ML19309A503
| ML19309A503 | |
| Person / Time | |
|---|---|
| Site: | Vermont Yankee File:NorthStar Vermont Yankee icon.png |
| Issue date: | 03/27/1980 |
| From: | Carey W VERMONT YANKEE NUCLEAR POWER CORP. |
| To: | Lear G Office of Nuclear Reactor Regulation |
| Shared Package | |
| ML19309A504 | List: |
| References | |
| NUDOCS 8003310372 | |
| Download: ML19309A503 (1) | |
Text
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s VERMONT YANKEE NUCLEAR POWER CORPORATION SEVENTY SEVEN GROVE STREET RUTLAND, VERMONT 05701 mem n oca ns.a.
March 27, 1980 Mr. George Lear, Chief Boiling Water Reactors Branch 1 Directorate Branch 1 Director of Licensing Nuclear Regulatory Commission Washington, D.C.
20555 Re:
Licence No. DPR28, Docket 50-271
Dear Mr. Lear:
Enclosed are ten (10) copies of Financial Statements of Vermont Yankee Nuclear Power Corporation certified by Peat, Marwick, Mitchell and Co., Certified Public Accountants.
Very truly yours, 61%E &w; Willis W. Carey Treasurer and' Asst. Secretary WWC/sa l
8003810 4
I VERMONT YANKEE NUCLEAR POWER CORPORATION Financial Statements December 31, 1979 and 1978 (With Accountants' Report Thereon)
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Certified Public Accountants One Hoston Place Itat,Manvick,Mitchell&CQ Hoston, Massachusetts 02108 The Stockholders and Board of Directors Vermont Yankee Nuclear Power Corporation:
We have examined the balance sheets of Vermont Yankee Nuclear Power Corporation as of December 31, 1979 and 1978 and the related statements of income and retained earnings and changes in financial position for the years then ended. Our examina-tions were made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditirg procedures as we considered necessary in the circumstances.
In our opinion, the aforementioned financial statements present fairly the finan-cial position of Vermont Yankee Nuclear Power Corporation at December 31, 1979 and 1978, and the results of its operations and the changes in its financial position for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.
O i us. h~A Na A.
February 15, 1980
VERMONT YANKEE NUCLEAR POWER CORPORA Balance Sheets December 31, 1979 and 1978 Assets 1979 1978 Capitalj Utility plant:
Capitalizatio-Electric plant, at cost S 214,335,562 209,990,887 Common sto.
Less accumulated depreciation 53,003,149 45,273,555 Common s, author Net electric plant 161,332,413 164,717,332 outsta' Other pa Nuclear fuel, at cost (note 2):
Retained Assemblies in reactor 48,955,319 35,734,808 Fuel in process 16,011,781 14,026,990 Spent nuclear fuel 51,294,372 44,223,367 116,261,472 93,985,165 Cumulative Less accumulated amortization 80,674,131 65,128,298 series; 300,000(
Net nuclear fuel 35,587,341 28,856,867 183,254 in 1978)
Net utility plant 196,919,754 193,574,199 Long-term /
1 Current assets:
,4 Cash (note 3)
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4,053,574 3,457,350 Temporary investments, at cost Current liabi which approximates market 2,591,448 Notes paya Accounts receivable, principally Long-term from sponsors 9,482,524 6,659,793 one year Materials and supplies, at cost 3,188,717 2,754,398 Accounts pl Prepaid expenses 390,143 290,848 Accrued in Accrued ta)
Total current assets 17,114,958 15,753,837 9R Deferred charges:
Unamortized debt expense 410,944 432,861 Unamortized g>
Unamortized downtime costs 3,218,783 1,470,045 Accumulated d Total deferred charges 3,629,727 1,902,906 Commitments a(
$ 217,664,439 211,230,942 See accompanying notes to financial statements.
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D' Bon rnd Liabilities 1979 1978 i
guity (note 4):
),
$100 par value;
)400,100 shares; Dg 400,014 shares S 40,001,400 40,001,400
!n ctpital 13,100,071 13,006,204
[nings 5,578,401 5,774,009
)commonstockequity 58,679,872 58,781,613
)firecd stock, 7.48%
)parvalue; authorized ico; outstanding (Ga (194,254 shares pta 4) 18,325,400 19,425,400
), nit (note 5) 81,278,573 85,799,697 c;pitalization 158,283,845 164,006,710 fcs:
6,000,000 to be retired within t2 5) 4,348,000 2,118,000 la 4,065,958 4,144,681 1,977,273 2,006,587 ct 629,409 1,147,672 1 current liabilities 17,020,640 9,416,940 on rst.cquired debt, net 392,370 313,878 tr&d income taxes 41,967,584 37,493,414
- x>ntingancie.s (note 8)
$ 217,664,439 211,230,942 w
-m.
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VERMONT YANKEE NUCLEAR POWER CORPORATION Statements of Income and Retained Earnings Years ended December 31, 1979 and 1978 1979 1978 Operating revenues S 65,981,810 61,637,509 Operating expenses:
Nuclear fuel expense (note 2) 15,326,978 13,151,317 Other operating expenses 11,245,967 10,260,905 Maintenance 5,363,759 3,120,981 Depreciation 8,299,930 8,085,918 Taxes on income (note 6) 6,564,000 7,509,531 Other taxes, principally property taxes 4,006,552 3,812,365 Total operating expenses 50,807,186 45,941,017 i
Operating income 15,174,624 15,696,492 Other income and deductions, net 190,387 153,024 Income before interest expense 15,365,011 15,849,516 Interest expense:
Interest on long-term debt 7,944,832 8,373,201 Other interest expense 162,557 71,949 Total interest expense 8,107,389 8,445,150 Net income 7,257,622 7,404,366 Retained earnings at beginning of year 5,774,009 6,899,155 l
13,031,631 14,303,521 l
Dividends declared:
Preferred stock, 7.48% series 1,453,020 1,537,267 Common stock, $15.00 per share (S17.48 in 1978) 6,000,210 6,992,245 Retained earnings at end of year S 5,578,401 5,774,009 Net income per average share of common stock outstanding S
14.53 14.68 See accompanying notes to financial statements.
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VERMONT YANKEE NUCLEAR POWER CORPORATION Statements of Changes in Financial sition Years ended December 31, 1979 and 1978 1979 1978 Source of funds:
From operations:
Net income
$ 7,257,622 7,404,366 Charges not requiring use of funds:
Depreciation 8,299,930 8,085,918 Amortization of nuclear fuel 15,326,978 13,151,317 Amortization of deferred downtime costs 2,350,554 2,567,388 Deferred income taxes 4,013,170 5,667,414 Investment tax credit adjustments 461,000 204,000 Amortization of debt and capital stock expense 18,711 23,018 Total from operations 37,727,965 37,103,421 Decrease in working capital 6,242,579 Other, net 499,609 384,267
$ 44,470,153 37,487,688 Use of funds:
Electric plant additions 5,020,200 4,389,235 Nuclear fuel additions 22,276,307 16,472,622 Downtime costs deferred 4,099,292 2,140,169 Reduction of long-term debt 4,521,124 4,521,124 Retirement of preferred stock 1,100,000 1,126,300 Preferred stock dividends 1,453,020 1,537,267 Common stock dividends 6,000,210 6,992,245 Increase in working capital 308,726
$ 44,470,153 37,487,688
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Changes in components of working capital:
Increase (decrease) in current assets:
Cash 596,224 2,771,088 Temporary investments (2,591,448)
(1,098,295)
Accounts receivable 2,822,731 (443,884)
Materials and supplies 434,319 230,395 Prepaid expenses 99,295 (36,484) 1,361,121 1,422,820 Increase (decrease) in current liabilities:
Notes payable 6,000,000 Long-term debt to be retired within one year 2,230,000 (2,269,000)
Accounts payable (78,723) 2,971,668 Accrued interest (29,314)
(155,354)
Accrued taxes (518,263) 566,780 7,603,700-1,114,094 Increase (decrease) in working capital
$ (6,242,579) 308,726 See_ accompanying notes to financial statements.
VERMONT YANKEE NUCLEAR POWER CORPGRATION Notes to Financial Statements December 31, 1979 and 1978 (1) Summary of Significant Accounting Policies (a) Regulation and Operations l
The Company is subject to the regulatory authority of the Federal Energy Regulatory Commission (FERC) and the Public Service Board of the State of Vermont as to transactions with associated companies, accounting and security issues.
The Company is also subject to regulation by Federal or state agencies with respect to nuclear plant licensing and safety, air and water quality, land use and other environmental matters.
Pursurnt to the terms of Power Contracts with sponsors, for a term of 30 years commencing on December 1,1972, each Sponsor is obligated to pay the Company each month (regardless of the Plant's operating level or whether it is operating or shutdown during the period), an amount equal to its entitlement percentage of the Company's total fuel costs and operating expenses with respect to the Plant, and an allowed return on equity. Also, under terms of l
the Capital Funds Agreements, the Sponsors are committed, subject to obtaining necessary regulatory authorizations, to make funds available in amounts required to obtain or maintain licenses necessary to keep the Plant in operation.
(b) Depreciation and Maintenance Electric plant is being depreciated on the straight-line method at rates designed to fully depreciate all depreciable properties through 1998.
Renewals and betterments constituting retirement units are charged to electric plant. Minor renewals and betterments are charged to maintenance expense.
At the time depreciable properties are retired, the original cost, plus cost of removal, lees salvage of such property is charged to the accumulated provision for depreciation.
(c) Amortization of Nuclear Fuel The cost of nuclear fuel is amortized to expense on the basis of the rate of burn down of the individual assemblies comprising the total core.
The Company also accrues the estimated future costs of disposing of spent nuclear fuel.
See note 2 of notes to financial statements.
(d) Deferred Charges Costs associated with scheduled plant downtime for replacement of nuclear fuel assemblies and major maintenance are amortized to expense over the estimated period until the succeeding downtime (normally between twelve and fourteen months).
(e) Taxes on Income The tax effects of timing differences are accounted for as prescribed by and in accordance with the rate-making policies of FERC. Provisions for deferred income taxes reflect the tax effects of all timing differences.
(Continued)
2 VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements I
Investment tax credits are deferred and amortized to income over the life of the related assets.
(2) Nuclear Fuel Expense The Company accrues estimated costs of disposing of nuclear fuel as a component of nuclear fuel expense.
Provisions for estimated costs of disposing of nuclear fuel in the reactor (at projected costs in 1987 when disposal facilities may be available) are being accrued based on the rate of burn-down of assemblies in the reactor.
Provisions for costs of disposing of
. nuclear fuel used prior to October, 1977 (estimated to cost $36,400,000 in 1987) are being accrued over a 10 year period ending in 1987.
Accruals for estimated costs of disposing of nuclear fuel increased 1979 and 1978 nuclear fuel expenso by approximately $5,800,000 and $4,900,000, respectively, and are expected to increase annual nuclear fuel expense by approximately $9,000,000 (including $4,700,000 for spent fuel) in 1980 and L
through the year 1987. Current estimates of disposal costs are subject to a number of uncertainties including the cost, availability and timing of disposal facilities, the extent of future inflation, regulatory require-ments and the cost of futo-e services, all of which may require periodic revisions in estimated ccats of disposal.
(3) Compensating Balances and Short-term Borrowings The Company had bank lines of credit aggregating $12,000,000 at December 31, 1979 requiring average compensating balances equal to 7.5% of outstanding loans (there were $6,000,000 of loans outstanding at December 31, 1979) and 7.5% of the line.
During 1979 the maximum amount of short-term borrowings outstanding at any month end was $6,000,000 and the daily average amount of short-term borrowings outstanding was $975,300 with a corresponding weighted average interest rate of 15.35%. There were no significant amounts of short-term borrowings during 1978.
(4) Capital Stock so long as any shares of the Cumulative Preferred Stock are outstanding, the payment of cash dividends and distributions on Common Stock (other than redemptions, which requires 30% common equity after redemption) is limited when Common Stock Equity (as defined) is less than 25% of Total Capitaliza-tion (as defined).. At December 31, 1979, Common Stock Equity was 35.91% of
' Total Capitalization.
The 7.48% series Preferred Stock is redeemable (1) at par through a mandatory sinking fund in the amount of $1,100,000 per annum, (2) at the option of the Company, at par, an additional $1,100,000 per annum and (3) in whole or in part from time to time, at redemption prices per share ranging from $106.97 in 1980 co.3100 in 1998, together in each case with accrued and unpaid dividends to the redemption date.
i (Continued)
3 VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements (5) Long-Term Debt A summary of long-term debt follows:
1979 1978 First mortgage bonds:
Series A 5/8% due 1998
$ 59,503,000 61,110,000 Series B 1/2% due 1998 11,150,000 11,394,000 Series C - 7.70% due 1998 14,843,000 15,273,000 Total first mortgage bonds 85,493,000 87,777,000 Unamortized premium on debt 133,573 140,697 Total long-term debt 85,626,573 87,917,697 Less long-term debt to be retired within one year 4,348,000 2,118,000 Long-term debt, net S 81,278,373 85,799,697 The Mortgage constitutes a first lien on utility plant, excluding nuclear fuel.
Bonds issued under tne Mortgage are further secured b3 the terms of the Power Contracts (except for related fuel payments) and the Capital Funds Agreements with the sponsors.
Sinking fund requirements with respect to First Mortgage Bonds amount to $4,514,000, annually.
(6) Income Taxes The components of inceme tax expense are:
1979 1978 Curreat:
Federal income taxes:
Included in operating income S 1,419,479 826,912 Included in non-operating income 173,000 158,000 Vermont income taxes:
. Included in operating income 670,351 811,205 2,262,830 1,796,117 Deferred:
Federal income taxes:
Included in operating income 3,695,521 5,412,088 Vermont income taxes:
Included in operating income 317,649 255,326 i
Total deferred income taxes 4,013,170 5,667,414 Investment credit adjustments 461,000 204,000 Total income taxes S 6,737,000 7,667,531 (Continued)
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E YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements A reconciliation of the Company's effective income tax rates with the Federal statutory rate is as follows:
1979 1978 Federal statutory rate 46.0%
48.0%
State income taxes, net of Federal income tax benefit 3.8 3.7 Investment credit (3.1)
(2.4) f Other 1.4 1.6 48.1%
50.9%
The principal items comprising deferred income tax expense are:
1979 1978 Excess of tax depreciation over financial t
h statement depreciation S 3,196,427 3,995,000 k
Exceas of fuel amortization for financial statement purposes over (under) tax amortization (1,750,704) (1,614,000)
Maintenance expenses deferred for financial statement purpcses 735,875 (220,000)
Other 51,572 60,000 Investment tax credits utilized 1,780,000 3,446,414
$ 4,013,170 5,667,414 (7) Retirement Plans The Company has retirement plans covering all regular employees. The Company's policy is to provide for and fund the normal cost including provisions to amortize the unfunded liability by 1998. Pension expense for 1979 and 1978 was $230,217 and $215,962, respectively.
(8) Ccmmitments and Contingencies Certain intervenors, challenging the sufficiency of the Nuclear Regulatory Commission's (NRC) environmental review of portions of the fuel cycle, appealed the NRC decision authorizing the Company's permanent, full power, 20rty-year operating license, to the Court of Appeals for the District of Colurabia Circuit, where their appeal was consolidated with another appeal from the NRC's generic rulemaking proceeding on the same subject.
In July, 1976, that Court decided thz appeals by setting aside and remanding to the NRC for further proceedings certain aspects of the rulemaking which dealt with fuel reprocessing and waste disposal and by remanding the Vermont Yankee decision to await the outcome of the rulemaking.
On April 3, 1978 the United States Supreme Court ruled favorably on the Company's Appeal from that decision and remanded the consolidated cases to the District of Columbia Circuit where the matter is still pending.
(Continued)
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VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements The Company has commitments for nuclear fuel purchases through 1992 approxi-mating $139,850,000.
Expenditures for such commitments will be approxi-mately $19,800,000 in 1980 and approximately $17,000,000; $18,400,000;
$19,200,000 and $19,100,000 in the years 1981 through 1984, respectively.
The Company has contracted for uranium concentrate to meet substantially all power production requirements through 1983.
The Company has an enrichment contract with the United States Energy Research and Development Administra-tion through 2001 and has contrscted for fuel fabrication requirements through 1984 and conversion services through 1983.
The Company does not have contracts for disposal of spent fuel. Pursuant to an eff ective amendment to the plant's operating license, work is underway to expand temporary storage capacity so that spent fuel removed from the reactor through 1987 can be safely stored while maintaining the ability to discharge a full core should that be necessary for operational reasons.
By decision dated January 27, 1978 the NRC Atomic Safety and Licensing Appeal Board affirmed an earlier Licensing Board decision authorizing the license f
amendment to permit expansion of the fuel rack capacity for storage of spent fuel at the Vermont Yankee plant.
An appeal by one intervenor from that decision is currently pending before the Court of Appeals for the District of Columbia Circuit.
The Company is responsible for costs which will be incurred to decommission its nuclear generating plant at the end of its useful life.
While studies indicate that such costs could amount to $21,000,000 (in 1975 dollars), the eventual costs of decommissioning will be largely dependent upon technology and regulatory commission requirements at or near the time of decommis-sioning (the plant's current operating license expires in 2007) and such requirements could materially affect estimates based upon current tech-nology. The Company is not presently providing for decommissioning costs, i
The 1975 amendments to the Price-Anderson Act provide that each owner of an i
operating power reactor may be assessed a retrospective premium of up to
$5,000,000 per reactor in the event of any one nuclear incident occurring in any reactor in the United States (with a maximum assessment of $10,000,000 per year per reactor) should any nuclear incident result in liability losses which exceed the maximum available private insurance protection (presently
$160,000,000).
That Act further provides for federal indemnity for liability losses in excess of the above two layers of insurance up to the statutory limit of liability of $560,000,000.
(Continued) r
6 VERMONT YANKEE NUCLEAR POWER CORPORATION l
Notes to Financial Statements l
l (9) Unaudited Quarterly Financial Information The following quarterly financial information le unaudited and in the opinion of management includes all adjustments (consisting only of normal recurring accruals) necessary to a fair statement of results of operations for such periods.
Quarter ended 1979 December September June March Operating revenues S 19,318,085 15,762,525 15,788,644 15,112,556 Operating income 4,089,777 3,516,110 3,804,876 3,763,861 l
Net income 1,999,078 1,611,900 1,826,582 1,820,062 Net income per share of common stock 4.11 3.12 3.66 3.64 l
1978 p
Operating revenues S 15,245,831 13,490,261 16,477,351 16,424,066 Operating income 3,904,369 3,874,709 3,937,949 3,979,465 i
Net income 1,839,998 1,835,956 1,860,868 1,367,544 Net income per share of common stock 3.65 3.63 3.69 3.71 (Continued)
7 VERMONT YANKEE NUCLEldt POWER CORPORATION l
Notes to Financial Statements (10) Unaudited Information on the Ef fects of Changing Prices The following information is supplied in accordance with the requirements of the Statement of Financial Accounting Standards No. 33 for the purpose of
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providing certain information about the effects of changing prices.
It should be viewed as an estimate of the apptoximate effect of changing prices, rather than as a precise measure.
A statement of income adjusted for changing prices follows (dollars in thousands):
i Year ended December 31, 1979 Conventional Adjusted for Adjusted historical general for changes in cost inflation specific prices l
Operating revenues S 65,982 S 65,982 S 65,982 Operating expenses:
Nuclear fuel expense 15,327 17,190 18,312 l
Other operating expenses 11,246 11,246 11,246 Maintenance 5,364 5,364 5,364 Depreciation 8,300 14,365 16,523 Taxes on income 6,564 6,564 6,564 i
Other taxes, principally
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property taxes 4,006 4,006 4,006 Total operating expenses 50,807 58,735 62,015 Operating income 15,175 7,247 3,967 Other income and deductions, net 190 190 190 T-*"
est expense (8,107)
(8,107)
(8,107)
Net income (loss) excluding reduction to net recoverable cost S 7,258 (670) (A)
(3,9 50) (A)
Gain from decline in purchasing power of net amounts owed 16,830 16,830 Reduction to net recoverable 1
cost (17,548)
(14,268)
I S
(718)
(2,562)
Increase in specific prices (current cost) of property, plant and equipment held I
during the year (B) 38,085 Effect of increase in general price level 49,586 Excess of increase in general l
-price level over increase in specific prices S 11,501 (A)
Including the reduction to net recoverable cost, the net loss would have been $18,218.
(B) At December 31, 1979, the current cost of utility plant net of accumulated depreciation and amortization were estimated to be approximately
$402,346,000 as compared with net utility plant recoverable through depreciation and amortization of $196,920,000.
(Continued)
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VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements i
A five year comparison of selected supplementary financial data adjusted for the affects of charging prices follows (in thousands of average 1979 dollars except per share amounts):
Year ended December 31 1979 1978 1977 1976 1975 Operating revenues
$ 65,982 68,578 73,203 67,602 76,194 Historical cost information adjusted for general inflation:
Net loss (excluding reduction to net recoverable cost) 670 Net loss per share of common stock (excluding reduction to net recoverable cost) 5.29 Net assets at year-end at net recoverable cost 66,869 Current cost information:
Net loss (excluding reduction to net recoverable cost)
$ 3,950 Net loss per share of common stock (excluding reduction to net recoverable cost) 13.49 Excess of increase in general price level over increase in specific prices 11,501 Net assets at year-end at net recoverable cost 66,869 General information:
Gain from decline in purchasing power of net amounts owed
$ 16,830 Cash dividends declared per common share 15.00 19.45 20.94 22.29 17.86 Average consumer price index 217.4 195.4 181.5 170.5 161.2
. Dollar amounts adjusted for general inflation (constant dollar amounts) represent historical costs stated in terms of dollars of equal purchasing power, as measured by the Consumers Price Index for all Urban Consumers (CPI-U).
Dollar amounts adjusted for changes in specific prices (current cost amounts) reflect the changes in specific prices of net utility plant from the date the plant was acquired to the present, and differ from constant dollar amounts to the extent that specific prices have increased more or less rapidly than prices in general.
(Continued)
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VERMCNT YANKEE NUCLEAR POWER CORPORATICN Notes to Financial Statements l
The current cost of property, plant, and equipment, which includes land, land rights, intangible plant, propert/ held for future use, nuclear fuel and construction work in progress, represents the estimated cost of replacing existing plant assets and was determined by indexing surviving plant by the Handy-Whitman Index of Public Utility Construction Costs.
The current year's provisions for nuclear fuel expense and depreciation on the constant dollar and current cost amounts of utilief plant were determined 61 applying the Company 's cepreciation and amortization rates to the indexed plant amounts.
I As prescribed in Financial Accounting Standard No. 33, income taxes were not i
adjusted.
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Under terms of the Power Contracts, which specify costs billable to the Company 's sponsors, only the historical cost of utillef plant is recover-able in revenues as depreciation.
Therefore, the excess of the cost of plant stated in terms of constant dollars or current cost that exceeds the historical cost of plant is not presently recoverable in rates as deprecia-tion, and is reflected as a reduction to net recoverable cost.
While the Power Contracts give no recognition to the current cost of replacing propertf, plant, and equipment, based on past practices the Company believes it will be allowed to earn on the increased cost of its net investment when replacement of facilities actually occurs.
To properly reflect the economics of rate regulation in the statement of income adjusted for changing prices, the reduction of net propert1, plant, and equipment should be offset by the gain from the decline in purchasing power of net amounts owed.
During a period of inflation, holders of monetarf assets suffer a loss of general purchasing power while holders of monetary liabilities experience a gain.
The gain from the decline in purchasing power of net amounts owed is primarily attributable to the substantial amount of debt which has been used to finance property, plant, and equip-ment.
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 en debt and is limited to recovery only of the embedded cost of debt capital.
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