ML19323A942

Annual Financial Rept 1979

ML19323A942
Person / Time
Site:	Callaway
Issue date:	02/28/1980
From:	UNION ELECTRIC CO.
To:
References
NUDOCS 8005070505
Download: ML19323A942 (36)

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l Ilighlights Year Ended Annual Change December 31,1979 Current Year 10-Year Average Earnings per Average Common Share.

5 1.73

- 13.9 %

2.3 */

Dividends per Common Share.

5 1.44 2.9 1.9 Common Shares Outstanding ( Average).

52,577,432 8.9 7:

Average Common Stock Equity.

5 850,612,000 10.7 9.3 Total Kilowatt 41our Sales.

23,689,000,000

.7 3.6 Peak Demand (Kilowatts).

5,846,000

.6 3.7 Price per Ton of Coal.

5 26.02 7.7 18.2 Coal Burned (Tons).

12,037,000 1.4 7.3 Interest on Debt.

5 106,995,000 18.5 13.0 Total Indebtedness.

5 1,430,899,000 12.4 7_8 Distribution of Our 1979 income Consumer Prices 1967-1979 Depreciation Cost of Money Medical Care-Up 140%

Food-Up 135%

Taxes Housing-Up 128%

Consumer Price Index-Up 117%

Wages Transportation-Up 112%

Fuel &

Electricity-Up 85%

Other Expenses Purchased Power 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 i

Source: U.S. Department of Commerce, except for

" Electricity" which indicates Union Electric Company's average residential price per kilowatt hour.

To Our Stockholders Although our earnings for 1979 were by coal and water; less than one per cent is fueled down from the record level of last year, there are by oil or natural gas. With coal, our fuel costs are many favorable facts to be reported for Union about half of those of utilities depending on oil:

Electric at this time.

iur costs are more stable and the supply is more Common stock earnings for the year were certain. And whiis we must build to meet growth:

51.73 per share, as compared with $2.01 last year.

the oil-dependent utilities must build both for The principal cause of this reduction in earnings growth and to replace their oil-fired generation.

was the Missouri Supreme Court's decision which Additionally, our planned nuclear units outlawed the Company's fuel adjustment clause.

will diversify our fuel mix, and make it less subject That decision resulted in a write-off of 21 cents to the effects of price escalation since uranium is per share.

a much smaller percentage of total fuel costs than Kilowatt-hour sales for the year were up is coal.

about one per cent, with comme.c;al and industrial Our first nuclear unit Callaway No.1, sales posting two per cent increases as residential is on schedule for commercial operation in late sales declined two per cent. Significantly, however.

1982, and the timing of our October 1979 request while the inflationary spiral continued to raise for an operating license for the unit is also fortunate costs, our rates were virtually unchanged.

in that the current moratorium on licensingdoes not The effects of inflation, of course, are presently impact us.

adverse to almost everyone. Regulated utilities, Another favorable development in the however, are experiencing the additional problems nuclear field was the settlement in December of our of increased costs of regulation, aggrasations of long-standing suit to require Westinghouse Electric red-tape, delay and obstructionism, and continumg Corporation to fulfill its contractual obligations to difficulties in obtaining adequate and timely rate supply uranium to the Company. Under the settle-mereases-ment Westinghouse, over a period of years, will On the other hand, many and signif-make payments of cash and deliveries of uranium, icant are the blessings Union Electric enjoys.

goods, and services having a present value to Union First of all, electric energy is fundamental Electric of approximately 5200 million, which to our security, our health. our enjoyment; it is, represe ts a value equal to the amount in litigation.

in fact, essential to progress. And because electric Current projections of customer demands energy is our business, the pursuit of a nation's indicate that with the addition of the first unit of progress assures for us a continuing important and Callaway Plant the Company will have adequate basic role. Moreover, within our essential industry, generating capacity through 1987 Accordingly, the Union Electric today has advantages not shared by second unit at the Callaway site has been deferred many other electric utilities.

from 1987 until 1988.

Basically our generation is coal-fired.

Our ready access to other suppliers and Ninety-nine per cent of our electricity is produced markets through our extensive interconnections

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I repeat that we have a lot going for us:

with other utilities adds a measure of reliability the future can be bright. Realistically, however, to our service that is invaluable.

g vernment t day hasbecome animpediment tothe Although compliance with myriad, and pr gress which the future should represent. And, often unreasonable, environmental regulations although we have many advantages peculiar to us, continues to offer challenges,it now appears that the nation as a whole will suffer unless the our larger problems in this area hase been solved-a restrictions of government are relaxed so as to situation which is an obvious plus for the Company.

encourage capitalinvestment and permit realistic We are pleased to report, also, that rates of return thereon.

despite the high long-tem money rates which A

..itionah, nuckar pown development prevailed through the last half of 1979,we arranged should be eneouraged and expedited because,t is i

a $100 million bond issue which was privately placed the most efficient, the safest, and the most at a 9.95 per cent interest rate.

environmentally-acceptable method of meeting importantly, the interests of our the electric power requirements of the future.

stockholders and our customers were served by More importantly, those future requirementscan be the Public Service Commission's action permitting met only by developing nuclear power. The the electric utilities in Missouri to include fuel alternative-that is, a future with electrical power costs in their basic rates after the Court had declared shortages-would mean retrogression instead of the automatic fuel clause illegal.

progress; and that is a condition unknown to this nation. Unfortunately, too, such a condition and its We now have pending in Missouri a discomforts would probably entail a high risk of request for a rate increase of about $55.6 million.

civil strife and unrest.

Applicable statutes require that a decision in this matter be made by early June 1980.

Simply stated. America needs electric energy to preserve our way of life; and it is high So, you can see that we have a lot gs ;

time that governmental forces realize this and let for us. Certainly, we believe, there are many us get on with the job of providing our essential reasons for optimism about the challenges that service.

confront us.

In summary, everyone who believes in At the same time, however, realism Americ nd in our way of life, must also recognize requires that we also acknowledge the impediments that an adequate and reliable supply of electricity to progress which loom large on the horizon.

is a basic essential thereto. Thus is Union Electric's Those impediments are mainly encompassed m a future inexorably linked to the future of the nation's federal government which, incredibly:

i al refuses to acknowledge the fact that t Surely, the times call for a renewed and is the basic source and cause of more vigorous dedication by all to insure the better inflation; future available to us. With such dedication and the b) fosters irresponsibility by following a grace of God, the future will be bright.

practice of undisciplined spending; c) increases unemployment by raising the minimum wage; d) discourages self-reliance by providing give-aways; e) believes that it can encourage invest-k d /3L 1'L ment, research, and development by

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increasing taxation; and, Charles J. Dougherty f) attempts to meet expanding energy President and Chief Executive Officer

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needs by levying additional taxes on energy-producing companies and by February 28,1980 delaying nuclear power developments.

St. Louis, Missouri l

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" Basically our generation is coal-fired.

than one per cent is fueled by oil or Ninety-nine per cent of our electricity natural gasJ is produced by coal and water;less

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The Year 1979 Earnings and Sales Rates Common stock earnings for the year The Company's rates are regulated by a were $1.73 per share, as compared with $2.01 last commission in each of the three states in which we yrar. The principal cause of this reduction in operate, and our rates to municipalities and other ccrnings was the Missouri Supreme Court's utilities are regulated by the Federal Energy decision which outlawed the Company's fuel Regulatory Commission. Approximately 81 per cdjustment clause. That decision resulted in a cent of the Company's electric operating revenues write-off of 21 cents per share.

come from sales regulated by Missouri, about 12 per cent and 3 per cent, respectively, from sales Kilowatt-hour sales for the year were up in Illinois and lowa, and 4 per cent are derived about one per cent, with commercial and industrial from wholesale sales.

sales posting two per cent increases as residential Pursuant to a dec..ision of the Missouri sales declined two per cent.

Supreme Court, the Public Service Commission The total electric heating load connected terminated the fuel adjustment clause in the to the Company's system increased during the Company's rates as of October 1,1979. Beginning i

year by approximately 250,000 kilowatts, or 14 per on that same date, the Commission permitted the cent. In 1979, electric heat was installed in 34 per Company to include its June 1979 level of fuel cent of all single family residential construction costs in its basic rates. The termination of the and in 72 per cent of all multi family residential Missouri fuel adjustment clause means that the construction in the Company's service area.

Company will no longer be able to adjust its Missouri rates each month to reflect variations in the cost of fuel. Recovery of increased fuel costs Fuel will now be through the less responsive and time-consuming traditional rate-setting process.

In 1979 the Company burned 12,000,000 On July 6 Union Electric filed an tons of coal, which was 99 per cent of all fuel application with the Missouri Public Service burned. The total fuel bill for the year was $337 Commission for an increase in electric rates to million, representing a cost of $1.24 per million provide additional annual revenue of approxi-HTU, which is an increase of almost 7 per cent mately 581.6 million. That request sought to ever the prior year.

compensate for the loss of the fuel clause, as well as to recover increased labor costs, interest, and During the year, the Company was other expenses since our last rate increase, which required to make significant conversions to low-was based on 1977 costs. The Commission's action sulphur coal at the Labadie and Sioux Plants to of October 1 permitting the inclusion of the June come into compliance with new State sulphur 1979 level of fuel costs in our basic rates had the dioxide emission limitations. Rush Island Plant had effect of granting $26 million of the pending rate earlier been burning low-sulphur coal and was increase, thus reducing the request to $55.6 million.

in compliance with such regulations. Approxi-Hearings on the proposed increase are scheduled mately 25 per cent of the coal consumed at Labadie for March 1980, and the law requires a decision in and Sioux Plants is now low-sulphur coal purchased the case by early June.

principally from western states at a price delivered Subsidiary companies received rate in Missouri which is roughly double the cost of increases totaling 56 million, on an annual basis, lilinois coal. The use of low-sulphur coal at Labadie during 1979, and additional increases of 56 and Sioux Plants increased the Company's 1979 million are pending. Also during 1979 Union fuel costs approximately 538 million.

Electric received a $1.8 million increase in steam Use of oil is minimal and is expected to heating rates.

comprise only about one per cent of the generation Since March 1978 the Company has been mix for the next ten years.

collecting from wholesale customers $15 million 5

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should be encouraged and expedited electric power requirements of the l

because it is the most efficient, the future."

safest, and the most environmentally-6

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Tha Yer 1979 annually in higher rates subject to refund.

The Company's review of the cost of Since June 1978 the Company has been equivalent coal-fired capacity reveals that nuvicar collecting higher rates of 51% million annually generation is still the most economical method of subject to refund, from lowa customers.

supplying the area's need for additional electrical supply.

A major rate design case, which is Work is under way on the 345-kilovolt pending before the hiissouri Public Service transmission facilities necessary to tie the Callaway Commission, is not intended to change overall Plant into the system.

revenues of the Company, but seeks to determine Last summer the h1arshall Lakeshire how rates should be designed to apportion revenues 138-kilovolt transmission line was completed and among resident al, commercial, and industrial energized, substantially improving reliability of customer classifications. A proposed agreement on service to portions of St. Louis and St. Louis County.

rate design was recently submitted to the Commission by the parties to this case. The case A number of construction projects have developed from a cost-of-service study ordered by been undertaken to improve air quality and to the Commission in 1974.

c mply with clean air standards. The Company expects to spend approximately 550 million on su h facilities in 1980. At hieramec Plant, Construction construction has begun on enlargement of the ele trostatic precipitators which will further Total construction expernliares in 1979 were S395 million, of which about S266 million was

'*d" P ['I "l"'* **issi ns fr m the stacks.

Construction will beg.m shortly on similar spent on the Callaway Plant. As of al e end of 1979, impr vements to precipitators at the Labadie Plant.

cpproximately S720 million had been eended on The Company has requested, and received, a that nuclear plant.

variance allowing more time to install the additional Callaway Unit 1 is now about 60 per cent precipitator equipment. Coal blending facilities complete and is expected to begin operation in late are being planned at Labadie and Sioux Plants to 1982. In October, the Company applied to the facilitate the optimum economical blending of Nuclear Regulatory Commission for an operating jow. sulphur western coal with Illinois coal.

license for the 1,150-megawatt Callaway Unit 1.

Construction plans call for expenditures Capital Requirements of $433 million in 1980 and approximately $2.2 billion in the five-year period 1980-1984.

Included in the 1980 expenditures is The Company's financial requirements

$242 million for the first unit of the Callaway for construction e*Penditures are met through a nuclear plant. Design and other technical changes, e mWation of internally-generated funds and together with changed regulatory requirements and external financing. Twenty-seven per cent of the i

higher interest rates, have increEsed the total cost conSimeti n cXPenditures in 1979 were obtained of this unit 9h per cent, or $114 million. Estimated fr m internally. generated funds, with the sale of i

total cost of Unit 1 is now $1.3 billion, stocks and bonds and a lease arrangement providing the balance. In 1979 the Company and subsidiaries Based on current projections of customer arranged for long-term Cvecing totaling S346 requirements in the late 1980's, the in-service date million, of which $231 million was received during of the second unit at Callaway has been deferred 1979 with the balance to be provided during 1980.

from 1987 to 1988. The change in schedule will add approximately 5200 million to the cost of the in June the Company sold 575 million of second unit. That merease, together with revisions Preferred stock with an annual dividend rate of 9.2 in cost estimates of $150 million to reflect per cent to a group of institutional investors.

l conditions similar to those discussed above for The Company arranged for the sale to i

Unit 1, have increased the total estimated cost of a institutionalinvestor of $100 million,9.95 per l

the second unit to 51.7 billion.

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The Yccr 1979 issued in November 1979 an<l the balance in at discounts valued at over 563 million. The January 1980.

agreement also provides for further cash payments In December 5% million shares of having a present value of up to 57.6 million out of comr" n stock were sold to the public, providing any proceeds Westinghouse receives in its current the C.apany $61 million.

litigation with an alleged uranium cartel.

Also, during 1979 our subsidiary Research companies arranged for $10 million of long-term debt financing.

Three major research projects in which the Company is a participant are aimed at finding The Company has entered into a fuel-new approaches to planning generation for peak-lease arrangement which will provide for the use periods and intermediate load growth.

financing of up to $100 million of nuclear fuel by a corporation that will purchase this fuel for the Kilngas Project: research and develop-Callaway Plant and lease it to the Company. In the ment of a coal gasification plant which would use initial transaction under that lease, we received relatively inexpensive high-sulphur coal for approximately $40 million in the fourth quarter of conversion to a low-sulphur gaseous fuel. The the year from the sale of our existing nuclear fuel Kilngas would be more environmentally-acceptable inventory to the fuel corporation.

for power plant use. This project is being financed cooperatively by Allis-Chalmers, the State of The Company's Dividend Reinvestment Illinois and a group of electric utilities including and Stock Purchase Plan provides common Union Electric.

shareholders the opportunity to reinvest their dividends in the Company's stock and to make Compressed Air Energy Storage: a optional cash payments up to $5,000 in any month research project in which compressed air would be for the purchase of additional stock without pumped underground during periods of low demand for electricity, and stored there for later payment of a commission or service charge.

use in a combustion turbine to produce electricity At year-end,23,056 holders of Union during high demand periods. In the process, the Electric common stock. or about 15 per cent of efficiency of the combustion turbine is greatly common stockholders of record, were participating increased.

in the Company's Dividend Reinvestment and Lignite to Methanol: a study of con-Stock Purchase Plan. Approximately 514 million verting lignite to methanol as a substitute fuel for was invested through the Plan in 1979. Since the combustion turbines.

Plan began in July 1976,it has provided more than

$39 milhon of additional capital to the Company.

In addition, Union Electric is a partic-ipant with other electric utilitics in the Electric Power Research Institute, which rponsors a Uranium Litigation multitude of research progra:ns aimed at developing new, and improving old, methods of producing and In December the Company and Westing-distributing electricity house Electric Corporation settled the Company's long-standing suit to require Westinghouse to fulfill Labor Agreements its contractual obligation to deliver approximately in 1979 labor agreements which extend 10 million pounds of uranium U30s to the Company.

through June 30,1981 were executed whh all of The settlement provides for Westing-the unions representing Union Electric employees.

house, over a period of years: 'o make payments These contracts provide for wage increases t

of cash to the Company having a present value of amounting to approximately 7.2 per cent beginning over $83 million; to deliver to the Company slightly July 1,1979, and approximately 6.4 per cent over 2 million pounds of uranium at contract effective July 1,1980, plus various improvements prices, and 4.2 million pounds of uranium at price in other benefits..luly 1,1980 wage increases may discounts having a present value of approximately be adjusted upward by 0.6 per cent by reason of 546 million; and to furnish othergoods and services wage guideline liberalization.

9

"Our ready access to other suppliers adds a measure of reliability to our and markets thrcugh our extensive service that is invaluable."

interconnections with other utilities IE

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Consolidated Statement Of Ine:m3 (Thousandsof Dollars)

Year 1979 Year 1978 Union Electric and Subsidiaries Operating Resenues:

Electric.

S874,719 5844.473 Gas.

60,537 50.150 Steam.

10,172 8.149 Water.

1.369 1.216 Total operating revenues 946,797 903.988 Operating Espenses:

Operations Fuel and purchased power.

302,182 256.594 Other.

165.493 143.482 467,675 400.376 Maintenance.

71,184 68.012 Depreeiation.

76,300 73.477 income taxes.

56,181 80.366 Other taxes.

108.991 105.525 Tctal operatine expenses 780.331 727.756 166.466 176.232 Operating Income Other Income:

Allowance for equity funds used during construction.

31.245 15.980 Miscellaneous, net.

879 2.b96 Total ether income 32,124 18.876 Income Helore Interest 198.590 195.108 and Other items Interest and Other Items:

Interest on debt.

106,995 90.309 Allowance for borrowed funds used during construction.

(26,848)

(15.489)

Preferred dividends of subsidiaries.

388 390 Totalinterest and other items 80.535 75.210 118.055 119.898 Net Income Preferred Disidend 26,948 23.G40 Requirements of Company

$ 91,107 5 96.858 Earnings on Common Stock Earnings per Share of Common Stock (based on average shares

$1.73 52.01 outstanding)

Dividends Declared per St.44 51.40 Share of Common Stock Asernge Number of Common Sha es Outstanding 52,577,432 48.260,596 See Notes to Financial Statements on pages 19, 20 and 21.

l 1

C nsolid:t:d Hince Sh Ct (Thousandsof Dollars)

December 31, December 31.

Union Electric and Subsidiaries 1979 1978 Assets Property and Plant, at original cost:

Electric S2,727,017 52.651,602 Gas 63,647 61.609 Steam 9,875 10.035 Water 7,153 6.683 Other.

18,949 18,913 2,826,641 2,748,845 Less accumulated depreciation 786.147 725,448 2,040,494 2,023,397 Construction work in progress.

782,874 482,462 Nuclear fuel.

40,213 35,215 Total property and plant, net 2,863,581 2.541.074 Insestments, at cost 3,976 3,679 Deferred Charges:

Generating station construction abandonment.

5,336 7,114 Unamortized bond defeasance cost 5,042 5.236 Unamortized debt expense 3,035 2,776 Other.

357 459 Total deferred charges 13,770 15,585 Current Assets:

Cash 5,841 5,188 Deposits for payment of interest, and other deposits 10,503 7.342 Accounts receivable-trade (less allowance for doubtful accounts of 5884 and 5939,at respective dates) 83,648 75,072 Unbilled revenue.

41,552 38,346 Other accounts and notes receivable 23,282 3,520 Materials and supplies, at average cost-Fuel 85,107 69,198 Construction and maintenance 32,039 25,888 Recoverable fuel costs.

1,159 9,436 Prepayments and other assets 4,540 5,881 Total current assets 287,671 239,871 S3,168,998 52,800.209 See Notes to Financial Statements on pages 19. 20 and 21.

12

December 31, December 31, Union Electric and Subsidiaries 1979 1976 Capital and Liabilities Capitailiation:

Common stock and Common stock, $5 par value, authorized retained earnings 75,000,000 shares; outstanding 58,796,909 and 51,909,270 shares, at respective dates (excluding 42,990 shares at par value in treasury)

$ 293,984 5 259.546 Other paid-in capital, principally premium on common stock (see accompanying statement) 374,189 328,573 Retained earnings (see accompanying statement) 262,202 247,901 Total common stock and retained earnings 930,375 836,020 Preference stock Preference stock,51 par value (entitled to cumulative dividends), authorized 7,500,000 shares-none outstanding Preferred stock Preferred stock not subject to mandatory redemption, including premium of

$1,571 (see accompanying statement) 281,355 281,355 Preferred stock subject to mandatory redemption (see accompanying statement) 114,066 41,092 I ong-term debt Long-term debt (see accompanying statement) 1,306,860 1,237,576 Unamortized premium and discount on debt 1,130 1.284 Total capitalization 2,633,786 2,397,327 Accumulated Deferred Tases on Income 123,291 95,507 Accumulated Deferred Investment Tas Credits 87,556 55 M7 Current Liabilities:

Current matarity oflong-term debt 26,009 5,092 Accounts payable 85,502 79,177 Wages payable.

14,808 13,144 Bank loans.

36,600 14,400 Commereial paper.

60,300 15,200 Income taxes accrued 24,075 53,691 Other taxes accrued.

12,036 13,592 Interest accrued 28,866 26,736 Dividends declared

, 7,4 13 5,833 Other current liabilities 28,726 24,863 Tot 91 current liabilities 324,365 251,728 S3,168,998 52,800,209 1.

Long-Term Debt And Preferred Stock (Thousands or Dollars)

December 31. December 31.

Union Electric and Sulnidiaries 1979 1978 Long. Term Debt:

Union Electric Company 2%% Series due 1980 5 25,000 First mortgage bonds-note (a) 3%% Series due 1982 30,(MM) 30,000 3%% Series due 1986 40,000 40.000 4%% Series due 1988 35,000 35,000 4%% Series due 1990 50,000 50.000 4h% Series due 1991 30,000 30.000 4%% Series due 1993 30,000 30.000 4%% Series due 1995 35,000 35,000 5%% Series due 1996 3P,000 30,000 5%% Series due 1997 40,(MK) 40,000 7%

Series due 1998 50,000 50.000 7%% Series due 1999 35,000 35,000 8%% Se' ries due 1999 40,000 40,000 9,93% Series due 1999-note (b) 50,(MM) 9%

Series due 2000 60,(MK) 60.000 7h% Series due 2001 50,(MK) 50,(XM) 7%% Series due 2001 50,(MM) 50,000 81h% Series due 2001 60,(MM) 60.000 8%% Series due 2(XM 70,000 70,000 10%% Series due 2005...

70,(MM) 70,000 5.80% Series due 1992 to 2005 27,085 27,085 8h% Series due 2006 70,000 70.000 8%% Series due 2007 60,(MW) 60,000 9.35% Series due 2008 55,000 55.(XX)

Unsecured bank notes-note (c)

Due 1985 75,(MM) 75,000 hiiwouri ensironmental Series 1974, interest rates averaging improvement revenue bonds 6.21% due 1989 to 2(XM 16,500 16.500 Nuclear fuel lease 40,139 Total Union Electric Company 1,198,724 1,133,585 h1iwouri Power A Light Company 3W% Series due 1984 7,500 7.500 First mortgage bonds-note (a) 4%% Series due 1992 6,000 6.000 10%% Series due 1994 6,580 7,000 5%% Series due 1996 5,(MK) 5,000 5%% Series due 1997 5,tMM) 5,000 8%

Series due 1999 5,000 5.000 9%% Series due 2001 12,000 12,000 7%% Series due 2003 7,(MMI 7.000 10 %

Series due 20(M-note (d).

5,000 Total h1issouri Power & Light Company 59,080 54,500 51iwouri Utilities Company Sh% Series due 1984 1,000 1,000 First mortgage bends-note (a) 4%% Series due 1988 3,000 3.000 5%% Series due 1991 3,500 3,500 8%% Series due 1996 10,000 10,000 7.95% Series due 1998 4,000 4 000 9%% Series due 2001 6,(MM) 6,000 Unsecured notes-note (e) 6%

Due 1992.

2,345 2,450 Total hiissouri Utilities Company 29,845 29,950 h1ismuri Edison Company 11 W% Series due 1990 4,400 4,700 First mortgage bonds-note (a) 5%

Series due 1991 2,000 2.000 4%*4 Series due 1995 3,000 3,000 9%% Series due 2001 3,652 3,826 8%% Series due 2002 6,000 6,000 Unsecured notes-note (e) 7-7%% Due 1981.

7 15 Total hiissouri Edison Company 19,059 19,541 Union Colliery Company Unsecured note-note (c) 9%

Due 1999.

152 Total long.:erm dehe

$1,306,860 51.237.576 tal At December 31,1979, substantially all of the property and plant tb) An additional 550.000.000.9.95% Series. First Mortgage was mortgaged under, and subject to hens of. the respectise indentures Bonds mere issued on January 31,1980.

pursuant to which the bonds were issued.

I4 See Notes to Financial Statements on pages 19, 20 and 21.

.s..

December 31, December 31.

Union Electric and Subsidiaries 1979 1976 Preferred Stock not subject to mandatory redemption:

Union Electric Company Stated value of shares outstanding.

Preferred stock, without par

$100 per share-value tentitled to cumulative 57.44 Series-550.0fX) shares.

$ 55,(MM) 5 55.000 dividends)- note ifI 56.40 Series-300.000 shares 30,000 30.0(X) 54.56 Series-200,000 shares.

20,(M)0 20.000 54.50 Series-213.595 shares.

21,359 21.359 54.00 Series-150,(XX) shares.

15,(MM) 15.0(X) 53.70 Series-40.000 shares.

4,(MM) 4.000 53.50 Series-130.000 shares.

13,(MK) 13.01 K)

Stated value of shares outstanding, 597.50 per share-58.00 Series of 1971-425.000 shares 41,437 41.437 Stated value of shares outstanding.

592.25 per share-58.00 Series of 1969-350.000 shares 32,288 32.288 Stated value of shares outstanoing.

525.00 per share-52.125 Series-1.600.(XX) shares.

40,000 40.000 Total Union Electric Company 272,084 272,084 N1issouri Power & Light Company Outstanding-Preferred stock 5100 par value 4.30 % Series-20.(XX) shares.

2,000 2.000 l

(entitled to cumulative 3.90 % Series-40.000 shares.

4,000 4.000 disidends), authorized 75.(XX) shares Total hiissouri Power & Light Company 6,000 6,000 Alissouri Utilities Company Outstanding-Preferred stock,5100 par value 5% Series-14.000 sl. ares.

1,400 1.400 (entitled to cumulative 5% Series of June 1950 - 1.500 dividends)-note tg) shares.

150 150 5% Series of September 1950-1.500 shares 150 150 Total hiissouri Utilities Company 1,700 1,700 Total preferred stock not subject to mandatory redemption

$279,784 5279.764 Preferred Stock subject to mandatory redemption:

Union Electric Company Stated value of shares outstanding, i

Preferred stock, without par

$25.00 per share-value (entitled to cumulative

$2.72 Series-1,520.000 and 1.600.000 dividends)- note (f) shares at respective dates, due to 1998

$ 38,000 540.000 Stated value of shares outstanding, 550.00 per share-

$4.60 Series-1,500.000 shares due 1985 to 2004 75,000 Total Union Electric Company 113,000 40.000 hiissouri Utilities Company Outstanding-Preferred stock,5100 par value 5.70% Series-10.660 and 10,920 (entitled to cumulative shares at respective dates, dividends)-note (g) due to 2020.

1,066 1.092 Total preferred stock subject to mandatory redemption

$114,066 541,092 i

ac) Interest rate was 16% on December 31.1979 based on 10$% of the tin Authorized Union Electric Company total preferred stock-bank pnme interest rate, and the rate will vary based on the prime 15.000,000 shares.

rate through 1985.

(g) Authorized Missouri Utilities Company total preferred stock-(d) An additional 55.000.000.10% Series. First Mortgage Bonds were 50.000 shares.

issued on February 6,1980.

te) Notes due in equal annual installments.

(entitled to cumulative dividends), authorized 5.000 shares-none

[$ l outstanding.

Ccns:lidnt:d Str.t:m:nt Of R:trin:d Errnings (Thousandsof Dollars)

Union Electric and Subsidiaries Year 1979 Year 1976 Halance at Heginning of Period

$247,901 5218.h65 Add:

Net income 118.055 119.598 365.956 335.763 Deduct:

Preferred stock divia ids 27,783*

23.040 Common stock dividends-51.44 and 51.40 per share, respectively.

75,507 67.576 Write-off of capital stock expense 464 246 103,754 90.862 Halance at Close of Period (Under the mortgage indenture of Union Electric Company as amended, free and unrestricted retained earnings at December 31,1979 amounted to

$208.405)

$262,202 5247.901

' Includes dividends declared, applicable to subsequent periods.

Consolidated Statement Of Other Paid In Capital (Thousands of Dollars)

Union Electric and Subsidiaries Year 1979 Year 1978 Halance at Heginning of Period

$328,573 5280,187 Add:

Excess of sales price over par va'ue of 5,500,000 and 4,000,000 shares of common stock issued in 1979 and 1978, respectively.

34,017 38.080 Excess of sales price over par value of 1.014,971 and 808,379 shares of common stock issued during 1979 and 1978, respectively, for dividend reinvestment and stock purchase plan.

8,441 7,446 Excess of sales price over par value of 372.668 and 289,086 shares of common stock issued for tax reduction act stock ownership plan in 1979 and 1978, respectively.

3,158 2.860 Halance at Close of Period

$374,189 5328,573 See Notes to Financial Statements on pages 19, 20 and 21.

l 1

16

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Ccnsolidnted Statement Of Changes In Financial Position (Thousandsof Dollars)

Union E ectric and Subsidiaries Year 1979 Year 1978 Source of Funds:

From operations-Net income S118,055 5:19,898 Provision for depreciation 76,300 73,477 Provision for deferred taxes on income (net).

27,784 26.097 Provision for deferred investment tax credits (net) 31,909 22,035 Allowance for all funds used during construction.

(58,093)

(31,469) 195,955 210.038 Dividend reinvestment and stock purchase plans.

18,537 15,793 Issue of mortgage bonds.

55,000 55,000 Issue of preferred stock 75,000 Issue of ammon stock.

61,517 58,080 Issue of restructured long-term unsecured notes 75,000 Nuclear fuel lease.

40,139 Net changein deferred charges 1,815 9,068 Additional short-tenn bank loans and commercial paper 67,300 6.550 Total funds provided

$515,263 5429.529 Application of Funds:

Gross plant expenditures.

S394,984 5320,397 Allowance for all funds used during construction (58,093)

(31,469)

Union Electric dividends on preferred stock and common stock 103,290 90,616 Maturityof mortgage bonds.

4,974 Redemption of preferred stock 2,026 26 Restructured long-term unsecured notes 75,000 Nuclear fuel.

4,998 2,895 Net change in working capital (excluding short-term loans and current maturity oflong-term debt) 63,380 (28,494)

Net change in otheriunds.

(296) 558 Total funds applied

$515,263 5429,529 Changes in Components of

" Working Capital:

Cash and deposits S 3,814 5 (1,767)

Receivables, net 31,544 22,626 Fuel.

15,909 9,772 Other materials and supplies 6,151 2.347 Recoverable fuel costs.

(8,277) 3,470 Accounts and wages payable (7,989)

(34,576)

Taxes accrued 31,172 (23,338)

Interest accrued and dividends declared (3,740)

(2,137)

Other.

(5,2(M)

(4.891)

S 63,380 5(28,494)

See Notes to Financial Statements on pages 19, 20 and 21.

17

R:sponsibility For Fin:nci:1 St:t:m:nts The management of Union Electric Company is responsible for the preparation and presentation of the consolidated financial statements included in this Annual Report.The statements. consisting of a balance sheet and a statement of long-term debt and preferred stock and the related statements of income. retained earnings, other paid-in capital, and changes in financial position, have been prepared in accordance with generally accepted accounting principles consistently applied.

Accounting rules used in the preparation of the financial statements conform to the accounting policies prescribed by the federal and state regulatory commissions having jurisdiction. Other financial information included in this Annual Report is consistent, where applicable, with the consolidated financial statements.

The Company maintains a system of internal accounting controls designed to provide reasonable assurance as to the integrity of the financial records and the protection of assets. Qualified personnel are selected and an organization structure is maintained that provides for appropriate functional responsibility.

Written policies and procedures have been developed and are revised as necessary. The Company maintains and supports an extensive program of internal audits with appropriate management follow up.

The financial statements have been examined by Price Waterhouse & Co., independent accountants, and their report appears below. We believe that such report expresses an informed opinion as to whether management's financial statements present fairly, in conformity with generally accepted accounting principles, the Company's financial position and operating results.

The Board of Directors, through its Auditing Committee comprised of outside directors,is '

responsible for ensuring that both management and the independent accountants fulfill their proper respective responsibilities relative to the financial statements. Moreover, the independent accountants have full and free access to meet with the Auditing Committee, with or without management present, to discuss auditing or financial reporting matters.

Report Of Independent Accountants 7.

g OtvE MEMOA!AL DAivt ST louts MtSSOUAi 633C2 g/aterhouse &Co,

" " ' " =

February 14,1980 To the Stockholders and Board of Directors of Union Electric Company In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income, long-term debt and preferred stock, retained earnings, other paid-in capital and changes in financial position present fairly the financial position of Union Electric Company and its subsidiaries at December 31,1979 and 1978, and the results of their operations and the changes in their financial i

position for the years then ended,in conformity with generally accepted accounting principles consistently applied. Our examinations of these statements were made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

18

i.___._

-. ~ _.

_.E Notes To Financial Statements Unkm Electric and Subsidiaries Note 1-Summary of Accounting Policies The Company and its utility subsidiaries are subject to applicable to the liberalized depreciation methods regulation by the Missouri Public Service Commission, described above are accounted for as deferred income lilinois Commerce Commission, Iowa State Commerce taxes and amortized over the estimated useful lives of Commission and the Federal Energy Regulatory the related properties. In addition, the Company Commission of the Department of Energy.The accounting normalizes the income tax effects of the above-mentioned policies of the companies are in accordance with the rate-repair allowance, the debt component of the allowance making practices of the regulatory authorities having for funds used during construction, and taxes capitalized.

jurisdiction and, as such, conform to generally accepted The Company has elected to defer the additior, d accounting principles as applied to regulated public investment tax credit benefits resulting from the Tax utilities. A description of the Company's significant Reduction Act of 1975 with respect to properties in all accounting policies follows.

states, and is amortizing the deferrals over the estimated usefullives of the related properties. The Company is Principles of Consolidation e ntinuing to flow-through to income the 4% investment The consolidated financial statements include the tax credit on Missouri and Iowa properties which are not accounts of the Company and its subsidiaries, all of which qualified progress expenditures under the Tax Reduction are wholly-owned. In the process of consolidation, all Act of 1975.

intercompany investments and accounts and all inter-company sales and profits are eliminated.

Allowance for Funds bed During Construction Property and Plant The Federal Energy Regulatory Commission Uniform The cost of additions to and betterments of units of System of Accounts defines allowance for funds used property and plant is capitalized. Cost includes labor, during construction (AFC), which is a non-cash item, as material, applicable taxes, pensions and certain other the net cost for the period of construction of borrowed items, plus an allowance for funds used during con.

funds used for construction purposes and a reasonable rate on other fund when so used.

struction. Maintenance expenditures and renewals of items not considered to be units of property are charged During 1979 and 1978, the Company recorded AFC at to income as incurred. When units of depreciable various rates, compounded semi-annually. The net rates property are retired, the original cost and removal cost, reflect the Company's policy of deferring the income less salvage, are charged to accumulated depreciation.

tax effect applicable to the borrowed funds portion of the AFC rate. The average annual AFC rates were 9.45%

Depreciation (7.38% net) in 1979, and 8.65% (6.55% net) in 1978.

For financial statement purposes, depreciation is Unbilled Revenue provided over the estimated lives of the various classes of depreciable property by applying composite rates on The Company records on its books the estimated amount of accrued, but unbilled, revenue and also the a straight linc basis. The provisions for depreciation in 1979 and 1978 were equivalent to approximately 2.7%

accrued liability for the related taxes.

of the average depreciable cost.

Recoverable Fuel Costs On September 27,1979 in compliance with an order of Income Taxes the Missoun Suptcme Court, the Missoun Commission for income tax purposes, the Company computes r

t tennmation of the companies' fuel adjustment depreciation using the most liberalized methods I

in ent wnh i

• DS* I.

tbs action, th %ssoun Cgmnu. '.ssign also ordered revj allowed by the Internal Revenue Code. Net depreciable property and plant used in this computation excludes tariffs which mcreased basic electne rates effective costs (primarily repair allowance, the allowance for funds October 1,1979 and effectively replaced the FAC.

used during construction, and certain taxes) which are charged to property and plant for financial statement In recognition of the Missour. Ammission orders, the purposes but are treated as expenses when inc2rred for Company and its utility subsidiaries.a. ~ Nued income tax purposes.

recording deferred (unrecovered) fuel cc. a in the Missouri jurisdiction and, as a result, fuel.m anse of With respect to all property additions after H74 and approximately 514,000,000 was incurred in 1979 which prior additions in Illinois, the reductions in taxes amount otherwise would have been recovered from Missouri customers.

19

_ -_. _. : n -- ' ' l - - -- --

J - _- - -

Not:s To Fin:nci:1 St:t:m:nts (continued)

Union Electric and Subsidiaries Note 3-Retirement Plans In addition, as a result of the Supreme Court decision.

The retirement plans covering employees of the the Company and its utility subsidiaries refunded revenues Company and its subsidiaries are financed through collected under the surcharge authorized by the Missouri irrevocable pension trusts and group annuity contracts.

Commission in 1976, w hich amounted to approximately Such plans were amended during 1979 to provide 57,000,000.

increased benefits. The policy is to fund pension costs accrued. Costs of the retirement plans for the years 1979 and 1978 were 59,490,000 and 59,166,000, respectively, of which approximately 21% was charged to construction e unts. The aforementioned amounts include prior Note 2-Income Tases service costs which are be, g amortized over twenty years.

m Total income tax expense was less than the amount At December 31,1979, the unfunded prior service costs computed by multiplying the income-before-tax by the are estimated to be 543,000,000 and the actuarially statutory Federal income tax rate. The reasons for this

~

computed value of vested benefits exceeded the fund difference for the years in which shown are as follows (valued at market) by approximately $51.000,000.

(in thousands):

1979 1978 Tax computed at statutory rate on book income-before-tax.

$80,221 595,788 Increases (Decreases) in tax from:

Note 4-Compensating Balances and Additional depreciation.

100 (1,560)

Short-Term Borrowings Allowance for equity funds Short-term borrowings of the Company and its used during construction.

(14,570)

(7,940) subsidiaries consist of bank loans (maturities not in Investment tax credits.

(2,410)

(2,231) excess of 270 days) and commercial paper (maturities Capitalized costs.

(654)

(462) generally within 30-45 days). Information regarding Miscellaneous, net.

(6,348)

(3,936) such consolidated short-term borrowings is as follows Total.

356,339 579,659 (in thousands):

1979 1978 Income tax expense components (in thousands):

Amounts outstanding at year end-1979 1978 Bank loans.

S36,600 514,400 Included in operating expenses-Commercial paper.

$60,300

$15,200 Taxes currently payable:

Composite interest Federal.

S(12,406) 524,026 rates at year end-State.

3,691 4,445 Bank loans.

15.0 %

11.5%

Deferred taxes Ccmmercial paper.

14.0%

10.8%

(principally Federal):

Maximum aggregate Liberalized depreciation.

13,307 10,988 amount outstanding Repair allowance.

2,913 6,792 at any month end Allowance for borrowed during the year.

$148,555 5101,540 funds used during Average daily short-construction.

12,997 7,595 term borrowings Other (principally outstanding during capitalized costs).

1,598 3,666 the year-Provisions deferred in Aggregate amount.

$93,545 542,321 prior years.

(3,031)

(2,944)

Weighted com-Deferred investment tax posite interest credits, net.

37,112 25,798 rate.

11.7 %

7.6%

56,181 80,366 The above weighted composite interest rates were Current provision included in other income.

158 (707) calculated by dividing the applicable interest expense for the year by the average daily short-term borrowings Total.

356,339

$79,659 shown above.

20

-._,..~.._.m._.m Note 7-Nuclear Fuel Lease-Capitalized At December 31,1979, the Company and its subsid in accordance with state regulatory commissions' iaries had bank lines of credit aggregating $120,820,000 approvals, the Company is capitalizing its nuclear fuel which make available interim financing at the prime lease executed on November 27,1979. The Company is rate of interest. In support of such lines of credit, the unconditionally obligated to reimburse the lessor for all Company has unwritten agreements with the majority expenditures for nuclear fuel, interest and related costs.

of its lending banks to maintain average compensating Obligations under this nuclear fuel lease arrangement will balances equivalent to 8% of the line of credit as not become current until such time as the nuclear fuel is determined from the bank records. In addition, at engaged in heat production at the Company's Callaway December 31,1979, the Company had commitments from nuclear plant, the first unit of which is scheduled for banks aggregating 585.000,000 (550,000.000 to e5re completion in late 1982.

August 31,1960: 510,000.000 to expire September 12, 19Mh 515,000.000 to expire September 30,1980; and

$10,000,000 to expire October 31,1980). For these commitments the Company pays annual fees which range Note 8-Selected Quarterly Information from 0.25% to 0.375% on the unused portions of the (Unaudited)

C****"'S' in the opinion of the Company, the summarized data as shown under " Selected Quarterly Information" for the years 1979 and 1978 on pages 28 and 29 of this report includes all adjustments, consisting only of normal Note 5-Property Abandonment recurring adjustments, necessary for a fair statement in 1974, the Company cancelled its plans to of the results for the periods.

construct two electric generating units which had been Due to the effect of weather on sales and other factors scheduled for completion in 1979 and 1980. Negotiations which are characteristic of electric utility operations, of cancellation charges on construction contracts were financial results for interim periods are not necessarily completed in 1976 and these costs, when combined indicative of trends for any twelve-month period.

with construction costs related to the cancelled units, aggregated 58,893,000. In accordance with instructions received from regulatory authorities having jurisdiction, this amount and the related income taxes (54,446,000 net of such income taxes)is being amortized over a five-year period beginning January 1,1978.

Note 6-Construction Commitments The Company and its subsidieries are engaged in a construction program under which expenditures of approximately $2.2 billion are anticipated during the next five years, of which expenditures of

$433,000,000 and 5434.000,000 are estimated to be made in 1980 and 1981, respectively.

l This report and the financial statements contained herein are submitted for the information of the stockholders of the Company and are not intended to induce, or for use in connection with, any sale or purchase of any securities of the Company, or any of its subsidiaries.

21

Suppl:m:nt:ry Int:rm:tian en Infl: tion cnd Ch:nging Prices Union Electric and Subsidiaries The unaudited supplementary information on inflation precise measures of the effects of inflation.

and changing prices for the year ended December 31,1979 Generally accepted accounting principles presently is presented in accordance with the requirements of require the presentation of financial statements on a Statement No. 33 " Financial Reporting and Changing historical cost basis. Such a basis ignores changes in the Prices" issued by the Financial Accounting Standards purchasing power of the dollar. Financial reports Board. It is intended to reflect the effects of both general presented in constant dollars report historical costs in inflation as well as the increases in specific prices.

dollars of equal purchasing power as measured by the However, because of the nature of any estimating process, Consumer Price Index for All Urban Consumers (CPI-U).

the results should be viewed as approximate rather than Statement of Income from Operations Adjusted for Changing Prices For the Year Ended December 31,1979 Cons entional Constant Dollar Current Cost llistorical As erage Average 1979 Cost 1979 Dollars 1979 Dollars (Thousands of dollars except per share amounts) i Operating revenues.

5946.797 5946.797

$946.797 Operating expenses:

Fuel and purchased power.

302.182 302.182 302.182 Labor.

I13.545 113.545 113.545 Other operations and maintenance.

123.132 123.132 123.132 Depreciation.

76.300 152.666 160.336 Income taxes.

56.181 56.181 56.181 Taxes other than income taxes.

108.991 108.991 108.991 Total opera % expenses.

780.331 856.697 884.367 Operating income.

166.466 90.100 62.430 Other income and deductions.

32.124 32.124 32.124 Net interest charges.

(80.535)

(80.535) t b0.535)

Income from operations (excluding reduction to net recoserable cost).

5118.055 5 41,689

• 5 14.019 Per common share (after preferred dividend requirements) 51.73 5.28 5(.25)

Increase in specific prices (current cost) of property and plant held during 1979 "

5598.935 Effect of increase in general price level.

(763.M2)

Reduction to net recoserable cost of plant assets (277,344)

(84,967)

Excess of increase in general price level over increase in specific prices after reduction to net recoverable cost (249.6741 Gain from decline in purchasing power of net amounts owe !

192.270 192.270 Net.

5(85.074) 5 (57.4(M)

' Income from operations on a constant dollar basis would have been a loss of $235.655.000 if it reflected the reduction to net recoverable cost of $277,344.000.

j l

"At December 31,1979 the current cost of property, plant and equipment, net of accumulated depreciation was 56.248 968.000, while historical or net recoverable cost was 52.863,581.000: net assets (shareholders equity) at l

net recoverable cost for constant dollar and current cost in average 1979 dollars were $1,139.959.000.

l 22

_A.____..-_.

-- ai n u x A w e e

. ~...

Current costs reflect the changes in specific prices of The rate making practices of the regulatory property and plant f om the date such assets were commissions to which the Company is subject only permit acquired to the present, and differ from constant dollar she recovery of the historical cost of property and plant amounts to the extent that specific prices have increased through depreciation. Therefore, the excess of property more or less rapidly than prices measured by the CPI-U.

and plant in constant dollars or current cost over the 1979 The current cost of property and plant (which includes historical cost is not recoverable and the inflation-land, land rights, intangible plant, plant held for future adjusted amounts must be reduced to net recoverable use and construction work in progress) represents the cost. This reduction is shown in the Statement of estimated cost of currently replacing existing property and Income from Operanons. While the rate making process plant. Current costs were priinarily determined by does not recognize current cost rep!acement of property applying the appropriate index from the Handy-Whitman and plart, the Company believes it will be permitted to Index of Public Utility Construction Costs to the surviving earn a return on the increased cost of its net investment property and plant account balances by vintage years.

after replacement of existing facilities actually occurs.

Fuel inventories are effectively monetary assets and, To properly reflect the economics of rate regulation in accordingly, they, as well as fuel expenses, have not been the Statement of Income from Operations, the reduction restated from their historical value, of property and plant to net recoverable cost must be ffset by the gain from the decline in purchasing power of Depreciation expense applicable to constant dollar and net amounts owed. During a period of inflation, holders current cost property was computed by applying to the of monetary assets suffer a loss of purchasing power indexed property and plant amounts the same straight-line while holders of monetary liabilities experience a gain.

book rates used for historical purposes.

This gain is attributable to the substantial amount of As prescribed in Statement No. 33, income taxes were I ng-term debt, as well as refundable preferred stock and not adjusted in the Statement of Income from Operations other current liabilities which will be repaid with dollars to reflect the effect of changing prices, nor was any other having substantially less purchasmg power tlan the item except depreciation so adjusted.

dollars originally obtained.

Five Year Comparison of Selected Supplementary Financial Data Adjusted for Effects of Changing Prices Years E+d December 31, 1979 1978 1977 1976 1975,

Operating revenues (Thousands of dollars):

As reported.

5946,797 5 903,988 5765.102 5682,456 5 583,455 In average 1979 purchasing power.

946,797 1,006.000 916,000 870,000 787,000 Cash dividends per common share:

As reported.

51.44 51.40

$1.36 51.34 51.28 in average 1979 purchasing power.

1.44 1.56 1.63 1.71 1.73 Market price per share at year end:

Actual.

512 513 %

515 515 %

5133a In average 1979 parchasing power.

I1%

14 %

17 %

19 %

17 %

Average consumer price Index.

217.4 195.4 181.5 170.5 161.2

Cons: lid: tad Summ:ry Of Opcrctions (Thousandsof Dollars)

Union Electric and Subsidiaries 1979 1978 1977 1976 Operating Resenues:

Electric.

$874,719 5844,473 5713.036 5635.000 Gas 60,537 50.150 42,784 38,636 Steam.

10,172 8.149 8,097 7,688 Water.

1,369 1.216 1,185 1,132 Total operating revenues 946,797 903.988 765.102 682,456 Operating Espenses:

Operations Fuel and purchased power.

302,182 256,894 186,954 146,071 Other.

165,493 143,482 135,135 118.110 467.675 400,376 322.0h9 264,181 hiaintenance.

71,184 68.012 61,191 54.159 Depreciation.

76,300 73,477 68.814 63,062 Income taxes.

56,181 80,366 58,533 50.896 Other taxes.

108,991 105,525 95.336 86,044 Total operating expenses 780,331 727,756 605.963 518.342 Operating Income 166,466 176,232 159.139 IM.ll4 Other Income:

Allowance for funds used during construction All funds (prior to January 1,1977) 12,379 Equity funds (after December 31,1976).

31,245 15,980 8,301 Niiscellaneous, net.

879 2.896 1,389 (2,554)

Total other income 32.124 18,876 9.690 9.825 Income Hefore Interest and Other Items 198.590 195.108 168.829 173,939 Interest and Other Items:

Interest on debt.

106 995 90,309 83.624 78.136 Allowance for borrowed funds used during construction (after December 31,1976).

126,848)

(15,489)

(10,721)

Preferred dividends of subsidiaries.

388 390 391 393 Total interest and other items 80,535 75,210 73,294 78,529 Net Income 118,055 119,898 95,535 95,410 i

Preferred Disidend Requirements of Company 26,948 23.040 20,367 19.M0 Earnings on Common Stock S 91,107 5 96.858 5 75,168 5 75.770 Earnings per Share of Common Stock (based on average shares outstanding).

$1.73 52.01 51.67 51.86 Disidends Declared per Share of Common Stock.

S1.44 51.40 51.36 51.34 Average Number of Common i

Shares Outstanding.

52,577,432 48,260.596 45,110,245 40,795.152 Return on Aserage Common l

Stock Equity.

10.71 %

12.61 %

10.68 %

12.19 %

Ratio of Earnings to Fised Chary (a).

2.61 3.18 2.81 2.79 (a) Earnings consist of net income plus fixed charges (interest on debt. preferred dividends of subsidiaries and an appropriate amount of rentals charged to operating expenses) and income tases, Note: See pages 26 and 27for Management' Analysis of Operations covering the period since 1977.

s y

_.n.~ ~..

-,-~ ~~- - - - =

,.-- ~

1975 1974 1973 1972 1971 1970 1969 5542.977 5443.044 5399.161 5357.606 5325,964 5302.687 5271.217 31.388 17,877 14.527 13.679 11,796 10.735 9.474 8.136 7,735 4.261 3.903 3.148 3.306 3.503 954 583,455 468,656 417,949 375.188 340.908 316.728 2b4.194 137.078 116,229 78.245 90,287 72,540 54.800 46.342 105.597 75.271 76.273 66.979 61.595 57.456 53.528 242.675 191.500 154.518 157,266 134,135 112,256 99.870 39,495 41.913 35.039 31,564 25,363 22.462 22.330 56.871 53.016 49.811 44,784 43.336 38.093 34.749 29.175 3.573 6.850 560 4.535 19.200 21.655 77,853 65.653 60.471 52,863 47.105 40,452 35.866 446.569 355.655 306.689 287.037 254.474 232.463 214.470 136.866 113.001 111.260 88.151 86.434 84.265 69.724 23.107 13.696 10,521 13.377 13.457 14.092 10.084 1,403 1.154 99 578 494 (48)

(4) 24.510 14.850 10,620 13,955 13.951 14.044 10.080 161.396 127,851 121.880 102,106 100.385 98.309 79.8N 74.967 67,823 55.471 48.409 43.411 38.189 31.968 394 242 242 242 242 242 242 75.361 68 065 54,713 48.651 43.653 38,431 32.210 86.035 59.786 67,167 53,455 56.732 59.878 47.594 19.640 15.700 15.288 11.312 10.074 7.796 5.251 5 66.395 5 44.086 5 51.879 5 42.143 5 46.658 5 52.082 5 42.343 51,78 51.37 51.62 51.35 51.61 51.92 51.60 51.28 51.28 51.28 51.28 51.28 51.26 51.20 37,240.134 32,187.113 31,946.291 31.249.023 29.045.701 27.162.2N 26.440.670 11.98 %

8.94 %

10.72%

8.89 %

11.04 %

13.63".

12.07 %

2.51 1.92 2.33 2.10 2.39 3.03 3.12 25

Management's Analysis Of Operations Union Eiectric and Subsidiaries The principal fluctuations in revenues and major categories of income and expense during the past two years are discussed below.

Operating Revenues Operating Expenses The principal factors causing increases in revenues The changes in operating expenses were as follows:

were as follows:

Electric Variation from I'uel and Purchased Power Variation from Prior Year Prior Year 1979 1978 1979 1978 (Mdlions of Dollars)

(Millions of Dollars)

Rate increases.

$14.4 5 43.2 Fuel:

Revenues resulting from application Variation in KWH generation.

S

.9 5(4.9 of fuel cost adjustment riders.

12.5 67.9 Price increases.

25.3 73.7 KWH sales (excluding effect of the Discontinuance of recording factors listed above).

2.2 13.0 deferred fuel costs.

14.0 hiunicipallicense taxes.

1.1 7.3 Generation and fuel efficiencies.

(10.8) 2.4

$30.2 5131.4 Purchased and interchange power.

15.9 (1.3)

S45.3 569.9 See Recoverable Fuel Costs under Note 1 of the Notes to Financial Statements for information with respect to See Recoverable Fuel Costs under Note 1 of the Notes the termination, effective October 1.1979.of fuel to Financial Statements for information with respect to adjustment clauses in hiissouri.

the discontinuance of recording deferred fuel costs in connection with the termination of hiissouri fuel Gas Variation from adjustment clauses.

Prior Year 1979 1978 Other Operations Variation from Prior Year iMillions of Dollarsi Rate increases.

S 1.1

$ 1.0 1979 1978 Purchased gas adjustment riders.

7.7 2.9 tMillions of Dollars) h1CF sales (excluding effect of Normal increases due to growth.

the factors listed above).

1.6 3.5 inflation and wage increases.

S 8.8 57.0

$10.4 57.4 Settlement of a lawsuit against Westinghouse Electric Corporation based on generator failures at the Company's Labadie Plant in 1971 and 1972.

3.8 (3.8)

Increases due primarily to higher cost of purchased gas.

9.4 5.1

$22.0

$8.3 i

i i

26

.a

.-,- ~. -_

..- n.- ------

--a-.

4 Operating Expenses (continued)

Interest and Other Items The changes in interest and other items and in dividends on preferred shares were as follows:

Maintenance Variation from Variation from Prior Year Prior Year 1979 1978 1979 1978 (Millions of Dollars) iMillions of Dollars)

Normal increas-s principally due to Interest on debt.

$16.7 56.7 higher costs of repair parts and Allowance for borrowed funds used wage increases.

$3.2 56.8 during construction (AFC).

(11.4)

(4.8)

Preferred dividends of Company.

3.9 2.7 Depreciation s 9.2 54.6 The variations in depreciation resulted from increases in depreciable property. No changes were made in The increases in interest and preferred dividends were depreciation rates during the periods.

due to the issuance of securities to finance the construction program and higher interest and preferred dividend rates Income Taxes on certain of such securities. The portion of AFC related For information concerning income taxes refer to to borrowed funds has been classified as a reduction of Notes I and 2 under Notes to Financial Statements.

Interest and Other items (see Other Income for the portion of AFC related to equity funds).

Other Taxes These increases generally reflect higher payroll taxes.

and increased gross receipts taxes on greater revenues.

Other income The changes in other income were as follows:

Variation from Prior Year 1979 1978 (Millions of Dollars)

Allowance for equity funds used during construction (AFC).

$15.3

$7.7 Miscellaneous. net..

12.1) 1.5 813.2 59.2 The portion of AFC related to equity funds is included under Other Income and the borrowed funds portion is recorded as a reduction of interest as shown under Interest cnd Other Items.

27

_.__..n__._.__.

Capital Stock Informatiou Union Electric Company 1979 Calendar December 31 September 30 Preferred Stock Price Ranges Stated value of shares outstanding.

(Iligh and Lowh

$100 per share-57.44 Series (1)

$70 - 64

$77H - 71 56.40 Series (l) 61H - SOM 64 59 %

54.56 Series (1) 42 - 36 45M - 42 54.50 Series (1) 43 - 33 45 - 41 54.00 Series (1) 39H - 31%

41 - 33%

53.70 Series (2) and (4) 53.50 Series (1) 33M - 29 38 % 32 %

Stated value of shares outstanding.

597.50 per share-58.00 Series of 1971 (1) 74 % - 61 %

78 - 74 h Stated value of shares outstanding, 592.25 per share-58.00 Series of 1969 (1) and (3).

75H - 61H 79 - 73%

Stated value of shares outstanding, 550.00 per share-54.60 Series (4)

(issued in 1979)

Stated value of shares outstanding.

525.00 per share-

$2.72 Series (1) 25 % - 23 %

27H - 25%

$2.125 Series (1).

20M - 16%

22% - 20%

Preferred Stock Disidends:

Composite rate.

1.%5%

1.965%

Total requirements (in millions).

$7.5

$7.1 Preferred Shareholders at Year.End 21,618 Co.nmon Stock Price Ranges l

(Iligh and Low)(1)

S13 % 11 S14% - 13%

Common Stock Dividends:

Per share.

36c 36C Total payments (in millions).

$19.1 S18.9 Common Shareholders at Year.End 159,208 (1) Based on transactions r corded on the New York Stock Exchange; all other Series are traded on the Over the Counter Market.

(2) Based on asked and bid prices recorded on the Over the Counter Market.

Selected Quarterly Information Union Electric and Subsidiaries Operating Resenues (in thousands)

S226,496 S261,903 Operating Income (in thousands)

$ 37,053

$ 49,993 Net income (in thousands)

S 25,331 S 38,760 Earnings on Common Stock (in thousands)

S 17,874 S 31,275 Earnings per Common Share (a) 80.33 80.60 (a) Based on average shares outstanding.

28

.--....--...~-w..

..u...

......... ~.... - ~... ~.

a Quarters Ended 1978 Calendar Quarters Ended June 30 March 31 December 31 September 30 June 30 March 31

$78 - 75% $76 - 74 582 % - 75 %

582 - 78 581 % - 797/8 584 - 81 62% - 59 65 - 62 70 - 64 71 - 66 70 - 66 72 % - 68 %

44 - 41 %

46h - 44%

49 - 45%

47 % - 46 %

51 % - 49 %

52 - 51 4414 40 4514-41 49 % - 397,'s 4814 - 46 49 - 4514 51 - 47 40 % - 37 %

41 - 37%

41 - 37 43 - 41 44 % - 40 46 % - 43 %

34 31M 35 - 33%

37 % - 32 %

38 - 35%

38 % - 35 %

40 - 36%

78 - 72%

79 - 74%

86 - 75 85 - 80%

85 % - 82 %

89 - 83 79 % - 72 79 - 75 (4)

(4)

(4)

(4) 27 25 %

27 % - 25 %

28 % - 25 %

28 % - 26 %

28 % - 22 %

291/8 - 27 %

22M - 20%

21 % - 20 %

23 % - 20 %

24 % - 21 %

23 % - 211/8 24 % - 2238 1.887%

1.887%

1.887 %

1.887 %

1.887%

1.887 %

$5.8

$5.8 55.8 55.8 55.8 55.8 23,(M2

$14 - 13k% $1434 - 131%

515 - 13tA 5153A - 131,4 5143A-13th

$15% - 1414 36c 36c 36c 36c 34c 34c I

$18.8 S18.7 518.6 517.0

$16.0 515.9 157,956 (3) Accepted for listing on the New York Stock Exchange on December 14,1978.

(4) No asked or bid prices or transactions recorded.

$218,142 S240,256 5203,494 5266,750 5221,107 5212,637 S 37,470 S 41,950 5 36,428 5 60,217 5 42,060 5 37,527 S 24,383 S 29,581 5 24,070 5 46,156 5 27,514 5 22,158 S 18,137 S 23,821 5 18,310 5 40,396 5 21.754 5 16.398 80.35

$0.46 50.35 50.85 50.46 50.35 29

s Operating Statistics Union Electric and Subsidiaries 1979 1978 1977 1976 1975 1969 Electric Operating Resenues (000 Omitted):

Residential.

S333,251 5331,128 5283,124 5248,784 5220.174 5108.855 Commercial.

265,278 253,279 219.806 195,568 162,079 80.691 Indust rial.

221,617 209,440 169.834 154.539 127,939 M.636 Other electric utilities.

34,185 31,565 24,(M0 21,432 19.812 10.738 h1iscellaneous 20,388 19.GD 16.232 14.677 12.973 6.297 Total S874,719 5844,473 5713.036 5635.000 5542.977 5271,217 Percent of total:

Residential.

38.1%

39.2%

39.7 %

39.2%

40.6%

40.1%

l Commercial.

30.3 30.0 30.8 30.8 29.8 29.8 Indust rial.

25.3 24.8 23.8 24.3 23.6 23.8 Other electric utilities.

3.9 3.7 3.4 3.4 3.6 4.0 Aliscellaneous 2.4 2.3 2.3 2.3 2.4 2.3 Total 100.0 %

100.0 %

100.0 %

100.0 %

100.0 %

100.0*s Kilowatt flour Sales 1000.000 0mitted):

Residential.

7,546 7.670 7.389 6,625 6.897 4.659 Commercial.

6,463 6.332 6.331 5.823 5,554 4,639 Industrial.

7,858 7.738 7,656 7.221 6.855 5,913 Other electric utilities.

1,341 1.317 1.263 1.171 1.222 1,166 Aliscellaneous.

481 460 442 519 506 332 Total 23.689 23,517 23.081 21.359 20.944 16.709 Percent of total:

Residential.

31.8 %

32.6%

32.0%

31.0 %

32.5%

27.9 %

Ccmmercial.

27.3 26.9 27.4 27.3 26.5 27.8 Industrial.

33.2 32.9 33.2 33.8 32.7 35.3 Other electric utilities.

5.7 5.6 5.5 5.5 5.9 7.0 hiiscellaneous.

2.0 2.0 1.9 2.4 2.4 2.0 l

Total 100.0 %

100.0 %

100.0 %

100.0 %

100.0%

100.0 %

Electric Customers (End of year):

Residential.

853,908 845.074 832,251 821.564 810,702 715,769 Commercial.

101,355 99.751 99,105 45,248 93.848 76,927 Industrial.

5,334 5,348 5.225 5,459 5,368 4.844 Electric utilities.

24 24 24 24 25 21 Other.

2,917 2.753 2,312 1,472 1.350 1.001 Total

% 3,538 952.950 938.917 923,767 911.293 798,562 Residential Electric Customer Data ( Average):

Kilowatt hours used.

8,893 9,167 8.956 8.114 8.459 6.561 Annual bill.

$392.74 5395.74 5343.16 53(M.71 5273.62 5153.28 Revenue per kilowatt hour-cents.

4.42 4.32 3.83 3.76 3.23 2.34 t

.- - -,.. ~ - ~. - -..... -..

..... ~

G:n:r: tion Strtistics Union Electric and Subsidiaries 1979 1978 1977 1976 1975 1969 Kilowatt flour Output t000,000 Omitted):

Steam generation-Rush Island.

5,821 6,141 5,926 2,603 Labadie.

12,094 12.044 11,598 12,434 12,763 Sioux 4,702 3,831 4,407 4,207 4,460 4.919 Meramec.

2,855 3,260 3,732 4,135 4,108 5.471 Other (net).

73 196 195 523 420 2.580 Total steam.

25,545 25,472 25.858 23,902 21,751 12,970 liydro generation-Keokuk.

881 913 770 633 861 834 Osage.

436 407 301 268 624 775 Total hydro.

1,317 1,320 1,071 901 1,485 1,609 Purchased and other (net)

(1,123)

(1.246)

(1,860)

(1,498)

(457) 3,403 Total output 25,739 25,546 25.069 23,305 22,779 17,982 Less line losses, etc.

2,050 2,029 1,988 1,946 1.835 1,273 Kilowatt hour sales.

23,689 23,517 23,081 21.359 20,944 16,709 Output (in % of total):

Steam generation.

99.2 %

99.7 %

103.1 %

102.6%

95.5%

72.1%

llydro generation.

5.1 5.2 4.3 3.9 6.5 9.0 Purchased and other.

(4.3)

(4.9)

(7.4)

(6.5)

(2.0) 18.9 Total 100.0 %

100.0 %

100.0%

100.0 %

100.0 %

100.0%

Thermal Economy of Steam Plants (IlTU per KWil generated).

10,287 10,362 10,329 10,397 10,211 10,722 Fuel Cost (Cents per million BTU burned).

123.772 115.948 85.998 71.278 62.571 23.004 System Capability at Time of Peak, including Net of Firm Purchase and Sale of Capacity (Kilowatts).

7,739,000 6,873,000 6,891,000 6,913,000 6,474,000 4,611,000 System Generating Capability at Year End (Kilowatts).

6,964,000 6,850,000 6,673,000 6,361.000 5,891,000 3,720,000 System Gross Instantaneous Peak Demand (Kilowatts).

5,846,000 5,813,000 5,837,000 5,582,000 5,363,000 4.078,000 System Net Integrated flour Peal Demand (Kilowatts).

5,609,000 5,528,000 5,525,000 5,284,000 5,081,000 3.862.000 Load Factor (Net Integrated Hour) 52.4%

52.7%

51.8 %

50.2%

51.2%

53.2%

Major Generating Units Installed (Kilowatts):

1970-Labadie.

.600,000 1971 -Labadie.

.600,000 1972-Labadie.

.600,000 1973-Labadie.

.600,000 1976-Rush Island.

.600,000 1977-Rush Island.

.600,000 31

Property And Plant (Thousands of Dollars)

Union Electric and Subsidiaries December 31, 1979 1978 1977 1976 197f Property and Plant:

Electric.

S3,549,975 53,169,088 52,860,318 52.650,958 52,483,323 Gas 63,700 61,715 59,715 58,275 56.934 Steam.

9,877 10,039 10,080 9,891 10.704 Water.

7,227 6,767 5,734 4.493 4.218 Other.

18,949 18,913 17,998 18,820 17,115 Total S3,649,728 53,266,522 52,953,845 52,742,437 52.572,294 Electric Plant:

Pnxiuctien Steam.

$1,185,979 51,182,407 51,178,235 51.N8,147 5 841,772 Hydraulic.

59,675 59,614 59,403 59.220 59,205 Pumped storage.

45,855 45,856 45,854 45,b61 45,b61 Internal combustion.

42,299 42,287 22.249 19,476 18.528 Transmission and distribution.

1,301,054 1,238,093 1,183,134 1,133,955 1.067,119 General.

89,155 83.345 78,448 73,817 67,542 Electrie plant in service.

2,727,017 2,651,602 2.567.323 2.380,476 2.100,027 Constrrction work in progress.

822,958 517.486 292,995 270.482 383.296 Total S3,549,975 53,169,088 52.860.318 52.650.958 52,483,323 Accumulated Electric Depreciation:

Amount.

$752,819 5693,428 5632.027 5591,661 5555,9M Percent of depreciable property and plant.

27.8 %

26.3 %

24.8 %

25.1%

26.7%

Annual depreciation rate 2.7%

2.7%

2.7%

2.7%

2.7%

1979 1978 1977 1976 1975 Gross Plant Espenditures.

S394,984 5320,397 5227.584 5186.305 5167,044 Property Retirements.

S 16,776 5 10,615 5 29,025 5 29.725 5 8.940 Construction Forecast (Thousandsof Dollars)

Union Electric and Subsidiaries 1980 1981 1982 1983 1984 Construction Expenditures:

Callaway nuclear plant.

5249.683 5236.575 5271,859 5247.694 5271.665 All other facilities.

183,412 197.844 190.083 166.0N 172.101 Total 5433,095 5434,419 5461,942 5413.69h 5443.769 32

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Ek gu Union Electric Company

.a y Post Office Box 149

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r 5t. Louis. MO 63166

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i Statement of Policy We are a business enterprise -

dependent for success on the high quality and fair price of our senice: on the skill.

e courtesy. and lo: alty of our employees on the confidence e

of our investors: and on the 4

ability of our management 7

to forecast and provide for the electric power require-ments of our area.

In the conduct of our

[

business, we w ill render sen ice of the highest quality to our

- - - - - ~

i c ustomers - prom ptly, courteously md efficiently -

" * * " ' " " * ~

• at the lowest prices consistent with paying fair wages and affordmg job satisfaction and security to our employees:

providing modern fatilities for our customers' expanding needs for electric service; and paying a fair return to our investors who have provided the funds to make such service possible.

As a prisate enterprise l

entrusted with an essential i

public service, we recognize

~

our civic responsibility in the communities we serve. We shall strive to advance the growth and welfare of these communities and shall participate in civic activities which fulfill that goal..for we believe this is both good citizenship and good business.