ML18114A423
| ML18114A423 | |
| Person / Time | |
|---|---|
| Site: | Surry, North Anna  |
| Issue date: | 04/05/1979 |
| From: | Baum E VIRGINIA POWER (VIRGINIA ELECTRIC & POWER CO.) |
| To: | Harold Denton, Parr O Office of Nuclear Reactor Regulation |
| References | |
| NUDOCS 7904100304 | |
| Download: ML18114A423 (37) | |
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e VIRGINIA ELECTRIC AND POWER COMPANY RICHMOND, VIRGINI.a. 23261 Apr i 1 5, 1 979 Mr. Harold R. Denton, Director Office of Nuclear Reactor Regulation Attn:
Mr. 0. D. Parr, Chief Light Water Reactors Branch No. 3 Division of Project Management U. S. Nuclear Regulatory Commission Washington, DC 20555
Dear Mr. Denton:
Serial No. 226 LQA/RMN:esh Docket Nos. 50-280, 50-281 50-338, 50-339 50-404, 50-405 In accordance with 10 CFR 50.71(b)~ the Virginia Electric and Power Company hereby forwards twelve (12) copies of the 1978 Annual Report.
Very truly you~s,
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E. A. Baum Executive Manager Licensing & Quality Assurance Attachment 7 9 O 4 1 0 0 3o~
1 Highlights 2 Stockholders Letter 4
Revenues 4 Dividends 4 Expenses 4 Fuel Costs 4 Taxes 4 Sales of Electricity 4 Financing 5 Energy 7 North Anna Nuclear 7 Environmental 9 Bath County Pumped Storage 10 Rates and Responsibility 10 Designs for Efficiency 14 Management's Discussion and Analysis of Statements of Income 14 Description of Business 15 Financial Statements 28 Statistical Information 32 Directors and Officers
1978 Highlights Increase
% Increase 1978 1977 (Decrease)
(Decrease)
Financial Total Operating Revenues
$1,464,905,000
$1,358,860,000
$106,045,000 7.8 Total Operating Expenses
$1,159,630,000
$1,093,433,000
$ 66,197,000 6.1 Net Income
$ 203,864,000
$ 189,793,000
$ 14,071,000 7.4 Balance Available for Common Stock 150,276,000
$ 142,074,000 8,202,000 5.8 Average Shares of Common Stock Outstanding 80,060,000 74,025,000 6,035,000 8.2 Stockholders-Common, Preferred and Preference 180,800 167,200 13,600 8.1 Earnings Per Share of Common Stock
$1.88
$1.92
$(.04)
(2.1)
Dividends Per Share of Common Stock
$1.30
$1.24
$.06 4.8 Book Value Per Share of Common Stock
$19.09
$18.89
$.20 1.1 Capital Expenditures
$ 529, 186,000
$ 569,068,000
$(39,882,000)
(7.0)
Sales of Securities
$ 439,489,000
$ 402,342,000
$ 37,147,000 9.2 Operations System Output-Megawatt-hours (thousands) 39,968 38,249 1,719 4.5 Capability-Megawatts 9,999 9,101 898 9.9 Service Area Peak Load-Megawatts 7,805 7,902 (97)
(1.2)
Customers-Electric-Heating 261,899 227,509 34,390 15.1
-Other 1,008,001 1,000,791 7,210
.7 Total Electric 1,269,900 1,228,300 41,600 3.4 Customers-Gas 119,300 120,300 (1,000)
(. 8)
Average Residential Use-Electric-Kilowatt-hours 11,099 10,944 155 1.4 Employees-Full Time 9,382 8,821 561 6.4 Disposition of the 1978 Revenue Dollar Fuel used for Electric Generation Preferred, Preference and 1 O 3~ ____ _
Common D1v1dends
______ 18 7~ Operations and Maintenance Excluding Fuel
8.2~ Depreciation and Amortization
An overview of 1978 for our Stockholders:
The year 1978 was one of notable achievements for the Company. We wish to share them with you in this message highlighting the important points set forth in greater detail throughout the pages of this report.
The key operating event of the year was the beginning of commercial service of unit 1 at the North Anna Nuclear Power Station shown on the cover. This milestone for Vepco occurred on June 6, 1978 and generated substantial bene-fits during the year beyond those anticipated. When all four planned units are completed, North Anna will be one of the nation's largest nuclear stations. We are equally proud of the fact that its associated facilities-in particular the newly created Lake Anna-will afford enormous environmental and recreational benefits to the area.
Customers continued to use more electricity and records were set in kilowatt-hour sales, in total operating revenues (and expenses), and in net income. Earnings per share, however, did not reach the level attained in 1977 when 6 million fewer shares were outstanding and, in fact, de-creased by $.04 per share to $1.88. This reflects the continu-ing problems experienced by the Company under the necessity of issuing new securities to finance the construction of essential facilities.
Other factors contributing to lower earnings per share were the increased average number of shares outstanding and the regulatory delay in timely rate decisions in spite of a concentrated effort by management to seek rate relief to cover higher costs. Many calculations in rate cases are based on the prior year's operations, yet inflation continues during the entire period of time from the filing of a rate case until a rate increase is granted and takes effect. Very often during the protracted lag in time between request and deci-sion the high rate of inflation that has occurred has offset all or a substantial portion of the rate relief requested.
Results of our attempts to secure rate relief in 1978 are treated in more detail on page 10. The Company had hoped and expected to receive a decision on its $246 million rate request from the Virginia Commission prior to the printing of this Report. The Company will continue to seek increases when justified to offset increased costs and to assure our ability to raise new capital when required, thus enabling us to provide adequate service in the future to our growing area.
An increase in common stock dividends in June 1978, set a record for dividends paid with a 1978 pay-out of $1.30 per share, compared to the $1.24 per share paid in 1977.
New capital raised in 1978 totalled over $439 million includ-ing the successful public offering of 5 million additional shares of common stock reflecting continued investor confidence in the Company and the area we serve.
Progress was made in our continuing program to reduce dependence on costly imported oil. Power generated by nuclear fuel reached a new high of 35.3% of our customers' electric energy demands for the year.
Excellent progress was made throughout the year toward the scheduled completion of the Bath County Pumped Storage Station in 1982. This facility will have the world's largest powerhouse of this type, and will provide an efficient solution to a utility's most challenging problem-that of meet-ing peak demand without over-building.
New ground in financing was broken when Vepco be-came the first utility to sell its commercial paper notes directly to investors. Sales were made to regional investors in our area, and created significant savings in the cost of short-term debt.
Efficiency of management and operations improved with the move into new corporate headquarters at One James River Plaza. The leasing of this structure achieved working economies through the central location of personnel for-merly housed in seven separate buildings.
Persistent and pervasive inflation was prominent among the factors which pushed expenses upward during the year, offsetting significant economies in operations. Rising costs of fuels, higher depreciation and higher taxes contributed to an overall increase of 6% in the expenses of doing business.
The gain in nuclear operations with North Anna brought reductions in the average cost of generating a kilowatt-hour and reduced the Company's need for purchased and interchanged power.
The first unit at our second nuclear station (North Anna) performed at levels well above the national average. Put into service in June, North Anna's unit 1 operated for the remain-ing seven months of 1978 at a capacity factor of 81.3%. The two Surry units operated at a capacity factor of 74.2%. By contrast, the national average for nuclear units was a capa-city factor of 67.2% for the year.
The power generated at North Anna played a significant part in limiting the effects of inflation on our customers' bills.
During the month of November, Surry and North Anna nuclear units accounted for 52% of Vepco's generation-the first time nuclear power supplied over half of our energy for any one month. In mid-1979, we expect to bring North Anna unit 2 into service with its 934 Mw capacity.
The Bath County and North Anna projects are your Com-pany's response to one of its prime responsibilities-that of providing dependable electric service to meet our custom-ers' growing energy needs. The challenge of planning for the future is highlighted by the fact that sales of electricity have almost doubled over the past decade.
Beyond 1979 the Company plans to have 2,100 Mw of capacity from the Bath County Project in operation in 1982, and North Anna units 3 and 4 will bring 938 Mw each into service when needed in the mid or late 1980's. Our present forecast indicates that this new capacity will be needed to meet the normal peak demands of the 1980's.
Expenditures have reached $326 million to meet regula-tory and conservation requirements at North Anna and Bath County.
Five years have now passed since the Arabs imposed their oil embargo, with little apparent action, except by the utilities themselves, to try to cut down the nation's reliance on the politics and production of the OPEC nations. Mean-while, our balance of trade has established a record deficit, and fluctuations in the value of the dollar have been almost as turbulent as the turmoil in the Middle East.
Polls indicate, fortunately, that the public is beginning to recognize the seriousness of the energy problem in the years ahead. It is a popular pastime for special interest groups to accuse the nation of energy waste, yet consumers
I.I I I I I I I I I I I I I. I I I I I I I I,*. I I I. I I I I I I. I. I I I It. I I I I I,1 have conserved. Whether it is the sheer economic pressure of increasing prices or for patriotic reasons. the growth in the rate of consumption of electric energy is declining.
Opinion surveys also indicate continued strong public support for nuclear power as one energy alternative urgent-ly needed to get us through the next quarter of a century and reduce reliance on foreign oil. The average citizen today appears to be well aware of the perils to living standards and jobs from an energy shortage, despite the unceasing efforts of small, special interest groups to halt growth and block construction of new generating facilities. At some public hearings on our rates in Virginia last year, witnesses demon-strated a keen awareness of these problems and of the seriousness of delays by regulatory commissions as well.
The NAACP was one of those who recognized the need for a strong energy supply in any formula for a strong economy if those who have not yet attained a decent standard of liv-ing are to have their opportunity assured.
It should embarrass all Americans that it takes 10 to 12 years to build a nuclear plant in this country whereas the Japanese, Germans and French can build identical plants in half the time. Foreign countries are building breeder reactors that our national policy prohibits at home as a solution to future energy problems. Coal should be a prime fuel for energy use, but we face increasing environmental restric-tions on the mining and utilization of coal, shortages of young people in the coal fields and of coal cars and loco-motives on the rails. Our coal output today is just about the same as it was 30 years ago.
The utility industry, both public and private, has a strong, joint research and development program under way de-signed to improve existing systems, and to develop sources and alternatives for the future, including solar, fusion, geo-thermal and the breeder reactor.
It has been our policy for many years to strive to produce electricity at the lowest practicable cost in a socially respon-sive manner. We have cited a few of the contributing factors to the increasing cost of electricity, but we will continue our efforts to achieve our policy objectives. We have a strong and dedicated organization committed to our obligation to provide an adequate and reliable supply of electricity for all customers and an adequate and reliable source of return to our stockholders and investors who provide the funds for keeping the system economically healthy.
We express our appreciation for the loyalty and hard work of those Vepco employees who made 1978's achievements possible. We appreciate the continued support of our stock-holders. With these two assets, we are confident that 1979 will be another year of accomplishment.
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T. Justin Moore, Jr.
Stanley Ragone Chairman of the Board President T. Justin Moore, Jr.
Stanley Ragone
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The major factors that shaped Vepco's operations during 1978 are summarized graphically on these two pages.
Rising by 7.8%, Revenues set a rec-ord total of $1,465 million. Expenses, however, continued to increase and re-sulted in a gain in net income of only
$14.1 million, or 7.4%. From the year's balance available for common stock of
$150.3 million, the Company paid Dividends of $103.5 million, an increase of 13.4 %. Quarterly dividends received by stockholders amounted to $1.30 per share of common stock for 1978, com-pared to $1.24 in 1977, up 4.8%.
Revenues increased during the year, despite the lack of substantial rate re-lief, due primarily to increased customer demands for electric service. In meeting this demand, a 4.5% increase in electri-cal output was required with over 35%
of the total being generated by nuclear units. Both figures were substantially above national averages.
Inflation and other factors pushed Expenses up by 6% for the year, in spite of lower fuel costs resulting from nuclear generating efficiencies. The net increase in operating expense was $66 million with a year-end total of $1,160 million. There were significant increases in operation and maintenance expenses
($18.4 million), depreciation ($19.0 mil-lion) and taxes ($25.2 million). Purchased and interchanged power costs were $43 million lower than in 1977.
The increase in nuclear generation during 1978 was the major factor in hold-ing down spiraling Fuel Costs. These costs, amounting to $585.6 million com-pared to $575.2 million last year when fewer kilowatt-hours were generated re-flected an increase of $10.4 million.
The overall economy of nuclear gen-eration was realized by the reduced fuel cost per revenue dollar-down this year to only 38.5% of the revenue dollar, compared to40.8% of the revenue dollar in 1977.
A large share of the customer dollar went to pay increasing Taxes, up 18%
for a total of $166.2 million. State and local taxes amounted to $93.5 million of which gross receipt taxes were
$54.9 million and property taxes were
$26.3 million.
In addition, the Company collected from its customers $54.7 million in utility taxes imposed by local governments and passed on to them without any service or handling fees.
Federal income taxes amounted to
$72.7 million, an increase of 21.6%
over 1977.
Much of the increase in taxes resulted from the record Sales of Electricity.
Total electric operating revenues were
$1,414 million from sales of 37,067 thousand Mwh, a significant increase in consumption over 1977. Electric output was up 4.5%, topping the national av-erage increase of 3.7%. The number of residential customers increased to 1,138,470. These customers consumed 12,405 thousand Mwh ($564 million in revenues).
The Company achieved another in-novation in Financing for utilities in 1978 by being the first utility in the nation to sell commercial paper notes directly to inves-tors. Significant savings were realized
p £¢ z.
A in the cost of funds for daily operations through the sale of these short-term notes, which were placed directly with regional investors. This has an addi-tional benefit of promoting wider sup-port for the Company with large inves-tors in our area.
Major sources of long-term money for new capital totalling over $439 million included $105 million from bank and in-surance company loans; $37 million from Preferred Stock; $205 million from First and Refunding Mortgage Bonds; and $8 million from Pollution Control Bonds. The sale of 5 million shares of Common Stock in December provided
$68 million in funds. An additional $11.7 million was obtained from the issuance of Common Stock through the Auto-matic Dividend Reinvestment Plan and
$4.8 million through the Employees*
Savings Plan.
The number of stockholders increased during the year by 13,600 to a total of 180,800. They represent a broad spec-trum of investors living in all 50 of the United States and numerous foreign A
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! I IJ#AZI I countries. Over 30% of our stockholders are residents of the Company's three-state service area.
Common Stock Prices and Dividends for the last two years were:
1978 High Low First Quarter 14% 13\\/i Second Quarter 14 % 13 Y, Third Quarter 153/. 14 Ya Fourth Quarter 14 3/. 13%
1977 First Quarter Second Quarter Third Quarter Fourth Quarter 15% 14 15 Y2 14 Ya 15% 14'/.,
15Y2 14 Dividends
$.31
.33
.33
. 33
.31
.31
.31
.31 Vepco's Energy Picture was placed in a very favorable perspective at year-end because of the efficiency demonstrated by our three in-service nuclear units.
Both the North Anna and Surry units performed well above the average for nuclear stations nationally. In operation for seven months, North Anna Nuclear unit 1 operated at a capacity factor of 81.3%. The two Surry units performed with a capacity factor of 74.2% for the year. The national average in this yard-stick of efficiency was 67.2% for 1978.
Measured in terms of fuel economy, the three nuclear units generated en-ergy that would have used 25.4 million barrels of oil at an additional cost to customers of over $230 million. This same power produced by coal instead of oil would have added over $170 mil-lion to operating expenses and cus-tomers' bills for the year.
The picture in types of fuel has changed dramatically since 1972, when our first commercial nuclear operation began. The ratio of fuel oil used has dropped from 61 % in 1972 to a 39%
level in 1978. Over the same six years, nuclear generation has steadily grown from 2% to about 36%. This represents a long step forward in reducing the Company's use of oil, now being im-ported at spiraling costs.
For greater energy flexibility and op-erating economy, Vepco's plans for the future, which include nuclear, lower cost coal and pumped storage hydro generating facilities, are reviewed on the following pages of this Report.
OIL 43%
OIL 39%
OIL 61%
I
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'F North Anna Nuclear Power Station Game fish nosed into favored feeding spots and new homes were springing up along the shoreline of Lake Anna as Virginia's second nuclear power facility generated its first commercial output on June 6, 1978.
When Vepco planned the 13,000 acre Lake Anna to supply cooling water for the four-unit North Anna Nuclear Power Station, it was designed to become an environmental asset to our area as well as a functional water source. Today that promise is being fulfilled as North Anna unit 1 commenced operation of a facility which will ultimately have a capacity of 3.7 million Kw.
Located strategically along the North Anna River between Washington, D.C.
and Richmond, Virginia, Vepco's newest nuclear station represents a capital outlay of $1. 7 billion through 1978. It was available for operation 92% of the time since its in-service date in June and produced energy at a capacity factor of 81.3% for the year.
North Anna unit 2 is scheduled for commercial operation in mid-1979 and will complete the project's first phase.
The scope of this initial phase includes the pouring of some 320,000 cubic yards of concrete and the laying of 993 miles of electrical cable-enough to reach from Richmond to Oklahoma City.
Each of the four units at North Anna will use over 5,000 tons of uranium oxide over its life, which will produce energy equal to that of more than 12 At left. Lake Anna at sunset reveals one of many recreational benefits, with domes of Units 1 and 2 in background.
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billion gallons of oil or 75 million tons of coal. Planned construction of North Anna's second phase, units 3 and 4, is moving along toward scheduled opera-tion when needed in the mid or late 1980's.
With North Anna unit 1 now in opera-tion, Vepco can proceed with planned replacement of steam generator lower assemblies at Surry units 1 and 2. Ap-proved by the Nuclear Regulatory Com-mission (NRC), the process is timed to coincide with scheduled fueling and maintenance. Outage of the two units will be spaced so that loss of generat-ing capacity is held to a minimum.
Significantly, in this replacement Vepco will for the first time manage the project itself rather than have an agent provide the management. This empha-sizes our commitment to assume more responsibility for major projects through closer control over construction and should also minimize outage time.
During 1978, the NRC approved the Company's new Nuclear Training Simu-Below. Vepco personnel collect samples of aquatic life as part of continuing environmental studies around North Anna.
later installed at the former information center at Surry. An exact duplicate of the control room at Surry unit 1, the simulator reproduces the operation of the actual equipment. As a trainee responds to realistic situations (both routine and unexpected) his reactions are evaluated by an examiner at a control console behind a one-way vision glass screen.
In the first six months, 28 reactor operators were trained on this simulator.
Savings of over $1 million are expected each year with a program to train 15 new operators and retrain some 100 licensed operators annually. Other types of training will also be done at the Surry Center, as the NRC requires a rigorous and extensive program for reactor operators which ends in their testing and the issuing of a license that must be renewed regularly.
Environmental Investment The building of North Anna and its huge reservoir has involved a tremen-dous outlay of Vepco's resources.
A considerable portion has been invested in caring for and protecting the total environment-both natural surround-ings and manmade public / private additions.
Lake Anna serves many functions.
Year-round and summer homes have been built along its shoreline, together with marinas conveniently placed for public access to excellent boating and fishing. The reservoir is essentially a run of the river facility but its waters are also Below. Examiner in one way observation booth creates realistic nuclear control situations to test trainees on the new Surry simulator.
7
Rising 460 feet, the upper dam at Bath County will span this valley to store "water energy" equal to 23.7 million Kwh.
released at periods of low flow to main-tain the vitality of the North Anna River and provide a dependable water supply for a downstream county water system.
A multi-purpose shoreline park is planned by the state for the future.
More than 30,000 fishermen-days were chalked up in 1978, with reported catches of large mouth bass of over 8 pounds. Studies have shown that Lake Anna supports a balanced, well-fed and fast-growing fish population.
For environmental protection Vepco spent $322 million at North Anna on such items as five sewage treatment plants, a waste heat treatment facility, an environmental lab and other waste management facilities, as well as en-vironmental safeguards required by the Nuclear Regulatory Commission.
Comprehensive studies keep track of the " health" of Lake Anna much as a physician does by examining a patient.
The Virginia Commission of Game and Inland Fisheries conducts annual creel surveys to determine fishing success.
Vepco and its consultants study many phases of the lake's ecology-phytoplankton, zooplankton, bottom organisms and aquatic insects. These ongoing studies, estimated to cost nearly a half million dollars in 1979, have one aim-to detect and remedy any imbalance in the lake ecosystem.
Bath County Pumped Storage Station Nestled in the rugged Appalachian peaks and valleys where Virginia meets West Virginia, Vepco is also building one of the world 's largest pumped storage hydro-electric generating stations.
Behind a 460 foot high dam enough water will be stored in the upper reservoir to provide 23.7 million kilowatt-hours of electricity. During hot summer days when air conditioning demands build to a peak or on cold winter days when electric usage also is high, this stored energy will be tapped as 7.3 billion gallons of water drop more than 1,000 feet. The rushing waters will drive six massive turbine-generators, each capable of producing 350,000 kilowatts of electricity.
At night and on weekends as energy use diminishes, energy is then drawn from economical nuclear and coal units to reverse the process at Bath County.
The turbine-generators function as motor-pumps to return the water to the upper reservoir, storing it until it is needed again for generation.
Functioning in similar fashion to a giant storage battery that can be recharged, the Bath County station is designed to maximize the use of the Company's large base-load units.
Pumped storage in combination with our nuclear and fossil units will achieve a i\\t left. Bath County powerhouse will contain six 350 Mw generating units.
higher utilization of our facilities at mini-mum costs.
Pumped storage hydroelectric power is an economical way to solve a dilem-ma common to all utilities. It provides an instantly available reserve capacity of huge amounts of electricity to meet peak demands without over-building costly fuel burning stations that will be under-utilized.
This project is also being developed with concern for the environment, as more than $13 million will be spent in studies, facilities and action pro-grams. Over $4 million of the $13 mil-lion has already been spent on erosion and sediment control and sewage and industrial waste treatment. Major efforts have been successful in preventing stream degradation caused by erosion from work areas.
Tree and game food planting is scheduled for 1979 under plans sub-mitted to the Federal Energy Regulatory Commission(FERC)to minimize effects on fish and wildlife. These programs were developed by the Company and con-sultants from Virginia Polytechnic Insti-tute and State University in discussions with the U.S. Forest Service, the U.S.
Fish and Wildlife Service and the Vir-ginia Commission of Game and Inland Fisheries.
Ongoing surveys are monitoring 9
10 sediment load and water quality in Back Creek and Little Back Creek. Both streams will benefit from control over flow and flooding when the dams are completed. During natural droughts, planned releases from the two reser-voirs will maintain a good environment for aquatic life downstream. In flood seasons, the project can particularly reduce down stream flows for the com-monly occurring floods on Back Creek.
The reservoirs will be unsuitable for recreation because of their extreme water level fluctuation. However, as required under the Federal Power Act, Vepco will develop a 325 acre recrea-tion area downstream from the lower dam. Two large ponds covering 85 acres will be available for fishing, boat-ing and swimming. Visitors will also be able to enjoy picnic and camping facil-ities and hiking trails.
Bath County's pumped storage units, together with North Anna's four nuclear units, represent a substantial capital outlay over the next six years. They are the major elements in our efforts to assure adequate energy for the future at practicable cost.
Rates and Responsibility Emergency repairs to ice-damaged power lines bring a public spotlight to bear on Vepco's responsibility, and commitment, for adequate electric service at all times.
Behind this dramatic scene is our continuing effort to build new facilities to meet increasing demands, while deal-ing with the daily problems of operation and maintenance. In both areas, the persistent effects of inflation add a heavy burden of increasing costs.
Vepco is also committed to acting as a responsible steward for the investments of its stockholders and for providing them with a reasonable return on their investment. Improving performance in this area will improve our ability to ac-quire new capital on favorable terms.
To offset rising costs and strengthen our financial posture, management con-tinues to seek increased revenues through timely rate relief. Our efforts in 1978 met with mixed success as we sought total increases of $313.6 million.
The major request in Virginia was for a $246 million increase in permanent rate relief. The State Corporation Com-mission of Virginia granted an interim
$82 million at the same time North Anna went into service in June 1978. Although hearings on the remainder were com-pleted in September, a decision is still pending.
The Company negotiated a $17.2 mil-lion increase with governmental custom-ers in Virginia. Applications filed with FERC for wholesale service to coopera-tives and municipalities totalled $27.6 million, and settlement was reached with cooperatives for $11.8 million.
North Carolina's Utilities Commission approved an increase of $10.8 million annually, or 82% of the rate relief requested. At the request of the Gover-nor of North Carolina, the Commission has instituted an examination of the dif-ference between the Company's rates and other utilities in North Carolina. The matter is set for public hearing in April.
With every increase in rates, the Com-pany experiences an increase in cus-tomer reactions. In view of this, Vepco's program for responding to customers has been strengthened. For example, specially-trained "customer contact" employees follow up phone calls to sat-isfactory solutions.
A new concept has taken Chairman T. Justin Moore, Jr. to some of our cus-tomers' homes for spontaneous video tape interviews. Excerpts from these totally unrehearsed interviews will be shown on television since they deal with the most often asked questions about Company operations.
The following questions and answers are representative samples of this "Ongoing Dialog" with our customers.
Q. Can you tell me why Vepco rates have gone up-doubled in the past five years?
A. I'll start off by saying we don't like it any more than you do. But we're faced with two very serious problems. First, in-flation has run up the cost of everything we buy. And secondly, we have to build for the new customers and new busi-nesses that are moving into this area.
- 0. These nuclear plants, I feel like they're just a waste of money.
A. Well, they're just the opposite...
they're actually the cheapest kind of plants going. They are our base-load plants, the ones we run right around the clock. Right now a nuclear plant can produce a kilowatt hour at a much lower total cost than coal or oil, and environmentally it's a whole lot better.
Q. In my opinion really a monopoly can do what it pleases. If we had competi-tion in this state, I do believe we could get a whole lot better rates.
A. That's a popular misconception, sir, because Vepco is a very regulated pub-lic utility. We can't raise our rates or change our way of serving customers unless the regulatory authorities approve it. On the other hand, look at it this way.
Think of what a mess it would be if you had two or three sets of power lines going down this street of yours.
- 0. Well, aren't you asking for a 20%
increase right now? Is it 20% or 25%?
A. It works out to be 20%. And that will be our first one in about two years, and during that period the cost of living has gone up exactly that same amount. So that gets back to what you were saying.
We've all got to try to bring inflation under control.
Designs for Efficiency As a theme, "Working Together for Service" describes Vepco's approach to the management of human skills and technical resources in providing reliable power most efficiently and economically.
During 1978 this goal was realized in a literal way. Our corporate headquarters moved to a more efficient new home at One James River Plaza-just three blocks from its 1913 office tower in downtown Richmond.
Though short in distance, the move is a long step forward in efficiency. For the first time in years, our administrative people are working together in one building with all the advantages of centralized operations. Current arrange-ments also provide space for other occupants-space which will be avail-able for Vepco expansion in the future.
In recent years, our personnel have been forced to operate from seven separate buildings because of rapid growth as use of electricity increased eightfold. In the past fifteen years our ranks have increased by almost 4,000 to a year-end total of nearly 9,400.
Since it interacts with every other de-partment, our corporate computer cen-ter is an excellent illustration of the new effectiveness level. Previously, due to space limitations, our programmers worked in a building across the street from our computers. Many other depart-ments using computer services also were forced to communicate from scat-tered locations.
At One James River Plaza, all com-puter-related operations are housed to-gether-including the carefully con-trolled environment*necessary for our computers. These computers provide capacity for maintaining all company records along with daily operations.
The computer center has on-site stor-age with security for all master tapes, and duplicates are also stored in an off-site vault.
Centralizing the computer operations provides greater versatility in utilizing these resources. Our engineers use computer programs to assist in the de-sign of stations and calculate the per-formance of system construction. Such information as stockholder records and
I I I I I I I I I I
personnel files can be printed out on microfilm for study and storage.
The computers are also important in customer relations, since they are used to print monthly bills. These bills are inserted through an automated system at about 60,000 per day, and mailed to 1,389,200 customers. When someone in-quires about a bill, the computer flashes a complete history of the account to the customer contact employee who answers the call.
Another automated system, intercon-nected with the computer, results in the most efficient handling of bill payments.
Key to the Vepco method is combining the speed of machines that automat-ically open envelopes and handle the contents with electronic reading and matching of payments to records.
On the heaviest mail days, up to 60,000 payments are processed and operators average recording one entry every 6 seconds. All information is re-corded and accounts posted by the com-puters and verified against deposits made daily at various banks. This auto-mated centralized system results in a substantial savings each year over manual methods.
One James River Plaza will also even-tually house Vepco's new System Oper-ations Center. This modern " nerve center" will be used to control the gen-eration and transmission system to insure both reliability and economy. The huge command center, with its own dual computers and advanced tech-nology, has been designed to replace Vepco*s present System Operators Office and computer now located else-where. Interesting features of the new system include a panoramic diagram wall to display the complete transmis-sion system layout and color television displays to alert the operator to changing power supply conditions.
As the Company continues to grow, a prime goal continues to be the opti-mum use of our human resources. Sev-eral specific programs, many of them underway for years, are aimed toward reaching this goal.
Among these are plans for evaluating the skills of our present employees for functions formerly provided by contrac-tors; recruiting experienced personnel from industry and entry level profes-sionals from colleges and universities; tuition refunds for employees who want to enlarge their skills by education; and evaluating salary and benefit levels to remain competitive.
Vepco is committed to a concerted effort to train and develop men and women to help them increase their skills and general potential for advancement.
We believe that continued success will come from"Working Together for Service:*
Computer center in new corporate headquarters (at left) serves all departments, manages and stores data.
13
14 Management's Discussion and Analysis of the Statements of Income Balance for Common Stock increased $8.2 million in 1978 over 1977 as compared to a $19.1 million increase in 1977 over 1976.
The slight increase in 1978 Balance for Common Stock resulted principally from increased sales and lower fuel expenses achieved through improved nuclear operations at Surry during 1978 and the start up of North Anna 1 in June. Regulatory delays in the Company's request for rate relief prevented further improve-ment. The additional revenues were offset in part in 1978 and 1977 by continued inflation and rapid escalation of operating and capital costs.
Comparisons of the STATEMENTS OF INCOME for the years 1978 (as compared to 1977) and 1977 (as compared to 1976) appear below.
Electric Revenues Electric revenues increased over the prior year principally as a result of the following :
Rate increases and fuel cost recovery.
Unit sales (excluding effect of above).
Other.net Total Revenues Increase From Prior Year (Millions of Dollars) 1978 1977
$38.7
$206.5 59.2 45.6 2.0 1.2
$99.9
$253.3 See Page 10 for information with respect to current requests for increased rates, including interim increases already in effect.
Gas Revenues Gas revenues increased over the prior year principally as a re-sult of the following :
Rate increases and purchased gas cost recovery Unit sales (excluding effect of above).
Total Revenues Increase (Decrease)
From Prior Year (Millions of Dollars) 1978 1977
$5.2
.9
$6.1
$ 6.3 (4.8)
$ 1.5 Operating Expenses and Other Charges Operating expenses and other charges have changed principal-ly as a result of the following :
Fuel..
Purchased and interchanged power.
Maintenance....
Federal income taxes.....
Other taxes...
Other operating costs.....
Description of Business Expenses Increase (Decrease)
From Prior Year (Millions of Dollars) 1978 1977
$ 10.5
$128.2 (42.9) 36.5 20.4 16.1 12.9 11.0 12.3 9.8 34.0 25.2 The electric business of the Company is conducted in most of Virginia and in parts of North Carolina and West Virginia. In its service area it sel Is electricity to retai I customers (including governmental agencies), and at wholesale to rural electric cooper-Fuel expenses have fluctuated from 1976 through 1978 as a result of changes in fuel costs (see Notes A and G to FINANCIAL STATEMENTS), increased sales and changes in requirements for purchased and interchanged power to meet the increased sales (see below). For information with respect to unrecovered deferred fuel costs written-off in 1977, see Note C to FINANCIAL STATEMENTS. Purchased and interchanged power expenses have fluctuated from 1976 through 1978 as a result of tem-porary outages of major coal and nuclear units during the last quarter of 1976 and the first quarter of 1977 and the avail-ability of additional generation in 1978 from North Anna Unit 1.
Maintenance costs increased for 1977 due to repair costs incurred for the above mentioned coal and nuclear unit outages during the last quarter of 1976 and the first quarter of 1977.
Maintenance expense increased for 1978 due to major mainte-nance at the Chesterfield, Yorktown, Portsmouth and Surry Power Stations. Federal income taxes have fluctuated from 1976 through 1978 primarily due to changes in book income and to the increase in the provision for deferred taxes from normaliza-tion accounting. For the year 197 4, the Company incurred a net operating loss for tax purposes, which, after carry-back to prior years, resulted in a loss carry-forward of $55.1 million. The tax effect of the entire loss carry-forward, in the amount of $26.4 million, was used to reduce the Federal income taxes currently payable for 1975, and deferred income taxes of $22.8 million were reinstated in respect of the 197 4 deferred fuel adjustment.
(See Notes Band D to FINANCIAL STATEMENTS.) For information with respect to taxes other than Federal income taxes, see Note F to FINANCIAL STATEMENTS.
Other operating costs for 1978 and 1977 include $6.8 million and $3.2 million, respectively, of amortization of abandoned project costs relating to the cancellation of Surry Units 3 and 4.
For information with respect to these costs, see Note E to FINAN-CIAL STATEMENTS.
Continuation of the Company's large capital expenditures and the related financing together with increases in construction and uranium costs and changes in the cost of capital, have re-sulted in the following increases:
Depreciation....
Interest charges (before AFC).
Preferred and preference dividends Increase From Prior Year (Millions of Dollars) 1978 1977
$19.0
$ 3.3 17.0 19.7 5.9 3.9 The amounts of allowance for funds used during construc-tion (AFC) capitalized since 197 4 have increased substan-tially, reflecting, primarily, greater levels of investment in con-struction work in progress. Although AFC increased by more than $19 million in 1977, this increase was more than offset by increased interest costs and Preferred and Preference divi-dends. In 1978, AFC decreased by $10.8 million, and depre-ciation increased by $19 million primarily as a result of the termi-nation of AFC applicable to North Anna Unit 1 and the accrual of depreciation when that Unit was placed in-service.
atives and municipalities. Gas service is provided only in the Norfolk-Newport News area (except Portsmouth) and in the area extending from Newport News to and including Williamsburg.
Virginia Electric and Power Company Statements of Income Operating revenues (Notes A, Band L):
Electric..........................................
Gas.............................................
Total......................................
Operating expenses:
Operation:
Fuel used in electric generation (Notes A, C and G)................................
Purchased and interchanged power...........
Other (Note G)...............................
Maintenance (Note A)............................
Depreciation (Notes A and H).....................
Amortization of abandoned project costs (Note E).....................................
Taxes-Federal income (Notes A and D)............
-Other (Note F)............................
Total......................................
Operating income............................ *........
Other income:
Allowance for other funds used during construction (Note A)...........................
Allowance for funds used during construction (Note A)...........................
Miscellaneous.net................................
Income taxes associated with miscellaneous, net....
Total......................................
Income before interest charges........................
Interest charges:
Interest on long-term debt........................
Other............................................
Allowance for borrowed funds used during construction (Note A)...........................
Total......................................
Income before cumulative effect of change in accounting method.................................
Cumulative effect (to January 1, 197 4) of accruing estimated unbilled revenues, net of Federal income taxes of $6,810,000 (Note B).................
Net income (Note B)..................................
Preferred and preference dividends....................
Balance for common stock............................
Shares of common stock-average for year (thousands).
Earnings per share of common stock:
Income before cumulative effect of change in accounting method.............................
Cumulative effect (to January 1, 1974) of accruing estimated unbilled revenues............
Balance for common stock..... ;..................
Cash dividends paid per common share................
(
) Denotes red figure.
1978
$1,413,866 51,039 1,464,905 585,625 9,384 183,906 90,317 117,481 6,760 72,658 93,499 1,159,630 305,275 64,002 2,209 (867) 65,344 370,619 184,947 6,677 (24,869) 166,755 203,864 203,864 53,588
$ 150,276 80,060
$1.88
$1.88
$1.30 The accompanying notes are an integral part of the financial statements.
Years 1977 1976 1975 (Thousands of Dollars)
$1,313,937 44,923 1,358,860 575,151 52,273 153,514 69,885 98,527 3,173 59,736 81,174 1,093,433 265,427 72,361 (305)
(358) 71,698 337,125 168,885 5,748 (27,301) 147,332 189,793 189,793 47,719
$ 142,074 74,025
$1.92
$1.92
$1.24
$1,060,663
. $ 998,933 43,413 34,403 1,104,076 1,033,336 446,984 15,747
. 131,485 53,749 95,191 48,751 71,413 863,320 240,756 80,429 283 208 80,920 321,676 147,481 7,409 154,890 166,786 166,786 43,821 122,965 68,137
$1.80
$1.80
$1.22%
449,883 5,540 113,833 59;906 89,805 27,378 57,169 803,514 229,822 66,873 601 (57) 67,417 297,239 122,951 19,556 142,507 154,732 154,732 35,971 118,761 60,854
$1.95
$1.95
$1.18 1974
$735,962 28,050 764,012 300,384 44,609 95,399 38,324 77,757 (6,612) 48,216 598,077 165,935 65,735 938 (527) 66,146 232,081 94,058 23,214 117,272 114,809 12,353 127,162 30,419
$ 96,743 52,100
$1.62
.24
$1.86
$1.18 15
16 Virginia Electric and Power Company Balance Sheets Assets UTILITY PLANT (Note A):
Electric............................................
Gu...............................................
Common..........................................
Total (includes $1,283,841,000 plant under construction [1977-$1,682, 768,000))....
Less accumulated depreciation (Note H)...........
Nuclear fuel (less accumulated amortization of
$53,575,000 [1977-$23,873,000]).................
Net utility plant...........................
INVESTMENTS:
Non utility property at cost or written-down amounts (less allowance of $5,323,000)............
Subsidiary companies at equity (includes advances of $15,718,000 [1977-$11,372,000]) (Notes A and N)...........................................
Net investments..........................
CURRENT ASSETS:
Cash (Note J)......................................
Temporary cash investments........................
Accounts receivable:
December 31, 1978 December 31, 1977 (Thousands of Dollars)
$5,343,985
$4,852,295 60,654 60,042 16;s92 13,058 5,421,231 4,925,395 887,383 779,731 4,533,848 4,145,664 151,865 159,831 4,685,713 4,305,495 3,857 3,260 19,426 15,081 23,283 18,341 4,668 4,936 31,783
$120,658
$106,483 Customers.......................................
Other.......... *......................... *.........
Less allowance for doubtful accounts......
Accrued unbilled revenues (Note 8).................
Deferred fuel surcharge (Note C).......,............
Materials and supplies at average cost or less:
Plant and general (including construction ma-terials).........................................
Fossil fuel.......................................
Prepayments:
Tax~...........................................
Other............................................
- Total current assets......................
DEFERRED DEBITS:
Unamortized abandoned project costs (less ac-cumulated amortization of $9,933,000 [1977-
$3, 173,000]) (Note E).............................
Deferred fuel costs (Notes A and C):
Surcharge.......................................
Other............................................
Unamortized expense on debt.......................
Other..............................................
Total deferred debits......................
) Denotes red figure.
The accompanying notes are an integral part of the financial statements.
8,498 129,156 1,101 32,429 96,567 36,523 4,090 128,055 61,407 128,996 40,613 395,522 66,156 3,383 7,480 29,506 106,525
$5,211,043 2,383 108,866 1,123 26,760 94,952 29,962 1,669 107,743 63,930 11,028 121,712 31,631 340,980 70,285 7,878 25,403 7,179 26,448 137,193
$4,802,009
Capital and Liabilities CAPITAL STOCK (Note I):
Preferred stock-$100 par, cumulative; authorized 7,500,000 shares.........
Preference stock-no par, cumulative; authorized 30,000,000 shares.........
Common stock-no par; authorized 95,000,000 shares......................
OTHER PAID-IN CAPITAL (Note I)...........................................
EARNINGS REINVESTED IN BUSINESS, as annexed.........................
Total stockholders' equity......................................
LONG-TERM DEBT (Note K)................................................
CURRENT LIABILITIES:
Securities due within one year (Notes I and K)..............................
Loans payable, pending permanent financing (Note J)..............."......
Accounts payable, trade.................................................
Customer deposits.......................................................
Payrolls accrued.........................................................
Taxes accrued...................... *..... :..............................
Interest accrued..........................................................
Deferred income taxes.other (Notes A and D).............................
Other...................................................................
Total current liabilities..........................................
DEFERRED CREDITS:
Accumulated deferred income taxes (Note D):
Liberalized depreciation (Note A).......................................
Abandoned project costs (Note A)......................................
Accelerated amortization...............................................
Other (Note A).........................................................
Deferred investment tax credits (Notes A and D)............................
Customer advances for construction......................................
Other (Note G)..........................................................
Total deferred credits..........................................
COMMITMENTS AND CONTINGENCIES (Note N)
December 31, 1978 December 31, 1977 (Thousands of Dollars)
$ 593,091 57,360 1,235,105 27,859 364,215 2,277,630 2,376,796 75,293 3,437 54,413 12,310 10,.109 33,790 64,651 18,780 38,784 311,567 76,341 29,352 13,130 (2,016) 103,304 2,945 21,994 245,050
$5,211,043
$ 560,566
- 57,360
- 1,150,366 24,648 318,507 2,111,447 2,141,883 89,433 53,050 73,763 10,349 9,133 13,364 53,263 23,437 31,537 357,329 37,832 31,175 14,678 13,808 71,675 2,533 19,649 191,350
$4,802,009 17
18 Virginia Electric and Power Company Statements of Earnings Reinvested in Business.
Balance at beginning of year..........................
Net income (see "Statements of Income")..............
Total......................................
Cash dividends:
Preferred and preference stocks (at annual rates indicated below):
$5.00 preferred.................................
$4.04 preferred............................ :....
$4.20 preferred..........,......................
$4.12 preferred.................................
$4.80 preferred.................................
$7.72 preferred.................................
$8.84 preferred.................................
$7.45 preferred.................................
$7.20 preferred.................................
$7.72 preferred (1972 Series)....................
$7.325 preferred...............................
$8.40 preferred.................................
$9.75 preferred.................................
$9.125 preferred...............................
$8.20 preferred.................................
$8.60 preferred.................................
$8.625 preferred...............................
$2.90 preference...............................
Common stock.....................................
Total dividends............................
Transfer to common stock as authorized by Board of Directors..................................
. Other deductions, net................................
Total......................................
Balance at end of year.................................
1978
$318,507 203,864 522,371 533 52 62 134 351 2,702 3,094 2,980 3,240 3,860 5,128 6,720 5,850 1,825 4,920 3,392 1,785 6,960 103,474 157,062 1,094 1,094
$364,215 The accompanying notes are an integral part of the financial statements.
Years 1977 1976 1975 (Thousands of Dollars)
$328,115
$290,260
$242,742 189,793 166,786 154,732 517,908 457,046 397,474 1,447 1,447 1,447 404 404 404 420 420 420 515 515 515 1,440 1,440 1,440 2,702 2,702 2,702 3,094 3,094 3,094 2,980 2,980 2,980 3,240 3,240 3,240 3,860 3,860 3,860 5,128 5,128 5,128 6,720 6,720 6,720 5,850 4,566 1,825 345 1,134 6,960 6,960 4,021 91,225 82,923 70,786 138,944 126,744 106,757 60,000 457 2,187 457 60,457 2,187 457
$318,507
$328,115
$290,260 1974
$206,586 127,162 333,748 1,447 404 420 515 1,440 2,702 3,094 2,980 3,240 3,860 5,128 5,189 60,165 90,584 422 422
$242,742
Virginia Electric and Power Company Statements of Changes in Financial Position 1978 SOURCE OF FUNDS:
Funds provided by operations:
Net income (Note B)..............................
$203,864 Items not affecting working capital:
Provision for depreciation (Notes A and H).......
117,481 Amortization of nuclear fuel (Note A).............
29,702 Amortization of abandoned project costs (Note E) 6,760 Allowance for other funds used during construction (Note A).........................
(64,002)
Allowance for borrowed funds used during construction (Note A).........................
(24,869)
Allowance for funds used during construction (Note A).....................................
Deferred income taxes (Notes A and D)..........
14,668 Deferred investment tax credits, net (Notes A and D)..............................
34,827 Total funds provided by operations..........
318,431 Funds provided by financing:
Mortgage bonds (Note K).........................
213,000 Preferred stock (Note I)...........................
37,000 Preference stock (Note I).........................
Common stock (Note I):
Public offering.................................
68,275 Automatic dividend reinvestment plan............
11,690 Employee savings plan..........................
4,774 Term notes (Note K)..............................
104,750 Increase (decrease) in loans payable...............
(49,613)
Total funds provided by financing...........
389,876
$708,307 APPLICATION OF FUNDS:
Utility plant expenditures (excluding AFC)............
$422,857 Nuclear fuel (excluding AFC)........................
17,458 Abandoned project costs (Note E)...................
2,631 Dividends on common, preferred and preference stocks...........................................
157,062 Increase (decrease) in deferred debits, fuel costs (Notes A and C)..................................
(29,898)
Securities reacquired or repaid......................
97,273 Increase (decrease) in investment (net of repayment of advances) in subsidiary companies (Notes A and N).........................................
4,345 Increase in working capital other than loans payable':'
36,551 Other, net.........................................
28
$708,307 Changes in the individual amounts comprising working capital other than loans payable'~ were as follows:
Accounts receivable..............................
$ 20,312 Accrued unbilled revenues (Note B)...............
(2,523)
Deferred fuel surcharge (Note C)..................
(11,028)
Materials and supplies............................
7,284 Accounts payable, trade..........................
19,350 Interest accrued..................................
(11,388)
Deferred income taxes.other (Notes A and D)......
4,657 Other, net.......................................
9,887
$ 36,551 Years 1977 1976 1975 1974 (Thousands of Dollars)
$189,793
$166,786
$154,732
$127,162 98,527 95,191 89,805 77,757 14,526 8,962 385 3,173 (72,361)
(27,301)
(80,429)
(66,873)
(65,735) 31,536 14,002 28,686 12,956 19,009 32,540 (166)
(5,607) 256,902 237,052 206,569_
- 146,533 150,000 220,000 276,000 175,000 60,000 80,000 80,000
. 57,360 70,400 73,875 113,980 54,945 9,229 7,727 3,456 4,213 3,900 3,651 3,207 108,500 25,000 10,000 122,700 26,550 (83,550)
(146,895) 36,795 428,892 326,952 317,552 472,647
$685,794
$564,004
$524,121
$619,180
$394,875
$343,693
$339,845
$386,271 74,531 57,479 25,421 8,906 16,050 138,944 126,744 106,757 90,584 (18,812) 8,427 (32,855) 64,850 58,250 10,000 61,200 9,240 3,137 4,869 (4,873) 2,054 14,684 10,968 17,404 48,025 4,135 1,824 11,222 9,250
$685,794
$564,004
$524,121
$619,180 2,103
$ 13,017
$ (9,333)
$ 43,884 4,965 19,386 3,790 35,789 628 (1,670) 12,070 26,392 17,080 21,040 10,622 1,775 (32,963) 13,183 (26,135)
(6,916)
(7,177)
(7,234)
(14,366)
(2,537)
(577)
(10,496)
(3,493)
(11,726) 3,872 (5,616) 1,724
$ 14,684
$ 10,968
$ 17,404
$ 48,025
Does not include reclassification as current liabilities of maturing long-term debt and cash sinking fund obligations of debt and preferred stock as follows: 1978-$75,293,000; 1977-$89,433,000; 1976-$58,250,000 and 1974-$61,200,000.
The accompanying notes are an integral part of the financial statements.
19
20 Report of Independent Certified Pu~lic Accountants To the Stockholders and Board of Directors of Virginia Electric and Power Company:
We have examined the balance sheets of Virginia Electric and Power Company as of December 31, 1978 and 1977, and the related statements of income, earnings reinvested in business and changes in financial position for each of the five years in the period ended December 31, 1978. Our examinations were made in accordance with gen-erally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
As discussed in Note E to FINANCIAL STATEMENTS, the Company canceled plans to construct a nuclear facility.
The Company may also incur substantial contract cancellation costs. At this time, it is uncertain what part of the project costs and.contract cancellation costs ultimately to be incurred, will be recoverable.
In our opinion, subject to the effect, if any, on the financial statements of the ultimate resolution of the matter discussed in the preceding paragraph, the financial statements referred to above present fairly the financial position of Virginia Electric and Power.Company as of December 31, 1978 and 1977, and the results of its opera-tions and the changes in its financial position for each of the five years in the period ended December 31, 1978, in conformity with generally accepted accounting principles consistently applied during the period subsequent to the change in 197 4, with which we concur, in the method of accounting for estimated unbilled revenues as described in Note B to FINANCIAL STATEMENTS.
COOPERS & LYBRAND New York, February 7, 1979.
Notes to Financial Statements A. Significant Accounting Policies:
General:
The Company's accounting practices are prescribed by the Uniform System of Accounts promulgated by the regu-latory commissions having jurisdiction.
Revenues:
Operating revenues are recorded on the basis of service rendered.
Utility Plant and Depreciation:
Utility plant is recorded at original cost which includes labor, materials, services, allowance for funds used dur-ing construction and other indirect costs. The cost of depreciable utility plant retired and cost of removal, less salvage, are charged to accumulated depreciation.
The cost of maintenance and\\epairs is charged to the appropriate operating expense and clearing accounts.
The cost of renewals and betterments is charged to the appropriate utility plant account, except the cost of minor replacements which is charged to maintenance expense.
Provisions for depreciation, which include amounts applicable to estimated decommissioning costs of
$22,500,000 for nuclear units in service (assuming moth-balling in pairs), are recorded on the straight-line method based upon estimated service lives.
Nuclear Fuel:
Advance payments are being made for fuel to be owned or leased.
The Company has been providing for estimated re-processing costs relating to fuel which is presently being burned. The Company has requested commission ap-proval to recover on a current basis through fuel adjust-ment provisions the cost of permanent storage of spent fuel to be discharged from its nuclear reactors after 1978 and to recover through base rates such costs in excess of the reprocessing costs previously recovered of spent fuel discharged before 1979 over a ten-year period. Effective September 1, 1978, the North Carolina Commission granted approval to recover such costs in base rates, and effec-tive October1, 1978 the Federal EnergyRegulatoryCommis-sion (FERG) allowed the recovery of these costs through the fuel clause. For periods subsequent to these two decisions, operating expenses include costs of per-manent storage applicable to North Carolina and FERG jurisdictional customers.
Subsidiaries:
The Company has two wholly-owned subsidiaries.
Laurel Run Mining Company is engaged in the under-ground mining of coal, which is utilized solely by *the Company. On January 1, 1979, the first of two portals of the mine was declared operational and coal from such portal will be priced to include current production costs, amortization of deferred development costs and a return on the Company's investment in Laurel Run at the last overall rate of return approved by the Virginia State Cor-poration Commission. Development costs associated with the second portal are being deferred until it becomes operational. Virginia Nuclear, Inc. was organized to ex-plore for uranium reserves; however, no such activities are presently being conducted.
Federal Income Taxes:
The Company's practice is to reduce the current pro-vision for Federal income taxes to reflect the tax benefit resulting from* the use of the double-declining-balance method of depreciation for property additions and the adoption of the Asset Depreciation Range and Class Life Systems. Effective with property additions placed in serv-ice in 1974, the Company has provided deferred income taxes on the aforementioned benefit and, subsequently,
has provided deferred taxes on other differences between book income and income taxable for Federal income taxes to the extent permitted by the regulatory commis-sions having jurisdiction.
Investment Tax Credits:
Accumulated investment tax credits at July 1, 1970 are being amortized over a ten-year period, and credits re-corded after that date are being amortized over the serv-ice lives of the property giving rise to such credits. An additional investment tax credit of 1 % related to the Tax Reduction Act Stock Ownership Plan (TRASOP) does not affect net income and is recorded as a liability until the contribution is made to the TRASOP trust.
Allowance for Funds Used During Construction:
The applicable regulatory uniform system of accounts defines AFC as the net cost for the period of construction of borrowed funds used for construction purposes and a reasonable rate on other funds when so used.
In accordance with a change in FERG accounting rules effective January 1, 1977, the Company is separately determining rates and reporting amounts applicable to borrowed funds, calculated on a net of tax basis, and to equity funds. In accordance therewith, for 1978 the Com-pany employed an aggregate rate of 7.54% for the accrual of AFC and for 1977 employed an aggregate rate of 7. 75%.
For the years 1974 through 1976, the Company em-ployed the rate of 8% and reported AFC in accordance with the accounting rules then in effect. Since the as-sumptions as to source of construction funds, costs of B. Accounting Change:
Prior to 1974, the Company did not accrue the es-timated amount of utility revenues for service rendered but not billed at the end of each accounting period. This practice, while not providing a matching of costs and revenues, did not result in a significant distortion in net income for the years prior to 1974. As a result of rate in-creases granted during 1974, the continuation of such practice would have resulted in a significant understate-ment of net income for the year. Therefore, in December C. Deferred Fuel Accounting:
Effective December 31, 1978, monthly billings ap-plicable to Virginia jurisdictional customers based on fuel costs experienced during a three-month period were terminated. Monthly billings after that date will include under the new annual fuel factor, approved by the Virginia Commission but subject to quarterly hearings, the pro-jected fuel costs for 1979, including the amount of fuel costs unrecovered at December 31, 1978 under the pre-vious fuel adjustment clause and the surcharge placed in effect after a revision of the fuel adjustment clause in 1975.
Effective May 2, 1976, a new fuel clause under the jurisdiction of FERG automatically took effect and a sur-charge became effective, subject to refund, designed to recover over a two-year period deferred fuel expenses of approximately $7.2 million. On June 20, 1977, FERG such funds and capital ratios used by the Company prior to January 1, 1977 are not equivalent to those prescribed in the new accounting rules, the Company believes that retroactive reclassification of AFC in the Statements of Income for these years would be inappropriate.
Assuming that funds used to finance construction dur-ing the three years ended December 31, 1976 were ob-tained 35% from common equity, 52% from debt and 13%
from preferred and preference stocks, the common equity component of AFC as related to earnings available for common stock amounted to 15.9%, 7.2% and 17.4% for the years 1974 through 1976, respectively.
Deferred Fuel Costs:
The Company is deferring for accounting and rate-making purposes that portion of the cost of fuel con-sumed which, through the application of the annual fuel factor may result in increased operating revenues in a later period.
Retirement Annuity Plan:
The Company has a contributory retirement annuity plan and funds pension costs accrued. Prior service cost arising out of amendments to the plan in 1976 and changes in actuarial assumptions in 1977 is being provided in the accounts and funded on the basis of future salaries of participants currently covered by the plan.
Leases:
The Company's practice is to account for all leases as operating leases in accordance with the rate-making practices presently in effect.
1974, effective January 1, 1974, the Company adopted the policy of accruing estimated unbilled revenues. As a re-sult, net income for 1974 increased by $16,531,000 or.
32 cents per share, of which the cumulative effect of the change to January 1, 1974 was $12,353,000 or 24 cents per share (increase in estimated unbilled revenues of
$20,407,000 less related expenses of $1,244,000 and Federal income taxes of $6,810,000).
issued an Order prohibiting further surcharge collection and requiring a refund of the approximately $4.9 million that had been collected under the surcharge. The refund and the write-off of deferred fuel attributable to FERG and retail governmental customers resulted in a charge to income in 1977, before Federal income taxes, of $14. 7 million. A petition for rehearing of the FERG refund Order was denied and on appeal by the Company, the United States Court of Appeals for the Fourth Circuit affirmed the FERG decision.
In the event that future developments dictate a change in the fuel adjustment billing lag period or in the fuel cost base, the Company will request regulatory approval to recover through billings to customers any unrecovered deferred fuel costs.
21
22 D. Federal Income Taxes:
Details of Federal income taxes were as follows:
Years 1978 1977 1976 1975 1974 (Thousands of Dollars)
Computed tax expense on book income before Federal income taxes at statutory rate............. $133,147
$119,946
$103,358
$87,440
$61,386 (Decreases) increases resulting from:
Excess of tax over book depreciation not normalized.................................. (16,402)
(9,956)
(14,840)
(18,689)
(25,089)
AFC.......................................... (42,658)
(47,838)
(38,606)
(32,099)
(31,553)
Investment tax credits, amortization....,........
{5,467)
(4,539)
(3,028)
(2,452)
(2,412)
. Other, net....................................
4,038 2,123 1,867 (3,191)
(2,134)
(60,489)
(60,210)
(54,607)
(56,431)
(61,188)
Federal income tax expense before utilization of portion of operating tax loss carry-forward......... 72,658 59,736 48,751 31,009 198 1974 net operating tax loss carry-forward-utilized.....
(3,631)
Federal income tax expense........................ $ 72,658
$ 59,736
$ 48,751
$27,378 198 Currently payable (refundable)...................... $ 23,163 9,191 2,209
$(1,142)
$ (7,151)
Tax effects of timing differences:
Abandoned project costs.......................
(1,822) 31,175 Deferred fuel adjustment:
Current year.............................. (21,681)
(9,588) 3,243 (9,976) 7,808 Prior year (1974)...........................
22,793 Liberalized depreciation........................ 38,509 13,101 12,320 9,360 3,202 Virginia gross receipts taxes....................
636 2,375 1,379 4,702 3,493 Reprocessing/disposal costs on nuclear fuel....
{6,791)
(6,385)
(4,076)
Accelerated amortization.......................
{1,547)
(1,547)
(1,547)
(1,547)
(1,547)
Indirect construction costs.....................
3,154 2,912 1,796 2,424 Cost of removal of property retirements..........
2,484 1,696 1,426 930 Contributions in aid of construction.............
2,203 (2,203)
North Anna nuclear fuel........................
(487)
Other.........................................
10 (539) 14,668 31,536 14,002 28,686 12,956 Investment tax credits, including any carry-back......
40,294 23,548 35,568 2,286 (3,195)
Investment tax credits, amortization.................
{5,467)
(4,539)
(3,028)
(2,452)
(2,412)
Net deferred investment tax credits..............
34,827 19,009 32,540 (166)
(5,607)
Federal income tax expense....................... *. $ 72,658
$ 59,736
$ 48,751
$27,378 198 Charged (credited) to operating expense............ $ 72,658
$ 59,736
$ 48,751
$27,378
$ (6,612)
Charged to cumulative effect of accounting change..
6,810 Federal income tax expense........................ $ 72,658
$ 59,736
$ 48,751
$27,378 198 Due principally to the timing differences relating to deferred fuel costs and the excess of tax over book depreciation, the Company incurred a net operating loss for tax purposes in 1974, which after carry-back to prior years resulted in a loss carry-forward of $55.1 million. The tax effect of the entire loss carry-forward, in the amount of $26.4 million, was used to reduce the Federal income taxes currently payable for 1975, and deferred income taxes of $22.8 million were reinstated in respect of the fuel costs deferred in 197 4.
The Company has an investment tax credit carry-for-ward of $14,246,000 which will expire in 1985..
E. Abandoned Project Costs:
In March 1977, the Company canceled plans for con-struction of Surry Units 3 and 4, previously planned for completion in 1986 and 1987. At December 31, 1978, the Company had expended $76.1 million, including $7.3 mil-lion in nuclear fuel enrichment services. Additional can-cellation costs could be as much as $52 million. The Company is attempting to reduce such costs through sale of certain equipment and negotiations with suppliers. In July 1977, the Company began amortizing for accounting purposes costs, net of Federal income taxes, over a ten-year period and will amortize additional costs as incurred and the $7.3 million of nuclear fuel enrichment costs over a ten-year period. The North Carolina Utilities Commission has allowed the Company to begin recovery of such costs through amortization in rates over ten years. Continuation of this treatment is based on the Commission's approval, within one year, of the Company's construction program.
The Company has requested the same rate-making treat-ment of these costs from the Virginia Commission, FERG and the West Virginia Commission.
F. Supplementary Income Statement Information:
The amounts of royalties, advertising costs and research and development costs were not significant. Taxes other Taxes, other than Federal income taxes:
Real estate and property........................
State and local gross receipts...................
State income..................................
Other.........................................
Total..............................................
G. Leases:
Rents charged to expenses consisted of the following:
Operating leases:
Combustion turbines...........................
Nuclear fuel...................................
Other (principally buildings and teleprocessing equipment)..................................
Total..............................................
In September 1971, the Company sold 28 combustion turbines for $45,285,000 and leased back such turbines for a term of 20 years (plus two optional five-year renewal terms). Annual rental payments were $3,906,000 during the first four years. As a result of casualties, the Company terminated the lease with respect to two turbines. Con-sequently, the annual payments have been reduced to
$3,848,000 for 1976, $3,790,000 for 1977 and $3,674,000 for the remaining four years of the first ten-year term and
$6,444,000 during the second ten-year term. Additional rentals are being accrued during the first ten years, during which time payments representing interest only are re-quired, so that the annual effect on net income will be equalized over the twenty-year period. Deferred credits, other at December 31, 1978, include $15,997,000 with regard to such accruals. Had the lease been capitalized, the net asset value and present value of the lease commit-ment would be $26,981,000 and $42,601,000, respectively, at December 31, 1978 and $29,111,000 and $42,601,000, respectively, at December 31, 1977.
In August 1972, the Company sold and leased back the initial core of nuclear fuel for Surry Unit 1 for
$22,800,000. In June 1973, the Company sold the initial core of nuclear fuel for Surry Unit 2 for $22,100,000 and entered into a heat supply contract in respect thereof.
Quarterly payments are charged to income in amounts than Federal income taxes charged to expenses were as follows:
Years 1978 1977 1976 1975 1974 (Thousands of Dollars)
$26,333
$25,257
$22,899
$20,200
$20,821 54,865 49,812 42,382 31,909 23,048 505 248 215 87 175 11,796 5,857 5,917 4,973 4,172
$93,499
$81,174
$71,413
$57,169
$48,216 Years 1978 1977 1976 1975 1974 (Thousands of Dollars)
$ 5,694
$ 5,935
$ 6,185
$ 6,172
$ 6,329 35,491 29,518 21,447 24,657 15,073 8,427 6,648 5,552 4,761 3,691
$49,612
$42,101
$33,184
$35,590
$25,093 sufficient to pay for the fuel burned during each quarter (excluding reprocessing and permanent disposal costs) plus interest. Had the lease and contract been capitalized, '
the net asset value and present value of these commit-ments would be $72,288,000 and $73,935,000, respec-tively, at December 31, 1978 and $69,161,000 and
$69,880,000, respectively, at December 31, 1977.
In December 1974, the Company sold and leased back three office buildings for $7,300,000 for terms of twenty years (plus two optional five-year renewal terms). Annual rental payments are $730,000 during the initial terms of the leases. In August 1978, the Company leased a newly constructed headquarters office building for a term of thirty years (plus four optional five-year renewal terms)..
Annual rental payments are $2,993,000 during the initial term of the lease. Had the leases been capitalized, the net asset value and present value of the lease commitments would be $40,132,000 and $41,201,000, respectively, at December 31, 1978 and $6,205,000 and $6,795,000, re-spectively, at December 31, 1977.
If the Company had capitalized the above noted leases and contract, the increase in operating expenses for 1978, 1977 and 1976 would *not have been material.
The Company is responsible for expenses in connection with the leased turbines, nuclear fuel and buildings noted above, including insurance, taxes and maintenance.
23.
24 H. Depreciation:
The provision for depreciation based on mean depreci-able plant for the years 197 4 through 1977 approximated 3.1 %, 2.6% and 2.3% of Electric;- Gas and Common plant, respectively, and for 1978 approximated 3.2%, 3.1 % and 2.4% for Electric, Gas and Common, respectively.
I. Capital Stock and Other p.,aid-ln Capital:
Preferred Stock:
-.. -. -- -~--=:---~-------------
The Company received approval from the Virginia Com-mission to increase the depreciation rate on Gas plant effective January 1, 1978. This change resulted in an in-crease in the provision based on mean depreciable Gas plant at December 31, 1978, to 3.1 %.
Preferred Stock was represented by 5,942,746 shares outstanding at December 31, 1978, as follows:
Dividend Authorized
. $5.00 106,677 4.04 12,926 4.20 14,797 4.12 32,534 4.80 73,206 7.72 350,000 8.84 350,000 7.45 400,000 7.20 450,000
- 7. 72 (1972 Series) 500,000 7.325 700,000 8.40 800,000 9.75 600,000 9.125 200,000 8.20 600,000 8.60 382,606 8.625 370,000 Total 5,942,746 Shares Outstanding 106,677 12,926 14,797 32,534 73,209.,
350,00Q\\
350,000 400,000 450,000 500,000 700,000 800,000(1) 600,000(2) 200,000(3) 600,000(4) 382,606(5,7) 370,000(6) 5,942, 7 46(8)
Less shares due within one year..
11,834(8)
Balance........................ 5,930,912 Entitled Per Share Upon Voluntary Redemption Amount
$112.50 102.27 102.50 103.73 101.00 106.00 107.00 106.00 106.00 106.00 110.00 115.00 109.75 110.00 115.00 107.00 108.63 Through 5/31/81 8/31/82 2/28/81 1/31/82 9/30/82 3/31/83 3/31/84 2/28/81 9/19/81 9/20/87 12/20/87 6/20/83 And Thereafter To, Amounts Declining In Steps To
$101.50 after 5/31 /84 101.00 after 8/31 /85 101.00 after 2/29/84 101.00 after 1 /31 /85 101.00after 9/30/85 101.00 after 3/31 /88 100.00 after 3/31 /04 101.00 after 2/28/91 102.00after 9/19/91 100.41 after 9/20/96 100.00 after 12/20/97 100.00 after 6/20/02 (1) Issued March 1974. (2) Issued March 1976.
(3) Issued October 1976. (4) Issued September 1977.
(5) Issued December 1977. (6) 355,000 shares issued in May 1978 and 15,000 shares issued in September 1978.
(7) No redemption prior to December 20, 1982.
(8) Sinking Fund requirements call for annual redemption at $100 per share as follows:
Series
$8.60 9.125 8.20 7.325 8.625 8.40 Percentage of Shares Issued 3%
4 5
4 5
4 Beginning Dec. 1978 Sept. 1981 Sept. 1983 April 1984 June 1984 April 1985 Ending Dec.2010 Sept. 2000 Sept. 1996 April 2008 June 2002 April 2009 Upon involuntary liquidation, all shares are entitled to are cumulative and payable March 20, June 20, Sep-receive $100 per share plus accrued dividends. Dividends tember 20 and December 20.
Preference Stock:
Preference Stock was authorized for issuance effective April 17, 1975. On May 22, 1975, the Company issued 2,400,000 shares of $2.90 Dividend Preference Stock at
$23.90 per share which aggregated $57,360,000.
The Preference Stock is redeemable at $27.90 per share Common Stock:
Common Stock was represented by 85,241,100 shares outstanding at December 31, 1978. In addition, 2,051,282 shares (based on the conversion price of $24.375 per share) are reserved for conversion of the 3%% Convertible Automatic Dividend Year Public Offering Reinvestment Plan Additions To Additions To Shares Capital Account Shares Capital Account 1978.. 5,000,000 $ 68,275,000 827,514
$11,689,651 1977.. 5,000,000 70,400,000 626,886 9,229,553 1976.. 5,000,000 73,875,000 541,248 7,726,113 1975.. 9,000,000 113,980,000 267,802 3,455,908 1974.. 6,600,000 54,945,000 prior to May 1, 1980, and thereafter declines in steps to
$25.25 on May 1, 1990. Upon liquidation, all share$ are entitled to receive $25 per share plus accrued dividends.
Dividends are cumulative and payable March 20, June 20, September 20 and December 20.
Debentures due May 1, 1986. During the years 197 4 through i 978 the following changes in Common Stock occurred:
Savings Plan Total Outstanding Additions To Shares Capital Account Shares Capital Account 337,143
$4,774,135 85,241,100
$1,235,104,925 284,167 4,212,884 79,076,443 1,150,366, 139(1) 277,798 3,900,245 73,165,390 1,006,523, 702-301,065 3,651,754 67,346,344 921,022,344 323,825 3,206,975 57,777,477 799,934,682 50,853,652(2) 7 411782,707 (1) In May 1977, $60,000,000 was transferred from Earnings Reinvested in Business to the Common Stock account as authorized by the Board of Directors.
(2) Outstanding January 1, 1974.
On April 22, 1976, the number of authorized shares was increased from 70,000,000 to 95,000,000.
Other Paid-In Capital:
In November 1977, the Company solicited tenders of 594,850 shares of the various series of Preferred Stock, shares of $5.00 Dividend, $4.80 Dividend, $4.20 Dividend, having an aggregate stated value of $59,485,000, were
$4.12 Dividend and $4.04 Dividend series of Preferred tendered for 347,873 shares of $8.60 Dividend series Stock*in exchange for shares of $8.60 Dividend Preferred having a stated value of $34,787,000. The difference of Stock. The exchange offer expired January 4, 1978. The
$24,648,000, net of cash paid for fractional shares, has purposeofthisexchangeofferwastoincreasethebalance been transferred to Other Paid-In Capital. In addition, sheet ratio of Common equity to total equity, consistent 79,482 shares of the various series of Preferred Stock, with the objective of the Company to achieve and main-having an aggregate stated value of $7,948,000, were tain capitalization ratios in the range of 52% long-term tendered in January 1978 for 46,567 shares of $8.60 Divi-debt, 13% Preferred and Preference Stock and 35% Com-dend series having a stated value of $4,657,000. The dif-mon equity. No determination has been made by the ference of $3,211,000, net of cash paid for fractional Virginia State Corporation Commission as to rate-making shares, has been transferred to Other Paid-In Capital.
treatment of the exchange offer. As of December 31, 1977, J. Short-Term Loans and Compensating Balances:
Daily Month End Average Outstanding Maximum Outstanding Interest Rate At End Interest 1978 Maturity Of Year(1)*
Amount Rate(1)
Amount Date Commercial Paper..............
(2)
$43,833,690 7.28%
$101,636,000 6/30/78 Master Notes..................
(3) 9.10%
1,833,970 8.40 8,234,000 10/31/78 1977 Commercial Paper..............
(2) 6.76 34,356,000 5.88 71,500,000 1 /31 /77 (1) Weighted average interest.
(2) Principally 30 to 90 days.
(3) Maximum 180 days.
Available bank lines of credit amounted to $259,400,000 at December 31, 1978, including $80,000,000 applica-ble to a revolving credit arrangement effective through December 31, 1979. However, a limitation in that arrange-ment on total short-term indebtedness of the lesser of
$300,000,000 or available bank lines of credit would have permitted the issuance of only $255,963,000 of additional short-term.debt at December 31, 1978. The Company maintains compensating balances of up to 10% or pays fees in lieu of balances in connection with its lines of credit. The balances may be increased if the Company is utilizing the line of credit. The revolving credit agree-ment provides for commitment and other fees, which would aggregate 7%% of the prime rate plus % of 1 % of the commitment.
25
,... '* *,.' ' '*.-' :,-r...
26 K. Long-Term Debt:
Long-term debt outstanding at December 31, 1978:
First and refunding mortgage bonds(1 ):
Series G 2%%, due 1979.......... $
Series H 2%%, due 1980..........
Series I 3%%, due 1981..........
Series J 3%%, due 1982..........
Series DD 10%%, due 1983..........
Series K 3Ya%, due 1984..........
Series L 3%%, due 1985.....,....
Series A 6%%, due 1985(a).......
Series M 4Ya%, due 1986..........
Series N 4%%, due 1987..........
Series O 3Va%; due 1988..........
Series P 4%%, due 1990..........
Series Q 4Va%, due 1991..........
Series R 4%%, due 1993..........
Series$
4%%, due 1993..........
Series FF 11 %, due 1994..........
Series EE *. 11 %, due 1994..........
Series T 4%%, due 1995..........
Series U 5Ya%, due 1997..........
Series V 6Va%, due 1997..........
Series KK 8.95%, due 1998..........
Series W
?Ya%, due 1999..........
Series X 7%%, due 1999..........
Series Y 9%, due 2000..........
Series Z 8%%, due 2000..........
Series AA 7%%, due 2001..........
Series BB 7%%, due 2001..........
Series CC 7%%, due 2002..........
Series C 6.15%, due 2003(a).......
Series A 8%%, due 2005(a).......
Series GG 10%, due 2005..........
Series HH 9%%, due 2006..........
Series B 6%%, due 2006(a).......
Series 11 8%%, due 2006..........
Series JJ 8%%, due 2007..........
Series LL 9%%, due 2008..........
Total............................
Term notes due 1979-88 (including
$100,410,000 issued in 1978) (2)...
Convertible debentures 3%%, due 1986............................
Pollution control revenue bonds due 20,000,000 20,000,000 20,000,000 20,000,000 75,000,000 25,000,000 25,000,000 8,000,000 20,000,000 20,000,000 25,000,000 25,000,000 30,000,000 30,000,000 30,000,000 133,500,000 100,000,000 60,000,000 50,000,000 50,000,000 55,000,000(b) 85,000,000 75,000,000 83,725,000 83,725,000 90,000,000 50,000,000 100,000,000 8,000,000(b) 18,000,000 100,000,000 100,000,000 20,000,000 100,000,000 150,000,000 150,000,000(b) 2,054,950,000 303,610,000 50,000,000 1979-2004(3)..................... __
5_1..:_,5_0~0,'---0_00_
Less: Due within one year:
Sinking fund obligations(1)...
Term notes(2)...............
First and Refunding Mortgage Bonds...................
Pollution Control Revenue Bonds(3).............. :..
Unamortized discount-2,460,060,000( 4) 13,250,000 38,610,000 20,000,000 2,250,000 net of premium.............
9,154,000 Total long-term debt(c).. $2,376,796,000 (a) Pollution Control Series.
(b) Issued in 1978.
(c) No amount of any issue is pledged, held by or for account of the Company, held by affiliates or included in sinking or other special funds of the Company. All amounts are authorized by indenture and are issued and not retired or canceled.
(1) The Mortgage provides for sinking funds as follows:
Annual Sinking Series G through CC....
Series EE...............
Series FF...............
Series KK..............
Pollution Control Series A Pollution Control Series B Pollution Control Series C Commencing June 1979 Jan. 1977 Mar. 1984 Sept. 1986 May 1992 May 1989 Fund Requirements
$10,400,000 5,000,000 8,250,000 2,750,000 500,000 250,000 375,000
,:'The Company may satisfy these requirements by waiv-ing the privilege to issue an equal amount of Bonds by substituting property therefor and intends to do so in 1979.
Substantially all of the Company's property is subject to the lien of the Mortgage.
(2) Term Notes:
Variable Interest Rate Percentage Not to be of Base Not to Less Than Principal Lending Exceed An An Aver-Fixed Inter-Amount Maturity Rate of Average of age of est Rate
$ 13,200,000 Feb. 1979 8.15%
5,410,000 Oct. 1979 60%(a) 20,000,000 Dec. 1979 8.35 10,000,000 Feb. 1980 7%
10,000,000 Nov. 1980 (b) 8.15% 7%%
60,000,000 Feb. 1981 115 8%
5,000,000 Feb. 1981 8.15 25,000,000 Aug. 1981 (c) 8%(c) 50,000,000 Jan. 1982 115 8%
5,000,000 Apr. 1982 8%
10,000,000 Apr. 1983 8%
5,000,000 Oct. 1983 8%
10,000,000 Apr. 1984 8%
20,000,000 Feb. 1985 115 8%
5,000,000 Mar. 1985 8%
50,000,000 Mar. 1988 (d) 9 8
$303,610,000 (a) Pollution control note. The interest rate may not exceed 5%% at any time. (b) Base lending rate plus % of 1 %.
(c) Base lending rate plus % of 1 %. The 8%% average interest rate expires in August 1979.
(d) 118% of the higher of commercial paper rate plus% of 1 % or base lending rate.
(3) Pollution Control Revenue Bonds:
Mandatory Sinking Fund Requirements Principal Amount Maturity Interest Rate Annual Amount Period
$10,000,000 Dec.1979-83~'7.0-7.4%
None
{
$250,000 1979-1983 5,000,000 Dec. 1989 8.0 500,000 1984-1986 22,000,000 Oct. 2002 14,500,000 Dec. 2004
$51,500,000 750,000 1987-1988 5%
500,000 1990-2001 8%
750,000 1990-2003
,:,$2,000,000 of the $10,000,000 principal amount of Serial Bonds mature annually.
(4) In the first quarter of 1978, the Company redeemed the $88,250,000 of long-term debt and sinking fund obligations due in 1978. Maturities (including cash sinking fund obligations) through 1983 are as fol-lows: 1979-$7 4,110,000; 1980-$55,500,000; 1981-
$125,500, 000; 1982-$90,500,000; and 1983-
$105,500,000.
L. Effect of Rate Increases on Operating Revenues:
Rate increases which became effective for portions of the following years increased operating revenues for the respective years by the approximate amounts shown:
(Millions of Dollars) 1978 1977 Electric...... $56.9
$3.0 Gas.........
M. Retirement Annuity Plan:
1976
$6.3
.9 1975 1974
$14.8
$52.5
. 3 Costs to the Company under the plan were: 1978-
$8,586,000; 1977-$7,594,000; 1976-$5,046,000; 1975-
$3,720,000 and 1974-$2,609,000. Changes in actuarial assumptions in 1977, principally relating to incidence of retirement, salary scale and mortality, resulted in an in-crease in the unfunded liability of $8.9 million at that N. Commitments and Contingencies:
The Company has made substantial commitments in connection with its construction program, which is presently estimated to be in the range of $650-$750 mil-lion for 1979, subject to review pending resolution of the rate case before the Virginia Commission. Additional fi-nancing is contemplated in connection with this program.
In December 1975, Laurel Run Mining Co. sold to a non-affiliated party and leased back the major portion of its coal mining equipment. In 1976, additional equipment was leased under the same agreement. As guarantor, the Company has a contingent liability for annual lease pay-ments of $2.3 million in 1979, $2.1 million in 1980, $1.4 mil-lion in 1981, $1.4 million in 1982 and $1.1 million in 1983.
As a result of a routine periodic audit of the Company's compliance with the Uniform System of Accounts for the years 1970 through 1974, which has been in progress dur-ing the past two years, the FERG by letter dated November 20, 1978 directed the Company to reclassify $6.3 million
($4.3 million of AFC and $2.0 million of other costs) associ-ated with a boiler implosion in August 1974 at Yorktown Unit 3 at the time such unit was first placed in service which the Company has capitalized on its books. The Company, whose accounting for this item has been ap-
- 0. Quarterly Financial Data (Unaudited):
The following amounts (not examined by independent certified public accountants) reflect all adjustments, con-sisting of only normal recurring accruals, necessary in the Balance Earnings for Per Share Operating Operating Common of Common Quarter Revenues Income Stock Stock 1978 (Thousands of Dollars) 1st........ $391,771
$72,249
$40,699
$.51 2nd.......
329,340 67,265 32,283
.41 3rd........
404,763 90,238 45,700
.57 4th........
339,031 75,523 31,594
.39 Results for interim periods may fluctuate as a result of weather conditions, rate. relief and other factors.
Balance for Common Stock for the fourth quarter of 1978 was increased by a reduction, as a result of the P. Replacement Cost Data (Unaudited):
The impact of the rate of inflation experienced in recent years has resulted in replacement costs of productive ca-pacity that are significantly greater than the historical costs of such assets reported in the Company's financial Electric operating revenues for 1978 include $47.1 mil-lion subject to refund with interest pertaining to tempo-rary surcharges associated with the placing in-service of North Anna Unit 1 applicable to Virginia jurisdictional customers and certain nonjurisdictional customers. It is the Company's opinion that the likelihood of a required refund of any of this amount is remote.
time. At January 1, 1978, the date of the latest avail-able actuarial report, the unfunded liability of the plan amounted to approximately $20.3 million. At that date, the actuarially computed amount of vested benefits ex-ceeded the cost basis of the plan's assets by $3.7 million.
proved for rate-making purposes, does not agree with FERG and has requested a hearing before the full Com-mission but the outcome of this proceeding is presently uncertain.
In September 1975, Westinghouse Electric Corpora-tion announced its intention not to perform the contracts it had with the Company and a number of other utilities for the delivery of uranium. As a result, suits were insti-tuted against Westinghouse and on October 27, 1978, the United States District Court for the Eastern District of Virginia ruled that Westinghouse was not excused from performance under the commercial impracticability provisions of the Uniform Commercial Code. The court also held that the Company had a minimum-maximum contract, not a requirement contract which was the posi-tion of the Company throughout the proceeding. This added substantially to the amount of uranium to be de-livered under the contract. The amount of damages to which the Company is entitled has not been determined but is to be considered at a later trial expected to begin in the summer of 1979. The Company is engaged in set-tlement discussions with Westinghouse, but no agreement has yet been reached.
opinion of the Company for a fair statement of the results for the interim periods.
Balance Earnings for Per Share Operating Operating Common of Common Quarter Revenues Income Stock Stock 1977 (Thousands of Dollars) 1st........ $344,604
$60,699
$31,617
$.43 2nd.......
298,506 59,505 28,139
.38 3rd........
387,006 81,238 49,611
.67 4th........
328,744 63,985 32,707
.44 Revenue Act of 1978, of $2.2 million ($.03 per share) of Federal income taxes previously provided for contri-butions in aid of construction.
statements. In compliance with reporting requirements, estimated replacement cost information is disclosed in the Company's Annual Report to the Securities and Ex-change Commission on Form 10-K.
27
05 Ten Year Comparative Summary of Performance (Thousands of Dollars)
Operating revenues:
Electric.................................................
Gu....................................................
Total operating revenues.............................
Expenses (operation and maintenance)......................
Depreciation..............................................
Amortization of abandoned project costs..................
Taxes:
Federal income:
Currently payable (refundable)..........................
Investment tax credits, including carry-back.............
Investment tax credits, amortization.....................
Deferred-accelerated amortization.....................
-liberalized depreciation......................
-other.......................................
Other...................................................
Total operating expenses.............................
Operating income.........................................
Other income:
Allowance for other funds used during construction........
Allowance for funds used during construction.............
Miscellaneous, net......................................
Total other income...................................
Income before interest charges.............................
Interest charges:
Interest on long-term debt................................
Other...................................................
Allowance for borrowed funds used during construction....
Total interest charges................................
Income before cumulative effect of change in accounting method..
Cumulative effect to January 1, 1974 of accruing estimated unbilled revenues.net of taxes...........................
Net income................................................
Dividends:
On preferred and preference stock........................
On common stock.......................................
Total dividends......................................
Earnings reinvested in business.............................
Shares of common stock-average for year (thousands) (1)......................................
Earnings per share of common stock................,.......
Dividends paid per share of common stock (1)...............
Pay-out ratio..............................................
Return of capital:
Common stock dividends.................................
Preferred and preference stock dividends.................
Utility plant at original cost.................................
Utility plant expenditures...................................
Accumulated depreciation and amortization.................
Capitalization:
Preferred and preference stock...........................
Common stock, other paid-in capital and earnings reinvested in business.................................
Debt (excluding short-term debt)..........................
Total capitalization...................................
Short-term debt-pending permanent financing............
Capitalization ratios:
Preferred and preference stock...........................
Common stock and earnings reinvested in business........
Debt (excluding short-term debt)..........................
1978
$1,413,866 51,039 1,464,905 869,232 117,481 6,760 23,163 40,294 (5,467)
(1,547) 38,509 (22,294) 93,499 1,159,630 305,275 64,002 1,342 65,344 370,619 184,947 6,677 (24,869) 166,755 203,864 203,864 53,588 103,474 157,062 46,802 80,060
$1.88
$1.30 69%
$5,626,671
$ 529,186
$ 940,958
$ 651,634 1,627,179 2,460,060
$4,738,873 3,437 14%
34 52 (1) Restated to reflect the split of common stock (4 for 3) effected April 1968.
1977
$1,313,937 44,923 1,358,860 850,823 98,527 3,173 9,191 23,548 (4,539)
(1,547) 13,101 19,982 81,174 1,093,433 265,427 72,361 (663) 71,698 337,125 168,885 5,748 (27,301) 147,332 189,793 189,793 47,719 91,225 138,944 50,849 74,025
$1.92
$1.24 64%
72.654%
$5,109,099
$ 569,068
$ 803,604
$ 619,109 1,493,521 2,238,400
$4,351,030 53,050 14%
34 52
/2) 1gc1udes non-recurrina cumulative effect of chanqe in accountinq for unbilled revenues of $.24 per share.
1976
$1,060,663 43,413 1,104,076 647,965 95,191 2,209 35,568 (3,028)
(1,547) 12,320 3,229 71,413 863,320 240,756 80,429 491 80,920 321,676 147,481 7,409 154,890 166,786 166,786 43,821 82,923 126,744 40,042 68,137
$1.80
$1.22%
67%
25.267%
$4,609,416
$ 481,601
$ 700,254
$ 583,807 1,334,639 2,038,150
$3,956,596 26,500 15%
34 51 1975
$ 998,933 34,403 1,033,336 629,162 89,805 (1,142) 2,286 (2,452)
(1,547) 9,360 20,873 57,169 803,514 229,822 66,873 544 67,417 297,239 122,951 19,556 142,507 154,732 154,732 35,971 70,786 106,757 47,975 60,854
$1.95
$1.18 60
$4,142,900
$432,139
$ 609,304
$ 503,807 1,211,282 1,803,150
$3,518,239
$ 110,050 14 35 51
- .f *~ 4
- * ~
- ;
- f.
1974 1973 1972 1971 1970 1969 1968
$ 735,962
$ 524,963
$ 445,668
$ 390,370
$ 353,151
$ 305,770
$ 278,725 28,050 26,000 25,185 23,302 21,729 20,670 18,817 764,012 550,963 470,853 413,672 374,880 326,440 297,542 478,716 278,750 264,906 218,846 181,434 142,189 122,717 77,757 68,436 53,058 49,950 46,841 41,020 37,944 (7,678)
(1,010)
(6,850) 8,652 23,784 30,252 33,569 *
(3,195) 3,901 7,368 1,952 1,163 4,082 3,070 (2,412)
(2,413)
(2,225)
(2,062)
(1,318)
(516)
(424)
(1,547)
(1,547)
(1,547)
(1,547)
. (1,547)
(1,547)
(1,547) 3,202 5,018 7,265 1,356 1,050 48,216 42,170 36,629 33,514 29,367 26,653 24,603 598,077 395,552 352,695 310,355 279,724 242,133 219,932 165,935 155,411 118,158 103,317 95,156 84,307 77,610 65,735 57,359 58,451 39,993 24,175 13,602 6,682 411 336 (156) 142 274 619
- 66.
66,146 57,695 58,295 40,135 24,449 14,221 6,748 232,081 213,106 176,453 143,452 119,605 98,528 84,358 94,058 78,350 67,554 58,130 44,083 33,653 24,920 23,214 10,684 5,162 3,274 3,368 1,624 1,625 117,272 89,034 72,716 61,404 47,451 35,277 26,545 114,809 124,072 103,737 82,048 72,154 63,251 57,813 12,353 127,162 124,072 103,737 82,048 72,154 63,251 57,813 30,419 24,147 16,472 12,216 7,728 5,555 4,226 60,165 54,796 46,905 41,993 39,906 36,923 34,293 90,584
. 78,943 63,377 54,209 47,634 42,478 38,519 36,578 45,129 40,360 27,839 24,520 20,773 19,294 52,100 47,021 41,883 37,829 35,881 33,264 32,521
$1.86(2)
$2.13
$2.08
$1.85
$1.80
$1.73
$1.65
$1.18
$1.16Y2
$1.12
$1.12
$1.12
$1.11
$1.06%
71%
55%
54%
60%
62%
64%
64%
100.000%
49.407%
100.000%
96.724%
54.243%
100.000%
55.565%
$3,739,395
$3,298,447
$2,847,614
$2,416,130
$2,082,487
$1,754,776
$1,508,640
$ 460,912
$ 486,709
$ 472,819
$ 380,268
$ 338,074
$ 255,493
$ 177,967
$ 545,296
$ 476,121
$ 414,941
$ 373,834
$ 335,605
$ 298,175
$ 265,356
$ 446,447
$ 366,447
$ 296,447
$ 201,447
$ 161,447
$ 126,447 91,447 1,042,677 948,369 810,121 680,800 574,633 476,666 453,577 1,578,350 1,289,890 1,242,440 1,070,440 932,000 762,000 602 800 ll,3,067,474
$2,604,706
$2,349,008
$1,952,687
$1,668,080
$1,365,113
$1 147,824 11, 256,945
$ 220,150 88,400 61,800 53,700 53,900 63,100 15%
14%
13%
10%
10%
9%
8%
34 36 34 35 34 35 39 51 50 53 55 56 56 53 29
30 Ten Year Operating Statistics ELECTRIC DEPARTMENT Operating revenues (thousands):
Residential.........................................
Commercial.........................................
Industrial...........................................
Other sales of electric energy........................
Other electric revenues..............................
Total operating revenues-electric..................
Population served at retail-estimated....................
NumbeF of customers:
Residential.........................................
Commercial.........................................
Industrial...........................................
Other..............................................
Total customers...................................
Sales of electricity-Mwh (thousands):
Residential.........................................
Commercial.........................................
Industrial...........................................
Other..............................................
Total sales of electricity............................
Losses and miscellaneous system uses.................
Total distribution-energy supply...................
Less: Sales outside of service area.....................
Total distribution..................................
Source of electricity-Mwh (thousands):
Steam-Fossil.......................................
-Nuclear.....................................
Hydro..............................................
Other..............................................
Net purchased and interchanged.....................
Company energy supply...........................
Less: Sales outside of service area.....................
System output....................................
Interchange deliveries for account of others...........
Com.pany*s service area output.....................
Company's service area peak load-Mw.................
Power supply available for peak load-Mw Generating capability:
Steam-Fossil.....................................
-Nuclear...................................
H~ro............................................
Other............................................
Total generating capability.......................
SEPA power disposed of in Company's service area...
Available for firm peak load........................
Purchase (sale) outside service area...................
Available for service area peak load.................
BTU per kilowatt-hour generated.......................
Average fuel cost per KWH generated-mills..............
Electric line-pole miles................................
Underground construction-miles of route..............
GAS DEPARTMENT Operating revenues (thousands):
Residential.........................................
Commercial and industrial...........................
Other..............................................
Total operating revenues-gas.....................
Population served at retail-estimated...................
Number of customers..................................
Sales-Met (thousands)................................
Output-Met manufactured (thousands).................
Mcf natural gas purchased (thousands).........
Miles of main.........................................
1978
$ 563,561 392,101 182,901 268,213 7,090
$1,413,866 3,465,000 1,138,470 115,121 920 15,446 1,269,957 12,405 9,170 6,152 9,340 37,067 2,901 39,968 39,968 24,438 14,098 967 399 66 39,968 39,968 325 40,293 7,805 6,321 2,448 326 439 9,534 165 9,699 300 9,999 11,018 14.04 41,698 8,395 30,621 20,000 418 51,039 875,000 119,288 15,303 236 16,407 2,096 1977
$ 524,336 365,340 176,573 242,686 5,002
$1,313,937 3,415,000 1,100,876 111,662 920 14,922 1,228,380 11,867 8,762 6,022 8,806 35,457 2,792 38,249 38,249 26,403 9,481 444 625 1,296 38,249 38,249 325 38,574 7,902 6,321 1,550 326 439 8,636 165 8,801 300 9,101 10,933 15.23 41,446 7,794 26,640 17,981 302 44,923 875,000 120,262 15,065 650 15,448 2,099 1976
$ 420,150 298,681 144,770 193,096 3,966
$1,060,663 3,365,000 1,071,528 108,197 920 14,462 1,195,107 11,137 8,455 6,011 8,510 34,113 2,261 36,374 36,374 27,090 7,740 599 407 538 36,374 36,374 326 36,700 7,040 6,321 1,576 326 454 8,677 165 8,842 313 9,155 10,739 12.94 41,186 6,824 24,914 18,308 191 43,413 875,000 122,103 17,228 138 18,519 2,100 1975
$ 402,889 288,357 137,181 166,854 3,652
$ 998,933.
3,315,000 1,041,234 105,942 918 14,881 1,162,975 10,373 7,970 5,404 7,741 31,488 2,585 34,073 34,073 23,562 8,969 988 226 328 34,073 34,073 325 34,398 7,133 6,321 1,576 326 469 8,692 165 8,857 316 9,173 10,892 13.06 40,663 6,266 21,280 12,944 179 34,403 875,000 122,486 15,017 92 16,274 2,014
- Excludes the cumulative effect to January 1, 1974 of accruing estimated unbilled revenues ($18,842,000 electric-$1.565,000 gas) shown as a non-recurring item on the income statement, net of taxes.
IT"i 1 +=r r==te,+4 1 r:rsr 1 :=-+, 9 F+
1974 1973 1972 1971 1970 1969 1968
~ 308,834
$ 229,860 191,924 169,113
$ 158,698 133,506 120,515 211,486 150,758 130,599 113,646 99,957 86,907 79,379 106,309 66,131 58,785 48,375 41,889 39,099 36,974 106,018 75,170 61,440 56,392 50,073 43.323 39,968 3,315 3,044 2,920 2,844 2,534 2,935 1,889 735,962
$ 524,963
$ 445,668
$ 390,370
$ 353,151
$ 305,770
$ 278,725 3,270,000 3,225,000 3,185,000 3,150,000 3,100,000 3,025,000 2,975,000 1,018,346 989,471 954,374 920,839 895,210 878,206 853,429 105,531 103,253 100,175 98,223 97,113 96,437 94,857 916 910 894 874 873 881 848 13,045 12,350 11,817 11,392 10,948 10,216 9,561 1,137,838 1,105,984 1,067,260 1,031,328 1,004,144 985,740 958,695 9,850 9,911 8,775 8,121 7,873 6,870 6,011 7,307 7,330 6,471 5,980 5,617 5,035 4,488 5,658 5,535 5,136 4,683 4,456 4,256 3,995 7,120 7,268 6,529 5,902 5,560 4,861 4,517 29,935 30,044 26,911 24,686 23,506 21,022 1 ~.011 2,518 2,335 2,199 2,019 1,777 1,826 1,812 32,453 32,379 29,110 26,705 25,283 22,848 20,823 216 117 354 32,453 32,379 29,110 26,705 25,067 22,731 20,469 22,819 22,311 23,710 24,335 23,218 22,178 20,525 5,953 6,857 370 774 949 1,071 825 445 443 487 629 459 558 323 350 276 44 2,278 1,803 3,401 1,222 1,270 (49)
(233) 32,453 32,379 29,110 26,705 25,283 22,848 20,823 216 117 354 32,453 32,379 29,110 26,705 25,067 22,731 20,469 325 315 312 307 301 315 310 32,778 32,694 29,422 27,012 25,368 23,046 20,779 6,734 6,900 6,232 5,295 4,852 4,639 4,253 5,684 4,866 4,306 4,334 4,330 4,330 3,676 1,576 1,576 788 326 326 326 326 326 326 327 530 530 530 530 342 254 128 8,116 7,298 5,950 5,190 4,998 4,910 4,131 165 165 132 132 131 131 131 8,281 7,463 6,082 5,322 5,129 5,041 4,262 251 122 680 610 194 (165) 69 8,532 7,585 6,762 5,932 5,323 4,876 4,331 10,868 10,673 10,529 10,382 10,268 10,162 9,961 12.43 4.98 4.63 4.28 3.55 2.96 2.80 40,121 39,578 39,055 38,404 37,803 37,336 36,686 5,641 4,772 4,055 3,367 2,763 2,282 1,614 17,265 16,038 16,132 14,847 14,600 14,446 13,341 10,598 9,775 8,858 8,252 6,922 5,932 5,272 187 187 195 203 207 292 204 28,050
26,000 25,185 23,302 21,729 20,670 18,817 864,000 853,000 852,000 850,000 800,000 655,000 652,000 124,395 125,525 125,277 124,029 122,489 122,264 119,143 16,888 17,666 17,620 17,772 16,239 15,345 13,809 12 297 247 341 378 288 407 17,938 18,696 18,824 18,563 17,035 16,257 14,961 2,012 1,992 1,993 1,955 1,909 1,850 1,768
'l1
"r T2....-I _,,,..,..._.,.._......,....... F....,,..-,..-,--,-.....--..-,,...,.- f T_,....,,--,- -T -r-,--,---,--,-.----;r-~r
-r- -, ;:--;--, *-, ~
r-, ---,-,
~-------;---,-,
I 32 Directors Dr. Allix B. James James F Betts Shirley S Pierce Roy R Smith John M. McGurn William S. Peebles John M. McGurn-An Appreciation Spanning more than half of Vepco's modern history, the 44-year career of John M. McGurn has also shaped its future.
His aggressive stance has set a pattern of striving for tech-nical excellence, financial strength and reliable customer service. His unselfish leadership extended beyond company ranks to national industry groups as well as local community service. Transplanted from Texas as a power station engi-neer, he rose to become Chairman of the Board. Although he retired in 1978, his fellow directors look forward to the bene-fits of his expertise and dynamic personality as a member of the Board of Directors of the Company.
Stanley Ragone Wil liam F. Vosbeck. Jr.
Ken neth A. Randall T. Justin Moore. Jr.
Charles F. Burroughs. J r Wi lliam T Roos Mrs Mary C Fray Milton L. Drewer. Jr.
James F. Betts, President, The Life Insurance Company of Virginia, Richmond Charles F. Burroughs, Jr.. Chairman of the Board, Royster Company, Norfolk Milton L. Drewer, Jr., President, First American Bank of Virginia, McLean Mrs. Mary C. Fray, Culpeper Dr. Allix B. James, President, Virginia Union University, Richmond John M. McGurn, Retired Chairman of the Board T Justin Moore, Jr., Chairman of the Board of Directors William S. Peebles, 111, President, WS. Peebles and Company, Lawrenceville Shirley S. Pierce, President.
The Ahoskie Fertilizer Company, Inc., Ahoskie, N.C.
Stanley Ragone, President Kenneth A. Randall, President, The Conference Board, New York William T. Roos, President, Penn Luggage, Inc., Hampton Roy R. Smith, Chairman of the Board, Smith's Transfer Corporation, Staunton William F. Vosbeck, Jr., Managing Partner. VVKR Partnership, Alexandria T. Justin Moore, Jr., Chairman of the Board and Chief Executive Officer. Age 53 (22)
Stanley Ragone, President and Chief Operating Officer. Age 53 (30)
William W Berry, Executive Vice President, Age 46 (21)
Membership of Committees of the Board
- Committee Chairman l\\ilember Ex Officio Organization and Employees*
Compensation Benefit Audit Finance Samuel C. Brown Jr.,Pow tation Engineering and Construction. Age 53(25)
Lemuel L. Eley, Jr., Commercial Operations. Age 62 ( 41 )
Leon D. Johnson, Ill, Support Services, Age 61 (39)
William L. Proffitt, Power, Age 49 (23)
Wadsworth Bugg, Jr.. Age 57 (32)
Charles M. Jarvis, Age 50 (31 )
B.D. Johnson. Vice President and Controller. Age 46 (22)
Donald 8. McCammond, Age 63 (8)
John I. Oatts, Age 49(26) 0. James Peterson, Ill, Vice President and Treasurer. Age 43 (8)
William C. Spencer. Age 46 (11 )
Carlton M. Stallings, Age 60 (36)
William N. Thomas. Age 55 (30)
S. Brooks Robertson, Age 61 ( 40)
Northern Division, James P. Cox, Jr., Age 60 (39)
Eastern Division, Harrison Hubard, Age 61 (39)
Southern Division, Randolph D. Mciver, Age 48 (19)
Western Division, Charles S. Betts, Jr., Age 64 (45)
Central Division, David W Poole, Age 54 (28)
) Years of utility expe rience.
New York Stock Exchange United Virginia Bank, Richmond The Chase Manhattan Bank (N.A.), New York The Central National Bank of Richmond Manufacturers Hanover Trust Company, New York April 18, 1979
Vepco Virginia Electric and P P.O. Box 26666
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