ML19294A982

Annual Financial Rept 1979

ML19294A982
Person / Time
Site:	Dresden, Byron, Braidwood, Quad Cities, Zion, LaSalle
Issue date:	12/31/1979
From:	COMMONWEALTH EDISON CO.
To:
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ML17192A514	List: ML17192A513 ML19294A982
References
NUDOCS 8002260538
Download: ML19294A982 (24)

Text

Dear Stockholder:

As illustrated on the cover,1979 marked the 100th Second, while, as a result of TNil, the public has anniversary of Thomas Edison's deselopment of the become keenly aware of the risks of nudear pmver, we first practical incandescent light bulb.

beliese it also is developing an awareness that these Edison's remarkable lamp did more than light up risks must be compared with the great benefits of the world;it opened the door to the age of eieruicity.

nuclear generation and with the risks associated with Prior to that time, electricity was largely unknown.

other methods of energy production.

And like many unknowns, it frightened people.

For example, coal mining accidents and black lung When John Wanamaker & Company announced disease take hundreds of miners' lises eac h year.

in 1879 that electric arc lighting would replace gas NIoreover, the burning of c oal causes pollution, despite lights at its Philadelphia store, the news caused an advan(es in precipitator technology and other dean-uproar. Protesters took to the streets. The news media air systems. Although the nuning and burning of coal reported the protests and the public danger p > sed by cause more harm day in and day ou than nuclear the new te(hnology.

pmver,(oal's risks have been accepted because they are As we look back, this incident seems absurd. Eler-familiar and less frightening to the public.

tricity is an essential part of our lives. People not only The third reason Thil will be beneficialin the long anept it; they demand it. The public has learned that term is because it has focused attention on the im-the benefits of electricity far outweigh its risks.

portant role nudear power must play in the nation's Today, the technology under anack is nudear search for an adequate energy supply.

power. The pickets, protests and media reports have a The c hoice is not merely whether to be for or against familiar ring. Yet, just as electricity overcame its nuclear power. Rather, we must choose from an ex-critics, so also, in our judgment, will nudear power. It tremely limited number of alternatives for producing is the safest, deanest, most reliable and most additionat electricity between now and the year 2000.

economical way we have of producing electricity.

One such alternative is imported oil, which endan-While we do not minimize the seriousness of the gers national security, worsens 'he U.S. balance of accident at the Three N!ile Island (TNil) nudear payments deficit, and contributes to inflation and the power plant, the truth is that no one was injured.

instabdity of the dollar.

Indeed, in more than two decades of commercial Another alternative is to rely on those technologies operation in the U.S., no one has eser been injured by not yet adequately developed, which could lead to a reactor accident, although this is not to say that it power shortages, iising unemployment and a danger-could never happen.

ous downward economic spiral.

In the short term, Thil has slowed the development A third possibility is to develop only coal-fired of nuclear power. Ilowever, in the long term, we generation. Ilowever, the problem with this alter-beliese it will hase beneficial effects for at least three native is that although coal has vast potential, it can-not do the job by itself over the next 20 years or so.

reasons.

First, much has been learned from the accident, and Thus, it seems to me that the practical alternative for this knowledge is already being put to good use in increased power production is to use a combination of making nudear power an even safer te(hnology.

coal and nuclear power.

The number of in estigations completed or in The facts dearly demonstrate that nuclear power progress is impressive. llesides the Kemeny Commis-is dean, reliable and economical. A nation desperately sion (supported by 85 staff members and profession-searching for additional energy resources cannot turn als), several congressional task forces an.1 Nudear its back on nuclear power. Together with coal, it can Regulatory Commission study groups have thoroughly supply an increasing amount of the energy required to examined the accident and recommended ways to im-sustain a viable economy and pravide a better quality prove reactor safety.

of life for the American people during the remainder of in addition, various nongovernmental agencies, this century.

such as industry trade associations, the Electric Power Research Institute, individual utilities, independent Sinc erely, advisory panels (see page 5 for a discussion of the Edison panel report), and nudear equipment vendors have conducted studies and made suggestmns, or are m

---y the process of doing so. Some recommendations grow-Thomas G. Ayers ing out of these diverse examinations have already Chairman been adopted while others are being considered for fu-ture implementation.

800220063P 1

Commonwealth Edison Company /1979 in lleview SALES, REVENUES UP RATE INCREASE APPROVED Kilowatthour sales to ultimate consumers were up in April 1979, we applied to the Illinois Commerce 0.9 % in 1979, the smallest increase since the recession Commission for a S452 million rate int rease ami asked year of 1974. Because of a change from bi-monthly to that, pending completion of hearings on the full monthly billing in late N1ana, this increase refic<ts amount, half of the increase be placed in effect on an sales of about 625 million kilowatthours, principally to interim hasis. On September 12, 1979, the residential customers, whic h otherwise would not hase Commission granted us an interim increase of about been recorded until 1980. Without the change, sales to S45 million, effective October 15. Following that ultimate consumers would base declined about 0.1 %

disappointing decision, we suspended construction at in 1979. The slowdown in c(onomic a(tivity and an our Braidwood nuclear station and implemented exceptionally cool summer were factors limiting the limitations on hiring new employes.

rise in sales.

Combined with higher c harges for elec tric senice, On February 6,1980, the Commission issued its the sales increase produced an 11.4 % gain in 1979 final order granting the Corapany a rate increase of revenues. The table at the bottom of the opposite page S390 million, including the S45 million interim provides a breakdown of revenues and sales by (lass of im rease apprmed previously. The total int rease servite.

represents more than four-lifths of the increase we The number of customers ser ed at year-end was applied for in April 1979 2,919,000, up 44,000 over 1978.

EARNINGS DOWN Earnings on (ommon stock in 1979 were S2.51 per share, down 79e from the 53.30 per share carned in 1978. The sharp decline in carnings reflects continued inflation, increased punhased power costs, higher operating and interest expenses, and generating unit outages at several large coal-fired and nuc lear stations.

Increased provisions for dividends on preference sto(k, the lag in reemering higher 1979 fuel costs until 1980, and a greater number of common shares outstanding also contributed to the downtrend in per-share carn-ings. (For a more detailed analysis, see N1anagement's Discussion and Analysis of the Summary of Opera-tions on page 9.)

1979 IIighlights chaoue

^'eraxe 5ince Annual Change 1979 1978 Sin <c 1969 Net Income on Common Stock S215.0 millWn down 15.4"L up 6.9 ";

Earnings per Common and Common Equivalent Share S2.51 down 23.9"L down 0.4 "L Cash Dividends Paid per Common Share S2.60 up 8.3 %

up

1. 5 "L Electric Operating Revenues 52,720.9 million up 11.4 *L up 13.3 "L Sales to Ultimate Consumers 62.9 billion kwh up 0.9 ";

ap 3.7 "L Ascrage Residential Revenue

• 5.1le per kwh up 10.4 %

up

7. 5 '"o Average Residential Use 6,673 kwh down 0.4 ";

up 2.3 "/o Electric Customers at December 31 2.92 million up 1.5 "L up 1.4 "L Peak Load 13.8 million kw u p 0.6 ";

up 3.8 %

'Euludes beht bulb seni<c.

2

1979 FINANCINGS SET llECORD SIORE FINANCING REQUIRED 1979 was the heaviest year of outside finanting in the During 1980, we will need to raise about Si billion Company's history. During the year. we completed through outside financings. As this report went to rine major financings totaling mer 51.3 billion. The print, we were planning our first public finanting of presious high was S863 million raised through fisc the year-the sale of 8,000,000 shares of common finamings in 1978.

stock through underwriters on or about February 20 A list of major 1979 finan(ings is shown below. In The type and timing of additional financings in addition to the sale of 7,000.000 additional shares of 1980 are uncertain. They will depend on market common stoc k, the financings imluded two new series c onditions and other factors, including the Company's of preferen(e stot k and three tax-exempt pollution ability to sell additional first mortgage bonds under the control obligations.

terms of our mortgage.

SECURITIES RATINGS LOWERED in January 1979, a major rating agency reduced our Amount first mortgage bond rating from Aaa to Aa and our N!onth issue

( millions )

publicly held debenture rating from Aa to A. In January 6% % and 6%% Pollution Nmember, that agency again lowered our ratings, Control Obligations S

50 from Aa to A for our mortgage bonds and from A to February Common Stock 180 llaa for publicly held debentures. In June, another 51 arc h S9.25 Prefereace Stock 150 niajor rating service lowered the rating on our

"'"rtgage bonds from AA to AA,. Our pollution con-April 10"L Sinking Fund Debentures, Series 4 300 trol obligations and preferred and preference stoc ks also were downgraded on these o< ca sion s.

The June 9% % First Alortgage Bonds, Series 39 200 Company's continued heavy construction and August 6%% and 6%% Pollution financing programs, combined with inadequate rate relief from the Illinois Commer(c Commission, were Control Obligations 75 cited as principal reasons for the downgradings.

Nmember S11.70 Preference Stock 75 November 8%% and SS"L Pollution Control Obligations 50 December 12M"; Debentures, Series 5 250 Total 51,330 1979 REVENUES AND SALES Elect ric operating increase Kilowanhour Increase Resenues (1)

Oser Sales (1)

Oser (thousands) 1978

( millions) 1978 Residential S 912,771 11.7 %

17,753 kwh 1.2 "L Small commercial and industrial 895,363 9.8 "a 18,877 0.1 %

1.arge commercial and industrial 646,043 15.3 %

20,361 1.9 %

Public authorities 194,506 10.7 "L 5,513 1.1 %

• Electric railroads 11,124 15.0 %

348 Ultimate consumers 52.659,807 1 1.9 "L 62,852 kwh 0.9 %

Sales for resale 43,684 1,206 Other resenues 17,431 Total S2,720,922 64,058 kwh

'l)ctrease (I ) In ludes appoo,imatch $ H ' nulhon of addmonal riri tni operating resenues and about 63 rndhon c.f kihewaubours. poniipally residential, resulung from ibc hange to mombly frorn bi-monthh bdhng m lair Stan h 1979 3

lhe IDH-ton l ' nit I reactor i enel n uppend:d br}ae herng n'

,l set in ldat e In ode the containtnr ni striu ture at litarduwod j

s ta tio n, near lirarduund. Ilhnon. Con s t r u. tron on thc g

statwn \\ tv u 1,120.nou-kdowatt nu< lear unuts i..as aInant hall c ornfdo ted when unrk was suspended in &pternher lui!).

n Constreu tron n ra]>ec ted to rourne un the stat:Ig of 1980, f.dlowing II.c flhnon Cornrne rie C aninnuon i dernwn on February n,1980 to grant the <:ornpany addituanal rate rehrf IChicago 1nhune l'hoto) 4

[d'._

.9 The delays will significantly increase our (onstruc-tion costs and will be reflected in the higher electric bills of our customers, who will sorely miss the lower power costs these units wouhl hase prosided.

The new sersi<c dates for the six sihedulcd nmlear i

units under construction are as follows:

N heduled for Net Capability Unit Seni<c (kilowatts) 1.aSalle County 1 1980 1,078,000 1.aSalle County 2 1981 1,078,000 liyron 1

982 1,120,000 K

r E

.h Ilyron 2 1983 1,120.000 tr liraidwood i 1983*

1,120,000 h

liraidwood 2 1984*

1,120,000

• \\ssuries resurnption in spring 19W of ronuruoion susprnded in Septe.nher 19N.

NUCLEAll UNITS DELAYED The Company also has contrac ted for some equi [unent for two additional 1,120,000-kilowatt As previously annoumed, sc heduled service dates of nudm units at a proposed site in Carroll County the four nuclear units at our Ilyron and liraidwood (Ill.). Iloweser,,t has the option to can el or defer the i

stations were deferred for periods of from one to two two units during the next several years, when we will years due to licensing delays..I.he slippages were the haw a beuer view not only of our load and capacity result of transfers of Nmicar Regulatory Commission needs but of the nuclear regulatory (limate and our (NRC) staff resources from licensing actisities to the financial resources. Interstate Power Company and investigation of the.I.hree.\\lile Island nuclear power Iowa-Illinois G,as and Electric C,ompany w.ll have a i

plant accident in Pennsylsania. In addition, construc-one-fourth comb.ir.ed ownership interest in these units.

tion changes m.vol ing both L, nits I and

.3 at our In addition, some coal-b. red cycling capacity is likely to LaSalle C,ounty station have deferred their service be added in the late 1980s.

dates by nine and la months, respc<tively, and these dates could be further postponed in the NRC regula-

$4.5 IllLLION CONSTIlUCTION llUDGET tory process.

Subsequent to these annoumed delays, in Sep-Our five-year construction budget for the period tember the Company suspended ionstruction at liraid-1980-84 is S4.51 illion, including approximately 5340 wood station following the Illinois Commerce Com-million for ensironmental control fa(ilities. The mission's decision to allow only 1.65 % of the 9.2 %

budget in(ludes estimated year-by-year expenditures interim rate increase we applied for in April 1979. We for electric plant and equipment of S1,100 million in expect to resume (onstrmtion at liraidwood in the 1980, S1,200 million in 1981, S900 million in 1982, spring of 1980, following the Commission's detision S700 million ir, 1983 and S600 million in 1984.

on February 6,1980 granting the Company additional Construction expenditures in 1979 were S1,292 rate relief.

million.

4

EXPENSES RISE A number of recommendations were made by the p nel, which is satisfied that the imprmements can be Purchased power costs were up 221 % in 1979, reflect-m de while our nuclear plants are kept in operation.

ing had weather early in the year and generating unit One recommendation invol ed the separation of nu-outages at sescral large coal-fired and nuclear stations.

c!c r operati ns fr m other activities. Responding to A sigr.ificant amount of the power purchased from that recommendadon, we han pland au nuclear other utilities was bought at prices lower than we could have generated it ourselves.

engineem:g, licensing and operating responsibih, ties under one executive.

As shown ir the table below, expenses for fuel, Additionel actions have been taken or are under operation, maintenance, depreciation, and interest on c nsideration. I hese actions are in response to the debt also were higher in 1979. (For more information Pane s mommendations and those of the Kemeny on expenses, see Afanagement's Discussion and C,ommissi n,NuclearRegulatoryCommission (NRC),

Analysis of the Summary of Operations on page 9.)

and others, including several of our own Company task forces.

NUCLEAR SAFETY UPDATE I,or example, we are increasing the les el of technical At the April 18,1979 annual meeting of stockholders, expertise assigned to each control room shift. We also we reported on the steps being taken by the Company are increasing the use of control room simulators in the to further assure safe operation of our nuclear stations training of nuclear station personnel. New simulator.,

following the Three Alile Island (TN1I) nuclear plant are now planned for our LaSalle County and Byror./

accident in Pennsylvania. One such step was the Braidwood stations. These simulators will be compar-formation of an independent senior advisory panel of able to our Zion and Dresden station simulators, eminent scientists and engineers to review our rnclear which have proven to be excellent training devices.

safety systems, equipment, procedures and plans for The new simulators will be tailored to the individual response to emergencies requirements of the new plants.

The advisory panel delivered its report. :d recom.

Other Company actions imin6e the review and mendations in late June 1979. The panel found that strengthening of operatiag procedures; plant modifica-the Company is doing a creditable job in the man-tions to make abnormal conditions easier for operators agement, operation and maintenance of its nuclear to recognize and respond to; and revision of emergency plants and in future planning for nuclear power. It plans to reflect the experience at Th!!, including es-also found high standards of quality in our safety pro-tablishment of news information and technical support grams fo. the public and employes as well as in our centers, and improvements in emergency communica-training programs, emergency plans and in the profes-tion systems and procedures. Also, we are working sionalism of control room staff. The panel concluded with the State nf Illinois on expanded off-site monitor-we should not alter our goals for producing electricity ing capabilities, and assisting the state in revising its from nuclear power.

emergency plans to meet new NRC guidelines.

1979 ELECTRIC OPERATING 1979 Increase AND CERTAIN OTIIER EXPENSES (thousands)

Over 1978 Fuel S 962,742 27.7 %

Purchased and Interchanged Pawer (net) 163,205 221.0 %

Operation 406,179 14.7 %

hiaintenance 179,124 8.9 %

Depreciation 250,122 9.3 %

Total Electric Operating Expenses

$1,961,372 26.4'7o Taxes (including deferred income) 357,772 17.7 %

• Interest on Debt 334,776 30.2 %

• Decrease 5

At the industry level, we are participating in a Edward Byron Smith, Chairman of the Executise number of ac tivities designeci to improve the lesel of Committee of Northern Trust Corimration, retired operations at all nuclear plants. One suc h attivity was from the lloard after 19 3 cara of senit e.

the recent formation of the Institute for Nuclear Power During the year, Vite-Chairman Gordon R. Corey Operations (INPO) to promote high training and retired. Nir. Corey continues to sene on the Board.

operating standards on an industrywide basis. Another Vic e-Presidents Glen W. Beeman and 1.udwig F.

was the establishment of the Nuclear Safety Analysis 1.is< her also retired. Cordell Reed, formerly N!anager Center (NSAC), which has completed a detailed te(h-of Nmlear Operations, and James W. Johnson, nic.d analysis of the TNil anident. NSAC is currently formerly Assistant Vice-President, were ele ted Vice-undertaking a series of follow-on studies to analy/c the Presidents. Preston H. Kavanagh, previously General

" lessons learned" and determine the actions necessary Purt basing Agent,was named Nianager of Purc hasing.

to prevent or minimize such problems in the future.

O'CONNOlt ELECTED CllAlllNIAN Tile CONSERVATION ENERGY

.N H d M Dimms e puxy 31,1980, elected Uranium and < oal are the major fuels we use to make James J. O'Connor Chairman and < hief executise ein tricity. Together, they account for about nine of ollicer of the Company, suo ceding Thomas G. Ayers, escry 10 kilowatthours Edison produces. Their use who has held that position since 1973. The c hange is consenes the less abundant fuels. In 1979, for exam-efic(tive with Alr. Ayers retirement from a< tise servi (e plc, mer 95 million barrels of oil wouhl hase been on N! arc h 1,1980.

required to generate the electricity we produced with Nir. O'Connor,42 will be the youngest < hief exn u-uranium and coal. The cost of substituting oil, assum-t;te in the Company's history. A graduate of Iloly ing it were available and we could burn it, wouhl base Cross College, liarvard flusiness Si hool, and George-increased our 1979 fuel expenses by an estimated S1.5 town Unisersity I.aw S< hool, he joined Edison in 1963 billion.

and was ein ted Vi< c-1 resident in 1970 and Executive Vice-President in 1973. Alr. O'Connor became Presi-TAX STATUS OF 1979 DIVIDENDS dent in 1977 and a Director the following year. Ile will retain the title of President.

We have calculated th it portions of the dividends paid Nir. Ayers began his career in 1938 with I,ubh,e in 109 on all dasses of our stm k represent a return of h

C of Northern Illinois, a former Edi-capital (rather than ordmary disidend income) f.or aidig s wmWM VimPmidem in 1953, federal income tax purposes. I'he portiens if those F

N'i P ids W IW and President in disidends considered a return of capital were comput-Nm N-a Di b 19M ad will ed by the Company and reported as ' nontaxable dis-tributions" on the substitute Form 1999 statements conunue to sene m that capuity.

mailed to stoc kholders in late January, along with a letter of explanation. Stoc kholders who did not receive their statements or the explanatory letter shouhl con-tact Commonwealth Edison Shareholder Services,

/

P.O. Box 767, Chicago, Illinois 60690.

NEW TRANSFER AGENT NANIED Effectise November 1,1979, The First National llank g

of Chicago was appointed Chicago Transter Agent for

-A the Company's stock and Chicago Warrant Agent for g

our common stock purchase warrants, repla(ing The

-_c Northern Trust Company. A complete listing of

,~t Agents and Registrars is on the inside front cover of this reimrt.

Nir. O'Connor Af r. Ay ers llOARD, NIANAGENIENT CIIANGES in &- Rwd mim Wlue 11. llehnke, Jr.,

Donahl P. Jacobs, Dean of the J. L Kellogg Graduate former Executive Vice-President, was elected Vice-Sc hool of Nianagement at Northwestern University, Chairman, and llyron I.ee, Jr. and Hide 1. Thomas, was elected to the lloard of Directors for the first time former Vice-Presidents, were elec ted Executive Vice-at the annual meeting on April 18,1979. At that time, Presidents.

6

Stock Price and Dividend Information The Company's u,mnmn stu k, warrants 51425 (omert.

Stu k Ex< hanges, with the tic ker s> mluil CWE.

ible preferred sim k and 51.90,52 00,52.375,52 875,57.24, Sim k pri< r and disidend pay ment data on all classes of 58.38,58.40,58.40 Series 11 and $11.70 cumulatisc pref er-ihr Company's sim k for the years 1979 and 1978 are en< r sim ks are listed on the New York, Niidwest and Pacihr presented below.

Ist Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Year liigh I.ow liigh 1.ow liigh I.ow liigh 1.ow liigh Low 1979 Nfarket Price-5 per Share (1)

CONINION 27 % 25%

25% 22 %

25 22 %

23% 19 %

27 % 19 %

$1.425 CONVERTillEE PREFERRl;D.

20 % 18 %

19 % 17 %

19 % 16%

17 % 15%

20 % 15%

CUNIUI.ATIVE PREFERENCE

$1.90 Series 20 % 18 %

20% 18 %

20 % 17 %

18% 14 %

20 % 14 %

1.96 Series (2) 2.00 Series 21 % 20 %

21 % 19 %

21 % 18 %

19 15%

21 % 15%

2.375 Series 26% 25%

26% 25%

26% 24 %

24 % 19 %

26 % 19 %

2.875 Series 28 % 26%

27 % 25 %

28 25%

26% 23 28 % 23 7.24 Series 78 74 %

76% 74 76% 71 71 58 78 58 8.20 Series ( 3) 8.38 Series 91 % 85%

89 % 83%

89 % 83 83 63%

91 % 63%

8.40 Series 89 87 89 % 87 h9% 85 84 64 %

89 % 64 %

8.40 Series 11 98 % 96 99 96%

99 % 95 %

95 92 99 % 92 8.85 Series (3) 9.25 Series (3)

II.70 Scrics(4 )

1978 Nfarket Price-$ per Share (l)

CONINION 29 % 26%

28 % 26 4 28 % 26 27% 24 %

29 % 24 %

$1.425 CONVERTilll.E PREI ERRED.

20 % 19 20 4 19 %

21 19 %

19 % 18 %

21 18%

CUNIUI.ATIVE PREFERENCE 51.90 Scries 22 % 21 %

21 % 20 %

22 % 20 21 % 19 22 % 19 1.96 Series (2) 2.00 Series 23 4 22 %

23 21 %

23% 21%

23 20 %

23% 20%

2.375 Series 27% 26%

27 25%

27 % 26 27 % 25%

27 % 25%

2.875 Series 32% 30 %

31 % 29 %

31 29 %

30 % 26%

32 % 26%

7.24 Series 84 % 82 %

83% 77 %

84 % 77%

83% 76%

84 % 76%

8 20 Series (3) 8.38 Series 98 95%

96% 90%

98 % 89 %

96 % 88 98 % 88 8.40 Series 97 % 95 95 90 4 100 % 90 98 87 100 % 87 8.40 Series 11 97 96 102 % 96% 102 % 95% 102% 954 8.85 Series (3)

Dividends Paid per Share CONINION I979 65v 65v 65(

65c

$2.60 1978.

60e 60e 60(

60c

$2.40 PREFERRED AND PREFERENCE.Ibidends paid in 1979 and 197M at regular indicated quarterly rates, ex<cpt for the following prorated initial disidend pay mentt 52.36 per share on the 58 40 Series 11 vm k in the 3rd quarter of 1978 52.3327 per share on the 58.85 sun k in the 4th quarter of 1978, and

$31699 per share on the 59.25 sim k in the 3rd quarter of 1979. The imtial disid-nd on the

$11.70 sim k, issued Nmember 15,1979, was a prorated payment of $2.48 per share on February 1,1980.

( I ).k reported on the N.Y.S.E. -Com;=>siac Transartmns tape.

(2) Series traded mer-the-<uunter; bid and asked prites not regularly quoted (3) Series prisately plaird and therefore not traded (4 ) N.Y.S.I' trading began in January 1980.

7

5-Year Summary of Operations

't he following summary presents in wndensed form the summary should be r 'd in wnjunnion with the Gnantial results of operations of the Company and subsidiary statements and notes thereto appearing on pages 10 through companies for the fise years ended December 31,1979. This 20 of this Annual Report.

1979 1978 1977 1976 1975

-Stillions of Dollars-Electric operating revenues.

52,720.9 52,442 8 52,095.0 51,908.2 51,722.3 Electric operating expenses and taxes:

Fuel 5 9628 5 7538 5 592.3 5 489.1 5 411.8 Purchased and interc hanged power-net.

163 2 50.8 71.3 46.9 47.9 Operation.

406.2 354.3 307.8 286.4 272.3 hiaintenance 179.1 164.5 142.9 121.2 127.8 Depreciation 250.1 228.9 212.4 196.9 180.4 Taxes (except income).

305.7 320.9 280 4 250.7 233.5 inwrne taxes (current and deferred).

122.7 162.3 103.6 141.5 134.3 Imestraent tax credits deferred-net

( 4.0 )

32.5 57.3 45.2 23.9 52,385.8 $ 2,068.0 51,768.0 51,577.9

$ 1,4 31.9 Electric operating income.

5 3351 S 374 8 5 3270

$ 330.3 5 290.4 Other income and deductions:

Interest on long-term debt S (298.3) 5 (240.9) $ ( 204.1 ) 5 (167 8) $ (139.2 )

Interest on notes payable

( 36.4 )

( 16.2 )

( 10.2 )

( 5.0 )

( 10.0 )

Allowance for funds uvd during construction.

222.1 159.3 104.9 66.7 48.1 Current income tax cr dits applicable to nonoperating activities.

77.3 51.3 35.9 21.2 13 0 hiist ellaneous-net.

( 3.1 )

( 7.3 )

( 6.7 )

( 3.6 )

4.6 5 ( 38.4 ) $ ( 518 ) $ (80 2) 5 ( 88.5 ) $ (83.5)

Net income.

S 296.7 5 321.0 5 246.8 5 241.8 5 206.9 Provision for dividends on preferred and preference stocks 81.7 66.9 54.1 48.5 42.8 Net income on common stm k.

$ 215.0 5 254.1 5 192 7 5 193.3 5 164.1 Average number of wmmon and common equivalent shares outstanding (in millions) 8;.8 76.9 67.4 60.5 55.7 Earnings per mmmon end common equivalent share (in dollars) 52.51 S3.30 S2.86

$3.20

$2.95 Cash disidends declared per common shae (in dollars) 52.60 52.45

$2.40 52.40

$2.30

( ) Indicates deduction.

DIVIDEND REINVESThlENT PLAN quire additional shares at the full market price.

The Automatic Dividend Reinvestment and Stock Participating stm kholders pay no brokerage com-Purchase Plan gained over 5,000 new participants missions or bank sersice fees for purt hases made in 1979, with total enrollment at year-end under the plan. Participants have purchased over numbering close to 37,000 holders of our common Sl18 million c,f stock under the plan since its incep-stock.

tion in 1974.

Under the plan, participants purchase additional A prospc(tus describing the plan and an common shares by reinvesting their quarterly com-enrollment form are available to interested common mon stoc k dividends at a 5"' discount from the mar-sto( kholders upcn request to Commonwealth o

ket price. They also may make optional cash I;dison Sharchi.ider Sers ices, P.O.

Ibx 767, payments of from S25 to S3,000 per quarter to ac.

Chicago, Illinois 60690.

8

1 Management's Discussion and Analysis of payroll costs due to annual wage rate increases; increased the Summary of Operations employe benefits due to renegotiated agreements covering pensions and other matters; extensise merhaul and repair The following factors had a major impact on thanges in the costs incurred at generating stations; and increased expenses results of the Company's operations during the years 1979 due to the implementation of monthly billing procedures.

and 1978:

Operation and maintenance expenses increased Electric Operatmg Revenac3. Operating resenues in-

$68,100,000 in 1978 as a result of additional plant and creased $278,100,000 in 1979, of which approximately equipment in servi (e, including two additional generating 585,200,000 resulted from rate increases ef fec tise December units placed in service at Collins station in 1978; increased 14, 1978 and October 15,1979, $160,500,000 from in-payroll costs due to annual wage rate increases, more per-creased fuel adjustm-nt charges because of higher fossil fuel sonnel principally for nudear stations and increased excess costs, 533,700,000 from the change from bi-monthly to time; and extensive merhaul and repair costs.

monthly billing of residential and certain commercial cus-Depreciation expense increased $21,200,000 in 1979 and tomers and $8,400,000 from the transfer of resenues from

$16,500,000 in 1978 principally from additions to plant and resale customers which had been recorded in other deferred equipment in service, including new generating facilities.

credits pending a final federal regulatory decision on revised The average depreciation rate increased from 3.59% in wholesale rate schedules, reduced by 59,700,000 from 1977 to 3.63% in 1978 and to 3.68% in 1979.

decreased kilowatthour sales (excluding the effect of the Taxes (except income) decreased $15,200,000 in 1979 (hange from bi-monthly to monthly billing) and other due to the climination of personal property taxes which items. Reference is made to Notes 13 and 14 of Notes to were abolished January 1,1979 by the Illinois Constitution.

Financial Statements.

This elimination was partially offset by the Illinois invested Operatiag resenues increased $347,800,000 in 1978, of capital tax which became clTective July 1,1979 and by in-which approximately $141,600,000 resulted from rate in-creased revenue taxes as a result of an 11 % growth in reve-creases effective October 14,1977 and December 14,1978, nues. Reference is made to Note 12 of Notes to Financial

$ 150,400,000 from increased fuel adjustment (harges be-Statements.

cause of higher fossil fuel costs and $55,800,000 from in-Taxes (except income) increased $40,500,000 in 1978 creased kilowatthour sales and other items.

primarily due to increased property taxes as a result of addi-Electric Operating Expen3es and Taxe3. Fuel expense in.

tional plant and equipment and generally higher property creased $209,000,000 in 1979 resulting from a 39% in.

tax rates and to increased resenue taxes as a result of a 17 %

crease in the aserage cost of fuel consumed which was sig.

growth in resenues.

nificantiv affected by a decrease in lower (ost nuclear gener.

Interest on Debt. Interest on long-term debt increased ation primarily in the quarters ended h! arch 31,1979 and 557,400,000 in 1979 and $36,800,000 in 1978 and inter-December 31,1979. In addition, in< reases in fuel costs were est on notes payable increased $20,200,000 in 1979 due to prolonged generating unit outages and severe and $6,000,000 in 1978, because of greater amounts of weather and transportation problems early'in 1979, which debt outstandmg and higher interest rates. During 197o affected fossil fuel plants and required the burning of higher 1978 and 1977: average long-term debt outstanding wa3 priced fuels.

$3,895,445,000, $3,306,410,000 and $2,908,126,000, re-Fuel expense increased S161,500,000 in 1978 resulting spectively, and the average interest rates thereon were from a 6% increase in generation, and a 20% increase in the 7.66%,7.29% and 7.02%, respectively; and average notes aserage cost of fuel consumed which was moderated by an payable outstanding was $325,719,000, S206,563,000 and

~

increase in lower cost nuclear generation.

$ 183,866,000, respectively, and the average interest rates thereon were 11.18%,7.83% and 5.52%, respectively.

Purchased and interchanged pmvu expense increased 5112,400,000 m 1979 as a result of, creased kilowatthour OMer hems. The increases of $62,800,000 in 1979 and m

$54,400,000 in 1978 in the amounts of allowance for funds purchases primarily during the quarters ended N! arch 31, used during construction primarily reflect increases in the 1979 and L)ecember 31,1979 due to prolonged generating levels of investment in construction work in progress and unit outages. The quarter ended NIarch 31,1979 was also changes in the annual rates as discussed in Note 1 of Notes significantly alTected by prolonged severe weather which to Financial Statements.

impaired barge and rad deliveries of coal and oil to fossil-fueled generating stations and hampered coal handling Earnings Per Common Share. Earnings per common share decreased 50.79 in 1979 due to a $24,300,000 decrease operations. Sfost of the kilowatthour purchases in 1979 were at prices lower than could have been generated on the in net income as a result of factors discussed above, an in-crease of $14,800,000 in the provision for dividends on Company s system at the time of purchase.

preferred and preference stocks and an 8,900,000 increase Purchased and interchanged power expense decreased in the average number of common shares outstanding.

520,500,000 in 1978 as a result primarily of an increase in Earnings per common share increased 50.44 in 1978 due energy supplied to other utilities, much of it emergency to a $74,200,000 increase in net income resulting from the energy during the prolonged coal strike and extreme cold increases in electric operating revenues and allowance for weather early in 1978.

funds used during construction and from other factors dis-Operation and maintenance expenses increased cussed above. This increase was partially offset by an in-566,500,000 in 1979 as a result of additional plant a crease of $12,800,000 in the prmision for dividends on equipment in service, including an additional generating preferred and preference stocks and a 9,500,000 increase in unit placed in service at Collins station in 1979; increased the average number of common shares outstanding.

9

Commonwealth Edison Company and Subsidiary Companies Statements of Consolidated Income 1979 1978

-Thousands of Dollars-ELECTRIC OPERA IING REVENUES (Notes 13 and 14).

52,720,922

$2,442,788 ELECTRIC OPERATING EXPENSES AND TANES:

Fuel (Notes 1 and 19)

S 962,742 S 753,800 Purchased and interchanged power-net 163,205 50,845 Operation 406,179 354,249 N1aintenance.

179,124 164,491 Depreciation (Notes 1 and 19).

250,122 228,871 Taxes (except income) (Note 12) 305,705 320,876 Income taxes (Notes 1 and 11)-

Current-Federal 61,813 70,050

- State.

8,711 9,439 Deferred-Federal-net 46,119 76,145

-State-net 6,093 6,691 Investment tax credits deferred-net (Notes I and 11)

(3,981) 32,537

$ 2,385,832 S2,067,994 El.ECTRIC OPERATING INCONIE S 335,090

$ 374,794 OTilER INCONIE AND DEDUCTIONS:

Interest on long-term debt.

5 (298,354) $ (240,936)

Interest on notes payable.

(36,422)

(16,171)

Allowance for funds used during construction (Note 1)-

llorrowed funds, net of incorne taxes 68,859 44,597 Equity funds.

153,269 114,679 Current income tax credits applicable to nonoperating activities (Notes 1 and 11) 77,305 51,332 Niiscellaneous-net (3 069)

(7,337) 5 (38,412) S (53,836)

NET INCONIE.

S 296,678 5 320,958 PROVISION FOR DIVIDENDS ON PREFERRED AND PREFERENCE STOCKS.

81,722 66,905 NET INCONIE ON CONINION STOCK S 214,956 S 254,053 AVERAGE N'JN!!!ER OF CONINION AND CONIN10N EQUIVAl ENT SilARES OUTSTANDING (in thousands) 85,759 76,939 EARNINGS PER COh!NION AND CONINION EQUIVAI.ENT SilARE (Note 1).

52.51 S3.30 CASil DIVIDENDS DECI.ARED PER CONINION SilARE S2.60

$2.45

( ) Indicates deduction.

The accompanying Notes to Financial Statements are an integral part of the abme statements.

Report of Independent Public Accountants To the Sto(kholders of Commonwealth Edison Company:

We have examined the consolidated balance sheets and tests of the accounting records and such other auditing statements of consolidated capitalization of Commonwealth prm edures as we considered necessary in the circumstances.

Edison Company (an Illinois corgmration) and subsidiary In our opinion, the financial statements referred to abcve companies as of December 31,1979, and 1978, and the present fairly the financial [msition of Commonwealth related statements of consolidated income, retained earn-Edison Company and subsidiary companies as of December ings, premium on common stmk and other paid-in capital, 31,1979, and 1978, and the results of their operations and and (hanges in financial position for the years then ended.

changes in their financial position for the years then ended, Our examinations were made in accordance with generally in conformity with generally accepted accounting principles accepted auditing standards and, accordingly, included such applied on a consistent basis.

, 1 85.

E I ir y

10

Consolidated Balance Sheets December 31, 1979 1978

-Thousands of Dollars-ASSETS UTILITY PLANT (Notes 1,8,16 and 19):

e Plant and equipment, at original cost (includes construction work in progress of $3,296 million and S2,685 million, respectisely).

S10,810,932

$9,573,981 Less-Accumulated prosision for depreciation 2.096,394 1,893,353 5 8,714,538 57,680,628 Nuclear fuel, including leased fuel, at amortized cost (No:e 15).

359,767 319,210 S 9,074,305

$7,999,838 Less-Accumulated deferred income taxes (Note 2) 839,199 799,062 5 8,235,106 S7,200,776 POLLUTION CONTROL CONSTRUCTION FUNDS IIELD IW TRUSTEE 5

647 S

5,150 INVESThlENTS:

Subsidiaries not consolidated (Note 1)

S 178,619

$ 154,849 Other imestments, at cost.

81,586 59,341 S 260,205 S 214,190 CURRENT ASSETS:

Cash (Note 9).

S 14,804 5

13,084 Temporary cash investments, at cost which approximates market.

120 4,572 Special deposits 12,643 12,500 Receivables,less provision for uncollectible accounts 249,773 210,998 Coal and fuel oil, at average cost 299,800 175,259 h!aterials and supplies, at average nst 65,415 61,807 Prepayments 5,040 6,209

$ 647,595 S 484,429 DEFERRED CilARGES.

S 29,062 S

19,636 5 9,172,615

$7,924,181 LIABILITIES CAPITALIZATION (see accompanying statements):

Commen stock equity 5 2,534,043

$2,293,311 Preferred and preference stocks without mandatory redemption requirements.

490,300 513,274 Preference stock subject to mandatory redemption requrements.

585,567 369,244 Long-term debt 4,281,927 3,422,507 Nuclear fuel lease obligation 3,458 S 7,891,837

$6,601,794 CURRENT LIABILITIES:

Notes payable (Note 9)

S 360,540 5 325,545 Current maturities of long-term debt.

49,080 139,572 Accounts payable.

260,807 189,456 Accrued interest.

85,531 81,844 Accrued taxes.

123,378 191,926 Dividends payable.

80,098 68,852 Other 48,675 56,235 5 1,008,109

$ 1,053,430 DEFERRED CREDITS:

Accumulated deferred imestment tax credits (Note 1)

S 241,387 5 245,370 Other (Note 13) 31,282 23,587 5 272,669 5 268,957 COhlhilThlENTS AND CONTINGENT LIA151LiTIES (Note 17)

S 9,172,615

$7,924,181 The accompanying Notes to Financial Statements are an integral part of the alxne staternents.

11 4

a

Statements of Consolidated Capitalization December 31, 1979 1978

-Thousands of Dollars-CONIN10N STOCK EQUITY (Notes 3,4 and 5):

Common stu k,512.50 par value per share-Outstanding _87,883,260 shares and 78,050,252 shares, respettisely S1,098,541 S 975,628 Premium on common stmk and other paid-in rapital 818,929 687,100 Treasury sim k, at cost.

(6)

(7)

Capital sim k and warrant expense.

(13,417)

(12,127)

Retained earnings 629.996 642,717 S2,534,043

$2,293,311 PREFERRED AND PREFERENCE STOCKS WITilOUT N1 ANDATORY REDEN1PTION REQUIREN1ENTS (Notes 3 and 6):

Preference stm k, cumulatise, without par value-cutstanding-10,499,549 shares S 432,320

$ 432,320

$1.425 convertible preferred simk, rumulatise, without par value-Outstanding-1,823,280 shares and 2,545,723 shares, respectisely 57,980 80,954 Prior preferred stmk, cumulatise, $100 par value per share-no shares outstanding.

S 490,300 S 513,274 PREFERENCE STOCK SUBJECT TO NI ANDATORY REDEN1PTION REQUIRENIENTS (Notes 3 and 7):

Preference stmk, cumulative, without par value-Outstanding-10,200,000 shares and 8,250,000 shares, respertisely S 585,567 S 369,244 LONG-TERN! DEBT (Note 8):

First mortgage bonds:

N1aturing 1979 through 1984-7.55% due April 1,1979.

5 5

14,504 9% duc June 15,1979 125,000 0%% duc July 1,1980 49,009 49,009 8% To due April 1,1981.

39,269 39,269 3%% due January 1,1982 4,000 4,f4)0 3% % duc July 1,1982 40,000 40,000 8% duc October 1,1982 99,695 99,695 9To due August 1,1983.

125,000 125,000 3% due N!ay 1,1984.

50,000 50,000 9%% duc June 15,1984.

200,000 N1aturing 1985 through 1994-3% to 5.80%.

294,000 294,000 N!aturing 1995 through 2004-5% % to 9%%

950,000 950,000 N1aturing 2005 t'

> ugh 2008-8% % to 9% %

855,000 855,000

$2,705,973

$2,645,477 Debentures, due December 15,1986-12M%

250,000 Sinking fund debentures, duc 1996 through 2004-2% % to 10%

1,064,619 771,876 Sinking fund debentures, due 2008 through 2011-3%% to 4%%

53,838 56,002 Pollution control obligations, duc 2004 through 2009-5%% to 8M%

275,000 100,000 Other long-term debt.

2,198 2,266 Current maturities of long-term debt included in < urrent liabilities.

(49,080)

(139,572)

Unamortized net debt discount and premium.

(20,621)

(13,542) 54,281,927 53,422,507 NUCLEAR FUEL LEASE OBLIGATION (Note 15).

5 S

3,458 57,891,837 56,601,794

( ) Indicates deduction.

The acrompanying Notes to Financial Statements are an integral part of the alue statements.

12

Statements of Consolidated 1979 1978 Changes in Financial Position

- rhousands of Doitars-FUNDS PROVIDED BY:

Current operations-Net income.

S 296,678 5 320,938 Depreciation and amortization 329,421 309,331 Deferred income taxes and insestment tax credits-net 54,445 118,083 Equity comix>nent of allowance for funds used during construction.

(153,269)

(114,679)

Other non-cash items-net (5,384)

(5,010)

Funds prosided internally S 521,891 5 628,683 Issuance of securities-1.ong-term debt 916.223 545,375 Capital sto< k.

454,032 348,423 Income tax deferrals applicable to prior years.

(5,376)

Increase in short-term borrowings 34,995 98,210

$ 1,921,765 51,620,691 FUNDS APPLIED TO.

Construction expenditures.

S1,292,176 51,317,207 Nuclear fuel expenditures.

139,620 160,110 Equity component of allowance for funds used during construction.

(153,269)

(114,679) 51,278,527 51,362,638 Cash disidends declared on capital stak 309,105 257,529 Retirement of first mortgage bonds for cash.

139,504 83,321 Redemption of preference simk.

7,230 Insestment in subsidiaries not consolidated 19,920 41,915 Decrease in pollution control construction funds held by trustee (4,503)

(36,509)

Increase (Decrease) in working capital (other than short-term borrowings and current maturities of long-term debt) 152,990 (95,217)

Other items-net 18,992 7,014 51,921,765 51,620,691

=

( ) Indicates deduction.

Statements of Consolidated 1979 1978 Retained Earnings

-Thousands of Dollars-BALANCE AT BEGINNING OF YEAR.

S 642,717

$ 579,288 N ET INCONIE.

296.678 320,958 5 939,395 5 900,246 DEDUCT-Cash dividends declared on-Common stock S 225,567 5 189,546 Preferred and preference stocks, 83,538 67,983 Premium and expense on preference simk redeemed.

294 S 309,399 5 257,529 BALANCE AT END OF YEAR S 629,996 5 642,717 Statem$rits of Consolidated Premium on 1979 1978 Common Stock and Other Paid-in Capital

-Thousands of Dollars-BALANCE AT BEGINNING OF YEAR.

S 687,100 5 574,033 ADD-Premium on issuance of common stmk.

132,175 113,480 S 819,275 5 687,513 DEDUCT-Transfer to common sto<k account the par value of common stu k issued upon exercise of warrants.

346 413 BALANCE AT END OF YEAR S 818,929 5 687,100 The accompanying Notes to l'inancial Statements are an integral part of the atxwe statements.

13

Notes to Financial Statements (1) Summary of Significant Accounting Policies prescribed by regulatory authorities, the Company capi-talizes Al UDC which represents the estimated net cost of Prmciples of Cmsolidation. 'Ine consolidated financial funds used to finance the construction program. Annual statements indude the accounts of all subsidiaries engaged rates of 7.26%,7.0% and 6.6%, compounded semiannual-in the electric utility business. All significant intercompany ly, were used in 1979,1978 and 1977, respectis ely, to deter-transactions base been climinated.

mine the amounts of AFUDC. These rates were calculated Investments m Subsidiaries not Conudulated. The Com.

in accordance with the formula prescribed by the Federal pany accounts for investments in its subsidiaries not con.

Energy Regulatory Commission. AFUDC is a non-cash solidated in an ordance with the equity methul. At item and does not conuibute to the current cash flow of the December 31,1979 and 1978, retained earnings include Com pany.

$23,389,000 and $19,076,000, respectively, of undistributed Earnings l'er Cominon and Commn Equn a/ent Eure.

earnings of subsidiaries not consolidated. The Company's Earnings per share were computed using the weighted aser-investment in its uranium subsidiary at December 31,1979 age number of shares of common stmk and common stm-k includes about $6,638,000 which represents the unamor-equivalents outstanding. Additional shares of common stmk ii/ed portion of the purchase cost attributable to uranium whith would be issued if all outstanding common simk pur-chase warrants were converted into common stm k have been ore reserves after taking account of the estimated net value of the subsidiary's other assets at the date of acquisition.

considered common stock equivalents.

This amount is being amortized on the basis of uranium (2) Accumulated Deferred Income Taxes concentrate produced from the resenes.

Accumulated deferred income taxes hase been deducted Depreciation. Depreciation is prmided. the strzight-from utility plant investment because a substantial portion line basis by amortizing the cost of depreciable tility plant thereof, like the depreciation resene, is a valuation resene and equipment over estimated composite service lives. Such and is deducted from plant investment in arriving at the rate provisions fordepreciation approximated 3.68% and 3.63%

base used in ratemaking proceedings.

of average depreciable utility plant and equipment for 1979 (3) Authorized Shares and and 1978, respectisely. While the eventual cost of retiring a Voting Rights of Capital Stocks nuclear generating unit is uncertain at the present time, At Dece her 31,1979, the authorized shares of capital these composite depreciation rates include significant allowances for both interim (hemical cleaning and end-of-stmks were: Cemmon Stm k-125,000,000 shares; Prefer-ence Sim k-35,000,000 shares; $1.425 Comertible life decontamination and retirement.

Amortization of Xuclear Fuel The cost of nuclear fuel, Preferred Stock-1,823,280 shares; and Prior Preferred Stock- -850,000 shares. The Preference Stmk is issuable in including spent fuel disposal cost, is amortized to fuel ex.

pense based on the quantity of heat produced for the genera-series and may be issued with or without mandatory tion of electric energy. The disposal cost outlook is reviewed redemption requirements. The preferred and preferen(e periodically and the estimate is revised, as deemed appro, stmis are nonparti(ipating. Ilolders of shares at any time priate, on a prospective Lsis. The Company's objective is to outstanding, regard! css of (lass, are entitled to one vote for ea(h share held on e ich matter submitted to a vote at a meet-provide for all disposal costs by the time final disposition is made of all nuclear fuel currently on hand, including spent ing of stmkholders, with the right to cumulate sotes in all elections for directors.

fuel. Since October 1976, a provision for costs associated with su(h dis [msal of spent fuel has been included in nuclear (4) Common Stock fuel expense. No such prmision was made prior to October At December 31,1979,5,619,973 shares of common stmk 1976, and prior to October 1975, modest net salvage credits were resened for the following purposes: 1,403,925 shares werc anticipated. Nuclea r fuel a mortization was S79,299,000 for conversion of $1.425 comertible preferted stock; and $80,460,000 for 1979 and 1978, respectively.

548,971 shares for exercise of common stmk punbase war-Income Tares. The Company provides for deferred in-rants; 2,108,864 shares for Automatic Dividend Reimest-come taxes on certain timing differences between book and ment and Stmk Punhase Plan; 1,393,139 shares for Em-tax annunting as discussed in Note i1. Income taxes playe Stot k Purchase Plan; and 165,074 shares for Employe deferred in prior years are charged or credited to income as Stmk Ownership Plan.

the timing differences reverse.

During 1979 and 1978, shares of common stock,512.50 Investment tax credits utilized are deferred and amortized par value per share, were issued for the following purpo es:

tbrough credits to income over the lives of related property.

Provisions for deferral < of construction-related income 1979 397g tax benefits (e.g. liberalized depreciation) reflect consump-pg tion of the plant and equipment to which they relate. Con-Comersion of $1.425 mmertible sequently, they are simdar to depreciation provisions, and preferred stuk 555,448 220,954 the related accumulated deferral is a valuation reserve like Comersion of warrants 27,570 33,019 the accumulated provision for depreciation.

Pun hased with warrants.

127 75 Income tax credits resulting from inu rest charges ap-Automatic Disidend Reimestment and plicable to nonoperating activities, principally construction, Stmk Punhase Pir.

I,908,348 1.148,549 are dassified as other income.

Empime Sto< k Punnase Plan.

341,515 287,699 Allovnnce Jhr Funds l '> cd Durmg Construction 3,833,008 7,600.296 (AFUDC). In accordance with uniform systems of accounts 14

At December 31,1979, the Company held in its treasury (7) Preference Stock Subject to 297 shares ofits common stock which were reacquired from Mandatory Redemption Requirements participants who withdrew from the Automatic Dividend Reinvcstment and Stmk Punhase Plan.

..he senes of pnference stock m@ct m mandatog w-demption requirements outstanding at December 31,1979 are summarized as follows:

Current Redempoon (5) Common Stock Purchase Warrants Aegregate Price Per share At December 31,1979 and 1978, 548,971 and 632,323 g [, Q yji "Ai$

ik" m) h t"d 3

un common stmk punhase warrants, respectisely, were out-standing. Each warrant entitles the holder to punhase one

-Thousa nds share of common stmk for 530 or to comert such warrant of Dollars-into common stu k at a conversion rate of one share of com-52 875 2,700,t xio 5 65,070 Non-i allable prior to Nm em-h*'I'I"*4*

mon stm k for three warrants. The option to pun base shares of common stuk will expire on April 30,1981. Thereafter, 52.375 3,t n >0,0oo 72.450 on-t al le prior to Nm em-any unexercised warrants will contmue to be convertible in-58'20 750'00()

75,000 Non-callable prior to Nm em-to common stock. During 1979 and 1978,83,352 and 99,522 ber 1,19s

warrants, respectisely, were exercised both to punbase and 58.40, 750,000 74,494 Non-callabic prior to for (onversion into common stock.

Series B N!ay 1,1983 58 85 750,0t H i 75,000 Non-callable prior to August 1,1988*

59.25 1,500,000 150,000 Non-callable prior to (6) Preferred and Preference Stock, August 1,19m'

$11.70 750,000 73,553 Non4 allable prior io Nmem-Without Mandatory Redemption Requirements ber 1,1989*

The series of prefereme sawk without mandatory re-39,290,999 s ys,537 demption requirements outstanding at December 31,1979 are summari/cd as follows:

• Except for sinking fund Current Redemp' ion t to mambog ahmp-Mes o Feemmesu m

Shares

( lsa r ar d Series Outstanding Value unpaid disidends,if any )

tion requirements were issued as follows: 2,250,000 shares in 1979 and 1,500,000 shares in 1978.

-Thousand s The mandatory sinking fund requiremen's of outstanding of Dollars-preferente stock Itre summarized as follows:

51.90 4.249,549 5106,239 526 prior to Niay 1,1981 52 00 2,000.000 51,560 526 81 prior t" Annual Sinking Fund Requirement and Dnember 1,1981 Prite Per Share (plus au rued and 61.96 2,000,000 52,440

$27.65 prior to Series unpaid diudends, il any)

December 1,1982

$ 7.24 750,000 74.340

$103 prior to 52.875.

150JNH) shares at 525 Nianh 1,1983 52 375.

150,000 shares beginning in 1980, at $25 58.40 750,0m) 74,175 5103 prior to 58 20 3;.715 shares beginning in 1982, at 5100 February 1,1984 58.40 Series B 30.000 shares beginning in 198 3, at 5100 58.38 750,000 73,566 Non-callable prior to 58.85.

37,500 shares beginning in 1984, at 5100 Apri! 1,1982 59.25.

75,000 shares beginning in 1985, at $100

1. d"" "d "

10,499,549 5432,320 Annual remaining sinking fund requirements will aggre-The shares of the $1.425 convertible preferred stmk are gate 53,750,000 in 1980,57,500,000 in 1981, SI1,071,500 convertible at the option of the holders thereof, at any time, in 1982, $14.071,500 in 1983 and 517,821.500 in 1984.

into common stmk currently at the rate of 77/100ths of a During 1979, 300,000 shares of the 52.875 series were share of common stmk for each share of (omertible redeemed. No redemptions were made in 1978. The Com-preferred sim k, subject to future adjustment. The comert-pany has non4umulative options to increase the annual ible preferred stmk may be redeemed at $42 per share, plus sinking fund payments on ea(h sinking fund requirement accrued and unpaid dividends, if any, During 1979 and date to retire an additional 150,000 shares of the 52.875 1978, 722,443 shares and 299,302 shares, respectisely, of series, an addi:ional 150,000 shares of the $2.375 series the comertible preferred su>ck were converted into common beginning in 1980, an additional 30,000 shares of the 58.40 sunk.

Series B beginning in 1983 and an addnional 37,500 shares No shares of preferred or preference stmk without man-of the SI1,70 series beginning in 1985. The excess,if any, of datory redemption requirements were issued or redeemed the redemption price over the carrying value of preferente during 1979 and 1978 shares retired will be charged to retained earnings.

15

Notes to Financial Statements conunued (8) Long-Term Debt (11) Income Taxes Sinking fund requirements and scheduled maturities for Provisions for current and deferred state and federal in-the years 1980 through 1984 for long-term debt catstanding come taxes and investment tax credits deferred for 1979 and at December 31, 1979, after deducting debentures reac-1978 resulted in ellective tax rates of 28.4% and 37.3%, re-quired for satisfaction of future sinking fund requirements spectively. The principal differences between these rates and deduting annual sinking fund requirements for mort-and the federal statutory rates of 46.0% and 48.07 for gage Imnds to be satisfied by available property additions, 1979 and 1978, respectively, were (i) the effect of state in-are summarized as follows. 1980 - 549,080,000; 1981 -

wme taxes rhich increases the composite statutory rates to

$ 39,343,000; 1982-$166,893,000, 1983 - 5150,576,000; 48.90 To and 50.08% for 1979 and 1978, respectively, and and 1984-5296,579,000. Long-term debt maturing within (ii) the exclusion trom taxable income of the equity com-one year has been imluded in current liabilities.

ponent of allowan e for funds used during construction, the The Company's outstanding first mortgage bands are federal income tax effect of which, stated as a percentage of secured by a tien on substantially all property and fran-pre-tax income, was 17.07 and 10.87. for 1979 and 1978, (hises,other than expressly excepted property owned by the respectis ely.

Company.

Provisions for deferred income taxes on timing differences between book and tax accounting, net of reversals, of which (9) Notes Payable

$52,212,000 and $82,836,000 were charged to electric oper-At December 31, 1979, the Company had outstanding ations for 1979 and 1978, respectively, and $6,217,000 and promissory notes payabk as follows: mmmercial paper of

$2,707,000 were charged to other income and deductions for 5356,740,000 due on various dates through June 23,1980, 1979 and 1978, respectively, were as follows:

at annual discount rates averaging 13.52 7o, and bank loans of $3,800,000, due February 4,1980 and July 8,1980, at 1979 1978 prevailing prime interest rates aseraging 15.14 To.

-Thousands During 1979, the average amount of outstanding promis-of Dollars-sory notes payable was $325,719,000 and the weighted aserage annual dismunt rate thereon was 11.18%. The 1.iberatiied depreciation.

$ 58,942 551,931 maximum amount of promissory notes payable outstanding

,' [ t liied.

9,3 9,

at any month end during 1979 was $483,845,000.

I,oss carr> forward (58,934)

The Company has unused bank lines of credit that enable Spent nuclear fuel disposal costs,

(12,376) ( t 1,134) it to borrow up to $289,400,000 at prevailing prime interest Additional revenues frora < hange to rates. Short-term borrowings may be made under these lines monthly bilHng.

15,243 of credit on unsecured notes of the Company. Substantially Other items-net 8,224 (2,108) all of the current lines of credit expire September 30,1980.

558,429 $85,543 In connection with the nuclear fuel lease entered into in January 1980, discussed in Note 15, the Company has an additional unused S300,000,000 line of credit, subject to At December 31, 1979, unused investment tax credits regulatory approval. This line of credit expires January 30, were approximately $235,000,000, of which $94,000,000 1985.

may be carried forward through 1985 and $141,000,000 The Company maintains cash balances on deposit with may be carried forward through 1986. The 1979 loss for in-banks to provide operating funds, to assure asallability of its come tax purposes may be carried forward through 1986. It lines of credit and to mmpensate the banks for other sersices is currently expected that the unused investment tax credits they perform for the Company. These bank balances for the and the loss carryforward will be utilized by the expiration Company and consolidated subsidiaries are maintained at dates.

an average level of approximately $11,500,000 without for-(12) Taxes, Except Income Taxes mal commitments to do so. As demand deposits, these balances may be legally withdrawn at any time.

Provisions for taxes, except income taxes, for 1979 and 1978 were as follows:

(10) Service Annuity Systems The non-contributory service annuity systems coser all 1979 1978 regular employes. The sersice annuity systems were revised

-Thousands of Dollars-as of January 1,1979 to increase pension benefits. Provi.

sions for contributions to the related trust funds for 1979 Real estate, personal property and and 1978 were $56,804,000 and $49,308,000, respectively, capital stock.

5 54.232 $124,566 and were equivalent to actuarial normal costs based on the Illinois invested capital.

28,419 aggregate cost method.

tilinois public utility revenue.

128,355 113,994 At December 31, 1979, the current value of the trust N1unicipal utility gross receipts 49,740 45,514 funds approximated the estimated actuarially computed Niunicipal compensation.

36,175 32,970 value of sested benefits at that date, which estimate was Other,

8,784 3.832 based upon the latest actuarial valuation as of January 1,

$305,705 $ 320,876 1979.

16

I Personal property taxes were abolished cliectis e January 1, in addition, the Company has leased certain other 1979 by the Illinois Constitution. On August 6,1979, the 11 property which would meet the criteria requiring capi-i linois legislature approved the Gmernor's amendatory seto talizition under an ac(ounting standard issued by the Fi.

I of the replacement tax legislation, effective July 1,1979, nancial Accounting Standards Board. Iloweser, sin e they

-j which established a new state tax of 0.8% on invested capi.

have been treated as operating leases for ratemaking pur-tal of utilities and increased the state income tax rate on cor-

[mses, they base been accoated for as such. If such leases porations from the previous rate of 4% to 6.85% until had been capitalized, related assets and liabilities of approx-January 1,1981 and to 6.5% thereafter. Because of the imately $60,995,000 and 555,046 000 would hase been delay in enactment of such legislation and uncertainties remrded at December 31,1979 and 1978, respe Aly. The regarding the imposition of replacement taxes, the effect on expenses for 1979 and 1978 would not have been Company's interim provisions for taxes (except income) material.

induded estimates which required adjustment in the fourth Future minimum rental payments, net of executory costs, quarter to reflect expected liabili:ies. Ilad the expected at December 31,1979 for such leases, including the capi-liabilities for 1979 real estate and invested capital taxes been talized nudear fuel lease and the other capitalizable leases recorded ratably during the year, earnings per common and referred to abose, are estimated to aggregate S91,160,000, common equivalent share would have increased approxi.

induding $15,124,000 in 1980, S11,923,000 in 1981, mately 50.07 and 50.06 in the first and second quarters, re-

$11,923,000 in 1982, S11,923,000 in 1983,511,923,000 in spectively, and decreased apprcximately 50.13 in the fourth 1984, $24,568,000 in 1985-1989 and $3,776,000 in quarter.

1990-91. The estimated interest component of suc h rental payments aggregates $23,104,000.

(13) Revenues Subject to Possible Refund in January 1980, the Company entered into a nuclear fuellease agreement with Commonweabh Fuel Trust under Since October 31, 1974 the Company has billed which the Trust will lease nudear fuel to the Company.

528,348,000 to resale customers subject to possible refund Rental payments will cmer the amortization of the value of with interest pending final decisions on revised wholesale the nuclear fuel used in the Company's rea(tors plus lessor's rate schedules filed with the Federal Energy Regulatory related finance expenses. Since the lease will be t reated as an

=_

Commission. On September 14, 1979, the Commission operating lease for ratemaking purposes, it will be account-issued an order with resp ct to the rate schedules effectise ed for in the same manner.

October 31, 1974 requiring that additional studies be prepared and filed with the Commission. The studies (16) Joint Plant Ownership concluded that any refunds required would be nomin.d and The Company has a 75% undisided ownership interest in Nmember 1979, the Company transferred to operating in the Quad-Cities nuclear generating station. 'I he Com-resenues $8,434,000 of such prior years billings which had pany is responsible for 75% of all costs and such costs are been recorded in other deferred credits pending a final deci-charged to appropriate imestment, operation or mainte-sion. This transfer increased earnings per common and nance accounts. The Company provides its own linancing.

common equivalent share approximately 50.05. In connec-At December 31,1979, for its 75% proportion, the Com-tion with the Illinois Commerce Commission interim rate pany had invested $204,162,000 in utility plant in seni(e, order ef fective October 15,1979, approximately $9,398,000

$15,539,000 in (onstruction work in progress and of billings, subject to refund with interest, hase been in-S48,093,000 in unamortized nuclear fuel. The related ac-duded in operating resenues. With the transfer discussed cumulated prmision for depreciation of utility plant was above, all revenues collected subject to Imssible refund hase

$ 51,033,000.

been included in operating revenues.

(17) Commitments, Contingent Liabih.. ties (14) EfTect of Change to Monthly Billing and the Construction Program Pursuant to an order of the Illinois Commer(c Commis-Purchase commitments, principally related to construc-sion, the C,ompany, beginning during the latter part of tion and nuclear fuel, appro., mated $1,831,000,000 at i

Dec ember 31,1979 March 1979, changed from bi-monthly to monthly billing The Company is a member of Sudear Mutual 1 imited, for residential and certain commercial customers. Dus change resulted m additional operating reyenues of approx-established to prmide insurante coverage against property damage to members' nudcar generating facilities. The imately $33,700,000 and addit onal earmngs per common and common equivalent share of approximately 50.12 for Company would be subiert to a maximum assessment of ap-the year 1979.

proximately $75,000,000 in the esent of losses.

In addition, cliectise August 1, 1977, the Nudcar Regulatory Commission's indemnity for public liability (15) Lease Obligations coverage under the Price-Anderson Act began to be support-The Company has capitaliicd and recorded the obliga-ed by a mandatory industry-wide program under which tion for nudear fuel leased for Dresden Unit 3. The lease owners of nudear generating facilities could be assessed in will terminate on September 1,1980, and the balan e of the the esent of nuclear incidents. Based on the number of nu-lease obligation of $2,521,000 at December 31,1979 has dear reactors presently in ser ice, the Company would be been induded in current liabilities.

subject to a maximum assessment of $32,500,000 in the 17

Notes to Financial Statements contim<ed event of an imident, limited to a maximum of 565,000,000 Company's net earnings which are turnntly at a level in any calendar year. For eac h additional nuclear reactor which does not allow the issuan e of additional first mort-placed in sersi<c, such maximum assessments will inc rease gage honds under the Company's Niortgage, ext ept through 55,000,000 and S10J)o0.000, respectisely.

lxmdable hond retirements.

As a result of the limited amount of the interim increase On January 31,1980 the Company was served with a authorized by the Illinois Commerce Commission on Sep-complaint filed in the United States District Court alleging tember 12,1979, the Company announced that it has for the in effect that the Company's prospectus dated February 8, present halted <onstruction on its Braidwomi nuclear gener.

1979 used in connection with the sale of common stin k ating station. At December 31,1979, construction work in contained materia! misstatements and omissions and that progress in luded approximately S811,796J)00 applicable similar misstatements and omissions mntinued until some-to the Braidwom! station. The suspension will ultimately re-time in June 1979. There has not been an opportunity to sult in increased construction costs due to escalation in ma-thoroughly evaluate the allegations of the complaint, but terial and labor (osts, and allowance for funds used during in the opinion of the management of the Company said construction whic h is continuing to be capitalized during the prospectus does not contain any material misstatements or suspension period. The timing of the Company's resump-omissions. Although it is not possible to predict with < ertain-tion of construction at Braidwood station, which is presently ty the outcome of litigation,in the opinion of counsel for the expected in the spring of 1980, as well as the continuation of Company, the Company should incur no material liability other construction proje(ts,is dependent upon adequate and as a result of this action.

timely rate relief.

The Company is in olved in administrative and legal The external linancings required for the 1980-84 con-proceedings concerning air quality, water quality and other struction program are subject to market conditions and an matters. The outcome of these proceedings may or may not imprmement through adequate and timely rate relief in the entail additional future costs.

(18) Quarterly Financial Information Aserage Number of Earnings Per Ein tric Elect ric Common and Common and Operating Operating Net Net In ome on Common Equisalent Common Res enues in< ome income Common Sox k Shares Outstanding Equiulent Share

-Thousands oI Dollars-

-In Thousands-Three Ntombs Ended:

Nian'n 31.1978 5614.579 5 80,336 5 66.798

%51,826 74.863 50 69 June 30,1978.

$;69,106 S 89,976 5 77,554 561,414 77.230 50 80 Septendier 30.1978

$661,373

$ 119,008 $ 105.296 587,620 77,600

$1.13 Dn ember 31,1978 5597,730 $ 85,474

$ 71,310

$ 53,193 78.OU 3

$0.68 Nianh 31,19'9

$66x.549 5 50.187 5 48,140 529,956 82,0;4 50 37 June 30,1979.

S664.322 5 96. M 3 5 87,195 566,959 86.221 50.7.3 Sept ember 30.1979

$735,404 5128.110 5120.254 599,267 86.978 51.14 Un ember 31.1979 5652.647

$ 54,440

$ 41,089

$ 18,774 87,782

$0 21 Referen<c is made to Notes 12 and I L (19) Supplementary Information Concerning the EfTects of Changing Prices (Unaudited)

The Company's estimates of the ellects of thanging prices effects of inflation are not secognized for income tax or (indation) on its operations at December 31,1979, set forth ratemaking purposes. The data shown are estimates and not below, were prepared on the basis prescribed by the exact measures and are not intended to adjust earnings Financial A(counting Standards Board ( FASB) Standard reported on a historical cost hasis. Explanations of relesant No. 33, " Financial Reporting and Changing Prit es." The information are set forth in the notes below.

18

Statement of Income Frorn Continuing Operations Adjusted for Changing Prices For the Year 1979 Adjusted for Adjusted for Changes ilistoric al Cost as General in Specific Prices Reported in the inflation *

(Current Cost)*

Inmme statement

( Note a )

(Note a)

-Niillions of !)ollars-Elcotric operating resenues.

52,721 52,721

$2,721 Fuel ( N<,te d ).

5 963 5 977 51,038 Other operation and maintenan<e 749 749 749

!)rprcriation (Note e) 250 478 652 Taxes and insestmen tax credits-net 424 424 424 Other in< ome and deduc tions-net.

38 38 38 52,424 12.666

$2,901 Inmme (loss) from continuing operations,lefore reflecting the full etic < t of regulatory restrictions upon the amount of net utihty plant retoserable as depreciation from operations (Notes g and i):

Income (lossi.

S 297 5 55

$(180)

Lew-Prosision for disidends on preferred and preferense stons.

82 82 82 Inmme (i.oss) on mmmon stm k.

5 215 5 (27)

$(262)

Inmme (loss) ter common and mmmon c<piisalent share (in dohars).

5 151

$( 0.31 )

$( 3.05 )

Ex< ess of ini rease in the general pri< r les el ( $2,170 million ) m er the inc rease in spetilk prices h urrent cost) of net utility plam (51.804 million)

( Note f)"

$(366).

Pure hasmg power loss not reflec ted ahe from regulatory restrh tions upon the amount of net utility plant remserable as depreciation from ope ations (Notes g and i)'

S(812)

$(21I)

Reduition of part hasing power loss through drht financing (Note h)

S 755 5 755

• Aserage 1979 dollars.

" At I)et ember 31,19N the current mst of nei utility piant, including nuc lear furt, before redu(tion for at rumulated deferred income taxes, is estimaird at $18,7'16 million and the historical net rost reimerable through depreciation and amortization was 59,074 million.

Five-Year Comparison of Selected Supplementary Financial Data Adjusted for the EITects of Changing Prices Restated to Ascraec 1979 I)ollars 1979 1978 1977 1976 1975 Electric operating resenues (millions of dollars) 52,721

$2,718

$ 2.509 52,433

$2.323 Cash.lisidends declared [er common share.

52.60

$2.73

$2.87

$ 3.06

$3.10 hlarket piiie per common share at 1)ciember 31.

51194

$27.59 S33 73 S39.45 539.45 Net awets (common sim k equity ) at I)ctember 31, as calculated under either generalintlation or current cost method and rellc< ting reduction of net utihty plant to rermerable amount (millions of dolla rs )

52,399 52.457

$2.361 52,213 52.048 Aserage Consumer Pri<e lndex (hasc 3 car 1967=100).

217.4 195.4 181.5 170.5 161.2 Notes to Supplementary Information Concerning the Ellects of Chancing Prices:

a. Gmnal. The data adjusted for general inflation were Price Index"). This method reflects general inflation and is determined by comerting the historical rost of plant and intended to measure income af ter reflecting the cost of equipment, nudear fuel and certain other items into dollars maintaining insestors' purchasing power of the dollars of the same general purchasing p<mer using the Consumer invested in these assets.

Price Index for All Urban Consumers (the " Consumer 19

Notes to Financial Statements cm.cluded The data adjusted for changes in spe(ilic prices (current

d. Fuel Expense. Fuel expense was adjusted for the cost) of nudear generating equipment was based on the (ost amortization of nuclear fuel. Nudear fuel amortization was of amstrutting new capacity at current price lesels. The calculated by applying the nuclear fuel usage to the adjusted current cost of all other plant and equipment was measured cost data for nuclear fuel plus appropriate allo,vances for by using the llandy-Whitman Index of Public Utility spent fuel dis [xisal costs.

Construction Costs applied to plant accounts by vintage

e. Deprecmtion expense. Depreciation expense was years. The current cost of nuclear fuel was estimated by determined by applying the rates and methods used for applying current prices to existing nuclear fuel. This computing book depreciation to the adjusted cost data for method is intended to measure income after reflecting the plant and equipment.

cost of maintaining the capability of the Company's system J. Excess of increase m the general price level over the to provide elet tric ser ice at current prit e levels.

mcrease m specific prices (current cmt) o[ net utihty plant.

The difference between current (ost data and costs The excess of the increase in the general price level over the adjusted for general inflation results from specific prices of increase in specific prices (current cost) of net utility plant utility plant assets increasing at a rate ditTerent than the raic shows that the rate of general inflation as measured by the of general inflation.

Consumer Price Index was greater during 1979 than the in accordance with the FASil Standard, the adjustment of increae in the s ~trent cost of net utility plant. Iloweser, the items in the income statement was limited to depreciation of curren wst of net utility plant at Decemb 31,1979 was plant and equipment and amortization of nudear fuel.

higher than net utility plant as adjusted.or general inflation

b. Utdity plant. The data for plant and equipment, because over the life of the plant the current cost increased at induding construction work in progress, were adjusted for a greater rate than the rate of general inflation.

general inflation and for specific prices (current cost) as

g. /%rchaung power bm from regulatmy restrictions described abme. The resulting adjusied data for plant and upon the amount of net utdity plant raoverable a> de-equipment are not indicatise of the Company's future precmlion from operationt In all of the Company's recent capital requirements because the a tual replacement of rate regulatory proceedings the recovery of utility plant existing plant and equipment will take place mer many investment, including nudear fuel, has been limited to years and % not likely to be a reproduction of presently depreciated original cost. Therefore, the value of the utility existing assets. The accumulated prmisions for depreciation plant under Imth methods must be reduced to the lower of plant and equipment in service under both of the methmis recoverable amount which is original cost less accumulated described abow were estimated for ca(h major dass of plant depreciation.

and equipmet -nudear production, fossil produc tion,

h. Reduction of purchasmg power lms through debt other productim. transmission, distribution and general fmancmg. Ily holding monetary assets, such as cash and plant. The methor, used was to multiply the respectise cost receivables, the Company loses purchasing power during data by a percentas,e representing the ratio of the accu-periods of inflation because these items can purchase less at mulated book depreciation to the book cost of existing a future date. Ahernalisely, monetary liabilities, primarily depreciable plant in service for each dass at December 31, long-term debt, will be satisfied with dollars having less 1979 and 1978.

purchasing power. The unrealized gain because debt will The nudear fuel data adjusted for general inllation were be paid back in dollars hasing less purchasing [mwer, estimated by applying the appropriate Consumer Pri(e partially oIIsets the purchasing power lass because only Index to the historical cost of nudear fuel. The current cost original cost depreciation on utility plant is presently data were estimated by applying the current pri(es of nu-reemerable. Preferred and preferen e stocks were treated dear fuel at December 31,1979 and 1978. L'nder both in the same manner as long-term debt because these methods appropriate reductions were made for accumulated stukholders do not expect the purchasing power of their amortization and spent fuel disposal or,ts. The accumulated imestment to be maintained but rather expect to be paid amortization was calculated by multiplying the respectise dividends at a lixed amount.

cost data by a percentage representing the expired life at

i. Effect of m/lation on the Company. The regulatory December 31,1979 and 1978.

prmess limits the amount of depreci, tion expense included Although a substantial [mrtion of the anumulated in the Company's resenue allowance to the original cost of deferred income taxes are deducted f rom utility plant utility plant investment. Such amount produces cash flows imestment in arrising at the rate base used in ratemaking which are inadequate to replace such property in future prm eedings. accumulated deferred income taxes at Decem-years or preserve the pur hasing power of common equity her 31,1979 ar.d 1978 were treated as monetary liabilities, capital previously invested. The Company therefore has a in accordance with the l'ASil Standard.

significant net purchasing power loss which is experienced

c. Coal and fuel od mventorics. The historical cost of by the common stockholder and can be overcome only as a inventories of coal and fuel oil at December 31,1979 and result of more adequate rate relief in the regulatory prmess.

1978 was not adjusted for changing prites during the year.

While a recent decision of the Illinois Supreme Court Sin (e the imentory turns m er several times during the year, requires consideration of " fair value" in ratemaking the difference between the historical cost and costs adjusted proceedings, the regulatory consequences of this decision,if for changing prices would not be material.

any, are far from dear.

20

Board of Directors OfTicers Thomas G. Ayers m <s)

Thomas G. Ayers Cordell Reed C'iairman of the Company Chairman Vice-President Norris A. Aldeen m m James J. O'Connor Robert J. Schultz Former Chairman and President President Vice-President r71 r nianufacturer)

KaHge B. Behnke. Jr.

Bide L Thomas

(( linct Executise \\ ice-President

\\ ice-President Ilubert,11. Nexon John J. Viera e

Sonnenschein Carlin Nath & Rosenthal Senior \\, ice-President

\\ n e-President

( Attorneys)

John G. Eilering Raymond P. Bachert Vice-President Secretary and Treasurer Wallace B. Behnke, Jr. m Executise Vice-President of the Company James W. Johnson Ralph L licumann Vi(e-President Comptroller Gordon R. Core) m Former Vice-Chairman of the Company V'yron Lee, Jr.

ll ce-President Albert 11. Dick 111 m m m Chairman of the Board A. B. Ihok Company (NIanufacturer of copying. duplicating and printing equipment and supplies)

Donald P.

acobs oj m Dean, J. L 'ellogg uraduate School of NIanagement Afanagers Division Vice-Presidents Northwestern Unisersity Robert L Bolger Wi!!iam,J. Cormack Assistant Vice-President Chicago-North George E. Johnson m <4 > m Chairman and President Paul J. Fenoglio Lester J. Dugas Johnson Products Co., Inc.

N!anager of Computer Sersites Chicago-South (N!anufacturer of hair care and facial cosmetics)

Preston 11. h.avanagh Anthony E. Enrietto Brooks AltCormick a m m Nianager of Pur basing Northern (Northbrook)

Chairman, Executisc Committee International llanester Company Arthur %. Kleinrath Charles G. Ilarnach (N!anufacturer of trucks and agricuhural.

N!anager of Statmn Const.uction Southern (Joliet) industrial and construction equipment)

Donald A. Petkus Leslie W. Niilligan James J. O'Connor m Nianager of Community Relations Western ( Lombard) bresident of the Company George P. Rifakes Arthur J. Ntocre William Wood Prince m m m Nianager of Fuel and Budgets Rock River ( Rockford)

President Ernest N1. Roth Klaus II. Wisiol F. II. Prince & Co, Inc.

Nianager of Imestments Chicago-Central (Investments)

James A. S(hneider A. Dean Swn.t<ii m

' Operating N!anager President Sears. Roebuc k and Co.

Walter J. Shewski

( Nierchandising)

Nianager of Quality Assurance

, Joseph S. Wright m m m Chairman and Chief Executisc Officer Zenith Radio Corporation (Consumer electronics manufacturer)

( t ) Esc < uthe (bmmirece (2) Auda (bmmmec

( 3) hnance (hmmince (4) Comprnsuion Commoire (3) Lminating Commitice

Commonwealth Edison Company Post Office Box 767 Chicago, Illinois 60690 s

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a WILLBURY NG NUCLEARWASTE BURYUSALL?

It's enough to strike fear m anvonei heart radnutiuty renummg n>4e than enough tmie to Ntulear waste. by prahat of eien reator m the decay to atxmt the stme lesel as the backgneund wMd. radr aine for te ns of thousands v4 years.

radiation w eie esp acd to all the tune.

1 mg there hke sorne nuleu dent gesae m a b <tle

%ne < 4 that is a pipyh eam. It's fa1. I h tunwnted 3

wanmg to N let tw At 5;rlied out agam ar-d agam m countless That s w hat the f ature of unnnw

. gos ernment rep sts and mdependent cial nuclear p.wer hmges on I*.,

N studies. I'roun agam and agam What do we do w'th the

=

m exhau3tive tests and pdot w a-te)Where on earth h it j

'.'t prmects 'in Eng:and. France.

t 4 Denn;mv. $weden and Canada.

safe) Can tunmg it reallv keep it fnen cmurg hm k '

'i as well ad Kansas. Nesada and Washirgton statel. And

t. Lill us'

, 3 '% abnost unhersally acepted No matter w nat p 6ve a*

heard. there are answers.

) by the soentific and technical Solutnns exist. Now cornmuruty wvildwide.

(he is repraessmg h

hti av re. there are Inwdvmg spent fuel

' hterauy thmsands of wraare rods m a strmg and.

• miles of salt beds and granite then seWiratmar out the

{ fonrat.ons under Amenca, plutomum and lettos er uramum an i s olv a few vgire miles for reuse it leave-pt omld ea dy hold every ounce o

four y-rcent of the M

of hwh level waste generated taal to hury And in ux b> all our ntKlear p,wer plants hundred > ears that four put together. Not to mention pertert wm't co:: tam any the eighty nu!hro gallons note radnKtmt) th.m ali w

stared up m the thirty five the uramum ore mmed to 4.%,,

h

) ears our omntry has been nuke the fuci m the first pkwe makmg at.mr weapos.

Now. if m hundred s ears ste The only pn blem we hasen't 3olved sounds hke an etermty, conuder 7 s et is how to get the show m the road.

the po s ess cal led utnfwmion.

" ~We can't reptwess htause the govern in pain Er.ghsh. that nwans im T:

rnent won't okay it. Despite the knowledge robihzmg the waste..ktually turmne

' that esery pound of plutonium we salvage tv4 it mio a piece of 9h! gle. Inert. chemicali only leas es one Irw to burv. but also can produce as stable gl.ess.ent b ed m a steel gket an mth mix h energy as seven hundred fittv tons of a elor me thu k and buns d.,

b hundred thirty thouvnd gallons of od.

Ream) buned A gm! two thousand feet down And we can't bun what weYe already gd.

m a bone dn salt bed or gramte fannation whose esen though domg it safely dmn't depend on wrv emtenir na ans it hasn't hn n daturtwd reprocessmg. hecause Corgress gave the gm ernment bs gnmndwater er an eaathp2ake in at least ten a nonoph on p(rmanent st rage back in ICL nulbon iears. Ar.d in ali pn Abthtv won't be And despite the weight of aMrmatne endence, f.4 mdhons more it ha-n1.kted yet.

liut what if ? If there were a quake. If the sbft-The pn.blem is if all sewnty two rmclear power mg canh dn wird the mie m a rn er of water. If the plants in the United states samshed tomorrow.

A new issue-oriented ad\\ertising 4 eel W et npped anart. lf the dass mude we rulcar wete wouldn't. here's stdl a Ir4 sittmg k

esp med to the cinTent f4 ages to cmie lf wr. chow.

around. but less th;m one penert of it is fn m power program was begun by the in me unpf,able way.though giam is hos ptmt,. wen,mner. > ear s of nta iear w eap es ComIaan} in late December 1979.

'r*4"* m w ter 't '"3 "un"ded t" d~ ^e And P"*!"e:'"n h ve anus-cd eighty m:lho gallons.

the water. thweh c;iarated frun the surfae by two and there s nvre c cur.g The 6rst two in a series of ads deal so,and feet of no and +d. stal nanard to I-n't it imie we. aid the poib!cm to rest) ft.:d a way up.

with the disposal of nuclear waste ifan s,hy p,a y.,aii a the,

(right) and the,ced for adequate cun fun"her And the slow flow ign.unaw ater emui-vd m + f water w"uld dhte the dis *4 -te electric sern.ce rates. %,e beh.ne less than a hundncaruoud ave the Commorwealth Edison these informational messages will This ad n pid for h3 Ihe enmpan3. and not pubished at our customers' espen-e.

enhance the public's understanding of nuclear power and other important energy-related issues.