ML19206A265

Annual Financial Rept 1968

ML19206A265
Person / Time
Site:	Crane
Issue date:	03/24/1969
From:	Cox F, Parry G Metropolitan Edison Co
To:
References
NUDOCS 7904180447
Download: ML19206A265 (12)

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W7ct""L*DW '**Kr%D nim # m:aca.ur"~M+CMR =3=m-aGM n cx= A M W % & ~,ad Er METROPOLITAN EDISON COMPANY A SUBSIDIARY OF GENERAL. PUBLIC UTILITIES CORPORATION DIRECTORS TRUSTEE - FIRST MORTGAGE BONDS Af0RcAN GUARANTY TRUST COMPANY OF NEw YORK G. R. PARRY, Chairmsu

[.[3.hsu,er J. LEE BACsHER R. E. NrtDic Y.

10015 FREDERIC COx G. J. SCHNEIDER J. A. DUNLAP F. J. SstiTH TRUSTEE - DEBENTURES

4. G. KuHNs 31ARINE hilDLAND GRACE trust COh!PANY OF NEW YORK IM Broadwar New York, N.

10015 EXECUTIVE COMMITTEE FREDERIC COx

. Chair man W. G. KUHNs TRANSFER AGENTS G. R. PARRY THE FIRsT PENNSiLVANIA J. A. DUNLAP

. d/ter s Jte BANKING AND TRUST C05f PANY 15th and Chestnut Streets Philadelphia, P2.

19101 CHE5tfCAL BANK 5

OFFICERS E,DV "4 v.

wo13 FRrDERIC COx

. Prefiden!

REGISTRARS W. 51. CREITz

. Vice Prefilent GIR ARD TRUST BANK J. A. DUNLAP

. Vice President Broad and Chestnut Streets J. G. STILLER

.I'/ce Pr 1! dent Phd2 Jehhia, P2.

19101 R. E. NEIDic

. Vice Piefident Af ANUrACTURERs HANOVER TRUST CO5f PANY E. J. SsuiH

. Vice President 43 un gg,,,

W. D. HOLLtsctR

. Secretary and Tressrirer New york, N. y.

1o015 St.A.KoHR

, A151. Secretar)

R. E. WERTS

. Cmnptrc/!er PRINCIPAL OFFICE

s00 Pottsville Pike, Af nienberg Township, ANNUAL MEETING Berks County, P2.

SECOND hf0NDAY IN SfAY 3 fading Address: P. O. Box SU, Read:ng, P2.

19603 Albert F. Tepp, former President and Chairman vacancy caused by the hath cf Mr. Sypher, and of the Board of Directors of General Public Utilities Startin E. Kohr was named Assistant Secretary.

Corporaticn, submitted his resignation as 2 member Early in 1v09, the Board of Directors named John of the Board a Directors of Mctropo'itan Edison G. Miller Vice President and Chief Engineer and Company. At its February,1969, meeting the Met.Ed Walter M. Creitz Vice President and Western Divi-Board accepted the resignation and expressed app e.

sion Manager.

ciation for Mr. Tegen's years of dedicated service.

During 1964, Theodcre O. McQuiston, Vice Pres-It is with deep regret that we report ident-Sales, submitted his resignation to the Board i

of Directors o Afet.Ed for the purpose of retiring

he death on June 8,1968, of Raymond effective August 31,1968.

E. Sypher, our Secretary-Treasurer.

George J. Schneider, Vice President of General The lite Mr. Sypher's electric utility carter spanned 43 years with Afetropolitan Public Utilitie Corporation, was named a member o r

the Met.Ed Eoard of Directors by action t2 ken in Ed s n Company and its affih2te.t. He came to Met.Ed in 1939 as an accountant October' He was elected Secret 2rv-Treasurer of

, Vice Presi> lent John A. Dunlap resigned the pest-Stet.Ed in 1962 and the sime year Secre.

tion of Compt eller to assume expanded duties as Vice tary. Treasurer of the Saxton Nuclear Ex-President. By action of the Board of Directors, Ray-perimental Corporation.

mond E. We:ts was named Comptroller; Wilbur D.

Hollinger was named Secretary-Treasurer, filling the r^r

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I TO THE SECURITY HOLDERS OF MET ED:

i A review of the operations of Metropolitan Edison Company and activities in the area served during 1968 retlects sound economic growth.

This continued development resulted in an improved sales recoid in all markets. The average num-ber of customers served by Met-Ed increased by 4,628 and megaw:tt-hour sales increased by 9.77c. The revenue increase was 9.*Sc. An important factor affecting this growth rate is the increasing customer preference for electricity as the exclusive source of energy-in other words, confidence in the Total Elect-ic Concept.

During the year, Met-Ed added 312 electrically space-cor.ditioned commercial and industrial build-ings. This represents 51[c of all new commercial and industrial buildings constructed in the territory in 1968.

In the residential market, an estimated 475h of all new homes constructed in 1968 in our territory employed electricity as the means of heating. This, plus the comersion of 441 existing homes, made a total of 8,856 electrically heated homes in Met-Ed territory as of the end of 1968. At the same time, Met-Ed customers showed their greatest increase in residential kilowatt-hour use-an increase of 437 KWH to an average annual use of 5,823 KWH.

In facing the challenge of serving this progressive area, Met Ed has continued, in fact increased, the orderly development of its power system to assure economical and depend 2ble electric energy.

In May,1968, the Atomic Energy Commission granted a construction permit for Met Ed s Three Mile Island Nuclear Generating Staticn located near Middletown, Pennsylvanit. Completion of this 840,000 KW plant is scheduled for the fall of 1971.

Cocstruction is on schedule for early 1970 and 1971 operation of the two generating units at Cone.

rr.augh Station. This jointly owned 1,800,000 kilowatt mine-mouth station near Seward, Pennsylvania, will add 296,000 kilowatts to the Met-Ed system. The associated 500,000 volt transmission lines are also on schedule.

The addition and expansion of transmission, distnbution and substation facilities within the Met Ed territory is moving ahead at a rapid pace to increase system reliability and to provide for the expected load growth of the 1970's.

The ccst of power generated and purchased during 1968 was higher than planned because of delays encountered in construction of new generating capacity.

With the approval of the Public Utility Commission, Met-Ed discontinued the unprofitable steam heating services in the city of Easton as of June 1,1968.

On October 1,1968, Met.Ed, together with the Monsar.to Company, announced the success of a research and development program to prove a process which will remove sulfur dioxide from st2ck gas.

Work on this program has been under way at Met.Ed's Portland Generating Station since the spring of 1966, 2nd is expected to continue for about 2 nether year.

Throughout 1969, Met Ed will continue its deve!opment to meet the growing cha'lenges.

Frederic Cox G. R. Parry President ChJrman-Board of Directors Reading, Pennsylvania March 24,1969

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E ELECTRIC GENERATION AND SALES STATISTICS 1968 1967 1966 196S 1964 GENERATING CAPACITIES & PEAKS:

Installed Capacity-KW 894,300 894,300 859,300 859,300 878,300 Firm Power Purchases 31,000 31,000 Totals 894,300 894,300 859,300 890,300 909,300 Annual Peak Load 1,021,000 912,000 864,000 792,700 717,600 NET SYSTEM LOAD (megawatt hours):

Nct Generrion 5,223,030 5,122,761 5,117,216 4,938,349 4,737,234 Purchased 99,333 70,159 63,326 69,395 40,658 Net Interchange 605,266 196,317 (168,480)

(453,259)

(636,367)

Net System Load 5,927,629 5,389,237 5,012,062 4,554,485 4,141,525 STEAM PRODUCTION DATA:

Average Bru (per net KWH) 10,377 10,116 10,192 9,916 9,786 uel Cost (e per million bru) 32.2 31.1 30.0 30.1 29.3 Cost of Fuel (mills per KWH) 3.34 3.15 3.05 2.99 2.87 Total Production Costs (mills per KWH) 4.47 4.13 3.94 3.87 3.72 ENERGY SALES (megawatt hours):

Residential 1,471,444 1,338,981 1,231.031 1,128,070 1,061,684 Commercial 836,976 757,344 710,415 649,555 605. 27 Industnal 2,647,(237 2,449.053 2,344,263 2,123,620 1,898,547

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All Other 397,953 335,121 218,111 175.1}9_

153,764 Tot Is 5,354.010 4.880,479 4,503,820 4,076,674 3,729,222 Gain Over Prior Year 9.79 8.49 10.5 9 9.39 7.79 OPERAT'NG REVENUES (in thousand 5) :

Residential 30.519 28,185 $ 26,328 $ 24,644 $ 23,521 Commercial 16,274 14,990 14,169 13,590 12,932 Industrial 28,773 27,199 26,135 24,750 23,276 Other 5,023 4,374 3,435 2,938 2,757 Total, from KWH Sales 80,529 74,748 $

70,067 $ 65,922 $ 62,489 Other Revenues

.,719 1,335 642 578 528 Tx21s

$ 83,308

$ 76,083 $

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Gain Over Prior Year 9.59 7.69 6.39 5.59 5.09 l

CUSTOMERS--YEAR END:

l Re<idential 254,996 250,551 246,646 242,558 238,472 Commercial 31,588 31,119 30,773 30,237 29,765 Industrial 2,474 2,515 2,565 2,590 2,614 All Other 2,175 2,124 2,062 1.965 1.009 Tet21s 291,233 286,309 282,046 277,360 272,760 AVERAGE USE, BILL AND PRICE:

Residential Customers:

KWH Use Per Custoner 5,823 5,386 5,033 4,693 4,494 Annual Bill

$120.77

$113.38

$ 107.64

$102,52

$99.57 d.

Price Per KWH 2.07p 2,10(

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O METROPOLITAN EDISON COMPANY STATEMENTS OF INCOME For the years ended December 31,1968 and 1967 1968 1967 OPERATING REVENUES.

Electric

$83,307,991

$76,08;,291 St eam heating...........................

351,693 421,252 Totals.

$83,659,684

$76,504,543 -

OPERATING EXPENSES:

Operation

$32,490,906

$31,103,442 Power purchased and interchanged 6,662,445 3,338,771 Maintenance......

7,619,505 6,334,082 Depreciation of utility plant (Note 2) 9,937,000 9,251,000 Federal income tax (Note 5).

2,669,504 3,333.820 St1te income tax (Note 5) 502,595 685,671 Amount equivalent to current investment credit (Ncte 5) 715,500 v 54,100 Amortization of accumulated investment credit (Note 5)

(332,600)

(79 700)

Other taxes 2,816,429 2,539,049 Totals

$63,081.284

$ 57,360,235

$ 20,5 78,400

$19,144,308 OPERATING INCOME.

OTHER INCOME.

85,235 61,812

$20,663,635

$ 19,206,120 GROSS INCOME INCOME DEDUCTIONS:

Interest on first mortgagt bonds and debentures

$ 7,918,084

$ 6,311,797 Other interest...

655,856 658,201 Interest charged to constr.dion (Note 6)

(1,157,949)

(918,250)

Other 440,124 69,280 Totals

$ 7,856,115

$ 6,121,02s NET INCOME..

$12,807,520

$ 13,085,092 N

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The accompanying notes are an integral part of the financial statements.

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4 METROPOLITAN EDISON COMPANY BALANct S11EEIS December 31,1968 and 1967 sass us7 ASSETS:

PROPE~iTY, PLANT AND EQUIPMENT (at original cost):

Electric (Note 1)

$439,142,861

$392,999,201 Steam heating 1,542,573 3,341,960 Utility plant in service and under construction.

3440,685,434

$396,341,161 Less, Reserve for depreciation (Note 2)....................

99,841,492 93,651,612 Net property, plant and equipment

$340,843,942

$ 302,689,549 INVESTMENTS:

Other physical property, at original cost 15,365 18,567 Other, at cost 540,310 551,809 Totals 555,675 570,376 CURRENT A3 SETS:

Cash..............................

$ 2,218,128

$ 1,912,820 Accounts recervable 7,914,610 6,611,535 Materials and supplies (including construction materials), at average cost or less 4,130,805 5,714,524 Other 843,974 472,420 Totals......

$ 15,107,527

$ 14,711,299 DEFERRED DE3lTS:

Charges related to proposed construction projects and other work..

533,927 373,101 86,449 112,731 Other Totals.................................

619,876 485,832

$357,127,020

$ 318,457,056 TOTAL ASSETS 9

The accornpanying notes are an integral part of the financial statements.

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I METROPOLITAN EDISON COMPANY BALANCE $1IEETS December 31,1968 2nd 1967 l

1968 1967 LIABILITIES AND CAPITAL:

LONG-TERM DEBT, CAPITAL STOCK AND SURPLUS (see pages 6 and 7):

First mortgage bonds and d:bentures

$194,270,000

$ 168,790,000 Notes p2yable to banks due within one year to be refinanced 3,000,000 6,000,000 Totals

$197,273,000

$174,790,000 Cumulative preferred stock

$ 23,391,200

$ 23,391,200 Premium on cumulative preferred stock 206,209 206,209 Totals

$ 23,597.409

$ 23,597,409 Common stock and surplus:

Common stcck

$ 66,273,400

$ 66,273,400 Capital surplus (Note 3) 39,823,611 23,323,611 Un2ppropriated earned surplus (Note 4) 13,591,568 13,727,596 Totals

$118.688,579

$ 103,324,607 Tctals

$ 339,5 5 5,988

$ 301,712,016 4

CURRENT LIABILITIES:

Debentures due within one year,

816,000 520,000 Accounts payable 7,937,734 6,J 27,139 Customer deposits.

261,635 254.994 Taxes accrued 1,463,000 2,244,185 Int. rest accrued 1,906,696 1,416,259 Othe.

' 1,986 1,115,945 Totals

$ 13,357,051 S 11,778,572 DEFERRED CREDITS:

Unamortized premium on debt.

216.046 171,160 Other 187,943 207,046 Totals 403,989 378,206 RESERVES:

Un2mortized investment credit (Note 5)

$ 2,904,800

$ 2,581,900 Other 104,075 100,675 Totals.

$ 3,068,875

-3 2,682,575 CONTRIBUTIONS IN AfD 05 CONSTRUCTION 741,117

$ 1,905,687 TCTAL LIABILITIES AND CAPITAL,

' $357,127,020

$ 319,4 57,05(3 The accompanying notes are an integral part of the hnancial statements.

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METROPOLITAN EDISON COMPANY STATE 51ENTS OF UNAPPROPRIATED EARNED SURPLUS For the years ended December 31,1968 and 1967 1968 1967 BALANCE. Begmrung of year

$13,727,596

$14,186,0 5 2 ADD, Net income (see statements on page 3) 12,807,520 13,085,092 Totals

$ 26,535,116

$ 27,271,144 DEDUCT, Dividends on capital stock:

Cumulative preferred stock:

3.909 Series

$ 4s9.144

$ 459,144 4.35Fe Series 144,632 144,632 i

3.857c Series.

112.324 112,324 3.80 c'c Series 68,864 68,864 l

4.45% Series 158,584 158,584

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Common stock 12,000,000 12,600,000 Tott.!s

$ 12,943,548

$ 13,54 3,548 BALANCE, End of year (Note 4)

$13,591,568

$13,727,596 STATE 51ENTS OF SOURCE.ND APPLICATION OF FUNDS For the years ended r ccember 31,1968 and 1967 SOURCE OF FUNDS:

1968 1967 i

l Net income (see statements on page 3)

$12,8 37,5 20

$13,08 5,092 l

Depreciation (Note 2).

9,937,000 9,251,000 t

In estment credit, less amortizatica (Note 5 )

382,900 774,400 Totals

$ 2 3,127,420

$ 2 3,110,492 Sale of bonds and debentures 26,000,000 20,000.000 Osh contribution from General Public Utilities Corporation, parent company (Note 3) 15,500,000 8,000,000 l

Bank loans 1,550,000 l

Price fixing settle.nents, net (2) 268.904 l

Other, net 2,128,908 Total Funds Received...

$66,756,328

$ 52,929.3' 6 l

APPLICATION OF FUNDS:

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$ 50,588,780

$ 38,244,744 943,548 943,548 Dividends on cornmon stock 12,000,000 12,600,000 i

Retirement of debentures 224,000 120,000 Payment of bank loans 3,000,000 Other, net 1,021,104 Total Funds Applied............

$66,756,328

$ 52,929,396 (a) Plant additions shown are before credits arising from price Exing settlements.

The accomranying notes are an integrsi part of the financial statements.

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'O METROPOLITAN EDISON COMPANY LONG-tem 1 DEBT AND CAPITAL STOCK mber 31,1968 LONG-TERM DEST OUTSTANDING IN HANDS OF PUBLIC (exduding sinking fund requirements due withia one year):

First mortgage bonds:

2%9 Series, due 1974

........ $ 24,500,000 37c Series, due 1977....

4,500,000 39 Series, cue 1978 3,500,000 2%7c Series, due 1980.

12,250,000 3%c' Series, due 1982....

c 7,800,000 31/39 Series, due 1984.....

15,000,000 4%C*c Series, due 1987 19,000,000 5 0'c Series, due 1990 15,000,000 4%f'c Series, due 1992 15,000,000 4%c'c Series, due 1995

!,000,000

- (h 5%Q Series, due 19c6 15,000,000

. ic Series, due 1998 26,000,000 Debent':res (2):

4%9 Series, due 1990 5,520,000 61' !c Series, due 1992 g

19,200,000 Total

$194,270,000 Notes payable to banks. 61/fe, due within one year to be refinanced.

$ 3,000,000 CAPITAL STOCK:

Cumulative preferred stock, par value $100 a share, 400,000 shares authorized:

3.9076 Series, 117,729 shares outstanding, callable at $105.625 a share.

$ 11,772,900 4.359 Series, 33,249 shares outstanding, callable at $104.25 a share.

3,324,900 3.F5(F Series, 29,175 shares outstanding, callable at $104.00 a share.

2,917,500 3.807c Series, 18,122 shares outstanding, callible at $104.70 a share.

1,812,200 4.457c Series, 35,637 shares outstanding, callable at $104.25 a share.

3,563,700 Total

$ 23,391,200 Common stock, no par value, 900,000 shares authorized, 859,500 shares outstanding........ $ 66,273,400 (a) At December 31, 1968 the annual sinking fund requirements amounted to $520,000.

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NOTES TO FINANCIAL STATEMENTS

1. UTILITY PLANT:

1, 1%s decreased 1968 net income by approximately On September 2 1 1968, the Federal Power Commis-D " """-

sion issued an order prescribing a general method for The Company toins uith its parent and others in 61ing the determinatmn of " net investment" in hydroelectric conwhJared Federal income tax returns. Examination of pnyects licensed as such under Part I of the Federal returns through 1964 has been completed and all de-Power Act. The method so prescribed h:d been opposed 6ciencies paid. The consolidated Federal income tax by s artuallr all licensees (including the Company), a l'abihty is allocated amcng the participants in the con-number of state pubhc utility commissions and others.

solidated eturns pursuant to agreements genera:ly de-The order requires the reporting by licensees to the signed to allocare suc5 lubihrs in proportion to the Commission of " net insestment" as calculated in accord.

participants' respective contributions to such liabihty.

ance with the prescnbed method but makes no provision As a public utihty, the revenues of the Company in for re6ectmg such calculations in 'he accounts main.

anv r+riod are Jerendent to a signi6 cant extent upon the tained by licensees The order states *ut it costs which are recognized and allowed in that period

• * * *should not have any erTect on rate deterraination for rate. making purposts. It is the pohcy of the Com-by the various states, since no state reculates or, a pany in connection with the 6nancal stat-ments con-

' net investment basi <. As for our woolesale rate reg.

tamed in registratmn statements pursuant to which ulation. our actwn does not decide the issue of whether securities are oriered and in reports of financial con-we thould utihte ths ' net investment' f cure."

dition and of the results of operationi to the holders of However, the order states that, unless th'e Commission such secunties to follow the basic accountmg principle orders otherwise, the " net investment" so calculated shni of matching costs and revenues, takmg into considera-be employed in determinmg the price to ac paid by the tmn this aspect of the rate-making process. In accordance United States or another licensee in the event of the therewith. the Company has employed the following take-mer of a licensed prmect.

Pohciev The Comrans and a number of other interested parties Lhr.dal Daimu: ion al Gaildiner and Ruler.

including several state public u ility commissions, other The prosisions for income taxes in the accompanying hunwes and the Insestment Bankers Association have mcome statements were directly reduced bv amounts 6 led retations for rehearme of the order. On Nmeraber equal to the reduction m income cases attributab!e to 22,19M 2 rehearmg was granted for the limited purpose the em ploy ment of hberaheed deproaation and the of enabling the Commissmn to give the matter further

' Guidelmts and Rules '

consideration. The Company bdieses that no arpropriate Inmiment Credi. Charco to income equal to the 3%

basis exnts for redocmg the irnestment in the Comrany's insestment credit are rnaJe and the accumulated bal-hydroelectric prmect, but the Company estimates that, as ances (class 6ed in the accompanying balance sheets as at December 31, 1069, the maximum reduction in such a resene but is deferred credits m reports to regul2-irnestment of the Company that micht be asser*ed by tory a cenues ) were beme amortized prmr to 1968 the Comraission based on the September 27 IS64 order oser the estimated scnice hves of the related facilities ss approximately $'M00.000 Etiective Januart 1, Im. the amortization perind was reduced to ten years This chance increased 1968 net m me appmimach p,m

2. DEPRECIATION:

for rate-makmg and Enancial accounting purposes, the

6. INTEREST CHARGED TO Company pnnides for deprecution at annual rates deter.

mmed and revised perindically on the basis of studies by CONSTRUCTION:

independent enci,eers en be sutEcient to amortare the The applicable regulatory uniform systems ei.ccounts orismal cost of depreciable property on a systematic basis dsne interest durmg construction as mcluding the net oser estimated service lives, which are generally Icnger cost durmg the period of construction. of borrowed funds than those empimed for tax purpnses. The Company used for construction purposes and a reasonable rate on uses deprecution rates based on functional account groups other funds w hen so used. In accordance therewith and which, on an aggregate composite basis, resulted in ap-in recognition of the increasing cost of capital, etTective proximate annual rates of 2.70G and 2.71"c for the Januan 1, 1968, the Company increased the rate em-years 19M and 1967, respectively.

ployed for the accrual of interest during construction from 67 tn 6W, per annum Thn change increased

3. CAPITAL SURPLUS:

Durine 1948 tapital surplus increased by $15,500,000

7. COMMITMENTS:

as a result of cash contrabaions by the parent company.

The Company expects to make expenditures of ap-proumately $91000,000 for plant auJitions during 1969

4. UNAPPROPRI ATED EARNED SURPLUS:

and in enat connection had meurred substantial commit-ments at Dacember 31, 1968. The Company plans to C:rtam limitations on the dedaration or cash dividends issue secuntws to partully 6 nance such construction-cn common stock are contained in the Company's mort-gage, debenture indenture and char'er, the most restric-tive presently being that contained in the mortpge, under

8. PENSIOJ PLAN:

which S3,360,052 of the balance of earned surplus at The Company Fas established a pension plan for its Decen.ber 31, 1968 are so restricted.

emplovees and has made provision to fund the ' cost of' such plan. The past service cost of the plan is fully funded. The annual current service costs and the contr6u-S. INCOME TAXES:

tions by the Company for such costs were 27 prox}nately The 107e Federal corporate surt2x efective January 5980,000 and $1,100,000 for 1968 and 196', respectively.

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LYBRAND, ROSS BROS. & MONTGOMERY CERTIFIED PUBLIC ACCOUNTANTS To the Bc.:rlof Directors, hfETROPOLITAN Edison COMPANY, READING, PINNSYLVANIA.

We have examined the balance sheet of Aferropolitan Edison Company 25 of December 31,1968, the related statements of income and unappropriated earned surplus-2nd the statement of source and application of funds for the year then ended. Our ex2mination was made in acccrdance with generally accepted auJiting standards, 2nd accordingly included such tests cf the accounting records and : ui other auditing pro-cedures 2s se considered necessary in the circumsunce. W'e previously examined and reported upon the snancial statements for the year 1967 In our opinion, the aforementioned statements present fairly the financial position of Aferropolian Edison Company at December 31, 1968 and 1967, and the results of operations and the source and applicatica of funds for the years then ended, in cen-fermity with generally accepted accounting principles applied on a consistent basis.

LYBRAND, Ross BPOS. & Af0NTGOMERY Philadelphia, Pennsylv2nia.

January 29, 1969.

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