ML19031A125
| ML19031A125 | |
| Person / Time | |
|---|---|
| Site: | Salem  |
| Issue date: | 07/28/1976 |
| From: | Philadelphia Electric Co |
| To: | Office of Nuclear Reactor Regulation |
| References | |
| Download: ML19031A125 (36) | |
Text
NOTICE -
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DIRECTORS OFFICERS "Gustave G. Amsterdam Robert F. Gilkeson Chairman of the Board Chairman of the Board Bankers Securities Corporation James L. Everett (Merchandising and Real Estate)
President "George H. Brown, Jr. Henry T. Bryans Director, Girard Bank Vice President -
"James L. Everett Personnel and Industrial Relations President of the Company Vincent S. Boyer "Robert F. Gilkeson Vice President-Chairman of the Board and Engineering and Research Chief Executive Officer of Edward G. Bauer, Jr.
the Company Vice President and General Counsel "William W. Hagerty John H. Austin, Jr.
President, Drexel University Vice President-
"William G. Hamilton, Jr. Finance and Accounting Director, Singer Company Martin F. Gavet (Diversified Manufacturing)
Vice President - Gas Operations Robert D. Harrison Clair V. Myers President, John Wanamaker, Vice President-Philadelphia Purchasing and General Services (Merchandising)
William B. Morlok Paul R. Kaiser Vice President-Commercial Operations Chairman of the Board Tasty Baking Company Wayne C. Astley (Manufacturing) Vice President - General Administration Joseph J. McLaughlin John L. Hankins President, Beneficial Vice President - Electric Production Mutual Savings Bank William L. Maruchi John R. Park Vice President - Electric Transmission Chairman of the Board and and Distribution President Theodore S. Fetter American Stores Company Secretary (Retailing)
Morton W. Rimerman
'Member of Executive Committee 'freasurer James D. Lynch Assistant Secretary Donald P. Scott Assistant 'freasurer Alfred M. Newill Assistant Treasurer Joseph W. Ruff Assistant Treasurer
CONTENTS ANNUAL MEETING GENERAL OFF1CE 2 Financial Highlights The annual meeting of the share- 2301 Market Street 3 Letter to Shareholders holders of the Company will be held Philadelphia , Pennsylvania 19101 6 Rates on April 14, 1976, at eleven a.m .. in g Nuclear Generation the Crystal Ball Room, Benjamin 12 Availability and Cost of Fuels Franklin Hotel, Ninth and Chestnut 14 Conservation of Energy Streets , Philadelphia, Pennsylvania.
16 Environmental Concerns Shareholders of record at the close 18 Serving Our Customers of business March 5 are entitled to 21 Financial Statements vote at this meeting.
26 Notes to Financial Statements Notice of the meeting, proxy state-29 Report of Accountants ment, and proxy will be mailed 30 Financial Statistics under separate cover. Prompt return 32 Operating Statistics of the proxies will be appreciated.
33 Fiscal Agents MANAGEMENT CHANGES IN 1975 On February 24, William T. Coleman, Jr. resigned from the Board of Directors to accept an appointment as United States Secretary of Transportation.
On September 2, Clifford Brenner was appointed General Manager of our newly formed Corporate Com-munications Department.
On December 1, Charles W. Watson retired as Senior Vice President.
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FINANCIAL IDGHLIGIITS Percent Increase 1975 1974 or (Decrease)
Operating Revenue $1,134,810,120 $1,011,726,459 12.2%
Operating Expenses, including Fuel, Maintenance, Depreciation, and Taxes 937,724,740 858,719,597 9.2 %
Operating Income 197,085,380 153,006,862 28.8%
Other Income, primarily Allowance for Funds Used during Construction 91,231,605 96,553,268 ( 5.5%)
Income before Interest Charges 288,316,985 249,560,130 15.5%
Interest Charges 144,391,513 120,463,147 19.9%
Net Income 143,925,472 129,096,983 11.5%
Preferred Stock Dividends 36,026,349 33,681,772 7.0%
Earnings Applicable to Common Stock 107,899,123 95,415,211 13.1%
Dividends on Common Stock 95,439,435 86,458,457 10.4%
Balance to Retained Earnings $ 12,459,688 $ 8,956,754 39.1%
Shares of Common Stock-Average 58,135,012 52 ,716,813 10.3%
Earnings Per Average Share $1.86 $1.81 2.8%
Dividends Paid Per Share $1.64 $1.64 Earnings for common stock in 1975 of despite decreased energy sales for all Financing requirements were met by
$107.9 million were 13 percent higher services. Major elements of increased the sale of the following securities:
than last year, but earnings per share revenue were rate increases and the $100 million of debentures at 12-3/ 4%;
increased only moderately to $1.86 as increase in fuel adjustment revenue two mortgage bond issues ($65 million a result of a 10 percent increase in the required to recover higher fuel costs. at 11-5/ 8% and $80 million at 11 %);
average number of shares outstanding. Operating expenses rose 9 percent, almost 11 million shares of common Common stock dividends were main- reflecting continued high prices for stock (4 million through a public offer-tained at $1.64 a share, 30 percent of fossil fuels, higher taxes, and inflation ing for $51 million; 6 million through a which were not taxable for federal in all areas of doing business. rights offering for $73.5 million; and income tax purposes. Construction expenditures amounted approximately 866,000 through the Div-Operating revenue exceeded $1.1 bil- to $361.4 million, increasing total in- idend Reinvestment and Employee lion, a 12 percent increase over 1974, vestment in plant to $3.7 billion. Stock Purchase Plans for $11.9 million).
WHERE THE DOLLAR CAME FROM. WHERE IT WENT.
FUEL 38¢ WAGES & BENEFITS 12¢ OPERATING REVENUE 93¢ TAXES 13¢ INTEREST AND PREFERRED STOCK DIVIDENDS 15¢
- COMMON STO CK DIVIDENDS 8¢
- - - - - - - - - - - RETAINED EARNINGS 1¢ 2
LETfER TO OUR SHAREHOLDERS:
ELECTRIC SALES (BILLIONS KWH) 15 14 13 12 11 The past year was one of modest successes for your 10 9
Company. Our new nuclear plant at Peach Bottom per- 8 formed excellently which enabled us to reduce 7 significantly the fuel adjustment charge on our 6 customers' bills. We were able to raise a substantial 4
amount of new capital to finance our reduced construc- 3 tion program. We successfully instituted a completely 2 new billing system which will enable us to better 0 serve our customers and improve communications with them. A new Corporate Communications Depart- RESIDENTIAL ment was established and began an aggressive program for communicating Philadelphia Electric's story to its public. 4 For the year, your Company's total common stock earnings amounted to $107.9 million, an increase of approximately 13 percent over 1974. Earnings per share, however, rose only three percent to $1.86 from last year's $1 .81 due to the increase of more than 10 percent in average shares outstanding.
Rate increases were granted by the Pennsylvania Public Utility Commission for all three of our utility 15 services, after extensive hearings. 14 13 The impact of the recession on the large manu- 12 facturing segment of the economy in the Company's 11 service area resulted in sharply lower electric sales 10 9
to our large industrial accounts in 1975. Despite 8
slight increases over 1974 in all other classes of sales, 7 total kilowatt hours sold decreased about one percent. 6 5
We look for a resumption of modest growth in 1976.
4 The maximum system demand for electricity, although 3 still below the 1973 peak, increased two percent over 1974.
0 Gas revenues increased eight percent over 1974 as a result of higher rates and fuel adjustment revenue, LARGE COMMERCIAL AND INDUSTRIAL but the volume of gas sold was 14 percent lower than last year because of curtailments from pipeline suppliers and warmer weather which reduced house heating sales. The warmer weather and conservation 2 measures by our customers caused a decrease of six 0
percent in steam sales. However, steam revenue increased 31 percent due to higher rates, primarily to OTHER recover the higher fuel cost.
3
NUCLEAR PROGRAM part of the year until the correction of vibration of monitoring devices within the reactor, the plant still For electric generation nuclear power is still the contributed 16 percent of our total kilowatt-hour clear economic choice, even though construction of output in 1975. The corrections were made and the nuclear plants has placed heavy demands on our plant returned to full service.
capital requirements at a time when inflation has Construction of the two Salem nuclear units by pushed interest rates to new highs. Nuclear fuel costs Public Service Electric and Gas Company (New Jersey) only about one-eighth as much as oil, is produced is progressing. Your Company has a 42 percent interest in this country and more than offsets the higher capital in these units, having a capacity of 1,090,000 kilowatts cost of nuclear plants. Therefore, nuclear generation and 1,115,000 kilowatts, respectively, and scheduled in the long-run, will reduce operating costs and our for operation in 1976 and 1979. Our two wholly-owned dependency upon imported fuel resources. Limerick units with a capacity of 1,055,000 kilowatts Our Peach Bottom nuclear plant has completed its each are scheduled for operation in 1981 and 1982.
first full year of operations, and even though the When these units are operating we expect to generate Nuclear Regulatory Commission temporarily restricted over 50 percent of our output with nuclear energy.
its maximum load to about 50 percent in the latter Indicative of the economy of nuclear generation, NUCLEAR GENERATION AS A PERCENT OF TOTAL GENERATION GENERATING COSTS (CENTS PER KWH) 1985 ESTIMATED 5.11¢ 4.82¢ CAPITAL CAPITAL 3.33¢ FUEL CAPITAL FUEL FUEL
- O&M *O&M *O&M COAL OIL NUCLEAR Peach Bottom operations increased our Company's nuclear generation "'Operation and Maintenance Expense.
dramatically in 1975. Projections through 1985 indicate nuclear power will remain the economical choice.
COST OF FUEL PER MILLION BTU (DOLLARS)
$2 .20 2.10 2.00 1.90 1.80 1.70 1.60 1.50 1.40 1.30 1.20 1.10 1.00
.!JO
.80
.70
.60
.50
.40
.30
.20
.10 0
1970 1971 1972 1973 1974 1975 0 COAL (Phila. Stations) COAL (Mine Mout h)
- OIL
- INfERNAL COMBUSTION (Oil)
- NUCLEAR Nuclear fuel costs are substantially lower than alternative sources of energy.
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Peach Bottom saved the equivalent of approximately FINANCING/ RATE INCREASES 18 million barrels of oil in 1975. Our customers During the year, we sold $145 million of mortgage received the benefits of these savings, coupled with bonds, $100 million of debentures, and almost other generation economies. 11 million shares of common stock. The sale of these securities was essential to continued construction ADVAN CEMENTS THROUGH RESEARCH of our nuclear plants and provided a financing mix Research played a vital role in our success at which preserved the strong equity capital position so Peach Bottom, and it continues to be a keystone for necessary to maintaining the long standing good our future. In this Bicentennial Year, as we look back credit of Philadelphia Electric Company.
over our nation's history, we might also glance at our In an effort to keep pace with spiraling costs, your Company's own heritage. Electrical equipment and Company continued to make timely applications to appliances that we now accept as everyday items the Pennsylvania Public Utility Commission for rate in our industry and homes were not too long ago just increases. Our last rate increase was settled on experiments on the drawing board or in the laboratory. March 25, 1975 when the Commission gave final Likewise, today as scientists and engineers explore approval to $105 million out of our $136 million technology to utilize heat pumps, solar energy and electric rate request which had been in effect since wa.s te disposal in the production of electrical energy, January 1, 1975. However, due to the addition of over our Company supports these and other projects through $200 million of new plant and equipment and continu-its participation in the Electric Power Research ing inflation, on November 19, 1975 we filed a two-step Institute and other research organizations. Also, while $95 million electric rate increase for all classes of we are going ahead with our nuclear program, we are service. The Commission allowed a $24.3 million investing in technology which will permit us to burn interim rate increase to become effective on February coal economically and still adhere to the strict air 6, 1976, but suspended the remainder of the requested quality regulations prevailing in Pennsylvania. rate increase to July 21 , 1976 pending completion of its investigation.
NATURAL GAS SUPPLY OUTLOOK Due to a national natural gas shortage, your Company's pipeline suppliers curtailed about 25 In summary. although rate increases have temporarily percent of their contract amounts in 1975 and antic- halted the downward trend in earnings, additional ipate a curtailment of approximately 33 percent in increases will be necessary as long as inflation 1976. However, we are taking action to alleviate these persists in the United States economy. Full financial gas supply problems. For example, we have purchased recovery will also be dependent on a resumption of both synthetic gas and liquefied petroleum gas and growth in sales coupled with curtailed capital produced substitute gas from oil. Also, along with spending until we are again making optimum economic other gas utilities, we have entered into a joint venture use of our plant investment.
with an independent producer to explore and drill for We appreciate your confidence and loyal support gas in the Gulf Coast area. - manifested through your oversubscription of our rights offering in October and your continuing CONSTRUCTION PROGRAM purchases of common stock through our Dividend Reinvestment and Employee Stock Purchase Plans.
Your Company continued to operate under tight We are convinced that with an upswing in the financial controls; prompted by continued inflation, economy of the Philadelphia region, an increase in the high cost of funds to finance our construction nuclear generation, and adequate pricing of our program, the regulatory lag in granting adequate rate products, we can look forward optimistically to relief and the impact of the recession on sales. increased sales and improved earnings.
In May of 1975 we trimmed our planned construction expenditures for 1976-79 by $230 million on top of a
$600 million reduction in 1974. In addition, we cur-tailed operating expenses to minimum levels without seriously jeopardizing the reliability of service for March 1, 1976 our customers. CHAlRMAN OF THE BOARD 5
RATES This report tells about the ways in which Phila-delphia Electric has attempted to deal with these issues.
The key issue facing Philadelphia Electric and other investor-owned electric utilities across the nation is the matter of rates. And not only rate increases, but the rate-making process itself, inflation, high interest rates and the misunderstood fuel adjustment clause, which has boosted customers' bills without a penny At our Nation's Bicentennial Year, perhaps nothing of profit for the Company.
is more symbolic of conditions today in the electric Rates must produce revenues sufficient to attract utility industry than the cover design of this report. the capital required to modernize and expand our It depicts a storm center, ringed by high velocity winds system and provide shareholders with a fair return on which can hurt, damage, disrupt and halt. their investments.
Electric utilities today are literally at the center of Our current rate increase request reflects the a storm. Around them swirl the forces of opposition, effects of inflation. The filing consists of a two-stage delay, hostility, mistrust and misunderstanding. This electric rate increase totaling $95 million, an overall is the storm electric utilities must weather, while increase of 8.3 percent to residential customers, and at the same time they must continue to deliver their an increase of about 12 percent to larger commercial services with the reliability that is the industry's and industrial users.
hallmark. By holding the total increase to 9.9 percent, the Of the many issues facing the industry, five are Company was able to demonstrate that the increase the most crucial. They are: was actually less than the rise in the cost of living since the Company's last request for increased rates .
D Rates The first stage of $47 million was needed to provide D Nuclear Generation a fair return on over $200 million of new plant since D Availability and Cost of Fuels the Company's last rate increase, including $150 D Conservation of Energy million for the carrying costs of Peach Bottom Nuclear D Environmental Concerns Unit No. 3 which went into service in December, 1974.
Philadelphia Electlic takes plide in the loyalty and dedication of its employees. Not only have they done an outstanding job in providing our customers with excellent service-our reliability rating for 1975 was 99.988%-but they remain one of our best resources in confronting the issues facing the Company.
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The second stage of $48 million was requested to cost of virtually all necessities has been rising bring the Company's earnings up to the level approved steadily. No one would be more pleased than your by the PUC in the rate case filed in January, 1974, Company if the need for rate increases could be in which we received $105 million of a requested avoided-as they were for several decades prior to
$136 million. the imposition of severe environmental constraints, Early this year, the PUC suspended the entire $95 rising interest rates, high priced oil and double-digit million request pending further investigation, but inflation. These factors, largely beyond our control, granted the Company an interim rate increase of continue to drive up the cost of reliable service to
$24.3 million, with the proviso that none of it be the public .
applied to residential customers using less than 500 To minimize the effects of those factors, your kilowatt-hours per month. Company is using every means at its disposal -
A $14 million gas rate increase request was filed financial, managerial and technical - to reduce the with the PUC in 1975 to become effective in two stages, cost of providing electric, gas and steam service. As affecting only larger commercial and industrial an example, the Company's work force has been customers. The first stage, $6.4 million, was permitted reduced by over 700 regular employees in the past to go into effect on June 2, subject to possible refund. three years, as new labor-saving methods and equip-The second stage, $7.6 million, was suspended to ment make it possible to continue to perform effi-March 1976. ciently with less manpower. Savings have also been Another rate request, filed with the Federal Power produced in other ways. For example:
Commission (FPC), was for an increase of approximately 0 The useful life of wooden utility poles is being
$5.7 million in the wholesale electric power rate to extended about ten years through steel reinforce-Conowingo Power Company, a wholly-owned sub- ment. In 1975, 870 poles were reinforced, saving sidiary. Initially, the FPC permitted the new rate to be about $380,000. Another 800 wooden poles will be placed into effect on August 18, subject to refund reinforced during 1976 at an estimated saving of pending a hearing and final decision. The FPC has $320,000 and as an ongoing program, about 500 now granted $3.5 million of the requested increase. poles per year are to be reinforced.
These rate increase requests have naturally pro- D Older, high mileage cars in PE's transportation voked consumer resistance, and sometimes anger, fleet are being recycled to save dollars through an understandable response during a time when the longer highway use. The Company's Transportation The Company's General Meter Shop in King of Prussia is a very modern.
efficient installation - unique to the utility industry. It represents the con-solidation in one building of all electric. gas and steam meter testing and repair activities which assures accuracy in recording our customers' usage.
Its location at the center of the Company's System is essential to serve all sections of our service area efficiently.
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Center in Berwyn is spending about $600 to put bills, now sent bi-monthly, are mailed in envelopes a reconditioned car back on the road instead of and include return envelopes for convenience in purchasing a new car with an average price of making payments.
$3,000. On the four-year purchase cycle about When the cost of fuel rises, the adjustment charge 200 cars would be bought every year. Now, each to the customer rises; when the cost of fuel drops, year of extended life is a capital savings of the charge drops. While customers' bills rose
$600,000 offset by the maintenance expense dramatically after the oil embargo of 1973-74 as fuel of $200,000. costs soared, 1975 witnessed a downward trend D In our 26-story headquarters building energy use in our fossil fuel expense and consumers benefited has been cut by more than six million kilowatt- accordingly. The decreases were made possible hours, or enough to provide electric service to primarily because of the operation of the two new about 1,000 typical residential customers for an units at Peach Bottom, more hydroelectric output at entire year. This was achieved principally by Conowingo, more generation from the mine-mouth using waste heat generated by computers and coal plants in western Pennsylvania, and the judicious, by the -reduction of lighting levels throughout timely purchases of power generated at cost cheaper the building. than if our Company generated the same electricity.
The latter savings, through the operation of the Pennsylvania-New Jersey-Maryland Interconnection, On the subject of rate design it should be noted that amounted to $36 million in 1975.
the rates approved in March, 1975, provided a reduc- Utilities in Pennsylvania carry a disproportionate tion to customers using 250 kilowatt-hours or less per share of State taxes. The Pennsylvania Economy month. Our present filing includes a major step toward League study of taxation of public utilities in Pennsyl-implementing "time of day" pricing for electricity, vania concluded that they are taxed "on a basis a new rate for residential appliance usage limited to different from other forms of business and their taxes off-peak hours. This rate is about half the proposed are more burdensome when measured against income kilowatt-hour cost for regular residential usage. and assets and have been increasing much more Your Company recently modernized its billing rapidly in recent years than those imposed on other system to provide substantially more information to classes of business." Your Company has, on its own customers. Their response has been gratifying, with motion and through industry associations, registered a clear overall acceptance of the change. The new strong protests against discriminatory taxation policies.
A PE decal is affixed to a new-looking 1970 compact car that has been reconditioned as part of a recycling effort designed to squeeze every mile and every dollar out of the cars we now have.
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NUCLEAR GENERATION In July 1975, Peach Bottom Units Nos. 2 and 3 were limited to about 50 percent of capacity because of vibration in certain monitoring devices within the reactor core. In late October, Unit No. 2 was taken out of service for correction of the vibration problem. The unit was returned to service late in Novem.ber and proceeded to full power. Unit No. 3 was taken out of service for similar correctional work in January 1976, In making a choice of power plants, an electric and returned to full power operation in February.
utility has the responsibility to select the type which Construction of two additional cooling towers at will provide electricity reliably and at the least overall Peach Bottom was started in 1975 under an agreement cost to our customers. Right now, nuclear power is the with the Pennsylvania Department of Environmental clear choice and your Company expects that half of Resources. During the construction period the station our power generation will be nuclear by 1982. Continu- will operate in accordance with interim river water ation of the Company's nuclear construction program temperature limitations.
is essential to avoid higher costs in future years with Construction is rapidly nearing completion on the the use of plants employing more expensive and first unit of Public Service Electric and Gas Company's perhaps unobtainable fuels. Nuclear power also is the twin pressurized-water reactors in Salem, New Jersey, keystone of Project Independence-the national effort of which Philadelphia Electric has a 42 percent owner-to reduce dependence on foreign oil, which Phila- ship. Unit No. 1 at Salem is scheduled to go into com-delphia Electric strongly supports. mercial operation by late 1976, with Unit No. 2 Nuclear plants continue to demonstrate an economic scheduled for commercial operation in 1979.
benefit to our customers. The Company's share of Progress continues on construction of our Limerick the Peach Bottom plant makes up about 12 percent nuclear generating station. When completed in 1982, of our total generating capacity, but produced more this 2,110 megawatt station will save the equivalent than 16 percent of our total output in 1975 at a saving of more than 20 million barrels of oil each year and, to customers of $90 million and the equivalent of 18 like the Peach Bottom experience, result in substantial million barrels of oil. fuel cost savings, which will be reflected in the Workmen make modifications within the reactor core of Peach Bottom Uni t 3. foll owing simi lar work completed on Unit 2. to correct an instrument A continuous program of maintenance assures operat-vibration problem. ing efficiency and reliability of our nuclear units .
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Fuel Adjustment Clause then in effect. considerable work performed in the areas of design, In September 1975, the Company was notified by engineering, environmental impact studies and safety General Atomic Company that it was unwilling to analysis. In addition, General Atomic has agreed to continue work on the nuclear steam supply system provide, at its acquisition cost, two million pounds of for the Fulton Generating Station, and that it was uranium to PE, to be delivered in 1982, 1983 and 1984 suspending work on this project. The Fulton Station representing substantial savings to the Company.
reactors were to have been in commercial operation General Atomic Company also cancelled construc-in 1984 and 1986. tion of the Summit Nuclear Station, which was to have In view of the action taken by General Atomic been built on the system of Delmarva Power and Company, your Company suspended its work at the Light Company in Delaware. Philadelphia Electric site in Lancaster County, Pennsylvania, pending a owned a 15 percent share of Summit's proposed complete review of the project and alternate plans capacity. Our Company has recovered its investment to provide electric generating capacity in the mid- in this plant.
to-late 1980's. The critical question is whether your Company will On February 13, 1976, General Atomic agreed to be able to supply the future power needs of the com-pay $64 million to reimburse your Company for sub- munity it serves. Inability to finance new construction stantially all its costs incurred in the Fulton Station. and delays in present and planned construction can Although construction had not begun, there had been lead to power shortages.
In 1975, the successful operation of our nuclear power plant at Peach Bottom accounted for 16 percent of PE's total electric output. Tills generation of electricity by nuclear power resulted in a saving to our customers of $90 million and the equivalent of 18 million barrels of oil. and continues to demonstrate that it is the economical way to meet our cus-tomers' present and future requirements for electricity.
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Construction progressed during 1975 at the site of our nuclear powered The reactor containment building is a thick. air-tight shell of metal and Limerick Generating Station which is located in Limerick Township. reinforced concrete which completely surrounds the reactor vessel.
Montgomery County, Pennsylvania. Limerick will have two boiling water Enclosed in the thick steel reactor vessel are the fuel element bundles reactors. each capable of producing 1.055,000 kilowatts of electric power. which make up the reactor core. A fuel bundle is made up of sixty-three Unit 1 is scheduled for operation in 1981 and Unit 2 in 1982. 12-foot long metal zircaloy tubes which contain the nuclear fuel uranium oxide in the form of small pellets. Each pellet is about the size of the eraser on a pencil yet contains as much equivalent energy as a ton of coal.
Steel reinforced concrete forms will support the turbine buildings which will house large turbine-generators that produce electricity. The basic This circular area will be the construction site for one of two natural draft difference between a nuclear plant and a fossil-fueled electric generating cooling towers which will prevent overheating the Schuylkill River. assuring plant is the source of heat. Instead of burning coal or oil. nuclear plants that fish or other aquatic life will not be harmed. Cooling water passes produce heat by the controlled splitting of uranium atoms. Water circulating through tubes inside condensers where it absorbs heat from condensing through the reactor boils and the steam produced drives the turbine-steam. This water is pumped to the cooling towers where the water gives generators. The steam is then condensed back to water and returned to up its heat to the air. the reactor in a continuous cycle.
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AVAILABILITY AND COST OF FUELS Oil - Heavy oil, used in generating stations prin-cipally in the City of Philadelphia, and light oil, used in combustion turbine peaking generators, were both available in adequate quantity during 1975.
Heavy oil decreased in price about $1.20 a barrel-about nine percent - largely through the Federal Government's removal of a 60-cent-a-barrel import fee. Light oil, on the other hand, increased in price about $.98 a barrel, or eight percent, to a level more in balance with heavy oil by year's end.
The electric utility industry is basically a converter Although both types of oil were readily available of the energy of various fuels into the most versatile in 1975, actions by the Organization of Petroleum form of energy, electricity. Exporting Countries (OPEC) could, at any time, again It is of prime importance, therefore, to know the create serious shortages or price escalation, or both, status of reliable and environmentally acceptable fuels as it did in 1973.
to be used in the conversion process. Here is the mid- Coal-During 1975, there were ample supplies of range outlook: coal for our present needs. Due to substantial wage Uranium-As far as supply is concerned, your rate and fringe benefit increases granted United Mine Company has long-term contracts with uranium Workers, prices on annual orders by our major sup-producers which will provide adequate fuel for the pliers rose about six percent, or by about $1 to $1.50 a continued operation of all its nuclear units. ton. Prices on the "spot market," however, dropped While prices for uranium ore concentrate have more several dollars a ton for good quality coal.
than doubled since 1973, it is such a small part of the Gas - Because deliveries of interstate pipeline cost of production that nuclear power still maintains a natural gas for 1975 remained below contract quanti-substantial cost advantage over power generated from ties, Philadelphia Electric announced in January, 1975, fossil fuels. Company studies have shown that the cost a curtailment of sales to some industrial customers.
of nuclear power generation is much less sensitive to In February of 1976, however, it became possible to uranium ore price increases than the cost of fossil fuel terminate these curtailments for the 1975-1976 winter generation is to price increases of oil or coal. period. Conservation efforts by customers, abnormally The Company's Croydon Genera ting Station has eight rugh-effi ciency Eddystone Unit 4. schedul ed for comme rcial operation in the combusti on turbine generators wruch can be operated economically with spring of 1976. will add 400,000 kilowatts of oil-fired genera ting a variety of oils. capacity to our System.
12 J
warm temperatures in early winter, and a depressed been declining since 1972 and, without realistic well-economy significantly reduced the need to withdraw head prices to generate the incentive for the producer gas from storage. Purchase of additional emergency to explore and develop new supplies. the declining supplies from intrastate pipeline suppliers also helped trend will continue. Deregulation would spur explora-to reduce our supply shortfall. In addition, propane tion, increase proven reserves and more effectively supplies were ample for the 1975-1976 winter period. allocate a valuable resource in the marketplace.
The average price of firm contract-purchased natural Even if present price ceilings are maintained, the gas delivered to PE increased during 1975 from 68 cents cost of gas would increase to the consumer, since per thousand cubic feet at the beginning of the year fixed costs of transmission pipelines and compressor to 99 cents per thousand cubic feet in December, and stations would have to be applied to a declining prices are expected to continue to rise as old contracts volume of delivery. Further, distribution companies, with producers expire and new contracts are negotiated. such as Philadelphia Electric, faced with maintaining Deregulation of wellhead pricing of newly-found service to its present customers, would have to increase natural gas is important to the gas industry and to the the amount of high-cost supplemental fuels to offset consumer. The gas supply of the United States has the increased curtaili;ients of pipeline gas.
Coal. as a source of heal for steam generation. accounted for over and use play a n important role in providing the e nergy requirements 30 percent of the Company*s electric output. Its continued production of our customers.
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CONSERVATION OF ENERGY programs to show consumers how to conserve energy and thus save on their bills.
Conservation efforts, however, ran head-on into the rising cost of electricity. Admittedly, we have had rate increases, and have emphasized repeatedly that the biggest jump in bills has resulted from the increased cost of fuel, which has added to the con-sumers' burden, but not to Company profits. Explana-tions, however, have had only soft impact on a great many customers who have framed in their minds these "Conservation is everybody's business" has been a four words: "Using less, paying more."
watchword at Philadelphia Electric for many years. We have continued our conservation efforts with Your Company not only has offered conservation consumers' programs, seminars and meetings with advice to its customers, but has practiced what it builders, contractors, architects and engineers on preached. Recognition of its efforts came in late the efficient use of energy in lighting, heating and 1975 when the Federal Energy Administration (FEA) air-conditioning.
presented the Company with five separate awards Three years ago, in cooperation with the Electrical for reductions in energy use on its own system. Association of Philadelphia, a high-efficiency air-Energy savings were obtained by reducing heating, conditioning program was initiated which has cooling and lighting levels. achieved national recognition. It is conservatively In presenting the awards, Joseph A. LaSala, regional estimated that this program will result in a saving of director, said: "These programs were completely 600,000 kilowatts of air-conditioning load connected voluntary and have resulted in savings of more than to our system over the next ten years, and that the three and one-half million kilowatt-hours. It is equivalent saving in fuel will be nearly one and significant that one of the nation's leading energy one-half million barrels of oil.
firms should be the recipient of these awards ." A growing interest in the heat pump, the most As early as 1966, PE stopped promotional programs energy-efficient alternate method for heating and for air-conditioning, and in 1970 halted promotional cooling that is commercially available today has been advertising for all energy use. It has initiated many given special attention. At the same time, a compre-Company representatives helped our customers-homeown-Computers. which have greatly increased efficiency and productivity in many ers and operators of businesses alike-to save money by facets of Company operations. are now helping to conserve energy by using the checking for possible energy wasting areas and by advising waste heat created by their operation to aid in heating our headquarters building . them on how to use energy wisely.
14
hensive education program was instituted for national energy requirements for several decades -
consumers on the heat pump's energy conservation and in the meantime we must do with the available benefits. sources at hand.
In the lobby of the Company's headquarters building Philadelphia Electric is actively involved in the and in our merchandise showrooms throughout our development of new energy sources and in the service area, exhibits, booklets and brochures give maximum utilization of existing sources . This is a dual valuable information to the public on the selection commitment, both as a Company and as part of the of energy-saving electric appliances. electric utility industry, in cooperation with private An informative folder on the conservation of gas and governmental efforts. Included is the development for home appliances has been distributed to all of the liquid metal fast-breeder nuclear reactor which residential customers. The folder emphasizes the will greatly extend the supply of uranium fuel, serious need for conservation, as well as itemizing participation in a major program to develop a fuel pointers on how to save gas in the use of specific cell for electric utility application and the conversion appliances. It also describes the measures Phila- of coal to a pipeline quality natural gas.
delphia Electric is taking to increase gas supplies. Conservation of all energy must continue and its Additional information on energy-saving gas replace- wise use must be promoted in order to stretch present ment appliances and equipment is given to the available supplies, but for the long term the only public through your Company's representatives. solution to the energy crunch is to increase the Much is heard these days about alternate energy domestic supplies of all energy sources - oil, coal, sources such as solar, geothermal and fusion, and the uranium and natural gas. To assure an adequate question often arises why these sources are not in the supply of electric energy, and maintain our present immediate energy future. These alternatives are not standard of living, more generating plants must be likely to make significant contributions to our total built and nuclear power must be expanded.
A comprehensive campaign was begilll in October 1975. urging residential gas customers to conserve natural gas during the winter months . The effort, focused on job-saving, was prompted by notification to the Company of curtailments by our pipeline suppliers. Although residentiel gas customers were not to be curtailed. the gas they save through conserva-tion efforts would help ease the curtailments to commercial and industrial customers that supply jobs for thousands of residents of the Delaware Valley.
15
ENVIRONMENTAL CONCERNS particulate matter and of sulfur dioxide emissions from the flue gas. Your Company was a national leader with a particulate emissions abatement program that began in 1935 when one of the industry's first electro-static precipitators was put into operation. Installa-tion of double collector systems-electrostatic and mechanical-was begun in 1948.
The electric utility industry has spent more than
$300 million and operated nearly 50 pilot plants and prototypes in an effort to develop a commercially successful system to remove both particulates and Philadelphia Electric has had a long-standing sulfur dioxide. Their operation has been disappointing, interest in maintaining high standards of air and and a number of them have had to be abandoned water quality, evidenced well before much of the after expenditures of millions of dollars.
environmental regulations were enacted. However, Your Company has completed a newly-designed our continuing concern is whether the benefits to be particulate and sulfur removal system at its Eddystone obtained by recent and much stricter regulations will Station, our largest coal-fired plant.
be commensurate with the substantial costs to our If, after thorough tests, this scrubber demonstrates customers, as environmental controls are having an that it is commercially reliable, the system will be increasing impact on the cost of Company operations. expanded to serve the two coal-fired boilers at the In the five year period, 1976-80, it is estimated that Eddystone plant and similar scrubbers will be installed your Company will spend approximately $77 million at our Cromby station. The total cost of the scrubbers for air and water quality control facilities at its fossil is estimated at $76 million, and will reduce the fuel power plants. Air quality regulations have, since efficiency of generation by seven percent.
1970, limited our choice of fuel. Expensive low-sulfur In December 1975, Philadelphia Electric and the oil, most of which is imported, is required to be City of Philadelphia signed an agreement to design an burned in our generating stations. energy conservation project to convert trash into Coal-burning power plants have a dual problem in steam for our steam heat distribution system in center meeting air quality regulations: the removal of both city Philadelphia. Trash will produce energy cleanly PE's long-standing concern for maintaining high standards of air and on the environment (left) and the extensive program of developing.
water quality is reflected by the continuous monitoring by Company installing and now testing of a particulate and s ulfur removal system chemists and technicians the impact our power plant operations have at our coal-burning units at Eddystone Generating Station. (right) 16
and economically, meeting air quality regulations and On February 4, 1976, the Federal Power Commission reducing the City's land requirements for refuse granted your Company a new annual license for the disposal. The plant will conserve 630,000 barrels of Conowingo Project, expiring February 19, 1977.
oil a year. Philadelphia Electric and the City both will At the Muddy Run Pumped Storage Hydroelectric realize savings from the project, and PE will have a Plant a recreation park was developed with facilities new source of steam. for camping, boating, fishing and picnicking. Along While your Company will continue to develop and the river, adjacent to the powerhouse, a fishermen 's use every source of energy that is environmentally park features a fishing walkway near the water's acceptable, Philadelphia Electric is committed edge, a fish cleaning shed, modern restrooms and a principally to nuclear energy which has the least public observation deck. In 1975, nearly 250,000 impact on the environment. visitors took advantage of the facilities at Muddy Run .
Nuclear power plants do not pollute the air, but Another concept in the use of land for recreation like all steam power plants they must have facilities to is demonstrated under the Company's high voltage control the heat discharged to the river water used for transmission lines. Licenses to use this land for condensing steam. To maintain river quality at the recreation have been granted to county and municipal Peach Bottom plant, the discharge system utilizes governments, school districts , civic organizations and cooling towers to partially remove heat from water adjacent property owners.
used in the plant before it is returned to the river. About 25 years ago, your Company began a program Ecological studies have been underway for a number of landscaping its facilities. Careful consideration is of years on the thermal effect of power plant operation given to the aesthetics of an area when planning on aquatic life in the Susquehanna River. Philadelphia buildings, transmission lines , generating plants and Electric also is taking part in an intensive investigation, substations. One outstanding example of how our with Johns Hopkins University, of cooling water facilities' impact on the community in which they must discharges and their environmental impact. be located can be reduced is the underground sub-Facilities for public recreation have been provided station beneath Independence Hall Mall, which has along the 14-mile lake created by Conowingo Dam on been in operation a number of years , hidden from the Susquehanna River. More than 600 cottage sites are sight, and with no effect on the beauty of the area.
leased to individuals. The area includes four marinas Millions of visitors to the historic site in the Bicen-and several boat launching sites, wild-life sanctuaries, tennial Year will be completely unaware of its fishing and camping activities. existence.
On our transmission right-of-way in Chesler Co W1ty. a park providr)s recreational facilities such as baseball. teruus. soccer and picnicking for the residents of Tredyffrin Township.
17
SERVING OUR CUSTOMERS By]. L. Everett, III, President In this report we've talked a lot helpful people. And we're going to do Service department had more than about problems and what your Com- everything we can to keep it that way. 2,600,000 customer contacts. Nearly pany is doing about them. As president When I came to the Company 25 two million of these represented tele-of Philadelphia Electric, I'd like to say years ago, the late R. G. Rincliffe, who phone calls which were handled by a a few words about a "non-problem" - was then president, said: force of more than 400 service repre-the people who make up the Philadel- "When we talk about our advanced sentatives, using highly sophisticated phia Electric Company. technology, our modern methods and electronic retrieval equipment that It's no accident that our record for equipment, our sound financial placed information about each customer's reliability is 99.988 percent. That kind policies, and our outstanding employee account literally at their fingertips.
of performance takes a talented and group, we do it to give form and shape About 350,000 customers made dedicated organization of men and to the number-one test of our success personal visits to our offices. There, women. They do a tremendous job for as a Company, to provide the very in seconds, our representatives used our customers, and they make me best possible service to our customers. the same electronic equipment to proud to be one of them! If we do that job well, we'll be able bring billing records to a television Our customers have suffered a series to pay investors an attractive return screen for quick resolution of problems.
of shocks in recent years. We've had to and provide our employees with good Besides the nearly two million ask the PUC for price increases five wages and benefits." phone conversations with customers, times in six years. The cost of poles, That's the way it still is. we received about 160,000 letters, wires, transformers, cable and other The efficiency of our Customers many of which told us that customers supplies and equipment has gone up Service department has served as a do appreciate the kind of service of from 80 percent to 200 percent in the model for the utility industry. Its which our people are so proud.
last six years. Fuel costs, which quick, courteous response to On the following page are excerpts account for about 40 percent of each customers is outstanding and of from some of the many letters we have customer dollar, have increased 400 considerable importance in maintain- received from our customers. Taken percent for coal and 700 percent for ing a favorable public attitude. together, they convey the strong oil in the six-year period. With the increasing cost of elec- sense of community and "service to One thing that hasn't changed, tricity, there has been a corresponding our customers" that has been the though, is our service. It's still reliable increase in the number of customer basic philosophy of the Company and and it's still provided by cheerful, inquiries. Last year, our Customers its employees down through the years.
18
Here are a few: "Last week the electric circuits into when something good happens and all "The Essington Fire Company would my home developed several problems a company gets are gripes. Please thank like to extend its thanks for the Gas which repeatedly interrupted service. again the very prompt and especially Fire School. ... Companies such as We live far from the road - and my nice young men."
yours who have seen the problems of firemen and who have taken the time wife had just returned from the hos-pital . . . Your service crews went "You have two wonderful guys and money to research and improve beyond the 'call of duty' to insure that employed by your company. Refusing their own training programs are to be we had power ... I did not expect the to give their names and refusing my commended." personal and rapid service I received offer of money, they repaired my car, One of our Gas Division employees in these days of bureaucracy." enabling three frightened women to get home safely. With all the traffic, witnessed the theft of a woman 's handbag, called police and then "Last Thursday night all our lights went out in our house and also the it was a dangerous place to break down. Tell them how grateful we are chased two thieves until the alerted farm house on our place. We phoned for the help they gave."
police arrived. The police expressed your office and you had a man out here their thanks and appreciation for his promptly, followed by a Jot more men
- There is a general thought that big companies are cold, impersonal and community interest and willingness to and they worked all night in the rain
'get involved', and added "Action such and finally, after about twelve hours of remote. Actually, a big company is as his is a credit to him and to the fine work we had lights. I would just like people. At Philadelphia Electric there caliber of men working for the Phila- to write a note of thanks and apprecia- are some 9,700 men and women who delphia Electric Company." tion to all your nice men." do their jobs with others in mind-men and women who are dedicated to In a similar case, two Transmission *
"On New Year's Eve a tree toppled serve, who are friendly, who are and Distribution employees captured over and our electricity was cut off. interested and concerned, who try a young man who snatched an enve- Two very nice men came in short order to treat each customer as they would lope containing vacation money from a and were still there at 2:30 A.M... . So a neighbor and who try at all times Germantown woman. Said she, "They many times people forget to mention to be helpful and understanding.
were wonderful." To me, a recent editorial repro-duced on the following page says it very well.
19
- Mayfair
- Northeast News SERVING: MAYFAIR, TACONY, HOLMESBURG, WISSINOM ING, TORRESDALE NEWS OFFICE 1612 MARGARET ST.-J E 5-4274 Philadelphia, Pa ., Thursday, February 5, 1976 We Salute Phila.
Electric Linemen The Philadelphia Electric linemen are to be congratulated on the wonderful work they ac-complished Monday after a sudden storm caused a power failure affecting 17,000 homes.
The storm, which dropped one to three inches of snow and brought winds of up to 65 miles an hour, knocked down power lines throughout the city, the suburbs and South Jersey. We understand Ocean City, New Jersey, was entirely without electric power for a period of time.
Philadelphia Electric Co. reported that "practically all" power in Philadelphia and the suburbs had been restored by 10 p.m . Monday night.
This is a wonderful response to the needs of the people. These P .E. linemen risked their lives to restore power despite 65 m .p.h. winds and 10 degree temperatures. By nightfall most of the lights were on and once again electric power was at the "fingertips" of the P .E. customer.
We all complain about the high cost of electric bills but this revenue provides us with the expert service we receive.
As long as Philadelphia Electric remains a private utility we can be assured of efficient ser-vice and an almost constant flow of electrical power.
The actions of the company Monday exemplify the advantages of having the company private and not under government regulation.
Hats off to the people at Philadelphia Electric!!
Reprinted with permission of News Gleaner Publications
~()
J
FINANCIAL SECTION MANAGEMENf'S DISCUSSION AND ANALYSIS OF TIIE CONSOLIDATED STATEMENT OF INCOME Operating revenue in 1974 increased substantial increases in fossil fuel placed in service during late 1974.
by $245 million over the previous year prices, and a further increase of $19 Income tax reductions credited to and a further increase of $123 million million was experienced in 1975. Other Income amounted to $25 million was experienced in 1975. Major ele- Other operation and maintenance in 1974 and $22 million in 1975. Alloca-ments of increased revenue were in- expenses rose $16 million over 1973 tion of these credits to Other Income creases in fuel adjustment revenue and an additional $17 million over began on October 1, 1973, pursuant to required to recover higher fuel costs, 1974. These increases are primarily a Pennsylvania Public Utility Commis-amounting to $214 million in 1974 and attributable to inflationary pressures sion order, and represents an addi-a further $23 million in 1975, and rate and increases in rentals. tional source of cash flow.
increases amounting to $45 million in Depreciation expense increased $13 Interest charges and Preferred Stock 1974 and a further $88 million in 1975. million in both 197 4 and 1975, reflecting dividends continued to rise increasing Kwh sales of electricity in 1974 were the effect of placing almost $650 million $36 million in 1974 and $26 million in approximately 3 percent lower than in of new facilities in service during 1974. 1975 due to higher interest rates and 1973, reflecting reduced usage by all Taxes charged to operations in- new securities issued to finance the major classes of customers . Electric creased $32 million in 1974 and $30 Company's construction program.
sales in 1975 were slightly below 1974 million in 1975. Taxes on income rose Earnings available for Common Stock due to lower sales to large industrial by $22 million in 1974 and by $19 mil- remained essentially the same at $95 customers which were partially offset lion in 1975. Taxes, other than income million for 1973 and 1974, but increased by higher sales to residential and other taxes , increased $10 million in both to $108 million for 1975. The sales of commercial customers. MCF sales of 1974 and 1975, primarily due to state approximately 7.5 million shares of gas decreased approximately 4 percent gross receipts taxes on higher rev- Common Stock in 1973, almost 950,000 in 1974 from 1973 due to conservation enues. The Company accrued $49 mil- shares in 1974, and almost 11 million by customers. A further decrease of lion of deferred income taxes in 1974 shares in 1975 increased the average 14 percent in 1975 reflects curtailments and $33 million in 1975 as a result of number of shares outstanding by 10 to certain large industrial customers normalizing the tax reductions result- percent in 1974 and an additional 10 and warmer weather. ing from liberalized depreciation and percent in 1975. Earnings per average Fuel and energy interchange expense investment tax credit. share fell from $1.99 in 1973 to $1.81 in in 1974 increased by $179 million over Allowances for Funds Used During 1974, but rose to $1.86 in 1975. Divi-the previous year, primarily due to Construction totaled $71 million in dends remained at $1 .64 a share.
1974 and $67 million in 1975. The de-crease in the allowance for 1975 as compared with 1974, resulted from the full year effect in 1975 of new plant 21
CONSOLIDATED STATEMENf OF INCOME Philadelphia Electric Company and Subsidiary Companies For the Year Ended December 31 1975 1974 (Thousands of Dollars)
Operating Revenue Electric . . . . . ..... ... . ...... .. . . .. ... . ...... ... . . $ 978,368 $ 873,474 Gas. ......................... . ....... . 117,989 108,929 Steam . .. . . . .. ... ....... .. . .. . . . . ..... .. . ..... . . 38,453 29,323 Total Operating Revenue 1,134,810 1,011,726 Operating Expenses Fuel and Energy Interchanged .... .. ..... . ........... . 457,783 439,231 Other Operation Expenses .. .. .. .......... . . .. ...... . 162,504 145,415 Maintenance . . . . .. ... .. .......... . ..... . ... . ... . 62,313 61,971 Depreciation ..... .. ......... .. .. ... . .. .. .. . .. ... . 91,221 77,802 Taxes, Other than Income . . ..... . .. . .. .. . ......... . 77,567 67,143 Taxes on Income ....... . .. .... ...... . ........... . 86,337 67,157 Total Operating Expenses 937,725 858,719 Operating Income 197,085 153,007 Other Income Allowance for Funds Used During Construction . . ....... . 66,874 70,841 Income Tax Credits, net. . . . . . . . . . . . . .......... . 22,271 25,441 Other, net . . . . . .... . .. . ... .. .............. . 2,087 271 Total Other Income 91,232 96,553 Income Before Interest Ch11rges 288,317 249,560 Interest Charges Long-Term Debt ........ . ... . ..... . .... . .. . . . . . 136,507 106,298 Short-Term Debt . ... . . . .. . . . . . ......... .. . . . . . ... . 7,885 14,165 Total Interest Charges 144,392 120,463 Net Income ........ . . . ...... . . . ...... . .. ... .. . ... . ..... . .. . ........... . 143,925 129,097 Preferred Stock Dividends ............. . .. . ... . . ....... . ..... . . . . . ... . .... . 36,026 33,682 Earnings Applicable to Common Stock . . . . ............. .. . .. . . .. . .. ..... . $ 107,899 $ 95,415 Shares of Common Stock-Average (Thousands) .......... . .. .. ... .. . .. ... . .... . . 58,135 52,717 Earnings Per Average Share (Dollars) . . . ........... . .. . .. .. ... . . . . .. ........ . $1.86 $1.81 Dividends Per Share (Dollars) ... . .. . .......... . . . ... .. . . . . . . ... . . .. ...... . . $1.64 $1.64 The notes and schedules to financial statements are an integral part of this statement.
22
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSmON Philadelphia Electric Company and Subsidiary Companies For the Year Ended December 31 1975 1974 (Thousands of Dollars)
Source of Funds Net Income .. . . . ..... .. ... . . . . . ..... . .. . .... . . . . . $143,925 $129,097 Charges (Credits) Not Affecting Funds Depreciation . .. .. . . .. ..... . .. . . ..... . .. .. .. . . 91,221 77,802 Deferred Income Taxes, net . . ........... . ...... . 24,472 28,313 Investment Tax Credit Adjustments, net ....... . .. . . 8,353 20,691 Allowance for Funds Used During Construction .... . . (66,874) (70,841)
Total from Operations 201,097 185,062 Sale of Long-Term Debt .. ....... ... . . . . ..... . . . . .... .. . 245,000 375,000 Preferred Stock . . . . . . .. .... .. . .. ... . . . . . ...... . . 75,000 Common Stock . . . . . . . . . . . . . . .... . . . . .. . .... . 133,723 11,151 Increase (Decrease) in Short-Term Debt ......... .. . .. . . (69,970) 30,192 Proceeds from sale of contracts for nuclear plant ....... . 18,750 Total $528,600 $676,405 Use of Funds Additions to Utility Plant .......................... . $361,368 $476,696 Allowance for Funds Used During Construction (Deduction) (66,874) (70,841)
Dividends on Preferred and Common Stock . . . . .. . .. . . . . 131,465 120,730 Retirement of Long-Term Debt .......... . ....... . ... . 95,193 69,313 Pollution Control Funds ............... ... .. .. .. . .. . (12,239)
Increase (Decrease) in Working Capitalt . .. .. . . .. . . . .. . (2,032) 90,600 Other, net ...................................... . 9,480 2,146 Total $528,600 $676,405 t Changes in Working Capital (Other than reflected in Source and Use of Funds)
Accounts Receivable ...... . ... . ...... ... ......... . $ 9,827 $ 54,348 Deferred Fuel Expense ... .... .. ...... . . .... . .. . ... . (3,722) 21,655 Material and Supplies-Fuel. ................ . ..... . 14,855 29,103 Accounts Payable and Dividends Declared .. . .. . .. . ... . (1,256) (11,455)
Taxes Accrued ........ .. .. . ............ . . . .... .. . (16,143) 1,614 Other, net ............. . .. . ..... .. .... ... . . .. .. . . (5,593) (4,665)
Total $ (2,032) $ 90,600 The notes and schedul es to finan c ial s tat ements are en integral part of this statemen t.
23
CONSOLIDATED BALANCE SHEET Philadelphia Electric Company and Subsidiary Companies December 31 ASSETS 1975 1974 (Thousands of Dollars)
Utility Plant, Electric ... ...... ....... . .. .. . . .. ............... . $2,889,428 $2,807,956 at original cost Gas ............ . . . ..... .. . . . . . .... .... .. .. .... . 272,944 265,728 Steam . .. .......... ... ..... . .... . ... .. . ... . . . . . . 48,919 42,256 Common, used in all services .............. . . .. . . ... . 115,855 114,796 Construction Work in Progress .... .. ........ . .... . . . . 1,118,471 893,161 4,445,61 7 4,123,897 Less: Accumulated Depreciation .... . .. . . ........... . 775,856 717,808 3,669,761 3,406,089 Nonutility Property and Other Investments . .. .. .. ....... . .. ... . ... .. . ... . . .. . . 12,273 12,701 CUITent Assets Cash ............... . . .. . . .. . ... . . .. .. .. . .. . ... . 17,429 15,986 Accounts Receivable Customers .. ...... .. ....... ... . ............. . 113,647 102,553 Refundable Federal Income Taxes . . . ...... ... . 18,089 Other .. .. ...................... . .. ... . ... . . . . 26,157 9,335 Deferred Fuel Expense . . ..... . ..... . .............. . 17,933 21 ,655 Materials and Supplies , at average cost Fuel (Coal. Oil and Gas) ... . ... .. . . . .. . . .. . . . ... . . . 61,522 46,667 Operating and Construction .......... . .. . .. .... .. . 26,497 25,830 Prepayments ... . .. .... ... ......... .. ... . .... .. . . 2,439 3,085 265,624 243,200 Deferred Debits .. . .......... .. .. . ............. . ........... . . . ... ... . . .. . 13,805 6,036 Total $3,961,463 $3,668,026 T he notes a nd schedu les to financial stateme nts are an integral part of this statement.
24
December 31 LIABILITIES 1975 1974 (Thousands of Dollars)
Capitalization Stockholders' Equity Preferred Stock - See Schedule, page 29 . . . ... . $ 485,864 $ 486,383 Common Stock - See Schedule, page 29 . .. . ......... . 916,639 782 ,916 Other Paid-In Capital .. .. . . .. . ..... ....... . . . .. . . 1,498 1,306 Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304,678 293 ,747 1,708,679 1,564,352 Long-Term Debt - See Schedule, page 29 . .... . ...... .. . 1,776,936 1,597,690 3,485,615 3,162, 042 Cummt Liabilities Short-Term Debt Bank Loans . . . .. . . . .. .... ........ .. ...... ..... . 50,200 115,100 Commercial Paper . .. . .. ....... . . . .. .. . ... ... . . . 57,754 62,824 Accounts Payable . . .... . . . . . .. . ... . .... .... .... .. . 67,618 66,125 Taxes Accrued . . .. . . .... .. ... . .. .. .. .. . ... ... . . .. . . . 34,650 16,512 Deferred ........... . . . .... . . .... .. .. .. . .... .. . 9,476 11,471 Interest Accrued . . . . ... .. . ... .. ... . . . . .......... . 37,829 30,462 Dividends Declared . . . ... . .. ... .... . . .. . . .. . . .... . 12,457 12,694 Current Maturities of Long-Term Debt .... . .... . .. . . . . . 60,894 91,866 Other . .. . . . . . ... .. . .. . .. ... .. .. .. . ........ ... . . 3,549 3,859 334,427 410,913 Deferred Credits Accumulated Deferred Income Taxes ..... . .... . .. ... . . 83,001 56,533 Accumulated Deferred Investment Tax Credits . . . .. .. .. . 40,203 32,551
~~* * **** ** * *** ** * * * ** ******* ......... . 18,217 5,987 141,421 95,071 Total $3 ,961,463 $3,668,026 25
CONSOLIDATED STATEMENT OF RETAINED EARNINGS Philadelphia Electric Company and Subsidiary Companies For the Year Ended December 31 1975 1974 (Thousands of Dollars)
Balance, January 1 .................... . ....... . $293,747 $286,230 Net Income (from page22) . . .... .. .. .. . . . ....... . 143,925 129,097 437,672 415,327 Cash Dividends Declared Preferred Stock . . ... . .. . ... . .. . . .. . . . . ... . . 36,026 34,272 Common Stock ..... . ........... . . ....... ... . 95,439 86,458 Expenses of Capital Stock Issues ....... . .. . .. . .. . . 1,529 850 132,994 121,580 Balance, December 31 . . . .. ...... . .. . .... . . . ... . $304,678 $293,747 The notes and schedules to finan c ial stat ements are an Integral part of this statement.
NOTES TO FINANCIAL STATEMENTS-Thousands of Dollars
- 1. Significant Accounting Policies: revenue. The Company adopted this The Company's share of nuclear accounting practice for its fuel adjust- energy costs, relating to the Peach General: All utility subsidiary compa- ment clauses on January 1, 1974 for Bottom nuclear generating station, is nies of Philadelphia Electric Company electric, on January 1, 1975 for steam charged to fuel expense on the basis are wholly-owned and are included and on October 1, 1975 for gas. The of the number of units of thermal in the consolidated financial state- amounts involved prior to the respec- energy produced as they relate to the ments. The accounts are maintained tive dates were considered immaterial total thermal units to be produced in accordance with the uniform sys- to operations. Amounts of fuel ex- over the estimated four-year life of tem of accounts prescribed by the pense recovered currently under the the fuel.
regulatory authorities having juris- electric fuel adjustment clause in ex- Depreciation: For financial reporting diction. cess of the amounts of expense pre- purposes, depreciation is provided Revenues: Revenues are recorded in viously deferred are charged to over the estimated service lives of the the accounts upon billing to the cus- operations with an equivalent credit plant on a straight-line basis. Higher tomer. Rate increases are billed from to the deferred fuel expense. Accord- depreciation deductions are taken for dates authorized or permitted to be- ingly, the deferred fuel expense has tax purposes based on the use of a come effective by regulatory authori- been reduced to an amount less than liberalized method of computing de-ties. The revenues billed under rate the amount to be recovered under the preciation and of shorter lives per-increases permitted to become effec- fuel adjustment clauses. For income mitted by the Internal Revenue tive pending final approval of the tax purposes, fuel expense is con- Service. Prior to 1971 the resultant regulatory authorities are subject to sidered an expense when incurred. tax deferrals flowed through to in-possible refund. (See Note 7) The resultant tax deferrals are nor- come. However, beginning in 1971 Fuel Expense: The Company currently malized and classified as a current the Company normalizes the effect defers that portion of fuel expense liability. The deferral of fuel expense of the tax deferrals resulting from the which is recoverable under fuel ad- until reflected in customers' billings liberalized method of computing de-justment clauses until it is subse- under fuel adjustment clauses had preciation and from timing differ-quently billed as fuel adjustment the effect of decreasing earnings per ences between guideline and asset revenue in order to effect a better share $.03 for 1975 and of increasing depreciation range lives in accor-matching of fuel expense with related earnings per share $.19 for 1974. dance with the regulatory treatment 26
for rate-making purposes. These tax Retirement Plan: The Companies have 1975 1974 deferrals will be credited to income a noncontributory service annuity Federal statutory in years when depreciation expense plan applicable to all regular employ- rates . . . . . . . . . . . 48.0% 48.0%
for financial reporting purposes ex- ees. The annuities are determined Iner. (deer.) in ceed that deductible for tax purposes. under a formula which is applied uni- effective tax rate Investment Tax Credit: Federal in- formly to all employees regardless of due to:
come tax expense reflects reductions position, and the amount depends on Allowance for for investment tax credits which were length of service and compensation funds used dur-deferred by equivalent charges to in- earned to normal retirement age. The ing construction (15.5%) (19.9%)
come and subsequently amortized by annuities are paid out of an irrevo- Excess of tax de-credits to income over a five-year cable trust fund, to which the Com- preciation over period for credits deferred prior to panies make contributions to fund book deprecia-1971 and over the estimated useful current and prior service costs over a tion not life of the plant for credits thereafter. twenty year period. (See Note 5) normalized . . . . ( 2.0%) ( 2.8%)
Allowance for Funds Used During 2. Taxes, Other than Income: State income Construction: Allowance for funds taxes , including used during construction is defined 1975 1974 portion de-in the applicable regulatory system Gross Receipts $48,263 $43,407 ferred , net of of accounts as "the net cost for the Capital Stock . . 10,667 9,087 federal income period of construction of borrowed Realty . . .. . . . 10,687 7,138 tax benefits .... 4.0% 3.8%
funds used for construction purposes Other, prin- Amortization of and a reasonable rate upon other cipally social investment tax funds when so used." For financial security .... 7,950 7,511 credits . . . . . . . ( 1.2%) ( 1.5%)
reporting purposes the allowance is $77 ,567 $67,143 Other mis-recorded as a non-cash charge to con- 3. Taxes on Income: cellaneous struction in the plant accounts with a differences . . . . ( 2.5%) ( 3.2 %)
corresponding non-cash credit to Applicable to: Effective income tax "Other Income," there by deferring the Operations 1975 1974 rates . . . . . . . . . . . 30.8% 24.4%
estimated cost of the capital em- Federal in- Provisions for deferred income ployed in construction work in come .. . .. . $42,161 $10,986 taxes consist of the following tax ef-progress. For income tax purposes, State income .. 11 ,351 7,167 fects of timing differences between the allowance accrued is not included Deferred in- tax and book income:
in taxable income, nor is the deprecia- come, net ... 24,472 28,313 1975 1974 tion of the capitalized allowance a tax Investment tax Tax deprecia-deductible expense. The allowance is credits , net. 8,353 20,691 tion in determined using a "net after tax rate" 86,337 67,157 excess of for borrowed funds and the income book depre-tax reductions arising from interest Other Income .. (22,271) {25,441) ciation . .... $26,030 $18,307 charges associated with debt used to Total income Deferred fuel finance construction are allocated to tax provi-expense . . . . ( 1,995) 11 ,471 other income. Such income tax reduc- sions ..... . $64,066 $41,716 Other ... . . . . 437 ( 1,465) tions allocated from operating ex- The aforementioned income tax $24,472 $28,313 penses to other income tax credits provisions are equivalent to effective were $22,520for1975 and $25,134 for income tax rates for financial report- Investment tax credits of $10,843 1974. The allowance is reviewed for ing purposes which were less than and $23 ,221 applicable to new plant change in rate every six months the federal statutory rate due to tim- and equipment placed in service in whereby the rates used during 1974 ing differences between tax and book 1975 and 1974, respectively, have and 1975 were 71/2% , 7% %, 8% and income as follows: been reflected as reductions of fed-81JI %. respectively. The estimated eral income tax expense with equiv-portions of the allowance attributable alent amounts reflected in investment to funds provided by common stock tax credits, net. For federal income equity, without regard to the tax effect tax purposes the 1974 investment tax of interest on debt, were equivalent credits reduced current taxes pay-to 9 percent in 1975 and 16 percent in able to the extent allowable, $5,132, 1974 of earnings applicable to common and resulted in a refund of prior years' stock. federal income taxes of $18,089.
27
- 4. Short-Tenn Debt: the contracts for construction and cancelable agreements are $19,200 The average short-term borrowings the related fuel supply. The Com- for 1976, $18,100 for 1977, $17,200 for during 1975 aggregated $97,044 at an pany's share of the proceeds from 1978, $16,400for 1979, $4,100for1980, average rate of 7.85% and during the sale of the contracts, net of ex- $27,000 for 1981-85, $27,000 for 1986-1974 aggregated $118,744 at an aver- penditures, is included in other de- 90, $26,200 for 1991-95 and a re-age rate of 11.13%; the maximum short- ferred credits at December 31, 1975 mainder of $6,500. The minimum term borrowings outstanding were in the amount of $11 ,848. It is the rental commitments are applicable
$183,900inJanuary, 1975 and $202,579 intention of the Company to apply to the following types of property:
in May, 1974. The average rate of this credit to the cost of subsequent nuclear fuel $51,600 (estimated to be interest on short-term borrowings at plant expenditures. charged to operations over a four December 31, 1975 was 7.25% for This supplier was also the supplier year period); combustion turbine bank loans and 6.07% for commercial of the nuclear systems and fuel for generators $83,000; computer equip-paper. As of December 31, 1975 the the Company's Fulton Station. On ment $4,700; other, principally rights-Company had informal lines of credit February 13, 1976, the Company and of-way $22,400.
with banks aggregating $212,575. The the supplier signed an agreement Operating revenues for 1974 include Company generally does not have whereby the supplier will pay $64,000 $16,300 billed under an interim formal compensating balance arrange- to reimburse the Company for sub- electric rate increase. With respect ments with these banks. The Company stantially all its costs incurred in the to this revenue, the Commonwealth maintains deposits with banks for Fulton Project. In addition, the sup- of Pennsylvania has filed an appeal working funds for normal operations. plier has agreed to provide two mil- from the decision of the PUC. Argu-
- 5. Retirement Plan: lion pounds of uranium to the ment on this appeal has been heard Annuities under the Companies' Company to be delivered at future by the Commonwealth Court, but a Retirement Plan are funded through dates, at the supplier's acquisition decision has not been announced. The a Trust Fund. Contributions by the cost. Company does not believe it will be Companies aggregated $14,315 in 7. Commitments and Contingent required to make any refunds to its 1975 and $9,856 in 1974. Of such Liabilities: customers. However, a decision un-amounts approximately 73 percent The Companies have incurred sub- favorable to the Company could re-was charged to operating expense stantial commitments in connection sult in a refund of $16,300 plus with their construction program. Con- interest, which would require a re-and 27 percent, associated with con-struction labor, was included in the struction expenditures for the year statement of the related accounts for cost of new utility plant. Based upon 1976 are estimated to be $437,000. 1974. Such restatement, if required, The Company's proportionate share would be to reduce earnings appli-actuarial assumptions, the estimated of a commitment for nuclear fuel at cable to common stock previously prior service liability of the Plan was substantially fully funded at Decem- the Peach Bottom Atomic Power Sta- reported for 1974 by approximately tion (owned by the Company and $7,700 ($.15 per share).
ber 31, 1975. The Companies' com-three contiguous utilities) as of De- Complaints have been filed with pliance with the Employee Retirement cember 31, 1975, was $44,944. Under the PUC against the Electric Fuel Income Security Act is not expected a contract, an independent fuel com- Adjustment Clause and an action has to have a significant effect upon pen- pany will acquire and own up to a been filed in the U.S. District Court sion costs, funding and vested bene-maximum of $150,000 of such fuel at against the Company with respect fits in future years. any one time and will sell the energy to alleged discrimination in its em-
- 6. Contract Tenninations- therefrom to the Company, as the ployment or promotion practices .
Nuclear Projects: operator of this Station. Counsel representing the Company in In October 1975, Delmarva Power Rentals charged to operating ex- these matters are of the opinion that
& Light Company and the supplier penses were $25,854 in 1975 and no refunds will be required of for nuclear systems and fuel at their $18,539 in 1974, which include revenues collected under the fuel Summit Power Station, in which the nuclear fuel contract payments of adjustment clause and that the Com-Company has a 15% particip<Uion, $12,455 in 1975 and $4,553 in 1974. pany has meritorious defenses to the terminated their contractual arrange- Minimum rental commitments as suit with respect to its employment or ments and the supplier purchased of December 31, 1975, under all non- promotion practices.
28
SCHEDULE OF CAPITAL STOCK-DECEMBER 31, 1975 Philadelphia Electric Company Number of Shari;:~ Amount Preferred Stock ($100 par) cumulative: Redemption (Thousands Series Price (A) Authorized Outstanding of Dollars) 9.50% (Sold 1974 at $100 per share) . $109.50 750,000 750,000 $ 75,000 8.75%. . . .. .. .. . . 110.00 650,000 650.000 65.000 7.85 % . . . ...... . 108.00 500,000 500,000 50,000 7.80% ........ . 108.00 750,000 750.000 75,000 7.75% ..... .. ' ' . .. . ... ' .. ' 108.00 200,000 200,000 20,000 7.325%. . . ' .. . . ... . . .. . . 106.74 750,000 750,000 (B) 75.000 7% ..... . .... '. 107.00 400.000 383.915 (C) 38,392 4.68 % . .. .. .... . 104.00 150.000 150,000 15,000 4.4% ...... .. .. ... . . . . 112.50 274,720 274,720 27,472 4.3 %. 102.00 150,000 150.000 15,000 3.8% .......... . 106.00 300,000 300.000 30.000 Unclassified . . . 5.125 ,280 Total Preferred Stock .......... . 10.000.000 4,858.635 $485,864 Common Stock- no par (D) .. 100.000.000 64.196,338 $916.639 (A) Redeemable. at the option of the Company, at the indicated dollar amounts per share, plus accrued dividends.
(B) 30,000 shares to be redeemed annually at $100 per share commencing May 1, 1979.
(C) 8,000 shares to be redeemed annually at $100 per share. The Company purchased 5,200 shares in 1975 and 6,370 shares in 1974 for this purpose and at December 31, 1975 had applied 8,085 shares to future redemption requirements. The excess of aggregate par value of such shares is reflected in Other Paid-In Capital ($192 in 1975 and $62 in 1974).
(D) The Company sold 10,866,340 shares for $133,723 in 1975 and 949,434 shares for $11 ,151 in 1974. At December 31, 1975 there were 410,264 shares reserved for issuance under the Employee Stock Purchase Plan an.cl 1,808,475 shares under the Dividend Reinvestment and Stock Purchase Plan .
SCHEDULE OF LONG-TERM DEBT-DECEMBER 31, 1975 Philadelphia Electric Company First and Refunding Mortgag e Bonds (A):
Amount Amount Amount (Thousands (Thousands (Thousands Series Due of Dollars) Series Due of Dollars) Series Due of Dollars) 8 1/2% 1976 . $ 46.700 31/s% 1985 $ 50.000 8'1<1% 1996 . $ 80,000 6 1 4% 1976. 11.000 43/s % 1986. 50,000 61/s% 1997 .... ' .. . . 75,000 5314% 1977 .. 34.000 45/s % 1987 . 40.000 71/2% 1998 . 100,000 2Vs% 1978. 25 .000 33/<! % 1988. 40.000 71/2% 1999 ........ . 100,000 11% 1980 . 125.000 5% 1989 . . . . . . . . . 50,000 73/<!% 2000. 78.325 2314% 1981. 30,000 6 1/2% 1993 . 60,000 11% 2000 . 80.000 3 1/<!% 1982 . . . ...... 35.000 4 1/2 % 1994. 50.000 11 5/s% 2000 .... ' . . .. 65,000 31/s% 1983 . 20.000 9% 1995 . 76.069 73/s% 2001 . 80,000 8 1/2% 2004 . 125.000 Total First and Refunding Mortgag e Bonds . 1.526. 094 Note Payable - Bank .. . .. (B) 1979 125.000 Pollution Control Note. . . 5.5% 1976-97 38,000 Debentures . . ......... . ...... 12 3/<!% 1981 100.000 Debentures . . 4.85 % 1986 28,453 Unamort ized Debt Discount and Premium, Net. (4.008)
Total Philadelphia Electric Company. 1.813,539 Philadelphia Electric Power Company - A Subsidiary:
Sinking Fund Debentures ..... .... ........ . . 4 Y, % 1995 24,416 Unamortized Debt Discount . . . (125)
Total Long-Term Debt . 1.837,830 Current Maturities included in Current Liabilities (60.894)
Long -Tenn Debt included in Capitalization . $1 .7 76.936 (A) Utility plant is subject to the lien of the Company's mortgage .
(B) Interest at a rate of 114% of the base rate of the bank on 90-day loans to responsible and commercial borrowers in e ffect from time to time through May 27, 1976 and at accelerating rates up to 118% of such base rate through maturity .
REPORT OF ACCOUNTANTS To Shareholders and the Board of Directors Philadelphia Electric Company Philadelphia. Pennsylvania We have examined the consolidated balance sheet of Philadelphia Electric Company and Subsidiary Companies as of December 31 , 1975, the related statements of income , retained earnings and changes in financial position for the year then end e d. Our exa mination was made in accordance with generally accepted auditing standards and, accordingly, included such tests of the acco unting records a nd such other a uditing procedures as we considered necessary in th e circumstances. We previously examined and reported upon the consolidated financial sta tements of the com-panies for the year 1974.
In our opinion. the aforementioned consolidated financial statements present fairly the financial position of Philadelphia Electric Company and Subsidiary Companies at December 31 , 1975 and 1974, and the results of their operations and the changes in their financial position for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.
1900 Three Girard Plaza Philadelphia. Pennsylvania February 13. 1976 COOPERS & LYBRAND 29
FINANCIAL STATISTICS Summary of Earnings (Millions of dollars) 1975 1974 1973 1972 1971 1970 1965 Operating Revenue (for details see pages 32 and 33). . . . . . . . $1,134.8 $1,011.7 $766.6 $685 .0 $608.1 $504.4 $340.9 Operating Expenses Fuel and Energy Interchanged ........ . .. . 457.8 439.2 260.3 212.0 189.8 137.3 77.1 Labor. . ....... . 152.2 134.0 125.6 120.4 108.8 103.0 73.3 Other Materials, Supplies and Services ... . . 72.6 73.4 65.5 55.0 45 .2 42.6 ---1Z.1.
Total Operation and Maintenance ... 682.6 646.6 451.4 387.4 343.8 282.9 177.5 Depreciation ... . . 91.2 77.8 64.3 60.5 55.9 53.9 38.1 Taxes. . ..... . . 163.9 134.3 102.5 ~ 80.8 59.9 __il_Z Total Operating Expenses . . . 937.7 858.7 618.2 541 .5 480.5 396. 7 263 .3 Operating Income . . . . . . . . . . . . . . . . . . . . . . . 197.1 153.0 148.4 143.5 127.6 107.7 ---1.L§.
Other Income Allowance for Funds Used During Construction . . . . . . . . . . .. . 66.9 70.8 58.7 42 .5 31.7 18.5 1.5 Income Tax Credits, net ... .. .... . . . . . . . . 22.3 25.5 3.4 (0.4) (1.7) 0.2 (0.5)
Other, net .......... . ......... . ... . .. . 2.0 0.3 2.7 0.2 3.2 0.7 Total Other Income . . . . . . 91.2 --- 96.6 64.8 42 .3 33.2 18.7 ---12 Income Before Interest Charges . .. ... . . . . . 288.3 249.6 213.2 185.8 160.8 126.4 ___1!U.
Interest Charges Long-Term Debt . .. . . ........ . ...... . . 136.5 106.3 84.8 73 .4 60.9 50.3 22.4 Short-Term Debt . 7.9 -- 14.2
- 5.5 4.4 ____§d_ 7.7 0.4 Total Interest Charges ... .. .. . . . .. . . . . 144.4 120.5 90.3 --..ZZ:..11 __QU 58.0 ~
Net Income..... . ... . . ... .. . . . . . 143.9 129.1 122 .9 108.0 93 .6 68.4 56.5 Preferred Stock Dividends ... .... . 36.0 - --33.7 27 .6 21.6 _lg __J!,,§_ ---12 Earnings Applicable to Common Stock . . ..... . 107.9 95.4 95.3 86.4 78.3 59.8 52.8 Dividends on Common Stock ..... .... . . . . . . 95.4 86.4 78 .4 67.7 60.7 53.7 39.6 Earnings Retained . . . . . . . . . . . . . . . . . . . . $ 12.5 ~ $16.9 $18.7 $17.6 $6.1 ....liU Earnings per Average Share (dollars) .. . .. . .. . $1.86 $1 .81 $1.99 $2.08 $2.10 $1 .84 $1.92 Dividends Paid per Share (dollars) ..... . $1.64 $1.64 $1 .64 $1.64 $1.64 $1.64 $1.44 Shares of Common Stock - Average (Millions) .. 58.1 52.7 47.8 41.5 37.3 32 .6 27.5 See page 21 for Discussion and Analysis of the Consolidated Statement of Income .
Common Stock Prices, Earnings and Dividends by Quarters (Per Share) 1975 1974 Fourth Third Second First Fourth Third Second First Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter High Price ... .. ... . ...... . $15 1/2 $15 $15 1/ 2 $14 3,/,i $12 \hi $123/ll $18 \hi $19 1/2 Low Price ...... .. .... .. . . . $12 Vs $12 % $12 1/s $11 1/s $ 93/s $ 93,/,i $10 $18 Earnings . ...... .. ... . 41Q: 50Q: 47Q: 48Q: 37Q: 42Q: 49Q: 53Q:
Dividends ..... ... . . . 41Q: 41Q: 41Q: 41Q: 41 Q: 41Q: 41Q: 41 Q:
30
Summary of Financial Condition-December 31 (Millions of dollars) 1975 1974 1973 1972 1971 1970 1965 Assets Utility Plant, at Original Cost ........... $4,445.6 $4,123.9 $3,672.1 $3,222.6 $2,851.0 $2,521.6 $1,553.4 Less: Accumulated Depreciation .... . .. . . . ._ . 775.8 717.8 665 .4 624.2 585.7 549.5 402.5 Total Utility Plant . . . . .. 3,669.8 3,406.1 3,006.7 2,598.4 2,265.3 1,972 .1 1,150.9 Nonutility Property and Other Investments .... 12 .3 12 .7 11.5 9.5 6.0 3.9 9.7 Current Assets Cash . . ...... .. ... . . .. .. .. .... . . . .. . . 17.4 16.0 16.2 17.8 25.2 24.2 14.2 Pollution Control Funds . . . .. .. ... . ... . .. 12.2 38.0 Accounts Receivable . . . ... . .. . . ... . .... 139.8 111.9 75.6 72.1 63 .0 50.8 31.8 Deferred Fuel Expense . . . . . . . . . . . . . . . . . . 17.9 21.7 Materials and Supplies .. . . 88.0 72.5 40.2 38.8 34.2 33.6 21.4 Other .. . . .. . . . . . . . . . .. . ... .. . . ... . . . 2.5 21.1 3.8 2.8 2.0 1.8 3.5 Deferred Debits .. . . . . 13.8 6.0 9.9 7.5 6.6 5.5 4.9 Total Assets . . . . $3,961.5 $3,668.0 $3,176.1 $2 ,784.9 $2,402 .3 $2,091 .9 $1,236 .4 Liabilities Preferred Stock . .. ... . . . . ... . . $ 485.9 $ 486.4 $ 412.0 $ 337.5 $ 262 .5 $ 192.5 $ 87.5 Common Stock . ....... .. . . . .. .. . .. .. . .. . 916.6 782.9 771 .8 622 .5 528.2 424.9 256.3 Other Paid-In Capital . 1.5 1.3 1.3 1.2 1.2 1.2 1.2 Retained Earnings . . . . . . . . . . .. . . . . . .. . . . . 304.7 293.7 286.2 271 .0 254.7 239.5 182.5 Total Stockholders' Equity ..... . . . . ... . 1,708.7 1,564.3 1,471.3 1,232.2 1,046.6 858.1 527.5 Long-Term Debt. . . . . . . . ............ 1,776.9 1,597.7 1,319.1 1,287.2 1,161.8 1,019.8 612 .9 Total Capitalization .... . ... .. . .. . . 3,485.6 3,162 .0 2,790.4 2,519 .4 2,208 .4 1,877.9 1, 140.4 Current Liabilities Bank Loans . ........ . .. . . . .... . . . . . ... 50.2 115.1 83 .5 41 .1 1.8 14.6 10.5 Commercial Paper . .. ... ......... 57.8 62.8 64.2 62.7 47 .5 60.9 Accounts Payable and Dividends Declared .. 80.1 78.8 67 .4 49 .5 40.7 42.7 20.5 Taxes Accrued . . . . . . . . . . . . . . . . . . . . . . 34.7 16.5 18.1 18.4 22.3 9.4 19.0 Taxes Deferred ... ... .. ... . . 9.5 11.5 Current Maturities of Long-Term Debt. 60.9 91.9 67.3 13.5 17.1 33.9 1.0 Other. ............ 41 .3 34.3 27.4 23.7 20.7 18.4 8.0 Deferred Credits .... 141 .4 95.1 57.8 44.0 31.8 22.4 26.8 Contributions in Aid of Construction . 12.6 12.0 11.7 10.2 Total Liabilities . . $3,961.5 $3 ,668.0 $3 ,176.1 $2 ,784.9 $2,402.3 $2,091 .9 $1,236.4 31
OPERATING STATISTICS 1975 1974 1973 1972 1971 1970 1965 ELECTRIC OPERATIONS Output (millions of kilowatt-hours)
Steam . . . . . . . . . . . . . . . . . . . . . . .... 12,814 16,649 18,536 20,181 19,849 19,446 15,133 Nuclear ... . . . . . . . . . . . . . . . . . . . . . . . . .. 4,387 1,745 176 97 206 137 Hydraulic. . . . . . . . . . . . . .. ... .. .. . . .. . ... . 2,275 1,938 2,132 2,242 1,738 1,877 1 ,117 Pumped Storage Output . ...... . .. 1,275 1,075 1,318 1,430 1,639 1,829 Pumped Storage Input. . . . . . . . . . . . . ' . . . . . . . .. .. (1,785) (1 ,515) (1 ,876) (2 ,018) (2,302) (2,523)
Purchase and Net Interchange . ... . .. . ... 7,363 5,300 7,094 3,472 2,889 2,886 1,606 Internal Combustion . .... . . . . 914 1.200 688 946 940 744 6 Other . ...... .. . . . ... ... . . . .... . . . . .. 1,016 27 1 86 45 Total Electric Output . 27,243 27,408 28.095 26,351 25.045 24,441 17,862 Sales (millions of kilowatt-hours)
Residen tial . . . . . . . . . . . . . . . . . . . .. .. . . . . . . . . . . . . . 7,424 7,159 7,493 6,856 6,649 6,381 4,168 Small Commercial and Industrial .. . . . . . . .. 2,624 2,558 2,663 2,503 2,428 2,365 2,003 Large Commercial and Industrial . ... .. .. . . . . . .. . . .. 14,060 14,622 14,953 14,011 13,296 12 ,970 9,470 All Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1,227 1,217 1,192 1.136 1,085 1.097 1,097 Total Electric Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,335 25.556 26,301 24,506 23,458 22 .813 16,738 Number of Customers, December 31 Residential .. ................. .... .. . . . . . . . . . 1,120,981 1,113,036 1,103,163 1.090,921 1,079,585 1,070,312 986,304 Small Commercial and Industrial . 114,896 117,237 118,009 118,522 119,203 120,034 148,760 Large Commercial and Industrial . .... . . . . . . .... ... . 5,719 5,724 5,663 5,645 5,517 5.465 4,630 All Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,305 2,248 2,207 2,163 2,130 2,101 1,909 Total Electric Customers .. . . . . . . . . . . 1,243,901 1.238.245 1,229.042 1.217 .251 1.206.435 1.197,912 1,141,603 Operating Revenue (millions of dollars)
Residential . .... .. .. . . . .... . . $ 364.7 $ 314.4 $ 254.4 $ 222.7 $ 198.3 $ 161.7 $ 99 .1 Small Commercial and Industrial . . 138.9 122 .0 97 .5 88 .1 78.6 66.3 51.7 Large Commercial and Industrial . 418.3 388.1 257 .5 228.6 198.2 158.4 103.5 All Other . . . . .... . 56.5 49.0 37 .4 35.0 31 .6 26.1 19.8 Total Electric Revenue. $ 978.4 $ 873.5 $ 646.8 $ 574.4 $ 506.7 $ 412.5 $ 274.1 Operating Income Before Income Taxes (millions of dollars). . . . . . . . . . . . . . . . . . . $ 261.5 $ 196.5 $ 170.1 $ 166.1 $ 141.8 $ 111 .7 $ 98 .2 Average Use per Residential Customer (kilowatt-hours). 6,645 6,460 6,829 6,317 6.187 5.990 4,263 Electric Peak Load, Net Hourly Demand (thous. kw) . . . . 5,530 5,431 5,760 5,313 4,922 4,712 3,366 Net Electric Generating Capacity (thous. kw) . . . . . . . . . . . . 7,186 7,808 6,650 6.348 6,366 5,564 3,663 Cost of Fuel per Million Btu . ...... . .. . . .. $1 .23 $1 .42 $0 .71 $0.62 $0 .59 $0.41 $0 .30 Btu per Net Kilowatt-hour Generated . ......... 10,523 10,676 10.523 10.666 10.782 11.079 10,397 32
1975 1974 1973 1972 1971 1970 1965 GAS OPERATIONS Sales (millions of cubic feet)
Residential . . . ... . . .... . . . . 2,334 2,281 2,317 2,418 2,441 2,454 2,233 House Heating . .. .... .... 20,817 23,793 24,125 26,026 25,165 24,949 19,642 Commercial and Industrial . ..... . . . ... . ... . .. . .... 30,012 35,913 37,868 41,490 40,624 40,360 30,354 All Other . .. . .... . . . . . . . ............... 74 79 90 104 102 124 61 Total Gas Sales . .... . ..... . . . . . . . . . 53,237 62,066 64,400 70,038 68,332 67,887 52,290 Number of Customers, December 31 Residential .... . . .. ............... . .... 90,117 90,870 91,682 94,035 95,478 97,250 101,238 House Heating .... . . . . . . . . .. . ... ... . .... . . . . .. 162,914 163,093 163,096 159,780 154,902 149,800 128,345 Commercial and Industrial . 19,874 20,276 20,518 20,312 19,778 19,063 19,641 Total Gas Customers .. .... . .. . . 272,905 274,239 275,296 274,127 270,158 266,113 249,224 Operating Revenue (millions of dollars)
Residential . . . ....... . . . . . . . . . . . . $ 8.1 $ 7.1 $ 6.7 $ 6.2 $ 6.2 $ 6.0 $ 5.5 House Heating . . ............ .. . . 54.8 55.4 51.3 48.4 45.8 43.1 33.4 Commercial and Industrial . . . . . . . . . . . . ... ..... 54.5 45.7 42.0 38.2 34.8 31.3 19.7 All Other ..... ........................ 0.1 0.1 0.1 0.1 0 .1 0.2 0.1 Subtotal .. . . . . . . . . . . . . . . . .. . . . 117.5 108.3 100.1 92.9 86.9 80.6 58.7 Other Revenue ... ........ . ... . .. .. .. 0.5 0.6 0.4 0.4 0.4 0.4 0.2 Total Gas Revenue . ..... . . . ... . . ... $ 118.0 $ 108.9 $ 100.5 $ 93.3 $ 87.3 $ 81.0 $ 58.9 Operating Income Before Income Taxes (millions of dollars). $ 19.6 $ 26.9 $ 22.8 $ 16 .9 $ 21.7 $ 18.5 $ 15.4 STEAM OPERATIONS Sales (millions of pounds) . 7,117 7.600 7,762 8.328 8.223 8.172 6,528 Number of Customers, December 31 . . . .. . . . 689 710 723 737 733 939 1,139 Total Steam Revenue (millions of dollars) . $ 38.5 $ 29.3 $ 19.4 $ 17.3 $ 14.2 $ 10.9 $ 7.8 Operating Income Before Income Taxes (millions of dollars). . . . . . . . . . . . . . . $ 2.3 $ (3.2) $ 0.7 $ 1.2 $ (2.2) $ (1.1) $ 1.1 FISCAL AGENTS FOR STOCKS AND BONDS PHILADELPHIA ELECTRIC COMPANY - Preferred and Common Stocks Registrars Transfer Agents GIRARD BANK PHILADELPHIA ELECTRIC COMPANY One Girard Plaza. Philadelphia. Pa. 19101 2301 Market Street. Philadelphia, Pa. 19101 CHEMICAL BANK MORGAN GUARANTY TRUST CO. of N.Y.
20 Pine Street. New York. N.Y. 10015 30 West Broadway. New York. N.Y. 10015 PHILADELPHIA ELECTRIC COMPANY - First and Refunding Mortgage Bonds Trustee New York Agent THE FIDELITY BANK MORGAN GUARANTY TRUST CO. of N.Y.
Broad & Walnut Streets. Philadelphia , Pa. 19109 23 Wall Street. New York. N.Y. 10015 PHILADELPHIA ELECTRIC COMPANY - Sinking Fund Debentures PHILADELPHIA ELECTRIC POWER COMPANY (A Subsidiary) - Debentures Trustee New York Agent THE PHILADELPHIA NATIONAL BANK IRVING TRUST COMPANY Broad & Chestnut Streets. Philadelphia . Pa . 19101 One Wall Street. New York. N.Y. 10015 All Philadelphia Electric Company securities. except the Sinking Fund Debentures and those series of First and Refunding Mortgage Bonds and Preferred Stock which were sold privately to institutional investors. a re listed on the PBW Stock Exchange and the New York Stock Exchange . Philadelphia Electric Power Company Debentures are listed on the PBW Stock Exchange.