ML18151A496
| ML18151A496 | |
| Person / Time | |
|---|---|
| Site: | Surry, North Anna  |
| Issue date: | 03/22/1991 |
| From: | Stewart W VIRGINIA POWER (VIRGINIA ELECTRIC & POWER CO.) |
| To: | Office of Nuclear Reactor Regulation |
| References | |
| 91-143, NUDOCS 9103280216 | |
| Download: ML18151A496 (80) | |
Text
VIRGINIA ELECTRIC AND POWER COMPANY
.RICHMOND, VIRGINIA 23261 March 22, 1991 Director of Nuclear Reactor Regulation United States Nuclear Regulatory Commission Washington, D. C.
20555 Gentlemen:
VIRGINIA ELECTRIC AND POWER COMPANY SURRY POWER STATION UNITS 1 AND 2 NORTH ANNA POWER STATION UNITS 1 AND 2 PRICE-ANDERSON ACT Serial No.
NURBP Docket Nos.
License Nos.91-143 50-280 50-281 50-338 50-339 DPR-32 DPR-37 NPF-4 NPF-7 Pursuant to 10 CFR 140.21 (e) regarding licensee guarantees of payment of deferred premiums, we are providing the following information:
- 1. Annual Report to Securities and Exchange Commission on Form 10-K for 1990.
- 2. Comparative Statement of Income for the three months ended December 31, 1990 and 1989.
- 3. Internal cash flow projection for calendar year 1991 with certification by officer of the Company.
- 4. Statement ensuring availability of funds for payment of retrospective premiums without curtailment of required nuclear construction expenditures.
In accordance with 1 O CFR 140.7, we submitted a check to the NRC for $1,000 on November 19, 1990, which is the minimum required premium for the period November 15, 1990, through November 14, 1991.
Very truly yours,
/---\\~
Vv W. L.
tewart Senior Vice President - Nuclear Enclosures 1
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U. S. Nuclear Regulatory Commission Region II 101 Marietta Street, N. W.
Suite 2900 Atlanta, Georgia 30323 U. S. Nuclear Regulatory Commission Attention: Document Control Desk Washington, D. C. 20555 Mr. W. E. Holland NRC Senior Resident Inspector Surry Power Station Mr. M. S. Lesser NRC Senior Resident Inspector North Anna Power Station
INFORMATION L~ REGARD TO LICENSEE GUARANTEES OF PAYMENT OF DEFERRED PREMIUMS REC'D W/LTR DTD 03/22/91.... 9103280216
~NOTICE~
THE ATTACHED FILES ARE. OFFICIAL
. RECORDS OF THE INFORMATION &
REPORTS MANAGEMENT BRANCH.
THEY HAVE BEEN CHARGED TO YOU FOR A LIMITEQ:"TIME.:PERIOD AND
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':,: **,.~...... ; :, *.*
MUST BE,, RETtfflMD -TO. THE RE:-
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. FEARED-TO FILE PERSONNEL.
,)*
ATTACHMENTS
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-K (Mark One)
~ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d).OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1990 or 0
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to _____
Commission file number 1-2255 VIRGINIA ELECTRIC AND POWER COMPANY (Exact name of registrant as specified in its charter)
VIRGINIA (State or other jurisdiction of incorporation or organization)
One James River Plaza Richmond, Virginia (Address of principal executive offices)
(804) 771-3000 54-0418825 (IRS Employer Identification No.)
23261-6666 (Zip Code)
(Registrant's telephone number, including area code),
Securities registered pursuant to Section 12(b) of the Act:
- Title of each class Preferred Stock (cumulative)
$100 liquidation value:
$5.00 dividend
$7.72 dividend
$7.45 dividend
$7.20 dividend
$7.72 dividend (1972 Series)
$8.60 dividend Name of each exchange on which registered New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act:
None (Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ~ No The aggregate market value of the voting stock held by non-affiliates of the registrant as of January 31, 1991 was zero.
As of January 31, 1991, there were issued and outstanding 156,049 shares of the registrant's common stock, without par value, all of which were held, beneficially and of record, by Dominion Resources, Inc.
DOCUMENTS INCORPORATED BY REFERENCE.
None
THIS PAGE INTENTIONALLY LEFT BLANK
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-K (Mark One)
[gj ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d).OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1990 or
'D TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to _____
Commission file number 1-2255 VIRGINIA ELECTRIC AND POWER COMPANY (Exact name of registrant as specified in its charter)
VIRGINIA (State or other jurisdiction of incorporation or organization)
=One James River Plaza Richmond, Virginia (Address of principal executive offices)
(804) 771-3000 54-0418825 (IRS Employer Identification No.)
23261-6666 (Zip Code)
(Registrant's telephone number, including area code),
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
- Preferred Stock (cumulative)
$100 liquidation value:
$5.00 dividend
$7.72 dividend
$7.45 dividend
$7.20 dividend
$7.72 dividend (1972 Series)
$8.60 dividend Name of each exchange on which registered New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act:
None (Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such Shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes,,., No The aggregate market value of the voting stock held by non-affiliates of the registrant as of January 31, 1991 was zero.
As of January 31, 1991, there were issued and outstanding 156,049 shares of the registrant's common stock, without par value, all of which were held, beneficially and of record, by Dominion Resources, Inc.
DOCUMENTS INCORPORATED BY REFERENCE.
None
Item Number VIRGINIA ELECTRIC AND POWER COMPANY PARTI
- 1. Business........................................................
The Company....................................................
Capital Requirements and Financing Program.................................
Construction and Nuclear Fuel Expenditures................................
Financing Program................................................
Rates........................ *.................................
Virginia......................................................
North Carolina..................................................
County and Municipal Customers.......................................
Governmental-Commonwealth of Virginia..................................
Governmental-Federal..............................................
Federal Energy Regulatory Commission...................................
Sources of Power..................................................
Company Generating Units...........................................
Utility Purchases.................................................
Non-Utility Generation..............................................
New Company Generating Units........................................
Sources of Energy Used and Fuel Costs....................................
Nuclear Operations and Fuel Supply.....................................
Coal Supply....................................................
Purchases and Sales of Power..........................................
Interconnections...................................................
Future Sources of Power.............................................
Company Owned Generation..........................................
Non-Utility Generation.............................................
Competition......................................................
Demand Management...............................................
- 2. Properties.......................................................
- 3. Legal Proceedings..................................................
Regulation-General.................................................
Water Quality Control...............................................
Air Quality Control.................................................
Nuciear Regulation.................................................
- 4. Submission of Matters to a Vote of Security Holders.............................
PARTil
- 5. Market for the Registrant's Common Equity and Related Stockholder Matters...............................
- 6. Selected Financial Data................................
- 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.............................................
- 8. Financial Statements and Supplementary Data..................................
- 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.............................................
PART ill
- 10. Directors and Executive Officers of the Registrant...............................
- 11. Executive Compensation..............................................
- 12. Security Ownership of Certain Beneficial Owners and Management....................................................
- 13. Certain Relationships and Related Transactions................................
PART IV
- 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K............................................
Page Number 1
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4 5
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11 11 11 11 12 12 12 12 13 14 14 14 15 15 21 52 52 57 63 64 64
- PART I ITEM 1. BUSINESS THE COMPANY.
Virginia Electric and Power Company-was incorporated in Virginia in 1909 and has its principal office at One James River Plaza, Richmond, Virginia 23261-6666, telephone (804) 771-3000.
It is a wholly-owned subsidiary of Dominion Resources, Inc. (Dominion Resources), a Vir~inia corporation.
Virginia Electric and Power Company is a regulated public utility engaged in the generation, transmission, distribution and sale of electric energy within a 30,000 square mile area in Virginia and northeastern North Carolina.
It transacts business under the name Virginia Power in Virginia and under the name North Carolina Power in North Carolina. It sells electricity to retail customers (including governmental agencies) and to wholesale customers such as rural electric cooperatives and municipalities. The Virginia service area comprises about 65 percent of Virginia's total land area, but. accounts for over 80 percent of its population. As used herein, the terms "Virginia Power" and the "Company" shall refer to the entirety of Virginia Electric and Power Company, including, without limitation, its Virginia and North Carolina.operations.
The Company has nonexclusive franchises or permits for electric -Operations in substantially all cities and towns now.served.
It also has certificates of convenfence and necessity from the Virginia State Corporation Commission (the Virginia Commission) for service in all territory served at retail in that State..
The North Carolina Utilities Commission (the.North Carolina Commission) has
- assigned territory to the Company for substantially all of its retail service outside certain municipalities in that State.
The Company owns its principal properties in fee (except as indicated below), subject to defects and encumbrances that do not interfere materially with their use.
Substantially all of its property is subject to the li_en of a mortgage securing its First and Refunding Mortgage Bonds.
Right-of-way grants from the apparent owners of real estate have been obtained for most electric lines, but underlying titles have not been examined except for transmission lines of 69,000 volts or more. Where rights of way have not been obtained, they could be acquired from private owners by condemnation if necessary.. Many electric lines are on publicly owned property as to which permission for use is generally revocable.
Portions of a 500,000 volt transmission line from the Company's coal-fired station at Mt. Storm, West Virginia, cross national parks and forests under permits entitling the federal government to use, at specified charges, surplus electricity in the line if any ~xists.
The Company leases combustion turbines and certain buildings and equipment.
See Note G to FINANCIAL STATEMENTS.
A wholly-owned subsidiary of the Company, Virginia Power Fuel Corporation (VP Fuel), owns and finances nuclear fuel and related materials for the Company's Surry nuclear units, and sells the heat from such fuel to the Company.
VP Fuel purchases nuclear fuel through the sale of commercial paper, which is guaranteed by the Company.
1
The Company strives to operate its generating facilities in accordance with prudent utility industry practice and in conformity with applicable statutes, rules and regulations. Like other electri.c,utilities, the Company's generating facilities. are subject to unanticipated or extended. outages -for repairs, replacements or modifications of equipment or otherwise to comply with regulatory requirements. Such outages may involve significant expenditures not previously budgeted, including replacement energy costs. See Nuclear Op.erations and Fuel Supply under SOURCES OF ENERGY USED AND FUEL COSTS and Nuclear Regulations under LEGAL PROCEEDING.
The Company had 12,759 full-time employees on December 31, 1990.
Approximately 4,537 of the Company's employees are represented by the Intern at i ona l Brotherhood of El ectri cal Workers. under a contract. extending to March 31, 1992. The Company considers its relations.with its, union and nonunion employees to be* good.*
CAPITAL REQUIREMENTS AND FINANCING PROGRAM Constructfon and.Nuclear Fuel Expenditures Virginia Power's estimated construction.and* nuclear fuel expenditures, including Allowance for Funds Used During Construction (AFC}, for the three-year period 1991-1993, total $2.8 billion.
It has adopted a 1991 budget for construction and nuc l ea*r fuel expenditures as set forth below:
New Generating Facilities:
Chesterfield Unit 8........
Clover Unit 1.....
Clover Unit 2......
Future Base Load Station.... *......
Combustion Turbines. ;.
Other Production....*..........
General Support F ac il it i es Transmission Distribution...*........
Nuclear Fuel.............. *....... "..
Total Construction Reqtiirements and Nuclear.Fuel...
AFC...............
Tot~l Ex~~nditures...............
2 ESTIMATED 1991 EXPENDITURES (MILLIONS)
.$ 28*
93
- 20 5
1 153 66 66 274 74
. 780
' 9
$789
Financing Program
. In 1990,* Virginia Power obtained $400 million from the sale of securities.
Its long-term financings included' $200 million of First and Refunding Mortgage Bonds and $200 mill ion of Common Stock sold to Domini on Resources. From the proceeds of the 1990 securities sales, the Company retired $162. 0 mi 11 ion of securities*through mandatory debt maturities and sinking fund requirements and retired an additional $62.5 million of debt financing and preferred stock through optional redemptions and sinking fund payments.
The Company
- ente*red into*
agreements through a major commercial bank that permit the Company to sell up to $300 million of its accounts receivable. As of December 31, 1990, $150 million of such receivables were outstanding under these agreements. See Uqujdjty and Capital Resources under MANAGEMENT'S DISCUSSION AND* ANALYSIS OF FINANCIAL
-CONDITION AND RESULTS OF OPERATIONS.
. Virginia Power's 1991 construction requirements, exclusive of AFC and.
refundings, ar~ estimated to be $780 million, as detailed above. Of this amount, it is expected that approximately $496 million will be obtained from internal sources. The remaining $284 million of construction requirements, as well as the
$146 million of debt and preferred stock maturities and sinking fund requirements, will be obtained by a combination of sales of securities, sales of receivables and borrowings under an inter-company credit agreement with Dominion Resources.
See Uqujdity and Capital Resources under MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
RATES The Companj was subject to electric rate regulation in 1990 as follows:
1990 Virginia retail:
Non-Governmental customers.
Governmental customers Virginia Commission Not regulated (negotiated agreements)
... North Carolina Commission
. Federal Energy Regulatory Commission (FERC)
North Carolina retail Wholesale........
Percent Percent of Electric of Revenues Kwh Sales 81 11 4
--4 100%
78 13 4
~
100%
All of the Company's electric sale*s are subject to recovery of changes in fuel costs either through fuel adjustment factors or periodic *adjustments to base rates, each of which requires prior regulatory approval.
Rate relief obtained by the Company is frequently less than requested.
The principal rate proceedings in which the Company was involved in 1990 are described below by jurisdiction.
3
Virginia On, March 30, 1990, the Company filed with the Virginia Commission an application for a rate, increase of $147.5 million, requesting, a May 1, 1990 effective date under the' Virginia Commission's, rules for. expedited rate proceedings.
On May 1, 1990, the proposed rates were placed in effect on an interim basis, subject to refund pending the Virginia Commission's Final Order.
On June 19, 1990, the Company lowered its rate increase request to $136.9 million to cor~ect an error in the Company's filing. Thereafter, pursuant to a Hearing Examiner's ruling of July 12, 1990, the Company correspondingly reduced the interim rates collected subject to refund. Due,to further updates of estimates and acceptance of certain Commission Staff proposed adjustments, the Company's request was lowered to $101.8 million at the, time of the hearing on October 30, 1990.
Br,i ef s were filed on November 30, 1990, with increases recommended by other parties ranging from $34.2 million by the Virginia Attorney General's Office to $80. 3 mi 11 ion by the Commission Sta ff.
The Company is recognizing revenues at a level that management believes is appropriate in view of the facts in this case, pending a final Commission Order.
,On September 7, 1990, the Company filed an application for revision of its fuel factor in which it requested a reduction 1n fuel factor revenues of $33.6 million on an annual basis. A hearing was held before the Virginia Commission on October 24, 1990, and on October 31, 1990 the Virginia Commission ordered that the Company's proposed factor be further reduced to reflect the disallowance of
$6.85 million of replacement power costs associated with the 1988-89 outages at the Surry Nuclear Power Station.
North Carolina On May 31, 1990, the Company filed with the North Carolina Commission an application for a general base rate increase~ The new rates, which are designed to produce additional annual revenues of approximately $25.1 million, were suspended by the North Carolina Commission pending a hearing on the proposed rate increase.
A Hearing on the request was held from November 27, 1990 through December 6, 1990. In its Brief and proposed order filed with the North Carolina Commission on January 17,.1991, the Company requested an increase in net annual revenues of $16.3 million. The Company also proposed a one-time refund of $6.1 million of excess deferred federal income taxes.
The North Carolina Public Staff's proposed order supported a base r\\te increase of $11. 9 mi 11 ion less the one time refund of deferred federal. income taxes.
On February 14, 1991, the North Carol,ina Commission issued its Final Order approving an increase in base rates of $13. 9 mi 11 ion, off set in part by a one-ti me refund of $5. 9 mill ion of excess deferred federal income taxes.
The Order denied the Company's request to institute a mechanism that would allow rate recovery of expenses paid by the Company to non-utility power producers outside the context of a general rate case~.
The Company filed its annual fuel factor case on September 21, 1990 with the North Carolina Commission requesting a $6.1 million reduction for the twelve months beginning January l, 1991.
The Commission approved the requested reductiori in an O~der dated December 21, 1990.
4
County and Municipal Customers On February 15, 1989, Virginia Power reached agreement on the terms of a three-year contract governing rates for county and municipal customers in Virginia, which will continue through June 30, 1991. Pursuant to this contract an increase of $4 million became effective July 1, 1990.
Governmental-Commonwealth of Virginia Governmental base rates for the Commonwealth of Virginia are unregulated but follow the methodology approved by the Virginia Commission for jurisdictional base rates. On May 1, 1990, an increase of $3.3 million was placed into effect, subject to refund, based upon the allocation methodology of the rates filed in Virginia on March 30, 1990.
Pursuant to the Virginia Commission Hearing Examiner's ruling* of July 12, 1990, these interim rates were reduced by approximately $0.2 million.
Governmental-Federal Governmental base rates for federal governmental customers are unregulated but follow the ratemaking methodology approved by FERC for the Company's resale service to municipalities. An increase of $12.5 million for federal governmental customers corresponds to the $8.5 million increase for FERC jurisdictional customers described below.
Under the approved methodology, this $12.5 million increase should become effective on March 16, 1991, subject to refund.
Federal Energy Regulatory Commission On August 7, 1990, the Company filed with FERC an application for a rate increase of $8.5 million, effective October 7, 1990, from the Company's wholesale customers.
On October 12, 1990, FERC suspended the rates until March 16, 1991.
In response to complaints filed by several of the Company's wholesale customers, on December 18, 1990, FERC ordered an investigation concerning the Company's existing rates for its wholesale customers.. FERC established March 16, 1991 as the date from which any refund that it may ultimately order would be effective.
FERC consolidated the complaint proceeding with the Company's rate increase proceeding.
Hearings in the combined proceeding* are tentatively scheduled to begin in August 1991.
SOURCES OF POWER Company Generating Units Name of Station, Units and Location Nuclear:
Surry Units 1 & 2, Surry, Va North Anna Units l'. & 2, Mineral, Va Total nuclear stations 5
Years Installed 1972-73 1978-80 Type of Fuel Nuclear Nuclear Winter Capability Mw 1,562 l,820(a) 3,382
Steam:
ossil Fuel:
Bremo Units 3 & 4, Bremo Bluff, Va....
Chesterfield Units 3-6, Chester, Va..
Mt. Storm Units 1-3,*Mt. Storm, W. Va.
Chesapeake Units 1-4, Chesapeake, Va Possum Point Units 3 & 4, Dumfries, Va Yorktown Units 1 & 2, Yorktown, Va Possum Point Units 1, 2, & 5, Dumfries, Va Yorktown Unit 3, Yorktown, Va... ~..
Combustion Turbines............
Combined Cycle..............
Total fossil stations Hydroelectric:
Gaston Units 1-4, Roanoke Rapids, N.C Roanoke Rapids Units 1-4, Roanoke Rapids, N.C..... ~
0 Other Bath County Units 1-6.*.
Total hydro stations Total.Company generating unit capability t il i ty Purchases...
on-Ut i H ty Generation...........
Total Capability....
1950-58 1952-69
.. 1965-73 1953-62 1955-62 1957-59 1948-75 1974 1967-90 1990 1963 1955 1930-87 1985 Coal Coal Coal Coal Coal Coal Oil Oil & Gas Oil & Gas Oil & Gas Conventional Conventional Conventional Pumped Storage 234
. 1,280 1,628 605 326 346 946 820 1,222 219 7,626 225 104 3
1, 260(b) 1,592 12,600 1,330 1,112 15,042 (a) Includes an undivided interest of 11.6 percent (211 Mw) owned by Old Dominion Electric Cooperative (ODEC).
(b)
Includes only th~ Company's 60 percent u~divided inte~est in the 2,100 Mw
- station.
A 40 percent undivided interest in the facility is owned by Allegheny Generating Company, a subsidiary of Allegheny Power System, Inc. (APS).
The Company's highest orie-hour integrated service area winter peak demand was 12,697 Mw established on December 22, 1989, and the highest one-hour integrated summer peak demand was 12,113 Mw established on July 10, 1990.
At the time of these peaks, the Company had a total winter capability of 13,838 Mw and a total summer capability of 14,716 Mw.
New Company Generatin*g Units*
During 1990, Virginia Power.adde*d five new generating uni ts to its system generating capability.
- Included were four combustion turbine units at its Darbytown facility, two of which. became operational in April and two in May 1990. The four units 6
provide a total of 288 Mw of summer capability and 336 Mw of winter capability. T Company also completed Chesterfield Unit 7, Virginia Power's first combined-cycle uni This unit, which is capable of using either natural gas or oil as fuel, was placed in service in June 1990 and provides 189 Mw summer capability and 219 Mw of winter capability.
For financial.data as to the property, plant and equipment of the Company, see Schedule V to FINANCIAL STATEMENTS Schedules.
SOURCES OF ENERGY USED AND FUEL COSTS For information as to energy supply mix and the average fuel cost of energy supply, see Results of Operations under MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Nuclear Operations and Fuel Supply In 1990, the Company's four nuclear units achieved a combined capacity factor of 80.3 percent. In 1989, the Nuclear Regulatory Commission (NRC) raised concerns about the performance at the Company~s nuclear power stations and increased the NRC review of the operation of the Company's Surry Power Station. However, in 1990, the NRC noted improved performance at the Company's nuclear units and removed Surry from the list of nuclear power stations requiring increased NRC attention.
The Company utilizes both long-term contracts and spot purchases to support its needs for nuclear fuel. Virginia Power's nuclear fuel supply and related services are expected to be adequate to support current and planned nuclear generation requirement The Company continually evaluates market conditions in order to assure adequate nucle fuel supply.
Current agreements, inventories and market conditions will suppor planned fuel cycles into the mid-1990s.
On-site spent nuclear fuel storage is adequate for the Company's needs through 1998, when it is expected.that spent nuclear fuel storage will be provided for nuclear reactor licensees by the Department of Energy (DOE). If DOE js unable to accept spent fuel by 1998, as required by law, an interim storage facility may be required for the Company's North Anna Power Station in the late 1990s.
For details regarding nuclear insurance and certain related contingent liabilities as well as a NRC rule that requires proceeds from certain insurance policies to be used first to pay stabilization and decontamination expenses, see Note M to FINANCIAL STATEMENTS..
Coal Supply In 1990, Virginia Power consumed approximately 9.2 million tons of coal. As with nuclear fuel, the Company utilizes both long-term contracts and spot purchases to support its needs.
The central Appalachian coal market, from which the Company purchases most of its coal, continues* to.produce coal supplies sufficient for the Company's needs.
The Company presently anticipates that sufficient coal supplies at reasonable prices will be avail~ble at least into the mid-1990s..
7
r
~urchases and Sales of Power
~ Virginia Power reduces fossil fuel costs by purchasing power from other utility systems when it is available at a cost lower than the Company's own generation costs.
Conversely, it seeks to sell energy to other utilities when the proceeds from such sales will reduce its fuel expenses.
It also relies upon purchases of power to meet an increasing amount of its capacity requirements.
Under contracts effective January 1, 1985, Virginia Power agreed to purchase 400 Mw of electricity through 1999 from Hoosier Energy Rural Electric Cooperative, Inc.,
and agreed to purchase 500 Mw of electricity during 1987-99 from certain operating subsidiaries of American Electric Power Company,. Inc. (AEP).
The Company also contracted with Carolina Power and Light Company (CP&L) to purchase 100 Mw for January and February 1991 and 300 Mw from June through August 1991.
As of December 31, 1990, Virginia Power also has 82 non-utility power purchase contracts with a combined dependable winter capacity of 3,870 Mw.
Of this amount,*
1,112 Mw were operational at the end of 1990 with the balance scheduled to come on-line through 1997 (see Note M to FINANCIAL STATEMENTS).*
INTERCONNECTIONS The Company maintains major interconnections with CP&L, AEP, APS and the utilities in the Pennsylvania-New Jersey-Maryland Power Pool.
Through this major transmission network, the Company has arrangements with these utilities for coordinated planning, operation, emergency assistance and exchanges of capacity and energy.
On March 23, 1990, the Company and Appalachian Power Company (an operating unit of AEP) announced an agreement to increase the ability to exchange electricity between the two companies through the construction of major transmission facilities.
The proposed construction, resulting from a joint study begun in March 1989, will consist of 212 miles of new transmission lines and related substation improvements.
The transmission additions will include 110 miles of 765 kv and 102 miles of 500 kv lines.
Completion of the project will take three to four years after all final regulatory approvals have been obtained.
FUTURE SOURCES OF POWER Virginia Power is committed to obtaining new sources of reliable and economic generating capacity. This capacity may be built, owned and operated by others and sold to the Company under a competitive bid process or may be built by the Company if it determines it can build capacity at a lower overall cost.
The Company presently anticipates that system load growth will require approximately 5,000 Mw of additional capacity during the 1990s.
The Company has and will pursue several options to provide that capacity and maintain a high degree of service reliability.
8
On January 29, 1988, the Virginia Commission issued an Order approving in concep the voluntary use of competitive bidding for procuring new capacity. Virginia Power which had supported such a result, -adopted a program of competitive bidding for sue capacity.
On December 21, 1988, the Cammi ss ion, ordered. the Company to negotiate outside the bidding process with respectto 208 Mw of capacity that had been offered by a developer before the Order approving competitive bidding had-been entered. The developer subsequently increased the capacity of the project to 350 Mw, and in 1990 a dispute arose as to whether the Company was obligated to contract with respect to the capacity in excess of 208 Mw and, if so, at what rates. *On November 30, 1990, the Commission held that the Company should negotiate with respect to the excess capacity, but that the rate for that capacity should be determined as of the date it was offered.
In 1989, after adoption of the Commission's competitive bidding order,. another developer petitioned the Commission to require Virginia Power to purchase 316 -Mw outside of the bidding process.
The Company opposed the petition on the ground that a developer should not be allowed to bypass the bidding process unilaterally, but on April 25, 1990 the Commission directed the Company.to negotiate. On November 28, 1990, the Commission adopted rules governing electric and capacity bidding programs. Those rules will prevent suppliers from bypassing the bidding process in the future, and the rules will not require any material change in the Company's program of competitive bidding.
On January 8, 1990, the Company filed with the Virginia Commission an application for approval of construction of three or four additional combustion turbines with an aggregate capacity of 325-340 Mw.
On June 26, 1990, a Hearing Examiner recommended that preliminary approval for construction of the combustion turbines be granted, but that the Commission delay final granting of a Certificate of Public Convenience and Necessity pending a determination as to the specific site for the facilities, th.
timing of the installation and its cost.* On October 1, 1990, the Commission rejecte the Hearing Examiner's Report, finding that approval of the facilities was premature, and held that the. Company could lawfully make certain expenditures related to the project without prior approval.
The case was continued generally pending a further filing by the Company of appropriate evidence essential to the final disposition of the petition.
On.January 22,.1990, in a proceeding in which the Virginia Commission had approved construction of certain generating facilities in 1989 but continued on the Commission's docket for investigation of the Company's.capacity planning process, a Hearing Examiner issued a report critic.izing the Company's capacity planning and recommending that it be monitored more closely by the Commission's Staff.
On May 1, 1990, the Commission
~dopted the Hearing Examiner's findings and directed its Staff. to inc.rease its administrative review of the Company's capacity planning and acquisition process and to expand its review of the Company's long-range forecasts.
On May 14, 1990, the Company announced pl ans to build a 400. Mw coa 1-fi red generating unit~
Three sites in Virginia are being evaluated for the Company-owned unit, which would come on-line in 1997.
On May 31, 1990, the Company entered into a Purchase and Construction Agreement (the Purchase Agreement) with ODEC, under which the Company purchased a 50 percent undivided ownership interest in a 786 Mw coal-fired power station to be constructed near Clover, Virginia in Halifax County. Under an Operating Agreement with ODEC, the Company will operate the power station after it is completed.
On May 31, 1990, the 9
l
ompany,also, became a party to the contract between, ODEC and a consortium (the onsortium) consisting of Westinghouse, Black & Veatch, Combustion Engineering and H.
. Zachryfor the construction of the two-unit facility.
The cost of the Company's 50 percent ownership interest is expected to be approximately $500 million.
At the time the Company executed the Purchase Agreement, on-site construction of the first unit was expected to begin in September 1990 and on-site construction of the second unit was expected to begin one year later.
Because of delays in obtaining environmental permits for the project, however, permanent on-site construction is now expected to begin in the Fall of 1991.
Engineering, procurement and manufacturing related to the project (to date, the Company's share of which is approximately $60 million) are continuing.
The Company, ODEC and the Consortium are in the process of examining the impact on the cost of the project caused by the delay in permanent on-site construction., The Company is aware of opposition by an environmental group to the issuance of the air emissions permit, which permit is necessary to begin permanent on-site construction of the facility.
In 1987, the Company signed agreements for the purchase of approximately 1,300 Mw of additional capacity frpm six non-utility power producers all of which are either operational, financed, or under construction., In 1988, as a result of a competitive bidding solicitation, the Company entered into 19 contracts for approximately 2,000 Mw of additional capacity for initial delivery at various dates through 1994. Six of these contracts totalling 634 Mw have subsequently been terminated. The Company also issued a Request for Proposals on August 15, 1989, for competitive bids for up to an additional 1,100 Mw of power to come on-line during 1995-1997. Bids were received in January 1990 from 38 developers for 78 projects aggregating 11,600 Mw of capacity.
Contracts were executed with three of those selected developers in July 1990 for apacity totalling 448 Mw., One project of 210 Mw was later terminated for failure to ost financial security.. according to schedule.
- The.contracts from all three solicitations are generally for a duration of 25 years after the commencement of commercial operation.
The projects.cover a variety of technologies, fuel supplies, pricing mechanisms, and in-servjce dates.
Each agreement for the purchase of power contains liquidated damage provisions that may be exercised if the electricity is not available as scheduled. The Company has also developed a contingency pl an to meet the demand. for power in the event that the growth in demand exceeds present forecasts or in the event of a failure of any of these power purchase agreements.
Several non-utility power producers with whom the Company has executed power purchase agreements are experiencing difficulty in obtaining air permits necessary for the construction of the generating facilities. This delay in obtaining the necessary air permi,ts may cause a delay in the in-service dates of this additional capacity.
The Company anticipates that there will be a lternat i.ve energy sources in the event that
.any of these generating facilities are significantly delayed.
The Company's continuing program to meet future energy requirements is summarized in the following table:
10
Company.Owned Generation Name of Units Chesterfield 8 Clover Project:
Unit l Unit 2
- Capability Mw 218 3.93*
393*
- Expected In-Service Date June 1992 1994 1995
- Includes the 50 percent undivided ownership interest of ODEC.
Non-Utility Generation Contracts Executed.
Projects Financed Number of.
Projects 42 11
- COMPETITION.
2,758
- 1,221 Competition is playing an increasingly important role in the Company's business.
Public utilities such as the Company have been granted exclusive franthises to serve all classes of retail customers within designated service areas in return *for a commitment to provide adequate service on a fair and reasonable. basis.
This traditional arrangement is being altered due to *changing federal and state governmenta.
regulations, technological developments, rising costs of constructing generatin facilities and alternative energy sources.
As a result of these factors, some industrial, municipal and cooperative.customers of the Company are presented with a greater variety of power supply options. Technological developments have given some retail customers increased opportunities to obtain power through self-generation. But the Company's relatively low retail rates make widespread use of this option unlikely for the foreseeable future. Competition for retail customers would require fundamental changes in law and regulatory policies that ar.e not currently under consideration.
The Company is committed to maintaining high standards of service at competitive rates for all classes of customers.
The Company now has, and in the future will have, increased opportunities to obtain power from sources other than.its own generating facilities (see Future Sources of Power under BUSINESS).
In particular, the Public Utility Regulatory Polici.es Act of 1978 {PURPA) has encouraged non-utilities to enter the. business of producing electricity. The Company supports a competitive system for utilities to buy capacity as an option to meet future demand.
DEMAND MANAGEMENT The Company is committed to least-cost planning and has developed a detailed analysis procedure in which effective demand~side and supply-side options are both considered in order to determine "the least cost method to satisfy the customers' needs.
The Company' has some demand-management prograins that have existed for several years 11
and other programs are being considered that may become beneficial to the Company's ustomers in the future.
Th.~ Company is preparing for the evo 1 ut ion of more demand-i de programs through technology changes, legislative mandates, increasing attention to envi ronmenta 1 concerns, a,nd regulatory incentives to encourage such programs.
On January 7, 1991, the Virginia Commission established a proceeding to.consider rules and Commission pol icy regarding conservation and load management programs of electric utilities, including the appropriateness of payments, subsidies and allowances to influence the installation or use of certain appliances or equipment. The Company will participate in the proceeding and file comments, which are required to *be filed by February 28, 1991.
ITEM 2. PROPERTIES See Company Generating Units under Sources Of Power under BUSINESS and Schedule V of the FINANCIAL STATEMENTS Schedules.
- ITEM 3. LEGAL PROCEEDINGS Regulation-General The Company is presently subject to regulation by the Virginia Commission and the North Carolina Commission, the Environmental Protection Agency (EPA), DOE, FERC, NRC,.
the Army Corps of Engineers and other*federal, state and local authorities.
Virginia Power may not construct, or incur financial commitments for construction f~ any substantial generating facilities or large capacity transmission lines without the prior approval of state and federal governmental agencies having jurisdiction over various aspects of its business.
Such approvals relate to, among other things, the environmental impact of such activities, the relationship of such activities to the need for providing adequate utility service and the design and operation of proposed facilities.
From time to time, the Company may be in violation of or in default under orders, statutes, rules or regulations relating to p.rotection of the environment, compliance plans imposed upon or agreed to by the Company or permits issued by various local, state and federal agencies for the construction or operation of facilities. There may be pending from time to time administrative proceedings involving violations of state or federal environmental regulations that the Company believes are not material with respect to it and for which its aggregate 1 i ability for fines or penalties wil 1 not exceed $100,000.. There are no material agency enforcement actions or citizen suits pending or, to the Company's present knowledge, threatened against the Company.
Water Quality.Control In 1986, Virginia Power began a. project to expand the capacity of two existing ash disposal. ponds at its Possum Point Power Station.
- As a condition of the environmental permitting process, on April
- 14, 1987, the Company accepted a special order, *issued by the Virginia Water Control Board (VWCB), requiring* it to perform a
. six-month*~valuation of groundwater quality in the vicinity of the two ponds.. The study, which has been completed and submitted to the VWCB, concluded that the quality 12
of groundwater near existing domestic.wells adjacent to the site was good and met al-health-based EPA. primary drinking water standards.
. However, some groundwate contamination associated with the disposal of certain fossil fuel by-products at the facilities was identified. In order to remedy this impact, the Company has proposed a course of action that includes removal and relocation of certain wastes, back-fitting impermeable liners and additional monitoring to measure improvement in site groundwater.
The proposed action is estimated to cost up to $3.5 million.
Before the introduction of natural gas into the Company's system, the Company and its predecessors manufactured gas from coal. This.process produced coal tar as a by-product, which was _disposed of on-site. One division of the Company was organized into Virginia Natural Gas, Inc. (VNG), formerly a wholly-owned subsidiary of the Company's parent, Domi.nion Resources.
VNG was purchased from Dominion Resources by Consolidated Natura] Gas Company.(CNG) on February 15, 1990.
Some constituents of coal tar may,un'der certain circumstances, be regulated under. various federal and state laws, and a contingent :1 iabil ity may exist for their, remediation. As part of the agreement for the sale of VNG, the C.ompany and. CNG wi 11 share the costs associated with remediation of sites where cpal tar was disposed. The Company's share of the presently estimated investigation and remediati.on costs would not exceed approximately $5 million, of which $3. 4 million has been recorded on the Company's books through 1990.
From time to time, the Company may.be identified as a potentially responsible party with respect to a Superfund site.
EPA (or a state) can either (a) allow such a party to conduct and pay for a remedial investigation and feasibility study and remedial action or (b) conduct the remedial investigation and action arid then seek reimbursement from the parties. Each party can be held jointly, severally and strictly liable for all costs, but the parties can then bring*contribution actions against eac.
other. As a result of the Superfund Act, the Company may be required to expend amount on remedial investigations and actions, wh-.ich amounts cannot be determined at the present time but could ultimately prove to.be significant.
Permits under the Clean Water Act and state laws have been issued for all of the Company's steam generating stations now in operation.* Such permits are subject to reissuance and continuing review.
Air Quality Control The Company is subject to the* Clean Air Act (Air Act),.which provides the statutory basis for ambient air quality.standards.
In order to maintain compliance with such standards and reduce the impact of emissions on ambient air quality, the Company may be required to incur additional expenditures, the amount of which is not presently determinable but which could be significant, in constructing new facilities or in modifying existing facilities.
On November 15, 1990, the President signed Air Act amendments. These.amendments will require the Company to reduce sulfur dioxide and nitrogen oxides emissions in two phases. The Company's emissions of sulfur dioxide and nitrogen oxides are relatively low in comparison to many other electric utilities. Ne~ertheless, the cost impact on the Company to comply with the amendments will be significant. The Company anticipates having to install emission monitoring and control.equipment and probably will do limited fuel switching to comply with standards applicable to the first phase.
In addition, the Company will probably need to install additional emission controls in 13
rder to meet standards for*.the*second phase.
Full ~ompliance must be achieved no ater than January 1, 2000.
The capital* cost for compliance, including three scrubbers, is estimated at $470 million. Annual operation, maintenance and fuel costs are estimated to be $140 million.
Nuclear Regulation All aspects of the operation and maintenance of the Company's nuclear power stations are regulated by the NRC.
Operating licenses issued by the NRC are subject to revocation; suspension or. modification, and operation of a nuclear unit may be suspended if the NRC determines that the public interest, health or safety so requires.
From tiine to time, the NRC adopts new ~equirements. for the **operation and maintenance of nuclear facilities.
In many cases, these new regulations require changes in the design, operation and maintenance of existing nucle~r reactors. If the NRC adopts such requirements in the future, it could result in substantial increases in the cost of operating and maintaining the Company's nucl~ar generating units.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY. HOLDERS *
- None PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON. EQUITY AND'RELATED STOCKHOLDER. MATTERS All of the Company's,Common Stock is owned by Dom.inion Resources.
During 1990 and 1989.; the Company paid quarterly cash divjdends on its Common Stoc~ as follows:
1st 2nd 3rd 4th
{Mill ions) 1990.................
$'79.1
$ 80.6 $ 81.6 $ 85.5 1989.................
$ 74.3
$ 75.0 $ 75.2 $ 78.4 14
ITEM 6. SELECTED FINANCIAL DATA Operating revenues....................
Operating income...*...........,\\.....
Net income............ *',*....... *.......
Balance available for Common Stock *..
Total assets.........................*
Total net utility plant...........*...
Long-term debt, noncurrent capital lease obligations and preferred*
stock subject to mandatory redemption....."....... *....... ~..
~... ~....
Utility plant.expenditures (including nuclear fuel)..........**.
1990 1989 1988 1987 (Mi 1 lions)
$ 3, 462 $ 3, 459 $, 3, 098 $ 3, 078 $
806 759 737 737 450 435 460 456 392 375 407 407 10,105 10,086
- 9,495 9,256 8,831 8,498 7,998 7,639 4,147 4,331 4,089 4,052 803 905 807 836 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITlON AND RESULTS OF OPERATIONS Liquidity and Capital Resources 2,960 693 428 380 8,750 7,228 3,978 835
- The Company's major sources of financi~g during 1990 were the 'issuance of
$200 mi 11 ion* of First and Refunding Mortgage Bonds and $200 ~i 11 ion of Common Stock sold to Dominion Resources for the primary purpose of meeting the Company's capital needs.
From these proceeds, the Comp.any retired $162. 0 million of securities through mandatory debt maturities and sinking fund requirements and retired an additional $10.1 million of high cost debt and preferred stock through optional sinking fund payments.
In addition, the Company redeemed at a premium all of its outstandi~g $28.1 million *First and Refunding Mortgage Bonds of 1980, Series A, 12.5 percent, due 2000, $20 million of its First and Refunding Mortgage Bonds of 1984, Series C, 12.85 percent, due 2004 and a $4.3 million bank loan,
- 12.375 percent, due 1995.
The Company utilized the inter-company credit agreement with Domini on* Resources as needed throughout 1990; however, a 11 amounts borrowed had been repaid as of Dec,mber 31,. 1990.
The Company has entered into agreements through a major commercial bank for the limited recourse sale of up to $300 million of the Company's accounts receivable.
As of.December 31, 1990, $150 million of su*ch.receivables were outstanding under these agreements. (See Note C to FINANCIAL STATEMENTS)
- 15
From 1988 t.o 1990, the Company's major sources of financing were as follows:
- Common Stock......... *............ *......*...
Preferred. stock..........*.................
Mortgage borids... *............. *.............
Medi um-term notes............. *...... *.. ~.....
$199,978 200,000 1989 1988 -
(Thousands) *.
$ 99,999 75,000
- 250,000 322,000
- $ 34,994 75,POO 150,000 118,000
-~Funds used'in inve~ting activities during 1988 through 1990 (most of which
.
- were from operating act i vlt i es) were as fol low~:
- 1990 1989.
1988 (Thousands)
Utility )laht expenditures (excluding AFC~other funds)......... ~..............................
$728,782 $870,:186 $743,270 Nuclear fuel expenditures (excluding AFC-other
, funds)..... *.......... -~..... ~-................ ! **.****
. 74,595 34,552 63,444 The Company' has sig~*ificant capital requirements due. to its program of maintenance, upgrading and expansion of facilities, a~~ the need for.working capital and cash requirements for the retirement of maturing debt and sinking fu_nd* obltgati.ons (see Note M to FINANCIAL STATEMENTS).
.The 1991 construction requirements (excluding AFC) include $706 million for construction expenditures and $74 million for nuclear fuel.expenditures. Other capital requirements are for $111 million of securities due within one year, plus an additional. $35 million of sinking fund paymen:ts.
Jhe Company presently estimates that approximately 64 percent -0f its 1991 construction requirements, inc.luding nuclear fuel expenditures, will be met by internal cash generation and that the balance will be obtained by a combination of sales of V.irginia Power's securities, sales of receivables and borrowings under its inter~Gompany c~edit
. agreement with Dominion Resources.
Projected construction and nuclear fuel expenditures for.the next three years are $2.8 billion. Actual construction costs may vary from this estimate because of such factors as design ch~nges, modifications of.environmental regulations, revised load projections, :the cost and effi d ency of construct fon labor, equipment and materials, and the cost of.capital~
Results of Operations The following is a diicussion of results of operations for the years ended 1990 as compared* to 1989, and 1989 as compared to 1988.
1990 Compared to 1989 Operating revenues wer~ $2.6 m.illion higher in 1990 primarily as a result of
- 16
- I
the rate increase of $64.4 million effective May 1, 1989 and an increase in base
- rates effective May 1, 1990, subject to refund, but offset, in part, by decreased unit sales due to the mild weather in 1990 and a weakening economy and a decrease in fuel rates effective November 1, 1990.
The effect of these items, among others, on operating revenues is shown in the following table:
Kwh s al es, o ********************,:; ******.
Base and fuel rates..................
Other, net.. o ************************
Total...............................
Increase (Decrease) From Prior Years (MU 1 ions) 1990 1989 1988
$(80.3) 80.5 2.4
$ 2.6
$161.3
.196. 9 3.1
$ill..:]_
$ 69.l (57.3)
~
$ 19.4 Fuel used in current generation decreased in 1990 due to the unavailability of the Company's nuclear units in 1989 which resulted in a more expensive energy supply mix for that year.
Purchased and interchanged power, *net decreased due to the increased availability of Company-owned nuclear generation capacity during 1990.
The average fuel cost of energy supply is shown below (a):
MH ls Per Kilowatt-hour 1990 1989 1988 Nuclear~.. **......*................ o ****
5~08 4.30 5.72 Coal-Mt. Storm (mine-mouth)...........
14.44 13.47 13.12
-Other... *..... o *******************
15.95.
15.59 15.54 Oil o ***** o ** ~ ***** ; ** ******************
35~51 29.21 30.04 Purchased and interchanged* ( b) *.**....
26.40 26.15 26.21 Gas... ~.... ~..........................
27.99 25.33 26.31 Combustion turbines...................
47.20 62.01 60.88 Combined eye 1 e........................
17.52 Average fuel costs..... -...............
13.66 16.04 1.4.13 Energy supply mix is.shown below (a):
Estimated *
- Actual
"=='-----
1991 1990 1989 N l
( )
32.%
uc ear c.*...................
Coal..................... *......
45 Oil.... o ***********************
2 Purchased and interchanged.....
19 Other................. o
- _2 100%
17 38%
40 2
18 2
'100%
22%
47 7
23
_l 100%
34%
45 4
16
_l 100%
(a) The table does not include ahy explicit* reference to the Bath County Pumped Storage* Station, which uses electricity.generated from.other fuel sources to pump water from a valley reservoir to another reservoir *at the top of an adjacent mountain.*. The water stored in th*e up.per reservoir is used to generate electricity when the water flows through *a hydroelectric generator into the lower reservoir. *Accordingly~ the Bath County Pumped Storage Station may be viewed as storing previously* generated electrfcity for later use.
Hydroelectric generation is incl ude.d in: determining average fuel costs.
(b)
- Excludes costs attributable *to capacity charges paid under long-term power purchase agreements.
(c) Excludes ODEC's 11.6 percent own'ership interest in the North Anna Power Station (see Note D to FINANCIAL STATEMENTS).
Deferred fuel expenses, net increa*sed primarily as a result of the increased ability' of the current fuel factors to recover fuel expenses. In addition, fuel expenses subject to d~ferral
- accounting were lower in 1990 :due.to a more economical energy supply *mix resulting froni the increased availability of the Company's nuclear units.
- Other operation expenses decreased primarily as a result of a decrease of
$10.8 million in industry association dues in 1990 and the establishment of a regulatory liability in 1989 ($11.2 million at December 31, 1989) associated with the rate treatment of a gain resulting from the 1988 settlement of a portion of the projected benefit obligation under the Dominion Resources' Retirement Plan (the Retirement Plan).
1989 Compare~ to 1988 Operating revenues were $36L3 million higher in 1989 due principally to a
$88.5 'million increase in* 1989 attributable to increased fuel rates, $82.4 million in 1989 as a-result of increased unit sales resulting froni new customer connect i ans, $72. 0 mi 11 ion as a result of increased customer usage, $50. 0 million attributable to an increase in base rates, effective May' 1, 1989, *and the effect of a one-time refund i'n 1988 of approximately $80 million attributable to a reduction of certain deferred income tax balances ordered by the Virginia Commission.
Purchased and interchanged power, *net increased in 1989 due to the reduced availability of C6mpany-owned generation~
Deferred fuel expenses; net decreased in 1989 because fuel costs subject to deferral accounting increased due to a more expensive energy supply mix resulting.
from the nuclear unit outages during the year, offset in p*art by a higher level.
of recovery of previously deferred fuel expenses.
Other operation expenses increased
- as a result *of the increased operation costs related to the extended refueling and repair outages at Surry Units 1 and 2, and the establishment of a regulatory liability ( $11. 2 million at December 31, 1989) associated with the rate treatment of a gain resulting from the 1988 18
settlement of a portion of the projected benefit*obligation under the Retirement Plan, offset in part by the excellent performance of coal-fired generating units.
Maintenance expenses increased as a result of the extended refueling and repair outages at Surry Units 1 and 2 and the normal refueling outages at North Anna Units land 2 in 1989, offset in part, by the establishment of a regulatory asset ($19.5 million at December 31, 1989) for nonrecurring costs incurred during 1988 and 1989 associated with the extended outages,at the Surry Nuclear Power Station.
Income taxes increased primarily customers in 1988 for. reductions in ordered by the Virginia Commission.
FINANCIAL STATEMENTS.
as a result of the one-time refund to certain def erred income tax *ba 1 ances as For additional information see Note B to Other taxes-operating i.ncreased $26.2 million primarily due to $12.4 million resulting from a change in law which had the effect of increasing th~ West Virginia Business and Occupation taxes on power generation, $7.0 million attributable to increased gross receipts taxes due to increased revenues, $3.3 million for a provision for an estimated Virginia Sales and Use taxes audit deficiency, which is being contested by the Company, and $3.1 million due to increased property taxes resulting from an increase in Company-owned property.
For additional information, see Note K to FINANCIAL STATEMENTS.
Other income-misce77aneous, net decreased approximately $31.4 million a.s a result of the income rec~ived during 1988 from ODEC to compensate for the 300 Mw load reduction effective January 1, 1988.
Interest on long-term debt increased primarily as a result of the issuance of First and Refunding Mortgage Bonds and Medium-Term Notes, offset'in part, by the termination of the Virginia Power Finaniing Trust.
FUTURE ISSUES Recently Issued Accounting Standards In December 1987, *the Financial Accounting Standards Board (FASB) issued*
Statement of Financial Accounting Standards*(SFAS) No. 96, "Accounting for Income Taxes." As a result of subsequent amendments, the provisions of SFAS No. 96 must be adopted by the Company no later than 1992.* The objective of the new standard is to recognize the amount of current and deferred taxes payable and refundable for all events that have been recognized in the financial statements based on enacted tax laws at.the date of the financial statements.
(For th~ effect of adopting these provisions, see Note A to FINANCIAL STATEMENTS, Significant Accounting Policies, Federal Income Taxe~.)
For information on SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" issued by FASB in December 1990, see Note L to FINANCIAL STATEMENTS..
19
Utility Rate Regulation Rate relief, especially in Virginia, continues to be of great importance to the Company, and it is a major variable that can materially affect its financial results. The Virginia Commission fixes rates based on a past test year, and in a period of increasing costs, such* ratemaking methodology causes attrition in earnings, especially if the utility is engaged in a large construction program.
The Virginia Commission has traditionally allowed certain ratemaking adjustments that tend to offset such attrition, although in recent cases changes have been required that have diminished the attrition adjustments to some extent. In its most recent Virginia rate proceeding,.. the Company requested an attrition adjustment that would mitig~te this problem, and the Company will continue to pursue such.a solution.
However, failure* by the Virginia Commission to. allow adequate attrition adjustments will have an adverse effect on the Company's financial results.
Environmental Matters
-The Company is subject to increasing costs resulting from a steadily increasing number of federal, state and local laws and regulations designed to protect human health and the *environment by.imposing stringent controls with r~gard to planning and construction activiti~s; land use, air pollution, water pollution, and in recent years by comprehensively governing the use, treatment, storage, and di sposa 1 of hazardous
- or taxi c materi a 1 s.
These laws and regulations affect future planning and existing operations~
In response, the Company has undertaken specific compliance efforts, the costs of which have historically been recovered through the ratemaking process.
For information on the Clean Air Act and*the VNG coal tar site clean-up, see Air QuaUty Control and Water Quality Control, respectively, under Item 3, LEGAL PROCEEDINGS..
Future Sources of Power The Company plans to meet its future generating capacity requirements with a combination of Company-constructed generating units and purchases from non-utility generators.
Each of these options will play an important role in the Company's over a 11 p 1 an to meet projected capacity needs.
Recent 1 y, Company construction has proven to be more economical in some instances and purchases in others.
Other Trends Operation and maintenance expenses are expected to increase in the future due to changing regul at i ans and costs associated with customer growth. However, with its four nuclear units in service at the end of 1990 and only refueling outages expected, the Company anticipates an economical energy supply mix. The Company's buy/build strategy of meeting the growing demand for electric power should continue to provide a low cost energy mix.
Conanitments and Contingencies For more information on commitments and contingencies, see Note M to FINANCIAL STATEMENTS.
20
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX Report of Independent Auditors.........* ~.
Report of Management Statements of Income for the years ended December 31, 1990, 1989 and 1988 *...... *..* *. * * *... *..
Balance Sheets at December 31, 1990 and 1989 *******.
Statements of Earnings Reinvested in Business for the years ended December 31, 1990, 1989 and 1988 *.*. ~.***
Statements of Cash Flows for the years ended.December 31, 1990, 1989 and 1988..*...*.**...*.*
Statements of Capitalization at December 31, 1990 and 1989 Notes to Financial Statements.......*....*..
Financial Statements Schedules:*
IV-Indebtedness of and to Related Parties Not Current for the years ended December 31, 1990, 1989 and 1988 V-Property, Plant and Equipment for the years ended December 31, 1990, 1989 and 1988...........
VI-Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment for the years ended December 31, 1990, 1989 and 1988 Page *No.
22 23
- 24 25
.. 27
- 28 29
. 31 47 48 51 Schedules other than those listed above have been omitted since they are not required, are inapplicable or are unnecessary due to the presentation of the required information in the financial statements or notes thereto.
,21
REPORT OF INDEPENDENT AUDITORS To. the Board of Directors of Virginia Electric and Power Company:
We have audited the accompanying financial statements of Virginia Electric and Power Company* (a wholly-owned subsidiary of Dominion. Resources, Inc.) as of December 31, 1990 and 1989 and for each of the three years in the period ended December 31, 1990 listed in the index *on page 21.
These financial statements
- and the supplemental schedules discussed below are the responsibility of the Company's management.* Our responsibility ls to express an opinion on these.
financial statements based on our audits.
We -conducted. our audits - in. accordance with genera 11 y accepted auditing standards~ Those standards require that we plan and perform*the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles "u*sed and significant estimates made by management~ as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material respects, the financial position of Virginia Electric and Power Company at December 31, 1990 and 1989 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1990 in conformity with generalli ~ccepted accounti~g principl~s.
Our audits also comprehended the supplemental sthedules of Virginia Electric and Power Company for the.years ended December 31~ 1990, 1989-and 1988 listed in the index on page 21.
In our opinion, such supplemental schedules, when considered in relation *to the basic financial-statements, present fairly in all material respects the information shown therein..
Richmond; Virginia February 1, 1991 22 DELOITTE & TOUCHE
REPORT OF MANAGEMENT The Company's management is responsible for all information and representations contained in the Financial Statements.and other sections of the Company's report on Form 10-K. The Financial Statements, which include amounts based on estimates and judgments of management, have been prepared in.conformity with generally accepted accounting principles. Other financial information i.n the Form 10-K is consistent with that in the Financial Statements.
Management maintains a system of internal accountin~ controls designed to provide reasonable assurance, at a reasonable cost,. that the Company' S*. assets are safeguarded against loss from unauthorized use or disposition and* that transactions are.executed and recorded in accordance with established procedures.*
. Management recognizes the inherent limitations of any system of internal accounting contra l and, therefore cannot provide *absolute assurance that. the objectives of the established internal accounting ~ontrols *will be met.
This system includes written policies, an.organizational*structure designed to ensure appropriate segregati~n of responsibilities, careful selection and training of qualified personnel and internal audits. Management believes that during.1990 the system of internal contra l was adequate to accomplish the intended objective.
The Financial Statements have been audited by Deloitte & Touche, independent auditors, whose designation was approved by the Board of Directors. Their audits were conducted in. accordance with. generally* accepted auditing standards and included a review of the Company's accounting systems, procedures and internal controls, and the performance of tests,and other auditing procedures sufficient to provide reasonable assurance that the Financial Statements are not materially misleading and do not contain material errors.
The Audit Committee of the Board of Directors; composed entirely of.directors who are not officers or employees of the Company, meets periodically with the independent auditors, the int~rnal auditors and management to discuss auditing, internal accounting control and financial reporting matters and to ensure that each is properly discharging its responsibilities. Both the.independent auditors and the internal auditors periodically meet alone with the Audit Committee and have free access to the Committee at any time~
Management recognizes its* responsibility for fostering a strong ethical climate so that the Company's affairs are conducted according to the highest standards of personal and corporate conduct.
This responsibility is characterized and reflected in the Company's Code of Ethics, which is distributed throughout the Company.
The Code of Ethics addresses~ among oth~r things, the importance of ensuring open communication within the Company; potential conflicts of interest; compliance with all domesti,c and *foreign laws, including. those relating to financial disclosure; the confidentiality of proprietary information; and full disclosure of public information.
23 VIRGINIA ELECTRIC AND POWER COMPANY B. D. Johnson Senior Vice President-Finance and Controller'
VIRGINIA ELECTRIC AND POWER COMPANY STATEMENTS OF INCOME For The Years Ended December 31, Operating revenues Operating expenses:
Operation:
Fuel used in current generation.*..
Purchased and interchanged power, net.
Deferred fuel expenses, net...
Purchased power capacity expenses...
Other................
Maintenance...............
Depreciation..............
Amortization of terminated construction project costs Taxes-Income
-Other Total Operating income Other income:
Allowance for other funds used during construction........
Mi see 11 aneous, 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 Total Net income.....
Preferred dividends.
Balance available for Common Stock
$3,461,500 526,400 270,062 125,952 184,870 440,755 281,249 373,550 49,805 200,171 202,888 2,655,702 805,798 3,335 34,930 (13,292) 24,973 830,771 356,279 25,927" (1,789)
- 380,417 450,354 58,190
$ 392,164 1989 (Thousands)
$3,458,928 595,452 360,591 (6,989) 176,250 485,656 295,436 347,646 53,061 187,993 204,800 2,699,896 759,032 3,703 36,005 (5,025) 34,683 793,715 344,520 16,258 (2,529) 358,249 435,466 60,226
$ 375,240
$3,097,579 562,732 238,676 38,026 158,061 414,374 271,883 322,738 62,068 113,055 179,042 2,360,655 736,924 1,845 71,401 (29,297) 43,949 780,873 313,625 8,757 (1,615) 320,767 460,106 53,095
$ 407,011 The accompanying notes are an integral part of the financial statem~nts.
24
VIRGINIA ELECTRIC AND POWER COMPANY BALANCE SHEETS Assets At December 31, 1990 1989 (Thousands)
UTI L ITV PLANT:
Electric (includes plant under construction of
$691,709 in 1990 and $745,369 in 1989)..............
Less accumulated depreciation.........................
$11,769,900 3,171,463 8,598,437 Nuclear fuel (leis accumulated amortiiation of
$661,600 in 1990 and $576,840 in 1989)...***.*...*..
- 232,331 Total net utility plant.... ;..........**.-........
8;830,768 PLANT AND PROPERTY UNDER CAPITAL LEASES (less atcumulated amortization of $48,570 in 1990 and
$41,892 in 1989)....................,......... ;.. *... ~
- 30,625 INVESTMENTS:
Non-utility property (less accumulated depreciation of
$457 in 1990 and $239 in 1989)......................
Notes receivable..........*....... :...............**...
Pollution control project funds.... ~..............*...
Nuclear decommissioning trust funds...............**.*
Other *****************.....*.***. * *****..*...*..*******
Total net investments....................... ;.. ~.;*
CURRENT ASSETS:
Cash ******************************************.********
Accounts receivable, net (less allowance for doubtful accounts of $1,054 in 1990 and $1,148 in 1989)......
Accrued unbilled r~Venues..................*..........
Materials and supplies at average cost or less:
Pl~nt and general................*.........*.. ~.~***
FosSi l fuel.............**...**...........*.........
Other.............,............................ ~.......
Tota 1 current assets.............................*.
DEFERRED DEBITS AND OTHER ASSETS:
Terminated construction project costs (less accumulated amortization of $460,511 in 1990 and
$410,706 in 1989)~...*.**.........*..*. ~~ *..........
Deferred fuel expenses................................
Ot-her *********** * ************************
a ***************
Total deferred debits and other assets...........*
Total assets.......................................
10,329 21,115 5,617 125,432 1,314 163,807 19,267 208,000 90,243 184,202 160,403 51,955 714,070 218,177 16,125 123,834 358,136
$10,105,406
$11,135,791 2,880,084 8,255,707 242,237 8,497,944 41,536 5,528 25,959 40,151 98,920
- 1,838 172,396 17,977 353,773 177,304 172,981 99,928 35,602
- 857,565 246,992 142,077 127,023
- 516,092
$10,085,533 The accompanying no.tes are an i ntegra 1 part of the fi nanc i a 1. statements.
2.5
VIRGINIA ELECTRIC AND.POWER COMPANY BALANCE 'SHEETS Capitalization and Liabilities CAPITALIZATION:
Long-term debt (see Statements of Capital izatton)......
Preferred stock subject to mandatory redemption.v......
Preferred stock not
- subject to mandatory.redemption...
Common.stockholder's equity:
Common Stock, no par....... *.......... ~.............*...
Other paid-in capital................ ~..........*......
Earnings rein.vested in business............... ~.....
Total common.,stockholder's equity..................
Total ca~ttalization.~.~~~:... ~;..................
OBLIGATIONS UNDER CAPITAL LEASES....... :................
- CURRENT LIABILITIES:
Securities due within one year (see Statements of c*apital ization)............................... *......
Short-term debt........................................
Obligations under capital leases due within one year..
Accounts pay ab J e, t ra~e.. ! ****.************************
Cash due to banks....................... ~.............
Customer deposits..................*..............*...
Payro*11 s accrued.. ~....................................
TaXE!s accrued.................._... ~................ -.....
Interest accrued........*. ~........... *....... *... 0 ******
Other................ ~.........................
0 ******
Total current liabilities.............*...........
DEFERRED CREDITS AND OTHER LIABILITIES:.
Accumulated deferred income taxes:
Liberalized depreciation............................
Terminated construction project costs...............
Other................................................
Deferred investment tax credits............... ;.......
Other.. ~.................... *...... *....*........ *.-.......
Total deferred credits and other liabilities......
COMMITMENTS AND CONTINGENCIES Total capitalization and liabilities..............
At December 31, 1990 1989 CThQusand's)°"
s 3;817,403 $3,977,649
- -296,718
.. *. 318,652 469,014 469,014
. 2,398,320
- , 17~208 1,043,810 3,459,338 8,042,473 32,685 145,658 118,587 6,050 192,940
- 49,940 46,255 46,460 17,949 107,609 78,548 809,996 713,799 25,432 85,929 363,651 31,441 1,220,252 2,197,506
- 17,985 980,606' 3,196,097
.7,961,412 34,667 159,976 39,295 6,869 197,407 49,424 43,645 46,131 93,856 104,958 70,366 811,927 695,963 27,439 129,771 385,341 39,013 1,277,527
$10,105~406 $10,085,533
~ The acco~panying notes are an.integral part of the financial statements.
26
VIRGINIA ELECTRIC*AND POWER COMPANY STATEMENTS OF EARNINGS' REINVESTED IN BUSINESS For the Years Ended December 31, 1990 1989 1988 Balance at* beginning of year......*........ $ 980,606
- Net.in~ome (see Statements of Income).. ~...
- 450,354 Total...........-................ *'**********
1,430,960 Cash dividends:
Preferred stock subject to mandatory redemption. *..... *........................
26,365 Preferred stock not subject to mandatory redemption. *... ~..........................
32,560 Common Stock..... _.............*............
326,862 Total dividends............... :......
385,787 Other deductions, net......................
1,363 Balance at end of year.. ~.................. $1,043,810
- (Thousands) 910,335 435,466 * :
1;345,801 28,668 31,234 302,994 3'62,896 2,299
$ 980,606 795,107
- 460,106 1;255,213 30,480
.23,646 289,101 343,227 1,651
$ 910,335 The accompanying notes are an integral part of the financial statements.
27
VIRGINIA ELECTRIC AND POWER COMPANY
. STATEMENTS OF CASH FLOWS For the Years Ended December 31.
1990 1989 1988 (Thousands)
Cash Flow From Operating Activities:
Net income...............................'..................
$ 450,354
$435,466
$ 460,106 Adjustments.to reconcile net income.to net cash provided
- . by operating activities:
Depreciation and amortization........ ;.................
515,232 458,372 489,928 Allowance for other funds used during construction.....
Deferred income taxes.........................'..... :.... *
(3,335)
(3,70~)
(t,845)
(35,823).
35,358 (27,843)
Def.erred investment tax credits, net...................
(21,690)
(24,279)
(10; 270)
ParHal settlement-pension plan.... :.................,...
11,200 (17,287)
Noncash return of terminated construction project costs-pretax........................................
Deferred fuel expenses............. :....,..............
(22,i28)
- (24,980)
(27,995) 125,952 (6,245) 37,976 Changes in current assets and liabilities(*):
Accounts receivable.. :...............................
14~.773 *
(40,616)
- (36,549)
Accrued unb.i lled revenues......................... * *..
87',061*
(42,885)
(12,733)
Materials and supplies................,*..........,...
Accounts payable, trade...............................
,(71,696)
(24,528) 87,341
(~.467)
- (5,539) 47,905 Accrued expenses.....,..,..............................
Other.............................................. *.....
(72,927) 66,311 32,961 7 27,7
'(13,976) 15,911 Net Cash Flow From Operating Activities......................
1,099,583 819,956 l,037, 606
- Cash Flow 'From (To) Financing Activities:
Common Stock...............................................
199;978 99,999
- 34,994 Preferred stock..................................... '..........
. 75,000 75,000 Long-term.debt................... *.............. :...........
Short-term debt............ *......................... ;......
200,000 *
'592,589 273,258 (7,22n.
3,655 (6,664)
Inter-company credit agreement.......................... :..
Repayment of long-term debt and preferred stock........... ;
Connion Stock dividend payments.........................,...
Preferred stock dividend payments..........................
(84,000) 55,500.
1,500 (224,526)
(350,501)
(267,095)
(326,862)
(302,994)
(289,101)
(58,925)
(59,902)
(54,126)
Principal payments under capital lease obligations.........
Other..... *.......,.......... *..................................
(6;957)
(6,301)
(6,009)
[2,299)
[2,904)
[13,535)
N~t Cash Flow.From (To) Financing Activities.................
{310,818) 104,141 (251. 778)
- Cash Flow.(Used in) Investing.Activities:
Utility plant expenditures (excluding AFC-other funds).....
(728,782)
- (870,186)
(743,270)
Nuclear fuel (excluding AFC-other-funds)....... '.............
- (74,595)
(34,552)
(63,444)
Pollution control project funds............................
Nuclear dec01m1issiohing trust funds........................
'.34,534 46,911 34,613 (26,512)
(29,841).
(24,839)
Other..................... *.... ;...................... ;.....
7,880
[29,009) 11,170 Net Cash Flow (Used in) Invest,ihg Activities.................
{787,475)
{916,677)
. {785,770) increase in cash and cash equi~alents........................
1,290 7,420 58 Cash *and cash equivalents at beginning of year....... ;.......
.17,977
- 10,557 10,499 Cash and cash equivalents at end of year................';... *.
19,267 *
$ 17,977 10,557
(*)
- Does not include recla;s ificat ion as current liabilities of maturing long..:term debt and cash sinking fund obligations of debt and preferred stock as follows: 1990-$145, 658; 1989-$159, 976; and 1988-$114, 622.
The accompanying notes are an integral part of the financial statements; 28
VIRGINIA*ELECTRIC AND POWER COMPANY STATEMENTS. OF CAPITALIZATION Long-term debt:
First and refunding mortg~ge bonds (1):
Series P, 4.625%, due 1990 Series Q, 4.875%, due 1991....... *......
Series R, 4.375%, due 1~93
...... a
- series S, 4~5%, due 1993' *.
1984 Series A, 13.3%,.due 1994
- 1934 Series B, 13.25%, due 1994
...* ~
~
1987 Series B, 9.375%,.due 1994
.. ~..*
Seri es T,. 4. 5%, due 1995...
~......
- Various series,.5.125%"'.'15.75%, due 1996-2000 Various serie~; 7.375%-10%, due 2001-2005.
Various series, *6.75%-10.25%, due 2006-2010 Various series,.8.5%-9~875%, due 2016-2020 Total first and reftin_dj ng. mortgage bonds Other long-term d~bt:
Bank loans, notes and term loans:
Fixed interest. rate, 7.4%-10.8%, due.1991-2003 Pollution control financings:
. Fixed interest rate, 5.625%, due 2002..
- . Money Market Municipals, due 2008-2017 (2)
Inter-company credit agre~~ent (3)
~....
Nuclear fuel _financing (4)
Total other long-term debt.
Less amounts due within, one ye~r:
First and Refunding Mortgage Bonds Bank loans, notes.and term loans
.Sinking fund obligations (5)
Total amount due withtn one year Les*s unamortized idi'scount, net of premium *.
Total long"'.'term debt Preferred stock
~ *.... *.... *.........
Less amounts du~ within on~ ~ear~sinking fund obl fgations..... >.....
Total preferred stock Common stockholder's equity (6).
Total capitalization
.(Continued) 29 At December 31 1 1990 1989
~-(Thousands-)~
25,000 30,000 30,000
. 30,,000 30,"000 29, 9.85 29,985
- . 66,000
- 66,000 75,000
. 75_,000 100,000.
100,000 56,600
- 56,600 735,740 776,740 434,500 461,250 572,000
- 582,000
- 700,000 500,000
$2,829,825 2,732,575
- . 717,680
. 809,823 21,000
- 21,500 388,600 388,600 84,000 86,519 1,127,280 li390,442 3,957,105 4,123,017 30,000
- 25,000
. 80, 57~
. " *.. 86, 910 17,000 22,783 127,575
- 134,693
.*.12,121 10,675
. 3 ~817,403 3,977,649
. 783,815' 812~949 18,083 25,283 765,732 787,666 3,459,338 3,196,-097
$8,042,473
'$Z,961,41Z
VIRGINIA',ELECTRIC AND POWER COMPANY STATEMENTS OF CAPITALIZATION (Continued)
(!)Substantially all of the Company's prciperty is subject to the lien of. its mortgage, securing its First and Refunding Mortgage Bonds.
(2)1nterest rates vary based on short-term tax-exempt market rates.
Pollution control bonds subject to remarketing within ~ne year are classified as long-term debt to the extent that the Company's intention to maintain the debt is supported by long-term 'bank commitments,.
(3)Under the terms of an agreement with Dominion Resources, the Company may borrow funds from Domini on Resources.. on a daily bas i.s and repay a 11 or any part of the loan at any time during the term of the agreement, presently due to expire on July I, 1992.
Borrowings under the agreement are limited to $300 million.
The weighted average interest rate for 1990 was 8.12 ~ercent.
(4) In October 1987, VP Fuel, a wholly-owned subsidiary of the Company, entered into a four-year standby revolving credit agreement, in support of its commercial paper*financing of nuclear fuel used at the Company's Surry Power Station. Subject to.the terms of the revolving credit agreement, which is uncond it i ona 11.y guaranteed by the Company, VP Fuel may borrow and re borrow up to $200 million at any one ti me, mi nus the aggregate amount of outstanding commercial paper. The weighted average interest rate for VP Fuel financing in 1990,
- including bank facility fees, was 8.54 percent.
The standby revolving credit agreement which supports the related.commercial paper expires in October 1991; therefore, the total outstanding amount has, been classified as short-term debt.,
(5)$8,133,250 of the annual sinking fund requirements on the First and Refunding Mortgage Bonds may be satisfied by waiving the privilege to issue an equal amount of bonds and by substituting property therefor.
- The Company i,ntends to exercise* such waiver,in 1991.
(6)Common Stock was represented by 156,049 s~ares outstanding at December 31, 1990 (300,000 shares authorized).
Maturities (including preferre4 stock cash. sinking fund obligations) through 1995 are as follows: 1991-$145, 658,400; 1992-$93, 208,400; 1993-$169,818,300; 1994-$331,833,400; and 1995-$176,383,400.
The accompanying notes are an integral part of the financial statements.
30
VIRGINIA ELECTRIC AND.POWER COMPANY 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 regulatory commissions having jurisdiction and in accordance with generally accepted accounting pr1nc1ples applicable to regulated industries.
The Company is a wholly-owned subsidiary of Dominion Resources, a Virginia cotporation.,The financial *statements.include the accounts of the Company and VP Fuel, w.ith all significant inter-company transactions and accounts being eliminated in consolidati-0n.
Revenues:
Operating revenues are recorded ~n the basis cif service rendered.
Utility Plant and Depreciation:
Utility plant is recorded at original cost which includes labor, materials, servi~es,:AFC and *other indirect costs.
Depree i at ion of ut il i ty pl ant ( other than nuclear fuel) is computed on the straight-line met.hod based on projected useful service lives.
The cost of depreciable utility plant retired and the.cost of.removal, less salvage, are charged to accumulated depreciation.
The provision for depreciation is based on weighted average depreciable plant using a rate of 3.2 percent for 1990, 1989 and 1988.
The cost of maintenance and repairs.is cha~ged to the appropri~te operating expense and clearing accounts. The cost of additions and replacements is charged to the appropriate utility plant account, except that the cost of minor.additions and replacements* is charged to maintenance expense.
- Nuclear Decommissioning:
Based on the most recent decommissioning cost study completed in 1990, future decommissioning costs for the Company's four nuclear units are approximately $854 million, as measured in 1990 dollars.
Funds collected in 1984-1990 have been placed in a special trust in order that the Company may avail itself of certain federal income tax benefits. Pre-1984 collections have been placed in a separate trust. Trust funds will be invested with earnings generated and accumulated in the trusts for funding of future decommissioning obligations. Additional funds needed for decommissioning wi 11 be co 11 ected as approved by the j uri sd i ct i ona l.
regulatory commissions. The accumulated provision for decommissioning of $125.4 million and $98.7 million is included in Utility Plant Accumulated Depreciation at December 31, 1990 and 1989, respectively. Provisions for decommissioning of 31
$21.0 million, $21.3 million ~nd*$21.2-million applicable to 1990, 1989 and 1988, respectively, are included in Depreciation Expense.
Nuclear Fuel:
Operating expenses include amortization of rtuclear fuel, which is provided on a unit of production basis sufficient to fully amortize, over the estimated service life, the cost of the fuel plus future storage and disposal costs.
Federal Income Taxes:
The Company files a consolidated federal income tax return with Dominion Resources.
The Company's practice is to reduce the current provision for federal income taxes to reflect the tax benefit resulting* from the use of the* accelerated depreciation methodology for property additions.
Prior to 1974, the Company flowed through to income the tax effect of most timing differences between book and tax accounting. Effective with property additions placed in service in 1974, deferred income taxes have been* provided on* the effects of accelerated depreciation and, subsequently; -deferred taxes have been provided on most other timing differences between book income and federal taxable income to the.extent permitted by the regulatory commissions having jurisdiction.
To the extent timing differences have arisen in prior periods which have not been normalized, the tax increase or decrease will be recorded when the timing differences reverse.
The Company's only significant non-normalized timing difference pertains primarily to accelerated tax-depreciation of plant placed in service prior to 1974.
Deferred tax provisions have not *been recorded on these timing differences (with the exceptiori of FERC jurisdictional operations) because they are not allowed for ratemaking purposes. As of December 31, 1990, the cumulative net amount of such timing differences was approximately $739.6 million. The tax effect of this amount is not recorded currently, but such costs are expected to be reflected in rates when the timing differences reverse.
Deferred investment tax credits are being amortized over the service lives of the property giving rise to such credits. The Tax Reform Act of 1986 repealed the investment tax credit, *effective* January 1, 1986, except for certain transitional property qualifying for the credit that expired effective January 1, 1991.
In December 1987, the FASB issued SFAS No. 96, "Accounting for Income Taxes."
As a result of subsequent amendments, the-provisions of SFAS No. 96 must be adopted by the Company no later than. 1992.
The objective of the new standard is to recognize the amount of current and deferred taxes payable and refundable for all events that have been recognized in the financial statements based on enacted tax laws at the date of the financial statements. Implementation of the standard may be accomplished by either restating financial statements for prior periods or reporting_the cumul~tive effect of the change in income of the current year.
The Company,has preliminarily* determined that the net effect provided by 32
adoption of the standard will be the recording of additional deferred income tax liabilities on the Company's balanc*e sheet.
These additional deferred income tax 1 i abi 1 it i es represent the tax effects of those differences between book income and federal taxable income for which deferred income taxes have not been provided and differences in bases of assets and liabilities for book and income tax purposes. At the time the Company records these additional deferred income taxes., a regulatory receivable will a 1 so be recorded. The Company wi 11 recognize the tax effects in future.customer rates when such differences reverse.* Based on the provisions of the existing standards, the Company has preliminarily determined that the adoption of the standard will increase earnings by approximately $13 million.
Allowance for Funds Used During Construction:
The applicable regulatory Uniform System of Accounts defines AFC as the net cost during* the construction period of borrowed funds used for construction purposes and a reasonable rate on other funds when so used.
The Company separately determines rates and reports amounts applicable to borrowed funds, calculated on a net-.of-tax basis, and to equity funds.. Aggregate AFC rates of 9.0 percent~ 8.95 percent and 8~8g percent were used for 1990, 1989 and 1988, respectively.
Substantially all of the. Company's construction work in progress is now included in rate base, and a cash return is collected currently thereon.
Deferred Fuel and Capacity:
Approximately 78 percent of fuel expenses is subject to.a deferral method of accounting.
Under this method, the differ~nce between actual fuel expenses and the level of fuel expenses included in current rates is deferred and matched against anticipated future fuel-related rate increases.
During 1987, the Company, b~sed on regulatory authorization, deferred approximately $33 million of capacity charges in excess of the level of sue~
charges included in base rates.
Subsequently, in Virginia's base rate proceeding, the Company sought recove.ry of these deferred capacity charges over a two-year period. On December 30, 1988, the Virginia Commission denied recovery of these costs in its Order.
As a result, these capacity costs were expensed in 1988.
Pollution Control Project Funds:
Pollution control project funds represent unexpended proceeds, plus interest earned thereon, from the sale of pollution control securities. These funds are placed in a trust for the benefit of the Company, until the Company requisitions monies from the trustee for the reimbursement of qualified project expenditures.
For. certain regulatory jurisdictions, investment earnings generated from the unused portion of such funds are recorded as interest income.
Statement of Cash Flows:
For purposes of the Statement of.Cash Flows, the Cbmpany consid~rs cash and
cash equivalents to include cash on hand and temporary investments purchased with an initial maturity of three months or less.
Reel assi fic_ati on:
Certain amounts in the 1989 and 1988 financial statements have been reclassified to conf~rm to the 1990 presentation.
B. Income Taxes:
Details of income tax.expense are as follows:
Current expense:
Federal........ :..........................................
$ 248,483 State.....................................................
4,253
$ 252,736 Deferred expense-federal:
Plant related items:
Liberalized depreciation................................
50,092 Indirect construction costs.............................
(20,451)
Cost of removal-property retirements....................
4,664 Nuclear decommissioning costs...........................
(343)
Other........................................ ;..........
(1,633)
Deferred fuel adjustment...........*.......................
(42*,823)
Unbilled revenues................ ;... *................".....
(4,127)
Terminated construction project costs.....................
(10,613)
Customer accounts reserve..............*..................
(6,579)
Reduction of certain deferred tax balances pursuant to regulatory order (*)....................................
(2,005)
Other.*....................................................
3,236 (30,582)
Deferred investment tax credits:
Gross.........................".............................
(4,328)
Amert izat ion......*.......................................
(17,655)
Net deferred investment tax credits....... :................
(21,983)
Income tax expense-operating income....................... :
200,171.
Income tax_expense associated with-nonoperating income:
- current expense:
Federal...................................................
17,988 State...............................*...................*.
252 Deferred expense-federa 1..................'..... '... ;........
18,240 (5,241)
Net deferred investment tax credits-amortization...........
293 Income tax expense nonoperating income.....................
13.292 Total income tax expense *..*..*................-....,.......
$ 213,463 $
Years 1989 (Thousands)
$168,005
$151,727 2,865 2,274 170,870 154,001 69,672 58,809 (20,854)
(13,924) 5,501 4,788 (188).
1,928 3,189 (2,439) 2,297 (15,167)
(4,127)
(4,127)
(13,142)
(15,976) 3,474 (333)
(4,906)
(49,062) 486 4,827 41,402 (30,676)
(5,644) 10,969 (18,635)
(21,239)
(24,279)
(10,270) 187,993 113. 055 10,867 26,068 202 396 11.069 26.464 (6,044) 2,833 5.025 2_9.297 193,018. * $ 142,352
(*) Represents the effect of a refund to customers for a reduction in c.ertain deferred income tax balances as ordered by the Virginia Commission, including settlement with county and municipal customers.
34
Total federal income tax expense differs**from the amount computed by applying the statutory federal income tax rate to pretax income for the following reasons:
Computed federal tax expense at statutory rate on income ( 1)................
Increases (decreases) resulting from:
Utility plant differences (2)...............
Ratable amortization of investment tax.credits...............................
Reduction of certain deferred tax balances pursuant to regulatory order (3)..........
Terminated construction project costs (2).................................
Other, net........................... ;........
Total federal income tax expense..............
Years 1990 1989 1988 Xof Xof
- Pretax
- Pretax Amount lncane Amount lncaE Amount (Thousands. except percentages).
$224,166 34.0%
$212,642 34.0%
$203,928 (842) (0.1) 6,876 1.1 (2,753)
(17,363) (2.6)
(18,635) (3.0)
(21,239)
(2,005) (0.3)
(4,906) '(0.8)
(49,062) 9,363 1.4 8,285 1.3 8,880
~) 1Q..z)
(14,311) il.:l)
(73)
(15,209) il.:l.)
(22,691) 11....§)
(64,247)
$208,957 31.7% * $189,951 30.4%
$139,681 X of Pretax lncOlle 34.0%
(0.5)
(3.5)
(8.2)
. 1.5
.JL..Q (10.7) 23.3%
(1) Net income plus total federal income tax expense.
(2) Items for which deferred taxes had not been provided in prior*years, net of amortization* of certain deferred tax provisions recorded.at higher levels than the current statutory rate.*
(3) Represents the effect of a refund to customers for a reduction in certain deferred income tax balances as ordered by the Virginia Commission including settlement with county and municipals customers.
C. Sale of Receivables:
In December 1990,. the Company entered into agreements to sell, with limited recourse, certain customer accounts receivable, including unbilled amounts, through a major commercial bank. The agreements expire December 10, 1991 unless terminated prior to that date by the Company or renewed upon proper notice to the purchasers. The agreements allow the Company to sell up. to $300 million of receivables at any.time.
An undivided interest in new pools of accounts receivable may be sold at the discretion of the Company as previously sold interests are collected.
As of December 31, 1990, $150 million of accounts receivable were outstanding under these agreements.
The Company has provided for, in its accounts, the probable level of anticipated uncollectible accounts receivable, for which it *retains responsibility under the recourse provisions of these arrangements. In the e~ent the entire undivided interest sold becomes uncollectible, the Company's obligation under the recourse provisions would be limited to five percent of the purchaser's undivided interest.
35
D. Jointly Owned Plants:
The following information relates to the Company's proportionate share* of jointly owned plants at December* 31, 1990:
Ownership interest.... !.~ *********
Utility plant in service..........
Accumulated depreciation..... ~~***
Construction work*tn progress.....
Bath County
- Pumped Storage Station 60.0%
$1,069.6 108. 7
- 2.6 North Anna Clover Power Power Station Station
- 88. 4%.. 50. 0%
(Millions)
$2,139.4.
989.1 185.3
$42.9 The co-owners are obligated to pay their share of all future construction expenditures and operating costs of the jointly owned facilities in the same proportion as their. respective ownership interests.
The Company's share of operating costs is classified. in the* appropriate operating expense (fuel, maintenance, depreciation, taxes, etc.) in the Statements of Income.
E. Terminated Construction Project Costs:
Costs, net of taxes, incurred in connection with terminated construction projects are summarized as follows:
Nuclear Unit North Anna 3 North Anna 4 Surry 3 & 4 Date Construction Tenninated November 1982 November 1980
- March 1977 Net Cost*
Incurred
$387,583 85,641
- 54,611 Unamortized.
. Balance At Decenmer 31.
1990 (Thousands)
$185,446
. 7,280 19 Perfcd of.
Amortization In Rates
(*)
10 years 10 year.s
(*) The.amounts deferr~d are being amortized over 15 years for.Virginia and FERC *jurisdictional customers and over a ten-year.period in the North Carolina jurisdiction.
F. Short-Term Debt:
Year End Daily Average Outstanding Interest Interest Max 11111111 Maturity Amoun_t Rate(a}
. Amount Rate(a}
Outstanding (Thoosands. except percentages) 1990 Nuclear fuel financing.......
(b)
$118,587 (c)
(c) 8.30%
(c) 1989 Nuclear fuel financing.......
(b)
$ 39,295 (c)
(c) 9.46%
(c)
Real estate notes............
(d)
$ 525 10.00%
825 Tota 1......................
$ 39.295 1988 Nuclear fuel financing.......
(b)
$ 34,815 (c)
(c) 7.66%
(cl Real estate notes............
(d) 825 10.00%
2 10.00%
825 Total........*...............
$ 35,640 36
(a) Weighted average.
(b) Maximum 270 days.
(cl The total amount of conmercial paper outstanding under this*arrangementat December 31,.1990, 1989 and 1988 was $118.6 million, $125.8 million and $100.7 million, respectively. The totals include amounts classified as other long-term debt of $86.5 million and $65.9 million at December 31, 1989 and 1988, respectively (see Note (4) to the Statements of Capitalization). The standby revolving credit agreement which supports the related conmercial paper expires in October 1991; therefore, the total outstanding amount has been classified as short-term debt.
(d) Maximum 364 days.
G. Leases:
The Company has leases for certain property and equipment that meet the criteria for capitalization under the provisions of SFAS No. 13, "Accounting for Leases," which require recognition of all capital leases.
Plant and property under capital leases at December 31, 1990 and 1989 included the following:
Combustion turbines.............................
Office buildings (*)............................
Data processing equipment.......................
Total plant and property under capital leases.*
Less accumulated amortization.......... ;........
Net plant and property under capital leases~....
1990 1989
---rfhousandrj
$42,051 40,827 4,317
- 87,195 48,570
$38,625
$42,601 40,827 83,428 41,892
$41,536
(*)The Company currently lea~es one building from its parent, Dominion Resources.
The capitalized cost of the property under that lease, riet of accumulated amortization, represented $28. 5 million and $29. 2 million at December 31, 1990 and 1989, respectively.
Rental payments. for such lease were $3.0 million for each of the three years ended December 31, 1990, 1989 and 1988.
The Company is responsible for expenses in connection with the leases noted above, including insurance, taxes and maintenance.
Future minimum lease payments for each of the next five years and in the aggregate under noncancellable capital leases and for operating leases that have initial or remaining lease terms in excess of one year as of December 31, 1990, are as follows:
199 I.................................... *......
1992...........................................
1993.....*......................................
1994..................................... :......
37 Capital Operating Leases Leases (Thousands)
$11,155 4,711.
4,711
- 4,711
. $ 6,501 3,364 2,136 1,714
1995............... 0 **************************
After 1995....................................
Total future minimum lease payments...........
Less interest element included above.......*..
Present value of future minimum lease payments 3,711 37,667 66,666 25,958
$40,708 498 4,795
$19,008 Rents on leases have been charged to other operation expenses and include the following:
1989 (Thousands)
Interest on capital lease obligations........*
Amortization of property under capital leases.
Rental expense relating to capital leases.....
Rental expense relating to operating leases...
Less: sublease rents..........................
Tota 1.........................................
$ 3,014 4,695 7,709 9,330 57
$16,982 H. Preferred Stock Subject to Mandatory Redemption:
$ 3,271 4,402 7,673 10,450 56
$18,067
$3,723 4,417 8,140 10,878 59
$18,959 Preferred stock subject to mandatory redemption, $100 liquidation preference, at December 31, 1990, was represented by the following:
Annual Sinking Fund Requirements Entitled Per Share at $100 Per Upon Voluntary Liquidation Redemption Share Authorized and And Thereafter To Outstanding Amounts Declining Dividend Shares Amount Through In Steps To Shares
$ 7.30 500,000 $107. 30 4/14/93 $100.00 after 4/14/02 (a) 7.325 456,419 101.00 28,000 7.58 600,000 107.58 6/19/92 100.00 after 6/19/93 (b}
8.20 360,000 102.87 9/20/91 100.41 after 9/20/96 30,000 8.40 544,000 103.92 3/31/91
- 100.00 after 3/31/04 32,000 8.60 240,598 105.00 12/19/92 100.00 after 12/19/97 11,834 8.625 222,000 104.32 6/20/91 100.00 after 6/20/02 18,500.
8.925 175,000 105.66 9/20/91 100.00 after 9/20/09 10,500 10.25 50,000 101. 00 50,000 3,148,017 Less shares due within one year 180,834 Total 2,967,183 38
(a)" 15,000 shares annually commencing in June 1992.
(b)* 120,000 shares annually commencing in June 1992.
Matutities through 1995 are as follows:.1991-$18~083,400;~1992~$26,583,400; 1993-$26,583,400; 1994-$26,583,400; and 1995-$26,583,400.
In 199*0, 10,500 shares of the $8. 925 Dividend *Preferr~d Stock were redeemed through _an optional sinking fund.
- In 1989, 47,581 shares of the $7.325 Dividend Preferred Stock and 10,500 sha.res of the $8.925 Dividend.Preferred Stock were redeemed through an optional sinking fund. * *
. In.1988, 32,-000 shares of the $8.40 Dividend Preferred Sto~k were redeemed through an optional sinki~g fund.
The total number of authorized shafes for all pref~~red stock.is 10,~00,000 shares. Upon involuntary liquidation, all presently outstanding preferred stock is entitled to receive $100 per sha*re, plus accrued dividend*s.
Dividends are cumulative.
- l. Preferred Stock Not Subject to Mandatory Redemption:
Preferred stock not
- subject to mandatory redemption, $100 l iquidat.ion.
- prefere_nce, at December 31, 1990, was represented by the following:
Dividend
$5.00
. 4.04 4.20 4.12
- 4.80
- 7. 72.
7.45 7.20 7;72 (1972 Series)
Money Market Preferred (January I98TSeries) (*)
Money Market Preferred *.
(June 1987 Series)*(*)
Money Market Preferred (October 1988 Series)(*)
Money Market Preferred (June 1989 Series) (*)
Total Authorized
- And Outstanding Shares 106,677 12., 926 14,797 32,534 73,206 350,000 400,000 450,000
- 500,000 500,_000 750,000 750,000 750,000 4,690,140 39 Entitled Per Share Upon Voluntary
- Li qui dat ion Redemption Amount
$112. 50 102."27 102.50 103.73 101.00 iOl.50 101.00 101.00
.. 101.00 100.00 100.00
. 100. 00 100.00
(*)Dividend rates are variable and are set every 49 days via ah auction process. The combined weighted average rates for these series in 1990, 1989 and 1988 including fees for broker/dealer agreements, were 6.95 percent, 7.45 percent and 6.39 percent, respectively..
J. Common Stoclc:
During the years 1988 through 1990 the following changes in Common Stock occurred:
Shares Years 1989 (Thousands', except shares)
Shares Shares.
Outstanding Amount Balance at January 1........ 147,077
$2,197,506 Outstanding_
Amount 142,433. $2,096,671 Outstanding
.Amount 140,788.
$2,060,841 Transfer from Other Paid-in Capital.:.......
836 836 Issuance to Dominion
. Resources................ *
- 8. 972 199,978 836
~ 99,999 147,077
$2,197,506 1,645 34,994*
Balance at December 31...... 156,049
$2,398,320
- K. Supplementary Income Statement Information:
Cash flows* information: *
- Cash paid during the year for:
Interest (reduced for the net cost of
- borrowed funds capitalized as AFC)~...... ~
Income taxes.....................,............
- Noncash transactions from investing and financing activities:
Capital lease obligations:
Additions............ *..... *..........*..
Retirements*~..... ~ ~..... *............... *..
142.433
$2,096,671 Years
. 1990 1989
$388,335 339,628
$ 4,316*
(Thousands)
$350,003
. 145,352
- 549 $ 4,554
'$329,091 146,391 Taxes other than income taxes charged to expenses were as follows:
Years 1990 1989 1988 (Thousands)
Real estate and property........... ~..........
'$ 66,409 $ 60,832
$ 57,714 Local gross receipts..*..*....................
. 86,600 84,413 78,767 Payro 11 related........................... *......
27,694 27,684 26,659 West Virginia businegs arid occupation.........
, *21,830 21,899
.9,481 Other............................. ~........*..
355 92972 62421 Total..........................................
$2022888 $2042800
$1792042 40
L. Retirement Plan and Postretirement Benefits:
The Company participates in the Retirement Plan, a defined benefit pension plan. The Retirement Plan covers virtually all employees of Dominion Resources and its subsidiaries, including the Company. The Company's disclosure regarding participation by its employees in the Retirement Plan is provided in accordance with guidelines applicable to plans of a controlled group of corporations. The benefits are based \\on years of service and the employee's final average compensation.
For 1990 pension plan expense was $5.1 million and funding was provided in the amount of $6.8 million.
Additional funding attributable to the 1990 plan year of $2.1 million will be made in the first quarter of 1991.
For 1989, the pension plan expense was $6.7 million and funding was provided in the amount of
$6.7 million.
In 1988, the pension plan expense was $2.5 million; no funding was provided to the Retirement Plan in accordance with the full funding limitation of the Employee Retirement Income Security Act of 1974 (ERISA}.
In 1988, $72.2 million of the Retirement Plan's projected benefit obligation was settled by purchasing nonparticipating insured annuities for certain retirees.
The settlement was accounted for in accordance with SFAS No. 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit Plans and for Termination Benefits."
As a result, a gain of $11.4 million (net of associated taxes of $5.9 million} attributable to the Company's allocable portion of the transaction was recognized in 1988 and reported as a reduction of Other Operating Expenses.
In September 1989, the Company established a regulatory liability associated with the rate treatment of the gain resulting from the settlement.
As a result, the balance available for Common Stock was decreased by $8. 2 mill ion.
In.addition to providing pension benefits, Dominion Resources and the Company provide certain health care and life insurance benefits for retired employees.
Generally, employees remain eligible at retirement for certain health and life insurance benefits if they reach retirement age while working for the Company.
These and similar benefits for active employees are provided through insurance companies with annual premiums based on benefits paid during the year.
The Company recognizes the cost of providing health care and life insurance benefits by expensing the annual insurance premiums.
The following information relates to the retiree health care and life insurance benefits provided by the Company:
Years 1990 1989 1988 Health care premiums paid (millions}..........
$ 6.8
$ 6.3
$ 3.0 Retirees covered under health care............
2,500 2,400 2,100 life insurance premiums paid (millions).......
0.4 0.4 1.2*
Retirees covered under life insurance.........
2,200 2,000 1,700 41
- Prior to 1989, the cost of providing life insurance benefits for retirees was not separable from the cost of providing benefits for active employees; therefore, premiums covered approximately 13,000 active and 1,700 retired employees.
SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" was issued by FASB in December 1990.
Based on the current terms of its benefit plans, the Company estimates that the required application of this standard in 1993 will increase annual expenses by $50 million.
A transition obligation of approximately $337 million would result from the application of this standard as of January 1, 1993.
The transition obligation would be amortized c;,ver a twenty-year period. To the extent that the new standard results in accruals for other postretirement benefits in excess of amounts collected through rates and the collectibility of such excess in future rates is deemed probable, the Company will record a receivable representing that amount to be co 11 ected through future rates.
Under the terms of its benefit pl ans, the Company reserves the right to change, modify or terminate the plans.
From time to time in the past, benefits have changed, and some of these changes have reduced benefits.
M. Comitments and Contingencies:
Construct;on Program:
- The Company has made substantial commitments in connection with its construction program and nuclear fuel expenditures.
Those commitments are estimated to total $780 million {excluding AFC) for 1991. Additional financing is contemplated in connection with this pro~ram.
Purchased Power Contracts:
Since 1984, the Company has entered into contracts for the long-term purchases of capacity and energy from* other utilities, qualifying facilities and independent power producers. As of December 31, 1990, there were~2 non-utility purchase contracts with a combined dependable winter capacity of 3,870 Mw.
Of these, 40.projects (aggregating 1,112 Mw) were operational.as of the end of 1990 with the balance to bec6me operational through 1997.
In 1987, the Company signed agreements for the purchase of approximately 1~300 Mw of additional generating capacity from six non-utility _power producers.
As a result of the 1988 competitive bidding solicitation, the Company entered into 19 contracts for approximately 2,000 Mw of additional capacity for initial delivery at various.dates. through 1994. During July 1990, as a result of a 1989 request for proposals for competitive bids from all supply-side sources, the Company signed contracts with three suppliers for 448 Mw of power to come on line during 1995-1997.
These contracts are generally for a duration of 25 years after initial delivery.
The table below reflects the Company's mini mum commitments as of December. 31, 1990, for power purchases from utility and. non-utility suppliers that are currently operating or have obtaihed construction financing. The table does not 42
reflect the remainder of the above-mentioned contracts, where necessary financing for the generating facility has not yet been obtained.
- This minimum purchase commitment includes. both capacity payments and the mini mum required energy payments.
1991..................................
1992...... *.. *........ *.*..... ~.........
1993........................... *.......
- 1994.................................
1995... ~.............................
Late~ years........... ~ **... ;~~...***
Total................ ~.......... e.-.'.
Present value of the total.....*..*.
Commitment (Millions) 500.7 623.1 675.3 703.3 721.7 14,062.1
$17,286.2
$ 6,013.7 In addition to the minimum purchase commitments in the table above, under some of these contracts the Company may purchase, at its option, additional power as needed.
Actual payments for purchased power (including ee.onomy, emergency, limited term, short-term and long-term purchases and interchange.received} for the years 1990, 1989 and 1988 were $473.6 million, $559.1 million and $410.3 million, respectively.
Coal and Uranium Purchases:
The Company's estimated coal and uranium purchases for the next five years for system generation are as follows.(millions}:
1991-$277; 1992-$238; 1993-
$132; 1994-$133 and 1995-$70.
Nuclear Insurance:
The Price-Ariderson Amendments Act of 1988 amends and extends for fifteen years the federal mandates regarding compensatiowof the public in the event of an accident at a federally licensed nuclear reactor. The current limit imposed by the Price-Anderson Act for the public liability of an owner of a nuclear power plant for a single nuclear incident, including the five percent surcharge if funds are insufficient to *pay the claims, is $7.8 billion as of December 31, 1990.
43
The Company's insurance coverages and maximum retrospective assessments for its.nuclear operations are as follows:
Type and Source of Coverage Public Liability:
- American Nuclear Insurers.... ~... ;...........*
Federal Government (a)........................
New Nuclear Workers:
American Nuclear Insurers (c}.................
Property Damage (per site}:
. Nuclear Mutijal Limited (d).... ~**********~****
Nuclear Electric Insurance Limited (NEil} (d}.
American Nuclear Insurers.....................
Replacement Power:
NEIL....*.....................................
Maximum Retrospect he Assessments.
for a Single Coverage Incident (Mn 1 ions)
$ 200 7,607
$264.6(b}
- $7,807 *
$264.6
$ 400
$-1£:..Q
$ 500
$ 20.8 975 15.6 400
$1,875
$ 36.4
. $1,365
$ 10;3 (a}
Retrospective premium program under the Price-Anderson Liability provisions of the Atomic Energy Act of 1954; as amended.
Subject to retrospective assessment with respect to loss from a nuclear incident at any licensed nuclear reactor in the United States.
(b} $66.15 million for each of the four reactors owned by the Company with assessments not to exceed $10 million per year per reactor for any one nuclear incident.
This assessment is subject to inflation indexing every fifth year based.on the Consumer Price Index. There *is no limit on the number of nucleat incidents for which the 1 icensee of a reactor may be retroactively asse.ssed.
(c} Includes one automatic reinstatement of $200 ~illion. Provides coverage against claims, except those arising out of an extraordinary nuclear occurrence, made by nuclear workers first hired after January 1, 1988. The maximum coverage is for the entire nuclear industry and not just the Company.
The amount of the maximum retrospective assessment is the most the Company could be ~ssessed under the Master Worker insurance program which is effective from January 1,
- 1988 through December 31, 1992.
(d} Mutual insurance companies of which the Company is a member. The Company is subject to retrospective assessment with respect to 1 oss at any nuclear generating station covered by such insurance.
The NRC requires 1 icensees of nuc 1 ear p 1 ants, inc 1 ud i ng the.~ompany, to maintain at l~ast $1.06 billion of property insurance on each reactor site. It 44
also requires that the insurance proceeds be used first to pay stabilization and decontamination expenses.
The effect of the rule is to prevent the use of
. property insurance proceeds for the rebuilding of damaged facilities or the payment of holders of the Company's First and Refunding Mortgage Bonds (which are secured in part by such facilities) until after stabilization and.
decontamination are completed. For any property losses in excess of the $1.875 billion property coverage, and to the extent that insurance proceeds would be unavailable for property coverage because they must be used for.decontamination as required by the NRC, the Company has the financial responsibility for the losses.
As part owner of the North Anna Power Station, ODEC is responsible for its proportionate share (11.6 percent) of the insurance premiums applicable to that station, including any retrospective premium assessments and any losses* not covered by insurance.
Environmental Matters For more information, see Item 7, Future Issues, Environmental Matters under Management's Discussion and Analysis of Financial Condition and Results of Operations.
N. Effect of Rate Changes on Operating Revenues:
1990 For information on the principal rate proceedings in which the Company was involved in 1990; including those currently in progress, see Item I, Rates under BUSINESS.
1989 On-March 31, 1989, the Company filed with the Virginia Commission an application for a rate increase of $95 million.
On January* 12, 1990, the Virginia Commission entered its Final Order which approved a rate increase of
$64.4 million based on a 1988 test year.
O. Quarterly Ffoanchl Data (Un.audited):
The following amounts reflect all adjustments, consisting of only normal recurring accruals (except as discussed below), necessary in the opinion of the management for a fair statement of the results for the int~rim periods.
Quarter 1990 Operating Revenues 1st...............
$ 846,975 2nd....*.... ~....* *
. 813,581
- 3rd.*....... ~ *....
- 982,141 4th...............
- 81a,ao3 45 Operating Balance Available for Income Common Stock (Thousands)
$ 202,197 181,027 256,170 166,404
$ 98,379 77,197 148,599 67,989
1989 I st..... e ** ** ******
$ 851,695
$ 181,249
$ 88,107 2nd...............
798,363 136,880 40,858 3rd...............
943,179 242,146 138,415 4th...............
865,691 196,597 107,860 Results for interim periods may fluctuate as a result of weather conditions, rate relief and other factors.
In the third quarter of 1989, the Company established a regulatory liability associated with the rate treatment of a gain resulting from the fourth quarter 1988 settlement of the projected pension benefit obligation for certain retirees.
Operating income and balance available for Common Stock were decreased by $8.2 million (net of associated taxes of $4.2 million).
This included the amortization of $2. 0 mil.1 ion of the liability for May through September 1989.
46
VIRGINIA ELECTRIC AND POWER COMPANY SCHEDULE IV INDEBTEDNESS OF AND TO RELATED PARTIES NOT CURRENT SCHEDULE IV For the years ended December 31, 1990, 1989 and 1988 Col. A Col. B Col. C Col. D Indebtedness of Name of Balance at person Beginning Additions Deductions Daninion Resources:
1990...............
1989...............
1988...............
Col. E Balance at End (Thousands)
Col. F Balance at
. Beginning
$ 84,000
$ 28,500
$ 27,000 See Note (3) to the Statements of Capitalization included herein.
47 Col. 6 Col. H Col. I Indebtedness~
Balance Additions Deductions at End
$ 746,860 $. 830,860 0
$1,344,200 $1,288,700
$84,000
$ 504,006 $ 502,506
$ 28,500
VIRGINIA ELECTRIC AND POWER COMPANY SCHEDULE V PROPERTY, PLANT AND EQUIPMENT For the year ended December 31, 1990
- Col. B
.Col. C Col. D Balance at Beginning Additions
. Retirements Classification of Period at Cost or Sales (Thousands).
Utility plant:
Electric plant:
In service:
Intangible........... *....... $
49,058 19,838
$ 4,360 Production................. *.
5,787,457 374,511 27,402 Transmission... :........... *.
1,010,007 53,845 4,436 Distribution................
2,963,931 270,947 44,653 Genera 1.....................
- 532,713 53,986 11,447 Total electric plant in service.................
10,343,166 773,127 92,298
.Construct ion work in progress 745,369 (53, 660)(*)
Held for future use...........
4,478 6,588 Electric plant acquisition adjustment..................
42,778 Total electric plant......
11.135. 791 726.055 92,298 Nuclear fuel....................
819,077 74;856 Total uti li'ty plant....... * $11,954,868 800,911
$ 92.298 Non-ut i l i ty property.............. $
5,767 181 Capital leases.................... $
83,428 549 SCHEDULE V Col. E Col. F Other Changes Balance Add at End (Deduct}.
of Period 64.,536 (1,914) 6,132,652 561 1,059,977 384 3,190,609 1,386 576.638 417 11,024,412 691,709 (65) 11,001 42,778 352 11,769.900 893,933 352
$12,663.833 5,200 10,786 4,316 87,195
(*) Includes additions of $719.5 million net of $773.1 million transferred to plant in service.
48
VIRGINIA ELECTRIC AND POWER COMPANY SCHEDULE V PROPERTY, PLANT AND EQUIPMENT For the year ended December.31, 1989 Classification Ut i 1 ity plant:
Electric plant:
In service:
- Intangible..................
_Production..................
Transmission........ ~......
Distribution................
- General.......*.............
Total electric plant in service.................
Construction work in progress.
Held for future use...........
Electric plant acquisition adjustment....... *...........
Total electric plant......
Nuclear fuel..... ;..............
Col. B Balance at Beginning of Period 43,220
. 5,504,370.
972,486 2,675,825 469.152 9,665,053 641.491 4,478 42.778 10.353,800 784.511 Total utility plant....... $11,138,311 Non-utility property.............. $
Capital leases.... ********:******* $
5.871 87.982 Col. C' Col. D Additions Retirements at Cost or Sales (Thousands)
$13,524
$ 7,686 313,943 31,634 42,818 5,046 326,511 38,633 72.547
-8.885 769,343 91,884 103,878(*)
873,221.
91.884 34,566
$907,787
$ 91.884 15
$ 4.554 SCHEDULE V Col. E Col. F Other Changes Balance Add at End (Deduct) of Period 49,058 778 5,787,457 (251) 1,010,007 228 2,963,931
[101) 532. 713 654 10,343,166 745,369 4,478 42.778 654
- 11,135.791 819.077 654
$11.954, 868
.[89) 5.767 83.428
(*)Includes additions of $873.2 million net of $769.3 million transferred to plant in service.
49
1, SCHEDULE V VIRGINIA ELECTRIC AND POWER COMP~NY
- SCHEDULE V PROPERTY, PLANT AND EQUIPMENT For the year ended December 31, 1988 Col. A Col. B Col. C Col. D Col. E Col. F Other Balance at Changes Balance Beginning Additions Retirenents Add at End Classification of Period at Cost or Sales
[Deduct) of Period
. (Thousands)
Utility plant:
Electric plant:
In service:
Intangible.. 1 ************* $
36,226
$. 11,904 4,910 43,220 Production...............
5,379,668
- 136,599 13,778 1,881 5,504,370 Transmission.............
920,103 58,848 6,229 (236) 972,486 Distribution.............
2,404,886 304.757 33,934 116 2,675,825 General.... ;.............
418,617 62,633 12,068
[30) 469,152 Total electric plant in service...........
9,159,500 574,741 70,919 1,731 9,665,053 Construction work in progress.................
488,674
- 152,a17(*)
641,491 Held for future use........
. 4,050 659 13 (218) 4,478 Electric plant acquisition adjustment...............
. 42,778 42,778 Total electric plant...
9,695,002 728,217 70,932 1,513 10,353,800 Nuclear fue 1...........*.......
720,752 64,797 1,038 784,511.
Total utility plant.... $10,415,754
$ 793,014
$ 71,970 1,513
$11,138,311 Non-utility property........... $
6,309 2
[436) 5,871 Capital leases.......,......... $
87,982 87,982.
(*) Includes additions o.f $727.5 million net of*$574.7 milli~n transferred to plant in service.
50
- SCHEDULE VI VIRGINIA ELECTRIC AND POWER COMPANY.
SCHEDULE VI ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT For the years ended D.ecember 31, 1990, 1989 and 1988
. Col. A Col. B Col. C Col. D Col. E Col. F Other Qalance at Additions Changes Balance Beginning
- charged to
. Add at End Classification of Period Costs & E~nses Retirements (Deduct).
of Period (Thousands) 1990 Accumulated depreciation and amortization of electric plant... $2,880,084
$352,955
$ 92,181
$ 30,605
$3.171.463 Accumulated amortization of capital leases................... $
41,892
$~
549
$---1!Q 48,570 Accumulated amortization *of nuclear fuel........ :............ $ 576.840
$ 84,760
$ 661.600 1989 Accumulated depreciation and
$2,880,084 amortization of electric plant... $2,615,011
$319,110
$ 84,177
$ 30.140 Accumulated amortization of capital leases................... $
40,000
$~
$ 4,554 41,892 Accumulated*amortization of nuclear fuel.... ;......... *..... *.. $ 525,623.
$ 51.217
$ 576.840 1988 Accumulated depreciation and amortization of electric plant... $2,350,065
$300,706
$ 65,959
$ 30.199
$2,615,011 Accumulated amortization of capital leas.es.. '... *.*.......,....... $
33,854
$----2...IB 2
40,000 Accumulated amortization of nuclear fue 1....... *.............. $ 426,721
$ 98,902
$ 525,623 Note:
Provision for depreciation bf automobiles and trucks is charged to transportation expense clearing account and redistributed to operathm expense, utility plant and other accounts.
51
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None PART Ill ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (a) Information concerning directors of Virginia Electric and Power Company is.
as follows:
Name and Age William W. Berry (58)
- Thos. E. Capps (55)
Principal Occupation for Last 5 Years, Directorships in Public Corporations Cha~rman of the*Board of Directors of Virginia Electri~ and Power Co~pany and Dami n ion* Resources* ( from November 1, 1986 to May 1, 1990, Chairman of
- the* board of Directors and Chief Executive Officer of Dominion Resource~; from July 1 tci November 1, 1986, *chairman of the Board of Directors, President and Chief*
.Executive Officer ***of Dominion
- Resources; prior to July 1, 1986, Chairman of the Board of Di rectors and Chief Executive Officer of Dominion Resources and Virginia Electric and Power Company).
He is a Director of Dominion Resources, C&S/Sovran Corporation, Ethyl Corporation and Universal Corporatiori.
- Vice Chairman of the Board of Director~
of Virginia Electric and Power Company and President and Chief Executive Officer of *Dominion Resources (from April l, 1989 to May 1,
- 1990, President and Chief Operating Officer of Dominion Resources, from November 1, 1986 to April 1, 1989, President of Dominion Resources; prior to November 1, 1986, Executive Vice President of.
- Virginia Electric and Power Company).
.. He is a*
Oirector of Dominion Resources, Signet Banking Corporation and Bassett Furniture Industries, Incorporated.
52
- Year First Elected a Director 1980 1989
Name and Age James T. Rhodes (49)
John B. Adams, Jr. (46)
Anna Ruth Inskeep* (65)
Dr. Allix B. James* (68)
Harvey L. Lindsay, Jr. (61)
Shirley S. Pierce (67)
William T. Roos (63)
William G. Thomas (51)
Prindpal. Occupation *for* Last *s Years.
Directorships in Public Cor~orations
~resident and Chief Executive Officer of Virginia Electric and Power Company
- (from January I, 1988 to April 1, 1989,. Senior Vice President-Finance; prior to January 1, 1988, Senior Vice President-Power Operations). He is.a Di rector of Dami n ion. Re.sources and..
Sovran Bank, N.A.
President and Chief Executive Officer of A. Smith Bowman Distillery, Inc.,
Fredericksburg,* Virginia, a manu-facturer and bottler of alcoholic beverages, December 27~ 1989 to date~*
(prior to December 27, 1989 Vice President and Director).
Battle Park Farms, Rapidan, Virginia, a dairy farm and milk hauling busi-ness.
Chancellor of Virginia Union University, Richmond, Virginia. He is a Director of Consolidated Bank &.Trust Company.
- Chairman and Chi*f Executive Officer of Harvey Lindsay Commercial Real Estate, a commercial real estate development firm, Norfolk, Virginia.
Chairman of the Board and President of The Ahoskie Fertilizer Company, Inc.,
- Ahoskie, North Carolina, a manu~
facturer and distributor of fertilizer and agricultural. products.
He is a Di rector of Planters. National Bank and Trust Company.
President of Penn Luggage, Inc., retail
.specialty stores, Hampton, Virginia.
President of Hazel & Thomas, P.C.
Alexandria, Virginia, a law firm.
He is a Director of Perpetual Financial
. Corporation and Perpetual Savings Bank.
53 YearFirst-Elected Director 1989 1987 1987 1971
- 1986 1972 1975
'1987
1
- Each Dire~tor holds office ~ntil the next Annual* Meeting of Sharehold~rs or until i~ or her su~cessor is duly elected.
(b)
Information concerning.. the executive officers of Vi rgi ni a. Electric and Power Company is as follows:
Name and Age Willi am W *.. Berry (58)
Thos. E. Capps (55)
- James T. Rhodes (49)
John A. Ahladas (48)
Larry W. Ell i.s ( 50)
Robert F. Hill (55)
- 8. D. Johnson (58)
William L. Stewart (47)
Charles A. Brown (48)
Business Experience Past Five Years Chairman of the Board*of Directors, July 1, 1986 to date; Chairman of the Board of Directors and Chief Executive Officer pripr to July l, 1986.
- Vice Chairman of the Board of Directors, April 1, 1989 to date; President and Chief Operating Officer of Dominion
- Resources, Inc., November 1, 1986 to April 1, 1989;
- Executive Vice Pr~sident prior to November 1, 1986.
President and Chief Executive Officer,.April 1, 1989 to date; Senior Vice President-Finance, January 1, 1988 to April 1, 1989; Senior Vice President-Power Operati.ons prior to January 1, 1988.
Senior Vice President-Corporate Services, January 1, i990
- to date; Senior* Vice President-Corporate Technical
- Services, April 1, 1988 to January* 1, 1990; Vice President-Engineering prior to April. 1, '1988.
. Senior Vice President-Power Operati-0ns and Planning,*.
January 1, 1990 to date; Vice President-Sy.stem Planning and Power* Supply, March 18, 1988 to January 1, 1990; Manager, *System Planning and Power Supply, October 1, 1986 to March 18, 1988; Manager, Power Supply prior to October 1, 1986.. *
- Senior Vice President-Commercial Ope.rations.
Senior Vice President-Finance and Controller, January, 1, 1990 to date; Vice President and Controller prior to January 1, 1990.
- Senior Vice President-Nuclear, January 1, 1990 to date; Senior Vice President-Power, April 1, 1988 to January 1, 1990; Vice.President-Nuclear Operations prtor to April 1, 1988.
Vice President-Procurement, September I,.1988 to date; Manager, Materials Management, May 1, 1988 to September 1,.1988; Manager, Contracts prior to May 1, 1988.
54
Name,.and Age William R. Cartwright.(48)
Thomas L. Caviness, Jr. (45)
James T. Earwood, Jr. (47)
James *R. Frazier, Jr. (49)
Larry M. Girvin (47)
Earl R. Gore (50)
E. Wayne Harrell (44)
Horace A. Keever, Jr. (59)
F. Kenneth Moore (49)
Business Experience Past Five Years Vice President-Fossil and Hydro Operations, January 1, 1990 to date; Vice Presi~ent-Nuclear Operations, September 1, 1988 to January 1, 1990; Vice President-Fossil and Hydro, March 1, 1986 to September 1, 1988; Manager, Maintenance and Performance Services prior to March 1, 1986.
- Vice-President-Eastern Division, November 1, 1989 to date; Executive Project Di rector, November 1, 1988 to November 1, 1989;
- Manager,. Productivity prior to November 1, 1988.
Vice President-Division Services, September 1, 1986 to date; Vice President-Central Division prior to September 1, 1986.
Vice President-Southern Division.
Vice President - Central Division, January 1, 1991 to date; District Manager Richmond, September 1, 1989 to January 1, 1991; District Manager East Richmond, February 1, 1987 to September 1, 1989; Assistant Treasurer.of Dominion Resources, May 16, 1986 to
- February 1, 1987; Manager, Corporate Compensation Services, prior to May 16, 1986.
Vice President-Northern Division, September 1, 1988 to date; Manager, -Operations and Construction prior to September 1, 1988.
Vice President-Nuclear Operations, January 1, 1990 to date; Vice* President-Fossil and Hydro Operations, September I, 1988 to January 1, 1990; Manager, Fossil and Hydro Operation Support, April 1 ~..
- 1988 to September 1, 1988; Station Manager, Nuclear prior to April 1, 1988.
Vice President-Human Resources, September 1, 1986 to date; Vice President-Division Services prior to September 1, 1986.
Vice President-Nuclear Engineering Services~ November 1, 1989 to date; Vice President-Power Engineering Services, March 18, 1988 to November 1, 1989; Manager, Purchasing prior to March 18, 1988.
55 r
~
~rene M. Moszer (47)
James P. O'Hanlon (47)
Thomas J. O'Neil (48)
Robert E. Rigsby (41)
Johnny V. Shenal (45)
Eva S. Teig (46)
Robert F. Saunders (47)
Business Experience Past Five Years Vice President, Treasurer and Corporate Secretary, January 1, 1990 to date; -Vice President-Administrative Services prior.to January 1, 1990.
Vice President-Nuclear Ser~ices, June 15, 1989 to date; Vice President, United Energy Services Corporation prior to June 15, 1989. *.
Vice President-Regulation, August 1, 1988 to date; Vice President-Western Division prior to August 1, 1988.
Vice President-Information Systems, January 1, 1990 to date; Vice Presid~nt~Western Division, August 1, 1988 to January 1, 1990; Genera*l Auditor prior to August 1, 1988.
- Vice* President-Western Division, January 1, 1990 date;
. Manager, Transmission and Substation Engineering, August 1', 1988 to January 1, 1990; District Manager,*Alexandria prior to August 1, 1988.
Vice President-:Publ ic Affairs, September 7, 1990 to date; Vice President-Government Affairs, January 1, 1990 to September 7, 1990;,Secretary of Health and Human Resources, Commonwealth of Virginia, January 11, 1986 to January 1, 1990; Division Manager, Community and Government Affairs prior to January 11, 1986.
Assistant Vice President-Nuclear, November 1, 1990 to
- date; Manager; Nuclear Licensing and Programs, November 1, 1989 to November 1, 1990; Manager, Nuclear Licensing, December 16, 1988 to November 1, 1989; Manager, Nuclear Programs, April 1, 1988 to December 16, 1988; Nuclear Specialist, July 1, 1987 to April 1, 1988; Station Manager-Nuclear.prior to July 1, 1987.
There is no family relationship between any of the persons named in response to Item 10.
56
ITEM 11.
EXECUTIVE COMPENSATION The. fo 11 owing table l i sts a 11 cash compensation paid by t~e Company for services rendered in 1990 to each of the five most highly compensated executive officers and to all executive officers as a group.
Name and Capacity in Which Served Will1am W. Berry, Chairman of the Board and Director.*......*.
Thos. E. Capps, Vice Chairman of the Board of Directors and Di rector.......................... *.. **..........................
James T. Rhodes, President and Chief Executive Officer and Di rector o o................ ~ **********************************
Robert F. Hill, Senior Vice President...........*.......*...*.
William l. Stewart, Senior Vice PresidEmt.............*.......
Executive officers 6f the Company as a group 27 persons (including those named above).........
Cash Compensation
$ 424,874 374,198
- 381,223 250,567.
242,737 5,054,712 Certain exetutive officers of the Company are eligible to participate in one of two annual incentive plans. The Virginia Power Management Incentive Plan (the Management Incentive Plan) has been in effect since 1981 and provides incentive compensation for designated executives and employees of the Company.
The Dominion Resources, Inc. Short-Term Incentive Plan (the Dominion Resources Incentive Plan) provides incentive compensation for designated executives~f the Company who are employees of Dominion Resources, including Mr. Berry and Mr.
Capps. The Company's Board of Directors' Organization and Compensation Committee
- administers and establishes the rules of eligibility, participants' goals and actual awards for the Management Incentive Plan. The Dominion Resources' Board of Directors' Organization and Compensation Committee performs the same administrative function for the Dominion Resources Incentive Plan.
Under both incentive plans, annual awards to participants are based on the achievement of individual and corporate performance goals that are. adopted annua 11 y.
The individual component of each incentive pl an is based on the achievement of individual management go_als.
To the extent that awards paid by the Domini on. Resources Incentive Pl an are for the achievement of corporate performance goals related to the Company, that portion of the award is paid by the Company.
The 1990 Management Incentive Plan provided for incentive compensation based on (1) individual management goals, (2) achieving a stated return on equity and (3) a comparison of the annual change in expenses per kilowatt-hour to the annual change in the Consumer Price Index. Beginning with the 1991 plan year, financial performance will be measured by the Company's earning per share contribution to Dominion Resources' earnings replacing the Company's present return on equity.
For executives of the Company, the 1990 Dominion Resources Incentive Plan included return on equity objectives for the Company. Certain executive officers of the Company received a portion of the payments under the 1990 Management Incentive Plan in December 1990, and *will receive the balance in March 1991, 57
- f.
except for Mr. Berry and Mr. Capps who received a portion of their awards under the 1990 Dominion Resources Incentive Plan in December 1990 and will receive the balance in February 1991. These payments are included in the cash compensation table above.. Amounts earned for the year 1989 under the Management Incentive Plan were paid in March 1990 and were reported in the 1989 Form 10-K and are not included in the above compensation table.
A Performance Achievement' Pl an (the Performance Pl an) was established effective January 1, 1985, and was approved by the Dominion Resources Stockholders at the 1985 Annual Meeting. The Performance Plan awards shares* of Dominion Resources Common Stock for the achievement of specific long-term goals and strategies that are approved by the Organization and Compensation Committee (the Committee) of the Board of Directors of the Company.. Distributions of stock under the Performance Plan may not exceed 10,000 shares times the number of participants in the Performance Plan on the relevant date. The duration of each performance period is three*years, and a new performance period and set of goals are initiated annually.
Participants in the Performance Plans for the periods of 1988-90, 1989-91 and 1990-92 include the.President and all Vice Presidents of the Company, but do not include the Chairman or Vice Chairman,of the Board of Directors.
Subject to the Committee's approval and within certain time periods established in.the Performance Plan, each participant may elect to receive up to 50 percent of any award in cash and to defer all or part of any award.
To be eligible for an award, an employee must occupy a qualifying position for an entire performance cycle. Individual awards will be determined on the basis of goal achievement, positions held during the performance period, the salary grade mid-points of those positions and the average price of the Common Stock on the last day of September, October and November of the year before the start of. the performance eye le.
Following the cone l us ion of each performance period, the Committee determines the level of achievement of the goals for that performance period.
The Board of Directors must approve each participant's award, and may approve pro rata awards to participants who retire, die, become disabled, or transfer during a performance cycle; Dominion Resources' Board of Directors must approve any award for any participant who is also an officer or director of Dominion Resources.
In the 1988-1990 Performance Plan cycle, the following executive officers of Dominion Resources were* executive officers. of the Company and will receive pro rat a awards:
Tynda 11 L. Baucom, who was Vice President of the Company prior to his election as an executive officer of Dominion Resources in September 1988; Donald T. Herrick, Jr., who was Vice President of the Company prior to his election as an executive officer of Dominion Resources in January 1990;* and Linwood R. Robertson, who was Vice President of the Company prior to his election as an executive officer of Dominion Resources in January 1990.
Awards for the 1988-90 performance period were made in December 1990 and February 1991 and were based on (1) the performance of Virginia Power's return on equity over the three-year period as compared to the average for comparable electric utilities, and (2) a comparison between the increase in expenses per kilowatt-hour and the ihcrea~e in the Consumer Price Index over the three-year period.
The following awards of Dominion Resources Common Stock and cash were made for the 1988-90 performance period: James T. Rhodes: 674 shares and $1,966; Robert F. Hill: 377 shares and $2,341; and William L. Stewart: 365 shares and
$2,294; and 4,302 shares and $84,215 for the 24 participating executive officers 58
as a group.
No awards can be determined or made under the 1989-91 and the 1990-92 performance periods of the Performance Plans until 1992 and 1993, respectively.
In addition, Messrs. Herrick and Robertson are also eligible for a pro rata awards under the 1989-91 performance cycle.
In 1990, the Company established a Budget Incentive Plan (the Budget Plan) for 1990 and 1991.
Incentive awards are earned by (1) reducing actual 1990 operation and maintenance (O&M) and capital budget expenses to specified target levels, (2) developing budgets for 1991 to meet targets, and (3) keeping actual 1991 expenses and capital expenses at target levels for 1991. With the exception of the Chairman, Vice Chairman, and the President, officers and managers of the Company participate in the Budget Plan.
For 1990,. the Plan provided each participant with an incentive opportunity of $4,000 if O&M and capital expense targets were met.
If one, but not both, targets were met, 40% of the award is payable.
For 1991, the Plan provides each participant with a maximum award of
$7,000 if both targets are met, of which 25% was payable for planning, and 75%
is payable for making, the 1991 targets. Awards for 1990 and for planning the 1991 budget were paid in December 1990 and January 1991 and are included in the cash compensation table above.
Awards for making the 1991 targets will be paid in January 1992.
In 1990, the Company established a one-year incentive plan (the Nuclear Performance Plan) directed at key personnel in the Company's nuclear operations area.
Incent i.ve awards under the Nuclear Incentive Pl an were earned by completing the Fall 1990 scheduled outages at the Company's nuclear power stations within the established time schedule. Awards were reduced by 10 percent for each day that the outage continued beyond the scheduled completion date.
Awards were paid November 1990 and are included in the cash compensation table above.
An employee savings plan has been in effect since 1963.
Effective January 1, 1989, the employee savings plan was amended by separating it into two plans (the Savings Plans), one for salaried and one for nonsalaried employees.
The Savings Plans include a salary reduction provision under Section 401(k) of the Internal Revenue Code of 1986 (the Code) for officers and employees.
The two Savings Plans are identical in all material respects. Under the Savings Plan, employees who have attained age 18 and completed six months of service may make contributions of between 2 percent and 6 percent of their base compensation, and the Company contributes an amount equal to 50 percent of such contributions.
Employees may also make additional contributions, which are not matched by their employer.
(In accordance with Section 401(k) of the Code, the Savings Plans provide participants with the option to reduce their gross income for federal income tax purposes and the Company contributes that amount to the Savings Plan on behalf of the employee.)
Participants' contributions and deferrals under Section 401(k) are subject to certain limitations prescribed in the Code.
The compensation table above includes amounts deferred pursuant to Section 40l(k).
The employees may direct that their contributions _be allocated between an interest bearing fund, which invests primarily in U.S. Government securities, and a stock fund, which invests in Dominion Resources Common Stock. All of the Company's matching contributions to the Savings Plans are invested in Dominion 59
l Resources Common Stock.
The Savings Plans provide for the vesting of the Co~pany's matching contributions at the earlier of (a) the beginning of the third year following the year in which the contribution was made and (b) the date the participant completes five years of service with the Company~ However, matching contributions vest immediately for participants aged 55 or older~ Amounts shown in the Cash Compensation table above do not include any Company matching contributions..
The following Company matching contributions vested under the Savings Plan during 1990: William W. Berry:
147 shares; Thos. E. Capps:
147 shares; James T. Rhodes:
74 shares; Robert F. Hil 1:
129 shares; Wil 1 i am L.
Stewart:
42 shares; and 2,155 shares* to the 27 executive officers as a group.
A retirement plan (the Retirement Plan).provides retirement benefits for all eligible officers and employees of Virginia Power who have attained age 21 and completed six months of service.
The Retirement Plan is a noncontributory defined benefit p 1 an that provides for vesting of retirement benefits upon completion of five years of vesting service or, if earlier, upon.attainment of age 50.
Employer contributions to the Retirement Pl~n a~e determin~d actuarially. Benefits under the Retirement Plan, as of December 31, 1990, are based on (i) average base compensation over the consecutive 60-month period in which pay is highest, (ii) years of credited service, (iii) age at retirement, afld (iv) the offset of Social Security Benefits.
Compensation in excess of
$200,000 (indexed for changes in the cost of 1 iving) may not be taken into account *under the Pl an.
Benefits under the Retirement Pl an are payable as a straight life benefit or a joint and survivor benefit. In May 1990, the Internal Revenue Service issued proposed regulations, subsequently modified,* ~el~ted to pension plan non-discrimination requirements that were included in the Tax Reform Act of 1986.
The Company has determined that the Retirem~nt Plan's benefit formula complies with such regulations and that no changes to the benefit formula will be necessary.
The table below sets forth the estimated annual straight life benefit that would be paid following retirement under the Retirement Plan's benefit formula.
Certain officers have entered into retirement agreements that give additional credited years of service for retirement and retirement 1 i fe insurance purposes, contingent upon the officer reaching a ~pecified age and remaining in the employ of the Company.
At*this time, credited years of service under the Retirement Plan and such retirement agreements (excluding contingent years) for the individuals named in the cofuperisation table on page.57 are as follows: William W. Berry: 30, Thos. E. Capps: 20; James T. Rhodes: 19; Robert F. Hill: 19; and William L. Stewart: 20.
Estimated annual benefit figures are based on the formulas in effect under the Retirement Plan as of December 31, 1990.
Final Estimated Annual Benefits Payable Upon Retirement*
Credited Years of Service Average Earnings**
15 20 25
$ 75,000
$ 18,821
$ 25,094
$ 31,368 100,000 26,321 35,094 43,868 125,000 33,821
- 45, 094 56,368 60 30
$ 37,642 52,642 67,642
150,000 41,321 55,094 68,868 82,642
- 175,000
. 48,821 -
65;094 81,368 97,642 200,000 56,321 75,094 93,868 112,642 250,000 71,321 95,094 118,868 142,642 300,000 86,321 115,094 143,868 172,642 350,000 101,321 135,094 168,868 202,642 400,000 116,321 155,094 193,868.
232,642
- Ba.sed on normal retirement at age 65.
- Final Average Earnings is one-fifth of the earnings during the 60 consecutive calendar months during which the individual's earnings are the highest.
For purposes of.the above table, based on 1990 compensation, final average earnings for each of the individuals named in the compensation table on page 57 would be as follows:
William W. Berry: $348,960;,Thos. E. Capps: $278,068; James T. Rhodes: $169;905; Robert F. Hill: $169,660; and William L. Stewart:
$141,727.
The Internal Revenue Code limits the annual retirement benefit that may be paid from a qua 1 if i ed retirement p 1 an and, as noted above, the amount of compensation that may be recognized by the Retirement Plan.
To the extent that benefits determined under the Retirement Pl an' s benefit formula -exceed the limitations imposed by the Internal Revenue Code, they will be paid either from general funds-as. an operating expense or from a secular. trust fund established
- for such purpose.
. The Company also provides an Executive Supplemental Retfrement Plan {the Supplemental Plan) to its elected offfcers designated to participate by the Board of Directors. The Supplemental Plan provides an annual retirement benefit equal to 25.percent of a participant's final compensation {base pay plus annual incentive -p 1 an payments and Di rectors' fees). _ The norma 1 form of benefit is payable in equal monthly installments for 120 months to a participant with 60 months of service, who {i) retires at or after *age 55-from the employ-of the
. Company, (ii) has become permanently disabled, of (iii) dies. If a participant dies while employed, the normal form of benefit will be paid to a designated beneficiary.
If a participant dies while retired,. but before receiving all benefit payments, the remaining installments will be paid to a designated beneficiary.
In order to be entitled to benefits under the Supp 1 ementa 1 Pl an, an employee must be employed as an elected officer of the Company until death, disability or retirem~nt.
~ased on 1990 compensation, theestimated annual retirement benefit for each of the executive officers under the Supplemental Plan would be as follows:
William W. Berry: $164,608; Thos. E. Capps: $147,108; James T. Rhodes: $85,320; Robert F. Hill: $56,740; and William L. Stewart: $55,515.
The Company has transferred cash, and in its discretion may make future transfers of cash or other property, to an. irrevocable trust.
The assets of the trust must be used to satisfy employee benefit and similar obligations to 61
employees and former* employees of the Company,' including the obligations described above for executive employees.
The Board of Directors of Dominion Resources adopted the Dominion Resources, Inc.. Retirement Benefit Funding Plan (the Funding Plan) on June 15, 1990.
The Funding Plan is intended to allow Dominion Resources and its subsidiaries, including the Company, to fund their obligations under '(i) the S1Jppleniental Plan, (ii) a benefit restoration plan (which restores benefits*that cannot be paid under the Retirement Plan on account of Internal Revenue Code Limits) and (iii) employment agreements with certain key executives. Benefits provided under the Funding Plan reduce, on a dollar-for-dollar basis, the amounts payable under the above pl ans. The Company's Board of Di rectors and -the Committee have certain responsibilities ~nder the Funding Plan with respect to participants who are current or former
The Administrative and Investment Benefit C<>mmittee and the Administrative Benefit Committee also have responsibilities under the Funding Plan.
Dominion Resources and its*subsidiaries, including the Company, may, in their discretion, make contributions to the Funding Plan.
In addition, amounts may be transferred to the Funding Plan from the irrevocable trust described above.
Contributions and transfers on behalf of Virginia Power Participants are subject to t~e approval of the Co~pany's Board of Directors.
- An individual may become a Virginia Power Participant onlYupon his selection by* the Company's Board of Directors.
The Committee* is responsible for establishing a funding policy with respect to Virginia Power Participants. The current funding policy adopted by the Committee calls for nominal contributions during an individual's i~itial )ears of participation in the Funding Plan and for full funding of his Supplemental Plan, benefit restoration plan, and employment agreement benefits between the ages 51 and 55.
The Administrative and Investment Benefit Committee is responsible for establishing an investment policy for the Funding Plan.
The Administrative Benefits Committee* is responsible for the implementation of that investment policy as' well as the day-to-day administration of the Funding Plan.
Participants in the Funding Plan are fully vested in their interests in the plan.
Each Funding Plan participant will begin to receive his benefit from the Funding.Plan upon separation from service (without regard to the reason for his separation). Benefits are paid under the Funding Plan in the same manner as the Supplemental Plan's benefits.
Dominion Resources has reserved the right to amend or terminate the Funding Plan at any time.
No amendment or termination will divest.a participant of amounts previously allocated to his Funding Plan account.
- Amounts contributed or transferred to the Funding Plan may not revert to Dominion Resources or any of its subsidiaries.
During 1990, a total of $1,999,262 was contributed to the Funding Plan and allocated to the accounts of the 23 Funding Plan participants, including the executive officers named on page 57 and all executive officers as a group.
62
t The.Company has purc~ased an insurance policy that provides certain managers and all elected officers with accidental.death and dismemberment.insurance. The pol icy provides an accidental death benefit to managers and officers ranging from
$50,000 to $250,000, with the specific dollar amount of coverage being determined on the *basis of the covered employee's position.
The policy al so provides accidental death and dismemberment insurance to the spou~es of all officers who are Vice Presidents or,higher in rank, and the accident~l death benefit ranges from $100,000 to $200~000 (depending on the officer's position). Th1s insurance coverage is provided at no cost to covered employees.
The Company has entered into employment agreements.(the Agreements) with key management.executives, including the officers named above.
Each Agreement has a three-year. term and thereafter is.automatically extended on its anniversary date for an. additional year unless notified that the Agreement will not be extended by the Company. If, following a change in control of Dominion Resources (as defined in the Agreements), an executive's employment is terminated by the Company without cause, or voluntarily by the executive within sixty days after a
material. reduction in the executive's compensation, benefits or res pons i bi.lit i es, the Company wn l be obligated to pay to the.executive continued compensation equaling the average bas~ salary and c.ash incentive bonuses for the thirty-six full month period of employment preceding the change in. control or employment termination. In addition, the terminated executive will continue to be entitled to any benefits due under any stock or-benefit *plans. The Agreements do not alter the compensation and benefits available to an executive whose emp 1 oyment with the Company continues for the full term of the executive's Agreement. The amount of_ benefits provided under each executive's Agreement will be reduced by any compensation earned by the executive from comparable employment
- by another employer during the thirty-six months following termination of employment with the Company.
An executive shall not be entitled to the above benefits in the event termination is for cause..
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The table below sets forth -as of January -15, 1991, except as noted, the number of shares of Common Stock of Dominion Resources owned. by directors of Virginia Electric and Power Company.
_Name Wi 11 i am W. Berry............ ~......
Thos. E. Capps. "....................
James T. Rhodes.......... *..........
John B. Adams, Jr...............*..*
Anna Ruth Inskeep.*.. ~*************
A 11 i x B. James......................
Harvey L. *u ndsay, Jr~.............
Shirley S. Pierce..................
Wi 11 i ~m T. Roos................*....
Will hm G. Thomas.......*......****.
63 Shares of Common Stock Beneficially Owned.
23,367(a)
- 13,646(b)"
2,169 599 1,354 2,580 114
- 2,669 l,635(c)
' 0
(a} Inc.ludes. 5;930 shares repres~nted. by. options awarded *and exercisable under the Domini on Resources*, Inc. Long*-:-Term Incentive PT an.
(b) A *member of Mr. Capp's family is a beneficiary of a trust that owns an additional 1,000 shares of Common Stock. Also includes 3,850 shares represented by options awarded and exercisable under the Domini on Resources,. Inc. Long-Term Incentive Plan.
(c)Members of ~r. Roos' *family are *b~neficiaries of trusts that own an additional 1,892 shares-of Common Stock for which he disclaimed beneficial ownership.
All current Directors and officers as a*group (34 persons) beneficially own, in the aggregate, less than 1 )ercent of each class of Dominion Resources and the Company's equity securiti~s, r~sp~ctively.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Hazel & Thomas, P. C., provided legal. serv.ices to the Company during 1990.
Mr. William G. Thomas, a director of the Company, is President of Hazel & Thomas.
PART IV ITEM 14~ EXHIBITS, FINANCIAL STATEMENT SCHEDULES~.
AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this Form 10-K:
- 1. Ffoanchl Statements See Index on page 2L
- 2. Financial Statement Schedules See Index on page 21.'
- 3. Exhibits*
3( i)
. 3(ii)
- 4( i)
- 4(ii)
- *-Restated Articles of Incorporation; as. amended, as in effect on 1989 * ( Exhibit 3 ( i), Form 10-Q for the quarter ended September 30, 1989, File No. 1-2255*, incorporated by reference).
- ~Bylaws, as amended, as in effect on April 1, 1989.(Exhibit 3(i),
Form 10-Q for quarter year ended March 31, 1989, File No. 1-2255,.
~see Exhibit (3(i)} above.
-IndentOre of Mortgage of th~ Company, dated.November 1, 1935, as supplemented a_nd modified bi fifty-eight Supplemental Indentures, Exhibit 4(ii), Form 10-K for the fiscal year *ended December 31, 1985, *File No. 1-2255, incorp9rated by reference; Fifty.:.Ninth Supplemental Indenture, Exhibit 4(ii), Form 10-Q for the quarter 64
4(iii) 4( iv) 4(v) 4(vi) lO(i) lO(ii) lO(iii) 1 f
_ended March 31, *1986, Fi.le No~ 1-2255, incorporated by reference; Sixtieth Supplemental Indenture, Exhi bi.t 4( ii), Form 10-Q for the quarter ended September JO, 1986, File No. 1-2255, incorporated by.reference; Sixty-First Supplemental Indenture, Exhibit 4(ii),
Form 10-Q for the quarter ended June-30, 1987, File No. 1-2255, incorporated by.reference; Sixty-Second Supplemental Indenture, Exhibit 4(ii), Forni 8-K, dated November 3, 1987, File No. 1--2255,,
incorporated by reference; Sixty-Third Supplemental Indenture,
.. Exhibit 4(i), Form 8-K, dated June 8, 1988, File No~ 1-2255,
. incorporated by reference; -Sixty.,.Fourth Supplemental Indenture, Exhibit 4(i), Form 8-K, dated February 8, 1989, File No. _1-2255, incorporated by reference; Sixty-Fifth Supplemental Indenture, Exhibit 4(1), Form 8~K, dated June 22, 1989, File No. 1-2255, incorporated by reference and Sixty-Sixth Supplemental Indenture,.
- Exhfbit 4(i), Form 8-K, dated February 27, 1990, File.No.,1-2255, incorporated by reference.
-Indenture, dated April l; 1985,. between Virginia Electric and Power Company and Crestar Bank (formerly United' Virginia Bank)
Exhibit.4.(i), File No... 2-96772, incorpo,rated by reference).
.,.Indentur~. dated as of Juni 1, 1986, between Virginia Ele~tric and Power Company and Chemical Bank (Exhibit 4(i), File No.
33-5763, incorporated by reference).
-Indenture, dated April 1, '1988, between Virginia Electric and Power,Company and Chemical Bank (Exhibit 4( i), File No. 33-21319, incorporated by reference) as supplemented and modified by a First
.. Supp,lemental Indenture, dated Augus\\, 1989, (Exhibit 4(ii), File
- No~ 33-30532,
-Virgi~ia Electric ~nd Power Company agrees to furnish to the Commission upon request any cfther i nstrumer:it with respect to long-term debt as to which the total amount of securities authorized thereunder does* not exceed 10 percent of Virginia Electric and Power Company's total as~ets. ~
-;Operating Agreement, dated June 17, 1981, between Virginia.
Electric and Power Company and Moriongahela Power Company, The Potomac Edi son Company, West Penn Power Company and Allegheny Generating Company (Exhibit lO(vi), Form 10-K for the fiscal year ended December 31, 1983, File No... 1-2255, incorporated by reference).
-Purchase, Construction and Ownershig Agreement, dated as of December 28, 1982 as amended and restated* on *october 17, 1983, between Virg.inia Electric and Power Company and Old-Dominion
.
- Ele.ctric Cooperative (Exhibit lO(viii.), Forn:i 10-K for the fiscal
. year,.ended De.ceniber 31', 1983, File No. *l-2255, incorporated by reference).
- Interconnection and Operating Agreement,.dated as of December 28,. 1982 as ~mended and restated on October 17, 1983, between Virginia Eleciric and Power Coinpany and Old Domi_nion Electric Cooperative (Exhibit lO(ix), Form 10-K for the fiscal year ended
.. December 31, 1983,, File No. 1.:.2255, incorporated by reference).
65
.J.
lO(iv) lO(v) lO(vi).
lO(vii) lO{viii) lO(ix) lO{x) lO(xi) lO{xii) lO{xiii) lO(xiv) 1.0 (xv)
-Nuclear Fuel AgrEJement,.dated as.of December *2s, 1982 as amended and *restated on October 17, 1983, between Virginia Electric and Power Company and Old Dominion Electric Cooperative (Exhibit l*O(x), Form 10-K for the fiscal year ended December 31, 1983, File No. 1~2255, incorporated by reference).
-Heat.Supply Contract, dated as of October 14, 1987, between
, Virginia Electric and Power.Company and Virgtnia Power Fuel Corporation (Exhibit IO(v), Form 10-K for the fiscal year ended December 31, 1987, File No. 1-2255, incorporated by reference).
-Credit Agreement, dat,ed as of October 14, 1987, among Virginia Power Fuel* Corporation, A 1 gemene Bank Nederland N. V.,. New York
- Branch, *as Facility Agent, and the Banks named therein (Exhibit lO(vi), Form 10-K for the fiscal year ended December 31, 1987, File No. 1-2255, incorporated by reference).
-Guarantee, dated as.of October 14, 1987, by Virginia Electric and Power Company in favor of Algemene Bank Nederland N.V., as faci 1 ity Agency,. and* the Banks named the.rein (Exhibit lO(vi i),
Form 10-K for the fiscal year ended December 31, 1987, File No.
1-2255, incorporated by reference).
-Inter-Company Credit Agreement, dated July 1, 1986, as amended and restated. as ~f September 1, 1987 between Dominion Resources and Virginia Electric and Power Company (Exhibit IO(viii), Form 10-K for the fiscal yea.r ended December 31, 1987, File No. 1-2255, incorporated by reference).
- -Credit Agreement, dated December l, 1985, between Virginia Electric and Power*company and Old Dominion Electric Cooperative
. (Exhibit 10 (xix), Form 10-K for the fiscal year ended December 31, 1985,. File No. 1-2255, tncorporated by reference).
-Agreement for Northern Virginia Services, dated as of November 1, 1985, between Potomac Electric Power Company and Virginia Electric: and Power Company (Exhibit lO(xxi), Form 10-K for the fiscal year ended December 31, 1985, File.No. 1-2255, incorporated
- by reference).
-Purchase, Construction and Ownership Agreement, dated May 31,
- 1990,.between Virgin*ia Electric and Power company and Old Dominion Electric Cooperative (filed herewtth).
-Operating Agreement, dat~d May 31, 1990, between Virginia EJectric and Power Company and Old Dominion Electric Cooperative (filed herewith).
-*coal-Fired Un.it Turnkey Contract (Volume 1), dated April 6, 1989, and the Unit 2 Amendment (Volume 1), dated May 31, 1990, between Virginia Electric and Power Company and Old Dominion Electric Cooperative, Westinghouse, Black & Veatch,. Combustion Engineering and H.* B; Zachry (Volumes 2-11 contain technical specifications only) (filed herewith).
-Receivables Purchase Agreement, dated as of December 10, 1990, between Virginia Electric and Power Company and The First National Bank of Chicago. (filed herewith).
-Receivables Purchase Agreement, dated as of D~cember 10, 1990, between Virginia Electric and Power Company and Preferred Receivables Funding Corporation (filed herewith).
66
22 24(i) 24(ii).
24(iii)
(b)
-Subsidiaries of Virginia Electric and Power Company (not in-*
eluded because Virgini'a Electric and Power Company's subsidiaries, considered in the aggregate as a single subsidiary, would not constitute a "sign.ificant subsidiary under Ru*le l-02(v) of
- Regulation S-X as of the end of the year covered by this-report).
-Consent of Hunton & Williams -(filed*herewith).
-Consent of Jackson & Kelly (filed* herewith).
-Consent of Deloitte & Touche (filed herewith).
Report on Form 8-K None 67
- t.
~J-
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorj_zed.
Date:
February 15, 1991 VIRGINIA ELECTRIC AND POWER COMPANY WILLIAM W. BERRY BY (William W. Berry, Chairman of the Board of Directors)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
SIGNATlRE TITLE DATE WILLIAM W. BERRY William W. Berry Chairman of the Board of Directors February 15, 1991 and Director THOSE. CAPPS Thos E. Capps Vice Chairman of the Board of Directors February 15, 1991 and Director J. T. RHODES J. T. Rhodes President (Chief Executive Officer)
February 15, 1991 and Director JOHN B. ADAMS, JR.
John B. Adams, Jr.
Director February 15, 1991 ANNA RUTH INSKEEP Anna Ruth Inskeep Directqr February 15, 1991 ALLIX B. JAMES Allix B. James Director February 15, 1991 HARVEY L. LINDSAY. JR.
Harvey L. Lindsay, Jr.
Director February 15, 1991 SHIRLEY S. PIERCE Shirley S. Pierce Director February 15, 1991 WILLIAM T. ROOS Wi 11 iam T. Roos Director February 15, 1991 WILLIAM G. THOMAS William G. Thomas Director February 15, 1991 B. D. JOHNSON B. D. Johnson Senior Vice President and Controller February 15, 1991 (Principal Accounting Officer)
IRENE M. MOSZER Irene M. Moszer Vice President and Treasurer February 15, 1991 (Chief Financial Officer) 68
VIRGINIA ELECTRIC AND POWER COMPANY STATEMENTS OF INCOME (UNAUDITED)
Operating Revenues Operating Expenses:
Operation - Fuel used in electric generation
- Purchased and interchanged power
- Other Maintenance Depreciation Amortization Qf abandoned project costs Taxes - Income
- Other Total Operating Income Other Income:
Allowance for other funds used during construction Miscellaneous, net Income taxes associated with miscellaneous, Total Income Before Interest Charges Interest Charges:
Interest on long-term debt Other Allowance for borrowed funds used during construction Total Net Income Preferred Dividends Balance Available for Common Stock net Three Months Ended December 31, 1990 1989 (OOO's)
$819,803
$865,691 139,101 146,037 131,116 100,554 121,151 155,521 85,425 59,247 93,782 89,193 12,454 12,452 22,692 54,466 47,678 49,464 653,399 666,934 166,404 198,757 985 701 6,693 8,530
{2,867) 3,924 4,811 13,155 171,215 211,912 88,276 86,934 1,133 2,210
{484)
{404) 88,925 88,740 82,290 123,172 14,301 15,312
$ 67,989
$107,860
IL~
I l (1)
VIRGINIA ELECTRIC AND POWER COMPANY 1991 ESTIMATED INTERNAL CASH FLOW (Millions of Dollars)
January April July through through through March June September Cash Receipts
$998.2
$847.0
$1,019.9 Less:
Cash for Operations 505.4 462.2 500.2 Taxes paid 55.1 199.0 97.3 Interest paid 84.2 89.7 87.1 Dividends paid
- Preferred Stock 13.1 14.8 13.0
'.'" Common Stock 85.7 85.0 86.0 Decommissioning Trust 5.9 5.9 5.9 Changes in working capital 41.0
{ 1. 2) 0.3 lnternal cash flow 207.8 (8.4) 230.1 Pl us:
Proceeds from sale of 11.6% of North Anna to Old Dominion Electric Co-op 1.2 1.2 1.2 Total Cash Flow(l)
$209.0
$ {7. 2)
$ 231.3 Before financing and construction requirements.
October Estimated through 1991 December Total
$ 903.4
$3,768.5 478.7 1,946.5 170.4 521.8 99.9 360.9 14.9 55.8 86.8 343.5 5.9 23.6
{5.8) 34.3 52.6 482.1 1.2 4.8 53.8
$ 486.9
VIRGINIA ELECTRIC AND POWER COMPANY STATEMENT The Company currently estimates 1991 construction and nuclear fuel expenditures (exclusive of Allowance for Funds Used During Construction) to be
$780 million.
In addition, the Company must provide $146 million for debt maturities and mandatory sinking fund payments.
The Company expects to raise about $439 million through the sales of securities, sales of receivables, and borrowings under its inter-company credit agreement with Dominion Resources.
The Company is reasonably assured thatl based on the best available cash flow projections which are provided herewith, curtailment of capital expenditures for required nuclear programs would not be required to cover the Price-Anderson maximum retrospective premium assessment for a single incident of $264.6 million
($66.15 mill ion for each of the four reactors owned by the Company with assessments not to exceed $10 million per reactor per year) currently in force.
- 4$2 VIRGINIA ELECTRIC AND POWER COMPANY CERTIFICATE I, the undersigned B. D. Johnson, do hereby certify, pursuant to the guarantee requirements set forth in the Commission's letter dated June 15, 1977, that the cash flow projection for 1991, provided herewith, is based on the best available information and is a reasonably accurate projection of the Company's 1991 cash flow.
Commonwealth of Virginia City of Richmond Sworn to and subscribed before me this
/~
day of h(ae.d.,1991.
diavJk.~
j Notary Public
- My commission expires:~,t<f /9'1.:zJ NOTARIAL SEAL B. D. Johnson Senior Vice President-Finance and Controller