ML19263D759
| ML19263D759 | |
| Person / Time | |
|---|---|
| Site: | Millstone, 05000496, 05000497  |
| Issue date: | 04/10/1979 |
| From: | NORTHEAST NUCLEAR ENERGY CO. |
| To: | |
| Shared Package | |
| ML19263D750 | List: |
| References | |
| NUDOCS 7904130230 | |
| Download: ML19263D759 (8) | |
Text
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NORTlIEAST NUCLEAR ENERGY CoffPANY Financial Statements as of December 31, 1978 and 1977 Together With Auditors' Report 79041302%
r au u; ro. AOm
AUDITORS' rep 0RT To the lloard of Directors of Northeast Nuclear Energy Company:
We have examined the balance sheets of Northeast Nuclear Energy Company (a Connecticut corporation and a wholly owned subsidiary of Northeast Utilities) as of December 31, 1978 and 1977, and the related statements of income and retained earnings and sources of funds for gross property additions for the years 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 necessary in the circumstances.
In ou-opinion, the accompanying iinancial statements present fairly the fin; acial position of Northeast Nuclear Energy Company as of December 31, 1978 and 1977, and the resiJts of its operations and the sources of funds for gross property ailditions for the years then ended, in conf ormity with generally accepted accounting principles consistently applied during the periods.
ARTilUR ANDERSEN & CO.
llartford, Connecticut, February 14, 1979.
O
NORTilEAST NUCI. EAR ENERGY CutlPANY 8alance Sheets December 31, 1978 and 1977 Assets 1978 1977 Nuclear fuel, at original cost
$1/2,105,960
$145,132,413 1.e s s : Accumulated provision for amortization 89,850,058 70,651,756 Nuclear fuel, net of amortization 82,255,_902
/4,480,657 Current assets:
Cash 101,271 120,088 Accounts receivable 185,889 18,505 Due irom affi1iated companies 11,125,282 11,127,029 Flaterials and supplies, at average cost 3,190,636 1,637,063 Other
_ _ _ _ _ _221,863 207,657
_._14,824,941
_I 3, l_10,34 2 Deterred charges
!!namo rt ized debt expense 195,388 164,719 Work in progress 254,353 1.68,443 Other 3,853,577 3_,245,312 4,303,318
__5,378,474 Total Assets
$101,384,161
$ 92g)69,473 Cap _i t a l i_za t i on a n.d I. i a b i l i t iy_ s Capitalizati, i:
Commor tock without par value Author-iz a0,000 shares; issued and out-st fing 1,500 shares, at stated value 15,000 15,000 Capi.at surplus, paid in (Note 2) 15,350,000 15,350,000 Retained earnings (Note 3) 10.,790,739
_7,596,440 Total common stockholder's equity 26,155,739 22,961,440 Long-term debt (Note 4)
_ 40,00_0,000
._-.0,000,000 Total capitalization 66,155,739
__62,961,440 Current liabilities:
Short-term debt (Note 5) 15,000,000 Nuclear fuel payable 24,707,610 Accounts payable 4,286,155 8,238,661 Due to af f iliated companies 2,008,597 4,530,869 Accrued taxes 2,023,380 459,430 Accrued interest 325,729 550,400 Other
. _ _ _ 44,199_
__28,847,456_
._68,096
__33,395_,870 Deferred credits:
Accumulated deferred investment tax credits 1,147,610 1,160,577 Other 684,94_2 1,832,552 1,.160,577 C.
qents (Note 7)
Total Capitalization and Liabilities
$ 101_,38_4,161
$ 92,969,473_
The accompanying notes are an integral part of these balanct sheets.
NORTIIEAST NUCLEAR ENERGY COMPANY Statements of Income and Retained Earnings For the Years Ended December 31, 1978 and 1977 I 9_7_8 1977 Operating revenues
$73,792,887
$59_,445,518 Operating expenses:
Operation -
Fuel 19,631,434 20,508,472 Other 25,495,794 20,073,113 Maintenance 18,160,635 10,528,542 Federal and state income taxes (Note 6) -
Current income taxes 2,474,133 389,297 Deferred investment tax credits, net (12,967) 880,628 Taxes other than income taxes 455,410 382,549 Total operating expenses
__66,204,441 52,762,601 Operating income 7,588 446 6 682,917_
1 1
Other income:
Allowance for equity funds used during construction 73,918 Other (12,125)
(21,330)
Net other income (12,125) 52,588 income before intercat charges 7,576,321 6,735_,505 Interest charges:
Interest on long-term debt 3,955,367 3,075,642 Other interest 2,181,772 1,4i8,168 Allowance for borrowed funds used during construction
(
_ h 755,117)
(336,740)
Total interest charges 4,382,022
___4,157,070 Net income 3,194,299 2,578,435 Retained earnings at beginning of period 7,596,440 5,018,005 Re,ained earnings at end of period (Note 3)
$10,790,739
$ 7 596,440 1
The accompanying notes are an integral part of these financial statements.
NORTifEAST NUCI EAR ENERGY Cotti'ANY Statements of Sources of Fumis for Gross Property Additions For the Years Ended December 31, 1978 and 1977
_19_78
_19_7_7 Funds generated f rom operations Income from operations
$ 3,194,299
$ 2,578,435 Principal noncash items -
Amortizat ion of nuclear fuel 19,631,434 20.508,472 Investment tax credits (12,967) 880,628 Amortization of other noncash items 49,610 35,81/
Allowance for funds used during construction
_ l_,_755,117)
(410,658)
(
Net f unds generated f rom operations 21_,107,259 23 59_2_,694 n
Funds obtained from financing Proceeds from issuance of long-term debt 10,973,781 Increase (decrease) in short-term debt.
(15,000,000)
(8,000,000)
Capital contributions from Northeast Uti1ities (parent) 2,050,000 Nuclear f ueI payable 24 707 610 1
u Net funds from financing 9,707,610 5,0_23,781 Other sources (uses) of funds Decrease (increase) in net current assets (excluding shcrt-term debt and nuclear fuel payable) -
Cash 18,817 3,199 Accounts receivable (165,637)
(3,868,730) flaterials and supplies (1,553,573)
(1,024,060)
Accounts payable (6,474,778) 2,710,709 Accrued taxes 1,5t>3,950 271,740 Other, net (262 574) 2_40,6_2_0 1
Net change (6,873,795)
(1,666,522)
Sale of nuclear fuel (Note !)
7,231,143 Other, net
__l 2_74_,804 (3,051,884) x Net other sources (uses) of funds
_ 5,598,991)
_ 2_,512,737
(
Total funds from above sources 25,215,878 31,129,212 Allowance for f unds used during construction 1,755,117 410,658 GROSS PROPERTY ADDITIONS - Nuclear fuel
$_26,970 995
$3!,539,870 1
The accompanying notes are an integral part of these financial statements.
NORTIIEAST NUCLEAR ENERGY COMPANY Notca to Financial Statements (1)
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES Affiliation: The Company is a wholly owned subsidiary of Northeast Utilities, a registered holding company under the Public Utility llolding Company Act of 1935. The Company acts as agent for The Connecticut Light and Power Company (CL&P), The llartford Electric Light Company (llELCO) and Western Masssachusetts Electric Company (WMECO) (Affiliated Utility Companies, all wholly owned by Northeast Utilities) in the construction and operation of nuclear generating facilities and in the financing of nuclear fuel for such facilities.
Two nuclear generating units are currently being operated by the Company. The cost of the nuclear units is recorded on the books of the Affiliated Utility Companies in their proportionate shares of ownership.
The cost of the nuclear fuel for the uni u is recorded on the books of the Company.
Revenues: The Company provides services to the Affi1iated Utility Companies on the basis of recovery of cost plus return on capital, as defined under terms of agreements which have been approved by various federal and state regulatory commissions having jurisdic-tion over operations of the Company and the Affiliated Ut.ility Companies.
Nuclear Fuel:
The cost of nuclear fuel, based on a net salvage value of zero, is amortized to operation expense on a unit-of-production method at rates based on estimated kilowatt-hours of energy to be provided. Such amortization was $19,631,434 in 1978 and $20,508,472 in 1977.
It is est.imated that future disposal costs of Millstone Unit Nos. I and 2 spent fuel, excluding prior period disposal costs, could approximate $4-$5 million per year.
If the prior period disposal costs are amortized over ten years, as requested by CL&P and IIELCO of the Connecticut Public Utilities Control Authority, such amortization would amount to an additional
$3-$4 million per year during such ten year period.
Storage for spent f uel at the Millstone nuclear station, includirg the facilities currently under construction at Millstone Unit. No. 3, will be sufficient until at least the mid-1990's.
Nuclear fuel for Millstone Unit. No. 2 is being financed pursuant to a fuel supply trust agreement under which the trust owns and finances the nuclear fuel prior to its being placed into the nuclear reactor.
The trust obtains funds by the sale of commercial paper and/or through bank loans.
The Company is obligated to purchast the nuclear fuel from the trust when specific events occur.
During 1978, interest costs of $1,755,117 related to financing this nuclear fuel were capitalized and recorded in allowance for borrowed funds used during construction by the Company using a weighted average i n te res t.
rate of 8.2 percent, the average interest rate charged by the trust for its commercial paper.
Federal Income Taxes: The Company is inclinled in the consolidated federal income tax return filed by Northeast Utilities.
Additional investment tax credits received as a result of the Tax Reduction Act of 1975 are deferred and subsequently amortized to income over a four year period.
See Note 6 for additional income tax informa-tion.
Allowance for Funds Used During Construction:
Allowance for funds used during construction (AFUDC) represents the estimated cost of capital funds used to finance the acquisition of nuclear fuel, which is added to the cost of such fuel, during the period preceeding the operational status of a nuclea r uni t.
The AFUDC recorded in 1977 pertained to t!illstone Unit No. 3 nuclear inel in process which was sold during 1977 to the Affiliated Utility Companies.
The 1978 AFUDC represents Millstone Unit No. 2 nuclear fuel interest costs related to the fuel supply trust financing agreement discussed under Nuclear Fuel above Retirement Plan: The Company participates in a uniform noncon-tributory retirement plan covering all regular employees.
It is the policy of the Company to provide for and fund the actuarial liability, which includes the current cost and the amortization of prior service cost over a period of 40 years.
Total pension cost, part of which was charged to utility plant, approximated $472,000 in 1978 and $381,000 in 1977. The pension fund assets exceeded the actuarially computed value of vested benefits at December 31, 1978.
The unfunded actuarial liability of the plan was approximately
$899,003 at December 31, 1978.
(2) CAPITAL, SURPLUS,_ PAID IN During 1977, the Company received a $2,050,000 capital contribution from Northeast Utilities which was credited to capital surplus, paid in.
(3) DIVIDEND RESTRICTION At December 31, 1978, $4,567,000 was available for payment of cash dividends on common stock.
(4) LONG-TERM DEBT Details of long-term debt outstanding at December 31, 1978 and 1977 are as follows:
Secured Notes, Series A, 8-1/2%, due 1982
$ 9,000,000 Secured Notes, Series B, 11-1/4%, due 1982 20,000,000 Secured Notes, Series C, 8-1/8%, due 1982 11,000,000 Total long-term debt
$40 000,000
_1 Northeast Utilities has guaranteed the payment of the Notes and the Company's nuclear fuel has been pledged as security f or the payment of the Notes.
(5) SHORT-TERT! DEBf The maximum amount of short-term borrowings as currently authorized by the SEC is $30,000,000.
There was no sho r t -t e rm debt outstanding at December 31, 1978.
(6)
INCOttE TAXES The principal reasons for the difference between total tax expense and the amount calculated by applying the f eite ra l income tax rate to pretax income are as follows:
1978 1977 income before income tax
$ 5,655,465
$ 3,848,360 Federal statutory rate 48%
48%
Resultant tax if calculated on above basis 2,714,624 1,847,213 Tax effect of differences:
State tax, net of federal benefit 298,666 133,220 Al1owance for funds used during construction -
not recognized as income for tax purposes (197,116)
Investment tax credit amortization (552,966)
(136,803)
Other, net 842 (176,589)
Income taxes
$_2,461J 66
$ 1,269 925 u
(7) C0titt lTtlENTS The Company, under terms of an agreement expiring in 1982, is obligated to siipply the nuclear fuel required for the operation of flillstone Unit. Nos. I and 2 which are owned by the Affiliated Utility Companies.
Nuclear fuel expenditures for Unit Nos. I and 2 are estimated to total $277,806,000 through 1984, including $25,723,000 for 1979.
In 1977, the Company sold nuclear fuel for units other than t!illstone Unit Nos. L and 2 to the Affiliated Utility Companies.
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