ML19031A130

Submit 1976 Annual Report by Delmarva Power & Light Company

ML19031A130
Person / Time
Site:	Salem
Issue date:	05/23/1977
From:	Delmarva Power & Light Co
To:	Office of Nuclear Reactor Regulation
References
Download: ML19031A130 (36)

Text

our Service Area - Delmarva Power provides electric service throughout most of the 5,700 square-mile Delmarva Peninsula. This area includes the State of Delaware, portions of nine Eastern Shore Counties of Maryland and the two Eastern Shore Counties of Virginia. In addition, the Company distributes natural gas in a 270 square-mile area in Northern Delaware .

Locations of the Company 's I DE.

generating stations on the peninsula are indicated on the map . In addition , the Company receives generation from two coal-burning stations in Western Pennsylvania and from the Peach Bottom , Pennsylvania, and Salem ,

' Delaware City Power Station, Delaware City New Jersey, nuclear power stations .

Indian River Power Station, Millsboro ON THE COVER (Clockwise from top left) - Construction is underway on coal-fired unit at Indian River Power Station; Thomas J.

Warren , Sr., Mechanical Welder at Delaware City Power Station ;

propane mixing station helps offset increased natural gas curtailment by our pipeline supplier; Joseph Huszti , Chemist, Delaware City Power Station; Jean McGrory, Section Supervisor, Customer Services, discusses billing question with Robert Moore, Clerk, Customer Services.

Percent Financial Highlights 1976 1975 Increase <Decrease>

Revenues $286.4 million $276.0 million

• 3.8 Net Income $35.1 million $31 .5 million* 11.4 Earnings per share $1.48 $1 .38* 7.2 Dividends Declared $1 .20 $1.20 Common Stock Outstanding (Average Shares) 18,820,521 17,579,509 7.1 Common Stock Book Value $15.01 $14.79 1.5 Construction Requirements $76.0 million $80.5 million (5.6)

Electric Sales 6. 7 billion kwh 6.4 billion kwh 4.7 Gas Sales 13.8 million mcf 12.9 million mcf 7.0 Electric Customers 260,476 250 ,593 3.9 Gas Customers 73,352 73,827 (0.6)

• Restated contents ANNUAL MEETING Third Tuesday in April at Page 12:30 p .m ., in the Company's President's & Chairman 's General Offices Message to Stockholders 2 800 King Street Revenues Up $10 .4 Million 4 Wilmington , Delaware Operating Expenses Increase

$9.1 Million 4 Earnings Increase to $1.48 Per Share 4 Construction and Financing 4 FIRST MORTGAGE AND Rate Increases in Effect COLLATERAL TRUST BONDS -

and Pending 4 Trustee, Chemical Bank ,

Favorable Decision from SEC 6 New York, N.Y Electric Consumption PREFERRED STOCK - Transfer Increases 7 Agent , Wilmington Trust Company, Gas Supply 8 Wilmington , Del.,

Gas Exploration Successful 8 Registrar -

Marketing Energy Efficiency 8 Delaware Trust Company, Generation Planning 9 Wilmington , Del .

Fuel Supply and Costs 10 COMMON STOCK - Stock Environmental Matters 10 Symbol, DEW, Listed on the New FEA Conversion Order 10 York and Philadelphia Stock River Crossing Project 10 Exchanges. Transfer Agents -

Chestertown Utility Acquired 11 Wi lmington Trust Company, Communications Activities 11 Wilmington , Del., and Irving Trust Employees 12 Company, New York, N.Y Management Changes 12 Reg istrars - Delaware Trust Officers and Directors 14 Company, Wilmington, Del. and Management Review of Bankers Trust Company, Operations 15 New York, N.Y Quarterly Financial Information 17 Financial Section 18 Consolidated Statistics 28

To our Shareholders:

Company earnings of $1.48 for received and construction During the year a plan was 1976 were 7.2% over restated is underway. developed for meeting the need earnings for 1975 of $1.38. In spite

• The Securities & Exchange power in our service area durin of this increase, earnings were well Commission granted the the next decade and for financi below expectations mainly Company's request for an this plan. The plan is based on because of an adverse rate exemption from the Public ver y thorough study and project decision by the Delaware Public Utility Company Holding Act of our peak load growth betwee Servic e Commission which allowed of 1935. The SEC decision now and the year 1995. We hav only 52% of the amount requested. essentially reaffirms our concluded that our peak load w*

In addition , a tentative settlement position that the Company grow at a rate of about 5.44% p was reached in February, 1977 of a is a single integrated utility year during the next 10 years. T rate case pending before the system and puts to rest the compares to an 8.5% average Federal Power Commission, which uncertainty regarding the annual rate of growth for the pa reduced revenue collected during separation of the gas and decade. Our projections take in 1976 by 1.4 million dollars. electric properties. account the influence of energy In mid-January, 1977 the

• The natural gas exploration conservation, population growt Company filed for an overall venture in which the and the effects of higher energ increase in Delaware electric Company is participating prices . In accordance with a revenues of about $26 million or found gas in the Southwest. Delaware PS.C. order, this plan 18%. This increase is required to The Company's share of the been submitted to the Corilmiss bring Company revenues up to the find will be an extremely for approval.

rate of return previously authorized small portion of our In order to have adequate as well as offset the continuing customers ' needs. generation to meet our growth erosion of the Company's earnings

• A reorganization of projections , we studied many during 1977. The Company plans to Company management was generation alternatives before request in a timely manner rate accomplished to more selecting the one which is most increases in other jurisdictions closely coordinate the acceptable from the standpoint during the year. parent and subsidiary capital and revenue requiremen Your Company is working with companies ' operations One part of our generation pl the Delaware , Maryland and throughout the peninsula. consists of purchase of capacit Virginia Comm issions to develop Mr. Roe was elected from the Philadelphia Electric electric rate structures that will Chairman of the Board , Company's Limerick nuclear po more closely reflect the on peak succeeding Mr. Gardner station from mid-1983 through 1 and off peak costs of providing and we are working together This arrangement is beneficial service. to improve internal because these units are under Several events took place during efficiencies. construction and no capital the year which are of special

• With the exception of $34.5 expenditures are required by importance to the Company: million of pollution control Delmarva prior to the startup of

• The final permit for the revenue bonds, no external units.

500,000 volt aerial financing was required in transmission line across the 1976. The pollution bonds Delaware River was afford the Company a more favorable interest rate.

2

Another part of our plan is the production , we cont inue to support methods of accounting for tallat ion of a nuclear generating industry efforts aimed at the construction work in progress and it to be on line in 1987. In order to deregulation of the price of natural allowance for funds used during hieve economy of size, this gas . construction .

ility would be either 900 or 1200 A national energy policy is sorely We appreciate the cooperation gawatts . Our system would needed and is long overdue. We of all employees during the past quire about 600 megawatts of this hope that a comprehensive policy year and we will all work together in it and we would invite other regarding use of all fu els and the 1977 to improve th e return on lities to share ownership . Our closing of the nuclear fuel cycle will shareholders ' equity while alysis of generation options be formulated during the next year. providing our customers with the icates that a nuclear plant is Such a policy will assist us in best possible service.

sently the most economical choosing the best course to follow Sincerely, ernative for the late 1980's.

wever, the plan provides us with in carrying out our proposed 10-year generation plan . The ~

flexibility to make changes in the results of nuclear referendums in Thomas C. Roe e of the unit or type of fuel seven states this year are Chairman of the Board RN~

clear or fossil) . Our objective is encouraging and indicate that a provide the most economical majority of peopl e support neration for the lowest overall development of nuclear power. Robert D. Weimer st to the Company and its Your Company will seek to President and Chief stomers . improve the quality of its earnings Executive Officer t the present time, oi l provides by proposing changes in the February 14, 1977 out 53% of our kilowatt-hour neration; coal provides 36% ,

d nuclear power 11 %. In 1987, we n for nuclear power to provide

% of our kilowatt-hour neration , while coal will provide

% and oil only 12%.

he Company continues to phasize conservation of all ms of energy due to what we lieve to be a serious , long range rgy problem in this country.

t has been necessary to curtail ural gas supplies to many ustrial and commercial gas tomers because of severe tailments by our pipeline plier. In order to stimulate gas Robert D. Weimer Thomas C. Roe 3

summit settlement Provides construction Funds Revenues Up $10.4 Million construction and Financing interest rate of 7Y4% and 7Ys%

Operating revenues totaled Construction requirements for respectively and were sold to

$286.4 in 1976, a 3.8% increase 1976 were approximately $76.0 finance pollution control equipme over 1975. The increase .is due million . From 1977 to 1981 for the Company's coal-burning primarily to increased rates and a construction requirements are Indian River Power Station and f 4.7% increase in electric sales. estimated at $673 million. Of that its share of pollution control Increases and decreases in amount, approximately $190 million equipment at the Peach Bottom revenue over 1975 by customer will be required in 1977, $157 million Atomic Power Station .

class were as follows : in 1978, $98 million in 1979, $83 During 1977 the Company Electric Gas million in 1980 and $145 million in anticipates financing a portion o Residential 4.3 % 22 .5% 1981 . its construction program through Commercial 3.3 % 29 .6% Funds for 1976 construction the sale of approximately $23.2 Industrial 0.5 % 37.8% million of common stock, $20.0 requirements were provided by Resale (3 .3)% million of preferred stock and $41 proceeds from the settlement of Interruptible (27.4) %

the nuclear plant contract with million of first mortgage bonds a Operating Expenses General Atomic Company and from short-term securities. The type, Increase $9.1 Million internally generated funds. These amounts and timing of future Operating expenses totaled sources are also expected to financing will be determined by

$233.3 million for 1976, an increase provide the cash requirements for prevailing market conditions.

of $9.1 million or 4.1% over 1975. $255 million of the financing The increase primarily reflects the requirements for 1977 through Rate Increases In Effect higher cost of purchased natural 1981 . We expect to finance the and Pending gas and increased maintenance balance of the construction Gas Rates costs for generation and program through 1981, together In April the Public Service transmission facilities. Fuel with $32 million required for Commission of Delaware (PSC) expenses leveled off in 1976 and refunding maturing long-term debt, approved the Company's reque represented an increase of 1.5%. through the issuance of first for an increase of 11.4%, or $2. 7 Earnings Increase to mortgage bonds, pollution control million, in revenue from rates

$1.48 Per Share revenue bonds, preferred and charged natural gas customers.

Earnings on common stock for common stock and unsecured The increas13 had been in effect, 1976 increased to $27.9 million short-term notes.

subject to refund since June 19 from $24.3 million in 1975. Earnings In December the Company No decision was reached duri per share in 1976 were $1.48, received the proceeds from the the year on the Company's app compared to $1.38 in 1975. At sale of $32 million of pollution to the courts, for the second tim year's end there were 55,860 control revenue bonds by the State of the Delaware Public Service shareholders of common stock. of Delaware and $2 .5 million of Commission's order concerning The Company has determined pollution control revenue bonds by 1973 request for a 12% increase that 100% of 1976 common stock the Commonwealth of gas rates. The Commission dividends are taxable for federal Pennsylvania. The bonds bear an granted an increase of about 411:

income tax purposes .

4

April 1974. On remand by the urt, the Commission reaffirmed 1975 the 4V2% increase to be fective from June 1, 1973 through rch 8, 1974 and agreed to xamine the subsequent period **

til June, 1 1975 in connection th an application for increased 12

• II s rates filed in 1975. The Court held Delmarva's position in the cond appeal , but a Commission

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'* ll g for rehearing was pending at ar end .

ctric Rates In May, at the Company's uest, the Delaware PSC reheard rtions of its decision issued the vious month which allowed the mpany a 6.5% increase in retail ctric revenues . As a result of the earing, the PSC granted a total rease of 7.1% or $10.6 million in ditional revenues. The Company requested an increase of 5% . The primary reason the full uest was not granted was due he Commission 's treatment of Top - The Company sorts service bills to use 12¢ favorable settlement of the first-class bulk mail rate for an annual savings of about mit project which occurred $25,000. Bottom left - The issuance of pollution e months after the rate control revenue bonds afforded the Company more rease was filed in 1975. favorable interest rates as compared to conventional y order of the Commission , the financing. Bottom right - Ken Jones, left, Assistant mpany proposed a new Manager of Corporate Planning and Earl Krapf, idential electric rate to the Manager of Corporate Planning, share a lighter aware PSC in June. The moment between rate hearings .

posed rate is not a rate increase ause it is intended to provide roximately the same revenues he Company. The proposed rate uces the cost of electricity ing winter months for customers 5

S.E.C. Decision Supports company Position who conserve electricity during the customers for the chang ing costs filed with the FPC in August 1974 peak summer months and of fuel used to produce electricity. The agreement provides the increases costs for those who The Commission concluded that Company with 4 7% or contribute to the summer peak. the Company 's calculation method approxi mately $1.7 mill ion of a $3 Hearings before the PSC on the resulted in collecting more during million rate increase. The rate proposal have not been 1974 than the method proposed by settlement requires final FPC scheduled . The Company is the Commission . The Company approval. Since the entire increa unable to predict when the new was ordered to refund that amount has been in effect since October rates will become effective or if or show cause why such refunds 1974, amounts collected in exce changes in the rates will be made . should not be made. The Company of the settlement amount will be In August the Delaware PSC is unable to predict what the final refunded to resale customers approved a temporary residential decision will be on th is matter. following FPC approval.

electric heating rate retroactive to See Note 2 to Finan cial Virginia April 13, 1976. The temporary Statements for additional In November the Virginia State heating rate , like the proposed information concern ing "Rate Corporation Commission approved residential rate, offers an incentive Matters."

a 4.5% increase in retail electric to customers who conserve revenues for the Virginia Favorable SEC Decision electricity during the peak summer subsid iary. The increase months. In October the Securities and represents 44% of the Company's Exchange Commission (SEC) total request and will increase Maryland granted the Company an annual revenues by $349,000.

In January, 1976 the Maryland exemption from most of the PSC approved a 5.2% rate Municipals and Cooperatives provisions of the Publ ic Utility increase in retail electric revenues In January, 1976 the Company Holding Company Act of 1935 a for the Maryland subsidiary. The applied to the Federal Power requested by the Company. The increase represents 58% of the Commission (FPC) for an average decision does not require the Company's total request and will increase in electric rates of 12.9% Company to divest its gas prope increase annual revenue by to all resale customers. The However, the Commission reserv

$2 ,379 ,000. increase was placed in effect in the right to consider divestiture The Company has appealed an April subject to refund . If approved , the gas property at some future order from the Public Service the new rate will increase annual date.

Commission of Maryland requiring revenues by approximately $4 .1 The Commission took into the Maryland subsidiary to refund million . A tentative settlement in consideration testimony of the

$125 ,000 to Maryland customers. th is case was reached on February Public Service Commission of The appeal results from a 1975 2, 1977, and is explained in Note 2 Delaware indicating that decision by the PSC of Maryland (b) to Financial Statements. separation of the gas company requiring the Maryland subsidiary In November a tentati ve would increase costs to users of to revise its formula for billing settlement was reached between both gas and electricity.

the Company and intervenors concerning a resale rate increase 6

The decision by the SEC mmed from action initiated by SEC in 1972 concern ing the paration of Delmarva's gas perty. In response to the SEC er, the Company requested an emption from the Public Utility lding Company Act of 1935 on basis that the Company is dominately an operating mpany and is operating a single egrated utility system .

ectric consumption creases ystem electric sales were 6.7 ion kilowatt hours in 1976, or

% higher th an in 1975. The rease reflects an improvement in anomic con ditions affecting Top - These townhouses in Wilton, a ctric sales to firm industrial new community near Wilmington, reflect stomers along with increased continued residential growth . Center -

ge by commercial and Progress continues at Wilmington 's Civic idential cu stomers. Center complex, where Company ncreases and decreases in headquarters building is located es as compared to 1975 by (partially visible, center background).

tomer class were as follows: Bot tom - Bil l Abern athy, Sr., Electric Residential 6. 9 % Meterman, affixes metering device to Commercial 3.9 % record customer usage patterns for Industrial 5.5 % rate-making analysis .

Resale {1.8)%

7

Generation Planning centers on coal and Nuclear Power Electric heating is a popular As a result of severe winter Marketing Energy choice of new customers . weather and add itional Efficiency During 1976 the Company added curtailments by our pipeline 8,799 residential electric supplier, gas volumes were The Company is committed to customers; of these, 2, 764 heat curtailed to industrial and encouraging its customers to ma their homes electrically. Of the commercial customers during the most efficient use of electrici 1,000 commercial customers January and February, 1977. Gas especially during peak load added during the year, 193 have service to residential customers periods on the system.

electric heat. Further increases in was not curtailed . Customers An Energy Efficiency Award the electric heating category are cooperated in reducing natural gas Program was initiated to anticipated as new home usage as requested by the encourage home builders to construction on the Delmarva Company. incorporate energy efficient Peninsula increases . No new gas customers have features in new home constructi The peak demand was 1,434,000 been added to the system since on the peninsula. To qualify for t kilowatts on June 28 , 1976 at 5 p.m. 1972. award , the builder must meet This peak was less than the 1975 The Company continues to requirements for adequate peak by 2% , and was 4.9% less support efforts to deregulate the insulation in order to reduce ener than the 1,508,000 kilowatt all time interstate price of new natural gas requirements. Response from peak set in 1973. in order to stimulate exploration builders and potential home buy and production of this domestic has been very favorable .

Company representatives are Oas curtailment Increases fuel.

pointing out the benefits of the For the sixth consecutive year, Oas Exploration successful electric heat pump, which offers the Company's natural gas supply Natural gas was discovered in the homeowner improved heatin was curtailed by the 1976 by the exploration consortium efficiency at a cost that is very Transcontinental Gas Pipe Line which the Company joined in 1975 competitive with other systems .

Corporation (Transco) . The through a wholly-owned subsidiary, Considerable interest has been Company experienced a "Delmarva Energy Company". The developed and a substantial curtailment of 41 % for the 1976 - Company's share of the number of new electric heating 1977 winter season and expects a discoveries, which are located in installations are heat pumps.

curtailment of 52% for the summer the Southwest, is equivalent to Through on-going meetings wi of 1977. 0.3% of our daily contractual commercial and industrial To partially offset these supply and will help to offset the customers, the Company provid shortages we are storing 3.4 billion pipeline curtailment. The gas is assistance in energy manageme cubic feet of natural gas and have expected to arrive by mid 1977. especially the use of techniques obtained propane equivalent to an Delmarva Energy Company has help control energy demand duri additional 220 million cubic feet. a 7.5% share in the exploration peak periods. Studies are The Company is seeking additional partnership and has invested underway to measure customer underground field storage . $338,000 through 1976. usage patterns in order to impro Exploration is continuing and load management aspects of Delmarva Energy Company will marketing energy efficiency.

participate in a second year of exploration at a cost of $280,000.

8

eneration Planning PLANNED CAPACITY ADDITIONS The Company has developed a Scheduled w generating plan following Total Company Commercial ncellation of the Summit Power Megawatts Portion Operation ation in 1975 when the reactor Under Construction :

pplier was unable to fulfill its Nuclear:

ntract. In agreeing to terminate Salem #1 1,090 81 1977 e contract, the Company Salem #2 1, 115 82 1979 tained a settlement of $125 Coal Fired :

ii lion . In dian Ri ver #4 400 400 1979 The plan is based on a year-long udy of generation alternatives Planned :

d energy demand on our system Nuclear:

Limerick #1 1,055 200* 1983 - 86 m 1976 through 1995.

Limerick #2 1,055 200* 1985 - 87 The following table shows major Summit 900/1200 600 1987 nerating facilities of the

• short term purchase mpany which are under nstruction and those which are Top - Meeting anned as part of the long range customer demand neration plan .

requires near-term The generation plan includes and long-range O megawatts of peaking generation planning .

neration in 1986 and an Left - Bob Bradway, ditional 100 megawatts in 1988.

Builder Services e addition of these units can be Representative , holds justed to reflect changes in the Company's mand and gives flexibility to the "Energy Efficiency eral l plan .

Award " sign for An integral and necessary part placement in front of our overall plan is to undertake qualifying home . The e selection activities on the award was created in ninsula for a coal-burning plant 1976 to encourage ncurrently with our plans for energy-efficient velop ing a nuclear site. Early site construction from the lection for a coal plant must ground up .

oceed to provide an alternate ould future events , for whatever ason, make a nuclear facility desirable or impossible.

9

construction Underway on River crossing Transmission Line Fuel supply and cost Studies at Pea Patch Island , units have remaining useful lives Delaware , continued in 1976 in only 6 to 9 years and the availabili The fuel supply situation was order to adequately document the of an adequate supply of low sulf stable in 1976 and the overall cost status of the colony of wading birds coal is questionable. The Campa of fuel (per million BTU) declined which nest there in the spring and has filed a plan with the EPA to for the second consecutive year.

summer months. This site is a convert two of the units to burn 1 During 1976 the Company breeding area and is one of the sulfur coal with an upgrading of received 11 % of its generation from largest mixed-species heronries on particulate control equipment. Th the Peach Bottom nuclear units, the east coast . Construction of the two oldest units would remain representing a savings in fossil Company's 500,000 volt Delaware oil-fired . The cost of the Compan fuels equivalent to 1.5 million River transmission line crossing plan would be approximately $31 barrels of fuel oil.

began about one mile north of the million , including interest during Oil provided 53% of the heronry in the fall of 1976 after construction but exclud ing Company's generation in 1976, and most of the birds had departed for expenditures to obtain an 36% was provided by coal.

their winter nesting areas to the adequate supply of coal.

The Company expects oil costs south. Since construction will A ruling on this matter is to increase in 1977 as the result of a continue into the 1977 breeding expected from the FEA in 1977.

worldwide increase in oil prices.

season, an additional year of study The increase will be partially offset is planned. No significant adverse by greater nuclear generation from impacts on the heronry are River crossing Project Unit #1 at Salem Nuclear anticipated as a result of line Started Generating Station, which began construction .

pre-commercial operation in In August the Company December 1976.

received the final permit required FEA conversion Order construct a 500,000 volt No decision was reached in 1976 transmission line across the Environmental Matters regarding the Federal Energy Delaware River. Construction of t Wastewater discharge permits Administration's (FEA) order in line is expected to take 15 month issued for the Company's four 1975 prohibiting the burning of oil to complete at a cost of $22 millio generating stations on the in Units 1 through 4 at the Edge When proposed in 1969 the peninsula require compliance with Moor Power Station. Environmental projected cost was approximate!

chemical and thermal discharge studies are being conducted by $6 million .

limitations. Construction of both the FEA and the The line represents an importa wastewater treatment facilities to Environmental Protection Agency link in an interstate high voltage meet chemical discharge limits by (EPA) on the effects of burning transmission system and will a July 1, 1977, statutory deadline is coal. enable the Company to receive it now underway at all four plants and The Company questions the share of power from the Salem total costs are estimated at about advisability of converting all 4 units Nuclear Generating Station .

$6.5 million. at Edge Moor because three of the 10

estertown Utility cquired In November the Company quired The Chestertown Electric ght and Power Company, which rved approximately 4,500 ectric customers in Kent and ueen Anne 's counties , Maryland .

e acquisition occurred through a ock-for-stock transfer. The estertown system previously s one of the Company's olesale-for-resale customers .

mmunications Activities To inform our customers about e many energy issues and ncerns facing us , the Company nducts an on-going mmunications program using a riety of media. Energy nservation information is a key ment in the program. The mpany instituted a mmunications campaign to orm southern system customers the economies and energ y ficiency of the electric heat mp . Top Left - Environmental studies during the year indi-Experience has proven that cate that wading birds , such as this snowy egret, will e-to-face communications not be adversely affected by a high voltage transm is-ough school programs , sion line across the Delaware River. Top Rig ht - The eaking engagements and daily energy conservation attributes of th e el ectric heat stomer contact is extremely pump are featured in Company advertising. Bottom -

ective in building understanding Unit #1 at Salem Nuclear Generating Stati on, ri ght, Company decisions and began pre-commercial testing in late Decembe r, with erations . Such communications commercial operati on scheduled for spring.

11

r

... "I consider it very good service indeedl" also provid e feedback of customer and women throughout our system . Operations , who retired October attitudes toward the Company. This The following letter from a Mr. Minich served the Company aspect of the program receives customer speaks for the way that with distinction for 42 years and greater emphasis than in the past. our employees strive to provide expertise contributed greatly to Delmarva Power is interested in service. well-run gas system .

the well -being of all communiti es in "Last night at about 10:00 my James A. Clark, Jr., added the its service area and continues to house was plunged into darkness duties of Vice President of Gas encourage employees to because of the failure of the Operations and President of participate in business and social transformer in my yard. Delmarva Energy Company to hi organizations of the communities "Your Resident Serviceman in duties as Vice President of where they live . As members of Trappe responded promptly to my Electric Operations .

these groups , employees are call and quickly organized a The Board also approved company spokesmen and benefit replacement. This was management and organizational the company greatly by being able accomplished by a crew from structure changes to improve th to discuss questions about Cambridge in a little over two hours efficiency and coordination of th company activities at the time they from the time of the outage. Since Company's system-wide arise. this involved mobilizing a number operations . The changes include of men and two pieces of heavy the election of William G. Price t Employees equipment in the middle of the Senior Vice President, Operation Approximately 1,671 of the night, I consider it very good and Generation; J. Kenneth Wile Company's 2.416 employees are service indeed! to Senior Vice President ,

represented by the International "Many thanks to everyone Engineering and Accounting ; H.

Brotherhood of Electrical Workers concerned ." - Robert W. Chapin , Ray Landon to Vice President, (A.FL.-C.1.0.). During 1976 a labor Trappe , Maryland. Personnel and Industrial Relatio contract was satisfactorily J. Edwin Hobbs to a Vice Presid concluded for the parent company. Management Changes and Ralph H. Smith to an Assist The labor contract for the In September the Board of Comptroller. In addition, Mr. Hob subsidiary companies is effective Directors elected Thomas C. Roe was named President and Mr.

until June, 1977. Wages and Chairman of the Board. He Smith a Vice President of the salaries of all employees during succeeds Austin T. Gardner who subsidiary companies .

1976 totaled $39.6 million. retired November 1. Mr. Gardner Mr. Roe joined the subsidiary Providing dependable utility remains on the Board , is a member companies in 1936 and has serv service is the very basis of our of the Executive Committee and is as President and Director of the business . Our success at living up retained in a consulting capacity. subsidiaries and a Vice Preside to this responsibility requires the William G. Price was elected to the and Director of the parent individual efforts and skills of men Board to replace Charles G. Company since 1971 .

Minich, Vice President, Gas 12

Mr. Price joined the parent mpany in 1970 as Manager of wer Plant Design Eng ineering d was promoted to Vice esident , Generation , in 1972.

Mr. Wiley joined the parent mpany in 1974 as Vice esident, Engineering . He was eviously associated with electric ilities in Florida.

Mr. Landon joined the subsidiary mpanies in 1963 as Manager of ustrial Relat ions and was med their Vice President, rsonnel and Public Relations in 73 .

Mr. Hobbs joined the subsidiary mpanies in 1933 and has served Vice President of Operation s ce 1968 and Director since 1974.

Mr. Clark joined the parent mpany in 1949 and was named e President of Electric erations in 1975.

Mr . Smith joined the bsidiary companies in 1961 a Staff Accountant and has rved as an Assistant Secretary d Assistant Treasurer of the rent Company since 1971. He is rrently Treasurer and Vice si dent for fi nance of th e Top - The Company participated in Bicentennial celebrations, such bsidiar y companies .

as this one in historic New Castle , Delaware. Center - Billie Tennant, Control Room Operator, Delaware City Power Station ; George Biddle, Jr., Cable Splicer; Mary Charlotte Campbell, Coal Handler, Indian River Power Station. Bottom - Doris DeStafney, Clerk, Customer Account-ing; Eileen Klosowski , Clerk, Accounts Receivable.

13

Board of Directors THOMAS C. ROE* FRANK R. GRIER Chairman of the Board Director of Dentsply International , Inc .

ROBERT D. WEIMER* (manufacturer and distributor of dental and President and Chief Executive Officer of the optical supplies) and retired Vice President ,

Company the L. D. Caulk Divisi on of Dentsply, Milford ,

WERNER C. BROWN ** Delaware President and Director of Hercules, Inc . DR. EARL C. JACKSON , SR.

{chemical manufacturer) Wilmington, Retired , former Superintendent of the Delaware Wilmington Public Schools OSCAR L. CAREY Wilmingto n, Delaware President and Director of Larmar WILLIAM G. PRICE Corporation (general real estate an d home Senior Vice President of the Company builders) Salisbury, Maryland DR. E. ARTHUR TRABANT

!RENEE duPONT, JR.* President of the University of Delaware Senior Vice President and Director of E. I. Newark, Delaware duPont de Nemours & Company (chemical JAMES M. TUNNELL, JR.

• manufacturer) Wilmington , Delaware Partner of Morris, Nichols , Arsht & Tunnell ,

AUSTIN T . GARDNER* attorneys Retired , former Chairman of the Board , Wilmington , Delaware President and Chief Executive Officer

• Member of Executive Comm ittee

• • Chairman of Executive Committee Officers THOMAS C. ROE H. RAY LANDON Chairman of the Board Vice President, Personnel and Industrial 41 Years ' Service Relations ROBERT D. WEIMER 13 Years ' Service President and Chief Executive Officer of the GEORGE J. PINTO Company Vice President , Administrative Services 29 Years ' Service 28 Years' Se rvice WILLIAM G. PRICE EDWARD F. SPEAR Senior Vice President, Operations and Vice Presid ent, Corporate Communications Generation and Customer Services 6 Years ' Se rvice 30 Years ' Service J. KENNETH WILEY ALFRED C. THAWLEY, JR.

Senior Vice President, Engineering and Secretary and Treasurer Accounting 21 Years' Service 2 Years' Service WILLIAM E. ROSSELL, SR.

JAMES A. CLARK, JR. Comptroller Vice President , (Electric and Gas 28 Years' Service Operations) of the Company and President JAMES W. PORTER of Delmarva Energy Company Ass istant Comptroller 27 Years ' Service 20 Years ' Service JAMES L. HAMMOND RALPH H. SMITH Vice President, Finance & Accounting Assistant Comptroller 18 Years' Service 16 Years' Se rvice J. EDWIN HOBBS RUTH V. LOKEY Vice President of the Company and Assistant Secretary and Assistant Treasurer President of Delmarva Power & Light 39 Years' Se rvice Company of Maryland and Delmarva Power PAUL A. MODESTO

& Light Company of Virginia Assistant Secretary and Assistant Treasurer 43 Years ' Service 6 Years ' Service 14

Dividend Reinvestment and Common Share Purchase Plan For more than 2 years , the Company has offered the owners of Common Stock the opportun ity to reinvest cash dividends and/or invest additional cash monthly in amounts from $25 up to $3,000 per quarter to purchase additional shares of Common Stock without paying any brokerage or service charges . More than 8,000 (or 14%)

of the common shareholders are participating in the Plan . They have

Q)

"'O 0

()

0.

N invested their dividends and/or optional cash payments amounting to more than $5.6 million to purchase 455,252 new shares of the Company's Common Stock.

If you are not participating, you may want to consider the benefits of joining the Plan. To receive a Summary Prospectus containing details of the Plan , please complete and mail the attached CJ) form to the Company. In the event that you are participating in the Plan on an optional cash payment basis only, remember that you can instruct the Company to invest your dividends also.

Q)

E ro z ()

Please Affix9¢ Postage*

Delmarva Power 800 King Street Wilmington, DE.19899 ATTN: Stockholders Relations

MANAGEMENT REVIEW OF OPERATIONS Consolidated Summary of Earnings (Thousands of Dollars) 1976 1975* 1974* 1973 1972 1971 Operating Revenue .. ............... . . $286,388 $276,026 $261,494 $188,359 $158,844 $129,505 Operating Expenses Operation . .. . .... . ....... ... . . .

' 169,924 165,165 153,494 99,323 80 ,517 66,982 Maintenance ... . ...... . . ... . ... . . 21,596 17,769 16,289 13, 715 12,960 10,536 Depreciation ... ... .. . . . . .. . ...... 25,367 24 ,579 21 ,656 18,278 16,329 13,961 Taxes ... .... ..... . ...... . .. ... .

' 16,455 16,689 18,684 15,545 14,609 9,479 Total operating expenses ... .. . 233,342 224 ,202 210,123 146,861 124,415 100,958 Operating Income ..... . ... . . . ..... . .. 53,046 51 ,824 51 ,371 41,498 34,429 28,547 Other Income Allowance for funds used during construction . . .. ... .. .. . . 9,439 8,354 8,527 10,251 9,770 8,037 Other, net of taxes . .... . . . . . . . . . . ' 2,289 605 190 54 156 92 Income Before Interest Charges .... ... . 64,774 60,783 60,088 51 ,803 44,355 36,676 Interest Charges ......... . .... . .... . . 29,646 29,244 27 ,355 21, 141 16,848 13,368 Net Income . .. ...... .. ........... .... 35,128 31 ,539 32,733 30,662 27 ,507 23 ,308 Dividends on Preferred Stock .......... 7,250 7,250 7,250 6,360 6,050 4,637 Earnings Applicable to Common Stock .. 27,878 24 ,289 25,483 24 ,302 21,457 18,671 Dividends on Common Stock . .... . .. . . 22,618 21, 107 17,995 15,851 13,940 12,233 Addition to Retained Earnings ... . .... . . $ 5,260 $ 3, 182 $ 7,488 $ 8,451 $ 7,517 $ 6,438 Common Stock Average shares outstanding (thousands) ........ ... . . .. . .... 18,821 17,580 14,862 13,547 12,128 10,921 Earnings per average share . . . . . . . $1.48 $1 .38 $1 .72 $1.79 $1 .77 $1.71 Dividends per share ....... . . $1 .20 $1.20 $1.20 $1.17 $1 .13 $1.12

• Restated Operating Revenue Total operating revenue for the year ended December 31 , 1976 increased $10.4 million , or 3.8%, over 1975. The increase reflects higher gas base rate and gas production revenues ($6.6 million) as well as increased electric base rate revenues ($25 .8 million) and higher electric and gas sales. This increase was partially offset by lower electric fuel adjustment charges ($19.2 million) and , in 1975, repeal of the Delaware 5% utility tax to residential customers and the termination of a facil ities agreement between the Company and a neighboring ut ility.

Increased sales reflect improved economic conditions and greater heating demands as a result of unusually cold weather. Total heating degree days in the Company 's area for 1976 were higher than the norm for the past thirty years.

Industrial sales were 119,000,000 KWH , or 6%, higher than last year.

Total operating revenues for .1975 increased $14.5 million , or 5.6% , over 1974 due mainly to rate increases placed into effect and higher fuel adjustments partially offset by the repeal of the Delaware 5% utility tax and a slight decrease (3.0%)

in electrical energy sales .

15

Operation, Fuel and Maintenance Expenses Total electric fuel expense for 1976 increased slightly over 1975 reflecting write-offs of fuel costs previously deferred, partially offset by a decrease in fuel cost per million Btu . The increase in 1975over1974 reflects higher previously deferred fuel costs offset by a decrease in cost per million Btu combined with lower generation during the year (See Note 1 - Fuel Costs). Fuel expense per million Btu at the Company's generating stations is shown in the following table:

1976 1975 1974 Oil $1.91 $2.12 $2.18 Coal 1.07 1.09 .90 Refinery By-Product 1.83 2.03 1. 71 Nuclear .26 .26 .26 Overall Cost $1.46 $1.53 $1.70 Generation was 494 ,000,000 KWH, or 6. 7%, higher in 1976 and 781,000,000 KWH lower in 1975 when com-pared to the corresponding previous years. The increase in 1976 reflects greater sales of energy to the Pennsylvania-New Jersey-Maryland interconnection. Nuclear energy was 11 % of system generation in 1976 and 1975 compared with 4% in 1974.

Other operation expenses increased $10.6 million, or 18.9%, over 1975 and 1975 increased $6.5 , or 13%, over 1974. These increases are due primarily to an increase in the cost of gas purchased , escalated labor costs and general inflationary pressures. The increase in the cost of gas purchased was particularly higher in 1976 as the Company acted in response to greater curtailments from its supplier by purchasing supplemental gas supplies in the unregulated intrastate market at higher rates. The average cost of gas was $1.22 per MCF in 1976 compared to $0.92 per MCF in 1975.

Maintenance expenses increased $3.8 million, or 21.5%, over 1975 due mainly to increased maintenance performed at the Peach Bottom Nuclear Generating Station as well as increased maintenance on the Com-pany's transmission and distribution systems.

Taxes Taxes on income increased $1.2 million over the year 1975, reflecting the normalization of tax benefits with respect to additions to plant for 1975 and 1976. Taxes other than income decreased $1.4 million compared to 1975 and such taxes for 1975 decreased $1.1 million compared to 1974 primarily due to the repeal of the Delaware Public Utility Tax to residential customers in July, 1975.

Other Income Allowance for funds used during construction increased $1.1 million, or 13.0%, over 1975 primarily as a result of on-going construction at the Salem Nuclear and Indian River Power Stations as well as an increase in the rate used to 8% in January 1976 from 7Y2% in 1975.

Other income increased $1 .7 million over 1975 largely due to interest income received from short-term investment of the proceeds of the Summit Nuclear Settlement.

Interest Charges Total interest charges for 1976 increased slightly over 1975. Interest on long-term debt increased $2.2 million and represented the annualization of interest paid on $30 million of bonds issued in July, 1975. This increase was largely offset by a decrease in short-term interest charges of $1.9 million. As a result of a favorable cash position gained through the Summit settlement, the Company did not incur any short-term debt in 1976. Total interest charges for 1975 increased 6.9% over 1974 reflecting the sale of two $30 million bond issues.

Earnings Per Share Earnings applicable to Common Stock increased 14.8% in 1976. An increase in the average number of common shares outstanding as a result of the Company's Dividend Reinvestment Plan and the Chestertown acquisition acted to hold the increase in earnings per share to 7.2%. Earnings per share decreased in 1975 from 1974 due to the factors discussed above and the sale of 2 million shares of Common Stock in July, 1975.

16

Dividends and Price Range of Common Stock The initial public distribution of the Common Stock of the Company was made in May 1944, and quarterly dividends have been paid continuously since July, 1944. A quarterly dividend of 30~ per share has been declared for the fourth quarter of 1976 payable January 31, 1977 to shareholders of record January 9, 1977.

Dividends on Common Stock increased $1.5 million over 1975 and 1975 dividends increased $3.1 million over 1974. These increases were due to an increased number of shares outstanding. Dividends paid during 1976 averaged 81.1 % of earnings applicable to Common Stock compared to 86.9% in 1975 and 70.6% in 1974. Future dividends will be dependent upon future earnings, the financial condition of the Company and other factors (See Note 9 to Financial Statements).

The following tabulation shows the price range and dividends per share of the Common Stock of the Company on the New York Stock Exchange during the periods indicated:

1976 1975 High Low Div. High Low Div.

1st quarter 135/a 12% $0.30 113/a 9 $0.30 2nd quarter 13Va 123/a 0.30 133/a 10% 0.30 3rd quarter 143/a 12V2 0.30 125/a 1OV2 0.30 4th quarter 143/a 13Va 0.30 13 103/<i 0.30 Quarterly Finanoial Information Presented below are quarterly results of operations for 1976 and 1975. Previously reported quarterly financial statements have been restated to reflect the adjustments described in Note 2 to Financial Statements pertaining to "Rate Matters".

Three Months Ended (000)

March 31 June 30 1976 1975 1976 1975 Operating Revenue .................... $75,909 $75,462 $69 ,330 $61,611 Operating Income . . .. ........... .. .... $14,774 $13,625 $11,857 $11,390 Net Income . .. .. .. . ... . .. . ............ $10,120 $ 8,345 $ 7,321 $ 6,334 Earnings Applicable to Common Stock ... $ 8,308 $ 6,532 $ 5,508 $ 4,522 Average Shares of Common Stock Outstanding . . . . . . . . . . . . . . . . . . . . . . . . 18, 701 16,516 18,760 16,558 Earnings Per Average Share of Common Stock . . . . . . . . . . . . . . . . . . . . . . $.44 $.40 $.30 $.27 Three Months Ended (000)

September 30 December 31 1976 1975 1976 1975 Operating Revenue .. . ................. $71,959 $72 ,37 4 $69, 190 $66,579 Operating Income ..... .. . . . . ... . . .. ... $15,159 $15,416 $11,256 $11,393 Net Income ..... .. ........... . .... . ... $10,712 $10,232 $ 6,975 $ 6,628 Earnings Applicable to Common Stock ... $ 8,900 $ 8,420 $ 5,162 $ 4,815 Average Shares of Common Stock Outstanding . . . . . . . . . . . . . . . . . . . . . . . . 18,820 18,601 19,001 18,643 Earnings Per Average Share of Common Stock . . . . . . . . . . . . . . . . . . . . . . $.47 $.46 $.27 $.25 17

CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31 (Thousands of Dollars) 1975 1976 (Note 2)

OPERATING REVENUES Electric .... ... .. .. ....... . ...... .. . . . .. . .. .. ... ..... .. ..... . $242,279 $239,355 Gas .. ............ ... ..... .. .. ... . . . . . . .................... . 32,248 25,673 Steam and electric (refinery service) . .. .......... . ...... . .... . . 11,861 10,998 286,388 276,026 OPERATING EXPENSES Operation :

Fuel for electric generation . . ... . .... . .................. . .. . 123,792 122,020 Energy interchange, net . ........ . ... . .... . . . . .. . . . .. .. . ... . (20,852) (13,190)

Gas purchased ..... . . . . . ... . . . .. . . . ... .. ............. . .. . . 17,495 12, 179 Other operation .... . .............. .. . . . . ......... . . . . . .. . . 49,489 44, 156 Maintenance .................... ..... ....... . . . ... . ... . .. . . . 21,596 17,769 Depreciation ........ .. ..... . .... . .... . . .. . . ....... . ..... .. . . 25,367 24 ,579 Taxes on income ........... . .... . . . . .. . . ........ . .. . .... .. . . 2,614 1,415 Taxes other than income ...... . ... . ... . . . .. . .. .... . . ...... . . . . 13,841 15,274 233,342 224,202 OPERATING INCOME ... . . . ....... . ... .. ............... ... ... . 53,046 51 ,824 OTHER INCOME Allowance for funds used during construction ............. .. . .. . 9,439 8,354 Other, principally interest income in 1976, net of taxes ........ ... . 2,289 605 11,728 8,959 INCOME BEFORE INTEREST CHARGES 64,774 60,783 INTEREST CHARGES Long-term debt ........... .. .. ... ... . .. ........ . ... . ... . ... . . 29,379 27 ,217 Short-term debt and other ......... . .... ... ................ . . . 267 2,027 29,646 29,244 NET INCOME 35, 128 31 ,539 DIVIDENDS ON PREFERRED STOCK 7,250 7,250 EARNINGS APPLICABLE TO COMMON STOCK $ 27,878 $ 24 ,289 COMMON STOCK Average shares outstanding (thousands) .................... .. . 18,821 17,580 Earnings per average share . .......... . ......... . . . .... ... ... . $1.48 $1 .38 Dividends per share . ........ . . . .. . .... ... .. .. ... . . . .. . ..... . $1.20 $1 .20 The Notes to Financial Statements are an integ ral part of the above statemen ts.

DELMARVA POWER & LIGHT COMPANY and Subsidiary Companies 18

CONSOLIDATED STATEMENTS OF CHANCES IN FINANCIAL POSITION FOR THE YEARS ENDED DECEMBER 31 (Thousands of Dollars) 1975 1976 (Note 2)

SOURCE OF FUNDS Net Income . .. ... . ..................... .... .. .. ........... . $35, 128 $ 31,539 Items not requiring (providing) funds :

Depreciation ... . .... .. .......................... . . . . . .. . . 25,367 24,579 Allowance for fun ds used during construction ....... .. ..... . . (9,439) (8,354)

Investment tax credit adjustments , net .. .. . .... . .. . . . . . .. ... . 4,187 2,962 Deferred income taxes , net ..... . . .. .......... . ....... . .. . . 1,175 (3,038)

Funds provided from operations . .. . ....... . . . ..... . ..... . 56,418 47,688 Net proceeds from sale of:

Long-term debt .. .. ..... . .. .... .. ... . ..... . ... . . ....... . . . 33,524 59 ,339 Common stock ............ . ........ . . ... . .. . . . . . 5,221 25,823 roceeds from sale of contracts for nuclear plant ............... . 106,250 Other . . . .. . ........ . . . .. .... . ................. . . . . .. . .... . . (3,520) 9,403

$91,643 $248,503 USE OF FUNDS Construction expenditures (excluding allowance for funds used during construction) . .. ...... . .. . . . . . . .. . .. .... . $66,541 $ 72 ,100 Di vid ends on common and preferred stock . .... .. . 29,868 28,357 Current maturity of long-term debt .. .... . ..... ... ............ . 10,000 Decrease in short-term debt . ...... . . . . ........ . .... . ........ . 53 ,050 Increase in preliminary survey and investigation charges . .. .... . 3,755 5,296 Deferred fuel expense not billable within one year . ....... . 2,268 Adjustments to net credit arising from sale of contracts for nuclear plant ... . ................ . .......... . ....... . . (9,343) 13,600 Increase (decrease) in working capital* ..... . ,_........ . ..... . . . (11,446) 76, 100

$91,643 $248,503

• CHANGES IN COMPONENTS OF WORKING CAPITAL Cash and temporary cash investments ....... . .... ... . ... .. . $34,552 $ 16,654 Special deposit for pollution control equipment .... . ... .... . . 23,617 Recei vables from sale of contracts for nuclear plant .. . . . . .... . (90,000) 90,000 Accounts payable ............. . . . ............... .. . ..... . 22,830 (23,062)

Other, net . . ......... . .... ... . . ..... ... .. . . .. ... . . . . . . .. . . (2,445) (7,492)

$(11,446) $ 76,100 The Notes to Financial Statements are an integral part of the above statements.

DELMARVA POWER & LIGHT COMPANY and Subsidiary Compani es 19

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31 (Thousands of Dollars)

ASSETS 1976 1975 UTILITY PLANT, at original cost Elect ric .. . .. . . . .. . ............ .. .... .... .. . . .. . .... . ... .. . . . $754,139 $702,393 Gas ... . .. ............................. . .. .. ........... . ... . 54,917 54,268 Steam and electric (refinery service) .... . .... ... ... . .... . .. .. .. . 22,223 22 ,216 Common ... ..... . ...................... ...... . .. . .... ... . . . . 17,993 17,766 849,272 796,643 Less: Accumulated depreciation 220,979 198,965 628,293 597 ,678 Construction work in progress ....... . ... . . . . ... . ... . ... . . 155,028 131 ,228 783 ,321 728 ,906 NONUTILITY PROPERTY AND OTHER INVESTMENTS 3,106 2,200 CURRENT ASSETS Cash and temporary cash investments .. . .. . .. .. . .. ........ . . 62,610 28,058 Special deposit for pollution control equipment .... . . .. .......... . 23,617 Receivable from sale of contracts for nuclear plant . ... . .. ....... . . 90,000 Accounts receivable ............. . . . ...... .. ... .. ... .. . . . .... . 35,607 25,813 Deferred fuel expense ...... ... .. ... . .............. . ..... .. .. . 4,785 7,980 Materials and supplies, at average cost:

Fuel .... . . .... ..... . .. . . .. .. . . ............ .. . . ...... . .... . 21 , 113 22 ,556 Operation and construction ..... . .. ........ . ...... .. . . .. . ... . 17,862 17,263 Prepayments . .. . . .............. ..... . . . ..... ......... ...... . 3,067 2,691 168,661 194,361 DEFERRED DEBITS ... . . . ............ . ....................... . 16,509 9,257 TOTAL .. . . . .. . . . ... ... .. ........ . . . .. . . .. .. . .. .... ...... . . .. . . $971,597 $934,724 The Notes to Financial State DELMARVA POWER & LI 20

1975 LIABILITIES 1976 (Note 2)

CAPITALIZATION Stockholders' equity:

Preferred stock, cumulative, par value

$100, author ized 1,800,000 shares:

Outstand ing 1,050,000 shares . ..... .... ... .. ....... . ... . $105,000 $105,000 Premium on preferred stock .............. .. ................ . 226 226 Common stock, par value $3.375, authorized 25,000,000 shares:

Outstanding 19,076,019, and 18,652,779 shares .......... . 64,382 62 ,953 Premium on common stock . .. . .... . . . ................. . . .. . 123,354 119,562 Retained earnings ......... . . ... . . . ....... . ............... . 98,349 93 ,089 391 ,311 380,830 Long-term debt ............. .. ............. . .. . ......... . ... . 430,920 407 ,348 822,231 788 ,178 CURRENT LIABILITIES Current maturity of long-term debt ... . . ....... ................ . 10,000 Accounts payable .................... ... ... .. .. . . . . . .. . . . . . . 15,811 38,641 Taxes:

Accrued ...... . ... ... .... .. . . ....... ... ... .... .... . . .. ... . 5,059 3,411 Deferred ... . ..... ............. . .... .. ......... . .......... . 2,410 4,003 Interest accrued . . ... ... ........ ... .. .... ...... . .. .. . ... ... . . 8,938 8.717 Dividends declared ... ..... .. . . . . ... ... .. . ..... .. ..... .. .. . . . 5,723 7,501 Other ..... . ....... . ... . ...... . . . ... .. . . . . .. .. . .... .. . . .... . 3,055 4,570 50,996 66,843 DEFERRED CREDITS AND OTHER Net credit arising from sale of contracts for nuclear plant .. .. . .. ..... ..... . .... ... ....... . ... . . . 74,221 64 ,878 Accumulated deferred income taxes ...... . . . . . . .. .... ...... .. . 5,391 2,623 Accumulated deferred investment tax credits .................. . 12,414 8,171 Other .... . ..... . .. . .. . .................... .. .. . .. ... . 6,344 4,031 98,370 79 ,703 CONTINGENCIES AND COMMITMENTS (Note 10)

TOTAL ... . . . ..... . ....... .. . .. ............ . . ................. . $971 ,597 $934,724 n integral part of the above statements.

PANY and Subsidiary Companies 21

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS FOR THE YEARS ENDED DECEMBER 31 (Thousands of Dollars) 1975 1976 (Note 2)

BALANCE, JANUARY 1 $ 93,089 $ 89 ,907 NET INCOME . .... . .. . ... . . . . . .. ...... ... . ...... . .. . .. . .. . ... . 35, 128 31,539 128,217 121,446 CASH DIVIDENDS DECLARED Preferred stock 7,250 7,250 Common stock .. . . . . ....... . ... . .. ... . ..... . . . .. .. . . . 22,618 21, 107 29,868 28,357 BALANCE, DECEMBER 31 ... . .. . ... . . . . .. .... . . . .. .. . . . .. .. . . . $ 98,349 $ 93,089 The Notes to Financial Statements are an integral part of the above statements .

DELMARVA POWER & LIGHT COMPANY and Subsidiary Companies NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies :

Financial Statements:

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary companies . The accounts are maintained in accordance with the uniform systems of accounts prescribed by the regu latory commissions having jurisdiction with respect to accounting matters .

Revenue:

Revenues are billed to customers on a monthly cycle basis and include rate increases permitted to be billed subject to refund, pending final approval. At the end of each month, there is an amount of unbilled electric and gas service which has been rendered from the last meter reading to the month-end.

Fuel Costs:

Fuel costs are deferred and charged to operations on the basis of the fuel cost per kilowatt hour included in customer billings. For tax purposes fuel costs are expensed as incurred. See Note 2 for additional information concerning deferred fuel costs .

The Company's share of nuclear fuel costs relating to the Peach Bottom nuclear generating station has been charged to fuel expense on a unit of production basis.

Depreciation and Maintenance:

The annual provisions for depreciation are computed by the use of composite rates applied on the straight-line method for financial accounting purposes and principally on accelerated methods for income tax purposes . The effect of this difference in recording depreciation is a reduction in income taxes , the benefit of which , effective with respect to additions to utility plant in 1975 and thereafter, is deferred (normalized) for credit to subsequent years when financial accounting expense exceeds tax expense.

The previous deferral of such reductions in income taxes was discontinued in 1962, and the deferrals accumulated to that date were restored to income over a 10-year period ended in 1976.

Accumulated tax deferrals relating to amortization of completed construction costs under necessity certificates are being restored to income as straight-line depreciation charges exceed the amounts deductible for income tax purposes .

22

The relationship of the annual provision for depreciation for financial accounting purposes to average depreciable property was 3.2% and 3.3% for 1976 and 1975, respectively.

The cost of maintenance and repairs , including renewals of minor items of property, is charged to operating expenses . A replacement of a unit of property is accounted for as an addition to and a retirement from the utility plant account. The original cost of the property retired is charged to accumu-lated depreciation together with the net cost of removal. For income tax purposes the cost of removing retired property is deducted as an expense.

Investment Tax Credit:

Investment tax credits utilized ($6,551 ,000 in 1976 and $4 ,605 ,000 in 1975) to reduce federal income taxes are deferred for financial accounting purposes by equivalent charges to income and are credited to income over subsequent five-year periods.

Allowance for Funds Used During Construction:

Allowance for funds used during construction (AFUDC) is a noncash item and is defined in regulatory systems of accounts as the net cost, during the period of construction, of borrowed funds used for construction purposes and a reasonable rate for other funds so used . The allowance is considered a cost of utility plant and an item of other income in the consolidated statements of income; for income tax purposes , the allowance is excluded from taxable income . The rate used in determining the amount of the allowance was 8% in 1976 and 7112'Yo in 1975.

The estimated portion of AFUDC attributable to the common equity component of total capitaliza-tion was 11.9% and 10.6% of earnings applicable to common stock for the years 1976 and 1975, respectively.

Pension Plan:

The Company and Subsidiaries have a trusteed noncontributory pension plan covering all of their regular employees . Pension contributions , charged principally to operating expenses (aggregating

$4,950,000 for 1976 and $4,454,000 for 1975), provide for normal cost and amortization of prior service costs over a period of approximately twenty years. At December 31, 1976, the prior service costs exceeded the market value of the assets in the retirement fund by approximately $5,800,000. As of the same date , the market value of the fund assets exceeded the actuarially computed value of vested benefits.

Capital Stock Expenses:

The premiums on preferred and common stock are stated net of the expenses related to the issuance of such stock.

2. Rate Matters:

(a) Revenue subject to refund - Operating revenues for the years 1976 and 1975 include $4,375,000 and $2,916,000, respectively, of amounts billed but subject to refund , pending final determination of requested rate increases. If these amounts had to be currently refunded , the years 1976 and 1975 would be restated , the effect of which would be to reduce earnings applicable to common stock by $2 ,111 ,000 ($ .11 per share) and $1,407,000 ($.08 per share) , respectively. The aforemen-tioned amounts of revenue subject to refund largely represent the tentatively approved portions of resale rate increases and exclude $2,371,000 and $2 ,522 ,000 , respectively, which the Company anticipates refunding as described below.

(b) Tentative settlement of 1976 resale rate request - On February 2, 1977, a tentative settlement was reached between the Company and intervenors in connection with the electric resale rates that became effective as of April 1, 1976, subject to refund . The tentative agreement would require the Company to refund, with interest, approximately 27% of the amount collected ($5,313 ,000 as of December 31 , 1976). The staff of the Federal Power Commission (FPC) were present when the tentative settlement was reached and the Company believes that the settlement will be finalized and ultimately approved by the FPC. Accordingly, the applicable revenue and related tax accounts for the year 1976 have been adjusted to reflect the terms of the tentative settlement. The effect of the adjustment was to reduce 1976 operating revenues, earnings applicable to common stock , and earnings per average share by $1 ,415,000, $696,000 and $.04, respectively.

(c) Modifications of fuel adjustment clauses - Approval was received during 1976 to modify the Company's resale and certain retail fuel adjustment clauses to permit more timely recovery of fuel 23

expense under these clauses. In addition, approval was received from the Delaware Public Ser-vice Commission to recover the deferred fuel balance relating to Delaware retail customers at March 31, 1976, aggregating approximately $4,830,000, over a three-year period beginning June 1, 1976. Similar recovery of the deferred fuel balance relating to resale customers was put into effect April 1, 1976, subject to refund pending FPC approval. On January 12, 1977, an Administrative Law Judge disallowed such recovery. The Company anticipates refunding the amount collected

($419,000 at December 31, 1976) and has excluded such amount from operating revenues . An additional $832 ,000 of deferred fuel costs not expected to be recovered was charged to 1976 operating expenses , the effect of which was to reduce earnings applicable to common stock and earnings per average share by $410,000 and $.02, respectively.

(d) Tentative settlement of 1974 resale rate request - On November 3, 1976, a settlement was reached between the Company and intervenors in connection with electric resale rates that became effec-tive in October 1974, subject to refund. The tentative agreement would require the Company to refund, with interest, approximately 53% of the $6,568,000 collected as of March 31 , 1976. The staff of the FPC were present when the settlement was reached and the Company believes that the settlement will be ultimately approved. Accordingly, the applicable revenue and related tax ac-counts for the year 1975 and retained earnings as of January 1, 1975 have been restated to reflect the terms of the settement.

The effect of the restatement upon previously reported 1975 financial statements was as follows:

Retaine.d Earnings Earnings Applicable Earnings January 1, Operating to Common Per 1975 Revenues Stock Average

($000) ($000) ($000) Share As originally reported $90,115 $278,548 $25,537 $1.45 Adjustment (208) (2,522) (1,248) (.07)

As restated $89,907 $276,026 $24,289 $1.38 3 . Taxes on Income:

1976 ($000) 1975 Operations:

Federal income . . . ............. . .. . . . ...... . ... $(3 ,068) $ 789 State income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320 702 Deferred income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,175 (3 ,038)

Investment tax credit adjustments, net . . . . . . . . . . . 4,187 2,962 2,614 1,415 Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,418 545

$5,032 $1 ,960 The Company's effective income tax rates for financiaJ reporting purposes were substantially less than the federal statutory rate of 48% . The reasons for these differences are as follows :

~~~~~~-

1976 ($000) ~~~~~~~

1975 Amount Rate Amount Rate Statutory income tax expense . .......... . .... . . .. . ... $19,277 48% $16,Q79 48%

Reduction in taxes resulting from:

Excess of tax depreciation over book depreciation not normalized . . . . . . . . . . . . . . . . . . (5,951) (15) (7,111) (21)

Exclusion of AFUDC for income tax purposes . . . . . . (4,531) ( 11) (4,010) (12)

Investment tax credits amortized to income . . . . . . . . (2,364) (6) (1,643) (5)

Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,399) (3) (1,355) (4)

Income tax expense .... . .... ... . . ... .. .. .. . ...... . .. $ 5,032 13% $ 1,960 6%

24

The components of deferred income taxes relate to the following:

1976 ($000) 1975 Normalization of difference between book and tax depreciation ................... . ....... $3,550 $ 544 Deferred fuel costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (420) (1,553)

Restoration of prior deferrals . . . . . . . . . . . . . . . . . . . . . . . . (755) (755)

Antic ipated rate refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . (1 ,200) (1 ,274)

$1 ,175 $(3,038)

4. Taxes Other Than Income:

1976 ($000) 1975 Delaware util ity ... . ... .. .. . * .. . . . .................. $ 5,214 $ 7,164 Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,525 4,309 Franchise and gross receipts . . . . . . . . . . . . . . . . . . . . . . . 2,093 1,981 Social security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,521 1,359 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488 461

$13 ,841 $15 ,274

5. Capital Stock:

Preferred stock outstanding at December 31 , 1976, redeemable at the option of the Company, was as follows:

Redemption Prices per Share at Par Value Series Shares 12/31 /76 ($000) 3.70%-5% 320,000 $103-$105 $ 32 ,000 7.52%-7.88% 450 ,000 107- 108 45,000 8%-8.96% 280,000 108- 109 28,000 1,050,000 $105,000 Changes in capital stock and related accounts for the period January 1, 1975 to December 31 , 1976 were as follows :

Aggregate Par Shares Value ($000) Premium ($000)

Common Preferred Common Preferred Common Preferred Balance, January 1, 1975 16,487,340 1,050,000 $55,645 $105 ,000 $101,047 $226 Sale of common stock 2,000,000 6,750 17,277 Issuance of common stock for Dividend Reinvestment and Common Share Purchase Plan 165,439 558 1,238 Balance , December 31 , 1975 18,652,779 1,050,000 62 ,953 105,000 119,562 226 Issuance of common stock for Dividend Reinvestment and Common Share Purchase Plan 236, 171 798 2,179 Issuance of common stock for acquisition of certain utility plant 187,069 631 1,613 Balance, December 31 , 1976 19,076,019 1,050,000 $64,382 $105,000 $123,354 $226 At December 31 , 1976 there were 327,277 shares of common stock reserved for issuance under the Dividend Reinvestment and Common Share Purchase Plan .

25

6. Long-Term Debt:

Long-term debt outstanding at December 31 , 1976 was as follows:

Principal Amount

($000)

First Mortgage and Collateral Trust Bonds:

31/s% Series, due 1977 ....... . .. ..... ... .... ... .......... $ 10,000 2'l's% Series , due 1979 . .... . ............. .. ...... .. ..... . 10,000 23/4% Series , due 1980 . . ..... ... ..... . ....... .. ......... . 12,000 93/s% Series , due 1983 .. ... . .... . . .. . ...... ...... ....... . 30,000 31/s%-3'l's% Series, due 1984-1988 . . . . ..... . . .. ... . . ... .. . 45,000 4%%-7% Series , due 1994-1998 . .. ... . . ... . ... . . . ..... . . . 75,000 71/2%-83/4% Series , due 2000-2002 ..... . . . ........... .. .. . 125,000 8%-11 % Series , due 2003-2005 . . ...... . . . . . . . .. ... . ..... . 90,000 397 ,000 Pollution Control Notes:

Series 1973, 5.9% effective rate, due 1983-1998 8,000 Series 1976, 7.3% effective rate , due 1992-2006 34 ,500 42,500 Unamortized premium and discount on debt, net 1,420 440,920 Current maturity of long-term debt . ..... .. ..... . ..... . .... . . . (10,000)

$430 ,920 The annual interest requirements on the above indebtedness at December 31 , 1976 are

$31 ,370,000.

Substantially all utility plant of the Company now or hereafter owned and all securities issued by its subsidiaries are subject to the lien of the related Mortgage and Deed of Trust.

7. Short-Term Debt:

Established bank lines of credit as of December 31 , 1976 amounted to $75,000,000, all of which bear interest at the prime rate. The Company is required to maintain a 10% compensating balance on these lines when not in use and an additional 10% balance when in use . There was no short-term debt outstanding during 1976. Average short-term debt outstanding during 1975 was $21,221,000 (princi-pally commercial paper) , with an average interest rate of 8.8%.

8. Sale of Contracts For Nuclear Plant :

The proceeds received by the Company for the sale, in October 1975, of the contracts for a nuclear steam supply system and related fuel , net of plant expenditures which were considered of no future value to the Company are classified as a deferred credit in the balance sheet. It is the intention of the Company to reduce the cost of subsequent, alternative plant expenditures by the amount of these net proceeds.

The Company, under advice of Counsel , is not treating the sale of these contracts as taxable for federal and state income tax purposes . Accordingly, the tax basis of the Company's depreciable property has been reduced by approximately $77,000,000. The annual tax effect of the resulting decrease in tax depreciation is currently being classified as a reduction of the deferred credit balance .

If this transaction is ultimately considered taxable , additional taxes payable at December 31, 1976 would approximate between $26 million and $37 million and would be applied to the aforementioned credit balance.

9. Dividend Restriction on Common Stock:

The Fiftieth Supplemental Indenture restricts the amount of retained earnings available for cash dividend payments on common stock to $29,600,000 plus accumulations after June 30, 1975. The unrestricted consolidated retained earnings amounted to approximately $37,000 ,000 at December 31 ,

1976.

10. Contingencies and Commitments :

See Note 2 for information relating to possible refunds of amounts billed to customers and Note 8 for possible payment of income taxes relat ing to the sale of contracts .

The Company is constructing a fossil fuel unit estimated to cost approximately $216,000,000. At December 31, 1976, construction commitments for the aforementioned plant and other facilities aggregated approximately $196 ,000 ,000.

26

Minimum rental commitments as of December 31, 1976 under all noncancelable agreements are as follows :

1977 $ 5,721,000 1982-1986 10,623,000 1978 5,519,000 1987-1991 6,288,000 1979 5,323,000 1992-1996 5,440,000 1980 5, 130,000 Remainder 2,901,000 1981 2,888,000 Total $49,833,000 The total minimum rental commitments are applicable to the following types of property: Com-pany's share of Peach Bottom nuclear fuel, $9,206,000 (estimated to be charged to operations over a four-year period); fuel storage and pipeline facilities, $33,989,000; railroad coal cars, $4,041,000; other, principally computer equipment, $2,597,000. Rentals charged to operating expenses aggre-gated $6,461,000 in 1976 and $5,901,000 in 1975, including $2,477,000 and $2,204,000 for nuclear fuel, respectively.

Public liability insurance on the nuclear generating units in which the Company has an ownership participation is currently provided by a combination of private insurance and indemnity agreements with the Nuclear Regulatory Commission (NRC). Beginning in August 1977, however, the indemnity by the NRC will decrease and, in the event of a nuclear incident involving any facility covered by government indemnification, the Company could be assessed up to $375,000 for each reactor owned (maximum of $750,000 per unit in a year) . For property damage to the nuclear plant facilities, the Company and its co-owners have private insurance up to $150 million for the Salem Station and $175 million for the Peach Bottom Station. Because the possibility of a nuclear incident is considered to be highly unlikely, the Company is a self-insurer, to the extent of its ownership interests, for any property loss in excess of the aforementioned amounts.

11. Quarterly Financial Information (Unaudited):

See "Quarterly Financial Information" in the accompanying text for quarterly results of operations for 1976.

12. Replacement Cost Data (Unaudited):

Under new rules of the Securities and Exchange Commission, current replacement cost informa-tion for certain assets and expenses is to be disclosed in the Company's Form 10-K filed with the Commission. The current replacement cost of the Company's affected plant and equipment and the amount of the associated depreciation expense calculated using replacement costs are generally higher than the comparable historical costs shown in the financial statements .

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Board of Directors Delmarva Power & Light Company Wilmington, Delaware We have examined the consolidated balance sheets of Delmarva Power & Light Company and subsidiary companies as of December 31, 1976 and 1975, and the related consolidated statements of income, retained earnings and changes in financial position for the years then ended . Our examinations were made in accor-dance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

As explained in Note 2 to the financial statements, the 1975 financial statements have been restated, with our concurrence, to reflect adjustments retroactive to October 1974 arising from the tentative settlement of an electric resale rate request. As further explained in Note 2, operating revenues continue to include amounts subject to refund pending final determination of requested rate increases.

In our opinion, subject to the effects , if any, of the final determination of the rate matters referred to in the preceding paragraph, the aforementioned financial statements present fairly the consolidated financial position of Delmarva Power & Light Company and subsidiary companies at December 31 , 1976 and 1975, and the consolidated results of their operations and the changes in their financial position for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis .

COOPERS & LYBRAND 1900 Three Girard Plaza Phildelphia, Pennsylvania February 8, 1977 27

CONSOLIDATED STATISTICS 10 YEARS OF PROGRESS . . . 1966 -1976 1976 1975 1974 1973 1972 ELECTRIC REVENUES (thousands): Residential .. ........ .. . $ 80,416 $ 77 ,069 $ 68,730 $ 51,799 $ 43,8 Commercial .. . ......... . 60, 111 58,169 51 , 192 37,888 31 ,8 Industrial .............. . 64,458 64, 141 66,381 41 ,284 35,9 Other utilities , etc ....... . . 34,896 35,606* 32,976* 21,518 16,8 Miscellaneous revenues . . 2,398 4,370 9,194 5,287 2,8 Total electric revenues . . $242,279 $239,355* $228,473* $157,776 $131,3 ELECTRIC SALES (1,000 kilowatt-hours): Residential .. . ....... .. . 1,787,663 1,672, 180 1,597,472 1,629,641 1,463,8 Commercial . ... . ....... . 1,412,259 1,359,673 1,303,053 1,360,216 1,227,2 Industrial ..... .. ... . ... . 2,260,661 2,142,151 2,461 ,303 2,512,877 2,412 ,2 Other utilities, etc ..... . . . . 1,199,155 1,218,785 1,230,528 1,252,977 1, 137,2 Total electric sales .. . . . 6,659,738 6,392 ,789 6,592 ,356 6,755,711 6,240,5 ELECTRIC CUSTOMERS (end of period) : Residential . ... . .. . .... . 230,579 221 ,780 215,516 208,073 200,5 Commercial ... ....... . . . 28,345 27 ,345 27,132 26 ,708 25 ,8 Industrial ....... .. . . ... . 1,002 923 891 867 8 Other utilities, etc ........ . 550 545 501 506 L'j Total electric customers 260,476 250,593 244,040 236,154 227 ,8' GAS REVENUES (thousands): Residential ............ . $18,826 $15,365 $14 ,298 $13,018 $12 ,9 Commercial . ....... .. .. . 6,062 4 ,676 4 ,201 3,715 3,5 Industrial ... ........... . 5,984 4,343 3,726 3,505 3,2 Interruptible ......... .. . . 1,301 1,211 1,532 1.363 1,0 Other utilities, etc .. ...... . 44 33 26 30 Miscellaneous revenues 31 45 96 22 Total gas revenues ... $32,248 $25,673 $23 ,879 $21 ,653 $20,8 GAS SALES (million cubic feet): Residential ... . ... .. . . . . 6,956 6,540 6,863 7,134 7,7 Commercial ..... ... .. .. . 2 ,586 2,429 2,526 2,614 2,6 Industrial ......... . .... . 3 ,264 2,849 3,215 3,653 3,8 Interruptible .. . ...... . .. . 953 1,073 2,257 2,346 2, 1 Other utilities , etc ... . .... . 20 18 16 23 Total gas sales ..... . .. . 13,779 12,909 14,877 15,770 16,4 GAS CUSTOMERS (end of period) : Residential . ... . ...... . . 68 ,978 69,418 69,525 69,833 69,8 Commercial . .. ....... .. . 4,154 4,189 4,356 4,418 4,4 Industrial .............. . 198 198 195 197 1 Interruptible . . .. . .... . .. . 21 21 21 21 Other utilities, etc. . ..... . . 1 1 1 1 Total gas customers ... . 73,352 73 ,827 74,098 74,470 74,5 REFINERY SERVICE - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ---.

Electricity delivered ..... . 343 ,531 297,282 350,021 341,700 295,2 (1 ,000 kilowatt-hours)

Steam delivered ........ . 5 ,301,421 5,517,000 5,921,000 5,926,000 7,261 ,0 (1 ,000 pounds)

• Restated 28

Average Annual Compound %

1971 1970 1969 1968 1967 1966 Rate of Growth ELECTRIC REVENUES

$ 36,198 $30,992 $27,857 $25.487 $22,900 $21.406 14.1 5 Residential 25.468 21.430 19,333 17.754 16,377 15,256 14.70 Commercial 28,903 24,069 22.483 20, 120 16.4 71 15,187 15.55 Industrial 12,964 10, 175 8,936 7,962 7,099 6,594 18.13 Other util ities , etc .

1,209 530 513 504 497 490 17.21 Miscellaneous revenues

$104.742 $87, 196 $79, 122 $71 ,827 $63,344 $58,933 15.18 Total electric revenues ELECTRIC SALES 1,380.763 1,280.420 1, 151 , 108 1,037 ,223 910,548 838,548 7.86 Res idential 1,099,897 1,009,488 923,064 856,258 774,382 719,001 6.98 Commercial 2,252 ,219 2,264 ,084 2,217,655 2 ,048 ,776 1,633,827 1,509,966 4,12 Industrial 1,014,972 885,720 792, 151 708,899 629,643 570,961 7.70 Other utilities , etc .

5.747,851 5,439, 712 5,083,978 4,651 ,156 3,948.400 3,638.476 6.23 Total electric sales ELECTRIC CUSTOMERS I 193,282 187,683 183.458 178,948 174,039 169,906 3.10 Residential 25, 139 24 ,383 24,058 23.474 22 ,966 22,644 2.27 Commercial 810 834 815 806 760 769 2.68 Industrial l 460 375 283 281 281 274 7.22 Other utilities, etc.

219 ,691 213,275 208 ,614 203 ,509 198,046 193,593 3.01 Total electric customers GAS REVENUES

$11 ,948 $11 ,283 $10.708 $10,290 $10,041 $ 9,333 7. 27 Residential 3,126 2,861 2,555 2,207 1,980 1,693 13.60 Commercial 2,998 2,618 2,641 2,536 2,032 1, 668 13.63 Industrial 1,153 1,340 1,222 1,155 1,293 1, 197 0.84 Interruptible 16 10 7 8 8 8 18.59 Other utilities , etc .

39 225 251 215 204 186 (16.40) Miscellaneous revenues

$19,280 . $18,337 $17 ,384 $16.411 $15,558 $14,085 8.64 Total gas revenues GAS SALES 7,583 7.406 6,942 6,601 6.432 5,851 1.74 Res idential 2,534 2,384 2,097 1,770 1,564 1,305 7.08 Commercial 3,797 3,549 3.700 3.455 2,659 2, 125 4.39 Industrial 2.708 3.423 3,263 3,089 3.447 3, 152 (11. 27) Interruptible 13 8 6 6 7 6 12.79 Other utilities , etc .

16,635 16,770 16,008 14,921 14,109 12.439 1.03 Total gas sales GAS CUSTOMERS 69 ,604 68,614 68,074 67 ,270 66,079 65,097 0.58 Res idential 4.426 4.444 4,423 4,341 4,225 4,117 0.09 Commercial 204 206 103 93 95 91 8.08 Industrial 21 21 19 19 16 15 3.42 Interruptible 1 1 1 1 1 1 - Other utilities , etc.

74 ,256 73 ,286 72,620 71 ,724 70.4 16 69,321 0.57 Total gas customers REFI NERY SERV ICE 272,649 244,614 281 , 120 265,824 276,598 288.431 1.76 Electricity delivered (1 ,000 kilowatt-hours)

,564,000 7,779,000 7,536,000 7,296 ,000 7,390,000 7,300,000 (3. 15) Steam delivered (1 ,000 pounds)

J

Delmarva Power & Light Company U.S. POSTAGE 800 King Street PAID Wilmington , Delaware 19899 Wilmington , De.

Permit No. 68 Zip Code 19899 Where The 1976 Delmarva Power Dollar went.

8¢ Depreciation 12 ¢ Preferred Dividends

& Interest 5¢ Purchased Gas 9¢ Materials ,

Supplies &

Other Expenses

?¢Common Dividends