ML18230B383

1976 Annual Report

ML18230B383
Person / Time
Site:	Harris
Issue date:	06/09/1977
From:	Carolina Power & Light Co
To:	Office of Nuclear Reactor Regulation
References
Download: ML18230B383 (36)

Text

EXHIBIT A Carolina Power 8cLightCompany 1976AnnuaIReport

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h Contents 1 Highlights, Operating Revenue Dollar 2 The Chairman's Message 4 Financial 8 Pates 9 Construction 10 Operations 13 Ownership 14 Customers 16 Service Area Map 18 People 20 Balance Sheets 22 Statements of Income 22 Statements of Retained Earnings 23 Statements of Source and Use of Financial Resources 24 Notes to Financial Statements 30 Auditors'pinion 30 Directors 31 Officers 32 Statistical Review Transfer Agents and Registtars For Common Stock and Preference Stock:

Wachovia Bank & Trust Company. NA Bankers Trust Company Winston-Salem, N.C. New York, N.Y.

For Preferred Stock:

Wachovia Bank 5. Trust Company, N.A.

Winston-Salem, N.C.

Annual Meeting The 1977 Annual Meeting of Shareholders will be held in Raleigh, North Carolina, on May 18 at ll A.M. A formal notice of the meeting together with a proxy statement and This Annual Report is submitted for Information of shareholders. It is not form of proxy will be mailed intended for use in connection with any sale or purchase of, or any offer or about April 13. solicitation of offers to buy or sell, securities.

About the Cover:

Carolina Power tk Light Company.

336 Fayetteville Street, Coal and uranium, the nation's most plentiful boiler fuels, provided more than 95 percent Company's generation of electricity during 1976. Of this total, coal accounted for abo~>8 c~

Raleigh. N.C. 27602 percent and nuclear 27 percent.

Highlights Percent 76 Change Operating Revenues $ 698,449,000 $ 601,903,000 16%

.Net Income $ 118,341,000 $ 95,198,000*'4 Number Shares of Common Stock Outstanding (Year End) 35,890,000 32,693,000 10 Earned per Average Common Share Outstanding $ 2.74 $ 2.47<<e 11 Cash Dividends Paid per Common Share $ 1.66 $ 1.60 4 Dividends Paid (Common and Preferred) $ 81,328,000 $ 66,894,000 22 Kilowatt-Hour Sales (Thousands)

• Excluding Nonterritorial Sales 25,915,000 24,057,000 8 Total Sales 26,176,000 24,118,000 9 System Capability Including Purchases (Kilowatts) 7,106,000 7,072,000 Maximum Service Area Hourly Load (Kilowatts) 5,121,000 5,060,000 1 Total Utility Plant (Including Nuclear Fuel) $ 2,769,279,000 $ 2,559,346,000 8 Construction Expenditures $ 205,953,000 $ 300,659,000 (31)

Customers (Year End) 677,000 661,000 2

'Employees (Year End) 4,983 4,749 5

'NonterAtoAal sales are sales to other electAc utilities outside the company service area.

-Restated to reflect 1/31/77 N.C. Supreme Court Decision.

Operating Revenue Dollar SOURCE 320 280 180 170 40 10 Residential IndustAal Commercial Wholesale Other electric Nonterrltorlal customers customers customers customers operating revenues sales S 221,531.000 S193,168.000 S123,624.000 S120,578,000 S30,018,000 - S9,530,000

• Does nct Indude S2593IAXS of wages ard employee benefits for Ccrqpany employees that I ~icn was charged to and other

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acaxnts.

200 210 70 4OF U$ E

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330 Compensation to investors for use of their funds (Interest, S143 Taxes 506'000 90 Wages and employee benefits <<

S50,993,000 Maintenance (except employee wages)

Fuel 90; preferred and Depreciation S27.206.000 S 231,513.000 S62,385,000 50 1C preference stock, 20; Other operating Purchased and common stock, 90) expenses interchange power, net S1 43.005.000 S31,266,000 S8,575,000

The Chairman's Message "Neither coal nor uranium alone can supply this nation's additional energy requirements, but there is hope if we make maximum use of both."

My fellow shareholders: Effective with the third quarter peak. However, the sustained sub-In view of the energy shortages of. payment, the annual dividend rate freezing conditions In January 1977 last winter, it is appropriate to begin on common stock was raised from produced a peak of 5,509,000 kilo-this report by noting that during 1976 S1.60 to S1.72. Our interest coverage watts, an increase of 7.6 percent. In we generated 68 percent of the at year end was 2.94 times, up from recent years, our annual peaks have energy for our system from coal and 2.15 in 1975. come In summer.

27 percent from nuclear fuel. We ex- With the return to more normal in- During the year we received final pect to put our third nuclear generat- dustrial activity, our territorial energy approval for retail rate increases in ing unit Into commercial operation sales increased 7.7 percent. Operat- North Carolina and South Carolina this spring, so that for 1977 approxi- ing revenues rose percent 16 to S698.4 which, on the basis of 1976 sales, will million and net income was up 24.3 produce S113 million of annual rev-rnately 40 percent of our energy will be from nuclear fuel and 57 percent percent to S118.3 rnillior. These figures enue. We have pending before the from coal. reflect the impact of 1975 and 1976 Federal Power Commission two As a nation, our basic energy prob- retail and wholesale rate adjustments wholesale rate requests that were lem Is that while petroleum and which added S254.1 million to 1976 placed into effect in 1975 and 1976, natural gas represent only about 4 revenues. respectively. The proposed higher percent of our fossil fuel resources, we rates are being collected subject to i presently are dependent. on these Construction Totaled $ 206 Million refund of the amount, if any, which is scarce fuels for 75 percent of the total Construction expenditures during not finally allowed.

energy that is used. To have the 1976 totaled S206 million. A construc- When our second Brunswick ni~

energy we shall need during the re- tion budget of S304.4 million has clear generating unit goes Int%RF mainder of this century, our country been adopted for 1977. Expenditures operation this spring, it 'ommercial has no choice but to make far greater for the three years 1977-79 are esti- will represent an additional invest-use of coal anduranium. Neither coal mated to be S1,146 million. The pres- ment of approximately S331 million to nor uranium alone can supply this na- ent construction plan reflects cut- serve our customers. This added in-tion's additional energy require- backs and deferrals that were made vestment plus continuing inflation will ments, but there is hope if we make in 1974 and 1975 as growth in energy require another increase in our base maximum use of both. usage dipped and depressed earn- rates. We filed a request with the It is imperative that we have a na- ings made it necessary to tailor con- North Carolina Utilities Commission tional energy policy which will permit struction plans to the amount of capi- last December for a 15 percent in-cohesive action now to avoid crip- tal the Company could expect to at- crease and a hearing has been set pling energy shortages in the future. tract on reasonable terms. for April1977. We willrequest a similar Forecasts are that our customers'nergy Increase in South Carolina and for our Financial Situation Improved requirements will grow at an wholesale customers. The timing of During 1976 the Company's finan- average rate of about 6.9 percent the filings varies because of the dif-cial situation Improved as earnings annually for the next 10 years. This ference in the procedural rules of the per share rose to S2.74 compared to compares with a 10.3 percent growth commissions.

S2.47 (restated) in 1975 and S2.21 in rate for the years 1971-73 and less than 1974. The 1975 net income was re- 2 percent for 1974-75. To cope with Lower Fuel Charges stated to reflect a ruling by the North that growth, we retain some flexibility This increase in base rates will be Carolina Supreme Court requiring a in our present construction plan to partially offset by lower fuel adjust-refund of S12.4 million in deferred fuel move up the completion date for two ment charges which will result from costs collected as a fuel adjustment large coal-fired generating units. obtaining a larger share of our,gen-surcharge ln 1975 and 1976. We have The peak demand on our system eration from less expensive nuclear petitioned the Supreme Court for a during 1976 was 5,121,000 kilowatts, fuel.

rehearing. up only 61,000 kilowatts from the 1975

We have told our customers that if that range from the development of nation Is to approach a full employ-this increase is granted, we hope we solar energy to the gasification of ment economy.

shall not have to seek another price coal, from studies of innovative rate Largely as the result of the sale of Increase until 1980 when our next structures to the development of new three million additional shares of major new generating facility will be electrical systems technology. common stock In October, the completed. We are today faced with long lead number of shareholders Increased to In December we completed a times to plan and build generating 96,958 of whom about 42 percent live major reorganization which is de- plants, and regulation has added to in the Carolinas.

signed to strengthen our ability to re- both the time and expense of build- We gratefully acknowledge the spond to the increasingly complex ing the necessary plants. We must confidence and assIstance of our fel-problems that confront us and to in- find a way to cut through the maze of low shareholders. At the same time sure that our Company is strong and regulatory approvals and get on with we recognize the Initiative and dedi-viable. We had a similar reorganiza- the job of staying ahead of America' cation of our more than 4900 em-tion about 10 years ago. In planning energy needs. ployees whose individual and collec-for this change, which includes the In planning for our energy future, tive effort made 1976 another suc-designation of chief administrative there is a need to balance our desire cessful year for CPSI.

and chief operating officers, the to protect the environment with the Respectfully submitted by order of senior management group was realization that we must have steadily our Board of Directors.

aided ln its studies by independent increasing amounts of energy if our anagement consultants.

Performance Audited The North Carolina Utilities Com-mission ordered a management per-formance audit of our Company by Booz, Allen Bc Hamilton, an indepen-dent management consulting firm. A team of 20 consultants studied our operations over a period of eight months. Their report was delivered to the commission in January 1977. They found that we operate in a cost-efficient manner'nd that our employees are cost-conscious and have a strong customer seivice orien-tation. In short, the report stands for the proposition that CPfkL is doing a Sincerely yours, good job for its customers, and they are getting their money's worth.

Through the Electric Power Re-search Institute, CPIkL is participating with other power suppliers private Shearon Hams and public in a coordinated re- Chairman search and development program.

ith an annual budget of $ 206 mil-lion for 1977, EPRI is funding projects March 16, 1977

Financial Net income for 1976 was creases placed into effect during In November 1975.

S118,341,000 In comparison with 1975 and 1976 resulted In increased Deferred fuel cost accounting S95,198,000 as restated for 1975. Earn- revenues of S146.3 million in 1976 and (begun in 1974 with the implementa-ings per share, on the basis of a larger S37.5 million in 1975. Fuel adjustment tion of fossil fuel adjustment clauses) number of shares outstanding, were charges totaled S107.8 million in 1976 resulted in a net credit to income of S2.74, in comparison with S2A7 as re- and S148.1 million in 1975. S.9 million in 1976 in comparison with  !

stated for 1975. Dividends totaling Sales of electric energy, excluding a net charge against income of S28.6 S1.66 per share were paid on com- nonterritorial sales, increased 7.7 million in 1975. The Company discon-mon stock during the year. percent In 1976, as compared with a tinued deferring excess fuel costs for The 1975 net income has been re- 1.9 percent increase in 1975. The sales North Carolina retail operations on stated to reflect a January 31, 1977 growth reflects increased Industrial September1, 1975 and for wholesale North Carolina Supreme Court ruling activity and an improvement in gen- operations on May 1, 1976. Excess fuel that approximately S12.4 million of eral economic conditions. Sales of costs are deferred only for South revenues be refunded. The revenues energy to industrial customers In 1976 Carolina retail operations.

were collected (S4.43 million in 1975 showed an 11.8 percent increase over Purchased power costs decreased and S7.93 million in 1976) to recover 1975 and a 5.9 percent increase over 35 percent in 1976 in comparison with deferred fuel costs accumulated at 1974. 10 percent in 1975. The 1976 decrease August 31, 1975 for North Carolina re- reflects a 49 percent reduction in tail operations. The restatement re- Operating Expenses kilowatt-hours purchased primarily flects the write-off as of August 31, Operating expenses Increased 12 because the Company's own plan~ .

1975 of the S12.4 million of deferred percent or S58 million in 1976, as a greater proportion of 'enerated fuel costs less applicable income compared with 30 percent or S113.8 energy requirements.

taxes of S5.9 million. million in 1975. The increase in other operation The total cost of fuel for electric and maintenance expenses during Operating Revenues generation decreased about 1 per- 1976 and 1975 reflects many factors, During 1976, operating revenues cent in both 1976 and 1975. Nuclear- including inflation and a full-year' from sales of electricity within the ser- fueled generation increased by 32 operating cost (in 1976) for the initial vice area increased S93.4 million percent ln 1976, a reflection of the unit of the Brunswick nuclear power over those for 1975. General rate in- operation of the first unit of the plant. The nuclear unit, which has fuel Brunswick plant for a full year. This unit costs significantly lower than those for was placedln commercial operation

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Analysis of Results of Operations Percent Percent Change Change from from 4~9 1975 1974 1975'000's (000's omitted) omitted)

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Operating revenues:

Total from electricity sales in service area $ 682,127 16% $ 588,735 33%

Nontetritorial electricity sales 9,531 27 7,485 (45)

Miscellaneous electric revenues 6,791 19 5,683 2 Total operating revenues 698,449 16 601,903 31 Operating expenses:

Fuel 231,513 (1) 232,722 (1)

Deferred fossil fuel expense (credit), net (900) (103) 28,578 182 Purchased power 8,575 (35) 13,115 (10)

Wages and employee benefits 50,993 17 43,667 15 Maintenance (except employee wages) 27,206 15 23,604 17 Other operation expenses 32,166 37 23,451 39 Depreciation 62,385 34 46,648 31 Taxes other than income taxes 53,499 15 46,436 14 Income tax expense 90,007 129 39,240 132 Total operating expenses 555,444 12 497,461 30 Operating income 143,005 37 104,442 35 Other Income:

Allowance for funds used during construction 48,802 (19) 59,957 10 Income taxes-credit 14,586 (26) 19,734 23 Other, net 469 (54) 1,020 31 Total other income 63,857 (21) 80;711 13 Grass income 2064862 12 185,153 24 Interest charges 88,521 (2) 89,955 18 Net Income 1184341 24 95,198 32 Preferred and preference stock dividend requirements 26,926 5 25,752 25 Earnings for common stock 9 91 415 32 6 69 446 35 Average common shares outstanding 33,385 19 28,109 21 Earnings per common share $ 2.74 11 $ 2.47 12 Common dividends paid per share $ 1.66 4 $ 1.60 See Statistical Review for additional data for the years 1966 and,1971 through 1976.

'Aeflects restated flnanclal statements as a result of 1/31/77 N.C. Supreme Court Decision.

(left to right) Utility operator coordinates un-loading of coal cars at CPSL generating plant; secretary handles arrangements for meeting; (lower) customer service representative makes energy audit at customer's home; and lineman works on high-voltage transmission line.

a fossil unit, has a h!gher requirement 21 cents of each revenue dollar with 9 mission, and S27.4 million was for for other operating expenses. cents for state and local govern- distribution and general facilities. In Depreciation expense increased ments and 12 cents for federal taxes. addition, nuclear fuel expenditures S15.7 million In 1976; in comparison These amounts compare with 14 during 1976 totaled S21.4 million.

with'an increase of Sll.l million in 1975. cents, 8 cents, and 6 cents, respec- During 1976, the Company gener-The increase reflected greater tively, for 1975. ated substantial funds Internally.

amounts of property in selVic, prin- Recovery of capital through depre-cipally the first unit of the Brunswick Other Inccme ciation and amortization charges to-nuclear plant, and a full year's effect Other income decreased S16.9 mil- taled S76.2 million; earnings retained (S10,150,000 in 1976) of revised de- lion in 1976 as compared with a S9.3 and invested in the business totaled preciation rates adopted effective million increase in 1975. Allowance S34.7 million; and deferred income October 1, 1975. for funds used during construction taxes and investment tax credits pro-Income tax expense increased to and income tax (construction interest vided S77.8 million.

S90 rnillion inl976, in comparison with associated) credits decreased sub- In October 1976, the Company sold S39milllonin 1975. This reflects primar- stantially, a reflection of the reduced three million shares of common stock Ily the increase In income before average investment in construction for net proceeds of S64,950,000. In taxes. In addition, during 1976 the work in progress in 1976. June, the Company prepaid its S50 Company started providing fully for million six-year note and In De-eferred income taxes.

Financing and Construction cember, a S2 million principal Tax expense for 1976 represented Construction expenditures during amount of First Mortgage Bonds 1976 totaled S206 million. Of this total, S162.4 million was for generating facilities, S16.2 million was for trans-PRICE RANGES AND DIVIDENDS PAID PER SHARE COMMON AND PREFERRED STOCK Common Stock $5 Preferred Stock N.Y. Stock Exchange Amertcan Stock Exchange Reported Prices Reported Prices Dtvtdends Dividends 1975 H~fh Low Paid 1975 H~th Low Paid First Quarter $ 17 $ 11 $ .40 First Quarter $ 55Vs $ 49 $ 1.25 Second Quarter 18Ys 13Vs .40 Second Quarter 53Vs fi 48 1.25 Third Quarter 18sh 15s/4 .40 Third Quarter 55'h b 49Vs 1.25 Fourth Quarter 20V< 16'/s .40 Fourth Quarter 59 50 1.25 1976 1976 Quarter 21'9Ve .40 First Quarter 59 53 1.25 First Second Quarter Third Quarter 21eh 23Ve 17'40 20V4 .43 Second Quarter Third Quarter 58 Vs 59 53V4 54Ve 1.25 1.25 Fourth Quarter 24 Vs 21'/e .43 Fourth Quarter 60~h 55 1.25 Note: Other voting stocks are not actively traded. Regular quarterly dividends have been paid on all preferred and preference stocks.

(11~/e.% Series due 1994) was re- pany and Virginia Electric &. Power thorizedto be placed into effect, sub-deemed under sinking fund require- Company, filed proposed time-of- ject to refund with interest, in January ments. day rates for all classes of North 1975. Total increased revenues of The Company's construction pro- Carolina retail customers in early Oc- S59.8 million have been billed under gram for 1977 through 1979 is esti- tober. Preliminary hearings were held this rate increase for electric service mated to require Sl.l billion with in December. The Company is In- rendered through April 30, 1976.

S304.4 million budgeted for 1977. volved in three separate studies to Negotiations with the Federal Power determine the feasibility of time-of- Commission (FPC) and with the Capitalization day metering and peak pricing. Company's wholesale customers for The Company's capitalization at In January 1977, the North Carolina the settlement of this rate case con-the end of the year amounted to Supreme Court, by a 4-3 vote, re- tinue. If the case is not settled, a con-S2,259,038A68; it consisted of 48.8 versed an earlier decision of the North cluding hearing on one aspect of the percent first mortgage bonds, Carolina Court of Appeals which up- rates will be held in April 1977.

36.3 percent common equity, and held the right of CP &L to collect On January 30, 1976, CP&L re-14.9 percent preferred and prefer- deferred fossil fuel expenses of ap- quested that the FPC allow new rates ence stock. proximately S12.4 million through a for wholesale customers to be surcharge. Similar rulings were made placed into effect on March 1, 1976.

by the court in cases involving two The FPC ordered these new rates Rates other major power companies operating in the state. The recent placed into effect, subject to refund with interest, on May 1, 1976. The in Rate increases, excluding fuel ad- court decision would require refunds crease resulted in additional justment charges, placed into effect of surcharge amounts collected fro'm wholesale revenues of approxi-during 1975 andl976 produced addi- September 1975 through August 1976 mately S21 million during 1976. Initial tional revenues of S146,346,000 for for fuel expense incurred in July and hearings on the case began in March the Company during 1976. August 1975. The Company has 1977.

asked for a rehearing.

Retail Performance Audit gqrth Carolina-Affer making ap- SouththeCarolina-In South Carolina September Public Ser-In January 1977, the North Carolina p1ication in July 1975, CP &L received 1976, Utilities Commission released a report approval in February 1976 for a retail vice Commission issued an order ap-

&L's on the performance analysis audit of rate increase which raised total cus- proving CP requests (filed in July CP&L which was conducted from tomer charges In North Carolina by and August 1975) for an increase in retail rates in South Carolina. The May to December 1976 by Booz, approximately 22 percent or S82 mil- Allen &. Hamilton, a management lion annually, based on the 1974 test order allowed an increase in retail consulting firm retained by the com-year. revenues of approximately 27'er-mission.

In December, the Company made cent. or about S22.5 million annually.

In an overall summary of its find-Bpplication to the North Carolina based on the 1975 test year.

ings, Booz, Allen concluded that.

Utilities Commission for an increase of Application for an increase (similar "CP&L has demonstrated the capa-about 15 percent in base charges to to the one applied for in North bility to anticipate, respond to, and retail customers. The case will be Carolina in December) will be made successfully manage change."

in South Carolina duriing the early part heard in April 1977. The summary report listed a In response to a commission order, of 1977. number of CP &l's strong points. These CP&L, along with Duke Power Com-. Wholesale Initial hearings have been com-pleted on a wholesale rate increase which was filed in July 1974 and au-

Construction included: management system is operating ef- New Facilities

~ Well-defined goals that ap- fectively. The report pointed out that Unit No. 1 of the Brunswick nuclear propriately reflect current the accounting support to the field is plant is expected to go into commer-priorities effectively managed, and the an- cial operation in April1977. At the end

~ A sound basic organization nual budget receives rigorous top of 1976, the Company had Invested with recent organizational management review. $ 709 million at the plant, which in-and staffing changes par- The consultants also identified four cludes an earlier unit (No. 2) which

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ticularly well-conceived and areas as having potential for im- began. commercial operation in carried out provement In managerial and November 1975. Total investment in

~ A position of industry leader- operating efficiency: the completed plant, Including the

~ Reorganizing selected func-ship in utilizing state-of-the- expense for cooling towers and other art technology in.several tions for improved coordina- modifications to the, cooling system, functional areas tion and control will be approximately $ 824 million.

~ Favorable cost trends In ~ Upgrading work manage-comparison with a group of ment systems for improved Canstruction Schedule other utilities In the South At- productivity and control Minor changes were made to the lantic region ~

Developing improved pur- Company's construction schedule,

~ A hIgh degree of cost con- chasing and inventory man- which was revised in 1975 on the basis sciousness reflected in man- agement procedures of revised energy forecasts and un-

" agement systems for labor ~ Strengthening the Com- availability of capital on reasonable cost control pany's financial reporting sys- terms.

The consulting firm also reported tem The current schedule supports a that CPSL's generating facilities are The report stated that the Com- growth rate of 6.5 percent annually, being efficiently designed and con- pany had previously recognized slightly less than the 6.9 percent stiucted; that the Company is con- these areas for Improvement poten- compounded ten-year growth rate ducting its nuclear fuel planning, tial and initiated action to ac-procurement, and management ac- complish them.

tivities in an effective manner; and A summary of the report Is avail-that the Company's performance in able from the Company's corporate coal activ1ties demonstrates that its secretary, 336 Fayetteville Street, Raleigh, N.C. 27602.

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which latest studies indicate will oc- protect the environment. Of this S1.1 fish life was minimal. The Company cur. If demand dictates, the Com- million went for air quality control then appealed the EPA permit and pany could accelerate the construc- equipment and S19.7 million for water requested a delay in construction of tion of one or more coal-fired plants. quality control devices. A cooling the cooling towers until more defini-In March 1977, approval was tower for Roxboro Unit No. 3 was tive data couldbe accumulated with granted for CP &L's application for a completed during the year. both units in operation.

certificate of convenience and Expenditures for environmental pro- In June 1976, the EPA conducted necessity for construction of a coal- tection equipment at new and exist- hearings on the Company's appeal.

fired plant on Mayo Creek In Person ing plants are expected to be S25 In October, the administrative law County, N.C. The plant's first 720,000- million in 1977. judge hearing the matter recorn-kilowatt unit is scheduled for com- mended denial of the postpone-mercial service in 1983 and the sec- EPA Hearing on Robinson ment. The case is now pending be-ond In 1985. On February 8, 1977, the Environ- fore the Region IV EPA Administrator.

There was limited construction dur- mental Protection Agency (EPA) Construction of the cooling towers ing 1976 on Unit No. 4 at Roxboro. This conducted a public hearing on was suspended in May pending the unit is scheduled for operation in 1980. CP &L's request for less stringent ther- outcome of the proceeding. In March In August 1976, CP &Lrequested the mal limits of the heated water at the 1977. the Company filed with the NRC NRC to resume hearings on a con- Robinson plant. If the Company's re- an amendment requesting that the struction permit for the Harris nuclear quest ls denied, the construction of cooling tower requirement be de-plant. The commission has not set a cooling towers at an estimated cost leted from the operating licenses hearing date. of S35 million may be required. Cost of the towers and related work is Based on the technical reports filed estimated to be approximately S92 by the Company and EPA biologists, million.

Proposed Construction the EPA and the state of South In Service Carolina have preliminarily agreed Unit Btunswlck ¹1 ( 821MWj Type Nudear Date 1977 that off-stream cooling is not required to protect fish and wildlife at the Operations 10 Pcoboro ¹4 ( 720MWj Fossil 80 Mayo ¹1 ( 720MWj Fossil 83 plant. A satisfactory resolution of the Total system energy requirements Harls ¹1 ( 900MWj Nuclear , 84 matter is considered likely. for 1976 were 27.7 billion kilowatt-Mayo ¹2 ( 720MWj Fossil 85 hours. Of this total, about 0.3 billion Harls ¹2 ( 900MWj Nudear 88 Haris ¹4 Nudear Brunswick Cooling Towers kilowatt-hours were sold to utilities

( 900MWj 88 Undesignated (1150MWj Nudear 89 In order to receive an operating outside the service area. System load Harls ¹3 ( 900MWj Nudear 90 factor was 61 percent as compared Undesignated (1150MWj Nuclear 91 license from the Nuclear Regulatory Commission (NRC) for. the Brunswick to 58.1 percent in 1975. System capa-plant, CP &L in 1974 signed a stipula- bility. including long-term contract Transmission Line Authorized tion agreeing to construct a closed- purchases from other utilities, was cycle cooling system. The EPA permit 7,105,500 kilowatts.

Authorized transmission line con- for the plant also required this Total generating capacity is struction for 1977 and following years type of cooling system. Construction on two 6,877,500 kilowatts. Of this, 56.9 per-includes 335 miles of 500,000-volt natural<raft, salt-water cent is from seven steam-electric cooling tow-line, 637 miles of 230,000-volt line, ers plants burning fossil fuels, 21.6 per-began in 1975.

and 90 miles of 115,000-volt line. ln January 1974, when the once- cent from the Robinson and Bruns-Environmental Matters through circulating water system for wick nuclear units, 18.4 percent from Unit No. 2 became operational, the 33 internal combustion turbine CP &Lspent nearly S20.8 million dur-Company began more extensive generators, and the remaining 3.1 ing 1976 for construction of facilities to biological monitoring. The prelimi-naty data from this study showed that the effect of the plant on the area's

(lett to right) Television technician edits video tape for training program: (lower) computer operator loads tape to process billing Informa-tion; proJect engineer tests new Insulator; dis-trict accounting personnel discuss customer account; and (lower) plant engineer Inspects agdliay generating equipment.

percent from four hydroelectric plants.

Sources for the total energy pro-duced were 68.2 percent coal, 27.1 1966 percent nuclear, 2.8 percent hydro-67 electric, 0.9 percent residual oil, 1.0

'68

'69 percent No. 2 oil, and 0.1 percent

'70 natural gas.

'71 Of the 7.7 million tons of coal

'72 burned during the year, 79 percent

'73 was received under long-term con-

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'75 tracts. The Company expects to re-76 ceive approximately 75 percent of its 1977 coal requirements from contrac-tual agreements.

Peak Loads A new peak load for the system

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~ was reached on January 17, 1977 when customer demand durin record+reaklng cold weather was 5,509,000 kilowatts, 7.6 percent higher than the previous peak de-mand of 5,121.000 kilowatts on July 29, 1976. The new record for energy use In one day was also set on January 17 when customers required 115,121.000 kilowatt-hours. The previ-ous one-day record of 102,578,000 kilowatt-hours was on January 19, 1976.

Reliability Groups CPSL continues its participation as

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one of the 30 companies In the Southeastern Electric Reliability Council (SERC). Membership in-cludes all power suppliers with generating capacities of at least 25,000 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 princi-pal purpose of both groups.

Coal Production the Company to meet air quality re- 1977 through 1986.

Leslie coal mine, owned jointly by quirements without adding scrubbers In the arbitration proceedings, the Company and Pickands Mather to a new unit. CP&L is seeking damages from

&Co., began raw coal production in Uranex in excess of $ 400 million, the Action Against Uranium Supplier difference befween the contract June. Shipments of clean coal began in January 1977. On January 18, 1977, CP&L took price of seven to eight dollars per Initial development of fhe Com- legal action against Uranex, a French pound and the current market price pany's second jointly owned mine in uranium supplier, which has said it is of uranium.

Pike County, Kentucky will begin in unwilling to deliver approximately 12 Other uranium is also available at mid-1977. CP &Lanticipates receiving million pounds of uranium at the con- prices higher than those previously an annual supply of 1.6 million tons of tracted price. agreed to by Uranex, but the Corn-low-sulfur coal from the two mines CP &L has sufficient uranium under pany is pressing its claim under the after both attain full production. It Is contract from other sources to meet contract as part of its responsibility to ifs needs through 1982. The contract hold the long-term price of electricity expected that this coal will enable with Uranex calls for delivery from at the lowest reasonable level.

Ownership Ofstrlbutfon of Stock Ownership (Common, Preferred, and Preference Stock Combined)

Shareholders Shares Number Percent Number Percent The Carolinas . 40,863 42.15 9,332,669 22.88 Elsewhere ~.... 56,095 57.85 31,463,515 77.12 Totals....... 96,958 100.00 40,796,184 100.00 The total number of shares and which are held by banks, stock- participating shareholders.

shareholders Increased considerably brokers, Investment trusfs, or initiated by fhe company in 1973, during the year as a result of the is- nominees. the plan permits automatic reinvest-suance and sale of three million At the 1976 annual meeting, more lng of common, preferred, or prefer-shares of common stock. than 83 percent of the total shares ence dividends in additional shares At the end of the year, there were outstanding were represented in per- of stock. At year's end, more than 73,775 holders of common stock, son or by proxy. 8,000 shareholders were participat-15,796 holders of preferred stock, and The largest beneficial shareholder ing, compared with 4,100 at the end 7,387 holders of preference stock, or of record at fhe end of 'i976 held less of 1975.

a total of 96,958 shareholders com- than2percentofthesharesoutstand- The program is administered by pared with 91,628 at the end of 1975. ing. Norfh Carolina National Bank and The percentage of those living in the any questions regarding participa-Carolinas was 42.15 percent at the Divldend Reinvestment Service tion should be directed. to NCNB,-

t end of 1976. Shareholders were notified in Dividend Reinvestment Service, Post In addition to shareholders indi- November of a revision to the Div- Office Box 120, Charlotte, North eated by these statistics, several idend Reinvestment Plan, effective Carolina, 28201.

thousand shareholders own shares Januaryl, 1977. The revision allows the company to issue "authorized but un-issued" shares of stock at no cost to

Customers Total energy sales Increased in 1976. 22.1 percent of total Company Management Magazine's Survey 1976 by 7.7 percent compared with sales. of Buying Power.

1.9 percent in 1975. Total Company Of the total residential units served sales were 25.9 billion kilowatt-hours by CP81L at year's end, 23.7 percent Commercial compared to 24.1 billion in 1975. Resi- were all-electric. Similarly, 23.5 per- The Company's 96,783 commer-dential sales were up 5.5 percent: cent of the commercial and 11.4 per- cial customers represented 14.3 per-commercial sales increased 5.8 per- cent of the Industrial customers had cent of the total retail customers and cent; sales for resale were up 6.8 total electric facilities. produced 17.7 percent of operating percent; and kilowatt-hour sales to revenues.

industrial customers showed the Residential tn 1976, average annual usage by largest increase at 11.8 percent. Residential customers totaled commercial customers was 41,080 The number of retail customers In- 575,019, representing 84.9 percent of kilowatt-hours. an increase of 1,031 creased 2.5 percent to 676,902. Elec- the Company's customers, and ac- kilowatt-hours over 1975.

tlic energy for resale was supplied to counted for 31.7 percent of 1976 18 electric membership corporations, operating revenues. Average annual Industrial 24 municipalities, and 2 privately consumption per customer was11A07 For the year, CPM.'s 3,353 industrial owned utilities. These resale custom- kilowatt-hours, up from 11,094 in 1975. customers used 8.8 billion kllowatt-ers used 5.7 billion kilowatt-hours in The average annual residential bill of

$ 389.32 was less than 3 percent of the average family buying income for the Carollnas as reported by Sales Average Price of Electricity Paid by Residential Customers ITwetve Montto Ending December 31, 1976 and 1975)

Cents Per Cents Per Ktsowatt&our Kilowatt&our

%974 1975 Place 1974 4976 Place 8.85 8.27 New York. New York 3.69 3.04 Jackson, Mississippi 5.75 5.44 Newark. New Jersey 361 369 Columbia. South Cardlna ~

SA8 526 Boston, Massachusetts ~

3.50 3.53 lvllaml. Florida 5.05 5.01 Phtlodetphta. Pennsylvania 3.46 2.89 Gutrport. Mississippi 4.74 4.55 Pittsburgh, Pennsylvonla 3A4 3M Syracuse. New York 4.61 4.56 New Hoven, Connecticut 4.46 4.71 Hartford. Connecticut 3.41 3.11 4.20 4.25 Battlmore, Maryfand 4.19 4.09 St. Petersbwg, Florida 4.08 3.59 Tampa, Fkxtda 3.31 3.25 Atlanta. Georgia 4.00 337 Fairmont. West VVglnta 3.29 3.00 Charlotte. North Carolina 3.97 3.88 Cleveland, Ohio 3.24 3.18 Cincinnati, Ohio 3.94 3.61 Savannah, Georgia 3.19 3.00 Pensacola. Florida 3.88 3.89 Washington. D.c. 3.10 2.97 Roanoke, Virglnla 3.77 3.89 Richmond. Virginia 3.08 2.97 BVmlngham, Alcbama (Prices shown are averages for the systems of companies which serve these cities)

hours, representing an increase of 11.8

~

~ ~ ~

percent overl975. Industrial sales rep-

~ ~

resented 27.7 percent of the total Company operating revenues. 1966 Expenditures announced for new '6 and expanded industries in the ser- 65 vice area totaled S259 million.slightly '69

'70 less than the $ 269 million reported in

'71 1975. '72 An estimated 7,597 new job oppor- '73 tunities, with an annual payroll of '74

'75

$ 61.3 million, are expected to be pro-

'76 vided by the new or expanded in-dustries.

Customer Relations t

As part of Its load management program, the Company developed ~ ~ ~ ~

recommendations for saving energy in new home construction. The first energy-efficient home was erected by a builder in Marion; South Carolina; others have been com-pletedinvarious locations throughout '70 the service area. The success of this '71 pilot project has prompted the Com- '72 pany to adopt promotion of the '73

'74 Common Sense House as part of the '75 1977 customer service program. '76 The Company's communications and customer contact programs continued to stress conservation and greater understanding of current energy issues.

~ ~

~ ~

I I

'67 I I 68 I I 6 I I

'70 I

'71 I

'72

'73 l i

'74 I

'75 I I

'76 I

N.C.

QQ::..'.,@+SHALL',ASHEVILLE 8

.ASHEVI At the end of 1976, CPM. was providing electric service to about 677,000 customers in an area of 30,000 square miles-almost half of North Carolina and about one-fourth of South Carolina. Total population 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 of the Mountain and Piedmont regions, but is largely in the Coastal Plains section. Service to customers is provided by more than 4,900 employees through 5 division, 10 district, and 40 area offices.

S.C,

HENDERSON RALEISH HARRIS CAPE FEAR ANFORD

. LEE GOLDSBQRO SOUTHERN PINES BLEWETT JACKSONVILLE ASTON V/EATHERSPOON NSON SUTTON WLMINSTON LORENCE BRUNSIhtlCK

People ~ i Management Changes zation were W. E. Graham, Jr., gen- Howe, technical services; Wilson W.

Organizational changes were im- eral counsel and group executive for Morgan, system planning and coor-plemented in December 1976 to en- legal, regulatory, and communica- dination; and Earl F. Stephenson, cus-sure the continued efficient operation tions; E. E. Utley, group executive for tomer service operations support.

of the Company. The new form of or- power supply; Darrell V. Menscer, Paul S. Bradshaw was named con-group executive for corporate ser- troller and chief accounting officer.

ganization was developed as a result vices; and M. A. McDuffie, group Howe joined CP&L in 1971 after of studies made during 1975 andl976 executive for engineering and con- more than 20 years'xperience in the by senior management with the assis-struction. nuclear energy field. He became Graham, 47, was a judge on the manager of CP&L's technical ser-North Carolina Court of Appeals be- vices department in 1975.

fore coming to CP &L in 1973 as vice- Morganbegan working for CP &Lin president and senior counsel. He was 1950 as an engineer. He became named general counsel in 1974. manager of system planning in 1969, Utley, 52, joined the Company in manager of system planning and 1959 and was a plant manager and cost control in 1972, assistant to the production and results engineer be- group executive for engineering, fore becoming manager of the bulk construction, and operation in 1975, power supply department in 1970. He and manager of the system plannin~

was elected a vice-president in 1972. and coordination department earlier Menscer, 42, started at CP&L in in 1976.

1960 as a junior engineer. Sub- Stephenson came to CP &L in 1949 sequently, he served as budget di- as an engineer and was named tance of a management consulting rector, western division operations planning engineer in 1965. He was firm. manager, assistant to the group made manager of transmission and Sherwood H. Smith, Jr., was elected executive for engineering and opera- distribution construction in 1971 and president and chief administrative of- tions, manager of the special sewices northern division general manager in ficer. Smith, 42, who joined CP&L in department, and manager of corpo- 1972.

1965 as associate general counsel, rate performance review. He was received his A.B. degree and his J.D. elected a vice-president In 1973.

degree withhonors from the University of North Carolina where he was a Morehead Scholar and a Phi Beta Kappa. He was elected senior vice-McDuffie, 53, had sewed as con struction manager with overall re-sponsibility for construction on several i ~i nuclear projects before he came with w P;,"l(3 president, general counsel, and a CP&L in 1970. He was elected vice- ..+-,.i g director in 1971, and became execu- president for power plant construc-tive vice-president-administration in tion in 1974 and senior vice-president 1974. in June 1976.

J. A. Jones, executive vice- Three department heads were Mr. Graham Mr. Utley president, was designated as chief elected vice-presidents: Patrick W.

operating officer, and Edward G.

Lllly, Jr., senior vice-president and group executive for finance and ac-counting, was designated chief fi- j QW(

nancial officer.

Elected senior vice-presidents and group executives in the new organi-Mr. Hcwve

Bradshaw, an accountant with promoted to central division general Employee Relations CP&L since 1962, was named assis- manager in 1972. The Company ended 1976 with tant controller in 1969, manager of 4,983 employees, an increase of 234 budgets and statistics In 1972, and Directors Elected over the number employed at the assistant treasurer ln 1975. George H. V. Cecil and A. Coy end of 1975. Additional personnel Elected division vice-presidents Monk, Jr. were elected directors in were needed to prepare increasing were E. Wilson Craig, Wilmlngton; March 1976. data required by regulatory bodies, C. Joe Turner, Florence; and to computerize additional Company W. Burt Grant, Southern Pines. functions, and to properly administer Craig joined CP&L ln 1965 ln the growing operating requirements.

area development department. In During the year, more than 2,000 1971, he was named ecological employees from all levels of man-coordinator in the engineering and agement participated in 24 courses operating group and in 1972 was and seminars designed to upgrade named eastern division general job performance.

manager. During 1976, a new merit pay plan Turner came to CP &L in 1960 as an Mr. Cecil was initiated for all supervisory and industrial development agent, was professional positions in the Com-med director of Industrial de- Mr. Cecil, who was educated in pany. The Company reinstated most elopment for the Company in 1964, England and Switzerland, is president of the employee benefit programs manager of the area development of the Blltrnore Company, Asheville, suspended in February 1975 because department in 1968, and southern di- N.C., and a director of the First Union of depressed earnings and updated vision general manager in 1972. Corporation and of Multimedia, Inc. its pension plan, holiday, and vaca-Grant's association with the Com- He has served as president of the tion policies. The Company also an-pany began in 1956 as a cadet man- Southern Association of Ice Cream nounced the establishment of an ager. He was named district rnan- Manufacturers and as vice-president Employee Stock Ownership Program.

ager in Southern Pines in 1969 and of the N.C. Dairy Products Associa- During the year, the International tion. Union of Operating Engineers made Mr. Monk is president and treasurer a concerted effort to organize CPM.

of A. C. Monk and Company, employees at seven of the Com-Farmville, N.C., and a director of the pany's generating plants in the cen-Monk-Henderson Tobacco Com- tral service area. In a November elec-pany and the Wachovia Corpora- tion, employees rejected the union tion. He has served as president of the by more than a three to one margin.

Tobacco Association of the U.S. and Within the Southeastern Electric Ex-as president and chairman of the change, a 25-member association of executive committee of the Leaf To- private power companies in the bacco Exporters Association. Mr. southeastern states, CPM. was the Monk attended Duke University. safest working utility of its size (with fewest lost-time injuries for each mil-lion manhours worked) for the fourth consecutive year. CP &L also placed first in its group on vehicle safety (with fewest accidents per million miles driven) for the third consecutive year.

Mr. Craig Mr. TUrner Mr. Grant Mr. Bradshaw

Balance Sheets December 31, 1916 and 1975 ASSETS 1976 1975 (see Note 7)

Electric Utility Plant (At original cost):

Electric utility plant other than nuclear fuel:

In service $ 1,905) 090,664 $ 1,837,332,579 Held for future use . 4,673,993 8,705,994 Construction work In progress . 775,981,828 643,068,549 Total . 2)685,746,485 2,489,107,122 Less accumulated depreciation 352,855,967 296,425,899 Net 2,332,890,518 2,192,681,223 Nuclear fuel . 83,532,576 70,239,100 Less accumulated amortization 22)535,100 18,507,102 Net . 60) 997,476 51,731,998 Electric utility plant, net 2,393,887,994 2,244,413,221 Other Property and Investments 5,057,266 2,026,358 Current Assets:

Cash. 9,571,930 9,354,350 Temporary cash Investments 11,459,656 13,496,583 Accounts receivable, net 37) 891,233 31,484,653 Deferred fuel costs (Notes 5 and 7) 7)349,637 6,450,224 Materials and supplies:

Fuel 39,649,652 60,008,940 Other . 18,790,871 18,093,951 Current portion of deferred income taxes (Notes 4 and 7) 6,861,669 519',733 Prepayrnents, etc. 1,788,679 1,472,295 Total current assets 133,363,327 140,880,729 Deferred Debits:

Unamortized debt expense 1) 428) 536 1,518,038 Other 10,369,353 5,775,927 Total deferred debits . 11,797,889 7,293,965 Total $ 2,544,106,476 $ 2,394,614,273 See notes to financial statements.

Carolina Power fkLightCompany LIABILITIES 1976 1975 (see Note 7)

Capital Stock and Retained Earnings (Note 2):

Preferred stock $ 288,118,400 $ 288,118,400 Preference stock ~

47,900,000 47,900,000 Common stock 634,821,118 565,609,691 Retained earnings (Note 7) . 184,735,570 150,252,672 Total capital stock and retained earnings . ~ .. ~....... 1,155) 575) 088 1,051,880,763 Long-Term Debt (Excluding current maturlties):

Principal amounts (Note 3) 1,105,204,721 1,157,234,359 Less unamortized discount and premium, net.... 3,741,341 3,980,298 Long-term debt, net 1,101,463,380 1,153,254,061 Current Liabilities:

Long-term debt due within one year (Note 3)............... 2,000,000 2,000,000 Notes payable . 10,961 78,385

, ~ Accounts payable .

Reserve for possible refund of revenues (Note 7) ............

~ Customers'eposits,.........., ~ .. ~

33,258,477 12,353,377 3,830,590 28,710,977 3,753,970 Taxes accrued ~..., ~ ~ ~... ~ . ~.......... ~ ~ . ~ 13,738,804 9,380,705 interest accrued 20,183,468 20,932,577 Dividends declared 27,966,944 25,608,792 Other 2)945,436 2,114,170 Total current liabilities . 116,288,057 92,579,576 Deferred Credits:

Investment tax credits (Note 1) . ~ 46,896,915 18,787,931 Reserve for possible refund of revenues (Note 7) ~...... 4,425,686 Customers'dvances for construction . 319,983 202,420 Other . 654,349 459,170 Total deferred credits 47,871,247 23,875,207 Reserve for InJurles and Damages .... 964,976 794,184 Accumulated Deferred Income Taxes (Notes 4 and 7) .... 121,943,728 72,230,482 I

Commitments and Contingencies (Note 5) ................

Total $ 2,544,106,476 $ 2,394,614,273 See notes to financial statements.

StaternentS Of InCOme Fcr the Years Ended December 31, 1976 1975 (See Note 7)

Operating Revenues (Notes 5, 6 and 7) $ 698,449,356 $ 601,903,43 Operating Expenses:

Fuel for generation ... 231,512,614 232,722,278 Deferred fuel expense (credit) (Notes 5 and 7) ................. (899,413) 28,577,822 Purchased power 8,574,961 13,114,681 Other operation expenses 70) 924,518 57,035,576 Maintenance . 39,440,641 33,685,947 Depreciation . 62,385,000 46,648,000 Taxes other than on income, 53,498,736 46,436,686 Income tax expense (Notes 4 and 7) ~ 90,006,759 39,240,171 Total operating expenses . 555,443,81 6 497,461,161 Operating Income ......,.......... 143,005,540 104,442,275 Other Income:

Allowance for funds used during construction . 48) 801) 829 59,956,830 Income taxes-credit (Note 4) . 14,585,869 19,733,336 Other, net ........ ..... ., .... ................ .. .... . 468,909 1,020,787

~ ~ ~ ~

Total other income 63,856,607 80,710,953 Gross Income . 206,862,147 185,153,228 Interest Charges:

Long-term debt Other .

.. 86,965,303 85,740,402 4,214,861 1,555,931 Total interest charges . 88,521,234 89,955,263 Net income . 118,340,913 95,197,965 Preferred and Preference Stock Dividend Requirements,... 26,925,913 25,751,863 Earnings for Common Stock $ 91,415,000 $ 69,446,102 Average Common Shares Outstanding 33,385,493 28,109,099 Earnings Per Common Share $ 2.74 $ 2.

StaterrentS Of Retained EarniAgS Fcr the Years Ended December 31, Balance at Beginning of Year: 1976 1975 As previously reported . $ 156,676,428 $ 128,762,726 22 Adjustment (Note 7) ..............

As restated.................. ~ ~ 150,252,672 128,762,726 Net Income 118,340,913 95,197,965 Total...,. ~ ~ ~ 268,593,585 223,960,691 Deduct:

Cash dividends declared:

$ 5 Preferred Stock . 1,186,295 1,186,295 Serial Preferred Stock:

$ 4.20 Series 420,000 420,000

$ 5.44 Series 1,360,000 1,360,000

$ 9.10 Series 2,730,009 2,730,009

$ 7.95 Series ...,........,...,,, .. .. ~ 2)782) 526 2,782)525

$ 7.72 Series . 3,860,000 3,860,000

$ 8.48 Series . 5,512,000 5,512,000 Preferred Stock A, $ 7.45 Series 3,725,000 3,725,000

$ 2.675 Preference Stock, Series A ... 5,350,083 5,513,534 Stock (at annual rate of $ 1.69 a share in 'ommon 1976 and $ 1.60 in 1975) 56,760,099 46,172,859 Total cash dividends declared ..... ~..... ~ ~... 83,686,012 73,262,2P Capital stock expense... 172,003 445,76 Total deductions . ~ ......... ~..... ~ ........ 83,858,015 73,708,019 Balance at End of Year . 3) 64,735 576 5150,252,672 See notes to financial statements.

Statements of Source and Use of Financial Resouices

~5:or the Years Ended December 3I, 1976 and 1975 f 1976 1975 (see Note 7)

Source of Ftnanclal Resources:

Current resources provided from operations:

Net income, . $ 118,340,913 $ 95,197,965 Items not requiring (providing) current resources:

Depreciation and amortization....... ~ .., . ~ . ~ 76,280,043 57,242,327 Noncurrent deferred income taxes, net . 49,713,246 22,448,849 Investment tax credit adjustments, net 28,108,984 14,273,805 Allowance for funds used during construction ................ (48,801,829) (59,956,830)

Total current resources provided from operations ..., . .., . ~ ~ 223,641,357 129,206,116 Other resources provided:

Additions to plant accounts representing capitalization of the net cost of funds used during construction... . ~........ ~ 48,801,829 59,956,830 Net decrease in working capital, excluding temporary cash investments, long-term debt due within one year, and short-term notes payable . 29) 2561380 25,278,014 Miscellaneous, net ~5,299,175) 11,522,163 Total resources provided from operations and other......... 296,400,391 225,963,123 Financlngs:

Sale of:

First mortgage bonds........................., ~ ~...... ~ . 120 742 943 Preference stock 47,744,042 Common stock .. 69,071,132 145,617,948 Increase (decrease) in short-term notes payable t less temporary cash investments...... ~, . ..,... ~ ~ ~ ~ ., 1,969,503 (145,075,244) i Total resources provided from financings 71,040,635 169,029,689 TOTAL ~ ~ ~ ~ ~ ~ ~ ~ ~ s ~ ..... $ 367,441,026 $ 394,992,812 Use of Financial Resources:

Gross property additions, excluding nuclear fuel* $ 210,299,669 $ 305,552,826 Nuclear fuel additions* . 21,455,345 17,515,265 Dividends for the year ... 83,686,012 71,924,721 Prepayment of six-year note 50,000,000 Redemption of first mortgage bonds . 2,000,000 TOTAL $ 367,441,026 $ 394,992,812 Decrease (increase) in working capital, excluding temporary cash Investments, tong-term debt due within one year, and short-term notes payable, by components:

Accounts receivable S (6,406,580) $ 14,135,051 Deferred fuel costs ~ (899,413) 28,577,822 Material and supplies (principally fuel) . 19,662,368 19,575,705 Accounts payable 4,547,500 (30,701,206)

Reserve for possible refund of revenues 12,353,377 Taxes accrued 4,358,099 (1,896,194)

Current portion of deferred income taxes .. (6,341,936) (14,097,276) interest and dividends payable... 1,609,043 7,979,956 Other, net . 373,922 1,704,156 Net decrease in working capital, excluding temporary cash investments, long-term debt due within one year, and short-term notes payable . $ 29,256,380 $ 25,278,014

'Includes amounts capitalized as allowance for funds used during construction.

See notes to financial statements.

Notes to Rnancial Statements I.

SUMMARY

OF SIGNIFICANT ACCOUNTING corded when billed, as is the customary practice in POLICIES the industry.

System of Accounts. The accounting records of Deferred Fuel Costs. Pursuant to regulatory the Company are maintained as prescribed in uni- commission orders allowing the Company to recover form systems of accounts of the Federal Power Comm- increased fuel costs, automatic fossil fuel adjustment ission (FPC) and the regulatory commissions of North " clauses were placed into effect (retail, 1974; Carolina (NCUC) Cnd South Carolina (SCPSC). wholesale, January 1975). Because a time lag existed between the date increased fuel cost was incurred Electric UtilityPlant. The cost of additions, includ- and the date such cost was billed to customers, the ing replacements of units of properly and better- Company began deferring increased fuel cost when ments, is charged to utility plant. Maintenance and Incurred and expensing such cost in the month the repairs of property, and replacements and renewals related revenue was billed. Related deferred income of items determined to be less than units of property, are recorded.

taxes are charged to maintenance expense. The cost of units of property replaced or renewed plus removal In September 1975 for North Carolina retail custom-costs, less salvage, is charged to accumulated de-ers, and May 1976 for wholesale customers, the Com-preciation. Utility plant is subject to the lien of the Company's mortgage. pany ceased deferring increased fuel costs and was authorized to recover by billings to customers the de-ferred fuel costs accumulated at the dates such ac-Allowance for Funds Used During Construction counting ceased. However, see Note 7 with regard to (AFUDC). As prescribedin regulatory uniform systems the deferred fuel costs for North Carolina retail cus-of accounts, an allowance for borrowed and equity tomers and Note 5 for deferred fuel costs for funds used to finance construction is charged to cost wholesale customers.

of plant construction work In progress. The offsetting non-cash credit Is made to Other Income. Regula-Income Taxes. Deferred Income tax provisions tory authorities consider the..inclusion of this recog- are recorded only to the extent such amounts are nized cost inutiliiyplant as anbppropriate cost for the currently allowed for rate-making purposes. In con-purpose of establishing rates for the Company's utility nection with rate increases placed into effect In service charges to customers over the service lives of March 1976 for retail operations, and in May 1976 for the property. The allowance for 1976 and 1975. was wholesale operations, the Company began provid-calculated using an 8/o composite net-of-tax rate ing fullyfor all significan'timing differences. Because 24 applied to construction work in progress balances these provisions coincided with the recognition of-excluding previously accumulated AFUDC, revenues from new billing rates which reflect such net income was not materially affected. In Depreciation and Amortization. Depreciation costs, compliance with regulatory accounting, income of utility plant, other than nuclear fuel, for financial taxes are allocated between Operating Income and reporting purposes is computed on the straight-line Other Income, principally with respect to Interest methodbased on estimateduseful lives and charged charges related to construction work in progress. De-principally to depreciation expense. Depreciation ferred income taxes are provided relating to the de-provisions as a percent of average depreciable duction for income tax purposes of a coal mining properly other than nuclear fuel approximated 3.5'/o subsidiary's development costs and such tax provi-inl976and 3.0/0 In 1975. Effective as of October 1, 1975 sions are included in Income Taxes Credit in Other the Company adopted revised depreciation rates Income. See Note 4 with respect to certain other in-generally reflecting shorter estimated useful lives for come tax information:

utility plant, which increased the provision'for depre-ciation by S10,150,000 in 1976 and S2,538,000 in 1975. Investment Tax Credits. Investment tax credits Amortization of nucle'ar fuel charged to fuel expense generated and utilized after 1971 have been deferred 0976, S12,190,000;~I975, S9,190,000) is computed on and are being amortized over the service lives of the the unit~f-production method. property; substantially all credits prior to 1972 were deferred for amortization over five-year periods. A Revenues. Customers meters are read and bills December 31, 1976 the Company had generatedbut are rendered on a cycle basis. Revenues are re- not utilizedinvestment taxcredits totaling S16,000,000.

I Preferred and Preference Dividends. Preferred and preference dividends declared and charged to the plan by approximately Sll million.

retained earnings include amounts applicable to the Other Policies. The Company has available lines first quarter of the following year, except for the Pre- of credit with various banks and maintains account ferred Stock A, $ 7.45 Series, which dividends are balances In connection with certain of such lines.

wholly applicable to the year in which declared. Other property and investments are stated principally at cost, less accumulated depreciation where Retirement Plan. The Company has a non- applicable, except for the investment in its coal min-contributory retirement plan for all regular full-time ing subsidiary which is accounted for on the equity employees and is funding the costs accrued under basis. Temporary cash investments are stated at cost, the plan. Retirement plan costs for1976 andl975 were approximating market value. Materials and supplies approximately S3,810,000 and $ 3,526,000, respec- inventories are stated at average cost. The Company tively. At January 1, 1976, the date of the latest actu- maintains an allowance for doubtful accounts re-arial valuation, the unfunded prior service cost was ceivable (1976, $ 1,184,199: 1975, $ 580.237). Bond approximately $ 21 million and the actuarially com- premium, discount and expense are amortized over puted value of vested benefits exceeded assets of the fife of the related debt.

I

2. CAPITAL STOCK December 31 1976 1975 Preferred Stock. without par value, cumulative:

$ 5 (authorized, 300,000 shares: outstanding, 237,259 shores) $ 24,375,900 $ 24,375,900 Serial (authorized, 10.000.000 shares):

$ 4.20 Series (outstanding. 100,000 shares) 10,000,000 10,000,000

$ 5.44 Series (outstanding. 250,000 shares) ............ ......,......,..........., 25,000,000 25,000,000

$ 9.10 Series (outstanding. 300,000 shares) 30,000,000 30,000,000 i $7.95 Series (outstanding. 350,000 shares) ., 35,000,000 35,000,000

$ 7.72 Series (outstanding, 500,000 shares) 49,425,000 49,425,000

$ 8.48 Series (outstanding, 650,000 shares) 64,317,500 64,317,500 Preferred Stock A (authorized, 5,000,000 shares)-

$ 7.45 Series (outstanding. 500,000 shares) ...,......... ~........,........., ., .... 50,000,000 50,000,000 Total . ~ ~ ~ ~ ~ ~ $ 288,118,400 $ 288,118,400 Preference Stock, without par value, cumulative (authorized. 10,000,000 shares)- 25

$ 2.675 Series A (outstanding, 2,000,000 shares) $ 47,900,000 $ 47,900,000 i

Conan Stock, without par value (authorized. 60,000,000 shares):

Outstanding 0976, 35.889,949 shares; 1975, 32,692,79) shares) $ 634 677f41 5 $ 565 609p691 Subscribed but not issued-6,019 shares . 143,703 Total ie t r i

~ ~ ~ vq i

~ ~ ~ ~ ~ 'I $ 634,821,118 $ 565,609,691 Common stock outstanding increased S69,067,724 tember 1976 and at December 31, 1976, 500,000 in 1976 and $ 146,151,004 in 1975 from the sale of shares of unissued common stock were reserved for 3,000,000 shares in 1976 and 9,000.000 shares in 1975 issuance under the Plan.

in public offerings and the sale of 197,158 shares in The preferred stocks are callable, in whole or in 1976 and 253,947 shares in 1975 under the Company's part, at redemption prices ranging from $ 102 to S115 a Stock Purchase-Savings Program for Employees. The share plus accumulated dividends. The Preferred preference stock account increased $ 47,900,000 in Stock A, S7.45 Series, has a sinking fund requirement, 1975 from the sale of 2,000,000 shares of such se-curities in public offerings.

commencing in 1984, to redeem 20,000 shares annu-ally at S100 per share plus accumulated dividends. In At December 31, 1976, 514,355 shares of unissued the event of liquidation, the preferred stocks are entI-mon stock were reserved for issuance under the tied to S100 a share plus accumulated dividends. The tock Purchase-Savings Program. An Automatic Div- $ 2.675 Preference Stock, Series A, is presently call-idend Reinvestment Plan was authorized in Sep- able in whole or in part at S27.68 per share plus ac-

cumulated dividends, unless refunding Is involved in December 31, 1976 1975 which case there are substantial limitations on re-demption until April 1, 1980, and in the event of liqui- BV%Sedes, due 2003 100,000,000 100,000,000 dation Is entitled, in preference only to the common 9V4% Series, due 2004 125,000,000 125,000,000 stock, to S25 a share plus accumulated dividends.

Total ................. 1,107,030,000 1,109,030,000 Six-year note payable to a bank 50,000,000 The Company's charter and the first mortgage IViiscellaneous promissory notes 174,721 204,359 bond indenture as amended contain provisions Ilmit-Ing payments of cash dividends on common stock Total long-term debt, under certain circumstances. At December 31, 1976, including current none of the retained earnings was restricted under maturities . ~......... 1,107,204,721 1,159,234,359 these provisions. Less long-term debt due within one year-llVO% Series, due 1994 ......... ...., . 2,000,000 2,000,000

3. LONG-TERM DEBT-PRINCIPAL AMOUNTS Total long-term debt, December 31, excluding current 1976 1975 maturl ties ........... $ 1,105,204,721 $ 1,157,234.359 First Mortgage Bonds:

3'%eries, due 1979 ..... $ 20,100,000 $ 20,100,000 3'%eries, due 1979 43,930,000 43,930,000 2)/s% Series, due 1981 ..... 15,000,000 15,000,000 3V~% Series, due 1982 ..... 20>000,000 20,000,000 11 %Series,due1984 ..... 100,000,000 100,000,000 The bond indenture, as amended, contains re-4Vs% Series, due 1988 ..... 20,000,000 20,000,000 quirements that additional properly be certified o~

4Vs% Series, due 1990 ..... 25,000,000 25,000,000 4V2% Series, due 1991 25,000,000 25,000,000 that specified amounts in cash and/or principa~

4Vi% Series, due 1994 ..... 30>000>000 30,000)000 amount ofbonds be delivered annually to the Trustee 11Vs% Series, due 1994 ..... 48,000,000 50,000,000 as an "improvement fund." At December 31, 1976, the 5Vs% Sedes, due 1996 ..... 30,000,000 30,000,000 "improvement fund" requirements for 1977 approxi-

&Vs% Sales, due 1997 ..... 40,000,000 40,000,000 mated S6,700,000.

6Vs% Series, due 1998 ..... 40,000,000 40,000,000 8%% Series, due 2000 ..... 40,000,000 40,000,000 Bonds of the ll'/a% Series, due 1994, are being re-83/4% Series, due 2000 ..... 50,000,000 50,000,000 deerned under sinking fund provisions at S2,000,000 7%% Series, due 2001 65,000,000 65,000,000 26 TVi% Series, due 2001 ..... 70,000,000 70,000,000 on December 1 each year, commencing In 1976, at TY4% Series, due 2002 ..... 100,000,000 100,000,000 the principal amount without premium plus accrued 7V4% Series, due 2003 ~ . ~ ~ ~ 100,000,000 100,000,000 interest.

4. INCOME TAXES Year Ended December 31, 1976 1975 (Amounts in Thousands)

Income tax expense ls composed of tho following:

Induded In Operating Expenses:

Provision for currently payable taxes . $ 20,767 $ 19,451 Provision for deferred taxes, net . 41,131 5,515 Investment tax credit adjustments, net,...., ~ > ~

28,109 14,274 Total charged to operating income . 90,007 39,240 Included In Other Income:

Reduction In currently payable taxes,. (16,826) (22,570)

Provision for deferred taxes,... . 2,240 2,837 Total credited to other income,....,. ~... ., ~.... (14,586) (19,73 Total Income tax expense, $ 75,421 $ 19,507

Year fnded December 31, 1976 1975 A reconclllatton of the Company's effeotlve Income tax rate (computed by dividing total

) Income tax expense by pre-tax Income) to the statutory federal Income tax rate follows:

Effective Income tax rate ., ~ > II ~ 38.9o/o 170 /o Effect of including AFUDC (not includible ln taxable income) In pre-tax Income . 13.1 18.6 1

Effective Income tax rate, excluding AFUDC from pre-tax income .. 52.0" 35.6 State income taxes, net of federal income tax benefit .............., .. (3.3) (2.5)

Differences between book and tax property depreciation and amortization for which deferred taxes have not been provided . 4.6 4

Taxes and fringe benefit costs capitalized ~ I 1 5.8 Other differences. net ........ I' ~ 1 r% ~ 4 4 IP4 ~ (7) 4.5 Statutory federal Income tax rate ....,...,. 48.04/o 480/0 i

Provisions for net deferred Income taxes, which result from timing differences In the recognltlon of items for tax and financial reporting purposes, related to the followlngr Excess of tax depreciation deductions over straight-line book depreciation and amortization .... $ 42,395** $ 21,245 Reserve for possible refund of revenues (3,806) (2,124)

Taxes and fringe benefit costs capitalized 2,983 Deferred fuel costs 432 (13,717)

Utlllzatlon of subsidiary's tax net loss ....,..........,...... .......,...,..................... 2,240 2,837 Miscellaneous other timing differences (873) 111 Total provisions for deferred taxes. net $ 43,371 $ 8,352

'Amounts for 1976 are not significant.

I

-Includes, beglnn! ng In 1976, provisions for differences between book and tax lives of property-the amounts are not significant as the Company's revised depreciation rates for financial reporting purposes (see Note 1) more closely approximate useful lives for income tax purposes. Also includes S8.346,000 provision related to additional 1975 depreciation for Income tax purposes: provisions for deferred investment tax credits have been appropriately reduced and, therefore. there Is no significant effect on 1976 net Income.

i 27

5. COMMITMENTS AND CONTINGENCIES

) It is estimated the Company's construction program ing, operating and managing mineral properties, to for 1977 through 1979, excluding nuclear fuel, will cost develop two adjacent deep coal mines in Pike approximately Sl.l billion. At December 31, 1976, firm County, Kentucky, each capable of producing commitments for construction aggregated approxi- 1,000,000 tons of coal per year over about 25 years. A mately S536 million plus approximately S318 million subsidiary, Leslie Coal Mining Company (LC), has for initial and replacement nuclear fuel, In addition, been formed, owned 80 kby the Company and 20/o the Company has a contract with the Energy Re- by PM, to construct and develop one of the mines.

search and Development Administration for nuclear Significant aspects of LC's financial position are fuel enrichment requirements through June 30, 2002, summarized as follows (in thousands):

which is cancelable without penalty upon five years ritten notice. Payments for enrichment services are December 31, ticipated to approximate S149 million during the 1976 1975 ext five years. Many contracts include escalation Total assets ...~...,,.... ....,."....,$ 30,252 $ 17,744 provisions. Notes payable to bank ................. $ 27,345 $ 16,200 Cost of assets financed by lease ........ $ 10,255 The Company has entered into agreements with i Pickands Mather (k Co. (PM), a firm engaged in own-

The Company has guaranteed the obligations of LC Electric utility plant at December 31. 1976 includes under the terms ofbank loan agreements and a lease approximately S15 million representing cost less ac-financing arrangement (S10.3 million obtained cumulated depreciation of four hydroelectric proj-through December 31, 1976) which can provide up to ects licensed by the FPC. Upon or after expiration of S49.7 million in funds for the LC mine (currently esti- each license, the United States may take over the mated maximum capital cost is S50 million). The project, or the FPC may issue a new license either to Company has further agreed to advance any other the Company or a new licensee. In the event of a funds requlredby LC and to cause LC to complete the takeover or licensing to another licensee, the Com-mine not later than December 31, 1979. The Company pany would be paid its "net investment" in the proj-and PM have entered into coal purchase contracts ect, not to exceed fair value, pIus severance dam-for 80% and 20%, respectively, of LC's production at ages, if any. The Company has applied for a new prices sufficient to meet all of its costs. The adjacent 50-year license for its 105,000 kilowatt Walters Hydro-mine is currently expected to cost approximately electric Project which original license expired in S51.8 million. November 1976. An annual license has been issued and will be continued until a new license is issued or Rentals, excluding nuclear fuel, charged to Income federal takeover takes place. A competing applica-were approximately S8,188,000 In 1976 and tion has been flied by a group of rural electric S7A00,000 in 1975. Minfmum rental commitments ~ratives.

under noncancelabie leases (except for nuclear fuel) at December 31, 1976 aggregated approximately The Company is a member of Nuclear Mutual S119,923,000 (ICT generators, S85,500.000; other, Limited (NML), established to provide insurance S34A23,000) and for each of the five succeeding coverage against property damage to generating facilities. The Company wouldbe members'uclear years were (in thousands):

ICZ subteot to a maximum assessment ot about $ 25 miO Payable Generators Other lion in the event of losses which exceed premiums, 1977 $ 3,800 $ 3,000 reseives and other NML resources.

1978 3,800 1,700 1979 3,800 1,300 1980 3,800 1)200 There are certain claims pending against the 1981 3,800 1,400 Company; in the opinion of the Company, liabilities, if any, arising from these claims wouldnot have a mate-The above does not Include rentals forbuildfng space rial effect on the financial position or results of opera-28 expected to be occupied In late 1977 with annual tions of the Company.

rental expected to approximate S2.1 million.

Federal Income tax returnsafter1973 have not been Rentals under a nuclear fuel lease totaled examined.

S9A59,000 in 1976 and S5A00.000 fn 1975 of which S6,200,000 for 1976 and S3,500,000 for 1975 was Operating revenues include S59.300.000 for 1976 charged to income. Such rentals include a compo- and S50.732,000 for 1975 subject to possible refund nent based on energy produced and another com- with Interest to the extent not finally allowed in pend-puted on the lessor's unamortized acquisition cost fng FPC rate proceedings. Included in the balance (S41,200,000 at December 31, 1976). Rental payments sheet at December 31, 1976 are deferred fuel costs of fornuclear fuel presently under lease are estimated to S3,050,000 which the FPC, in authorizing new general approximate S10,000,000 in 1977 and S13,000,000 in rates effective May 1, 1976 and the termination of 1978 and declinlng each year thereafter through 1980. deferred fuel cost accounting, has authorizedbe col-Under the terms of the leases for the internal combus- lected (subject to possible refund with interest) as a tion turbine (ICT) generators and the nuclear fuel, the temporary surcharge from wholesale customers. By Company, under certain circumstances, is contin- agreement with such customers, the Company has gently liable to purchase the properties from the les- deferred collection of this surcharge pending final sors. The Company is responsible for expenses in con- regulatory determinations relating to the wholesale nection with most of the leased properties, including rates.

insurance, taxes and maintenance.

~

6. RATE INCREASES deferred fuel cost accounting for North Carolina retail Operating revenues Include amounts (1976, customers and the authorization for recovery of de-S146,346,000; 1975, S37A51,000) attributable to au- ferred costs accumulated at August 31,1975byatem-thorized basic rate Increases placed in effect during porary rate surcharge over an approximate twelve-1976 and 1975, and fuel cost adjustment billings of month period, with matching amortization of the de-S107,770,000 and S148,111,000, respectively (see Note ferred costs. The Company plans to request a rehear-5). ing on the Supreme Court's ruling.

7. RESTATEMENT OF FINANCIALSTATEMENTS The accompanying financial statements reflect in retained earnings at December 31, 1975 the write-off The financial statements for 1975 have been re- of S12,353,377 In deferred costs accumulated at Au-stated to reflect a North Carolina Supreme Court gust 31, 1975, less applicable income taxes of judgment on January 31, 1977 declaring that an Au- S5,929,621, and the balance sheet at December 31, gust 27, 1975 NCUC order, authorizing the Company 1976 reflects a reserve for possible refund of revenues to add a temporary fuel adjustment surcharge to Ifs of S12,353,377. The statement of income for 1975 re-North Carolina retail rates, was in excess of the Com- flecfs a reduction of S4A25,686 in operating revenues mission's authority. The judgment reversed an earlier (surcharge collected In 1975), a net increase in de-decision of the Court of Appeals of North Carolina ferred fuel expense of S7.927,691 (the S12,353,377 less confftmlng the NCUC order and directed that the the S4A25.686 amortized through December 31, NCUC order the-Company to refund the surcharge 1975), and a reduction in income tax expense of amounts collected. The surcharge to be refunded S5,929,621. The effect of the restatement on 1975 net related to the withdrawal by NCUC on August 27, income was a reduction of S6,423,756 (S.23 per 1975, effective September 1, 1975, of the approval of share).

Quarters Ending During 1976 First Second Third Fourth (In millions, except Earnings per Common Share)

Revenues*'...., ..... ~..............,

Operating Operating Net Income .,

Income....,......,,

Earnings for Common Stock

...~ ......

,, .............,......,.... ...... .36.6

$ 167.3 29.0 22.3

$ 156.7 32.9 26.6 19.9

$ 188.7 41.0 35.0 28.3

$ 185.7 32.5 27.7 20.9 29 Earnings per Common Share........,...

Average Common Shares Outstanding, ~

32.71

,68 $

32.76

.61 $

32.81 86 $

35.25 59

'Quarterly data normally varies seasonably with temperature variations, the timing of rate increases and the scheduled down-time and maintenance of electric generating units, especially nuclear fueled units.

-Amounts restated to reflect provision for possible refund of revenues (see Note 7).

9. REPLACEMENT COST The impact of inflation has resulted in replacement preciation expense on suchbasis will be included as costs of productive capacity that are significantly unaudited supplemental data in registration state-greater than the historical costs of such assets re- ments and annual reports filed with the SEC. Existing ported in the Company's financial statements. In con- accounting principles do not permit such computed nection with Securities and Exchange Commission additional depreciation expense based on esti-(SEC) regulations adopted in 1976, estimated current mated replacement costs to be reflected in conven-replacernent costs for productive capacity and de- tional financial statements.

Auditors'pinion Ditectors

'At January 1, 1977 To the Board of Directors and Shareholders of Carolina Power 5 Light Company:

We have examined the balance sheets of Carolina Power 8. Light Company as of Oantel D. Cameron, Sr.

President December 31, 1976 and 1975, and the Atlantic Telecasting Corporation related statements of income. retained Vriimtngton, N.C. $ 970) earnings, and source and use of financial resources for.the years then ended. Our examinations were 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 Felton J. Capel the circumstances. President Century Associates of North Carolina Southern Pines, N.C. 0972)

As discussed in the last paragraph of Note 5 to financial statements, operating revenues include S59,300,000 for 1976 and S50,732,000 for 1975 which are subject to refund with interest, and the December 31, 1976 balance sheet includes deferred fuel costs of S3,050,000 for which collection has been deferred, pending final regulatory George H. V. Cecil determinations. President, The Biltmore Company Asheville, N.C. 0976)

In our opinion, subject to the effects, if any, on the 1976 and 1975 financial 30 statements of the final determination of the uncertainties described in the preceding paragraph, the financial statements referred Q

(Q to above present fairly the financial position of Carolina Power 8, Light Company as of December 31, 1976 and 1975, and the Charles W. Coker, Jr.

results of its operations and the source and President. Sonoco Products Company Hartsvllle, S.C. 0975) use of its financial resources for the years then ended. in conformity with generally accepted accounting principles applied on a consistent basis.

Margaret T. Harper Owner, Stevens Agency Southport, N.C. (1975)

Raleigh, North Carolina February 21, 1977

Officers At January 1, 1977 Shearon Harris Chairman and Chief Executive Office Sherwood H. Smith, Jr.

President and Chief Administrative Officer J. A. Jones Executive Vice President Shoaron Harris and Chief Operating Officer A. C, Monk, Jr.

Chairman of the Board President and Treasurer Edward O. Lllly, Jr.

and Chief Executive Office A. G Monk and Company Senior Vice President of the Company Farmvllle, N.C. (1976) and Chief Financial Officer Raleigh, N.C. 0961) (Group Executive)

William E. Oraham, Jr.

Senior Vice President and General Counsel (Group Executive)

Lg Darrell V. Menscer Senior Vice Presidenf (Group Executive) 1I M. A. McDuNe Senior Vice President L H. Harvln, Jr. Sherwood H. Smith, Jr. (Group Executive)

President President W. J. Rldout, Jr.

and Chief Executive Offfcer and Chfef Administrative Officer Senior Vice President Pose's Stores, Inc. of the Company (Group Executive)

Henderson, N.C. (195S) Palelgh, N.C. (1971) Edwfn E. Utley, Jr.

Senior Vice President (Group Executive)

Samuel Behrends, Jr.

Vice President E. M. Oeddle Vice President P. W. Howe Vice President Karl O. Hudson, Jr. Horace L Tllghman, Jr. William B. Klncald Executive Vice President Peal Estate and investments Vice President and General Manager Marion, S.C. (1961) Wilson W. Morgan Hudson-Belk Company Vice President Palelgh, N.C. (1967) Albert L Morris, Jr.

Vice President J. R. Riley Vice President Earl F. Stephenson Vice President R. S. Talton Vice President J. S. Currle J. A. Jones John F. Watllngton, Jr. Treasurer Executive Vice President Chairman of the Executive Committee L T. Quarles and Chief Operating Officer of the Wachovla Corporation Assistant Treasurer of the Company and Wachovla Bank & Trust Company. N.A. Paul S. Bradshaw Paieigh, N.C. (1971) Winston4alem, N.C. (1970) Controller and Chief Accounting Officer C. D. Mann Assistant Controller J. L Lancaster, Jr.

Secretary Robert M. Williams Assistant Secretary DIVISION OFFICERS:

Edward O. Lllly,Jr.

Senior Vice President E. Wilson Craig and Chief Financial Officer Vice President-Eastern Division f the Company 'Year shown tn parenthesis Indicates W. Burt Orant leigh, N.C, (1971) beglnnlng of service as a director. Vice President-Central Division C. Joseph Turner Vice President-Southern Division

Statistical Review 1976 1975 1974 1973 1972 1971 1966 (Dollars In Thousands)

Balance Sheet Data (End of Period):

1,212,822 587,000 Total ¹ililyPlant other than Nuclear Fuel,... $ 2,685,?46 2,489,107 2,197,738 1,872,859 1,524,238 Accumulated DeprMlatlon ...,.....,..., 352,856 296;426 256,659 227,645 200,190 178,096 111,640 Net Umity Plant other than Nuclear. Fuel ..... S2,332,890 2,192,681 1,941,079 1,645,214 1,324,048 1.034,726 475,360 italization K mmon Stock and Retained Preferred Stock .

Earnings ... S 819,557 288,118 715,862 288,118 548,465 288,118 531,297 223,801 447,609 173,801 299,852 124,376 174,703 34,376 Preference Stock 47,900 47,900 First Mortgage Bonds, Net'.............. 1,103,289 1,105,050 983,861 832,548 632,497 533,003 229,224 Other Long-Term Debt ..............,.... 175 50,204 50,234 50,253 50,110 123 957,354 438,303 Total > i ~ . S2,259,039 2,20,134 1,870,678 1,637,899 1,304,017 Ratio of Accumulated Depreciation to Utility Plant ln Service ...... ~...,......... 18.5 16.1 18.8 17.7 18.4 18.9 20.2 Percent of Total Capitalization 39.9 Ccmmon Stock and Retafried Earnings ... 36.3 32.4 29.3 32.4 34.3 31.3 7.8 Preferred Stock 12.8 13.1 15.4 13.7 13.3 13.0 Preference Stock ...........,........ ~... 2.1 2.2 First Mortgage Bonds. Net'..,......... . 48.8 50.0 52.6 50.8 48.5 55.7 52.3

~

Other Long-Term Debt .. 2.3 2.7 3.1 3.9 Total . 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Ratio Bonds to Net UtlliiyPlant Other'than Nuclear Fuel ... ...., ~ ., 47,3 50.4 50.7 50.6 47.8 51.5 48.2 Results of Operatfons Operating Revenues S 698,449 601,903 460,977 341,206 307,136 255,643 134,892 Operating Expenses Fuel for Generation of Power ...........,. 231,513 232,722 235,842 106,191 88,549 84,749 28,7 Deferred Fossil Fuel Expense (Credit) ...... (900) 28,578 (35,028) 14,494 7,847 11,537 10,422 6,113 Purchased Power 8,575 13,115 Other Operation Expense .....'.,...~.... 70>924 57,036 i 46,549 41,910 32,979 28,510 18,368 Maintenance Depreciation.

. 39,441 62,385 33,686 46,648 28,591 35,544 29,749 31,845 25,624 27,280 23,098 22,820 9,413 12,516 53,499 46,436 40,684 28,706 24,021 21,400 12,216 Taxes-income.............. ... i...... 90,007 39,240 16,947 21,268 26,378 14,328 17,573 Total Operating Expenses .............. 555,444 497,461 383,623- 267,516 236,368 205,327 104,906 Operating income ~ ~ ~ ~ ~ ~ ~ ~ s ~ ~ ~ ~ ~ r ~ ~ ~ ~ ~ c ~ ~ 143,005 104, 42 77,354 73.690 70,768 50,316 29,986 Other Income ~

Q Allowance for Funds Used During 32 Construction .......,........ ,...,... 48,802 59,957 54,609 38,093 24,759 14,708 2,153 income Taxes-6edit ................... 14,586 19,734 16,068 10,477 6,666 3,532 433 Other Income (Deductions)-Net ... ..... 469 1,020 776 393 49 517 104 Other Income I ~, I ~, i .

Gross Income Interest Charges i,,...... ~...,. 63,857 206,862 80,711 185,153 71,453 148,807 48,963 122,653 31,474 102,242 18,757 69,073 2,690 32,676 Bond fnterest.....,....., ~.......,...... 84,995 81,108 63,676 45,653 37,782 27,895 8,774 Other Interest Charges ...,...............

~

3,526 8,847 12,860 11,001 3,931 3,704 651 Total Interest Charges..... .........,, 88,521 89,955 76,536 56,654 41,713 31,599 9,425 Net Income . 7%HA Tr22r m5 I>VK5 5 ~2,251 Preferred Stock Dividend Requirements ... 26,926 25,752 20,672 13,017 9,612 8,371 1,606 Earnings for Common Stock ......,......, .. 91,415 69,446 51,599 52,982 50,917 29,103 21,645 DMdends Declared on Common Stock ... 56,760 46,173 37,375 32,691 27,174 22,122 14,891 Earnings Invested In the Business.....,...... S 34,655 23,273 14,224 20,291 23,743 6,981 6,754 Share-Weighted Average..... 2.74 2.47 2.21 2.58 2.86 1.97 1.88 Earnings Per DMdends Paid Per Common Share .........

S S 1.66 1.60 1.60 72.4 1.54 60.0 1.47'.46 51.6 74.1 1.28 68.5 Payout Percent 60.6 64.8 Shares Common Stock Outstanding (000's)

Year-End ........,;......:........., .. 35,890 32,693 23,439 23,234 20,125 15,555 11,570 Wefghted average alluring year...,....,., 33,385 28,109 23,324 20,554 17,814 14,776 11,488 Times Earned Bond Interest-Before Income Taxes ...,., 3.32 2.52 2.35 2.92 3.23 2.86 5.68 Fixed Charges*

-After income Taxes Preferred Dividend Requfrements ..., ., 4.40 2.43 2.94 2.28 3.70 2.15 2.34 3.50 1.92 2.69 5.07 2.34 2.71 6.30 2.90 2.48 4.48 2.50 3.72 14.4r 5.

'Includes current maturities of long-term debt.

'For purposes of this rat fo. earnings represent net Incom e plus Income taxes and fixed charges; fixed charges represent fnterest charges plus anlmputed Interest factor portion of rentals.

Revenues (Thousands) 1976 1975 1974 1973 1972 1971 1966 Residential S 221>531 191,349 156,134 117,559 103,254 89,711 51,944 Commercial 123,624 110,700 88,420 65,647 58,246 49,223 26,653 industrial- 78,634 69,290 56,661 36,689 33,438 26,725 13,526 Textile'ndustrial-Other 114,534 96,581 78,649 47,677 41,161 34,096 18,168 Government and Municipal Sales for Resale

............. 23,227 120,578 20,825 16,034 11,632 10,827 9,685 7,347 99,990 46,015 43,827 35,396 31,643 15,977 Total Electrfcity Sales Within Service Area . 682,128 588,735 441,913 323,031 282,322 241,083 133,615 NonterNorfal Electricity Sales ............ 9,530 7,485 13,499 13,608 21,040 11,967 Miscellaneous Revenues ................ 6,791 5,683 5,565 4,567 3,774 2,593 1,277 Total Operating Revenues .......... S 698,449 601,903 460,977 341,206 307.136 255,643 134,892 Load Data Electric Energy Sales (Millions):

Resldentfal Kwh 6,491 6,152 5,917 5,937 5,208 4,974 2,991 Ccmmercial ...

industrfal........,.............,,.......

4,016 8,759 3,798 7,833 3,576 8,273 3,628 3,202 2,945 1,666 7,885 7,037 6,232 3,586 Other. 6,649 6,274 5,841 5,779 5,070 4,710 2,763 Total Energy Sales Within Service Area .. 25,915 24,057 23,607 23,229 20,517 18,861 11,006 Nonterrltorlal . 261 61 469 853 1,584 796 Total Electric Energy Sales.......,...... 26,176 24,118 24,076 24,082 22,101 19,657 11,006 Company Uses, Losses and Unaccounted For . 1,528 1,700 1,556 1,501 1,671 1,307 912 Total Energy Requirements .............Kwh 27,704 25,818 25,632 25,583 23.772 20,964 11,918 Electric Energy Supply (Millions):

Generated-Steam-Fossil ...........Kwh 18,989 18,374 18,603 19,875 16,605 16,135 10,323 Generated-Steam-Nuclear ...... ~..... 7>383 5,591 4,813 3,764 4,828 2,414 Generated-Hydro 756 947 921 891 882 849 620 Generated-Other Fuel .......,........., 130 31 215 113 210 257 Purchased and interchange-Net ........ 446 875 1,080 940 1,247 1,309 975 Total Energy Supply.................Kwh 27,704 25,818 25,632 25,583 23,772 20,964 11,918 Peak Demand of Firm Load (000's):

Within Service Area............,..... XW 5>121 5,060 4,771 4,711 4,119 3,625 2,184 Nonterrftorfal . 62 38 143 212 516 170 Total Peak Demand ...,............KW 5,183 5,098 4,914 4,923 4,635 3,795 2,184 Total Capability at December 31 (000's):

Fossil Fuel Plants..................,...KW 5,176 5,142 5,014 4,453 3,833 3,482 2,038 Nuclear Plants............ 1,490 1,490 700 700 700 700 Hydro Plants . 212 212 212 212 212 211 211 Purchased . 228 228 280 280 265 245 263 Total Capability* ...................KW 7,106 7,072 6,206 5,645 5,010 4,638 2,512 Miscellaneous Customers at Year End Residential . 575,019 560,954 550,128 535,607 515,041 495,528 426,707 Other ...,............ 101,937 99,574 98,179 96,844 95,020 90,561 73,469 Total 676>956 660,528 648,307 632,451 610,061 586,089 500,176 Average Revenue Per KWH Residential .......Cents 3.41 3,11 2.64 1.98 1.98 1.80 1.74 Commercial 3.08 2.91 2.47 1.81 1.82 1.67 1.60 Industrial . 2.21 2.12 1.64 1.07 1.06 .98 .88 Total Energy Sales Within Service Area .... 2.63 2.45 1.87 1.39 1.38 1.28 1.21 Residential Average Annual Energy Use ..........Kwh 11,407 11,094 10,861 11,276 10,293 10,205 7,093 Average Annual Bill ..................... S 389.32 345.04 286.60 223.29 204.05 184.08 123.19 Steam Electric Generating Plant Fossil Fuel Average Annual Heat Rate (BTU Per Net KWH)...................., 9,980 9,951 10,090 9,739 9,946 9,832 9,672 Average Cost Per Million BTU....., ..Cents 108.4 119.0 116.7 50.0 45.7 48.0 28.7 Aver Cost Per Million BTU-All Fuels ..... 84.9 94.6 96.6 44.6 39.6 44.9 28.7 Annu~a Load Factor, Service Area Load...,.  % 61.0 58.1 60.2 59.9 61.3 63.5 62.3 Includes yarn mills, weaving or cloth mills, finishing plants (bfeaching. shrinking, dyeing and printing), knitting mills, and hosiery mills.

'Company now has 821.000 Kw, under construction for service In 1977.

I CPRL Carolina Power lk Ught Company P.O. Box 1551, Raleigh, N.C. 27602 CORRECTED ADDRESS REQUESTED