ML19276F921
| ML19276F921 | |
| Person / Time | |
|---|---|
| Site: | Pilgrim, 05000471 |
| Issue date: | 04/17/1979 |
| From: | Rhonda Butler BOSTON EDISON CO. |
| To: | Parr O Office of Nuclear Reactor Regulation |
| References | |
| NUDOCS 7904250362 | |
| Download: ML19276F921 (31) | |
Text
e 9
e BOSTON EDISON CO M PANY GENERAL OFFICES 800 GO fLETON STREET B O sTO N, M AE S ACNU B ETTs 0 219 9 ROBERT M. DUTLER MANAGER NUCLEAR PROJECTS DEPARTMENT April 17,1979 Olan D. Parr, Chief Light Water Reactors Branch #3 Division of Project Management U.S. Nuclear Regulatory Commission Washington, D.C.
Financial Qualifications Review:
Submission of Further Information, BECo Annual Report and Form 10-K
Dear Sir:
In accordance with the request of Mr. Karlowicz, Boston Edison hereby submits the latest Annual Report and SEC Form 10-K which contain financial information for the Company for the year 1978.
Very truly yours,
/5 " < -
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- es V> g Enclosure WRG/cac cc
- Mr. Michael Karlowicz w/a Financial Analysis Section Division of Project Management USNRC Washington, D.C.
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Wa a r.in g t :0 .: 2 2:- c 70:Jf .;-K A';N"A1. REP:RT Pr?.EU/d'~ !] SECT!::.12 er 15 t d ) CF THE SECr?,:!!ES E::C:1.wCE A ! 0F 1934 For the fiscal ~ea r end ed Dec erte r 31, 1Q78 Con =1 s sion f il _ nu=be r 1 .' 3 02-2 SCSTC': D T = CC'Cid.**
(Exact name of registrant as specified in its charter)
Massachusetts 04-1278810 (State or other jurisdiction of LI.R.S. Employer incorporation or organization) Identification No.)
900 Boylston Street, Bost:n, Massachusetts 0:199 (Address at principal executive of fices) (Zip Code)
Registrant's telephone number, including area code 617-424-2000 Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on Title of each class which reeistered Common Stock Beston Stock Exchange (par value $10 per share) New York Stock Exchanze Preference Steck: Boston Stock Exchange
$1.175 Series New York Stock Exchange
$1.46 Series (par value $1 per share)
Cumulative Preferred Stock, New York Stock Exchange 8.88: Series (par value $100 per share)
First Mortgage Bonds, Series B. Boston Stock Exchange 2 3/4% Due 1980 First Mortgage Bonds: Boston Stock Exchange Series 0, 12S% Due 1979 New York Stock Exchange Series P, 9k: Due 2007 Securities registered pureuant to Section 12(g) of the Act:
None (Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES X NO Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report.
Class Out standing' at December 31, 1978 _ . _ _ . _ .
Common Stock, $10 par value 11.534,500 shares
PART I Item 1: DESCRIPTION OF BUSINESS Item 1 (a): GENERAL DEVELOPMENT OF BUSINES3 Item 1 (a) (1): THE COMPANY The Company is an operating public utility engaged principally in the generation, purchase, transmission, distribution and sale of electric energy.
It was incorporated in 1886 under the laws of The Commonwealth of Massachusetts.
Its principal executive offices are located at 800 Boylston Street, Boston, Massachusetts 02199, and its telephone number is (617) 424-2000. It is not a subsidiary of any other company and has no subsidiaries.
Item 1 (b): FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS - Inapplicable Item 1 (c): NARRATIVE DESCRIPTION OF BUSINESS Item 1 (c) (1) (i): PRINCIPAL PRODUCTS AND SERVICES The Company supplies electricity at retail to an area of approximately 590 square miles within 30 miles of Boston, encompassing the City of Boston and 39 surrounding cities and towns. The population of the territory served with electricity at retail was approximately 1,600,000. At year-end 1978, the Company served about 549,000 customers.
The Company also supplies electricity at wholesale for resale to other utilities and municipal electric departments.
The Company supplies steam, chiefly from its own steam generating plants, to approximately 457 customers in the City of Boston.
Item 1 (c) (1) (ii): STATUS OF CONSTRUCTION PROGRAM AND FINANCING The Company is engaged in a construction program designed to accommodate existing and estimated future loads of its electric and steam systems. During the five years 1974 through 1978, construction expenditures were approximately
$505,000,000, not including an allowance for funds used during construction
("AFUDC") of $58,000,000 and retirements were approximately $132,000,000. In addition, expenditures of approximately $42,000,000, not including AFUDC of about $3,000,000, were made in respect of nuclear fuel during this period. In 1977 and 1978, construction expenditures for new plant facilities totaled approximately $110,000,000 and $112,000,000, respectively, not including AFUDC of $8,800,000 in 1977 and $16,600,000 in 1978. Construction expenditures have been estimated to amount to about $128,000,000 in 1979, not including AFUDC of
$23,000,000.
The Company's construction program for the period 1979 through 1933, which is subject to continuing rrciew and adjustuent, is currently estimated to be app roximatel'/ $351,000,000 excluding AFEDC of $253,000,000 (based upon assumed rates ranging from 10.2% to 10.5%) and excludir.g any allowance for nuclear fuel or modifications which may be required in the future by regulatory cuthorities but including allowances of $204,000,000, for escalation of costs.
In addition to the need for funds to support the Company's construction program, during the period 1979 through 1983, funds aggregating $174,263,000 must be provided for sinking fund requirements of $10,583,000, matarities of bonds of
$88,680,000 and the maturity of a term note of $75,000,000. The proceeds of
$45,500,000 from the Series Q bonds to be delivered on August 15, 1979, will be used to satisfy part of the bond maturity requirement. (See Item 6(c) of this Form 10-K.)
The continuation of the Company's construction program at its present and projected levels depends upon the continued availability of substantial amounts of outside capital from the issuance of debt and equity securities and other financing arrangements. The Company presently anticipates issuing additional permanent securities during 1979; however, the ability of the Company to issue such securities and the type and amount of securities to be so issued are dependent upon a number of factors, including particularly conditions in the securities market.
The Company's outstanding First Mortgage Bonds are rated Baa by Moody's Investors Service, Inc. and BBB by Standard & Poor's Corporation.
Actual construction expenditures could vary from the estimates stated above because of changes in the Company's plans and load forecast, cost fluctua-tions, licensing delays, and other factors. The Company is continuing to experience increases in costs for construction of ceu facilities as a result of escalating labor, material and equipment costs, regulatory requirements and environmental considerations. Also, substantial additional expenditures may be required for regulatory and environmental purposes at the Company's plants.
See Item 1(c)(2)(iii).
The largest project in the Company's construction program is a second nuclear generating facility, Unit No. 2, at Pilgrim Station. The following table sets forth certain estimates with respect to construction of the Unit, assuming issuance of various Federal, state and local permits necessary to begin construction in July 1979:
Pilgrim Unit No. 2 Company Estimated Share of Estimated Completion Capacity Cost of Capacity and Cost Date (kW) Unit Estimated Cost per kW December 1985 1,150,000 $908,000,000(1) 59.026% $790(1)
(1) These estimated costs do not include allowances of approximately $182,000,000 for cost escalation through 1985, $129,000,000 for contingencias (including modifications which may be required by regulatory authorities), $676,000,000 for funds used during construction (of which $429,000,000 applies to the Company), or any allowance for nuclear fuel.
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The cumplexity of present-day electric utilit3 technology and the time re piired for the construction of generating facilities anc! for the completion of the licensing and other regulatory proceedings relating thereto have com-pelled the Company, as well as other electric utilities, to make substantial investments in the construction of such facilities prior to the completion of licensing and regulatory proceedingc. For example, the Company estimates that through the end of November 1978 its share of the accumulated expenditures related to Pilgrim Unit No. 2 and estimated cancellation penalty costs if construction of the Unit were terminated would aggregate approximately
$139,800,000.
Hearings before the Nuclear Regulatory Commission ("NRC") commenced luring 1975 on the application for a construction permit for the Unit. Under the NRC's present procedures an opera ting license for Pilgrim Unit No. 2 can be obtained only when the construction of the Unit has been completed. See
" Regulation". There is no assurance that the necessary permits, licenses and authorizations will be issued.
The Massachusetts Department af Public Utilities has commenced a pro-ceeding to inquire into the capacity needs of the Company and the construction program required to meet such needs. The Company is unable at this time to predict the outcome of this proceeding.
REGULATION Rates, Accounting and Securities The Company operates under the jurisdiction of the Department of Public Utilities of Massachusetts, whose regulation includes supervision over retail rates for electricity, accounting and the issue of bonds, capital stock and certain other securities. The Federal Energy Regulatory Commission has juris-diction over various phases of the business of the Company, including among other things regulation of the system of accounts, rates for power sold at wholesale for resale and facilities used for the transmission or sale of such power.
Nuclear The Federal Nuclear Regulatory Commission ("NRC") has broad supervisory and regulatory jurisdiction over the siting and construction and continuing supervisory and regulatory jurisdiction over operation of nuclear reactors with respect to public health and safety and environmental matters and anti-trust considerations. A permit or license granted by the NRC may be revoked, sus-pended or modified by the NRC because of conditions revealed by the appli-cation therefor or any report or inspection which would warrant the NRC to refuse to grant a license on an original application or for failure to con-struct or operate a facility in accordance with the terms of a construction permit or license.
Evolving NRC regulatory requirements, continuing NRC review, and certain operating occurrences at other nuclear plants throughout the country have periodically resulted in requirements of additional capital expenditures for modifications to Unit No. I at Pilgrim Station. The Company cannot predict the extent, cost or timing of modifications to Unit No. 1 or to proposed Unit
'!o . ,. a t Pilgrim Station which might be required in the future by regulator; authorities; nor can it determine the effect on continued operations of the Unit. Set forth below is a summary of '.he principal proceedings involving NRC regulatory action relating to Units 1 and 2.
Pilgrim Unit No. 1. As a result of certain operatin; occurrences at other nuclear plants and recent testing, various structural 1. ads and stresses have been identified which were not previously considered in the design of the Pilgrim Unit No. I reactor torus. In light of this information, which the NRC is now evaluating, the Company is conducting an analysis ta determine the adequacy of the Pilgrim Unit No. I torus and appropriate design modifications.
The Company has authorized capital expenditures of about $5,150,000 for torus testing and modifications but cannot now predict the final outcome of the analysis.
The Company is currently preparing a response to a recent NRC bulletin regarding the environmental qualifications of electrical equipment during hypothetical post-accident conditions. A review of existing documentetion of such equipment is underway and at this time the impact of the investigation cannot be predicted.
The NRC is currently reviewing all operating nuclear reactors for adequate protection from ATWS " anticipated transient without SCRAM (tripping the reactor off-line)" During its next scheduled refueling outage, Unit I will be required to undergo an electrical modification to protect against ATWS; however, the magnitude of this modification is unknown at this time.
The NRC has recently established firm guidelines on fire protection standards applicable to nuclear plants. Major modifications to Unit l's current fire protection systems will be necessary in order to comply with these requirements; however, the cost and method of implementation is at present uncertain.
The NRC has recently promulgated revised security regulations for operating nuclear plants. The Company has undertaken modifications to the existing security systems in Unit 1 in order to comply with the regulations by June 23, 1979. The total cost for installation and operation of the revised security system in Unit 1 is approximately $4,000,000.
Pilgrim Unit No. 2. In December 1973, the NRC accepted for filing the application of the Company and the other joint owners for authorization to construct and operate Unit No. 2 at Pilgrim Station. Hearings before an Atomic Safety and Licensing Boatd of the NRC concerning various radiological, health, safety, environmental and financial matters commenced in October 1975.
The Attorney General of Massachusetts and certain other parties have been permitted to intervene in opposition to the application. In 1977, the Appli-cant's request for a limited work authorization to permit site preparation work in advance of the receipt of a construction permit was rejected by the Atomic Safety and Licensing Board which held that the NRC's staff review of alternative sites was inadequate under the National Environmental Policy Act of 1969. Further hearings on this and other issues are continuing.
Item 1 (c) (1) (iii): SCCRCES A.','D A" AIL \BILITY CF EEEL SUPPLi M. All of the Company's steam-electric generatint, u n i t .s (other than Pilgrim Unit No. 1) and a substantial number of other generating units within NEPOOL a re oil-fired. The Company's generation by energy source since 1973 and the cost of fuels during the period are set forth below:
Average Cost in Cents per Million Percentage of Generation by Sources BTU's on Burned Basis" 1978 1977 1976 1975 1974 1978 1977 1976 1975 1974 Oil ... .. 66.28 76.69 77.55 73.75 78.11 203.8C 218.3C 188.8C 202.8C 193.4C Nuclear .. 33.67 23.29 22.43 26.10 21.15 25.6 14.8 19.7 16.3 21.5 Gas. . 0.05 0.02 0.02 0.15 0.71 142.4 193.3 142.0 131.2 125.6
- Categories revised in 1978 for more accurate presentation of generation by source.
- In determining its nuclear fuel cost amortization, the Company is presently accounting for the fuel now in the reactor of Pilgrim Unit No. I at zero net salvage value; the unrealized net salvage value of fuel discharged from the Unit in the amount of approximately $1.3 million is being amor-tized over the current refueling cycle of the Unit. Oil expense for December 1978 was 2.2290 per kilowatthour, on a weighted average basis.
Substantially all of the Company's oil purchaces involve imported oil acquired from major international suppliers. The Company has contracts, expiring in June 1983, with major oil companies which will supply approximately 50% of the Company's estimated requirements. The Company purchases small amounts in the spot market from time to time when it is economical to do so and other satisfactory arrangements cannot be made. The Company's average month-end oil inventory during the last quarter of 1978 was approximately 582,000 barrels.
In March 1979, the Company was notified by certain of its suppliers that shortages of low-sulphur oil are possible. The timing and extent of such shortages, if they occur, cannot be determined at this time.
The Company is not one of the utilities which has been ordered by the Federal Energy Administration to convert any of its oil-fired generating units to coal. The Company has not burned coal in any of its generating units in approximately ten years, and does not now have any plans to do so. The Company could not burn coal in any of its oil-fired units and still meet the Massachusetts regulations for the Boston metropolitan area governing particulate emissions without substantial expenditures for modifications and the installation of air pollution control equipment.
Nuclear. The cycle of production and utilization of nuclear fuel consists of (1) the mining and milling of uranium ore, (2) the conversion of uranium concentrate to uranium hexafluoride, (3) the enrichment of the uranium hexa-fluoride, (4) the fabrication of fuel assemblies, (5) the utilization of the nuclear fuel in the generating station reactor and (6) the storage and re-processing or disposal of spent fuel assemblies.
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The Company's contractual entitlements for supplies of uranium concentrate are at the present time sufficient to permit operation of Pilgrim Unit No. I through 1986 and tc provide the initial core to be placed in Pilgrim Unit No.
in mid-1985.
The Company has also entered into contracts for other segments of the nuclear ftel supply cycle which will satisfy the requirements of Pilgrim Units No. I and 2 with respect to such segments through the approximate dates indi-cated below:
Conversion Enrichment Fabrication Pilgrim Unit No. 1 1986 1999 1986 Pilgrim Unit No. 2 .... .... . 1986 (a) (b)
(a) The Company has a contract with the U.S. Department of Energy (DOE) which extends for 30 years from the first deli /ery of enriched uranium. Under current contractual arrangements with DOE, the Company must supply approximately 500,000 pounds of natural uranium for the initial core commencing in mid-1979 for delivery of enriched uranium commencing in 1981, regardless of the Unit's commercial operation date. The Company does not have deliveries of uranium concentrates scheduled from its supplier in time to meet this require-ment. The Company is currently evaluating an offer by DOE to convert to a new form of enrichment contract which would eliminate this obligation.
(b) The contract with Combustion Engineering Inc. provides fabrication services for the initial core and one reload.
A contract for the reprocessing of spent fuel from the initial and first replacement core of Pilgrim Unit No. I was entered into with General Electric Company ("G.E."). G.E. has given notice pursuant to the contract that its fuel reprocessing facility will be inoperable, that it vill be unable to re-process the spent fuel from these cores and that the reprocessing portic of the contract (which contract also relates to fabrication services for Pilgrim Unit No. 1) han been terminated. The Company is seeking to negotiate a settle-ment with General Electric.
Presently there is no facility in operation to reprocess spent nuclear fuel and, as a result, the Company's spent nuclear fuel assemblies may have tc be stored indefinitely. No provision has been made for the costs of indefinite storage because such ultimate costs cannot be reasonably estimated at this time. The Company is, however, in the process of expanding storage facilities at the Pilgrim Station site sufficient to store spent fuel through approximately the year 1990. The added capital costs of these expanded storage facilities are estimated to be $2.8 million excluding construction overhead costs which will be amortized over the useful life of the facility.
Item 1 (c) (1) (iv): FRANCHISES The Company by virtue of its charter, which is unlimited in time, har the right to engage in the business of producing and selling electricity, steam and other forms of energy, has powers incidental thereto and is entitled to d
all the rights and privileges of and sut>j ecc ta the duties imposed upon elec-tric ccmpanies uraier the General Laws of Massachusetts. The locations in public ways for the, Company's transmission and distribution lines, both steam and electric, are obtained from the municipal and other state authorities which in granting such locations act as agents of the state. The action of sucn authorities is in some cases subject on appeal to the jurisdiction of the Department of Public Utilities. These locations are unlimited in time, but the rights obtained therefrem are not vested and are subject to the action of the legislature.
Item 1 (c) (1) (v): SEASONAL NATURE OF BUSINESS Although the number of kilowatthours of electricity sold by the Company in its territory has historically been less in the Spring and Fall than during Winter and Summer, the Company's electric revenues and operating income are dependent on a variety of other factors which are not necessarily seasonal, including contract sales of system and unit power to other electric companies, changes in the Company's rates and charges, the extent and nature of trans-actions involving New England Power Pool, and general economic conditions.
See also Note J of Notes to Financial Statements. Item 12 (a) - Financial Statements Filed.
Item 1 (c) (1) (vi): WORKING CAPITAL PRACTICES The Company has no special or significant practices with respect to working capital items.
Item 1 (c) (1) (vii): CUSTOMERS No material part of the business of the Company is dependent upon a single custormer.
Item 1 (c) (1) (viii): BACKLOG - Inapplicable Item 1 (c) (1) (ix): GOVERNMENT CONTRACTS No portion of the Company's business is subject to renegotiation or term-ination of ccntracts at the election of the Government.
Item 1 (c) (1) (x): COMPETITIVE CONDITIONS The Company, like other Massachusetts electric compan es, is protected to the following extent against other utilities offering service in any of the municipalities comprising the Company's service area: first, another electric utility may not extend its service area to include municipalities other than those named in its agreement of association or charter without the authorization of the Department of Public Utilities granted after notice and public hearing; second, another company may not obtain an initial location for its lines in a municipality served by the Company without the approval of the municipal auth-orities, subject to the right of appeal to the Department of Public Utilities; and third, a municipality may not engage in the electric utility business without complying with statutes which require (a) in the case of a city, a two-thirds vote of its city council (or a vote of a majority of the commissioners t
if the city government consists of a ccmmission) passed in each of two con-secutive municipal years and thereafter ratified c;. a majority of the voters at an annual or special city election and (b) in the case of a town, a two-thirds vote at each of two town meetings held at intervals of not less than two nor more than thirteen months. Such statutes also require the municipality, if the Company elects to sell, to purchase so much of the Company's property within the limits of such municipality as the parties determine by agreement or, if the parties fail to agree, so much of such property as the Department of Public Utilities determines and at prices fixed by the Department.
In 1975 the Massachusetts legislature enacted 'egislation constituting the Massachusetts Municipal Wholesale Electric Company ("MMWEC") a public corporation. Its membership may include those cities and towns which were members of MMWEC before it became a public corporation and those which are authorized to become members by majority vote of such city or town. In general, MMWEC has the statutory authority to exercise those powers which were previously exercised by individual municipal light departments through authority granted by vote of the respective city or town. Its powers include, but are not limited to, authority to construct electric power facilities, to generate, purchase and sell electric power and energy te member and non-member cities and towns having municipal electric departments or to other utilities, public and private, and to otherwise participate in intrastate and interstate arrange-ments, including NEPOOL. MMWEC can also issue bonds for any of its corporate purposes, including the financing of electric power facilities on behalf of its member municipalities.
The Company competes with other electric utility companies in connection with its sales of electricity at wholesale for resale.
Item 1 (c) (2) (i): RESEARCH ACTIVITIES - Inapplicable Item 1 (c) (2) (ii): CUSTOMERS There is no single customer to whom sales are made in an amount which equals 10 percent or more than the Company's revenue.
Item 1 (c) (2) (iii): ENVIRONMENTAL MATTERS The Company is subject, like other electric utilities, to local zoning and similar controls, and to developing standards administered by federal, state and local authorities with respect to siting of facilities and air and water quality and other environmental considerations. Such standards and controls may require modification of existing facilities or curtailment or cessation of operations at such facilities and may in some cases delay con-struction of new facilities and increase capital and operating costs by sub-stantial amounts. The Company believes that its operating facilities are in substantial compliance with presently applicable statutory and regulatory requirements relating to such matters.
The Company estimates that its capital expenditures (excluding AFUDC) for environmental purposes during the five years 1974 through 1978 totaled approx-imately $44,153,000, and for the period 1979 through 1983 are presently expected to be approximately $34,978,000 for such purposes, including approximately t
$5,598,000 for the year 1979 and 37,980,000 for 1980. Substantial additional e::pendi tu re s ma'j be required as a result of changes in environ:cental require-ments.
?!assachusetts legislation establishing the Energy Facilities Siting Council requires the Council to approve the Company's long-range forecasts with respect to the electric power needa and requirements of the Company's market area. To approve a long-range forecast, the Council must find, among other things, that plans for new generation or transmission facilities are consistent with Massachusetts pclicies regarding health, environmental pro-tection, and resource use and development. Construction of generation and transmission facilities is prohibited unless such facilities are approved by the Council as consistent with the most recently approved long-range forecast.
The Council approved the Company's May 1976, December 1976 and December 1977 forecasts subject to certain conditions. The Company will file its next forecast with the Council on or before April 1, 1979. The Council will have until December 31, 1979 to approve or reject the forecast.
The Company is subject to regulation by the Federal Environmental Pro-tection Agency (" EPA") and the Massachusetts Division of Water Pollution Control ("dDWPC") with respect to thermal and other discharges from the Company's power plants into receiving waters. The Federal Clean Water Act (the "Act")
requires each discharger to receive a permit (" NPDES permit") limiting its discharge in accordance with applicable effluent discharge limitations and water quality standards. The EPA has published regulations under the Act establishing effluent discharge limitations for thermal and chemical discharges from steam-electric generating plants, which regulations, unless waived, may require non-exempt generating units to use closed-cycle cooling systems such as cooling towers. A similar discharge permit is also required under Massachusetts law; however, pursuaat to a Memorandum of Understanding between EPA and MDWPC, the two agencies may jointly issue a single permit.
Pilgrim Station. Based on the Company's demonstration concerning the combined discharges of Pilgrim Units No. 1 and 2, the EPA and the MDWPC issued permits on March 11, 1977 authorizing once-through cooling for Units No. 1 and 2 and granting exemptions from the EPA's thermal effluent guidelines. Appeals of the permits for Units No. 1 and 2 were taken by parties who sought adjudi-catory hearings before EPA and MDWPC. These hearings were completed in November 1977. A final decision upholding the permit issuance has been received from the EPA Administrator. A tentative decision upholding the permit issuance was received from MDWPC on March 23, 1979. Parties may file objections and argu-ments concerning this decision within twenty-one days; if no such objections or ar8uments are received, the tentative decision shall become final. Each of these permits expires during 1979 and must be renewed.
Oil-fired Units. The Company's oil-fired steam-electric generating plants have received all permits required by the EPA and the MDWPC governing chemical and/or thermal discharges and are either exempt from the requirement of closed-cycle cooling systems or have obtained permits which do not require closed-cycle cooling. Such permits expire during 1979 and must be renewed before expiration.
()
To the extent that re;;ula tions limiting the sulfur content of oil burned in generating plants require the use of more expensive fuel, the Cz.pany con-siders that fuel adjustment clauses in its retail and wholesale rate schedules presently provide substantial protection against the resulting increased cost of power. The Massachusetts Department of Environmental Quality Engineering
("DEQE") has adopted and the EPA has approved regulations which allow the Company to use higher sulfur content fuels at Mystic, New Boston, and L Street until July l, 1979, although supplies of low sulfur fuel must be maintained for use during periods of adverse meteorological conditions. The DEQE has approved a permanent extension of these regulations, the Company cannot predict whether this extension will be approved by the EPA. On the basis of the Company's experience in 1978, and assuming that the regulations are extended, the Company estimates that these regulations will result in an annual fuel saving of approximately $10,000,000; actual savings will vary from this esti-mate because of periodic fluctuations in the cost differentials of fuels with various sulfur contents. Any fuel savings which may result from the use of higher sulfur content fuel will be passed on to the Company's customers under the fuel and purchased power adjustment clauses.
Item 1 (c) (2) (iv): NUMEER OF EMPLOYFES The Company had 3,837 employees as of December 31, 1978.
Item 1 (d): FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES - Inapplicable Item 2: SUT!ARY OF OPERATIONS The Company's Statements of Income for the five vears ended December 31, 1978 and Management's Discussion and Analysis of Statements of Income set forth on Pages 10 and 11 of the 1978 Annual Report to Stockholders (submitted herewith) are incorporated herein by reference. These Statements and Manage-ment's Discussion and Analysis should be read in conjunction with the other financial statements and notes included on Pages 12 through 21 of the Company's 1978 Annual Report to Stockholders, certain of which notes are supplemented hereby, together with the Supplementary Schedules included with this Form 10K Report. (See Item 12 (a) 1 Financial Statements Filed.)
Item 3 (a): PROPERTY AND POWER SUPPLY The Company's total installed generating capability (winter maximum) is 2,806,000 kW, and consists of four steam-electric generating stations, one nuclear (67G,000 kW) and three oil-fired (total 1,796,000 kW), and ten com-
- ustion turbine generators (total 305,000 kW) and a 35,000 kW ownership in Yarmouth Unit #4 built by Central Maine Power Company and located in Yarmouth, Maine. The Pilgrim Nuclear Station is located in Plymouth, Massachusetts and the other steam-electric generating stations are the Mystic Statica in Everett and the L Street and New Boston Stations in South Boston. All of the oil-fired steam-electric generating units are located at tide water and have access to ample fuel oil storage and condensing water. The Company retired in December 1978 three electrical generators having a capacity of 264 megawatts at the Edgar Station. Additional generating capacity is available to the Company as a result of its contractual arrangements with other utilities and its parti-cipation in NEP00L, which are described below. (See Note M on Page F-5 of this Form 10-K.)
As of December 31, 1973 the Company's transmissien system comprised approximately 356 miles of overhead circuits operating at 115,0C0, 230,000 and 345,000 volts and approximately 145 miles of underground circuits operating at 115,000 and 345,000 volts. The substations fed by these lines consisted of 20 transmission or combined transmission and distribution substations with a transformer an.1 frequency changer capacity of 8,374,679 kVA, 95 distribution substations with a trans former or a convers a capacity of 4,630,015 kVA, 25 primary network units with 106,660 kVA capacity, 458 secondary network vaults with 407,315 kVA capacity and 104 tertiary network vaults with 423,310 kVA capacity. In addition, high tension service was delivered to 212 customers' substations. The overhead distribution system covered approximately 3,347 miles of streets and the underground distribution system extended through approximately 774 miles of streets.
The Company owns four steam generating plants in Boston, with a normal aggregate maximum hourly send-out capacity of 2,340,000 pounds of steam; one of these four, the L Street Station, is now used partly for the generation of electricity but principally for the production of steam. All of the steam producing stations are interconnected.
Except for tne Company's executive offices and some of the Company's service centers and other offices which are leased, the important items of property comprising the Company's generating statione., substations, offices and service centers are on land owned in fee. The Company's high-tension transmission lines are generally located on land either owned by the Company or subject to an easement in its favor, with crossings of public ways, tide waters and water courses, railroads and public domain when encountered. The Company's low-tension distribution lines and its steam mains are located principally in public streets and ways under permission granted by municipal or state authorities. They are, however, also located to some extent in private ways and on private property pursuant to leases, licenses or permits.
See Ite.n 1(c)(1)(iv).
The Company owns 9.5% of the common stock of Yankee Atomic Electric Company and Connecticut Yankee Atomic Power Company which operate nuclear generating units with net capabilities of 175,000 kW and 575,000 kW, respec-tively. Until the expiration of the power contracts relating to these units (June 1991 and January 1998, respectively), the Company is entitled to receive 9.5% of the output of each unit and is obligated to pay to each company 9.5%
of such amount as will provide such company with operating revenues and other income from all sources (including power revenues) equal to its total operating expenses plus an annual return on investment. In each case, other New England electric utility companies have made similar arrangements with varying percent-ages of participation.
The Company has entered into a contract, pursuant to which the Company, subsidiaries of New England Gas and Electric Association and two other utilities are sharing in four equal parts the output of a 580,000 kW, oil-fired steam generating plant at the Cape Cod Canal in Sandwich, Massachusetts. The unit is owned by a wholly owned subsidiary of New England Gas and Electric Association and went into commercial operation in July 1968, after which the Company is obligated to pay over a period of thirty-three and one-third years 25% of the unit's fixed and operating costs.
The Cogany has entered into agreements to parti:1pate with other Nes England utilities in p'trchasing power f rom generating units of the . e '. . drunswick Electric Power Commission, Neu Brunswick, Canada, and in sharing the expenses for a 345 kV transmission interconnection in Maine. The Company is also participating as a 5.83 percent joint owner in Yarmouth Unit No. 4, a 615,500 kW oil-fired unit constructed by Central Maine Power Company, which went into service in 1978.
The Company has entered into agreements with Montaup Electric Company, a subsidiary of Eastern Utilities Associates, and with New Bedford Gas and Edison Light Company under which each of Montaup and New Bedford purchases 11%
of the capacity and corresponding energy of Unit No. I at Pilgrim Station until December 2000, and pays 11% of the Unit's fixed and op-rating costs and will indemnify the Company to the extent of 11% of sub
- nt: 2ily all loss, liability or damage (not covered by incurance) arising out of the operation, condemnation, shutdown retirement of the Unit.
The Company has entered into other agreements with several New England utilities for varying periods for purchases of unit power, for sales of Company system and unit power, and for transmission services. The Company's rates and charges under certain of these contracts are the subject of proceedings before the Federal Energy Regulatory Commission.
In June 1970, the Company and other utilities activated a computer-controlled dispatch center for New England ("NEPEX"). Also, the major utilities in New England, including the Company, and certain municipal and cooperative utilities, have executed a New England Power Pool Agreement ("NEP00L") which provides for continuation of the joint planning and operation of generating and transmission facilities previously provided for under NEPEX and also incorporates generating capacity obligations and provisions regarding the use ,
of major transmission lines and payment for such use. In September 1976 the Federal Power Commission issued an Opinion and Order generally approving the NEP00L Agreement but disapproving provisions of the Agreement relating to the instal.'.ation size of new generating capacity and penalties for failure to meet NEP00L capability requirements. A petition for review of the Commission decision was filed with the United States Court of Appeals for the District of Columbia, which in October, 1978 upheld the Commission decision.
As a result of its participation in NEP00L, the Company's operating revenues and costs are affected to some extent by the operations of other participants in those arrangements. The table below sets forth certain infor-mation concerning the installed capacity of the New England utilities partic-ipating in NEPEX and the capacity of the Company, adding purchases from and deducting capacity sales to other utilities, at the date of the recent summer and winter peak loads:
August 17, 1978 February 14, 1979 (1978 Summer peak) (1978-79 Winter peak)
NEPEX utilities installed capacity (normal rating) 19,557,000 kW 20,781,000 kW NEPEX peak load .................. 14,348,000 kW 14,977,000 kW Company capacity (net) ........... 2,970,000 kW 2,794,000 kW
, Company territory peak load ...... 2,031,000 kW 1,825,000 kW Company NEPOOL capacity obligations 2,462,000 kW 2,448,000 kW (est.)
Item 3 (b): OIL AND GAS RESEEVES - Inapolicable Item 4: PMENTS AND SUBSIDIARIES The Company has no parents and no subsidiaries.
Item 5 LEGAL PROCEEDINGS For information concerning pending litigation involving the Company, see Note G3 of Notes to Financial Statements as incorporated by reference in Item 12(a)1 of this Form 10-K. For infarmation concerning proceedings involving the Company's wholesale rates except as noted in the innediate following para-graph, see Note G2 of Notes to Financial Statements incorporated by reference in Item 12(a)1 of this Form 10-K. See Iten.s 1(c)(1) (ii) & (iii) and 1(c)(2)(iii) for a description of proceedings before various governmental authorities involving the Company's operating and planned generating facilities.
The Company's petition for rehearing of the Federal Energy Regulatory Commission's decision disallowing the collection of $1,900,000 in deferred fuel costs has been denied. The Conpany is currently reviewing its position with respect to further appeal.
On February 27, 19/3, enc "ompany filed a proposed wholesale rate increase (Rate S-5) for its three total-regairements customers (the Towns of Concord, Norwood, and Wellesley) and its partial-requirements Contract Demand customer (the Town of Reading) with the Federal Energy Regulatory Commission (FERC).
The proposed rate increase for the twelve months ending September 30, 1978, amounts to $656,000 for the three total-requirements cuetomers and $332,148 for the Contract Demand customer. The FERC has 60 days to respond to the Company's filing. The maximum suspension period, if the filing is accepted, is five months.
On March 16, 1979, the Company filed for $46.2 million in rate relief from the Massachusetts Department of Public Util :ies (MDPU). The MDPU sus-pended implementation of the rate increase for si,. months. By law, the MDPU must make a decision on the request by October 1, 1979, or the proposed rates automatically go into effect.
Item 6 (a): INCREASES AND DECREASES IN OUTSTANDING EQUITY SECURITIES None.
Item 6 (b): INCREASES AND DECREASES IN OUTSTANDING INDEBTEDNESS On August 1, 1978, the Company entered into a $50,000,000 auclear fuel financing and security agreement with Prulease, Inc., as previously reported in Part I, Note 5 of Notes to Unaudited Financial Statements of the Company's Form 10-Q, dated September 30, 1978.
As of December 31, 1978, $43,789,000 had been drawn down by the Company.
[ tem o (c): Enl:RTH T!dir?P C:!.\"GES I: OUTSTARDI: G ut_GITIES MD 'SDUlf:l'.253 4
As of December 13, 197d, the Ccmpany executed a Eeud Purchase Agreem: :L for the private placement sale of $95,000,000 aggregate principal amount of First Mortgage Bonds , Series Q, 9 3 /4'",, due 2'J03. The bonds were sold to a group of institutional investors w: .h $49,500,000 delivered in December 1973 and $45,500,000 to be delivered in august 1979- The proceeds of the December 1973 delivery were applied to the payment of outstanding short-term debt. The proceeds from the August 1979 delivery will be applied to the payment at maturity of the outstanding First Mortgage Bonds, Series 0, 1240, due August 15, 1979. Under the agreement, the bonds are redeemable at prices declining from 109.75% at the present time to 100.00% of par value in the year 2002 ard may not be refunded prior to December 15, 1988 wich indebtedness having a shorter life to maturity or a lower interest rate. The Company will be re-quired to make annual sinking fund deposits of $2,375,000 in the years 1983 through 1989, $3,800,000 in the years 1990 through 1995 and $6,935,000 in the years 1996 through 2002.
First Mortgage Bonds Balance at December 31, 1977 $506,838,000 Sale of First Mortgage Bonds 49,500,000 less: Sinking Fund and other Retirements (150,000)
Balance at December 31, 1978 $556,188,000 The issuance of the Series Q First Mortgage Bonds is exempt from regis-tration requirements under the Securities Act of 1933, as amended, pursuant to Section IV (2) of such Act.
Item 7: CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED SECURITIES None.
Item 8: DEFAULTS UPON SENIOR SECURITIES None.
(
Iten 9: APP'iOXIMATE M:MEER OF EOUITY SECURI TY I!OEi:PS Title of Clags Number of Record Hulders Ccmmon 57,667 Preferred:
4.25% Series 647 4.78% Series 876 8.88% Series 3,928 Preference:
$1.175 Series 12,269
$1.46 Series 7,874 Item 10: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Reference is made to Part II, Item 7 of the Company's Form 10Q for the quarter ended June 30, 1978.
Item 10A: EXECUTIVE OFFICERS OF T1IE REGISTRANT The names, ages and positions of all the executive ;fficers of the Company are listed below along with their business experience during the past five years. Except for the fact that Mr. Parry is married to the sister of Mr. Lydon, there are no family relationships among any of the officers of the Company, nor any arrangement or under:'tanding between any such officer and another person pursuant to which he was elected as an officer.
Name, Age Business Experience and Position During Past 5 Years Thomas J. Galligan, Jr., 59 President and Directer since 1967 -
President chief Executive Officer since 1970.
Responsibility covers all Company functions.
Francis M. Staszesky, 60 Executive Vice President since 1967 Executive Vice President and elected Director in 1968. Res-ponsibility covers all Company functions.
Joseph P. Tyrrell, 53 Senior Vice President and Director.
Appointed Senior Vice President in 1975 with responsibility for Accounting, Legal, Internal Auditing, and Treasury functions and Stockholder Relations. From 1966 until 1975, he was Vice President - Financial and Accounting Organization and Treasurer.
Name, Age Business i:pe rience and Position Durin Past 5 Years Maurice J. Feldmann, 61 Appointeu Senior Vice President in Senior Vice President 1975 with responsibility for Electric, Nuclear and Research and Environmental Affairs Organizations. From 1969 until 1975, he was Vice President - Operations and Engineering Organization.
James M. Lydon, 50 Appointed Senior Vice President in 1978 Senior Vice President - with responsibility for Corporate Corporate Palations Relations, Commercial, Rate Research and Forecasting, and Power Supply Administration. From lo69 to 1977, he was Vice President and Director of Corporate Relations (changed from Public Relations in 1975).
Eleanor T. Daly, 49 Appointed Vice President and Vice President - Assistant to Assistant to President in 1974. From President 1969 to 1973 she was Staff Assistant in the Personnel Department.
John L. Sullivan, 57 Appointed Vice President and Commerical Vice President Manager in 1966. From 1972 - 1977 re-sponsibility included Procurement and Service Organizations.
Robert T. Parry, 59 Appointed Vice President in 1973.
Vice President - From 1969 - 1972, Assistant Director Employee Relations and for a portion of 1"i2 and 1973 Acting Director of Employee Relations.
Benjamin H. Weiner, 56 Appointed Vice President - Power Supply Vice President - Power Supply Administration in 1973. Assistant to Aduinistration President during 1969 to 1973.
Victor H. Kazanjian, 51 Appointed Vice President and General Vice President and Counsel ir.1975. Associate General General Counsel Counsel during 1975. Assistant General Counsel and Assistant Clerk of the Corporation from 1969 to 1975.
Andrew F. Corry, 56 Appointed Vice President in 1975.
Vice President - Electric Assistant to Executive Vice President from 1969 - 1973 and from 1973 until 1975, he was Director of Engineering, Planning, Nuclear and Systems Operation.
~
N_me, age Business Experience any Position During Past 5 Years J. Edward Howard Appointed Vice President in 1975.
Vice President - Nuclear From 1969 to 1975, suelear Projects Manager - Superintendent, Nuclear Engineering Department - Director Nuclear.
David J. O'Connor, Jr., 53 Appointed Vice President in 1975.
Vice President - Accounting From 1965 to 1975, Superintendent, Procedures and Office Services Department - Director, Procedures and Office Services. In 1978, responsibility was increased to include the Procurement and Service Organizations.
Stephen J. Sweeney, 50 Appointed Vice President in 1976.
Vice President - Steam During 1975 and 1976 was Director of Operations, Environmental Public Affairs Department. From 1972 Affairs, Planning and Research to 1976 he was Superintendent, System Operations and Planning Department.
Ralph M. Kelmon, 59 Appointed Treasurer and Head of Treasury Treasurer Organization in 1975. From 1969 he was Assistant Treasurer and Superintendent, Financial Planning and Reports Depart-ment.
Timothy J. Heffernan, 46 Appointed Assistant Treasurer in 1975.
Assistant Treasurer Since 1967 has been Manager of the Tax Department.
Thomas J. May, 31 Appointed Assistant Treasurer in 1976.
Assistant Treasurer Prior to joining the Company in 1976, he was General Practice Manager with Coopers and Lybrand, Independent Certified Public Accountants.
Marc S. Alpert, 34 Appointed Assistant Treasurer in 1978.
Assistant Treasurer From 1973 to 1978, he was a Principal Financial Research Analyst.
Diane Kinch Tritter, 33 Appointed Clerk of the Corporation Clerk of the Corporation in 1975. Joined the Company in 1971 and since then has been Assistant Counsel - Senior Counsel - Assistant Clerk of the Corporation.
Barbara M. Donahue, 43 Appointed Assistant Clerk of the Assistant Clerk Corporation in 1978. Joined the Company in 1959 since then has been Secretary to the President and Administrative Assistant to the President.
4 iLe , 11: I.'il'E:!NIFIC.iTION OF OIRECTOP.S AND OFFICERS Information with respect to this item is unchanged from the Company's Form 10-K for the sjear ended December 31, 1977 (Commisswn Eile ';u.nb e r 1-2302-2) and is incornorated herein by reference.
Item 12 (a)l: FINANCIAL STATE!!ENTS FILED Information required by Item 12(a)1 is incorporated herein by reference to pages 11 through 21 inclusive of the Company's 1978 Annual Report to Stock-holders (submitted herewith). The index on page F1 sets forth certain supple-mental information and the schedules of the Company which are included herewith.
Item 12 (a)2: EXHIBITS Description Bond Purchase Agreement, dated December 15, 1978, relating to First ?!ortgage Bonds, Series Q, 9 3/4%, Due 2003.
Thirty-sixth Supplemental Indenture, dated as of December 15, 1978, securing First B!ortgage Bonds, Series Q, 9 3/4%, Due 2003.
Nuclear diaterial Lease and Security Agreement between Prulease, Inc. and Boston Edison Compary, dated as of August 1, 1978.
Item 12(b'): REPORTS ON FORF1 8K None.
P.\RT II Omitted in accordance with General Instruction if to form 10-s inasmuch as definitive copies of the Company's proxy statement fcc its Annual
!!eeting of Stockholders to be held on April 17, 1979 ere mailed to the Commission on or about February 23, 1979.
SIGNATURE Pursuant to the requirements Blarch 30, 1979 of Section 13 or 15(d) of the Boston Edison Company Securities Exchange Act of 1934, the registrant has duly By: /S/ Ralph ?!. Kelmon caused this report to be signed Ralph Bl. Kelmon on its behalf by the undersigned, Treasurer thereunto duly authorized.
BOSTON EDISON CO:!PANY INDEX TO FINANCIAL STATE:IE';TS AND SCHEDULES FOR 197S FOR'l 10-K ANNUAL REPORT
( ITE'1 12 ( a ) 1)
Pages Financial Statements:
Statements of Income for the Five Years Ended December 31, 1978.
Balance Sheets as of December 31, 1978 and 1977 Statements of Sources of Constrr: tion Funds for the Five Years Ended December 31, 1978. -
Statements of Retained Earnings for the Five Years Ended December 31, 1978 -
^
Notes to Financial Statements Report of Independent Certified Public Accountants F-2 Supplement to Notes to Financial Statements F-3 through F-6 Schedules for Years Ended December 31, 1978 and 1977:
V - Property, Plant and Equipment S-1, S-2 VI - Reserves for Depreciation and Amortization of Property, Plant and Equipment S-3, S-4 XII - Reserves S-5 XVI - Supplementary Income Statement Information S-6 All other schedules are omitted as they are either not required, not applicable, or the information is otherwise provided in the financial statements or notes thereto.
- These statements and related notes required under Regulation S-X are incorporated herein by references to pages 11 through 21 inclusive of the Company's Annual Report to Stockholders.
F-1
SUPPLE':E.'.T TO NOTES TO FINANCI AL STATENE.'7TS L. Replacement Cost Information (Unaudited):
The replacement cost information for certain of the Company's assets and related depreciation is presented to comply with the reporting require-ments of the Securities and Exchange Commission (the "Ccnunission") as set forth in Accounting Series Release No. 190.
The Company advises readers of the imprecise nature of these data and of the many subjective judgments required in the replacement cost estimation.
This information does not purport to represent the current value of the assets or the amounts which could be realized if the assets were to be sold. Further these data are only estimates of the cost that would be incurred if such assets were replaced, at today's prices, with assets of a modern type including additional pollution control equipment presently required under environmental regulations. The excess of replacement cost over historical cost amounts does not represent additional book value of common stock.
The Company is subject to the jurisdiction of regulatory commissions in the determination of fair rates of return on its investment in utility plant. Under current ratemaking policy, the Company recovers, through future depreciation charges, the historical dollars invested in pro-ductive capacity. The ratemaking process does not allow the Company to recover the excess of replacement cost over historical cost.
As these data are limited to selected categories of assets and related depreciation and do not relate to other assets and liability and equity accounts, or to other expense and revenue accounts, there are significant limitations in using this information to evaluate the effect of inflation on the Company. This data should not be used to adjust and compare this Company's balance sheet or income statement with any other Company's financial statements. The Commission has cautioned investors and analysts on the simplistic use of replacement cost data and has also decided not to require at this time the disclosure of the effect of replacement cost data on net income because there are still substantial theoretical problems in determining an income effect. Subject to these limitations and the imprecise and subjective nature of the data, these data and related disclosures are provided in good faith in compliance with the Commission's rules and regulations.
The computed replacement co of the Company's productive capacity, related accumulated depreciation and depreciation expense, with com-parative historical cost data, are presented below:
F-3
Computed Actual Replacement Historical Cost Cost (In Thousands)
December 31, 1978:
Utility Plant in Service. . .. . $2,660,700 $1,470,472 Less: Accumulated Deoreciation. . 735,897 367,926 Utility Plant in Service - Net... $1,924,803 S1,102,546 Depreciation Expense - Twelve Months Ended December 31, 1978. . . . . .. .. . $ 81,421 $ 45,936 December 31, 1977:
Utility Plant in Service.. . ... . S2,506,190 $1,437,435 Less: Accumulated Depreciation.. 736,942_ 387,418 Utility Plant in Service - Net.... .. $1,769,248 S1,050,017 Depreciation Expense - Twelve Months Ended December 31, 1977. ... .. ...... . S 77,057 $ 44,814 The utility plant in service historical cost amounts are reconciled to the net property, plant and equipment amounts shown in the accompanying balance sheets as follows:
Recorded Utility Plant (In Thousands)
Dec. 31, 1978 Dec. 31, 1977 Amounts for which replacement cost data are provided above. $1,470,472 $1,437,435 Land, Land Rights and Intangible Plant......... ... ....... 33,223 33,184 Property Held for Future Use............................... 1,914 1,717 Construction Work in Progress.............................. 169,960 141,519 Nuclear Fuel Net of accumulated amortization..... ....... 38,464 43,549 Nonutility Property - Net of accumulated depreciation. . . . . . 899 689 Accumulated Depreciation... ............................... (367,926) (387,418)
$1,347,006 $1,270,675 It was not necessary to include either the replacement cost or the present value of the Company's noncapitaliaed financing leases, in the data re-flected above since such leases are immaterial in relation to the Company's total assets and thus not subject to the replacement cost requirement. In addition, land, land rights and intangibles are excluded from the replace-ment cost data since such assets are not consumed in the productive process.
Construction work in progress representing future productive capacity is also excluded. Replacement cost data relating to nuclear fuel and fossil fuel inventories are excluded since changes in cost levels are recovered through the operation of the Company's fuel adjustment clauses. Property held for future use, nonutility property, and materials and supplies in-ventories (net of fossil fuel inventory) have been excluded because these amounts are immaterial in relation to the Company's total assets.
F-4
The replacement cost of production plant was determine.1 by applying the cost per unit of production of recently installed units trended to December 31, D78 and 1977 by using the HandyWhitman Index of Public Utility Construction Costs to the respective types of the Company's presently installed generating capacity. An inflation factor based on the Handy-Whitman Index of Public Utility Construction Costs was applied to surviving plant for transmission and distribution facilities. The replacement cost of surviving general plant, office furniture and trans-portation equipment was restated by using the GNP Price Deflator Index.
With the exception of transmission, distribution and general plant, the accumulated depreciation based on replacement costs was calculated by applying the ratio between gross plant and accumulated depreciation on an historical cost basis to the computed replacement cost. Accumulated depreciation based on replacement cost with respect to transmission and distribution facilities was determined by applying the ratio between the age of this property as of December 31, 1978 and 1977 by account, and the total expected useful life of this plant based on book estimates to the computed replacement cost as of December 31, 1978 and 1977. Replacement cost depreciation expense was computed by applying the current book accrual rates by functional group to the average replacement cost for the year.
M. Information Regarding Joint-Owned Electric Plants and Long-Term Purchase Power Contracts
- 1. Joint-Owned Electric Plants The Company's share of direct expenses of Yarmouth Unit //4 are charged to operating expenses and are immaterial in amount.
F-5
- 2. Long-Term Contracts for the Purchase of Electricity The Company has five long-term contracts for the purchase of electric power.
The total annual costs under these contracts are included in the Company's Statements of Income with purchased power expense. The contracts are as follows:
Boston Edison's 1978 Procortionate Share Contract 7. Unit (s)* Interest Portion Generating Expiration Capacity Total Minimum of Minimum Debt Unit Date Purchased Excense(c) Debt Service Debt Service Outstanding (in C00's)
Canal Unit #1 2001 25.0(a) $ 4,400 $ 675 $ 400 S 3,967 Coleson Core Units 1986 9.7 620 420 400 606 (b)
Connecticut Yankee Atomic 1998 9.5 2,640 700 460 6,300 Potter Unit #2 1984 46.5 1,560 1,225 660 1,861 (b)
Yankee Atomic 1991 9.5 1,600 280 180 950 Total $10,820 $3,300 $2,100 $13,684 (a) Represents 5.17. of the Company's installed net capability; the remaining four units aggregate 6.27..
(b) These contracts do not extend for the life of the unit; however the amount represents the estimated debt payments through the contract expiration dates.
(c) Excluding fuel costs.
F-6
BOSTON EDISON COMPANY SCllEDULE V PROPERTY, PLANT AND EQUIPMENT Year Ended December 31, 1978 (In thousands)
Column B Column E Column F Balance at Column C Column D Other Charges Balance Column A Beginning Additions Retirements Deb it / (Cred it ) at Close Classification of Period At Cost or Sales Describe of Period Electric plant:
Land and rights of way $ 33,037 $ 264 $ 1 $ 285 $ 33,585 Generating station and substation buildings and miscellaneous structures 188,136 7,042 18,287 176,891 Electric generating equipment 513,788 52,082 39,003 526,867 Transmission, distribution, street lighting and other utilization equipment 691,769 37,456 7,228 721,997 1,426,730 96,844 64,519 285 1,459,340 Steam IIcating service plant:
Land 923 (517) 406 Generating plant buildings and equipment 23,403 1,624 54 24,973 Steam pipes, meters and other distribution equipment 21,280 (284) 106 20,890 45,606 1,340 160 (517) 46,269 Operating property and equipment 1,472,336 98,184 64,679 (232) 1,505,609 Nuclear fuel 77,595 6,532 84,127 Nonutility property 885 190 232 927 Construction work in progress 141,519 28,441 169,960 jl,692,335 $ 133,157 $64,869 p1_,760,623 Note: The additions during the year represent principally, expenditures incurred in -
the construction of additional generating station equipment, transmission and distribution facilities, and nuclear fuel. The principal retirement in 1978 was Edgar Station.
S-1
110STOtl EDISott CairANY SCllEDULE V PROPEllTY, PLANT AND EQUIPME!Tf Year Ended December 31, 1977 .
(In thousands)
. Column 11 Column E Col $uu, l' Balance at Colunni C Colunut D Other Changer, lia lanc e Beginning Adili t ions ite t i remen ts Debi t / (Credi t ) at close of Period At Cost or Sales Describe of Perioil Electric Plant:
Land and rights of way $ 27,138 $ 5,891 $ 12 $ $ 33,03 Cenerating station and substation buildings and miscellaneous structures 176,159 13,512 1,570 35 188,131 Electric generati.,, equipment 485,904 28,069 574 389 513,78f Transmission, distribution, street lighting and other utilization equipment 675,289 24,133 7,229 (4 L 4 ) 691,7 (d 1,364,510 71,605 9,385 1,426J_3t Steam heating service plant:
Land 902 21 92' Generating plant buildings and equipment 23,196 2 23 16 23,40:
Steam pipes, meters and other distribution equipment 20,826 637 183 21,28(
44,924 881 199 45,60(
Operating property and equipment 1,409,434 72,486 9,584 1,472,33(
Nuclear fuel 78,380 (785) 77,59f ilonutility property 2,776 1,891 88' Construction work in progress 95,930 45,589 141,51'
$1,586,520 $117,290 $11,47S _j l_d92 ,13 '
Note: The additions during the year represent principally, expenditure, incurred in the construction of generaLing and additional transmim ion and distri-bution facilities. Ite t ire men t s represent principally, generating, trans-mission and distribution facilities.
3-2
EthTLX4 tu!.9 0 CuhPAIN SuiLDULE VI An u.aulated tw pra c ia t iva, bepit t a aa a;aJ Anortization of Pr in-s ty, Pl an t and f.gu gatnt Year Fnded Denater li d Q (In thousands)
Col. C AJJ 1 t ic -.s Col. D.
De !octions fren keserve Col. B. Cha r red t o Ot i.c r Ac t samt s Col. E. tut. t. Cal, e .
Balance Charged to Inven-Salvage kttirenants balance: (b r ic a r vun ta lan. t Col. A. at Beginning Prof. & Loss Transp- Value o f Pr op. kenewis anJ Cost et at Close Acquiustaou et Clvat Description of Period Expense LeMat en,ent s kemoval et Pe r i al or Incisne Retired of Period M ustu nt Depreciatio.4 T server Electric Plant Production - Steam 132,915 12.402 hone 30 St. , b O S 1,17) 87,389 8 7,3e 9
- Nuc l ea r 40,615 9,104 ,None 351 49,366 49,166
- Other 4.874 681 None -U- __M ) -U* 5 569 M by Total Production 178,424 22,187 Noi.e 30 5c,791 1, W t, 142,324 -u- 142,314 Transmission 35,559 5,835 None 60 820 125 40,503 40,5u 1 Distribution 150,650 16,072 None 1,606 f,,6 74 751 160,905 405 161,310 Ceneral 4,736 501 None 3 223 51 4,966 4 , 'st. 8 Plant Held for f uture Use :
Production 69 5 None 74 -U- la Transmission None -u- _o-Distribution 14 None 14 14 Total Electric 369,454 44,600 None i,701 t,4 , 514 2,453 345,788 405 349,19)
Steam Heating Service 11.021 1,124 None 151 76 !!,918 -u- II, ils C-m Plant :
Electric (Prod.) 1,250 52 W ane -u- 2 1,300 -u- 1, )tn Steam 5.69) 217 None 9 -0 _5y -u- % y l, Total Cousnon 6,943 289 Nane -U- 11 7,221 7,'. 11 Nonutility 190 2 None 167 3 16) 27 J7 Total 357,614 46,015 Naue 1,701 64,b6 3 2,$13 167,954 $t.8,3 5 9 Accunnalated Amortization of Nuclear Fuel 34.046 11,617 None 4 35 t.6 3 -o- a b e:eq Total 421,660 57,632 None l,701 64,8b1 1,513 411,617 405 414,0!J e
S-3
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BOSTON EDISON COMPANY SCIIEDULE X11 RESERVES Years Ended December 31, (in thousands)
Column C Additionc (1) (2) Column D Column B Charged Charged Deductions Column E Balance at to Profit to Other from Balance at Column A Beginning and Loss Accounts - Reserves - Close of Description of Period or Income Describe Describe Period Reserve deducted in the balance sheet from assets Allowance for uncollectible accounts:
1977 $688 jl3,381 $501 (A) $3,685 (B) p88_5 1978 $885 $3,555 $564 (A) $3,938 (B) $1,066 Notes:
(A) - Recoveries from accounts receivable previously written off.
(B) - Unco 11ectible accounts written off.
S-5
, BCSTON EDISON COMPANY SC'IEDUIM XVI SUPPLEMENTARY INCCME STATEMET INFORMATION Years Ended December 31, (in thousands)
Column A Item Column B Charged to Costs and Expenses 1978 1977 Taxes Other than Income Taxes:
Municipal property taxes $79,261 $76,167 Payroll and other taxes 3,670 3,614
$82,931 $79,781 The above amounts are net of capitalized expenses.
The amounts of maintenance and repairs depreciation and taxes charged to accounts other than operating expenses were not significant. See note G of notes to financial statements for information relating to rentals.
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