ML19031A125
| ML19031A125 | |
| Person / Time | |
|---|---|
| Site: | Salem  (DPR-070, DPR-075) |
| 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 "Gustave G. Amsterdam Chairman of the Board Bankers Securities Corporation (Merchandising and Real Estate)
"George H. Brown, Jr.
Director, Girard Bank "James L. Everett President of the Company "Robert F. Gilkeson Chairman of the Board and Chief Executive Officer of the Company "William W. Hagerty President, Drexel University "William G. Hamilton, Jr.
Director, Singer Company (Diversified Manufacturing)
Robert D. Harrison President, John Wanamaker, Philadelphia (Merchandising)
Paul R. Kaiser Chairman of the Board Tasty Baking Company (Manufacturing)
Joseph J. McLaughlin President, Beneficial Mutual Savings Bank John R. Park Chairman of the Board and President American Stores Company (Retailing)
'Member of Executive Committee OFFICERS Robert F. Gilkeson Chairman of the Board James L. Everett President Henry T. Bryans Vice President-Personnel and Industrial Relations Vincent S. Boyer Vice President-Engineering and Research Edward G. Bauer, Jr.
Vice President and General Counsel John H. Austin, Jr.
Vice President-Finance and Accounting Martin F. Gavet Vice President-Gas Operations Clair V. Myers Vice President-Purchasing and General Services William B. Morlok Vice President-Commercial Operations Wayne C. Astley Vice President-General Administration John L. Hankins Vice President-Electric Production William L. Maruchi Vice President-Electric Transmission and Distribution Theodore S. Fetter Secretary Morton W. Rimerman
'freasurer James D. Lynch Assistant Secretary Donald P. Scott Assistant 'freasurer Alfred M. Newill Assistant Treasurer Joseph W. Ruff Assistant Treasurer
CONTENTS 2 Financial Highlights 3 Letter to Shareholders 6 Rates g Nuclear Generation 12 Availability and Cost of Fuels 14 Conservation of Energy 16 Environmental Concerns 18 Serving Our Customers 21 Financial Statements 26 Notes to Financial Statements 29 Report of Accountants 30 Financial Statistics 32 Operating Statistics 33 Fiscal Agents ANNUAL MEETING GENERAL OFF1CE The annual meeting of the share-2301 Market Street holders of the Company will be held Philadelphia, Pennsylvania 19101 on April 14, 1976, at eleven a.m.. in the Crystal Ball Room, Benjamin Franklin Hotel, Ninth and Chestnut Streets, Philadelphia, Pennsylvania.
Shareholders of record at the close of business March 5 are entitled to vote at this meeting.
Notice of the meeting, proxy state-ment, and proxy will be mailed under separate cover. Prompt return of the proxies will be appreciated.
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.
1
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 Income before Interest Charges Interest Charges Net Income Preferred Stock Dividends Earnings Applicable to Common Stock Dividends on Common Stock Balance to Retained Earnings Shares of Common Stock-Average Earnings Per Average Share Dividends Paid Per Share Earnings for common stock in 1975 of
$107.9 million were 13 percent higher than last year, but earnings per share increased only moderately to $1.86 as a result of a 10 percent increase in the average number of shares outstanding.
Common stock dividends were main-tained at $1.64 a share, 30 percent of which were not taxable for federal income tax purposes.
Operating revenue exceeded $1.1 bil-lion, a 12 percent increase over 1974, WHERE THE DOLLAR CAME FROM.
OPERATING REVENUE 93¢ 2
91,231,605 96,553,268
( 5.5%)
288,316,985 249,560,130 15.5%
144,391,513 120,463,147 19.9%
143,925,472 129,096,983 11.5%
36,026,349 33,681,772 7.0%
107,899,123 95,415,211 13.1%
95,439,435 86,458,457 10.4%
12,459,688 8,956,754 39.1%
58,135,012 52,716,813 10.3%
$1.86
$1.81 2.8%
$1.64
$1.64 despite decreased energy sales for all services. Major elements of increased revenue were rate increases and the increase in fuel adjustment revenue required to recover higher fuel costs.
Operating expenses rose 9 percent, reflecting continued high prices for fossil fuels, higher taxes, and inflation in all areas of doing business.
Construction expenditures amounted to $361.4 million, increasing total in-vestment in plant to $3.7 billion.
Financing requirements were met by the sale of the following securities:
$100 million of debentures at 12-3/ 4%;
two mortgage bond issues ($65 million at 11-5/ 8% and $80 million at 11 %);
almost 11 million shares of common stock ( 4 million through a public offer-ing for $51 million; 6 million through a rights offering for $73.5 million; and approximately 866,000 through the Div-idend Reinvestment and Employee Stock Purchase Plans for $11.9 million).
WHERE IT WENT.
FUEL 38¢ WAGES & BENEFITS 12¢ TAXES 13¢ INTEREST AND PREFERRED STOCK DIVIDENDS 15¢ COMMON STOCK DIVIDENDS 8¢
RETAINED EARNINGS 1¢
LETfER TO OUR SHAREHOLDERS:
The past year was one of modest successes for your Company. Our new nuclear plant at Peach Bottom per-formed excellently which enabled us to reduce significantly the fuel adjustment charge on our customers' bills. We were able to raise a substantial amount of new capital to finance our reduced construc-tion program. We successfully instituted a completely new billing system which will enable us to better serve our customers and improve communications with them. A new Corporate Communications Depart-ment was established and began an aggressive program for communicating Philadelphia Electric's story to its public.
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 services, after extensive hearings.
The impact of the recession on the large manu-facturing segment of the economy in the Company's service area resulted in sharply lower electric sales to our large industrial accounts in 1975. Despite slight increases over 1974 in all other classes of sales, total kilowatt hours sold decreased about one percent.
We look for a resumption of modest growth in 1976.
The maximum system demand for electricity, although still below the 1973 peak, increased two percent over 1974.
Gas revenues increased eight percent over 1974 as a result of higher rates and fuel adjustment revenue, 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 measures by our customers caused a decrease of six percent in steam sales. However, steam revenue increased 31 percent due to higher rates, primarily to recover the higher fuel cost.
ELECTRIC SALES (BILLIONS KWH) 15 14 13 12 11 10 9
8 7
6 4
3 2
0 RESIDENTIAL 4
15 14 13 12 11 10 9
8 7
6 5
4 3
0 LARGE COMMERCIAL AND INDUSTRIAL 2
0 OTHER 3
4 NUCLEAR PROGRAM For electric generation nuclear power is still the clear economic choice, even though construction of nuclear plants has placed heavy demands on our capital requirements at a time when inflation has pushed interest rates to new highs. Nuclear fuel costs only about one-eighth as much as oil, is produced in this country and more than offsets the higher capital cost of nuclear plants. Therefore, nuclear generation in the long-run, will reduce operating costs and our dependency upon imported fuel resources.
Our Peach Bottom nuclear plant has completed its first full year of operations, and even though the Nuclear Regulatory Commission temporarily restricted its maximum load to about 50 percent in the latter NUCLEAR GENERATION AS A PERCENT OF TOTAL GENERATION Peach Bottom operations increased our Company's nuclear generation dramatically in 1975.
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 part of the year until the correction of vibration of monitoring devices within the reactor, the plant still contributed 16 percent of our total kilowatt-hour output in 1975. The corrections were made and the plant returned to full service.
Construction of the two Salem nuclear units by Public Service Electric and Gas Company (New Jersey) is progressing. Your Company has a 42 percent interest in these units, having a capacity of 1,090,000 kilowatts and 1,115,000 kilowatts, respectively, and scheduled for operation in 1976 and 1979. Our two wholly-owned Limerick units with a capacity of 1,055,000 kilowatts each are scheduled for operation in 1981 and 1982.
When these units are operating we expect to generate over 50 percent of our output with nuclear energy.
Indicative of the economy of nuclear generation, GENERATING COSTS (CENTS PER KWH) 1985 ESTIMATED 5.11¢ 4.82¢ CAPITAL CAPITAL 3.33¢ FUEL FUEL CAPITAL FUEL
- O&M
- O&M
- O&M COAL OIL NUCLEAR
"'Operation and Maintenance Expense.
Projections through 1985 indicate nuclear power will remain the economical choice.
1973 1974 1975 0 COAL (Phila. Stations)
COAL (Mine Mouth)
- OIL
- INfERNAL COMBUSTION (Oil)
- NUCLEAR Nuclear fuel costs are substantially lower than alternative sources of energy.
Peach Bottom saved the equivalent of approximately 18 million barrels of oil in 1975. Our customers received the benefits of these savings, coupled with other generation economies.
ADV AN CEMENTS THROUGH RESEARCH Research played a vital role in our success at Peach Bottom, and it continues to be a keystone for our future. In this Bicentennial Year, as we look back over our nation's history, we might also glance at our Company's own heritage. Electrical equipment and appliances that we now accept as everyday items in our industry and homes were not too long ago just experiments on the drawing board or in the laboratory.
Likewise, today as scientists and engineers explore technology to utilize heat pumps, solar energy and wa.ste disposal in the production of electrical energy, our Company supports these and other projects through its participation in the Electric Power Research Institute and other research organizations. Also, while we are going ahead with our nuclear program, we are investing in technology which will permit us to burn coal economically and still adhere to the strict air quality regulations prevailing in Pennsylvania.
NATURAL GAS SUPPLY Due to a national natural gas shortage, your Company's pipeline suppliers curtailed about 25 percent of their contract amounts in 1975 and antic-ipate a curtailment of approximately 33 percent in 1976. However, we are taking action to alleviate these gas supply problems. For example, we have purchased both synthetic gas and liquefied petroleum gas and produced substitute gas from oil. Also, along with other gas utilities, we have entered into a joint venture with an independent producer to explore and drill for gas in the Gulf Coast area.
CONSTRUCTION PROGRAM Your Company continued to operate under tight financial controls; prompted by continued inflation, the high cost of funds to finance our construction program, the regulatory lag in granting adequate rate relief and the impact of the recession on sales.
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 our customers.
FINANCING/RATE INCREASES During the year, we sold $145 million of mortgage bonds, $100 million of debentures, and almost 11 million shares of common stock. The sale of these securities was essential to continued construction of our nuclear plants and provided a financing mix which preserved the strong equity capital position so necessary to maintaining the long standing good credit of Philadelphia Electric Company.
In an effort to keep pace with spiraling costs, your Company continued to make timely applications to the Pennsylvania Public Utility Commission for rate increases. Our last rate increase was settled on March 25, 1975 when the Commission gave final approval to $105 million out of our $136 million electric rate request which had been in effect since January 1, 1975. However, due to the addition of over
$200 million of new plant and equipment and continu-ing inflation, on November 19, 1975 we filed a two-step
$95 million electric rate increase for all classes of service. The Commission allowed a $24.3 million interim rate increase to become effective on February 6, 1976, but suspended the remainder of the requested rate increase to July 21, 1976 pending completion of its investigation.
OUTLOOK In summary. although rate increases have temporarily halted the downward trend in earnings, additional increases will be necessary as long as inflation persists in the United States economy. Full financial recovery will also be dependent on a resumption of growth in sales coupled with curtailed capital spending until we are again making optimum economic use of our plant investment.
We appreciate your confidence and loyal support
- manifested through your oversubscription of our rights offering in October and your continuing purchases of common stock through our Dividend Reinvestment and Employee Stock Purchase Plans.
We are convinced that with an upswing in the economy of the Philadelphia region, an increase in nuclear generation, and adequate pricing of our products, we can look forward optimistically to increased sales and improved earnings.
March 1, 1976 CHAlRMAN OF THE BOARD 5
6 RATES At our Nation's Bicentennial Year, perhaps nothing is more symbolic of conditions today in the electric utility industry than the cover design of this report.
It depicts a storm center, ringed by high velocity winds which can hurt, damage, disrupt and halt.
Electric utilities today are literally at the center of a storm. Around them swirl the forces of opposition, delay, hostility, mistrust and misunderstanding. This is the storm electric utilities must weather, while at the same time they must continue to deliver their services with the reliability that is the industry's hallmark.
Of the many issues facing the industry, five are the most crucial. They are:
D Rates D Nuclear Generation D Availability and Cost of Fuels D Conservation of Energy D Environmental Concerns 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 of profit for the Company.
Rates must produce revenues sufficient to attract the capital required to modernize and expand our system and provide shareholders with a fair return on their investments.
Our current rate increase request reflects the effects of inflation. The filing consists of a two-stage electric rate increase totaling $95 million, an overall increase of 8.3 percent to residential customers, and an increase of about 12 percent to larger commercial and industrial users.
By holding the total increase to 9.9 percent, the Company was able to demonstrate that the increase was actually less than the rise in the cost of living since the Company's last request for increased rates.
The first stage of $47 million was needed to provide a fair return on over $200 million of new plant since the Company's last rate increase, including $150 million for the carrying costs of Peach Bottom Nuclear 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.
The second stage of $48 million was requested to bring the Company's earnings up to the level approved by the PUC in the rate case filed in January, 1974, in which we received $105 million of a requested
$136 million.
Early this year, the PUC suspended the entire $95 million request pending further investigation, but granted the Company an interim rate increase of
$24.3 million, with the proviso that none of it be applied to residential customers using less than 500 kilowatt-hours per month.
A $14 million gas rate increase request was filed with the PUC in 1975 to become effective in two stages, affecting only larger commercial and industrial customers. The first stage, $6.4 million, was permitted to go into effect on June 2, subject to possible refund.
The second stage, $7.6 million, was suspended to March 1976.
Another rate request, filed with the Federal Power Commission (FPC), was for an increase of approximately
$5.7 million in the wholesale electric power rate to Conowingo Power Company, a wholly-owned sub-sidiary. Initially, the FPC permitted the new rate to be placed into effect on August 18, subject to refund pending a hearing and final decision. The FPC has now granted $3.5 million of the requested increase.
These rate increase requests have naturally pro-voked consumer resistance, and sometimes anger, an understandable response during a time when the cost of virtually all necessities has been rising steadily. No one would be more pleased than your Company if the need for rate increases could be avoided-as they were for several decades prior to the imposition of severe environmental constraints, rising interest rates, high priced oil and double-digit inflation. These factors, largely beyond our control, continue to drive up the cost of reliable service to the public.
To minimize the effects of those factors, your Company is using every means at its disposal -
financial, managerial and technical-to reduce the cost of providing electric, gas and steam service. As an example, the Company's work force has been reduced by over 700 regular employees in the past three years, as new labor-saving methods and equip-ment make it possible to continue to perform effi-ciently with less manpower. Savings have also been produced in other ways. For example:
0 The useful life of wooden utility poles is being extended about ten years through steel reinforce-ment. In 1975, 870 poles were reinforced, saving about $380,000. Another 800 wooden poles will be reinforced during 1976 at an estimated saving of
$320,000 and as an ongoing program, about 500 poles per year are to be reinforced.
D Older, high mileage cars in PE's transportation fleet are being recycled to save dollars through 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.
7
8 Center in Berwyn is spending about $600 to put a reconditioned car back on the road instead of purchasing a new car with an average price of
$3,000. On the four-year purchase cycle about 200 cars would be bought every year. Now, each year of extended life is a capital savings of
$600,000 offset by the maintenance expense of $200,000.
D In our 26-story headquarters building energy use has been cut by more than six million kilowatt-hours, or enough to provide electric service to about 1,000 typical residential customers for an entire year. This was achieved principally by using waste heat generated by computers and by the -reduction of lighting levels throughout the building.
On the subject of rate design it should be noted that the rates approved in March, 1975, provided a reduc-tion to customers using 250 kilowatt-hours or less per month. Our present filing includes a major step toward implementing "time of day" pricing for electricity, a new rate for residential appliance usage limited to off-peak hours. This rate is about half the proposed kilowatt-hour cost for regular residential usage.
Your Company recently modernized its billing system to provide substantially more information to customers. Their response has been gratifying, with a clear overall acceptance of the change. The new bills, now sent bi-monthly, are mailed in envelopes and include return envelopes for convenience in making payments.
When the cost of fuel rises, the adjustment charge to the customer rises; when the cost of fuel drops, the charge drops. While customers' bills rose dramatically after the oil embargo of 1973-74 as fuel costs soared, 1975 witnessed a downward trend in our fossil fuel expense and consumers benefited accordingly. The decreases were made possible primarily because of the operation of the two new units at Peach Bottom, more hydroelectric output at Conowingo, more generation from the mine-mouth coal plants in western Pennsylvania, and the judicious, timely purchases of power generated at cost cheaper than if our Company generated the same electricity.
The latter savings, through the operation of the Pennsylvania-New Jersey-Maryland Interconnection, amounted to $36 million in 1975.
Utilities in Pennsylvania carry a disproportionate share of State taxes. The Pennsylvania Economy League study of taxation of public utilities in Pennsyl-vania concluded that they are taxed "on a basis different from other forms of business and their taxes are more burdensome when measured against income and assets and have been increasing much more rapidly in recent years than those imposed on other classes of business." Your Company has, on its own motion and through industry associations, registered 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.
NUCLEAR GENERATION In making a choice of power plants, an electric utility has the responsibility to select the type which will provide electricity reliably and at the least overall cost to our customers. Right now, nuclear power is the clear choice and your Company expects that half of our power generation will be nuclear by 1982. Continu-ation of the Company's nuclear construction program is essential to avoid higher costs in future years with the use of plants employing more expensive and perhaps unobtainable fuels. Nuclear power also is the keystone of Project Independence-the national effort to reduce dependence on foreign oil, which Phila-delphia Electric strongly supports.
Nuclear plants continue to demonstrate an economic benefit to our customers. The Company's share of the Peach Bottom plant makes up about 12 percent of our total generating capacity, but produced more than 16 percent of our total output in 1975 at a saving to customers of $90 million and the equivalent of 18 million barrels of oil.
Workmen make modifications within the reactor core of Peach Bottom Unit 3. following similar work completed on Unit 2. to correct an instrument vibration problem.
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, and returned to full power operation in February.
Construction of two additional cooling towers at Peach Bottom was started in 1975 under an agreement with the Pennsylvania Department of Environmental Resources. During the construction period the station will operate in accordance with interim river water temperature limitations.
Construction is rapidly nearing completion on the first unit of Public Service Electric and Gas Company's twin pressurized-water reactors in Salem, New Jersey, of which Philadelphia Electric has a 42 percent owner-ship. Unit No. 1 at Salem is scheduled to go into com-mercial operation by late 1976, with Unit No. 2 scheduled for commercial operation in 1979.
Progress continues on construction of our Limerick nuclear generating station. When completed in 1982, this 2,110 megawatt station will save the equivalent of more than 20 million barrels of oil each year and, like the Peach Bottom experience, result in substantial fuel cost savings, which will be reflected in the A continuous program of maintenance assures operat-ing efficiency and reliability of our nuclear units.
9
10 Fuel Adjustment Clause then in effect.
In September 1975, the Company was notified by General Atomic Company that it was unwilling to continue work on the nuclear steam supply system for the Fulton Generating Station, and that it was suspending work on this project. The Fulton Station reactors were to have been in commercial operation in 1984 and 1986.
In view of the action taken by General Atomic Company, your Company suspended its work at the site in Lancaster County, Pennsylvania, pending a complete review of the project and alternate plans to provide electric generating capacity in the mid-to-late 1980's.
On February 13, 1976, General Atomic agreed to pay $64 million to reimburse your Company for sub-stantially all its costs incurred in the Fulton Station.
Although construction had not begun, there had been considerable work performed in the areas of design, engineering, environmental impact studies and safety analysis. In addition, General Atomic has agreed to provide, at its acquisition cost, two million pounds of uranium to PE, to be delivered in 1982, 1983 and 1984 representing substantial savings to the Company.
General Atomic Company also cancelled construc-tion of the Summit Nuclear Station, which was to have been built on the system of Delmarva Power and Light Company in Delaware. Philadelphia Electric owned a 15 percent share of Summit's proposed capacity. Our Company has recovered its investment in this plant.
The critical question is whether your Company will be able to supply the future power needs of the com-munity it serves. Inability to finance new construction and delays in present and planned construction can 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.
Construction progressed during 1975 at the site of our nuclear powered Limerick Generating Station which is located in Limerick Township.
Montgomery County, Pennsylvania. Limerick will have two boiling water reactors. each capable of producing 1.055,000 kilowatts of electric power.
Unit 1 is scheduled for operation in 1981 and Unit 2 in 1982.
This circular area will be the construction site for one of two natural draft cooling towers which will prevent overheating the Schuylkill River. assuring that fish or other aquatic life will not be harmed. Cooling water passes through tubes inside condensers where it absorbs heat from condensing steam. This water is pumped to the cooling towers where the water gives up its heat to the air.
The reactor containment building is a thick. air-tight shell of metal and reinforced concrete which completely surrounds the reactor vessel.
Enclosed in the thick steel reactor vessel are the fuel element bundles which make up the reactor core. A fuel bundle is made up of sixty-three 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 difference between a nuclear plant and a fossil-fueled electric generating plant is the source of heat. Instead of burning coal or oil. nuclear plants produce heat by the controlled splitting of uranium atoms. Water circulating through the reactor boils and the steam produced drives the turbine-generators. The steam is then condensed back to water and returned to the reactor in a continuous cycle.
11
12 AVAILABILITY AND COST OF FUELS The electric utility industry is basically a converter of the energy of various fuels into the most versatile form of energy, electricity.
It is of prime importance, therefore, to know the status of reliable and environmentally acceptable fuels to be used in the conversion process. Here is the mid-range outlook:
Uranium-As far as supply is concerned, your Company has long-term contracts with uranium producers which will provide adequate fuel for the continued operation of all its nuclear units.
While prices for uranium ore concentrate have more than doubled since 1973, it is such a small part of the cost of production that nuclear power still maintains a substantial cost advantage over power generated from fossil fuels. Company studies have shown that the cost of nuclear power generation is much less sensitive to uranium ore price increases than the cost of fossil fuel generation is to price increases of oil or coal.
The Company's Croydon Generating Station has eight rugh-efficiency combustion turbine generators wruch can be operated economically with a variety of oils.
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.
Although both types of oil were readily available in 1975, actions by the Organization of Petroleum Exporting Countries (OPEC) could, at any time, again create serious shortages or price escalation, or both, as it did in 1973.
Coal-During 1975, there were ample supplies of coal for our present needs. Due to substantial wage rate and fringe benefit increases granted United Mine Workers, prices on annual orders by our major sup-pliers rose about six percent, or by about $1 to $1.50 a ton. Prices on the "spot market," however, dropped several dollars a ton for good quality coal.
Gas - Because deliveries of interstate pipeline natural gas for 1975 remained below contract quanti-ties, Philadelphia Electric announced in January, 1975, a curtailment of sales to some industrial customers.
In February of 1976, however, it became possible to terminate these curtailments for the 1975-1976 winter period. Conservation efforts by customers, abnormally Eddystone Unit 4. scheduled for commercial operation in the spring of 1976. will add 400,000 kilowatts of oil-fired generating capacity to our System.
J
warm temperatures in early winter, and a depressed economy significantly reduced the need to withdraw gas from storage. Purchase of additional emergency supplies from intrastate pipeline suppliers also helped to reduce our supply shortfall. In addition, propane supplies were ample for the 1975-1976 winter period.
The average price of firm contract-purchased natural gas delivered to PE increased during 1975 from 68 cents per thousand cubic feet at the beginning of the year to 99 cents per thousand cubic feet in December, and prices are expected to continue to rise as old contracts with producers expire and new contracts are negotiated.
Deregulation of wellhead pricing of newly-found natural gas is important to the gas industry and to the consumer. The gas supply of the United States has Coal. as a source of heal for steam generation. accounted for over 30 percent of the Company*s electric output. Its continued production been declining since 1972 and, without realistic well-head prices to generate the incentive for the producer to explore and develop new supplies. the declining trend will continue. Deregulation would spur explora-tion, increase proven reserves and more effectively allocate a valuable resource in the marketplace.
Even if present price ceilings are maintained, the cost of gas would increase to the consumer, since fixed costs of transmission pipelines and compressor stations would have to be applied to a declining volume of delivery. Further, distribution companies, such as Philadelphia Electric, faced with maintaining service to its present customers, would have to increase the amount of high-cost supplemental fuels to offset the increased curtaili;ients of pipeline gas.
and use play an important role in providing the energy requirements of our customers.
13
14 CONSERVATION OF ENERGY "Conservation is everybody's business" has been a watchword at Philadelphia Electric for many years.
Your Company not only has offered conservation advice to its customers, but has practiced what it preached. Recognition of its efforts came in late 1975 when the Federal Energy Administration (FEA) presented the Company with five separate awards for reductions in energy use on its own system.
Energy savings were obtained by reducing heating, cooling and lighting levels.
In presenting the awards, Joseph A. LaSala, regional director, said: "These programs were completely voluntary and have resulted in savings of more than three and one-half million kilowatt-hours. It is significant that one of the nation's leading energy firms should be the recipient of these awards."
As early as 1966, PE stopped promotional programs for air-conditioning, and in 1970 halted promotional advertising for all energy use. It has initiated many 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 four words: "Using less, paying more."
We have continued our conservation efforts with consumers' programs, seminars and meetings with builders, contractors, architects and engineers on the efficient use of energy in lighting, heating and air-conditioning.
Three years ago, in cooperation with the Electrical Association of Philadelphia, a high-efficiency air-conditioning program was initiated which has achieved national recognition. It is conservatively estimated that this program will result in a saving of 600,000 kilowatts of air-conditioning load connected to our system over the next ten years, and that the equivalent saving in fuel will be nearly one and one-half million barrels of oil.
A growing interest in the heat pump, the most energy-efficient alternate method for heating and cooling that is commercially available today has been given special attention. At the same time, a compre-Computers. which have greatly increased efficiency and productivity in many facets of Company operations. are now helping to conserve energy by using the waste heat created by their operation to aid in heating our headquarters building.
Company representatives helped our customers-homeown-ers and operators of businesses alike-to save money by checking for possible energy wasting areas and by advising them on how to use energy wisely.
hensive education program was instituted for consumers on the heat pump's energy conservation benefits.
In the lobby of the Company's headquarters building and in our merchandise showrooms throughout our service area, exhibits, booklets and brochures give valuable information to the public on the selection of energy-saving electric appliances.
An informative folder on the conservation of gas for home appliances has been distributed to all residential customers. The folder emphasizes the serious need for conservation, as well as itemizing pointers on how to save gas in the use of specific appliances. It also describes the measures Phila-delphia Electric is taking to increase gas supplies.
Additional information on energy-saving gas replace-ment appliances and equipment is given to the public through your Company's representatives.
Much is heard these days about alternate energy sources such as solar, geothermal and fusion, and the question often arises why these sources are not in the immediate energy future. These alternatives are not likely to make significant contributions to our total national energy requirements for several decades -
and in the meantime we must do with the available sources at hand.
Philadelphia Electric is actively involved in the development of new energy sources and in the maximum utilization of existing sources. This is a dual commitment, both as a Company and as part of the electric utility industry, in cooperation with private and governmental efforts. Included is the development of the liquid metal fast-breeder nuclear reactor which will greatly extend the supply of uranium fuel, participation in a major program to develop a fuel cell for electric utility application and the conversion of coal to a pipeline quality natural gas.
Conservation of all energy must continue and its wise use must be promoted in order to stretch present available supplies, but for the long term the only solution to the energy crunch is to increase the domestic supplies of all energy sources - oil, coal, uranium and natural gas. To assure an adequate supply of electric energy, and maintain our present standard of living, more generating plants must be 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
16 ENVIRONMENTAL CONCERNS Philadelphia Electric has had a long-standing interest in maintaining high standards of air and water quality, evidenced well before much of the environmental regulations were enacted. However, our continuing concern is whether the benefits to be obtained by recent and much stricter regulations will be commensurate with the substantial costs to our customers, as environmental controls are having an increasing impact on the cost of Company operations.
In the five year period, 1976-80, it is estimated that your Company will spend approximately $77 million for air and water quality control facilities at its fossil fuel power plants. Air quality regulations have, since 1970, limited our choice of fuel. Expensive low-sulfur oil, most of which is imported, is required to be burned in our generating stations.
Coal-burning power plants have a dual problem in meeting air quality regulations: the removal of both PE's long-standing concern for maintaining high standards of air and water quality is reflected by the continuous monitoring by Company chemists and technicians the impact our power plant operations have 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 sulfur dioxide. Their operation has been disappointing, and a number of them have had to be abandoned after expenditures of millions of dollars.
Your Company has completed a newly-designed particulate and sulfur removal system at its Eddystone Station, our largest coal-fired plant.
If, after thorough tests, this scrubber demonstrates that it is commercially reliable, the system will be expanded to serve the two coal-fired boilers at the Eddystone plant and similar scrubbers will be installed at our Cromby station. The total cost of the scrubbers is estimated at $76 million, and will reduce the efficiency of generation by seven percent.
In December 1975, Philadelphia Electric and the City of Philadelphia signed an agreement to design an energy conservation project to convert trash into steam for our steam heat distribution system in center city Philadelphia. Trash will produce energy cleanly on the environment (left) and the extensive program of developing.
installing and now testing of a particulate and sulfur removal system at our coal-burning units at Eddystone Generating Station. (right)
and economically, meeting air quality regulations and reducing the City's land requirements for refuse disposal. The plant will conserve 630,000 barrels of oil a year. Philadelphia Electric and the City both will realize savings from the project, and PE will have a new source of steam.
While your Company will continue to develop and use every source of energy that is environmentally acceptable, Philadelphia Electric is committed principally to nuclear energy which has the least impact on the environment.
Nuclear power plants do not pollute the air, but like all steam power plants they must have facilities to control the heat discharged to the river water used for condensing steam. To maintain river quality at the Peach Bottom plant, the discharge system utilizes cooling towers to partially remove heat from water used in the plant before it is returned to the river.
Ecological studies have been underway for a number of years on the thermal effect of power plant operation on aquatic life in the Susquehanna River. Philadelphia Electric also is taking part in an intensive investigation, with Johns Hopkins University, of cooling water discharges and their environmental impact.
Facilities for public recreation have been provided along the 14-mile lake created by Conowingo Dam on the Susquehanna River. More than 600 cottage sites are leased to individuals. The area includes four marinas and several boat launching sites, wild-life sanctuaries, fishing and camping activities.
On February 4, 1976, the Federal Power Commission granted your Company a new annual license for the Conowingo Project, expiring February 19, 1977.
At the Muddy Run Pumped Storage Hydroelectric Plant a recreation park was developed with facilities for camping, boating, fishing and picnicking. Along the river, adjacent to the powerhouse, a fishermen's park features a fishing walkway near the water's edge, a fish cleaning shed, modern restrooms and a public observation deck. In 1975, nearly 250,000 visitors took advantage of the facilities at Muddy Run.
Another concept in the use of land for recreation is demonstrated under the Company's high voltage transmission lines. Licenses to use this land for recreation have been granted to county and municipal governments, school districts, civic organizations and adjacent property owners.
About 25 years ago, your Company began a program of landscaping its facilities. Careful consideration is given to the aesthetics of an area when planning buildings, transmission lines, generating plants and substations. One outstanding example of how our facilities' impact on the community in which they must be located can be reduced is the underground sub-station beneath Independence Hall Mall, which has been in operation a number of years, hidden from sight, and with no effect on the beauty of the area.
Millions of visitors to the historic site in the Bicen-tennial Year will be completely unaware of its existence.
On our transmission right-of-way in Chesler CoW1ty. 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 about problems and what your Com-pany is doing about them. As president of Philadelphia Electric, I'd like to say a few words about a "non-problem" -
the people who make up the Philadel-phia Electric Company.
It's no accident that our record for reliability is 99.988 percent. That kind of performance takes a talented and dedicated organization of men and women. They do a tremendous job for our customers, and they make me proud to be one of them!
Our customers have suffered a series of shocks in recent years. We've had to ask the PUC for price increases five times in six years. The cost of poles, wires, transformers, cable and other supplies and equipment has gone up from 80 percent to 200 percent in the last six years. Fuel costs, which account for about 40 percent of each customer dollar, have increased 400 percent for coal and 700 percent for oil in the six-year period.
One thing that hasn't changed, though, is our service. It's still reliable and it's still provided by cheerful, 18 helpful people. And we're going to do everything we can to keep it that way.
When I came to the Company 25 years ago, the late R. G. Rincliffe, who was then president, said:
"When we talk about our advanced technology, our modern methods and equipment, our sound financial policies, and our outstanding employee group, we do it to give form and shape to the number-one test of our success as a Company, to provide the very best possible service to our customers.
If we do that job well, we'll be able to pay investors an attractive return and provide our employees with good wages and benefits."
That's the way it still is.
The efficiency of our Customers Service department has served as a model for the utility industry. Its quick, courteous response to customers is outstanding and of considerable importance in maintain-ing a favorable public attitude.
With the increasing cost of elec-tricity, there has been a corresponding increase in the number of customer inquiries. Last year, our Customers Service department had more than 2,600,000 customer contacts. Nearly two million of these represented tele-phone calls which were handled by a force of more than 400 service repre-sentatives, using highly sophisticated electronic retrieval equipment that placed information about each customer's account literally at their fingertips.
About 350,000 customers made personal visits to our offices. There, in seconds, our representatives used the same electronic equipment to bring billing records to a television screen for quick resolution of problems.
Besides the nearly two million phone conversations with customers, we received about 160,000 letters, many of which told us that customers do appreciate the kind of service of which our people are so proud.
On the following page are excerpts from some of the many letters we have received from our customers. Taken together, they convey the strong sense of community and "service to our customers" that has been the basic philosophy of the Company and its employees down through the years.
Here are a few:
"The Essington Fire Company would like to extend its thanks for the Gas Fire School.... Companies such as yours who have seen the problems of firemen and who have taken the time and money to research and improve their own training programs are to be commended."
One of our Gas Division employees witnessed the theft of a woman 's handbag, called police and then chased two thieves until the alerted police arrived. The police expressed their thanks and appreciation for his community interest and willingness to
'get involved', and added "Action such as his is a credit to him and to the fine caliber of men working for the Phila-delphia Electric Company."
In a similar case, two Transmission and Distribution employees captured a young man who snatched an enve-lope containing vacation money from a Germantown woman. Said she, "They were wonderful."
"Last week the electric circuits into my home developed several problems which repeatedly interrupted service.
We live far from the road-and my wife had just returned from the hos-pital... Your service crews went beyond the 'call of duty' to insure that we had power... I did not expect the personal and rapid service I received in these days of bureaucracy."
"Last Thursday night all our lights went out in our house and also the farm house on our place. We phoned your office and you had a man out here promptly, followed by a Jot more men and they worked all night in the rain and finally, after about twelve hours of work we had lights. I would just like to write a note of thanks and apprecia-tion to all your nice men."
"On New Year's Eve a tree toppled over and our electricity was cut off.
Two very nice men came in short order and were still there at 2:30 A.M.... So many times people forget to mention when something good happens and all a company gets are gripes. Please thank again the very prompt and especially nice young men."
"You have two wonderful guys employed by your company. Refusing to give their names and refusing my offer of money, they repaired my car, enabling three frightened women to get home safely. With all the traffic, it was a dangerous place to break down. Tell them how grateful we are for the help they gave."
There is a general thought that big companies are cold, impersonal and remote. Actually, a big company is people. At Philadelphia Electric there are some 9,700 men and women who do their jobs with others in mind-men and women who are dedicated to serve, who are friendly, who are interested and concerned, who try to treat each customer as they would a neighbor and who try at all times to be helpful and understanding.
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 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 Philadelphia, Pa., Thursday, February 5, 1976 J
FINANCIAL SECTION MANAGEMENf'S DISCUSSION AND ANALYSIS OF TIIE CONSOLIDATED STATEMENT OF INCOME Operating revenue in 1974 increased by $245 million over the previous year and a further increase of $123 million was experienced in 1975. Major ele-ments of increased revenue were in-creases in fuel adjustment revenue required to recover higher fuel costs, amounting to $214 million in 1974 and a further $23 million in 1975, and rate increases amounting to $45 million in 1974 and a further $88 million in 1975.
Kwh sales of electricity in 1974 were approximately 3 percent lower than in 1973, reflecting reduced usage by all major classes of customers. Electric sales in 1975 were slightly below 1974 due to lower sales to large industrial customers which were partially offset by higher sales to residential and other commercial customers. MCF sales of gas decreased approximately 4 percent in 1974 from 1973 due to conservation by customers. A further decrease of 14 percent in 1975 reflects curtailments to certain large industrial customers and warmer weather.
Fuel and energy interchange expense in 1974 increased by $179 million over the previous year, primarily due to substantial increases in fossil fuel prices, and a further increase of $19 million was experienced in 1975.
Other operation and maintenance expenses rose $16 million over 1973 and an additional $17 million over 1974. These increases are primarily attributable to inflationary pressures and increases in rentals.
Depreciation expense increased $13 million in both 197 4 and 1975, reflecting the effect of placing almost $650 million of new facilities in service during 1974.
Taxes charged to operations in-creased $32 million in 1974 and $30 million in 1975. Taxes on income rose by $22 million in 1974 and by $19 mil-lion in 1975. Taxes, other than income taxes, increased $10 million in both 1974 and 1975, primarily due to state gross receipts taxes on higher rev-enues. The Company accrued $49 mil-lion of deferred income taxes in 1974 and $33 million in 1975 as a result of normalizing the tax reductions result-ing from liberalized depreciation and investment tax credit.
Allowances for Funds Used During Construction totaled $71 million in 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 placed in service during late 1974.
Income tax reductions credited to Other Income amounted to $25 million in 1974 and $22 million in 1975. Alloca-tion of these credits to Other Income began on October 1, 1973, pursuant to a Pennsylvania Public Utility Commis-sion order, and represents an addi-tional source of cash flow.
Interest charges and Preferred Stock dividends continued to rise increasing
$36 million in 1974 and $26 million in 1975 due to higher interest rates and new securities issued to finance the Company's construction program.
Earnings available for Common Stock remained essentially the same at $95 million for 1973 and 1974, but increased to $108 million for 1975. The sales of approximately 7.5 million shares of Common Stock in 1973, almost 950,000 shares in 1974, and almost 11 million shares in 1975 increased the average number of shares outstanding by 10 percent in 1974 and an additional 10 percent in 1975. Earnings per average share fell from $1.99 in 1973 to $1.81 in 1974, but rose to $1.86 in 1975. Divi-dends remained at $1.64 a share.
21
CONSOLIDATED STATEMENf OF INCOME Philadelphia Electric Company and Subsidiary Companies Operating Revenue Electric.........................................
Gas.
Steam..........................................
Total Operating Revenue Operating Expenses Fuel and Energy Interchanged........................
Other Operation Expenses...........................
Maintenance....................................
Depreciation.....................................
Taxes, Other than Income..........................
Taxes on Income.................................
Total Operating Expenses Operating Income Other Income Allowance for Funds Used During Construction..........
Income Tax Credits, net........................
Other, net....
Total Other Income Income Before Interest Ch11rges Interest Charges Long-Term Debt...............................
Short-Term Debt..................................
Total Interest Charges Net Income............................................................
Preferred Stock Dividends.................................................
Earnings Applicable to Common Stock...................................
Shares of Common Stock-Average (Thousands).................................
Earnings Per Average Share (Dollars)........................................
Dividends Per Share (Dollars)..............................................
The notes and schedules to financial statements are an integral part of this statement.
22 For the Year Ended December 31 1975 1974 (Thousands of Dollars)
$ 978,368 117,989 38,453 1,134,810 457,783 162,504 62,313 91,221 77,567 86,337 937,725 197,085 66,874 22,271 2,087 91,232 288,317 136,507 7,885 144,392 143,925 36,026
$ 107,899 58,135
$1.86
$1.64
$ 873,474 108,929 29,323 1,011,726 439,231 145,415 61,971 77,802 67,143 67,157 858,719 153,007 70,841 25,441 271 96,553 249,560 106,298 14,165 120,463 129,097 33,682 95,415 52,717
$1.81
$1.64
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSmON Philadelphia Electric Company and Subsidiary Companies Source of Funds Net Income......................................
Charges (Credits) Not Affecting Funds Depreciation.................................
Deferred Income Taxes, net.....................
Investment Tax Credit Adjustments, net............
Allowance for Funds Used During Construction......
Total from Operations Sale of Long-Term Debt................................
Preferred Stock.................................
Common Stock...........
Increase (Decrease) in Short-Term Debt................
Proceeds from sale of contracts for nuclear plant........
Total Use of Funds Additions to Utility Plant...........................
Allowance for Funds Used During Construction (Deduction)
Dividends on Preferred and Common Stock.............
Retirement of Long-Term Debt.......................
Pollution Control Funds............................
Increase (Decrease) in Working Capitalt...............
Other, net.......................................
Total t Changes in Working Capital (Other than reflected in Source and Use of Funds)
Accounts Receivable..............................
Deferred Fuel Expense.............................
Material and Supplies-Fuel........................
Accounts Payable and Dividends Declared.............
Taxes Accrued...................................
Other, net.......................................
Total The notes and schedules to financ ial statements are en integral part of this statement.
For the Year Ended December 31 1975 1974 (Thousands of Dollars)
$143,925 91,221 24,472 8,353 (66,874) 201,097 245,000 133,723 (69,970) 18,750
$528,600
$361,368 (66,874) 131,465 95,193 (2,032) 9,480
$528,600
$ 9,827 (3,722) 14,855 (1,256)
(16,143)
(5,593)
$ (2,032)
$129,097 77,802 28,313 20,691 (70,841) 185,062 375,000 75,000 11,151 30,192
$676,405
$476,696 (70,841) 120,730 69,313 (12,239) 90,600 2,146
$676,405
$ 54,348 21,655 29,103 (11,455) 1,614 (4,665)
$ 90,600 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 and schedules to financial stateme nts are an integral part of this statement.
24
LIABILITIES Capitalization Cummt Liabilities Deferred Credits Stockholders' Equity Preferred Stock-See Schedule, page 29.......
Common Stock-See Schedule, page 29..............
Other Paid-In Capital............................
Retained Earnings...............................
Long-Term Debt - See Schedule, page 29...............
Short-Term Debt Bank Loans....................................
Commercial Paper..............................
Accounts Payable.................................
Taxes Accrued......................................
Deferred......................................
Interest Accrued.................................
Dividends Declared...............................
Current Maturities of Long-Term Debt.................
Other..........................................
Accumulated Deferred Income Taxes..................
Accumulated Deferred Investment Tax Credits..........
~~*
December 31 1975 1974 (Thousands of Dollars)
$ 485,864 916,639 1,498 304,678 1,708,679 1,776,936 3,485,615 50,200 57,754 67,618 34,650 9,476 37,829 12,457 60,894 3,549 334,427 83,001 40,203 18,217 141,421
$ 486,383 782,916 1,306 293,747 1,564,352 1,597,690 3,162,042 115,100 62,824 66,125 16,512 11,471 30,462 12,694 91,866 3,859 410,913 56,533 32,551 5,987 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.............................
$293,747 143,925 437,672
$286,230 129,097 Net Income (from page22).......................
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 financial statements are an Integral part of this statement.
NOTES TO FINANCIAL STATEMENTS-Thousands of Dollars
- 1. Significant Accounting Policies:
General: All utility subsidiary compa-nies of Philadelphia Electric Company are wholly-owned and are included in the consolidated financial state-ments. The accounts are maintained in accordance with the uniform sys-tem of accounts prescribed by the regulatory authorities having juris-diction.
Revenues: Revenues are recorded in the accounts upon billing to the cus-tomer. Rate increases are billed from dates authorized or permitted to be-come effective by regulatory authori-ties. The revenues billed under rate increases permitted to become effec-tive pending final approval of the regulatory authorities are subject to possible refund. (See Note 7)
Fuel Expense: The Company currently defers that portion of fuel expense which is recoverable under fuel ad-justment clauses until it is subse-quently billed as fuel adjustment revenue in order to effect a better matching of fuel expense with related 26 revenue. The Company adopted this accounting practice for its fuel adjust-ment clauses on January 1, 1974 for electric, on January 1, 1975 for steam and on October 1, 1975 for gas. The amounts involved prior to the respec-tive dates were considered immaterial to operations. Amounts of fuel ex-pense recovered currently under the electric fuel adjustment clause in ex-cess of the amounts of expense pre-viously deferred are charged to operations with an equivalent credit to the deferred fuel expense. Accord-ingly, the deferred fuel expense has been reduced to an amount less than the amount to be recovered under the fuel adjustment clauses. For income tax purposes, fuel expense is con-sidered an expense when incurred.
The resultant tax deferrals are nor-malized and classified as a current liability. The deferral of fuel expense until reflected in customers' billings under fuel adjustment clauses had the effect of decreasing earnings per share $.03 for 1975 and of increasing earnings per share $.19 for 1974.
The Company's share of nuclear energy costs, relating to the Peach Bottom nuclear generating station, is charged to fuel expense on the basis of the number of units of thermal energy produced as they relate to the total thermal units to be produced over the estimated four-year life of the fuel.
Depreciation: For financial reporting purposes, depreciation is provided over the estimated service lives of the plant on a straight-line basis. Higher depreciation deductions are taken for tax purposes based on the use of a liberalized method of computing de-preciation and of shorter lives per-mitted by the Internal Revenue Service. Prior to 1971 the resultant tax deferrals flowed through to in-come. However, beginning in 1971 the Company normalizes the effect of the tax deferrals resulting from the liberalized method of computing de-preciation and from timing differ-ences between guideline and asset depreciation range lives in accor-dance with the regulatory treatment
for rate-making purposes. These tax deferrals will be credited to income in years when depreciation expense for financial reporting purposes ex-ceed that deductible for tax purposes.
Investment Tax Credit: Federal in-come tax expense reflects reductions for investment tax credits which were deferred by equivalent charges to in-come and subsequently amortized by credits to income over a five-year period for credits deferred prior to 1971 and over the estimated useful life of the plant for credits thereafter.
Allowance for Funds Used During Construction: Allowance for funds used during construction is defined in the applicable regulatory system of accounts as "the net cost for the period of construction of borrowed funds used for construction purposes and a reasonable rate upon other funds when so used." For financial reporting purposes the allowance is recorded as a non-cash charge to con-struction in the plant accounts with a corresponding non-cash credit to "Other Income," there by deferring the estimated cost of the capital em-ployed in construction work in progress. For income tax purposes, the allowance accrued is not included in taxable income, nor is the deprecia-tion of the capitalized allowance a tax deductible expense. The allowance is determined using a "net after tax rate" for borrowed funds and the income tax reductions arising from interest charges associated with debt used to finance construction are allocated to other income. Such income tax reduc-tions allocated from operating ex-penses to other income tax credits were $22,520for1975 and $25,134 for 1974. The allowance is reviewed for change in rate every six months whereby the rates used during 1974 and 1975 were 71/2%, 7% %, 8% and 81JI %. respectively. The estimated portions of the allowance attributable to funds provided by common stock equity, without regard to the tax effect of interest on debt, were equivalent to 9 percent in 1975 and 16 percent in 197 4 of earnings applicable to common stock.
Retirement Plan: The Companies have a noncontributory service annuity plan applicable to all regular employ-ees. The annuities are determined under a formula which is applied uni-formly to all employees regardless of position, and the amount depends on length of service and compensation earned to normal retirement age. The annuities are paid out of an irrevo-cable trust fund, to which the Com-panies make contributions to fund current and prior service costs over a twenty year period. (See Note 5)
- 2. Taxes, Other than Income:
Gross Receipts Capital Stock..
Realty.......
Other, prin-cipally social security....
1975
$48,263 10,667 10,687 7,950
$77,567
- 3. Taxes on Income:
Applicable to:
Operations 1975 Federal in-come...... $42,161 State income..
11,351 Deferred in-come, net...
24,472 Investment tax credits, net.
8,353 86,337 Other Income..
(22,271)
Total income tax provi-sions......
$64,066 1974
$43,407 9,087 7,138 7,511
$67,143 1974
$10,986 7,167 28,313 20,691 67,157
{25,441)
$41,716 The aforementioned income tax provisions are equivalent to effective income tax rates for financial report-ing purposes which were less than the federal statutory rate due to tim-ing differences between tax and book income as follows:
1975 1974 Federal statutory rates...........
48.0% 48.0%
Iner. (deer.) in effective tax rate due to:
Allowance for funds used dur-ing construction (15.5%) (19.9%)
Excess of tax de-preciation over book deprecia-tion not normalized.... ( 2.0%) ( 2.8%)
State income taxes, including portion de-ferred, net of federal income tax benefits....
Amortization of investment tax 4.0%
3.8%
credits....... ( 1.2%) ( 1.5%)
Other mis-cellaneous differences.... ( 2.5%) ( 3.2%)
Effective income tax rates...........
30.8% 24.4%
Provisions for deferred income taxes consist of the following tax ef-fects of timing differences between tax and book income:
Tax deprecia-tion in excess of book depre-ciation.....
Deferred fuel expense....
Other.......
1975 1974
$26,030
( 1,995) 437
$24,472
$18,307 11,471
( 1,465)
$28,313 Investment tax credits of $10,843 and $23,221 applicable to new plant and equipment placed in service in 1975 and 1974, respectively, have been reflected as reductions of fed-eral income tax expense with equiv-alent amounts reflected in investment tax credits, net. For federal income tax purposes the 1974 investment tax credits reduced current taxes pay-able to the extent allowable, $5,132, and resulted in a refund of prior years' federal income taxes of $18,089.
27
- 4. Short-Tenn Debt:
The average short-term borrowings during 1975 aggregated $97,044 at an average rate of 7.85% and during 1974 aggregated $118,744 at an aver-age rate of 11.13%; the maximum short-term borrowings outstanding were
$183,900inJanuary, 1975 and $202,579 in May, 1974. The average rate of interest on short-term borrowings at December 31, 1975 was 7.25% for bank loans and 6.07% for commercial paper. As of December 31, 1975 the Company had informal lines of credit with banks aggregating $212,575. The Company generally does not have formal compensating balance arrange-ments with these banks. The Company maintains deposits with banks for working funds for normal operations.
- 5. Retirement Plan:
Annuities under the Companies' Retirement Plan are funded through a Trust Fund. Contributions by the Companies aggregated $14,315 in 1975 and $9,856 in 1974. Of such amounts approximately 73 percent was charged to operating expense and 27 percent, associated with con-struction labor, was included in the cost of new utility plant. Based upon actuarial assumptions, the estimated prior service liability of the Plan was substantially fully funded at Decem-ber 31, 1975. The Companies' com-pliance with the Employee Retirement Income Security Act is not expected to have a significant effect upon pen-sion costs, funding and vested bene-fits in future years.
- 6. Contract Tenninations-Nuclear Projects:
In October 1975, Delmarva Power
& Light Company and the supplier for nuclear systems and fuel at their Summit Power Station, in which the Company has a 15% particip<Uion, terminated their contractual arrange-ments and the supplier purchased 28 the contracts for construction and the related fuel supply. The Com-pany's share of the proceeds from the sale of the contracts, net of ex-penditures, is included in other de-ferred credits at December 31, 1975 in the amount of $11,848. It is the intention of the Company to apply this credit to the cost of subsequent plant expenditures.
This supplier was also the supplier of the nuclear systems and fuel for the Company's Fulton Station. On February 13, 1976, the Company and the supplier signed an agreement whereby the supplier will pay $64,000 to reimburse the Company for sub-stantially all its costs incurred in the Fulton Project. In addition, the sup-plier has agreed to provide two mil-lion pounds of uranium to the Company to be delivered at future dates, at the supplier's acquisition cost.
- 7. Commitments and Contingent Liabilities:
The Companies have incurred sub-stantial commitments in connection with their construction program. Con-struction expenditures for the year 1976 are estimated to be $437,000.
The Company's proportionate share of a commitment for nuclear fuel at the Peach Bottom Atomic Power Sta-tion (owned by the Company and three contiguous utilities) as of De-cember 31, 1975, was $44,944. Under a contract, an independent fuel com-pany will acquire and own up to a maximum of $150,000 of such fuel at any one time and will sell the energy therefrom to the Company, as the operator of this Station.
Rentals charged to operating ex-penses were $25,854 in 1975 and
$18,539 in 1974, which include nuclear fuel contract payments of
$12,455 in 1975 and $4,553 in 1974.
Minimum rental commitments as of December 31, 1975, under all non-cancelable agreements are $19,200 for 1976, $18,100 for 1977, $17,200 for 1978, $16,400for 1979, $4,100for1980,
$27,000 for 1981-85, $27,000 for 1986-90, $26,200 for 1991-95 and a re-mainder of $6,500. The minimum rental commitments are applicable to the following types of property:
nuclear fuel $51,600 (estimated to be charged to operations over a four year period); combustion turbine generators $83,000; computer equip-ment $4,700; other, principally rights-of-way $22,400.
Operating revenues for 197 4 include
$16,300 billed under an interim electric rate increase. With respect to this revenue, the Commonwealth of Pennsylvania has filed an appeal from the decision of the PUC. Argu-ment on this appeal has been heard by the Commonwealth Court, but a decision has not been announced. The Company does not believe it will be required to make any refunds to its customers. However, a decision un-favorable to the Company could re-sult in a refund of $16,300 plus interest, which would require a re-statement of the related accounts for 1974. Such restatement, if required, would be to reduce earnings appli-cable to common stock previously reported for 1974 by approximately
$7,700 ($.15 per share).
Complaints have been filed with the PUC against the Electric Fuel Adjustment Clause and an action has been filed in the U.S. District Court against the Company with respect to alleged discrimination in its em-ployment or promotion practices.
Counsel representing the Company in these matters are of the opinion that no refunds will be required of revenues collected under the fuel adjustment clause and that the Com-pany has meritorious defenses to the suit with respect to its employment or promotion practices.
SCHEDULE OF CAPITAL STOCK-DECEMBER 31, 1975 Philadelphia Electric Company Preferred Stock ($100 par) cumulative:
Series 9.50% (Sold 1974 at $100 per share).
8.75%.
7.85%.
7.80%.........
7.75%....... ' '...
7.325%.
7%.......... '.
4.68%..........
4.4%............... ..
4.3 %.
3.8%...........
Unclassified...
Total Preferred Stock...........
Common Stock-no par (D)..
Redemption Price (A)
$109.50 110.00 108.00 108.00 108.00 106.74 107.00 104.00 112.50 102.00 106.00 Number of Shari;:~
Authorized Outstanding 750,000 750,000 650,000 650.000 500,000 500,000 750,000 750.000 200,000 200,000 750,000 750,000 (B) 400.000 383.915 (C) 150.000 150,000 274,720 274,720 150,000 150.000 300,000 300.000 5.125,280 10.000.000 4,858.635 100.000.000 64.196,338 (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.
Amount (Thousands of Dollars)
$ 75,000 65.000 50,000 75,000 20,000 75.000 38,392 15,000 27,472 15,000 30.000
$485,864
$916.639 (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 Mortgage Bonds (A):
Amount (Thousands Series Due of Dollars)
Series 81/2%
1976.
$ 46.700 31/s%
6 14%
1976.
11.000 43/s%
5314%
1977..
34.000 45/s %
2Vs%
1978.
25.000 33/<! %
11%
1980.
125.000 5%
2314%
1981.
30,000 61/2%
3 1/<!%
1982.........
35.000 4 1/2%
31/s%
1983.
20.000 9%
Total First and Refunding Mortgage Bonds.
Note Payable - Bank..
... (B)
Pollution Control Note.
.. 5.5%
Debentures.
................. 123/<!%
Debentures.
. 4.85%
Unamortized Debt Discount and Premium, Net.
Total Philadelphia Electric Company.
Philadelphia Electric Power Company - A Subsidiary:
Sinking Fund Debentures................... 4Y, %
Unamortized Debt Discount...
Total Long-Term Debt.
Current Maturities included in Current Liabilities Long-Tenn Debt included in Capitalization.
Due 1985 1986.
1987.
1988.
1989.........
1993.
1994.
1995.
1979 1976-97 1981 1986 1995 (A) Utility plant is subject to the lien of the Company's mortgage.
Amount (Thousands of Dollars)
$ 50.000 50,000 40.000 40.000 50,000 60,000 50.000 76.069 Series 8'1<1%
61/s%
71/2%
71/2%
73/<!%
11%
11 5/s%
73/s%
8 1/2%
Due 1996.
1997.... '....
1998.
1999.........
2000.
2000.
2000.... '....
2001.
2004.
Amount (Thousands of Dollars)
$ 80,000 75,000 100,000 100,000 78.325 80.000 65,000 80,000 125.000 1.526.094 125.000 38,000 100.000 28,453 (4.008) 1.813,539 24,416 (125) 1.837,830 (60.894)
$1.776.936 (B) Interest at a rate of 114% of the base rate of the bank on 90-day loans to responsible and commercial borrowers in effect 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 ended. Our examination was made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. We previously examined and reported upon the consolidated financial statements 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 Operating Revenue (for details see pages 32 and 33).
$1,134.8
$1,011.7 Operating Expenses Fuel and Energy Interchanged............
Labor.
Other Materials, Supplies and Services.....
Total Operation and Maintenance...
Depreciation.....
Taxes.
Total Operating Expenses...
Operating Income.......................
Other Income Allowance for Funds Used During Construction....
Income Tax Credits, net.................
Other, net............................
Total Other Income......
Income Before Interest Charges...........
Interest Charges Long-Term Debt......................
Short-Term Debt.
Total Interest Charges................
Net Income..........
Preferred Stock Dividends........
Earnings Applicable to Common Stock........
Dividends on Common Stock...............
Earnings Retained.
Earnings per Average Share (dollars).........
Dividends Paid per Share (dollars)......
Shares of Common Stock-Average (Millions)..
457.8 152.2 72.6 682.6 91.2 163.9 937.7 197.1 66.9 22.3 2.0 91.2 288.3 136.5 7.9 144.4 143.9 36.0 107.9 95.4 12.5
$1.86
$1.64 58.1 439.2 134.0 73.4 646.6 77.8 134.3 858.7 153.0 70.8 25.5 0.3 96.6 249.6 106.3 14.2 120.5 129.1 33.7 95.4 86.4
~
$1.81
$1.64 52.7 See page 21 for Discussion and Analysis of the Consolidated Statement of Income.
Common Stock Prices, Earnings and Dividends by Quarters (Per Share) 1975 High Price................
Low Price.................
Earnings.............
Dividends...........
30 Fourth Third Second Quarter
$151/2
$12Vs 41Q:
41Q:
Quarter
$15
$12%
50Q:
41Q:
Quarter
$151/2
$12 1/s 47Q:
41Q:
First Quarter
$143,/,i
$11 1/s 48Q:
41Q:
1973
$766.6 260.3 125.6 65.5 451.4 64.3 102.5 618.2 148.4 58.7 3.4 2.7 64.8 213.2 84.8 5.5 90.3 122.9 27.6 95.3 78.4
$16.9
$1.99
$1.64 47.8 1972
$685.0 212.0 120.4 55.0 387.4 60.5
~
541.5 143.5 42.5 (0.4) 0.2 42.3 185.8 73.4 4.4
--..ZZ:..11 108.0 21.6 86.4 67.7
$18.7
$2.08
$1.64 41.5 Fourth Quarter
$12 \\hi
$ 93/s 37Q:
41 Q:
1971
$608.1 189.8 108.8 45.2 343.8 55.9 80.8 480.5 127.6 31.7 (1.7) 3.2 33.2 160.8 60.9
____§d_
__QU 93.6
_lg 78.3 60.7
$17.6
$2.10
$1.64 37.3 1974 1970
$504.4 137.3 103.0 42.6 282.9 53.9 59.9 396.7 107.7 18.5 0.2 18.7 126.4 50.3 7.7 58.0 68.4
__J!,,§_
59.8 53.7
$6.1
$1.84
$1.64 32.6 Third Second Quarter Quarter
$123/ll
$18 \\hi
$ 93,/,i
$10 42Q:
49Q:
41Q:
41Q:
1965
$340.9 77.1 73.3
---1Z.1.
177.5 38.1
__il_Z 263.3
---1.L§.
1.5 (0.5) 0.7
---12
___1!U.
22.4 0.4
~
56.5
---12 52.8 39.6
....liU
$1.92
$1.44 27.5 First Quarter
$191/2
$18 53Q:
41 Q:
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)
Residential....................................
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 GAS OPERATIONS Sales (millions of cubic feet)
Residential......
2,334 2,281 2,317 House Heating.
20,817 23,793 24,125 Commercial and Industrial........................
30,012 35,913 37,868 All Other..............................
74 79 90 Total Gas Sales.
53,237 62,066 64,400 Number of Customers, December 31 Residential........
90,117 90,870 91,682 House Heating...........
162,914 163,093 163,096 Commercial and Industrial.
19,874 20,276 20,518 Total Gas Customers...........
272,905 274,239 275,296 Operating Revenue (millions of dollars)
Residential...
8.1 7.1 6.7 House Heating..
54.8 55.4 51.3 Commercial and Industrial.
54.5 45.7 42.0 All Other.....
0.1 0.1 0.1 Subtotal..
117.5 108.3 100.1 Other Revenue......................
0.5 0.6 0.4 Total Gas Revenue.
$ 118.0
$ 108.9
$ 100.5 Operating Income Before Income Taxes (millions of dollars).
19.6 26.9 22.8 STEAM OPERATIONS Sales (millions of pounds).
7,117 7.600 7,762 Number of Customers, December 31.
689 710 723 Total Steam Revenue (millions of dollars).
38.5 29.3 19.4 Operating Income Before Income Taxes (millions of dollars).
2.3 (3.2) 0.7 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 1972 1971 1970 1965 2,418 2,441 2,454 2,233 26,026 25,165 24,949 19,642 41,490 40,624 40,360 30,354 104 102 124 61 70,038 68,332 67,887 52,290 94,035 95,478 97,250 101,238 159,780 154,902 149,800 128,345 20,312 19,778 19,063 19,641 274,127 270,158 266,113 249,224 6.2 6.2 6.0 5.5 48.4 45.8 43.1 33.4 38.2 34.8 31.3 19.7 0.1 0.1 0.2 0.1 92.9 86.9 80.6 58.7 0.4 0.4 0.4 0.2 93.3 87.3 81.0 58.9 16.9 21.7 18.5 15.4 8.328 8.223 8.172 6,528 737 733 939 1,139 17.3 14.2 10.9 7.8 1.2 (2.2)
(1.1) 1.1 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. are listed on the PBW Stock Exchange and the New York Stock Exchange. Philadelphia Electric Power Company Debentures are listed on the PBW Stock Exchange.