ML19206A209

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Annual Financial Rept 1970
ML19206A209
Person / Time
Site: Crane 
Issue date: 03/25/1971
From: Bovier R
JERSEY CENTRAL POWER & LIGHT CO.
To:
References
NUDOCS 7904180387
Download: ML19206A209 (12)
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9 l I Jersey Central Poiv r & Light Company 1 ,[ l h/j) MADISON AVENUE AT PUNCH BOWL. RO AD e MORRISTOWN, N. J. e Jefferson 9-6111 TO THE STOCKHOt.DERS An EMPt.oYEEs OF March 25,1971 JERSEY CENTRAt. POWER & IJGHT COMPANY I On June 25,1970, the New Jersey Board of Public Utility terms of both equipment and procedures has ban taken to Commissioners granted the Company an interim general preclude a recurrence of last July's accident. Insurance rate increase of $6.3-rnillion or approximately 6.5% which coverage amounts to about 807o of the damages incurred. became effective July 13, 1970. On October 8, a further Four combustion turbines, designed to operate on low increase was granted totaling $3-million or approximately sulfur oil or natural gas, were completed and en:ered oper-3% which became effective for meter readings after No-ation during the year. The new units, located in Holland vember 5,1970. Dese rate increases of 59.3-million on :n Township, have a capacity of 33,000 KW each. annual basis, based on 1968 consumption, represented ap-De Company has a heavy commitment to comtu..on proximately 73% of the amount requested by the Company turbines over the next four years, with eight 25,000-KW in its application for a rate increase filed At gust 1,1969. units scheduled to be installed in Lebanon Township in The continuing rapid rise in construction, capital and 1971. The first of four 72,000-KW units under way at South operating costs (including particularly the cost of fuel) has Amboy is expected to enter service in late 1971 with the substantially absorbed all the rate relief received under remaining three scheduled for 1972. An addit.onal four units the 1970 increases. In this light, the Company filed on are to be added in Sayreville in the winter of 1971. All December i1,1970, a motion for authority to place into combustion turbine capacities noted above represent winter effect a fuel adjustment clause designed to increase or de-ratings. crease revenues automatically for changea in fuel costs. In The Company and Public Service Electric and Gas Com-general the financial situation of the Company is such that pany, co-owners of the Yards Creek Pumped Storage Station additional rate increases are expected to be sought in tne in Blairstown, continue to seek authorization to expand the near future. project from its present capacity of 330,000 KW to Despite the overall economic picture, eere were some 1,630,000 KW, These efforts were significantly advanced encouraging signs during the year. Electricity sales continued when Congress passed and President Nixon signed into law the growth of recent years as sales totaled 5,855,800 mega-a bill which perm:ts the companies to integrate the expanded wa+t hours and sales ruenues rexhed $121.5-million, in-plant with the Federal Tocks Island Reservoir. Current ac-creases of 9% and 12%, respectively, over the previous tivity is directed toward obtaining the specific regulatory year. The average annual use per residential custome was approvals required before construction can begin. 6,432 kilowatt hours, an increase of 9 % over 1969. Common During 1970, the Company expended $91.S-million for stock earnings improved over last year but are sigMicantly nuclear fuel and plant additions. To finance this program, below the Icvel required to continue to attract c?pital. $12.million of 10% 30-year First Mortgage Bonds were On July 28, the Company set a new annual hourly peak sold at $100.219 for an effective interest cost of 9.977%; load of 1,316,000 kilowatts (h.W), an increase of 76,000 $16-million of 8% % 30-year First Mortgage Bonds were KW over the 1969 peak. sold at $100.677 for an effective interest cost of 8.686%, and Another bright spot in 1970 was the Oyster Creek Nuclear 250,000 shares of 9.36% cumulative preferred stock were Generating Station which completed its first year of service sold at $100.257 for an effective dividend rate of 9.336%. on December 23. The Oyster Creek unit, which entered Cash capital contributions of $23.3-million were received service with a rating of $30,000 KW, compiled an enviable from GPU during the year. Bank loans outstanding at De. record of reliability during its first year. The capacity of the cember 31,1970 totaled $36-million. station was increased to 563,000 KW on December 13. The On February 24,1971, the Company sold 250,000 shares station is expected to achieve its ultimate capacity of 640,000 of $100-par cumulative preferred stock at a price of KW in late 1971. $100.030 to yield 8.118%. On the following day, February He 1,800,000-KW Three-Mile Island Nuclear Generst. 25, $35-million of 8Va% First Mortgage Bot.ds were sold ing Stauon in Pennsylvania, in which the Company expects at $100.057 of principal amount resulting in a net effective to acquire a 25% interest, is movir:g steadily toward com-interest rate of 8.120%. The bulk of the proceeds of these pletion. The first of the station's 900,000-KW units is sales have been used to repay short-term bank loans and the scheduled for completion in 1973 with the second following in 1974. balance used to finance the 1971 construction program. For the first time in a number of yeart, the Company in Repair work is nearly complete on the boiler damaged in 1970 experienced a decrease in operatior, and maintenance an explosion last July of the 820,000-KW Unit I at the expense. This was primarily attributable to the fact that, Keystone Generating Station in Western Pennsylvania. The largely as a result of the operation of the Oyster Creek unit, in which the Company has an interest of 16.67%, is station, the Company receised less KWH from and sold expected to be back in full operation well in advance of more KWH to neighboring utilities. summer peak loads. In the meantime, correctae action in For the Board of Directors, M~bN I R. F. BoVIER President

O ELECTRIC GENERATION AND SALES STATISTICS 1970 1969 1968 1967 1964 GENERATING CAPACITIES AND PEAKS - KW: Installed CapaC y. 1,603.000_ 1,438,000 929,200 777,400 627,400 -1,124,000 906.000 863,600 Annual Peak Load. 1,316,000 1,240,000 MET SYSTEM LOAD (megawatt hours): Net Generation. 7,120,001 4,312,270 3,707,028 2,919,077 2,571,945 Purchased. 84,954 83,779 78,187 75,072 123,579 Net Interchange. (791,495) 1,494,490 1,551,748 1,794,566 1,738,650 Net System Load. 6,413,460 5,890,539 5.336,963 4,788,715 _4,434,174 STEAM PRODUCTION DATA: Average Btu (per net KWH) 11,218, 10,530 10,553 10,839 10,627 Fuel Cost (( per million btu) 35.8 30.3 29.8 30.9 31.0 Cost of Fuel (mills per KWH) 4.02 3.19 3.14 3.35 3.29 i Total Production Ccsts (mills per KWH) 5.50 4.44 4.28 4.63 4.50 ENERGY SALES (megawatt hours): Residential. 2,318,451 2,059,975 1,828,726 1,623,472 1,451,889 Commercial. 1,469,035 1,321,492 1,195,989 1,068,747 980,766 Industrial 1,858,231 1,796,199 1,668,865 1,539,150 1,450,182 All Other. 210,083 201.183 185.262 170,421 176,139 Totals 5,855,800 5,378,849 4,878,842 4,401,790 4,058,976 Gain Over Prior Year, 8.9 9c 10.2 % ~ 10.8 % 8.4% 14.0 % OPERATING REVENUES: Residential S 59,298,936 5 52,006,767 5 47,111,539 $42,619,152 $38,855,768 Commercial. 34,920,716 30,907,885 28,405,800 25,889,045 23,993,526 Industrial 22,722,660 21,060,209 19,510,171 18,089,037 17,138,528 Other 4,593,457 4,221,716 3,966,022 3,662,767 3,653,748 Total, from KWH Sales. $121,535,769 $108,196,577 $ 98,993,532 $90,260,001 $83,641,570 Other Revenues. 1,233,540 1,410,696 1,343,883 1,253,764 1,196,504 Totals $ 122,769.309 $109,607,273 5100,337,415 $91,513,765 584,838,074 Gain Over Prior Year. 12.0 % 9.2 % 9.6% 7.9% 10.9 % CUSTOMERS-YEAR-END: Residential 363,676 352,441 339,779 326,142 312,293 Commercial 39,616 38,590 37,591 36,587 35,616 l Industrial. 1,700 1,573 1,513 1,461 1,424 All Other. 405 259 262 266 258 Totals 40J,397 392,863 379,145 364,456 349,591 AVERAGE USE, BILL AND PRICE: Residential Customers: KWH Use per Customer. 6,432 5,914 5,451 5,044 4,714 Annual Bill. $164.52 $149.31 $ 140.43 $ 132.42 $126.17 Price per KWH < 2.56c 2.52r 2.58( 2.63r 2.68 t ( ) Indicates red figure. g 2

~. -. _. _ -. _ _ _ -. -. - -. - _.. - - e e 9 I JERSEY CENTRAL POWER & LIGHT COMPANY l STATEMENTS OF SOURCE AND APPLICATION OF FUNDS 4 For the Years Ended December 31,1970 and 1969 l ,,,e 4 SOURCE OF FUNDS: Net income (see statement on page 6) $ 28,779,319 521,521,629 Depreciation (Note 3 ). 16.261,100 12,475,700 Amortization of nuclear fuel (Note 4) 2,085,939 37,049 Investment tax credit,less amortization (Note 8). (976.786) 2,360,106 Totals Sale of bonds. 5 46,149,572 536,394,484 Sale of preferred stock (Note 6). 28,000,000 10,000,000 25,064,250 l Cash contributions from General Public Utilities Corporation, parent company (Note 6), 23,300,000 23,000,000 i Bank borrowings. 25,200,000 Other, net. 1,596.231 e Total Funds Received, 5124.110.053 594.594.484 APPLICATION OF FUNDS: Additions to: Utility plant 5 85,465,337 $64,262,763 Nuclear fuel. 6,371,800 3,125,439 Cash dividends on preferred stock. 1,199,456 500,000 + Cash dividends on common stock 27,461,460 22,401,852 Payment of bank borrowings. 1,600,000 Retirement of first mortgage bonds and debentures. 2,012,000 2,998,000 Other, net 1,306.430 I Total Funds Applied $ 124.110.053 594.594.484 t ( ) Ineucates red figure. i The accompanying notes are an integral part of the financial statements. AUDITORS' REPORT To the Boardof Directors, JERSEY CENTRAL POWER & LIGHT COMPANY, Morristown, New Jersey. We have examined the balance sheet of Jersey Central Power & Light Company as of December 31,1970 and the related statements of income and unappropriated earned surplus and the statement of source and application of funds for the year then ended. Our examination was j made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing proceduces as we considered nec-j essary in the circtmstances. We previously examined and reported upon the financial statements for the year 1969. In our opinion, the aforementioned statements present fairly the financial position of Jersey Central Power & Light Company at December 31,1970 and 1969 and the results of its opera-tions and the source and application of funds for the years then ended, in conformity with gen-crally accepted accounting principles applied on a consistent basis. LYBRAND, Ross BROS. & MONTGOMERY New York, N. Y. February 1,1971. 50~~149 3

m m., m.m.mm -.~ JERSEY CENTRAL POWER & LIGHT COMPANY BALANCE SHEETS December 31,1970 and 1969 l'. ASSETS 1970 1969 PROPERTY, PLANT AND EQUIPMENT (at original cost): Utility plant in service and under construction (Note 2). 5683,110,322 $601,047,318 Less, accumulated depreciation (Note 3) 83,049,562 69,225,040 Net utility plant. 5600,060,760 $531,822,278 $ 20,394,586 S 14,022,786 Nuclear fuel Less, accumulated amortization (Note 4). 2,122,988 37,049 Net nuclear fuel. S 18.271,598 5 13,985,737 Net property, plant and equipment. $618,332,358 $545,808,015 INVESTMENTS: Other physical property, at original cost. S 98,860 $ 98,860 27,526 15,433 Other, at cost Totals 126,386 S 114.293 CURRENT ASSETS: Cash (Note 5). S 6,673,559 5 6,845,976 Accounts receivable (Note 8). 16,590,193 12,895,706 Materials and supplies (including construction materials), at average cost or less. 7,074,477 6,678,335 Prepayments 602,223 594,979 1,459,933 743,836 Other. Totals.. S 32,400.385 S 27,758,832 DEFERRED DEBITS: Charges related to proposed construction projects and other work. S 1,490,968 S 1,175,590 Other 546,908 270.978 Totals S 2,037,876 S 1,446.568 TOTAL ASSETS 5652,897,005 $575,127,708 The accompanying notes are an integral part of the financial statements.. rm-4-n OU .4. U U 4 i

9 O JERSEY CENTRAL POWER & LIGHT COMPANY BALANCE SHEETS I December 31,1970 and 1969 t LI ABILITIES AND C APIT AL 19r0 s969 LONG-TERM DEBT, CAPITAL STOCK AND SURPLUS (see page 7): P. mortgage bonds and debentures. 0313,695,000 $287,915,000 No;~ payable to banks dt'e within one year to be refinanced. 36,000,0J0 37,600,000 Totals Cumt:lative preferred stock (Note 6) $349,695,000 $325.515,000 $ 37,500,000 $ 12,500,000 Premium on cumulative preferred stock (Note 6) 213,000 148,750 Totals S 37,713,000 $ 12,648,750 Common stock and surp!us: Common stock S 69,787,700 $ 69,787,700 Capital surplus (Note 6) 150,489,323 127,189,323 Unappropriated earned surplus (see statement on page 7 and Note 7), 7,406.502 7.288,099 Totals. $227,683,525 $204.265,122 Totals $615,091,525 $542,428,872 CURRENT LIABILITIES: Debentures due within one year, S 460,000 $ 252,000 Accounts payable 12,768,152 12,567,206 Customer deposits. Taxes accrued - 1,540,031 1,394,303 3,531,997 887,131 Interest accrued. 4,507,046 4,726,263 Other 4,486,094 2.919,257 Totals S 27,293.320 5 22,746,160 DEFERRED CREDITS: Unamortized premium on debt.. 5 1,301,103 $ 1,369,985 Other Totals 1,711,490 777,197 S 3,012,593 5 2,147,182 RESERVES: Unamortized investment tax credit (Note 8). S 5,990,243 $ 6,967,029 Pensions (Note 13), 268,470 Totals S 6,258,713 $ 6,967.029 CONTRIBUTIONS IN AfD OF CONSTRUCTION, S 1,240,854 5 838,465 TOTAL LIABILITIES AND CAPITAL. 5652,897,005 5575,127,708 The accompanying notes are an integral part of the financial statemen:s.

iG 151 5

,-n.._ - -. JERSEY CENTRAL POWER & LIGHT COMPANY STATEMEN(S OF INCOME For the Years Ended December 31,1970 and 1969 ~ 1970 1969 OPERATING REVENUES. 5122,769,309 5109.607.273 OPERATINO EXPENSES: Operation S 45,302,043 5 33,367,827 Power purchased and interchanged: Affiliates (7,640,388) 1,720 Others 5,336,109 13,813,427 Maintenance 7,869,885 6,555,276 Depreciation of utility plant (Note 3) 16,261,100 12,475,700 Federal income tax (Note 8) (417,394) (2,446,448) Amount equivalent to current investment tax credit (Note 8) 3,191,096 Amortization of accumulated investment tax credit (Note 8) (976,786) (830,990) Other taxes 14,972,823 13,499,639 Totals S 80,707,392 5 79,632,247 OPERATING INCOME S 4.061,917 5 29,975,026 OTHER INCOME AND DEDUCTIONS: Interest charged to construction - credit (Note 9) $ 4,441,559 $ 7,520,098 Other miscellaneous income, net. 587,316 190,037 Income taxes associated with other income, net. 47,626 35.838 Totals. S 5,076,501 S 7,745,9A GROSS INCOME.. S 47,138,418 5 37,720,999 INTEREST CHARGES: Interest on first mortgage bonds and debentures. S 15,343,352 $ 14,052,806 Amortization of premium and expense on debt. (68,511) (50,690) Other interest expense. 3,084,258 2,197.254 Totals. 5 18.359,099 $ 16,199,370 NET INCOME, S 28,779,319 $ 21,521,629 ( ) Indacates red figure. The accompanying notes are an integral part of the financial statements. d$"$b0 ~ 6 t

JERSEY CENTRAL POWER & LIGHT COMPANY STATEMENTS OF UNAPPROPRIATED EARNED SURPLUS For the Years Ended December 31,1970 and 1969 !"8 E BALANCE, Beginning of year. $ 7,288,099 $ 8,668,322 ADD, Net income (see statement on page 6) 28,779,319 21,521,629 Totals _ $36,067,418 530,189.951 DEDUCT, Dividends on capital stock: Cumulative preferred stock: 4Fo Series S 500,000 $ 500,000 9.36% Series Common stock. 699,456 27,461,460 22,401,852 Totals $28,660,916 $22,901,852 BALANCE, End of year (Note 7). s 7,406,502 5 7.288,099 The accompanying notes are an integral part of the financial statements. LONG-TERM DEBT AND CAPITAL STOCK December 31,1970 LONG TERM DEBT (excluding sinking fund requirements due within one year): First mortgage bonds (a): 2?a% Series due 1976 j $ 34,500,000 9 3%% Series due 1978 3,500,000 3 % Fc Series due 1984 6,000,003 3% % Series due 1985 18,560,000 4%Fc Series due 1986 I 5 % Ser:es due 1987 10,000,000 15,000,000 5 % % Se s due 1989 5,770,000 4% Fo Series due 1992 4% % Series due 1993 I1,000,000 18,525,000 4% Cc Series duc 1994 17,980,000 4?' Fe Series due 1995 20,000,000 s 61, s rc Series due 1996 25,010,000 6% Fo Series due 1997 28,860,000 7% % Series due 1998 24,7." 000 8% Fe Series due 1999 10 % Series due 2000 8,68 N)0 8% % Series due 2000 12,0C Debentures (a): 16,00v,000 d%% Seric due 1988 7,560,000 4 % Pc Series due 1989. 4,300,000 5%% Series due 1990 7,920,000 6 % Series due 1992 13,800,000 Total. Notes payable (6% % to 7% % ) to banks due within one year -~$313,695,000 to be refinanced $ 36,000.000 s CAPITAL STOCK: Cumulative preferred stock, par value $100 a share, 1,000,000 shares authorized: 4Fo Series, 125,000 shares outstanding, callable at $106.50 s share. $ 12,500,000 9.36Fc Series, 250,000 shares outstan.fing, callable initially. subject to certain limitation % at $111.10 a share 25.000,000 Tota 2 5 37.500.000 Common stock, par value $10 a share, 7,000,000 shares authorized; 6,978,770 shares outstanding. $ 69,787,700 (a) At Decernber 31, 1970, the annual sinking fund requiren ents on first mortgage bonds and debentues amountad to $2,220,000, of which 31,760,000 had been reacquired. 50 153 7

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~ g h "* =-, w*-' e~. -a m., r*e" - - " ' m_ h ^ ~ . "h g 4 M.}_-*& M p w ewe ~ _ _ s- ~m-- 4 es NOTES TO FINANCIAL STATEMENTS j l. GENERAL: 1970 balance sheet as an account receivable. h The accompanying Enancial stainments have been clasuned in in adJition, the Company had a current investment taa credit of h accordance with the Uniform Spiem of Accounts of the Federal approaimately 1950.000 which, due to t r'utauona resultmg from the Po*er Commimon ohn.h benme effective January 1.1970. consolidated net operstma losa, is currently unavs: table to be carned back and act ed agamsa tames paid in a pnor year tut may be carned b 2. UTILfiY PLANT: Fot" the pst wveral years. the Company and the City of Jerwy forward and appl.ed aga.nst taxes to be paid m futun tears h City have been making expenditures m connecuan with the Longwood For the year 1969, the Company had an investment tax creet of Valley jont water supply and pumpd storage power protect. At $ 3.191.096 which s.as m excess of the 1969 Federal isame taa. De December 31, 1970, the Company had an mvestment of appros-eacess was carned back and apphed agamst tames paid m prior years imatety 55,500.000 in the protect and understands that the City had resulung in a Fe teral income tan credat a ths stateme1t of income invested e reasonably comparable amount. On June 4,1970. the far 1969. Mayor of the City announced that the City had concluded t at it As a public utihty. the reven.ies of the Company in any period are should not proceed with the prosect and that the Cary was stoppmg dependent to a significant eatent upon the costs which are recogmzed l work on it Subwquent to st.ch announcement, reprewntatives of the . si allowed in that gened for rate-makms purposet It to the pobcy municigshty i, which the protect is located and a county water supNy o, 'he Company, in connecuon eith the financzal statements con-agency have met with reprewntauves of the Company and the City tained in regatranon statementa pursuant to whkh wcunties are and are currently givmg consaderation to a pouable arrangemeat in offered and m repMs of financial condition and of the resalts of L shich the mumcipahry and the agency would participate in financm3 operations to the boklers of such wcuntaes, to fo!!ow the basic the prtgect in return for a share of the water yield of the rewrvoirs-accounting prmciple of matchms costs and reventes takmg into l f Other non-governmental groups have also empressed a posuble interest connderation th s aspect of the rate-making process. In acwrd.ni.m in proceed.ng wnh the protect. theremth, the Company has ernployed the follommg,ohcies: f If. in the future, at shound become necessary to abandon the UBER Al2 ZED DEPRECIATION AND Gf;lDEUNES AND 7 prosect, the Company would plan to seek authonry from the New JtULES. ne provmons for income tan in the accompanyms in. Jerwy Board of Pubt c Utihty Comrrusuoacrs to amoruze its net loss come statements were directly reduced by amounta equal to the ( $ 3,000,000 after salvage and incoma taa deducuons) for rate-reducuon in income tan astnbutable to the employmect of bberal-making and au:ounting p"spows over a reasonable pnad. At this ized deprectauon and the "Guidehnes and Rulev time, the Comps ny does not know *hether such authority would be INVESTMENT TAX CRED/T Charges to income equal to the 3% granted by the New Jerwy Board of Public Utdity Cummissweers if investment ta.: creet (ehen available) are made anJ the ac-circumstances caumns it to make such a request were to anse but it cumulated balances (clamfied in the accompanymg bstance sheets bebeves that there are precedents for such acuan by the New Jerwy as a reserve but as deferred credits an reports to regulatory Board of PubLc Utihty Commissionert agencici) are bems amortued over ten yeart The Company believes that no ad,ustment of the investment is 9. INTE REST CHARGED TO CONSTRUCTION: appwpriate at tN pr-sent time-The apphcable regulatory uniform syuems of accounts defioe interest 3. DE PR ECIA1 f0N: charged to conuruction as including the net cost dunns the grtM of For rate-makmg and financial accountms purpows. the Company construcuon of burrowed funds uwd for cocstruction purpows and a provides for deprecianon at annual rates determined and revised reasonable rate on other funds when so uwd. In accorLance therewith peno&cally on the basis of stuees by indetwndent engmeen to be and in recogniuon cf the incressms cost of capital the Company in-sufficient to amorttze the ongmal cost of depreciable property over creased the rate employed for the accrual of interes charged to con-estunated service lives, which are generally longer than those struction-credit effecuw January 1,1970 from 7% to 8%V This emploved for tan purpows. The Company uses depreciation rates change increased the amount of mierest capitahzed in 1970 by $780,000. bawd on functional account smurs which, on an agtmaste compoete

10. COMMITMENTS AND CONTINGENT ITEM:

basis. resuhed in an approximate annual rate of 2.97%, 2.39%. The Company expects to make espendnures of approsunately li3"v,2.38% and 160% for the yurs 1970,1969,1963,1967 and $161.000,000 for plant addiuons durtng 1971. and in that connecuon 1966, resmetivety. has uwurred.uhuntial commitmcots. The Company plans to 1.sne 4. AMORT 1ZAT10N OF NUCLEAR FUEL: secunues to part: ally finance such constructwrL For rate-makms and financial account:ng purposes, the amortiza-The Company is makms stu&es of its po<ential claims against the tion of nuclear fuei is provided on a uma of pre:!uction basis. Rates suppher - construcuan contractor for the damages suffered by the are determir.ed and penodically revted to amortize the net cost Company by reamm of the failure of suppher - construction con-over the uwful bfe. tractor to complete the Oyster Creek nuclear generanns stauon on The amort zanon rates used resulted is annual amoruzation of schedule, but is prewntly unable to determine whether, then and to t $2.035.939 in 1970 and $37,049 m 1969. what talent it wt.1 be able to effect recovery on such potential claims. 3. C"MPENSATING BALANCES:

11. COAL MINE DEVELOPMENT COSTS:

Exces for daily workms funds and hke items, subuantially all the ne Company has participated with the un non affiliated coownrrs funds mcluded m cash retwnent compensating balances mamtamed of the Keywone genermung station in the guarantee of artain indebted-in respect of thos' c. tot borrowmss or hoes of credit for ness (matunns senally through 1977) incurred by a non-affiliated pos:enal borrowmst mming company m connecuon with the development and equipment of 6. CAPITAL STOCK AND CAPITAL SURPLUS: mines to supply the Keystone generating station. The amount of s Dunns 1970, the Company sold 250.000 shares of cumulanve indebtedness so guaranteed by the Company is $1.300.0M The co-preferred stock, recemos prcreeds of $25,064.250 c,f which $64,250 owness of the Keyssone generatmg stanon have aho made unrestncied oss cred.ted to prerruum on preferreo stock. advance deposata with the nunmg compa.iy wbsch the latter is to apply Dunng 1770. wpui surplus etwd by $23,300.000 as a result agamst future dehvenes of coal at times when such appbcation would of cah captal contnbuuons by General Pubbc Utilmes Corporanon, not create a default under its loan agreements. The amount so depouted parent co nreny. by the Company at December 31,1970 was $257,000. 7. UNAPPROPRIATED EARNED St RPLUS: Il RATE INCREASE: ~ Certain linutauons on the declaration of cash dividends on comme Reference is made to the President's letter, included in this report. s.ock ase contamed in the Company's mortgage, debenture indenture relat.ng to a recently granted rate increase and to a rnotion for a fuel and charter, the most restncuve presently being that o:ntamed in the adustment clause. mortgage and debenture indenture, under which $1,729,154 of the

13. PENSION PIANS:

klance of unappropnated earned surphs at December 31, 1970 The Company has established pension plans for its ernployees end, are so restncted. pursuent thereto, made aggregate provisions for pas.on expense of g. FEDERAL INCOME TAX: approumately $980.000 and $1,200.000 in 1970 and 1969. respectively. The Company joins wi:2 its parent and aff1 hates in filing comnhdated The Company and its local unions have agreed upon a new corttract Federal income tax returnt Exammataan of returns through 1%5 has ' involving increases in wage rates and various fnage benefits inclu&ng been cornpleted and all deficiencies hase been paid. The yean 1966 a comprehenuve revision of the employee life insurance and pensson through 1969 are currently under audit. It is anticipated that the plans. The new pem:on plans involve both a plan applicable to all j compleuon of such audits will not result in may matenal deficiencaes employees, the cost of whnh is being funded with a trustee, and a for which provimon has not been made. AD participants in a con- ' supplemental plan apphcable only to supervisory employees which is sohdated Federal income tax return are severally hable for the fun not funded but for wbch a reserve has been created by regular inonthly amount of any tax, mcludmg penalties and mterest, eluch may be charges to pension emp nse. m The Company has hertiofore foCowed the policy of treating and assessed asamst the group. The consohdated Federal income tax , funding as " current service costs" all changes in the costs of the pennon i hahbry is allocated among the participants in the consohdated returns pursuant to agmments generally deugned to aDocate such plans includmg increaics in costs resulting from plan changes that to-

  • aabihty in yeerten so the participants' respecuve contnbuuces to creased benefits based upon penada of service pnor to such plan such habsbry. The agreements also provide that a participant (other changes. However, for the year beg nning January l.1970, the Com-than the parent) will not pay a tas in excess of separate retum tax pany is treating benefit changes related to prior priods of service as a ha tistiry.

"past service cat

  • to be amortzed and funded over a penod of ap-For the year 1970, the consol. dated group had a net operaung loss and proximately 25 yeart Moremver, for the past several years the costs of the G G.oy s un nsfucuan has been reah:rd thrwgh the carry-back the plans have been determmed on the bass of an assumpnon that the to pnor yean of such net operating loss. Therefore, the statement of penson funds will earn 4% per annum. In 1970, the Company in-income for 1970 includes a Federal income tax credit of $465,020 creased that earnings assumpt. ion to 5 % % per annum. The net effect of

($417.394 credited to operating expenses and $47,626 credi:e4 to other the chanres in plan benefits and in earnings assumpiams did not igave a income). De related potenual claun for refund is reflected in the significant effect on net income of the Company, _}}

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