ML19031A129

Submit 1976 Annual Report by Philadelphia Electric Company

ML19031A129
Person / Time
Site:	Salem
Issue date:	05/23/1977
From:	Philadelphia Electric Co
To:	Office of Nuclear Reactor Regulation
References
Download: ML19031A129 (36)

Text

Philatklphia Electric Company Annual Report 1976

DIRECTORS OFFICERS

• Gustave G. Am sterdam Robert F. Gilk eso n C hairman of the Board C hairman of th e Board Bankers Securities Corporation Jam es L. Everett (M erchandi sin g and Rea l Estate)

Presid ent

• James L. Everett Wa yne C. Astley Pres id ent of the Company Vice President

• Robert F. Gilkeson General Administratio n C hairman of the Board and John H. Austin, Jr .

C hi ef Executive Officer of Vice President the Compan y Finance and Accounting

• William W. Ha gerty Edward G. Bauer, Jr.

President , Drexel University Vice President and Ge nera l Counsel

• Willi am G . Hamilto n. Jr.

Vincent S. Boyer Director, Singer Co mpan y Vice Presid ent (Diversified Manufacturin g )

Engineering and Research Robert D. Harr iso n C lifford Brenner Pres ident, John Wanamak er, Vice Pres id ent Philade lphi a Co rp ora te Communi ca ti o ns (M erchandi sing )

H en ry T. Brya ns Paul R . Kai se r Vice Presiden t C hairma n of the Board Personnel and Indu strial Relations Tasty Bakin g Company (M anufacturing ) M artin F. Gavct Vice Pres id ent Jose ph J. McLau ghlin Gas Operations Pres id ent , Beneficial Mutual Savings Bank John L. Hankins Vice Presid ent J o hn R . Par k El ec tri c P ro duc ti o n Chairman of th e Board and Pres id ent William L. Maru chi A mcri ca n Stores Co mpan y Vice Presid ent (Retailing ) Electric Transmiss ion and Distribution William B. M o rl o k

'Member of Executive Committee Vice Presid ent Commercial OpLTations C lair V. Myers Vice Presid ent Purchasin g and Genera l Services Th eo dore S. Fetter Secretary M o rto n W. Rimerm an Treasurer Jam es D. Ly nch Ass istant Secretary Alfred M. N ew ill Ass istant Treas urer J osep h W. Ruff Ass istant Treas urer Donald P. Sco tt Assistant Treasurer

CONTENTS ANNUAL MEETING 2 Financial Hig hli g hts The annua l meeting of the shareholders of the Company wi ll be held on April 13, 3 Letter to Shareholders 1977, at eleven a.m ., in th e Crysta l Ball 5 Reliable Service Room , Benjamin Franklin Hotel, Ninth 8 Help for a Neighbor and C hestnut Streets, Philadelphia, Penn sylvania.

9 Scen es Behind Scenes Shareholders of record at the close of 10 Keepin g PE on the Move business March 4 arc entitled to vote at 12 M eetin g the Challenges of Gas Supply this meeting.

Notice of the meeting, proxy statement, 13 Imp ortance of Customer Contact and proxy will be mailed und er separate 14 Supporting the Front Lin es cover. Prompt return of th e proxies will 15 Qualified Employees be appreciated.

16 Tellin g Our Story 19 The 1976 Tax Story MANAGEMENT CHANGES 20 Financial Statements 25 Notes to Financial Statements George H. Brown , Jr. , who se rved as a 29 Report of Auditors director since 1963, withheld his name from nomination for re-election to the 29 Fin anc ial Statist ics Board prior to th e annual mee tin g held 31 Operatin g Statistics Apri l 14, 1976.

32 Fiscal Age nts On Apri l 14, 1976, Clifford Brenn er, ge neral manager of Corporate Commun i-ca tions, was elected Vice President of that department.

William G. Hamilton , Jr., resigned as a director on December 31, 1976 .

William S. Fishman, President and C hief Executive Officer of ARA Services, In c. and Jose ph C. Ladd, President of Fidelity Mutual Life Insurance Company.

were elected directo rs on January 24, 1977.

GENERAL OFFICE 2301 Market Street Philadelphia, Penn sylvania 19101 1

FINANCIAL HIGHLIGHTS 1976 1975 Percent In crease Operating Revenue $1,224,141 ,382 Sl,134,8 10,120 7.9%

Operating Expenses, including Fuel, Maintena nce, Depreciation, and Taxes 1,012,7 16,075 937,724,740 8.0%

Operating Income 211 ,425 ,307 197,085,380 7.3%

Other Income, primarily All owance for Funds U sed during Constructi on 104,356,626 91,231 ,605 14.4%

Incom e before Interest Charges 315,781 ,933 288,3 16,985 9. 5%

Interest Charges 151 ,163,223 144,391,513 4.7%

N et In come 164,618 ,710 143,925 ,472 14.4%

Preferred Stock Dividends 39,021 ,780 36,026,349 8.3%

Earnin gs App li cable to Common Stock 125,596,930 107,899, 123 16.4%

Divid ends on Co mm o n Stock 107,682,682 95,439,435 12.8%

Balance to Reta in ed Earnin gs s 17,9 14,248 s 12,45 9, 688 43.8%

Shares of Comm on Stock - Avera ge 65,60 5,660 58, 135,012 12.9%

Earnings Per Average Share Sl. 91 Sl .86 2.7%

Dividends Paid Per Share Sl.64 Sl .64 (Millions )

Common stock earnings improved Operating revenue rose to a nevv high Mortgage Bond s from $107.9 million in 1975 to $125.6 of$ 1.2 billion , an increase of 7.9 percent 9 l/s% Se ries . .. $100.0 millio n in 1976, an in crease of 16.4 o ver 1975, as sa les to all classes of 95/s% Series. 100.0 percent. serv ice-e lec tri c, gas and stea m - Prefr rred Stock Earnings per average share increased showed ga ins ove r 1975 . 9.52% Series modera tely from $1.86 to $1. 91 as the Operating expenses were up 8 perce nt (500,000 shares ) . 50.0 average number of shares outsta nding reflectin g co ntinued inflati on in al l Common Stock increased 12.9 percent. areas of doing b usiness. - through a publi c Dividends paid on the common Construction expenditures amounted offe rin g (4,000,000 stock were maintained at $1.64 a share, to $380 milli on, increasin g to tal inves t- shares ) . 67 .7 all of which were taxable in 1976 as ment in plant to $3.9 billion. - th rough co ntinuin g ordinary d ividend incom e for Federal Financing requirements were met by Dividend Rei nves tm ent incom e tax purposes. the sa le of the fo ll ow in g securities: and Emp loyee Plans

( 1, 110,227 shares). 18.4 S336.1 WHERE THE DOLLAR WHERE IT WENT.

CAME FROM ...

FUEL 36<

WAGES & BENEFITS 12<

O PERATING REVENUE 92<

DEPREC IATION 8<

TAXES 14<

INTEREST AND PREFER l~ED STO C K DIVIDENDS 14<

COMMO STOC K DIVIDENDS 8<

RETAI NED EARN INGS 1e --=-...___.._._......,

2

TO OUR SHAREHOLDERS:

As our nation emerged from its showin g that the nation wa s recuperat- Altho ugh w e were successful in Bicentennial Year, the factors which in g from the severest recession since obtaining rate increases for all three shaped its growth are as vital today as th e Great D epression. Philadelphia cl asses o f service during 1976, o ur they w ere 200 years ago. Issues such as El ectric Company 's gains in earnings, realized return on inves tment continues taxation, governmental regul ation of revenues and sal es confirmed these to be penali zed by " reg ulatory la g ."

industry, personal freedom and avail- trends. Of the $95 milli o n electric rate increase able resources, includin g energy, C ommon stock earnings amounted fil ed in November, 197 5 the Penn syl-mo ney and credit are all current to $125.6 million, an increase of vania Public Utility C o mmission influences o n o ur country's economic approximately 16 percent over 1975, permitted $47 million to beco me health and , of necessity, o n o ur w hile ea rnin gs per share rose fi ve effecti ve in 1976. In February 1977 the Company's as w ell. Any emphasis or cents a share to $1. 91, even th ough Commission allowed an additi o nal shift in emphasis on these variables there were 13 percent more average $25 millio n to become effecti ve, bring-presents con stant challenges for yo ur shares outstanding . ing the to tal am o unt of th e in crease to managem ent team - challenges which El ec tric revenue w as $46 millio n, $72 milli on o r 76 percent of the mu st be met witho ut the benefit of a o r five percent above la st yea r, as a amo unt initiall y reguested.

com prehensive national energy po licy. result of higher rates and a fo ur percent In 1976, o ur Com pa ny spent approx-At no time in our histo ry has there in crease in total kilowatt-hour sa les . im ately $380 milli o n o n constru cti o n, been a m ore urgent need to ad opt Whil e sa les to all cl asses of electric an increase o f abo ut $19 milli o n over natio nal energy guidelines to fo ster service increased in 1976, the upturn in 1975. During the yea r, w e pared o ur eco nomic and soc ial grow th. To mee t the econo my of o ur region was 1976-1980 constru cti o n estim ate by these chall enges, yo ur Compan y is refl ected by a four percent increase in ap proximately $800 million and even secure in the know ledge that we have sa les to comm ercial and industrial though this cutback relates principa ll y the p ro ven sci entific, eng inee ring, use rs. Res idential sal es, aided by the to the ca ncellation o f the Fulto n and construction and operatin g ca pabilities addition o f ove r fo ur th ousa nd elec tric Summit nuclea r ge nera ting stations ,

to produ ce and di stribute o ur se rvices ho use heatin g customers, also showed and the extensio n o f the compl eti on reliably, economi call y and profi tabl y. a ga in of $8.5 million over last year. date for Limeri ck nuclea r statio n by We loo k fo rwa rd to a pro mi sing future Higher rates and increased gas approxim ately two years, it docs no t conv in ced th at there is a grow in g need ava ilability were primaril y respo nsible indi cate any change in o ur commi tment and mark et fo r these se rvices. for the increase in gas re venue w hich to nucl ea r generati on. C learly, we must The past yea r ended on a no te of rose $41 millio n or 35 percent. Stea rn co ntinue to in ves t in nuclear pl ants as ca utio us op timi sm w ith the trad itional revenue increased $2 million o r fi ve well as explo re en v iro nmentall y eco no mic indica tors tentativel y pe rcent over 197 5. acceptable generati on from coa l to meet 3

th e anticipated load grow th in the M ovin g into a new era of o ur mentation of advancing technology.

years ahead and to lessen the relian ce nati o n's history, we are ever more However, our main priority ha s been o n imported petroleum fuel s for cogni za nt that we are in an energy directed to the twin objectives o f genera ti on. controlled economy. We are dependent service and reliability in all facets of La st yea r, nuclea r generation from o n the availability of reasonably priced o ur business and the remainder of this our Peach Bottom Statio n accou nted fuels m ore than the other factors of report illustrates in more detail the fo r 17 percent of o ur o utput and production. Therefore, we need the manner in which ou r Company fulfill s resulted in substantial fuel sav ings for kind o f unified national effor t that puts its da y-to-da y resp o nsibilities. Our our customers. Co nstru cti o n was also men on the moon and satellites into greatest strengths are still the abilities, compl eted o n the first unit of the Salem space if we are to obtain op timum dedication and spirit of our employee Nucl ear Station in which the Company results fr o m o ur natural resources. tea m. We acknowledge with pride their ha s a 42 percent ownership interest. We need responsible leadership too, important contributions to the year The first unit is schedul ed for commer- in order to permit the growth of pa st and look forward to continued cial ope rati o n later thi s yea r w ith the industr y w hich impacts the envi ro n- successfu l dedica tio n in suppl y ing o ur second unit schedul ed for 1979. Con- ment and, espec ially, w e need an services to the community.

struction of Lim erick Station also informed public capable of differentiat-moved forward in 1976 and commercial in g fact from my th and progress from opera tio n of the two nuclear units is panic. With this kind of understanding March 7, 1977 expec ted in 1983 and 198 5. Wh en th ese power plants can b e built and be available units are compl eted, m o re than 50 per- when need ed , industry ca 11 expa nd cent of our o utput vvill come from the with confidence and inves tors can peace time a torn. rece ive an adequate re turn o n their Our curtailed construction prog ram investment.

has reduced o ur need fo r new cap ital , Durin g the past difficult recessio nary but has no t eliminated it entirely. peri od we have concentrated on CHAIRMAN OF THE BOARD N ew common stock issues arc kept as es tablishing a so und finan cial ba se, small as possible to minimize the stringently co ntrolling o ur expenses d/.~

dilution pena lty to o ur shareholders, and filing promptl y for required rate but arc necessary to support construc- relief. We have also sharp ened our ti on essential to the lon g run health of skill s in scientific and professional the Company. management and prepared for imple- PRESIDENT 4

REUABIUTY: OUR BOTTOMUNE Ask utility planners about their prob-lems and they 'll recite a litan y of how thin gs ca n go wrong, how equipment to ge nerate elec tricit y breaks d ow n and how the bes t laid plan s ca n becom e ung lued. But ask them whether cus-tomers are affected by these problems and th ey say, "N o t at all. Equipment failures, scheduled maintenan ce and rea rrangements are 011r probl em s. The customer-more likel y than not -

kno ws nothin g about them. The power is there at the switch and, to the customer, that's what counts."

So it takes a special breed of person to work devo tedl y behind the scenes to provide serv ice at the "flick of a switch. " o pat on the back is expected for making thi s event happen millions and millions of tim es a da y . Thi s spec ial breed aims to mak e the utility business a career, a way of life based on renderin g a vital se rvice , rather than manufacturing a product.

Every one of PE 's 9, 450 employees-no matter how rem o te from customer contact - has an impo rtant tea m role to play in bringing this about . They take ge nuin e pride in crea ting the daily marvel s that kee p our modern world alive. There is a dedica tion rarely found elsewhere that brings satisfacti o n to these employees in their collective effort to achieve perfection - 100 per-cent reliability-o r power at the sw itch e11ery time it is flick ed on.

Storms, ca rs hittin g poles, trees fall-ing o n w ires and eq uipment failure prevent the achievement of 100 percent reliability. but for the last three yea rs, PE has produced an enviable record of reliab ility for electric se rvice:

1974- 99 .993%

1975- 99 .990%

1976-99 .991%

This reco rd is eloquent tes timon y of the Compan y's efforts.

Attaining such a hig h degree of reliability yea r after yea r is no accident.

For Philadelphia Electric, Reliability tops the list o f Corporate Obj ec tives :

"O ur Number On e o bj ec tive is to supply our customers with reliable servi ce at reaso nable rates. We will be 5

responsive to the customer o n all ser- signed by Phil adelphia Electric engi- tion of more than 21 million . Such vice-related matters and co rrect defi- neers- the larges t and most adva nced planning for bulk power requirements ciences prom p tl y. utility co n trol system in the United assures that a sufficient ma rgin of "Rel iability of service depends on ( 1) Sta tes. T he men are updating the reserve power is ava ilable at lower cost preven tio n of interruptions of service, schedule of genera to rs w hich w ill be than could be achieved by each com-and (2) m inimization of the length of operated to meet customer electric pa ny acting independen tly. Daily gen-those interruptions w hich do occur ... " needs for the day, feeding in a variety era tion requ irements are sched uled to A lthough it has been made official of info rmation w hich w ill enable the achieve the lowest possibl e costs, w hile in this statement of Company po licy, system to opera te mos t rel iably and at power transm issio n is moni to red and reliability is not the responsibility of the lowes t cost. Consideration is given contro lled to ass ure that elec tricity is any one person , nor of one Compa ny to wea ther , to maintenance work on ava il abl e for the needs of the 7.5 mil -

department . Ir is the co ntrib ution of lines and at substations, to loadin g of lion customers served by the partic-every P E man and woman at work . transmissio n lines, the startup of cer- ipating companies . The General Beca use the renderin g of service is a ta in heavy indu stry after a holid ay Administration D epartment represents 24-hour j ob, every day of the yea r, and or o ther shutdow n, and to many o ther PE on PJM 's eleven-utility management yea r after year, it , lik e a ring, has factors. A similar sys tem is d o in g committee.

neither beginning nor end. the same j ob for gas and steam In 1977 PJM - America's pi oneer Break into rhar ring as a new day req uirements. power pool-w ill celebrate 50 years dawns . In Electric Production's system With the generatin g req uirement o f o perations, during which time it operatio ns division headq uarters, dis- fo recas t com pleted as accurately as has played an important role in pa tchers are holding quiet telephone possible, additi onal generating capacity enhancin g PE's sys tem rel iability.

co nversa tio ns, checking info rmation is added as a reserve- in the event of Transmiss io n lin es also co nn ec t PJM and calling fort h up-to-the-second data equipment fa il ure-a nd the res ultant to neigh bori ng powe r pools fo r the fro m com p uters, using one of the most conclusions are communica ted to the exchange of electricity to red uce costs sop histica ted tools of the industry, Pennsylvania-N ew J ersey-Maryland and for mutu al assistance in tim es of SAMAC , a compu terized sys tem de- Interco nnecti on (PJM ) co ntro l center. emergency. For example, PJM so ld PJM 's staff coordin ates the power emergency power to severa l neighbors supply of eleven inves to r-ow ned in January, 1977, w hen severe wea ther utilities in a 50,000 square mile area of co nd iti ons stra in ed rhe capac it y of the mid-Atlantic states with a popula- utility sys tems in the Mid wes t and So uth.

The high-vo ltage transmi ssio n sys tems of utilities in all the conti guous states and part o f Ca nada are interco nn ec ted fo r o ne co mm on Th<' Cc1111/lilll).< S;JJf,.j C w11trc>I "'""' is do111i11ated by 1wtc>11wted scrC'e11s 1uhich display its S<'11m1ti11s and tm11s111issic>11 facilities. Disp11tchers co11sta11tly 1111tilyz1* a11d co11trol rlic jlo1J1 oj clearicity. They cc111 tirder i11aeascs tlr dC'aeascs in the outpllts 11} .~l'11eratit1g 1111its affordi11~~ to rhe demands for p<>1Per and numitor the rra11smissio11 system which 6 dcli11crs p11111cr il'hcre it is 11ccded.

o il to the delivery of electricity throug h the hig h-voltage transmissio n sys tem s.

U suall y, the work perform ed by this gro up is not obv io us to customers or the public in genera l, but there arc exceptions.

On Sunday, October 3, 1976, m o n-ito rs at Peach Bottom Atomic Power Sta ti on recorded hi gher than norma l radioactivity at the site and in the sur-round ing area . Whil e the level of radioactivity presented no hea lth ha z-Sched11/ed inspections, w11ti1111ous mo11itori11.~, reg11lar 11wi111e11anCl' ard, personnel at th e station took a11d prompt repair of l'c/11ipmc11t are basic demems of immediate precautionary measures, d<'pt11dabl<' serl'ice.

including the wa shing down of cars and wa lkways and notificatio n of the of service depends on ( 1) preventio n of U .S. Nuclear Reg ulatory Commiss ion interruptions of service and (2) min-and the Pennsy lvan ia Burea u of Radio- imi zation of the length o f those log ica l H ea lth . The Company also interruptio ns w hich d o occur. An other issued a news release. way of sayi ng thi s is that reliable service Su bseq uen ti y, governmcn ta 1 reg- depends o n a well co nstructed sys tem lf'ater and air '/mility comrol; improved recrcmio11al which is properly maintained and

/aciliti<'s; 1111d rnr<'f11/ w11sider11rio11 to /1111dsrnpi11g 1111d ulatory agenci es anno unced that the tlt's tltetics in plm111i11g rrc111smissio11 lines..~c11t*rc1ti11g abnorma l radioactivity o utside the which is rapidl y restored when storms pla11ts, mid s11bs1ario11s are major co11Cl'ms tlf the Company or o ther troubl es affect it.

i11 order to protl'Ct the e1111iro11111e1lf of rhc area it scr11es.

Peach Bottom plant res ulted from the fa ll ou t of a Chin ese nucl ea r bo mb tes t PE has a well desig ned sys tem ,

purpose- reliable elec tric se rvice across in late September. Philadelphia Electric constructed with hig h quality co m-Amer ica, at the lo w est cost . received nati o nal recognitio n for being ponents assembled according to good Electric Production - 1ikc other de- th e first to detec t such fa ll o ut in th e standards, with quality wo rkmans h ip, partments- believes it is the keysto ne continental United States. and is keeping it that way. The in the Company's arch of reliability. To Electric Transmiss ion and other imp ortant factor in reliabl e There is nothing wrong w ith that kind Dis tribution (T & D ) people, reliability service is the restoration o f service of thinking- it creates a consciousness w hen it is interrupted. The mos t that leads to good perform ance. With important aspect here is the availability a logica l credo , "Electric service beg ins of a source of highly motivated, skilled w ith the production of electricity,"

the D epartment mans generating stati o ns 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> a da y, every day, w ith well -trained perso nnel.

Electric Production 's maintenance people peri odi ca ll y inspec t genera ting fac ilities for preventive maintenance work and perform emergency repa ir work at any loca tion when needed.

C hemi sts and technicians monitor the quality of water, lubrica tin g o ils and fuel s, amon g other duties. Trainin g prog ram s fo r generatin g plant ope r-ators and nu clea r techni cians arc con-tinually imp roved and expa nded and changes arc mad e constan tl y through-o ut the D epa rtment to improve pro-cedure and opera tions.

R esponsibilites o f the D epartm ent extend from the delivery of coal and

.'"111 S)ISf<'lllS arc .~o in the (c1111ml roo111 at rhc EddystcH/£' Ce11crati11.~ Sr,11in11. Staffed 'nm11d the dcick, conrrol roo111 111u*ra1<1rs /l1llflit1ir 11la11r pcrj11n11crnu* tn i11s11rc c1111ti111w11s electric scn frc J11r PEC11 c11sr11111crs.

1 7

.i. special tool (a/led a p11e11111a<~ophcr Stll'l'S tJme and 1110tH')' in F11wre /i111'11H'll gai11 <"<>11}id,*11ff by pl11yi11g ,-,1((/1while11/ tire rop of poles d11ri11g dl'xterity drills m tire Co111p1111y's w1dc~~n,1111d ser11icc work. This roof dri11es Jon/lard, pushii1.~ 1hro11 Li111*1111111 '/'r11i11i11.~ ,<;,)11>0/. rhc earth ro create' a hole into whid1 clcarical n1wl11it ccm he i11s1all manpowe r, p ro perl y trained in res tora- speak of an eight-to-five fair w eather ti o n w ork. j ob . Service reliability and resto rati o n With th e beginning of the new day, procedures are put to the se verest test th e T & D D epartment co nce ntrates during the fo ul est w eather and any o n a repo rt de tailin g service interrup - h o ur o f any nig ht or day.

ti ons during th e pas t 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br />. It is und er these co nditi o ns that our The repo rt is studied to answer two fi eld forces , supp orted b y o ther per-bas ic ques ti ons: 1) Wh at happened' sonnel in o ffices and serv ice buildin gs, and 2) H o w can w e prevent this from present the bes t ima ge of o ur Com-happening again ? And these ques ti ons: pan y's dedica tion to reliability.

H o w lo ng wa s service intcrrupte~ ? What w e have glimpsed as the begin-Was se rvi ce interrupted because of nin g of a new da y is really a part o f a weath er, trees d own , equipm ent continuing process. None of the sched -

failure? C an w e identify a recurrin g uling , non e of the anal yses, not even pro bl em or benefit in any w ay from quick resto rati o n would be possible th e experi ence? The in fo rmati on is without the monumental plannin g, th o rou ghl y analyzed and , where appli- design and constru ction that w ent ca bl e, acti on is tak en fo r future im- befo rehand.

pro v ement. Once an interrupti on occurs, restoration is T & D 's first co n- HELP FOR A NEIGHBOR ce rn . A s they say, "Our j ob is to get Storms of various kinds are respon-electricity from the p owe r plant sible for 111 ost interrupti ons of service to o ur customers wherever and when- to customers. Relatively mild storm s, ever they need it. or accidents inv olving PE lines and "The cu stom er is co ncerned o nly po les, are generally handl ed by T & D ab out elec tric service at his house, his operating perso nnel with routin e sto re, his plant. It's wh at happens when efficiency . When sto rm s of maj o r th e customer £lips the sw itch that deter- pro portion approa ch o ur se rvice area ,

mines reliability- as he sees it . We all however, special prepara ti ons arc have one j ob to do . Give the best pos- und ertak en, and w hen th ose of extreme sibl e service at reasonabl e cos t. " severity strik e, a spec ial Sto rm Co ntrol Elec tric T & D people- and their C enter is ac tivated .

Gas Operations co unterparts- d on 't I l (~h 11c1/ragc tower li11e 111<lrk rt'cp1ires spl'Cial l'1/11ipmnu and people. Elcari( 011crhcad rra11s111issio11 S('(tiofl li11emc11 11s1* 11 wlf-pn>pelled <"art that is 11/l<l<"ill'd to 11 de-e11,*~~i::ed <"t1ble. Tirey **rid" tire wire""-' they perj1>r111 8 their lr(~lr-li11e """k S<'l'eral lr1111dreds ofjeet i11 tire air.

In Au g ust, 1976, Hurrican e Belle swe pt up th e coast. Preparin g fo r th e wo rst, Phil adelphia El ectric ass ig ned app roximatel y 1,000 off-dut y em-plo yees to em ergency res toration w o rk .

Altho ug h hi g h wind s and heav y rains interrupted electric power to o nl y abo ut tw o percent of PE 's custom ers, the brunt of th e sto rm passed us by.

Even so, o ur crews wo rk ed overtime to put every custo m er back in se rvi ce.

M ea n w hile , Belle slammed into Lo ng Island Li g htin g Co mpany (LIL CO) territo ry, w here it kno ck ed o ut abo ut half o f LIL CO's 860,000 customers.

Under a mutu al assistance pl an , LIL C O as ked PE and o th er co mpanies for ass is-tance at 4 a.m. o n Au g ust 10. Within ho urs, PE sys tem crews were o n their way. In all , 121 linem en and su perv iso ry perso nnel and fi ve trans-portat io n m echanics w ith 55 vehi cles m ade the 130-mil e j o urney to LIL CO's headg uarters. (All of PE 's cos ts were paid b y LIL C O. )

O ur crew s went ri g ht to w o rk , help-in g to rebuild power lines th at had bee n dow ned th ro ugho ut th e area b y fa ll en trees. The w reckage w as cl ea red and power res tored to the LIL CO cus-to mers. man y of w ho m had bee n wi th-o ut serv ice fo r th ree d ays . O ne PE em ployee sa id LIL CO cu sto mers every -

\\*here ex pressed th eir appreciatio n fo r Phil ad el phia Elcc rric's help. "Th ey eve n se t off firewo rk s," he sa id.

Certainl y Phila delphia Electri c w as glad to hel p a neig hb o r utility, bur it is reass urin g to kn ow that had PE ex per-ie nced tro ubl e of simil ar m ag nitude, it co ul d co um also o n ass istan ce fro m o rh n u ri1i tics. Ir d id . in fac t. get such assistance afrn th e bi g snows torm of 1958. w hen crews ca m e in fr o m New Yo rk , D etro it . Sr. Lo ui s. and as fa r so uth as Al abam:i .

SCENES BEHIND SCENES If a brge proportio n of :icrivirics carr ied on by PE opnat in g peopk :ire no t rea dil y :i p pare nt to cusro mns. :i n even large r sh:ire of th e Eng in en in g

.! 11J1l/1l/ /ll//t'.*/tl//t U/ tft1t"1l//.*fl/1tf/1llf1l/r/1t* ( tlJllJlilll(* l/lltft'1H

/ltl/l't'rt'd / 111111i,J.: (;('l/t'/1/llll< "itclf/11// ftltlk ffc/i( /cH<' II/

/9..,f>. !'lit' l!'dtf11r /'('_,,('/ /111 ( *1111 I !I'd.* frdll*/'1il(c'd /r11111 it.*

/i1h1h1/llll1/ ft .111d /1ft!'d lllft 1 1h1 ,,111{,/llllllt'll{ h11ild111.'.,!.

l 111! I , ,htd11lt*d /1111/'t1,ui,111111 /'I.) i.

and Resea rch D epa rtment's work is KEEPING PE ON THE unknown to the genera l public. This MOVE gro up has the responsibility of plan-Purchasin g and Genera l Services nin g, designin g and constructing fac il -

Department span s the gamut from real ities that arc going to be required far estate and insurance to auto motive in th e future. Proj ects such as the huge eq uipment and teleco mmunica tions .

nucl ea r installati ons at Peach Bottom Does this strike the chord of reliability?

and Lim erick arc perhaps the most Members of the D epartment admit that spec tacular, beca use they w ill suppl y by the nature of their work they are most of the power requirements in the in the background. But they are quite yea rs ahead-reliably and at lowe r proud to be able to say, "It is our cost. They also point to the day when responsibility to see that all other PE we ca n free ourselves fro m the strangle- employees have the right tools ,

ho ld of hi gh-cos t imp orted oil.

vehicles, equipment , and anything Peach Bo ttom is an excell ent exa mple else they need to d o their jobs."

of w hat nucl ea r power can d o. During Building Managemen t division is 1976, th e plant supplied 11. 6 billion responsible for operating 70 buildings kilowatt-hours of electricity which or pieces of property containing more { '11il'crsity s11bs1mim1 ser11cs bMh Drexel { 'nil'l'rsity mid rhe saved the equivalent of 20 million than two million square fee t of fl oor L"11il'crsir)' <>f Pt*1111syll'1111ic1 i11 If (*sr Plrilc1dclplric1.

barrels of imp orted oil. With the first space and 65 acres of land used for unit of Salem Generating Station storage. The division ha s been respon-coming into commercial operation in sibl e for energy conservation measures 1977, furth er savings are anticipated within our buildings that have brought diligence and accuracy by the Purchas-with this increased nuclear generated many awards from the Federal Energ y ing divisio n. Purchasing mu st acquire electricity. Administration. all our fu el and items ranging from The Engineering and Research Transportation division maintains Aluminum ca bl e to Zirconium D epartment's work involves planning nearly 3,000 vehicles, including line components for nucl ea r plants. They and construction of all Company trucks, pol e di gge rs, bucket trucks, demand adherence to exac tin g specifi-energy services: electricity, gas and cranes and just plain automobiles. Vehi- ca tions and strive for fair prices-no steam . In addition to nuclea r facilities , cl es relate directl y to reliability, since small j ob in this era of shortages.

there are coal gas desulfurization pro- their condition and availability some- Fuels are purchased from a diversity jects (to permit the use of coal in com- times make the differe nce between a of suppliers to enhance reliability of pliance with environmental regula- short power interrupti on or a long deliveries. Coal, for example is pur-tions), protective relay systems, design one . chased from deep mines, as well as and construction of transmission lines, Telecommunications division coor- from strip mines, so long as our and the development of many other dinates all telephone and radio com- required quality specifications can be new techniques and equipment. Engi- munications required by the Company. met. About two million tons were neers are working with the City of It o pera tes sw itchboa rds , co nso les and purcha sed in 1976.

Philadel phia to develop a steam suppl y 42 base stations for radio frequencies , About 13 million barrels of heavy from the burning of trash and other and co nstantly eva luates the efficiency oil were supplied by four major was te material s. Research programs are of its installations. suppliers w ho had both domestic and continuo usly evaluating other new In addition to keeping the Company offshore refineries. Approximately so urces of energy and D epartment per- on the move, the Department must see 1.5 million barrels of light oil were sonnel are actively working on such that material s needed by o ther depart- purchased fro m eight suppliers. The exo ti c fo rms as fuel cells and so lar ments are in the ri ght quantities at the Company has leased storage space for power. Other key inves tiga tions cover ri g ht place at the right time. The lo gis- 1.5 million barrels at a terminal in imp roved systems for more efficient tics problem this poses is controlled by N ew J ersey to provide continuity and reliable co ntrol of present and the Stores divisio n w hich uses a com- of supp ly.

futu re genera ting equipment. Literall y puter-oriented inventory manage ment During th e year, Purchasing millions of man hours of engineering system to track the mo re than 50,000 nego tiated contracts for uranium ore work must be performed befo re most items in stock. that, with other existing contracts, projects see the light of da y- and all To obtain all the material s and sup- will ass ure supp lies of nuclea r fuel for are direc ted to the goal of reliable ser- plies PE people use, and to nego tiate Peach Bottom an d Limerick genera ting v ice, at the lowest poss ible cos t. all co nstruction contracts, requires stat io n throu gh 1985.

10

111 111 I,

While we believe nuclear power is the best alremative for Philadelphia Electric, we continue to develop techniques that will enable us to continue to bum high-sulfur coal 11 that is available to eastern wilities. And to do so without emitting large amounts of sulfur dioxide and ash into the enviro11111ent.

MEETING THE CHALLENGES OF GAS SUPPLY The past winter's natural gas shor t-age came as no surprise to PE 's Gas Operations Department. With d e-li veries of natural gas being curtailed by pipeline suppliers over the las t half dozen years, Gas Operations has faced m an y chall enges during that period.

H andlin g this past w inter's task was m ade m o re demandin g and projected into public visibility by the severity of the weather, but the prob lem had bee n there all the time. Building of a liquefied natural gas stora ge fac ility in 1972 at Wes t Conshohocken was a maj o r step toward grea ter reliabi lity.

Additional undergro und sto rage was co ntracted for in western Penns ylvani a and in Texas and Lo ui siana. In month s of low gas demand , excess gas was stored there for use in m o nths of

'/ (1prn11tclc/nr111~1rc c111ailabiliry 1~/.~c1s d11n11.~ rht 111111tc*r lt( 11/111g 1

S{'11S011 11 '1{'11U1Sto111cr11s1tge' is rhc.~rccucst. rhc C11111pc111y 1

g rea ter need. Sti ll later, gas was pur-S{<1rt'S ,<,!els 11! lfS '11//1( 1/icd lltltllrcll .~'IS (L.\'C) ,i1,11111111d in 1111dc~~ftllllld Sfllft~~(' /ttt"iliti('S. cha sed from intrastate pipelin es in the Gulf area under Federal regul ati o ns labeled "Em erge ncy Purchase."

While Gas Operations loo ks hope-fully to construc ti o n of a sy nthetic natural gas plant in the Compan y's servi ce area, and to research o n co m-me rcial gas ifi cat io n of domestic coa l rese rves, perh aps the most exciting proj ec t to o btain additi o nal gas - and a fir st in the histor y of Philadelphia Electric- is a j o int venture of exp lora -

ti o n and development dri llin g in the o nshore coasta l areas of th e Gulf of Mexico. Some gas field s already drill ed show pro mi se and th e first gas from this project is expected to reach Phila-delphia ea rl y in 1977.

Gas demand va ries each heating season, of co urse, as tempera tures chan ge. In late 1976 the therm o meter dropped to unu sual lows for lo ng period s. October. November and December, 1976, was the co ldest q uar-ter in th e hi sto ry of the Wea ther Bureau and g reat quantities of gas were distri-buted. N o curtailment of indu strial custo m ers was necessa ry at that tim e, but rese rves were lowered co nsidera bl y.

Co ntinu ed seve re co ld throu g ho ut the eas tern half of the N atio n co nverted a se ri ous natural gas shortage into a 12

crisis and, in January and February, the Company was forced to initiate orderly ste ps of gas curtailment to indu strial and large commercial cus-tomers. Know ledge of our customers' needs and o ur gas sys tem capability helped o ur peo pl e to minimize the potentiall y devastatin g impact on the area eco no m y.

Gas Opera ti o ns co ndu cts trainin g session s for app liance serv ice men w ho tra vel with fully equipped vehicles. so that one ca ll is usuall y suffi cirnt to res to re hea t o r ho t water to a res-idential custo mer with an emerge ncy. .-tr rhe Co111pa11J.1's Fire School. 1'11/u111ecr /irc11w11 arc .~il'Cll aduiCl' i11 .fi.v,llfi11,v, 111a11holcjires as pan of a trc1i11i11g pro,v,ram Trouble 111en arc o n shift dut y 24 ho urs tl// h1H1 1 r11 hand c cl1Ytricc1/ 1'111c~v,e11cics.

a d ay.

A co mmunity se rvice that IMPORTANCE OF and train terminal s, stadiums , theaters affec ts bo th reliability and safe ty is PERSONAL CUSTOMER and o ther pla ces where large gro ups the fire schoo l opera red by Gas Oper- CONTACT assemble. P ower interruptions at such ations for volunteer firemen th ro ug h- installations are often due to customer Perhaps the *'special breed " that o ut th e Co mpan y's se rvice ter rito ry. equipm ent problems, and man y times Originally, it dea lt with gas fires o nl y, characterizes the utility employee is Philadelphia Electric lends its equip -

epitomized in the phil oso phy that but proper procedures for handlin g m ent until the customer's faulty elec tric fires were recently added. It g uides Commercial Operations em -

apparatus can be repaired or replaced.

pl oyees in their daily conversations 1s considered one of the fin es t fir e Workin g fr o m th eir special knowl-sc hoo ls in the country and in stru cti o n with residential and commercial cus-ed ge of custo111ers and the territor y, a has bee n g ive n to hundred s of vo lun - tomers. Commercial Operations people gro u p of analysts in Commercial teer firem en fr o m local com111unities. arc trained to .. think as o ur custom ers Operations proj ec ts our future energy Bo th lives and property have bee n rhink "- to sec the custo mer 's side of a needs. Informatio n from many fields problem and help to solv e that problem saved as a result of trainin g received is fed into computers- data gleaned at the sc hoo l. in a sy mpath etic and courteo us manner.

from o ur own voluminous reco rds as Every custo111 er contact is rega rded as an o pportunit y to render prompt and efficient se rvic e and, if possible , to make a friend. As an imp o rtant element in thi s se rvice, telepho ne ce nters are operated around the clock throu g hout th e yea r and arc prepared to respo nd immediately to em ergency co nditions.

Co mputeri zed eq uipm ent ena bles them to retrieve custo mer reco rd s in seco nds, to speed their anal yses of problems and reduce the tim e customers need to wait for their answers .

Special groups in the Comm ercial Operations D epartment fill i111p o rtant ro les in m aintaining contacts with large industrial and co mmerc ial custo mers.

Many of th ese accounts, in turn . serve the genera l public , through th e oper-ti o n of hospital s, water pumpin g sta-tion s, sewa ge treatment plants, o r air Gels ( >11crclfit111s has lllcllfr t'_\*tc11si11c i111proue111c11r .: /tl t/1('  :';J,1'£°i,tlly trt1i11cd ( .'11sr1ll111'1s ,\'('n 1frl' rcprcsctllclfi11cs ,111itkly

(,',11111Jc111y'.: ,v,as clistri/111rio11 sysrc111 r11 i11act1st' it.' ..:,1f<'1y rcs111111d ,,, s1*1-,.i1 t' n*,1111*s1s 1111cl i11,111iries 1/1n111.v./1 rl1t' 1111d rdi,,/1iliry. (l111111wni:td dlSf11111a i11/11n11c11i1111 systt'lll. 13

well as from planning commissions, Ten years is a tight planning horizon SUPPORTING THE universities, economists , trade associa- in our business. FRONTUNES tions, government agencies and many Commercial Operations engineers Except in times of trouble, or when media so urces. Housing starts, popula- work closely with architects, builders there is a question to be answered, the tion studies, appliance sales, industrial and major commercial and industrial PE empl oyee most familiar to cus-production and commercial construc- customers to help them achieve max- tom ers is the meter reader who works tion figures, all related to our area, imum efficienc y in the use of our in the Finance and Accounting Depart-are sifted . energy services. Nationally recognized ment (F & A ).

Their aim is to provide detail ed high-efficiency air conditioning pro- There is much more activity in growth es timates so that the energy grams and hea t pump application F & A than meter reading, however.

needs for jobs or homes of future cus- seminars, both co-sponsored by The As anyone in the Department will tell tomers, many of whom are now in Electrical Association of Philadelphia ,

yo u, they consider themselves as sup-our grade schools , can be satisfied in are but two exampl es of how this porting troops, behind the front lines ,

distant tomorrows as reliably as today. D epartment is dedicated to serving the pass in g the ammunition to ge t the rest customer.

of the Company 's work done. Here res ts the responsibility to provide funds for da y -to-day operations, as well as to raise enough cap ital for necessa ry expan sion and construct ion to meet the future needs of customers.

Without proper money management ,

Philad elphia Electric could not m ain-tain a good credit rating , and without a good credit rating co uld not obtain ,

through the sa le of securiti es, the vast amounts of m oney required to build ,

operate and servi ce the faciliti es tha t g uarantee reliable service.

F & A also is responsible for prep-ara ti on and mailing of PE's bills to its customers. 1976 marked the fir st full yea r of PE 's new, improved billin g system w hich has bee n widely ac-cepted by our customers.

Th e Department al so operates the Company 's computer center, w ith its man y remote terminals, which provide accou nting and service perso nnel in stant access to the computerized customer information system for handling customer ca ll s and trouble analys is.

Utility rates, although not the most popu lar subject with consumers, arc of paramount importance to the Com -

pany. Unl ess fa ir and adequate rates are established , new construction of our fac ilities either slows down or halts, and the possibility is always o n the horizo n that if new construction stops, the da y may come when a power Predicting 1uluu "fies ahead" is an important factor i11 11wi11wi11i11g reliable ser11iC£'. A 11alysrs w11ti111wlly ~*wdy rhe eco1w111i~

state of the Company's sen,ice area i11cl11di11g the s11 1i11g to electricity from Mher e11e~~y so11rCl's bew11se oj rhe ii11111i11e11Cl' oj slwrta,~l'S i11 .~as and oil.

14

Company's extensive training pro g rams, administers benefits and records, con-tributes to their health and well-being, assures a safe working environment ,

and affords all employees an o ppo r-tunity to participate in education al improvement and recrea tional pro-gra ms. The Perso nnel Department shares with General Administration the key responsibility for our progressive mana gement training and developmen t programs.

The Department has a direct employee-management working rela-tionship , maintains good labor relations, and interprets and communi-cates to employees the Company's personnel policies, practices and procedures. In comparison with other investor-owned utilities , PE has long Flir a majority of 011r cmtomcrs rite merer reader is their 011/y pcrso11e1/ co11rao ll'ith rite Company.

been considered a pace setter for the industry.

shortage prohibits the supplying of HIGHLY QUAUFIED The success of enlightened employee service to newly forming households PEOPLE MAINTAIN policies is reflected in the remarkably and new and expanded industries .

REUABIUTY small turnover of emp loyees. Of the When F & A determines that an 9,450 persons working for the Com-Employ the best qualified , provide increase in rates is absolutely essential ,

good working conditions, good tools, pany , 2, 196 have twenty-five or more the Company's Lega l D epartment ful -

fair sa laries and incentives to remain years of service.

fills its obligation to reliability by and grow w ith the Company. Thi s is presenting th e Company's position in the goal of Personnel and Indu strial rate cases, working throu gh seemin gly Relations. In addition to hiring and interminabl e hearings in an effort to introducing employees to th e Com-obtain the needed rate of return to pany, this Department coordinates the keep th e Company financiall y so und .

The Lega l D epartment also handles the regulatory aspects of all operations, especiall y the licensing of nucl ea r or o ther pl ants. H ere, again, delays, drawn-o ut hea rin gs and months of hard work are more the general rul e than th e exception . It is Legal 's task to work through the regulatory maze to get approval for ge nerating faciliti es as quickly as poss ibl e. The sooner a new plant goes on th e lin e, the soo ner customers can benefit from lower operating costs and reli ab ility is enhanced .

The Department also keeps a cl ose watch on proposed sta te and Federal leg islati on and ana lyzes, among other things, its impact on service reliability.

Pn>11idi11g reliable sa11iff fl'1Jllircs cxpcric11(t'd a11d dedicated paso1111el .. -1 11 011goi1.1g co11ccr11 ~>f 011r Pas<m11e.l Dt'/Wrt111£'1lf is rhe rcrmitllH'llf <~/ 11e11 e111ployces mid the dc*11elop111c111 <1} presc11r employees ro 111s11rc 11u1x111111111 opporr11111ry.

1 15

A number of divisions within the porated in the basic des ig n. Safety TELUNGTHE D epartment work directly for the talks and sa fe practices prog rams are PHILADELPIIIA benefit of empl oyees. The M edical presented co ntinuo usly to employee ELECTRIC STORY division offers a variety of services gro ups . A s examples of these programs' As the name impli es , Corporate desig ned to maintain standards of effectiveness, we have exceeded two C ommunications D epartment is con-empl oyees' physical capabilities as millio n operating man-hours at Peach cerned w ith the maintenance of open well as to improve their health and Bottom Atomic P ower Statio n , and lines of communi cat ion, both w ithin prevent problems which may affect two million m o re in substa tio ns with-the Co mpan y and with the var ious their work performance. In addition, o ut lost-time accidents.

publics it se rves.

th ro ugh its six dispensaries throu ghout Empl oyee Services administers the the service area , it is eq uipped to Durin g 1976, the D epartment co n-Co mpany 's pension plans, gro up life ad minister emergency treatment for ce ntrated o n creatin g a climate fo r a in surance, a dental care plan, Blue illness or accident occ urring on the job . freer exchan ge of id eas, no t o nl y with Cross, Blue Shield and M ajo r M edical PE's Safety divi sion has won many newspaper, television and rad io program s. Trained perso nn el offer pre-industry-w ide award s for its first-aid reporters, but w ith civic, busin ess and retirement cou nseling and help and res uscitation programs. Durin g "grass roots" gro up s in th e Co mp an y's empl oyees with personal problem s, se rvice area . Not a week wen t by with -

1976 about 1,700 employees were given o perating on the premi se th at "a sati s-trainin g in cardiovascular pulmonary o ut at least o ne PE represe ntati ve bein g fied employee is a good emplo yee who res usc itatio n (CPR ). Such training intervi ewed by th e press . Topi cs produces better work."

has saved many lives, bo th among covered a w id e ran ge, embracing vir-Employee Activities recogni zes th e empl oyees and in the communities tuall y every ph ase of Co mpan y efforts and achievements of empl oyees operations. In addition, emplo yees at throu g hout our service area. It con- throu g h a rewardin g sugges tion sys tem.

all levels participated frequentl y in stantly checks all facilities for safe It al so helps maintain hi g h m orale by panel o r talk show s.

workin g conditi ons and review s new providing cultural, soc ial , vaca ti o n and co nstru ctio n to be sure sa fety is inco r- A Speakers Bureau , co mposed of athl eti c ac ti viti es for empl oyee g roup s.

volunteer empl oyees from all depart-ments, and the Peach Bo tto m and Lim erick in formatio n ce nters brou g ht the PE story to th o usand s throu gh men's and women's clubs. church gro ups, school s and civi c o rganizati o ns.

Retired em ployee vo luntee rs ass isted in spec ial program s fo r se ni o r citi ze ns.

In all com muniti es, meetin gs were held with op ini on leaders, to w ho m inform ati ve literature was give n as backgr o und mate rial fo r their use .

Similar mater ial was di stributed to ed ito rs and feature writcrs.

Direc t co n tact w ith customers was accompli shed th roug h a series of bill encl osures w hich o ffer ed tip s o n sa fet y and energ y conse rvation . Till' enclo -

sures offered helpful booklets and.

judging from th e response, were g reatl y app reciated .

Because th e econom y of th e area in which it o perates is imp orta nt to its ow n economic w ell-bein g, the Com -

pan y recogni zes its soc ial res pon sibili-ties for assisting in the developme nt of the reg io n 's yo un g people.

/)11n11.~ /9~6 thl' (;,1111111111y miti,unl 1l /'fl~~r11111 /1ir iwrrrr ((111111111t1ifcl!io11s ll'ith its "l'Jlrclsimcuc 10.000 .\11,rnis'1 s1wt1ki11.~

d1sr11111a:.:. Fl1t* St'n*i((' i11, ludcs 11 sp1*t"i1il rdeJ'ht111c 1111111/ia t"11s1n1111'rs t"tlll t"cdl 111 dsk ,111csrio11s 1111d rt'ffi11<' 1111.-:wns. h1lfli i11

'f'11111sli. In 11dditil111, .'J'l'tT1rl ;1ictcs ti/ (.11111p1111r lirn11t11rc lri11 c* ht'tll rn111.d11!<'d i11ro Spimis/11111d 11 erc distrihwt'd to 1 1 1*/.,11<'1.< ,I( 1/1< /tr6 \/l,1/11.'/r f,111 irt'fc/ II/ J>/r,/,1,/t'/j,/lld.

16

For several years , PE Company has made available to guidance counselors in area school s a library of 40 film s, describing the variou s careers in the world of work. In 1976, arrangements w ere made to have these film s shown on the local public tel ev ision outlet, which ha s stimulated consid erabl y the req ues ts for films by schools.

An advisor y council of outstanding area educators was form ed to devel op and impl ement a comprehensive energy in formation and education program to broaden the base of public under-stand in g among o ur yo unger citizens.

Internally, the Department expanded communicati o ns with employees and devel o ped special prog rams to keep emp loyees up to date on matters affec tin g their Compan y and the elec tric indu str y in gene ral.

WHAT IS REUABIUTY?

Ar Philadelphia El ectric Company it is the top line of Corporate Objec-tives. And when all is done as plann ed it is the bottom lin e of our "acco unt-ing" shee t to our customers.

In short, reliability transcends mere stati stics and is in the final analys is an assessment of th e Company 's respon-siven ess to customers ' needs.

Serving our customers effici entl y, eco nomically, promptly and courte-ously is the essence of our business and the jusrifica rion for a fair return to our investors. The ultimate value and secu rity of our shareholders' inves tm ent rests on the foundation of superior se rvice .

( ,'11sttllll('r n*s11011si"s u111si.,rc*11tly f1<1i111 tlllf r/i,u J>/,//,1clclplii11 1-'lctrri( c11111/l1)'<<'t'.' i1rc 1'1,1111,!llf ti/ ,is "fnn1dly" 1111d "scn 1it-c l1rin1tecl." I /ere one 11/ 1111r e1111i/11y1*cs dn111111_,*trc1tes the "flJ11/_, t1/ /1is uwlc" ft' 1l _i,!n11111 ti/ s1/i,111f-i1.l.!cd tl11/ch<<'11 ,1_,

f'drl 11/ 1l J'rt'_l.!r,1111 ,,, c.\p/11111 dcont"itr i111d  :.:afcry /ti st"ht111/ t!n111J'S .

17

18 "Reliability of ser11ice depends i11 pan 011 th£* pre11e11rio11 of iwerr11ptio11s of ser11ice ... " This objcai11e 111as cJ1ide11ced by 011r 011crhead Trn11s111issio11 sario11 's relocnri11.~ a

£ra11s111issio11 tower from the path of a 11e111l'.\press1uay111hilc w11d11aors supported br the ,,_Hflt'r rt*111t1i11ed l'fll'~~i:::cd. Ext£'11si1w tmi11i11,~ in 1/1<1rki11.~ 111ith e11e~~ized lines has i111pro11ed <'Hr reliabiliry record and helps prci11itle oJJr rnsro111ers JJ'irh l""i'r ar rhe "}lick oj 11 s111irdr."

THE 1976 TAX STORY D espite the common misconcep tion the expenses of running the business wise be paid to the government help that utilities pay little or no income such as foe! , labor, deprecia tion , etc. us to reduce our external financing taxes , PE actually incurs many We can consider this our first allow- requirements and hold down the cost millions of dollars of Federal and able deduction, which for 1976 of supplying energy . These fonds are state income taxes every year. The amounted to $912 million. used to finance our construction Company 's total income tax obliga- In addition, we are also permitted program, including our bi ggest proj ect tion ( Federal and state) for 1976 was to deduct interes t expenses, that is the - the nuclear Limerick Genera ting

$76 million. Of the to tal obligation, interes t we pay on bo th long- and Station which empl oys 2,000 workers

$62 million represents Federal inco me short-term debt, w hich totaled $151 at the site. If the Company did no t taxes and the remainder represents million in 1976. Other allowable deduc- invest in new facilities, it would be state income taxes. See Note 2 of tions of $27 million reduced our taxable required to pa y the entire amount of Notes to Financial Statements on income for 1976 to $134 million. This income taxes in cash currently. By page 25. is the income on which the tax rate is investing , the deferred taxes are put The Company's Federal income tax ap plied . Our calculated income tax at to work for both our shareholders and bill is calculated the same way as the the Federal statutory rate (48%) our customers.

individual taxpayer calculates his own amounted to $64 million in 1976. In addition to income taxes , we also income tax return - the income tax In order to enco urage co mpanies to pay many million s of doll ars of taxes rate is applied to the Company's incom e maintain modern and efficient facilitie s regardless of our inco me. For 1976, after ded ucting certain allowable and to expand these facilities as re- these taxes amounted to $83 millio n expenses. quired, the tax laws grant an income and included gross receipts taxes (which T o illu strate, the Company's revenue tax inves tment credit for certain new are only applicable to utilities), rea l from sa les during 1976 was $1.2 billi on . plant and equipment. For 1976 this es tate taxes, capital stock taxes and From this, we are permitted to deduct reduction amounted to $2 million and so cial security taxes.

brought our total Federal income tax The Company's total tax expense Calculation of Federal Income obligation to $62 million . for 1976 is indicated below :

• Tax Obligation H owever, not all of our income tax (Mil lions) obligations ha ve to be paid currentl y . Total Taxes-1976 Operating Revenue $1,224 Tax laws permit a company to defer (Millions) pay ment of its tax obligation to the Less: Income $ 76 future if the company invests in new Operating E:x.rpenses $912 plant and equipment for expansion or Gross Receipts 52 modernization. In 1976, primarily Interest Expense 151 Realty 11 because of tax depreciation and invest-Other Deductions 27 1,090 ment tax credits, we were able to Ca pital Stock 11 defer our $62 million tax obligation.

Taxable Income $ 134 Social Security 6 This is not a tax "loophole". D efe rral Income Taxes on above $ 64 of taxes by industry was expressly Other 3 at 48% Federal statutory provided for by Congress to stimulate rate the economy and increase employmen t. Total $159 When these tax payments are Amortization of Invest- __ (2) deferred, both our customers and o ur ment Tax Credit shareholders benefit , beca use these Federal Income Tax interest-free fond s which would other-19

FINANCIAL SECTION MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOUDATED STATEMENTS OF INCOME.

Operating revenue increased $123 expense wa s primaril y due to substan- The decrease in the all owan ce fo r million in 197 5 and $89 million in tial increases in foss il fu el pri ces. fund s used durin g co nstru cti o n fo r 1976 principall y reflecting higher Other o perati o n and m aintenan ce 197 5, as co mpared w ith 1974, res ulted fu el adjustment revenues and base rates ex penses have in creased in each period fro m the full yea r effect in 1975 o f new w hich added an aggregate o f $111 due to g ro w th in utility pl ant and plant pl aced in service durin g late 1974.

milli on to operating revenues in 197 5 inflatio nary pressures. The in crease in 1976 o ver 197 5 resulted and $53 milli on in 1976. K w h sal es of In creases in depreciati o n in 197 5 and fr om an in crease in co nstru cti o n w o rk el ectricity in 197 5 w ere slig htly belo w 1976 refl ect maj o r additi o ns to new in prog ress and a hi ghe r cost of capital 1974, a s a res ult of lower sales to plant in service. fo r co nstru cti o n.

large commercial and industrial cu s- Salem N o . 1 nucl ear ge neratin g unit , Interes t charges on debt and div-tom ers which w ere only partially in which th e Co mpan y has an o wner- id ends o n preferred stock have in-offse t by increased sales to res idential ship interes t o f app roxim ately 42 per- creased substanti all y in rece nt yea rs custom ers. Mcf sa les of gas decreased cent, qu alifi ed as in se rvi ce fo r tax beca use o f th e hi g her cos t o f m oney 14 perce nt in 197 5 from 1974 prin- pur poses in D ecember 1976. Fede ral and in creases in the am o unts o f debt cipall y beca use of curtailments by th e and state in co me taxes fo r 1976 refle ct and preferred stock o utstandin g .

Company's major pipelin e suppliers. reductio ns o f $9. 1 milli o n associated Ea rnin gs ava il abl e for comm on Fo r 1976, kwh sales increased fo ur per- w ith Salem Unit 1 tax depreci ati o n stock in creased fr om $95 milli on in ce nt over 197 5, principally refl ecting (o f which $5.5 milli o n was deferred 1974 to $108 milli o n in 1975 and $126 the eco nomic recovery, and mcf sales and $3. 6 milli o n fl owed th ro ug h to milli o n in 1976. The sa les of alm os t increased 13 percent as a result of the income) . The related inves tment 11 milli o n shares o f comm on stock avail ability of gas under emergency tax credit of $29 mill ion reduced in 197 5, and approximatel y 5.1 milli on contrac ts and colder wea ther in O ct- Federal inco me taxes paya bl e and was in 1976 in creased th e ave ra ge number ober, N ovember and December 1976. deferred b y charg in g in ves tment of shares o utstandin g b y 10 pe rcent Fu el and energy interchange expense tax credits, net b y the sa me amount. in 1975 and b y 13 percent in 1976.

in 1974 increased by $1 79 million over T axes, o ther than in co me taxes, have Earnin gs per ave rage share in creased the previous year, and further increases escalated prim aril y due to increases in fr om $1.81in1 974 to $1. 86 in 197 5 of $19 milli on and $23 milli on, res pec- revenue, w hich is subj ect to a gross and to $1. 91 in 1976. Di vid ends o n tively, we re experienced in 197 5 and receipts tax. co mm o n stock we re paid at the ra te 1976. In 1974 the increase in this o f $1. 64 per share.

20

CONSOUDATED STATEMENTS OF INCOME Philadelphia Electric Company and Subsidiary Companies For the Year Ended December 31 1976 1975 (Th ousa nds of Do llars )

Operating Revenue Electr ic .. . . . . . . . . . . . . .. .. .... .. . . .... . . .. .. . . . . $1,024,8 14 $ 978,368 Gas .... . .................. . 158,865 117,989 Steam. 40,462 38,453 Total Operating Revenue 1,224, 141 1,134,810 Operating Expenses Fuel and Energy Interchange ...... . . 480,663 457,783 Other Operation Expense ...... . . . . . .... . . . . ..... . . 175,801 162,504 Maintenance ................ . . 75,030 62,313 Dep reciati o n . 97,980 91,221 Taxes o n In come. 100,598 86,337 Taxes, O th er than In come. 82,644 77,567 Total Operating Expenses 1,012,716 937,725 Operating Income 211 ,425 197,085 Other Income All owa nce for Funds Used Durin g Co nstruction. 77,641 66,874 In come Tax Cred its, net . . ................. . 24,167 22,271 Other, net . 2,548 2,087 Total Other Income 104,356 91,232 Income Before Interest Charges 315,781 288,3 17 Interest Charges Long-Ter m Debt. 147,596 136,507 Short-Term Debt .... . . ... . ... . 3,567 7,885 Total Interest Charges 151 ,163 144,392 Net Income ................ . .. . . . ... . . .... . . . . . .. . 164,6 18 143,925 Preferred Stock Dividends ............. . 39,022 36,026 Earnings Applicable to Common Stock . $ 125,596 $ 107,899 Shares of Common Stock-Average (Thousands) .. .. . .. . 65,606 58,135 Earnings Per Average Share (Dollars) . $1. 91 $1.86 Dividends Per Share (Dollars) ...... . . $1.64 $1.64 The note s an d sc hedul es to fin:incial s r:HL'llll.'IH S arc an in1egral pan of this st:ll cmcnt .

21

CONSOUDATED BALANCE SHEETS Philadelphia Elec tric Company and Subsidiary Compa ni es D ecember 31 1976 1975 ASSETS (Thousa nds of D ollars )

Utility Plant, In Service:

at original cost Electric. $3,034,654 $2,889,428 Gas ..... . 278,1 81 272,944 Steam . . 50,877 48,9 19 Common, used in all services ......... . 11 8,085 115,855 3,481,797 3,327, 146 Less: Accumulated D epreciation .. 860,349 77 5,856 2,621,448 2,551 ,290 Construction Work in Progress (including nucl ea r fuel of 1,265,443 1,118,471

$76,128 in 1976 and $47,511 in 1975 ) ................. . 3,886,891 3,669,761 Nonutility Property and Otherlnvestments . .. .. .. . . .. . . . .... . .... . . . . . . .. . . 13,203 12,273 Current Assets Cash. 23,847 17,429 Accounts Receivable Customers.. . . . . . . . . . . . . . .. .... ... . ... .. . 137,920 113,647 Refundabl e Federal Income Taxes. . ... . .... . 14,67 1 Other .. . .... . . . . . 15,428 26, 157 Deferred Fuel Expense . 19,854 17,933 Materials and Supplies, at average cos t Fuel (Coal , Oil and Gas ) ....... . . 58,722 61,522 Operating and Construction . . . .... . ..... . 29,614 26,497 Prepayments. . . . . ...... . 2,597 2,439 302 ,653 265 ,624 Deferred Debits ... . . ... . ..... .. ... . .. ... ... . .. . ... ..... . . 14,669 13,805 Total $4,217 ,416 $3,961,463 Th e no ccs and sc hedule s to finJncial statement s arc an im cgral pare of th is statemen t.

22

D ecember 31 UABIUTIES 1976 1975 (Th o usands of D o lla rs )

Capitalization Stockholders' Eq uity Preferred Stock - See Schedul e, page 28. $ 535,072 $ 485 ,864 Comm on Stock - See Schedul e, page 28 .. . . . . . .. ... . . 1,002,767 916,639 O ther Paid-In Capital ........... . 1,713 1,498 Retained Earnings ...... . . . ...... . 321,190 304,678 1,860,742 1,708,679 Lo ng-Term D ebt - See Schedule, pa ge 28 ...... . . . 1,936,4 17 1,776,936 3,797, 159 3,485 ,615 Current Liabilities Short-Term Deb t Ba nk Loan s ........ . . . .. .... . . . .. . . ... . . . . . . . . . 800 50,200 Commercia l Paper ............. . 6,426 57,754 C urrent Maturities of Lon g-Term D ebt . 36,898 60,894 Acco unts Payab le. . . . ... .. . . . . . . . .. .. . 72,278 67,618 Taxes Accru ed. . .. .. ........ . 20,170 34,650 Deferred (fuel expense) . . . .. . . . . .. . . . .. . . .. .. . .. . 10,53 1 9, 476 In teres t Accrued . . . . . . . . ....... . ..... . 43,183 37,829 Dividends D eclared . 11 ,570 12,457 Other. 4,654 3,549 206,510 334,427 Deferred Credits Accumul ated Deferred Income Taxes ........... . . 110,829 83,001 Accumu lated D eferred In vestment Tax Cred its ... . . . . . . . 87,957 40,203 Other . 14,961 18,217 213,747 141 ,421 Total $4,2 17,4 16 $3,96 1,463 Th e no tes and sc hedule s to finan cial stacemcnts arc an int eg ral pan of chis sra! cme nt.

23

CONSOUDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION Philadelphi a El ec tri c Comp any and Subsidiary Co mpani es For the Year Ended D ecember 31 1976 1975 (T h ouson ds of Do li ors)

Source of Funds N et Income... . . ... . . $164,618 $143,925 Charges (Credits) Not Affecting Funds Depreciation ...... . . 97,980 91,221 D eferred Income Taxes, net . .. . . .. . 28,882 24,472 Investment Tax Credits, net . . . ... .. ..... . . 52 ,668 8,353 Allowance for Funds Used During Construction .. (77 ,641 ) (66,874)

Total from Operations 266,507 201,097 Sale of Lon g-Term D ebt . .. . . . .. .. . . .. . .. .. . 200,000 245,000 Preferred Stock . . . . . . .. . . . 50,000 Common Stock. 86,128 133,723 Decrease in Short-Term D ebt . (100,728) (69,970)

Proceeds from contract term in ations- nuclear proj ects . 64,000 18,750 Total $565 ,907 $528,600 Use of Funds Addition s to Utility Plant . . . .. .......... . $380,007 $361 ,368 All owance for Funds Used During Construction (D eduction) (77 ,641 ) (66,874)

Dividends on Preferred and Common Stock. 147,097 131 ,465 Retirement of Long-Term D ebt. . .. . .. .. .. . .. . . 63,271 95,193 In crease (D ecrease ) in Other Items of Working Capital. 40,222 (2,032)

Other, net . . ......... . ... . .. . . . . 12,951 9, 480 Total $565,907 $528,600 Th t* no t1..*s and schedu les to fin :rnc ial s1a temen ts are an int egral p:ir t of th is Sl J tt'!lll' nt .

CONSOUDATED STATEMENTS OF RETAINED EARMNGS Phil adelphi a Electric Co m pa n y and Subsidi ary Co m pa ni es For the Year Ended December 31 1976 1975 (Th o usonds o f D o llo rs )

Balance, January 1 ......... . . ........... . .... . . . $304,678 S293 ,747 N et Inc ome (from pa ge 21 ) . . ..... . . .. . 164,618 143,925 469, 296 437 ,672 Cash Dividends D eclared Preferred Stock .. . 39,414 36, 026 C omm on Stock .. . 107,683 95,439 Expenses of Capita l Stock Issues. 1,009 1,529 148, 106 132,994 Balance, D ecember 31 .. ... . .. . . . . . ... .. . . .. . $321 ,190 $304,678 Th e narcs and scl1l* dul cs to fin:inci:i\ st:Heml'll l S are :i n inrcgra l pa rt of th is statcnwnt.

24

NOTES TO FINANCIAL STATEMENTS-Thousands of Dollars

1. Significant Accounting Policies: permitted b y the regul ato r y author- applied unifo rml y to all empl oyees General: All utility subsidiary co m- ities for rate-making purp oses. r ega rdl ess o f p os iti o n , a nd th e p a ni es o f Phil a d e lphia El e ctric In vestm ent tax credi ts w hich red uce am o unt depends o n len g th of service C ompan y are w h o ll y -owned and are Federal in co me tax expense, arc d e- and compensati o n ea rned to n o rm al included in the conso lidated fin ancial f e r re d by e quiv a le nt c h a r ges t o retirem ent age. The annuiti es arc statem ents. The acco unts arc main- in com e and subseq uentl y am o rti zed by paid o ut o f an irrevocabl e trust fund ,

tained in acco rd ance w ith the unifo rm cred its to in com e ove r the es tim ated to w hich the Com pa n ies m ak e con-system of acco unts prescribed by th e use ful li fe of th e rel ated utilit y p lant. tr ibutions to fund current and pnor r eg ul a t o r y auth o riti es h a vin g Allowance for Funds Used During se rvice cos t s o v e r a tw e nt y ye ar jurisdicti o n . Construction: Allowa n ce fo r fund s period . (Sec N o te 5)

Revenues: Reve nu es are reco rded in used durin g co nstructio n is defin ed in the acco unts up o n billing to the cu s- the a pplica bl e regulato ry sys tem o f 2. Taxes 011 Income:

tomer. Rate increases arc bill ed from accounts as " the net cost fo r the dates auth o rized o r permitted to b e- period o f constructi o n o f bo rro w ed com e effec tive by regulato ry autho r- fund s used fo r co nstru cti o n purposes Included in o per-ities . and a reasonable ra te up on o ther ating expenses:

Fuel Expenses: Fo r financial report- fund s when so used ." For fin ancial C urrent income in g purposes the Co mpany d efers that r e p o rtin g purp oses, th e all o w a n ce tax es po rtio n of fuel ex pense w hi ch is rc- determined in accordan ce w ith the Federal 5 6, 147 $42,161 cove r a b lc und er fu e l adju stm e nt forego in g definiti on is recorded as a State 12,901 11 ,351 cl auses until it is subsequentl y bill ed n o n-cash charge to con structi o n in the T otal 19,048 53,512 as fu el adjustment revenue in o rder plant acco unts with a corres po nding D eferred income to effec t a b etter matchin g o f fu e l n o n-cash credit to "O ther Incom e," taxes, net e xp e n se w ith r e la t e d re vc n u cs. thereby d efe rrin g the estimated cost Federal 23,447 19,955 Amounts o f fu el expense reco vered o f the ca pital empl oyed in constructi o n State 5,435 4,5 17 u nder the fu el adj ustment clauses arc wo rk in progress . Fo r incom e tax T otal 28,882 24,472 ch ar ged to o perati o ns wi th eq ui va lent purposes, the all owa nce accrued is no t In ves tment tax credits to deferred fu el expen se . included in taxable inco me, nor is th e credits, net The Co mpan y's sh are (42 .49% ) of d e prec iatio n o f the ca pitalized all o w- Federal 52,668 8,353 nucl ea r energy cos ts, relatin g to the ance a tax d educti b le expense . Inco m e T otal incl uded in Peach Bo tto m Sta ti o n (ow ned by the tax reducti ons o f $24,701 in 1976 and operating expense Co mpan y and three co nti g u o us uti - $22 ,520 in 1975 ari sin g from interes t Federal 82,262 70,469 1i ti es ), r e fl ec t s a zero n e t sa l vage charges assoc iated w ith debt used to State 18,336 15,868 va lu e and is charged to fuel ex penses o n fin ance co nstructio n arc all oca ted to T otal 100, 598 86,337 the b as is o f the number of units o f o th er incom e . The net after-tax rates Included in thermal energy p rodu ced as they relate w ere 8% o n J anuary 1, 1975, 8\,11% other income:

to the to tal therm al u nits to be pro- o n Jul y 1, 1975, 8.20% o n J anu ary C urrent income d uced ove r th e estim ated fo ur-year 1, 1976 and 8.40% o n Jul y 1, 1976 . taxes life o f the fu el. The es timated po rti o ns o f the all o w - Federal (19,684) (18,096)

Depreciation: Fo r fin ancial re po rtin g an ce attributable to fund s prov ided State ( 4,483) ( 4,175) purp oses, d e pr ec ia ti o n is prov id e d by commo n stock equity, w ith o ut T otal (24, 167 ) (22,271) o ver th e es timated servi ce li ves of th e regard to the tax effec t o f interes t T o tal income tax pl ant o n a straig ht-lin e bas is. The o n d ebt , we re equivalent to 15 percent prov1s1ons:

a nnu al d ep rec ia ti o n prov isio n s ex- in 1976 and 13 perce nt in 1975 o f Federal 62, 578 52, 373 p ressed as a perce nt o f ave rage dep re- ea rnin gs a pplica bl e to comm on stock. State 13,853 11 ,693 cia bl e utilit y p lan t in se rv ice, were Retirement Plan: T h e Co m pa ni es T o tal s 76,431 $64,066 approx imately 2.97% fo r 1976 and h ave a n o n co ntribut o r y serv ice 2.88% for 1975. annuity pl an ap plica bl e to all reg ul ar I11co1ne Taxes: D efe rred in co me taxes empl oyees. Th e annuiti es arc dctcr- Th e afo re m e nti o n ed in co m e t ax arc p rov i<l cd fo r di ffe rences be twee n mi n c d und er a fo rmul a w hi c h is prov isio ns di ffe r fr o m am o unts com-boo k and taxab le in co m e to th e extent puted b y appl y ing the Federal statuto ry 25

tax rate to adju sted income before Provisions for deferred income taxes bal a nc e arrangements with these 111 co m e taxes for th e fo ll ow in g consist of the fo ll owing tax effects of banks. The Company maintains de-reasons: timing differences between tax and posits w ith banks for working fund s 1976 1975 book incom e: for normal operations.

N et Income. $164,618 $143,925 1976 197 5 Depreciation. $29,770 $26,030 5. Retirement Plan:

Total income Deferred fuel Annuities under the Companies' taxprovisions.. 76,431 64,066 expense . . 1,054 ( 1,995) Retirement Pl an are funded throu gh a Other. ( 1,942 ) 437 Trust Fund . Contributions b y the Income before income taxes ... $241,049 $207,99 1 $28,882 $24,472 Companies aggregated $15,225 in 1976 and $14,315 in 197 5. Of such Deduct- Allow-Investment tax credits of $54,306 amounts, approximately 77 percent ance for Funds and $10,843 applicable to new plant was charged to operating expense Used During and equipment placed in service in and 23 percent , associated with con-Consu-uction 1976 and 1975 , respectively, have been struction labor, was included in the (non-taxable) . (77,641 ) (66,864) refl ected as reductions of Federa l in- cost of new utility plant. Based up on Adjusted income actuarial ass umptions, the es timated come tax expense with eq uivalent before income amounts refl ec ted in investment tax prior service liability of the Plan was taxes . .. .. $163,408 $141 ,127 credits, net. For Federal income tax substantiall y fully fund ed at December purpos es th e 1976 inv es tment tax 31, 1976.

Income taxes on above at Federal credits will eliminate current Federal 6. Commitments and Contingent statutOt)' rate income taxes payabl e, $39,635, and Liabilities:

(48%) . $ 78,436 $ 67,741 result in a claim for refund of prior Th e Companies have incurred sub-Increase (Decrease) yea rs' Federal income taxes of $14,671. stanti al commitments in connection due to: 3. Taxes, Other than Income: with their construction program. Con-Excess of tax struction expenditures are estimated 1976 197 5 depreciation to be $414,000 for 1977 and $1 ,338,000 Gross Receipts. $52 ,103 $48,263 over book de- for 1978-1 980.

Capital Stock. 10,817 10,667 preciation not The Price-Anderso n Act places a Realty. 11 ,127 10,687 nom1aliz.ed. (5,285 ) ( 4,229) "Limit of Liability" of $560,000 on Other, prin-State income tax, each nuclear generating fa cility for cipally social net of Federal public liability claims that co uld ari se security . 8,597 7,950 income tax from a nucl ea r incident . The owners benefits . 9,8 12 8,249 $82,644 $77,567 insure this ex posure by purcha sing the Amortization of 4. Short-Term Debt: maximum private insuranc e of investment tax The average short-term borrowings $125,000 and the remainder is pro-a*edits during 1976 aggregated $51,131 at an vided by indemnity agreements with previously average rate of 6.74% and durin g 197 5 the Nuclear Reg ulatory Commission deferred . .. (1,638 ) (2,490) aggregated $97,044 at an average rate (NR C ); however, beginning in Au-Other, net. ( 4,894) (5,205 ) of 7.85%. The maximum short-term gust, 1977, the indemnity by the NRC Total income tax borrowin gs o ut s tandin g were will decrea se, and , in the eve nt of a proV!S!OllS . $ 76,431 $ 64,066 $132,200 111 February, 1976 and nu clea r incid ent , the Company, to

$183,900 inJanuary, 197 5. The average the extent of its ownership participa-Provisions for rate of interes t o n sh ort-term borrow- ti on, co uld be assessed $5,000 for each income taxes as ings at D ecember 31, 1976 was 6.25% reactor owned (maximum $10,000 per a percent of: for bank loan s and 4.73% for com- reactor in a yea r). For property dam-Income before mercial paper. As of December 31, age to the nuclear plant facilities income taxes . 31.7% 30.8% 1976 the Company had informal lines which could arise from an incident Adjusted income of credit with bank s aggregating at the P each Bottom Station, the before mcome $212,575. The Company ge nerall y Company and its co-owners have taxes .. 46.8% 45.4% does no t have formal compensating private in surance up to $175 ,000; for 26

the Salem Station, the Company, Complaints have been fi led before Quarter Ended through the operator of the Station , the Pennsylvania Public Utility Com- Sep. 30, D ec. 31, is a m ember of Nucl ear Mutual mission against the Electric Fuel Ad- 1976 1976 Limited (NML ) which provides for justment C lause. Counsel for the coverage up to $150,000. In the event Company is of the opinion that no Operating of a loss at a plant insured by NML , refunds will be required of revenues revenue.. . .. $316,01 1 $300,982 the Company ma y be subj ec t to a collected under the fuel adjustment N et income .... $ 44,875 $ 44,042 maximum amount of fourteen times clause. Earnings its annual premium (currentl y no t Actions have been fil ed in the U.S. applicable to material for any one incident). The District Court against the Company common stock $ 34,693 $ 33,863 Company is a self-insurer , to the w ith respect to alleged discrimination Average shares extent of its ownershi p interest, for in its emp loyment or promotion outstanding any property loss in excess of the practices . Counsel for the Company (thousands).. . 64,8 18 68,859 aforementioned amo unts. is of the opinion that the Company Earnings per The Company's proportionate share has meritorious defenses to these suits. average share of a commitment for nuclea r fuel at (dollars ).. . $ .54 $ .48 th e P eac h Bottom Station as o f D ecember 31, 1976, was $45,373. An 8. Replacement Cost Information independent fu el company has been 7. Quarterly Data (Unaudited): (Unaudited):

authorized to acquire and own up to The quarterl y data shown below is Inflation has resulted in replacement a maximum of $150,000 of such fu el unaudited but in the opinion of the costs of utility plant in service that are at any one time and sell the energy Company includ es all adju stm ent s significantly greater than the recorded therefrom to the Company, as the (consisting of normal recurring original cost. The current replace-operator of this Station. accrua ls) necessary for a fair presenta- ment cost of the gross utility plant in Minimum rental commitments as of tion of such amounts. service at D ecember 31, 1976 is esti-December 31, 1976, under all non - mated at $7,780,000 which compares cancelable agreements are $18,500 for Quarter Ended to recorded cost of $3, 481, 797 .

1977, $17 ,800 for 1978, $17,000 for Mar. 31 , Jun . 30, The estimated replacement cost of 1979, $15,700 for 1980, $4,900 for 1976 1976 utility plant, determined by applying 198 1, $27,600 for 1982-86, $26,900 for indices to recorded cos t, does not 1987-91, $23,500 for 1992-96 and a Operating necessarily reflect the current value remainder of $3,800. The minimum revenue . . .. $324,740 $282,408 of these assets, nor does the excess of rental co mmitment s aggregating N et in come .... $ 42,986 $ 32,715 replacement cost over recorded cost

$155,700 at December 31, 1976 are Earnings represent additional equity for the applicable to the fol lowing ty pes of applicable to Company's common shareholders. Re-leased property: nuclear fuel $5 1,000 comm on stock$ 33,983 $ 23 ,057 placement cost of utility plant is the (es timated to be charged to operatio ns Average shares Compan y's estimate of the current over a four yea r period ); combusti o n outstanding cost to rep lace existing plant with turbine genera tors $80,400; co mputer (thousa nds) . 64,221 64,498 similar plant of most recent des ig n.

eq uipm ent $3,600; o ther, principally Earnings per Thi s rep lac em e nt co st informa -

rights - of - way $20,700. R ent als average share ti o n sho uld not be used to evaluate charged to operating expenses were (dollars). $ .53 $ .36 the effec t of inflation upon the Com-

$25,293 in 1976 and $25 ,854 in 1975 , pany's financia l position and results of which include nucl ea r fuel contrac t operation s, as repo rted .

payments of $13,790 in 1976 and In comp li ance with reporting

$12,455 in 1975. req uirements additional replacement cost in for mation is disclosed in the Co mpan y's annual r e p or t to th e Securities and Exchange Commission.

27

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~

SCHEDULE OF CAPITAL STOCK-DECEMBER 31, 1976 Philadelphia Electric Company C urrent Number o f Shares Am o unt Preferred Stock (Sl OO par ) cumulat ive: Redem pti o n (T ho usa nds)

Se ri es Price (A ) Auth orize d O utstandin g o f D oll ars) 9.52% (So ld 1976 at $100 per share). 109.52 500,000 500,000 (B) s 50,000 9.50%. 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% ...... . . . .... ... ... ... . 10800 750,000 750,000 75,000 7.75%...... .. . . ......... . 105.50 200,000 200,000 20,000 7.325%. . ............. . 106 .45 750,000 750,000 (C ) 75,000 7%. . ..... . . ..... . . 107 .00 400.000 376,000 (D ) 37 .600 4.68% . . . . . ... ... .. . . 104.00 150,000 150.000 15,000 4.4%. . ........... . 112.50 27 4,720 274,720 27,472 4.3% ....... . . . .. . .. . . ..... . 102.00 150,000 150,000 15,000 3.8%. *** ***** * * * * * *** 106.00 300,000 300,000 30,000 Un class ifi ed . .. .. . ......... ... . 4, 625 ,280 Total Preferred Srock . 10,000,000 5,350,720 s 535,072 Common Sto ck - no par (E) . 100,000,000 69,306 ,565 Sl ,002,767 (A) Redeemable at th e o ptio n of th e Company. at th e indica ted doll ar am o unts per share, plus accru ed di vidend s.

( B) 20,000 shares to be redeemed annuall y at $100 per share co mm encin g May 1, 198 1.

(C ) 30,000 shares to be redeem ed annuall y at $100 per share co mm encin g May 1, 1979 .

(D ) 8,000 shares arc bein g redeemed annu all y at $100 per share. The Co mpany purchased 7,915 shares in 1976 and 5,200 shares in 1975 fo r this purpose and at D ecember 31, 1976 had applied 8,000 shares to futur e redempti o n requirem ents. The excess of th e aggrega te par value of such shares over the aggrega te purchase price is refl ected in Other Paid-In Ca pital (S21 5 in 1976a nd , 192 in 1975 ).

(E) The Co mpany issued 5.110,227 shares of Co mm o n Stock (4,000,000 shares th ro ug h a public o fferin g and 1 , 1 10,~27 shares th ro ug h co nt inuin g D1 v1drnd Re111 ves tmrnt and Empl oyee Pl ans) for $86,128 111 1976 and 10,866,340 shares fo r S133.723 111 197:i . Ar Dece mber 31, 1976 there wen: 199,697 shares rese rved for issuance und er the Employee Srock Purchase Plan and 1,658,8 15 sha res under th e Dividend Rein ves tm ent and Srock Purcha se Plan .

SCHEDULE OF LONG-TERM DEBT-DECEMBER 31, 1976 Philadelphia Electric Company First a*nd Refundin g Mo rtgage Bo nd s (A ):

Am o unt Am o unt Am o unt (Tho usa nds) (Tho usa nds) (Th o usa nd s Seri es Due of Dollars) Se ri es Due of Dollars) Series Due o f Doll ars) 53/,i % 1977 . s 34 ,000 45/s% 1987. s 40,000 7 1/2 % 1998. $100,000 27/s% 1978. 25 ,000 33/,i % 1988 . 40,000 71/2% 1999 .. 100,000 11 % 1980. 125,000 5% 1989 . 50,000 73;'4% 2000 . 76.800 23,4% 1981 . 30,000 6 1/2% 1993. 60,000 11 % 2000 (Sold 1975 ) 80,000 3 1/,i % 1982 . 35,000 4 1/2% 1994 . 50,000 11 5/s% 2000 (Sold 197 5) 65,000 3 1/s% 1983. 20,000 9% 1995 . .. ...... 75,200 73/s % 2001 . 80,000 31/s% 1985 . 50,000 8 14% 1996. 80,000 95/8% 2002 (Sold 1976) 100,000 43s % 1986. 50,000 6 1/s% 1997. 75,000 8 1/2% 2004 . 125.000 91/s% 2006 (Sold 1976) 100,000 To tal First and Refundin g M o rtgage Bond s ............. ..... .. . . .. . . . . 1,666,000 N o te Pa ya ble- Bank . . . (B ) 1979 125,000 Pollutio n Co nt ro l o re ............... . ..... 5.5% 1977-97 37,000 Debentures. . ..... 12 % % 1981 (Sold 1975 ) 100.000 Debentures. . ......................... 4.85% 1986 26,994 Unam ortized D ebt Di sco unt and Premium , N et . . ............ . (5.263)

To tal Phi lad elphia El ectric Co mpan y ........ . . . ..... . .. . .. . . 1. 949,73 1 Philadelphia Electric Pow er Company -a subsidiary :

Sinking Fund D ebentures. 41/ 2 % 1995 23,698 Unam o rti zed D ebt Disco unt . (114 )

To tal Lo ng-Te_rm D ebt (Annual interes t rcq.uirem ents S151.404) 1,973 ,315 C urrent Matunn es 111cl uded 111 C urrent L1 abilmes ............ . (36,898 )

Lo ng-Term Debt included in Ca pitali za ti on . . ........... . ... . . Sl.936 ,41 7 (A ) Utilit y plant is subj ec t to th e lien of th e Co mp any's m o rtgage .

(B) Interes t at a rate of 115% of th e base rare o f th e bank on 90-da y loans to respon sible and commercial borro we rs in effect from rim e ro rime throug h Ma y 27, 1977 (effective rate 7.19%, D ecember 31, 1976) and at accelerating rates up to 11 8% of such base rare through m aturit y.

28

REPORT OF AUDITORS To Shareholders and the Board of Direc tors Philadelphia Electr ic Compa n y Philadelphia, Pennsylva ni a We have examined the consolidated balance shee ts of Philadelphia Electric Compan y and Subsidiary Companies as of December 31, 1976 and 1975, and th e related co nsol id ated stateme nts of income, reta in ed earn in gs, and chan ges in financial position for th e years th en ended. Our exa m -

in ati ons we re m ade in accordance w ith ge nerall y accepted aud it ing standards and, accordi ng ly, included such tests of the accou ntin g record s and such other auditing procedures as we con sidered n ecessar y in the circumstances.

In our op ini on , the conso lid ated fi nanc ial statem ents referred to above present fai rl y the fi nancia l position of Philade lphi a Electric Co mpan y and Subsidiary Co mpani es at December 31 , 1976 and 1975, and th e results o f th eir operat ions and the chan ges in their financial position for the years then end ed , in conformity with gen erally accepted accounting principles app lied on a consistent basis.

1900 Three Girard Plaza Phi lad elphi a, Penn sy lva ni a COOPERS & LYBRAND Febru ary 8. 1977 FINANCIAL STATISTICS Summary of Earnings (Millions of dollars}

1976 1975 1974 1973 1972 1971 1966 Operating Revenue (for details sec pages 31 and 32 ) . $1,224 .1 $1 ,134.8 $1,011.7 $766.6 $685 .0 $608 .1 S357.9 Operating Expenses Fuel and En ergy Interchange .. . 480 .7 457.8 439.2 260 .3 212 .0 189.8 86 .3 Labor. ........... . . . 161.9 152.2 134.0 125.6 120.4 108.8 76. 1 Other Materi als, Supplies and Services. 88.9 72 .6 73.4 65.5 ___fil 45.2 25.0 Total O peration and Maintenance. 73 1.5 682 .6 646 .6 451.4 387.4 343.8 187.4 D epreciation . . . . . . . . . . . . . . . . . . . . . . . 98.0 91.2 77.8 64.3 60.5 55.9 39.0 Taxes. ............. 183.2 163.9 134 .3 102.5 93 .6 80.8 50.0 Total Operat ing Expenses. 1,012 .7 937.7 858.7 618.2 541 .5 480.5 276.4 Operating Income. . . . . . . . . . . . . . . 211.4 197 .1 153.0 148.4 143.5 127.6 81. 5 Other In come Allowance for Funds Used During Construction . ..... . . . . . .. . . . .. 77.6 66.9 70.8 58.7 42.5 31.7 3.9 Income Tax Credits, net . ..... .. . 24.2 22.3 25.5 3.4 (0.4 ) (1.7 ) (0.2 )

Other, net .. 2.6 __bQ ___QJ 2.7 _ill --11 0.2 Total Other In com e . . . . . . . . .. 104.4 91.2 ~ 64.8 __R2 ___)).2 -----12 Income Before Interest C harges . ... . . . .. . . . 315 .8 288 .3 249.6 213.2 185.8 160.8 85.4 Interest C harges Lon g-Term Debt. 147 .6 136.5 106.3 84.8 73.4 60 .9 23.0 Shorr-Term Debt. ---1§ -----22. ~ 5.5 ~ ___Q] -12 Total Interest C harges. 151.2 144.4 120.5 90.3 77 .8 67.2 24.5 Net In come .. . . . . . . . . . . . . . . . . . 164 .6 143.9 129.1 122.9 108.0 93 .6 60.9 Preferred Stock Dividends .. 39.0 36.0 33 .7 27.6 21.6 15.3 3.7 Ea rnin gs Applicable to Common Stock. 125 .6 107.9 95.4 95.3 86.4 78.3 57.2 Dividends on Common Stock . .......... . . . . 107 .7 78.4

- -95.4- 86.4 67 .7 60.7 40.7 Earnings Retain ed . . . . . . . . . . . $ 17.9 $ 12.5 s 9.0 s 16.9 s 18.7 $ 17.6 s 16.5 Ea rnin gs per A vcrage Share (doll ars) . Sl .91 $1.86 Sl .81 $1.99 $2 .08 52.10 $2.08 Dividends Paid per Share (dollars) . .... . .. . ... $1.64 $1.64 $1.64 $1.64 $1.64 $1.64 $1.48 Common Stock Equity (Per Share) .. $19.13 $19.05 $20.21 $20.22 $20.00 $19 .54 516 .66 Shares of Comm on Stock - Average (Millions) . 65.6 58. 1 52.7 47 .8 41 .5 37.3 27.5 See page 20 fo r Discussion and Analysis of the Consolidated Statements of In come.

Common Stock Prices, Earnings and Dividends by Quarters (Per Share}

1976 1975 Fourth Third Second First Fourth Third Second First Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter High Price. . . . . . . . . . 518 $173/<i $167/ s $17 1/s $15 1/2 $15 $ 15 1/ 2 $143/<i Low Price. ...... . .. $ 15 5/s $155/s $15 S14 Vs $ 12 7/ s $12 3/<i $121/s $11 1/s Earnings . .... . . . . .. .. . . . . 4811 54<! 3611 53<! 41Q: 5oa: 4n 4811 Dividends. ... . .. .. 41<1 41<1 41<1 41<1 41<1 41<1 41<1 41Q:

29

FINANCIAL STATISTICS Summary of Financial Condition-December 31 (Millions of dollars) 1976 197 5 1974 1973 1972 197 1 1966 Assets Utility P lant, at Original C ost . .. . ... .. .. $4,7 47.2 $4,445. 6 $4,123 .9 $3,672 .1 $3,222 .6 $2,851.0 $1,657 .7 Less: Accumulated D epreciation . ... . .... . .. . 860.3 - 77 --5.8 717.8 - 665.4

- - 624.2 585.7 429.0 Total Utility Plant .. .. ... . .. . . 3,886.9 3,669.8 3,406.1 3,006 .7 2,598 .4 2,265. 3 1,228.7 N onutilit y Property and Other In ves tments ... 13.2 12.3 12 .7 11.5 9. 5 6.0 8. 1 Current Assets Cash . ... . . . .. .. . . . . . . 23.8 17 .4 16.0 16.2 17.8 25.2 12.3 Pollution Control Funds. 12.2 38 .0 Accounts Receivabl e . . .... . . . . . . . ... . . .. 168.0 139.8 111.9 75.6 72.1 63 .0 34.2 D eferred Fuel Expense . . . . . . .. . . . 19.9 17 .9 21.7 Materials and Supplies . . . . . . . . . .. .. . 88.3 88 .0 72.5 40.2 38.8 34.2 22.4 Other. 2.6 2. 5 21.1 3.8 2.8 2.0 2.6 D eferred D ebits. . . . . ... 14.7 -----1.1] 6.0 ------12_ 7.5 6.6 5.3 Total Assets. . . ... . .. .. . . ... . $4,21 7.4 $3,961.5 $3,668 .0 $3, 176 .1 $2,784.9 $2,402.3 $1,3 13.6 Liabilities Preferred Stock . . . . . . . . . . . . . . $ 535. 1 $ 485. 9 $ 486.4 $ 412.0 $ 337.5 $ 262 .5 $ 87 .5 Comm on Stock . ... .. . . . . ... . . ... . 1,002.8 916.6 782.9 77 1.8 622 .5 528.2 260.3 Other P aid-In Capital . 1.7 1.5 1.3 1.3 1.2 1.2 1.2 Retained Earnings .. . .. . .. .. 32 1.2 304.7 293.7 286 .2 27 1.0 254.7 199.0 Total Stockholders' Eq uity. 1,860.8 1,708 .7 1,564 .3 1,47 1.3 1,232 .2 1,046.6 548.0 Long-Term D ebt . .. . . . . . .. . . . .. . ... 1,936.4 1,776.9 1,597.7 1,3 19. 1 1,287 .2 1,1 61.8 651. 3 Total Ca pitaliza tion . . . . .. . . . . . . 3,797.2 3,485.6 3, 162 .0 2,790.4 2,519.4 2,208.4 1,199.3 C urrent Liabilities Bank Loans ..... ... .. . . . . .... 0.8 50.2 115.1 83.5 41.1 1.8 32 .3 Commercial Paper . ....... 6.4 57.8 62.8 64 .2 62 .7 47 .5 C urrent Maturities of Long-Term D ebt . 36.9 60.9 91.9 67.3 13.5 17 .1 1.5 Accounts Paya ble and Dividends D eclared . 83 .9 80.1 78 .8 67.4 49 .5 40.7 20.8 Taxes Accru ed . 20.2 34.7 16.5 18. 1 18.4 22 .3 13.7 Tax es D eferred (fuel expense) ..... .. .. . . 10. 5 9. 5 11 .5 O ther . .. . . ... . 47 .8 41.3 34.3 27.4 23 .7 20.7 8.7 D eferred C redits. 21 3.7 141.4 95.1 57.8 44 .0 31.8 26.8 Contribu tions in Aid of Construction* 12.6 12.0 10.5 Total Liabilities. $4,21 7.4 $3 ,961.5 $3,668 .0 $3, 176.1 $2,784.9 $2,402 .3 $1,3 13.6

• T ransferred to U tility Acco unts in 1973.

30

OPERATING STATISTICS 1976 1975 1974 1973 1972 1971 1966 ELECTRIC OPERATIONS Output (millions of kilowatt-hours)

Steam. ...... ... . . . ... ... . .... 13,385 12,814 16,649 18,536 20,181 19,849 16,007 Nuclear. . . . . . ... . . . . . . .. 4,937 4,387 1,745 176 97 206 H ydr aulic. . . . . . . . . . . . . . . . . . . . . . ... 2,065 2,275 1,938 2,132 2,242 1,738 1,304 Pumped Storage Output .. 1,062 1,275 1,075 1,3 18 1,430 1,639 Pumped Storage Input . . . . . . . . . . . . . . . (1,506 ) (1,785) (1,515 ) (1,876) (2,018) (2,302 )

Purchase and N et Interchange. 7,666 7,363 5,300 7,094 3,472 2,889 2,000 In ternal Combustion. . . . . . . . . . . . . . . ... . . .. . 792 914 1,200 688 946 940 19 Other. . . . . . . . . . . . . . . . . . . 36 1,016 27 1 86 Total Elec tric Output . . ..... . .. 28,437 27,243 27,408 28 ,095 26 ,351 25 ,045 19,330 Sales (millio ns of kilo watt-hours)

Residential . . . . . . . . . . . . . . . . . . . . . . . ...... . . . . . 7,585 7,424 7,159 7,493 6,856 6,649 4,457 Sm all Commercia l and Industri al . 2,755 2,624 2,558 2,663 2,503 2,428 2,087 Large Commercial and Industrial . ... . .. . . . . . .. . . . .. . 14,662 14,060 14,622 14,953 14,011 13,296 10,267 All Other. 1,271 1,227 1,217 ~ 1,1 36 1,085 -1.J.11 Tota l Elec tri c Sales. ... . . . . . . . . .. ..... .. . . . .... . 26,273 25,335 25,556 26,301 24,506 23,458 17, 9"24 Number of Customers, December 31 Res id enti al . . . . . . . . . . . . . ....... . . 1,137,544 1,120,981 1,113,036 1,103,163 1,090,92 1 1,079,585 1,006,613 Small Commercial and Industrial . 115 ,422 114,896 117 ,237 11 8,009 118,522 119,203 141 ,752 Large Comm erc ial and In dustrial. ... .. . .. . .. . 5,747 5,719 5,724 5,663 5,645 5,517 4,827 All Other .. . . . . . . . . . . . . . . . . . . . . 2,345 2,305 2,248 2,207 2,1 63 2 130 1,926 Total Elec tric C ustomers. . . . . . . . . . . . . . . . . . . 1,261 ,058 1,243,901 1,238,245 1,229 ,042 1,217,251 1,206,435 1,155,11 8 Operating Revenue (million s of dollars)

Residential . . . . . . . . . . . . .. . . ... . $ 373.2 $ 364 .7 $ 314.4 $ 254.4 $ 222 .7 $ 198 .3 $ 104.6 Small Comm ercial an d Industri al . . . . . . . . 149.3 138.9 122 .0 97.5 88. 1 78.6 53 .0 Large Commerc ial and Industrial . ... .. .. .. . . . .... .. . 442.9 418.3 388.1 257.5 228.6 198.2 110.0 All Other. 59.4 56.5 49.0 37.4 35.0 31.6 ~

Total Elect ric Revenue . .. . . .. . . . .. .... . .. . . .. $1,024 .8 $ 978.4 $ 873 .5 $ 646 .8 $ 574.4 $ 506.7 $ 287.9 Operatin g Income Before In come Taxes (milli ons of dollars ) . .... . . . .. .... $ 273.8 $ 261.5 $ 196 .5 $ 170.1 $ 166. 1 $ 141.8 $ 102.3 Avera ge Use per Residenti al Customer (kilowatt-hours). 6,710 6,645 6,460 6,829 6,317 6,187 4,477 Elec tric Peak Load, Net Hourly D emand (thous. kw ) . 5,346 5,530 5,431 5,760 5,313 4,922 3,673 Net Elec tri c Generating Capacit y- Summ er Ratin g (thou s. kw ) . 7,742 7,1 86 7,808 6,650 6,348 6,366 3,663 Cos t of Fuel per Million Btu . $1.24 Sl .23 $1.42 $0.71 $0.62 $0.59 $0.30 Btu per N et Kil owa tt-hour Generated. . . . . . .. . .. . 10,529 10,523 10,676 10,523 10,666 10,782 10,648 31

OPERA TING STATISTICS 1976 197 5 1974 1973 1972 1971 1966 GAS OPERATIONS S ales (millions of cubic feet)

Residential. ...... . . . 2,342 2,334 2,281 2,317 2,418 2,441 2,231 Ho use H eati ng. ..... . . . .. . .. . . . . . . . . . . . . 24,540 20,817 23,793 24,125 26,026 25,165 20,343 Commerical and Industrial . ..... . . . . . . . . . . . 33,390 30,012 35,913 37,868 41,490 40,624 32,060 All Other .. ...... .. . . . . . . .. 89 74 79 90 104 102 62 Total Gas Sales . 60,361 53 ,237 62,066 64,400 70,038 68 ,332 54,696 Number of Customers, December 31 Residential .. ... .. .. .. . . .. . . .. 89,459 90, 117 90,870 91,682 94 ,035 95,478 100,264 H ouse Heating. .. . . . . . . . 162,993 162,914 163,093 163,096 159,780 154,902 131,858 Commercial and Industrial . .. .. ... . . . . . . . 19,669 19,874 20,276 20,518 20,312 19,778 20,056 Total Gas C ustomers. ...... .. . . . . . . .. 272 ,121 272,905 274,239 275 ,296 274 ,127 270, 158 252,178 Operating Revenue (millions of do llars)

Residential .. $ 8.7 $ 8.1 $ 7 .1 $ 6.7 $ 6.2 s 6.2 $ 5.5 Ho use H eating. 73.3 54.8 55.4 51 .3 48.4 45.8 34.6 Commercial and Industrial . .. . . . . .... . . . . . . ... 76.1 54.5 45.7 42.0 38.2 34.8 21.4 All Other. . . . . . . . . ........ 0.2 0. 1 0. 1 0.1 0.1 0.1 0.1 Subtotal . . . . . . . . . . . . ..... . . . .. ... . . . .. 158.3 117 .5 108.3 100 .1 92.9 86 .9 61.6 Other Reven ue. ...... .... . .. . . .. 0.6 0.5 0.6 0.4 0.4 0.4 0.3 Total Gas Reven ue. ........ . . . ....... $ 158.9 $ 11 8.0 $ 108.9 $ 100 .5 $ 93 .3 $ 87 .3 s 61.9 Opera ting Income Before Income Taxes (millions of dollars) . . . . . . . . . . . . . . . . .. . $ 34.4 $ 19.6 $ 26.9 $ 22. 8 $ 16 .9 $ 21.7 $ 16.6 STEAM OPERATIONS Sales (milli ons of pounds ) . . . . . . . . . . . . . . . 7,735 7,117 7,600 7,762 8,328 8,223 6,674 Number of C ustomers, December 31. . . . . . . . . . . . . 679 689 710 723 737 733 1,154 Total Steam Revenue (millions of do llars ) . $ 40.5 $ 38.5 $ 29.3 $ 19.4 s 17.3 $ 14.2 $ 8.1 Operatin g Income Before Income Taxes (millions of doll ars ) . $ 3.8 $ 2.3 $ (3.2) $ 0.7 $ 1.2 s (2.2 ) $ 0.8 FISCAL AGENTS FOR STOCKS AND BONDS PHIL AD ELPH IA ELECTR IC CO MPAN Y - Preferred and Comm on Stock s l~cg i s trars Tran sfer Agents G IR ARD BANK PH ILADELPH IA EL ECTR IC COMPANY One Girard Pla za , Philadelph ia, Pa. 19101 2301 Mark et Stree t, Phi ladelp hia, Pa. 19101 C HEM ICA L BANK MORGAN GUA RANTY TRU ST CO ofN .Y.

20 Pinc Street, New York, N.Y. 10015 30 West Broa dwa y, New York , N.Y. 10015 PH ILADELPH IA ELECTR IC COMPANY - First and Refundin g Mortg age Bonds Trustee New York Agcm THE FIDELITY BANK MORGAN GUARANTY TRU ST CO. of N.Y.

Broad & Walnut Streets, Philade lph ia. Pa. 19109 23 Wall Stree t, New Yo rk , N .Y. 10015 PHIL ADELPH IA ELEC TR IC COMPA N Y - Sinkin g Fund D ebe ntures PH ILADELPH IA ELECTR IC POWER COM PA Y (A Su bsidiar y )- Debcmur es Trustee New Yo rk A gem THE PH ILADELPI-11 /\ ATIO AL 13A K IRV ING TRU ST COMPA N Y Broad & C hestn ut Stree ts, Phil adelphia, Pa. 19101 One Wall Street, New York , N. Y. 10015 All Philadelph ia Electr ic Compan y securities, excep t the Sinking Fund D ebentures and those series of First and Refundin g Mortgage Bonds and Preferred Stoc k w hich were sold privately to in stitutio nal in vestors , are listed on the Philadelphia Stock Exchange and the New Yo rk Stock Exchange. Phil adelp hia Electric Power Co mpan y Debentures are listed on the Philadelphi a Stock Exchange.

32 Oppositl': ,~ *11111" '"")'to spread tire ll'<>rd tlrat PE propides dependable elccrrir sen,ice 11*11s 111ade tlrn>1(~lr tire distrib111ion oj in>1HJI/ decals to e111ployees and tlreir friends and nc'(~lrbors.

PHILADELPHIA ELECTRIC COMPANY BULK RATE 2301 MARKET STREET U.S. POSTAGE P.O. BOX 8699 PHILADELPHIA , PA 19101 PAID PECO Address Correction Requested Return Postage Guaranteed