ML19290D932
| ML19290D932 | |
| Person / Time | |
|---|---|
| Site: | Clinton  |
| Issue date: | 12/31/1979 |
| From: | ILLINOIS POWER CO. |
| To: | |
| Shared Package | |
| ML19290D931 | List: |
| References | |
| NUDOCS 8002290509 | |
| Download: ML19290D932 (35) | |
Text
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lLLINDIS POWER COMPANY Annual Report 1979 8002290 $Of
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%=:2:. 'vOp SI 0Ff Contents Page Highlights of 1979 2 gQ"fQ Letter to Stockholders 3 swEw The Annual Report . 4 Earnings, Revenues, and Sates 4 Financing 4 Pate Increase Granted . 6 Construction Program .. . 6 Impact of Three Mile Island Accident 7
__ Electric and Gas Services 8 Systems Re!iability 9 Fuel Supply . 9 Environmental Protection 10 Research and Development 10 Consumer Services . 11 Legislation and Regu!ation 11 Report of Management 12 Board of Directors and Officers 12 The Board and Officers 13 Financial Statements .. 14 Management's Discussion and Analysis of The Statements of Income 25 Two Year Dividends and Stock Prices by Quarters 26 Suppfementary Information to Disclose the Effects of Changing Pnces 27 Operating Statistics 30 Map Inside Back Cover 5_ Illincis Power Company is a public utility engaged primarily in the gen-eration, transmission, distr:bution and sate of electric energy and the distr but:on and safe of natura! gas in the State of IIHncis. T _ _ _ . . _ . . . .
Highlights of 1979 1978 1979 increase 13,574 14,226 4.8 Electric cafes-kdowatt-hours (millions) 5452.207 $479,052 5.9 Elcctric revenues (thousands) 1,035 1,052 1.6 G% sa!cs-therms (millions)
$219,807 $272,770 24.1 Gas revenues (thousands)
$672,014 $751,822 11.9 Total operating revenues (thousands)
S 82,361 $ 91,335 10.9 Net income (thousands)
$ 66,662 $ 75,636 13.5 Earnings avai!ab'e for commor stock (thousands) 24.302 27,980 15.1 Average number of shares outstanding (thousands)
S2.74 $2.70 (1.5) Earnings per share of common stock What We Received and What We Paid Out or Set Aside 1978 1979 1979 % We Received From-(Thousan't ct Do!!ars) S452,207 $479,052 63.7 Sa!cs of efectricity 219,807 272,770 36.3 Sales of gas
$672,014 $751,822 100.0 We Paid or Set Aside For-S 61,173 $ 66,487 8.8 Payrolls and benef;ts to employees engaged in operations 145.486 191,296 25.5 Gas purchased for resa!e 5,505 6,171 .8 Power purchased for resale (47,078) (58,498) (7.8) Power interchanged-net 207,082 225,621 30.0 Fuel for electric plants 38,692 43,766 5.8 Materiais and other expenses 51,569 55.967 7.4 Recovery of cost of property due to wear and obsolescence 79,468 82,693 11.0 Taxes-federal, state and local 22.793 21,958 2.9 Investment tax cred,t deferred--net Use of funds invested in our business-(28.929) (38,731) (5.1 ) Allowance for funds used during construction 53.892 63,757 8.5 Interest-inc!uding short-term loans 15,099 15,699 2.1 Preferred stock dividends 56,252 64,615 8.6 Common stock dividends 10.410 11,021 1.5 Future use in our business
$672.014 $751,822 100.0 2
--,.~._,.~,-.,.w~~ deliver the unit's power into our ciectrical transmir sion system.
To Our Stockholders: Looking to the immediate future, the Company will be operating under cash flow problems until the unit is completed. The recent rate increase will help this The Illinois Commerce Commission on November 28 situation in 1980, but additional rate relief will be granted us a substantial part of the electric and gas required before completion of construction. We have increases we requested at the beginning of the year. not yet d]termined the timing of future rate increase While the new rates helped revenues and earnings requests. only during the last month of 1979, they should Looking further ahead. we have made a new esti-assure us the financial status that will enable us to mate of projected growth of electric demand. Our raise the outside capital we must have in 1980 for our estimate of demand has been reduced because of construction program. such factors as conservation and a general slacken-Our construction program consists mainly of com- ing of business activity. It now appears that a second pleting our first nuclear unit at Clintun. Construction unit at C inton, which was scheduled for service in was started on this unit in the fall of 1975. Our latest 1988, wil not be needed before 1991. Because of review of progress indicates we willload nuclear fuel this, the Board of Directors is making a complete re-in April,1982 with commercial operation planned for evaluation of generating alternatives after Clinton 1. December of that year. This is an ambitious sched- In my letter to stockholders of December 14, I ute, but one that is attainab!c barring unforeseen reviewed with you the 60 Minutes program of last events. There are factors beyond our control which Novembe' on our Clinton plant I told you about our could disrupt our schedule. For example, the Nuclear film documentary refuting the charges made against Regulatory Commission has suspended all licensing the Company. We have shown this documentary to hearings for at least six months. Our application for our employees. customers, a great many stockhold-our operating license was filed, on schedule, Decem- ers. and '.o much of the financial community. The bor 1,1979. However, we do not know when the support we have received from all of these groups NRC will begin its review and public hearings. Fuel encourages us to believe that the effects of this loading cannot take place without the operating attack arc behind us. license. Your responses to our letter were gratifying and With favorable weather during the summer, fall, we thank all of you who took the time to give us your and early winter, virtually all of the interior work at views, wh ch were overwhelmingly supportive. the plant is under roof or weather-protected. In early October, we met the most important schedule mile- Respectfu ly submitted, stone of the year with the installation of the reactor pressure vessel onto its pedestal in the containment building. The steel and concrete work is nearly done. What remains is the completion of piping, electrical / work, and installation of equipment. We estimate that at the end of 1979,62 per cent of the construc-tion was completed. During the year, we also began Wendell J Kelley construction of the 35 miles of 345 kilovolt lines to Chairman and President 3
Earnings, Revenues, and Sales Financing
- -,.n w--._nn,wnn Earnmqs per share of our common stock were $2.70 Capital requuements for 1979 consisted of $292 mil-for 1979. compared to $2.74 for 1978 The earnings hon for construction expenditures and $15 mdlion to include the highest net interchange sales of electnc refund a bond incue which matured on July 1. These energy to other electric ubhties in our Company's requhements were financed by the issun of common history and increased sales of both electricity and stock in Apnl. the sale of first mortgage boads, the gas The lugher electric and gas rates authorized by issue of new common stock under the provisions the Ilhnois Commerce Commission at the end of of the stock ownership plans internally generated November were a factor only m the last month funds and short-term bank loans-of the year. Earmngs por share were shghtly below On Apnl 19,1979. three million shares of common 1978 becaus = of contmuing increased operating stock were offered to the public by a group of under-costs and capital costs of our construction program writers at a price of $22 25 per share. Proceeds to Total revenum for the Company were $752 million, the Company were $21.55 por share, or $G4,650,000.
an increase of $80 rmthon. or 11.9 per cent, over Also in Apol we negotiated the pnvate placement 1978 Electnc revenues of $479 million for 1979 of $100 million of f ast mortgage bonds,9% % Series represent an increase of 5 9 por cent over 1978 due 200a. to 22 institutional investors for delivery in and primarily reflect increased kilowatt-hour sales the third luarter of the year. This was the first private the recovery of increased fuel costs and rate in- sale of secunties in the Company's history The sale creases Cas revenues of $273 nullion for 1979 rep of the bonds was scheduled in three parts in antici-resent an increase of 241 per cent over 1978 This pation of our cash needs We received $50 million increase resulted primanly from the recovery of in- of the proceeds in July, $24 milhon in August, and creased costs of natural gas with only a small $2G million in Geptember. increase a, therrn sales Approximate!) $20 8 mdhon of new common stock Kdowatt-hour nales of electncity increased by 4 8 was is',ued under the 90ck ownership plans, which per cent in both 1978 and 1979. Sales to our resi- include the Automatic Reinvestment and Stock Pur-dentia! customers decreased 0 9 per cent ret!ectmg chase Plan, the Employees Stock Ownership Plan, energy conservahon efforts of our customern and and the Tax Reauction Act Stock Ownership Plan cooler sununer weather than in 1978. A 5.7 per cent arul Trust (TRASOP). increase m Sales to commercial and industrial cus- 1979 was the first full year that participants in the tonu'rs reflects both economic growtr. in our terntory Automatic Reinvestment and Stock Purchase Plan dunng the year and the adverse effect on 1978 sates and the Employees Stock Ownership Plan were per-caused by the coal stnke that year. Sales to other rmited to purchase shares through the reinvestment electoc utihhes increased 20 8 per cent. This was of dividends and interest at 95 per cent of the rnarket pnmanly due to sewaal muntcipal electnc utihbes pnce of our common stock. The increase in partici-which poor to May, 1979 purchased power under pation as a result of this ahange has been significant. interchange agreements electing to take service as in 19 79. appro>c.mately 793.000 shares of new issue wholesale customers common stock were purchased for the plans provid-Net interchange sales of elecinc energy to other ing additional capital of approximately $15.903.000. electric utihbes in 1979 exceedod $58 mdhon, an all- Th s compares to 374.000 shares of common stock time record The S11 mdhon increase over 1978 and approximately $9.149.030 of additional capital reflects a greater demand for electric energy by prowded ance inception o the plans in January, other utihbes and our atuhty to supply it at favorable 1976 through December,19.8. Approximately 10.800 prices secunty holders and 660 employees are now par-Therm gas sales for 1979 mcreased only 10 per ticipating in the plans. Almost 13 per cent of our cent compared to a 10 3 per cent increase in 1978. Common and preferred stockho!ders were participat-Tho 1979 increase in t:1erm cates to our industrial in2 at year end. (Security holders interested in ob-customers was pa:tially offset by the decrease in gas tainiag more information about the reinvestment plan therm sales to our residential customers. may obtain a copy of the prospectus and other 4
Electric Revenues Gas Revenues (MLUONS OF DOLLARS) (MILUONS OF DOLLARS) 480 480 460 460 440 440 420 - 420 400 - 400 380 380 360 360 340 340 320 320 300 300 280 280 260 260 240 240 - 220 220 200 - 200 180 180 160 160 140 140 120 120 100 - 100 80 80 60 60 40 40 20 20 70 71 72 73 74 75 76 77 7', 79 70 71 72 73 74 75 76 77 79 79 Electric Peak Loads Gas Peak Loads (IN THOUSANDS Of KW) (IN THOUSANDS OF THERMS) 3200 , 9600 3r00 9003 2800 84r0 2600 w~ 7800 2400 7200 2200 6600 2000 6000 1800 5400 1600 4800 1400 4200 1200 3600 1000 3000 800 2400 600 - 1800 400 1200 200 600 0 ^ O 70 71 72 73 74 75 76 77 78 79 70 71 72 73 74 75 76 77 78 79 5
matenal from D. F. Meek. Secretary and Treasurer, control.'
!!hnois Power Company, 500 South 27th Street, Certain mtervenors and the Company petitioned Decatur. I!hnois 62525.) the Commission to rehear and reconsider its order.
Approomately $4 838 000 of additional capital in These petitions were denied and these intervunorn 1979 was provided by the TRASOP. Sixty-four per and the Company appeated the Commission order cent of the eligible employees made voluntary con- to the Illinois Circu:t Court. tributions v.hich were matched by the Company. Even with the rate increase. Our electnc rates Since the plan was started m 1977, 430.000 shares continue to be the lowest of the major utihties based have been issued and about $10.159.000 of addi- in llhnois Our electric rates are supported by peak tional capital has been provided to the Company. load pricing concepts designed to provide customers Estimated capital requirements for 1980 are $320 with an incentive to make more efficient year-around million for construction expenditures plus $10 million use of electricity, thus using our facilities more to refund a first mortgage bond issue maturing on ethciently. April 1, 1980. To meet these requirements, we Since 1973 the Illinois Commerce Commission has anticipW approximately $200 milhon of permanent based its ratemaking decisions on original cost valu-financing in 1980 with the balance to be provided by ahon of a utihty's property. On October 2,1979. the short-term borrowing and internally generated funds. Supreme Court of Illinois issued a decision stating The types, amounts and timing of these permanent that under the Illinois Public Uhhties Act just and financings have not yet been determined. reasonable rates must be based upon the present fair value of a utihty's property. Proponents of -
-~ --~~,n onginal cost valuation petihoned the Supreme Court
__.n g gg g Rate Increase Granted 30. Because these petitions were pendin0 at the time our rate order was under consideration by the c .% . .=- " " Commission, the Commission rejected fair value data T he llhnois Commerce Commission granted increases supphed by the Company in our rate proceeding. in our e!ectric and gas rates on November 28,1979. The changes will provide increases of $45 7 million annually, or 10 9 per cent, in electric operating reve- Construction Program num and SIG 9 million, or 7.9 per cent, in gas operating revenues The increases granted are in full comphance with the Council on Wage and Price During 1979. construction of the 950.000 kdowatt Stabihty's voluntary price guidehnes. nuclear generating Unit 1 at the Clinton power station The Commission authorized a 9 85 per cent rate advanced towaru the scheduled loading of nuclear of return for the electric utility and 9 55 per cent rate fuel and operation in 1982. Much of the work was of return for the gas utihty. This results in an overall in the installation of the reinforced concrete walls total com"any rate of return of 9.8 per cent. and floors and concrete block walls for buddings in In determining thu new rate leveh the Commis- the power block area. sion aHou j un to recover anticipated increases in Several major pieces of equipment have been electric and gas operation and maintenance ex- placed in the buildings as construction has prog-penses through 1980 This action will lessen the ressed. Piping and electrical work have continued impact of inflation on our future camings. as areas in the buildings have become available for The Commission also approved the inclusion of this type of work.
$97 muhnn of Construction Work in Progress (CWIP) In preceding winters, it was necessary to dras-associated with the Clinton nuclear station in our tically reduce the werk force in severe weather. By electric rate base. With the inclusion of CWIP in early winter of 1979, many building areas were electric rate base the Commission plans to investi- enclosed, allowing work on interior concrete wa"s qate in a separate proceeding the potentialincentives and floors and installation of equipment, piping and for cost control at the Clinton nuclear station. The electrical facihties to continue.
Commisnien stated that the objective of such an Of the schedule milestones met this past year, the incentive plan would be "to control the remaining most significant was the placement on October 7 of cost of the entire C!inton project and the total cost of the reactor pressure vessel onto its pedestal in the future major construction projects by other utilities. containment building. This consisted of the surface The incentives would benefit both ratepayers and transportation of a vessel, 69 feet high,18 feet in investors. The Company would be rewarded and diarneter, and weighing 621 tons for approximately penahzed, respectively, for superior and poor cost 500 feet. It was raised vertically 130 feet, transported 6
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peak f,rm demand expenenced in 1978. Company was c ted as among the best investor-We e<pect our load factor to increase in the years o.vned utd. ties in :he nation in terms of power plant ahead as a racult of our continuing load management productivity and one of the top five nationa!Iy in terms program. Kdowatt-hour consumption in the 1980's of productivoy from !arge coal units.
;s expected to gro.v at a rate one per cent per year We were able to provide assistance to capacity-greater than that of peak demand. short systems. Net interchange deliveries reached a Our gas suppUes improved during the year. This maximum level cf 410,202.000 kdowatt hours in De-and another colder-than-ncrmal winter resulted in a cember and totaled 2.009.542.614 kilowatt hours for gas sales record for the cecond consecutive year. the year. Most of this was produced by our coal-fired Three releases of natural gas were made during generating units and was used, to a large extent, by the year. All srace heating applicants and all com- other utihties to replace oil.
rr,ercial and ir.rustrial non-space heating applicants ,_ .
,, y e a owng up to 150 therms per hour who applied by October 15,1979, and all commercial and industrial Fuel Supply non-space heat ng applicants using more than 150 mmm __ ,m___,
therms per hour who applied by May 30,1974, were offered gas service. The gas releases were made Coal accounted for 95 9 per cent of the fuel we used possible by improved long-term forecasts of gas for generating e!ectncity in 1979 vath 76 2 per cent supply, the continuing effects of conservation and of it from Illinois menes We also used low-sulfur coal the conversion of some industrial customers from from Kentucky and Colorado. Oil provided 3 0 per hm:ted firm service to interruptible service. Cent of our generation. and other fuels were used for We entered into a Icng-term contract with Pan- 1.1 per cent. We will have a more balanced mix of handle Eastem Pipehne Company for one billion fuels when Clinton Unit 1 goes into service, with cubic feet of underground storage capacity This is nuclear generation accounting for 16 6 per cent of in addition to similar storage agreements with Natural our generating capability. Gas Pipehne Company and the capacity of our eight Over the next 10 years our estimated average re-undergicund storage fields. The new leased storage qu!rement for coal is 7.7 million tons annually Fu-capacity will insure our ability to meet the oeak ture coal needs for existing coal-fired units are demands of our gas customers and enhance our estimated to be 170 million tons Cortracts in effect Ibb:hty in purchasing natural gas supplies when- as of December 31, 1979, including extension op-ever they are available. tions, provide for delivery of approximately 167 Steps were taken in 1979 to develop a new electric million tons. and gas d;spatch center which will be completed in Fuel for the Clinton nuclear power station will be 1983 This center v.dl have superv,sory control and supplied by Kerr-McGee Nuclear Corporation under data acquation equipment which wdl allow the d;s- the terms of two contracts. The contracts provide patchers to directly monit" and control the electric for the purchase and conversion of approximately and gas systems and take immed; ate action in 5.4 million pounds of uranium to be delivered to the response to known or forecasted conditions. It will Department of Energy, with whom we have 30 year further improve our abihty to insure cont;nued high contracts for our enrichment requirements. The rehabihty of electric and gas service. "Long Term Fixed Commitment Contracts" with the y ,., : . . z.o _..._m r _g #., Department of Energy for enrichment services have been replaced with long term " Adjustable Fixed Systems Reliability Commitment Contracts" with schedules for enrich-ment services adjusted to suit current operating needs. A contract with the General Electric Com-We constantly review the planning, design and op- pany provides approximately 15 years of fuel fabri-ercting reliability of our electric and gas systems to cation requirements. provide continuous service to our customers. We In 1979, in response to a request from the federal work closely within the Illinois Missouri Pool (ILLMO), government to ease the demand for some types of the Mid-America Interpool Network (MAIN), and the oil, we installed a new supply pipeline and fueled National Electric Reliability Council (NERC) to insure three generating units at the Wood R;ver power sta-that the interconnected electric system can reliably tion and two combustion turbine peaking units with deliver bulk power to large regional areas. The lili- natural gas during the summer months. We have re-nois Commerce Commission is currently reviewing tained the capability to switch these units from oil the reliabihty practices of all Illinois utilities. to gas and have continued to do so when gas is In testimony presented by illinois Commerce Com- available from the gas pipeline supplier. This change mission staff during our rate case, Illinois Power conserves number 2 distillate fuel oil. 9
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Environmental Protection Research and Development m.m-m y-- , .s. mm e m m m ym. _ . .-. _ . - Operat:ng spon m for envaanmental related activi- Ree and development expenditures for 1979 ta" m 1979 mceed< d $50 mdhon Th:s equals ap- tot a about $3.1 mdhon. Includm1 were funds for prn.imately 11 per cent of e l ectric revenuo Our research in nuclear power, coal ash use, air and accumulated cap,tal opnd.tJteb for env:ronmental water standards, Coal gasifiCation, Solar, and other pmtection progrann have mashed $116 nd!mn <,ince technologies to meet future energy needs in envi-19m ronmentally and economically acceptable ways Our We hwe all nocemary air pollution nparatinq 1980 expenditures aro estimated to be 33 9 million. pormt and water po!!utron control cperating permits The largest sing!e 1979 expenditure, $1.7 milhon. fur our facilities was made through the Electric Power Research In-A culfur dioxide em:ssion hntt for the BaldMn st tute (EPRI). an organization formed to coordinate power ntahon wa ; approved by tho llhnom Po!!ut!an the electnc utihty research of more than 580 pubhc, Centrol Board in 1979, and vie are anaiting final private, and cooperative ut hties. The total EPRI re-approval nf the hmit from tho U G. Environmental search budget for 1980 m more than $200 milhon . Pmtectmn Agency. Before wo are assured that This was our fourth year of support for the Alks-Haida:n can conhnue to be fueled 100 per cent with Chalmers Ki!ngas coal gasification process. We pro-libnois coal, we must demonstrate mth data gathered vWd $430.000 toward bauc engmeering, apphcatron m 1979 and 1980 that this emismon limit will not ntudic< and demonstration assessment activities. ma "J ambient ground level sulfur dionde concen- We hme also been assmt ny Alhs-Chaimers in trahnn standanh enhnhng the financml md of the State of Ilhnois. Iho U S EPA made effechve on August 13,1979 a the Electric Power Research Institute, and other nn, wt of ri qutations which. m part, reclassified the utihties to budd a Kilngas demonstration plant at our coolmq reservoir at the Ba!d Am power station and Wood River power station. The State of Illinois is caused the waste streams entenng the reservoir to expected to invest $18 million in the dernonstration ho nubs t to ntandards Meeting these st;mdards by plant. and t.e plan to mvent $5 5 milhon over hve My.1984 m est; mated to cost about $14 milhon At years. the othor power plants compliance with the Clean Other research projects for 1980 include contin-Water Act Arnendmonts requiring best available ued work on using underground compressed air as control technology fnr exishnq facdities by July,1984 a storage rnedium for peaking generation, improve-
.JI cost appreamatoly $8 mdhon This does not ment of operations and maintenance of nuclear gen-include the cost of regulations under development by eration, investigation with our industrial customers of EPA for the S:ite Dunking Water, Resource Conner- potential joint steam production-electric generahon vahon and Recovery. and Toxic Substance Control facilities, experimentation with customer load modi-Acts fication control systems and techniques to minimize _
We miend to ble a pehtion before the ilhnois the add tional capital equipment needed to serve our PoHuhon Control Boant to obtwn a higher thermal customers, and the development of constructive uses dmcharge hmit for the f rst unit at the Chnten power of power plant waste heat and ash. stahen Thm wouhl preclude installation of a supple. One project uses warmed water from our Bahlwin montal cochng system f ar discharge rator to the power stat on to heat a greenhouse. The project is SB00 acre couhnq lake untd a second unit is being performed by a Unmersity of Ilhnois group with mstalk'd. a grant "om Ilhnois Power Company and other As the Natienal Pollutant Dmcharge Elimination sources System pernnts were renewed, we appealed those We also 1re planning an experiment to control 100 portions of the new pennits that could later create residential water heaters so that they may be turned undue hardships on power generating facihiy opera. off dunng peak loads on our system. The storage t on and unneceuary opense to the Company. Ap. capabihty of the water heaters should avoid major peah for three permits are now before the Po!!ution inconvenience to the custorners involved. Control Heard. Dunnq 1979, envircnmental data concoming air quahty bielogical mformat on and water quahty were collected at potential sites of future electric generat-mg faciht en 10
y,vemmy,ew.w%r - ., .& : s_ - rctce improvements /ccre made in our cornputerized Consumer Services system of custcmer information, includ:nq insta!la-enm mm_, - . . - - ~ _ _ m , - , , m "' _ tion of a new ccmputer to further insure the prompt availab!hty of account informaticn and installation of the en-hne information system in five more customer The Ccmpany provided free home encrgy audits of service center offlces 13.851 remdential units in 1979 as part of the electric
" "" 7 ~ V * """""
ut:htici National Energy Watch program More than 800 cther inspections of commercial estabbshments, l egislation and Regulation r.chools and other pubhc buldings were conducted. We have done more than 50.000 on-site energy " " ~ ^ ' ' ^ - " " " " " " + ^ " " audits for customers since 1977. The major public utility federal legislation affecting We je ned the National Enerny Watch commercial- the Companv is the National Energy Act passod in mdustrmi program, wh;ch was begun nationaNy dur- November.1978. mq the year. The Act consists of four parts The National Energy We sponsored our third. and largest, conference Conservation Policy Act provides federal subsidies on energy ethciency for industrial and commercial to encourage energy consersation. improvements in customers n Octcher Fif ty-two manufacturers of efhciency, and expansion of solar energy. The Power energy eff cient aquipment dmplayed and discussed Plant and Industrial Fuel Use Act requires major new thWr products sr 200 participants at the conference. industrial boilers to use coal rather than oil or nat-v.hich was hc!d on the campus of I!Iinois State ural gas The Public Utiht'es Regulatory Policy Act University. (PURPA) estabhshes standards for electnc rate de-1979 started with a Nen Year's Eve ice storm in sign and utility practices to be considered by state scuthwestern 11non in late February another ice regulatory agenctes The Natural Gas Policy Act pro-y storm struck in the Sparta and Mt. Vernon service vides fedoral jurisdiction, includ:ng price controls, areas The smern ice stcrms in 1978 and 1979 over both interstate and intrastate natural gas sa!es cauwd the worr,t v:nter damage in IRnois Power The National Energy Act is certain to add an ad-Company hotory Ten of our 12 cervice areas were m;nistratn.e burden to our industry v.hich already is affectrut by th6e storms burdened with needless paperwork. We are working Two new I!!inois Commerce Commission orders w,th the various regulatory agencies to minimize any covern:ng relations bet.veen ut!hties and customers adverse effects of this legislation.
<;cre issued in 1979 One is the result of more than The major state legislat:on affecting the Company two years of dchberations; it further restricts utihty !s a replacement tax for the corporate personal ccMection activities Snveral provisions of the order nroperty tax and capital stock tax which were elim-
.ere m hne e/;th costmq IRnois Power Company !nated Janulty 1.1979, as mandated by the current
, rrrtes The etht r owr. enactod in resnome to stain Const:tution The replacement tax package 1979 !cgWatne resoiut'onn restncted curtadment of imposed a tax on invested capital at the rate of 0 8 utMty nrv y for nanpayment from December 1 per cent and an income tax increase of 2 85 per cent 1979 to Apnl 1,1980. untd January 1,1981, and 2.5 per cent thereafter.
In order to further assist persons on fixed incomes These replacement taxes became effective July 1. and other custcmers, we began a program entitled 1979 and resulted in a decreased tax liability for the Project HELP. With this program, we have increased year 1979 since they were effective for only six cooperation with governrnental agencies administer- months We anticipate an increased tax burden in ing federal biH paymont assistance programs. Also. future years as a result of the rep'acement tax. add;t;onal office hours were offered in the fall so in matters of state regulation, the Illinois Com-custcmers could make payment arrangements or merce Commission has conducted six investigative start budget bdhng before hinh winter heating billing proceedings affecting all major utilities in the state. began These are to determine an appropriate level of re-We mado improvements during the year i,, our liabihty for the major electric generating utilities, bdi:ng system and employee training activities. A rcconcile revenues collected under fuel and gas t'ooWt with basic information about our services, adjustment charges with actual costs, investigate bdhng. and the Company was developed for distri- adoption of uniform purchased gas and fuel adjust-t'uber to customers We added information to help ment clauses, consider the application of peak load customers better understand our bill and v. e pncing concepts, and investigate electric load fore-changed our final notice form to add consumer infor- casting procedures. Other Commission actions are mat;on and to emphasbe the importance of this reported in the Consumer Services section. 11
v a -_ .._:.,_ m mmms ery Ward Credit Corporation, Marcor, Inc and Bliss Report of Managernent & pucMn Indusua Inc. The Board of Directors en March 29 elected two
. -e new Vice Presidents: A. E. Gray, formerly Centroller The f1nancial statements and a!I information in this and Assistant Secretary, and P. J. Womeldorff, annual report are the responsibility of management. fonnedy Manager of Plann:ng Mr. Gray has respon-The f nancial statements base been prepared in con, mbihties for accounting. data processing and budg-formity wIth generally accepted accounting pnncip!es et;ng and forecasting operations. Mr. Womeldorff consistently app lied and, in the opinion of manage- has respons:bilities for engineering, energy supply, ment, fairly ret:ect the Company's financial position, planning operabons and research and development resu!ts of operations and sources of funds provided programs.
for gross property additions. Vice President L. N. Talbott did not stand for re-The Company maintains accounting and interna election as an officer of the Company at the March control systems which it believes are adequate to Board meeting. He will continue to serve the Com-provide reasonable assurance that assets are safe- pany as a consultant. Mr. Johnson Kanady, Assistant guarded against loss from unauthorized use or dispo, to the President, retired on August 1 after 18 years sition and that the financial records are reliabfe for with the Company. preparing financial statements. Members of the Board serve on committees estab-The f nancial staternents have been audited by our lished to address various issues of management. _ independent accountants, Price Waterhouse & Co., Recommendations of the committees are presented in accordance with genera'ly accepted auditing to the full Board for discussion and final determina-standards v.hich include a stud / and evaluation of tion. Current committees and their memberships are: internal control for the purposes of establishing basis for reliance thereon relative to the scope of FINANCE COMMITTEE The ,,' nance Committee meets to review the Com-their examinat:on of the financial statements. In ad-dition to the use of independent accountants, the pany's financial forecast, financing plans, and Company maintains a professional staff of internal pension fund investments and makes recom-auditors who conduct financial, procedural and mondations to the Board concerning such matters. special audits. The selection and training of quali- o e comMee am t'ed personnel, the establishment and communica- ge E HaWah Gahan tion of accounting and administrative policies and Will am C. Gerstner Boyd F. Schenk procedures, as well as the program of internal audits, Wendell J. Kelley Charles W. Wells are irnportant elements of the internal control system. Keith R. Potter Gordon R. Worley The Audit Committee of the Board of Directors, AUDIT COMMITTEE cons: sting so!ely of non management dqectors, The Audit Committee recommends the appoint-meets periodically with management, the internal aud: tors, and the independent accountants to dis- ment of he Company's independent accountants, confers with the independent accountants, reviews cuss aud.t and financial reporting matters. Both Price Waterhouse & Co. and the ,mternal auditors the scope of the audit, the results of auditors' ex-aminations. and the activities of the Corapany's have d rect access to the Audit Committee to assure their independence. nternal auditors. The members are: Vernon K. Zimmerman, Chairman m.,_m m. - ~. * = = a - - - - - Robert J. Burow John H. Leslie Board of Directors and Officers Richard P. Stone COMPENSATION AND ORGANIZATION Mr. Harold G. Meenen, former Vice Chairman of the COMMITTEE Company, retired from the Board of Directors in This committee reviews and recommends com-March. He was a member of the Board since 1966 pensation of elected Company officers, reviews and associated with the Company since 1950. Mr. benefit plans and recommends nominees to fill Gordon R. Worley was elected to the Board on March vacancies on the Board of Directors. The members 29,1979. Ten other directors were re-elected. am Mr. Worley, of River Forest, Illinois, is Executive Keith R. Potter, Chairman Vice President-Fmance of Montgomery Ward & Co., Robert J. Burow John H. Leslie inccrporated Among the companies which he serves Wendell J. Kelley Boyd F. Schenk as a director are Montgomery Ward & Co , Incorpo-rated, Container Correration of America. Montgom-12
Board of Directors Officers Robert J. Burow Wendell J. Kelley Cor.w? v t rd H. ' red Pub der Cha rm 1, nr j Pre; der.t T5 Cc imercea! f b , Di, t in.nc% William C. Gerstner Charles W. Wells E>cco'se V cc Execut c Vice Pr o s t d.a n t Preudent William C. Gerstner En ce s. V,ce Prec d. r.t of the Compa y Arthur E. Gray James O. McHood Oc u, IRr o a V,cc President V:ce Presider.t Larry D. Haab William E. Warren George E. Hatmaker V,ce Prw jert V ce Pres: dent rm r l' ',';l.,f o,yo.s o -'c I,,r1,3n . 2 Leonard J. Koch Porter J. Womeldorff Vice Premdent Vce President Wendell J. Kelley D. F. Meek J. B. Burdick charme a-d Pre < ;Jc-t c f the Cernpany Sottetry and Tror cr Ace sur.t Treasurer O. . % r 1".nr,i; John H. Leslie ci uman cf t'o annrd cf
.an-do Cc rpc'atmn (rmnuf y.to.r c f rWI ard Ca%c
'erc nl and ra9wng systems)
G%n s.c A 11 nn.s Transfer Agent and Registrar Cort m r.ta! IUino.3 Nahanat Om and Trust K*3* *l. Potter
. Ccmpany cf Chica,o Ve Chi m > ! cf 231 S: :*h LaS1"e Street Chicago,1:imois C0093 In . e dp c c r Cmc 1nf $[
CNcago, is N1 $ct3E[t ut[b) '" Stockholder Records and Dividend Disbursing Office D. F. thek. Secretary and Trenarer ihmcis Po..er Company BoYd F. Schenk 500 South 27tn Strc et, Prr., de r :t c.nd Ch>cf Execu' 'O"U- r(f CPcl!Jr.llhnCis6 a J Pet inccrrc nted (217) 424-7 54 (ptccr "or and m-A rtor cf ferd ; Tdutb and cP cr consumer ga rds) The annual sfoclec/dcrs mrelm: C* iOW .f.t'Soud /Jarch 27.1980 at the cecunvc,Jof6ce ai'l beoft'cl'1 the comp 3ny at 70 A t.f. Prcces far this mcenng af!
- , reques cd by t?c Bmid of Dorectors A prony I
si remen! A W! be ir 1:id TO SfX'h0'dcG 3DoDI Richard P. Stone reneury 29.1980 Gra.n an j S ej f arm Open*:r senrosett I.hre - ; Th;s repyt and the f nancm! sta*ements con-
,a.ned t ere,n are subwted for the geretal in-formron cf the stockhoiders of t*>e Company Charles W. Wells I as cuch and are not m ended 12 induce or ta I be uced in cenrectico mth. any sa:e er run r.ecut vn v, Pr, adent cf t' Campin/ -
et,aco c f secun' c D. catur, I ' w ' i Gordon R. Worley 3 Evr o V:ce Pre ude nt-Fmarce of 0) fj h9 OnN ]
" , mmery w va & Co . Incerpe ated r, .
n lf, j{ "A Ch ai p itna,s il e) s ' l
>i h< Mk lt1i
--~s.-am.,
i m Vernon K. Zimmerman ILLINOIS POWER COMPANY Den Cree cf Comme ce and Bosu ; Advs ' a' cn principal Office Unn ersity of in.ncis f.?;nt ceno, IM res 618_o y,b.1na H rio:s : Note: The pra upa! occupat cq of each c.re:._, Executive Office ed c" cor d lanms Peact Corrpry o 500 Sadh 2 7:h SW . Deca' ,r, IL n n 302525
- Sat ! c'ed ?. .<ng his ram Phene (217) 424-0600 13
r d'j!g@lhb I
- i Balance Sheets j -4 : .) ; ,, , & December 31, 1979 1978 ASSETS * " ' F W Utility Plant, at original cost E'octnc (rncludm c; :"uct.on v.o'k in p'c';ress of $703 229.000 and 5487.540.000.
remectrse'y) $2,212,046 $ 1,952.401 Gas (includes conctrucnon v.ork in prog ess of 58.190,000 and $5.217.000, respectise'y) _ 313,19_3 _ 295.105 2,525,241 2.247.500 Less- Accumu!ated depreciat on 536,584 508.504 1,968,657 1,739.002 Nuclear fuel in procesc 18,262 13.983 Acquisition ad,ustmer' Dess amortrzation of $1.434.000 and $1,188.000, respectively) . 2,499 2.741 1,989,418 1,755.729 investments and Other Assets 8,663- 7.892 Current Assets Cash 10,535 7.889 Temporary cash investments at cost, which approximates market 2,500 - Accounts receivab!e (les': anowance of 52,000.000 for doubitul accounts) 68,194 SG.521 Matena!s and suppl es at average cost 109,582 90.354 Prepayments and m sce,',noous accounts receivable ,, 16,975 13.071 207,786 107.835 Deferred Charges Unamortized debt expense 2,638 2,134 Other 6,147 4.910 8,785 7.050
$2,214,652 $1933 500
- = ==. =
CAPITAL AND LIABILITIES Capitalization Common stock-No par va'ue. 40.000.000 and 30 000.000 shares authorized. respectively, 29.487.643 and 25.474.381 shares outstand:ng. respectively, stated at $ 490,539 $ 405.088 Retained earn.ngs 168,553 157,532 Less-Cap.tal stock expense 3,795 3.427 Tc'a! common stock equity 655,297 559,193 Preferred and preference stock (see deta!!s on page 15) 215,171 215,171 I ong-term debt (see dotads on page 15) 866,747 776.559 Total cap;tahzation 1,737,215 1,550.923 Current Liabilities Accounts payable 87,813 60.032 Notes payab'c 34,145 10,000 Long-term debt matunng w; thin one year 10,000 15,000 Dmdends payab'c 20,823 18,458 income taxes accrued 2,132 209 General taxes accrued 20,440 25.818 Interest accrued 21,514 18,228 Other 17,010 16.868 213,877 164.613 Other Accumu!ated defer ed income taxes 153,299 134,664 Accumu!ated deferred investment tax credit 110,261 88.306 263.560 222.970
$2,214,652 $1.938,506
.=.
See rMes to hnanna: statemer:rs sh ch are an nteral part c. ,,,ese sistevees 14
nur, vom n cc .mumun uront m IF Long-Term Debt, Preferred and Preference Stock December 31, 1979 1978 (IF O ssr P, Cf Oda'5) LONG-TERM DEBT First mortg1ge bonds *- 2% ~ cerics due 1979 $ - $15,000 2%'b ceries duc 1980 10,000 10,000 3h 95 cerics due 1982 20,000 20.000 3n C , ceries due 1933 20,000 20.000 33.'49b ceries duc 1980 20,000 20.000 49 ceries due 1983 25,000 25.000 4% 95 ceries due 1993 35,000 35.000 5 85% vr;es duc 193G 40,000 40.000 63.'s % cerie'., due 1998 25,000 25,000 6%% cer,es due 1993 45,000 45.000 0 359 > cer.es due 1999 35,000 35.000 9% cenes due 2000 35,000 35,000 7 COS cenes due 2001 35,000 35.000 7%% cries duc 2003 60,000 60.000 6 601a ser'es due 2004 (Po!!ut.on Control Series A) . 8,500 8.500 9%c series v duc 200', .. . " > "O - 10W '", ceries due 2004 2 " 0 50.000 8%?1 cenes due 2006 100,000 100.000 6% cenes due 2007 (Po'lution Control Series B) 18,700 18.700 8% ':0 ceries due 2007 . 100,000 100.000 8% 9, cer:es duc 2008 100,000 100 000 Tc*al long-term debt 882,200 797,200 Unamortized premium and d accunt on debt (5,453) (5.641) 876,747 791,559 Less first mortgage bonds class {ed as a curr3nt liabihty 10,000 15.000
$866,747 $776.559
'ru e ,, o s. m o- ?st a w , ,, - :n :r , o w* v i n c' th t wed eracem. !rw scs a d
- a t ' - ~ c 'e n ' s ! * (r *1 a *~ m e e r * *, r : s ',e f *c. , 4 4 - n *
- n t- t *q3 y $rcu'n; ?%' t yds
!* , - , t > v co ra ?tc-',* ,4*?av * (). ~ t er 31, 1'm s t ac" e n ~ rely $cCf s CCC,C00 PREFERRED AND PREFERENCE STOCK /,y p.] g Serial preferred stock, cumu!a'ive,550 par va!ue- g[I h ]j Rg g[1[ hy Authonted 5,000.000 shares; outstand ng 4,280,000 chares.
Series Shares Redemption prices 4 08 % 300.000 551.50 . , $ 15,000 $ 15.000 4 2GL; 150 000 51.50 . 7,500 7,500 4 70 % 200.000 51.50 10,000 10,000
- 4 429b 150,000 51.50 , 7,500 7,500 4 209b 180,000 52.00~ . 9,000 9.000 53 90 prior to August 1, f 957 8 24 % 000.000 52 93 thereafter and prior to August 1,1980 30,000 30.000 51.90 thereafter 53 575 prior to July 1,1982 7 EG'", 700.000 52.63 'hereafter and prior to Ju'y 1,1987 35,000 35,000 51.085 increaf ter 55 55 prior to March 1.1981 *
- 54 25 therca'ter and prior to March 1,1986 l
891% 1,000.000 l. 50,000 50,000 E? 90 therea'ter and prior to March 1,1991 51 C0 thereafter 55 29 prior to August 1,1932*
- 54 29 thereafter and prior to August 1,1987 50,000 8 00 % 1,000.000 , - 50.000 53 29 trereafter and poor to August 1,1992 52 29 thereafter Prem'um on preferred stock 1.171 1,171 Serial preferred stock, cumu'ative, w;thout par va!ue-Authorized 5.0CO.000 shares in 1979, ncne cutstanding _
Total preferred stock 215,171 215,171 Preference stock, cumulahve, v.ithout par value-Authorize 1 ;.000.000 shares in 1979, none outstand ng __- , - Total preferred and pre'erence stock $215,17_1_ $215._1_71 n:t rccer- , , im ;n a 1.". - < v ; c:cra : at a ccs ta t~ cc c yy cr %ss tra, 8 9:% c er a,,um pec, 35 u ?.*3 'C h 1,1931 fCl the 8 9.t % SC' es Jnd 7.93'a i c! a % m p ' ' ' 13 A.;;. s t 1, 19?? tor the 8 00% sc:.cs.
. s ' ?\ \
l QUs-Q 1&lf & l j 44s Statements of incomo For the Years Ended December 31, 1979 1978 1977 Operating Revenues E "C'N C $479,052
.. . ..... . . $452.207 $383,567
% 272,770 219 807 183.820 E' un _ _
Ta'al . . .. 751,822
. .. G 72.0 t 4 SG 7,387 Operating Expenses and Taxes Fuel for c'ectnc prants .. . .. . .. 225.621 207.082 148.553 Po.ver purcNe,od for recato 6,171
. . . . . 5.E05 8.GG4 Poe.er inte chanqed-not (58,498)
G n purcL;c,ed for recaio
. .. .. . ... .. ... . (47.078) (30.855) 191,296 145.48G 117.812 Other opmahnq expenses 73,531 70.4 G3 59.827 t/a .n ten a nc o 37,763
.. . . . 33 934 28 919 Dopecaton 55,967 51.5G9 47.188 Gonora! tw , . .. , . 55,225 54.325 40.974 Ma e mcomc. tvrecurrent 4,820 2 C97 3.188 deferred (net) ,
2,090 1. B iG 930 f 4: rat met n, t nos--current 14,231 6.812 15.7G0 deferred (not) 15,329 18.638 9.053 Irre *mmt ta < cred t--deferred (net) 21,958 22.793 19.573 To'al 645,504
. .. .. . . 5 74.G92 475 G30 Oporahnq mcomo 106,318
. . . 97.922 91.751 Other Incomo Moe.amm fm funch used during construction-A i fond, - pnor to January 1,1977 .
OtNr funt-after December 31.1970 27,520 21.321 15.137 f&,ceManeotn ~ nct 10,043 9.402 5.709 To'at 37.563 30.723 20.846 Incomo before interest chargos 143,881-- - ~ ~ ~128.G45 112.597 Interest Charges -~ ~ Interont on long term debt 62,005
. . . ... 52.453 42.091 Other interest charges 1,752 1,439 1.888 A' foe,ance for borrowed funds used during construction- s amer December 31,1976 .. (11,211)
(7.608) (5.046) Total 52.546 46.284 38.933 Not income 91,335
. .. . ... . . . 82.3G1 73.GG4 Pref.:rred dmd.md requirements 15.699
.. 15.G99 13.257 Not income apphrah'o to common ctock $ 75,636
$ CG.G62 $ CO.407 We qhted average number of common shares outstanding "
dunn 1 the pennd 27,979,606 24.302.139 22.521.013 E.irnmqs por ccmmon share $2.70 $2.74
$2.68 Ca';h dmdend; doctared per common sharo $2.28 $2 28 $2.22 Retained Earnings For the Years Ended December 31, 1979 1978
( T r.omnds of Dollars) Ba!ance at Deg nnin0 of Year . . .. $157,532 $147.122 Net income . . . .. .... .. .. ... ... 91,335 82.361 248.867 229.483 less-- Cash dwidends-Preferred stock .. .. . .... ... ... . ...... 15,699 15.699 Common stock .. . .. . .... ...... .. 64.615 56.252 80,314 71.951 Da!ance at End of Year . . . .. . ....... $168,553 $157.532 Sco nc'es ta financial sta!cments which are an in!cgral part of thr:3 s!atements. 16
ILUNols POWER COMPANY / ANNUAL REPonT 1979 1976 1975 1974 1973 1972 1971 1970 (TP asands of Ocna's) 5303,066 5275,809 5221,126 S199,489 S177,209 S159,175 5149,046 158,595 133,142 108,789 94,953 95,445 86,i 73 81,221 48 166 461,661 408.951 329,915 294,442 272,654 245,396 230,433 123,782 88.725 63,013 41,408 34,470 31,892 23,518 7,092 5,591 4.727 4,179 3,671 3,156 4,726 (51.484) (29,522) (18,321) (10,547) 266 (9,806) 91,476 (6,886) 71,288 56,539 47,728 46,469 40,722
' 35,140 53 295 49.631 41,083 37,649 32,302 29,737 27.598 25.726 19.5C6 17.584 16,131 15,500 13,583 11,327 45,556 42,911 39.282 36,103 32,178 30,230 25,667 40.368 37,036 31,210 28.833 26.282 23,719 22,425 2,444 2,381 1,717 1,732 1,479 1,868 2,340 1,199 1,106 817 813 714 702 191 16,001 11,575 15,831 14.099 15,265 20,711 23,450 11,433 11,081 7,367 7,199 6,838 4,342 3,993 10.994 15,034 1,7C6 5,118 1,567 395 3,935 377,882 327,003 262,555 230,445 217,001 191,251 177,424 83,779 81,948 67,360 63,997 55,653 54.145 53,009 10,503 7,459 7,960 7,189 7.339 4,018 6,089 3,1 74 1,967 2.231 2,143 2,101 1,174 1,842 13,677 9.426 10,191 9,332 9,440 5,192 7,931 97,456 91.374 77,551 73,329 65,093 59.337 60,940 35,927 33,144 28,779 25,237 22,810 20,615 17,486 1,744 1,508 4,122 891 1,079 1,511 1,432 37,671 34,652 32.901 26.128 23,889 22,126 18,918 59,785 56,722 44,650 47,201 41,204 37,211 42,022 10.606 7,229 7,229 5,729 7.229 3,078 2,111 5 49,179 5 49.493 5 37,421 5 39,972 S 35,475 S 34,133 S 39,911 20,369.958 18,277,397 16,544,110 15,940,000 14,887,945 13,946,849 13.801,644 52.41 S2.71 52 26 S2.51 $2.38 S2.45 52 89 52.20 $2.20 52 20 S2.20 S2.20 $2.20 $2.10
).
~
o"""'"**** Q TML Tater
}lIWC_hotise24Ca Z~ "" ,
q(igg , To the Board of Director:s of lilinois Power Company: In our opinion, the accompanying ba!ance sheets and related statements of income, of retained earnings and of sources of funds provided for gross property additions present fairly the financial position of Illinois Power Company at December 31,1979 and 1978, and the resu!!s of its operations and the sources Report of of funds provided for gross property additions for the years then ended, in conformity with generally Independent accepted accounting principles consistently applied, Also, in our opinion, the statements of income and of sources of funds provided for gross property additions for the eight years ended December 31,1977, Accountants which have been prepared from the applicable statements covered by our reports on each of those years, present fairly the financial information included therein. Our examinations of these statements were 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 thv circumstances, m &dqhp a&G , g 17
u dv - Statements of Sources of Funds Provided for Gross Property Additions For the Years Ended December 31, Total 1979 1978 1977 Funds Provided from operations Not income S 576,155 $ 91,335 S 82,361 S 73,664 Items not requiring v>orking capital-Depreciation, amortization and miscollaneous 425,561 57,653 53,003 49,761 Deferred income taxes-net 106.391 17,419 20.484 10.033 Investrnent tax cred.t-deferred (not) 103,073 21,958 22,793 19.573 A!:o/,ance for funds used during construction (138.400) (38,731) (28.929) (20.183) Total funds provided from operations 1.072,780 149,634 149.712 132,848 DMdends on-Preferred stock (88.999) (15,699) (15.699) (13,590) , Common stock (422.803) (64,615) (56.252) (50.051) Net funds prov;ded from operations 560.978 69,320 77.761 69,207 Funds obtained from External sources Proceeds from sa'e of-Common stock 375.414 85,451 67.870 3.788 Preferred stock 165.856 - - 50,450 Capital stock expense (2,387) (368) (379) (275) Proceeds from sa!e of bonds 607.200 100,000 100.000 118.700 Po'lution control construction funds held by trustee - - 2.999 (2,999) Proceeds from sa'e of ownership interests in the CNoton power stat,on 103.980 - 33.926 42.855 Net increase (decrease) in notes payab'e 22,145 24,145 10,000 --- Retirement of bonds (75.000) (15,000) (15.000) - Total funds obta:ned from external sources 1,197.208 194,228 199.416 212.519 Other Funds Provided (Used) Net cecrease (increase) in v,orking cap;ta!* (53,612) (9,832) 7,136 (19.414) M sce'J aneous-net 1.487 (835) (814) 1,371 1 Total otner funds provided (used) (52,125) (10,667) 6.322 (18,043) Total funds from above sources 1,706 061 252,881 283 499 263,683 ALov.ance for funds used during construct!on 138.400 38,731 28.929 20,183 Gross property additio u $1,844,461 $291,612 $312,428 $283,866 Decrease (Increase) in s.,omponents of Working Capital
- Cash and temporary investments S (4,853) $ (5,146) S 22,231 S (534)
Accounts receivab'e (48.992) (11,673) (10,466) (3.632) Matena's and surphes (99.893) (19,228) (14,253) (24.868) Accounts payab'e 65.384 27,781 10.884 9.832 DMdends payab e 13,625 2,365 1.650 1,528 Accrued taxes 4.040 (3,455) 178 (4,466) Interest accrued 18,139 3,286 3.711 692 Oter-net (1.062) (3,762) (6.799) 2,034 S (53.612) $_(9,832) S 7.136 $(19.414)
- Exclud.ng notes payabic and long-term debt maturing within one year.
Gross Property Additions and Retirements For the Years Ended December 31, Total 1979 1978 1977 Additions -E'ectric S1,704 593 $270,806 5296,597 S272,462 Gas 13 1868 20,806 15,831 11,404
$1,844,461 $291,612 $312,428 $283,866 S 59.384 $ 5,748 S 6,247 $ 5,040 Retirements--E!cctric Gas. , 19.300 2,218 2,280 1,746 Otner 514 - - -
S 79.198 $__7,96_ 6 S 8,527 _S 6.7E6 10 See ro:cs to financi,1 statements which a?e an integral part of Um s'arements.
~ ~
f . IL UP,0 3 POV,ER CO*,'PANY/M, NUAu F: PORT 1973
.1 Y !b ) \. La 1976 1975 1974 1973 1972 1971 1970 (Thousands cf Don v:) $ 59.785 S 56,722 S 44,650 $ 47,201 $ 41,204 S 37,211 S 42.022 49.845 44.810 41.216 37,532 33,351 31,460 26.930 12,632 12.847 8.184 7,552 8.012 5.044 4.184 10.934 15.031 1.706 5,118 1,567 395 3,935 (10.503) (7,459) (7,960) (7.189) (7,339) (4.018) (6.089) 122,753 121.954 87,796 90,674 76,335 70,092 70.982 (10.979) (7.229) (7.229) (7.229) (5,950) (3,284) (2,111)
(45.226) (41.338) (36.993) (35,068) (33.418) (30.778) (29.064) 66.548 73 387 43.574 48.377 36,967 36.030 39.807 63.712 47.256 27,894 - 43.306 20,400 15,737 50.100 - 35,177 30,129 - (525) (186) (139) - (242) (193) 100.000 (80) 58.500 60.000 - 35,000 35,000 27,193 - (10.000) (12.000) 19,000 (6.000) 8,000 3,000 (14.000) (45 000) - 185.486 35.070 105.255 54.000 86.241 71,336 53,657 (13.177) 7,378 (27,781) 4,546 (160) 788 (3,096) 965 (407) (1.238) (1,743) 5,523 (1,399) 64 (12.212) 6.971 (29.019) 2,803 5.363 (3,032) (611) 239.822 115.428 119,810 105,180 128,571 106.755 90,432 10.503 7,459 7.960 7,189 7,339 4.018 6,089 S250.325 $122,887 S127,770 $112,369 s $135.910 S110,773 $ 96,521 S(17,997) S 1,996 S (3.873) S 1,985 S (2,278) $ (1,520) $ 283 (8.313) 12,749 (25.792) 1,842 (4,077) 26 344 (11,149) (9.134) (11,944) (1,348) (3,685) (2,367) (1,917) 6.429 6,983 3,186 (2,896) 8,321 421 (5,557) 2.533 1.210 962 1,487 948 942 5.529 (6.330) 5,101 4.094 2,540 (1,023) 1,872 6 520 (402) 2.827 379 (2) 660 468 3 271 306 1.752 490 1,097 80 469 S_( .13._17 7 ) $ 738, S(27J8J) $ 4.546 $___. ( 1_60 ) S 788 S (3,096) 1976 1975 1974 1973 1972 1971 1970 (Thousands of DeMars) S239 936 5112.234 $116.637 S 98,646 $ 94,524 S119 893 S 82.858 10.389 10,653 11,133 13,723 16,017 16.249 13,663 S250.325 $122,88 7 $127,7 70 $112,369 $135.910 $110.773 $ 96,521 h 50[0 2,034 3M2b 1,695 Ih33 b552 $75T3 $ 4,645 5 3.735 2,014 2,126 2,369 1,358 1,460 514 - S 10.044 S 9.115 $ 8.278 S 7,868 $ 8.901 5 6 517 5 5,196 19
L Notes to Financial Statements i g g @ehge Note 1-Summary of Accounting Policies: ber, 1979 Stnce the level of rates approved by the Commission included the normahzation expense, there The Compan/ is subject to regulations of the Ilknots Commerce Commission and the Federal Energy Regu. was no effect on net income. latory Commission Because of the rate-making process. Certain overhead and dismantling costs which are certain differences arise in the apphcation of generally capitatized for book purposes but claimed currently as accepted accounting princip!cs as between regulated deductions for income tax purposes are normalized. and non-regu!ated businesses Such differences con- - cern mainly the time at v.hich various items enter into Investment tax credits which reduce federal income taxes have been du tred and are being amortized to the determination of net income in order to follov. the principle of matching costs and revenues. ine Com. income over the life of the property which gave rise pany's nrmcipal accountmg policies, including those to the investment tax credits. based on this concept, are described below. For purposes of computing income taxes, net de-preciable utility plant does not include the allowance Utility Plant-The cost of additions to utihty plant and for funds used during construction v<hich is capitalized replacements for retired property units is capitahzed for knancial statement purposes The tax effect result-Cost includes labor, material and an allocation of gen- ing from this dlference and certain other differences eral and administrative costs plus an allowance for in the depreciation bases is reflected currently in net funds used during construction as described later in income. this note Maintenance ar d repairs. including replace- Federal and state income taxes are allocated be-ment of minor items of property, are charged to mainte- and non-operating income and ex-nance expense as incurred When units of depreciable tween enses. operating' The tax effects relating to non-operating activ property are retired, the original cost and dismantling ties are included in Other income-Miscellaneous-net, charges less salvage, are charged to accumulated deprecwtion' Allowance for Funds Used During Construction-The Federal Energy Regulatory Commission ("FERC") Uni-Depreciation-For hnancial statement purposes de-form System of Accounts defines Allowance for Funds preciahon is provided over the estimated I,ves of the Used During Construction ("AFDC") as the net cost various classes of deprec able property by applying for the period of construction of borrowed funds used compomte rates on a straight-l;ne basis. Provisions for for construction purposec d a reasonable rate on deprecmt.on in 1979 and 1978 were equivalent to ap- other funds when so used. AFOC is capitalized at a ' proxanately 3A% and '.9% of the averago depreciable rate which is related to the approximate overall cost cost for electric and gas uhhty p! ant. respectively. of capital reduced by the income tax effect of the interest portion thereof. While cash is not reatized income Taerfor income ta< purposes, the Company currently from such allo' Nance, it is realized under the computes deprecmbon using the most hberalized lives rate-making process over the service life of the related and methods allowed by the Internal Revenue Service. property through increased revenues resulting from The tax effect of additional deductions for income higher rate base and higher depreciation expense. tav purposes which result from (a) use of hberalized The rate used during 1979 and 1978 in computing depreciahon method 3. (b) use of different book and AFDC by the Company was 7% (the effective after-tax tax ctoprec ab!e hvos mcluomq Class Life (ADR) Sys-rate) compounded semi-annually. - tems and (c) the amothzation of certain f acilities, is deferred and recognized in determmation of net in- in accordance with the November 28.1979 Ilhnois , come for f nancial statement purposes when book pro- Commerce Commission rate order, the Company has visions exceed deductions taken for tax purposes The excluded $97,064.000 of electric plant construction tax effect which results from the use of different book work in progress ("CWIP") from the base on which and tax depreciable hvc3 of gas utihty plant (other than AFDC is computed for the Clinton power station unit No. ADR) was not normahzed for hnancial statement pur- 1. Also in accordance with the June 16,1977 Illinois poses pnor to November,1979, but is being normahzed Commerce Commission rate order, the Company ex-subsequent thereto in accordance vath the provisions cluded $79.866.000 of efectric plant construction work of an lihnois Commerce Commission order in Novem- in progress from the base on which the AFDC was 20
computed for the Havana power station unit No. 6 of issuance and carry an interest rate equivalent to ohich was placed in service on June 22,1978. Since the prime rate in effect at the time of issuance, adjusted these orders authorized the inclusion of such expendi- to the prime rate in effect on the first day of each tures in the rate base upon which the Company realizes calendar quarter thereafter. The Company has unwrit-revenues there was no material effect on not income. ten agreements with banks committed for $80.000,000 of the total bank commitments to maintain average Unbilled Revenue-The Company records revenue as checking account balances equivalent to 10% of the bmed to its customers on a monthly cycle bilhng basis. commitments for borrowings from the banks or 15% At the end of each month, there is an undetermined of the borrowings outstanding, whichever is greater. amount of unbWed electric and gas service which has been rendered from the latest date of each cycle billing e madmum aggmgam amount of hem W to the month-end Revenues as determined by meters mw ngs at any monMnd Mng M aM GM was read but not billed at year-end are subject to income $34.145,000 and $21,465,000, respectively. The aver-taves. The income tax effect of this book-tax timing go daily short-term borrowings during these periods difference in the recognition of revenues is normalized. pproximated $12,000,000 and $13,100,000, respec-tively (ca!culated as an average of the daily borrowings Debt Premium and Discount-Bond premium, discount utstanding), with a weighted average interest rate and related expenses are being amortized on a straight- . and 7.9% respectively (calculated by divid-1:ne basis over the hves of the related issues. ing the interest expense during the period for such borrowings by the average short-term borrowings indi-Note 2-investments and Other Assets: investments and Other Assets are carried at cost- Note 4-Income Taxes: except for the Company's investment at December 31, 1979 and 1978 of $3.995,000 and $3,983,000, respec_ Income taxes included in the Statements of Income tively, in IP Gas Supply Company, a wholly-owned consist of the following components: subs: diary. The investment in IP Gas Supply Company Year Ended is for the purposo of acquiring interests in gas and December 31, oil leases. In accordance with an order from the 1979 1978 I!1 nois Commerce Commission, the accounts of the subsidiary are not consolidated with the accounts of (Thousands of Donars) the Company but are accounted for as an investment Current taxes-on the equity accounting method. Inc!uded in Operating Expenses and Taxes $19,051 5 9,509 Note 3-Short-term Loans and Compensating included in Other Income-Balances: Miscellaneous-net (0.037) (4,899) At December 31, 1979 notes payable consisted of Total current xes 10,014 4,610
$34.145,000 in commercial paper bearing interest at Deferred taxes-an average rate of 13.9% and matunng between Janu- Book-tax depreciation ary ?,1980 and February 29, 1980. At December 31-differences-net 14.240 15,764 1978 notes payable consisted of $10,000,000 in com-Certain overhead and
^ mercial paper bearing interest at an average rate of dismantling costs 10.7% and maturing between January 29,1979 and capitalized-net 4.395 4,511 February 13,1979. Book-tax revenue The Company had unused commitments of recognition differences (1,216) 209 S105,775,000 for short-term bank borrowings at De- 17,419 Total deferred taxes 20,484 cember 31,1979. Unused bank commitments are held In ax cmh availab!e to support the amount of commercial paper outstanding at any time. Bank borrowings under such m (net) 21,958 22,B3 commitments have a 360-day matunty from the time Total income taxes $49,391 S47,887 21
Notes (Continued)
!ncome taxes are less than the amount which would The Company also has a Tax Reduction Act Stock be computed by applying the statutory income tax Ownership Plan ("TRASOP"), permittin0 the Company rates to pre-tax income; the principal differences are a maximum additional investment tax credit of 1%
as follows: provided common stock of the Company equal in value Year Ended to the additional credit is contnbuted to the Trust. The December 31 TRASOP a!!ows an additional investment tax credit uo 1979 1978 to '2 o' provided that such amount is matched by (Th u ands of employee contributions and that common stock of the Computed tax expense at Company equal in value to the additional credit and statutory federal and state the employee contributions is contnbuted to the Trust. income tax rates $68.815 $65,228 Under this p an, 169,986 shares of common stock were designated for issuance at December 31,1979. Reductions in income taxes resulting from- Common stock issued during 1979 and 1978 war as IOHOWS: Allowance for funds used 14,487 1979 during construction 18,940 Other-net 484 2.854 Shares Arnount* Total income taxes $49.391 S47,887 Public offonngs 3,000,000 $64,650 Automatic Reinvestment and Note 5-Pension Costs: Stock Purchase Plan 771,796 15,509 The Company has pension plans covering all officers ESOP 21,439 454 and employees. Pension costs, which are funded as accrued. include current service costs plus unfunded TRASOP 220,027 4,838 prior service cess which are being amortized over a 4.013,262 $85.451 period of about 25 years. The Company's pension plans were amended d mng 1979 and 1978 to provide 1978 increased benefits. Dunng 1979, based upon recom- Shares Amount
- mendations by the Company's independent actuary " N 0'O actuarial assumptions were revised to reflect both ac tual Plan experience and actuarial projections. The Automatic Reinvestment and cost of the pension plans was $6,391,000 and $5,670,000 Stock Purchase Plan 194.447 4,515 during 1979 and 1978 respectively. Based on the ESOP 17,538 422 latest actuarial report, the unfunded prior service costs 163,062 TRASOP 4,058 at December 31,1979 were approximately $10,100,000.
Pension fund assets exceed the actuarially-computed 2,875,047 $67,870 value of vested benefits at December 31, 1979. "* "* "d*C'd *' Note 7-Sale of Interest in Clinton Power Station: Note 6-Capital Stock: On October 16, 1978, pursuant to agreements en-At the annual meeting of the Company on March 29, tered into in August,1976, the Company sold a 10.5% 1979 the s!cckho!dern voted to amend the Articles of interest to Soyland Power Cooperanve, Inc. and a 9.5% Incorporatten to (a) authorize an additional 10,000,000 nterest to Western Illinois Power Cooperative, Inc. in shares of common stock of the Company, (b) create the Clinton power station currently under construction. a new class of 5.000.000 shares of serial preferred The sales aggregated $103,980,000, substantially all of stock without par value, and (c) create a new class of which had been previously advanced to the Company. 5.000,000 shares of preference stock without par value. Subsequent to the sale each party is responsible for The Company has an Automatic Reinvestment and its portion of construction expenditures. The Company's Stock Purchase Plan and an Employee Stock Owner- 80 % interest in the power station including land, ship Plan ("ESOP") for which 395,308 and 37,063 nuclear fuel in process, and allowance for funds used shares, respectively, of common stock were designated during construction applicab!c to the Company's inter-for issuance at December 31,1979. est at December 31,1979 and 1978 was $701,710,000 22
and $490,152,000, respectively. The sa!es agreements 1979 1978 include the provisions that the Company will exercise (Thousands of Dollars control over construction and operation of the generat- Ex ept Earn n p, ing station, the parties will share electricity generated Second quarter
)
in proportion to their interests and the Company will Operating revenues $164,445 S148,632 have certain obligations to provide replacement power Operating income 22,430 23,818 to the cooperatives when the units are out of service. Net income 19,151 20,981 Net income applicable to Note 8-Commitments: common stock 15,226 17,056 Reference should be made to " Construction Pro. Earnings per common gram" and " Financing" in the forepart of this annual snare 54c 71c report for information concerning construction expendi- Third quarter tures. Operating revenues 167,929 160,458 Operating income 27,560 26.085 Note 9-Ouarterly Financial Information Not income 24,428 21,513 (Unaudited): Net income applicable to The following information, in the opinion of the Com. common stock 20,504 17,589 pany, includes all adjustments (which include only Earnings per common normal recurring adjustments) necessary for a fair share 71c 70c statement of the results of operations for the period. Fourth quarter 1979 1978 Operating revenues 190,253 164,999 (Thousands of Dollars 0 ' ' Except Earnings Not income 17,976 13,461 Per Common Share) Net income applicable to First quarter Operating revenues $229,195 $197,925 common stock 14,051 9,535 Operating income 34,256 Earnings per common 30,376 r 48c 37c Net income 29,780 26,406 Net income applicable to Quarterly earnings per common share are based on common stock 25,855 22,482 weighted average number of shares outstanding during Earmngs per common the quarter and the sum of the quarters may not equal share $1.01 99C annual earnings per common share. O 9 [ s !\ L Lrtu h g 23
Notes (Continued)
.,r j 1 Note 10-Segments of Business:
The Company if, a public utility engaged in the tric energy and the distribution and sale of natural generation, transmission, distribution and sale of elec- gas. Year Ended December 31,1979 Year Ended December 31,1978 Total Total Electric Gas Company Electric Gas Company
- Operating information-Operating revenues S 479,052 S272,770 $ 751,822 S 452,207 $219,807 5 672,014 Operating expenses, excluding provision for income taxes 343,592 243,484 587.076 327.374 193,932 521,306 Pre-tax operating income 135,460 29,286 164,746 124,833 25,875 150,708 Allowance for funds used during construction (AFDC) 38,525 206 38.731 28,823 106 28,929 Pre-tax operating income, including AFDC $ 173,985 S 29,492 203,477 S 153.656 S 25,981 179,637 Other (income) and deductions (10,043) (9,402)
Interest charges 63,757 53,892 Provision for income taxes 58,428 52,786 Net income per accompanying statements of income S 91,335 $ 82.361 Other information-Depreciation S 47.377 S 8,590 $ 55,967 5 43.316 $ 8.253 S 51.569 Capital expenditures S 270,806 S 20,806 S 291,612 S 296,597 5 15,831 $ 312,428 investment information-identifiable assets * $1,836,862 S266.463 $2.103,325 $1,603.847 5245,492 $1,849,339 Nonutility plant and other investments 8,663 7,892 Assets utilized for overall Company operations 102,664 81,275 - Total assets $2,214,652 $1,938,506
- Utility plant, nuclear fuel in process and acquisition adjustment less accumulated depreciation and amortization, fuel, natural gas stored underground and materials and supplies.
24
Management's Discussion and Analysis of the Statements of income Reference is made to the Statements of Income, Notes to Financial Statements. Electric Operating Statistics and Gas Operat.ng Statistics for information concerning the results of operations for the period 1975 through 1979. The factors having significant impact on the results of operations and earnings per common share since January 1,1977 are as follows: Operating Revenues Electric revenues increasod $68 6 milhon in 1978 and $26.8 mHlion in 1979 These increases were the result of general rate increases of 113% effective June 16,1977 and 10 9% effective November 30, 1979: rate increases to nine wholesale electric cooperative customers of 30% eifective June 1.1977 and 14.5% effective October 1, 1978; increases in kilowatt-hour sales of 4 8% in both 1978 and 1979: and the recovery of increased fuel costs. The rate increases, increased ki!owatt-hour sales and the recovery of increased fuel costs (calculated on the base cost of fuel in effect January 1,1977) accounted for approximately 23%,17% and 60%, respectively, of the 1978 revenue increase and 12% 45% and 43%, respectively, of the 1979 revenue increase. The major factors accounting for the 536 mit. ion ard $53 million increases in gas rnvenues in 1978 and 1979, respectively, were the recovery of the increased cost of natural gas in both years and a 10.3% increase in therm sa!os in 1978. Other factors affecting gas revenues were the rate order effective June 16,1977, the 7.9% gas rate increase effective November 30,1979 and changes in the hmited firm gas service rate in August,1977, 1978 and 1979. i Operating Expenses and Taxes The cost of fuel for electric plants increased $58.5 milhon in 1978 reflecting the continuing escalation of fuel pnces as wcll as an increase in kilowatt-hour generation. The increase of $18.5 million in 1979 resulted from htgher fuel costs and increased generation partially offset by the greater use of lower cost generating units. The credit for power interchanged-net increased about $16 million in 1978 as a result of the increased gen-erating capacity available for such sales to other utilitics a favorable market for interchange sales and higher prices for the energy sold due to increased fuel costs. The increase of $11 million in 1979 resulted principally from the continuing high level of sa!es to other utilities. The cost of gas purchased for resafe increased in 1978 as a result of higher prices paid for gas and increased therm sa!es. The 1979 increase primarily reflects higher prices paid for natural gas. The increase in other operating and maintenance expenses during 1978 and 1979 reflects increased wages and employee benefits as well as the continuing effect of the inflationary trends on all costs and expenses. Other operating expenses for 1978 also reflect the expenses incurred in the test!ng of Havana power station unit No. 6 prior to commercial operation on June 22. 1978. In addition, the 1978 maintenance expenses reflect the costs associated with the March and December,1978 ice storms. Maintenance expenses in 1979 reflect the increased cost of maintaining our generating capacity. Depreciation expense in 1978 and 1979 increased primarily as a result of the addition of Havana unit No. 6. General taves increased in both years primarily due to higher state and municipal public utility taxes result-ing from increased revenues and higher real estate taxes ref!ecting both increased assessed valuation and higher tax rates The 1979 increase 'vas moderated by the elim nation of the personal property and capital stock tax as of January 1,1979, partially offset by the replacement tax on invested capital effective July 1,1979. The investment tax credit-deferred (net) fluctuates based upon the level of construction expenditures, and was higher in 1978 due to the completion of Havana unit No. 6 and the ongoing construction of Clinton unit No.1. For a detailed analysis of income tax components, see Note 4 of " Notes to Financial Statements" Other Income The changes in the allowance for funds used during construction in 1978 and 1979 relate to the amount of construction work in progress; the discontinuance of the capitalization of a!!awance for funds used during con-struction on approximately $80 million of construction work in progress included in the rate base betv een June 16,1977 and June 22,1978 for Havana unit No. 6, and approximately 597 million of construction work in progress 25
L included in the rate base beginning November 28,1979, for Clinton unit No.1 as explained in Note 1 of " Notes to Financial Statements" The increase in miscellaneous-net in 1978 and 1979 reflects increased income tax reductions applicable to non-operating activities, principally construction projects. Interest Charges The increbe in interest on long-term debt in 1978 and 1979 reflects the issuance of additional long-term debt in May and November,1977, August,1978 and the third quarter of 1979, partially offset by the refunding of long-term debt in February,1978 and July,1979. Earnings Per Common Share The changes in net income applicable to common stock in 1978 and 1979 resulted from the interaction of all the factors discussed herein. The changes in earnings per common share in 1978 and 1979 also reflect the in-crease in the number of common and preferred shares outstanding. Two Year Dividends and Stock Prices by Quarters The Common Stock is listed on the New York Stock Exchange and the Midwest Stock Exchange. The prices below are the prices reported on the Composite Tape. The Preferred Stocks are listed on the New York Stock Exchange and the prices below are the prices on that Exchange. , 1978 Stock Prices 1979 Stock Prices 1 2 3 4 1 2 3 4
- Dividends High Low High Low High Low High Low High Low High Low High Low High Low Commor, S .57 2G% 24% 25% 23% 25W 23 25 % 21 % 233/4 21Ya 23% 20 23 % 21 22 17W 4 Ud% Pfd .51 25W 23% 23% 22% 23% 22 23 % 19 % 22% 20W 22% 20% 22W 19 20 % 16 %
4 2690 Pfd. .53 % 20 26 25 22W 26 24 24 21 % 23W 21 W 24% 21 24% 21W 20 17 % 4 70% Pfd 583'4 29 2718 28 24 W 28W 24h 27 24 25 24 25W 23 25W 24 24 19W 4 42% Pfd .55% 26W 26W 26% 24W 24h 23 26 21 23 22% 22W 22W 24 22W 20% 18W 4 20% Pfd .52 W 27 24 % 25 23 24% 23 24h 21 22 20% 22W 20W 23 20W 20 19 % 8 2493 Pfd 1.03 50 48 49% 45% 51 44 W 48% 42 45 % 42 % 46 % 42 % 45 % 42 42 35W 7.5G% Pfd 94 % 46 % 45 45% 42W 46% 41% 44% 40 42 % 41 42W 38% 43 39 37 32W _ 8 94% Pld 1.11 % 54 51 % 53 49 % 54 % 49 % 52 % 48 % 50W 48 50% 48 50 % 44 % 44 % 38 8 00% Pfd 1.00 49% 47% 48B 45% 48% 44% 47W 43% 445's 42W 45 43 % 43 % 4? 40 34
- The amount paid in each quartar dunng 1978 and 1979.
26
Supplementary information to Disclose the Effects of Changing Prices The following unaudited supplementary information is supplied in accordance with the requirements of the State-ment of Financial Accounting Standards No. 33 for the purpose of providing certain information about the effects of changing prices. This information should be viewed as an estimate of the approximate effect of inflation. The scope of this accounting requirement encompasses the restatement of the Company's utility plant on both a constant dollar and a current cost basis. Constant dollar amounts represent historical costs stated in terms of dol-lars of equal purchasing power, as measured by the Consumer Price Index for all Urban Consumers (CPI-U). Cur-rent cost amounts reflect the changes in cpecific prices of piant from the date the plant was acquired to the present. Constant and current dollar amounts differ to the extent that specific prices have increased more or less rapidly than prices in general. The current cost of utility plant, which includes land, land rights, intangible plant, property held for future use, c 'nstruction work ir' progress, and nuclear fuel in process represents the estimated cost of reproducing existing plant assets and was determined by indexing surviving plant using the Handy-Whitman Index of Public Utility Con-struction Costs. Accumulated depreciation was calculated by applying the historical depreciation rates to the esti-mated current costs of depreciable properties by year of addition. The current year's provision for depreciation stated in constant dollars and current costs was determined by applying the Company's composite depreciation rates to the indexed utihty plant amounts. Fuel inventories, the cost of fuel used in generation, and gas purchased for resale have not been restated from their historical costs. Regulation limits the recovery through the operation of adjustment clauses in basic rate sched-ules to the actual costs of fuel and purchased gas. For this reason, fuel inventories are considered monetary assets. As prescribed in Financial Accounting Standards No. 33, income taxes were not adjusted. Under the rate-making procedures prescribed by the regulatory commissions to which the Company is subject. only the historical cost of utility plant in recent years has been reflected in the rate base useo in determining the amount of return to which the Company is entitled. Therefore, the excess of the cost of utility plant stated in terms of constant dollars or current cost that exceeds the historical cost of utility plant is not presently being recovered in the Company's rates, and is reflected as a reduction to net recoverable cost. However, the Illinois Supreme Court issued a ruling in late 1979 which, in essence, required the Illinois Commerce Commission to utilize " fair value" concepts in computing the value of property, plant and equipment to be used for the purpose of establishing rates. The effect of this ruling on future rate-making cannot be predicted. To properly reflect the economics of rate regulation in the Statement of Income Adjusted for Changing Prices, the reduction of net utility plant to net recoverable cost should be offset by the gain frorn the decline in purchasing power of net amounts owed. During a period of inflation, holders of monetary assets suffer a loss of general pur-chasing power while holders of monetary liabilities experience a gain. The gain from the decline in purchasing power of net amounts owed is primarily attributable to the substantial amount of debt and preferred stock which has been used to finance utility plant. The Company is no longer required by Securities and Exchange Commission (SEC) regulations to report re-placement cost data. Under SEC regulations the concept of " replacement cost" represented the amourit that would have to be paid to obtain a new asset of equivalent operating or productive capacity, giving recognition to techno-logical improvements. As stated above, the data presented herein reflects only the costs, adjusted for price level changes, of reproducing existing utility plant. 27
Supplementary information to Disclose the Effects of Changing Prices (Continued) Statement of income Adjusted for Changing Prices FOR THE YEAR ENDED DECEMBER 31, 1979 (thousands oF DoLLAns) Conventional Constant Dollar Current Cost Historical Average Average Cost 1979 Dollars 1979 Dollars Operating revenues S 751.822 S 751,822 S 751,822 Fuel, purchased power and power interchanged-net. 173,294 173,294 173,294 Gac purchased for resale 191,296 191,296 191,296 Other operating and maintenance expense 111,294 111,294 111,294 Depreciation expense 55,967 109,655 126.916 General taxes 55,225 55,225 55,225 Income tax expense 58,428 58,428 58,428 Interest charges 52,546 52,546 52,546 Other income and deductions-net (37,563) (37,563) (37,563) 660,487 714,175 731,436 Income frorn operations (excluding reduction to not recoverable cost) S 91.335 S 37,647' S 20.386 Increase in specific prices (current cost) of utility plant held during the year" $ 208,301 Less increase in cost of utility plant adjusted for changes in gen-eral price level . 374,479 Excess of increase in general price level over increase in specific prices . . . (166,178) Reduction to net recoverable cost S(192,800) (9,361) (175,539) Gain from decline in purchasing power of net amounts owed 153,833 153.833 Net S (38.967) S (21,706)
- Includ:ng the reduction to not recoverable cost, the loss from operations on a constant dollar basis would have been aporoximately $155 million for 1979.
*
- At December 31, 1979, current cost of utility pl ant, not of accumulated depreciation was approximately $3 billion, while not histancal cost recoverabic through depreciation was approximately $2 billion.
1 28
Five Year Comparison of Selected Supplementary Financial Data Adjusted for Effects of Chr.nging Prices (IN THOUSANDS cf AVERAGE 1979 DOLLARS) For the Years Ended December 31, 1975 1976 1977 1978 1979 Operating revenues-Adjusted for generalinflation $552,033 $589.193 $680.239 $748.364 $751,822 Historical cost information adjusted for general inflation income frt . operations (excluding reduction to net recoverable cost) 37,647 Income per common share (after preferred stock dividend requirements and excluding reduc-tion to net recoverable cost) .78 Net assets at year-end at net recoverable cost. 617,585 Current cost information income from operations (excluding reduction to net recoverable cost) 20,386 Income per common share (after preferred stock dividend requirements and excluding redu.' ion to net recoverable cost) .17 Excess of increase in general price level over in-crease in specific prices after reduction to net recoverable cost 175,539 Net assets at year-end at net recoverable cost 617,585 General information Gain from decline in purchasing power of net amounts owed 153,833 Cash dividends declared per common share- _ Adjusted for general inflation 2.97 2.81 2.66 2.54 2.28 Market price per common share at year-end-Adjusted for general inflation 35.00 34.33 30.99 24.40 18.00 Average consumer price index 161.2 170.5 181.5 195.4 217.6*
- Estimated.
m 29
Electric Operating Statistics . B
,2 D
).h ff 6 IL hA .
d 1979 1978 1977 1976 1975 Revenues (Thoranis cf occw Residential $ 160,355 $ 159.493 $ 139.458 5 108,932 $ 104.609 Ccmmercial and smail poner 105,262 102,170 69,947 53,698 49,363 Large por.or and light 174,315 158.611 149.307 121,735 105,458 Other 8,137 7,631 G,28G 5,170 4,441 Revenues-ult: mate consumers 448,069 427,905 3G4,998 289,535 263.871 Rural cooperat;ves anJ mun;cipal uMities 27,790 21,448 15,853 10,920 9,359 Other electric utilities 59 GG 50 39 28 Miscellaneous 3,134 2,788 2 GGG 2.572 2.551
$ 479,052 $ 452,207 S 383,567 5 303,066 $ 275,809
==_
Customers at End of Year Residential 461,966 455,014 445,130 435 G11 426,062 Ccmniercial and sn all pcner 53,804 53,051 51,384 51,019 49,996 Large power and light 374 3G8 1,305 1,340 1,309 Other 714 699 692 694 689 516,858 509,132 498.511 488,664 478.056 Sales in KWH (Traun,dd Residential 3,737,245 3,770.703 3,632.898 3.271,719 3.277,064 Commercia: and sma!! pov er 2,408,131 2.383,521 1,690,894 1,405,389 1,380,771 Lmge power and hght 6,738,321 6.271,872 6,541,429 6,412,648 5,759.317 Other 282,848 271,853 260.263 247.208 222.810 Gales-u'timate consumers 13,166,545 12,097,949 12.131.484 11,337,054 10,640,562 Rural cooperativos and mun:cipal utthties 1,057,113 87',452 817,334 730,834 683,026 Other electric utihties 1,874 2,004 2,035 1,836 1,650 14,225,532 13.574,405 12.075 724 11,325,238 12 }50,853 Generated and Purchased in KWH thowdo Generated -- Steam 16,840,214 15,770,060 14,530,570 15,688,384 13,850.240 ' Hydro and intemal combust.on 55,241 38.039 74,117 55.844 45,795 Total generated 16,895,455 15,808.099 14 G04,687 15.744.228 13,890,035 Purchased and interchanged - net (1,666,889) ( 1,25G,163) (606,844) (2,707,988) (1.777.640) Total output 15,228,566 14,551.936 13.937,843 13.036,240 12.118.395 Less -used and unaccounted for 1,003,034 977,531 986.990 900.516 793,157 14,225,532 13.574,495 12.950.853 12.075,724 11.325,238 Peak Demand (native load) in KW m mdo 3,019
~
E[85 7 816 ~~ 23f0 ~376 2 Net Generating Capability in KW (1ho.nruo 3,db 3,815 3,41'U ~ Tiil 33M
~ = = - ==== = = . - , - - . =- .- -
Duc to a change in It c Companis rato structure in 1977, there was a reclassification of customers bet voon the commercial and ;ma'! pour category and the large power amt I;ght category for the years 1979 and 1978. As a resu!! of this reclassufica-t;on. only cuslomors having a domand of 500 K y or greater are class: lied in t.no large power and I:ght category. 30
ILLINOIS POWER COMPANY / ANNUAL nEPO9T 1973 Gas Operating Statistics H2l JJ !, 1979 1978 1977 1976 1975 Revenues (Thomros cf Detys) Residential -without space heating $ 2,056 S 1,758 S 1,819 $ 1,801 S 1,909 Mth space heating 124,354 105,484 91,798 74,521 65,338 Commercial-without space heating 2,858 1,722 1,4G9 2,005 1,508 with space heating 46,010 37,536 31,098 24,905 21,939 Inoustrial -non-interrupt.b!e 43,714 30,910 25,641 20,325 16,476 interrupttbte . 51,354 40.906 33.376 35,083 26,459 Revenues-u'timate consumers 270,346 218.316 185,201 158.640 133,689 Interdepartmental revenues-interruptible 2,365 1,058 75 60 42 Msce!!aneous 59 433 (1,456) (105) (589)
$ 272,770 $ 219,807 S 183.820 S 158,595 S 133,142 Customers at End of Year Resident al -without space heating
, 18,251 19,834 21.377 23,204 24,133 with space heating 326,816 319,968 313,900 308,578 302,772 Ccmmercial-w.thout space heating 2,048 2,112 2,192 2,465 2,507 w,th space heating 30,032 29,522 29.116 28,771 28,767 Industrial -non-interruptibte 480 470 457 457 223 interrupt.b'e 58 80 102 103 101 377,685 371,986 367,144 363,578 358,503 Sales in Therms (Thousands)
Residential -without space heat;ng 6,231 6,172 6,840 8.321 10,175 with space heating 459,329 469,906 436.838 433,993 420,819 Commercial-e,9thout space heating 10,586 7,986 7,554 12,820 11,441 with space heating 182,212 181,960 166.455 171,562 165,192 Industnal -non-interrupt:b!e 194,310 181,029 172,089 178,637 168.290 interrupt.bte 186,264 180.138 147,205 181.784 185.695 Sa!es-uit;ma+e consumers 1,038,932 1,027,191 936,981 987,117 961,612 Interdepartmental sales-interrupt b!e 13,141 8,034 693 720 654 1,052,073 1,035,225 937,674 987,837 962,266 Purchased and Produced-Therms (Thoucands) Purchased 1,118,246 1,087,749 1,024,805 1,012.047 1,009,171 Storage--net of (injected) and ".ithdrawn (30,203) (14,998) (57,182) 28.269 (340) Purchased gas dehvered 1,088,043 1,072,751 967,623 1,040,316 1,008.831 Produced 69 24 2.417 91 36 Total 1,088,112 1,072,775 970,040 1,040,407 1,008,867 Less--used and onaccounted for 36,039 37,550 32.366 52,570 46.601 1,052,073 1,035.225 937,674 987,837 962 266 31
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