ML19309E160
| ML19309E160 | |
| Person / Time | |
|---|---|
| Site: | Crystal River  |
| Issue date: | 02/06/1979 |
| From: | FLORIDA POWER CORP. |
| To: | |
| Shared Package | |
| ML19309E142 | List: |
| References | |
| NUDOCS 8004180484 | |
| Download: ML19309E160 (31) | |
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Florida r Power ,
Corporation Annual Report.
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l I I Highlights of 1978 1978 1977 Revenues increased 14.5% . . . . . . . . . . . . . . . . . $751,220,000 $656,138,000 Fuel And Purchased Power- Up 20.4% . . . . . $330,939,000 $274,845,000 Earnings Per Share - Down Slightly . . . . . . . . . $4.74 $4.82 Dividends On Common Stock increased $2.55 $2.33 Construction Expenditures Were Higher . . . $124,191,000 $94,423,000 Sales Of Energy - Up 7% . . . . . . . . . . . . . . . . . . 17 Billion KWH 15.9 Billion KWH Average Customers increased 4.5% . . . . . . . . . . 699,677 669,615 Average Residential Usage - Up Slightly . . . . . 10,895 KWH 10,604 KWH Peak Demand Was 6.1% Higher . . . . .. .. 4,135,000 KW 3,899,000 KW Contents 1 President's Report to Shareholders 27 Discussion of the Summary 5 Financial Services f Operations 7 Corporate Services 27 Common Stock Prices and Dividends Per Share 11 Engineering and Construction 14 Operations 28 Directors and Officers 17 Financial Statements 28 Corporate Information 26 Summary of Operations 29 Business and System Map 0 About the Cover 4 08 0 Emerging from our corporate logo, the organizational structure, 1 0 which took shape in 1977, has proven to be highly effective. The related functions of each area are highlighted in this report. h
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w_ Florida Power's financial performance in unit to be shut down for over six months. 1978 can ba summarized as good, but not During this time, we were unable to i spectacular. This is nut unexpected, in operate our new unit at the Anclote Plant i tiew of the highly inflationary period in because of sharp differences between the ; which we live. It is in this context that the Company and the Environmental l Company goes about its business of Protection Agency. As a result, wo had to l supplying the electric service needs make strong appeals to the public to ( of over 2.8 million people, their curtail their use of electricity during the homes, businesses, industry and summer. The public heeded our request, l other institutions. and we were able to get through withoui ! serious interruptions. A special note ! Earnings for the year were $4.74 per share, of thanks is due our customers for ! down slightly from 1977. The year end their cooperation. j annual dividend rate was increased from i
$2.48 to $2.76 per share. To provide for future needs for electricity, l the Company began construction late in Electric service is a long-term business, 1978 on two new 640,000 kilowatt with planning and construction activities coal-burning u nits.These are to be located l spanning, in come cases, ten years or at our Crystal River Plant site, with the first ,
more. It requires a long-term commitment unit due in service at the end of 1982. to the future of the area served. This These units will not only provide additional ; commitment takes the form not only of electric capacity, they will further improve , financial resources but also involves the the Company's fuel mix, permitting us to careers and dedicated work of those who generate a larger proportion of our , comprise the company. Allinvolved have a requirements by using coalinstead of oil. l l role in the accomplishments--customer, in addition to the two new coal-burning ! ! shareholder and employee. The basic units at Crystal River, planning is under l interests of these three groups are way for the construction of 195,000 i not in conflict. Rather, they supplement kilowatts of peaking capacity at the t each other. Company's Suwannee River Plant site. ; This capacity is scheduled for operation Our basic business is supplying adequate, in 1980. - reliable electric service. During 1978, we had our hands full getting this done. A There were substantial achievements ; malfunction required our large nuclear during the year by Electric Fuels 1 i D q vv o. a S .k a !
Corporation, our subsidiary, involving coal investment and help hold down the cost of procurement and transportation.Two new electricity in the future. In the gen 3ral field unit trains of 70 cars each were placed in c' 'nergy conservation, our program for service on a continuing run between t:nergy Saver Homes was quite active eastern Kentucky and Crystal River. In during the year. We have also initiated a addition, thro ug h joint ventures, a new tug program of Energy Audits, where and barge entered service on the trained Company employees conduct a cross-Gulf run, and a new transloading survey of a customer's home and facility south of New Orleans went into make recommendations to reduce operation toward the closing days of 1978. energy requirements. Work continued with Dravo Corporation During the year, investigations continued on our experimental program of burning a on several fronts regarding the composite fuel consisting of finely controversial oil overcharge issue of the powdered coal suspended in oil. Other 1973-74 period. From the inception of research and development activities this issue, Florida Power has sought include the use of cheaper residual fuelin federal action and cooperated in the peaking units and a program to reduce various investigations. plant emissions by cleaning oil before it is burned. In a settlement of some of the litigation resulting from the oil overcharge issue, the We have continued our research in the Company, the Attorney General of Florida, load management area, involving various the Public Counsel and the Florida Public types of control systems. This work is Service Commission entered into a being done in conjunction with two other settlement agreement which utilities in Florida. Our purpose is to find a contemplates that the Company will way to reduce the need for future plant refund approximately $6 million to customers affected by the 1973-74 oil W 9 prices. This was done to clear pending 9 D "TI <j L, litigation so that the Company could g[ gj gj _J_. b pursue its efforts to recover the alleged overcharge from its suppliers. Further details are given on page teven. t C ..s N ge
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EARNINGS AND DIVIDENDS PER SHARE E EARNINGS Florida's continually growing E DIVIDE JDS requirements for more and more
$5.00 electricity. These changes since 1976, reflect the hard work and good thinking of thousands of employees. I am happy to be 4 00 able to speak for them and for your Board of Directors in reporting these 3.00 gains to you.
The Company's annual dividend rate has 2.00 increased from $2.28 to $2.76 per share. 1.00
-I---- Residential rates have increased less than inflation, in spite of mechanical problems in 1978.
i 0 The Company's balance sheet has 74 75 76 77 78 improved substantially with the long-term debt ratio dropping Since early 1977, the Company has been from 54% to 49% engaged in proceedings before the Florida The book value of a share of common Public Service Commission regarding the stock has increased from proper handling of the fixed charges on $31.07 to $35.71. l our Crystal River nuclear unit. As discussed on page seven, the Company has The number of service interruptions been allowed to collect those fixed incurred by our average customer , charges with the benefits of the lower cost dropped 22% fuel passing through to our customers. In January 1979, the Commission ordered a F nally, may I express a word of personal full review of the Company s rates, rate appreciation to the mar)Y who have aided base and operating expenses. Hearings and susta.ined me during a very busy year.1 will probably commence around mid 1979. am increasingly aware that this past year, and the new one of 1979, move within a The Company continues to collect , revenues sufficient to cover the fixed purpose which humankind is not charges, subject to re' md, pending the p ivileged to understand, but which works full review. foc ur well-being in all things. For the Board of Directors, At the Annual Meeting of Stockholders on March 24,1979, Mr. Robert M. King retires I as a director of the Company. He has / i served well and faithfully for 13 years and j g l his counsel has been most helpful. / l
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j As part of our overalllook at the Company, ; I thought that you would be interested in , the tabulation below. It shows very solid President I progress in rate stability, improved capital l structure, better dividends to the shareholder and a good record in meeting February 6,1979 , I l President Andrew H. Hines,Jr. and his Staff-Canior i Vice Presidents: Billy L. G rif fin, Clarence W. McKee l Jr., Stanley A. Brandimore and Lee H. Scott. i 3 ! I
X an im orta par of ou sh anager ent sy te B Paying only our fair share of property taxes and income taxes requires expert knowledge and training C Internal auditing procedures for inventories. as pQ (y y r W j [h well as operations help improve management efficiency i .s s o. > a D Automatic load leveling techniques help identify new alternatives to meet our customers requirements
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Clarence W. McKee, Jr. Senior Vice President, Financial Services j _} z a; q < w FINANCIAL SERVICES Earnings and Dividends million, or 8.5%. The Company also as pw mn g ng es Although income from operations in high demand periods during the summer. increased $6.8 million, or 5.4%, earn.mgs This contributed to the $33.8 million per common share in 1978 were slightly increase in purchased power expenses. below 1977. Our earnings per share decreased from $4.82 in 1977 to $4.74 in 1978. This was caused primarily by the $6.5 Other operating expenses increased during million cost for a proposed refund to our 1978, due primarily to higher maintenance customers, which reduced earnings $.22 and depreciation expenses. Maintenance per share. This is discussed on page seven. expenses were up $8.3 million, or 29.5% in 1978, which included the first regular The annual dividend rate was raised from maintenance of our nuclear unit. The $4.9
$2.48 to $2.76 per common share beginning million, or 9%, increase in depreciation with the December 20,1978 quarterly expenses included a full year's effect of the payment. This was the 26th consecutive nuclear unit and the addition of Anclote year that the Company's total common Unit No. 2 in October.
stock dividends have increased. Economic Outlook Revenues and Expenses The economy of Florida remained strong Revenues in 1978 reached $751.2 million, during 1978, and the near-term outlook is up 14.5% from 1977. The increased for a generally healthy economic revenues reflect higher than expected environment. Population, which has grown energy sales which occurred primarily in at an average annual rate of 3.5% during the early, cold weather months of 1978. the 1970s, is expected to grow at a more Revenues also increased due to higher fuel modest rate of about 2.5% into the 1980s. costs during the nuclear unit outage. The construction industry is expected to far outpace the national growth rate in new l Operating expenses increased $88.3 residential and commercial building. The i million, or 16.6%, during 1978 to $619.7 tourist industry had a 1978 estimated million. The more costly fossil-fueled increase of 8.1% in visitors and 18.2% in generation used during the nuclear unit revenues. We project the annual customer outage this summer contributed to the growth rate in our service area will average increase in our fuel expenses of $22.3 3.5-4% in the early 1980s. 5
Corporate Planning study will be concluded at the end of 1979. The increasing demand for electric service A third load leveling test includes control places additional requirements on the devices and a flexible time-of-day rate w aHows me customs to conkol use of Company's existing facilities. Although the majority of our energy is sold during the energy during peak periods. warm summer months, our peak demands occur in the winter. In 1978, our peak While we hope for success in our efforts to demand was 4,135,000 kilowatts, up 6.1% hold down peak demand, new electrical from the previous winter. We expect our facilities must be built to meet our peak demand to grow at an annual rate of projected customer growth. Alth3 ugh the 6-7% into the 1980s. To meet our customer emphasis during the 1980s will be on base demand in the future, the Company is load generating units, the Company is working, first, to reduce the growth of peak considering the possibility of building gas demand, which is a key factor in controlling turbine peaking capability in 1980,1981 and the need for new facilities. Second, when 1983. Our plans call for the next new base planning for our new generating facilities, load generation to be two 640,000 kilowatt, we must provide for uncertainties such as coal-burning units for late 1982 and 1984. fuel availability and price, environmental Looking even further ahead, preparations regulations, rate requirements and for environmental and site certification new technology. work will begin in 1979 in anticipation of a new generating site for additional base load Developing incentives for reducing peak generation beyond 1984. demand are well under way. The Company has been experimenting with special time-of-day rates which are designed to Capital Requirements shift energy usage from peak periods to off- Construction expenditures in 1978 were peak periods. Although earlier test results $124.2 million, and we anticipate that 1979 of these rates were unsatisfactory, a requirements will reach $221.9 million, up modification to the rate design is currently 78.7% During the next three years, under study which may make this program construction expenditures will total almost more effective. Another experiment involves $1 billion. The bulk of these expenditures the leveling of demand by using represents an investment in generating radio-controlled devices on a group of our capability, with large sums for additional i residential customers' water heaters and power delivery facilities. During 1978, the central air conditioning and heating units. Company was able to meet its construction Radio transmitters operate control devices program by internal sources of funds. attached to these customers' appliances, However, the increasing construction shutting them off for short periods of the program will boost the Company's future day during peak dcmands. This two-year requirements for external financing. 6
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\ \ i i s - Stanley A. Brandimore ;
J Senior Vice President, Corporate Services lf , and General Counsel l h Ih 4 i CORPORATE SERVICES Rates and Regulation proceeding should be calendar year 1978. Our continuing objective is to furnish P" xpects hearings to begin u d 1979. reliable, adequate electric service at the lowest possible cost and, at the same time, provide a fair return to our investors. Naturally, we must be able to charge rates Oil Pricing Litigation that not only recover our costs but in September 1978, a federal Grand Jury, provide a fair return on existing investment investigating the alleged pricing ; while allowing the orderly financing of irregularities in the " spot" market for light new facilities. oil during the 1973-74 period, returned . indictments against sevsn persons. This ! In early 1978, progress was made on this includes two retired officers of the , objective when we were authorized by the Company, who we.e also directors, and a Florida Public Service Commission to former consultant retained by the Company increase our retail base rates by $59.5 to locate " spot' market light oil during the million to recover the annual fixed costs critical short9ges of 1973-74. The associated with the investment in our new indictments alleged a conspiracy to Crystal River nuclear unit. This increase overcharge the Company in certain light oil was essentially offset by direct savings to purchases. On February 2,1979, Mr. A. P. the customer from the lower fuel costs of Perez, one of the indicted individuals, who < nuclear generation. However, shortly after was a former President and Chairman of the the rate modification, the Commission, in Board of the Company, pleaded guilty to , an unusual response to the unit's forced criminal conspiracy. The U. S. Department : shutdown, withdrew its authorization and of Justice filed a civil action against six of ordered a full revenue requirements rate the persons indicted, as well as several oil proceeding. The Company has been companies, charging violation of federal oil allowed to continue collecting the pricing regulations. The Company had previously authorized revenues on an previously brought a civil action against i interim basis, which amounted to $39.8 essentially the same defendants for
- million in 1977 and $66.6 million in 1978, recovery of damages suffered as a result of subject to refund, pending the completion the alleged overcharges.
of the rate proceeding. In late December, the Florida Supreme Court denied the in early 1975, when the Company first had Company's appeal of this action by the reason to believe it had been overcharged Commission. The Commission has for " spot" market purchases of light oil determined the test period for the rate during the 1973-74 period, it went to the 0 f 00k 7
l Feceral Energy Administration to request the State of Florida, it was agreed by all an investigation. Apparently, the parties that the Company would advance investigation was conducted along with $6.5 million with the intent that $6 million many hundreds of other investigations, and would be available as a refund to the leaks to the media over a period of several Company's customers and approximately months in 1977 caused media criticism to $500,000 for administrative costs. be directed at the Company and resulted in The settlement contemplates dismissal of the initiation of investigations by numerous the Commission's investigation and must federal and state agencies, as well as ti,9 be approved by the U. S. District Court for filing of several lawsuits against the the Middle District of Florida. If the Company. One suit, filed by the Attorney Commission elects not to dismiss the show General on behalf of the Company's cause proceeding, or if the U. S. District customers, resulted in the Company Court does not approve the agreement, the becoming a defendant in the federal court settlement may not be completed. suit where the Company had previously filed for recovery of damages from the The settlement agreement,if appropriately alleged overcharges. This placed the approved, will require many months to Company in the novel position of being administer due to the extreme complexity both a plaintiff and a defendant in determining who the customers in the same lawsuit, were during the alleged overcharge impact period and the amount of The Florida Public Service Commission their overcharges. 1 issued an order for the Company to show cause why it should not be required to refund $8,495,000, the amount their special Nuclear Unit Shutdown Investigation investigator suggested to be the alleged The forced shutdown of the Crystal River overcharge. The Company denied nuclear unit led to an investigation by the wrongdoing and corrected numerous Florida Public Service Commission to assertions in a lengthy, detailed response to determine whether the Company's actions the Commission's order and the report of relating to the shutdown were in any way ; the special investigator. Nevertheless, the responsible for the time it was out of Company expressed a willingness to service. The unit was shut down on March advance a refund, if agreement could be 3,1978, to repair damages caused by loose reached as to an appropriate amount and if parts within the unit and was returned to the Attorney General dismissed the state's full service in early October. While the unit suit against the Company. This would free was out of service, replacement and the Company to move forward as the purchased power from fossil-fueled plaintiff in the suit to seek recovery of the generation caused sharp increases in the alleged overcharges. Following extensive fuel adjustment portion of the customer's negotiations among the Company, the bill. About $49 million is subject to Commission's Special Counsel, the possible refund pending the outcome of Attorney General and the Public Counsel of these proceedings. 8
A Our communications programs inform employees ! and customers about issues and events affecting l the Company i B Company representatives testif y at public hearings dealing with rates environmentalimpact. new facilities and other critical matters C Rehable operations of generating plants require n e -- - I continuous supplies of proper fuel and equipment Q rc)
,; f ! ll j D Environmental technology and solar research U.; i b combine to apply to future energy systems A B
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Environment ago and the federal administration's expressions of substituting domestic . Environmental protection leg.islat. ion will natural gas for imported oil to offset i continue to have an increasing impact on balance-of-payment deficits, the Company the production and cost of electricity. While is carefully studying the possibility of l our policy is to seek comphance with all . maintaining its gas-burning potential. existing environmental regulations, we will However, until something definitive is continue to quest,oni inequitable available, we expect our fuel mix after interpretation of regulations which do not
, mid 1979 to be 51% oil,26% nuclear justify added costs. For instance, the and 23% coal. !
Company has agreed to install cooling ; towers at the new generating units to be The Company has no present plans for > built at the Crystal River Plant site. another nuclear unit but would be positively l However, we are opposing Environmental encouraged by a demonstrated ! Protection Agency efforts to force a cooling improvement in political and regulatory tower system at our Anclote Plant site. The attitudes. Coal will be the primary fuel for ! Anclote Plant was constructed according to our new base load generation planned for all existing environmental protection the 1980s, but we will stay close to the I requirements. The results of a recent fast-changing natural gas situation. Our l two-year study of the Anclote estuary have subsidiary, Electric Fuels Corporation, will I concluded that there has been no continue to provide all of our coal i significant deter,ioration of the area. A requirements. About one-half of our coal cooling tower system for the Anclote Plant supply is delivered by water and the could cost up to $50 million to construct, as balance is delivered by rail. well as increasing operating and maintenance expenses, and reducing efficiency of the plant. We do not feel that the best interests of the environment, the Personnel customers or the shareholders can be served by installing these facilities. Training, education and communication help employees in self-improvement and better job 'rformance. A wide range of Fuel Company-sponsored and outside programs encourage professional enrichment and Our long-range objective for fuel mix is to advanced training at every job level. utilize three fuel sources-coal, oil and uranium-to meet the growing demand for To effectively utilize all of our employee energy. Our contract policy for a firm resources, the Company is fully committed supply of our fuel requirements adds to our to providing equal employment opportunity reliability in an era of uncertainties. in all phases of hiring and personnel Because of recent ee: mates that long-term activities. Strong emphasis is placed on the reserves of natural gas are substantially in job development of women and minorities excess of those estimated just a short time within our Company.
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b_ 1 $l w ) Billy L Griffin Senior Vice President, h Engineering and Construction ; r E , C - e l ENGl.\dERING AND CONSTRUCTION Power Generation At the end of 1978, our system generating This will be corrected by installing a new and ! capacity was 4,929,000 kilowatts, of which much larger precipitator system which will i 70% is from large base load generating units, take two years and $23 million to construct. ; with the balance from mid-range and . peaking units. Our 506,000 kilowatt Anclote Due to this lack of base load capability during } Unit No. 2, completed in April 1978, was the summer, the Company was forced to use scheduled to improve our base load less efficient generation in its place and to purchase power from neighboring utilities ! generating capability. However, the unit is still not available for normal operation due to during high demand periods. The Company the lack of a cooling water discharge permit carried out an extensive communications l from the Environmental Protection Agency. campaign advising our customers of the ' The EPA has permitted the adjacent 506,000 severe lack of capacity and the need to . kilowatt Unit No.1 to continue operation. In reduce energy use through conservation January 1979, following routine start-up efforts. As a result of this campaign and the testing, Unit No. 2 was placed in a " stand by" effects of relatively mild weather during the status, to be used only during emergency summer, the Company escaped potential l situations until the environmental issues are load interruptions. resolved. The Company is seeking acceptable alternatives to these problems l with the EPA and hopes that extended Power for the Future l l litigation is not required. During the next six years, the Company plans l In addition to the absence of Anclote Unit to construct about 2,000,000 kilowatts of No. 2 during the summer, we were also generating capability. For base load without the 731,000 kilowatts of capacity generation during this period, the Company ' from our Crystal River nuclear unit. The unit is looking to coal as the primary source of was forced to shut down early in the year fuel. We will supplement this base load because metal parts of a coupling had generation with limited quantities of broken loose in the reactor and were carried oil-burning peaking and mid-range units, as by water flow to the top of one steam well as purchased power agreements with ! generator, resulting in significant damage. neighboring utilities. i Fol!owing a thorough inspection, interim repair work on the damage was completed, As part of our commitment to coal, the and the unit was returned to full service in Company is converting Crystal River Unit early October.The Company was also forced No.1 from oil to coal. This work is scheduled to limit output of its 413,000 kilowatt for completion in the spring of 1979. Unit coal-fired Crystal River Unit No. 2 at certain No.2 was converted from oil and has been times in order to meet air quality standards. operating on coal since December 1976. pgQh Ok 11
A A high efficiency precipit.u ar is being added to Crystal River Urut No 1 as part of its $23 milhon conversion from oil to coal B So!ving design problems today helps reduce transmission costs for tomorrow
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{ [:( j ( 4 x D A major contributio ' to our rehabihty record is the routine maintenance of ge,.' rating units A B 3YL".lmp? MQ 77y;*qi>~ 7:r ns iy p ., if p: yQ-? - ng ,&f&hh]):q> [ w fgg M k )q
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l i Both of these units were originally environmental requirements, the Company constructed to burn coal but were converted must install its first cooling towers which will to oil by late 1971 as a result of rising costs use salt water from the Gulf of Mexico. and environmental problems. At the present time, these two coal-burn.ng units represent , 16% of our generating capcility. Power Delivery As our new generating units come on-line, The nature of our system load requires the new transmission facilities must be use of low fixed cost combustion turbine constructed to carry this energy to our load generation to meet the short-term peak centers for distribution to ou r customers. We requirements. We are presently constructing presently have about 4,000 miles of an additional 195,000 kilowatts of transmission lines throughout our 20,600 ' combustion turbine peaking capacity at our square mile service area. The backbone of - Suwannee River Plant. These units, costing this system is 125 miles of 500,000 volt
$30 million, are scheduled to come on-line in transmission lines and over 1,000 miles of 1980. For 1981, the Company is considering 230,000 volt transmission lines. By 1984, we the addition of 353,000 kilowatts of capacity will have added or rebuilt about 500 miles of to our A. W. Higgins Plant using the efficient transmission lines to match our increased repowering concept design. This uses the generating capacity. i hot exhaust gases from the new combustion [
turbine units to generate steam for the in expanding our transmission grid, the existing steam turbines. The result of this Company has increased efforts for i concept would more than double the total environmental impact considerations and plant capacity and substantially improve instituted procedures to reduce construction operating efficiency. and maintenance costs. Although the environmental problems have caused delay Our next base load generating units are and additional cost in the construction of planned for operation in late 1982 and 1984. transmission lines, improved design has These two 640,000 kilowatt, coal-burning helped to offset some of the increasing cost units will be located at our Crystal River site. and maintenance. Our Company has We received the necessary site certification increased the use of single steel poles, with a and construction permits, and construction new insulator system, as a replacement for began in November 1978. These units, the familiar bulky, four-legged transmission representing an investment of about $800 towers.This has reduced pole and , l million,will burn low sulfur coal which will be installation costs. it has aisc rs Nced the ' delivered to our existing coal-handling right-of-way land required and improved the facilities at the Crystal River Plant. To meet aesthetic effect on the environment. l l 13
.; Y Lee H. Scott .
Senior Vice President, Operations I
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OPERATIONS Energy Sales Growth improve in the future as another major A healthy economy, an upsurge in home industrial segment, phosphate mining, building and an increase in customer usage expands to meet world market demand resulted in a 7% increase in 1978 during the next several years. kilowatt-hour sales.This compares f avorably to the 7.5% sales increase in 1977 which The balance of our energy sales during 1978 included one of Florida's coldest winters in primarily reflects sales to other utilities for history. Our average customer growth rate resale to their retail customers. Sales to these wholesale customers ,ncreased i 8.8% in 1978 during 1978 was 4.5%, compared to 3.8% in 1977 and significantly above the low compared to a 4% increase in 1977. of 2.7% in 1975. Energy sales to our residential customers in nergy Consenadon Rograms 1978 were up 7.3% over 1977 sales. Althougn The Company redou bled its effo rts in 1978 to sales to these customers increased 10.8% insure that electricity is not wasted. The more during 1977, the more normal weather in efficient our system operates in terms of 1978 reflected an annual sales growth rate power generation.and customer usage, the ; more in line with our expectations for the lower our costs will be in the years to come. I future. The average energy usage by our Our service area is one of the fastest growing ! residential customers was 10,895 in the country. Efficient energy usage will kilowatt-hours, an increase of 2.7% above lessen the need for new facilities, thereby . 1977.The increases in residential usage have reducing our construction expenditures and l begun to level off following the recovery after operating costs. ' the energy crisis of 1974-75. In addition to our existing programs of Our commercial customers used 6.8% more customer conservation bulletins, group energy in 1978 than 1977. This is slightly presentations and advertising, we are also below tha 6.9 4 growth rate in 1977 and is offering specific programs for individual indicat've ci the state's economic stability. customer conservation: { ENERGY SAVER PROGRAM. The Energy Energy sales to our industrial customers Saver New Home Award program has been gained 4.6% in 1978, the same rate for the well received by the residential building previous year. Although Florida has industry and new home buyers. The Award experienced an increase in industrial grewth gives both the builder and the home buyer in recent years, our energy sales to two of our specific guidelines for choosing the most ; major industrial customers, citrus beneficial energy saving options. A home l l concentrates and chemical processing, were built to minimum Award specifications may I lower. We expect our industrial sales to provide a homeowner with energy savings of ! 14 4h hh ,
A Customers questions are answered quickly with l the aid of our new Customer Information Control System B Finishing touches are checked on the mapboard of our new Energy Control Center. to be operational late in 1979 C Another homeowner has qualified for our innovative Energy Saver New Home Award D Our distribution construction crews are busy installing new lines to meet customer growth A B (l-l M MIQS$5' ' ' \l k~~$$2[s t l W: i Ay gw-y ts ((W, v.s f; @ J
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up to 35% annually. In 1978, more than 1,400 that the increased efficiency provided by this new homes were certified under this facility will reduce annual operating costs by program. We expect more than 3,000 over $1 million through fuel savings alone. certifications in 1979. The Energy Control Center will provide HOME ENERGY CHECKUP. In 1979, the m dern, computerized planning techniques Company will begin a pilot program for for improving operating efficiency and existing homeowners to determine how they reducing costs for many years ahead. can reduce energy waste in their homes.This project is designed to provide our residential The Company is also implementing a new customers with trained energy surveyors to program to help monitor and control our locate energy leaks and energy losses in their distribution system. This program will homes. This information is analyzed and interface with the new Energy Control Center returned to the customers, advising them of computers, allowing distribution dispatchers the energy saving options available and the to react more swiftly to emergencies, restore estimated cost for installing each option. We outages faster and manage power expect to survey more than 4,000 distribution more efficiently. Initially, five of customers in 1979. our distribution dispatch offices will be equipped with video display terminals. System Operatica System reliability is an important factor in the Power Theft Company's ability to respond to customer This industry-wide problem has increased in demand. Cost of service, another major recent years as the price of electricity has consideration, is equally important. The risen. The effectiveness of our new Current Company continues its efforts to maintain a Diversion Investigation Program is service reliability factor of 99.9% and at the evidenced by the fact that almost $175,000 in same time reduce the cost to the customer revenue was recovered in 1978. A deterrent is by the use of improved procedures being established through public awareness and facilities. that our Company is taking a firm stand against power theft without large in late 1979, the Company's new $9.6 million expenditures on security devices or massive Energy Control Center will take over the resealing of meters. These efforts beefit all monitoring and control of our 49 generating of our customers by reducing lost re.enues units and transmission system. We expect which otherwise would result in higher rates. l 16
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?,;, {j;j FLCRIDA POWER CORP! RATION wp STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31,1978 AND 1977 1978 1977 OPERATING REVENUES (Notes 1b and 6b):
Residential .
$327,146 S287,382 Commercial . . . 187,574 164,265 Industrial 101,479 88,084 Other 135,021 116,407 751,220 656,138 OPERATING EXPENSES:
Operation-Fuel (Note 1b) . 282,876 260,610 Purchased power . . 48,063 14,235 Other . _ 64,416 52,923 235,355 327,768 Maintenance (Note 1c) . . 36,572 28,239 Depreciation (Note 1c) 59,361 54,440 Taxes other than income taxes . 44,627 40,382 Income taxes (Notes 1 g and 4)- Federal 74,931 72,147 State 8,804 8,392 619,650 531.368 OPERATING INCOME 131,570 124,770 OTHER INCOME AND DEDUCTIONS: Allowance for equity funds used during construction (Note 1d) . . 575 3,071 Gain on reacquired bonds . . 1,263 1,094 Miscellaneous other income and (deductions) (Note 6b) (2,058) 2.510 (220) 6,675 INTEREST CHARGES: Interest on long term debt . . 46,624 49,611 Other interest expense . .. 3,610 1,487 50,234 51,098 Allowance for borrowed funds used during construction (Note 1d) . .. (375) (2,005) 49,859 49.093 l NET INCOME . . . 81,491 82,352 DIVIDENDS ON PREFERRED STOCK . . 13,340 13.498 NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK . S 68,151 S 68.854 AVERAGE SHARES OF COMMON STOCK OUTSTANDING 14,388,683 14,291,866 EARNINGS PER AVERAGE COMMON SHARE (Note 6b) . S4.74 S4.82 The accompanying notes are an integral part of these financial statements. 17
=
BALANCE SHEETS DECEMBER 31,1978 AND 1977 ASSETS 1978 1977 ELECTRIC PLANT (Notes 1,6a and 8): ( "**"*} In service and held for future use $1,826,490 $1,684,821 Less-Accumulated depreciation . . 359,500 307,390 1,466,990 1,377,431 Construction work in progress , 65,109 113,406 Nuclear fuel, at amortized cost 35,416 24,769 1,567,515 1,515,606 OTHER PROPERTY AND INVESTMENTS: Nonutility property and other investments 4,791 5,056 Investment in and advances to subsidiary (Note 1e) . 12,325 7,371 17,116 12.427 CURRENT ASSETS: Cash (Note 5) 12,035 9,077 Special deposits , 1,732 4,418 Temporary cash investments 4,000 4,000 Accounts receivable,less reserve of S1,264,000 in 1978 and $1,009,000 in 1977 . 36,991 31,316 Materials anc' supplies, at average cost-Fuel . . .. 58,535 51,359 Plant materials and operating supplies 25,574 25,109 Prepayments . . 2,374 1,233 141,241 126.512 DEFERRED CHARGES: Unamortized debt expense, being amortized over term of debt . . . . . 4,132 4,381 Other . . . . 9,077 6.233 13,209 10.614
$1.739,081 $1,665.159 The accompanying notes are an integral part of these financial statements.
18
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FLORIDA POWER CCRPORATION
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CAPITALIZATION AND LIABILITIES 1978 1977 I "**"
- CAPITALIZATION (see accompanying statements):
Common stock equity . .. $ 515,200 $ 481,412 Cumulative preferred stock . 172,200 173,775 Long term debt . 658,676 673,867 1,346,076 1,329,054 CURRENT LIABILITIES: Accounts payable . 19,198 17,263 Customers' deposits . 23,243 25,370 Accrued income taxes 47,062 29,751 Accrued other taxes . 14,438 12,361 Accrued interest 10,954 9,403 Other (Note 6b) . . . 10,841 6,882 125,736 101/ 30 Long-term debt due within one year . 10,000 4 384 135,736 106,014 DEFERRED CREDITS: Accumulated deferred income taxes (Note 1g) 193,509 171,478 Accumulated deferred investment tax credits (Note 1g) 61,562 55,852 Other . . . . . . . . . 2,198 2,761 257,269 230,091 COMMITMENTS AND CONTINGENCIES (Note 6)
$1.739,081 $1,665,159 19
l STATEMENTS OF RETAINED EARNINGS FOR THE YEARS ENDED DECEMBER 31,1978 AND 1977 1978 1977 (Thousands) Balance at Beginning of Year . . .. ..... , $241,264 $205,772 Add-Net income after dividends on preferred stock 68,151 68,854 309,415 274,626 Deduct: Cash dividends on common stock; quarterly dividends equivalent to the following annual rates-
$2.28 . .
24.443
$2.48 . 26,759 8.889
$2.76 . . .. . . 9,946 -
Expense of issuing common stock . 15 30 36,720 33,362 Balance at End of Year , $272.695 S241,264 STATEMENTS OF SOURCE OF FUNDS USED FOR CONSTRUCTION FOR THE YEARS ENDED DECEMBER 31,1978 AND 1977 1978 1977 SOURCE OF FUNDS: Funds Derived from Operations-Net income after dividends on preferred stock , S 68,151 S 68.854 Less-Dividends on common stock 36,705 33,332 Earnings retained in the business . 31,446 35,522 items included in net income not requiring cash outlay-Depreciation . ..... 59,361 54,440 Amortization of nuclear fuel . 5,218 8.638 Deferred income taxes and investment tax credit . 29,290 40,965 Allowance for all funds used during construction . (950) (5.076) 124,365 134,489 Decrease in Net Current Assets (exclusive of temporary cash investments and current debt)(a) . 9,977 26.512 Funds from Financing ano Other Sources (Uses)- Decrease in bank term loan . - (50,000) Electric consumer capital notes redeemed ... - (12,784) Pollution control revenue bond anticipation note . .
- 10,000 Common stock-employee benefit and dividend reinvestment plans 2,342 3,725 Net decrease in short term debt . , -
(9,000) Increase in temporary cash investments . ... (4,000) Long term debt and preferred stock matured or reacquired for sinking fund . . (11,547) (6.562) Increase in investment and advances to subsidiary . . (4,954) (7,371) Other sources (net) 3,058 4.338 (11,101) (71,654) 123,241 89,347 Allowance for All Funds Used During Construction . 950 5,076 FUNDS USED FOR CONSTRUCTION . . $124,191 S 94,423 (a) Analysis of Decreasein Net Current Assets-Cash and special deposits . . S (272) S (1,341) Accounts receivable . (5,675) (1,271) Income taxes receivable - 13,058 Materials and supplies . .. . (7,641) (15,618) Accounts payable 1,935 (5,830) Accrued income taxes . . ... 17,311 29,751 Other (net) . . . . , 4,319 7,763
$ 9,977 S 26,512 The accompanying notes are an integral part of these financial statements.
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FLCRIDA POWER CORPORATl:N
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STATEMENTS OF CAPITALIZATION DECEMBER 31,1978 AND 1977 1978 1977 COMMON STOCK EQUITY (Note 3): Common Stock Usted Common stock, S2.50 par, authorized 30,000,000 shares New York (442,818 shares reserved for conversion of convertible Stock Exchange debentures), outstanding 14.426,122 shares in 1978 and 14,350,326 in 1977 . . S 36,065 S 35.876 Transfu Agent for Premium on capital stock . 204,997 202,829 Cornmon Stock Other paid-in capital . . 1,443 1,443 Retained earnings, including $32,376,000 not available for Manufacturers Hanover dividends on common stock 272,695 _ 241,264 Trust Company 515,200 38 % 481,412 36 % New York, N.Y. CUMULATIVE PREFERRED STOCK (Notes 2 and 3): $100 par, authorized 4,000,000 s'. ares-Shares Outstanding Series December 31,1978 4% - 4.75% . 335,000 33,500 33,500 Transfer Agent for 7.40% 300,000 30,000 30,000 Preferred Stock 7.76 % 500,000 50,000 50,000 Chemical Bank 8.80 % 200,000 20,000 20,000 New York, N.Y. 10%, 387,000 38,700 40.275 172,200 13% 173,775 13 % LONG-TERM DEBT (Note 2): First mortgage bonds-3'!4% due November 1,1978 - 5.332 Trustees for 3%% due July 1,1981 8,495 8,745 First Ycrtgage Bonds 3%% due November 1,1982 . 9,136 9,401 Morgan Guars.ity Trust 3%% due November 1.1983 . 6,011 6.234 Company of '1ew York Maturing 1984 through 1993 - 3%% to 4%% , 70,240 72,292 g 7, , Maturing 1994 through 2003 - 45/e% to 9% 442,034 444,083 Bank ouacksonviHe Maturing 2006 - 8%% 80,000 80,000 Premium, being amortized over term of bonds . 6,365 6,711 Par value of bonds reacquired to meet cash sinking fund requirements (4,945) (5,311) 617,336 627,487 Trustee for Convertible debentures,4%% due August 1,1986 Convertible Debentures (convertible into shares of common stcck at the rate of one share for each $44.00 of principal amount) . 19,484 19,494 Irving Trust Company 11,295 New York, N.Y. 9.10% electric consumer capital notes due October 1,1980 . 11,281 Guarantee of 7%% pollution control revenue bond due 2004 10,575 10.575 TmstMor 4.10% pollution control bond anticipation note due 1979. . 10,000 10,000 Efectric Consumer 668,676 678,851 Capital Notes Long-term debt due within one year . . (10,000) (4,984) Sou heast Banks Trust 658,676 49% 673.867 51 %
$1,346,076 $1,329.054 rg Fr The accompanying notes are an integral part of these financial statements, 21
NOTES TO FINANCIAL STATEMENTS (1)
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (a) Electric Plant-Electric plant is stated at the original cost of construction which includes payroll and related costs such as taxes, pensions, and other fringe benefits, general and administrative costs and an allowance for f unds used during construction. Substantially all of the Company's electric plant is pledged as collateral for the first mortgage bonds. (b) Operating Revenues and Fuel Expense-The Company recognizes revenues concurrent with billing to customers on a cycle billing basis. The cost of fuel for electric generation is charged to expense as burned. The cost of nuclear fuelis amortized to fuel expense based on the quantity of heat produced for generation of electric energy in relation to the quantity of heat expected to be produced over the life of the nuclear fuel core. Because of the uncertainties involving nuclear fuel storage and reprocessing, the Florida Public Service Commission (FPSC) does not presently allow a provision for these costs to be recovered in the Company's fuel adjustment clause. Accordingly, the Company is not providing for such costs. (c) Depreciation and Maintenance-The Company provides for the depreciation of the original cost of properties over their estimated useful lives on a straight-line basis. The annual provision for depreciation, expressed as a percentage of the average balances of depreciable plant, for 1978 and 1977 was 3.63% and 3.65%, respectively. The depreciation rate applied to nuclear facilities includes a factor for dismantling or removal costs to the extent allowed by the FPSC. The Company charges maintenance with the cost of repairs and minor renewals of property, the plant accounts with the cost of renewals and replacements of property units and accumulated depreciation with cost,less net salvage, of property units retired. (d) Allowance for Funds Used During Construction (AFDC)-This item represents the estimated cost of funds applicable to utility plant under construction. Recognition of this item as a cost of utility plant is appropriate because it constitutes an actual cost of construction and, under established regulatory rate practices, the Company is permitted to earn a return on such costs and to recover them in the rates charged for utility services. The rate used in computing AFDC for 1978 and 1977 was 8.66%, which af ter consideration of deferred income taxes on the debt component of AFDC produces an after tax rate of 6.93%. The rate of 8.66% is applied to the construction work in progress base which excludes $106.250,000, the amount allowed in the rate base for rate-making purposes. (e) Investment in Subsidlary-The Company has a wholly-owned subsidiary, Electric Fuels Corporation, formed to secure long-term fuel supplies. The Company accounts for the investment in the subsidiary on the equity method. (f) Pension Costs-The Company has a retiremcat plan for substantially all employees. The Company's policy is to fund pension costs accrued. Pension costs for the years 1978 and 1977 were S7.140,000 and $6,151,000, respectively The unfunded past service liability of the plan, which is being funded over 10 years, was approximately $8,800,000 at December 31,1978. A change in the interest rate assumption reduced the unfunded past service liability approximately
$4,800.000 at December 31,1978. The assets of the plan exceed the actuarially computed value of the vested benefits at i December 31,1978.
(g) income Taxes-Deferred income taxes result primarily from the use of liberalized depreciation, accelerated amortization, the repair allowance and from the deferral of taxes on the debt component of the allowance for funds used during construction and substantially all other current book-tax timing differences as recognized in rates by the FPSC. The investment tax credits, including job development investment tax credits, have been deferred and are being amortized through credits to income over the lives of the related property. (2) SINKING FUND REQUIREMENTS The annual sinking fund requirement relating to the first mortgage bonds at December 31,1978 is $10,050.000 of which
$4,987,500 must be satisfied in cash or an equal principal amount of bonds and the balance may be satisfied with bondable additions. At December 31,1978 the Company had reacquired $10,128,000 principal amount of bonds. This amount will be used to satisfy the 1979 cash sinking fund requirement and the remainder will be used for future cash sinking fund requirements. The balance of the 1979 sinking fund requirement will be met with bondable additions.
The Company is also required to redeem and retire 15,750 shares of the cumulative preferred stock,10% series, before August 15 of each year. 22
kf.....i, FLSRl A P?,WER CIRPORATl!N
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(3) EQUITY SECURITIES The changes in equity securities for 1978 Premium other and 1977 are as follows: Common on Pald-in Preferred Stock Capital Stock Capital Stock (Thousands) Balance December 31,1976 . $35.574 $199.376 $1,443 $175,350 120.806 common shares sold . 302 3.453 - - 10% series,15.750 shares reacquired . - - - (1.575) Balance December 31,1977 . 35.876 202.829 1,443 173.775 75,796 common shares sold 189 2.168 - - 10% series,15,750 shares reacquired . - - - (1.575) Balance December 31,1978 . $36.065 $204,997 $1.443 $172.200 The Company has 1,000,000 shares of authorized but ur issued preference stock, $100 par, and 5,000,000 shares of authorized but unissued cumulative preferred stock, no pr. (4) INCOME TAX EXPENSE The amounts comprising income tax expense 1978 1977 are detailed as follows: Federal State Federal State (Thousands) Payable currently S44,143 $5.880 $31.851 $4.955 Deferred to subsequent years (a) . 26.588 2.919 33.477 3.667 Deferred income taxes-credits (6,534) (434) (6.683) (498) Investment tax credit, net of amortization . 6.751 - 11.002 - Income tax expense 70,948 8.365 69.647 8.124 Taxes included in miscellaneous other income and deductions . 3.983 439 2.500 268 income tax expense in operating expenses . S74.931 $8.804 $72.147 S8.392 (a) The components of income tax deferred 1878 1877 to subsequent years were as follows: Federal State Federal State (Thousands) Excess tax over book depreciation $15.983 S1,756 $22,558 $2.470 Normalization of construction costs and other property related items deducted for tax purposes . 3.631 397 4,147 456 Repair a!!owance 4,711 519 6.501 711 Other . 2.263 247 271 30
$26.588 $2,919 $33.477 S3.667 The provision for federalincome tax, including amounts allocated to miscelfaneous other income and deductions, produced an etfective income tax rate of 47% in 1978 and 46% in 1977.
(5) SHORT TERM DEBT During 1978, the Company had established lines of credit which totaled $80 million, with interest payable at the prime rate. With the exception of basic working funds, substantially all cash of the Company represents legally unrestricted compensating balances, maintained in support of these lines of credit which were unused at December 31,1978. The maximum amount, average monthly amount and the weighted average interest rate of short-term borrowings during 1978 and 1977 were: 1978 1977 I (Thousands) j Maximum amount $21,000 $9.000 i Average monthly amount . S 3.000 S1.667 Weighted average interest rate . 7.9% 5.6% 23
1 NOTES TO FINANCIAL STATEMENTS (6) COMMITMENTS AND CONTINGENCIES (a) Construction Program-Substantial commitments have been made in connection with the Company's 1979 construction program which is presently estimated to be $221.9 million. (b) Legal Proceedings-As detailed on page 7. " Oil Pricing Litigation", the Company has agreed to make a refund in settlement of certain alleged fuel overcharges. The $6,500,000 cost of this settlement, which has been recorded in Miscellaneous Other Income and Deductions, reduced 1978 earnings by $.22 per share. In April 1977, the Florida Public Service Commission (FPSC) granted the Company an interim rate increase of approximately $60,800,000 annually in order to recover the fixed costs associated with the ownership of its Crystal River nuclear unit. On February 2,1978, the FPSC made approximately $59.500,000 of this increase permanent. As a result of subsequent repair problems associated with the detection of loose parts within the urit and petitions for reconsideration by intervenors, the FPSC on April 13,1978 ordered that the permanent increase revert back tr ac !nterim increase, subject to refund, pending a full revenue requirements hearing, which the Company anticipates will be held in mid 1979. As a result of this action, approximately $39,800,000 of retail revenues recorded in 1977 and $66,600,000 recorded in 1978 are now subject to possible refund. The final outcome of the proceedings cannot be predicted. The FPSC is conducting an investigation into the circumstances surrounding the shutdown of the Crystal River nuclear unit on March 3,1978, following the detection of loose parts within the unit. The FPSC is taking the position that,if the Company acted imprudently in repairing the unit, any higher fuel costs incurred due to the unit being out of service for prolonged repair should be borne by the Company. The FPSC intends to hold further public hearings on this matter to review delays associated with the repair effort, but no date has been set. Approximately $49,000,000 is subject to possible refund pending the outcome of the FPSC's investigation. The final outcome of the proceedings cannot be predicted. (7) QUARTERLY FINANCIAL DATA (Unaudited) The following quarterly information has been prepared without audit: Three Months Ended March 31 June 30 September 30 December 31 (Thousands) Operating revenues . $178.250 $175.748 $223,729 $173.493 Net income 19,352 12,301 26.044 23,794 Carnings on common stock . 16.002 8.951 22,714 20,484 Earnings per average common share . 1.11 .62 1.58 1.43 1977 Operating revenues $171.813 $146.042 $187,140 $151,143 Net income 23.918 12.088 26.210 20.136 Earnings on common stock , 20.528 8.699 22,840 16,787 Earnings per average common share . 1.44 .b . 1.60 1.17 As a result of recording the refund settlement discussed in note 6(b), earnings for the four,th quarter 1978 were reduced by
$.22 per share.
i The business of the Company is seasonalin nature and it is management's opinion that comparisons of earnings for the quarters do not give a true indication of overall trends and changes in the Company's operations. 1 (8) REPLACEMENT COST INFORMATION (Unaudited) ! The impact of the rate of inflation experienced in recent years has resulted in replacement costs that are significantly l greater than the historical costs reported in the Company's financial statements. Estimated replacement cost information is disclosed in the Company's annual report on Form 10 K (a copy of which is available on request). 24
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Shareholders of Florida Power Corporation: WD have examined the balance sheets and statements of capitalization of Florida Power Corporation (a Florida corporation) as of December 31,1978 and 1977, and the related statements of income, retained earnings and source of funds used for construction for the years then ended. Our examination was made in accordance with g:nerally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. As the result of actions of the Florida Public Service Commission, as discussed more fully in Note 6(b) of Notes to Financial Statements, approximately $39,800,000 of retail revenues recorded in 1977 and S115,600,000 recorded in 1978 are subject to possible refund. The final outcome of the proceedings under which such ravenues have been billed cannot presently be determined. In our report dated January 30,1978, included in tha 1977 Annual Report to the Shareholders of Florida Power Corporation, our opinion was unqualified; however,in view of the rate matters discussed above, our present opir> ion as presented herein is different from that expressed in our previous report. In our opinion, subject to the effect,if any, of the resolution of the rate matters discussed in the preceding paragraph, the financial statements referred to above present fairly the financial position of Florida Power Corporation as of December 31,1978 and 1977, and the results of its operations and the source of funds used for construction for the years then ended,in conformity with generally accepted accounting principles consistently applied during the periods. ARTHUR ANDERSEN & CO. Trmmpa, Florida, February 2,1979.
.25
)
1
SUMMARY
OF OPERATIONS 1974-1978 (Thousands) 1978 1977 1976 1975 1974 Operating Revenues . . . . ... S 751,220 S 656,138 $ 551,439 $ 504,496 S 404,993 Operating Expenses: Fuel . . . .. 282,876 260,610 248,849 235,138 200,270 Other Operating Expenses . 253,039 190,219 164,752 145,676 138,090 Income Taxes . . . . 83,735 80,539 48,428 35,307 10,930 Total Operating Expenses . . 619,650 531,368 462,029 416,121 349,290 Operating income . . .. 131,570 124,770 89,410 88,375 55,703 Other income (Deductions) (220) 6,675 12,574 17,192 22,954 Interest Charges (Net) . . . (49,859) (49,093) (42,722) (38,524) (36,829) Net income . . .. . 81,491 82,352 59,262 67,043 41.828 Dividends on Preferred Stock 13,340 13.498 13,655 13,733 11,785 Net income after Dividends on Preferred Stock . . S 68,151 S 68,854 S 45,607 S 53,310 $ 30,043 Average Shares of Common Stock Outstanding (000) ... 14,389 14,292 14,199 13,246 12,436 Earnings per Average Common Share $4.74 $4.82 $3.21 $4.02 $2.42 Dividends per Common Share $2.55 $2.33 S2.145 $1.9875 S1.95 OTHER FINANCIAL AND OPERATING DATA 1974 1978 CAPITAllZATION (Thousands) Long Term Debt S 658,676 S 673,867 $ 724,383 S 661,233 $ 642,458 Preferred Stock . . 172,200 173,775 175,350 176,920 178,500 Common Stock Equity . . . 515,200 481,412 442,165 425,633 370,907 Total . $1,346,076 $1,329,054 $1,341,898 $1,263,786 $1,191,865 ELECTRIC SALES (Thousands of KWH) Residential . . 6,838,906 6,373,899 5,750,889 5,411,991 5,285,716 Commercial . 3,766,194 3,526,562 3,298,036 3,187,479 2,935,162 Industrial . . 2,942,065 2,813,000 2,690,525 2,479,378 2,421,715 Other . 3,499,576 3,221,536 3.077,572 2.864,816 2.671,120 Total . 17,046,741 15,934,997 14,817,022 13,943,664 13.313,713 RESIDENTIAL SERVICE (Average Annual) l KWH Sales per Customer 10,895 10,604 9,932 9,701 9,758 l Revenue per Customer . $521.19 $473.12 S416.15 $396.37 S333.37 l Revenue per KWH . 4.78C 4.51 4.19& 4.09 3.42 l OPERATING DATA Investment in Electric Plant (000) . $1,940,917 $1,831,680 $1,749,429 $1,623,387 $1,529,801 Net Generating Capability (KW) . 4,929,000 4,452,000 3,895,000 3,712,000 3,625,000 Net System Peak Load (KW) 4,135,000 3,899,000 3,530,000 3,281,000
)
. 2,989,000 l BTU per KWH of Net Output . . 10,481 10,423 10,136 10,046 10,371 Fuel Cost per Million BTU . $1.68 $1.51 $1.67 $1.68 $1.51 Average Number of Customers . . . 699,677 669,615 644,846 621,780 605,332 Number of Employees . . . . 3,738 3,546 3,443 3,372 3,478 26
*W**
A FLCRIDA POWER CORPORATION
- kh:
DISCUSSION OF THE
SUMMARY
OF OPERATIONS Operating Revenues. In 1977, the increase The 1977 increase in other operating in operating revenues was due to increased expenses was attributed to depreciation, prices from base rate adjustments related to taxes other than income taxes and the Crystal River nuclear unit and increased maintenance associated primarily with the kilowatt hour sales due to unseasonable operating expenses of the nuclear unit.This wrather. The 1978 increase includes the was partially offset by a reduction in r:covery of higher fuel expenses due to an purchased power. Other operating expenses extended outage at the nuclear unit. Increased during 1978, due primarily to higher Operating revenues increased as follows: maintenance and depreciation expenses. Maintenance expenses include the first increases in regular maintenance of our nuclear unit and Minions or poner. depreciation expenses include a full year's
,,7, 3,77 effect of the nuclear unit and the addition of Anclote Unit No. 2 in October.
Increase in revenue due to increase in price OtherIncome (Deductions). In 1977, the per kilowatt hour sold $49.5 $ 61.8 decline in other inco.ne was caused by a u n in aHowance fomulty Nnds increase in revenue due to kilowatt hours sold 45.0 40.9 used during construction. In 1978, the decline in otherincome resulted from recording the Increase in other $6.5 million cost of a settlement for alleged revenues .. .6 2.0 fuel overcharges.
$95.1 $104.7 Interest Charges. In 1977, net interest chargesincreased primarily because of a reduction in allowance for borrowed funds Operating Expenses. For 1977, the increase used during construction.
in fuel costs was due primarily to increased For 1978, the increase in interest charges was consumption, since the unit cost of fuel the result of interest related to a federal d: creased in 1978, operating expenses income tax deficiency and a reduction in the increased as the more costly fossil fueled allowance for borrowed funds used during g:neration replaced lower cost nuclear. The construction, which was partially offset by Company also purchased power in high redemption of the five year bank term loan demand periods during the summer. In 1977. COMMON STOCK PRICES AND DIVIDENDS PER SHARE Price of Common Stock on New York stock Exchange Dividends Pald 1978 1977 Per share High Low High Low 1978 1977 , First Quarter . . $33 $29% $32% $28% $.62 S.57 Second Quarter . . . 30 % 28 % 34 % 29 % .62 .57 Third Quarter . . . 33 % 29 % 33 % 29 % .62 .57 Fourth Quarter . . 32 % 29 % 33 % 29 % .69 .62 27
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n FLCRIDA POWER C'ERPORATl3N M"j:'j d General Of fices. 320134th Street South P. O Box 14042. St. Petersburg, Florida 33733 Telephone 813-866-5151 DIRECTORS OFFICERS OTHER CORPORATE INFORMATION THAN DIRECTORS Wilmer W. Bassett, Jr. S. A. Brandimore Transfer and Dividend President and General Manager Senior Vice President Disbursing Agents Bassett Brothers, Inc. Corporate Services and Common Stock (Dairy Business) General Counsel Monticello, Florida Manufacturers Hanover Trust Co. 4 New York Plaza B. L Griffin New York, New York 10015 Sam T. Dell Senior Vice President Senior Partner, Dell, Graham, Engineering and Construction Preferred Stock Willcox. Barber, Ryals. Chemical Bank Henderson & Monaco, P.A. Lee H. Scott 55 Water Street (Attorneys at Law) Senior Vice President New York, New York 10041 Gainesville, Florida Operations Jean W. Giles J. E. Gleason President, St. Petersburg Vice President Eastern Shareholders' Agent For Federal Savings & Loan and Ridge Divisions Dividend Reinvestment Plan Association Manufacturers Hanover Trust Co. St. Petersburg. Florida R.R. Hayes Dividend Reinvestment Department Vice President and Box 24850, Church Street Station Byron E. Herlong Controller New York, New York 10242 President, A. S. Herlong & Co., Inc. (Citrus Business) M.F.Hebb Leesburg, Florida Vice President, Staff Exchange Listing R. W. Neiser New York Stock Exchange res o n Vice President and Ticker Symbol "FDP" wal Gunsel Frank M. Hubbard Chairman of the Board A. J. Ormston Hubbard Construction V ce President Annual Report Form 10-K and the Company Statistical Supplement (Highway Construction) Orlando, Florida N.B. Spake Upon request, the Company will furnish its Vice President slareholders without charge a copy of its Environment and New 1978 Form 10-K, without exhibits, as filed Technology with the Securities and Exchange a an o he Board Commission. A detailed Ten-Year
" ' '" ' T. F. Thompson Statistical Report on the Company's emi ole Flo ida business is also available. Requests should Vice President Administrative Services be addressed to J. G. Loader, Secretary.
Robert M. King Chairman of the Executive Committee Rutland-King, Inc. J. G. Loader (Department Stores) Secretary and Treasurer St. Petersburg, Florida J. H. Blanchard Clarence W. McKee, Jr. Assistant Vice President Senior Vice President, System Operations Financial Services J.H. Joyce Corneal B. Myers Assistant Secretary and Partner, Peterson, Myers.Craig, Assistant Treasurer Crews, Brandon & Mann, P.A. (Attorneys at Law) Betty M. Clayton Lake Wales, Florida Assistant Secretary l 28 l
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OCALA e %5 E D E LAN g D G *';. a. . CRYSTAL RIVER O Ed Ts e. WINTER PARK C M E is b WALT DISNEY The Company serves nearly 700,000 customers in 375 cities, towns and E WORLD G !k d:.3 rural communities. The territory TARPON SPRINGS e r$ b. fj comprises approximately 20,600 5%%.E 5 E CLEARWATER 9 g O TAMPAQ pc 3 R-3 square miles with a population over 2.800,000 located in 32 of 67 Florida ST. PETERSBURG e a T .d 9 LAKE WALES $ counties. In addition to the generating di .p# p Jg j E jl-- Q plants indicated on the map, electric power can be supplied by f - ? :1 e- " '
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