ML19305D688
| ML19305D688 | |
| Person / Time | |
|---|---|
| Site: | Millstone  |
| Issue date: | 03/14/1980 |
| From: | NORTHEAST NUCLEAR ENERGY CO. |
| To: | |
| Shared Package | |
| ML19305D642 | List: |
| References | |
| NUDOCS 8004150409 | |
| Download: ML19305D688 (10) | |
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AUDITORS' REPORT To the Board of Directors of Northeast Nuclear Energy Company: lie have examined the balance sheets of Northeast Nuclear Energy Company (a Connecticut corporation and a wholly owned subsidiary of Northeast ?ltilities) as of December 31, 1979, and 1978, and the related statem?nts of income and retained earnings and sources of funds for gross property additions for the years then ended. Our examinations were made in ac:ordance with generally accepted auditing standards and, accordingly, in:luded such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the financial statements referred to above present fairly the financial position of Northeast Nuclear Energy Company as of December 31, 1979, and 1978, and the results of its operations and the sources of funds for gross property additions for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis. ARTHUR ANDERSEN & CO. Hartford, Connecticut, February 20, 1980. m I. s 4 + I' s
NORTHEAST NUCLEAR ENERGY COMPANY Balance Sheets December 31, 1979 and 1978 Assets 1979 1978 Nuclear fuel, at original cost $218,643,073 $172,105,960 Less: Accumulated provision for amortization 119,881,022 89,850,058 Nuclear fuel, net of amortization 98,762,051 82,255,902 Current assets: Cash 12,991 101,271 Accounts receivable 975,250 185,889 Due from affiliated companies 15,670,717 11,125,282 Materials and supplies, at average cost 3,641,195 3,190,636 Other 263,080 221,863 20,563,233 14,824,941 Deferred charges: Accumulated deferred income taxes 3,881,388 Unamortized debt expense 145,502 195,388 Work in progress 389,055 254,353 Other 4,435,460 3,853,577 8,851,405 4,303,318 Total Assets $128,176_,689 $101,384,161 Capitalization and Liabilities Capitalization: Common stock without par value. Author-ized 60,000 shares; issued and out-standing 1,500 shares, at stated value 15,000 15,000 Capital surplus, paid in 15,350,000 15,350,000 Retained earnings (hote 2) 14,429,067 10,790,739 Total common stockholder's equity 29,794,067 26,155,739 Long-term debt (Note 3) 40,000,000 40,000,000 Total capitalization 69,794,067 66,155,739 Current liabilities: Nuclear fuel payable 22,125,000 24,707,610 Accounts payable 27,241,251 4,286,155 o Due to affiliated companies 3,423,285 2,008,597 Accrued taxes 3,582,667 2,023,380 Accrued interest 325,729 325,729 Other 62,332 44,399 56,760,264 33,395,870' Deferred credits: Accumulated deferred investment tax credits 1,566,323. 1,147,610 Other 56,035 684,942 1,622,358 1,832,552 Commitments (Note 6) Total' Capitalization and Liabilities .$128,176,689 '$101,384,161 The accompanying notes are an integral part of.these balance sheets.
NORTHEAST NUCLEAR ENERGY COMPANY . Statements of Income and Retained Earnings For the Years Ended December 31, 1979 and 1978 1979 1978 Operating revenues $87,116,025 $73,792,887 Operating expenses: Operation - Fuel 25,553,285 19,631,434 Other 29,576,657 25,495,795 ?!aintenance 20,320,059 18,160,635 Federal and state income taxes (Note 5)- 2,065,491 2,461,166' Taxes other than income taxes 664,874 455,411 Total operating expenses 78,180,366 66,204,441 i Operating income 8,935,659 7,588,446 t Other income, net (8,215) (12,125) Income before interest' charges 8,927,444 7,576',321 Interest charges: Interest on long-term debt 3,958,636 3,955,367 Other interest 3,315,846 2,181,772 l Allowance for borrowed funds used during l construction (1,985,366) (1,755,117) Total interest charges 5,289,116 4,382,022 i Net income 2,638,328 3,194,299 Retained earnings at beginning of period
- p),790,739 7,596,440 Retained earnings at end of period (Note 2)
$l.4,429,067 $10,790,739 l The accompanying notes are an integral part of these financial statements. I l r
NORTHEAST NUCLEAR ENERGY COMPANY Statements of Sources of Funds for Gross Property Additions For the Years Ended December 31, 1979 and 1978 1979 1978 Funds generated from operations Income from operations $ 3,638,328 $ 3,194,299 Principal noncash items - Amortization of nuclear fuel 25,553,285 19,631,434 Deferred income taxes, net (3,333,118) (12,967) Amortization of other noncash items 57,270 49,610 Allowance for funds used during - construction (1,985,366) (1,755,117) Net funds generated from operations 23,930,399 21,107,259 Funds obtained from financing Increase (decrease) in short-term debt (15,000,000) Nuclear fuel payable _(2,582,610) 24,707,610 Net funds from financ,ing (2,582,610) 9,707,610 Other sources (uses) of funds Decrease (increase) in net current assets (excluding short-term debt and nuclear fuel payable) - Cash 88,280 18,817 Accounts receivable (5,334,796) (165,637) Materials and supplies (450,559) (1,553,573) Accounts payable 24,240,227 (6,474,778) Accrued taxes 1,559,287 1,563,950 Other, net (23,284) (262,574) Net change 20,079,155 (6,873,795) Other, net 3,124,803 1,274,804 Net other sources (uses) of funds 23,203,958 (5,598,991) Tota'l funds from above sources 44,551,747 25,215,878 Allowance for funds used during construction 1,985,366 1,755,117 GROSS PROPERTY ADDITIONS - Nuclear fuel $46,537,113 $26,970,995 The accompanying notes are an integral part of these financial statements.
NORTHEAST NUCLEAR ENERGY COMPANY Notes to Financial Statements (1)
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES Affiliation: The Company is a wholly owned subsidiary of Northeast Utilities, a registered holding company under the Public Utility Holding Company Act of 1935. The Company acts as agent for The Connecticut Light and Power Company, The Hartford Electric Light Company and Western Masssachusetts Electric Company (affiliated utility companies, all wholly owned by Northeast Utilities) in the ecnstruction and operation of nuclear generating facilities and in the financing of nuclear fuel for such facilities. Two nuclear generating units are currently being operated by the Coepany. The cost of the nuclear units is recorded on the books of the affiliated utility companies in their proportionate shares of ownership. The cost of the nuclear fuel for the units is recorded on the books of the Company. Revenues: The Company provides services to the affiliated utility companies on the basis of recovery of cost plus return on capi.al, as defined under terms of agreements which have been approved by various federal and state regulatory commissions having -jurisdic-tion over operations of the Company and the affiliated utility companies. Nuclear Fuel: The cost of nuclear fuel is amortized to operation expense on a unit-of production method at rates based on estimated kilowatt-hours of energy to be provided. Such amortization, including a current provision for estimated spent fuel disposal costs, was $25,553,285 in 1979 sad $19,631,434 in 1978. As approved by the appropriate regulatory commissions, the estimated spent fuel disposal e costs pertaining to fuel amortized prior to 1979 are being amortized 3 over a ten-year period. Storage for spent fuel at the Millstone nuclear station, including the facilities currently under construction at Hillstone III, will be sufficient until at least the mid-1990's. Nuclear fuel for Millstone I and II is being financed pursuant to a fuel supply trust agreement under which the trust owns and finances the nuclear fuel prior to its being placed into the nuclear-reactor. The trust obtains funds by the sale of commercial paper and/or through bank loans. Tne Company is obligated to purchase the nuclear fuel from the trust when specific events occur. During 1979, interest costs of $1,985,366 incurred in connection with financing this nuclear fuel were capitalized by the Company. The weighted average interest rate charged by the trust was 14.2 percent in 1979 and 8.2 percent in 1978. Federal Income Taxes: The Company is included in the consolidated federal income tax return filed by Northeast Utilities. Investment tax credit, all applicable to nuclear fuel, is deferred and subsequently amortized to income over a four year perod. See Note 5 for additional income tax information.
Allowance for Funds Used During Construction: The allowance.for ' funds used during construction (AFUDC) represents the estimated cost of capital funds used to finance the acquisition of nuclear fuel, which is added to the cost of such fuel, during the period preceding the operational status of a nuclear unit. The amounts recorded for 1979 and 1978 AFUDC represents Hillstone I and II nuclear fuel interest costs related to the fuel supply trust financing agreement discussed under Nuclear Fuel above. Retirement Plan: The Company participates in the Northeast Utilities Service Company Retirement Plan (the Plan). The Plan, which covers all regular employees, is noncontributory. The system's policy is to annually fund the actuarially determined contribution, which includes that year's normal cost, the amortization of prior years' actuarial losses over fifteen years, and the amortization of prior service costs over a period of forty years. At December 31, 1979, it is estimated that the Plan's unfunded liability was approximately $111,200,000 and that the Plan's assets exceeded the value of 7 1 vested benefits. The Company's allocated portion of the system's contribution, part of which was capitalized, approximated $800,000 in 1979 and $500,000 in 1978. (2) DIVIDEND RESTRICTION At December 31, 1979, $8,205,000 was available for payment of cash dividends on common stock. (3) LONG-TERM DEBT 1 Details of long-term debt outstanding at December 31, 1979 and 1978 are as follows: Secured Notes, Series A, 8-1/2%, due 1982 $ 9,000,000 Secured Notes, Series B, 11-1/4%, due'1982 20,000,000 Secured Notes, Series C, 8-1/8%, due 1982 11,000,000 Total long-term debt $40,000,000 Northeast Utilities h's guaranteed the payment of the Notes and the a Company's nuclear fuel has been pledged as security for the payment of the Notes. -(4) SHORT-TERM DEBT The maximum amount of.short-term borrowings as currently authorized 1 by the SEC is $30,000,000. There was no short term debt outstanding- ,at December 31,1979 and 1978. (5). INCOME TAXES The detail of federal and state income tax provisions charged to operations is set forth below: Year Ended December 31, 1979 1978 Current income taxes: Federal $4,121,813 $1,899,776 State 1,276,796 574,357 Total current 5,398,609 2,474,133 Deferred income taxes, net: Investment tax credits 548,270 (12,967) Federal (3,138,284) State _(693,104) -Total deferred (3,333,118) (12,967) Total income taxes .$2,065,491 $2,461,166 Deferred income taxes are comprised of the tax effects of timing differences as follows: Investnient t ax credits $ 548,270 (12,967) Settlement credits - nuclear fuel / (2,056,961) Spent fuel (1,824,427) Deferred income taxes, net, $(3,333,118) (12 967) 1 The principal reasons for the diffsence between total tax expenr,e and the amount calculated by app,1ying the federal income tax rate to pretax income are as follows! Year Ended December 31, / 1979 1978 Expected tax, at 46% of pretax income in 1979 (48%,in 1978) $ 2,623,757 $ 2,714,624 Tax effect of differences: State tax, net'of federal benefit / 315,194 298,666 Investment cax credit / amo rtiza 'J' ion (876,587) (552,966) Other,f[et 3,127 842 TItalincometaxes $ 2,065,491 $ 2,461,166 (6) COMIkTMENTS Nhe Company, under terms of an agreement expiring in 1982, is -' obligated to supply the nuclear fuel required for the operation of 7 Millstone I and II, which are owned by the affiliated utility / companies. Nuclear fuel expenditures for Millstone I and II are - / estimated to total $329,696,000 through 1985, including $48,253,000 for 1980. / / p}}