ML19305E126

Annual Financial Rept 1979

ML19305E126
Person / Time
Site:	Fort Saint Vrain
Issue date:	02/07/1980
From:	PUBLIC SERVICE CO. OF COLORADO
To:
Shared Package
ML19305E125	List: ML19305E124 ML19305E126
References
NUDOCS 8004220778
Download: ML19305E126 (43)

Text

1 F

i i

l 1

O

. -1

\\

l l

4 rm_ _

, W

~

h PUBLIC SERVICE COMPANY OF COLORADO l

ANNUAL REPORT 1979

,I l

I' 1

l l

l i

i l

f I

s

• -s

-pe.

- -., + - - -

.+-s-

,w.

I p,

g

... ~

,.; s _

v k*

4 3

,f o.

y

.I. '

4

.. M,

g i

i l

,,e

'.. - 4

'g-,,

4 i

r

-[ f s

y

+

33,

,. (,

y e

$' j J

2

,+

I 3

3 5

I*-

yt

• 4 j z 3 7 -4 % i / ' g k,

},.,.

3, '.,1 4

. ' y.

a v,,.. -

. i s:..

L A,. aL e

s

'N M

Y 4

=

I 6

1 y

4. '5.*4v

. b.,.. s

' ) " '$ f ~' e % ~.

/ w es,?.,'

.h,l,, g.

77,2...

i Y

f J *, *.

l-

• j.*k

. 7 6.,

1

...m n

( '

[

j J, ..s,, y )- gq *,v l

i

, ) { \\ g f, d.,.

px.'_

j Q

. e, ?....

1_,

1, r,

w a

x p,

w -

b'.'

,

• s 4.

o'

.~

.s t.. (/ * ;

v l

.,yL g

s-1;

.;)*-.. t.' T !. ~,! } j ',,, '. )(

s, ' ' e, i. - - st t.'

.'.?

l

/ +

'o a

q 1

e.

i 1

i

,.. k ',

.f

..,',y.. ' ],, '. -

+

l g

~

-4

)

l Y,

-i e

j

'4

'f 1

's 1

S '

g*

, ;,,. ) h,j, y S

- p

}Yc i

~ " ' '

L )$,A

._ e ...t

^

e 4

' i

., g g

i -

a j

t l;

',:, d-s g.

~

1:

)

F i;

q

+

'i Ry

-t

_g

_-.s.

e,

l p

4 E

v 9.

e g,e

[.

-_ - _. 8004220 _7 7 8-__-

l

. Em.E PUBLIC SERVICE COMPANY OF COLORADO ANNUAL REPORT 1979 i

l l

l CententS Page 1

Public Service Company: A Changing Profile.

1 Year in Review 2

Management Commentary.

4 Electric Operations.

6 Natural Gas Operations

.10 Subsidiary Operations

.12 Regulation

.14 Financing

.16 System Map.

.18 i

Financial Information

.19 Shareholder information

.40 Officers and Board of Directors.

..Inside Back Cover Annual Meeting i

The Annual Meeting of Shareholders will be held on April 16,1980 at 2.00 p.m. (MST) at Public Service Company headquarters,55015th Street, Denver, Colorado. Notices, proxy statements and proxies are mailed more than 30 days prior to the Annual Meeting. Management sincerely hopes that all shareholders who are able to do so will attend the mceting in person.

The Cover: The statement on the cover is an excerpt from Management's Commentary on the state of the company, which begins on page 4.

A copy of Public Service Company's 1979 report to the U. S.

S:curities and Exchange Commission on Form 10K is avail-able without charge upon request to the Shareholder Serv-ic;s, P. O. Box 840. Room 1048, Denver, Colorado 80201.

Public Service Company:

A Changing Profile Public Service Company is a coiabination utility providing Greeley, Colorado. Westem Slope Gas Company is engaged electric, natural gas and steam service in Colorado, and in the transmission and wholesale supply of natural gas.

electric and natural gas service in the Cheyenne, Wyoming Fuel Resources Development Co. explores, develops and area.

produces natural gas and oil in Colorado, Montana, North Dakota, Texas, Utah and Wyoming.

The Company is the largest utility in Colorado serving 2.5 million of its estimated 2.9 million people. Approximately 1.9 The Company's service territory is a unique study in con-million of the population served by the Company lives in trasting characteristics. It consists of large cities and rural Metropolitan Denver. Electric generation and transmission communities; diversified businesses such as agriculture, f acilities and natural gas distribution hnes bring utility service tourism, mining, retail and manufacturing: city apartments, to more than 200 urban, suburban and rural communities downtown condominiums, suburban single family houses throughout most areas of the state.

and mountain hideaways.

The heartbeat of Public Service Company's electric system Denver is a city rushing toward tomorrow. It is one of the is at the 9 major generating stations located throughout fastest growing metropolitan centers in the country, making Colorado. Plants with names like Arapahoe, Cherokee, Colorado the fifth fastest growing state in the United States.

Comanche, Pawnee and Zuni stir the imagination about Denver has rapidly evolved as the Rocky Mountain energy western hentage but have a technological capability that is resource center in an area rich in coal, gas, oil, uranium and definitely late 20th century. Add to this about 16,000 miles of many valuable metalA Employment opportunities are at I

transmission and distribution lines stretching through the attractive levels. People are continuing to move into the state.

mountains, across the plains and under busy metropolitan Consequently, population is increasing more rapidly than areas, countless poles and wires, natural gas distribution the national growth rate.

systems and storage facilities, a small army of service The demand for utility services in the near and long term vehicles, a computer bank that brings the whole picture future will parallel that growth. But the impact of inflation, together and 6,000 men and women with diversified talents inadequate rate relief and impractical government regulation and skills and you begin to get an idea of the scope of the have cast a shadow of uncertainty over the utility industry.

Company s operation.

Public Service Company in 1980 is a far different utility than Four operating subsidiaries complete the network of opera-the one that wrote a remarkable story of progress for more tions. Cheyenne Light, Fuel and Power Company provides than a century. The malaise of the latter part of the 1970's has gas and electric utility services to the Cheyenne, Wyoming forced the Company to focus on a new set of priorities..a set area. Home Light and Power Company serves electricity to of priorities that will carry it through the 1980's.

..py n.~.e g m.. g g g'

_g.

g g

M N

,l q.

+., sme e

3

_ - ~,

e f

~

&f.

l f',,,~

m t

1

Year In Review Net income Declines Specifically, here is how these and other factors adversely Net income for 1979 was $55.8 million, or $1.35 per share, on impacted financial performance:

operating revenues of $926.5 million compared with net income of $57.7 million, or $1.66 per share, on operating

= Expenses for fuel used in electric generation, purchased revenues of $729.8 million in calendar 1978.

power costs and natural gas purchased for resale increased 41 percent, or $151 million.Becauseof thelagin recovering The rise in operating revenues results from increases in the increased costs from our customers through adjust-electric and gas sales, modestly higher rates, and, more ment provisions of the Company's tariffs, operating reve-importantly, from the recovery of greatly increased electric nues derived in this manner did not fully offset these l

fuel and purchased gas costs which are billed to our cus-increased expenses.

tomers under provisions of the Company's rate tariffs.

= Fort St. Vrain Nuclear Generating Station was operated on Net income was adversely affected by sharply higher oper-a limited basis because of numerous scheduled shut-ating expenses and subsidiarylosses.Thefultimpactof the5 downs. Consequently, sales of electricity from this plant did percent annual rate increase granled by the Colorado Public not offset depreciation, maintenance and other operating

[

l Utilities Commission in November was not felt until late costs that resulted from acceptance of the plant for December, and thus had only a minimal effect on earnings for commercial operation as of January 1,1979.

i the period Per share earnings declined primanly because of a 17.5 percent increase in the average number of common e Purchased power from other utilities increased 30 percent shares outstanding during the year.

to compensate for the lack of generating capability.

y+. mm.gc.t.,4 ng y y.wgm+mm - y w

e m m :f x--

ym..<. 0; 'gmm m. -.&. n v. ;,

ns y

.gn 1 y m_'

eg 4

3 y

g..

e

- a

?

-: p*yi

Q.

M:[u[.[Q '.' 4:.jm f yb..y Mk.'g$.1%M;X3 '

y f

sj QN N

)$['

Q:g.W4 x ?';.;[.*

a MjkY$ Y 9%

M

.NIM-y-

m% m c.me.7.1 swy

. swAa,m e

c

.. w - A.....

y) s;

~

f jt.

.l.

_j,,j_f b;

4 s.e.._'

.... g t

% ^'

3 J 1"fl1.

C, J.

p-Q.

' l z

+$

u v

... 'i 1 4 l-

1. j. n !,

U '.

h U [. gy a h!

h'.

.. $ l

, '

g.

,.s

',e

,,{

@ ~

h 'i

• l[...

h5 ik. ! -.

s.

- a. 's -

... ~

7 s

j y ;..

y

r ' f f ; }. f

(

q

^ m{.,.

_j y'>.,

g.f.

l':7

..y

. f,f,-

.g.y g.

'Y:'.7... / v,i:&,.

~: i *.. '

% l.. y x N'\\

..?

[

R H Q,J'*'

~

q P

2

(

.. 6 Q $ '..

f g

~

. mp.

.. ~..

f

. f;'

~

~..

y

[

o n,.jy. ?'

k{

=

g,f_y ;

~

~ -

7.:. t _'.

.y, w f

.J. _' j ', ' q

^ '

^, M.A y '

,W:C

.D g

e

'a s..

r U.'.

e' i

g

-:'W-3 nrN'pt h,.-v%n,-

b; 3 _

?!

yp

'N.

M 4p.

' "< t h:

h:J I

i _ ;

9

. o l

l l }..

l l:

i

~

W1 i

h M E e M & M..

2

m Fuel Resources Development Co., a wholly-owned sub-

= $97 million in future payments for construction of additional sidiary, had sharply greater losses resulting from expens-electric production f acilities to replace the capacity reduc-ing sizable nonrecurring costs of dry holes, lease and well tion at Fort St. Vrain; abandonments andimpairments

= $8 million for the shipment, storage, handlir g and disposal y 7=. - -

of spent nuclear fuel elements used at Fort St. Vrain:

'EMININGS PER SHARE 1

e up to $5 million to study and solve the reactor temperature

g _

a._._

_. _.. ?;

_...i__

fluctuations, and up to $10 million for miscellaneous re!ated services.

s 9

In addition, General Atomic will provide the Company, at no

gg,y -

._.-.-y c.

through 1984 and will continue to supply fuel for Fort St. Vrain through 1992 with the Company paying only General Atomic's

%ED--

actual costs.

./

~

Energy Sales Rise

%3 Energy sales continued to outpace the national growth Mb patterns. The Company's total number of electric and natural gas customers went up 4 percent, which is about twice the utility industry average.

Electric sales increased 6.6 percent to 14.7 b!Ilion kilowatt Ww hours. Natural gas sales rose 3.2 percent to 213 billion cubic

<4MDENDS PAID PER SHARE,

feet.

g

-E--

The sources of 1979 operating revenues by customer classi-440.- r - - -

- -- e --

fication were as follows-Electric Gas Repdential.

.... 33.1 %

46.2%

gg-Commercial.

. 36.5%

31.0 %

Industrial..

. 21.1 %

17.5%

Other.

93%

5.3%

$t90 -

Company Granted General Rate increase

'..~j The Company was authorized to raise its total electric, natural gas and steam rates an average of 5.3 percent. The N-new rates, based on the Company's operating expenses in 1978, will increase annual revenues $40.4 million. The rate hike represents 63 percent of the total $64.4 million re-quested.

The rates were effective with meter readings on November Settlement Reached on Fort St. Vrain 26.1979. The Commission granted the Company a 9.53 The long-standing issue of acceptance for commercial operation of the Fort St. Vrain Nuclear Generating Station percent overall rate of return and a 14.6 percent retum on between Public Service Company and General Atomic common equity. The Company had asked that the return on Company, the primary contractor, was resolved in 1979 equity be raised to 16 percent from the 14.2 percent previously authorized by the Commission in August,1978.

General Atomic compensated Public Service Company for the shortcomings in the performance of the nuclear plant and Construction Expenditures Reflect Area Growth has agreed to provide certain services and fuel supplies as The Company's 1979 capital expenditures climbed to $321 part of the overall settlement. Public Servicca Company million, up from $210 million the year before.

accepted the plant for commercial operation as of January 1, 1979 and is fully responsible for its future performance.

A major portion of the expenditures went toward construction of the 500 megawatt Pawnee Electric Generating Station.

Public Service Company accepted the plant for commercial The plant was two-thirds complete by year end. The remain-operation at 200 megawatts electric generation based on General Atomic paying the following compensation costs:

der was appropriated for gas and electric transmission and distribution facilities, pollution control equipment on e'xisting a $60 million to tm used to reduce plant investment on the facilities, replacement of obsolete equipment and subsidiary Company's books; expansion.

3

l l

Management Commentary I

i

[

The results of the past year have been disappointing. But they Rate Increase Insuf ficient have not discouraged us and we address the future with Let us review a few of these major efforts. In June we determination.

requested a $64.4 million rate increase. Effective November 26, the Colorado Public Utilities Commission gave us $40.4 Few if any of us, have been able to escape the harsh effects million. Because of the use of the outdated historic test year of our inflation-infested economy. Utilities have been hit principle used by the Commission, the increase is based on particularly hard. Our business is both capital-intensive and costs we incurred during 1978. In times of quick-stepping energy-intensive at a time when the cost of both has Inflation rates, higher operating and capital costs and strict increased dramatica"y.

environmental standards, increases based on past costs are insufficient. However, the Company was encouraged by the Utility Character Changing Commission to seek future rate increases based on a The Public Service Company that stands at the threshold of partially forecast test year. We expect to employ that the 1980's faces a whole new breed of challenges and approach when we ask for another increase in 1980.

priorities. The golden years of the 1950's and 1960's are Construction expenditures for 1980 are estir ated at $304 gone. No longer can we talk about the character of our business in terms of predictability, low-cost fuel supplies, million. The 1980 budget excludes $54 millon that would economics of scale and stable customer bills.

have been spent on a new plant in SouthePotern Colorado.

i I

Construction of this $1 billion plant near Las Animas was The delicate balance between our financial posture and postponed because of its adverse effects on the Company service obligations has been tipped out of proper proportion and its customers in light of the present financial situation.

i by rampant inflation, high interest rates, above industry We are moving forward with construction of the 500 mega-average growth in our service territory and impractical watt Pawnee plant scheduled for completion in early 1981, government regulation.

new transmission and distribution facilities, and pollution This was never more evident than in 1979. Our operating control equipment on existing generating stations.

costs escalated 32 percent over 1978, primarily because of

.l o l '

higher costs of fuel used for electric generation and the price of natural gas purchased for resale. Rate relief has been l%

j.

inadequate in compensating us for rising costs.The return on l

our shareholders' investment is below desirable and com-pctitive levels. We are responding by reshaping our financial E

C position to accommodate cha Jng times.

f 6

Back to Basics D

h y,

As we go into the 1980's, we must reexamine the basic utility i

concepts that have always been at the root of our business:

p t e

our commitment as a regulated monopoly to provide reliable F

m h

service in whatever quantities customers demand; the rates

.l we will be permitted to charge to meet that commitment; and

~

the public's willingness to pay the necessary price.

Let us put our situation into perspective. Our service territcry I

%g i

/

is among the fastest growing in the country. Electric use by

+

customers continues to grow, although the rate of growth has tapered off. We were able to meet peak load demands but our

,g reserve margins were below desirable levels. We're buying

/

i more high-cost power from other utilities than ever before.We 1

h must have new generating facilities to meet these growing i

demands. Existing plants are being retrofitted with very expensive air quality control equipment. All of these items require an ever-increasing amount of capital at a time when

(-

we do not have the financial footing we've had in the past.

g We took what we felt were positive steps in 1979 to buttress

,//

our financial position. While all of our actions have not been O

as productive as we would have liked, we will continue to dn g

whatever is necessary in 1980 to ride out the current economic storm. We have confidence in the ability of our fhchard F. Walker. President and Chief Executwe Otticer, organization to reverse the situation.

seated.and Robert T. Porson, Chairrnan of the Board 4

"Few, if any of us, hav2 been able to escape the harsh effects ofour inflation-inlested economy. Utilities have been hit particularly hard.

Our business is both capital-intensive and energy-intensive at a time when the cost of both has increased dramatically."

Gas Storage Expanded courses of action will increase. If we are to avoid electric We took a big step in solving the problem of meeting peak day shortages, ' is understanding and support is vital.

naturalgas demands. A $24 million underground naturt' qas We have taken several initiatives during the year to expand storage facility has been built northeast of Denver. The customer assistance programs. In addition to helping cus-facility will be capable of delivering up to 50 million cubic feet tomers evaluate their energy consumption, we instituted a of natural gas per day by the start of the 1980 81 winter heating season. This will enable the Company to add about budget billing program to help customers cope with higher energy bills by spreading their payments over the entire year.

25,000 additional customers or the equivalent of a year's The Company will continue to expand efforts to help cus-growth. The storage facility enables the Company to pur-tomers who, like the Company itself, are feeling the impact of chase gas during ry n-heating summer months and have gas inHation.

available for high demand in the winter heating season.

As we step into a new decade, we feel more comfortable Investors will continue to be the backbone of our inanage-about the natural gas supply situation. Even as supplies ment strategy during these troubled times. The co.'lidence increase, however, we expect the price of natural gas to rise you display in us provides the ' capital power' that is essential to weather the economic cold winds that have hit the utility faster than the rate of inflation. Now we must address ourselves, as an industry, to the counterproductivity of industry.

government regulation. We must pave the way for a smooth Energy is one of the pillars on which the future will be built. If flow of those natural gas resources into the lifestyle of the the projections for continued rapid growth in Colorado are at 1980's.

all accurate, they will materialize only with adequate and reliable utility service.

Conservation Still important No commentary on the year can be complete without Conservation continues to play a key role in our resource mention of the men and women who are at the heart of our strategy. The energy conservation program launched sev-operations. We've had to put a heavy burden on the!r eral years ago was continued in 1979. The program is shoulders in difficult times and they've responded in a designed to help customers idenhty and climinate wasteful commendable spirit of commitment and cooperation.We are uses of gas and electricity. The program includes energy confident thet our employee organization is geared to the audits of homes and businesses, printed suggestions for challenges of change to which we will address ourselves in conservation and person-to-person consultations. Asimpor-the 1980's.

tant as conservation is, we recognize that it is not totally the Public Service Company and the union which represents answer to long-range power supply. We will still have to build substantially all of the Company's bargaining unit employees power plants to serve our growing population.

are in the process of negotiating various amendments to the principal labor-management agreement which expired Expanded Generation Needed For Future December 1,1979. As specified by the agreement, the Coal and nuclear power remain as a solution to this country's Company and the union will continue to negotiate until energy condition in the foreseeable future. Despite the agreement is reached or until either party gives notice to the increased attention on nuclear power brought about by the other that negotiations have ended. The unresolved matters unfortunate incident at Three Mile Island, we owe it to will then be submitted to binding arbitration.

ourselves and the next generation to analyze whatever errors We encourage you to read the remainder of this Annual were made and to engineer them out of the future. The Report which elaborates further on the important issues lessons that have been learned must be relegated to facing our Company, signposts along the road to safe, reliable nuclear energy.

The Company continues to contnbute to the research and For the Board of Directors, development that will help achieve that goal.

Service Obligations Must Be Weighed MM u-Dunng this period of inflation and crippling regulation, we R. T. Person have come to gnps with the reality that electric service may Chairman of the Board have to be downgraded. We must weigh the customers' growing unhappiness over higher rates with their willingness to accept less reliable service. Should we be obligated to i

provide the highest quality service if our customers do not R. F. Walker l

want to pay for it?

President and Chief Executive Officer We are convinced that if the majonty of people who will be affected by energy shortages become more concerned and February 7,1980 involved, public understanding and support for constructive Denver, Colorado 5

1 l

Electnc Operations l

l l

.g 4

~

ll n..'.

f,..,

s.

+

c a

%s-1 a

m

[

N l

g 2

f. heCIriCdy hMJ9.8 idN IW QIUUieh IIN,.t$SM M O..$ by GUI fl euskanewfo be thee when they mwt d. as.mudh as thev 7

'(.[

.b, )

g g A.h g f h

j T1., [

k'.

fh decepttydy mpp; bdt haudly <@atunutrefliri 1udpiupt cph,-

y t.

tomers nAhrstdd f ha ohimeos cMhu uhhty.mdup2 v.

x 1

~

1FrbuhtM by the in &mrss 91 the het rimngbsipSi nmMxm1

~

.everythmg the eastonug vw/wed nsing utthty bthwoharnt s

4.

{

g

',md anger ni W19 Elechkity has coways be6n.a c%.wne m.'

.thou h. v d' sUnelhtnq ihdi won them f$r the osinut, Mui

.. w l

~"

n l

he N h *h k lh IA h

b

• .r

(). [

t c7 1

lI -

..the 'chstorng quesjjDfM th6 Chaieter darf monvaadn d the

~

Cf unp my but dgeN D&t gtgsp th NCup f r[lhe dOUuMS br

.u..hh4y. w va edhh.<ue 3.reunT wctssitu tiv fy charuf nyh; Cp s [l!.sj j bt'I S j i..l Ii3 h.fi %) 11\\$JE iltTttdY 5

' IM N HJC.

I

'l

.w.

f iphm.pi p.s ramo fat du4 th uAe of the ubbty must bMuminm l

L Igted itdo t ha' JMu j. W HIHM.%u Qft d 't).u AWfh pkn ~ 1tFW % R iA

~

simnh{tuia ut% tqrwduate the epul envesuv rd rn7er64.

~

.L, l

r

' ~

.md.thop7peirte wha r ihwue n6pesarygnpipporf e%nc sbn. Sigh a p.a snfe nip.My dnpopble utMer ve@wm v

y

~

k. kMppii y4 mij:4IitJU $H aM upwaN'Dtyt$ht:s h j ye Ws4 : fjr I

u u x.

't4dJ5: ns, npydes thnt a rve tb f nd qds os serw r.4 ur in l'

' cul d NiG hthl Ik.i(1.tpe M rd:Cea. I{Nie Comp:Ni 6'

l'.phequMp and r@gts to < %rP ):t b6 +or v tcD. ;>

j Gmb4 its m unj,ite Vf>rc

~

l nYnst.y wu tenhhnq L w:Yu.:dTTTmuniron l

+

.g.....

y

.,p

~

q

'+

+ :.

f y

J _.,

~

~ :"

S; i

g

,3

.s,

?,

2 2-e g

a

+

i.

..g l

. _ +......._ _

_.n....

.x

~..

i<

_ _j 6

"While the delays at Pawnee and the limited service at Fort St. Vrain put a strain on the Company's ability to meet short-term demands, rising costs andinsufficient rate increases put the Company's long. term construction program into a state of uncertainty."

Electric Operations n' -

y-

+. gs.c.w r y g.4g The 4 percent increase in the number of electric customers.

M (q

.jE ' S :

Mf which exceeds the utility industry average, contributed 4

$ Q$Q*...

m WV ( '. ' :

<ni materially to a 6.6 percent increase in electric sales in 1979.

A t

0'Ei W' ~

w u,aw+c

,.m.-

~ ' <

Despite construction delays on new generating facilities and f[ W M i g }v C ' ~

?-

O eaV~?

1.-

.y the limited availability of its nuclear station, the Company was C 7/

s able to meet all normal requirements.

N

~

~

~

Firm Peak Load Reaches New High The Company reached a new net firm system peak load of h

2.642 megawatts on August 6,1979. The net effective capability at the time was 2,743 megawatts. The Company O

built up its reserve margin to 3.8 percent by contracting for

~~

the purchase of 175 megawatts of power from other utilities.

7 2

^

The population growth in Colorado translates into an expected 89,000 additional electnc customers during the next three 4

W years. Even if cor.servation reduces the average use per Q

customer, the Company expects electnc demand to increase "y

6 percent in 1980. 5.5 percent in 1981 and 5 percent in 1982.

g The following is a projection in megawatts of expected peaks.

.i capability and reserve margins for the next five years:

.j

,1 F4

'1979 Net Net Effective Peak Reserve Capability

• Demand Margin Pawnee Delayed Until Early 1981 1979....... 2,743 2.642 3.8%

The Company expected to bring the 500 megawatt Pawnee 1980

.3,148 2.800 12.4%

Steam Electric Generating Station into the system during 1981.

. 3.450 2,954 16 8%

1979. Inclement weather and numerous other delays forced 1982

.3.639 3,107 17.1 %

the Ccmpany to reschedule commercial operation of the 1983..

.3.497 3.258 7.3%

plant until ear /1981. At year end, the plant was about two-1984

.. 3,456 3,415 1.2%

thirds complete.

nciumnown purcnase po*er contracts The delays in completing the plant and rapid increases in construction costs will drive the estimated cost to about $420 Il g g Q....klNNROAWA M@ $ W it e ';[bbh Public Service Company's system.

~

R Q ft @ y

~

million. Pawnee will be the largest single generating unit in

. ~. y ;Q

^'

~~1L j

NET' Call'A81t/DL ~

1 ' Wig Fort St. Vrain Output Limited q-j.c

- ~ * -

r jQ The Fort St. Vrain Nuclear Generating Station north of Denver

.gf...-

i,_ sgQ experienced a number of scheduled shutdownsin 1979. As a

- !A result, the plant provided only 217 million kilowatt hours of p% ; it.- -

,1 -

'y ciectric generation. compared with 607 million kilowatt hours j.0 7 3

^'t in 1978.

= 1. r -

g.2500 g' ~ "

~

-~ ; i Beginning February 1,1979, the plant was shut down for its

-1 first refueling after having generated over 1 billion kilowatt hours. While shut down, the plant underwent routine main-

'.g tenance and inspection. These necessary procedures g_

fi

..i required nearly five months to be completed.

b.

E[

After bringing Fort St. Vrain back on line in late July, the l)S00-

- M Nuclear Regulatory Commission required that seismic tests be conducted at the plant site. The month-long testing was

, ;. i completed in September.

e

' ?

While the plant was shut down, the Cortpany installed a 1

series of restraining devices on the fuel elements as part of its

' 000 -

- 1977 j [-

1975 - 1975 1979 Od ongoing efforts to resolve a temperature fluctuation problem

..s

...<4 in the reactor core. The Nuclear Regulatory Commission has l

7 m

-.e.

"The decision to postpone construction of a m uch-needed new generating plant was made because of the current state of the economy and the Company feltit was in no financialposition to l

commititself atpresent to the long-range financing ofsuch a l

sizeable project."

limited reactor power to 70 percent of the plant's fulllicensed conditions improve. The Company still needs considerable capacity until the fluctuation problem is resolved.

financing for the completion of Pawnee and theinstallation of Although the plant is expected to be shut down until March, pollution control equipment on existing plants.

1980, the Company expects the plant to operate at a 50 percent availability factor in 1980, providing about 650 million Pollution Equipment Costs Keep Rising kilowatt hours.

Public Service Company spent $53 million in 1979 for air and i

water pollution control equipment. Over the past 10 years, the Construction Budget Cut Back For 1980 Company has invested $145 million in air and water pollution While the delays at Pawnee and the limited service at Fort St.

control equipment. The Company expects to spend another i

Vrain put a strain on the Company's ability to meet short-term

$211 million during the next 5 years.

demands., rising costs and insufficient rate increases put the Company s long-term construction program into a state of As society has become more complex and as our population uncertainty. The Company has announced anticipated has increased, pollution of all sorts has become a major i

spending of $304 million in 1980 compared with 1979 concern. Public Service Company has been concerned expenditures of $321 million. The 1980 construction budget about pollution control for many years, but as the air quality.in excludes $54 million that would have been spent on new the Denver metropolitan area has diminished in recent years, I

plant construction.

efforts to minimize pollution have been stepped up. Pollution control costs money and a lot of it. That cost is reflected in the A decision was made late in 1979 to temporarily shelve plans rates that customers pay for utility services.

l for the construction of Iwn 500 megawatt coal-fired units near M

a M d mm WM plMimo@ol j

Las Animas, Colorado. The first generating unit was originally l

Scheduled for commercial operation in 1984.

facilities, but it costs a tremendous amount of money to operate them. A.ir quality control equipment in a modern j

The decision to postpone construction of this much-needed generating plant will require nearly 10 percent of that plant's new generating plant was made because of the current state capacity and output just to operate it. Consequently, it of the economy and the Com?any felt it was in no financial becomes necessary to build bigger plants to serve the position to commit itself at the present time to thelong-range customers' basic needs. There are sut stantial fuel and other financing of such a sizable project. There is little doubt that an operating expenses involved in opersting pollution control j

additional plant will have to be constructed in the future if the equipment.

Company is to meet projected demand. The Company is completing basic preliminary engineenng studies, soil sam-This high price in the name of the environment is exacting a i

I pling and other studies at the proposed plar.t site so that it will heavy toll on utility operations. In weighing alternatives to be ready to move ahead when economic and financial keep customer rates and operating costs in perspective, there should be a review of excessive environmental regu-lation in the 1980's.

gym 2.wne e.) www w w _.m 31

.. e y. e #me -' '

Fuel Costs Drive Operating Costs Up umn r.w-Fuel used for generation is the Company's largest expense for producing electricity. Coal is the major fuel used and accounted for 79 percent of 1979 system input. Costs for coal supplies soared to an all time high of $106.8 million during 1979. These costs are expected to escalate toward $115 million in 1980.

Costs for coal and other fuel supplies are passed on to the m.;

customer under the Company's Fuel Cost Adjustment clause.

The typical electric customer's bill rose 15 percent in 1979.

About 70 percent of this increase is attributable to fuel cost adjustments. The Company's base rate for electricity went up 6.7 percent, which is about half the 1979 inflation rate.

Public Service Company purchases low sulfur coal from suppliers in Colorado and Wyoming. The Company's two largest coal supplies are from the Amax Coal Company mine in Gillette, Wyoming and the Energy Fuels Corporation mine in Routt County, Colorado.

The Company used 6.4 million tons of coal during 1979 and l.

projects similar usage in 1980. When the Pawnee plant is in ll.

m 8

"This high price in the narne of the environinentis exacting a heavy toll on utility operations. In weighing alternatives to keep custorner rates and operating costs in perspective, there should be a review of excessive environmentalregnlation in the 1980's."

~

capability. In recogaition of this compliance the Company we -

.4 mg

...-.~<.:

slh E 7f1{*?f(.,,.,. Ult, Ittt0NS.

while air quality control equipment undergoes replacement

i. :.b:-

ttA5 DOCS ^

has been allowed to burn necessary quantities of natural gas or modification. Installation of fabric filters at the Arapahoe.

g g'

j Cameo and Cherokee stations will enable the Company to 4

g

e., 3 7 v.

quality guidelines. In 1979, the Company burned a higher burn a maximum amount of coal while staying within air

.c 1.x v

'...h 4d

.W I :

~

than normal percentage of natural gas during the installation 7QMksIESN@[C F T

& c rk ppc? g y.4 '.

of fabric filters on two units at the Cherokee plant. This higher gas burn will continue until installation is complete in late b

~'

p $ x.A. <}' p,C L.. : -;..;..

1980.

x

. nggy, i.

r Ddt

%Q In 1979, approximately 18 percent of the fuel used for Ac.u:.i>i generation was natural gas. A smaller percentage of about 14 pqq.s m.-

~..

iIINIjfhp b Ck',.

k percent is projected for use in 1980. The Company's use of oil

.g_.y

y..

1.j 3; Ap *

• f ;

an

. T.

was minimal and considerably less than in 1978. Hydro-

~

~

electric generation was at about the same level as in 1978.

Average Fuel Cost U

...a

.?. s.

(Per Melkon BTU)

'/

O.].

Coal Natural Gas y

Nuclear Average h

yg.

-E

.-[

.~

~

1973.. 50.32

$0.36

$0.99

$0.35 f" gv$

V y%

g.

1974..

0.38 0.43 2.15 0.47 T

i hf< N A

• d,.

b[

=

g <"

1975 0.48 0 60 2.39 0.63 9.

1976 0.53 0.79 2.43 0.67 NN. hi, y!c

1. m 1977 0.63 1.03 2.54 0.75 1978.

0.70 1.29 2.16 0.85 full operation in 1981, the projected coal usage will increase 1979

. 0.85 1.95 2.91 0.19 1.10 to approximately 7.8 million tons annually.

The construction of new facilities and a leveling off of The Company continues to use natural gas in its major operating costs are the key factors that wili enable Public generating plants fo, oilot lights, flame stabilizers and emer-Service Company to continue to provide total electric service gency situations. The Company has voluntarily complied with when a customer goes to flick a switch 10 years from now.

requests from the Fedecal Government not to burn natural gas as a pnmary fuel in installations with coal burning m.

e a

p.*

1 p.

Iff J

0

' c v; s

r m

3.

I m1

=

l g '-

. '[

- W EB

~ Bi

{

9

< lIU I r) 1.H j )U' i!!()flH f-y

=

A gf.

.e m

.(

,7 F.

[

,. a _

.k,.,

4,.

~

.9'

+ =< '

DiffMTid r. Ok !;;ntppIV phidle eOMimued 10 Shct.W

~

)

O 'Ddb Dt

. ".' ~ ' igns of unproyemeh.t dutmo W79 Numenh u s

g.

.d uhn. g 4).ie pgsf cjecad. Whad beon Iac6d..wi.th eon 1,pfeWeur tl1efYt O W CUSt0{n 0oku s w.re ;iaw h e to cx4enet bbr=

' g.r~,,.'

vjcejo new easganers wrthout nevere restuctions

~

Q semaf events don,ne IW9 bathiened pmsras %r

• i I.' ;

'. future of the mdt.tsuy hicentthes awldd%m thv%ty6tl Gm f [ ~,

i Pohey4ci punpf66 en avsreuse m drdbmr achv@ &b '

~

^

inary repottw nditate.fhat nos.< ras weR comp 16tmm m 6.

NRit%d Slates mCtedMed 1.b' perceclov he-previo%,yb u.1 "The.numbdr 'oigfNii.m r rar.s ge'tive nitDecember 19791enched ;

f o 22 yMr higb. a tiem{ Jhat rs espected to contuaw ut NHO t

-Lik$wisg gevetnmentaf suppmf of the Ilso U nourra! uos. 6 dipp}hCP IQV}XMfFd Old,))pptOVaI Of Wifroy9 8Uppiy HI;txAj

~ j

' ' gl ~ prenects, promess on hwns1 stiob support:no f h4r dewsbppieni t Al synthetjc fuelsf and proytess rm b.psInh6rt.h Kib t tow,trd

' repeal of the [ndemental {hwina Mpects of the %hdo! b

~

A Pohey Adt haw aV boghtemed b ufunfrp s m M v and.

ll N

l gemana ou%.k r

i If '

f N..)$l kM I j i l.lD N nI<I%

• I(}h

@ ~ f fe.IN h 1.[,, f( di f-tiquedi snpfovenutut A. m.9jel 3n b <ue.Js of e* Ave 4

veruntental ynntrof hdfk m prusni.1ad ui genmal opr m b

=.

q.

t Md CDil $ C,b NC[ d U lleflM th f j> ('.

.M O$t i j

(

-d ir

. v m asm' oo m m# m m sco.. a x % s o m n &

+

' :.[ 1 UQd '^n{tfd hhM, Ih f hN[ f 0I, } M h. h

.0, OI e'i Ol'!, k f1

, the mtional enerro yWu y - thousare. rssties tehet wr on.m

~

grnpple wi$ as wcl go i5$2 ihe IHedis. Now they g+ NgdvWi 7.

"1

will be 4Twi.gsis fdr.[ Shaping the. %gture di thC.. utNuhtrv.

N

~ lf l

J l

~

y,

<j

(

, es

..g

,v e

- 3 s.

[,

+

i, k

l

.e 4,

10

"Despite the positive gains made during the l

past year, contin ued improvementis needed in the l

areas of excessive government control-both in pricing andin generaloperations."

E;MD customers have been attached since 1974 because of supply limitations. Now that the Company's annual supply Mh?

.. $ 7 has improved, due in part to customer conservation efforts,it J 3 W.QjS%d.g is in a position to offer interim natural gas service to lj

g. E:...

N @ d(W T.M47 ;

interruptible industrial customers on a short-term basis. This a

G 48Mbep4, M...@...c%.as.-

.g required changes in the gas tariff which were approved by the M N. o r i.

g w.

.~, w.

J. 7 Colorado Public Utilities Commission.

-- gw[M !y i) % :

h:4 Following nationwide patterns, Public Service Company v

p

..c

.p 1NM upMg.g r

%,[.

mv customers experienced significant increases in energy costs

%:F-fg k.ad 3.. J$[. j f K NZj. $E ?

?R/,:

a'M M-1J "

C during 1979. A typical customer's natural gas billincreased K $$. 6D d

32 percent. The Company's base rates increased 6 percent.

Y *> W} Q Q Mfi p p ' h g ;'

approved by the Commission and passed on to the customer.

• ^

The remainder represented supplier gas cost adjustments g"

y' 19 % fif M M :

f ${d$.E. L # W' [}-l s '

~J -

j still among the lowest in the United States.

.,. ?..

%~

Nevertheless, Public Service Company natural gas rates are 4

[

g

j. _

m.;ga 1

m g

1 11 ou.; ;.

w w a e

S

}

g.

yy S-y ;,g.,raq~a.w 1

N yt l

[

l I

U

~

Tf sto ib k

A

W.

(Q.,,, ;

~ p d.3d ll yg x

R g, ; n N '.' p.$

,m;

(

Gas Operations

~!

In 1979. Public Service Company, and its subsidiary Chey-g

+

enne Light, Fuel and Power Company, added 24,616 resi-dential and commercial customers to its natural gas distrib-ution systems in Colorado and Southern Wyoming. This represents a 2 percent increase over 1978 customer addi-tions.

^

l The Company added customers at a rate of about 4 percent N-during 1979. By year end, the total number of gas customers m

climbed to 658.219. To meet the requirements of these new g

_T 7

S, customers, Public Service Company obtained an increase in the peak day delivery obligation from Colorado Interstate Gas

f 7

Company of 23,351,000 cubic feet and from its own subsid-iary, Western Sicpe Gas Company, an additional 28,038.000 cubic feet The numt of gas customers is expected to increase by C

K, C 67,000 ovu the next three years. Demand is projected to

~

increase 3 percent during each of the next three years.

Gas Attachment Scheduling Continues

~

I The Company continues to operate under the Gas Attach-ment Scheduling Program which went into effect in 1973.

2 This program is designed to maintain a balance between new E

customer additions and available suppSes.

No new firm customers having an hourly requirement la excess of 7,500 cubic feet or new interruptible industrial L.

11

Subsidiary Operations Fuel Resources Development Co.

oil sales volume was up 243 percent. Revenue increased by Fuelco is engaged in the exploration, development and a larger percentage because of the new prices allowed under production of na' ural gas and oil in Colorado, Wyoming, the Natural Gas Policy Act and the increase in authorized oil Montana. North Dakota, Utah and Texas. Fuelco was orga-prices by the Department of Energy.

nized in late 1970 to develop natural gas reserves.

Several new sales contrtcts have been negotiated and Western Slope Gas Company has first right of refusal on several existing sWs c..ntracts have been renegotiated.

Fuelco's natural gas discoveries in Colorado. However. if Fuelco's contract for sales of gas to Mentana Power Com-Western does not exercise its option, Fuelco will market this pany has been renegotiated for a 25 cent per toousand cubic gas as well as all of its other gas and oil to the best available feet (MCF) increase in the wellhead purchase price and its markets. Fuelco has also made its natural gas available to gathering system transportation charge increased by 5 cents Cheyenne Light, Fuel & Power Company and Colorado per MCF effective January 1,1980.

Interstate Gas Co.

At year end, Fuelco had contracts for natural gas sales from Fuelco's sales in 1979 to Western Slope Gas accounted for 35 additional wells which will 17 gin prod'uction in 1980 when 43 percent of its gas sales revenues, while the balance of its permits have been issued and gathering system construction revenues came from other gas sales, crude oil sales and has been completed. This will bring its total producing wells to other types of income.

193 out of the 245 in which it has a working interest.

During 1978, a porticn of Fuelco's reveriue was derived from Fuelco projects an increase in sales volumes and prices and the resale of refined petroleum products to Public Service believes that all deficits have been eliminated paving the way l

Company through the Energetics exploration program.

for a positive income performance by 1981.

Exclusive of this activity, Fuelco's revenue in 1979 jumped to

$5.5 million from $1.9 million in 1978, an increase of 189 percent.

In spite of tUs significant increase in revenue, Fuelco's net losses for 1579 were $5.9 million. These losses resulted mostly from E charge to expense of $8.7 million for dry holes, lease abandonments, well impairments and lease impairments in 1979 and a change in Fuelco's accounting system to comply with changes required by the Financial Accounting Standards Board and the Securities Exchange Commission.

Since Fuelco was organized, geological and geophysical expenses had been capitalized as a part of the lease assets.

Under the new accounting method, these capitalcharges for all prior years had to be expensed in 1979. Effective January 1975, as required by the Financial Accounting Standards Board, Fuelco began providing for deferred income taxes.

However, it was not required to provide for deferred taxes for years prior to 1975. In 1979,it was necessary to increase the tax provisions by $1.2 million for these prior years. All of these changes resulted in a significant, but nonrecurring reduction to Fuelco's earnings.

Through sales of leases, farmouts, lease exploration and abandonments, gross acres have been reduced 30 percent to slightly under a million acres, and net acres have been reduced 33 percent to approximately 600.000.

Fuelco's net investment in wells for proven developed natural f

gas revenue interest reserves was $25.6 r ill ion. At year end, Fuelco's proven developed natural gas revenue interest

>y reserves were 110 billion cubic feet and ;ts crude oil revenue interest reserves were 783,000 barrels of oil. in addition,its

~

pg

' c proven undeveloped reserves were 84 billion cubic feet of g

natural gas and its proven undeveloped oil reserves were g39$Qg5 216,000 barrels. Gas volume sales were up 41 percent and its

%% mW*nw uw hl--

13 h l

12

Wester n Slope i.- optinmtic that there will be futu re sales iwneh us florn an inj >t o Veri qu.s s upp!Y sit uatic'n an c5 Its t iln li 'y ? ~onnm ~t ne w in tiustrialloacIs. [n17ticularly those D VO! Vin q !Elt' 'Ee Ve!Opin q Gis SllG!e in t ustry in ?be u

north western part of Coloracio f

smg?" Ae ya m%%..

'1

(*% we

- rya (.

c 4

I' y

W.f ?,

e p;

' QM t1

>NG e

. rm r

p.

m '

. u w e ^m

mL.sks?% W..

w

• n

-Mrt F -

-. m + 1p. @-

,,_.4 i drM e,e -

y v

• • Ml%

• p % T

'M54gwW'

,:;p MF We MW*

_., %W,,n gh^

w jGD?f ~ % ~p WN st, p w O n, e

' e -p' -

~

ymf% m tw ~pa: >

. V ht v.lf.. -

p Western Slope Gas Company Western Siope began a s'gn f cant expansion of :ts gas A, Jeu S,,

(, 4

(? " pans a * "ncy

/ neo sunsK'lars s!urace capatnts n 1979 aim deveiopment of the Roundup

% stre

'C radc,encaced

'acNv near W gg ns Colorado (n.ai construct,an of the 6 8

' 4 aae a n d c a!", ' nat w tv ' o r rubc feet underground storace f acil ts was compieted y

.e W.

>.;. to

,o e s hm sa:" w s n e '<

h3 Nos e'n her 1 1979 prowd ng a 1979 80 a,nter heating t

i

as,;ared d str but on season daa capacG o+ approxir ately 12 rrSon t uom feet t.s, a -

<we

Appt mates 70 i n+ tacatv am be capabte o+ pmv d'rg up to 50 mu!:an cuoic c

<am a e.

.,4 r n ;r,em e a"4 a r t m'"a'ew

'ee' J natu<a; gas per ca y du ng pear mnter months starting r

, a et or

,,u, e mad.$ Puhi c

.n the / 'ter M 1980-81 Th<s ad enatte the Cornpany to add

+

4

-(

' ad<

ahnu' 25 000 nea customers or the eaurvaient of one year s aroa m The pro ect s estaated to r ost a total of $24 mean

,A,

,e,

. - #,,s u, "e a r s > ! 2. h

.n 14 7 <2 e, ' 44 perce t, ver 10 78 The One of the largest problems Western Since faced in 1979 o,o a-

,4 f rn r

l

, a a:e's + roe a 41 peu ent ncrease was satisfying the provisions of the Natural Gas Pohcy Act of o.

y t

, ecose sr. n in, N ado PutF 19r8 H aner aehhead prices AHowed by th:s !eg*slation no,

, e i

m 'a ed to pass tN tuch to ts r us c aused Weste'r Sepe s purchased cas expense to nse very N,*

1N9 aas ap;,rm r 'atels $2 3 mivn ap.div and

• aas nt:cessar3 to rev se the procedure for t m r

s: 40 e 1978 pass'na throuoh the.nc reased costs to customers in order to

,.a o e w; rt St'r w e n at 3f W e n d t ot a le G, c, / t '

," ore acct rately retwct the c ost of Western Sl ope s pur-A,m,"' i~ t (.e s -

r h

chases T he Pubac Utmt'es Comm.ssion autnorized this new tt t,

$+!o' Jer t <:ntracts < t wr.no N, acus con 1

w ste' Durng me s car Westem S: ope procedu e at r.d year r

4 o.s,

I

,4 c d, ont s '

1 prNuc'on trom 49 nea Aehs 36 of wh:ch The r,s.na cost ut cas ovor tne last few years has caused the acre 4 m, r tee ano 13 :r,rtch we awa:t.ng connection at

!uss o' stan:f:c ant +ndustr ai ioad because some customers s ear, od T ho c. " pan, purchased a total ot 69 7 twon cubic have sutcned to cn as a pnmary fuel Despite this !oss o

na 19 f 9 M D; wn con c feet of whic h was Durchased Western Slore is wtim:stic that there WIN be future sa!es

% ! du r

'r < w C.mam !nterstate Gas Compans T hr. batanCe of benefits trom an Fpros Od Gas suppIy s!!uation and its abihty

, 'c hae acre made hom wehhead producers and cas-to conne. new industnal loads particularly those invo'ving one U+ ant outlets the deve op ng on shaie industry in Western Colorado i

13

Regulation i

The regulatory perspective became increasingly distorted in June 20,1979. The Colorado Public Utilities Commission 1979. As our energy ills intensified and the consumer issued its final order on January 22,1980 authorizing Public movement gathered momentum, regulators seemingly rc Service Company to raise its electric, natural gas and steam acted more to the mood of the public and less to the impact rates an average of 5.3 percent. The new rates, based on the of a changing economy on the utility industry.

Company's operating expenses for a 12-month period ending December 31,1978, will increase annual revenues $40.4 Poliucal pressures today have become very influentialon just about any type of business, particularly utilities. Those million. The rate hike represents 63 percent of the total $64.4 pressures largely come from special interest groups. It is million requested.

difficult for a business or regulators to respond to tne The rates were effective with meter readings on November pressures of one group. Such a response wou!d only create 26, 1979 based on the Commission's interim order of pressures from another group at whose expense the first November 23,1979, establishing revenue requirements. The group was satisfied. The challenge to utility and regulator, Commission's order allowing the collection of higher rates alike, is to strike a proper balance between conflicting was issued slightly more than five months after the Company interests.

filed for an increase on June 20,1979. The rate order granted the Company a 9.53 percent overall rate of retum and a 14.6 Nm Rules Continue To impact industry percent retum on common equity, The Company had asked Govemment continued to impose on the industry new rules that the retum on equity be raised to 16 percent from the 14.2 i

and procedures in the name of protecting the environment, percent previously authorized by the Commission in August, reshaping rate structures, resiricting land use and slowing 1978.

the development of nuclear energy.

S nce the new rates are based on the historic test year in many instances, regulation has become counterproductive.

principle-the Company's operating costs experienced The overabundance of indirection and indecision by govern-during 1978-and because inflation has accelerated so mental agencies has becorne a major hindrance to efficient drastically through 1979 and into 1980, the new rates are and economical utility operation.

already inadequate for the Company to eam the authorized Public Service Company may get more exposure to this rates of return,. As long as rates are based on past operating 1

regulation frustration because it is a combination utility and penods in an inflationary environment, the Company will be has natural gas exploration and transmission subsidiaries.

forced to seek additional rate relief. The Company is planning Much, if.not all, of the red tape could be avoided with some to file for another increase during the second quarter and to standardization of procedures between agencies and agree-seek measures to reduce the impact of inflation.

ment on the meaning of terms and objectives. Regulation,to The Company certainly recognizes the need for regulation, be successful, must not be contradictory. We need more but it feels strongly that the historic test year principle is consistency in the demands beirg made by the various levels outdated and is not cost effective. Rates must reflect present of government and even withh the same agencies.-

and future costs rather than relying entirely on past costs of More decision-making authority at the locallevelis needed in providing service. The Company has worked aggressively'to order to cut delays. Removing complicated and contradictory achieve acceptance of a more realistic pnnciple by regu-procedures, better coordination between agencies and more lators and customers and was pleased when the Commis-enlightened legislation could favorably impact the construc-sion encouraged the Company to seek future increases tion of electric generating facilities and the cost of gas based on a partially forecast test year.

l projects. The consumer, the utility industry, and the economy The Company continued to participate in a generic electric would all benefit.

rate case, which is an open-ended examination of the way in which rates are established. The Company firmly maintains Rsgulation Adds to Customer's Bill that the proper way to charge for service is to base those Individually, no one government action presented insur-charges on the cost of service and not the ability to pay.

l mountable obstacles. Collectively, regulatory measures l

added millions of dollars to the utility's cost of providing Public Service Company's subsidiary, Home Light and Power service, increased customer bills and narrowed the utility's Company, was granted a $1.2 million increase in electric choice in selecting alternatives to meet mounting demand for. rates on August 9,1979. The increase represented 86 energy. _

percent of the $1.4 million requested. Home Light and Power These steadily-rising costs coupled with the impact of Company serves Greeley, Colorado and its surrounding area.

inflation made it necessary for Public Service Company to -

take initiatives on several fronts during the year to keep its Own financial position in some sort of balance.

Resigning Commissioner Cites Utility Frustration The tidal wave of government regulation and the sesulting i_

Rtta increase Totals $40.4 Million mounds of paperwork that have drastically affected both The Company requested a $64.4 million rate increase on electric and natural gas operations came into sharper focus 14

1 "In munyinstances, regulation has become counter productive. The over abundance ofindirection andindecision by governmental agencies has become a major hindrance to efficient and economical utility operations."

1 on matters that are at the very heart of regulation-utility

/\\,

g "Too of ten," he said, " frivolous regulations cause expensive rates and system reliability."

.I

]

project delays, driving up utilities' costs which consumers i

k must eventually incur. Eight years ago, a company needed only six government certifications to construct an electric

}.

generating plant in Colorado. Today, 60 certificates are

}

needed for such a project!

\\

\\.

Arnold said he was particularly frustrated by natural gas regulations and the prices consumers are forced to pay. He 3

X i-cited the Public Service Company situation in particular.

' \\(

Public Service purchases 96 percent of the natural gas it distributes from Colorado Interstate Gas Company, which

\\

receives the majonty of its supplies from out-of-state sources.

I

/

" Consequently," Arnold said, " federal regulations mandate c

.(.

]

prices on that gas, not the PUC (Public Utilities Commission)."

x

\\

q l

Successor Named By Governor y_

Republican State Senator Duane Woodard of Fort Collins has

,Y been appointed by Governor Richard D. Lamm to succeed Arnold. Woodard's appointment must be confirmed by the gg q.g Colorado Senate. Arnold will remain on the Commission until his successor is confirmed by the Colorado Senate.

T,'.e Colorado Public Utilities Commission consists of threo full-time members appointed on a staggered basis to six year a

k terms and approved by the Colorado Senate. Only two 7

members may be from the same political party. The Chair-M hMMM man is selected by the Governor.

The other members now sitting on the Commission are: Dr.

!s b

Edythe S. Miller, a Democrat, who was appointed February, j

\\

N 1975 and whose term expires in 1981; and Daniel Muse,

/

V hl h Democrat, who was appointed May 17,1979 and will serve a l

,U tw y term expiring in 1985.

/\\

h

(;

Pnor to Muse's appointment, Public Service Company y

w, gy iM opposed the nominee selected to succeed Edwin R. Lund-s m

borg whose term expired in January,1979. The opposing i 5-n

?

g action was unprecedented, but the Company felt the nomi-i r

5 ab U L

)

nee's regulatory philosophy would be detrimental to the best s

( M

^ ^

(

interests of its shareholders, customers, and the utility

] \\

. N industry in Colorado. The Colorado Senate turned down the nomination.

s x

L' + M F/.

/

ai p

The regulatory environment is changing. It has to if it is to l

N g-maintain that delicate balance between fair and reasonable E

l

- - N

}

rates and reliable service. Regulation will have to be looked at in a new framework, discarding some of the concepts that R d

~

R served us well in the past and rearranging prionties as the 1

/

VR industry experiences a drastic transition.

b

/b IN m

I It is no longer adequate to look back and applaud the utility A

=_w ga aMn woM so weU mw waW Mahges when Sanders G. Arnold announced his resignation from the has thundered onto the utility scene. Only a new set of Colorado Public Utilities Commission on January 3,1980.

creative solutions, boldly conceived in a spint of compromise Arnold. in listing his reasons for resigning,said,"My frustration and cooperation, will restore the balance between utility and steadily grows as the Commission has less and less influence customer.

15

\\NNk

..v# ')

I/

fj, l /

%jf-hty f

+

4 k

IMAGE EVALUATION NNNN TEST TARGET (MT-3) 1.0 lS a m

1. e!" gu-m l,l h

IhN

\\

.8 1.25 1.4 1.6 6"

MICROCOPY RESOLUTION TEST CHART 4%

'b

%+/ Axxx),#

k+he

//,,,

q, s +7

^

l.

'a'M

-0 o.-.

--s a,,-.,

m

.s.m--e e, m, mm a

Nnancing Pubhc Service Company's financial position is like a two-former approach, but continuing inflation and inadequate headed coin. On one side, the need for new electric regulatory responses make such a course most difficult.

generating and natural gas distribution f acilities has become Early in 1980, two major national credit rating agencies irreversible. The number of customers keeps rising. So does reduced their ratings of the Company's fixed income securi-energy consumption. Plant capacity totters much too close to ties. Borrowing will thus become more expensive.

peak load demand with no reserve margin if a major umt Why does it cost so much to run a utihty business? There are should go out of service. While electric power is available several basic reasons. Public Service Company operates in a from other utilities. It is expensive, limited and of short-term service ter itory that is the fif th f astest growing in the country.

duration-It is adding new customers all the time. Existing customers On the other side of the coin, it has become more difficult to are using more electricity, old facilities become materially finance new facihties The utihty industry is capitalintensive; and technologically obsolete and must be replaced. Pollution capital intensive both in terms of existing facihties and new control equipment has become a significant addition to facihties which must be constructed if the Company is to construction costs.

continue providing utility service in the customary manner.

There is only one prir.cipal source of dollars-the investing public-that will enable the Company to take the growth Construction costs have reached staggering proportions Iternative. Compehtion for these investment dollars is keen Rising inflation rates have dnven the cost of a 500 megawatt nd the utihty must be in a position to provide a competitive coal-fired plant from $100 milhon in 1969 to more than $400 a

se Msms milhon in 1979. Ten yea' from now that same plant is expected to cost $900 million.

As part of its rate request Pubke Service Company asked the Public Utikties Commission to increase the return on invest-It is equally dif ficult to build and complete the plant af ter initial ment it is allowed to make from 14.2 percent to 16 percent. In financing. Environmental impact studies, lengthy and com-its rate order, the CQmmission allowed a 14.6 percent return.

plicated govemment-imposed procedures, and delays attn-buted to weather, labor and equipment dehvery make the Company vulnerable to longer construction times and future Social Obligations to invcoors inflation.

The Company feels that there are social implications in providing an adequate return on investment in addition to Tu %g M 7" N'"'

being competitive in financial markets The Company essen-

)

Mk.w%$ATIdS (% OF TOTAI, CAPITALIZATION) tially attracts two types of investors-individual and insti-p%j Wi@$1UtED STOCK -

tutiona1.

]

,[

~

Individual investors purchase Public Service Company cem-

[,gg mon stock for the express purpose of supplementing retire-mN

~

~ ~ '" ~

~

ment incomes or for helping them to meet inflated expenses.

~

7g The institutions likewise, manage money for individuals,

-o y~pc whether for future pension income or for investment objec-tives. The concern for the retum on investment, consequently.

becomes as important as the price the people must pay for utility service.

py i g

competes in capital markets. While the character of utihty it is against this backdrop that Public Service Company F'

m f M ~.

T

~

~~

7 financing may be changing, the Company is committed to the fN-i policies that will help it keep a firm financial footing in the type i

g0% -

e of economic and regulatory environment under which the i,

g Company must operate, this financial strength and stabihty 3

must be maintained if the Company is to be successfulin 1

4_

g L-1875 1978 1977 1973 -

1979 competing for new capital and building utility facilities for the

future, c.

s

- eg l

Company Faces Cervice Dilemma Pubhc Service Company has two fundamental choices on Financial Objectives how it approaches the future in light of this dilemma. It must A pri.cipal objective of the Company's financial policy continue to operate from a position of financial strength and continues to be a strong capital structure made up of debt not stability, covenng all costs of operation and of building new exceeding 50 percent, common equity not less than 35 l

facihCes, or, it must lower its operating expenses by cutting percent, and closer to 40 percent when possible, and t

back on the quali!/ of service. The Company opts for the preferred stock of not over 15 percent.

(

l 16

"The Compar;y feels there are socialimplications in providing an adequate return on investmentin addition to being competitive in financial markets."

i writing expenses were $79.5 million. In addition, $37 million hthh NiiMsIQfMW.111'filQ. WRW G WhM M of Adams County Pollution Control notes were sold to finance

~ 6%})514;MW M13U3OfMi P retrofit air quality work at the Cherokee, Cameo and Arapahoe E$i[iigsiiMNA$gE6qi!#

Plants.

4ISD~iR!h @ME to successfully finance long-term construction programs Inadequate rate relief in 1979 and uncertainty about its ability ma forced ?e Company to postpone its plans to build a much-needed new generating plant in Southeastern Colorado. The fg l

Company will not move ahead with those plans untilit feels reasonably certain that it can adequately finance that facility.

g e

~.

~

fM fp -

~:

3 O

\\

@)

)

+

l J

j F

l

..I y

/

\\

T.)

Ogi

.j p myg

4.,

l m

The Company remains committed to the aggressive pursuit of a fair return on its invested capital to properly compensate g'

shareholders for the use of their money. This fair and reason-able retum, coupled with an attractive dividend policy, is g

essential in achieving a market price for the Ccmpany's yg commcn stock at a reasonable premium more than its book value.

j Company Sells New Securities The Company took several steps in 19/9 and early 1980 to

-C raise the capital necessary to build facilities that will help it jp meet service requirements during the next few years.

e On April 24,1979. Public Service Company sold 2.5 million s

shares of common stock. The price per share to the general I

public was $16%, netting proceeds of $39 million after underwriting expenses. In addition.the Company raised $4.9 I

I million through the Automatic Dividend Reinvestment Plan compared with $3.4 million in 1978. Moreover, by selling common shares to employees through its employee invest-ment programs, about $542.000 also was raised in 1979.

i I

In October 1979, S50 million of Morgan County Pollution Control revenue bonds were sold to defray the costs of air and water pollution equipment and a solid waste disposal

\\\\

system at Pawnee. Approximately $35 million worth of these bonds, were sold at a 7% percentinterest rate.The remaining bonds were placed at 7% percent.

The Company sold 2.75 million shares of common stock and

$50 million of first mortgage bonds on February 26,1980 to

\\

finana part of its construction program and to reduce short-term borrowings. Proceeds from these sales after under-17

System Map 7f N l6 HEY,ENNE NEBRASKA 1,_

_ WYOMING 1

COLORADO

+.,

y a

^

q

,g suntino l

N V,

t M

- lE.OREELEY

..w1 1 7 h

i

\\

-,' N J.,-

s g

i L

w A

g'

,f

d. i,..a

_f 9

y v

hH autu.' -

s

)

Q 1,[*

N

- y' '

/

3,

[

g N

i ei

's i J/

n s

REEN

/

t 4

x l

M'-

~

s GRAND Qc y

~^

-\\.

J.

S.,

m x

'l$

N

- t 8

oz s

E..

.bh jg O

• - o PUEBLO 3J x

~

O p

g

/

/

)

'?

a N

A

'i y

8.

I m

4 ;. 5 m. s. m m COLORADO

..OKLdHOMA ~

• p.

ij NEW MEXICO MAJOR POWER PLANTS C8'^8E5 pdowatts)

NEr LEGEND PLANT NO OF VEAR END y ti NAME UNITS GROSS OF 1979 PEAK ELECTRIC SYSTEM

@ CHEROKEE

.4..

.775.000...706.000

@ COMANCHE 2..

725.000..

660 000

- etacrac tu s -tmora m oso votes

@ CABIN CREEK

.2.

. 324.000..

90,000*

• srsam mar o ss=vce

@VALMONT.

.5.

.311.100.

.247.000 Hl 'C"S * "5"co*c'a' *""own svsvews

@ARAPAHOE

.4.

.256.500.. 236.000

@ ZUNI

.2..

115.000...107.000

@ CAMEO

.2..

79,000..

75.200 GAS SYSTEM G) FORT ST. VRAIN 1.

.210.000...200.000

,0.c,,,,, cn.,,, o, coto,,oo saussim *f',,',05g,';^1c,0co,,,,

Additional capability from 4 c

GA steam. 10 flydro, 6 com-y bustion turbine and 7 diesel

,,,,co,3,,,,,,,,,,,,,,,co,,,,

?

'--"'''**'C""*

99

...246.800 susus poss or wtacowcrow n'ru orwee svsenws TOTAL

. 3 094,600. 2.568.000

@ PAWNEE - coal-fired unit un-der construction for service in g ougpo

,,,,ono,,,,,s 1981 - 500.000 kilowatts.

NOTE Ne t ef4cteve capabdity recogmzes seasonal capaedity reductes due to weather. stream now fuei avadaedity and station housepower require-mants for a r and water quahty control equipment

• one unit undergoing esteasive rece6r f

18

I

1 i

i

.i 4

l

-i T

l 4

2 I

4 l

i i

4 Consolidated i

Financial Information j

Page i

Summary of 0perations........................20 l

Financial and Operating Data...............

... 21 Management's Discussion and Analysis l

of the Consolidated Statement of Income....... 22 Responsibility for Financial Statements........... 23 i

Report of Certified Public Accountants........... 23 Consolidated Balance Sheet.................... 24 f

Consolidated Statement of income....

. 26 ConsoCdated Statement of Retained Earnings....... 27 Consolidated Statement of Source of Funds 4'

for Plaat Construction Expenditures.............. 28 Notes to Consolidated Financial Statements......... 29 j

l 19

Summary of Operations Year Ended December 31, 1979 1978 1977 1976 1975 1974 1969 Operating Revenues:

(Thousands of Dolars)

Electric

. $507,587 $421,732 $362,062 $322.102 $281,727 $224,177

$127,124 Gas-410,537 303.300 L46,059 197,549 174,612 134,867 76,387 Other.

8,386 4,746 5,178 2.503 3,842 3.200 1,248 926,510 729,778 613.299 522,154 460,181 362,244 204,759 Operating Expenses:

Fuel used in generation.

176,413 117,491 104,982 86,711 75,400 54,928 17,851 Gas purchased for resa'e.

310,129 224,840 176,193 127,788 103,469 78,243 37,306 Purchased power.

29,425 22,722 4,738 4,361 7,634 2,100 2,477 Other operating expenses.

162,858 132,647 105,434 87,931 77,824 69 834 38,703 Maintenance

' 17,092 28,249 27,220 23.241 19,471 16,943 8,903 Depreciation 55,990 49,541 46,133 43,196 39,618 36,426 21,173 Taxes (other than income taxes).

38,033 35,424 44,346 40,048 36,404 32,786 19,136 Income taxes 26,826 25,601 16,100 21,232 18,489 5,423 16.189 836,766 636,515 525,146 434,508 378,309 296,683 161,738 Operating income 89,744 93,263 88,153 87,646 81,872 65,561 43,021 Other income and Deductions:

Allowance for funds used during construction:

8,249 11,276 8,173 926 All funds (through December 31,1976).

Equity funds (from January 1,1977).

10,893 10,506 7,318 Miscellaneous income and deductions-net 2,269 (4,310)

(4,416)

(615)

(1,124) 764 (4) 102,906 99,459 91,055 95,280 92,024 74,498 43,943 Interest Charges:

Interest on long-term debt.

50,717 44,811 40,453 39,631 35,300 31,149 14,559 Amortizatic1 of debt discount and expense irss premium.

239 224 180 152 134 60 6

Other interes' 4,123 2,879 2,959 838 1,717 4,890 785 Allowance for funds used during construction:

Borrowed funds (from January 1,1977).

(7,982)

(6,156)

(3.674) 47,097 41,758 39,918 40,621 37,151 36,099 15,350 Net Income...

55,809 57,701 51,137 54,659 54,873 38,399 28,593 Dividend Requirements on Preferred Stock.

13,536 13,536 13.536 10,784 10,596 9,560 3,669 Errnings Available for Common Stock.

.$ 42,273 $ 44,165 $ 37,601 $ 43,875 $ 44,277 $ 28,839

$ 24,924 Shares of common stock outstanding (thousands):

Year-end 32,326 29,250 25,884 23,290 23,213 19,607 14,448 Average 31,225 26,572 23,976 23,240 21,409 17,657 14,448 Errnings per Average Share of Common Stock Outstanding

$1.35

$1.66

$1.57

$1.89

$2.07

$1.63

$1.73 Dividends per Share of Common Stock:

Declared.

$1.60

$1.53

$1.46

$1.38

$1.22%

$1.20

$1.06 Paid

$1.60

$1.49%

$1.46

$1.34

$1.20

$1.20

$1.06 Summary by Lines of Business Operating Revenues 54.8 %

57.8 %

59.0 %

61.7 %

61.2 %

61.9 %

62.1 %

Electric 44.3 41.6 40.1 37.8 38.0 37.2 37.3 Gas.

Other.

.9 0.6 0.9 0.5 0.8 0.9 0.6 Total 100.0 % 100.0 %

100.0 %

100.0 %

100.0 %

100.0 %

100.0 %

Operating income (1)

Electric.

84.4 %

94.0 %

99.1 %

91.9 %

85.5 %

87.7 %

79.2 %

Gas.

21.4 10.4 6.2 12.3 19.4 15.9 21.5 Other.

(5.8)

(4.4)

(5.3)

(4.2)

(4.9)

(3.6)

(0.7)

Total 100.0 % 100.0 %

100.0 %

100.0 %

100.0 %

100.0 %

100.0 %

(1) Before taxes on income and the charge equivalent to the reduction in income tax due to the investment credit, net of amortization.

l 20

Financial and Operating Data Fin ncial Data CIpitalitation Ratios-End of Year:

Long...rm Debt 50 %

50 49 49 53 53 53 Preferred Stock 14 14 16 17 14 16 13 Common Stock, Premium and Retained Eamings 36 36 35 34 33 31 34 Total 100 %

100 100 100 100 100 100 R;tes of Return Earned On:

Total Capitalization (Operating Income) 5.9%

6.5 6.7 7.2 6.8 6.1 7.2 Total Net Plant (Operating income).

5.2%

6.1 6.3 6.8 6.8 5.8 6.7 Total Common Equity (Net to Common).

7.6 %

8.6 8.2 10.7 11.1 8.7 12.4 Averige Annuallnterest Rate on C:nds Outstanding-End of Year.

6.9 %

6.8 6.6 6.2 6.2 5.9 4.5 Tim:s Fixed Charges Earned:

Before Federal and State income Taxes.

2.5 E.7 2.5 2.9 3.0 2.2 3.9

' 2.3 2.5 2.1 2.8 After Federal and State income Taxec.

2.0 2.2 2.2 C:mmon Stock Dividend Payout Ratio 119.3 %

93.2 94.2 73.1 60.0 73.5 61.4 l

Cook Value Per Share of Common Stock-1 End of Year.

$17.18 17.63 17.77 17.63 17.21 16.94 13.93 EI:ctriC Operations Tat:1 Kilowatt. Hour Sales (Millions).

14,659 13,754 12,877 11,890 11,316 10,602 6,699 Tctal Electric Customers

.794,533 764,779 733,033 676,070 657,438 640,816 479,131 Aver:ge Annual Residential C1nsumption-KWH 5,913 5,724 5,520 5,480 5,387 5,225 4.621 Av r:ge Residential Revenue per Kilowatt-Hour (Cents) 4.19 3.75 3.60 3.50 3.35 2.92 2.65 Percent of Electric Generation by Class of Fuel:

Coa!

79.2 85.0 83.8 75.5 67.1 61.2 61.0 Oil.

1.8 2.9 2.7 2.9 4.6 27 1.5 Gas.

17.6 12.1 13.5 21.6 28.3 36.1 37.5 r

Nuclear.

1.4 100.0 100.0 100.0

' 100.0 100.0 100.0 100.0 1

Net Effective Capability at Time of Peak-Kilowatts (000).

2,743 2,594 2,492 2,484 2,203 2,444 1,892 Net Firm System Peak Load -

Kilowatts (000)..

2,642 2,559 2,437 2.237 2,108 1,924 1,283 Annual System Load Factor (%)

68.0 66.4 65.2 65.9 66.1 67.8 64.3 N;tural Gas Operations Tctal Gas Sales (MMCF)

.213,274 206,700 198,257 209,672 215,448 205,444 176,828 CG Department Customers

.658,219 633,607 609,465 589,604 574,986 564,607 442,608 Average Annual Residential Consumption - MCF 157.3 151.2 146.3 160.3 172.3 164.1 185.6 D:lly Aval! ability-MMCF.

1,371 1,304 1,275 1,282 1,245 1,221 914 M:ximum Peak-Day Sendout-MMCF 1,143 1,160 1,129 1,161 1,067 1,068 860 4

4 21

Management's Discussion and Analysis of the Consolidated Statement of Income Th3 following factors, which may not be indicative of future pany is the major supplier of natural gas sold by the Com-opsrations or earnings, have had a significant effect upon pany and its utility subsidiaries.

the rqsults of operations during 1977,1978, and 1979.

The increase in purchased power in 1978 reflects the power produced at Fort St. Vrain being accounted for as Operating Revenues:

urchased power rather than system generated power Op rating revenues have increased significantly in each ending acceptance of that unit by the Company and psriod primarily as a result of (1) base rate increases; substantial increases in firm purchases of capacity and (2) recovery of increased fuel costs through the FCA pro-energy. The increase in 1979 is due to an increase in both vision of the Company's electn_c tariff; (3) recovery of the quantity and unit cost of the energy purchased.

increased gas for resale costs through the GCA provision of the Company's gas tariff; and (4) increases in customers.

Increases in other operating expenses and maintenance Sales continued to increase in each year except 1977, in 1977 was largely due to wage increases and normal whtn gas sales decreased due to warmer than normal system expansion. For the years 1978 and 1979, the major weather and voluntary customer energy conservation.

factors contributing to the increases, in addition to wage increases and normal system expansion, included: (1) a The following table sets forth the amounts by which electric reduction in the reimbursement from the prime contractor and gas revenues during each of the last three years ex-for loss of power production at Fort St. Vrain in 1978, and ceeded the revenues for the preceding year, together with (2) the inclusion of nuclear power operation and main-the estimated increases attributable to the major factors.

tenance expenses in 1979. (See Note 11 of Notes To Con-nrr un un solidated Financial Statements.)

(Milli no of D ll.rs)

Electric Revenues Depreciation expense has increased primarily as P. result 888' e

,, Cob"$s$Y....

of property additions. There have also been mir.or ci.a..ges n

Sales Volume and Other Changes.

28.9 21.3 27.2 in the rates used to calculate depreciation. (See Note 1 of Net increase

. $40.0

$59.7

$ e5.s Notes To Consolidated Financial Statements.)

Ga e n"[*

n 1977, taxes (other than income taxes) increased due to t ncreases.

. $ 1.0

$ 9.7

$ 10.1 9

GIs Cost Adjustment higher property taxes resulting from the additions of new plant and in some instances increased tax rates, and Sal o me and Other hanges,.

4 higher franchise taxes on increased revenues. The de-Net increase

.548.5

$57.2

$107.2 crease for the year 1978 is primarily the result of an order Operating Expenses:

from The Public Utilities Commission of the State of Colo-The increases (decreases) in operating expenses during rado, effective January 1,1978, which required that the years set forth below were as follows:

franchise taxes be surcharged on customers' bills and recorded as a tax collection rather than as a component of un un un (uimen..e o.ii.r.1 revenue and expense. The increase in 1979 is due primarily Fusi used in generation.

.$18.3

$ 12.5

$ 58.9 to higher property taxes and increases in Social Security Gas purchased for resale.

48.4 48.6 85.3 taxes. (See Note 9 of Notes To Consolidated Financial Purchased power..

0.4 18.0 s.7 Statements.)

OthIr operating expenses....

17.5 27.2 30.2 The decrease in income taxes in 1977 reflects a decrease r e at on Taxis (other than income taxes) 4.3 (8.9) 2.s in income, while the increase in income taxes in the year (5.1) 9.5 1.2 1978 is a result of increased income and the change in income taxes..

$90.7

$111.3

$200.2 accounting, effective December 1,1977, when the Com-pany began providing for certain deferred income taxes Th3 expense of fuel used in generation increased in each on accelerated depreciation. (See Notes 1 and 8 of Notes p:riod as a result of the continuing higher prices the Com-To Consolidated Financial Statements.)

pany must pay for fuel along with increased generation in 1977 and 1979.

The increases in the cost of gas purchased for resale are primarily the result of wholesale rate increases granted by the Federal Energy Regulatory Commission to Colorado Int:rstate Gas Company. Colorado Interstate Gas Com-22

Oth:r income, Deductions and interest Charges:

Arthur Young & Company, certified public accountants, are Tha significant increases (decreases) in other income and engaged to examine and to render an opinion as to whether deductions and interest charges during the years set forth management's financial statements present fairly the Com-b: low were as follows:

pany's financial position, results of operations, and source of funds for plant construction expenditures. Their exami-im me me

@Him W DoHwd nation is Conducted in accordance with generally accepted Allowance for funds used during construction:

auditing standards and their report is included herein.

All funds (through December 31,1976).. $(8.2)

Equity funds (from January 1,1977)..

7.3 3.2 0.4 The accounting and internal control procedures of the Misczllaneous income and deductions-net (3.8) 0.1 8.8 Company are subject to review by the Audit Committee of j

the Board of Directors. The Committee, which is composed te st on long-term debt 0

of three outside directors, meets regularly with both the Allowince for funds used during construction:

Borrowed funds (from January 1,1977),

(3.7)

(2.5)

(1.3) independent auditors and the intemal auditors to review The increase in total allowance for funds used during con-the activities relating to auditing and financial reporting struction in 1977, $2.8 million, reflects the construction matters.

expenditures made for major plant facilities in that year.

The increases in 1978 and 1979, $5.7 million and $2.4 million, respectively, are the result of both increased con-Report of Certified Public Accountants struction expenditures and the use of a higher rate to cal-The Board of Directors and Shareholders culate allowance for funds used during construction. (See Nots 1 of Notes To Consolidated Financiaf Statements.)

Public Service Company of Colorado We have examined the accompanying consolidated bal-The change in miscellaneous income and deductions-ance sheets of Public Service Company of Colorado and net in 1977 is due primarily to exploration charges associ-subsidiaries at December 31,1979 and 1978, and the re-ated with purchases of fuel oil from a subsidiary. The lated consolidated statements of income, retained earn-change in 1979 resulted from the discontinuance of these ings and source of funds for plant construction expendi-purchases.

tures for the years then ended. Our examinations were Increases in interest on long-term debt reflect the issuance made in accordance with generally accepted auditing of additional bonds and the continued high cost of per-standards and, accordingly, included such tests of the manent financing. The decrease in other interest in 1978 accounting records and such other auditing procedures and the increases in 1977 and 1979 indicate the varying as we considered necessary in the circumstances.

need for temporary financing experienced in those periods.

In our opinion, the statements mentioned above present fairly the consolidated financial position of Public Service Company of Colorado and subsidiaries at December 31, Responsibility for Financial Staternent's 1979 and 1978, and the consolidated results of operations

]

Management has prepared and is responsible for the and source of funds for plant construction expenditures

)

integrity of the financial data included in the accompany-for the years then ended, in conformity with generally ac-cepted accounting principles applied on a consistent basis ing consolidated financial statements. These statements have been prepared in conformity with generally accepted during the period.

l accounting principles consistent with the requirements of Arthur Young & Company ths Uniform System of Accounts of the Federal Energy Denver, Colorado 4

Ragulatory Commission as prescribed by the Public Utili-February 4,1980 tins Commission of the State of Colorado. Financial infor-mation presented elsewhere in this annual report is consistent with that in the financial statements.

[

Tha Company maintains an accounting system and related I

controls to provide reasonable assurance that financial r cords are reliable for preparing financial statements.

j This system includes a program of internal audits to assure management that proper procedures and methods of operation are used to implement the plans, policies, and dir:ctives of management.

l i

23

Consolidated Balance Sheet o.c1me.,ai,i 7,moio7.

PUILIC sERvlCE COMPANY OF colorado AND suBsiolARIEs Assets 1979 1978 Property, Plant and Equipment, at cost:

(Thou. ands or ooiiar.)

Electric

$1,416,386 S1.244.653 Gas.

409,539 373,096 Steam and other.

9,688 14,878 Common to all departments 85,486 81,696 Construction in progress.

339,794 305.952 2,260,893 2.020,275 Less accumulated provision for depreciation 537,284 482.925 1,723,609 1,537,350 Nuclear fuel, less accumulated provision for amortization of $516 at December 31,1979 (Notes 1 and 11) 8,874 1,732,483 1,537.350 investments, at cost.

270 152 Current Assets:

Cash..

2,117 15,307 Temporary cash investments.

12,923 3,005 Accounts receivable, less provision for uncollectible accounts (1979 - $1,656; 1978 - $1,412) 124,156 92,533 Notes receivable 2,556 260 Fuel inventory, at average cost _.

40,210 33,292 Materials and supplies, at average cost 45,499 29,485 Cost of gas delivered but not bi!!ed to customers 26,843 20,031 Gas in underground storage. at cost (LIFO) 1,944 1,885 Prepaid expenses.

5,161 2,865 Deferred Charges:

Debt expense (being amortized) 6,895 6,085 Other..........

10,207 3.427 17,102 9.512

$2,011,264 S1,745,677 sa recompanying notes.

I l

l l

l l

24

Capital and. Liabilities 1979 197s (Thousands of Dollars)

$ 419,108

$ 369,704 C:mmon Stock (Note 2)

Rit;ined Earnings 136,314 145.853 555,422 515,557 Total Common Equity Pr1firred Stock (Note 2):

Not subject to mandatory redemption.

140,008 140,008 Subject to mandatory redemption at par 64,400 64,400 L ng-term Debt (Note 3) 766,656 711.140 Total Capitalization:

1,526,486 1,431.105 Current Liabilities:

Notes payable (Note 4) 62,186 22.182 Long-term debt due within one year 2,250 2,232 Accounts payable 146,159 82.518 Dividends payable 16,319 15,085 Customers' deposits 24,169 23,993 Accrued taxes 41,347 35,326 j

Accrued interest.

13,776 12.749 Customers' refund 10,817 Other..

16,973 12,363 333,996 206,448 D:firred Credits:

Customers' advances for construction 25,060 23,199 Investment credit (being amortized over the productive lives of the related property) 80,991 60,777 Accumulated deferred income taxes (Notes 1 and 8) 30,818 23,981 Other.

13,913 167 C::mmitments and Contingencies (Note 6).

$2,011.264

$1,745.677 l

l 25

Consolidated Statement of Income v....nazoo;c.mo.,3i.ie72.noie7.

Pu!LIC SERVICE COMPANY oF Colorado AND SUBSIDIARIES 1979 1978 Cperating Revenues:

(inousand or Doiiar )

t507,587 S421,732 Electric.

Gas 410,537 303,300 Other 8,386 4,746 926,510 729,778 Cperating Expenses:

Fuel used in generation 176,413 117,491 Gas purchased for resale...

310,129 224,840 Purchased power.

29,425 22,722 Other operating expenses 162,858 132,647 Maintenance..

37,092 28,249 Depreciation (Note 1) 55,990 49,541 Taxes (other than income taxes) (Note 9) 38,033 35,424 income taxes (Note 8) 26,626 25,601 836,766 636,515 Cperating income 89,744 93,263 Other income and Deductions:

Allowance for equity funds used during construction (Note 1) 10,893 10,506 Misc'.:llaneous income and deductions-net.

2,269 (4,310) 102,906 99,459 Int: rest Charges:

Interest on long-term debt 50,717 44,811 Amortization of debt discount and expense less premium (Note 1) 239 224 Other interest 4,123 2,879 Allowance for borrowed funds used during constructior. (Note 1).

(7,982)

(6,156) 47,097 41.758 Net income 55,809 57,701 Dividend Requirements on Preferred Stock 13,536 13,536 E:rnings Available for Common Stock.

$ 42,273 S 44,165 Sh:res of Common Stock Outstanding (thousands):

Ycar-end.

32,326 29,250 Average.

31,225 26,572 E:rnings Per Average Share of Common Stock Outstanding.

$1.35 S1.66 Dividends Per Share of Common Stock Paid.

$1.60

$1.49%

$1.60

$1.53 Declared see accompanying notes, f

26

Consolidated Statement of Retained Earnings Yms.notooxc1..,33.is7.<nos.7e PUBLIC SERVICE COMPANY OF COLORADO ant SUGsIDIARIEs 1979 1978 (Thousands of Dollars)

$145,853

$144,828 R;t:ined Earnings at Beginning of Year.

55,809 57.701 Net income 201,662 202,529 Dividends:

On cumulative preferred stock:

$100 par value:

4.20% series 420 420 4% % series.

744 744 4% % series.

293 293 4.64% series.

742 742 4.90% series 735 735 4.90% 2nd series.

735 735 7.15% series 1,787 1,787 7.50% series 2,250 2,250 8.40% series 2,890 2,890

$25 par value:

8.40% series 2,940 2,940 13,536 13,536 On common stock:

$1.60 per share in 1979;

$1.53 per share in 1978 50,421 41.172 63,957 54,708 Expense of Issuing Stock 1,391 1,968 85,348 56,676 l

$136,314

$145,853 l

Rittined Earnings at End of Year see accompanying notes.

J 4

27

Consolidated Statement of Source of Funds for Plant Construction Expenditures years no oDeccmeersi.1979and1978 PUBLic SERVICE COMPANY oF COLORADO AND SUBSIDIARIES 1979 1978 S:urce of Funds:

(Thousands of poliars)

Funds from Operations:

Net income.

$ 55,809 S 57,701 Non-cash Charges (Credits) Against income Not involving Working Capital in the Current Period:

Depreciation charged to operating expenses 55,990 49,541 Depreciation charged to clearing and other accounts 5,105 4,065 Allowance for funds used during construction (18,875)

(16,662)

Investment credit-net of amortization 20,213 13,599 Deferred income taxes 2,018 8,178 Funds from Operations 120,260 116,422 Dividends:

On preferred stock (13,536)

(13,536)

On common stock (50,421)

(41.172)

Funds Retained in the Business 56,303 61,714 Funds from Financing-Net Proceeds:

Proceeds from sale of common stock 48,012 52.573 Proceeds from sale of first mortgage bonds 49,369 Proceeds from sale of pollution control bonds 40,380 1,390 Proceeds from issue of long-term notes 16,353 14,773 l

Funds from Financing.

104,745 118,105 Funds f.om Set *lement Agreement (Note 11).

G0,000 Reduction in Long-Term Debt (2,246)

(2,240) 18,327 12.771 Other Sources-Net Total Funds Available.

237,129 190.350 Decrease in Working Capital (64,802)

(2,937) nit Plant Construction Expenditures.

301,931 193,287 Allswance for Funds Used During Construction 18,875 16,662

$320,806 S209,949 Gr:ss Plant Construction Expenditures....

Increase (Decrease)in Components of Working Capital:

Current Assets:

4

$ (13,190)

$ (7,751)

Cash Temporary cash investments 9,918 (6,556)

Accounts and notes receivable.

33,919 22,987 Fuel inventory.

6,918 (1,667) 16,014 6,528 Materials and supplies.

Other 9,167 7.375 62,746 20,916 Current Liabilities:

Notes payable 40,004 5,182 Long-term debt due within one year.

18 (10,920)

Accounts payable 63,641 27,542 Accrued liabilities 7,048 3,016 Customers' refund 10,817 (12,834)

Other 6,020 11,867 127,548 23,853 Decrease in Working Capital

$ (64,802)

S (2,937) sse accompanying notes.

28

Notes to Consolidated Financial Statements Pu!Lic sERvlCE COMPANY OF Colorado AND SUBSIDIARIES

1. Summary of Significant Accounting Policies Deferred income taxes:

In an order dated November 1,1977, The Public Utilities Consolidation:

Commission of the State of Colorado (CPUC) allowed as The Company follows the practice of consoli;.ating the an operating expense a provision for certain deferred in-accounts of its significant subsidiaries.

come taxes resulting from the use of accelerated depreci-ation on property additions made on or after December 1, Depreciation policy:

1975. Effective December 1,1977, the Company began The Company and its suosidiaries, except Fuel Resources providing for these deferred income taxes. Deferred taxes Development Co. (Fuelco) use straight-line depreciation for are not provided on other book-tax differences, except for accounting purposes. Composite rates are used for the differences in amortization relating to certain pollution various classes of depreciable assets. Depreciation rates control facilities, the nuclear fuel, and spare parts.

include provisions for disposal and removal costs of prop-erty, plant and equipment, including the nuclear plant.

In an order dated November 14,1978, the CPUC allowed Total depreciation expense approximates an annual rate Western Slope Gas Company to include as an operating of 3.4% on the average cost of depreciable properties.

expense the provision for deferred incomo taxes resulting Fuelco uses the unit-of-production depreciation method from the use of accelerated depreciation on property addi-for accounting purposes. For income tax purposes, the tions made on or after April 1,1977. Deferred taxes are not Company and its subsidiaries use accelerated depreci-provided on other book-tax differences.

ation and other elections provided by the tax laws.

In accordance with an order dated June 13,1969, from Replacements and betterments representing units of prop-the Public Service Commission of Wyoming, Cheyenne erty are capitalized. Items that represent less than units of Light, Fuel and Power Company provides for deferred fed-property are charged to operations as maintenance. The eral income taxes on the difference between depreciation cost of units of property retired, together with cost of re-as computed for accounting purposes and tax purposes.

moval, less salvage, is charged in full against the accumu-In December 1977, the Financial Accounting Standards lated provision for depreciation.

Board issued Standard No.19 which requires certain Amortization of nuclear fuel:

ccounting changes, which are to be applied retroactively, Under the Settlement Agreement with General Atomic including comprehensive income tax allocation by the deferred method for all exploration and development costs.

Company (see Note 11), the Company received ownership Fuelco has generally followed the other provisions of the of the reactor core and all fuel elements at the Fort St. Vrain stand, wM are ehme for aH haMal stammds Nuclear Generating Station as of January 1,1979, and the f r fiscal years ending after December 25,1979. The con-General Atomic Company agreed to make available to the solidated financial statements for prior periods have not Co apany, at no charge (except certain possible incre-mental costs), nuclear fuel elements sufficient to operate been restated because the effect of this accounting change the plant at 200 Mw at 60% capacity through December is not materia [ Fuelco also provides for deferred income taxes on certain other book-tax differences.

31,1984, or until 16,166,400 Mwh thermal are produced, or could have been produced, whichever is earlier. The innstment cd nuclear fuel has been assigned a fair value and recorded on the balance sheet as property, plant and equipment, The investment credit provided by the Tax Reform Act of with a corresponding credit to miscellaneous deferred in-1976, as well as investment credits provided by previous come. For income tax purposes, the nuclear fuel and spare tax laws, is being deferred and amortized to income over parts have been treated as income. The assigned cost of the productive lives of the related property.

nuclear fuel is amortized to fuel expense based on the The Employee Stock Ownership Plan was established, quantity of heat produced for the generation of electric effective January 1,1976, to enable the Company to claim energy with a like amount credited to miscellaneous in-under the Tax Reduction Act of 1975 and the Tax Reform come. The Company's policy is to include in the cost of Act of 1976 an additional one percent investment credit on nuclear fuel a provision for spent fuel disposa! costs. The its consolidated federal tax return for contributions to a Company expects that the reimbursement from the supplier trustee for eligible employees. Contributions are made in of the nuclear fuel (see Note 11) is adequate to provide cash or the Company's Common Stock and, if cash, are for the disposal costs of the fuel presently in use.

invested in the Company's Common Stock. The Plan also enables the Company to claim an additional one-half per-l l

29

Notes to Consolidated Financial Statements mononu-a cent investment credit to the extent of employee contribu-for the portion of AFDC attributable to borrowed funds. The tions which are to be matched by the Company. The Plan capitalization of AFDC results in the inclusion of AFDC in also permits limited additional contributions by employees.

rate base and the recovery thereof through future billings to customers. In its November 1977 order, the CPUC Amortization of debt premium, discount and expense:

directed that in the future, the Company is to capitalize Debt premium, discount and expense is being amortized AFDC at its authorized rate of return, but not to exceed by charges to income over the respective original lives of the amount allowed by the formula prescribed by the FERC.

the applicable issues.

Accordingly, the rates used by the Company in 1978 were 8.77% for the first eight months and 9.14% for the last All:wance for funds used during construction (AFDC):

four months. For the first eleven months of 1979, the rate AFDC, which does not represent current cash earnings, is used was 9.14% and for December 1979, the rate used defined in the system of accounts prescribed by the Fed-was 9.53%. These rates represented the Company's au-eral Energy Regulatory Commission (FERC) and the CP,UC thorized rates of return at that time and did not exceed the as the net cost during the period of construction of bor-amount allowed by the formula prescribed by the FERC.

rowed funds used for construction purposes, and a reason-able rate on funds derived from other sources. In accor-Revenues:

dance with such system of accounts, the Company capital-The Company reads customers' meters on a cycle basis, izes AFDC as a part of the cost of utility plant, with a credit and renders bills each month. Revenues are recorded to nonoperating income for the portion of AFDC attribu-when the customers a.e billed.

table to equity funds'and a reduction of interest charges

2. Capital Stock 1979 1978 SHARES AMOUNT SHARES AMOUNT (Thousands (Thousands of Dollars) of Dollare)

Cumulative preferred stock, $100 par value:

Authorized 3,000,000 3.000,000 Issued and outstanding:

Not subject to mandatory redemption:

4.20% series....

100,000

$ 10,000 100,000

$ 10.000 4 % % series (includes $7,500 premium).

175,000 17,508 175,000 17,508 4W % series 65,000 6,500 65,000 6,500 4.64% series.

160,000 16,000 160,000 16.000 4.90% series 150,000 15,000 150,000 15,000 4.90% 2nd series 150,000 15,000 150,000 15,000 7.15% series.

250,000 25,000 250,000 25.000 Total 1,050,000

$105,008 1,050,000

$105,008 Subject to mandatory redemption:

7.50% serics.

300,000

$ 30,000 300,000

$ 30,000 8.40% series.

344,000 34,400 344,000 34,400 Total 644,000

$ 64,400 644,000

$ 64,400 Cumulative preferred stock ($25), $25 par value:

Authorized 4,000,000 4,000,000 lssued and outstanding:

Not subject to mandatory redemption:

8.40% series.

1,400,000

$ 35,000 1,400,000

$ 35,000 Common stock, $5 parvalue:

Authorized 40,000,000 40,000,000 lssued and outstanding U,326,418

$161,632 29I250 3 9

$146,252

~

Premium on common stock,...

257,358 223,444 Installments received from employees on subscriptions aggregating $247,922 for 15,375 shares at December 31,1979, and $814,832 for 50,382 shares at December 31,1978 118

_ 8 Total...,

$_4151'08

$369J04 30

Changes in common stock and premium on common stock for 1979 and 1978 are as follows:

Premium Price range Common on common per share stock stock (Thousands of Dollars)

D:l:nce, January 1,1978

$129,420

$185,744 206,345 shares sold under Dividend Reinvestment Plan.

$16.13 to 18.25 1,032 2,443 105.845 shares sold under Employees Stock Ownership rian.

$16.66 to 17.61 529 1,252 13,901 shares soid to employees.

$18.13 70 182

• 3,040,255 shares sold to the public and employees.

$16.13 15,201 33,823 Cal:nce, December 31,1978 146,252 223,444 322,627 shares soid under Dividend Reinvestrnent Plan

$13.44 to 16.81 1,613 3,326 219,981 shares sold under Employees Stock Ownership Plan

$13.31 to 16.71 1,100 2,401 1,177 shares sold to employees.

$18.13 6

15 32,289 shares sold to employees.

$16.13 161 359 2,500,000 shares sold to the public

$16.13 12,500 27,813 B:l:nco, December 31,1979

$161,632 5257,358 The preferred stock may be redeemed at the option of the series: $112 on or prior to July 31,1984 (not callable under Company upon at least 30, but not more than 60 days' certain conditions prior to July 31,1981), and $105 on or notice,in accordance with the following schedule of prices prior to July 31,1985, and reducing each year thereafter plus an amount equal to the accrued dividends to the date by S.25 per share until July 31,2004, after which the re-fixed for redemption:

demption price is $100 (starting in 1984 and in each year thereafter, the Company will offer to repurchase up to

$100 par value:

12,000 shares of the 7.50% Cumulative Preferred Stock at Not subject to mandatory redemption:

$100 per share, plus accrued dividends to the date set for 4.20% series: $101; 4% % series: $101; 4%% series:

repurchase; and starting in 1985 and in each year there-

$101; 4.64% series: $101; 4.90% seriesiS101; 4.90% 2nd after, the Company will offer to repurchase up to 13,760 series: $102 prior to March 1,1981, and S101 on and alter shares of the 8.40% Cumulative Pieferred Stock at $100 that date: 7.15% series: $105 prior to March 1,1982, per share, plus accrued dividends to the date set for

$102.50 thereafter but prior to March 1,1987, and $101 on repurchase).

and after that date.

$25 par value:

Subject to mandatory redemption:

Not subject to mandatory redemption:

7.50% series: $112 on or prior to August 31,1983 (not 8.40% series: $27.10 prior to December 1,1981 (not call-callable under certain conditions prior to September 1, able under certain conditions prior to December 1,1981),

1980), and $105 on or prior to August 31,1984, and reduc-

$26.50 thereafter but prior to December 1,1986, $25.75 ing each year thereafter by S.25 per share until August 31, thereafter but prior to December 1,1991, and $25.25 on 2003, after which the redamption price is $100; and 8.40%

or after that date.

31

Notes to Consolidated Financial Statements <wnunuem

3. Long-Term Debt 1979 1978 Public Service Company of Colorado:

(husands of Donars)

First mortgage bonds:

3% % series, duo October 1,1981

$ 15,000

$ 15,000 3 % series, due October 1,1984 20,000 20,000 4%% series, due May 1,1987 30,000 30,000 4%% series, due May 1,1989..

20,000 20,000 4% % series, due October 1,1991 30,000 30,000 4%% series, due March 1,1992.

8,800 8,800 4% % series, due June 1,1994 35,000 35,000 5%% series, due May 1,1996 35,000 35,000 5%% series, due July 1,1997 35,000 35,000 6%% series, due July 1,1998......

25,000 25,000 8%% serWs, due September 1,2000.

35,000 35,000 7% % seriis, due February 1,2001 40,000 40,000 7% % sern s, due August 1,2002 50,000 50,000 7%% series, due June 1,2003...

50,000 50,000 9%% series, due October 1,2005..

49,500 49,500 8% % series, due November 1,2007 50,000 50,000 9% % series, due October 1,2008 50,000 50,000 Pollution Control Series A:

5% %, due March 1,2004 24,000 24,000 Pollution Control Series B:

6%%, due December 1,1985.

10,500 10,500 7% %, due December 1,1990.

2,000 2,000 7%%, due December 1,1995.

2,500 2,500 35,000 35,000 8%, due December 1,2004.

Less amounts held in construction fund (1,781)

(3,419)

Pollution Control Series C:

7% %, due October 1,2004.

15,000 7%%, due October 1,2005.

1,960 7%%, due October 1,2006.

2,105 7%%, due October 1,2007.

2,260 7%%, due October 1,2008.

2,425 26,250 7%%, due October 1,2009.

Less amounts held in construction fund (10,199)

Unamortized premium 1,572 1,675 Unamortized discount (656)

(681) 691,236 649,875 Cheyenne Light, Fuel and Power Company:

First mortgage bonds:

938 960 3%% series, due May 1,1985 5% % series, due April 1,1990.

1,386 1,402 7% % series, due April 1,2003.

4,000 4,000 9!estern Slope Gas Company:

First mortgage pipeline t onds:

57 5%% series, due May 1,1980 Unsecured promissory notes:

7% %, due December 1,1997..

20,000 20,000 10,000 10.35%, due December 1,1999 1480 Welton, Inc.:

4%% secured notes, payable in equal quarterly installments of $168,388 to June 1,1992 covering principal and interest.

5,942 6,322 6%-8% mortgage notes payable, due in annualinstallments through 1987 112 184 32

1979 1878 Long-Term Debt (continued)

(Thousands of Donere)

Fu:1 Resources Development Co.:

l Unsecured note payable (effective interest rate 7% %),

due in annual principal installments of $1,066,016 through 1983 3,198 4,264 7W % unsecured note payable, due in annual principal 1,000 1,500 installments of $500,000 tbrough 1982....

Unsecured notes payable, due in twelve equal quarterly principal installments beginning March 31,1984, interest rate fluctuates with the prime rate (15% % at December 31,1979 and 11%% at December 31,1978) 21,100 14,700 Home Light and Power Company:

First mortgage bonds:

3%% series, due August 1,1982.

320 328 393 402 4% series, due February 1,1986.....

350 358 5%% series, due September 1,1989...

740 751 6% series, due April 1,1997........

2,237 2,275 7% % series, due December 1,2002.

3,704 3,762 10%% series, due January 1,2003

$766,656

$711,140 The 4%% notes of 1480 Welton, Inc. are secured by a

4. Notes Payable mortgage on land in downtown Denver and an assignment Information regarding notes payable for the years ended of the lease between 1480 Welton, Inc. and the Company December 31,1979 and 1978 is as follows:

I undr;r which the latter is the lessee of the office building 1979 1978 locat d thereon.

(Thousands of Douare)

Notes payable to banks (weighted Tha aggregate annual maturities and sinking fund require-average interest rate 15.35% at mints during the five years subsequent to December December 31,1979 and 11.11 %

31,1979 are: $5,788,000 (1980), $20,638,000 (1981),

at December 31,1978)

$ 7,236 $ 7,182

$5,638,000 (1982), $5,638,000 (1983), and $25,438,000 Commercial paper (weighted average (1984) for the Company; and $2,317,502 (1980),

interest rate 13.46% at December

$2,245,776 (1981), $2,566,040 (1982), $1,746,067 (1983),

31,1979 and 10.38% at and $9,035,003 (1984) for its subsidiaries. The Company December 31,1978) 54,950 15,000 may satisfy its sinking fund obligations through the apph-

$62,186 $22,182 cation of property additions, and Cheyenne Light, Fuel Maximum amount outstanding at and Power Company is satisfying $60,000 annually through the application of property additions.

any month-end during the period.

$70,908 $64,022 Weighted average amount (based on the daily outstanding balance) outstanding for the period (weighted average interest rate 11.85% for the year ended December 31,1979 and 8.72%

for the year ended l

December 31,1978).....,... $29,937 $23,707 i

l S. Bank Lines of Credit, Compensating Bank i

i Balances and Bankers' Acceptance i

Facilities Arrangements for bank lines of credit totaled $135,262,000 l

at December 31,1979 and $135,143,250 at December 31, 1978. These lines consisted of $51,762,000 at December 33

Notes to Consolidated Financial Statements <wnun-n 31,1979 and $64,643,250 at December 31,1978, main-31,1979 and 1978 would include in property, plant and tained by compensating balances and $75,000,000 at equipment $470,000 and $1,291,000, respectively, repre-December 31,1979 and $70,500,000 at December 31, senting capitalized leases with an accumulated amortiza-1978, maintained by fee payments in lieu of balances. At tion of $157,000 at December 31,1979 and $928,000 at December 31, 1979, noninterest bearing certificates of December 31,1978. Long-term debt would include non-deposit in the amount of $715,000 were maintained in current obligations under capital leases of $78,000 at support of $8,500,000 of bank lines of credit. They may be December 31,1979 and $106,000 at December 31,1978, withdrawn each year at the time that the lines of credit and current liabilities would include current obligations which they support are eligible for renewal. The compen-under capital leases of $125,000 and $141,000, respec-sating bank balance arrangements provide that the Com-tively. The charges to the income statement representing pany maintain average ccmpensating balances in the total lease payments recorded as rent expense exceeded amount of $5,176,200 for the period ending December 31, by $77,000 at December 31,1979 and $93,000 at Decem-1979 and $6,464,325 for the period ending December 31, ber 31,1978, the amount that would have been charged 1978, and do not legally restrict the right of the Company as amortization and interest expense had these leases to withdraw these compensating cash balances. These been capitalized.

bank lines of credit are also used to support the Com-The internal Revenue Service has under examination the par'y's issuance of commercial paper. Arrangements for Federal income tax returns of the Company and certain Bankers' Acceptance facilities amounting to $20,000,000 of its subsidiaries for 1973,1974,1975,1976,1977 and were available at December 31,1979 and December 31, 1978. The examiners have proposed to include in income 1978. These arrangements are not supported by either Fort St. Vrain Nuclear Generating Station contract refunds fees or compensating balances.

applied to plant costs. The Company is resisting the pro-posal and believes that the final outcome of these matters

6. Comm.tments and Contingencies i

will not have a material effect on the reported financial Commitments made by the Company for the purchase of position or results of operations of the Company.

various items of plant and equipment aggregated approxi-mately $168,000,000 at December 31, 1979 and

7. Retirement Plan

$245,000,000 at December 31,1978.

Contributions to a trusteed fund under the noncontributory The aggregate estimated annual commitments as of retirement plan covering all eligible employees were December 31,1979 under long-term leases are as follows:

$11,762,000 in 1979 and $10,856,000 in 1978. The Com-pany's policy is to fund pension cost accrued. The total u

market value of the pension fund at the end of its fiscal year, June 30,1979, was $97,874,000. The actuanally 1980

. $1,636 computed value of the vested benefits at June 30,1979 1981 1,422 under the plan was $87,392.000. An evaluation of the 1982 1,318 vested benefits as of December 31,1979 was not made.

1983 1,197 However, the market value of the pension fund at that date 1984..

. 1,063 was approximately $105,142,000.

1985-1989 5,170 Effective December 1,1978, the Company's Board of 1990-1994 4,579 Directors authonzed a supplemental payment to retired 1995-1999 259 employees and surviving beneficianes for employees who The Company has entered into various leases for transpor-retired prior to January 1,1977. These payments, approxi-tation equipment and miscellaneous office equipment mately $529,000 in 1979 and $46,000 in 1978, which do which would be classified as capital leases as defined by not constitute an employee pension benefit plan, are sub-the Securities and Exchange Commission and the Financial ject to approval annually, and are made from the general i

Accounting Standards Board in Standard No.13, Account-assets of the Company.

ing for Leases. The Company has been advised by The Public Utilities Commission of the State of Colorado that

8. Income Tax Expense it has not adopted Financial Accounting Standard No.13 Total income tax expense was less than the amount com-and it has instructed the Company to continue to adhere puted by applying the federal statutory rate to pre-tax to the existing Uniform System of Accounts. Had these accounting income. The reasons for this difference are Isases been capitalized, the balance sheet at December as follows:

34

1979 1978 (Thousands of Donars)

Tax computed at statutory rate on pre-tax accounting income

$38,012

$39,985 Increase (decrease)in tax from:

736 (4,696)

Excess o' tax over book depreciation.

Allowance for funds used during construction (6,682)

(7,998)

Amortization of investment credit (2,714)

(2,046)

State income taxes, net of federal income tax benefit.

1,209 1,136 Other-net...

(1,735)

(780)

Total income tax expense

$26,826

$25,601 Income tax expense consists of the following:

Current income taxes:

Federal

$ 2,412

$ 1,639 State 2,183 2,185 4,595 3,824 Deferred income taxes:

Nuclear fuel and spare parts.

(5,042)

Accelerated amortization.

237 683 7,576 4.988 Accelerated depreciat;on Intangible drillir.g costs.

3,221 2,469 Gain on installment sale (11) 38 l

Lease and well impairments..

(3,963) 2,018 8,178 Charge equivalent to reduction in income taxes due to deferred investment tax credit, not of amortization 20,213 13,599

$26,826

$25.601 Total income tax expense

9. Taxes (Other Than income Taxes) 1979 1978 (Thousands of Douars)

Real estate and personal property taxes

$25,643

$24,410 Franchise taxes 1,204 1,719 7,301 6,003 Social security taxes 4,354 3,202 i

City and state use taxes 1,641 1,754 l

Miscellaneous taxes.

$40,143

$37,088 Charged:

Directly to income:

$38,033

$35,424 Operating expenses.

118 63 Other..

To property, plant and equipment 1,992 1,601 and various clearing accounts

$40,143

$37,088 35

Notes to Consolidated Financial Statements <connnm

'10. Segments of Business Segment information for the year ended December 31,1979 is as follows:

Electric Gas Other Total (Thousands of DeMars)

Operating revenues..

$ 507,587

$410.537

$ 8,386

$ 926,510 Operating expenses, excluding depreciation 366,330 373,726 13,894 753,950 D:preciation..

42,906 11,835 1,249 55,990 Total operating expenses..

409,236 385,561 15,143 809,910 Operating income (loss)*...

$ 98.351

$ 24,976

$ (6,757)

$ 116,570 Plant construction expenditures"

$ 279,037

$ 35,334 5 6,435

$ 320,806 Identifiable assets, December 31,1979:

Utility plant"

$1,419,396

$268,707

$44,380

$1,732,483 Materials and supplies, excluding $375 of merchandise for resale..

$ 37,595

$ 7,050

$ 479 45,124 l

Fuel inventory

$ 39,993 217 40,210 Gas in underground storage.

$ 1,944 1,944

~

Other corporate assets..

191,503

$2,011,264 Segment information for the year ended December 31,1978 is as follows:

Electric Gas Other Total (Thousands of ooners)

Operating revenues.

$ 421,732

$303,300

$ 4.746

$ 729,778 Operating expanses, >3xcluding depreciation 272,246 280,035 9,092 561,373 Deprecidon 37,708 10.894 939 49,541 Total operating expenses.

309,954 290,929 10,031 610,914 Operating income (loss)*.

$ 111,778

$ 12,371

$ (5,285)

$ 118,864 Plant construction expenditures"

$ 170,792

$ 26,970

$12,187

$ 209,949 Identifiable assets,

~

~

~

December 31,1978:

Utility plant".

$1,239,659

$245,175

$52,516

$1,537,350 Materials and supplies, excluding $433 of merchandise for resale.

22,39_4

_S _ 4,779__

j_]

33,292

$ 1,879 29,052 Fuel inventory..

$ 33,232 Gas in underground storage.....

$ 1,885 1,885 Other corporate assets..........

144,098

$1,745,677

• Before income taxes and interest expense l

l

• Includes allocation of common utility property

11. Fort St. Vrain Settlement claims between the Company and GAC relative to Fort St.

On June 27,1979, the Company and the prime contractor Vrain. The terms of these Agreements include the follow-for the Fort St. Vrain Nuclear Generating Station, General ing: (a) GAC paid to the Company, upon execution of the Atomic Company (GAC), which is an equal partnership of Settlement Agreement, $60,000,000 as an adjustment of Scallop Nucinar Inc. (a company of the Royal Dutch Shell the plant cost for the reduction in the plant's capacity from Group) and Gulf Oil Corporation entered into a Settlement 330 Mw at 80% capacity factor to 200 Mw at 60% capacity Agreement, a Services Agreement and a Fuel and Fabri-factor; however, GAC made no warranty as to the capacity cation Agreement satisfying and settling all contracts and of the plant; (b) GAC will contribute to the Company, be-36

tween 1980 and 1984, $97,050,427 for the cost of replacing The current cost of property, plant, and equipment, which the 130 Mw reduction in capacity at Fort St. Vrain with includes land, land rights, intangible plant, property held future electric generating facilities and $8,068,791 reim-for future use, and construction work in progress, repre-bursement for shipment, storage, handling and disposal of sents the estimated cost of replacing existing plant assets spent nuclear fuel for which the Company will bear the and was primarily determined by indexing surviving plant responsibility and the cost; (c) ownership of the reactor by the Handy-Whitman Index of Public Utility Construction core and all fuel elements at the plant was transferred to Costs. The current year's provision for depreciation on the the Company by GAC as of January 1,1979, and GAC will constant dollar and current cost amounts of property, plant, make available to the Company, at no charge (except cer-and equipment was determined by applying the Company's tain possible incremental costs), nuclear fuel elemeris depreciation rates to the indexed amounts.

sufficient to operate the plant at 200 Mw at 60% capacity Fuel inventories, the cost of fuel used in generation, and through December 31,1984, or until 16,166,400 Mwh ther-gas purchased for resale have not been restated from their mal are produced, or could have been produced, which-historical cost in nominal dollars. Regulation limits the ever is earlier; (d) through 1992, GAC will provide or recovery of fuel and purchased gas costs through the oper-arrange to provide fuel fabrication services to the Com-ation of adjustment clauses or adjustments in basic rate pany, and the Company will reimburse GAC for GAC's schedules to actual costs. For this reason fuel inventories cost, for the manufacture of additional fuel elements for are effectively monetary assets.

use at Fort St. Vrain as the Company, at its own discretion, may schedule: (e) GAC transferred ownership of spare As prescribed in Financial Accounting Standard No. 33, parts and equipment for the plant, effective January 1, income taxes were not adjusted.

1979; (f) GAC will fund, up to $5,000,000, the study and Under the rate-making prescribed by the regulatory com-resolution of certain plant performance problems; (g) GAC missions to which the Company is subject, only the his-i will fund, up to $10,000,000, work related to certain open torical cost of plant is recoverable in revenues as deprecia-work items, documentation and seismic studies; (h) upon tion. Therefore, the portion of the cost of plant stated in execution of the Settlement Agreement but effective as of terms of constant dollars or current cost that exceeds the January 1,1979, the Company received title to ti'e Fort historical cost of plant is not presently recoverable in rates Lupton Gas Turbine Units; and (i) upon execution of the as depreciation, and is reflected as the reduction to net Settlement Agreement but effective as of January 1,1979, recoverable amount. While the rate-making process gives the Company accepted Fort St. Vrain for commercial oper-no recognition to the current cost of replacing property, ation.

plant, and equipment, based on past practices the Com-pany believes it will be allowed to earn on the increased

12. Effects of Changing Prices (Unaudited) cost of its net investment when replacement of facilities The following supplementary information is supplied in actually occurs.

~

accordance with the requirements of the Statement of To properly reflect the economics of rate regulation in the Financial Accounting Standards No. 33 for the purpose of Statement of Income from Continuing Operations, the i

providing certain information about the effects of general reduction of net property, plant, and equipment should be inflation and chancas in specific prices on the Company.

offset by the gain from the decline in purchasing power of It should be vieweo as an estimate rather than as a precise net amounts owed. In calculating this gain, preferred stock measure.

has been classified as a monetary item, which is consistent Constant dollar amounts represent historical costs stated with its treatment for rate-making purposes. During a in terms of dollars of equal purchasing power, as measured period of inflation, holders of monetary assets suffer a loss by the Consumer Price index for all Urban Consumers.

of general purchasing power while holders of monetary Current cost amounts reflect the changsWn specific prices liabilities experience a gain. The gain from the decline in of plant from the date the plant was acquired to the present, purchasing power of net amounts owed is primarily atttrib-l and differ from constant dollar amounts to the extent that utable to the substantial amount of debt and preferred specific prices hav s increased more or less than prices in stock which has been used to finance property, plant, and general.

equipment. Since the depreciation on this plant is limited to the recovery of historical costs, the Company does not

]

have the opportunity to realize a holding gain and is lim-ited to recovery of only the embedded cost of long-term debt and preferred stock.

t 37

Notes to Consolidated Fmancial Statements < coni.nuwi Statement of income from Continuir.g Operations Adjusted for Changing Prices for the Year Ended December 31,1979 (Thousands of Dollars)

Conventional Constant dollar current cost

's hielorical average average cool 1979 dellers 1979 dellers Operating revenues

$926,510

$ 926,510

$ 926,510 Fuel used in generation expense.

176.413 176.413 176.413 Gas purchased for resale expense...

310.129 310,129 310,129 Depreciation expense.........

55.990 98,138 145.779 Other operating and maintenance expense....

267,408 267,408 267,408 Income tax expense....

26,826 26,826 26,826 Interest expense............

47,097 47,097 47,097 Other income and deductions-net...

(13.162)

(13.162)

(13,162) 870,701 912,849 960,490 income (loss) from continuing operations (excluding reduction to net recoverable amount).

$ 55.809

$ 13,661*

$ (33,980)

Increase'in specific prices (current cost) of property, plant and equipment held during the year"

$549,910 Reduction to net recoverable amount...

$(164,766)

(265,529)

Effect of increase in general price level.

(401,506)

Excess of increase in general price level over increase in specific prices after reduction to net recoverable amount..

(117,125)

Gain from decline in purchasing power oinet amounts owed..........

130,096 130,096 Net.

$ (34,670)

$ 12,971

• Including the reduction to net recoverable amount. the income (loss) from continuing operations on a constant dollar basis would have been

$(151.105) for 1979.

• • At December 31,1979, current cost of property. plant and equipment, net of accumulated depreciation was $3.517,862, y hile historical cost or rut cost recoverable through depreciation was $1.732,483.

l 4

38

Five Year Comparison of Selected Financial Data Adjusted for Effects of Changing Prices (in Average 1979 Dollars)

(Thousands.Except Per Share Amounts)

Years ended December 31, 1979 1978 1977 1976 1975 Operating revenues.

$926,510

$812,317

$734,945

$666,091

$620,902 Historical cost information adjusted for generalinflation income from continuing operations (excluding reduction to net recoverable amount).

13,661 Pcome per common share (after dividend requirements on preferred stock and excluding reduction to net recoverable amount)

.01 Net assets at year-end at net recoverable amount.

524,552 Current cost inform 7 tion Income (loss) from continuing operations (excluding reduction to net recoverable amount)

(33,980)

Income (loss) per common share (after dividend requirements on preferred stock).

(1.52)

Excess of increase in general price level over increase in specific prices after aduction to net recoverable amount..

117,125 Net assets at year-end at net recoverable amount.

524,552 Generalinformation (Average 1979 Dollars)

Gain from decline in purchasing power of net amounts owed 130,096 Cash dividends declared per common share.

1.60 1.70 1.75 1.76 1.65 Market pnce per common share at year-end.

12.63 17.96 22.06 23.71 20.93 Average consumer price index.

217.5 1ES.4 181.5 170.5 161.2

13. Quarterly Financial Data (Unaudited)

Summarized quarterly data (in thousands of dollars except for per share amounts) for 1979 and 1978 is as follows:

1979 Three months ended March 31, June 30.

Seplec.ber 30 December 31.

Operating revenues.

.. $274,78'2

$209,470

$181,709

$260,549

. $ 30,656 S 22,023

$ 13,319

$ 23,746 Operating income.

Net income

. $ 21,501

$ 12,463

$ 6,428

$ 15,417 Earnings availaole for common stock..

. $ 18,117

$ 9,079

$ 3,044

$ 12,033 Average common shares outstanding (thousands).

29,298 31,188 32,138 32,276 Eamings per a serage common share *

$0.62

$0.29

$0.09

$0.37

• Due to rounding, quarterly figures do not add to annual total.

1978 Three months ended Merch 31, June 30, September 30, December 31.

Operating revenues....

.. $217,036

$162,195

$146,549

$203,998 l

Opcrating income...

.. $ 28,231

$ 20,400

$ 20,121

$ 24,511 Net income..

.$ 19,189

$ 11,892

$ 11,095

$ 15,525 Earnings available for common stock.

. $ 15,805

$ 8,508

$ 7,711

$ 12,141 Average common shares outstanding (thousands).

25,917 26.054 26,116 28,200 Earnings per average common share....

$0.61

$0.33

$0.29

$0.43,

39

Shareholder Information Stock Information Automatic Dividend Reinvestment Plan Public Service Company of Colorado Common stock ($5 par The Company's Automatic Dividend Reinvestment and value) is listed for trading on the New York and Midwest Stock Common Stock Purchase Plan provides preferred and com-Exchanges under the symbol "PSR". It is quoted as "PSvCol" mon shareholders with an economical and convenient in daily newspaper stock table listings. There were 9.587,300 method for purchasing additional shares of the Common common shares traded during 1979, an average daily volume Stock of the Company without the payment of a brokerage of 37,894 shares. In 1978. 5,683,600 common shares were commission or service charge. Two new features were traded, an average daily volume of 22,554 shares. On added to the Plan beginning with the February 1,1980 December 31, 1979, the Company had 63,094 common Investment Date.

shareholders and 6,529 preferred stockholders. This com-The price of the Common Stock purchased with reinvested pares with 54,867 common shareholders and 6,802 preferred cash dividends will be 95 percent of the average of the high stockholders on December 31,1978. The total number of and the low sale prices of such stock as reported on the common shares outstanding was 32.326,418 on December consolidated tape on each Investment Date. In addition, a 31,1979 compared with 29,250,344 at year end 1978.

second new feature allows preferred and common share-Three series of Cumulative preferred stock are actively holders whose shares are registered in names other than in traded. The 4%% series ($100 par value) is traded t;nder their own to participate in the Plan provided the broker or unksted trading privileges on the American Stock Exchange.

fiduciary who holds such stock in nominee name is willing to The 7.15% series ($100 par value) and 8.40% series ($25 par participate in the Plan.

value) are listed on the New York Stock Exchange. All other Participants in the Plan can also make stock purchases for series of cumulative preferred stock are not ac! vely traded, cash in amounts of not less than $10 nor more than $5,000 and market prices are not published.

per month. The price to M paid for each share of such stock The accompanying tables show the ranges of closing stock purchased with optiona, cash payments will be 100 percent prices and dividends pfd on the common and preferred of the purchase price on each Investment Date.

issues by quarter for 1979 and 1978.

An additional 2,807 shareholders joined the Plan during 1979, i

increasing participation to 14,722 or 23% of all our common ARTER 4th 3rd 2nd 1st and optional cash payments were applied to purchase 1979 High........... $15%

$16%

$17%

$17%

322.627 new shares, at an average cost of $15.31 per share.

Low.......... 12%

15%

15%

16%

A prospectus descr.bing the Plan and enrollment information i

Dividends Paid.. 40

.40

.40

.40 is available from the Shareholder Services Department by 1978 High........... $18K

$18%

$17W

$18%

wnting or by calling Area Code 303/571-7514.

Low...........

16 16%

15%

16%

Dividends Paid.. 40

.36W

.36 W

.36 W Cumulative Preferred Stock Transfer Agents and Registrars for QUARTER 4th 3rd 2r 4 1st All Issues of Capital Stock 4Y.% Series Principal Transfer Agent, Registrar. Dividend Paying Agent 1979 High......... $41 %

$44%

$43%

$47%

Morgan Guaranty Trust Company of New York Low....

34 40 40%

42%

New York, New York 1976 H ig h.......... $4 8

$47

$48

$49W Co-Transfer Agents Low..

44 W 44%

45 46%

United Bank of Denver National Association Denver, Colorado Bank of Amenca Nadonal Trust and SaWngs Assodadon 97 H h...........$74

$79%

$78%

$76%

San Francisco, California Low.......... 63 %

74 69 71 1978 High............ $82%

$83W

$82W

$84%

{e ank of Denver National Association Low.......

74W 75%

76 80K Denver. Colorado 8.40% Series Wells Fargo Bank, National Association 1979 High........... $21 %

$22%

$22%

$23%

San Francisco, California L ow........... 18 21 %

20 %

21 %

D;vidend Reinvestment Plan Agent 1978 High........ $24%

$24%

$24%

$25 Morgan Guaranty Trust Company of New York Lo w......

21 %

22 %

22%

23%

New York, New York 40

Officers and Directors BOARD OF DIRECTORS C. KEITH MILLEN (34)

MANAGERS, GEOGRAPHIC DIVISIONS Senior Vice President ROBERT J. COTTLE (31)

ROBERT T. PERSON, Denver Colorado (1957)

Churmin of the Board Operations Northeast Metropolitan RICHARD F_ WALKER Denver, Colorado (1976)

HARVEY P. BLICHMANN (30)

ROBERT J. FAIRCHILD (40)

Vice President Front Range President and Stra P an" Chi:t Executive Officer 0; the Company RONALD L FRENCH (27) ve cs WILLIAM E BLACKPURN, Denver. Colorado (1%5)

Pueblo JAMES N. BUMPUS (16)

Manager, Southern Region Resident Partner, Yaughey Vaughey ce

& Blickburn (Independent Oil Producers)

FRANK O. HELLWIG (29)

,n e an reasurer DORIS M DRURY, PhD. Denver. Colorado (1975)

Southeast Metropolitan E ALD (20)

University of Denver

^[p ROSS C. KING (14) et Professor of Economics and Director.

High Plains K

T F LER (32)

UG S C. LOCKHART (15)

A FE D AN.

s Angeles, Califomia (1977) et Executive Officer h[ntinental Ai Electnc Engineenng ROBERT E. MONINGER (32) s FRANK S HOAG. JFs. Pueblo, Colorado (1972)

President. Star-Journal Publishing Corp.

DELWIN D. HOCK (17)

M. GORDON PARKER (31)

Vice President Denver Metropolitan (Publisher of the Pueblo Star-Journal and Puet2o Chieftain newspapers)

Accounting and Secretary WALLACE K REED (33)

ROBERT E. KELLY, Denver, Colorado (1978)

. ROBERT E. KELLY (33)

Boulder Vice President V'ce President Manager, Foothills Region Fuel Supply and Gas Operations Fuel Supply and Gas Operations HAROLD L. RUST (24)

JOHN N. KERR. Denver. Colorado (19/1)

OSCAR R. LEE (29)

Platte Valley Senior Vice Prestdent of the Company V:ce President LOUIS W. SUPANCIC (28)

Electnc Production GEORGE B. McKINLEY. Grand Junction, Colo. (1976)

Southwest Metropolitan Chairrrian of the Board and ROBERT T. PERSON, JR (8)

N JAMES TEMPLE, JR. (33)

Chief Execuuve Orficer Vice President Western First National Banks in Aspen Craig.

Pubhc Affairs Manager, Western Region Glenwood Spnngs. Grand Junction and JAMES H. RANNIGER (21)

ROBERT J. V' DICK (24)

Grand Junction-North Vice President Northwest Metropolitan JOHN A McKINNEY. Denver. Colorado (1979)

Rates and Regulations JAMES R. WEXELS (14)

Chairman ar.d Chief Executive Officer JACK W ROUSE (34)

San Luis Valley Johns-Manville Corp.

Vice President C. KEITH MILLEN. Denver, Colorado (1969)

Division Administration Senior Vice President of the Company 0 Denotes years of service..m me company BRYANT O'DONNELL. Denver, Colorado (1972)

MANAGERS, SUBSIDIARY COMPANIES Executwe Vice President and OTHER OFFICERS MICHAEL J. GEILE (15)

General Counsei of the Company Vice President and General Manager Home Light & Power Company NICHOLAS R PETRY, Denver, Colorado (1961) s st nt V e res ent President. Petry-Vappi Construction C '

Govemmental Affairs JOHN M. HASSOLDT (29)

Managing Partner of Vice President and General Manager H. G. Petry Construction Co.

RICHARD R. MIDWINTER (30)

Western Slope Gas Company Controller and Assistant Secretary J MICHAEL POWERS. Cheyenne. Wyoming (1978)

President. Powers Buriders' Supply ROBERT C. BRYAN (11)

President and General Manager Assistant Secretary and Assistant Treasurer KlHG D. SHWAYDER Denver. Colorado (1967)

Cheyenne Light. Fuel and Power Company Chairman of the Board. Samsonite Corp.,

F. WILLIAM BEIER (40)

Manager, Northern Region subsidiary of Beatnce Foods Company Assistant Secretary ROBERT F. JONAS (32) o Year elected so the Board of Dwectors WILLIAM R. GARDINER (40)

Vice President and General Manager Assistant Secretary Fuel Resources Development Co.

EXECUTIVE COMMITTEE HENRY J. JOHNSON (40) o cemies years of service.m the company Robert T. Person Assistant Secretary Richard F. Walker IRA R. ADLER (6)

Willem T. Blackburn Assistant Treasurer George B. McKinley LEO L. BEEM (32)

LEGAL COUNSEL o[s Assistant Treasurer Kelly, Stansfield & O'Donnell g

WANDA GRUDE (6)

Denver, Colorado Assistant Treasurer AUDIT COMMITTEE RICHARD L HUNT (13)

Dons M. Drury Assistant Treasurer AUDITORS Frink S Hoag. Jr DOUGLAS S. ROBERTSON (1)

Arthur Young & Company King D. Shwayder Assistant Treasurer Security Life Building o oenoies years ce sennce ne me company Denver, Colorado EXECUTIVE OFFICERS ROBERT T. PERSON (44)

Chlirm;n of the Board EXECUTIVE APPOINTMENTS RICHARD F. WALKER (31)

The following executive appointments were made during 1979. Elected Vice Presidents Pr:sident and Chief Executive Officer were: Clark B. Ewald, Employee Relations; Oscar R. Lee, Electric Production; Robert T.

BRYANT O'DONNELL (30)

Person, Jr., Public Affairs; and James H. Ranniger, Rates and Rcgulations. Named Executwe Vice President Assistant Vice President was Dan R. McNellis, Governmental Affairs. Robert T, Person and Geneal Counsd retired as an employee of the Company but continues as Chairman of the Board.

JOHN N. KERR (44)

Sen:or Vice President General Administration

e -

Bulk flate M

E U.S. Postage PAID Permit No.14 PUBLIC SERVICE Denver, Coto.

COMPANY OF COLORADO P.O. Box 840 D:nvsr, Colorado 80201 (303) 571-7511