ML19316A465

Annual Financial Rept 1973

ML19316A465
Person / Time
Site:	Oconee, Mcguire, Catawba, McGuire
Issue date:	04/12/1974
From:	DUKE POWER CO.
To:
References
NUDOCS 7912110775
Download: ML19316A465 (37)

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While nearly all financial statistics for 1973 showed in view of anticipated shortages of fossil fuels,it is marked improvement over the prior year, the return particularly noteworthy that over 14 million kilowatts.

which the Company earned on the stockholders' equity or 86 per cent, of the planned new capability will come investments has not returned to an adequate level. from nuclear-fueled steam supply systems. This nuclear Earnings for common stock were 872 million, up 23 per capability will greatly reduce the Company's dependence cent over the prior year, and represented a return on on fossil fuels, thereby contributing to the conservation stockholders ~ equity of 9.6 per cent. This compares with of those fuels, and will serve as a hedge against expected the 12 per cent average return earned by the industry in further increases in the cost of fossil fuels. The economic recent years. advantages of nuclear over fossil fuels are outlined on page Earnings per share of common stock in 1973 were 16 of this report.

S1.87, an 11 per cent increase over the S1.69 earnings The new steam and hydro units brought into service in of 1972. 1973 and those planned for operation i 1974 will greatly Electric revenues for 1973 were up IS per cent to S601 reduce outside purchases of power and the use of internal

' million on sales of 43 hillion kilowatthours. Net invest- combustion turbines fired by oil and natural gas. Both ment in_ new plant facilities increased $479 million, of sources are expensive and tend to raise the system's which S90 million was derived from retained earnings overall operating costs.

and proceeds from common stock issues. We are participating in the nationwide effort to con-The increase in earnings for 1973 is due largely to the serve fuels through the dissemination to our customers effect of rate increases, and we are continuing our efforts of information encouraging the efficient uses of electri-to bring rates in line with current costs. We are especially city, and through continued progress in improving our encouraged by recent decisions of regulatory agencies, own generating and transmission efficiencies. In this particularly those occurring late in the year, which will regard, we are especially proud that our steam-electric affect future earnings. For the first time since the 1950's generating system has been named the nation's most state regulatory commissions have allowed the Company efficient for the second straight year. Contributing to this to automatically adjust retail rates as the cost of coal distinction was the unprecedented achievement of our increases or declines. These decisions will permit the Marshall Steam Station being named the most efficient recovery of expected increases in coal costs during this steam-electric station in the country for the seventh period of fuel shortages. consecutive year.

In 1973-74, the Company plans to place into senice Other major achievements during the year included more than S1 billion in new plant facilities, adding 4.1 the completion of a S50 million air pollution control million kilowatts of generating capability. Although program that has virtually eliminated the emissions of these facilities are being built at costs substantially flyash from our coal-burning plants, successful operation below current industry averages, the investment in these of our first pumped-storage hydroelectric facility, and facilities is at much higher costs than existing electric receipt of The Edison Award. the electric utility plant in service. As a consequence, further rate relief industry's highest honor, for planning and executing the will be necessary in 1974 to support the increase in the Keowee Toxaway development.

embedded cost of in-service facilities. The Company was saddened by the passing on June A sununary of management's efforts in 1973 to in- 21,1973 of Thomas L. Perkins, chairman of the Duke crease revenues through rate relief is found on page Power Board of Directors since April 24,1961. Mr.

2 of this report, and efforts to reduce expenses are Perkins' influence on the policies and decisions of this described on page 6. Company are reflected in the dedication to citizenship As concern over world energy resources continued to and service that has come to characterize Duke Power.

mount in 1973, our Company marks the year as a mile- The accomplishments of 1973 reflect an outstanding stone in the colossal effort to assure an abundant supply performance by all employees during the year, and we of electricity for the Piedmont Carolinas, one of the are grateful to them for their continued good work. We nation's fastest-growing areas. Our first commercial also are grateful to our directors for their leadership in nuclear unit, Oconee unit 1, began operations in July, vital undertakings, and to our customers for their recog-1973 and 14 additional steam units are scheduled to join nition and understanding of the Company's activities in the Duke system during the period 19741984. These new their behalf. We are especidly grateful to those who have facilities will add over 16 million kilowatts of generating demonstrated their support and confidence in our Com-capability and, upon their completion, will boost the pany by investing in its future.

l total system generating capability to over 24 million kilowatts.

For the Board of Directors Carl Horn. Jr. President February 15,1974

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Hiohlichts D D 1tm1! THE COVER 1

l Oconee Nuclear (

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1973 1972 =

Electnc Revenues: 1 Total S600,681,000 5508.232.000 18.2 I Regular Sales. S593,570,000 5497.095.000 19.4 l Earnings for Common Stock. S 72,106,000 $ 58.466.000 23.3 '

Per Share of Common Stock:

Earnings. S1.87 $ 1.69 10.7 Dividends Paid. S1.40 S1.40 -

l Plant Construction Costs. S478,953,000 S453.758.000 5.6 i Kilowatthour Sales (thousands): l Total 43,159,000 39.688.000 8.7 Regular Sales. 42,669,000 39.229.000 88 Peak Load (KW). 8,235,585 7.449 500 10.6 Customers. 1,083,152 1.040.427 4.1 Earnings and Dividends Per Share Common Stock

$2 20 2.00 l III 1.80 l l l l EARNINGS 1 60 1 40

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1964 65 66 67 68 69 70 71 72 1973 Earnings 1.48 1 66 1.72 1.85 1.91 2.05 1 57 1 88 1 69 1.87 Dividends 95 1 00 1.10 1.20 1 30 1.40 1 40 1.40 1.40 1.40 Before extraordmary stems and ad!U5ted for STOCh SOh!

Contents:

President's Letter . . inside cover Why Nuclear? 16 Highlights . .1 Personnel . 18 Rate Activities . .2 Back to the Good Old Ways 20 Serving Our Customers .4 Financing and Invester Activities . 2'?

Inflation: Meeting the Challenge . .6 Financial Statements 23 Saving the Resources .7 Statistical Summary . 30 1974-1984: Era of Promise . .8 Subsidiaries 31 Keowte-Toxaway 12 Directors & Officers. 32 Service Area . 36 3

Summaryof Rate Activities .

Background AMOUNT STATUS Contmued high costs of capital and new plant facil ties together with higher omvating expenws Iparticularly the rapid increase in (in InillionS) cost of fossd fuelsi required the Company to seek additional rate rehef m 1973. Followmg is a summary of rate activities dunng the year, with estimatal dollar anmunts annuahzed on 1973 e'wtne sales.

North Carolina Retail on June 21,1973, the N. C. Utihties Comnussion issued an order grantmg the Company 72 per cent of the retail rate merease Approved tw ing collectal subject to refund in that state since January 1.

1973.

The Company applied to the North Carolina Commission on September 14,1973. for additional rate rehef of 16A per cent and asked that 12 per cent be placed into effect on an interim basis. N Comminion appmved an eight per cent interim increase. and increased the amount to 10.25 per cent, g 10.25 Per Cent effective January 19,1974, af ter the Company amended Increase in Effect, its request. Pubbc hearings on the request for permanent  % "

Subject to Refund.

relief tefore the North Carolina Comnussion will tasin May 28,1974.On April 15,1974. the Company plans to place into effect, subject to refund. the full 16.8 pcr cent 1 $61.1 trullion annually) increase.

On Nmemter 30, the Company asked the horth Carolina Conanission for approval of a coal cost adjustment clause that would allow Duke to adjust automatically retail rates as coal costs increase or decline. The clause was authorized by the . -

Commission on December 20,1973. to be reflected on bills 17arleS With In EffeCt rendered on and after January 19,1974. The clause is bawd on Coal COSTS Duke's cost of coal burned for the month of October,1973 f.4745 cents per kwhL Although revenues collected under the clause are not subject to refund, the Commissic.n wi!I conduct public heanngs beginning May 28,1974, to determine if the clause will remain in effect.

South Carolina Retail On July 31,1973. N Public Service Commission of South Carohna issual an order granting the Company 83 per cent of f 4 Approved the retail rate increases being collectwf subject to refund in that %h Gal state.

Additional rate relief of 16.7 per cent was sought in an application fiini with the South Carolina Commission on September 19.1973.

The Company placed an eight per cent interim increase into effect I on November 15 and later was anowed to amend the figure to 10.25 per cent, effective January 19.1974. The Company phns g)EVa $ In e in Effect.

Subject to Refund.

to plan into effect, subject to refund. the full 16.7 per cent increase t $26.4 million annually) on April 15 1974. Public hearings on this raguest are expected to be held in 1974.

The South Carolina Commission also has approved the Company's undertakmg to place into effwt a coal cost adjustment clause . .

sinular to that approvwi for North Carolina reta 1 operations. YarleS With in Effeet.sebject to Resenues collated in South Carohna as a result of this clause Coal COSTS Refund.

are subiect to refund. pendmg the Commission's final determination. Public hearings on the clause also are expwted in 1974.

Wholesale Rates On January 23.1973 the Company filal an application with the Federal Power Commission t FIO to increase w holesale rates IR5 per cent and subwquently receised approval to place the rates into efIwt sub.iect to refund. on April 26.1973. The new ( Ig #m & In Effect Subject to Refund.

rates update the fuel cost adiustment clause that has lwn m effect. subject to refund, since August 23,1972. llearings tefore the FPC were completed in Dwember.1973. A determination is exp<tal in 1974. .

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Consumer Price index and l Total Revenues M.niens cf Douars iss I

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1970 1971 1972 1973 1963 64 65 66 67 63 6 70 71 72 1973

,7, he cosEof e et Et [Du$e a sa a Customers Average Cost Per Residential KWH Residential Service Cents Per KWH Average Annual Usage-KWH 11.072 1963 1968 1973 1963 1968 1973 I

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l Serving Our Customers The steady growth which has become charactaristic 402 circuit miles of new transmission lines and the l

of the Piedmont Carolinas continued in 1973 with 42,725 upgrading of 451 ciremt miles of existing lines. The total new customers joining Company lines. The number circuit miles of transmission lines in service at year end brought to 1.083.152 the total number of customers was 10.7T4.

served by Duke Power at year eni an increase of 4.1 Efforts also continued during the year to improve per cent over 1972. transmission interconnections with neighboring utilities.

This growth, together with efforts to improve senice Approximately 275 structure miles of a planned 560 mile.

to existing customers, required the addition of 1.443 525.000 volt transmission system had been completed at miles of distribution lines during the year, bringing year end. This extra high voltage :ystem, which was the system total for these lines to 48.933 miles. utilized extensively during the year for power exchanges.

The Company continued its position as a national will give Duke stronger interconnections with Appa-leader in placing distribution lines underground during lachian Power Company. Carolina Power & Light Com-the year. Over 329 miles of underground lines sening pany, and Georgia Power Company. The system also more than 14.000 new and existing residential customers permits the transmission of bulk power from generating were instalkxi. plants to distant load centers within the Duke senice Also completed during 1973 were the construction of area.

Balanced Load Building Peak Loads vs. Generating Capabilities Millions of Kiiowatts and Firm Purchases at Time of Peak

" 9.11 j Milhons of Kilowatts 6 24 f _

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The Company makes better year-round use of its generating f aciattees mth wei6-balanced summer and winter peans 4

1 In addition to these interconnections, reliability is was 9.110.164 kilowatts, prosiding an 11 per cent margin further insured by the Company's participation in the of reserve.

Virginia-Carolinas (VACAR) Reliability Group It was the second straight year that Duke Power was Agreement. VACAR provides for reliability planning named the most efficient steam-electric generating and transmission interconnections with participating system in the country, and our largest generating plant electric companies in Virginia. North Carolina and South - Alarshall Steam Station-earned the unprecedented Carolina. One of several sub-regions within the distinction of being the r.ation's most efficient steam-Southeastern Electric Reliability Council (SERC). which electric station for the wventh consecutive year. The coordinates planning for reliability of all bulk power efficiency ratings are based on operating reports filed systems in the Southeast. VACAR has power with the Federal Power Commission by U. S. operating coordinating agreements with similar groups in the mid- companies. Most of the Company's generating plants.

Atlantic and east-central regions. including Marshall, were designed and built by our own The 1973 peak load of 8.235.585 kilowatts occurred on engineering and construction forces.

August 29, and was 11 per cent higher than the 1972 peak of 7.449,500 kilowatts. At the time of peak load, the Company's generating and firm purchase capacity Total Number of Customers Gross Electric Plant investment Billions of Dollars i i i 1973 72 MW I 0 71 i

i 70 E e e 68 e 1973 e6 1.083.152 i 65 1968 '

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905.789 1964 1963 1 2 3 4 770.026 conng i%, s o.y.., g.,,co ove, s 2 4 bunon 1958 was inve,reo,m

,, sen.ov.o e:ectric o, tn. -..ioiant rn,..ano s t e bohon 680.038 1953 563.523 5

Inflation: MeetingtheChaaenge Rampant inflation that has caused construction. been implemented to further maximize material and oprating and maintenance costs to soar in recent years manpower resources in the distribution area. In addition has not gone unchallenged by Duke Power. In all areas to planning long-range construction schedules, this of Company activity, innovative management techniques system automatically estimates material and manpower are being employed and new programs developed to requirements for specific jobs and schedules daily work achieve maximum efficiency and cost effectiveness. assignments to assure maximum efficiency. The system in the construction of power lines and generating ~ has a built in work performance program which evaluates plants. work productivity is measured against actual ccsts against goals and automatically adjusts pre-established goals and trend lines are given close these goals on the basis of the latest, most efficient costs review to maximize efficiency in manpower and material of actual construction.

resources. As a result, new plants and related facilities, A computer system also has been developed to help which are designed and built by Duke's own engineering identify potentially overloaded transformers, an historic and construction forces, are brought into senice at costs source of high maintenance costs. The Transformer Load substantially below the industry average. Af anagement Pregram monitors the loads on each trans-The efficient operation of these facilities is assured by former on the distribution system and enables the Com-mcdern computer techniques which const mtly monitor pany to replace faulty transformers during regular equipment performance. At Alarshall Steam Station. the working hours, reducing unscheduled overtime and nation's most efficient steam-electric generating station avoids the loss of customer senice which might other-for seven consecutive years, computers provide informa- wise be experienced without such a monitoring program.

tion on current performance of major equipment A major new operating center, completed during the components and compare the performance with an op- year at Greensboro, will help reduce costs by consoli-timized standard. With this information updated every dating a number of activities previously performed at thrw minutes, the plant operators can make incremental scattered locations in the northern portion of the Com-adjustments to assure that each component makes its pany's senice area. In addition to sening as a base of bst contribution to overall efficiency. electric operations for the Greensboro District. the center These operating standards, together with the high includes a computerized power dispatching facility, quality of workmanship in plant design and construction, laboratories for testing meters and other equipment, have made our generating system the most efficient in and serves as an equipment and materials support the nation for the latest two years for which Federal facility for the northern region.

Power Commission data is available. Advanced computer applications also are being Alajor cost-saving programs also have been employed in quality control programs, customer billing, implemented in such areas as customer senice and payroll preparation, rate studies, load research, inventory distribution. maintenance, and monitoring of distribution and retail One such example is the new "On-Line Customer Order substation components.

System " an extension of the electronic Customer Significant savings in the installatica of underground f

Information System. This new system permits rapid distribution lines are being realized through the use of prccessing of changes affecting a customer's account, direct cable burial equipment. Duke engineers con-including connection and disconnection of senice, tributed to the conceptual design of this new equipment.

meter changes and miscellaneous charges, and automa- Activities to improve efficiencies and increase tically processes work instructions to field personnel. productivity are continuing in all areas of the Company's It eliminates over four million customer " paper" records operations. While efforts must continue to bring rates and some two million customer files. in line with current costs, the Company has committed A new Construction Afanagement System also has its full resources to holding those costs to a minimum.

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Savinoe theResources While the need to conserve natural resources has in the residential field, with consulting architects and become a matter of public concern only in recent years, engineers in the commercial and industrial areas, and in that need has been recognized by Duke Power for many the industrial field with in-house design groups of large decades. In addition to the savings realized by our organizations.

customers through the efficiencies previously mentioned . Initiation of educational and demonstration programs in this report, those efficiencies also have contributed by our Home Service Department on the efficient and measurably to the conservation of fossil fuels required economic uses of electricity.

in the generation of electricity. The need to conserve such

+ Through direct mail and mass media advertising, the fuels was a prime motive m the Company s current dissemination of information designed to help customers emphasis on nuclear and hydroelectne development. g Other energy-conserving activities mcb de:

The Company also has initiated an in-house The use of shunt capacitors to reduce wasteful conservation program which meludes reduction of the electrical load on distribution circuits, substation ,

transformers, transmission lines and generators, resulting ""* **". speed limit for Company vehicles: elmunation t decorative and office lighting where practical: lowering l in less generation requirement and lower fuel usage.

of thermostats during the heating season: and mereased

. Development of computer programs to analyze emphasis on car pools, both in Company and privatelv-distribution circuits, with particular emphasis on reducing owned vehicles.

distribution systemlosses. While efforts are continuing to encourage prudence

+ Development of computer programs to permit utilization in the end use of electricity, we realize that substantial of the most efficient plants for base load, minimizing (and savings of fuels can best be realized through improved in many instances eliminating entirely) the use of efficiencies in the generation, transmission and generating equipment requiring fuel oil and natural gas, distribution of power. Additional programs to improve

. The design of residential rate schedules to encourage E'"'#". ting efficiencies even further and to reduce system losses m the transmission and distribution of electncity ~

greater home m.sulation (in the pending rate case before are now being developed.

the N. C. Utilities Commission, the Company has We're also participating through the Electric Powec requested permission to increase the emphasis on proper Research Institute ( EPRI) in research to develop new insul tionL sources of energy. EPRI scientists are exploring such The design of industrial rates to encourage limitations potential energy sources as fusion, a process that will on peak electrical demands, which tends to improve the use a form of hydrogen as the source of heat energy:

load factor and utilization of fuels, fuel cells, which involve the direct conversion of The Company also has undertaken an extensive chemical energy into electricity:

magnetohydrodynamics OlHD), the conversion of heat program to educate its customers in the efficient uses energy into direct current electricity through ionized gas of electricity.

plasma: solarenergy and others.

This programincludes: Our Company also will contribute more than 87 million

. Promotion of" heat recovery" energy systems for over a 10-year period toward construction of the nation's commercial and industrial uses. These systems. which first large " fast breeder" fission reactor. By producing j redistribute heat created by lighting, machines, people. more nuclear fuel than it consumes. the breeder will etc.. provide the ultimate in energy conservation. substantially extend the available sources of fissionable Additional programs have been initiated with builders materials.

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! 1974-1984: Era of Promise and Challenge i

j Completion of unit 1 of the Oconee Nuclear Station and As new steam units are brought into service, the use of 4

early operation of our first pumped storage hydroekttric oil and gas fired internal combustion turbines, which facility brought the Company's generating capability to carry extremely high operating costs, will be greatly 8.259.700 kilowatts at year end. reduced. It is expected that these units will be used

Oconee unit 1 began commercial operations in July, only in emergency situations by the end of 1974.

1973, and 14 additional steam units are scheduled to join Of the planned generating capability, over 14 i the Duke system in the eleven years from 1974-1984. million kilowatts, or 86 per cent of the total, will be Total capability of the new units will be over 16 million nuclear. Upon completion of the units in 1984,62 per kilowatts, which will boost the system generating cent of the system's total capability will come from capability at the end of 1984 to 24.1 million kilowatts. nuclear fuekd generating units.

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The hrst two units of the Jocassee Ilydnelectric Station were ,

placed into a.ernce in 1973. arul two identical units are scheduled l for operation in 197T,. Tot,1 capability of the pumped storage 7* 3 facility upon completion will le 610.im kilowatts. .. . A<

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Oconee unit 2 has operatal at 75 per cent of capability been schedukd for completion in 1974. but were brought during testing and is schedukd for commercial operation into service ahead of schedule to assure further the

in spring 1974. Unit 3 is schedukd for operation in late reliability of serdce during the 1973 74 winter peak. They

summer 1974. The three Oconee units are rated at bmught to 1.147.000 kilowatts the Company's total l

MU100 kilowatts each, capability from hydroelectric stations, w hich are used Units 1 and 2 of the Twassee Hydroelectric Station almost exclusively as peaking" power.

were placid into service on December 19.1973, adding The first of two 1,145.000 kilowatt coal-fired units at I 305J oo kilowatts of pumped. storage hydro generation. the Belews Creek Steam Station also is schedukd for Two identical pumped-storage units are schedul x1 for completion in the summer of 1974. Unit 2 will become i

operation in 1975. The two operating units at .h>cassee had operational a year later. ( continued )

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I Era of Promise anc. Challenge _timd,  ;

Work on the William 13. h!cGuire Nuclear Station near Lake Wylie in York County. S. C. The second unit is I Charlotte was accelerated following the issuance in schedukd for operation in 19M). Public hearings on the February cf a construction permit by the Atomic Energy Company's application for a construction permit for this

! Commission I AECt. Some construction had been station will be held in early 1974. The two Catawba units

] completed earlier under exemptions previously granted will be rated at 1.153.000 kilowatts each.

j by the AEC. The two hicGuire units, rated at 1,180.000 Also during 1973. the Company announced orders for l kilowatts each, are now scheduled for operation in 1976 six additional nuclear units that are tentatively 1 and 1977. schedukd for operation in the ISWs. Three of the i

I n 1979, the Company expects to comphte the first of 1.2M.000 kilowatt nuclear units will comprise the two nuclear units at the Catawba Nuclear Station on Thomas L. Perkins Nuclear Station Inamed for the late l

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Six additional nuclear uruts have been ordered for operation in

'N - 4_ - J'r remairung three will comprne the Cherokee Nuclear Station in 5

N the 19*s. Three of the 1.Nwoo kilow att uruts will comprise the Cherokee County. S. C.

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Thomas I . Perkins former chairman of the Duke Power ject will incorporate a small t 312 surface acres) but deep Iloard of Directors) at a site on the Yadkin Itiver in reservoir that will be h>cated at a high elevation j

Davie County N. C., and three identical units will be overlookmg I.ake Jocassee. The four 250.0m kiiowatt located at the Cherokee Nuclear Station on the I3 road generators will be locatal some 800 vertical feet Iliver in Cherokee County. S. C. The Perkins units are inside the mountain. Work on the Ilad Creek project is tentatively schedula! for operation in 1981 and 82: the schedulal to start in 1977. [

Cherokee units in 1932. 83 and 84.

I The !!ad Creek II3 droelectric Station the second pumped storage facility at Keowee-Toxaway, is scheduled to begin operation in the mid 19so's. This unique pro.

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p ' ' Y 'A The two 1.t Dm kilowatt coal t' ired unit at the IMews Creek Steam Station are scheduled for completion in 1971 and 1975.

11

KEOWEE-TOXAWAY: " Channeling the forces of nature into the blessings of a better future."

The dedication of Keowee-Toxaway last fall was a a specter casting its shadow over the future of the tribute to thousands of Duke Power people whose industry. And now, predictions of speakers John professional abilities and loyalty made the development Nassikas. (Chairman. Federal Power Commission), Chet possible. IIolifield IChairman. Ilouse Government Operations The October 20 ceremonies expressed clearly both the Committw), and South Carolina Governor John West.

fact and spirit of employee achievement, and came nearly are sober realities.

nine years after announcement of this comprehensive Obviously, warnings of an energy crisis didn't begin development. with the dedication of Ikowee-Toxaway. Years ago The occasion, festive as it was with music, banners leaders of industry and government foresaw current and barbecue. sounded a somber note which. for the problems. Our 1965 commitment to nuclear technology utility industry and the entire nation. has proved was an early indication that Duke recognized expanding prophetic. energy requirements and diminishing availability of In all three dedication addresses, the energy crisis was fossil fuels. Nowhere has that realization been more

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conspicuous than at Keowee l'oxaway, where by 1975 the combined power of hydro and nuclear stations will bring over 3.4 million kilowatts to the people of the Piedmont Carolinas. l Despite the gloomy energy outlook, it was this )

technological achievement that dominated the dedication gj ceremonies. Representative Holifield. former chairman .,

of the Joint Committee on Atomic Energy, said:"We're here to dedicate this great device which will produce new sources of energy to replace failing sources. With this new force we will move fonvard toward the fulfillment of the needs of more and more people . . We're here to compliment the people of this great and progressive t continued) .

THE EDISON AWARD The Edison Award, the electric utility

- industry's highest honor, has been pre i ,~',O " J.

-- ,c, . .. , y ; 7 1 .C .. sented to Duke Power for its accomplish-~

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ments in planning and executing the

' ^[ c MQ4'.h M - N.., * -c. . sr.,Keowee-Toxmway deyelopment. The . . - gm .

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citation presented to Duise;flon 19ectrier WPresident C Horn, Jr.,'at time annual Ed InstitQte cohveEon'on April 4,1973 readei "For'i%"S8 Man'dEg' engineering accom . .

plishments in the integrated hydro. thermal

.e.> development of the Keowee-Toxaway

~~ e.

• g Project, fully utilizing the area and its

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. *w- s- . '9 o 7*- i. natura..l resourc,es forelect,r,i.c generation _

,9 and at the s.ame time protecting and JL.h. * ~. A enhancing the'eiGiroriEthniof thE'Keowee 7 * ~ - 'E

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4 , ' 1Valle , Duke Power-ie declardre.ciple. ,

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. . . omplishmeents of Duke employees ,

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h{.L*1ME Q involved.in the pr$9strhed."earne'd not 7. -M6 1  % f .'

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KEOWEE-TOXAWAY <eentinued. -

3

! region-pmple who are wise to modern needs and who as valuable nereational remurces.1le said "In addition

! are supporting the move to channel the forces of nature to the commercial and environmental elemants at into the blessines of a better future . Keowee-Toxaway. considerable attention 1.as been given l During the ceremonies Oconm unit I was operating at to the mercational potential involved in the creation of j .a per cent capacity and Oconee unit 'Jwas being readied two lakes . . You know. we live in an era of new leisure i for commercial operation in 1974. time . . As a result there is an increasing demand for j In building Keowee-Toxaway at a cost of about mx) recreational land. Duke's reco enition here of the million the Company created two lakes. Lake Keowee. opportunity and potential f4 hch usage at Keowee-with 18..9K) surface acres and a 300-mile shoreline,is Toxaway is of enormous benef.t to our state. and greatly the lower imroundment: Jocassee Dam. located 11 miles enhances the overall quality c;. life in this part of South upstream. rk s 34*> feet to form the 7.600-acre Jocassee Carolina.'

reser oir. As one of the world's most impressive power Governor West gave special attention to the new lakes developments. Keowee-Toxaway has an expanding 5 .

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, ure, and is someday expected to have a generating , rh, to//o-me leuer to emr/oieci arreared m a 3recial mue or capability of over 10 million kilowatts. '6e Ne Pr>=er Alavu:me mmmemoranne she deduunon or Keomee Towway. It u verrmted here m part to recoem:e llut it should be remembered that this technological f,,,3,, ,3, o,n ,,ys,, ,, 3,, ry,,,,, ,, ,3, ,,,, ,3,, 5 ,,,,

progress is the result of planning and building through emr/orces a h" acre 'm o^ ed in the croseci i deuen and conumcnon. ,

successive generations. In this regard perhaps no other industry has a greater impact on the lives of people to

Dear Fellow Employees:

This issue of your magazine is dedicated to Keowee-I n his dedication remarks. Chairman Nassikas spoke Toxaway and the dedication held October twentieth )

i about that impact. "There is a great deal of hope that ,

which officially recognized the achievements made there.

I we're going to resolve it i the energy crisis) because it's As most of you know. the project won the 1972 Edison I a question of survival . . survival as the number one ,

l Award, an honor which is a sou~ e of pride for all of us. ,

nation in the world with social values and the dignity As we approach a new year. I beheve each of us should of theindividuall

! understand fully the implications of the Keowee-Toxaway performance, accomplished dunng a period of stress on Duke Power people.

Midway into construction of the project, our business was jarred by an almost overnight escalation of operating costs which you know about. Concurrently, the demand for electricity vaulted at a rate that no one in the j industry had predicted. We found ourselves seriously E short of reserve capacity.

The problems didn't stop there. We experienced delays

/

%- in bringing Oconee unit 1 on the line-the worst among E them resulted from damages to steam generator tube w endings which alone postponed operation of the plant y-*,3

'[, 1 -" a full year-at a time when we desperately needed the

,, c 4 added capacity of this new unit.

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Urder this extended pressd're, employee morale has been put to the test. Your response to that test is marked C ..J by the fact that this Company has achieved outstanding f.i s results in the face of serious adversity.

r g  % 4 Nowhere has this employee response been more visible than at Keowee-Toxaway. All of the people connected

- i with that project, regardless of their individual tasks, have demonstrated the ability, the confidence and commitment which are vital to this Company and the i people of the Piedmont Carolinas.

The accomplishments of Duke Power through difficult times have not gone unnoticed. .\tany of our customers have taken the time to write me about the extra effort being made under trying circumstances.

• E " "

i lent . Booth. Executive Vice President ever. %.e want everyone to know that this Company will u n. Parker and Senior Vice President A. C. Thies with U. S.

i Senator Strom Thurmond i R-SCl. full 11 its obligation to provide electricity, and at the 1 Semor vice Pre ident W. S. Lee with Director Marshall I. Same time, that we will demonstrate a spirit of goodwill Pickens that shows we have not grown too big or too busy to care i 4 From lett. former S. C. Governor Robert E. McLir. Duke about the people we serve.

Preuderit Carl Horn. Jr.. Chairman Chet Hohtieki. House I want to thank each of vou for helping your Company Gos ernment Operations Committee. Babcock & Wdeux take an important step forkvard toward its continuous Pre-ident ( orge G. Zapt. and Chairman John Lwikas. Federal Power Comnu<uon.

goal of citizenship and service.

. South Cardina Gosernor John C. West. f A U. S. Cor.grewman William Jenning Bryan Dorn i D-SCl with

• Ch.urman ilolitwid; Carl Horn. Jr.

] 15

Technicians kiad f uel into core of Oconee unit :2 reactor. The urut n achedulmi for c.irnn rcud operation in wpring IML WhyNuclear?

In the early 19Ws Duke Pow er set as one of its chief I where constructior, costs are substantially below the goals the development of a generating system that would current industry averagest is about 40 per cent greater rely heavily on the power of the atom. Since this decision. than the construction costs of a comparable size coal-our Company has invested more than $700 million in burning plant. While the initial cost of a nuclear plant nuclear generating facilities. and 56.4 billion more has is higher than that of a coal plant. these costs are only been committed to the fulfillment of that goalin the eleven one of many factors involved in determining the cost of years tbrough 1984. electricity produced by these plants. The cost of fuel also Although predicated largely on economic and environ. is a big factor.

mental considerations, the impact of such a decision The economic adyantage of nuclear over fcssil fuels on conservation of fossil fuels was not to be felt until can be seen readily by comparing the projected operating more than a decade later u hen concern over world energy costs of our Oconee Nuclear Station with that of a com-resources reached crisis proportion. Duke now has one parable size coal fired plant built and operated during the nuclear unit in operation, and twelve additional nuclear same period. This comparison takes into consideration units are scheduksi to join the system during the period the higher capital cost of the Oconee station. Assuming 1974 19 4. that both stations would operate at the same level of In addition to conserving fossil fuels. nuclear power capability over their lifetimes and assuming that fuel plants have other advantages over conventional coal- costs remain at current levels, electricity produced by the fin <l generating plants. They're more compatible with Oconee nuclear units would cost about 25 per cent less the emironment. There are no emissions of "flyash" or than that produced by the coal-burning plant. Of course.

other pnxiucts of combustion to the atmosphere. The the cost of both fuels is expected to increase in the years small quantities of radioactive waste from a nuclear plant ahead, with the increase in coal costs out stripping the can be handh d with less emironmental impact than can rise in nuclear fuel costs by a substantial margin.

the millions of cubic feet of waste particulates that are in summary. nuclear power has many advantages both colk.cted annually in a nvxlern coal-burning plant. from the emironmental and economic standpoint. Our Nuclear plants also have a distinct economic advantage customers will have the benefit of a cleaner emironment over coal-burning plants and, we believe, will help hold as well as lower rates than would have been the case if down the amount of future increases in power costs. The all our generation were from fossil plants.

cost of constructing a nuciear plant on the Duke system Planned Generating Capabikty By Type MJheas cf Kdawatts 25 62 s 20 STEAM-NUCLEAR 24% 28% 43t 561 10 u j. , . , . 31 %

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1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 l 16 AcNa1 l

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5,r* C O . Ta, ed

, e v..v v _ vt The number of Company employees totalad 13.063 achievement awards for completing ten or more years at year end, including 5,125 who were engaged in the of operadon without a disabling injury.

design and construction of generating facilities. Recruiticg Of the eligible employees,5,933 were sharing in the Recruiting efforts during the year included sisits to Company s operations through the Stock Purchase- 25 colleges and universities and six technical schools.

Savings Program for Employees. Since the plan's incep- The recruiting program resulted in the employment of tion in 1959, employees have purchased 1,188.589 shares 141 engineers and 15 technical school graduates. An of common stock through payroll deduction. estimated 35 per cent of these had participated in the Training Programs Companyi summer employment program. An additional The Supenisory Management Development Program 32 graduates with accounting, mathematics computer provided training for 329 supenisors and management sciences and other degrees joined the Company's employees in 1973. This program has provided training professional ranks during the year.

for 2.640 err ployees since its inception in 1959. Review g; g.,4 sessions for 1,548 emplovees also have Inen conducted.

W. S. O'B. Robinson Awards were presented to three One hundred thirty-five employees completed 276 ~

employees in 1973. These awards, given annually, courses of study under the Tuition Refund Program. One rec gnize employees for outstanding senice in several hundred forty.seven employees are currently enrolled in categories. The winners are nominated and selected by 240 classes which are contributing to their future job feII w employees.

progress.

Receiving the awards in 1973 were Ralph W. Bostian, Szitty Steam Production Department, for his efforts in Accident prevention continues to be an important coordinating the construction and starting schedule for objective at Duke Power. Both the Gastonia District Cliffside unit No. 5: Mrs. Sharon Edwards, Greemille, and Cliffside Steam Station completed more than two for her contribution to human relations in helping enlist million manhours of work without a disabling injury community support for a resident suffering from an during 1973. The million manhour mark was reached incurable kidney ailment: and David McAvoy,

, by the Greemille District, which joins the High Point Distribution Department, for saving the life of a man District in pursuit of the two million manhour goal. who had been buried by a ditch cave-in.

Altogether, some 99 locations received safety I

l I

H. H. Parker, Executive Vice President and General 31anager, with W. S. O'H. Robinson Award winners David McAvoy. Mrs.

Sharon Edwards. and Ralph W. Bostian.

18

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l "Backtothe Good OldWays"

) A major advertising and employee motivation program are less known.

! was launched in 1973 to help improve customer relations Embracing the theme. "Your friendly, neighborhood and bring about greater public awareness of the power company," the new informational advertising l

Company's power supply and financial challenges and to program portrays Duke employees performing both on l demonstrate the Company's commitment to the quality and off the job senices which improve the quality of life of life in the Piedmont Carolinas. in the Company's senice area. The messages tell how The "Back to the Good Old Ways" program was Duke employees take part in civic and charitable organi-launch. i after customer opinion studies revealed that zations and how the company improves the quality of I

public acceptance of the Company's activities, including life by protecting the emironment, creating recreation j rate increases and nuclear plant construction, was best areas and teaching young homemakers to consen e j in areas where Duke's work in such fields as recreation, electricity. They point our that - . most of us grew wildlife protection, forestry and community senice is up here, and we know the people. That's why sening I well known. you doesn't really seem like work. It's more like helping j The studies also showed a higher degree of acceptance a neighbor."

i of these activities in the smaller cities and towns where In addition to the basic advertising materials, the it has been practical to maintain personal contact with program includes the distribution of newspaper supple-customers. Through the "Back to the Good Old Ways" ments and bill inserts devoted to energy conservation program, the Company is attempting to establish the and other subjects of aterest to Duke's customers.

same rapport with customers in the larger urban areas Attention also is given to such special problem areas as

where, because of growing transient populations, the rate increases, nuclear power and the emironment.

Company and its commitments to community senice

! One of your neighbors has some --

prettyoid-fashioned hat Rtakesa going, y-....-,.....m,.,,,. . tokeepour _._,

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l The1973 RevenueDollar l

Whereit came from:

(. .

35% 31 % 20% 12% l 2% Other Revenue Residential Industrial Commercial Other Howit was used:

- (

31 % 21 % 17% 13% 10%l 8% Taxes Fuel costs Cost of Capital Matenals Depre- Wages Power Other a

21

FinancingandInvenorActivities Construction costs reoched an all-time high of $479 Retirement of sinking million in 1973 as the Company continued to build to fund debentures. . . .. t 1.250.000) meet the growing electrical requirements of the Piedmont Cost of financing. net of Carolinas. These costs included $343 million for ek etric discounts and premiums generating facilities tincluding nuclear fuel). 849 million on sales. . . . . . . ( 3.537.000) for transmission facilities. 873 million for distribution Reduction in short term notes. . . I 26.704.0001 facilities and $14 million for other plant facilities. The construction program for 1974 is budgeted at $486 Net proceeds from financing. ... . S332 128.000 million. Construction costs for the three year period .

1974 76 are estimated at S1.4 billion. The Company launched in 1973 a new Dividend Funds retained in the business, principally earnings. Reinvestment and Stock Purchase Plan that allows depreciation accruals and tax credits and deferrals, common shareholders to purchase limited additional provided 20 per cent of the funds required for the 1973 shares directly from the Company. The Plan, which construction program. These sources are expected to benefits shareholders by eliminating brokerage

< produce about 40 per cent of construction costs for commissions and service charges, permits shareholders 1974 76. to ill have their quarterly cash dividends automatically The balance of construction funds for 1973 was reinvested in common stock. (2) continue to receive cash obtained from the following sources: dividends and invest in additional shares by making optional cash payments up to S500 per quarter, or (3) invest both their cash dividends and make quarterly Common stock- cash purchases up to S500. Approximately 10 per cent 1 3,000.000 shares = S23.00 of the total common stockholders were enrolled in the public offering. . . S 69.000.000 Plan at year end.

i 201.879 shares @ average S20.51 Efforts to keep the investment community informed issued to the Trustee of of the Company's financial affairs continued in 1973.

the Stock Purchase-Savings Members of management appeared before analyst groups Pmgram for Employees. .. 4.141.wo in New York on four occasions during the year.

55.350 shares 4 average S17.67 including an appearance in October before the New York issued under the Dividend Society of Security Analysts. The Company also was lleinvestment and Stock host to New York analysts during their tour in February Purchase Plan. . .. 978.000 of major electric suppliers in Virginia and the Carolinas.

On January 2.1973, the Company's financial affairs were Total common stock . . 74.119.000 discussed before analysts and members of the investment Preferred stock 7.35%. community in the Company's headquarters city of Series I-600.000 Charlotte. N. C. Presentations to similar groups in

, shares, par value $100. .. .. 60.000.000 major cities are anticipated for 1974.

First and refunding The number of common shareholders has increased mortgage bonds- in the five years since January 1.1969, from 12.059 to 7 3/4% Series due 2003. . .. 100,000.000 over 51.600 at December 31.1973. Holders of Duke Power 81/8% Series B due 2003. . . . . 100.000.000 common stock reside in each of the 50 states and many Term notes, nuclear fuel, rates foreign countries. The Company's home states of North based on floating prime, and South Carolina account for about 42 per cent of the due 1975. .. ....... ... ... 30.500.000 Duke shareholders. .

22 l

Statementof Source of Funds for Plant Construction Costs

....~.e.<._.,,, 1973 1972 SOURCE OF FUNDS:

Funds from operations-Net income. S 99,562.000 $ 80.367.000 Non-cash items (decrease):

Depreciation and amcrtization. 76,300,000 61.030.000 Deferred income taxes. net. 25.272,000 17.097.000 Common equity component of the allowance for funds used dunng construction. (29,492,000) (27.026.000)

Other, net (797,000) (619 000)

Funds from operations. 170,845,000 130.849.000 Dividends on common stock. (54,036,000) (47.758.000)

Dividends on preference and preferred stock. (27.456.000) f 21901.000)

Funds retained in the business. 89,353.000 61.190 000 Funds from financing-net proceeds-First mortgage bonds. 198,823,000 174.563.000 Common stock- 72,001,000 116.111.000 Preferred stock. 59,759,000 60.055.000 Term notes (nuclear fuel). 30,499,000 50.935.000 Decrease in notes payable. (26,704,000) (23.343.000)

Decrease in sinking fund debentures. (1,250,000) f1250 000)

Funds fre m financing. 333,128,000 377.071.000 Total a, ole funds. 422,481,000 438.261.000 Decrease (increase) in working capital. etc.-

Materials and supplies. 6,578,000 (10.703.000)

Investments in and advances to subsidiaries. 62,000 4.477.000 Current liabilities. 22.399.000 5.867.000 Other. (2.059.000) (11.170.000)

PLANT CONSTRUCTION EXPENDITURES. 449,461,000 426.732.000 Ccmmon equity component of the allowance for funds used during construction. 29.492.000 27 026.000 Plant ionstruction costs. S478.953.000 S453 758 000 se. note, to #1nanciai u. ..m.ms Aucitors' Opinion HASKINS & SELLS Certified Public Accountants DUKE POWER COMPANY: .

We have examined the balance sheet and the statement of capitalization of Duke Power Company as of December 31.1973 and 1972 and the related statements of income, retained earnings. and source of funds for plant construction costs for the years then ended. Our examination was made in accordance with generally accepted auditing standards. and accordingly included such tests of the accounting records and such other auuiting procedures as we considered necessary in the circumstances.

In our opinion, subject for 1973 to final settlement of the rate matters referred to in Note 2 to the financial statements the accompanyirig financial statements present fairly the financial position of the Company at December 31.1973 and 1972 and the results of its operations and the source of its funds for plant construction costs for the years then ended. in conformity with generally accepted accounting principles applied on a consistent basis.

9W Charlotte. North Carolina 23 February 15.1974

Balance Sheet- Assets s . ; . ,. . m 1973 1972 ELECTRIC PLANT At original cost (Note 1):

Electric plant in service . S2,500,520.000 $2.038.177.000 l Construction work in progress (includes in 1973 5492.808.000 of nuclear and 5268.278.000 of ,

other generating f acilities). 866.021.000 865.533 000  !

Total 3,366,541,000 2.903.710.000 Less-accumulated depreciation and amortization (Note 1). 652,652,000 584 748 000 Electric plant. net (Note 5). 2.713.889.000 2 318.962.000 OTHER PROPERTY At cost. 24,367,000 18.266.000 Less-accumulated depreciation. 3,106.000 2 806 000 Other property net. 21,261.000 15 460.000 INVESTMENTS Investments in and advances to tubsidiaries at equity (Note 3). 30,626,000 30.551.000 Other securities-at cost or less. 8.328.000 8 332 000 38,954.000 38 883 000 CURRENT ASSETS Cash. 14,563,000 16.021.000 Receivables less allowance for losses. 60,148,000 51.463.000 Materials and supplies-at average cost:

Fuel. 24,611,000 36.591.000 Other. 38,925,000 33.522.000 Prepayments. 489.000 690.000 138,736,000 138 287 000 DEFERRED DEBITS Debt discount, premium and expense, being amortized over terms of related debt. 5,466,000 5.460.000 Other. 5,029.000 4.545 000 10,495.000 10 005 000 S2.923.335.000 S2 521.597.000 Capitalization Millions of Dollars Common Eouity I Preference and Preferred Stock Long-Term Debt 1973 G8% 14% 30% 52694 4 1968 82% 11% 37% 5989.2 l

1963 521 44% $6416 4%

l 24

Balance Sheet-Liabilities c e= .,,o . 1973 1972 CAPITALIZATION Common stock equity (Note 4). S 796,730,000 S 706.899.000 Preference and preferred stock (Note 4). 395,000,000 335.000.000 Long-term debt (Notc 5). 1,502,630,000 1.270 224 000 Total capitalization. 2,694,360,000 2.312.123 000 CURREN7 LlABILITIES Accounts payable. 39,128,000 25.986.000 Interest accrued. 27,288,000 24.409.000 Taxes accrued. 8,181,000 4.520.000 Customers' deposits. 2,383,000 2.299.000 Other. 6.346,000 3.713.000 83,326,000 60.927,000 Notes payable for construction-pending permanent financing (Notes 8 and 9). 69,296,000 96.000 000 152,622,000 156.927.000 DEFERRED CREDITS, ETC. Accumulated deferred income taxes (Note 1). 56,438,000 30.758.000 Contributions in aid of construction. 11,861,000 10.414.000 Investment tax credit (Note 1). 3,746,000 7,706.000 Injuries and damages reserve. 2,250,000 2.262,000 Other deferred credits. 2,058,000 1.407,000 Commitments (Note 9).

76,353,000 52.547.000 s.. not.. ta nnanciai tar.,n.nt. S2,923,335,003 $2.521.597.000 Statement of Retained Earnings Vehr E*Ca1 D*Cemoar 31 1973 1972 RETAINED EARNINGS-Beginning of year. S 88.918,000 $ 81.818.000 ADD-Net income. 99,562.000 80.367.000 Total. 188,480,000 162.185.000 DEDUCT:

Cash dividends-Common stock ($1.40 per share). 54,036,000 47,758.000 Preference stock (56.75 per share). 3,375,000 3.375.000 Preferred stock- ~

Series C ($4.50 per share) . 1,575,000 1.575.000 Series D ($5.72 per share). 2,002.000 2.002.000 Series E ($6.72 per share). 2,352.000 2.352.000 Series F (58.70 per share) . 5,220,000 5.220.000 Senes G (58.20 per share). 4,920,000 4.920.000 Series H ($7.80 per share). 4,680,000 2.457,000 Series I (annual rate S7.35 per share). 3,3'32,000 -

Capital stock expense. 2.359,000 3.608.000 Total deductions. 83.851,000 73.267.000 RETAINED EARNINGS-End of year. S104,629,000 S 88 918 000 Se. notes to fmancial stat.m.nts 25

Statement of Income .._._..>, 1973 1972 ELECTRIC REVENUES (Note 2). S600.681.000 S5'08 232 000 ELECTRIC EXPENSES ANDTAXES:

Operation-Fuel used in efectnc generation. 191,861,000 172.072.000 Purchased power. 28,575,000 30.478.000 Wages and benefits materials, etc . 78,580,000 67.801.000 Maintenance of plant facilities-wages. matenats. etc . 28.886,000 26.408.000 Depreciation. 70,459,000 59.923.000 Taxes (Notes 1 and 7)-

General. 50,054,000 44.421.000 Federal income. 13,900,000 3.277.000 State income. 1,969,000 952.000 Deferred income taxes. net 25,272,000 17.097.000 investment tax credit:

Tax credit deferred. 178,000 1.055.000 Amortization of deferments (credit). (4.058.000) f 4 306 000)

Total electric expenses and taxes. 485,676.000 419 178 000 l Electric operating income. 115.005.000 89 054 000  !

OTHER INCOME:

Allowance for funds used during construction (Note 1). 59,459,000 51.185.000 Earnings of subsidiaries, net. 586.000 1.204.000 Dividends and interest. 1,616,000 1.347.000 Other, net (deduction). (1,109,000) (1.040.000) i income tax-credit. 15,406.000 13 035 000 I Total other income. 75.958.000 65.731.000 income before interest deductions. 190,963.000 154.785.000 INTEREST DEDUCTIONS:

Interest on long-term debt. 85,659,000 70.161,000 Other interest. 5,465,000 3.990.000 Amortization of debt discount. premium and expense. 277,000 267.000 Total interest deductions. 91,401,000 74 418 000 Net income. 99,562,000 80.367.000 DIVIDENDS ON PREFERENCE AND PREFERRED STOCK. 27,456.000 21.901.000 Earnings for common stock. S 72,106,000 5 58 466 000 AVERAGE COMMON SHARES OUTSTANDING. 38,465,000 34.592.000 EARNINGS PER SHARE OF COMMON STOCK. S1,87 $ 1.69 See nofet 70 fifiaticial Statefrients Cost of Fossd Fueis Embedded Cost of Money Used en Electre Generaleon SS Ss 7 22

• Sg (hetefred Stock

• g#*

e$

?

en i '

n, 3'

1969 197C 1971 1972 1973 26 .. .. .c ..., ..a ..,3

..E,.7 1E. I*.U

-NE 0. U

• I$ Y I* U U U

Statement of Capitalization me,e. ,,

Per Cent of Per Cent of Common Stock Equity: 1973 Capitalization 1972 Capitalization Common stock, no par. 50.000.000 shares authorized: 38,750.672 and 35.493.443 shares outstanding for 1973 and 1972. respectively. S 692,101.000 $ 617.981.000 Retained earnings ( Note 3). . . . .. IG4.629.000 88,918.000 Total common stock equity. . 796,730.000 29.6c'c 706.899.000 30.6%

Preference and Preferred Stock:

Preference stock $100 par. 6 3/4%

Convertible Series AA. 1.500.000 shares authorized. 500.000 shares outstanding. .. .. . . ... . 50.000.000 50.000.000 Preferred stock. $100 par. 5.000.000 shares authorized:

Series Shares outstanding 4.50"c C 350.000 35.000.000 35.000.000 5.7??c D 350.000 35.000.000 35.000.000 6.72?c E 350,000 35.000.000 35.000.000 8.70"e F 600,000 60.000,000 60.000.000 8.20"e G 600.000 60,000.000 60.000.000 7.80% H 600.000 60.000.000 60,000.000 7.35"o I 600,000 60.000.000 Total preference and preferred stock . 395.000.000 14.7", 335.000.000 14.5?c lamg. Term Debt:

First and refunding mortgage bonds:

Series Year Due 3"o 1975 40.000.000 40.000.000 2.65 % 1977 40.000.000 40.000.000 2 7/Sc~c 1979 40.000.000 40.000.000 31/4?c 1981 35.000.000 35.000.000 3 5/8"c 1986 30,000.000 30.000.000 41/2?c 1992 50.000.000 50.000.000 41/4?c B 1992 50.000.000 50.000.000 4 1/2"c 1995 40.000,000 40.000.000 53/8% 1997 75.000.000 75.000.000 63/8"o 1998 75.000.000 75.000.000 7"c 1999 75.000.000 75.000.000 8% B 1999 75.000.000 75.000.000 81/TPc 2000 75.000.000 75,000.000 8 5/8"c B 2000 100.000.000 100.000.000 71/27c 2001 100.000.000 100.000.000 7 3/8"o B 2001 40.000.000 40.000.000 7 3/4"c 2002 100.000,000 100.000.000 l 7 3/8cc B 2002 75.000.000 i o,000.0N 7 3/4"c 2003 100.0A0.000 -

81/8?c B 2003 100.000.000 -

Sinking fund debentures. 4 7/8"c 1982 33.750.000 35.000.000 Term notes:

6.85"e 1973 60.000.000 60.000.000

.' .'ucIear fuel. 61/2%7"c 1975-1977 51,000.000 51.000.000 Nuclear fuel. rates based on floating prime 1975 30.500.000 -

Turbine generator leases (Note 6) 12.380.000 9.224.000 Total long term debt. .

1.502.630.000 55.re 1.270.224.000 54.9"c Total capitalization. . 32.694.360.000 100.0"c $2.312.123.000 100.0"c l

See notes to hnancial statenwnts.

27l I

I

i l

Notes to Financial Statements 1 1. Summary of Significant Accounting Policies. recorded using the unit of production method.

j A. AsMitions so Electric PLnut. The Company charges C. Inconic Tax Provisioon. The Company prorides j to construction all direct labor and materia s, i as well as deferral income taxes under normalization accounting j '

related indirect construction costs including general for differences in book and tax depreciation arising from enginwring. research, development. taxes and the cost the use of accelerated tax depreciation, except for certain of money (allowance for funds used during constructioni. plant additions in 1968 and 1969. Income tax reductions l Allowance for funds used during construction i ADCI arising fmm the 4% Job Development investment tax

{ is a cost accounting procedure whereby the net composite credit placed in effect during 1971 are being amortized interest and equity costs of capital funds used to finance over the depreciable lives of the related property, and construction are transferred fmm the income statement those arising fmm the 3% investment tax credit in effect l to construction work in progress in the balance shwt until 1969 are being amortized. as approved by regula-

! and. accontingly. are capitalized in the same manner tory authority, over a five. year period. The Company l as construction labor and material costs. This item is has S17.944.000 of unused 1972 and 1973 investment tax i recognized as a cost of Electric Plant, with an offsetting credits available for carryover to future years.

j credit to Other Income because, under established D. Retirement PLm C ost. The Company has a non-j regulatory rate practices, a utility is permitted to contributory retirement plan for the benefit of its include a fair return on, and the recovery of, these capital employees. The Company's policy is to fund pension costs through their inclusion in the rate base and in the costs accrued, which amounted to $5.783.000 in 1973 and provision for depreciation. The amount of ADC trans- $5.285.000 in 1972. During 1973 the Plan was amended.

! ferred in recent years has increased as the balance of raising the level of benefits for employees and retirees, j construction work in progress has grown and as interest and the assumed earnings rate was increased from 31/2%

rates and equity capital costs have increased. ADC has to 41/41 The changes had no material effect on annual been calculated using a rate of 71/2% net of applicable costs for the Plan. The unfunded prior service cost of income taxes. The common aluity component of ADC is 54.319.000 at December 31,1973, is being amortized i not determinable without arbitrary cost allocations and over a ten year period.

i has bwn estimated. 2. Rate Matters. During 1972 and 1973 the regulatory i H. Depreciation and Amoni:ation. Provisions for authorities granted certain rate increases which are

! depreciation are recorded using the straight.line method included in Electric Revenues in the accompanying j at annual rates which averaged 3.20% in 1973 and 3.21% Statement of Income and are summarized in the table i in 1972. Provisions for amortization of nuclear fuel are below:

1 4

l Itate Increases l

Apprnimate Iles enue Increases l

i

Annualiint Per Cent Ef fert h e on 1973 Ycur Ended December 31 lbte Schedules G ranted Date Sales 1973 1972 I North Carolma itetail A939 Starch 27.1972 S 27.taxun o $27.t= n uer n $24.7iw un o North Carolma lietail Mo January 1.1973 2:uh u n xi 23n uunne -

l i South Carolina itetail t il 13.29 January 1.1973 19.1:n u u n 19.It oanio 4.Itu u n c Wholesale 2) IK5o Apn12fi.1973 lo.2i n u w e ei.w n u n u -

North Carohna lletail(36 10.25 Novemler 15.1973 :Ewmuno 3.>.s w u n ni -

South Caruhna Iterad (36 10.25 Nos emler 15.1973 pu u n u n e 1.N nu n vi -

Total 8133n nu n n e ex3Awu uien $24.w a u to

, 416 includes amounts collected on an interim tu*is prior to the effective date of the permanent increase.

12t Nuby et to refund uith interest.

l 13i The 10.2*M mercase is an interim increase, subject to refund with interest swndmg the outcome of the Company's rniuest for a permanent mcrease of Di Nu . Included in the 10.259 increase is an 89 intenm increase w hich was put into effect Novemler 15, 1973. and later increased by 2.25'i effective January 19.1974.

Since August 23.1972, the Company has collected. See page 2 under " Summary of Rate Activities" for subject to refund with interest. revenues under a fuel additional rate developments subsequent to December cost adjustment clause applicable to wholesale 31.1973.

customers. Such revenues amounted to 57.500.000 in 3. Subsidiaries. Cash dividends of S1.000.000 were

'1973 and 61.900.000 in 1972. received from subsidiaries during 1973 and 1972, and at i

e 28

December 31,1973. retained earnings included $6.766,000 taxes and operation and maintenance expenses. Ilentals of undistributed subsidiary earnings. an't rental commitments under certain combustion

4. Capital Stock. See Statement of Capitalization on turbine generator leases inc~ude accruals in excess of page 27. The changes in capital stock during 1973 are current payrnents in rgr. cunts required to equalize annual described under" Financing and Investor Activities- rent expense and satisfy the obligations of the leases, on page 22. In 1972. 5.263.980 shares of common stock net of salvage, at the end of the estimated useful life of were issued for a consideration of $119.774.000 and 600.000 the generators. Such leases contain options to purchase shares of 7.80% Series 11 Preferred Stock for $60.000.000. beginning in 1981 at the lessors' unrecovered cost.

The outstanding Preference Stock. 6 3/4% Con. 7. Income Tax Expense. Income taxes differ from vertible Series AA. is convertible into shares of common amounts computed by applying the statutory tax rates stock at the adjusted conversion price of $30.77 per to adjusted pre tax income as follows:

share, each share of such Preference Stock being taken 1973 1972 at $100 for such purpose. The conversion price is subject to certain adjustments designed to protect the conver- $',"'"**' expense i income sion privilege against dilution. taxes and credits and At December 31,1973 certain shares of common stock investment tax credits, net . 21.8ssam sx40 moo were reserved for issuance as follows: Allowance for funds used during construction. . 439.439D du i st.tssnMn Shares Total adjusted pre tax Converuon of Preference Stock. 1.ti2 8.939 Stock Purchaw-Savings Program I"C " ' ' **il "MA C 838 222M*

for Employees. 8II 8II Income taxes on the atmve thvidend Reinsestment and at the composite statutory Stock Purchaw Pl.m. 28830" Federal and state rate of Total. 2A31.02o s t .12'~r. , $31. tit 3.ooo $ t7. 494.000 Inereases Idecreases)

The outstanding preference and preferred capital attributable to:

stocks are callable at various redemption prices not Pensim and taxes capitalized on banks. . (5.779.0001 t s.779.oun exceeding $110 a share plus accumulated dividends to

. Amortization of investment redemption date. tax credit deferruts. . .4 o.waxn 14.3mi.cooi

5. leng-Term Debt. See Statement of Capitalization on Adjustment of prior accruals . -

t tunamn page 27. Substantially all electric plant is mortgaged Other items. net. 19n)o (1.3mmu at December 31,1973. The annual amounts of long term Income tax expense. s21.4ssun s so4ono debt maturities (including sinking fund requirements)

• '"* "*dI"'**

through 1978 are $1.250.000 in 1974, $84.750.000 in ,; ',***, 3.g g3q 1975. $11.300.000 in 1976 $69.200.000 in 1977 and

$61.250.000 in 1978.

6. Leases. Ilentals incurred in 1972 and 1973, and rental commitments at December 31,1973 under all

8. Short. Term Borrowings. The Company maintains bank non cancelable leases iprincipally combustion turbine ,

lines of credit with 69 commercial banks aggregating generator leases) are as follows:

Non-capitalised Other on and uses Om b ad ab commed Period Financing len es 14a es Total paper to finance its current cash requirements. During 1970 the maximum outstanding short term borrowings.

including c mmercial paper, were $121 million, and the t 811.3; ann s 743.000 $12.1teim) 1973 1 t.732s o 1.315 moo tani7.wo average was $M million. Bank loans are for 90 days or Rental comnutments: less and are at the commercial prime interest rate. The 1974 11.770n o 1.31sta.n 13.os,;3o daily average interest rate of all short-term borrowings 1975 t1.340s n 734 moo 12474.000 during the year was 8%

197e; Irustmoo 434 u n i1.4ssa o At December 31,1973 the notes payable for construc-tion consisted of $51.0 million of bank loans at prime t t s 197919-a 49.tesau 83nn 49.20 am interest rates ranging from 9 3/4% to 10% and $18.3 t+ 4 19+ at.26.w n - 26.2r ;ooo million of commercial paper at 9 7/S%

t9so. m a t.nw o -

t.2souw The Company's practice is to maintain bank balances nem.und r 3acuo -

3anse with all banks providing services. including those with An'ounts in 1972 and 1973 include $10,623.000 and lines of credit. Balances are maintained without formal

$11 147.000. respectively, charged to operating expenses, or informal agreements.

S abstantially all leases require the Company to pay 9. Construction Program and Financing. See page 22.

29

Financialand Statistical Summary INCOME DATA (DOLLARS IN THOUSANDS) 1973 1972 1971 1970 1969 1963 Eiectric revenues-Residential sales 5 212.213 5 184 561 5 166 442 5 140 281 5 126.145 5 79 27.

Ccmmercial sales 122.788 104 479 91.183 75 951 66.378 37 17)

Industrial sales 189.879 157.407 139.560 118 811 109 E88 64 357 Other energy sales 72.629 57.256 49 796 47.565 36 576 20 381 Otner revenues 3,172 4 507 4560 3 530 3 455 2 185 Tctal electric revenues 600 681 508.232 451.541 386.138 342.242 203 372 Electric escenses and tases Operation and ma,ntenance 327.902 296.759 261.178 222 307 162.404 85 450 Decreciation 70.459 59 923 53.062 48427 41.934 26.199 Tases 87.315 62496 55 246 47 105 65 892 51 743

Total electric empenses and taxes 485.676 41917e 369 486 317 839 270 230 163 392 Electric operating income. 115.005 69 054 82.055 66 299 72 012 39950 Otner income Allowance for funds used during construction 59.459 51.185 37.676 24.342 15.711 2.983 Other inccme. net 16,499 14 546 14 519 10.094 5.639 1.761 Interest deductions (91.401) (74 418- (E2 395; (51 557s (38 945; 112 8011 1

income before entraordinary items. 99,562 60.367 71.855 51,178 54 417 31.923 E ntraordinary items - - - - - 11 244 4 Net income (at . .. ,.. . ... 99.562 80.367 71.855 51.178 54.417 30 674 1 Dividends on preference and preferred stock . 27.456 21 901 16 341 11 177 6 969 1 360 Earnings for common stock 72.106 58 466 55 514 40.001 47.448 29.319 Davidends on common stock . .... 54.036 47.759 40 763 35 271 32 478 20 576 Earnings retained for use in the business. 5 18.070 5 10.70a 5 14.751 5 4.730 5 14 970 5 6.i o COMMON STOCK DATA Snares of common stock-year end (tnousands) 38,751 35.493 30.229 25.932 23.240 22.896 b)

Per share of common stocklallaverage snaresL Earnings betore entraordinary items (a). 5 1.87 5 1 69 5 1 88 5 1.57 5 2 05 5 1 34 Estraordinary items. net of related i income taxes - - - - -

( 05)

Earnings for common stock 1.87 1 69 1.88 1 57 2 05 1 29 Devidends paid. . ... 1.40 1 40 1 40 1 40 1 40 90 Market value-high low. . 23% 16 25 M 21 27N-20 % 29%-20 % 435-27% 33-26 %

-year end. 17'n 23 % 23 N 24 N 29% 31%

EALANCE SHEET DATA (DOLLARS IN THOUSANDS)

Electric olant toriginal costl 53.366.541 52.903.710 52.459.572 52.110 380 51.735.861 5 916.79e Accumulated deoreciation. .. 652.652 584.748 534.216 492.083 451.802 280.5E Capitalization and short-term notes' Common stock eouity. 796,730 706.899 580.025 457.319 386.190 285.058 Preference stock. 50.000 50.000 50.000 50.000 50.000 -

Preferred stock . 345.000 285.000 225.000 165.000 105 000 25.273 Long-term debt . . 1,502,630 1.270.224 1.040.891 837.500 663.750 331.250 Short term notes payable. 69.296 96.000 119 343 189.806 128.817 14.000 ELECTRIC AND OTHER STATISTICS Kilowatthour sales (millionsh Residential . 10.186 9.237 8.780 8.126 7.340 '4.175 Commercial. 7,287 6.515 5.938 5.391 4.767 2.131 Industrial. 18,848 17.778 16.357 15.140 14.593 8 390 Other 6.838 6 158 5838 6 631 5 180 2 589 Total kilowatthour sales 43,159 39.688 36.913 35.288 31 880 17.285 Number of customers (year endt Residential 931.020 895.488 864.361 835.706 810.743 671.508 Other- 152.132 144 939 137 090 129 871 124 496 98 518 Total customers 1.083,152 1.040 427 1.001.451 965.577 935.239 770.026 Residential customer data-Average annual KWH use. . 11.072 10.447 10.299 9.864 9.179 6.279 Average revenue per KWH. . . 2.08C 2 00c 1.90c 1.73c 1.72c 190c Number of employees (year end)-

l Operating and maintenance. ... 7.938 7.721 7.392 7.363 6.933 5 613 Generating plant construction and engineenng. 5,125 4.780 3.910 3.210 2.596 693 Source of energy (millions of KWH):

Generated-Steam-Fossil . 38.604 37.736 35 393 34.212 30.591 17.206

- Steam-Nuclear. . 2,402 -- - - - -

- Hydro . . . 2,377 1.961 2.028 1.491 1.784 1.125

-Combustion turbine generators 650 869 726 837 643 -

Purchased and net enterchange . 2,469 2.607 1.789 1.728 1.534 583 Loss and company use 3.343 3.485 3.023 2.979 2.672 1 629

% toss and company use 7.7% 81% 75% 7.8% 77% 86%

System average heat rate 9,713 9.702 9.728 9.784 9.738 9.578 System load factor 64.2% 65 7% 68 2% 66 6% 689% 64 1%

iai Net mCome for 19e9 has been ncreased by ss.125 000 is 22 per Common share, as a resuit of certam Changes as tonio*s m s725 000 from reduction of aeore teori rates for electrtC generatmg facsistees to the internal Revenue Service goedeeme rates a si 629 coo reduction m aeoreciation sess related income tames .

s2 650 ooo trum reduct on of the amertization period of deferred mvestment f an Credits from toerity-teve to tive years and in $1750 ooo from the adoption of flow-through encome las accounting m Connectiort with the use for mCome tas purposes of accelerated CeDreciation cri additions to electraC generatmg trans%ss on and certam generai piant f acsist es aCQuated in 196a and 1969

D6 The number of shares of Comrnon stock has been adiusted for 2 tot 1 sotet m 1964 30

e-o e SUbSIClarles Crescent Land & Timber Corp.

In managing over 280.000 acres of non utility land. Eastover Alining Company was organized to perform Crescent Land & Timber Corp. is devoting more and the atual mining of these reserves.

more of its acreage to planned residential and resort On January 31.1974, Eastover Land owned or had '

developments. controlling interest in approximately 30.600 acres of coal Timber hanesting and reforestation remain the reserves in eastern Kentucky and Virginia. These number one activity of this subsidiary, however, and reserves are estimated to contain up to 250,000.000 Crescent continues to plant new trees at a rate of 1.4 tons of recoverable coal.

million per year. The 1973 production from operating mines was Since 1939. Duke and its subsidiaries have harvested approximately 1.300.000 tons. The production was lower over 664 million board feet of timber and 1.4 million than forecast due to a strike which has idled the cords of pulpwood. Nearly 44 million seedlings have Brookside mine since July 26,1973. A strike settlement been planted on Company lands. had not been reached at year end.

Crescent has an equity interest in Carowinds, The total annual output of these mining investments Inc., a theme amusement park and land development is expected to reach seven million tons when all mines company. The theme park is located on the North reach full production in 1975.

Carolina South Carolina state line and is one of the Mill. Power Supply Company nation's largest family entertainment facilities. The park still. Power Supply Company moved into its new, opened its gates for the first time last spring and while 83,000 square foot warehouse and office facility in its attendance for the first year was excellent with over Charlotte during January,1973. The new structure, 1.2 million people, the first year start up costs built to accommodate the company's steadily increasing resulted in a loss for the year. The park looks forward inventory and sales. provides 66.000 square feet of ware-to a successful 1974 season. house space and 17.000 square feet for offices.

Realtec, Inc., a national resort firm selected by The oldest of Duke's subsidiaries. Still Power was Crescent to develop the first resort-residential chartered on June 7,1910. to buy. warehouse and sell community on Lake Keowee in South Carolina (one of electrical equipment to mills and other industries that two takes in Duke's Keowee-Toxaway project) has were converting to electricity from other sources of announced the sale of 349 lots. energy. Today, it is the authorized distributor for many

?astover Mining Company of the largest electrical equipment manufacturers in the Eastover Land Company c untry.

In addition to selling items to Duke and others as a The Eastover companies were organized in 1970 in the wholesale distributor, Still-Power purchases virtually wake of a severe coal shortage that threatened Duke's all supplies, equipment and fuel required by the parent supply of low-sulphur coal. Eastover Land Company was company. '

organized to acquire coal properties and reserves:

Subsidiaries-Financial Highlights F.nsncial nignhgnts cf subsidianes of Duke Power Company for the year enaed December 31.1973 are as f attows-EARNINGS Elecincas wnoiesaie distneution 5 t 120 000 Forestry. recreational and land developments e42.000)

Coal mmirig-under develocment -

Gross earnmgs . 1079 OCO Intercompany profit ehmmation +492 Ocot Earnegs to carent ectncany. net S 586 Oc0 OtVIDENOS*Paio to parent cer"cany s 1 000 000 NET ASSETS Property and mvestments-at cost.

14eal estate recreational ano land devetooment $61.350 000 C:al mmmg - 45 273 000 Net current asse's. ormcipally rece.vaoles and mventories 3 978 000 Total assets 110 599 000 Long-term debt-LJe maarance company i7 000 000; Bank etc - secured cy recreational f acihties s 161 million guaranteed cy Crescent! I29 185 000 Coat orcouction commitments ,25193 0001 De'er ed mcome tases '19 995 000)

Parent company mvestmer+t and advances 30 626 000 Advances tc parent at crime rate or mterest 2 022 000

., Net assets s32 948 000 31

d 1

Duke Power Executive Staff -

I Carl MaraD.,'ectoe J'

P.es oe,t a

!i * ' al.:.h."

A mee.

r 52 23 I

i F '- - 1 I I T- l iI d W J Burfor* M T Mauey Jr R E Frater

• Wilham H Gogg* JcM D Hicks' J S Maior i v.t e b es.nea* P,0 ec Weaege* Pa v ce Pees oeat F maac e vice Fees.oeas Vice P*es<reat vice P'es'oe**

ee onws a g g g _ D.,m, ve'en

. ,e,s.e, and Direevor G. .e a co.,ase a i

3 B B E E - C.e=sen Vaeve's *, Peo*ess onei E ag eee' 8 $ -Comeo' M4cMigea mad D.,,e sos C s'id ocovraie D rect A"or 's P S3 e'*"M

6) Je $1 2J Unet e's45 Ab L L 8 - Dwee B 5 - U 5 Nae '

Carl +eJ Put9sc V a+ =e's,*v Acacesav im e L ee i

a Auov tant A t'oe ae , Scaw LLg i i4S 13 41 11 A ,, mae ,

1 i S3 1 ?

l i

i B B Parker' i 1

e,E .eco ~e es.oeat v.eea.

C,eae j u a .ae.. eae D.,or,o.

B 5 E E - va.ve<say of N*n C a*ouca 59 3e l

0 W Booth

• W S Lee' A C Tnies*

Senece vue Pess neat Sea.oc Vice P es. deal Sea.cw vice P'es4cea' n esed Dooest oas sao D. ector E ag.aees ag &

Coest*weboa Procuct oa 4 Traasmiss oe

)

uaiwe and Devector and Directo<

S 5 Eo'EA.mesma'ost, B 5 C E Priaccioa B 5 M E -Geo's.e T e' a n a 21 Unive s4, *22F Prof ese*Oaa ! E agiae**

'D.eector and uemee< oe E necs ve Comm4'ee oeao et;'t::"4:'t;' :"s'e,..e l a2 1

2

. . . _ - . ~ . _ _ _ _ _ _m.. s __ . - _ _ _ _ _ . _ _ _ _ _ _ _ _ . . - . . _ _ _ m _ _ _ _ _ _ . _

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Actert C Ec*ards RfCnard B Her$ rey Howard Holderness Hermart W Lay 8 et deat Trustee and E necut ve Cesamen of the Boara Cnairman ce tae C4e**on umverserv O**ec J E secutive Commettee 0, ectoe Tae Due e En'of domment Ls,eete< son Sraneano ensurance Comoany Peas,Co mc C aa R >ver mc and JeHerso. Pinot Director Southern Regiones Corporshon Bramtt international Educat.on goers Director There Nationae Boca 8eae as asserve Boare os Carosma fe.eonoce a of Nasnwase R-camoed Cnanotte Branca To egraon Co-oany F *st Ia'*'natiocas JeHerson Pdot Beacsaares tac Corooration F es Nat.ocal Bana p.gis tree of tasveence company Soum este<n CaLas Lae insurance Campany

• .ison Socetreg Goods Comoany 7 .- ,7

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+; industries enc a M P sece:on Vawe+s:tv Menais FreaQMt Lines GS 34 At' ant < & Gast Caroires Rao.a, o

33 i

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h Steve C .Grtthin Porter A Hauser P D Hutt Frank A Jenkens i Secee a', and Jr C oah si Vice Pres.ceat Vice Pressmeat j

assoc +a'e Go essi ouasei B $ - mea Po.'e' rd Co+'ese 0.serieve oa e ag nee <mg t ransmiss.oa &

i B 5 -Commoa vaC. vers i, 4S6 34- 0 5 E E C+emsoa f eric casta' at.oas i L L D - u o' Sov'a C a oe aa u aave's.t v 9 E E -N C Stais l Af'oraov 60 3F unswe

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=lcESuhr /4 % f '_irU K 1,. k. #4 J Wesley Lewis Henry H Orr Warren H Or.en W,lham R Stemart V <e Pres. dent V,ce Pres.deat V<e #res.oeat Treasuree Div s.oa Ope'aucas u seses.eg Des ga E aseneeemg B S - um.e< set, of idmois B 5 t i -Cie'asoa 44 40- S u E -C+e= son Ce %ed Puo. c ba. vers.tv unsweesre, Accoumant Prosess.caa+ E egeneee Profess ones E agaaeee #43 3

,96 36- idT 26 I

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R J Asnmore S T Lammcre W Bruce Sna990n Ass s.am s ce P.es.oem ans stam v.ce P es oeat Ass.stane T eavec F .naac.ai Acm***strat>ca Comoviet Se'w<.e*

K C Stonebrawer S F Ca. peert W O Parke J< ass +aa C om.o-e-Ass s'am T ressur er A ss.st aat b < e P'es oem b'*** **"**

Mrs MCfnea Strouca J F Day Ass + eat sece a ,

i Asstenf 5ecreta<v R R Pierce Ass a a et vece Presiceat j

""*"**" ass +am v,ce Pres.oea-j j

JAssC Goowan

+are see,e J,-

a P e. . ,, ve e . ano E D Powel: Commua.c a%e s Ass s aat vece P'es oeat i Ass si m v ,

es.o.,i cPe,a,.a l

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34

Vice Presidents-Retail Divisions

+ . . . . . .

5 *': ?:T*12.. :'::;;';#

Management Changes At its regular meeting on February 27,1973, the Board of Directcrs approved reorganization of the Company's retail district operations into five geographical divisions and named a new vice president u....,.",^ to head each division. The reorganization will allow the O* o... ,

_2;'),. " " ~ C ?l7,P ~~~' Company closer contact with its more than one million  ;

customers. The new divisions are headquartered in J Greenville, S. C., and in the North Carolina cities of l Charlotte. Greensboro. Hickory and Winston Salem.

Elected vice presidents for the five retail divisions were A. Stell Doolittle. Southern Division: James D. Sloan.

Central Division: Keith Arledge, Western Division;

,. P u. ....l.h7.'O., o.....- Joseph G. Stann. Northern Division; and Thomas 31.

gg

\

"15.~.2..{.,*[4~;.*l Patrick. Jr., Eastern Division. They report to J. Wesley Lewis. Vice President, Division Operations, who had previously served as vice president, district operations.

Other board action during the year included the election of William O. Parker, Jr., to Assistant Vice

. President. Steam Production.51. T. If atley, Jr.. was s

1. named 51anager of the Rate Department. succeeding Glen A. Coan. Vice President. Rates, who retired after

> 2 i u pamcur

. . .3 v .c . p... .~ e ... , o.. , 41 years of service with the Company.

~4 Also retiring during the year was James W. Lawrence, Assistant Treasurer, who had served the Company since 1929.

The Company was saddened by the death on October

~ '

4.1973, of James S. Sense Assistant Secretary. Str.

] Sease had served Duke Power 54 years. longer than any

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i DukePower Service Area

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U sitaw titCTait sT&fion Cm MromotLttre!C sTATi0h 0 =uCtt aittCT .Csi& Tic-c..._.,....~

36

Servingthe PiedmontCarolinas The Piedmont Carolinas, the t.rea served by Duke Power, is the industrial heartland of the New South and one of the fastest-growing areas of the country.

Its 20,000 square miles, extending in a broad swath from Virginia to the Georgia state line, are characterized by contrasting scenes of bustling cities and towns and the rolling, pine-forested hills that separate the coastal and mountain regions of the two Carolinas.

Umause of its moderate climate, its excellent educational system and its long history of abundant energy, the Piedmont has become a mecca for expanding industries. While maintaining its worldwide lead in the manufacture of wooden household furniture, tobacco products and household textiles, a growing percentage of new investments is being made in such diversified industries as pharmaceuticals, chemicals, rubber, electronics and heavy machinery.

For the five year period ended 1973, the Duke Power service area had been chosen by 1,467 new and expanded industries requiring an investment of more than $2.7 billion. This industrial expansion created 79,544 new jobs with an annual payroll of $443 million.

Economic forecasters predict that the Piedmont's growth, in both industrial expansion and population, will continue during the coming decade. The Company's construction program outlined in this Report will proside the electricity for new industries, businesses and homes that will result from the area's progress.

NOTICE OF 1974 ANNUAL MEETING The Annual Meeting of holders of common stock of Duke Power Company will be held at the principal office of the Comoany. 422 S. Church Street. Charlotte. N. C..

on Tuesday, April 30,1974. at 10 a m.(Eastern Daylignt i Savings Timet l

'Il GENERAL OFFICES 422 South Church Street. Post Office Box 2178. Charlotte. North Carolina 28242 )

TRANSFER AGENTS FOR COMMON STOCK Morgan Guaranty Trust Company of New York; North Carolina National Bank. Charlotte.

- REGISTRARS FOR COMMON STOCK i First National C.ty Bank. New York;Wachovia Bank and Trust Company. Charlotte i I

1. P y g . .wp *m****

• • [ 'j REGULEC ,, , -

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