ 68 ,879 $ 80,964 Deferred Purchased Power Costs (12,938) (21,840) (19,660)
Deferred Energy Costs 13, 180 20,136 8,560 Noncash items affecting operating activities:
Preferred Stock Dividend Requirements of Subsidiary 16,411 10,799 8,765 Depreciation and Amortization 66,023 62,141 58,485 Allowance for Funds Used During Construction (4,873) (3, 953) (2,805)
Investment Tax Credit Adjustments-Net (2,348) (2,349) (2,449)
Deferred Income Taxes-Net 15,761 15,177 17,616 Net (Increase) Decrease in Other Working Capital (2,821) 9,591 (23,060)
Other-Net 10,508 1,290 902
~~~. ~~1.1.. 1.'!?.~~~~~~ <:)p~~~~~~~~~i~~~~~**** 184,538 159,871 127,318 Cash Flows Of Investing Activities:
Utility Cash Construction Expenditures (172,425) (166,818) (145,081)
Leveraged Lease Investments 3,960 3,993 (27,777)
Leased Property (8,793) (10,576) (9,229)
Nuclear Decommissioning Trust Fund Deposits (13,777) (1,920) (3,263) nutility Property and Equipment (538) (129) (3,536)
- ility Plant Removal Costs (5, 157) (3 ,912) (4,286)
Other-Net (6,822) (4,200) (4,548)
(197,720)
~~~. ~~1.1.. ~~*~*~ *~r.~\l~.5.~~~~~~i~~~~~***** (203,552)
(183,562)
Cash Flows Of Financing Activities:
Proceeds from Long Term Debt 38,779 150,183 Retirement and Maturity of Long Term Debt (50, 170) (28,625) (15,998)
Increase (Decrease) in Short Term Debt (23,350) 43,950 (61,000)
Proceeds from Capital Lease Obligations 8,793 10,576 9,229 Common Stock Issued 72,698 4,694 71,605 Preferred Stock Issued 70,000 50,000 Redemption of Preferred Stock (1,050) (1,050) (4,050)
Dividends on Preferred Stock (16,411) (10,799) (8, 765)
Dividends on Common Stock (62,769) (56,673) (52,756)
Other-Net J~~~~> ... (4,329) (4,044)
~~~. ~~1.1. J:>!?.~~~~.~~. ~~~~~~.~.~~~~ti~s ... 28,120 7,744 84,404 Net Increase (Decrease) in Cash and Temporary Investments 9,106 (15,947) 14,002
~ a.5.1.1. .11:1.1?. ! ~Il:1 p?. r.11:1:!'.~1:1.\l.e.5.tll:le..1.1~5.:..?. e. ~1.11:1i1:1~ .?.f ye a.r. ..... 8,961 24,908 10,906
~a.s1.1. .11:1.1?. ! ~ Il:1P.?.r.11:1:!'.~1:1\le.5.tll:l e.11 ~5.' .~ Ild .0 f xe.a.r. ..... $ 18,067 $ 8,961 $ 24,908 Supplemental Schedule of Payments:
Interest $ 57,221 $ 58,080 $ 52,817
-=:n::::~~:~~!~~*~end~*~~cl~c~~**
$ 23,721 $ 19,279 $ 14,284
..... l:1Il~e.r.?.i~i~e.r_i?.r.~iJ:l".e.5.~Il:1~.1.1~.P1~1:1 ... $ 11,304 $ 10,412 $ 9,639 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
Atlantic Energy, Inc. and Subsidiaries CO:\SOLIDATED BALA:\CE SHEET (Fhousands ofDollars) December31
........................................................................................................................................................................... *IIIIll***.............. *ll!l!Ill *......
Assets Electric utility Plant:
In Service:
Production $1,009,776 $ 953,342 Transmission 295,044 281,431 Distribution 557,494 494,807 General 152,441 119,892 Total In Service 2,014,755 1,849,472 Less Accumulated Depreciation 545,829 504,202 Net 1,468,926 1,345,270 Construction Work in Progress 102,708 114,622 Land Held for Future Use 5,045 5,073
~8.~~~~ ~r.?.P.8.J:"o/~~8.~ . 53,093 57,971 Electric Utility Plant-Net ........................ .
1,629,772 1,522,936 Nonutility Property and Investments:
Investment in Leveraged Leases 75,293 75,156 Nuclear Decommissioning Trust Fund 26,489 11 ,784 Nonutility Property and Equipment-Net 15,039 15,003 Other Investments and Funds 4,233 7,425
!?.~~1 .~?.~~~ilio/Yr.?.P.8.~Y. ~?.~.~~Y8.~~1?.~.~~8. ... 121,054 109,368 Current Assets:
Cash and Temporary Investments 18,067 8,961 Working Funds 15,955 14,709 Accounts Receivable:
Utility Service 49,842 48,461 Miscellaneous 16,703 17,767 Allowance for Doubtful Accounts (2,400) (2,000)
Unbilled Revenues 38,078 34,849 Fuel (at average cost) 21,646 26,262 Materials and Supplies (at average cost) 27,394 28,221 Prepayments 11,267 12,113 Deferred Taxes 11, 142 7,476 Total Current Assets 207,694 196,819 Deferred Debits:
Property Abandonment Costs 8,502 9,443 Unrecovered Purchased Power Costs 137,818 124,880 Deferred Energy Costs 10,360 10,360 Unamortized Debt Costs 22,505 22,379 .
Other 13,711 . 9,825 ...
Total Deferred Debits 192,896 176,887 Total Assets $2, 151,416 $2,006,010 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
- December31