ML19206A211

Annual Financial Rept 1969

ML19206A211
Person / Time
Site:	Crane
Issue date:	03/24/1970
From:	Bovier R JERSEY CENTRAL POWER & LIGHT CO.
To:
References
NUDOCS 7904180390
Download: ML19206A211 (12)

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M ADISON AVENUE AT PUNCH BOWL ROAD e MOPTitSTOWN, N. J. e Jefferson 9-6111 hfarch 24,1970 1

TO TifE STOCKHOLDERS AND EMPLOYEES oF j

JERSEY CENTRAL power & LicitT COMPANY On August I,1969, for the first time in its corporate Construction of another nuclear unit, originally sched-a t

history, the Company filed with the New Jersey Board of uled for completion in 1973 as the second unit at Oyster 4

Public Utility Comrnissioners an application for a general Creek. was transferred late in 1968 to Three-hiite Island rate increase designed to produce approximately $12.7-mil.

in the Susquehanna River near Harrisburg, Pa., which also e

lion of additional revenues based on 1968 consumption.

is the site of an essentially identical nuclear unit presently Afuch as the Company regrets the need to increase the under construction by hietropolitan Edison Company, an-cost of its service, we believe that we have reached the o:her GPU subsidiary. The two 840,000-KW units are point where advances in technoiogy aru no longer sufficient scheduled for completion in 1972 and 1974.

to offset the staggering increases in capital costs and oper-The Company announced in August,1969 that it would ating costs attendant on our load growth. Thus, it was felt build two 400,000-KW oil-fired units on a Company-owned i

l that in view of these increases, this was the only course site at Union Beach on Raritan Bay. These units were open to us.

scheduld for completion in 1973 and 1974. However, in If the Company should be successful in achieving the order to accelerate the availa'oility of additional generating rate increase sought, of the total of $12.7-million in addi-capacity, it was decided in December,1969 to cancel the tional revenues, $7-million would go for taxes, based on first unit planned for Union Beach and to order 400,000 1970 tax rates, leaving the Company a net increase in rev.

KW of combustion turbines to be installed in time to meet 3'

enues of $5.7-million. The Board has issued an order sus-the summer loads of 1971.

pending the rate increase until Ntay 1,1970 and it is ex.

Together with Public Service Electric and Gas Company, 1

pected that the suspension will be extended pending which is joint owner with the Company of the Yards Creek completion of the case. Direct testimony has been filed and Pumped Storage Station in Blairstown, the Company is cross examination is underway at the date of this report.

seeking authorization to expand the project from its present We are confident that the Board appreciates the gravity capacity of 330,000 KW to 1,600,000 KW. The Company's l

of the situation and will respond promptly and favorably share of the present capacity is 165,000 KW, and of the 1

to our request for increases in our electric service rates.

ultimate capacity, 560,000 KW.

Despite the fact that the Company found it necessary During the year the Company expended $67.4-million to apply for a rate increase, there were some encouraging for nuclear fuel and plant additions. To finance this pro-signs during the year. Our sales of electricity continued the gram, $10-million of 8% % 30-year First Mortgage Bonds growth that we have been experiencing in recent years.

were sold at an effective interest cost of 8.4295%, cash Sales totaled 5,378,849 megawatt hours and sales revenues capital contributions of $23-million were received from were $108.2-million, increases of 10% and 9%, respec.

GPU and bank loans of $25.2-million were issued. Bank tively, over the previous year. The average annual use per loans outstanding at December 31, 1969 totaled $37.6-residential customer was 5,914 kilowatt hours, an increase million.

of 8% over 1968. Net income was up $1.5-million, or 8%.

Despite the fact that the amount of power purchased was On July 17 the Company set a new annual hourly peak down, the cost of power received from other utilities in-load of 1,240,000 kilowatts (KW), an increase of 116,000 creased by $2-million due to higher costs per KWH of KW over the previous year's peak.

power received.

On December 23, 1969, about two-and-a-quarter years The $13.5-million spent for fuel represented an increase behind its initially scheduled operation date. the Oyster of 12% due to increases in the cost per BTU and in the Creek Nuclear Generating Station went into commercial kilowatt hours generated.

operation.

The Board of Directors at a meeting May 21,1969 ap-Our disappointment in the long delaad start-up of the proved the retirement of Mr. R. D. MacFee as Vice Presi-station was partially offset by the fact that when the station dent, Accounting, and as a roember of the Board.

entered commercial operation, it was at a capacity of Subsequently. Mr. George J. Schneider, a member of the 530,000 KW, or 15,000 KW above its warranted rated ca.

Company's Board of Directors and Vice President of GPU, pacity. Its expected ultimate rating is 640,000 KW. Coin-was elected Vice President, Financial. Also in 1969, Mr.

cident with the first Oyster Creek unit entering service, we James R. Leva was elected Vice President, Personnel, announced plans f~ t t=: d nuclear unit at Oyster Creek.

Safety and Services. Mr. Robert H. Sims, a Vice President, This urJt, which is scheduled for completion by the sum-was elected a member of the Board of Directors at a meeting mer of 1976, will have a capa6ty of 1,190,000 KW.

on January 15, 1970.

'30~183 For the Board of Directors, I

R. F. BoVIER President

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ELECTRIC GENERATION AND SALES STATISTICS 1969 i,6s i,67 i,64 i,6s GENERATING CAPACITIES AND PEAKS - KW:

Installed Capacity.

1,438,000 929,200 777,400 627,400 607,400 Firm Power Purchases.

28,000 Totals 1,433,000 929,200 777,400_

627,400 635,400 Annual Peak Load.

1,240,000 1,124,000 906.000 863,600 744,400 NET SYSTENI LOAD (megawatt hours):

Net Generation 4,312,270 3,707,028 2,919,077 2,571,945 2,360,719 Purchased 83,779 78,187 75,072 123,579 61,840 Net Interchange.

1,494,490 1,551,748 1,794.566 1,738,650 1,492,118 Net System Load.

5,890,539 5,336,963 4,788.715 4,434,174 3,914,677 STEAh! PRODUCTION DATA:

Average Bru (per net KWH) 10,530 10,553 10,839 10,627 10,564 Fuel Cost (e per million bru) 30.3 29.8 30.9 31.0 30.0 Cost of Fuel (mills per KWH) 3.19 3.14 3.35 3.29 3.17 Total Production Costs smills per KWH) 4.44 4.28 4.63 4.50 4.52 ENERGY SALES (megawatt hours):

1 Residential.

2,059,975 1,828,726 1,623,472 1,451,889 1,289,346 l !

Commercial.

1,321,492 1,195,989 1,068,747 980,766 872,318 l

Industrial 1,796,199 1,668,865 1,539,150 1,450,182 1,243,620 4

All Other.

201,183 185,262 170,421 176,139 155,707 I

Totals 5,378,849 4,878,842 4,401,790 4,058,976 3,560,991 Gain Over Prior Year.

10.2 %

10.8 %

8.4 %

14.0%

9.4%

1 OPERATING REVENUES:

}

Residential

$52,006,767 $ 47,111,539 $42,619,152 $38,855,768 $35,155,078 Ccmmercial.

30,907,885 28,405,800 25,889,045 23,993,526 21,793,781 Industrial 21,060,209 19,510,171 18,089,037 17,138,528 15,125,475 Other 4,221,716 3,966,022 3,662,767 3,653,748 3,408,229 Total, from KWH Sales.

$108,196,.,77 $ 98,993,532 $90,260,001 $83,641,570 $75,482,563 Other Revenues.

1,410,696 1,343,883 1,253,764 1,196,504 1,037,164 Totals

$109.607,273 $100,337,415 $91,513,765 $84.838.074 $76.519,727 Gain Over Prior Year.

9.2 %

9.6%

7.9 %

10.9 %

8.7%

CUSTOh!ERS-YEAR-END:

Residential 352,441 339,779 326,142 312,293 297,682 Commercial 38,590 37,591 36,587 35,616 34,547 Industrial.

1,573 1,513 1,461 1,424 1,373 All Other.

259 262 266 258 253 Totals 392,863 379.145 364,456 349,591 333,855 AVERAGE USE, BILL AND PRICE:

Residential Customers:

KWH Use per Customer.

5,914 5,451 5,044 4,714 4,395 Annual Bill

$149.31

$ 140.43

$ 132.42

$126.17

$119.82 Price per KWH.

2.52e 2.58f 2.63(

2.68e 2.73(

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JERSEY CENTRAL POWER & LIGHT COMPANY I

i STATEMENTS OF SOURCE AND APPLICATION C# FUNDS For the Years Ended December 31,1969 and 1968 l

1969 1968 I

SOURCE OF FUNDS:

Net income (see statement on page 6)

$21,521,629 $20,016,418 Depreciation (Note 2) 12,475,700 10,997,800 I

investment credit, less amortization (Note 5).

2.360,106 547,223 Totals 336,357,435 $31,561,441 Sale of bonds.

10,000,000 26,000,000 Cash contributions from General Public Utilities Corporation, parent company.

23,000,000 23,800,000 Bank borrowings.

25,200,000 Other, net 3,462,588 Total Funds Received.

$94,557,435 $84,824,029 APPLICATION OF FUNDS:

Additions to utdity plant.

$64,262,763 $54,774,652 Nuc! ear fuel 3,125,439 1,944,139 Dividends on preferred stock.

500,000 500,000 Dividends on common stock.

22,401,852

9,645,238 Payment of bank borrowings 7,000,000 Retirement of first mortgage bonds and debentures.

2,998,000 960,000 Other, net (Note 3) 1,269,381 Total Funds Applied.

$94.557,435 $84,824.029 The accompanying notes are an integral part of the financial statements.

AUDITORS' REPORT To the Board of Directors, JERSEY CEN FRAL POWER & LIGHT COMPANY, Morristown, New Jersey.

We have examined the balance sheet of Jersey Central Power & Light Company as of December 31,1969 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 made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered nec-essary in the circumstances. We previously examined and reported upon the financial statements for the year 1968.

In our opinion, the aforementioned statements present fairly the financial position of Jersey Central Power & Light Company at December 31,1969 and 1968 and the results of its opera-tions and the source and application of funds for the years then ended, in conformity with gen-erally accepted accounting principles applied on a consistent basis.

LYBRAND, Ross Bros. & MONTGOMERY New York, N. Y.

January 29,1970.

3 5 0 ".1 8 5

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Qq JERSEY CENTRAL POWER & LIGHT COMPANY i

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BALANCE SHEETS December 31,1969 and 1968 A5 SETS 1969 1968 PROPERTY, PLANT AND EQUIPMENT (at original cost):

Utility punt in service and under construction (Note 1)

$601,047,318 $540,224,811 Less, accumulated depreciation (Note 2).

69,225,040 59,310,663 Net utility plant.

$531,822,278 S480,914,148 Nuc! car fuel 5 14,022,786 S 10,897,347 Less, accumulated amortization 37,049 Net nuclear fuel.

5 I3,985,737 5 10,897,347 Net property, plant and equipment.

5545,808,015 5491,811,495 INVESTMENTS:

Other physical property, at original cost.

S 98,860 $

321,148 j

Other, at cost 15,433 76,721 Totals 114.293 $

397,869 CURRENT ASSETS:

Cash (Note 3)

S 6,845,976 S 1,782,691 l

Accounts receivable (Note 5).

12,895,706 9,642,700 Materials and supplies (including ccastruction materials), at average cost or less.

6,678,335 6,385,375 Prepayments 594,979 435,071 Other.

743,836 574,225 Totals 5 27,758,832 S 18,820,062 DEFERRED DEBITS:

L'namortized premium on bonds redeemed.

S 34,799 5 69,599 Charges related to prewsed construction projects and other work.

1,175,590 806,756 Other.

236,179 29,820 Totals

$ 1,446,568 $

906,175 TOTAL ASSETS

$575,127,708 5511,935,601 The accompanying notes are an integral part of the financial statements, aG 186 4

N

'4 JERSEY CENTRAL POWER & LIGHT COMPANY i

E N

BALANCE SHEETS December 31,1969 and 1968 v

LI ABILITIES AND C APIT AL U

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LONG-TERM DEBT, CAPITAL STOCK AND SURPLUS (see page 7):

First mortgage bonds and debentures.

$287,915,000 $279,995,000 e

Notes payable to banks due within one year to be refinar.ced.

37,600,000 12,400,000 i

Totals

$325,515,000 $292,395,000 Cumulative preferred stock.

$ 12,500,000 $ 12,500,000 Premium on cumulative preferred stock.

148,750 148,750 Totals

$ 12,648,750 $ 12,648,750 Common stock and surplus:

Common stock

$ 69,787,700 $ 69,787,700 Capital surplus (parent made capital contributions of

$23,000,000 in 1969 and $23,800,000 in 1968).

127,189,323 104,189,323 Unappropriated earned surplus (.,ee statement on page 7 and Note 4) 7,288,099 8,668,322 Totals

$204,265,122 $ 182,645,345 Tctals

$542,428,872 5487,689,095 CURRENT LIABILITIES:

First mortgage bonds and debentures due within one year.

252,000 $ 1,170,000 Accounts payable 12,567,206 7,606,982 Customer deposits.

1,394,303 1,294,005 Taxes accrued.

887,131 852,534 Interest accrued.

4,726,263 3,908,072 Other.

2,919,257 2,037,806 Totals

$ 22,746,160 $ 16,869,399 DEFERRED CREDITS:

Unamortized premium on debt.

Other

$ 1,369,985 $ 1,448,552 Totals 777,197 730,762 S 2,147,182 $ 2,179,314 RESERVE FOR UNAMORTIZED INVESTMENT CREDIT (Note 5)

$ 6,967,029 $ 4,606,923 CONTRIBUTIONS IN AlD OF CONSTRUCTION 838,465 $

590,870 TOTAL LIABILITIES AND CAPITAL

_ [5,127,708 $511,935,601 S5 The accompanying notes are an intesral part of the financial state.nents.

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11; STATEMENTS OF INCOME

%j For the Years Ended December 31,1969 and 1968 G

F- ~

N E

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el OPERATING REVENUES.

$ 109.607,273 $ 100,337,415 h

15 OPERATING EXPENSES:

y Operation S 33,367,827 5 29,543,628

{

Power purchased and interchanged.

13,820,147 11,846,118

}

Maintenance 6,555,276 6,544,321

)

Depreciation of utility plant (Note 2) 12,475,700 10,997,800 M

Federalincome tax (Note 5).

(2,574,302) 1,906,320 Amount equivalent to current investment credit (Note 5) 3,191,096 1,059,103 Amortization of accumulated investment credit (Note 5)

(830,990)

(511,880)

(N Other taxes 13,499,639 12,258,734 Totals S 79.504,393 $ 73,644,144 we OPERATING INCOME S 30,102,880 $ 26,693,271 OTHER INCOME 231,762 19,534 GROSS INCOME.

S 30.334.642 S 26,712,805 INCOME DEDUCTIONS:

Interest on first mortgage bonds and debentures.

$ 14,052,506 5 12,543,229 Other interest 2,197,254 1,172,997 Interest charged to construction.

(7,520,098)

(6,923,366)

It Other 83,051 (96.473)

Totals S 8,813,013 $ 6,696,387 a

Ib iJ

[

NET INCOME.

$ 21,521,629 $ 20,016,418

( ) Indicates red figure.

I 1

The accompanying notes are an integral part of the financial statements, 00 188 6

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JERSEY CENTRAL POWER & LIGHT COMPANY

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STATEMENTS OF UNAPPROPRIATED EARNED SURPLUS For the Years Ended December 31,1969 and 1968 d

1969

]

1 BALANCE, Beginning of year.

S 8,668,322 S 8,797,142 ADD, Net income (see statement on page 6 )

21.521,629 20,016.418 j

Totals

$30,189,'J51 528,813,560 l

DEDUCT, Dividends on capital stock:

49 Series cumulative preferred stock.

S 500,000 $

509,000 Common stock.

22,401.852 19,645,238 Totals

$22,901,852 $20,145,238 BALANCE, End of year (Note 4)

S 7,288,099 5 8,668.322 The accompanying notes are an integral part of the financial statements.

j LONG-TERM DEBT AND CAPITAL STOCK December 31,1969 LONG-TERM DEBT OUTSTANDING IN HANDS OF PUBLIC (excluding sinking fund requirements due within one year):

First mortgage bonds (a):

2% Tc Series due 1976 S 34,500,000 l

3% % Series due 1978.

3,500,000 3% Tc Series due 19M 6,000,000 3% Tc Series due 1985.

20,000,000 4% Tc Series due 1986.

10,000,000 1

5 % Series due 1987.

15,000,000 1

5% fc Series due 1989.

5,770,000 4% Tc Series due 1992.

I1,000,000 4% % Series due 1993.

18.525,000 455 Pc Series due 1994 18,000,000 4% Tc Series due 1995.

20,000,000 6! hfc Series due 1996.

29,010,000 6% Fe Series due 1997 28,860,000 7% fc Series due 1998.

24,730,000 8% fc Series due 1999.

8,680,000 Debentures (a):

4% To Series due 1988 7,740,000 4% fc Series due 1989 4,400,000 5% Tc Series due 1990.

8,100,000 6 fc Series due 1992.

14,100,000 Total 5287,915,000 Notes payable (7% Fe and 8% ?c ) to banks due within one year to be refinanced.

S 37,600,000 CAPITAL STOCK:

Cumulative preferred stock, par value $100 a share 175,000 shares authonzed; 4fc Series, 125,000 shares outstanding, callable at $106.50 a share.

S 12,500,000 Common stock, par value $10 a share,7,000,000 shares authorized; 6,978,770 shares out;tanding.

S 69,787,700 l

(a) At Decernber 31, 1969, annual sinking fund requirements amounted to 52,080,000, of which $1,828,000 were reacquired.

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g 90 NOTES TO FINANCIAL STATEMENTS l

l 1.

UTILITY PLANT:

making process. In accordance therewith, the Company has l

For the past several years, the Company and the City of Jer.

employed the followmg policies:

sey City base been making expenditures in connection with the 7.13ER A LIZED DEPRECIA TION AND GUIDELINES Longwood Valley joint water supp'y a-d w: aped storage power AND R(/LES: The provisions for income tax in the accom-project. At December 31,1969, the Co.npw had an investment panying income statements were directly reduced by amounts of approximately $5,300,000 in the project. M understands that equ.1 to the reduction in income tax attributable to the em-the City had invested a reasonably compvee amount. As a ployment of liberalized depreciation and the " Guidelines and result of changed conditions, it appears th tN project vould Rules."

not be fessible under the onginal arranger. ents. studies of re-INVESDfENT CREDIT: Charges to income equal to the visions of these arrangements are now in prces so as to permit 3 "c investrnent credit are made and the accumulated bal-the project to go forward.

ances (classified in the accompanying balance sheets as a g

In view of the foregoing, the Company believes that no ad-reserve but as deferred credits in reports to regulatory agen-E justment of its investment in such project is required. If subse-

.:ies) are being amortized over a ten-year period.

h quent events indicate that the project should be abandoned, the 6.

CON!NilTNf ENTS:

r, net loss would be appronmately $2.800.000 (after salvage and The Company expects to make expenditures of approximately income tax deductions).

$ 104,000.000 for plant additions during 1970, and in that con-2.

DEPRECIATION:

nection had incurred substantial commitments at December 31, For rate-making and financial accounting purposes, the Com-1969. The Company plans to issue secunties to partially finance pany provides for depreciation at annual rates determined and such const4uction.

revised periedically on the basis of studies by independent en-7.

COAL NilNE DEVELOPNfENT COSTS:

gineers to be sufficient to amortize the original cost of depre-The Company has participated with six non-affiliated co-ciable property over estimated service lives, which are generally owners of the Acystone generating station in the guamntee of longer than those employed for tax purposes. The Company certain indebtedness (matunng serially through 1977) incurred t.ses depreciation rates based on functional account groups by a non-affiliated mining company in connection with the de-which, on an aggregate composite basis, resulted in an approxi-velopment and equipment of mmes to supply the Keystone mate annual rate of 2.8 9 r~c, 2.88 9. 2.8 8"c, 2.66 % and generating station. The amount of indebtedness so guaranteed 2.61 ~c for the years 1969, 1968, 1967, 1966 and 1965, by the Company is $1,300.000. The co-owners of the Keystone respectively.

generating station have also made unrestricted advance deposits 3.

CON!PENSATING BALANCES:

with the mining company which the latter is to apply against Except for daily working funds and like items, substantially future delivenas of oal at times when such application would all the funds included in cash represent compensating balances not create a default by it under its loan agreements. The amount maintained in respect of short-term bank borrowing or lines of so deposited by the Company at December 31, 1969 was credit for potential borrowings.

$ 25 7,000.

4 UNAPPROPRIATED EARNED SURPLUS:

8.

RATE INCREASE APPLICATION:

Certain limitations en the declaration of cash dividends on Reference is made to the accompanying report for m, ferma-common stock are contained in the Company's mortgage, de-tion relating to the status of the application of the Company benture indenture and charter, the most restrictive presently being for a rate mcrease.

that contained in the mortgage and debenture indenture, under 9.

PENSION PLANS:

which $1.729,154 of the balance of unapprnpriated earned sur.

The Company has established pension plans for its employees plus at December 31, 1969 are so restricted.

and, pursuant thereto, made aggregate provisions for pension 5.

FEDERAf. INCON!E TAX:

expense of approximately $1,200,000 and $1,050,000 for 1969 and 1968, respectively.

The Company joins with its paren' and others m. fih.ng con-g.cctne as of October 31, 1969, the Company and the col-solidated Federal mcome tax returns. Exammation of returns through 1965 has been completed and all deficiencies have been lect ve bargainir.g representatives of the organized employees paid. The consolidated Federal income tax liability is allocated of the Company agreed upon a new contract (which was rati-among the participants in the consolidated returns pursuant t ined by the membership of such local unions on November 21, 1969) insolving among other things a comprehensive revision agreements generally designed to allocate such liability in pro-portion to the participants' respective contnbutions to such of the pension plans of the Company. As a result, the Company liability. The agreements also provide that a participant will is modifying the terms of such plans and the methods of deter-not pay a tax in excess of separate return tax liability, mining the cost thereof and of making provision therefor. The The 1969 investment tax credit (the accounting for which is new plans will involve both a plan applicable to all employees of the Company, the cost of which will be funded with a trustee, described below in this note) of approximately $3,200,000 was in excess of the 1969 Federal income tax (before such invest-and a supplemental plan applicable only to supervisory em-playees which will not be funded but for wnich a reserve will 2nent tax credit). The Internal Revenue Code provides that be created by regular monthly charges to pension expense.

such current investment tax credits may only be utili7ed to the extent of 50"c o.' the current tax liability before such credit, but The Company has heretofore followed the policy of treating and funding as " current service costs" all changes in the costs that any balance of such credit may be carried back and applied of the pension plans including increases in cost resulting from against the mcome tax paid in prior years. Prmespally as a result plan changes that increased benefits based upon periods of of these facts, the 1959 Federalincome tax is reflected in the in-service prior to such plan changes. However, effective as of s

come statement as a net credit of $2,574,302. The carry-back January 1,1970, the Company whi treat benefit changes re-t to pnor years resulted in a claim for rcNnd of tu paid in prior lated to pnor penods of service as a "past service cost" to be years and that claim for refund (amounting to $2.450.000) is classified in the 1969 balance sheet as an account receivable.

funded and amortized over a period of approximately 25 years.

Sforeover, for the past several years the costs of the plans have As a public utility, the revenues of the Company in any period been determined on the basis of an assumption that the pension are dependent to a significant extent upon the costs which are funds would earn 4G per annum. Effective January 1,1970, the recognized and allowed in that period for rate-making purposes.

Company will increase that earnings assumption to 5% % per it is the policy of the Company, in connection with the finan-annum. On these bases, the unfunded past service liability as cial statements contained in registration staten ents pursuant to of December 31, 1969 for the Comoany's plans amounted to which secunties are offered and in reports of financial condition approximately $5,000,000. If such unfunded past service cost and of the results of operations to the holders of such securi-is amortized over a period of approximately 25 years, the total ties, to follow the basic accounting principle of matching costs annual provision for pension costs will approximate tl,e amount and revenues, taking into consideration this aspect of the rate-4 8 charged to pension cxpense in the years 1969 and 1968 a0-190