ML18230A078
| ML18230A078 | |
| Person / Time | |
|---|---|
| Site: | Harris  |
| Issue date: | 05/26/1976 |
| From: | Carolina Power & Light Co |
| To: | Office of Nuclear Reactor Regulation |
| References | |
| Download: ML18230A078 (115) | |
Text
~ 0 j
Amendment No. 45 4
CAROLINA POWER
& LIGHT COMPANY A lication for Construction Permit and 0 eratin License General Information 1.
Name of A licant.
2 ~
Address of A licant.
Carolina Power
& Light Company 336 Payetteville Street Raleigh, North carolina 27602 3.
Descri tion of Business and Or anization of A licant.
Applicant is an electric utility engaged exclusively in the generation,
- purchase, transmission, distribution and sale of electric energy.
The territory served by Applicant, an area of approximately 30,000 square miles, includes a substantial portion of the Coastal Plain in North Carolina extend-ing to the Atlantic coast between the Pamlico River and the South Carolina
- border, the lower Piedmont section in North Carolina and in South Carolina and an area in western North Carolina in and around the City of Asheville.
The estimated total population of the service area is in excess of 2,800,.000.
As of December 31, 1975 the Applicant'furnished electric service to approxi-mately 660,000 customers.
Applicant's facilities in Asheville and vicinity are connected with the Applicant's system in other areas served by the Applicant through the U
facilities of Appalachian Power Company and of Duke Power
- Company, so that power may be transferred from or to the Asheville area through inter-connections with such companies.
There are also interconnections with the facilities of Tennessee Valley Authority, Virginia Electric and Power
'ompany, South Carolina Electric
& Gas
- Company, and Yadkin, Inc.
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Amendment No.
45 As of December 31, 1975, Applicant owned and operated eight steam electric generating plants with a net capability of 5,368,000 KW, four hydroelectric plants with a net capability of 211,500 KW and internal combustion generating units with a net capability of 1,264,000 KW.
Including net purchased power available on a firm commitment basis, the total system capability as of December 31,
- 1975, was 7,071,500 KW.
Applicant currently has under construction an 821,000 KW nuclear fueled steam electric generating unit to be completed in
- 1977, and a 720,000 KW fossil fueled steam electric generating unit to be completed in 1980.
Applicant is a public service corporation formed under the laws of North Carolina in 1926.
The names and addresses of Applicant',s directors and principal officers, all of whom are citizens of the United States, are as follows:
Directors:
Shearon Harris, Chairman, Raleigh, North Carolina Daniel D. Cameron, Sr
, Wilmington, North Carolina Felton J. Capel, Southern Pines, North Carolina George H. V. Cecil, Asheville, North Carolina Charles W. Coker, Jr., Hartsville, South Carolina Margaret T. Harper, Southport, North Carolina L. H. Harvin, Jr., Henderson, North Carolina Karl G. Hudson, Jr., Raleigh, North Carolina J. A. Jones, Raleigh, North Carolina
Amendment No. 45 E.
G. Lilly, Jr., Raleigh, North Carolina A. C. Monk, Jr., Farmville, North Carolina Sherwood H. Smith, Jr., 'Raleigh,.North Carolina H. L. Tilghman, Jr., Marion, South Carolina John F. Watlington, Jr., Winston-Salem, North Carolina Principal Officers:
Shearon Harris, President, Raleigh, North Carolina J.
A. Jones, Executive Vice President Engineering, Construction
& Operation, Raleigh, North Carolina Sherwood H. Smith, Jr., Executive Vice President Administration Edward G. Lilly, Jr.,
Senior Vice President and Group Executive, Raleigh, North Carolina W. J. Ridout, Jr.,
Senior Vice President and Group Executive, Raleigh, North Carolina Samuel Behrends, Jr., Vice President, Raleigh, North Carolina E.
M. Geddie, Vice President, Raleigh, North Carolina W. E. Graham, Jr., Vice President and General Counsel, Raleigh, North Carolina W. B. Kincaid, Vice President, Raleigh, North Carolina M. A. McDuffie, Vice President, Raleigh, North"Carolina D. V. Menscer, Vice President, Raleigh, North Carolina A. L. Morris, Vice President, Raleigh, North Carolina J.
R. Riley, Vice President, Raleigh, North Carolina R.
S. Talton, Vice President, Raleigh, North Carolina E. E. Utley, Vice President, Raleigh, North Carolina J. L. Lancaster, Jr.,
Secretary, Raleigh, North Carolina James S. Currie, Treasurer, Raleigh, North Carolina Applicant is not owned, controlled or dominated by an alien, foreign corporation or foreign government.
Applicant makes this application on its own behalf and is not acting as agent or representative of any other person.
~rr e.
r
Amendment No.
45 5.
Class and Period of License A lied For.
Applicant re'quests a class 103 construction permit and operating license for period of 40 years.
6.
Descri tion of Facilit and Use to Which Facilit Will-be Put.
Applicant proposes to build and operate four.pressurized water nuclear reactors as an integral part of a four-unit nuclear fueled steam electric generating plant to be constructed on an approximately 14,000-acre site in Wake and Chatham Counties, North Carolina, Each unit is designed for operation at a net electrical output of approximately 900 MWe.
The corresponding thermal
'ating of each reactor is 2785 MWt.
The first unit constructed is scheduled for commercial operation in March, 1984; the second unit in March, 1986; the third unit in March, 1988; and the fourth unit in March, 1990, Details concerning the plant and its site are contained in the Preliminary Safety Analysis Report (PSAR) constituting a part of this Application.
The plant will be used for the P
commercial generation of electrical energy.
7.
Additional Licenses A lied For.
Applicant requests such additional source, special nuclear and byproduct material licenses as may be necessary or appropriate to the construction and operation of the plant.
8.
Financial ualifications.
Applicant's annual report for the year ended December 31, 1975, is attached as Exhibit A.
Exhibit A contains a statistical summary of financial statements and energy sales for the years
- 1965, 1970,
- 1971, 1972, 1973,, 1974, and 1975.
Applicant's response to Dr. Lyall Johnson's letter of September 10, 1971, is attached as Exhibit B.
Applicant's interim financial statements for the three-month period ended March 31, 1976 is attached as Exhibit C.
Attached as Exhibit D is the Prospectus for the Applicant's latest public sale of securities.
Attached as Exhibit E is the most recent Officer's Certificate prepared by CP&L
I
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Amendment No.
45 in connection with the issuance of mortgage bonds.
Information showing interest coverage is found in Exhibit E.
Information showing debt ratio calculations pursuant to the applicable indenture is found in attachments to Exhibit F.
Attached as Exhibit F is the Applicant's, responses to Mr. Walter R. Butler' letter of December 5, 1974.
Attached as Exhibit G is the Applicant's responses to Mr. Walter R. Butler's letter of April 8, 1975 which were submitted by separate letter on May 14, 1975.
Construction of the nuclear plant will be financed as an integral part of Applicant's total construction program.
Applicant's program, subject to con-tinuing review and adjustments, is estimated for each of the years 1976 1990 to be as follows:
1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 270,621,000, 262,673,000 292,635,000 451,990,000 620,552,000 723,845,000 891,168,000 948,838,000 965,434,000 839,027,000 902,669,000 793,553,000 1,095,593,000 1,198,238,000 1,450,116,000 TOTAL
$ 11 j 706 ~ 952 ~ 000 Table 1 shows construction costs for planned generating units for =the years 1976 through 1990.
This table reflects costs associated with con-struction only, and does not include the additional budgeted costs for transmission, distribution, and general plant facilities.
Applicant's present plans for financing the overall construction program from 1976 to 1990 are outlined in Table 2.
The timing, amounts, and types of securities issued may vary depending upon market conditions.
-4A-
TABLE 1 CAROLINA POMBR & LIGHT COMPANY COHGIMENIS OVER IHE LIFE OF THE CONSTRUCTION OF THE SHEARON HARRIS NUCLEAR POMER PLANT (000's of Dollars) 15-Year 1976 1977 197S 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 Total PRODUCTION PLAÃr Purchase Lead for Plants 5,374 2>000 l>500 1>000 500 I>000 I>000 I>000 1 <<000 I>000 1 >000 I>000 I>000 1>000 19>674 Construct Unit No. 2-Brunswick N 821 W 1975 Construct Uait No. 1-Brunsvick-A 821 W 1977 Construct Uait No. 4-Roxboro-F 780 W 1980 Construct Unit No. I-Harris-N 900 W 1984 Construct Unit No.
2 Harris-N 900 W 1986 Construct Unit No. 4-Harris-N 900 W 19SS h
Construct Uait No. 3-Harris-N 900 W 1990 Construct Unit No. I-Mayo-F 720 W 1983 Construct Unit No. 2-Mayo-F 720 W 1985 Construct Unit ho. I-SR-h 1150 MM 1987 5>816 74 51,500 14,789 17,520 15,442 29,740 33,164 8,995 29>301 34>901 75>382 139<<694 246>610 189>486 193>532 143>770 32>656 27<<462 13> 775 16>025 21 ~313 32> 232 55>448 138> 260 100>531 94>395 76>954 21 >878 6 978 37>216 10 892 12<<281 22>196 25>937 54 ~ 555 126>151 176>297 134 ~ 177 107>568 99>116 34>228 5,890 66,289 104,861 1>085>332 598,273 847;592 6,446 1,609 3,669 695 4,205 96,514 114,988 95,641 49,219 19,747 1>370 4>064 8>212 75>887 117>582 56<<497 39>752 17>009 390,429 322>677 3>344 1>275 6>0$ 0 22>313 46>106 104>371 123>826 171>701 234>148 174>210 115>018 16,016 1,018,378 7>896 6>277 40>363 9 ~ 698 12>025 18>199 24>274 67>086 81>606 66<<134 170>105 125>976 116>962 104>243 41>422 892 ~ 266 Construct Unit No. 2 SR-h 1150 W 1989 3>075 483 646 9>234 19>169 36>316 33<<967 89>036 126>096 178>733 243>222 183>191 122>963 16<<973 1>063,104 Construct Generating Units 1991 - 1995 Air & Mater Quality Control Devices 29,018 49,925 15,691 50 50 50 50 50 50 40,796 159,232 50 50 50 50 50 95,184 572>055 801>989 l>094>528 2>668>600 Additions & Replace-neats of CeneratinS Pleats - Systea Total Production Pleat
~6606
~3119 ~3000
~2630 ~2820 3 015 3 225 201>945 183>640 204>864 351>905 513>703 604>850 739>490 3 450 3 690 3 950 4 226 4 522 4 839 5 178 5 540 59 810 779>019 789>690 652>217 703>863 589>103 852>097 929>433 1>142>540 9>238>359 f
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Amendment No.
45 Applicant is able to borrow on a short-term basis at the prime rate of I
interest.
Bond issues sold in recent years have been rated A or Double-A.
I'one of Applicant's outstanding bonds mature prior to 1979.
On February 24, 1975, Moody's Investors Service, Inc. downgraded the bond rating to Baa.
The Company's commercial paper rating was changed from Prime 1 to Prime 2.
Applicant's estimate of the cost of design and construction of the nuclear plant, including related items, and for procurement of the initial reactor cores for the four units is as follows:
(a)
Nuclear Production Plant Costs FPC Account No.
320 - Land 6 Land Rights 321 - Structures 6 Improvements 322 - Reactor Plant Equipment 323 Turbine Generator Equipment 324 Accessory Electrical Equipment 325 Misc. Power Plant Equipment Interest
$3,603,752,000 48,217,000 787,607,000 li188~025 F 000 385,748,000 231,438,000
'1,956,000 930,761,000 (b)
Transmission, Distribution 6 General Plant Cost 63,066,000 353 Transmission Plant Sta.
Equipment Interest 46,792,000 16,274,000 (c)
Nuclear Fuel Inventory Costs Nuclear Fuel Interest 1931704,000 1735886,000 19,818,000 TOTALS
$3~860~522 F000
$3~860~522
~ 000
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TABLE 2 Applicant:
Carolina Power. & Li ht C a
Nuclear Plant:
Harris Sources of Funds for S stem-Mide Construction Ex enditures Durin Period of Construction of Sub ect Nuclear Power Plant OIillions of Dollars)
Construction Years of Sub ect Nuclear Power Plane Security Issues and Other Funds 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 Comaon stock Preferred stock Long-tera debt Notes payable Total 60 82 50 50 50 200 200 200 93 80 162 264 409 87 100 300 6
493 183 100 400
~20) 663 188 100 400
~23 665 189 100 300 27 616 112 93 75 125 100 50 50 50 400 300 100 300 300 459 432 263 425 475 100 100 500 30 730 Internal Funds Nct Income Less:
Preferred dividends Cowmen dividends Retained earnings Deferred taxes Investment tax credit-net Depreciation 6 amortization Less:
AFDC Total Internal Funds 1OTAL FUNDS 27 27 29 33 54 60 63 66 39 54 51 61 24 33 37 40 17 18 5
2 63 72 83 88 51 45 51 64 92 132 125 127 185 212 287 391 41 49 56 71 82 96 59 76 88 44 46 46 9
2 1
93 99 102 85 123 166 120 100 71 529 593 734 120 141 143 160 171 207 240 286 302 368 422 66 78 87 94 114 129 142 156 106 95 139 172 49 68 81 87 16 32 13 20 112 148 184 208 194 183 194 191 89 160-223 296 754 776 682 728 102 167 159 101 27
. 246 171 362 625 102 179 255 114 23 290 164 518 943 102 187 240 124 27 334 161 564
~1039 108 196 197 132 21 378 177 551
~1281 428 536 529 501 struction Ex enditures
- Nuclear power plants Other Total Const Exp's.
112 118 128 171 107 99 113 217 219 217 241 388 316 338 448 220 263 277 536 601 725 538 595 456
- 475 217 187 189 237 755 782 645 712 269 354 623 156 57 776 981 932
~1038 29
~1244
~1273 Sub5ect Nuclear Plant 53 69 ill 142 256 213 314 316 293 185 220 141 96 56 29
- Exclusive of AFDC (Allowance for Funds Used During Construction)
Amendment No. 45 The estimated cost by units is as follows:
(All figures in (a)
Nuclear Production Plant Costs thousands)
FPC Account No.
320 321 322 323 324 325 Interest Unit 1 29,898 392,974 300,019 90,118 67,780 19,618 302,053 Unit 2 116, 727 220,493 89,793 50, 061 3,738 1799234 Unit 3 137,350 342,650 108,834 56,903 4,613 237,456 Unit 4 140,556 324,863 97,003 56,694 3,987 212,018 Land 14,532 3,787 Total 44,430 787,607
',188,025 385,748 231,438 31,956 934,548 353 Interest 14,357 4,876 6, 594 1,385 (b)
Transmission, Distribution and 18, 083 7, 180 General Plant Cost 7,758 2,833 46,792 16,274 (c)
Nuclear Fuel Inventory Cost Fuel 37,438 Interest 4 272 Totals 1,263,403 42,276 4 871 7 15 $ 172 49,627 5 643 953,667 44,545 5 032 909,961 18,319 173,886 19 818 3,860,522 The estimated cash flow or cost by unit by years is as follows:
Prior to 1976 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 Unit I 136,361 29,301 34,901 75,382 139,694 246,610 1899486 193,532 143,770 32,656 Unit 2 69,752 27,462 13,775 16,025 21,313 329232 55,448 138,260 100,531 94,395 76, 954 21,878 Unit 3 6,131 7,896 6,277 40,363 9,698 12$ 025 18,199 24,274 679086 81,606 66,134 170,105 125,976 116,962 104,243 41 422 Uni.t 4 12,792 6,978 37,216 10,892 129281 22,196 25,937 54,555 1269151 176,297 134,177 107,568 99,116 34,228 Land 14,821 3,498 Total 239,857 75,135 92,169 142,662 182,986 313,063 289,070 4109621 437,538 384,954 277,265 299,551 225,092 151,190 104,243 41 422 Subtotal 1,221,693 Fuel Cost 41 710 668, 025 47 147 898,397 55 270 860,384 49 577 18,319 3,666,818'93 704 Totals 1,263,403 715,172 953,667 909 '61 18,319 3,860,522
Amendment No.
37 The cost estimates for the nuclear steam supply systems and related equipment and the fuel fabrication services are based upon contracts with Westinghous'e Electric Corporation.
Items not covered by these contracts are based upon the best estimate of the Applicant and its architect-
- engineer, Ebasco
- Services, Incorporated.
All cost estimates include an allowance for escalation.
Estimates of the cost of design and construction of the Shearon Harris Nuclear Power Plant, including related items, and for procurement of the initial reactor cores are also presented for Units 1, 2, 4, and 3
in Tables 3, 4, 5, and 6.
TABLE 3 PLANT CAPITAL INVESTMENT Amendment No. 45
SUMMARY
- UNIT NO. 1 BASIC DATA Name of. Plant Net Capacity Reactor Type Location Shearon Harris a e'unty At start of construction (1973 dollars
$403 735 T
e of Coolin Desi n and Construction Period Month, Year NSSS Order Placed Month, Year of Commercial Operation Length of Workweek Interest Rate, Interest During Construction 4/71 3/84 40 hrs.
8%
Run of River Natural Draft Cooling Towers Mechanical Draft Cooling Towers Other (Describe)
COST
SUMMARY
Account Number DIRECT COSTS Account Title Total Cost (thousand dollars) 20 Land and Land Rights....................
33,663 21 22 23 24 25 PHYSICAL PLANT Structures and Site Facilities..........
Reactor Plant Equipment........,.........
Turbine Plant Equipment.................
Electric Plant Equipment................
Misc. Plant Equipment...................
Subtotal...........................
Spare Parts Allowance...................
Contingency Allowance...................
Subtotal
~ ~
~ e
~
~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ e ~ e 251,462 57,666 43 372'2 554 557 035 627 612 INDIRECT COSTS 91 92 93 94 Construction Facilities, Equipment, and Services
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
~ ~ ~ ~ i ~ ~ o ~ ~ ~ ~ ~
Engineering and Const. Mg't. Services...
Other'os'ts
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Interest During Construction............
Subtotalo
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
~ ~ ~ ~ ~ ~ ~
Start of Construction Cost...........;..
Escalation During Construction
(
7 % yr.)
Total Plant Capital Investment
($~/KW)
- Included Above 58,877 105 711 89 075 305 840 559 504 1 220 779 1 220'
pe) mr+
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TABLE 4 PLANT CAPITAL INVESTMENT Amendment No. 45
SUMMARY
- UNIT NO.
2 BASIC DATA Name of Plant Net Capacity Reactor Type Location Shearon Harris 900 MW(e)
Wake County Cost Basis:
At start of construction 1973 dollars 220 179-T e of-Coolin Desi n and Construction Period Month, Year NSSS Order Placed Month, Year of Commercial Operation Length of Workweek Interest Rate, Interest During Construction 4/71 3/86 40 hrs.
8%
Run of River Natural Draft Cooling Towers Mechanical Draft Cooling Towers Other (Describe)'OST
SUMMARY
Account Number DIRECT COSTS Account Title Total Cost (thousand dollars) 20 Land and Land Rights....................
21 22 23 24 25 PHYSICAL PLANT Structures and Site Facilities.
Reactor Plant Equipment........
Turbine Plant Equipment........
Electric Plant Equipment.......
Misc. Plant Equipment..........
Subtotal.................,
Spare Parts Allowance..........
Contingency Allowance..........
Subtotal.
~ ~
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
~ ~ ~
~ ~ ~ ~ ~ ~ ~ ~ ~
~ ~ ~ ~ ~ ~ ~
~ ~
75 330 142 295 57 948 32 307 2 412 310 292
'35 125 345 417 INDIRECT COSTS 91 92 93 94 Construction Facilities, Equipment, and Services.... 0...
0.. 0....
0..10 0 01010 0 0 0 Engineering and Const. Mg't. Services...
0ther Costse
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
~ ~ ~ ~ ~ ~ ~ ~
Interest During Construction....,.......
Subtotal.
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
~ ~
Start of Construction Cost..............
Escalation During Construction
( 7
% yr.)
Total Plant Capital Investment
($~73
/KW)
- Included Above 16 413 46 486 72 496 1
2 314 629 660 046 660 046
- 5C-
TABLE 5 PLANT CAPITAL INVESTMENT Amendment No. 45
SUMMARY
UNIT NO. 4 BASIC DATA Name of Plant Net Capacity Reactor Type Location
~
Shearon Harris 900 MW e Wake'Count Cost Basis:
At start of construction 1
227 202 T
e of Coolin Desi n and Construction Period Month, Year NSSS Order Placed Month, Year of Commercial Operation, Length of Workweek Interest Rate, Interest During Construction 4 71 3 88 40 hrs.
8 cd Run of River Natural Draft Cooling Towers Mechanical Draft
'Cooling Towers Other (Describe)
COST
SUMMARY
Account Number DIRECT COSTS Account Title Total Cost (thousand dollars) 20 Land and Land Rights................,...
21 22 23 24 25 "PHYSICAL PLANT Structures and Site Facilities.
Reactor Plant Equipment........
Turbine Plant Equipment........
Electric Plant Equipment.......
Misc. Plant Equipment..........
Subtotalo
~ ~ ~ ~ ~ ~ o ~ ~ ~ ~
~ ~ ~ ~ ~
Spare Parts Allowance..........
Contingency Allowance.....,....
Subtotal o ~
~ o
~
~ ~ ~ ~ ~ ~ ~
~
~ ~ ~ ~
99,671 230 365 68 787 40 203 2 827 441 853 50 205 4 208 INDIRECT COSTS 91 92 93 94 Construction Facilities, Equipment, and Selvices
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
~
~ ~ ~ ~ ~ ~ ~ ~
~ ~
Engineering and Const. Mg't. Services...
Other Costs....o......o........o.....o..
Interest During Construction............
Subtotal
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
~ 1 ~ ~ ~ ~ ~ ~
Start of Construction Cost..............
Escalation During Construction
( 7
% yr.)
Total Plant Capital Investment
($ 927/KW) 20 230 66 775 212 018 343 063 835 121 835 121
- Included Above
- 5D
TABLE 6 Amendment No. 45 PLANT CAPITAL INVES'QKNT
SUMMARY
UNIT NO. 3 BASIC DATA Name of Plant Net Capacity Reactor Typ'e Location Shearon Harris 900 MW e Wake Count Cost Basis:
At start of construction 1973 doll T
e of Coolin Desi n and Construction Period Month, Year NSSS Order Placed Month, Year of. Commercial Operation Interest Rate, Interest During Construction 4 71 3/90 0 hrs Run of River Natural Draft Co'oling Towers Mechanical.Draft Cooling Towers Other (Describe)
COST
SUMMARY
Account Number DIRECT COSTS Account Title Total Cost (thousand dollars) 20 Land and Land Rights....................
21 22 23 24 25 PHYSICAL PLANT Structures and Site Facilities..........
Reactor Plant Equipment.................
Turbine Plant Equipment..................
Electric Plant Equipment................
Misc. Plant Equipment...................
Subtotalo
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
~ ~ ~ ~ ~ ~ ~
Spare Parts Allowance..............,....
Contingency Allowance....................
Subtotal...........,...........,...
92 985 231 973 73 679 38 523 12 440 283 48 241 488 524 INDIRECT COSTS 91 92 93 94 Construction Facilities, Equipment, and Servicest
~ ~ ~ ~ ~ ~ ~ t ~ ~ ~ ~ ~ ~ 1 ~ ~ ~ ~
~ ~ ~ ~ ~ 0 ~ ~ ~ ~ ~
Engineering and Const. Mg't. Services...
Other Cos'ts
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
~ ~ ~ ~ ~ ~ ~
Interest During Construction............
Subtotal'..oo..oo.o.oo..o......o...
Start of Construction Cost..............
Escalation During Construction
( 7
% yr.)
Total Plant Capital Investment
($~6/KW) 20 581 5765 83 570 237 456 887 806'Included Above
g C)Yi 'lVQ&pfl&WA
Amendment No. 45 9.
Com letion Dates.
Applicant contemplates that a construction permit for the four units will be issued on or before December 1, 1976, that Unit No.
1 will be completed and ready for fuel loading on or about June 1, 1983; Unit No.
2 on or about June 1, 1985; Unit No.
4 on or about June 1, 1987; and Unit No.
3 on or about June 1, 1989; and that commercial operation of Unit No.
1 will commence in March, 1984; Unit No.
2 in March, 1986; Unit No.
4 in March, 1988; and Unit No.
3 in March, 1990.
The earliest estimated completion dates for the four units are December 1, 1982 for Unit No. 1; December 1,
1984 for Unit No. 2; December 1,
1986 for Unit No. 4, and December 1,
1988 for Unit No. 3.
The latest estimated completion dates for the four units are June 1, 1983 for Unit No. 1; June 1, 1985 for Unit No. 2; June 1, 1987 for Unit No. 4, and June 1, 1989 for Unit No. 3.
10.
Re ulator A encies and Media.
Applicant's retail rates and services in North Carolina are subject to the regulatory jurisdiction of the North Carolina Utilities Commission, One West Morgan Street, Raleigh, North Carolina 27601.
Applicant's retail rates and services in 'South Carolina are subject to the regulatory jurisdic-tion of the South Carolina Public Service Commission, P. 0. Drawer 11649,
- Columbia, South Carolina 29211.
Applicant's wholesale rates and services are subject to the regulatory jurisdiction of the Federal Power Commission, Washington, D.
C.
20426.
The following is a listing of the newspapers of general circulation in the Applicant's service area which are consid'ered appropriate to give reasonable notice of the application to those persons who might have a
potential interest in the facilities to be constructed by the Applicant:
r, EQiIBIT D PROSPECTUS 5,000,000 Shares Carolina Power 8'z K.ight Company Common Stock (Without Par Value)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINALOFFENSE.
er Share.
Total.
Price to Public
$ 17.875
$89,375,000 Underwriting Discounts( l )
$.66
$3,300,000 Proceeds to Company(2)
$ 17.215
$86,075,000 (1) The Company has agreed to indemnify the several Underwriters against certain civil liabilities, including liabilities under the Securities Act of 1933.
(2) Before deduction of expenses payable by the Company estimated at $ 116,000.
The Common Stock is offered subject to prior sale, when, as and if delivered to and accepted by the Underwriters, and subject to approval of certain legal matters by their counsel and counsel for the Company.
The Underwriters reserve the right to withdraw, cancel or modify such offer and to reject orders in whole or in part.
It is expected that delivery of the certificates for the Common Stock will be made at the office of MerrillLynch, Pierce, Fenner A Smith Incorporated, 2000 Wachovia Building, Winston-Salem, North Carolina, on or about No'vember 5, 1975.
MerrillLynch, Pierce, penner Ez Smith Incorporated The date of this Prospectus is October 28, 1975.
go 4O 4'/4O3$ 4O2 DTD+26-76 CONTROL $390 Regulatory Docket Fj[e
' IN CONNECTION WITHTHIS OFFERING, THE UNDERWRITERS MAYOVER-ALLOTOR EFFECT TRANSACTIONS WHICH STABILIZEOR MAINTAINTHE MARKETPRICE OF THE COMMON STOCK OF THE COMPANY AT A LEVELABOVE THAT WHICH MIGHTOTHER-ADVISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NET YORK STOCK EXCHANGE OR ANYOTHER STOCK EXCHANGE ON WHICH SUCH STOCK HAS BEEN ADMITTED TO TRADING PRIVILEGES, IN THE OVER-THE-COUNTER MARKFT OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DIS-CONTINUED AT ANYTIME.
AVAILABLEINFORMATION Tlie Cotnpany is subject to the informational requirements of the Securities Exchange Act of l934 and in accordance therewith files reports and other information with the Securities and Exchange Commission.
Certain information, as of particular
- dates, concerning the Company's directors and officers, their remuneratiorr and any material interest of such persons in transactions with the Company is disclosed in proxy statemetits distributed to stockholders and jiled with the Commission.
Such reports, proxy statements and other information may be inspected at the ogice of the Commission, II00 L Street, N. W., Washington, D. C., and copies ofsuch material can be obtained from the Commission at prescribed rates.
The Company's Conunon Stock is listed on the New York Stock Exchange, where reports, proxy material and other information concerning the Company may also be inspected.
- THE COMPANY Carolina Power &: Light Company (Company) is a public service corporation formed under the laws of North Carolina in 1926, and is engaged in the generation, transmission, distribution and sale of electricity in portions ofNorth Carolina and South Carolina.
(See map.) The principal executive offices of the Company are located at 336 Fayctteville Street, Raleigh, North Carolina 27602, telephone 919-828-8211.
GENERAL PROBLEMS OF THE INDUSTRY Thc utilityindustry is experiencing significant problems in a number ofareas, including a slowdown in sales growth, delays in receiving rate increase approvals, expenditures for pollution control facilities, high cost and limited availability of fuel, substantial increases in construction costs and difficulties in raising capital.
As discussed herein, certain of these problems have had an impact on the Company's operations.
During 1973, 1974 and the early months of 1975 the Company experienced rapid increases in fuel costs (see "Business Fossil Fuel Supply" ).
The Company has made substantial expenditures for environmental control facilitics and expects to continue to make substantial expenditures for such purposes over the next several years (see "Application of Proceeds",
"Financing Program",
"Construction Program" and "Business Environmental and Nuclear Licensing Matters" ). Increasing construction costs have resulted in increased capital needs, at a time when costs of capital are high, and these and other fa'ctors have caused significant changes in the Company's construction program.
The Company is unable to predict the effect of such factors on its future operations or on its construction program.
See "Management's Comments on Statement of Income".
Reference is also made to "Application of'roceeds'",
"Financing Program" and "Construction Program" for information as to factors affecting the Company's ability to finance its construction program.
2.
THE ISSUE IN BRIEF The following material is qualified in its entirety by the detailed information and financial statements appearing elsewhere in the Prospectus.
THE OFFERING
{Sec pages 4-8, 28)
Type of Security Common Stock Number of Shares Offered.
5,000,000 Shares Outstanding After Offering 32,604,589 Use of Proceeds.......................For general corporate purposes including the reduction of short-term borrowings incurred primarily for construction purposes Listed.
.New York Stock Exchange (Symbol: CPL) 1975 Price Range (Through October 27, 1975)........................18/s-I I
Closing Price October 27,1975..177/a CAROLINAPOWER 4 LIGHTCOMPANY (See pages 13-27)
Business................
'..................Generation, transmission, distribution and sale of electricity Service Area.....................Portions of North Carolina and South Carolina comprising approximately 30,000 square miles Customers.
~.~..........
~
.............Approximately 664,000 Summer Generating Capacity (in kilowatts)
.5,714,000 Sources of Generation during 1975 {estimated)....................74.9%
coal, 20.0% nuclear, 3.6% hydro, I
.6% No. 2 fuel oil,.8% natural gas,.1% residual oil FINANCIALINFORMATION (See pages 8-12, 31M)
Twelve hionths Ended Opcraung Revenues.
Earnings for Common Stock......................
A'verage Common Shares Outstanding......
Earnings Pcr Common Share.....................
Dividends Paid Per Common Share..........
December 31, l&4
$460,977,000
$ 51,599,000 23,324,000
$2.21
$ 1.60 August 3l, l975
$579,592,000'
$ 65,196,000 25,83S,000
$2.52
$ 1.60 As of Auttust 3l, l975 Long-term Debt...
Preferred Stock Preference Stock..........,......................
Common Equity.
Total Capitalization...............
Actual
$ 1,155,175,404 288,118,400 47,900,000 635,079,094
$2,126,272,898 Ratio 54.3%
13.6 2.2 29.9 100.0%
Adjustcdv~
$ 1,155,175,404 288,118,400 47,900,000 721,154,094
$2,212,347,898 Ratio 52.2%
13.0 2.2 32.6 100.0%
Includes $35,234,000 subject to refund.
Reference is made to Note 6 to Financial Statements and "Business Retail Rate Increases Wholesale Rate Increases" herein.
" See "Capitalization" herein.
APPLICATION OF PROCEEDS The net proceeds (approximately $85,959,000) to be received from the sale of 5,000,000 additional shares of Common Stock (New Common) will be used for general corporate purposes, principally the reduction of short-term borrowings incurred primarily for the construction of new facilities.
Such short-term borrowings totaled approximately $ 14,000,000 at August 31, 1975, and are expected to approximate
$63,000,000 immediately prior to the delivery of the New Common.
CONSTRUCTION PROGRAM The Company's construction program for the three-year period 1975 through 1977, subject to continuing review and adjustment, is presently estimated as follows:
Type of Facilities 1975 1 sys 1977 (Millionsof Dollars) 278.6 286,3 17.1 49.6 46.9 127.5 7.4 10.5 350.0 473.9 Generation Transmission.
Distribution.
Other.
Total.
In March, June and December 1974, the Company's construction program was reduced, including reductions of approximately $ 194 million for 1975. On May 1, 1975, the Company's construction program was funher revised (to the amounts set forth in the table above) so that thc aggregate reducdon is pproximatcly gt,)07 million for the years 1975-1977 (including approximately 8187 million for 1975). '
I'hese reductions were caused by revised energy forecasts and the lack of sufficient capital on reasonable terms. Thc May 1975 reductions include the deferral ofthe second Brunswick nuclear unit from 1976 until 1977, deferral of thc 720,000 KW coal fired Roxboro No. 4 Unit, (originally scheduled for 1976 and previously postponed two years) until 1981, and deferral of the four proposed 900,000 KW nuclear fueled units of the Shcaron Harris Nuclear Power Plant (previously rescheduled for 1981, 1982, 1983 and 1984) until 1984, 1986, 1988 and 1990, (an approximate average total deferral of six years).
Additionally, two coal fired units have been rescheduled for completion in 1983 and 1985, two nuclear units are to bc completed in 1987 and 1989, and a third nuclear unit has been indefinitely postponed.
These five units had been eliminated from the Company's construction program in December 1974 but were reinstated on May 1, 1975.
New generating units, now under construction, are planned for completion in the years and at the costs respectively stated:
Estimated Estimated Completion Estimated Cost Description Date Cost per KW Two 821,000 KW nuclear fueled units at the Brunswick Plant near Southport, N. C.
1975-1977
$792,561,000
$483 720,000 KW fossil fueled Unit No. 4 at the existing Roxboro Plant near Roxboro, N. C..............................
1981
$ 196,541,000
$273 As of August 31, 1975 the Company's gross investment in the Harris Plant was $ 189,986,310, in the two nuclear fueled units at the Brunswick Plant was $626,112,672 and in Unit No. 4 at the Roxboro Plant was $72,080,814.
The costs of the two 821,000 KW nuclear fueled units at the Brunswick Plant have increased over original 1968 estimates of approximately $287 million primarily because of escalation of labor, material an'd equipment costs, as well as increased expenditures for environmental controls, including a closed;cycle cooling system, design modifications resulting from Nuclear Regulatory Commission (NRC) licensing review, and delays in construction.
The estimated cost of the 720,000 KW Roxboro Unit has increased over the 1971 estimate of $93,725,000 because ofits five-year deferral, escalation oflabor, equipment and material costs and cooling towers.
The Company now estimates that the Harris Plant willcost approximately $3.65 billionofwhich $201 million is included in the 1975-1977 construction program.
The total project cost has increased over original and interim estimates primarily because of increased estimates of expenditures for labor, material and equipment as well as increased costs resulting ft;om the delay of the in-service dates of the four units.
Actual expenditures could vary from the estimates stated above because of changes in the Company's plans, cost fluctuations, licensing delays, and other factors.
The Company is continuing to experience
'increases in costs for construction of new facilities as a result of escalation of labor, material, and equipment costs and environmental controls.
Units similar to the Brunswick units operated by other companies have been required to reduce operating levels because of indications of excessive vibrations in the core monitoring system.
Unit Yo. 2, for which an operating license has been received, has been operated for a short period at 75% ofcapacity and, =although indications of excessive vibrations have not been
- detected, indications of moderate vibrations have been experienced and the Company now anticipates that excessive vibrations may occur.
Accordingly, the Company anticipates operating Unit Yo. 2 at about 55% of capacity. except during operational testing, until appropriate modifications can be efected to prevent excessive vibrations, and commercial operation, scheduled for December 1975, may be delayed.
The Company's own costs with respect to performing these modifications are not expected to exceed
$ 125,000.
Reductions in the operating level of Unit No. 2 or delay or interruptions in its operation with respect to accomplishing these modifications may require the Company to purchase replacement energy at substantial cost.
The commercial operation of Unit No.
1 is estimated for March 1977 and is subject to securing all necessary permits, including an operating license from the NRC.
Energy conservation and reduced economic activity of the Company's customers in 1974 and 1975 and milder weather in 1974 resulted in utilization of electric energy at only slightly above the level experienced in 1973 and the increase in peal( load in 1974 was modest compared to previous years (see "Operating Statistics Electric Sales" ). Ifsuch factors continue, and ifincreases in the Company's rates also have the effect ofreinforcing customer energy conservation, the construction program is expected to be suflicient to meet customer requirements through 1981. If, on the other hand, customer usage patterns and peak load demands return to prior trends of substantially increased
- usage, the Company's revised construction program may not be suScient to maintain the same degree of reliable service during some periods after 1979 that it has provided in the past and the Company may be forced to implement load management policies, subject to regulatory approvals, including curtailments at peak times.
The Company's 1975 peak load, experienced in August, was 6.1% above that of 1974 and 7.4% above that of 1973.
lri the event the Company's load growth exceeds current expectations, the Company may elect to accelerate the construction of coal burning plants now proposed or under construction and install additional generating facilities requiring a relatively short construction period, provided fuel supplies are available and financial capability permits.
, 0
Power purchases under long-term contracts are anticipated to represent approximately 3.2 percent of the Company's total long-term power resources for the winter of 1975-76.
In addition, the Company has short-term agreements for the temporary purchase of power.
Plant Accounts.
During the period from January 1, 1970, through August 31, 1975, there was added to the Company's utility plant
- accounts, including nuclear fuel, $ 1,798,159,000, there was retired
$68,224,000 ofproperty, there was sold or assigned to lessors $92,643,000, and transfers to other accounts and adjustments resulted in a net decrease of $7,358,000, resulting in net additions during the period of
$ 1,629,934,000, or an increase of approximately 197%.
FINANCINGPROGRAM Prior to the date of this Prospectus, the Company in 1975 issued $ 122,350,000 principal amount of First Mongagc Bonds, 4,000,000 shares of Common Stock for $56,000,000 and 2,000,000 shares of Prefcrcncc Stock for $47,900,000. It is anticipated that on or about October 30, 1975, the Company's Leslie coal mining subsidiary will enter into a $34,700,000 equipment lease financing arrangement, to be guaranteed by the Company, of mining equipment to be acquired over the next three years (see fifth paragraph under "Business Fossil Fuel Supply" ).
,For its 1976 construction program estimated at approximately $250 million, the Company estimates that it will need approximately $ 170 million from long-term sources and proposes to issue additional securities in 1976, the type, amount and timing of which willdepend on market conditions and the needs of thc Company.
The procccds from thc foregoing sales ofsecurities were used for general corporate purposes including the reduction ofshort-term borrowings incurred primarily for the construction ofnew faciliues. Other than any additional leasing arrangements that may be made by the Company's coal mining subsidiaries in connection with the development of coa) mines, and various minor transactions, the Company has no present plans for other such arrangements.
The Company is presently limited in its ability to issue additional preferred stock under the earnings.
test in its Charter, which requires among other things, that gross income (after depreciation and taxes) for a period ol 12 consecutive months within the 15 preceding months shall have been at least 1.50 times the sum of'nnual interest charges and annual preferred dividend requirements on outstanding shares of preferred stock and on any shares proposed to be issued.
At September 30, 1975, such ratio was 1.67, which would have permitted the Company to issue at that time I,150,000 shares of additional preferred stock at an assumed
$ 11 annual dividend rate.
Thc Company, however, is authorized to issue up to 8,000,000 shares of additional preference stock which is not subject to an earnings test.
In the event the Company fails to receive adequate and timely rate relief when requested from time to time in the future, it may be unablc to mcct thc earnings test required for thc issuance of additional preferred stock and may experience difliculty in marketing its first mortgage bonds and be required to reduce its construction program further. At August 31, 1975, the maximum additional first mortgage bonds that could be issued based on unused property additions at that date was $417,597,000, but based on the earnings for the twelve months ended August 31, 1975, the maximum additional first mortgage bonds which could be issued was
$414,012,000 (such earnings reflect deferred fuel costs of $4,674,000 and revenues of
$35,234,000 billed, which amounts have not yet been approved by regulatory authorities and
- are, therefore, subject to refund or adjustment to the extent not finallyapproved.
Referenceis made to the last paragraph of Note 6 to Financial Statements).
COMMON STOCK PRICE RANGE AND DIVIDENDS The Common Stock is listed on the New Y'ork Stock Exchange.
The high and low sales prices per share on the New York Stock Exchange for the periods indicated, as reported in The Wall Street Journal, and the dividends paid per share, were as follows:
Prtcc Range Dividends Annual Quarterly High Low 33r/a 21Yi 29r/a 22'la 32t/t 24
$ 1.46 1.46 1.475 303 27'la 25r/a 25t/a 20'40 137/a
.40 1
1 t/e
.40 10t/a
.40 1.60 1 970.....................................................
1 97 1 1 972 1 973 First Quarter..
24'/4
.38 Second Quarter.
24
.38 Third Quarter 21t/z
.38 Fourth Quarter.
19
.40
- 1.54 1974 r
First Quarter 23'/4 Second Quarter.....
19'/4 Third Quarter.
14'la Fourth Quarter......
14'4 1975 First Quarter 17 11
.40 Second Quarter....................
18'3r/a
.40 Third Quarter 181ft 15'la
.40 Fourth Quarter (through October 27, 1975)..
18'6'la Thc reported last sale on the New York Stock Exchange on October 27, 1975 was 17/a per share.
Because thc price per share of the New Common is less than the book value as of August 31. 1975, there willbe a dilutive effect on thc book value of Common Stock held by present shareholders.
The book value of the Common Stock as of August 31, 1975 was $23.01 pcr share and as adjusted (sec "Capitalization")
to give effect to the sale of'he New Common would bc $22.12 pcr sharc.
A fourth 1975 quarterly dividend of $.40 a sharc has been declared, payable November 1, 1975 to shareholders of record as of October 10, 1975.
The New, Common will not bc entitled to such dividend.
The Company has paid quarterly dividends on its Common Stock in each year since 1946, the year the Company's Common Stock became publicly held.
Of the dividends paid in 1973 and 1974, 57% and 100%, respectively, were not taxable for federal income tax purposes as ordinary income to the recipients thereof but constituted a return of capital which reduced the tax basis of the shares on which such dividends were paid.
It is presently anticipated that approximately 30% of the dividends paid on the
-Common Stock in 1975 willalso constitute a return ofcapital for such purposes, although such percentage can vary based on rate increases and other factors.
CAPITALIZATION Capitalization as of August 31, 1975, and as adjusted to reflect the issuance and sale of the New Common, is as follows:
Long-term Debt, net (Note 3)...
h Authorized (b) 15,300,000 shs Preferred Stock (Note 2)...............
I Preference Stock (Note 2)
(2.000,000 shares outstanding)..
10,000,000 shs.
August 31, 1975 Outstanding(a)
$ 1,155,175,404 288,118.400 47,900,000 Ratio 54.3%
13.6 2.2 Adjusted Outstanding(a)
$ 1 155 175 404 288,118,400 47,900,000 Ratio 52.2%
13.0 2.2 Common Stock, without par value (27.604.589 shares outstanding; 32.604.589 shares to be out-standing) (Note 2).....................
Retained Earnings (Note 2)..........
Common Equity....
Total....
60,000,000 shs.
477,980,155 157.098,939 635,079,094
$2.126,272,898 29.9 100.0%
564,055,155(c) 157,098,939 721,154.094
$2,212,347,898 32.6 100.0%
(a) Excluding short-term loans of $ 14,163,924 at August 31, 1975 (see "Application of Proceeds" and Notes 1 and 4').
See "Business Fossil Fuel Supply" for information relating to guarantees by the Company.
'b) Not limited except as set forth in the Company's Mortgage and Deed ofTrust, as supplemented (see "Financing Program" ).
(c) Includes proceeds from the sale of the New Common.
(d) Numbered notes refer to Notes to Financial Statements.
STATEMENT OF INCOME The followingstatement ofincome for the five years ended December 31, 1974 has been examined by Haskins 8c Sells, independent certified public accountants.
whose opinion with respect thereto is included
~ 'elsewhere herein.
The statement for the twelve months ended August 31, 1975 is unaudited but in the opinion ol'the Company includes all adjustments (consisting only of normal recurring accruals) necessary to a fair statement of the results of operations.
The statement and its notes should bc considered in conjunction with the other financial statements and related notes appearing elsewhere herein and additional information under "Business".
Tnelve Months Ended December 31, 1970 1971 1972 1973 Thousands of Dollars Auttust 31, 1974 1975 (Unaudited)
Operating Revenues-Electric..............................
Operating Expenses:
Fuel for electric generation................................
Deferred fossil fuel expense (credit), net (a)...
Purchased electric power...................................
Other operation expenses...................................
Maintenance Depreciation..
Taxes other than on income...............................
Income tax cxp<<nse (b).....................................
Total operaung expenses....................
Operating Income.
Other Income:
Allowance for I'unds used during construc-tion(c)..
In(x)mc taxes-credi((b)...................................
Other-nct.
Total other income..............................
Gross Income.................
Interest Charges:
Long-term debt-.
Other.
Total intcrcst charges..........................
Net Income..
Prcl'erred and Prefercncc Stock Dividend Requirements Earnings for Common Stock..................................
Average Common Shares Outstanding (thou-sands)...
Earnings per Common Share (based on average number ofshares outstanding)..........................
Cash Dividends Declared pcr Sharc of Common Stock (outstanding at respective dividend dates) 69,014 84,749 88,549 106,191 9,799 23,765 19,849 19,476 19,053 8,289 169,245 35,601 10.422 28,510 23.098 22.820 21.399 14.329 205.327 50.316 11.537 32,979 25.624 27.280 24,021 26.378 236.368 70.768 7,847 41.910 29.749 31.845 28.706 21.268 267,516 73.690 235.842
{35.028) 14.494 46.549 28.591 35.544 40.684 16.947 3113.623 77,354 269,644 (342) 14,951 53,906 29,104 40.593 48.508 2&,746 485,110 94 482.
10,505 2,709 (33) 13.181 48,782 14.708 3.532 517
)8.757 69.073 24.759 6,666 49 31.474
)02.242 38.093 10.477 393 48.963 122.653 54.609 16,068 776 71.453 148.807 63,561 20.581
{443)
&3,699 178,181 19,604 4,353 23,957 24,825 27,903 3.696 31.599 37,474 39,119 2.594 41.713 50.149 6.505 56.654 60.529 65,999 69.&78 6.658 76.536 72.271 80,913 8,103 89,016 89,165 4,699
$ 20,)26 8.371 5 29,)03 9.612 S 50.917 13.017 S 52.982 20.672 S 51.599 23,969 5 64,196 12,934 14,776 17,814 20.554 23.324 25,835 51.56 51.97
$2.86
$2.58
~
$ 2.21
$2.52 S 1.46 S 1.46 S 1.49 S 1.56 51.60 5).60
$204,846
$255.643 S307,136 5341,'206 5460977(a)
$579.592(a)
(a) Sce Notes 1 and 6 to Financial Statements for information relating to thc accounting for deferred fossil fuel inventory costs and expenses and for information on revenues subject to refund.
Also see "Business Wholesale Rate Increases".
(b) Sec Notes 1 and 5 to Financial Statements for information relating to income tax accounting policy, components of income tax expense and the reconciliation of an amount (computed by applying the statutory income tax rate to pre-tax income) to total income tax expense.
(c) In accordance with the uniform. systems of accounts prescribed by regulatory authorities, an allowance for funds used during constr'uction (AFC) is included in the cost of construction work in progress and credited to income using a composite rate, applied to construction work in progress, which recognizes that funds used for construction were provided by borrowings, preferred stock, and common equity.
This accounting practice results in the inclusion in construction work in progress of amounts considcrcd by regulatory authorities as an appropriate cost for the purpose of establishing rates for utility charges to customers, over thc service life of the property sufficien to recover such cost. Allowances for the five years ended Dcccmber 31, 1974, and the twelve months ended August 31, 1975, were determined on the basis of the following factors:
Year.
1970..
1971 1972 1973.
1974.
Twclvc months ended August 31, 1975.....
(a)
Average amount of applicable consiruction nark in progress during the period. excluding accumulated AFC
$ 131,313,000 183,850,000 309,488,000 476,162,000 682,613,000 794,513,000 (b)
Composite rate applied to amounts in column (a) to
'arrive at AFC 8.0%
8.0 8.0 8.0 8.0 8.0 AFC has totaled 22%, 21%, 24%, 31%. 37% and 36% of gross income during the years 1970-1974 and the twelve months ended August 31, 1975, respectively.
Although determination of the amount of AFC attributable to each source of funds used for construction is impracticable, based upon a pro rata allocation of thc cost of funds ( interest cxpcnse. preferred dividends, and earnings for common stock) on the ratio of AFC to gross income. adjusted for income tax effect of interest expense (assumed to be 50%), the portion of AFC attributable to funds provided by common equity would be approximately 29%, 28%, 30%, 40%,
49% and 48% of earnings for common stock'for the years 1970-1974 and thc twelve months ended August 31, 1975, respectively'.
In May 1975 thc Federal Power Commission published for comment certain proposed revisions in the Uniform System of Accounts and instructions relating thereto which would provide for a formula establishing a ceiling on permissible AFC rates and the separate reporting in the Statement of Income of thc debt and equity portion of AFC. The ultimate effect, ifany, on the Company's results ofoperations is not presently determinable pending definitive action on the proposal.
10
For the twelve months ended September 30, 1975, operating revenues, net income, earnings for Common Stock and earnings per Common Share were $590,571,000, $96,024,000, $71,610,000 and $2.73, respectively.
These amounts are unaudited but in the opinion of the Company>>include all adjustments (consisting of.only normal recurring accruals) necessary to a fair statement of the results of operations.
These amounts reflect $42,573,000 of revenues billed subject to refund with interest pending final regulatory determination, and a credit of$4,700,000 resulting from deferred fossil fuel costs applicablc to wholesale customers, which deferred costs are subject to further regulatory rcvicw and approval which may necessitate adjustment if such review so requires.
See "Business Retail Rate Increases" and "Business Wholesale'Rate Increases.,"
MANAGEMENT'SCOMMENTS ON STATEMENT OF INCOME I
The following factors significantly affected various income statcmcnt items for the years 1973, 1974 and the twelve months ended August 31, 1975:
(a) Operating revenues.
Various rate increases placed into effec since 1970 rcsultcd in increased revenue in 1971, 1972, 1973, 1974 and the twelve months ended August 31, 1975, ot approximately
$27,825,000,
$53,312,000,
$68,091,000,
$ 180,760,000, and $300,309,000, respectively.
Included in thc above increases. in revenues in 1974 and the twelve months cndcd August 31, 19l5 are
$73,792,000 and
$ 156,415,000,
'respectively, from fossil fuel adjustmcnt clauses which became effectiv in February 1974 for retail customers and in January 1975 for wholesale customers.
For information concerning regulatory and court proceedings sce "Business Retail Rate Increases" and "Business Wholesale Rate Increases".
Sales of clcctric energy, excluding nonterritorial sales, increased l3% in 1973 over 1972.
For 1974, the combined effect of energy conservation, relatively milder weather and rcduccd economic activity was such that such energy sales increased only about 2'ver the year 1973 and for the twelve months ended August 31, 1975 increased only about I'7o over the twclvc months ended August 31, 1974.
Sec "Operating Statistics-Electric Sales".
{b) Fuel for electric generation.
Fuel expense in 1973 rcAects increased generation.
Costs of fossil fuel burned increased significantly, averaging 46.5 cents pcr million BTU in 1972; 50.6 cents in 1973; 118.8 cents during 1974 and 139.0 cents for the twelve months ended August 31, 1975.
See "Business Fossil Fuel Supply". Fuel expense per million BTU in 1972 reflected the first full year of availability of the Company's Robinson Nuclear Unit, thereby reducing the level ofsuch expense.
Sce "Operating Statistics Electric Energy Generated and Purchased".
(c) Deferred fossilfuel erpense.
This item represents thc adoption in 1974, at the time the fuel adjustment clauses became operative, of the accounting practice ofdeferring increased fuel cost when incurred and expensing it in the month the related revenue is billed (two months later).
Sce Notes 1
and 6 to Financial Statements and "Business Retail Rate Increases".
(d ) Purchased electric power: In 1973, the Company generated a greater proportion ofits energy
,requirements as compared with 1972, thus decreasing purchased power costs.
See "Op.rating Statistics Electric Energy Generated and Purchased".
During 1974 and the twelve months ended
August 31, 1975, the Company purchased approximately 15% and 9%, respectively, more power than in 1973; however, fuel cost escalation provisions in contracts resulted in significantly higher cost per KWH for purchased power.
(
) Otlter operation and maintenance expense.
New facilities, especially for generation, have f
required additional personnel and maintenance costs.
Higher prices f'r goods and services of al kinds increased these items of expense.
During 1973, the initial and first annual refueling and maintenance of the low-1'ucl-cost Robinson Nuclear Unit was performed, thereby increasing related operations and maintenance expense.
During 1974 and the twelve months ended August 31, 1975, to improve earnings pending rate relief, the Company rescheduled discretionary maintenance for some of its facilitics and thereby reduced maintenance expense during those periods.
(f) Depreciation.
This item of expense increased as new facilities were placed in service.
(g) Taxes otlter than on income.
State and city franchise taxes increased as revenues increased and ad valorem taxes increased as plant in service increased.
See Note 8 to Financial Statements.
(h) Income tax expense.
Income tax expense net ofincome taxes credit decreased in 1973 from 1972 as the Company's operating income before income taxes decreased and related interest charges increased.
The 1973 decrease in income tax expense would have been less except for the increase in the amount of tax deductible interest charges which were capitalized through the allowance for funds used during construction.
Income tax expense for 1974 and thc twelve months ended August 3I, 1975, continued to be affected by the increasing amounts of interest and the allowance for funds used during construction.
In addition, thc latter periods reflect, especially 1'or 1974, the inadequacy of increases in revenues to cover fullythc increases in costs of service, thereby reducing the level of pre-tax income.
Scc Note 5 to Financial Statements.
(i) Allo~ance for funds used during construction.
This item increased as the Companys investment in construction work in progress increased.
(j ) Total interest charges.
These costs increased during each ofthe periods because ofadditional debt funds required and increased average interest rates.
While thc Company's revenues and net income for 1973, 1974 and thc twelve months ended August 31, 1975, increased over the year 1972, earnings per common share were lower than in 1972.
These decreases resulted primarily from increased capital
- costs, including preferred dividend requirements "reflecting additional preferred stock issues, and increased operating expenses (especially fossil fuel costs which increased from 67.0 cents per million BTU in January 1974 to 175.46 cents in December 1974 before dropping to 110.38 cents in August 1975) which have not been fullyoffset by operating economics or growth in rcvcnues.
In addition, the lower earnings per common share refiected the increased average number of common shares outstanding.
See "Business Retail Rate Increases" for additional information on retail rate increases and "Business Wholesale Rate Increases" for information on wholesale rate increases especially increases (including a wholesale fossil fuel adjustment clause) placed into effect on January 2, 1975.
C' i t
OPERATING STATISTICS T>>eI0e Months Ended 1970 1971 December 31, 1972 1974 August 31.
197$
Electric Energy Generated and Purchased (Thousands ofkilowatt-hours):
Generated-Net Station Output:
Steam-Fossil..
Steam-Nuclear....
Hydro..
Other.
Total Generated..
Purchased and Net Interchange Total Generated and Purchased................
Company
- Use, Distribution Losses and Unac-counted for.
Total Energy Sold.......................................
Average Fossil Fuel Cost per MillionBTU (cents).........
Average Total Fuel Cost (Fossil and Nuclear) per MillionBTU {cents)..
Average Nuclear Fuel Cost per hlillionBTU (cents).....
Electric Sales (Thousands ofkilowau.hours):
Residential..
Commerical..
Industrial.
Govcrnrnent and Municipal......................................
Total General Business...............................
Sales for Resale Nontcmtorial Sales.
Total Energy Sold.................,.....................
umber ofCustomers (As ofEnd ofPeriod):
Rcsidcnual..
Commercial..
Industrial Government and hlunicipal......................................
Total General Business...............................
Resale Total Customers..
Operating Revenues (In thousands):
Residential..
Commercial....
Industrial-Textile Industrial-O!her.
Govcrnmem and Municipal......................................
Total General Business...............................
Sales for Resale.......
Nontemtorial Electricity Sales..................................
Total from Energy Sales.............................
Miscellaneous.
Total Operating Revenues..........................
Peak Demand of Firm Load (kw):
WithinScree Area..
Nontemtorial.
Total Peak Demand...................................
Total Capability at End ofPerio {kw):
Steam Plants.
Internal Combustion Turbines..................................
Hydro Plants Purchased.
Total Capability( I )....................................
16,310.649 3,335 622,827 315,175 16,134,787 2.414,172 848,789 256,433 16,605,222 4,828.594 881,985 209,526 19,875,274 3,763,608 890,749 113.545 18.602.934 4,813.207 921,183 215.209 18,359.572 5,165,999 894,005 102.161 17,251,986 1,544,451 18,796,437 1,248,937 17.547.500 19,654.181 I ~309.355 20.963,536 1.306,863 19.656,673 22,525,327 1.247,164 23,772,491 1,671,019 22.101,472 24,643,176 939,578 24.552,533 24.521,737 1.079.517
'.025.171 25,582,754 25,632.050 25.546,908 1,501.435 1,555,604 1.700,313 24.081,319 24,076.446 23.846,595 42.1 42.1 18.4 48.9 44.9 18.4 46.5 39.6 17.5 50.6 44.6 18.0 118.8 96.6 16.5 139.0 1 10.7 19.1 4,634,149 2,693,338 5,622,593 832,839 13,782,919 3,518,369 246,212 4.973,640 2,944,735 6.231,507 857.930 15,007,812 3,852.549 796.312 5,208.235 3,202,067 7,037.060 872,712 16.320.074 4.197,433 1,583,965 5,936,924 3.627,739 7.884,513 922 532.
18.371,758 4,856,882 852,679 5,916,808 6.122.922 3.576.529 3.733, 108 8.273.238 7.708.496 848.996 885.959 18.615.571 18.450.485 4.991.730 5.291.370 469,145 104.740 17.54 7,5M 19,656.673 22,101,472 24.08 t,319 24,076.446 23.846.595 478,914 82,456 2,745 1,261 495,528 86.292 2,861 1,356 515.041 90.529 2,995 1,444 535,607 92,142 3,111 1.538 550.128 558.945 93.293 99.906 3,237 3.253 1.595 1.617 565,376 49 565,425 586.037 52 586.089 610,009 52 610,061 632,398 53 648.253 54 663.721 54 632.451 648.307 663.775 75,990 40,981
- 21.174 28,889 8,573 175,607 25,794 1,225 89.711 49.223 26.725 34.096 9,685 209.440 31.643 11,967 103,254 58.246 33,438 41,161 10.827 246.926 35.396 2 I,040 117.559 65.647 36.689 47,677 11.632 279,204 43,827 13.608 156,134 88;420 56,661 7&.649 16,034 395.898 46.015 I3,499 188.354 108.308 67.903 96.943 20.324 481.832 83.741 SASS 202,626 2.220 253,050 2.593 303,362 3,774 336.639 4.567 455.412 574.058 5.565 5.534 204,846 3,484,000 255,643 3,625.000 170.000 307.136 4,119.000 516,000 341.206 460.977 579.592 4,7I l,000 212,000 4.77 I,000 143.000 5.060.000 38.000 2,728,000 312,000 211,000 378,000 3,629,000 3.622.000 560.000 211,000 245.000 4,638.000 3,973,000 560.000 211.500 265.200 5,009,700 4.578,000 I. I36,000 211,500 280,000 4,593.000 560,000 211.500 280,000 4.482.000 1.01 S.000 214.000 227.500 5.644.500 6.205.500 5.941.'500 3.484,000 3.795,000 4.635,000 4.923.000 4.914.000 5.098.000
( I ) Additional reserve capacity is available from neighboring utilities under interchange agrccments.
l3
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- 10. Ikssoro flrclfKplshl ll. Orvhsnklt Nvckaf SI4 12 Vetshao Hyotoelecvk Plsnl
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F'uel Coal Coal Coal Coal Coal Coal/Gas'uclear Ashevtlle Cape Fear 385 Miv 670 itw 650 Mw 97 hfW 106 hfW 351 MiV Coal Coal Coal Coal/Oil Coal/Oil/Gas Coal/Oil I
1966 2
1968 3
1973 1954 2
1955 3
1972 Roxboro.
7.77 8,494,797 L. V. Suuon....
17.46 2.799,339
'his cost is based upon assumed recovery and recycling of residual uranium and,plutonium.
Costs I'or storage of these residuals have been considered in determining the present fuel cost.
In thc event that recycling docs not materialize, nuclear fuel cost willincrease, the extent of which is dependent primarily upon NRC actions.
15 BUSINESS Territory Sencd:
The, territory served, an area of approximately 30,000 square miles, includes a
substantial portion.of the Coastal Plain in North Carolina extending to thc Atlantic coast betwccn the Pamlico River and the South Carolina border, and the lower Piedmont section in'North Carolina and in South Carolina, as well as an area in western North Carolina in and around the City of Asheville.
The estimated total population of the territory served is in excess of 2,800,000.
Electric service is rendered at retail in 200 communities, each having an estimated population of 500 or morc, and wholesale service is supplied to 24 municipalities, to 18 REA cooperatives and to two private electric systems.
At August 31, 1975, the Company ivas furnishing electric service to approximately 664,000 customers.
During the twelve months ended August 31, 1975, 33% of operating rcvenucs, excluding nonterritorial sales, was derived from residential sales, 29% from industrial sales, 19% from commercial sales and 19%
from other sources.
Of such operating revenues, approximately 84% was dcrivcd in North Carolina and approximately 16% in South Carolina.
For the twelve months cndcd August 31, 1975, avcragc revenues pcr kiloivatt-hour sold to rcsidcntial, commercial and industrial customers were 3.08 cents, 2.90 cents and 2.14 cents, rcspcrtivcly.
Sales to residential customers have increased as follows:
Period of Use 4'4VH use Oitl pcr KlVll Year.
1970..
9.795
$ 160,62 1.64c 1971..
10.205 184.08 1.80 1972 10.293 204.05 1.98 1973..
11.276 223.29 1.98 1974..
10.861 286.60 2.64 Twelve months cndcd August 31. 1975..... '....
11.105 341.62 3.08 Thc erect of energy conservation, milder weather and rcduccd economic activity'on the Company's sales to date has been material to the extent that KKVH sales, excluding nonterritorial sales. for 1974 increased only about 2% over 1973 and for thc twelve months ended August 31, 1975 incrcascd only about 1% over the twclvc months ended August 31, 1974.
In 1973 the Company cxpcrienccd an increase in such K~VH sales ofabout 13% over 1972. Thc Company is unable to predict precisely what effect such factors may have on future demand for clcctric service by its customers.
Thc Company has taken steps to reduce energy consumption at its own facilities and is supporting conservation programs by promoting efficient use of energy.
For information with rcspcct to possible effects of thc reduced construction program, sce "Construc-tion Program".
Generating Capability: Approximately 71% of thc Company's total installed summer generating capability is in units of 97 MEV capacity or morc. Information with rcspcct to thcsc units is shown below:
Net Station Fuel Generation Cost Unit Year Summer iilIVII (1974 Atg. )
Plant iso.
Installed Capability (Total 1974) mills/Kfvff I
1964 198 iliV1 2
1971 194 i W I 2.141,853 13.96 5
1956 143 MiV 1 6
1958 173 hfw j 1,746,514 15.96 H. F. Lee 3
1962 252 MW 1,886,341 14.68 H. B. Robinson..................,.............'
1960 174 Miv I 5 75 62 I 13.79 2
1971 665MW I I
The Company maintains all of its properties in good operating condition in accordance with good management practice.
The life expectancy of the Company's generating facilities (excluding internal combustion turbine units) is 40 years for fossil units installed prior to 1966, 35 years for fossil units installed thereafter, and 30 years for nuclear units. Of the total installed summer generating capability of 5,714 MW, 56.6% is'coal, 18.3% is No. 2 oil, 11.6% is nuclear, 9.7% is dual coal/residual oil and 3.8% is hydro. Of the total capability, approximately 589 MW (10.3%) can alternately burn gas when available.
~ The Company's generation by energy source is set forth below:
1973 1974 197Si Coal.
67.6%
66.3%
74.9%
Nuclear...
15.3 19.6 20.0 Residual Oil I I. I 8.0
. I Hydro....
3.6 3.8 3.6 No. 2 fuel oil................................5 1.4
.6 Natural gas.............
1.9
.'9
.8 100%
100%
100%
'stimated.
Fossil Fuel Supply: The Company expects to receive approximately 61% of its coal requirements for 1975 from long-term agreements.
These agreements, including the Company's contract with its subsidiary, ave expiration dates ranging from 1975 to 2002 and a weighted average remaining length of 9.6 years.
he remainder of the Company's current coal requirements will be purchased in the spot or open market.
During 1973 and 1974, the Company received approximately 66% (4,100,000 tons) and 41% (2,800,000 tons) respectively ofits coal requirements from long-term agreements.
The Company purchased 2,050,000 tons of coal in the spot market in 1973 and 4,600,000 tons of coal in the spot market in 1974.
The Company's current contract coal purchase prices range from $ 13.78 to $29.75 per ton (F.O.B. mine) and based upon estimated deliveries have an average weighted price of$21.92 per ton (F.O.B. mine). These prices are subject to escalation under certain circumstances.
'The Company is currently paying from $ 15 to
$ 17 per ton (F.O.B. mine) for coal purchased in the spot market.
In November 1974, the Company filed suit in federal district court for the Eastern District of North Carolina against Logan & Kanawha Coal Company, Inc. and Marvin H. M. Stone for approximately $8 millionin damages for nondelivery ofcontracted for coal. Mr. Stone has counterclaimed for $ 114 million, and Logan & Kanawha has counterclaimed for an unstated total amount of commissions on coal which was to be sold to the Company under the contract.
In the opinion of general counsel for the Company the counterclaims are without legal or factual merit. In December 1974, the Company filed suit in the federal district court for the Eastern District ofNorth Carolina against General Coal Company and Westmoreland Coal Company for approximately $ 1.8 million for nondeliveries of coal.
General Coal Company has answered to the effect that delivery had been excused by force majeure and Westmoreland Coal Company has filed a motion to dismiss for lack of jurisdiction, and both defendants have sought to remove the lawsuit to the federal district court for the Western District of Virginia. In October 1974, Texas Energy Services, Inc. filed suit against the Company in federal district court for the Eastern District of Kentucky seeking to recover approximately $ 1 million which the Company recouped for poor quality coal delivered 16
40.82 47.77 45.44 48.76 108.21 133.55 1970...
1971 1972 1973..
1974..
Twelve months ended August 31, 1975................
by Texas Energy Services, Inc.
In addition to the amount recouped, in March 1975 the Company counterclaimed for approximately $ 1 million for breach ofwarranty, and is seeking to remove the lawsuit to the federal district court for the Eastern District of North Carolina.
The Company is also engaged in arbitration with Island Creek Coal Company in Washington, D. C. over its claim for approximately "$ 1 millionfor health and safety escalation allegedly due Island Creek for coal delivered pursuant to a contract which expired in 1972. Allof the above matters are in the preliminary stages and the Company cannot now predict the final disposition of any of such claims.
The average cost of coal burned by the Company over the past five years and for the twelve months ended August 31, 1975 is as follows:
S/ton 0/htillionBTU 9.94 11.61 11.14 11.91 25.58 31.55
.As ofAugust 31, 1974 and August 31, 1975, respectively, the Company had on hand about 50 and 71 days supply of coal based on anticipated burn rate.
The Company considers its present coal inventory su5cient to meet its needs.
The Company has entered into agreements with Pickands Mather & Co., (PM) a firm engaged in owning, operating and managing mineral properties, to develop two adjacent deep coal mines in Pike County, Kentucky, with an aggregate capacity of two million tons of coal per year of which the Company is to receive 1.6 million tons per year for 25 years.
Studies made on behalf of the Company and PM by Paul Weir Company Incorporated, Chicago, Illinois, independent mining consultants, show an estimated 43.6 million tons of minable and recoverable coal with an average sulfur content of 0.58 percent and a BTU content of 12,800 BTU's per pound to be located on the properties.
The Company and PM have formed a subsidiary, Leslie Coal Mimng Company (Leslie), to develop the first of these mines, the Leslie Coal Mine. The currently estimated maximum capital cost of the Leslie Coal Mine is $50 million, which is being financed through a combination ofdebt and leveraged leasing. The Company and PM have entered into coal purchase contracts with Leslie for 80% and 20%, respectively, of Leslie's production until the economically mineable coal reserves are exhausted, at prices at least sufiicient to meet all of Leslie's operating costs and other obligations. A shareholders agreement between the Company and PM provides that, ifno coal is delivered by Leslie during any calendar quarter under its coal purchase contracts with the Com'pany and PM, then the Company shall provide to Leslie all funds required to cover Leslie's operating costs and other expenses during such quarter.
The Company has guaranteed the obligations of Leslie under a $30 million term loan and revolving credit agreement which is providing funds for certain real property cos'ts of the Leslie Coal Mine and for the interim financing of the mining equipment to be lease financed.
In connection with the $34.7 million equipment lease financing arrangement, the Company expects to enter into a lease guaranty and completion agreement on or about October 30, 1975 pursuant to which the Company (i) willguarantee all of Leslie's obligations under the lease financing agreements and (ii) willagree to advance any funds required by Leslie (in addition to funds obtained by Leslie from other 17
'ources), and to cause Leslie to complete the Leslie Coal Mine by not later than December 31, 1979. The Company presently believes that the $30 million term loan and revolving credit agreement and the $34.7 millionequipment lease financing arrangement willprovide all ofthe funds required by Leslie to complete the Leslie Coal Mine and that therefore no additional funds will be required to be provided by the Company for that purpose pursuant to its lease guaranty and completion agreement.
Construction of the Leslie Coal Mine is progressing and the Company presently believes that the Leslie Coal Mine will be completed and fully operational by mid-1978.
The Company's obligations under these guarantees are absolute and unconditional, whether or not the Le'slie Coal Mine is completed, operating, operable or whether any coal is actually delivered to the Company.
The Company and PM are negotiating with respect to the financing and development of the second mine estimated to be fully operational by mid-1979.
The Company has elected to meet federal and state emission limitations for sulfur dioxide at all ofits coal-fired units (including Roxboro Unit No. 4 which is scheduled for completion in 1981 and the two additional coal-fired units scheduled for completion in 1983 and 1985, respectively) through burning low sulfur coal.
In order to meet emission limitations for existing plants located in North Carolina, it is necessary to burn coal having an average sulfur content of 1.4% or less at an average BTU content of 12,000 BTU's per pound.
To meet the standard in South Carolin'a requires coal with an average sulfur content of2;1% or less at 12,000 BTU's per pound. Compliance with new source standards ofperformance in North and South Carolina requires coal with an average sulfur content ofapproximately 0.7% at 12,000 BTU's per pound.
While the Company is presently able to obtain coal sufiiciently low in sulfur content to meet these standards without significant additional costs, there is no assurance that it will be able to do so in the future.
As indicated in the immediately preceding paragraph, the coal to be produced by the Company's joint venture with PM is expected to meet the foregoing standards.
The Company's existing coal-fired generating plants and the plant under construction are estimated to require an aggregate of 251 million tons of coal over their remaining useful lives.
Of this total,
- approximately 40 million tons are expected to be supplied by the Company's coal mining subsidiaries, and approximately 47 million tons pursuant to existing contracts with nonafiiliated coal producers.
The Company anticipates that the balance of approximately 164 million tons (65%) will be acquired through the negotiation of additional long-term contracts, short-term agreements, spot market purchases
- and, possibly, the acquisition and development ofadditional coal reserves.
There can be no assurance that the Company will receive all of the coal it has presently under contract or tha't it will be able successfully to complete such negotiations or acquisitions or that the coal supply presently available or acquired to meet the balance 'of its future requirements wiK.~eet the sulfur limitations necessary to comply with environmental standards.
Fossil fuels, including natural gas, oil and coal, have been, or are purported to be, subject to allocatioit by the Federal Energy Administratiori (FEA) under various federal laws and executive orders.
Such an allocation program could affect the abilityofthe Company to satisfy its requirements for oil used as fuel in combustion turbines, as fuel for startup,,regulation and testing ofcoal-fired units and for coal and oil used as boiler fuel. In June 1975 the FEA promulgated regulations authorizing the FEA to allocate low sulfur coal supplies to those areas designated by the Administrator ofthe United States Environmental Protection Agency (EPA) as requiring low sulfur fuel to avoid or minimize adverse impact on public health.
The Company is of the opiniort that it will be unable to replace its long-term coal supplies with coal ofsimilar quality on terms as favorable as those under which it presently receives such coal.
The Company is.
18
presently unable to determine whether or not any of its coal supplies will be allocated to other areas but believes that in the event such supplies are allocated, it will be required to pay substantially more for coal than it is presently paying.
'n February 1975, the Company converted its Sutton Plant to coal fired generation since coal was cheaper than residual oil. In June 1975, the Company received an order from the FEA requiring the Company to convert the Sutton Plant to coal fired generation.
Because the conversion had previously been completed and the cost of coal has been cheaper than oil, the Company has experienced no adverse efiect
'as a result of this order.
Also in June 1975, the Company received an order from the FEA requiring that two fossil fuel units presently scheduled for completion in 1983 and 1985 be constructed principally as coal fired units. The Company had planned for such units to be coal fired and accordingly no adverse effect is expected.
In January 1974, a group of New England electric utilities petitioned the Federal Power Commission (FPC) for emergency relief, under the Federal Power Act, to consist of an order directing a number of utilities in the eastern part of the United States, including the Company, to operate their non-oil fired generating facilities, and to permit the use of interconnected transmission facilities, during oA'-peak periods, in such a way that the New England utilities'eeds for fuel oil could be reduced during such periods.
The FPC issued an order in January 1974 indicating that the petition raises broad electric, operating and reliability questions throughout a large area of the nation.
In August 1974 the FPC issued an order permitting withdrawal of the petition and accepting certain settlement rate schedules.
In October 1
75 the FPC issued an order generally rea5rming its prior order.
The Company cannot predict the ate outcome of these proceedings or its eAect upon fuel resources available to the Company.
The Company primarily uses No. 2 fuel oil for its internal combustion turbine units for emergency backup and peaking purposes.
At August 31, 1975 the Company had suScient No. 2 fuel oil in storage to run all of such turbines 10 hours1.157407e-4 days <br />0.00278 hours <br />1.653439e-5 weeks <br />3.805e-6 months <br /> per day for 16 days which, based on current consumption estimates, is equal to approximately a 366 days supply. Additionally, the Company has fuel oil suppl'y contracts for its requirements through 1977.
The Company is unable to predict the effect that any mandatory allocation program might have on its future operations or its ability to utilize the No. 2 fuel oil under contract.
The average price of No. 2 oil burned over the past five,years and the twelve months ended August 31, 1975 in cents per million BTU is as follows:
1970..
81.12 1971 90.80 1972 90.07 1973.
107.79 1974.
217.55 Twelve months ended August 31, 1975 254 70 i
The Company utilizes natural gas when available as excess pipeline gas (dump gas), but does not rely on it as a regular source of supply.
The CompanY has exp rienced g'eatly increased costs for aH of its fossil fuels. The ave bilit d
cost offossil fuel could be further adversely aA'ected by legislation pending in Congress, coal aHocauo, th failure of coal production to meet demand, the availability of railroad coal can, and the,produ u
pricing and embargo policies of oil Producing foreign countries.
19
t, 0
Nuclear Fuel Supply: The Company has contracts for the nuclear fidel supply chain for its Robinson, Biunswick and Harris Units through the years shown below:
Unit Robinson No. 2'........~............
Brunswick No. 1.......................
Brunswick No. 2.................,.....
Harris No. 2 Harris No. 3.
Uranium 1988 1988 1988 1987 1987 1990 1988 1977 1975 1984 1986 1990 1988 Raw Materials Estimated ineervice date and Services 1988 1988 1988 1987 1987 1990 1988 2002 2002 2002 2002 2002 2002 2002 1984 1982 1980 1984 1986 1990 1988 1983 1983 1983 Conversion Enrtchlntt Fabrication Reprocesstntt
'obinson No. 2 is in commercial operation.
These services will supply the necessary nuclear fuel to operate Robinson No. 2 through
- 1985, Brunswick No.
1 through 1983, Brunswick No. 2 through 1981, Harris No. I through 1985, Harris No. 2
. through 1987, Harris No. 3 through 1991, and Harris No. 4 through 1989. There can be no assuiance that "the Company will be able to obtain nuclear fuel services for years later than those mentioned above; however, the Company does not expect to have difftculty in obtaining fabrication services for its nuclear fuel for years later than those mentioned above.
The Company has sufficient storage space for spent fuel at its Robinson Nuclear Unit to accommodate nt fuel up to the fall of 1976.
Sufftcient time and space is available to add underwater storage racks ta accommodate spent fuel through the fallof 1977. The Company has contracted for, and has applied to the NRC for a license to add, additional storage racks at its Robinson Nuclear Unit.
In addition, the Company has contracted for reprocessing ofspent fuel and expects to begin shipments to its reprocessor in early 1976.
However, licensing of the reprocessor's storage facilities by the NRC must be completed prior to initiating fuel shipments.
The Company cannot predict the outcome of these proceedings or their effect upon its ability to ship fuel~Should the Company be unable to ship fuel offsite or install additional storage racks prior to the fall of 1976, its Robinson Nuclear Unit's continued operation would be adversely affected after the fall of 1976. Should the Company be able to install additional storage racks prior to the fall of 1976 but be unable to ship fuel prior to the fall of 1977, its Robinson Nuclear Unit's continued operation would be adversely affected beginning in the fall of 1977.
The two Brunswick and four Harris nuclear units (not yet commercially operational) have sufftcient spent fuel storage space as designed to provide for planned operation through 1982 and 1988, respectively, without either shipping off'site to the reprocessor or expansion of storage racks.
The reprocessor has requested renegotiation of its contract with the Company and is seeking to raise its charges substantially because of increased costs which it has experienced and which it claims could not have been foreseen.
The Company has not responded.
Interconnections
%1th Other Systems:
The Company's facilities in Asheville and vicinity are connected with the Company's system in the other areas served by the Company through the facilities of Appala'chian Power Company (APCO) and of Duke Power Company (Duke), so that powe'r may be 20
~--"--
~-----
North Carolina North Carolina South Carolina North Carolina
........... 'outh Carolina 21 transferred from or to the Asheville area through interconnections with such companies.
There are also interconnections with the facilities of Tennessee Valley Authority (TVA), Virginia Electric and Power Company (VEPCO), South Carolina Electric & Gas Company (SCE&G), South Carolina Public Service Authority (SCPSA) arid Yadkin, Inc.
Interconnections between the Company and Duke, SCE&G, SCPSA and VEPCO include 230 kv ties, and 500 kv ties with Duke and VEPCO.
'he Company has two-party agreem'ents with APCO, Duke, SCE&G and VEPCO. These agreements provide for the purchasing of limited term power for yearly periods, or for shorter periods where the availability of limited term power depends on the in-service dates of new generating equipment or by mutual agreement.
Short-term power may be purchased for one or more calendar weeks. or for the balance of any calendar week whenever such power is available.
Additionally, two-party agreements made by the Company with SCPSA, TVA and the four utilities named above are such that emergency purchases may be made for periods normally extending less than 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br />.
. The Virginia-Carolinas Subregion of the Southeastern Electric Reliability Council is made up of the Company, Duke, SCE&G, SCPSA and VEPCO plus the Southeastern Power Administration and Yadkin, Inc.
Contractual arrangements among the members contribute to the reliability of bulk power supply.
Participation by the members in the activities of area, regional and national electric reliability organizations, including the Southeastern Electric Reliability Council and the National Elcctfic Reliability Council, promotes electric service reliability.
~
Operation of Asheville Plant Unit No. 2 is subject to an agreement between the Company, Duke, SCE&G and VEPCO, providing for the sale by the Company to the other companies of a portion of the unit's capacity for a limited period. This agreement provides that it may be terminated by the Company v~ it requires this capacity because of its load growth in thc Asheville area.
Sutton Plant Unit No. 3 is aMsubject to an agreement between the Company and SCE&G providing for thc sale by thc Company to it of one-third of the Unit No. 3 capacity for a limited period.
This agreement terminates on April 30, 1976.
In the Virginia-Carolinas Subregion, reserves for the summer of 1976 are estimated to be approximately 24% and the Company's individual reserves arc estimated to bc approximately 23% as compared with approximately 27% and 14%, respectively, for the summer of 1975.
Reserves are expressed as a percentage of the anticipated peak load and are derived by dividing the difference bctwcen total power resources (installed capacity plus purchases minus sales) and the anticipated peak load by the attticipated peak load.
The Company's generating capability is less in the summer.
Retail Rate Increases:
The Company has received the following permanent retail rate increases eA'ective,subsequent to December 31, 1970:
Annua ltzed Increased Revenues Based on 1974 Etfec tive Level of Date Description Sales January 1, 1971..................
S 5,632,000 February 1, 1971.....~..........
21,105,000 March 1, 1972 28,576,000 April 15, 1972 5,597,000 January 6, 1975;..~..............
51,900,000 January 15, 1975...~............
9,600,000
8
~
~
Pl N In October 1973, the Company filed with the North Carolina Utilities Commission (NCUC) an application for authority to increase its permanent retail rates to provide an approximate 21% increase in revenues from retail sales.
In January 1975, the NCUC, by order, granted the Company the requested annual rate increase equal to approximately $51,900,000 based on 1974 level of kilowatt-hour sales.
In March 1975, the North Carolina Attorney General and other intervenors appealed this rate order to the North Carolina Court of Appeals.
This matter is pending.
The Company expects this order to be sustained.
The Company was allowed to place into effect an automatic fossil fuel adjustment clause in North Carolina beginning in February 1974. In December 1974, the NCUC issued an order which, among other things, approved all revenues billed under the fossil fuel adjustment clause through September 30, 1974 and iri April 1975 the NCUC issued an order supplementing its previous order and approving all revenues collected under the fossil fuel adjustment clause through March 31, 1975.
In the April 1975 order, the NCUC found that the fuel adjustment clause "is a reasonable method to adjust rates to refiect changes in fuel expenses experienced by the company" and found that the Company's coal purchasing practices had not been unreasonable, rejecting contentions of the Attorney General of North Carolina that these practices shov ed poor management.
It approved the Company's method of calculating the adjustment, with minor changes which had prospective efiect.
Revenues billed under the fossil fuel adjustment clause since Mar'ch 31, 1975 have been approved by the NCUC on a monthly basis through August 31, 1975.
The North Carolina Attorney General and other intervenors have appealed in the North Carolina Court of Appeals the December 1974 NCUC order, challenging the validity of the Company's fossil fuel adjustment clause authorized by the NCUC on the ground, among others, that the NCUC is without authority to permit the automatic collection of revenues without public hearing prior to implementation of ach monthly fossil fuel adjustment.
The Company has recorded
$ 131,912,000 of revenues through August 31, 1975 pursuant to such fossil fuel adjustment clause.
The matter is pending.
In the opinion of the Company the validity of its fossil fuel adjustmcnt clause will be upheld.
In July 1975, the Company filed with the NCUC an application for authority to increase its retail rates in North Carolina by approximately 22% of total customer charges, which would produce additional revenue of$81,779,500 when applied to the test year ended December 31, 1974, to be effective August 15, 1975, and for an interim rate increase, should the 22% increase be suspended, ofapproximately 12%. The YCUC suspended the 22% general rate increase for 270 days and on August 20, 1975, granted the 12%
interim increase, which would amount to an increase in annual revenues of approximately $45 million, based on 1974 sales, for service rendered on or after that date.
Revenues collected under the interim rate
'ncrease are subject to refund, with 6% interest, to the extent, ifany, that they are in excess of revenues finally approved.
In addition, thc Company was ordered to commence immediately certain maintenance, which it had previously deferred, at an estimated cost of$2 million. Hearings on the general rate increase are scheduled to begin December 2, 1975. The NCUC, in its order ofJanuary,1975, approved rates which would have produced a return on common equity of 14.6% based on a 1973 test year.
The current filing seeks an approximate 15% return on common equity as applied to a 1974 test year. In this proceeding the Company has, among other things, also asked to be allowed to depreciate its generating plants at a faster rate.
Also in July
- 1975, the Company filed an application with the South Carolina Public Service Commission (SCPSC) requesting that it be permitted to increase rates to South Carolina residential customers only by approximately 7.5% of total customer charges, eA'ective September.
1, 1975, which it placed into eQect on that date, subject to refund with 9% interest.
This increase, which is intended to I
22 I
equalize the rates charged to residential customers in South Carolina to those charged in North Carolina, would iricrease annual revenues by approximately $2 million, based on 1974 sales.
In August 1975, the
', Company applied to the SCPSC for authority to increase its retail rates in South Carolina by about 23%
which, ifgranted, would result in a further increase in revenues ofabout $ 19 mBlion annually.'t the same time, the Company asked for an interim increase in rates of approximately 12%, which was placed into effect on September 15, 1975.
This interim increase, which is subject to refund with 9% interest to the extent, ifany, that revenues collected under it exceed those finally approved, would result in an increase in annual revenues of approximately $ 10 million. SCPSC action on these matters is pending.
As of September 30, 1975 the Company had collected approximately $2,851,000 of retail revenues subject to refund in North and South Carolina.
Pursuant to legislation passed by the North Carolina General Assembly in 1975 eliminating fossil fuel adjustment clauses, the Company applied for, and in August 1975 the NCVC issued, an order allowing an increase in rates to cover the current cost offuel as an "approved fuel charge". This order also requires the Company to cease deferring its fossil fuel expenses allocable to North Carolina retail customers and allows the Company to recover fossil fuel expenses which had been deferred prior to August 31, 1975 and previously unrecovered (approximately
$ 12.4 million) through a surcharge to North Carolina retail customers over an approximate twelve-month period beginning September 1, 1975. (See paragraph (c) in "Management's Comments on Statement of Income" and Notes 1 and 6 to Financial Statements.)
The NCUC has ruled that the Company must immediately file to reduce its rate charges for fossil fuel following any month in which such fossil fuel costs are less than the amount provided for in rates.
Similarly, the Co~any may apply for an increase in rates to the extent that fossil fuel costs exceed the amount provided folf'he North Carolina Attorney General has given notice that he intends to appeal this order.
In 1975, the North Carolina General Assembly amended the Public Utilities Act to allow the NCUC to hear rate cases in panels ofthree members and to permit the utilities to extend test year data to the close of proceedings in general rate cases, eliminating the use of a forward test period. Thc Company believes it is too early to determine the effect of these amendments.
In January 1975, certain records ofthe Company were subpoenaed by the Federal Trade Commission in connection with its national investigation of fuel adjustment clauses.
Wholesale Rate Increases:
Effective in May 1971, the Company was granted a rate increase as to its
, wholesale customers in North Carolina and South Carolina amounting to $6,500,000 annualized increased revenues based on the 1974 level of sales.
Effective in March 1973, the Company was granted rate increases applicable to municipalities and private utilities amounting to $2,800,000 annualized increased revenues based on the 1974 level of sales.
Pursuant to settlements reached between the Company and a majority of its wholesale customers, in connection with these rate increases, and approved by the FPC, no further change or substitution in the rate or other terms and conditions of service was to be applicable to service rendered these wholesale customers prior to January 1, 1975. In July'1974, the Company filed an application with the FPC for an increase in the basic rates and an automatic fossil fuel adjustment clause for its wholesale customers to be effective January 1, 1975.
On the average, ifgranted, the filing would increase basic rates to cooperatives by about 61% and to municipalities and private utilities by about 35% (before effect of the fossil fuel adjustment clause).
The increase in the new basic rates would add approximately $20,300,000 annually to revenues based on 1974 level ofKWH sales.
On August 26, 1974, the FPC issued an order suspending for one day the application for an increase in the basic rates and a fossil fuel adjustment clause to be effective 23
January 1, 1975. Under this order, the Company placed the new basic rates and the fossil fuel adjustment clause into efiect for service rendered on and after January 2, 1975, subject to refund with interest.
As of September 30, 1975 the Company had collected approximately $39,722,000 of wholesale revenues, subject to refund.
The majority of the Company's wholesale customers (Petitioners) have intervened in this rate proceeding.
In September 1974 Petitioners filed an application for rehearing on the August order alleging their right to assert anticompetitive issues in the rate proceeding and that the fossil fuel adjustment clause was improper and should have been rejected. Petitioners'pplication was denied.
Petitioners then filed a
~ petition for.review in the United States Court of Appeals for the District of Columbia which the FPC opposed by motion to dismiss.
In February 1975 the United States Court of Appeals ordered that the motion to dismiss be held in abeyance pending a decision in.a similar case before such Court. A decision in that similar case was handed down in April 1975 remanding to the FPC for consideration the petitioriers'ntitrust allegations.
On September 2, 1975, the FPC filed with the United States Supreme Court a petition for a writofcertiorari to review the judgment of the United States Court ofAppeals in this related case.
At August 31, 1975 the Company had deferred applicable fossil fuel costs of approximately
$4,674,000 which will be billed in September and October 1975 and had included in revenues through August 31, 1975 approximately $22,800,000 representing bills rendered in January through August 1975.
(See Note 6 to Financial Statements.)
Hearings before the FPC were held in April 1975 on the lawfulness and 'reasonableness of the increase in the basic rates and the fossil fuel adjustment clause.
The FPC has also ordered hearings to commence on December 17, 1975 concerning certain alleged anticompetitive provisions of the application for the rate increase and fossil fuel adjustment clause.
During the course of the April 1975 hearings, the administrative law judge granted the Company's motion to exclude certain idence on the grounds that such evidence related exclusively to the alleged anticompetitive activities hich are to be the subject of the December 1975 hearings.
In Junc 1975, the FPC affirme this decision.
Petitioners'ubsequent application for rehearing was denied and in August 1975, Petitioners filed a petition for review in the United States Court of Appeals for the District of Columbia. The Company has petitioned the Court of Appeals to intervene in this case.
The Company cannot predict the outcome of these proceedings.
Environmental and Nuclear Licensing platters: To comply with state and federal environmental laws and regulations, the Company has included $66 millionin the construction program for Brunswick Units 1
and 2 during thc period 1975-77, of which approximately
$9 million will be expended in 1975.
For Roxboro No. 4 Unit, $ 18 million has been included between 1975 and 1980 to comply with environmental laws and regulations.
In addition, approximately $25 million is estimated to be required between 1975 and 1977 for necessary modifications to comply with pollution control laws and regulations at the Company's existing facilities.
This sum includes the projected cost of cooling towers at Roxboro No. 3 Unit and at Cape Fear, and cooling systems at Weatherspoon, but does not include sums for cooling system modifications which could be required at other exisung facilities. The H. B. Robinson No. 2 Unit is the only other existing plant for which cooling system modifications are being contemplated by any of the regulatory agencies so far as thc Company knows. Ifoff-stream cooling is required for the Robinson No. 2 Unit, it is estimated to cost approximately $30 million.
Although the Company knows of no costs other than those outlined above which will be incurred for compliance with environmental laws and regulations, additional costs could be incurred as a,result of full implementation of all federal and state laws and regulations or in the event it is found that modifications now planned to meet the requirements of environmental laws and regulations fail to provide the anticipated degree of control.
24
AirPursuant to regulations adopted by the EPA under the Clean AirAct and by North and South arolina under similar state statutory authority, fossil generating units are subject to stringent emission imitations and other requirements, primarily for the control ofparticulate matter and sulfur dioxide. The ompany was generally required to have its existing generating units in compliance with these standards
'y May 31, 1975.
The EPA has also promulgated "Standards of Performance for New Stationary ources" which include stringent limitations on emissions of particulates, sulfur dioxide and nitrogen oxt es des from power plants with construction commencing after August 1971.
These standards are the of.
subject of litigation and administrative proceedings in which the Company is not a party and thc results o which cannot be'predicted.
Compliance with emission limitations for existing,units with respect to particulate, matter has necessitated the installation of electrostatic precipitators at all of the Company's.
fossil units.
Except for Cape Fear. Units No. 3 and 4, installation is complete.
The precipitator for Unit Yo. 3 at the Lee Plant has not yet been tied in, however, and the precipitators for four other units have failed to achicvc consistent compliance with the applicable limitation. As a consequence, the Company has been negotiating the terms and conditions of consent orders which the State of North Carolina has indicated it intends to issue for Sutton Units'No. 1, 2 and 3 and Roxboro No. 3 Unit, and has consented to such an order for Lee No. 3 Unit. When and ifissued, these consent orders would establish dates. by which necessary modifications which will result in full compliance with particulate emission limitations must be completed.
The Lee No. 3 Unit order establishes a date of March 15, 1976 for compliance.
In addition, the Company has been negotiating a consent order with the State of North Carolina for Cape Fear Units No. 3 and 4.
It is expected that an order will be issued for these units permitting continued operation without electrostatic prccipitators conditioned upon retirement of the units or the installation of such prccipitators by early 1981. The EPA, which has independent enforcement authority, is expected to issue
'oti~fviolation under Section 113 of the Clean AirAct and to issue order's for the above facilities or to agree Formally to withhold independent enforcement action based upon its concurrence with the state orders.
ThcCompany has, in,view of the FEA order prohibiting the burning of oil at the Sutton Plant, formally rcquestcd, as required by EPA regulations, that EPA extend the time within which the plant must comply with the Clean Air Act.
The Company complies with sulfur dioxide emission limitations through controlling the sulfur content of.the fuel it burns.
Coal distribution diAiculties have resulted in failure to meet sulfur dioxide limitations at some units on some occasions.
To overcome these problems, the Company has recently modified its coal sampling method and procurement practices.
Until all currently stockpiled coal has been burned, there may. be occa'sions when sulfur dioxide emission limitations are exceeded at certain plants.
In the event the regulatory agencies prevent the future use ofstockpiled coal, or in the event the regulatory agencies object to the Company's practice of using coal of differing quality to achieve overall compliance with emission limitations, the Company's fuel costs could increase substantially.
In the event the Company is unable to purchase coal ofsufficient quality to comply with emission limitations, significant additional costs could be incurred in conjunction with installation ofsulfur.dioxide removal equipment.
In addition, the cost of the two new fossil units scheduled for operation in 1983 and
)985, respectively, could increase if it is determined that these units must comply with anti-degradation requirements established by EPA.
Operating costs for Roxboro No. 4 Unit could also be increased ifit is found that the unit must comply with new source standards of performance.
WarerThe Federal Water Pollution Control Act Amendments of 1972 (FWPCA), among other things, prohibit the discharge ofpollutants {including heat) except pursuant to the terms and conditions of 25 0
National Pollutant Discharge Elimination System (NPDES) permits issued by the Administrator of EPA or the Administrator ofapproved state programs. Timely permit applications have been filed for all ofthe Company's generating facilities., In January 1975, the Company received NPDES permits for four of its existing plants and filed petitions with EPA (Region IV) requesting that an adjudicatory hearing be held in conjunction with each of these permits to determine whether they should be modified to conform to the facts and the law. The Company's requests for hearings have been granted, but no hearing dates have been set. A similar petition was filed by an adjoining landowner in January 1975 in conjunction with the H. B. Robinson Plant permit challenging its thermal discharge provisions.
The landowner petitioner in that proceeding has been allowed to intervene.
<<Vhile thc final rcquireinents imposed upon the Company following the conclusion of the four NPDES permit proceedings described above and'for the plants for which permits have not yet been issued cannot bc known at this time. they arc not expected to result in expenditures significantly in excess of those described
- above, exclusive of thc costs of any additional cooling 1'acilities which may be rcquircd.
iPDES permit applications have not yet been filed for the four units at the Shearon Harris Plant, or the two fossil-fired units scheduled for completion for 1983 and 1985, respectively. The terms and conditions ofpermits issued for these facilities are not expected to increase the costs of these units above those currently estimated, with the exception that additional and costly pollution control facilities could be required for the fossil units scheduled for 1983 and 1985 ifthey are determined to be new sources within ihe meaning of the FWPCA. The cooling system requirements for the Robinson and Brunswick Plants are at issue in the NPDES permit proceedings described above and also in proceedings before the NRC. See "Nuclear Licensing".
On October 15, 1975, thc EPA alleged that the Company has failed, to implement an oil spill vention control and countermeasure plan at its Robinson Plant and proposed a SI,000 civil penalty.
e Company has not yet responded.
Nuclear LicensingThe Final Environmental Impact Statement on thc H. B. Robinson Unit No. 2 was published by the NRC Regulatory Staff in April 1975.
This rcport recommends the continued operation of the unit conditioned upon adoption of certain administrative practices to assure protection of the environment.
A contested hearing commenced on August 12, 1975, in which an adjoinin'g landowner has asserted that the unit's thermal discharges to the Robinson impoundment arc detrimental to fish and wildlifeand adversely affect recreational use of the lake. The Company has challenged the jurisdiction of the NRC to establish any conditions requiring modification of the cooling system or to impose any other water quality related requirements as conditions,of the YRC operating license.
'Also involved in the hearing is the Company's request for a license amendment permitting it to incrcasc the core power level from 2200 MW thermal to 2300 M% thermal. The hearing has been completed, but the Company cannot predict its outcome. The main issue in contention, which is whcthcr or not some form ofoff-stream cooling system should be required for the plant, is also at issue in the NPDES permit proceeding.
The same landowner is also a party in that proceedirig.. EPA has given the Company until June 30, 1976 to submit
'vidence pursuant to Section 316(a) of the F'~VPCA demonstrating that the present once-through cooling system provides for the protection and propagation of a balanced indigenous population of shellfish, lish, and other aquatic wildlife. Thc Company cannot predict the outcome of this proceeding.
In December 1974, the NRC issued an operating license for the first of the two Brunswick Units subject to certain conditions.
Among these is a requirement to construct cooling towers by the spring of 1978 to minimize the adverse impact that the NRC and EPA assumed the intake portion of the existing once-through cooling system would have, on the Cape Fear estuary.
As a result of biological studies it has 26
conducted, thc Company has reason to believe that such adverse impact willnot occur and, therefore, has taken appropriate steps before thc NRC and thc EPA to extend the date by which cooling towers must be operational so that it may conduct further studies to determine whether or not cooling towers are in fact needed.
Regulatory action is pending and the Company cannot predict its outcome.
The NRC has proposed the assessment of a $7,000 civil penalty against the Company for alleged failur'e to implement fully the physical security plan for the Brunswick Plant. The Company has formally denied certain of the allegations, pleaded mitigating and extenuating circumstances with respect to others, and requested that no penalty be assessed.
Thc initial phase of the hearing on the Company's application for construction permits for the four units at the Shearon Harris Plant was held in October 1974.
The hearing is expected'to resume during 1976.
Remaining to be considered arc thc intervenor's contentions relative to whether the current and
. projected demand for power justifies construction of the proposed units and whether or not'he Company
.is financially qualifie to construct such facilities. The Company cannot predict the ultimate outcome of the licensing hearing.
In December 1973, the NRC adopted new regulations governing the emergency core cooling systems of nuclear power plants. Preliminary analysis to date for Robinson No. 2 Unit and Brunswick Units No. I and 2 indicates that there willbe no loss ofcapacity resulting from'compliance with these regulations.
Fuel to be supplied by Exxon Nuclear Company, Inc., will be used at Robinson for the first time in December 1975 and is undergoing licensing review by thc NRC for such use.
Although NRC approval of this I'uel is scheduled for December I, 1975, the Company cannot predict thc outcome of this review.
In May 1975, the NRC established numerical guides for meeting thc "as low as practicable" criterion foMioactivc material in reactor cNucnts.
By June 4, 1976, thc Company must file its plans with the NRWfor keeping radioactive rclcascs as low as practicable.
The Company does not anticipate that compliance with these guides will require major modifications to its facilities. If. however, EPA ultimately promulgates its proposed Standards ol Environmental Radiation Protection for Nuclear Power Operations
. published on May 29, 1975, such modifications could be required.
In view of the environmental and nuclear licensing matters discussed in this section, the Company may incur increased construction or operating expcnditurcs: and in thc further event that thc NRC should order the suspension ofoperation of thc H. B. Robinson Unit No. 2 or ofconstruction, or operation of the
- Brunswick Units or delay in the construction of thc Harris Units beyond the adjusted construction schedule, system power rcsourccs may become inadequate.
Other Litigation: In February 1975, the Company was served with a complaint and summons in an action brought in thc Court of Common Pleas of Marlboro County, South, Carolina. by Frank E. Cain, Jr.,
for himself and a purported class consisting of other persons residing within one mile of the city limits of the City of Bcnnettsviile, South Carolina, against the Company and the City of Bennettsville; The complaint, which has been amended, alleges that the Company and the City, a wholesale customer of the Company, have conspired to violate the civil rights of the plaintiffand the class by forcing them to buy electricity, at retail, from the City rather than from the Company and asks for a total of $50 million in actual and punitive damages and injunctive relief. The Company's general counsel is of the opinion that the suit is without foundation and can be successfully defended.
27
DESCRIPTION OF COMMON STOCK The following is a summary of certain rights and privileges of the Common Stock of the Company.
The summary does not purport to be complete, and reference is made to Article Fourth of the Agreement of Merger between Tide Water Power Company and the Company, dated December 12,
- 1951, as amended (Charter), filed as an exhibit to the Registration Statement, for complete statements.
The followingstatements are qualified in their entirety by such reference.
Reference is also made to the laws of North Carolina.
Dividend Rights: The Common Stock is entitled to all dividends after full provisions for Preferred Stock and Preference Stock dividends.
The Charter contains provisions limiting the amount of dividends or distributions which the Company may pay or make on its Common Stock (i) unless certain ratios of Common Stock and surplus to total capitalization are maintained or (ii) if there is a failure to pay dividends on any Preferred Stock or Preference Stock or to meet. sinking fund payments on the Preferred Stock A. So long as any of the present series of First Mortgage Bonds are outstanding, the payment of Common Stock dividends is restricted to aggregate net income available therefor (after dividends on all preferred stock outstanding) since December 31, 1948, plus $3,000,000.
See Note 2 to Financial Statements for the amount ofretained earnings restricted at August 31, 1975. There are no defaults in the payment of dividends on any of the outstanding Preferred Stocks or Preference Stock.
Voting Rights (Non-Cumulative Voting): Except with respect to Preferred'Stock A, each share of Preferred Stock and each share ofCommon Stock is entitled to one vote on all matters.
Since the holders ofsuch shares do not h'ave cumulative voting rights, the holders of more than 50% of the shares voting can elect all the Company's directors, and in such event the holders of the remaining shares voting (less than 50%) cannot elect any directors. Ifand when dividends payable on any ofthe Preferred Stocks shall be in default in an amount equivalent to four full quarterly payments or more per share, and thereafter until all arrears have been paid, holders of Preferred Stocks, voting as a class, shall be entitled to elect the smallest number of directors necessary to constitute a majority ofthe Board of Directors, and holders of Common Stock, voting as a class, shall have the right, subject to the prior rights of holders of Preference Stock, to elect the remaining directors. Ifand when dividends payable on the Preference Stock shall be in default in an amount equivalent to six full quarterly payments or morc per share, thereafter until all arrears have been paid, holders ofPreference Stock, voting as a class, shall be entitled, subject to the prior rights of the Preferred Stocks, to elect two directors.
Liquidation Rights: The Preferred Stocks are entitled, in liquidation, in preference to.the Preference Stock and the Common Stock, to $ 100 per share and accumulated unpaid dividends.
Each series of Preference
'tock is entitled, in liquidation, in preference to the Common Stock, to the amount per share fixed at the time'of issuarice thereof ($25 per share in the case of$2.675 Preference Stock, Series A) and accumulated
'npaid dividends.
The holders of the Common Stock are entitled to share, ratably, in the distributionof all remaining assets.
Pre-emptive Rights: The holders of Common Stock have no pre-emptive rights to purchase additional
,shares of Common Stock unless the Board of Directors shall determine to offer such additional shares for money other than by a public offering or an off'ering to or through underwriters or invest'ment bankers who shall have agreed promptly to make a public offering of such shares.
Shares offered to employees of the Company pursuant to a plan approved by shareholders are also exempt from pre-emptive rights.
Miscellaneous: Upon the issue-and sale of the New Common, such shares will be t'ully paid and non-assessable.
The transfer agents for the Common Stock are Wachovia Bank and Trust Company, N.A.,'inston-Salem, North Carolina, and Bankers Trust Company, New York, New York.
28
~MdNMlJ~
MANAGEMENT Directors DANIELD. CAMERGN, SR.
President, Atlantic Telecasting Corporation Wilmington, N. C.
FELTON J. CAPEL Regional Manager Century Metalcraft Corporation Southern Pines, N. C.
CHARLEs W., COKER, Ja.
President, Sonoco Products Company Hartsville, S. C.
E. HERVEY EVANS Farmer, Laurinburg, N. C.
MARGARET HARPER Owner, Stevens Agency Southport, N. C.
SHEARON HARRIS Chairman/President of the Company Raleigh, N. C.
L. H. HARVIN, JR.
President, Rose's Stores, Inc.
Henderson, N. C.
KA~. HUDsoN, JR.
EItive Vice President Hudson-Belk Company Raleigh, N. C.
J. A. JONEs Executive Vice President of the Company Raleigh, N. C.
EDWARD G. LILLY,JR.
Senior Vice President of the Company Raleigh, N. C.
SHERWOOD H. SMITH, JR.
Executive Vice President of the Company Raleigh, N. C.
HoRAGE L. TILGHMAN,JR.
Real Estate and Investments Marion, S. C.
JQHN B. VEAGH Business Consultant Asheville, N. C.
JOHN F. WATLINGTON,.JR.
Chairman of the Board Wachovia Bank & Trust Company, N.A.
Winston-Sa)em, N. C.
I 29 OScers SHEARGN HARRIs President J. A. JoNEs Executive Vice President (Group Executive)
SHERWOOD H. SMITH, JR.
Executive Vice President (Group Executive)
EDWARD G. LILLY,JR.
Senior Vice President (Group Executive)
W. J. RIDOUT, JR.
Senior Vice President (Group'Executive)
SAMUEL BEHRENDS, JR.
Vice President E. M. GEDDIE, Vice President WILLIAME; GRAHAM, JR.
Vice President and General Counsel WILLIAMB. KINCAID Vice President M. A. MCDyFFIE Vice President DARRELL V. MENscER Vice President ALBERT L. MoRRIs, JR.
Vice President J. R. RILEY Vice President R. S. TALTGN Vice President EDWIN E. UTLEY Vice President J. L. LANCASTER, JR.
Secretary ROBERT M. WILLIAMS Assistant Secretary JAMEs S. CURRIE Treasurer J. R.
PowE.I.'ontroller PAUL S. BRADSHAW Assistant Treasurer, C. D. MANN Assistant Treasurer
~
4
EXPERTS AND LEGALITY
'he balance sheet as of December 31, 1974, and the related statements of income, retained earnings and source and use of financial resources for the five years then ended contained in this Prospectus have been examined by Haskins & Sells, independent certified public accountants, as stated in their opinion included herein.
The statements made as to matters of law and legal conclusions under "Business" and "Descripuon ofCommon Stock" have been reviewed by WilliamE. Graham, Jr., Esq., Vice President and General Counsel for the Company.
All of such statements are'ct forth herein in reliance upon the opinions of said firm and individual, respectively, as experts, as expressed in their opinions with respect thereto.
The legality of the securities ofi'ered hereby will be passed upon for the Company by William E.
Graham, Jr., Esq., Vice President and General Counsel for the Company, Raleigh, North Carolina, and by Reid & Priest, 40 Wall Street, New York, New York, counsel to the Company, and for the Underwriters by Winthrop, Stimson, Putnam & Roberts, 40 Wall Street, New York, New York. However, all matters pertaining to the organization of the Company, titles, and local law willbe passed upon only by WilliamE.
Graham, Jr., Esq., who may rely as to all matters of South Carolina law on the opinion of Paulling &
'ames, Darlington, South Carolina.
As of August 31, 1975, William E. Graham, Jr., Esq., owned 665 shares of the Company's Common Stock. Mr. Graham is acquiring additional shares ofCommon Stock at regular intervals as a participant in the Company's Stock Purchase-Savings Program for Employees.
The information appearing in this Prospectus relative to the estimates of the Company's subsidiary's coal reserves
- have, as hereinabove
- stated, been reviewed and verified by Paul Weir Company corporated, Chicago, Illinois, independent mining consultants and engineers, and have been included ein in reliance upon the authority of said firm as experts.
I k
l 30
OPINION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS CAROLINAPOWER & LIGHT COMPANY:
We have examined the balance. sheet ofCarolina Power & Light Company as of December 31, 1974 and the related statements of income, retained earnings and source and use of financial resources for the five years then ended.
Our examination was made in accordance with generally accepted auditing standards
- and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, thc financial statements referred to above present fairly the financial position of the
~ -Company at December 31, 1974 and the results of its operations and thc source and use of its financial resources for the five years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.
HASKINS & SELLS Raleigh, North Carolina February 13, 1975
{April2, 1975 as to the last aragraph of Note 6 and ay 1, 1975 as to Note 9) 31
CAROLINAPOWER & LIGHT COMPANY BALANCESHEET AS S ETS December 31, 1974 August 31,
. 1975 (Unaudited)
ELECTRIC UTILITYPLANT:
Electric utilityplant other than nuclear fuel:
In service
~
~
~
~ 0
~ ~ ~
~
~
~
Plant held for future use Construction work in progress.
Total Less accumulated depreciation Net..
Nuclear fuel.
Less accumulated amortization.
Net
~
~
~
~
~
~
Electric utilityplant, net HER. PROPERTY AND INVESTMENTS CURRENT AssETs:
hh m banks....,.....
ial deposits for dividends, interest, etc..
orking funds.
Temporary cash investments...
Accounts receivable:
Refundable income taxes (Note 5)...
, 0ther, net.
~
~
~ ~ ~ ~ ~ ~ ~ ~ \\ ~ 0
~ ~ 01 F 001
~ ~ ~ I
~ ~ ~
De(erred fossil fuel inventory costs (Notes I and 6)..................
Materials and supplies:
Fuel...
Other.
Prepayments, etc..
Total current assets:.
DEFERRED DEBITS:
Unamortized debt expense Other Total deferred debits.
Total.
~
~ ~ ~\\
ro 0
~
~ ~
$ 1,364,183,273 7,542,840 826,012,064 2,197,738,177 256,659,461
$ 1,417,784,173 8,009,627 970,349,409 2,396,143,209 282,537,524 1,941,078,716 2,113,605,685 55,117,915 11,466,631 43,651,284 60,769,924 15,365,914 45,404,010 1,984,730,000 2,159,009,695 3,828,783 2,047,978 9,379,477 19,864 117,833 14,942,360 30,677,344 35,028,046 84,244,486 13,434,110 1,787,436 189,630,956 1,253,151 5,624,404 6,877,555 10,898,904
'22,537 125,240 4,998,438 30,721,045 19,888,635 47,248,103 15,600,876 2,216,112 131,719,890 1,476,555 6,276,543 7,753,098
$2,185,067,294
$2,300,530,661 See Notes to Financial Statements.
32
CAROLINAPOWER Sc LIGHTCOMPANY BALANCESHEET LIABILITIES CAPITALSTocK AND RETAINEDEARNINGs (Notes 2 and 8):
Preferred stock...
Preference stock.....
Common stock
'etained earnings...............'......................'................................
Total capital stock and retained earnings..................
LoNG-TERM DEBT (Note 3):
Principal amounts.
Less unamortized discount and premium, net...........................
Long-term debt, net.
CURRENT LIABILITIES:
Notes payable (Note 4):
Banks.
Commercial paper.............
Other Accounts payable:
Construction contract retentions.
Other Customers'eposits.
Taxes accrued Interest accrued Dividends declared.
Current portion ofdeferred income taxes (Note I ).................
Other Total current liabilities.
DEFERRED CREDITS:
Investment tax credits (Note 5)
Customers'dvances for construction.........................
Other
\\
Total deferred credits................................,.............
RESERVE FOR INJURIES AND DAMAGES.
AccUMULATEDDEFERRED INcoME TAxEs (Note 5)........................
CGMMITMENTsAND CoNTINGENcIEs (Note 6)
Total.
December 31, 1974
.'288,118,400 419,701,904 128,762,726 836,583,030 August 31, I97S (Unaudited)
$288,118,400 47,900,000 477,980,155 157,098,939 971,097,494 1,036,914,310 1,159,235,359 2,819,037 4,059,955 1,034,095,273 1,155,175,404 50,315,000 81,275,000 67,046 5,184,910 54,227,273 2,818,650 11,276,899 19,321,270 19,240,143 13,577,543 1,823,299 259,127,033 14,075,000 88,924
',198,773 15,782,805 3,516,517 19,160,839 27,190,926 5,800,199 6,047,148 2,618,269 98,479,400 4,514,126 125,873
'15,406 4,755,405 724,920 49,781,633 9,324,559 173,198 592,518 10,090,275 793,362 64,894,726
$2,185,067,294
$2,300,530,661 See Notes to Financial Statements.
33
CAROLINAPOWER 4 LIGHTCOMPANY STATEMENT OF RETAINED EARNINGS Balance at Beginning ofPeriod:
As previously reported...........
Adjustments (Note 8)...........
As restated..............................
Net Income Twelve Months Ended December 31, 1970 1971 1972 1973 66,662,241 24,825,122 66,607,790 37,473,640 72,313,288 60,529,232 94,833,367 65,998,934
$62,502,253
$ 62,447,802
$ 68,153,300
$ 90,673,379 4,159,988 4,159,988 4,159,988 4,159,988 1974
$ 110,816,532 5,246,508 116,063,040 72,270,556 August 31, 1975 (Unaudited)
$ 132,503,809 1,086,520 133,590,329 89.164,827 Total.....
91,487,363 104,081,430 132,842,520 160,832,301 I&8,333,596 222,755,156 Deductions:,
Cash dividendsdecla'red:.
$ 5 Preferred
($5.00 per sharc: per annum)...........
Serial preferred:
$4.20 Series ($4.20 per sharc per annum).......
$ 5.44 Series ($5.44 pcr share per annum).......
$9.10 Series ($9.10 per share per annum).......
$7.95 Series ($7.95 per share pcr annum).......
$7.72 Series ($7.72 per share per annum)
.......'8.48 Series ($8.48 pcr share per annum).......
Preferred Stock A:
$7.45 Series ($7.45 per share pcr annum).......
$2.675 Prcl'erence Stock.
Series A ($2.675 per share per annum)...........
Common stock (per share:
$ 1.46 in 1970 and 1971;
$ 1.49 in 1972; $ 1.56 in 1973 and $ 1.60 in 1974 and for the twelve months ended August 3 I, I975 ).........................
Capital stock discount and ex-pense Total deductions.........
Balance at End ofPeriod (Note 2)... $
1,186,295 1,186,295 1,186,295 1,186,295 1,186,295 I,I&6395 h
420,000 1,360,000 2,730,008 2,782,523 3,860,000 420,000 1,360,000 2,415,004 420,000 1,360,000 420,000 1,360,000 420,000 1,360,000 2,730,008 2,782,522 420,000 1,360,000 2,730,008 2.782,524 3,860,000 2,730,007
. 2,730,008 3,369,940 2,782,521 2,097,835 3,860,000 5,986,655 5,512,000 678,195 3,725,000 3,725,000 2,&38,496 19,012,828 22,121,658 27,173,710 32,691,198 37,374,994 145,395 59,570,870 40,779,840 462,054 65,656,217 485,446 580,242 258,784 147,563 24,879,573 31,768,142 38,009,153 45,855,781 66,607,790
$ 72,313,288
$ 94,833,367
$ 114,976,520
$ 128,762,726
$ 157,098,939 See Notes to Financial Statements.
34
CAROLINAPOPOVER & LIGHTCOMPANY STATE.")IEl8ITOF SOURCE AlqD USE OF Fll91ANCIALRESOURCES Twelve Months Ended P
December 31, 1970 1971 1972 1973 August 31, 1974 197$
(Unaudited) urce of Financial Resources:
Current resources provided from operations:
667et lnCOme.
Items not requiring (providing) current resources:
Depreciauon and amortization..............................
Allow'ance for funds used during consuuction......
Noncurrcnt dcfcrrcd income taxes net...............
Investment tax <<rcdit adjustments-net................
Total current resources from operations........
Other resources provided:
Additions to, plant accounts representing capital-ization ofnet cost offunds used during construction Proceeds from assignment to lessor of internal com-bustion,turbine generators.
Proceeds from sale and leaseback of nuclear fuel........
Miscellaneous-nct.
Total resources provided from operauons and other'inancings:
Sale of:
First mortgage bonds.
Six-year note.
Preferred stock Preference stock Common stock.
rcase (decrease) in short-term notes payablc less temporary cash investments......................................
Total resources provided from f)nancings.....
TQTAL.
se of Financial Resources:
Gross property additions excluding nuclear fuel'...............
nuclear fuel additions'...........
'tridends for the year...
Net increase (decrease) in working capital, excluding short term notes payable and temporary cash in-vcslrncnts TOT3tt.
crease
( Decrease) in IVorkingCapital, Excluding Short. term Yotes Payable and Temporary Cash Investments, by Com-ponents:
Materials and supplies (principally fuel).............................
Deferred fossil fuel inventory costs.......................................
Accounts receivable Accounts payable.
Current portion ofdeferred income taxes.............................
Taxes accrued Interest and dividends payable.
Othernet..
Net increase (decrease) in working capital, ex-cluding short. term notes payable......................
Thousands of Dollars 19,965 (10,505) 1,278 (1,505).
34,058 28.327 (14.708) 3.480 1.277 55.850 37.203 (24,759) 5,972 1,756 80,701 40,430 (38,093) 7,430 2,948 78,714 45,391 (54.609)
I I.I88 (6.241) 68.000 51,846 (63,561) 22.094 (821) 98,723 10,505 14.708 24,759 38,093 54.609 63,561 1.228 883 663 109 44.455 47,593 3.995 47,593 9,579 45.791 7).44)
.106.123 116.916 218,652 219.456 89,302 29,575 29,186 2.914 150.977 5196.768
$ 167,741 3.722 23,712 134.351 34,506 33.910 12.483 215.250
$286.691
$239.291 20.232 30;492 99.317 50.000 49.364 125,039
( 70.164) 253.556
$ 359.679
$ 318.382 16.918 36,785 199,755 49.949 63,449 16.356 329.509
$446,425
$359,056 37.610, 45,708 150.979 64.231 3.381 103.301 321.892
$ 540.544
$382.602 39,939 58,048 148,291 47,744 59,309 (10.583) 244.761
$464.217
$355,868 28.495 64.748 1.593
$ 196.768 (3.324)
$286.69 I (12.406)
$359.679 4.051
$446,425 59,955
$540.544 15,106
$464.217
$ 11,419
$ (9,107) 5,576 105 300 (4,374)
(3,845)
(5,426) 3,519 5.898 (2.219) 6.932 (5,656) 828 1,163 (8.567)
(3,222)
(5,876)
(1.480) 2,900 3,557 3,036 (5.153)
(394)
$ 69.335 35,028 19.869 (40,310)
( 13,578)
(7,693)
(6.077) 3,381 8.914 342 (10,774) 17,720 3.335 (5,461)
(6.5! I )
7.541 S
),593 8 (3.324)
$(12.406) 4.05)
$ 59.955 S 15,106 I
$ 24,825
$ 37,474
$ 60,529 '65,999
$ 72,271
$ 89.165 Includes amounts charged to utility plant representing the "allowance for (the cost of) funds used during nstruction".
See Notes'to Financial Statements.
35
CAROLINAPOWER & LIGHT COMPANY NOTES TO FINANCIALSTATEMENTS For the Five Years Ended December 31, 1974 and (Unaudited) the Twelve Months Ended August 31, 1975 l.
SUMMARY
oF SIGNIFIGANTAccoUNTING PGLIGIES System of Accounts.
The accounting records of the Company are maintained in accordance with uniform systems of accounts prescribed by the Federal Power Commission (FPC) and the regulatory commissions of North Carolina and South Carolina.
Electric UtilityPlant.
Electric utility plant is stated at original cost.
The cost of addi'tions, including replacements of units of property and betterments, is charged to utility plant.
The Company includes in.
such additions an allowance for funds used during construction (8% for 1970 through August 31, 1975).
Maintenance and repairs of property and replacements and renewals of items determined to be less than units of property are charged to maintenance expense.
The cost of units of property replaced or renewed plus removal costs, less salvage, is charged to accumulated depreciation.
Utilityplant is subject to'the lien of the Company's Mortgage.
Allowancefor Funds Used During Construction.
In accordance with the uniform systems of accounts, prescribed by regulatory authorities, an allowance for funds used during construction is included in nstruction work in progress and credited to income,.recognizing that funds used for construction were
~
~
rovided by borrowings, preferred stock, and common equity.
This accounting practice results in the inclusion in utilityplant in service of amounts considered by regulatory authorities as an appropriate cost for the purpose of establishing rates for utilitycharges to customers over the service lives of the property.
~
Depreciation and Amortization.
Depreciation of utility plant, other than nuclear fuel, for financial reporting purposes is computed on the straight-line method based on estimated useful lives and charged principally to depreciation expense.
Depreciation provisions as a percent of average depreciable property other than nuclear fuel approximated 2.7% for 1970 through 1972, 2.8% for 1973 and 1974, and 3.1% for the twelve months ended August 31, 1975.
Amortizauon of nuclear fuel is computed on the unit-of-production method and charged to fuel expense.
Compensating Bank Balances.
The Company maintains average balances.
in various banks in connection with bank lines ofcredit. Such compensating balances include amounts to support outstanding
.'bank loans and to provide back-up for bearer commercial paper and demand
- notes, and may be withdrawn without sanctions on a day-to-day basis so long as the required average balances are maintained at the banks.
Average balances, where required, are typically 10% ofline. Furthermore, all of such balances are available for use as general operating funds. At December 31, 1974 outstanding notes payable to banks required average compensating balances of$2,500,000.
At August 31, 1975 there were no outstanding notes payable to banks, and unused bank lines ofcredit totaled $ 130,815,000 and required total average compensating balances in the respective banks of $9,350,000 plus commitment fees of approximately $ 17,000 per month.
During the twelve months ended August 31, 1975, average compensating balance requirements reached a maximum month end total of $9,350,000 plus commitment fees of approximately $ 17,000 per month in support of total lines of credit of $ 130,815,000.
Revenues.
Customers'eters are read and bills are rendered on a cycle basis.
Revenues are recorded when billed, as is the customary pra'ctice in the industry.
36
4
CAROLINAPOWER & LIGHTCOMPANY NOTES TO FINANCIALSTATEMENTS-(Continued)
Deferred Fossil Fuel Inventory Costs.
On February 6, 1974, pursuant to state regulatory commissions'rders, the Company put into eA'ect retail service fossil fuel adjustment clauses to recover increased fuel costs. The provisions of the clauses result in a time lag between the date increased fuel cost is incurred and the date such cost is billed to customers.
Accordingly, to properly match increased fuel costs with the related rcvcnues, the Company is deferring the increased fuel cost when incurred and expensing it in the month the related revenues arc billed. Therefore, operating expenses in the statement ofincome for 1974 and the twelve months ended August 31, 1975 have been decreased and Deferred Fossil Fuel Inventory Costs in the balance sheet as ofDecember 31, 1974 and August 31, 1975 have been increased as compared with the respective balance sheets one year earlier by $35,028,046 and $342,154, respectively, representing the normalization of such cost.
Related deferred income taxes have been'recorded by increasing income tax expense in the statement of income and are rcAected in Current Portion of Deferred Income Taxes on thc balance sheet.
Sec Note 6 concerning status of thc fuel adjustment clauses.
Income Taxes.
Deferred income tax provisions are recorded only to the extent such amounts are currently'llowed for rate-making purposes.
In compliance with regulatory accounting, income taxes are allocated between Operating Income and Other Income, principally with respect to interest charges related to construction work in progress.
Sec Note 5 with respect to certain other income. tax information.
Investment Tax Credits.
Investment tax credits generated and utilized afte'r 1971 have been deferred a
are being amortized over the service lives of the property; substantially all credits prior to 1972 were deferred for amortization over five-year periods. At December 31, 1974 the Company had generated but not utilized investment tax credits totaling $9,800,000 (see Note 5 for prior years'nvestment tax credits eliminated in 1974 and included herein).
Preferred Dividends.
Preferred stock dividends declared and charged to retained earnings include amounts applicable to the first quarter ofthe following year, except for the Preferred Stock A, $7.45 Series, issued in 1973, which dividends are wholly applicable to the period in which they are declared.
Retirement Plan.
The Company has a non-contributory retirement plan for all regular full-time employees and is funding the costs accrued under the plan.
Retirement plan costs for 1970-1974 and the twelve months ended August 31, 1975 were approximately:
$ 1,383,000,
$ 1,627,000,
$ 1,700,000,
$ 1,748,000,
$2,421,000 and
$3,188,000, respectively.
In 1975, the Company amended the plan by
- changing, among other things, vesting provisions to conform with the requirements of the Employee Retirement Income Security Act of 1974, the interest assumption from 4K% to 5%, and the amortization of
.the unfunded prior service cost over a period of twenty years from January 1, 1975.
The eQ'ect of these changes on periodic net income is not material.
The unfunded prior service cost at January 1, 1975, the date of the latest actuarial valuation, was approximately $24 millionand the actuarially computed value of vested benefits exceeded assets of the plan by approximately $22 million.
Other Policies.
Other property and investments are stated principally at cost, less accumulated depreciation where applicable.
Materials and supplies inventories are "stated at average cost.
The.
Comp'any maintains an allowance for doubtful accounts receivable (December 31, 1974$427,876; August 31, 1975$399,459).
B'ond premium, discount and expenses are amortized over the life of the related debt.
37
O.
CAROLINAPOWER 8c LIGHTCOMPANY NOTES TO FINANCIALSTATEMENTS-(Continued)
December 31, 1974 August 3I, 197S
- 2. CAPITALSTOCK Preferred Stock, without par value, cumulative:
$ 5 ( authorized, 300,000 shares; outstanding, 237,259 shares)..
Serial (authorized, 10,000,000 shares):
$4.20 Series (outstanding, 100,000 shares).........................
$5.44 Series (outstanding, 250,000 shares)..........................
$9.10 Series (outstanding, 300,000 shares).........................
$7.95 Series (outstanding, 350,000 shares)............~............
$7.72 Series (outstanding, 500,000 shares).........................
$8.48 Series (outstanding, 650,000 shares)..............,..........
Preferred Stock,A (authorized, 5,000,000 shares):
$7.45 Series (outstanding, 500,000 shares).........:...............
Total.
Preference
- Stock, without par
- value, cumulative (authorized, 10,000,000 shares):
$2.675 Series A (outstanding, 2,000,000 shares) issued March 1975 Common
- Stock, without par value (authorized, 60,000,000 shares):
Outstanding 23,438,844 shares at December 31, 1974; 27,604,589 shares at August 31, 1975.....................
.Subscribed but not issued 19,875 shares Total.
10,000,000 25,000,000 30,000,000 35,000,000 49,425,000 64,317,500 50,000,000 10,000,000 25,000,000 30,000,000 35,000,000 49,425,000 64,317,500 50,000,000
$288,118,400
$288,118,400
$ 47,900,000
$419,458,687 243,217
$477,980,155
$419,701,904
$477,980,155
$ 24,375,900
$ 24,375,900 On May 21, 1975, the shareholders approved the increase in authorized preference stock from 2,000,000 to 10,000,000 shares.
At December 31, 1974, 965,460 (August 31, 1975, 799,715 shares) shares of unissued common stock were reserved for issuance under the Stock Purchase Savings Program for Employees.
The $ 5 and Serial Preferred stocks are callable, in whole or in part, at redemption prices ranging from
$ 102 to $ 115 a share plus accumulated dividends.
The Preferred Stock A, $7.45 Series, is presently callable at $ 115 per share plus accumulated dividends unless refunding is involved, in which case there are substantial limitations on redemption until after September 2, 1980. The Preferred Stock A, $7.45 Series, has a mandatory sinking fund commencing in 1984 to redeem 20,000 shares annually at a redemption price of $ 100 per share plus accrued and unpaid dividends.
In the event of liquidation, the preferred stocks are entitled to $ 100 a share plus accumulated dividends.
The $2.675 Preference Stock Series A is presently callable in whole or in part at $27.68 per share plus accumulated dividends unless refunding is involved, in which case there are substantial limitations on redemption until April 1, 1980, and in the event of liquidation is entitled to $25 a share plus accumulated dividends.
The Company's charter and the indentures relating to the First Mortgage Bonds contain provisions limiting payments of cash dividends on preference and common stock under certain circumstances.
At December 31, 1974, $21,035,987 ofretained earnings was so restricted under the charter provisions, which restriction was removed in January 1975 upon the sale of4,000,000 shares ofcommon stock, and at August 31, 1975, $ 19,084,446 of retained earnings was so restricted.
38
CAROLINAPOWER 4 LICHTCOMPANY NOTES TO FINANCIALSTATEMENTS-(Continued)
For the years 1970 through 1974 and the eight months ended August 31, 1975, shares ofcapital stock were issued as follows, representing the total increases in the respective accounts in the periods:
Common Stock Sales Public Offerings Under the Stock Purchase-Sayings Program for Employees Public Olferlnge Private Placement Public Offerlnge
'referred Stock Sales Preference Stock Sales 3.
300,000 350,000 500,000 500,000 2,000,000 20,100,000 43,930,000 15,000,000 20,000,000 100,000,000
20,000,000 25,000,000 25,000,000 30,000,000
'50,000,0000 30,000,000
. 40,000,000 40,000,000 40,000,000 50,000,000 65,000,000 70,000,000 100,000,000 100,000,000 100,000,000 125,000,000 1,109,030,000 50,000,000 205,359
$ 1,159,235,359 1970..................
1,250,000 62,333 1971..................
1,500,000 69,226 1972..................
4,500,000 69,442 1973..................
3,000,000 109,247 1 974..................
205,081 650,000 Eight months ended August 31, 1975.........
4,000,000 165,745 LONG-TERM DEBT First mortgage bonds (principal amounts):
3Va% Series, due 1979............,.
~.
3'%eries, due 1979.....
27/a% Series, due 1981 3Vt% Series, due 19li2 11
%Series, due 1984...'..
4Va% Series, due 1988.......,....
4v/a% ScrIes, due 1990............
4Va% Series, duc 1991.
4t/a% Series, due 1994..
11'/a% Series, duc 1994...
5Va% Series, due 1996...................
6s/a% Series, due 1997 6t/a% Series, due 1998..
8s/a% Series, due 2000..
8a/4% Series, due 2000.
7'eries, due 2001 7'/a% Series, due 2001 73/<% Series, due 2002 7~/i% Series, due 2003 8Va% Series, due 2003...
9'/a% Series, due 2004.
Total.
Six-year note payable to a bank, due July 31, 1978 at a fluctuating rate (8.925% at August 31, 1975) related to the bank's prime rate.....
Miscellaneous promissory notes (1974, $234,310)...............
Total at August 31, 1975.....
'22,350,000 issued in January 1975.
"Issued in May 1975.
39
CAROLINAPOPOVER & LIGHTCOMPANY NOTES TO FINANCIALSTATEMENTS-(Continued)
The bond indenture, as amended, contains requirements that additional property be certified.or that specified amounts in cash and/or principal amount of bonds be delivered annually to the Trustee as an improvement fund. These requirements are approximately $6,100,000 for 1975 and $6,700,000 for each of the years 1976 through 1980.
Current liabilities do not include the current improvement fund requireme'nts since the Company meets such requirements by the certification of additional property.
Bonds of the 1 it/s% Series due 1994 shall be redeemed under sinking fund provisions at $2,000,000
,each year commencing on December 1, 1976, at the principal amount without premium plus accrued.-
intercst..
4.
NOTES PAYABLE AND LINES OF CREDIT At December 31, 1974, outstanding notes payable to banks totaled $50,315.000 representing notes due on or before February 27, 1975,with an average eA'ective interest rate of 10.13%'outstanding commercial paper totaled $81,275,000, with due dates ranging from 2 to 42 days and had an average effective interest rate of 10.04%.
During the twelve months then ended, short-term notes payable outstanding averaged (on a daily weighted basis)
$63,162,000 ai an average eAective interest rate of 9.86% and with terms of up to three months.
'I At August 31, 1975 outstanding commercial paper totaled $ 14,075,000 with due dates from date of i
ranging from 40 to 42 days and had an average effective interest rate of 7%.
During the twelve mMths then
- ended, short-term notes payable outstanding averaged (on a daily weighted basis)
$68,366,741 at an average eAective interest rate of 9.68% and with terms of up to three months.
During the twelve months ended December 31, 1974 and August 31, 1975, maximum month-end aggregate short-term notes payable totaled $ 161,185,961.
At August 31, 1975, the Company'had -firm, unused lines of credit with various banks totaling
$ 130,815,000 including amounts to back up outstanding commercial pa'per.
Such lines of credit are periodically revieived by the various banks and at that time may be renewed or canceled.
5.
INcoME TAxEs Income tax expense is composed of the following:
Tsehe Months Ended December 31, 1970 1971 1972 1973 Thousands of Dollars August 31, 1974 1975 Included in Operating Expenses:
Provision (credit) for currently payable (refundable) taxes:
Federal.
State Provision for deferred taxes, nei........................
Investment tax credit adjustments. net (credit)
Total charged to operating income........
Reduction in currently payable taxes allocated to Other Income Total income tax expense........
$7,461 1.055 1,278
( 1.505) 8,289 (2.709)
$5.580
$ 7,893 1,679 3,480 1.277 14,329 (3,532)
$ 10,797
$ 15,879 2,771 5,972 1,756 26,378 (6,666)
$ 19,712
$ 8.952 1,938 7.430 2.948 21,268
( 10,477)
$ 10,791
$(3,190) 1,612 24,766 (6.241) 16,947 (16.068) 879
'8,480 2,328 18,759 (821) 28,746 (20,581)
$8.165
J
CAROLINAPOPOVER Ec LIGHTCOMPANY NOTES TO FINANCIALSTATEMENTS-(Continued)
At December 31, 1974 the Company had recorded income tax refunds receivable totaling $ 14,942,360 which was collected in June 1975.
The amount represented estimated tax recoveries resulting from the carryback ofthe 1974 net operating loss (see Note 1 for accounting policy for Irivestment Tax Credits and Note 8 with respect to income tax refund for years 1961 through 1968 totaling $4,159,988).
Federal income tax returns through 1970 have been examined and closed.
Provisions for net deferred income taxes result from timing difierences in the recognition of the following items for tax and financial reporting purposes and which tax efects were as follows:
Twelve Months Ended 1970 1971 December 31, 1972 1973 August 31, 1974 1975 Thousands of Dollars Excess ofaccelerated depreciauon deductions over straight-line depreciation otherwise deductible for income tax purposes.
$ I,278
$3,480
$5,972
$7.430
$ I4.5 I3
$25.373 Dcfcrred fossil fuel inventory costs..........................
l6.814 164 Taxable gain on sale and leaseback ofproperties...
(3,325)
(3.279) m Provision for net deferred income taxes...
$ 1,278
$3,480
$5,972
$7.430
$24.766
$ 18.759 A reconciliation of an amount, computed by applying the statutory federal income tax rate to pre-tax income (net iricome plus income tax expense),
to total income tax expense follows:
T>>cite Months Ended 1970 1971 December 31,.
1972 1973 1974 August 31, 1975 Amount derived by multiplying pre-tax income by statutory rate Add (deduct):
Investment tax credits (utilized) eliminated (See Note I ).
Other specihc reconciling items multiplied by the statutory rate:
Allowance for funds used during con-slrucuon.
Differences between book and tax depre-ciation for which deferred taxes have not been provided..................................
Taxes and lringe benefit costs capitalized.
State income taxes and other dillerenoes. net...
Provision lor current and deierred taxes.
Investment tax credit adjustments, net (cred-it)
Total income tax expense...........
Thousands of Dollars (SI )
(3,439)
(4,027)
(5,386) 5,706 303 (5.168)
(7.059)
(11,884)
(18.285)
(26.212)
(30.509)
(2.106)
(697) 178 (2,408)
(1.782) 1.038 (2,874)
(3,067) 1,292 (3,020)
(3,856) 1,531 (3.523)
(4.022) 59 (4.251)
(3,673) 398 7,085 9,520 17,956 7,843 7,120 8.986 (1.505)
$ 5,580 1,277
$ I0.797 1.756
$ 19.7I2 2.948 8 l0.791 (6.241) 879 (821)
'$ S.I65
$ 14.959
$23.170
$38.5 I6
" $36.859
$35. I 12
$46.718 0
CAROLINAPOWER & LIGHT COMPANY NOTES TO FINANCIALSTATEMENTS-(Conttnuot) 6.
CoMMITMENTS AND CoNTINGENcIEs Reference is made to "Construction Program", "Financing Program", and "Business" for information regarding estimated 'future plant expenditures.
At December 31, 1974, firm commitments for construction aggregated approximately $400 million plus approximately $264 million for initial and replacement nuclear fuel.
At August 31, 1975, those commitments were approximately $410 million plus approximately $310 million, respectively.
In addition, the Company has a contract with the Energy Research and Development Administration for nuclear fuel enrichment requirements through June 30, 2002 which is cancelable without penalty upon five years w'ritten nouce.
Payments for enrichment services are anticipated to total $96 million during the next five years.
Many contracts include escalation provisions.
The Company has entered into agreements with Pickands Mather & Co., a firm engaged in owning, operating and managing mineral properties, to develop through subsidiaries two adjacent deep coal mines.
Reference is made to the fifthparagraph under "Business Fossil Fuel Supply" for additional information eluding guarantees made by the Company under these agreements.
As of August 31, 1975, the company had advanced less than $ 1,000 to one of the subsidiaries.
During 1974 the Company assigned its rights to eleven internal combustion turbine generator units and related equipment for approximately $44.4 million. The property assigned excluded various auxiliary facilities, foundations and site preparation costs.
The turbines and related equipment were simultaneously leased to the Company undera 25-year lease arrangement.
Al) units have been placed in commercial operauon.
The Company's obligation to pay rent under the lease is unconditional. The lease requires the
- Company, among other things, to repurchase the equipment under certain circumstances and to pay certain tax and other indemnities.
In December 1974, the Company sold certain nuclear fuel materials for its cost of approximately
$47.6 million and then leased those materials from the purchaser for use when required in the two units of
'ts new Brunswick Plant.
The Company is contingently liable to repurchase these materials under certain circumstances.
Electric utility plant at December 31, 1974 and August 31, 1975 includes approximately $ 15 million representing cost less accumulated depreciation of four hydroelectric projects licensed by the FPC, which licenses expire in 1976, 1993 and 2008.
Upon or after expiration of each license, the United States may take over the project, or the FPC may issue a new license either to the Company or a new licensee.
In the
, event ofa takeover or licensing to another licensee, the Company would be paid its "net investment" in the project, not to exceed fair value, plus severance damages, ifany. No provision for amortization reserves as 42
~ l 4
~
w ~
CAROLINAPOWER & LIGHTCOMPANY l
NOTES TO FINANCIALSTATEMENTS-(Continued) required for the determination of "net investment" has been recorded as such amounts, if any, are considered immaterial.
In 1973, the Compaay applied for a new 50-year license for the Walters Hydroelectric Project which original license expires in 1976. A competing application has been filed by a group of rural electric cooperatives.
" The Company has committed a total of$3,450,000 for research concerning development ofthe Liquid Metal Fast Brccder Reactor payable in ten equal annual installments which commenced in 1972.
Reference is made to "Business Fossil Fuel Supply" for information with respect to claims against the Company and liugation with regard to coal supply contracts and to "Busin'ess Environmental and Nuclear Licensing Matters" and to "Business Other Litigation"with respect to other claims.
Reference is made to "Business Retail Rate Increases" for information regarding challenges by the North Carolina Attorney General of the validityof the fossil fuel adjustment clause and the reasonableness of amounts billed by the Company for November 1974 and subsequent months.
Operating revenues for.the year ended December 31, 1974 includes $30,444,000 which was billed subsequent to September 30, 1974 to retail customers in North Carolina under the provisions of a fossil fuel*adjustment clause, and which was subject to further regulatory review and refund with interest.
On April2, 1975, the North Carolina Utilities Commission (NCUC) issued an order affirming such revenues and requiring monthly review by the NCUC of that month's billing by the Company under the terms of the fossil fuel adjustmcnt clause.
In August 1975, the NCUC issued a further order which includes all fossil fuel 'costs in basic rates as an "approved fuel charge", effective September I, 1975, and eliminates billings under thc fossil fuel adjustment clause provisions.
Operating revenues for the twelve months ended August 31, 1975 include approximately $35,234,000 billed (including $22,800,000 under provisions of a fossil fuel adjustment clause) to wholesale customers during January through August 1975 which aie subject to refund with interest to the extent, ifany, not finally allowed in pending proceedings before the FPC.
Deferred fossil fuel inventory costs at December 31, 1974 totaling $35,028,046 and at August 31, 1975 totaling $7,521,416 represent approximate amounts to be billed customers during the following two months.
As a result of the April and August 1975 NCUC orders, the amounts of deferred costs which remain subject to further regulatory review and approval which may necessitate adjustment ifsuch review so requires are approximately $5;500,000 (FPC) at December 31, 1974 and $4,673,793 (FPC) at August 31, 1975.
Deferred fossil fuel inventory costs at August 31, 1975 include $ 12,367,219 representing unrecovered fuel costs applicable to North Carolina retail operations which, pursuant to the-August 1975 NCUC order, willbe recovered over approximately twelve months beginning September 1, 1975 through a temporary surcharge of $.00089 per kilowatt-hour of service billed.
43 F"
CAROLINAPOWER 8c LIGHTCOMPANY NOTES TO RNANCIALSTATEMENTS-(Concluded) 7.
SUPPLEMENTARY INCOME STATEMENT INFORMATION Twelve Months Ended December 31, 1970 1971 1972 1973 Thousands of Dollars August 31.
1974 1975 Amortization of nuclear I'ucl, charged to fuel expense....
$ 4,924
$ 9,261
$ 7,694
$ 8.757
$ 9,968 TaxeS-Other ihan on income:
Ad valorem.
State and city franchise....................
Federal and state social security......
Miscellaneous.
$ 7,352 10,999 1,003 100 Total
'9,454 Less-Amount charged io plant and sundry accounts.
401 Remainder-Charged io operating expenses.......................................
$ 19.053
$ 8,106 12,709 1,217 103 22,135 736
$21.399
$ 9,406 14,866 1,513 129 25,914 1.893
$24,021
$ 11,804 17,384 2 323 161 31,672 2,966
$28,706
$ 13,273 28,085 2,961 179 44,498 3,814
$40,684
$ 14,305 34,901 3,361 193 52,760 4.252
$48.508 Annual rentals under long-term leases at December 31, 1974 and August 31, 1975 are not considered material.
Maintenance and repairs, and depreciation, other than amounts set out separately in the statement of income are not significant. Rent expense for each of the five years ended December 31, 1974 was less than 1% of revenues (rent expense for the twelve months ended August 31, 1975 approximated $7 million).
II 8.
ADJUSTMENTS TO RETAINED EARNINGS During 1974, the Company received a $4,159,988 refund of federal income taxes paid with respect to the years 1961 through 1968.
The balances of retained earnings at December 31, 1968 and subsequent years have been restated by such amount.
Received also in connection with the tax ref'und was $2,089,461 of refunded interest and interest earned applicable to years prior to 1974. Accordingly, such interest (net of income tax of $ 1,002,941) has also been added to the December 31, 1973 balance but has not been allocated to 1973 and prior years since the effect on any one year is not material.
9.
SUBSEQUENT EVENTS 4
During 1974 the Company's construction program was reduced, including the elimination from its authorized construction budget of five proposed new generaung units.
On May 1, 1975 the Company reinstated the units into its construcuon program and therefore it does not now expect that there will be any charge-offs to operations related to such units.
See "Construction Program".
UNDERWRITING The Underwriters named below have severally agreed, subject to the terms and conditions of the Underwriting Agreement, to purchase from the Company the following numbers of shares of New Common.
Number Number or Shares Vnderi.riter of Shares Underwriter MerrillLynch, Pierce, Fenner &Smith Incorporated.
Blyth Eastman Dillon&Co. Incorporated............
The First Boston Corporation................................
Dillon, Read & Co. Inc Donaldson, Lufkin & Jenrcue Securities Corporation.
Drexel Burnham &Co. Incorporated....................
Goldman, Sachs &Co.
Halsey, Stuart &Co. Inc.
. Hornblower& Weeks Hemphill, Noyes Incorporated.
E. F. Huuon &Company lnc................................
Kidder, Peabody &Co. Incorporated...................
Kuhn, Loeb &Co.
Lazard Freres &Co.
Lehman Brothers Incorporated.............................
oades &Co.
Pain ebbcr, Jackson & Curtis Incorporated....
Reynolds Securities Inc.
Salomon Brothers.
Smith, Barney &Co. Incorporated........................
Wertheim & Co., lnc..
Wheat, First Securities, Inc...................................
White, Weld & Co. Incorporated..........................
Dean Witter& Co. Incorporated...........................
Shearson Hayden Stone Inc..................................
ABDSecurities Corporation..................................
Advest Co.
A. E. Ames &Co. Incorporated.............................
Robert W. Baird &Co. Incorporated....................
Basle Securities Corporation..................................
Bateman Eichler, HillRichards, Incorporated......
Bear, Stearns & Co.
J. C. Bradford &Co.. Incorporated.......................
Alex. Brown &Sons.
Carolina Securities Corporation............................
Dain, Kalman & Quail, Incorporated...................
Dominion Securiues Harris & Partners Inc..........
~ A. G. Edwards &Sons, Inc...................................
Eppler, Guerin &Turner, Inc...............................
Faulkner, Dawkins & Sulliyan Securities Corp....
l,334,000 65,000 65,000 65,000 65,000 65.000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65.000 65,000 65.000 65,000 65.000 65,000 65,000 37.000 37,000 37.000 37,000 37,000 37,000 37,000 37,000 37,000 37,000 37,000 37,000 37,000 37,000 37,000 Roben Fleming Incorporated.:..............................
Harris, Upham & Co. Incorporated......................
Interstate Securities Corporation...........................
Klcinwort, Benson Incorporated...........................
Ladenburg, Thalmann & Co. Inc..........................
McDonald &Company.
Moseley, Hallgarten & Estabrook Inc...................
New Court Securities Corporation........................
Nomura Securities International, Inc....................
Oppcnheimer &Co., Inc Piper. Jafrray & Hopwood Incorporated...............
Prescott, Ball &. Turbcn..
R. W. Pressprich &Co. Incorporated....................
W. H. Reavcs &Co., Inc The Robinson. Humphrey Company, Inc..............
L. F. Rothschild &Co.
Shields Model Roland Securities Incorporated.....
SoGen-Swiss International Corporauon...............
Suez American Corporation..................................
Thomson &McKinnon Auchincloss Kohlmeyer Inc.
Spencer Trask &Co. Incorporated........................
UBS-DB Corporation.
Ultrafin Internauonal Corporauon........................
Warburg Paribas Becker Inc.................................
Weedcn & Co. Incorporated..................................
Wood Gundy incorporated...................................
Wood. Struthers &Winthrop Inc..........................
American Securities Corporation...........................
Bacon. Whipple & Co.
WilliamBlair&Company.....................................
Blunt Ellis &Simmons Incorporated.....................
Bruns. Yordeman. Rea &Co................................
Butcher &Singer.
The Chicago Corporation......................................
First ofMichigan Corporation...............................
J. J. B. Hilliard, W. L. Lyons, Inc.........'.................
Johnson. Lane. Space, Smith &Co.. Inc...............
Johnston. Lemon &Co. Incorporated...................
Legg Mason/Wood Walker Div.of First Regional Securities, Inc....................
Loewi &Co. Incorporated.....................................
37,000 37,000 37,000 37,000 37,000 37,000 37,000 37,000, 37,000 37,000 37,000 37,000 37,000 37.000 37,000 37,000 37.000 37,000 37,000 37,000 37.000 37,000 37,000 37,000 37,000 37,000 37,000 l5,000 I5.000 I5,000 l5,000 15,000 15.000 15,000 I5.000 l5,000 l5,000 l5,000 l,5,000 l5,000 45
Under>>alter Ntnnber of Shares Underwriter Number ofShares McCarley &Company. Inc........................
Moore, Leonard & Lynch, Incorporated...
Newhard, Cook &Co. Incorporated.........
The Ohio Company.
Rauschcr Piercc Securities Corporation....
Reinholdt &Gardner Rotan Mosle Inc.
R. Rowland & Co. Incorp'orated Shuman, Agnew & Co,, Inc.......................
Stern Brothers & Co.
Sutro & Co. Incorporated Tucker. Anthony & R. L. Day. Inc............
C. E. Unterberg, Towbin Co......................
'William D. Witter. Inc Anderson &Strudwick. Incorporated Baker, Watts &Co.
D. H. Blair&Co.. Inc.
Craigic, hiason.Hagan. Inc........................
Davenport & Co. ofVirginia, Inc..............
~
~
~
Dolt&Co., Inc......................................
Elkins. Stroud. Suplec & Co......................
Evans & Co. Incorporated Frost, Johnson. Read &Smith, Inc...........
Gruntal & Co.
Henfeld &Stern Howard. V'eil, Labouisse. Fricdrichs incorporated.
Investmcnt Corporation ofVirginia..........
Paul Kendrick &Co., lnc...........................
Laidlaw-Coggeshall Inc McDaniel Lewis &Co...
l5,000 I5,000 I 5,000 l5,000 l5,000 I5,000 I 5,000 I5,000 l5,000 l5,000 I 5,000 15,000 l5,000 l5,000 6,000 6,000 6,000 6,000 6.000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6.000 6.000 6;000 Thc Milwaukee Company.....................................
Moore &Schley, Cameron & Co...........................
Murch & Co.. Inc..
H. O. Peet & Co. Inc..............
Pressman Frohlich Securities. Division of Philips, Appel & Walden, Inc............................
Scott &Stringfellow, Inc.......................................
Stern, Frank, hteyer & Fox, Incorporated............
Underwood, Yeuhaus & Co. Incorporated...........
Colin, Hochstin Co..
Cowcn'& Co.
Daniels & Bell, Inc........................
R. G. Dickinson & Co.
Equitable Securities Corporation...........................
First hlanhattan Co.
Foley, Warendorf & Co..
Furman Investment Corp. ofS.C.
~ Inc..................
Heine, Fishbein & Co., Inc....................................
Howe, Barnes &Johnson. Inc...............................
Joseph, Miller& Russell. Inc.................................
'Josephthal &Co.
J. Lec Peeler & Company. Inc...............................
John J. Ryan & Co. Incorporated..........................
Sux& Co. Inc Burton J. Vincent. Chesley & Co...........................
Wagenseller & Durst, lnc......................................
Total..
6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 4,000 4,000 4,000 4,000 4.000 4,000 4,000 4,000 4,000 4,000 4,000 4.000 4,000 4,000 4,000 4,000 4,000 5,000,000 The nature of the Underwriters'bligation is such that they are committed to take and pay for all of
,the shares il'any are taken.
Merrill Lynch, Pierce, Fenner & Smith Incorporated, the Representative of the Underwriters, has advised the Company that sales to certain dealers may be made at concessions not in excess of 46c per share and that the Underwriters may allow and such dealers may reallow not in excess of 37the per share to certain other dealers.
After the initial public offering, the public offering price and the concessions may be changed.
-46
No dealer, salesman or other person has been authorized to give any information or to make any representation not contained in this Prospectus and, if given or made, such information or representation must not be relied upon as hating been authorized by the Company or the Underwriters.
This Prospectus does not constitute an offer to sell or a solicitation of an oKer to buy any of the securities offered hereby in an> jurisdiction to any person to whom it is unlawful to make such olfer in such jurisdiction. Neither the delhery of this Prospectus nor any sale made hereunder shall, under any circumstancci. crcatc any implication that there has been no change in the affairs of the Company since the date'hereof.
5,000,000 Shares Carolina Power 8r Light Company Common Stock (Without Par Value)
TABLE OF CONTENTS Available information Company.
Ial Problems ofthe Industry................................,.
e Issue in Brie!'.
'Application of Proceeds..
Construction Program Financing Program..
Common Stock Price Range and Dividends.................
Capitalization..
Statement ol'Income Management's Comments on Statement ofIncome......
Operaung Statistics.
System Map.
Business.
Territory Served Generating Capability.
Fossil Fuel Supply.
Nuclear Fuel Supply.
Interconnections with Other Systems.....................
Retail Rate Increases.
. Wholesale Rate Increases.......................................
Environmental and Nuclear Licensing Maners.....
Other Litigation.
Description ofCommon Stock hianagement Experts and Legality..
Opinion ofIndependent Cenified Public Accountants.
Financial Statements.
Underwriting.
Page 2
2 3
,4 4
6 7
8 9ll 13 14 15 15 15 16 20 20 21 23 24 27 28 2,9 30 31 32 45 PROSPECTUS MerrillLynch, Pierce, Fenner & Smith Incorporated Dated October 28, 1978
/
~ E~i 0
EXHIBIT C Carolina Power & Light Company I ORGANIZED UNDER THE LAWS OF NORTH CAROLINAI INTERIM FlNANCIAL STATEMENTS
( NOT EXAMINED BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS)
MARCH 31, 1976
'o~4o 4ox/4o2/4o3 DzD 5-a6-76 comaoz 5390 geguIatory Docket File THESE STATEMENTS HAVE BEEN PREPARED FOR THE PURPOSE OF PROVIDING INFORMATION CONCERNING THK COMPANY AND NOT IN CONNECTION WITH ANY SALE, OFFER FOR SALE. OR SOLICITATION OF AN OFFER TO BUY ANY SECURITIES.
BALANCESHEET Assets:
Carolina Power 8 Light Company (Thousands ofDollars)
March 31 1976 1975 ELECTRIC UTILITYPLANT:
Electric utilityplant other than nuclear fuel (including construction work in progress:
1976, $683,815,072; 1975, $898,426,981).............
Less accumulated depreciation.
Electric utilityplant other than nuclear fuel Nuclear fuel (net of accumulated amortization).
Electric utilityplant, net.
OTHER PROPERTY AND INVESTMENTS CURRENT ASSETS:
'ash and temporary cash investments Accounts receivable, net (1975 includes $14,942,000 of refundable income taxes)
Materials and supplies..
Deferred fuel cost (Note 4)
Prepayments, etc..
Total current assets DEFERRED DEBITS TOTAL.
Liabilities:
CAPITALSTOCK ANDRETAINEDEARNINGS (Notes 1 and 2):
Preferred stock (outstanding shares:
1976, 2,887,259; 1975, 2,887,259)...
Preference stock (outstanding shares:
1976, 2,000,000; 1975, 2,000,000)..
Common stock (outstanding shares:
1976, 32,733,487; 1975, 27,516,361)
Retained earnings Total capital stock and retained earnings LONG-TERM DEBT, net (Note 1)..
CURRENT LIABILITIES:
Long-term debt due within one year......
Notes payable:
Banks Other Accounts payable Customers'eposits.
Taxes accrued.
Current portion ofdcferrcd income taxes.
Interest accrued Dividends dcclarcd.
Other Total current liabilities.
DEFERRED CREDITS (Includes accumulated deferred investment tax credits:
1976, $23,838,931; 1975, $ 10,110,756)
RESERVE FOR INJURIES AND DAMAGES ACCUMULATEDDEFERRED TAXES ON INCOME
~..
TOTAL......
STATEMENT'OF RETAINED EARNINGS For the Twelve Months Ended March 31, BALANCEATBEGINNINGOF PERIOD ADD-Net income Total..
DEDUCT:
a Preferred and prcferencc stock cash dividends declared.......
Common stock cash dividends declared Capital stock expense Total deductions.
BALANCEATEND OF PERIOD.
Scc Notes to Financial Statements.
$2,541,628 311 957 2 229 671 49,267 2,278,938 2,679 34,315 32,483 75,122 9,333 3 046 154 299 8,160
$2,444,076 288,118 47,900 566,447 165,897 1,068,362 1 153 311 2,000 11 21,331 3,895 25,180 377 34,171 25,625 3,173 115,763 24 844 811 80 985 82 444 076 1976 134,598 106,931 241,529 26,926 48,260 446 75 632 8
165 897
$2,282,213 267 107 2 015 106 41,015 2,056,121 5,565 7,912 48,677 80,029 22,181 1 736 160,535
- 9,709
$2,231.930 288,118 47,900 476,571 134,598 947,187 1,056,434 32,200 24,764 24,121 2,980 16,168 7,411 29,739 22,364 2,620 162,367 10 708 742 54 492 82 231 930 1975 117,701 79,193 196,894 23,077 39,074 145 62 296 8
134 598
STATEMENT OF INCOME (000's Omitted)
Three Months Ended Twelve Months Ended Monarch1 1976 1975
$ 170 807
$ 156 797 March 31 1976 1975
$620 339
$ 528 634 OPERATING REVENUES (Notes 3 and 4) ~........
OPERATING EXPENSES:
OTHER INCOME:
Allowance for funds used during construction......
Income taxes-credit Other income (deductions)-net.
Total other income GROSS INCOME................
INTEREST CHARGES:
Interest on long-term debt.
Other interest charges.
Total interest charges.............
~
NET INCOME..
PREFERRED ANDPREFERENCE DIVIDENDREQUIREMENTS..........
EARNINGS FOR COMMONSTOCK..............
264,643 (16,647) 14,865 48,434 28,610 37,252 44,627 22,007 224,567 12,848 8,864 60,219 34,189 51,220*
47,931 59,321 61,926 12,847 3,159 12,815 7,365 11,083 12,023 9,323 443 791 84,843 130 541 499 159 26 256 121 180 58,009 17,786 824 56,493 18,177 1,212 14,787 5,033
~15 11,323 3,476 177 14 976 19 805 75 882 76 619 51 547 46 061 197 062 161 462 88,361 1 770 19,663 2 662 22,284 217 74,119 8 150 82 269 79,193 22 501 22 325 90 131 106,931 23,736 29,046 6 732 26 926
$ 80,005 29,646 5
2.70 21,739
$ 57,454 24,128 2.38 5 557
$ 18 179 26,507
$,69 months resulting
$ 22 314 32,705
.68 AVERAGE COMMON SHARES OUTSTANDING...
EARNINGS PER SHARE.
~
Includes $2,558,000 for thc three months and $5,096,000 for the twelve as ofOctober 1, 1975, of revised depreciation rates.
from the adoption See Notes to Financial Statements.
Fuel 53,771 Deferred fuel expense net (Note 4)
~
~
~
~
~
~
~
~
~
~
~
5,045 Purchased and interchange power net (1,092)
Other operation expense.
15,997 Maintenance 7,868 Depreciation..
15,655*
Taxes other than on income 13,517 Income tax expense (Note 5) 23,475 Total operating expenses.... ~.......
134 236 OPERATING INCOME.
36 571 SUPPLEMENTAL DATA Operating Revcnucs ($000):
Sales ofelectricity-Within service area-Retail.
For resale..
Nonterritorial Miscellaneous Total.
Electric Energy Sales (millions of KWH):
Within service area-Retail.
For resale.
Nonterritorial.
TotaL
$ 140,698 26,073 2,647 1 389
$ 170 807 5,182 1,480 71 6 733
$128,383 25,194 2,000 1 220
$ 156 797 4,561 1,338 22 5,921
$505,486 100,868 8,132 5 853
$620,339 19,309 5,512 110 24,931
$450,353 60,293 12;315 5 673
$528,634 18,569 5,154 360 24,083 Electric Energy Generated and Purchased (millions of KWH):
Steam-Nuclear..
Steam-Fossil.
Hydro.
Internal combustion turbines.
Purchased and interchanged - net...
Total.
2,169 4)513 246 7
~104 1,435 4,063 350 4
203 6 831 6 055 6>326 18,824 843 33 567 26,593 4,821 18,576 937 203 1 015 25,552
NOTES TO FINANCIALSTATEMENTS 1.
These interim financial state'ments are prepared in conformity with the accounting principles reflected in the financial statements included in the Company's 1975 Annual Report.
Reference is also made to that Annual Report for details concerning Preferred Stock, Long-Term Debt, and Common Stock then and presently issued and outstanding.
These are in-terim financial statements and because of temperature variations between seasons of the year and the time of scheduled down-time and maintenance of electric generating units, especially nuclear fueled units, the amounts reported in the Statement of Income for periods of less than twelve months are not necessarily indicative of amounts expected for the year.
2.
During the two years covered by the Statement of Income 4,000,000 shares of Common Stock in January 1975 and 5,000,000 shares in November 1975 were issued and sold in public offerings and 464,931 shares in sales under the Company's Stock Purchase-Savings Program for Employees; and the Company sold 2,000,000 shares of 82.675 Preference Stock, Series A, in a public offering in March 1975.
As of March 31, 1976, 683,454 shares of Common Stock were reserved for issuance under the Program.
3.
Some rate increases in effect during the periods covered by these financial statements were not in effect for the entire periods.
The following tabulation sets forth the approximate effects on revenues of such rate increases plus fuel ad-justment charges which vary with fuel costs (in thousands of dollars):
Oescription Actual Revenue Increase Realized Effective Ds\\
14-75 1-15-75 1-2-75 2-20-76 3-1-76 9-1-75
~T NC Retail SC Retail Wholesala1 NC Ratailt SC Retail SC RetailsResidential Annualized Revenue Based On 1975 Level of Salas
, S 52 c}00 10,100 21,100 84,800 20/00 2,100
$ 191,300
$14,452 2,7482 5,672 18,3952 3/42 535 45,044
$13,163 2,415 3,887 19,465 3 Months 1976 1975
$ 54,190 10,440 21,763 328072 5,768 7,070 726,038 S 42,782 7,831 3,887 54,500 72Months 1976 1975 Fuel adjustment charges:
2-6-74 24.74 1-2-75 NC Retail SC Retail Wholesale 17,793 4,105 6,899
$73541 32,947 7,343
~9086
$68,841 86,082 17,310 28.568 82572t88 92,508 20 0502 9,086
$176,144 1 Total increase effective date shown; revenue included from related intedm increase which was terminated at same date.
Being billed subject to retund pending final determinations by regulatory authorities.
4.
At March 31, 1976 the Company has recorded $9,333,000 of deferred fuel cost including $2,993,000 subject to further regulatory review and approval which may necessitate adjustments if such review so requires.
Also included is 84,413,000 remaining unamortized deferred fossil fuel costs applicable to North Carolina retail operations which is being recovered by a temporary rate surcharge over an approximate twelve.month period which began September 1, 1975, the date when the old automatic "fossil fuel adjustment clause" was replaced by an "approved fuel charge."
Operating revenues include 847,928,000 of "approved fuel charges" billed from September 1, 1975 through March 31, 1976
($17,793,000 for the three months ending March 31, 1976) applicable to North Carolina retail oper-ations; and the Company has remaining 84,413,000 of related unbilled deferred fossil fuel inventory costs at March 31, 1976.
The Attorney General of North Carolina has appealed the August 27, 1975 order of the North Carolina Utilities Commission under which such charges are billed.
5.
In accordance with the Company's policy of providing for deferred income taxes to the extent that such are cur-rently allowed for ratemaking purposes, the Company commenced, in the first quarter of 1976, providing for deferred income taxes applicable to taxes and fringe benefit costs capitalized and tax depreciation differences resulting from different tax and
'ook straight-line depreciation rates, thereby increasing the provision for deferred income taxes by
$296,000 for the three months and the twelve months ended March 31, 1976.
JAMES S. CURRIE Treasurer RALEIGH, N. C. 27602 April 21, 1976
Carolina Power & Light Company 1975 Annual Report J
,'ii<<'f "~II",'II'$$ti'r>>,.'I i>>
iir>>f}
QtP}dklcP 4P r I
.,I 4)@kg~
tP>> I ~.y}<<>>.~ r,>>q 50~0401/402/403 rm~~6-76 aOmaOL 5390 Regulatory Docket FifII
Annual Meeting The 1976 Annual Meeting of Shareholders will be held in Raleigh, North Carolina, on May 19 at 11 A.M. A formal notice of the meeting together with a proxy statement and form ofproxy will be mailed about April 14. Highlights 1975 1974 Percent Change Operating Revenues Net Income Number Shares of Common Stock Outstanding (Year End) Earned per average Common Share outstanding Cash Dividends Paid per Common Share Dividends Paid (Common and Preferred) Kilowatt-Hour Sales (Thousands)
- Excluding Nonterritorial Sales Total Sales System Capability Including Purchases (Kilowatts)
Maximum Service Area Hourly Load (Kilowatts) Total UtilityPlant (Including Nuclear Fuel) Construction Expenditures Customers (Year End) Employees (Year End) 606,329,000 101,622,000 32,693,000 2.70 1.60 66,894,000 24,057,000 24,118,000 7)072,000 5,060,000 $2,559,346,000 300,659,000 661,000 4,749 $ 460,977,000 72,271,000 23,439,000 2.21 1.60 56,326,000 23,607,000 24,076,000 6,206,000 4,771,000 $2,252,856,000 381,375,000 648,000 4,742 32% 41 39 22 14 6 14 (21) 2
- Nonterritorial sales are sales to other electric utilities outside the Company service area.
Operating Revenue Dollar ';0 Source Residential customers Commercial customers Industrial customers Wholesale customers Nonterritorial sales r electric operating revenues Amount $192,734,000 111,602,000 167,798,000 99,990,000 7,485,000 26,720,000 $606,329,000 Cents Per Dollar 32/ 18 28 17 1 4 100/ Fuel Deferred fossil fuel expense, net Purchased and interchange power, net Taxes Wages and employee benefits" Depreciation Maintenance (except employee wages) Other operating expenses Compensation to investors for use of their funds (interest, 9g; preferred and pref- $232,722,000 20,650,000 13,115,000 91,606,000 43,667,000 46,648,000 23,604,000 23,451,000 38/ 4 2 15 7 8 4 4 erence stock, 2g; common stock, 7g) 110,866,000 18 $606,329,000 100/ "Does not include $22,882,000 of wages and employee benefits for Company employees that was charged to Construction and other accounts. Contents Inside Front Cover Highlights of 1975 1 The 1975 Operating Revenue Dollar 2 The President's Message 4 Financial 7 Rates e 8 Construction 9 Operations 11 Ownership 12 Customers 14 Territory Served 16 People 17 Statement of Income 17 Statement of Retained Earnings 18 Balance Sheet 20 Statement of Source and Use of Financial Resources 21 Notes to Financial Statements 26 Auditors'pinion 27 Directors and Officers Transfer Agents and Registrars 28 Statistical Review This Annual Rcport is submitted for information of shareholders. It is not intended for usc In connection with any sale or purchase of. or any offer or solicitation of offers to buy or scil. securities. Carolina Power tt: Light Company, 330 Fayettevillc Street. Raleigh, N. C. 27002
The President's Message My fellow shareholders: Our Company's financial picture showed im-provement in 1975, largely as the result of additional revenues produced from rate increases. Earnings per share ofcommon stock were $2.70, up from the severely depressed level of $2.21 in 1974. The annual dividend per share of common remained at $1;60. "... industrial sales lagged behind 1974...." Territorial energy sales increased only 2 percent to 24.1 billion kilowatt-hours. Commercial and resi-dential sales showed a healthy increase, but indus-trial sales lagged behind 1974, reflecting the general slowdown in the economy. During the fourth quarter some'turnaround was experienced in the industrial sector. Total operating revenues were $606 million, up from $461 millionin 1974, and net income rose from $72.3 million to $101.6 million. During 1975 our Company spent $301 millionfor construction and raised a net of $169 millionof new capital. We expect to spend $270 millionon construc-tion during 1976 and $826 millionfor the three years 1976-78. Our energy forecasts indicate that as industrial activity returns to a more normal level, growth in energy usage on the CP&L system will be at a 7.4 percent annual rate forthe next ten'years. That growth rate would compare with 9 percent for the 1966-75 period. "We made substantial reductions inour construction plan o ~ ~ ~ We made substantial reductions in our construc-tion plan in 1974 and again in 1975. The latter reduc- ~ tion represented a reluctant tailoring of the con- ~ struction budget to the amount of capital we could reasonably expect to attract. The present plan willsupport growth in demand at a /p'" ~ '.' "",:;M~ -~','.;@~ rate of only 6.5 percent during the next ten years, and may result in shortages of energy at intervals of peak de- '.<<.'-,'",.'t,"- mand beginning in 1981. We retain ,;"',. ~ Pq"",".'"1-', some flexibilityformoving up the '+--'@4'~~'.'~<~:-'~ construction of coal-burning '~",,", " '."",'=;"4~ plants ifload grows as we ex-q~".t;.'<<'~. P '<~-'-'.":= '. ';.;:;-'; '*.""<<".'",g>>..'.":"; " ',060,000 kilowatts in 1975. ,;..-.">':.'"';:"-'::':;*i"'.',.,"';':";-",,'.:.-:.. . ~';..;-;.:->.",.'.'",":!" i.'-j,.* z'."",.,~, "";-,,",+"-", "., -...'-.',"clear generating facility in com- <'>>r'~~ < <4jQuqg~,-~;,"'.".; ""-'"'~z."P'"-":-'.-.'.';=~:-'"r'">>',,-.':.. '"', 'he firstunit ofthe Brunswick plant to ,;:;~; j.~'~,4Jg~'" "....- ".~;-="<"~~<~, -=.',-'.-. ',, g'o into operation. The second unit is "','" ". scheduled for commercial service in 1977. -'-.'>>~ "The units are expected to have capacities of 821,000 kilowatts each.
"... we produced 22 percent of our energy from ~ ~ nuclear plants...." During the year we produced 22 percent of our energy requirements in nuclear plants, 74 percent in coal-burning plants, 4 percent in hydro plants, and less than 1 percent by burning oil and natural gas. We are fortunate to have most of our generation from the more plentiful fuels coal and uranium. In 1976 we expect that 30 percent oftotal generation willbe from nuclear plants. Ifit had been necessary for CP&L to produce the same amount of energy it obtained from nuclear plants during 1975 by burning coal or oil at the aver-age cost forour system, the Company's fuel billwould have been increased $52 million. "... 1975 was a good year for our customers ~..." In spite of the fact that electric bills have risen sharply, 1975 was a good year for our customers, too. In 1960 the average CP&L electric bill for 5,067 kilowatt-hours annually required a little less than 2 percent of the average buying income of Carolina families. Income figures for 1975 are not available. But in 1975 the average CP&L electric billfor 11,094 kilowatt-hours required less than 3 percqnt of the 1974 average buying income. Thus, while energy usage more than doubled in the last 15 years, the share of buying income required to pay the bill in-creased much slower. Our average revenue per kilowatt-hour forsales to residential customers continues to be one of the low-est for electric companies that operate along the east coast. In January of 1975 we received decisions in the retail rate cases that were filed in late 1973. Also in January we began billing a higher base rate and fuel charge to wholesale customers. Withescalating costs, we found it necessary to file during the summer for another retail rate increase, part of which we began collecting on an interim basis. The details of these rate actions are presented elsewhere in this report. While our revenues are up and earnings have im-proved and while tight cost controls are in effect in every area of our operation, the Company's earnings have remained below what the regulatory commis-sions have found to be just and reasonable because of the escalating costs in every area of the Company's operation. "We are very dependent upon reasonable and re-sponsive regulation...." We are very dependent upon reasonable and re-sponsive regulation. The speed with which reg-ulators act is very important. In 1975 the North Carolina General Assembly expanded the State UtilitiesCommission from five to seven members and authorized it to act in three-member panels. The case we filed in July 1975 was decided in February. That is only seven months from filing to final disposition. In December the North Carolina Commission called for bids from independent firms to study the operation of CP&Land three other utilitycompanies. This is a step we have publicly advocated. We are confident that such a study willprovide additional evidence for our customers that we are doing a good job for them. "... for the remainder of this century, the electric industry must depend primarily on coal and uranium for fuel." Through participation in the Electric Power Re-search Institute, our Company is involved in the ex-ploration and development of alternative methods of producing electricity. However, it is very clear that for the remainder ofthis century the electric industry must depend primarily on coal and uranium for fuel. Other technologies simply willnot be commercially available within this period. A small but vocal minority continues to question the safety of nuclear plants. The safety record of this industry is without parallel. Extensive studies indi-cate that the risk involved with nuclear plants is min-imal and contiollable so as to make them quite ac-ceptable, and particularly so when one considers the energy choices available to our society. "This country needs a cohesive national energy pol-
- Icy, This country needs a cohesive national energy policy. That policy should balance the need to protect the environment with reasonable use of domestic re-sources to supply energy. As it is now, some 50 com-mittees and agencies of the federal government ad-minister a fragmented energy program. Until this in-efficient system is streamlined, there is little chance for developing a comprehensive program to resolve the national energy dilemma. There is need for much broader public understanding of energy issues.
The year just ended was not an easy one for our Company. We hope we have turned the corner and that the days ahead willbe better. I am proud of the 4,700 men and women with whom I work at CP&L. They have shown commendable flexibilityand re-sourcefulness in adapting to changing circumstances and in finding solutions to the varied problems that face us. We also appreciate your continued support and confidence and pledge our best efforts in the chal-lenging days ahead. Respectfully submitted by order of our Hoard of Directors. Sincerely yours. March 17, 1976 Chairman/President
Financial Net Income, Earnings and Dividends Net income for 1975 was $101,622,000 as com-pared with $72,271,000 for 1974. Earnings per share based on the larger number of shares outstanding were $2.70 as compared with $2.21 in 1974. Div-idends totaling $1.60 per share were paid on common stock during the year. Operating Revenues Operating revenues from sales of electricity withinthe service area during 1975 increased $151.2 million over 1974. Rate increases placed into effect since 1970 to recover increased costs resulted in in- 'reased revenues of $324,819,000 in
- 1975,
$180,760,000 in 1974 and $68,091,000 in 1973. Sales of electric energy, excluding nonterritorial sales, increased about two percent in 1975, essen-tially the same percentage of growth as in 1974. The small increase during the past two years reflected the effects of energy conservation, relatively mild weather and reduced economic activity. Sales of energy to industrial customers showed a 5 percent net decrease in 1975 from the year earlier. In the fourth quarter, however, industrial sales reflected a 7 per-cent increase over the fourth quarter of 1974. Operating Expenses Operating expenses increased 29 percent or $111.8 millionin 1975 as compared with a 43 percent or $116 million increase in 1974. Cost of fuel for electric generation decreased 1 percent in 1975 after increasing 122 percent in 1974. Total kilowatt-hours generated infuel-burning plants increased 2 percent in 1975 after decreasing 1 per-cent in 1974. Average costs of fossil fuels increased only 1 percent in 1975 after increasing by 135 percent . in 1974. Nuclear-fueled generation increased by 16 percent in 1975, reflecting the operation ofunit two of th'e Brunswick nuclear plant which was declared in commercial operation in November 1975. Deferred fuel cost accounting (begun in 1974 with the implementation offossil fuel adjustment clauses) resulted in a net charge against income of $20.7 mil-lion in 1975 as compared with a net credit to income in 1974 of$35 million.Deferred fuel costs to be billed in future months reached $35 million at the end of 1974 and dropped to $14.4 millionat the end of 1975 principally as a result of a significant drop in the unit cost of fossil fuel burned. Also, for North Carolina retail operations, the Company started billing for higher fuel costs on a current basis effective Septem-ber 1, 1975; and the accumulated deferred and un-billed fuel costs which totaled $12.4 million at that time ($7,942,000 at December 31, 1975) are being collected over approximately 12 months. Purchased power costs decreased 10 percent in 1975 as compared with an 85 percent increase in 1974. The 1975 decrease reflects a 19 percent reduc-tion in kilowatt-hours purchased because the Com-pany's own plants generated a greater proportion of energy requirements. Maintenance expense (excluding employee wages) increased $3.4 million in 1975 as compared with a decrease of $2 millionin 1974. During the last quarter of 1975, the Company resumed normal maintenance schedules which were interrupted in 1974 when discretionary maintenance was deferred because of reduced revenues. ( Other operation and maintenance expenses in-creased in 1975, reflecting the impact of inflation on the costs ofgoods and services. In 1975 the Company placed in'service the initial unit at the Brunswick nuclear power plant which, while having a signif-icantly lower fuel cost than coal-fired plants, has a higher requirement for other operating expenses. Depreciation expense increased $11.1 million in 1975 as compared with $3.7 millionin 1974. During 1975 the Company began depreciating the firstunit of its Brunswick nuclear plant, and effective October 1 1975 adopted revised depreciation rates. The revised rates generally reflect shorter remaining service lives for electric plant in service, which increased depre-ciation expense by $2,538,000. Taxes other than income taxes reflect increased state and local taxes on revenues and plant in service. The increase in 1975 over 1974 was not as much as normal because in 1974 the Company refined its ac-counting forNorth Carolina gross receipts taxes. This resulted in a nonrecurring increase of $3,991,000 in expenses in 1974. Income tax expense increased to $45.2 millionin 1975 from $16.9 millionin 1974. In 1975 the increase resulted primarily from increased operating income before income taxes. Tax expense for 1975 represented 15 cents ofeach revenue dollar with 8 cents for state and local gov-ernments and 7 cents for federal taxes. This compares with 13 cents, 9 cents and 4 cents, respectively, for 1974. Other Income Other income increased $9.3 million in 1975 as compared with a $22.5 millionincrease in 1974. The
Analysis of Results of Operations 1975 (000's omitted) Percent Change from 1974 '1974 (000's omttted) Percent Change from 1973 Operating revenues: Total from electricity sales in service area Nonterritorial electricity sales Miscellaneous electric revenues Total operating revenues $593,161 7,485 5,683 606,329 34% $441,913 37% (45) 13,499 (1) 2 ~ 5,565 22 32 460,977 35 Operating expenses: Fuel Deferred fossil fuel expense (credit), net Purchased power Wages and employee benefits Maintenance (except employee wages) Other operation expenses Depreciation Taxes other than income taxes Income tax expense 2321722 20,650 13,115 43,667 23)604 23,451 461648 46,436 45,170 (1) 159 (10) 15 17 39 31 14 167 235,842 (35,028) 14,494 38,031 20,180 16,929 35,544 40,684 16,947 '122 85 17 (9) (1) 12 42 (20) Total operating expenses Operating income Other income: Allowance for funds used during construction Income taxes credit ~ Other, net Total other income Gross income Interest charges Net income Preferred and preference stock dividend requirements Earnings for common stock Average common shares outstanding Earnings per common share Common dividends paid per share 495)463 110,866 59,957 19,734 1,020 80,711 191,577 89,955 101,622 25,752 $ 75,870 28,109 2,70 1.60 29 43 10 23 31 13 29 18 41 25 47 21 22 383,623 43 77,354 5 54,609 43 16,068 53 776 97 71,453 46 148,807 21 76,536 35 72,271 10 20,672 59 $ 51,599 (3) 23,324 13 2.21 (14) 1.60 4 Seo Statistical Review for additional data for the years 1965 and 1970 through 1975.
6 Electric Operating Revenues 0 and Net Income CI (Millionsof Dollars) allowance for funds used during construction in-creased $5.3 millionin 1975 as compared witha $16.5 million increase in 1974. These increases reflect larger amounts of construction work in progress dur-ing the respective periods. Income tax credits increased $3.7 millionin 1975 as compared with a $5.6 million increase in 1974, reflecting primarily the increases in tax-deductible interest charges applicable to the greater amount of funds invested in facilities under construction. 122 135 147 '1 70 187 205 256 307 34 i'06 461 102 72 Financing and Construction Construction expenditures during 1975 totaled $301 million.Ofthis, $244 millionwas forgenerating facilities, $23 million for transmission and $34 mil-lion for distribution and general facilities. In addi-tion, nuclear fuel expenditures for 1975 totaled $17.5 million. During 1975 the Company completed the follow-ing financings: January 1975, four million shares of common stock for net proceeds of $58 million and $22.35 million principal amount of First Mortgage Bonds, 11'/8% Series, due 1994; inMarch, two million shares of $2.675 Series A Preference Stock for net proceeds of $47.9 million;in May, $100 millionprin-cipal amount of First Mortgage Bonds, 11% Series, ~ due April 15, 1984; and in November, five million~ shares of common stock for net proceeds of $86.075 million. Proceeds from 1975 financings were used to retire $131.6 millionofshort-term notes outstanding at the beginning of the year. In addition to financings, funds were provided from the recovery ofcapital through depreciation and amortization totaling $57 million; from earnings re-tained and invested in the business of $30 million; and from deferred income taxes and investment tax credits totaling $39 million. The Company's construction program for 1976 through 1978 is estimated to require $826 million with $270 millionof this amount budgeted for 1976. Tax Status of Common, Preferred and Preference Dividends Under existing Internal Revenue Service regula-tions, two percent of dividends paid to common shareholders during 1975 constituted a return ofcapi-tal for federal income tax purposes and is not taxable as dividend income. All dividends paid in 1975 to holders of preferred and preference stock are taxable as dividend income. 22 23 25 26 27 25 '1965 '66 '67 '68 '69 '70 '71 '72 '73 '74 '75 Capitalization The Company's capitalization at December 31, 1975 was $2,213,558,580, consisting of 49.9 percent ~ first mortgage bonds, 32.6 percent common equity, ~ 15.2 percent preferred and preference stock and 2.3 percent a six-year promissory note.
e Price Ranges and Dividends Paid Per Share Common and Preferred Stock Common Stock N.Y. Stock Exchange Reported Prices 1974 First Quarter Second Quarter Third Quarter Fourth Quarter 1975 First Quarter Second Quarter Third Quarter Fourth Quarter High $23i/4 19'/4 14'/4 142/4 Low $20 132/a 11'/s 10i/2" 17 11 18s/s 13~/a 18'/a 15'/4 20'/4 '16'/s Dividends Paid $.40 .40 .40 .40 .40 .40 .40 .40 $5 Preferred Stock American Stock Exchange Reported Prices 1974 First Quarter Second Quarter Third Quarter Fourth Quarter 1975 First Quarter Second Quarter Third Quarter Fourth Quarter High $ 66>/2-61'/4 56'/4 52'/2-551/2 53'/2 551/2-59 Low $60 55 50 46 49 48 49% 50 Dividends Paid $1.25 1.25 '1.25 '1.25 1.25 1.25 '1.25 1.25 Note: Other voting stocks are not actively traded. Regular quarterly dividends have been paid on all preferred and preference stocks. Rates Rate increases placed into effect during 1974 and 1975 produced additional revenues of $252,996,000 for the Company during 1975. North Carolina A permanent retail rate increase ofa'pproximately t 21.5 percent was approved by the North Carolina Utilities Commission in January 1975 with a minor modification of the residential rate schedule. The Company had filed for this increase in October 1973, and most of it had been placed in effect by the Com-pany in October 1974. In August 1975, the commis-sion approved a revised fuel charge requested by the Company and allowed, the Company to collect the unamortized fuel expense account over a 12-month period at the rate of.089 cents per kilowatt-hour. Intervenors in these proceedings have appealed to the Court of Appeals. South Carolina A permanent retail rate increase of 18.3 percent (rather than the 21 percent requested in October 1973) was granted by the South Carolina Public Service Commission in January 1975. In the same month, the South Carolina Commission also approved a fossil fuel adjustment clause similar to the one approved in North Carolina, which continues to be in effect in South Carolina. Wholesale An increase in wholesale rates and a fossil fuel adjustment clause for municipalities, private utilities, and rural electric cooperatives were placed in effect by the Company in January 1975. Applica-tion for these increases was made to the Federal Power Commission in July 1974. Hearings on the case began in April1975, but a final decision is pending. During 1975, these increases produced additional revenues of$50,732,000 ($19,978,000 from base rates and $30,754,000 from the fossil fuel adjustment charge), which are subject to refund.. Increasing costs in almost every area of the Com-pany's operations required that the Company file for 'additional rate relief in 1975. North Carolina In July 1975, an application to increase retail rates in North Carolina by approximately 22 percent was 'filed by the company, and a 12 percent interim in-crease was granted by the North Carolina Utilities Commission in August. Hearings on the general rate increase began in December 1975 and were con-cluded in January. In February, the commission ren-dered its decision allowing an increase of 22 percent or $82 million annually which was the'full amount requested. In its'order, the commission redesigned all resi-dential rates and included a basic facilities charge regardless of the kilowatt-hours used. In addition, it instituted a higher summer than winter rate for all-electric customers forJune through September usage. The commission also modified the approved fuel charge to reflect nuclear fuel costs and purchase and interchange power, and rolled more of the current fuel costs into the basic rates.
South Carolina The Company also made application in July 1975 for a rate increase of 7.5 percent to South Carolina residential customers. This increase was to equalize the residential rates in North Carolina and South Carolina. In August 1975, the Company filed to in-crease retail rates in South Carolina by about 23 per-cent. An interim increase of 12 percent was placed in effect in September. The South Carolina Public Ser-vice Commission has not yet set a hearing date, but effective March 1, 1976, the full increase was placed into effect subject to refund pending final hearings. Wholesale InDecember 1975, the Federal Power Commission directed CP&Lto modify the basis ofits fuel charge to wholesale customers effective January 1, 1976. The charge must now be based on costs for fossil and nuclear fuel and purchased and interchange power. On January 30, 1976, the Company filed with the Federal Power Commission to increase wholesale rates by approximately 34.5 percent. The increase, based on anticipated 1976 sales, would produce addi-tional annual revenue of $33.7 million for the Com-pany. In addition, the Company is seeking a tempo-rary fuel charge of.088 cents per kilowatt-hour (to be applied over a period of up to 12 months) as a means ofrecovering $4.6 millionin deferred fuel expenses. On February 27, 1976 the FPC accepted the Com-pany's wholesale rate filingand suspended the effec-tive date until May 1, 1976. However, the FPC order required the Company to submit revised tariffs re-flecting the elimination of tax normalization. Peak Pricing Hearings As a result ofthe growing interest in new methods of rate design and a statutory requirement, a hearing on peak load pricing, time-of-day metering, conserva-tion, and load management began on December 16, 1975 before the North Carolina UtilitiesCommission. The Company filedaffidavits setting forth its position and recommended that studies be made to determine whether the benefits of new rate designs would out-weigh the costs. In their testimony, CP8 Lrepresenta-tives described the Company's efforts in load man-agement and its participation in national rate design studies being conducted by the Electric Power Re-search Institute and the Edison Electric Institute. Construction New Facilities On November 3, UnitNo. 2 ofthe Brunswick plant was placed into commercial operation at 790,000 kilowatts. During pre-operational testing, this unit produced the first nuclear-generated electricity in North Carolina on April29. When the second unit is Common Stock Average Shares Outstanding (in thousands) 11,289 1965 11,488 '66 '11,584 '67 11,616 '68 11,920 '69 12,934 '70 14,776 '71 '17,814, '72 20,554 '73 23,324 '74 28,109 '75 Cl Dividends Paid per Share Q Earnings per Share $1%6 -.28 3 "38 4 1.56 -46
- 4.79
- 54 h60
- 60
$1.80 1.88 1.91 1.98 2.05 1.97 221 2.58 2.70 COnStruCtiOn EXPenditureS iMillionsof Dollars) 8 Projected 1965~'54 '67 '69 '71 '73 '75 ,'76
- 77
'78 77 238 301 270 263 293 358 ~
completed in 1977, the plant will represent an in-vestment of approximately $793 million, including the expense for cooling towers and other modifica-tions to the cooling system which are required under present operating and discharge permits. Construction Plan Revision Revised energy forecasts, coupled with the un-availability ofcapital on reasonable terms, caused the Company to make major revisions in construction plans. The revisions involved all future generating units and were designed to reduce capital outlays during the 1976-1979 time period. The current plan supports a growth rate of 6.5 percent annually less than the 7.4 percent com-pounded ten-year growth rate which latest studies indicate willoccur. Growth of more than 6.5 percent annually may result in negative reserves in the early 1980s. However, if earnings are sufficient to attract more capital, the Company could accelerate the con-struction of one or more coal-fired plants. Proposed Construction Unit Brunswick ¹1 (821MW) Roxboro ¹4 (720MW) Mayo ¹1 (720MW) Harris ¹1 (900MW) Mayo ¹2 (720MW) Harris ¹2 (900MW) Undesignated (1150MW) Harris ¹4 (900MW) Undesignated (1150MW) Harris ¹3 (900MW) Type Nuclear Fossil Fossil Nuclear Fossil Nuclear Nuclear Nuclear Nuclear Nuclear In-Service Date 4/77 3/80 3/83 3/84 3/85 3/86 3/87 3/88 3/89 3/90 Transmission Lines Authorized Authorized transmission line construction for 1976 and following years includes 286 miles of 500,000-volt line, 650 miles of 230,000-volt-line, and 151 miles of 115,000-volt line. Environmental Matters CP&L spent nearly $15.3 million during 1975 for construction of environmental protection facilities. Of this, $8 millionwent for air quality control equip-ment and $7.3 million for water quality control de-vices. Projects completed during 1975 included elec-trostatic precipitators at the Cape Fear, Lee, Sutton, and Weatherspoon plants; modifications to the cir-culating water system at the Weatherspoon plant; and installation ofmechanical cooling towers at the Cape Fear plant. Expenditures for environmental protection equipment at new and existing plants are expected to be$ 34 millionin 1976. Acooling tower at Roxboro ¹3 is scheduled for completion in 1976. Construction is underway at the Brunswick plant on two natural draft, salt water cooling towers which are scheduled to be operational by May 1978. However, the Company has challenged that por-tion of the Environmental Protection Agency (EPA) plant discharge permit which requires construction of the towers for the Brunswick plant and has asked for a re-evaluation of that requirement so that further studies of the present cooling system's impact on marine lifein the Cape Fear estuary may be completed and evaluated. Because construction of towers may not be necessary, the Company feels that the re-evaluation is clearly in the public interest. Aprehear-ing conference before an EPA administrative judge was held in January 1976; the full hearing is scheduled to begin in Raleigh on june 1. Amendments to the Clean AirAct of 1970 were among the important issues proposed in Congress during 1975. Originally intended to provide more time and flexibilityfor meeting the strict provisions of the 1970 law, the amendments now being consid-ered by Congress would, instead, increase its restric-tiveness. Ifadopted, the amendments would close a major portion of the nation's land to industrial de-velopment, nearly double the cost of pollution con-trol equipment forelectric plants, greatly increase the electric industry's capital requirements, and bring about further large increases in the cost of electricity for customers. Operations Total system energy requirements for 1975 were 25.8 billion kilowatt-hours. Of this total, about 0.1 ~ billion kilowatt-hours were sold to utilities outside the service area. System load factor was 58.1 percent as compared to 60.2 percent in 1974. System capabil-ity, including long-term contract purchases from other utilities, was 7,071,500 kilowatts. Total generating capacity is 6,843,500 kilowatts. Of this, 56.7 percent is from seven steam electric plants burning fossil fuels, 21.8 percent from the Robinson and Brunswick nuclear units, 18.4 percent from 33 internal combustion turbine generators, and the remaining 3.1 percent from four hydroelectric plants. Sources for the total energy produced were: 72.5 percent coal, 22.4 percent nuclear, 3.8 percent hydro-electric,.1 percent residual oil,.4 percent No. 2 oil, and.8 percent natural gas. The Sutton plant was con-verted from residual oil to coal in January 1975. The
Fuel Expense Allfuels as burned (Cents per MillionBtu) Total UtilityPlant (Billions of Dollars) Service Area Peak Load (Thousands of Kilowatts) U Summer Q Following Winter 2.56 5,060 4,771 2.25 1.96 3,625 3 171, 45 45 1.24 2,445 1,943 31 3'i 27 1965 '67 '69 '71 '73 '75 1965 '67 '69 '71 '73 '75 1965 '67 '69 '71 '73 '75
Company does not plan to use residual oil or gas as future fuel sources. Of the 7.5 milliontons of coal burned during the year, 61.1 percent was received under long-term con-tracts. The Company expects to receive approxi-mately 81 percent of its 1976 coal requirements from contractual agreements. Peak Loads A new peak load for the system was reached on August 25 when customer demand was 5,060,000 kilowatts, 6.1 percent higher than the 1974 summer peak. A winter peak load of 4,968,000 kilowatts was reached on January 19, 1976. A new record for energy used in one day was set on January 19 when custom-ers required 102,578,000 kilowatt-hours. The previ-ous one-day record of 97,158,000 kilowatt-hours was on August 26, 1975., Reliability Groups CP&L continues its participation as one of the 30 companies in the Southeastern Electric Reliability Council (SERG). Membership includes all power suppliers with generating capacities ofat least 25,00D kilowatts. The Company is also one of seven electric utilities in the Virginia-Carolinas Reliability Group (VACAR). Improving system reliability for member companies is the principal purpose of both groups. Long-term Coal Contract The Company is currently negotiating with Pick-ands Mather & Company to develop a second deep coal mine in Pike County, Kentucky. In 1974, an agreement was made to develop the first mine from which initial deliveries of coal are expected in 1976. CP&Lexpects to receive a total of 1.6 milliontons per year for 25 years from the two.mines. This is low sulfur coal which the Company expects willenable it to meet air quality requirements without adding scrubbers to a new plant. Ownership Distribution of Stock Ownership (Common, Preferred, and Preference Stock Combined) The Carolinas Elsewhere.... Totals...... Shareholders Shares Number Percent Number Percent 39,510 43.12 8,607,230 22.90 52,118 56.88 28,972,820 77.10 91,628 10D.OO 37,58D,D50 10D.OO The total number of shares and shareholders in-creased considerably during the year as a result ofthe issuance and sale of nine million shares of common stock and two million shares of preference stock. At the end ofthe year, there were 69,199 holders of common stock, 15,418 holders ofpreferred stock, and 7,011 holders of preference stock, or a total of 91,628 shareholders compared with 67,688 at the end of 1974. The percentage of those livingin the Carolinas was 43.12 percent at the end of 1975. In addition to shareholders indicated by these statistics, several thousand shareholders own shares which are held by banks, stockbrokers, investment t trusts, or nominees. At the 1975 annual meeting, more than 82 percent of the total shares outstanding were represented in person or by proxy. The largest beneficial shareholder of record at the end of 1975 had less than 2 percent of the shares outstanding. Dividend Reinvestment Service Interest in the,div'idend reinvestment plan con-tinued to increase during 1975. About 4,100 shareholders are participating in the Dividend Rein-vestment Plan initiated by the Company in 1973. Under the plan, Company common, preferred, or preference dividends may be automatically rein-vested in additional shares of common stock. The program is administered by North Carolina National Bank and any questions regarding participa-tion should be directed to NCNB, Dividend Rein-vestment Service, Post Office Box 120, Charlotte, North Carolina 28201.
Customers ~ Although total energy sales increased in 1975 by only 1.9 percent, energy consumption by all classes except industrial was up significantly. Sales within the service area were 24.1 billion kilowatt-hours coinpared to 23.6 billionin 1974. Kilowatt-hoursales to residential customers increased 4.0 percent; sales to commercial customers increased 6.2 percent; sales for resale increased 7.6 percent; and sales to indus-trial customers decreased 5.3 percent. The number ofretail customers increased 1.9 per-cent to 660,474. Electric service for resale was supplied to 18 electric membership corporations, 24 municipalities, and 2 privately owned utilities. These resale customers used 5.4 billion kilowatt-hours in 1975, 22 percent of total Company sales. Of the total residential units served by CP&L at year's end, 22.4 percent were all-electric. Similarly, 23.4 percent ofthe commercial and 11.2 percent ofthe industrial customers had total electric facilities. Residential Residential customers totaled 560,954, or 84.9 percent of the Company's total customers, and ac-counted for 31.8 percent of 1975 operating revenues. Average annual consumption per customer was 11,094 kilowatt-hours, up from 10,861 in 1974. The average annual residential bill of $347.54 was less than 3 percent, of the average family buying income for the Carolinas as reported by Sales Management Magazine's Survey of Buying Power. Commercial The Company's 94,556 commercial customers represented 14.3 percent of the total retail customers and produced 18.4 percent ofthe operating revenues. In 1975, average annual usage by commercial cus-tomers was 40,049 kilowatt-hours, an increase of 2,088 kilowatt-hours over 1974. Industrial For the year, CPgrL's 3,318 industrial customers used 7.8 billion kilowatt-hours, representing a de-crease from 1974 of 5.3 percent. Industrial sales rep-resented 27.7 percent ofthe total Company operating revenues. Expenditures announced for new and expanded industries in the service area totaled $269.1 million, substantially below the previous one-year high of $658.9 million established in 1974. It is estimated that 8,444 new job opportunities, with an annual payroll of $51 million, willbe pro-vided by this increased industrial activity. Customer Relations In June, the Company launched "Project Com-municate," an intensive program ofcustomer contact to help explain rising electric costs, counsel custom-ers on efficient use of electricity, and answer other questions about the Company and its operations. The object of the program, designed as an on-going effort to supplement the Company's regular customer communications activities, is greater public under-standing. Over 30,000 customer-households were contacted during the latter half of the year. Average Price of Electricity Paid by Residential Customers (Twelvo Months Ending December 31, 1975 and 1974) Cents Per Kilowatt-Hour 1975 1974 8.27 7.70 5.44 5.50 5.36 5.06 5.0'1 4.80 4.71 4.02 4.56 4.18 4.55 3.78 4.25 3.93 4.09 3.42 3.89 3.67 3.89 3.07 3,88 3.67 3.69 3.06 3.61 3.35 3.59 2.74 Place New York, N. Y. Newark. N. l. Boston, Mass. Philadelphia. Pa. Hartford, Conn. Now Haven. Conn. Pittsburgh. Pa. Baltimoro. Md. St. Petersburg. Fla. Washington. D. C. Richmond. Va. Cleveland. Ohio Columbia, S. C. Savannah. Ga. Tampa. Fla., Cents Per Kilowatt.Hour 1975 1974 3.53 2.89 3.37 2.63 3.36 2.89 3.25 2 48 3.18 2.86 3.13 2.64 3.04 2.98 300 '61 3.00 2.37 2.97 2.55 2.97 2.44 2.89 2.53 Place Miami~ Fla. Fairmont. W. Va. Syracuse. N. Y. Atlanta, Ga. Cincinnati, Ohio )ackson. Miss. Charlotte, N. C. Pensacola. Fla. Roanoke, Va. Birmingham. Ala. Gulfport. Miss. (Prices shown are averages lor the systems of companies which serve these cities)
Average Annual Kilowatt-Hour Sales to Residential Customers Total-Electric Residential Units (Cumulative Total) Energy Sales By Classes within service area (Millionsof Kilowatt4Iours) 11 276 11,094 123 233 117,305 CI Residential H Commercial U Industrial Q Other 24,057 10,205 Total 23,607 23,229 106,525 9,027 18,861 7,454 6,620 71 15,617 12,140 9,707 Il 31,584 19 1965 '67 '69 '71 '73 '75 1965 '67 '69 '71 '73 '75 1965 '67 '69 '71 '73 '75
Territory Served ,s+ 12 Asheville /( At the end of 1975, CP&L was providing electric service to more than 660,500 customers in an area of 30,000 square milesalmost half of North Carolina and about one-fourth of South Carolina. Total popu-lation of the territory is estimated to be about 2.8 million. This territory is comparable in size to the combined areas of Connecticut, Massachusetts, Rhode Island, New Jersey and New Hampshire. It includes part ofthe Mountain and Piedmont regions, but is largely in the Coastal Plains section. Service to customers is provided by more than 4,700 employees through 5 division, 10 district and 40 area offices.
Q Henderson e I up / ,Southern Pines Florence ~ >> L 10 + Raleigh 3 e 'g Sanford 2 14 - 5 r 9 r. r u Jacksonville t' I Wilmington ttett Sumter "'~ Columbia e r et"r Legend
- 1. Asheville Electric Plant
- 2. Blewett Hydroelectric Plant
- 3. Cape Fear Electric Plant
- 4. Lee Electric Plant
- 5. Robinson Electric Plant
- 6. Sutton Electric Plant
- 7. Tillery Hydroelectric Plant
- 8. Walters Hydroelectric Plant
- 9. Weatherspoon Electric Plant
- 10. Roxboro Electric Plant
- 11. Brunswick Nuclear Plant
- 12. Marshall Hydroelectric Plant
- 13. Harris Nuclear Site
- 14. Darlington Plant
~.CP8tL District Offices
People Directors Named In March, the board ofdirectors elected Charles W. Coker, Jr. and Mrs. Margaret Harper to the board. Mr. Coker, president of Sonoco Products Com-pany, Hartsville, S.C., is a graduate ofPrinceton Uni-versity and Harvard Business School. He is a director ofNCNB Corporation, First Federal Savings &Loan of Hartsville, the National Association of Manufactur-ers, and serves on the executive committee of the board of the American Paper Institute. Mrs. Harper, owner of the Stevens Agency, insur-ance, Southport, N.C., is a graduate of Greensboro College. She is secretary-treasurer of the North Carolina Press Association, a trustee ofthe University ofNorth Carolina at Chapel Hill,North Carolina Blue Cross and Blue Shield, and a member of the board of governors of the Research Triangle Institute. She is a past president of the North Carolina Federation of Women's Clubs and of the North Carolina Council of Women's Organizations. Nt) +y 4 Mr. Coker Mrs. Harper I'anagement Changes Darrell V. Menscer, vice president, was named to head a new department of corporate performance analysis. A graduate in electrical engineering from North Carolina State University, Menscer joined the Company in 1960. He served in various engineering positions until he was named budget director in 1968. He was promoted to manager of the special services department of the engineering, construction, and operating group in 1971 and elected a vice president in 1973. Patrick W. Howe was named manager of the spe-cial services department succeeding Menscer. A graduate in chemistry from The Citadel, Howe has more than 20 years'xperience in the nuclear energy field. Prior to joining CP&L in 1971, he was chief of the site, environmental, and radiological safety group in the AEC's division of reactor licensing. Paul S. Bradshaw was named an assistant trea-surer of the Company. A graduate of Southeastern University, Washington, D.C., Bradshaw joined CP&L in 1962. He was manager of budget and statistics at the time of his promotion. Employee Relations The Company ended 1975 with 4,749 employees, substantially the same number as at the end of 1974. During the year, more than 1,500 employees from all levels ofthe organization participated in 14 differ-ent courses and seminars designed to upgrade job performance. For the third consecutive year, CP8 L was the safest utilityin the Southeastern Electric Exchange, an association of electric companies located in the Southeast. The Company had a frequency rate of 1.28 lost-time injuries for each millionman-hours worked as compared to an average of 4.52 lost-time injuries per millionman-hours worked for the 25 members of the exchange. CP&L also placed first, for the second year in a row, in the Southeastern Electric Exchange ~ standing for vehicle safety with a frequency rate of 5.16 accidents per million miles driven.
Statement of Income For the Years Ended December 31, 1975 and 1974 Operating Revenues Electric (Notes 5 and 6) Operating Expenses: Fuel for electric generation Deferred fossil fuel expense (credit) (Notes 1 and 5)......... Purchased electric power Other operation expenses Maintenance Depreciation Taxes other than on income Income tax expense (Note 4) Total operating expenses Operating Income Other Income: Allowance for funds used during construction (Note 7) Income taxescredit (Note 4) Other, net Total other income Gross Income Interest Charges: Long-term debt Other Total interest charges Net Income Preferred and Preference Stock Dividend Requirements...... Earnings for Common Stock Average Common Shares Outstanding Earnings per Common Share 1975 $606,329,122 232,722,278 20,650,131 13,114,681 57,035,576 33,685,947 46,648,000 46)436) 686 45,169,792 495,463,091 110,866,031 59,956,830 19,733,336 1,020,787 80,710,953 1911576,984 85,740,402 4,214,861 89,955,263 101,621)721 25,751,863 $ 75,869,858 28,109,092 $2.70 1974 $460,977,024 235,842,050 (35,028,046) 14,493,620 46,549,415 28,591,432 35,544,206 40,683,529 16,946,789 383,622,995 77,354,029 54,608,879 16,067,820 775,762 71,452,46'l 148,806,490 69,877,700 6,658,234 76,535,934 72,270,556 20,672,481 $ 51,598,075 23,324,111 $2.21 Statement of Retained Earnings For the Years Ended December 31, 1975 and l974 Balance at Beginning of Year Net Income Total Deduct: Cash dividends declared: $ 5 preferred stock Serial preferred stock: $4.20 series $5.44 series $9.10 series $7.95 series $7.72 series $8.48 series Preferred stock A, $7.45 series $2.675 preference stock, series A. Common stock (at annual rate of $1.60 a share in 1974 and 1975) Total cash dividends declared Capital stock expense Total deductions Balance at End of Year $128,762,726 101,621,721 230,384,447 $116,063,040 72,270,556 188,333,596 1,186,295 1,186,295 420,000 1,360,000 2,730,009 2,782,525 3,860,000 5,512)000 3,725,000 5,513,534 420,000 1,360,000 2,730,008 2,782,523 3,860,000 5,986,655 3,725.000 37,374,994 59,425,475 145,395 59,570,870 46,172,859 73,262,222 445,797 73,708,019 $156,676,428 $128,762,726 See notes to financial statements. l
Balance Sheet December 31, 1975 and 1974 ASSETS Electric UtilityPlant: Electric utilityplant other than nuclear fuel: In service Held for future use Construction work in progress Total Less accumulated depreciation Net 1975 $1,837,332,579 8,705,994 643,068,549 2,489,107,122 296,425,899 2,192,681,223 1974 $1,364,183,273 7,542,840 826,012,064 2,197,738,177 256,659,461 1,941,078,716 Nuclear fuel. Less accumulated amortization Net Electric utilityplant, net 70,239>'l00 18,507,'102 51,731,998 2,244,413,221 55,117,915 11,466,631 43,651,284 1,984,730,000 Other Property and Investments 2,026,358 3,828,783 Current Assets: Cash Temporary cash investments Accounts receivable, net (1974 includes $14,942,360 of refundable income taxes)........... Deferred fossil fuel inventory costs (Notes 1 and 5),... Materials and supplies: Fuel Other. Prepayments. etc. Total current assets 9,354,350 13,496,583 31,484,653 14,377,915 60,008,940 18,093,951 '>472>295 148,288,687 9,517,174 45,619,704 35,028,046 84,244,486 13,434,110 1,787,436 189,630,956 Deferred Debits: Unamortized debt expense Other. ~ Total deferred debits Total See notes to financial statements. 1,518,038 5,775,927 7,293>965 $2,402,022,231 1>253,151 5,624,404 6,877,555 $2,185,067,294
Carolina Power 8r Light Company LIABILITIES Capital Stock and Retained Earnings (Note 2): Preferred stock Preference stock Common stock Retained earnings Total capital stock and retained earnings 1975 288,118,400 47,900,000 565,609,691 156,676,428 1,058,304,519 1974 288,118,400 419,701,904 128,762,726 836,583,030 Long-Term Debt (excluding current maturities): Principal amounts (Note 3) Less unamortized discount and premium, net Long-term debt, net 1,157,234,359 3,980)298 1,153,254,061 1,036,914,310 2,819,037 1,034,095,273 t Current Liabilities: Long-term debt due within one year (Note 3) Notes payable Accounts payable Customers'eposits Taxes accrued Current portion of deferred income taxes (Note 4) Interest accrued Dividends declared Other Total current liabilities 2,000,000 78,385 28,710,977 3,753,970 9,380,705 3,285,558 20,932,577 25,608,792 2,114,170 95,865,134 131,657,046 59,412,183 2,818,650 11,276,899 13,577,543 19,32'1,270 19,240,143 1,823,299 259,127.033 Deferred Credits: Investment tax credits (Note 1). Customers'dvances for construction Other Total deferred credits Reserve for Injuries,and Damages 18,787,931 202)420 459,170 19,449,521 794,184 4,514,126 125,873 115,406 4,755,405 724,920 Accumulated Deferred Income Taxes (Note 4) Commitments and Contingencies (Note 5) Total See notes to financial statements. 74,354,812 $2,402,022,231 49,781,633 $2,185,067,294
Statement of Source and Use of Financial Resources For the Years Ended December 31, 1975 and 1974 1975 1974 20 Source of Financial Resources: Current resources provided from operations: Net income Items not requiring (providing) current resources: Depreciation and amortization Noncurrent deferred income taxes, net Investment tax credit adjustments, net Allowance for funds used during construction.......... Total current resources provided from operations Other resources provided: Additions to plant accounts representing capitalization of the net cost of funds used during construction........ Proceeds from assignment to lessor of internal combustion turbine generators Proceeds from sale and leaseback of nuclear fuel.......... Miscellaneous, net Total resources provided from operations and other Financings: Sale of: First mortgage bonds Preferred stock Preference stock Common stock Increase (decrease) in short-term notes payable less temporary cash investments Total resources provided from financings........... TOTAL. 57,242,327 24,573,179 14,2731805 (59,956,830) 137,754,202 45,391,668 11,187,984 (6,241,299) (54,608,879) 68,000,030 59,956,830 54,608,879 7,096,477 204,807,509 44,455,470 47,593,386 3,994,354 21'8,652,119 120,742,943 47,744,042 145,617,948 (145,075,244) 169,029,689 $373,837,198 150,978,924 64,230,667 3,380,868 103,301,247 321,891,706 $540,543,825 $101,621,721 $ 72,270,556 Use of Financial Resources: Gross property additions, excluding nuclear fuel*..... Nuclear fuel additions* Dividends for the year Net increase (decrease) in working capital, excluding temporary cash investments, long-term debt due within one year, and short-term notes payable...... TOTAL. .. ~... $305,552)826 17,515,265 71,924,721 $382,602,011 39,939,431 58,047,475 (21,155,614) 59,954,908 $373,837,198 $540,543,825 $ 19,868,712 35,028,046 69,334,972 (40,310,318) (7,693,279) (13,577,543) (6,076,738) 3,381,056 Increase (decrease) in working capital, excluding temporary cash investments, long-term debt due within one year, and short-term notes payable, by components: Accounts receivable $(14,135,051) Deferred fossil fuel inventory costs (20,650,131) Material and supplies (principally fuel) (19,575,705) Accounts payable 30,701,206 Taxes accrued ~ 1,896,194 Current portion of deferred income taxes 10,291,985 Interest and dividends payable (7,979,956) Other, net (1,704,156) Net increase (decrease) in working capital, excluding temporary cash investments, long-term debt due within one year, and short-term notes payable.......... $(21,155,614) $ 59,954,908
- Includes amounts capitalized as allowance for funds used during construction.
See notes to financial statements.
Notes to Financial Statements
- 1.
SUMMARY
OF SIGNIFICANT'.ACCOUNTING POLICIES System ofAccounts. The accounting records of the Company are maintained in accordance withuniform systems ofaccounts prescribed by the Federal Power Commission and the regulatory commissions of North Carolina and South Carolina. Electric UtilityPlant. Electric utilityplant is stated at original cost. The cost of additions, including re-placements of units of property and betterments, is charged to utility plant. The Company includes in such additions an allowance for funds used during construction (8% for 1975 and 1974). Maintenance and repairs ofproperty and replacements and renew-als of items determined to be less than units of prop-erty are charged to maintenance expense. The cost of units of property replaced or renewed plus removal costs, less salvage, is charged to accumulated depre-ciation. Utilityplant is subject to the lien ofthe Com-pany's mortgage. Allowance forFunds Used During Construction. In accordance with the uniform systems of accounts prescribed by regulatory authorities, an allowance for funds used during construction is included in con-struction work in progress and credited to income, recognizing that funds used for construction were provided by borrowings, preferred stock, and com-mon equity. This accounting practice results in the inclusion in utilityplant in service of amounts con-sidered by regulatory authorities as an appropriate cost for the purpose of establishing rates for utility charges to customers over the service lives of the property. Depreciation and Amortization. Depreciation of utility plant, other than nuclear fuel, for financial reporting purposes is computed on the straight-line method based on estimated useful lives and charged principally to depreciation expense. Depreciation provisions as a percent of average depreciable prop-erty other than nuclear fuel approximated 3.0% in 1975 and 2.8% in 1974. Effective as ofOctober 1, 1975 the Company adopted revised depreciation rates gen-erally reflecting shorter estimated useful lives forutil-ityplant, which increased the provision for deprecia-tion by $2,538,000 in 1975. Amortization of nuclear fuel charged to fuel expense (1975, $9,190,000; 1974, $8,757,000) is computed on the unit-of-production method. Revenues. Customers meters are read and bills are rendered on a cycle basis. Revenues are recorded when billed, as is the customary practice in the indus-try. Deferred Fossil Fuel Inventory Costs. In 1974, pur-suant to state regulatory commission orders, and in january 1975, pursuant to Federal Power Commission order, the Company put into effect automatic fossil fuel adjustment clauses to recover increased fuel costs. The provisions ofthe clauses result in a time lag between the date increased fuel cost is incurred and the date such cost is billed to customers. To properly match increased fuel costs with the related revenues, the Company defers, except for North Carolina retail operations, increased fuel cost when incurred and expenses itin the month the related revenue is billed. Beginning September 1, 1975 for North Carolina re-tail operations, the fossil fuel adjustment clause was replaced by an "approved fuel charge" adjustment to basic rates (which results in billing increased fuel costs on a current basis) and the Company was au-thorized to recover the deferred fossil fuel inventory costs accumulated at August 31, 1975 by a temporary rate surcharge over an approximate twelve-month period, with matching amortization of the deferred costs (see Note 5). Therefore, as a result of deferred fuel cost accounting, operating expenses include a charge of $20,650,131 in 1975 and a credit of $35,028,046 in 1974 and deferred fossil fuel inven-tory costs on the balance sheet decreased $20,650,131 in 1975 and increased $35,028,046 in 1974, represent-ing the normalization of such costs. Related deferred income taxes have been recorded (see Note 4) and are reflected in income tax expense; and the accumulated deferred tax liabilityis reflected in Current Portion of Deferred Income Taxes on the balance sheet. Income Taxes. Deferred income tax provisions are recorded only to the extent such amounts are cur-rently allowed for rate-making purposes. In com-pliance withregulatory accounting, income taxes are allocated between Operating Income and Other In-come, principally with respect to interest charges re-lated to construction work in progress. Deferred in-come taxes are provided relating to the deduction for income tax purposes of a coal mining subsidiary's development costs and such taxes are charged to Other Income. See Note 4 withrespect to certain other income tax information. Investment Tax Credits. Investment tax credits generated and utilized after 1971 have been deferred and are being amortized over the service lives of the property; substantially all credits prior to 1972 were deferred for amortization over five-year periods. At December 31, 1975 the Company had generated but not utilized investment tax credits totaling $14,600,000.
Preferred Dividends. Preferred stock dividends de-clared and charged to retained earnings include amounts applicable to the first quarter of the follow-ing year, except forthe Preferred Stock A,$7.45 Series which dividends are whollyapplicable to the year in which declared. Retirement Plan. The Company has a non-contributory retirement plan for all regular full-time employees and is funding the costs accrued under the plan. Retirement plan costs for 1975 and 1974 were approximately $3,526,000 and $2,421,000, respec-tively. In 1975, the Company amended the plan by changing, among other things, vesting provisions to conform with the requirements of the Employee Re-tirement Income Security Act of 1974, the interest assumption from 4'/z% to 5%, and the amortization of unfunded prior service cost over a period of twenty years from January 1, 1975 instead offrom January 1, 1974. The effect of these changes on periodic net income is not material. AtJanuary 1, 1975, the date of the latest actuarial valuation, the unfunded prior ser-vice cost was approximately $24 million and the ac-tuarially computed value ofvested benefits exceeded assets of the plan by approximately $22 million. Other Policies. AtDecember 31, 1975 the Company had available lines of credit with various banks and maintains account balances in connection with cer-tain ofsuch lines. Other property and investments are stated principally at cost, less accumulated deprecia-tion where applicable, except forthe investment in its coal mining subsidiary which is accounted for on the equity basis. Temporary cash investments are stated at cost, approximating market value. Materials and supplies inventories are stated at average cost. The Company maintains an allowance for doubtful ac-counts receivable (1975, $580,237; 1974, $427,876). Bond premium, discount and expense are amortized over the life of the related debt. 22
- 2. CAPITALSTOCK Preferred Stock, without par value. cumulative:
$5 (authorized. 300.000 shares; outstanding. 237.259 shares) Serial (authorized. 10.000.000 shares): $4.20 Series (outstandingi 100,000 shares) $5.44 Series (outstanding,.250.000 shares) $9.10 Series (outstanding. 300.000 shares) $7.95 Series (outstanding. 350.000 shares) $7.72 Series (outstanding, 500.000 shares) $8.48 Series (outstanding. 650.000 shares) Preferred Stock A (authorized. 5.000.000 shares) $7.45 Series (outstanding. 500.000 shares) Total 1975 $ 24.375,900 10.000.000 25.000.000 30.000,000 35.000.000 49.425.000 64.317.500. 50.000.000 $288.118.400 19/4 $ 24.375.900 10,000.000 25.000.000 30.000.000 35.000.000 49,425.000 64.317,500 50.000,000 $288 118 400 Preference Stock. without par value. cumulative (authorized. 10.000.000 shares) $2.675 Series A (outstanding. 2.000.000 shares) Common Stock. without par value (authorized. 60.000.000 shares): Outstanding (1975. 32.692.791 shares; 1974. 23.438.844 shares) Subscribed but not issued 19.875 shares Total. $ 47.900,000 $565,609,691 $565.609.691 $419.458.687 243.217 $419.701.904 Authorized Preference Stock was increased from 2,000,000 to 10,000,000 shares in May 1975. Common stock outstanding increased $146,- 'l51,004 in 1975 and $3,137,651 in 1974 from the sale of9,000,000 shares in public offerings and the sale of 253,947 shares in 1975 and 205,081 shares in 1974 under the Company's Stock Purchase-Savings Prog-ram for Employees. At December 31, 1975, 711,513 shares of unissued common stock were reserved for issuance under the Program. The preferred stock ac-count increased $64,317,500 in 1974 from the sale of 650,000 shares and the preference stock account in-creased $47,900,000 in 1975 frown the sale of 2,000,000 shares of such securities in public offer-ings. The preferred stock is callable, in whole or in part, at redemption prices ranging from $102 to $115 a share plus accumulated dividends. The Preferred Stock A,$7.45 Series, has a sinking fund requirement, commencing in 1984, to redeem 20,000 shares annu-ally at $100 per share plus accumulated dividends. In~ the event ofliquidation, the preferred stock is entitled ~ to $100 a share plus accumulated dividends. The $2.675 Preference Stock Series A is presently callable
in whole or in part at $27.68 per share plus accumu-lated dividends, unless refunding is involved in which case there are substantial limitations on re-demption until April 1, 1980; and in the event of liquidation is entitled to $25 a share plus accumu-lated dividends in preference only to the common stock. The Company's charter and the first mortgage bond indenture as amended contain provisions limiting payments of cash dividends on common stock under certain circumstances. AtDecember 31, 1975, none of the retained earnings was restricted under these pro-visions. 3. LONG-TERM DEBTPRINCIPAL First mortgage bonds: 3'/s% Series. duo 1979................ 3'/4% Series. due 1979................ 21/so%%d Series, duo 1981................ 3%% Series. duo 1982................ 11% Series. duo 1984................ 41/11% Series. due 1988................ 41/s% Series. duo 1990................ 4%% Series. duc 1991................ 4'h% Series. due 1994...........:.... 11'/8'/0 Series. due 1994................ 5/s% Series. due 1996................ 6'/8% Series. due 1997................ 61/a% Series. due 1998................ 81/4% Series. due 2000................ GYES% Series. duc 2000....,........... 7~/s% Series. due 2001................ 774% Series. due 2001.........,...... 7/<% Series. due 2002 AMOUNTS 20.100.000 43.930.000 '1 5.000.000 20.000.000 100.000.000'0.000.000 25.000.000 25.000.000 30.000.000 50.000.000*" 30.000.000 40.000.000 40.000.000 40.000.000 50.000.000 65.000.000 70.000.000 100.000.000
- 4. INCOME TAXES Income tax expense is composed of the following:
Included in Operating Fxpenscs: Provision (credit) for currently payable (refundable) taxes Provision for deferred taxes. net Investment tax credit adiustments. net (credit) Total charged to operating incomo Included in Other Income: Reduction in currently payable taxes Provision for deferred taxes Total credited to other income Total income tax expense 100.000.000 100.000.000 125,000.000 7'%eries. due 2003.........,........... 81/8% Series. due 2003..................... 91/i% Series. due 2004..................... Total Six-year note payable to a bank. due luly 31, 1978. at a fluctuating rate'(8.33% at December 31. 1975) related to the bank's prime rate............. 50.000.000 Miscellaneous promissory notes (1974, $234.310). 204.359 Total long-term debt. including current maturities................. Less long-term debt due within ono year 111/s% Series. due 1994.................... Total long-term debt excluding current maturities at December 31. 1975....$ 1.157.234.359 1.109.030.000 2.000.000 $1 9.452 11.444 14.274 45.170 (22.571) 2.837 (19.734) $25.436 $ (1.578) 24.766 (6.241) 16.947 (16.068) ('lL00 8) 879
- Issued in 1975
"$22.350.000 issued in 1975 The bond indenture. as amended. contains re-quirements that additional property be certified or that specified amounts in cash and/or principal amount ofbonds be delivered annually to the Trustee as an improvement fund. Current liabilities do not include the current improvement fund requirements (approximately $6.700.000 at December
- 31. 1975) since the Company meets such requirements by the certification of additional property.
Bonds of the 11t/s% Series. due 1994. shall be re-deemed under sinking fund provisions at $2.000.000 each year commencing on December 1. 1976. at the principal amount without premium plus accrued in-terest. Year Ended December 31. 1975 1974 (Amounts in Thousands) 23 -e Total provisions for deferred taxes. net Pmvisions for nct deferred inrome taxes result from liming diffcrrnres in thc rrrognition of thr. follawing items for tax ond financial reporting purposes and whirh tax effects were as follows: Excess of accelerated depreciation deductions over straight-line depreciation otherwise deductible Deferred fossil fuel inventory costs Utilization of subsidiary's tax net loss Taxable gain on sale and leaseback of properties Accrual of franchise taxes on books. not deductible until paid. $21.245 (9.912) 2.837 491 (380) $14.281 $14.5'1 3 16,814 (3.325) (3.236) $24.766
- 4. INCOME TAXES (continued)
F Reconciliation of an omount. computed by applying the federal income tox rate of 48% to pre-tax income (net income plus income tax expense). to total income tax expense follows: Amount derived by multiplying pre-tax incomo by 48%. Add (deduct): Investmcnt tax credits (utilized) eliminated Other specific reconciling items multiplied by 48')(: Allowanco for funds used during construction Differences between book and tax property depreciation and amortization for which deferred taxes have not been provided Taxes and fringe benefit costs capitalized State income taxes and other differences, net Provisions for current and deferred taxes. Invostmont tax credit adlustmcnts. net Total income tax expense $60,988 ('14,820) (28,779) (2,512) (3,154) (561) 11,162 14.274 $25.436 $35,112 5,706 (26,212) (3,523) (4,022) 59 7,'120 (6,241) 879 Year Ended December 31, 1975 1974 (Amounts in Thousands) Total assets Notes payablc to bank (guaranteed by the Company).. December 31. 1975 1974 $17.744 $2,956 16,200 The Company has guaranteed the obligations of LC under the terms of bank loan agreements and a lease financing arrangement which can provide up to $49.7 millionin funds for the LC mine (currently estimated maximum capital cost is $50 million).The Company has further agreed to advance any other funds re-quired by LCand to cause LCto complete the mine not
- 5. COMMITMENTSAND CONTINGENCIES It is estimated the Company's construction pro-gram for 1976 through 1978, excluding nuclear fuel, willcost approximately $826 million. At December 31, 1975, firm commitments for construction aggre-gated approximately
$436 million plus approxi-mately $306 million for initial and replacement nu-clear fuel. In addition, tho Company has a contract with the Energy Research and Development Ad-ministration for nuclear fuel enrichment require-ments through June 30, 2002, which is cancelable without penalty upon five years written notice. Pay-ments for enrichment services are anticipated to ap-proximate $110.million during the next five years. .Many contracts include escalation provisions. The Company has entered into agreements with Pickands Mather & Co. (PM), a firm engaged in own-ing, operating and managing mineral properties, to develop two adjacent deep coal mines in Pike County, Kentucky, each capable of producing 1,000,000 tons of coal per year over about 25 years. A subsidiary, Leslie Coal Mining Company (LC), has been formed, owned 80% by the Company and 20% by PM, to construct and develop ono of the mines. Significant aspects of LC's financial position are summarized as follows (in thousands): later than December 31, 1979. The Company and PM have entered into coal purchase contracts for80% and 20%, respectively, of LC's production at prices suffi-cient to meet all of its costs. The adjacent mine is currently expected to cost approximately $46.6 mil-lion. ICl'enerators Payable 1976 1977 1978 1979 1980 1981-1985 1986-1990 1991-1995 Remainder Other $2,800 2,400 1,400 800 700 3,400 3,100 2,300 6,300 Total $ 6,600 6,200 5,200 4,600 4,500 22,400 22,100 21,300 19,600 $ 3,800 3,800 3,800 3,800 3,800 19,000 19,000 19,000 13,300 Rentals under a nuclear fuel lease totaled $5,400,000 in 1975 and $300,000 in 1974 ofwhich $3,500,000 for 1975 and none for 1974 was charged to income. Such rentals include a component based on energy pro-duced and another computed on the lessor's unamor-tized acquisition cost ($47,100,000 at December 31, 1975). Rental payments for nuclear fuel presently under lease are estimated to approximate $11,000,000 in 1976 and 1977 and declining each year thereafter through 1980. Under the terms of the leases for the internal combustion turbine (ICT) generators and the nuclear fuel, the Company, under certain cir-cumstances, is contingently liable to purchase the properties from the lessors. The Company is respon-sible for expenses in connection with most of the Rentals, excluding nuclear fuel, charged to income were approximately $ 7,400,000 in 1975 and '4,300,000 in 1974. Minimum rental commitments under noncancelable leases (except for nuclear fuel) at December 31, 1975 were approximately (in thousands):
leased properties, including insurance, taxes and maintenance. Electric utilityplant at December 31, 1975 includes approximately $15 millionrepresenting cost less ac-cumulated depreciation offour hydroelectric projects licensed by the Federal Power Commission (FPC), which licenses expire in 1976, 1993, and 2008. Upon or after expiration of each license, the United States may take over the project, or the FPC may issue a new license either to the Company or a new licensee. Inthe event of a takeover or licensing to another licensee, the Company would be paid its "net investment" in the project, not to exceed fair value, plus severance damages, if any. No provision for amortization re-serves as required for the determination of "net in-vestment" has been reco'rded as such amounts, ifany, are considered immaterial. In 1973, the Company applied for a new 50-year license for the Walters Hy-droelectric Project which original license expires in November 1976. A competing application has been filed by a group of rural electric cooperatives. The Company expects that its license application willbe granted. The Company is a member of Nuclear Mutual Limited, established to provide insurance coverage against property damage to members'uclear generating facilities. The Company would be subject to a maximum assessment ofabout $19 millionin the event of losses. In 1972 the Company committed a total of $3,450,000 for research concerning development of the Liquid Metal Fast Breeder Reactor payable in ten equal annual installments through 1981. There are certain claims pending against the Com-pany; in the opinion of the Company, liabilities, if any, arising from these claims would not have a mate-rial effect on the financial position or results ofopera-tions of the Company. Federal income tax returns after 1973 have not been examined. The decision of the North Carolina Court of Ap-peals affirming the order, dated December 1974, of the North Carolina Utilities Commission (NCUC) with respect to the Company's automatic fossil fuel adjustment clause applicable to North Carolina retail operations has been appealed to the North Carolina Supreme Court by the Attorney General of North Carolina. The Company recorded revenues of $71,101,000 in 1975 and $60,811,000 in 1974 pur-suant to such automatic fossil fuel adjustment clause. The resolution of the matter is pending. In the opin-ion of the Company the validity of the fossil fuel adjustment clause willbe upheld. On February 20, 1976 the NCUC approved the Company's application for a permanent increase in rates applicable to North Carolina retail operations, and also approved $14,412,000 of related interim-increase revenues billed in 1975. Operating revenues for the year ended December 31, 1975 include $53,793,000 (including $30,754,000 under provisions of a fossil fuel adjustment clause applicable to wholesale customers) subject to possi-ble refund to the extent not finallyallowed by pend-ing rate proceedings. Included in the balance sheet is deferred fossil fuel inventory costs of $3,790,000 which is subject to FPC review and approval which may necessitate adjustments if such review so re-quires. The Attorney General of North Carolina has ap-pealed the NCUC order of August 27, 1975 which authorized the Company, effective September 1, 1975, to replace its automatic fossil fuel adjustment clause with a corresponding increase in basic rates, and to recover through revenues over approximately twelve months deferred fossil fuel costs totaling $12,367,000 at August 31, 1975. Accordingly, the Company, from September 1 through December 31, 1975, has recorded revenues of $30,135,000, includ-ing $4,425,000 applicable to recovery of the previ-ously unbilled deferred fossil fuel costs. Although, upon motion of the Attorney General, the NCUC has reconsidered its order and determined that tht; Attor-ney General's exceptions were without merit, the ul-timate outcome of this matter is uncertain pending final judicial determination.
- 6. RATE INCREASES Operating revenues include amounts (1975,
$252,996,000; 1974, $110,486,000) attributable to au-thorized rate increases placed in effect during 1975 and 1974 (see Note 5).
- 7. PROPOSED ACCOUNTING RULES In May 1975 the FPC published for comment cer-tain proposed revisions in its uniform system of ac-counts which would provide for a formula establish-ing a ceiling on AFC (allowance forfunds used during construction) rates and the separate reporting in the statement ofincome ofthe debt and equity portions of AFC. The ultimate effects, ifany, on the Company's financial position and results of operations are not presently determinable pending definitive action on the proposal.
Auditors'pinion To the Board of Directors and Shareholders of Carolina Power & Light Company: We have examined the balance sheet of Carolina Power Sc Light Company as of December 31, 1975 and 1974, and the related statements of income, retained earnings, and source and use of financial resources for the years then ended. Our examination was made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. As discussed in the next to last paragraph ofNote 5 to financial statements, operating revenues for 1975 include $53,793,000 and the balance sheet includes deferred fossil fuel inventory costs of $3,790,000, which amounts are subject to possible refund or adjustment to the extent not finally allowed in pending rate proceedings. 26 As discussed in the last paragraph of Note 5 to financial statements, the Attorney General of North Carolina has appealed the North Carolina UtilitiesCommission order ofAugust 27, 1975, under which the Compariy has recorded revenues of $30,135,000 from September 1 through December 31, 1975 and'-has unrecovered deferred fossil fuel inventory costs of $7,942,000 at December 31, 1975. The ultimate outcome of this matter is uncertain pending final judicial determination. In our opinion', subject to the effect, if any, of the final determination of the uncertainties described in the preceding two paragraphs, the financial statements referred to above present fairlythe financial position ofthe Company at December 31, 1975 and 1974, and the results ofits operations and the source and use of its financial resources for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis. Raleigh, North Carolina February 20, 1976 cj33aak~
Directors At January 1, 1976 Officers At January 1, 1976 Year shown in parenthesis indicates beginning of period of service as a director Shearon Harris President Darrell V, Menscer Vice President Daniel D. Cameron, Sr., President, Atlantic Telecast-ing Corporation, Wilmington. N. C. (1970) Felton J. Capel, President. Century Associates of North Carolina, Southern Pines, N. C. (1972) Charles W. Coker, Jr., President, Sonoco Products Company, Hartsville, S. C. (1975) E. Hervey Evans, Farmer, Laurinburg, N. C. (1946) Margaret T. Harper, Owner, Stevens Agency, South-port, N. C. (1975) Shearon Harris, Chairman/President ofthe Company, Raleigh, N. C. (1961) L. H. Harvin, Jr., President, Rose's Stores, Inc.. Hen- ~ ~ ~ ~ ~ ~ derson, N. C. (1958) Karl G. Hudson, Jr., Executive Vice President and General Manager, Hudson-Belk Company, Raleigh, N. C. (1967) J.A. Jones, Executive Vice President ofthe Company, Raleigh. N. C. (1971) Edward G. Lilly, Jr., Senior Vice President of the Company, Raleigh, N. C. (1971) Sherwood H. Smith, Jr., Executive Vice President of the Company, Raleigh, N. C. (1971) J. A. Jones Executive Vice President (Group Executive) Sherwood H. Smith, Jr. Executive Vice President (Group Executive) Edward G. Lilly,Jr. Senior Vice President (Group Executive) W. J. Ridout, Jr. Senior Vice President (Group Executive) William E. Graham, Jr. Vice President and General Counsel Samuel Behrends, Jr. Vice President E. M. Geddie Vice President William B. Kincaid Vice President M. A. McDuffie Vice President Albert L. Morris, fr. Vice President J. R. Riley Vice President R. S. Talton Vice President Edwin E. Utley Vice President
- f. L. Lancaster, fr.
Secretary Robert M. Williams Assistant Secretary James S. Currie Treasurer J. R. Powell Controller Paul S. Bradshaw Assistant Treasurer C. D. Mann Assistant Treasurer 27 Horace L. Tilghman, Jr., Real Estate and Investments. Marion, S. C. (1961) John B. Veach, President, Veach-May-Wilson, Inc., Asheville, N. C. (1958) fohn F. Watlington, fr., Chairman of the Board, Wachovia Bank 8c Trust Company, N.A., Winston-Salem. N. C. (1970) Transfer Agents and Registrars For Common Stock and Preference Stock: Wachovia Bank 5 Trust Company. N.A., Winston-Salem. N. C. Bankers Trust Company. New York, N. Y. For Preferred Stock: Wachovia Bank 8c Trust Company. N.A.. Winston-Salem, N. C.
Statistical Review (Dollars in Thousands) Balance Sheet Data (End of Period): Total UtilityPlant other than Nuclear Fuel Accumulated Depreciation............. Net UtilityPlant other than Nuclear Fuel Capitalization Common Stock and Retained Earnings.. Preferred Stock Preference Stock First Mortgage Bonds. Net'........... Other Long-Torm Debt................. Total Ratio of Accumulated Depreciation to UtilityPlant in Service................ Percent of Total Capitalization Common Stock and Retained Farnings.. Preferred Stock Prcferenco Stock First Mortgage Bonds. Nct'........... Other Long-Term Debt................. Total Ratio Bonds to Net UtilityPlant other than Nuclear Fuel............... 1975 $2.4S9,107 296.426 $2.192.681 722,287 288,118 47,900 1,105,050 50.204 $2.213.559 9o 16.1 32.6 13.0 2.2 2.3 100.0 50.4 1974 2,197,738 256.659 1.941.079 548.4G5 288,118 983,861 50.234 1.870.678 29.3 15.4 52.6 2.7 100.0 50.7 1973 '1,872.859 227,645 1.645.214 531,297 223,801 832,548 50.253 1.637.899 17.7 32.4 '1 3.7 50.8 3.1 '1 00.0 SO.G 1972 1.524,238 200.190 1.324.048 447,609 173,801 632.497 50.110 1.304.017 18.4 34.3 13.3 48.5 3.9 100.0 47.8 1971 1.212,822 178.096 1.034.726 299,852 124,376 533,003 123 957.354 18.9 31.3 '1 3.0 55.7 100.0 51.5 1970 981.571 161.827 819.744 260,154 89,376 398,427 134 748.091 20.9 34.8 12.0 53.2 '100.0 . 48.G 1965 530,839 101.828 429.011 156,524 34.376 199,446 1.280 391.626 21.2 40.0 8.8 50.9 .3 100.0 46.5 28 Results of Operations Operating Rovenues Operating Expenses Fuel for Generation of Power........... Deferred Fossil Fuel Expense (Credit)... Purchased Power Other Operation Expense.............. Maintenanco Depreciation Taxes-Other Taxes Incomo Total Operating Expcnses.....:-;-..... Opcrating Incomo Other Income Allowanco for Funds Used During Construction Income Taxes Credit................. Other income (Deductions) Nct....... Other income Grass Income.... Interest Charges Bond Intcrost Other Interest Charges................. Total Interest Charges ...............'et Income Preferred Stock Dividend Requirements Earnings for Common Stock.............. Dividends Declared on Common Stock.. Earnings Invested in the Business........ Earnings Per Share Weighted Average... Dividends Paid Per Common Share....... Payout Percent Shares Common Stock Outstanding (000's) Year-End Weighted averago during year.......... Times Earned Bond InterestBefore Incomo Taxes.... After Income Taxes..... Preferred Dividend Requirements....... Fixed Charges~ 'Includes current maturities of long-term deb ~For purposes of this ratio. earnings represent plus an imputed interest factor portion of re 606.329 460.977 34'1.206 307.136 255.G43 204.846 122.003 232 722 20.650 '1 3,115 57,036 33,686 46,G48 46,43G 45.'1 70 23,677 235,842 (35,028) 14,494 46,549 28,591 35,544 40.684 16.947 106.191 88,549 84,749 69,014 7.847 41,910 29.749 31,845 28,70G 21.2G8 9,799 23,765 19,849 19,476 19,053 8.289 11,537 32,979 25,624 27,280 24.021 26.378 10,422 28,510 23.098 22,820 21,400 14.328 6,050 16,971 8.282 11,280 10,962 17.119 94.341 27.662 383.623 267.516 236.368 205.327 169.245 495.463 '110.6GG. 77.354 73.690 70.768 50.316 35.601 59,957 19,734 1.020 38.093 10,477 393 54,609 16,068 776 '14,708 10,505 3,532 2.709 sn ~33 24,759 6.666 49 1,628 266 282 80.711 71 453 48.963 18.757 31.474 2.176 13.181 191.577 148.807 122.G53 102.24Z 69.073 48.782 29.838 8'1,108 8.847 27,895 3.704 63,G7G 12.8GO 45,653 1'1.001 37,782 3.931 19,601 4.356 7.70G 175 89.955 101,G22 25.752 75,870 46.173 76.536 56.654 41.713 31.599 23.957 7.881 65,999 13.017 52.982 32.691 72,271 20.672 51,599 37.375 21,957 1.606 24,825 4.699 60,529 9.612 50,917 27.174 37,474 8.371 29,103 22,122 20,126 19.013 20,351 13.436 29.697 14.224 20.291 6.981 23.743 6.915 1.113 2.70 1.60 59.3 2.21 1.60 72.4 2.86 1.47'/z 51.6 1.97 1.46 74.1 1.56 1.46 93.6 2.58 1.54 60.0 1.80 1.16 64 4 32.693 28.109 23,439 23,324 20,125 17,814 13,986 12,934 23 234 20,554 15,555 14,776 11,297 11,289 6.06 3.87 13.67 5.77 2.35 2.34 3.50 '1.92 2.92 2.69 5.07 2.34 3.23 2.71 6.30 2.90 2.86 2.48 4.48 2.50 2.77 2.49 5.28 2.25 2.68 2.36 3.95 2.27 t. net incomo plus income taxes and fixed charges; fixed charges represent interest charges ntals
Revenues (Thousands) Residential Commercial. IndustrialTextile'.................... IndustrialOther Government and Municipal.............. Sales for Rcsalo................ Total Electricity Sales IVithinService Area r Nonterritorial Electricity Sales........... Miscellaneous Revenues................. Total Operating Revenues............ Load Data Electric Energy Sales (Millions): Residential Commercial. Industrial. Other Total Energy Sales WithinService Area Nonterritorial Total Electric Energy Sales........... Company Uses. Losses and Unaccounted For Total Energy Requirements..........Kwh Electric Energy Supply (Millions): Generated Steam Fossil.........Kwh Generated Steam Nuclear........... Generated Hydro..................... Generated Other Fuel................ Purchased and interchange Nct....... Total Energy Supply............Kwh Peak Demand of Firm Load (000's): Within Service Area...............KW Nonterritorial Total Peak Demand..............KW Total Capability at December 31 (000's): Fossil'Fuel Plants..................KW , Nuclear Plants.. Hydro Plants. Purchased Total Capability~.................KW 1975 $ 192,734 111,602 70,225 97,573 21,037 99.990 593,'161 7,485 5.683 S GGG.329 6,152 3,798 7,833 G,274 24,057 61 24.118 1.700 25.818 18.374 5,591 947 31 875 25.818 5,060 38 5,098 5,142 1,490 212 228 7,072 1974 156,134 88,420 56,661 78,649 1G,034 4 G.015 441,913 13,499 5,565 460.977 5 917 3,576 8,273 5.841 23,607 469 24,076 1.55G 25,632 18,603 4)813 921 215 1.080 25,G32 4,771 143 4,914 5.014 700 212 280 6.206 1973 117,559 G5,G47 36,689 47,677 '11,632 43.827 323,031 13,608 4.567 341.206 5,937 3,628 7.885 5,779 23,229 853 24,082 1,501 25.583 19,875 3,764 891 113 940 25.583 4,711 212 4.923 4,453 700 2'1 2 280 5.645 1972 103,254 58,246 33,438 41,161 10,827 35.39G 282,322 21,040 3.774 307,136 5,208 3,202 7,037 5.070 20,517 1.584 22,101 1,G11 23.772 16,G05 4,828 882 210 1.247 23.772 4,119 516 4.635 3,833 700 212 265 5.010 1971 89,71'1 49,223 2G,725 34.096 9,685 31,643 241,083 11,967 2,593 255.643 4,974 2,945 6,232 4,710 18,861 796 '1 9,657 1.307 20.964 16,135 2,414 849 257 1.309 20.964 3,625 '1 70 3.795 3,482 700 211 245 4.638 1970 75,990 40,981 21,174 28,889 ,8.573 25.794 201,401 1,225 2.220 204,846 4,634 2,693 5,623 4.352 17,302 24G 17,548 1.248 18,796 16,311 3 623 315 1.544 18.796 3,484 3.484 3,040 211 378 ',629 1965 47,985 23,888 11,909 15,385 7,292 '14.37G 120,835 1,168 '1 22.003 2,708 1,462 3,030 2,507 9,707 9,707 10,573 8,978 742 853 10.573 '1,931 1.931 1,G32 211 334 2.177 Miscellaneous Customers at Year End Residential Other Total. 'verage Revenuo Per KtVH Residential......................Cents Commercial. Industrial. Total Energy Sales Within Service Area. Residential Avorage Annual Energy Use.......Kwh Avcrago Annual Bill...........-........ Steam Electric Generating Plant Fossil Fuel Average Annual Heat Rate (BTU Per Net K'tVH)................. Average Cost Per MillionBTU....Cents Averago Cost Pcr MillionBTUAll Fuels Annual Load Factor. Service Area Load... 560,954 99.574 550,128 98.179 535,607 96.844 '1 '1,094 S 347.54 2.64 2.47 1.64 1.87 10,861 286.60 1.98 1.81 1.07 1.39 1'1,276 223.29 9,951 119.0 94.G 58.1 10.090 116.7 96.6 60.2 9,739 50.0 44.6 59.9 660.528 648.307 632.45'1 610.0G1 1.98 1.82 1.06 '1.38 10,293 204.05 586,089 1.80 1.G7 .98 1.28 10,205 184.08 9,946 45.7 39.G 61.3 9,832 48.0 44.9 63.5 515,041 495,528 95,020 90.561 478.914 86.511 565.425 1.G4 1.52 .89 1.16 9,794 160.62 9,185 41.2 42.1 60.8 1 n 415,396 70.911 48G.307 1.77 1.63 .90 1.24 6,620 117.28 9,770 27.0 27.0 G2.5 'Includes yarn mills, weaving or cloth mills. finishing plants (bleaching, shrinking, hosiery mills. ~Company now has'821,000 Kw. under construction for service in1977. dyeing and printing). knitting mills. and}}