ML19326D093
| ML19326D093 | |
| Person / Time | |
|---|---|
| Site: | Midland |
| Issue date: | 11/10/1975 |
| From: | CONSUMERS ENERGY CO. (FORMERLY CONSUMERS POWER CO.) |
| To: | |
| Shared Package | |
| ML19326D092 | List: |
| References | |
| NUDOCS 8006060610 | |
| Download: ML19326D093 (29) | |
Text
9 Q _n
/. Rego:dcry Doc!<et File CONSUMERS POWER COMPA!E Quarterly Report for the Third Quarter of 1975
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- , , u :e.3 I O Item 1 of the September 13, 1974 Request "Significant changes in Consumers Power Company's financial status, including operating costs, construction costs, and revenues."
Response
Information relating to this item is contained in the Company's STATEMENT OF INCOME and STATEMENT OF RETAINED EARNINGS and BALANCE SHEET for the twelve months ended September 30, 1975 and the NOTES TO FINANCIAL STATEMENTS. Copies of these documents are attached hereto as Appendix A.
Item 2 of the September 13, 1974 Request
" Progress reports on new capital raised and all rate increases granted your company."
Response
With respect to new capital raised, on July 10, 1975, ,
Consumers Power Company sold and delivered $75,000,000 principal amount of First Mortgage Bonds, 11-1/2% Series due 2000, realizing $73,950,000 after underwriting comissions, i and $75,000,000 principal amount of First Mortgage Bonds, 9-3/4 Series due 1980, realizing $74,325,000 after under-writing connissions.
With respect to rate increases, on August 29, 1975 l the Federal Power Comission authorf zed the Company, subject to refund, to increase its electric rates, effective 8006060 l0 l
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September 30,1975,by$5,065,720 annually, for its l
electric wholesale customers. A copy of this order is attached as Appendix B. i I
Item 3 of the September 13, 1974 Request 1
" Construction expenditures and sources of construction i funds on a quarterly basis during the calendar year 1975."
Response
Information relating to this item is contained in the STATEME2C OF SOURCE OF FUNDS FOR GROSS PROPERTY ADDITIONS for l l
the three months ended September 30, 1975 A copy of this document is attached hereto as Appendix C.
Remainder of the September 13, 1974 Request "In addition you should notify us of any changes in Consumers Power Company's quality control and quality assurance activities associated with the construction of the Midlar d Plant . "
Response
During the third quarter of 1975, Consumers Power Compan/'s quality control and qual.ity assurance activities remained uniha" Bed. As previously reported by the Company on March 17 and May 19, 1975, the curtai3 ment of construction activities at the Midland Plant caused Bechtel to make various manpower adjustments. During the third quarter of 1975, however, Bechtel was notified that Consumers Power Company intends to escalate construction activities at the Midland Plant, beginning January 1,1975 As a result of this escalation, it will be necessary for Bechtel to make
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various further manpower adjustments. - Such manpower adjustments will not, however, detract from the quality or scope of the QC or QA effort at Midland.
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3 CONStMERS POWER COMPANY M BAIANCE SHEFF SEPTD(BER 30, 1975 1
ASSETS S T O C K H O L D E R S' INVESTMENT AND LIABILITIES UTILITY P! ANT: CAPITALIZATION:
At original cost - Comanon stockholders' equity -
Plant in service and held for future use - Ccommon stock - $10 par value, authorized %2,500,000 Electric $2,109,665,732 shares, outstanding 26,903,786 shares (Notes 6 & 8) $ 269,037,860 cas 974,848,222 Capital in excess of par value (Note 8) 249,125,216 8 team 3,303,585 Comanon to all departmants 42,953,0b8 Retained earnings (Note 7) 253,687,634
$3.130,770,587 $ 771,850,710 g Leas t ' Provision for accrued depreciation 757,490.9f/> Less: Capital stock expense 11,502,146
$2.373,279,621 Total consson stockholders' equity $ 760,348,564 Construction work in progress (Notes 5 & 6) 461,2b9,298
$2.834,528,919 Preferred stock, cumulative, $100 par value, authorized 5,000,000 shares (Notes 6 & 8) $ 346,733,800 OTMBt PHYSICAL PROPERTY: Preference stock, cumulative, $1 par value, authorized At cost or less $ 3,450,836 5,000,000 shares (Note 8) 1,432,513 Less: Accumulated provision for accrued Capital in excess of par value of preference stock 70,193,137 depreciation and soortization 263,831 Total preferred and preference stock $ 418.359.h50
$ 3,187,005 Total stockholders' investment $1,170,706,014 INVEST 9ENTS:
Wholly-owned subsidiaries long-term debt (Notes 6 & 9) 1,b06,159,353 Michigan cas Storage Company (Note 1) $ 21,044,628 Northern Michigan Exploration Ccg any (Notes 1 & 15) 27,753,087 Total Capitalization $2,584,867,367 Other, at cost or less 1,119,406 CURRENT LIABILITIES:
$ 49,917,121 Current obligations Expected To Be Refinanced: (Note 6)
Notes payet,le (Average interest rate of 9.11%) $ 14,500,000
, CURRENT ASSETS: First mortgage bonds, 8-3/45 series due 1976 60,000,000
{ 2b,103,184 Cash (Note 6) $
Accounts receivable - less reserve of $1,180,603 66,478,012 $ 7b,500,000 Accrued utility revenue (Note 2) 47,886,000 Materials and supplies at average cost OTHER CURRENT LIABILITIES:
Fuel stock $6,441,577 Bankers' acceptance drafts 10,400,000 Other 33,048,934 Current maturities and sinking fund on long-term debt (Note 7) 684,283 Ces in underground storage, at average cost 99,781,222 Accounts payable (includes $3,MO,015 due to subsidiaries) 57,000,698 Property taxes - future period net 8,310,864 Dividende declared 8,082,096 Prepayments and other 1,818,131 Accrued tares 118.073,600 Accrued interest 30,266,843
$ 337,867,924 other 41,090.784
$ 265,598,304 Other preliminary construction costs of cancelled DEFERRED CREDITS AND RE'ERVIS:
projects being amortized (Note 5) 5,659,302 g
$ Deferred income taxes Note 13) '
Cther deferred debits 12,935,293 Investment tax credit Note 13) 6b,'815*h00 +
Other (Note 11) 33'191,361 0 I '59k'595
$ 319,129,893
. $3,2hh,09 W h u,244,o95,564 Tha accompanying noteen are an integral part of this statement.
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A-2 CONSUMERS POWER COMPANY STATEMENT OF INCOME FOR THE 12 M017 DIS ENDED SEPID4BER 30,1975 Operating Revenue: (Notes 1 & 2)
Electric $ 748,523,504 Gas 569,702,494 Steam 1,930,8 %
Total operating revenue $1,320,156,854 Operating Expenses and Taxes:
Operation -
Purchased and interchange puwer $ 117,292,783 Fuel consumed in electric generation 243,093,329 Cost of gas sold 367,530,010 Other 168,435,159 Total operation $ 896,351,281 Maintenance 61,360, % 9 Depreciation and amortization 88,339,314 General taxes 66,203,419 Income taya- ...ote 13) 52,020,292 Total operating expenses and taxes $1,164,275,275 Net operating income $ 155,881,579 Other Income:
Allowance for funds used during construction (Notes 1 & 14) $ 25,667,338 Income of subsidiaries (Notes 1 & 14) 9,051,686 Other, net 4,468,306 Net other income $ 39,187,330 Interest Charges:
Interest on long-term debt $ 98,191,829 Other interest charges 8,303,736 Total interest charges Ji 106,495,565 Net income :; 88,573,344 Dividends on Preferred Stock 24,098,253 Dividends on Preference Stock 4,997,720 Net income after dividends on preferred and preference stock $ 59,477,371 Earnings Per Share of Common Stock Based on 26,422,569 Average Shares Outstanding - Assuming No Dilution $2.25 Earnings Per Share of Common Stock Based on 29,623,674 Average Shares Outstanding - Assuming Full Dilution $2.18 The accompanying notes are an integral part of this statement.
A-3 CONSUMERS POWER COMPANY STATEMENT OF RETAINED EARNINGS FOR 12 MONTHS ENDING SEPIEMBER 30, 1975 RETAINED EARNINGS - September 30, 1974 as reported $218,836,170 Restatement for income tax effect of gain on reacquisition of long-term debt prior to September 30, 1974 (Note 4) 4,038,993 Restatement for unbilled revenue at September 30, 1974 (Note 2) 24,135,489 REIAINED EARNINGS - Beginning of period restated $247,010,652 ADD Net income after dividends on preferred and preference stock 59,477,371
$306,488,023 DEDUCT Cash dividends on common stock 52,800,389 RETAINED EARNINGS - End of period (Note 7) $253,687,634 The accompanying notes are an integral part of this statement, i
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Pa68 1 of 11 NOTES TO FINANCIAL STATD4ENTS (1) SIGNIFICANT ACCOUNTING POLICIES Effective January 1, 1973, the Company adopted the equity method of accounting for the investment in its wholly-owned subsidiaries, Michigan Gas Storage Company and Northern Michigan Exploration Company, pursuant to Federal Power Commission Order No h69 Under this method of accounting the Company's interest in the earnings of the subsidiaries is reflected currently in earnings and in the carrying value of the investments.
The Company provides depreciation on the basis of straight-line rates approved by the Michigan Public Service Commission (MPSC). Composite depreciation rates were approximately 2.82% for electric property and 3.h2% for gas property for the 12 months ended September 30, 1975 Effective January 1, 197h, the Company changed its method of accounting to accrue revenues for service rendered but not billed at month end.
Prior to January 1, 197h, operating revenue was recognized at the time of monthly billings on a cycle basis. (See Note 2.)
The Company makes annual contributions to the pension plan sufficient to cover current service costs, interest on unfunded prior service costs and amortization of prior service costs. (See Note 12.)
Allowance for funds used during construction, included in other income, represents the estimated cost of funds applicable to utility plant in process of construction capitalized as a component of the cost of utility plant. Under established regulatory practices, the Company is permitted to earn a return on the capitalized cost of such funds and to recover the same in the rates charged for utility services.
(See Note lh.)
(2) CHANGE IN ACCOUNTING METHOD Prior to 197h, the Company followed the policy of not recording revenues relating to service rendered but not billed at the end of the account-ing period since'the changes in such unrecorded amounts from year to year were generally not significant. Due to increases in costs and rate levels, the disparity between costs and revenues as a result of this method of accounting has increased. Accordingly, effective January 1, 197h, the Company changed to a preferable method of ac-counting to accrue the amount of unbilled revenues for services pro-vided to the month end to more closely match costs and revenues. The cur .ative effect of the change on periods prior to October 1, 1974 amounted to $2h,135,h89 after income taxes.
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(3) EARNINGS PER SHARE Earnings per share of Common Stock assuming no dilution gives effect to the average shares of Common Stock actually outstanding during the twelve months ended September 30, 1975 Earnings per share of Common Stock assuming full dilution give the effect on an average basis of the assumed conversion of the Company's $6,00 and $5 50 '
convertible Preference Stock from the time such stock was issued in August 197h and June 1975, respectively, and the elimination of divi- -
dends thereon in the amount of $h,997,720 for the twelve months ended September 30, 1975 (h) RESTATEMENTS Retained earnings at September 30,197h have been restated to eliminate
$h,038,993 in deferred income taxes provided in the years 1970, 1971 and 1972 applicable to the gain on reacquisition of long-term debt since such deferred taxes were not recognized by the Michigan Public Service Commission (MPSC) in setting the Company's rates for utility service and such deferred tax accounting has not been authorized by the MPSC as required by Federal Power Commission Order No 50h, dated February 11, 197h.
(5) NUCLEAR GENERATING PLANTS The Palisades Nuclear Plant was shut down in August 1973 for repairs.
In October 197h, the Plant resumed limited operation pursuant to an authorization to carry out a program to remove chemical impurities from the Plant's steam generators. While such program was being conducted, other operating problems required further shutdown to permit repairs. On April 2, 1975, the Palisades Plant was returned to operation subject to a requirement to shut down for steam gener-ator tube inspection after a limited period of operation, which requirement has subsequently been amended. It is estimated that the Plant will be removed from service for such purposg and for refueling, in late December 1975 In August 197h, the Company filed suit in the US District Court for the Western District of Michigan seeking not less than $300 million in past and future damages, together with equitable relief, from suppliers of components and design work for the Plant. The suit is still pending.
Construction work in progress includes $1h9,630,000 at September 30, 1975 related to the Midland Nuclear Plant. The issuance of con-struction permits by the Atomic Energy C maission (AIC), now Nuclear Regulatory Commission (NRC), in December 1972 vae upheld by an Appeal Board of the AEC in Ma- 1973 but has been appealed to the US Court of i
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Appeals for the District of Columb?a Circuit. Construction, delayed since 1970, was resumed in June 1973. In December 1973, the AEC issued an order for the Company to show cause why all construction activity should not be suspended pending a showing that the Company is in com-oliance with the AEC's quality assurance regulations and that there is reasonable assurance that such compliance vill continue throughout the construction process. Following hearings, an Atomic Safety and Licens-ing Board of the AEC on September 25, 197h determined the issues favor-ably to the Co=pany's position. The Board's decision was affirmed by an Atomic Safety and Licensing Appeal Board on July 30, 1975 except on a point of law as to which the Company has requested reconsideration.
The matter is pending.
The Company has canceled plans to construct a two-unit, 2,300 megawatt nuclear power plant near Quanicassee, Michigan, which was scheduled for commercial operation in 1983 and 1985 The decision to cancel the $1.h billion project was based upon the currently prevailing market conditions for utility securities, the Company's inadequate earnings, and the need for raising capital for other construction projects during the lengthy construction period required to build the Quanicassee Plant. (See Note 6.) Total costs (excluding land costs and expenditures which may have value in connection with the future use of the site for a generating plant) consisting of engi-neering, licensing expenses and other preliminary work having no salvageable value and cancellation charges amount to approxtnately
$12,600,000. The Company has been authorised by the Michigan Public Service Commission to amortise such costs net of related income taxes to operations over a period of ten years.
(6) CONSTRUCTION PROGRAM AND FINANCING RESTRICTIONS Difficulty in financing the Company's planned construction program, new estimates of increased costs, and a reduction in projected load growth have forced the Company to substantially reduce its five-year construction program. After giving effect to reductions in the construction program, capital expenditures in 1975 are cur-rently estimated to total $231 million and total construction ex-penditures through 1979 are presently estimated to approximate
$2.h billion. The reduction in the Company's planned construction progi m has resulted in the cancellation of the Quanicassee Nuclear Plant as discussed in Note 5 and the curtailment of construction activity at other electric generating plants which will postpone their planned completion dates from one to three years. The Company expects these reductions may have an adverse effect on the adequacy and reliability of energy supplies in the future. Substantial com-mitments have been made with respect to the construction program in future years.
A-7 Page h of 11 NOTES TO FINANCIAL STATDENTS (Contd)
In order to finance the 1975 construction program and other current obli-gations expected to be refinanced of $7h,500,000, it will be necessary for the Company to sell substantial additional securities, including the issuance of notes payable to banks, the amounts, timing and nature of which L ot yet been determined.
The earnings coverage provisions of the Indenture covering the Company's first mortgage bonds require for the issuance of additional mortgage bonds, except for certain refunding purposes, minimus earnings cover-age, before income taxes, of at least two times pro forma annual inter-est charges on bonds and other indebtedness secured by liens of prior or equal rank. On the basis of this formula, the pro forma coverage for the twelve months ended September 30, 1975 (computed including allow-ance for fundr ' sed during construction applicable to electric construc-tion, which, in the opinion of the Company's General Counsel, is properly so included) afwer giving effect to First Mortgage Bonds (First Serial Series of 1975 and Second Serial Series of 1975) issued in connection with ?.ev Installment Sales Contracts in connection with Pollution Control Revenue Bonds being issued by the Charter Township of Hampton and the Township of Port Sheldon, Michigan at an assumed interest rate would be at least 2.37 times as compared with the requirements of at least'two times. The amounts of additional first mortgage bonds which can be issued in future years vill be contingent upon increases in earnings through rate increases or otherwise.
The Company's Articles of Incorporation require for the issuance of addi-tional shares of preferred stock specified earnings coverages, including minimum earnings coverage after income taxes of at least one and one-half times the pro forma annual interest charges on all indebtedness and pre-ferred dividend requirements. On the basis of this for=ula, the pro forma coverage for the twelve months ended September 30, 1975 (computed including allowance for funds used during construction applicable to electric construction, which, in the opinion of the Company's General Counsel, is properly so included) would be at least 1.42 times as com-pared with the requirement of at least one and one-half times. The amounts of additional preferred stock which can be issued in future years vill be contingent upon increases in earnings through rate in-creases or otherwise.
t Equity securities of the Company may not be issued at less than par value pursuant to the Michigan Business Corporation Act.
The Company presently has arrangements with banks providing for short-term borrowings of up to $190,700,000, which are subject to periodic review. Included in the $190,700,000 is a commitment with respect to the issuance of up to $20,000,000 of Bankers Acceptances to finance coal purchases. In connection with various of these arrangements the Company is generally required to maintain average compensating balances with the banks, over an unspecified period of time, equal to 10% of the total line of- credit plus 10% of the average borrowings outstanding, as
- -A-8 Page 5 of 11 NOTES TO FINANCIAL STATDENTS (Contd) determined from the bank's records after adjustment for uncollected funds. There are no legal restrictions on the withdrawal of these funds. In addition, the Company has issued commercial paper from time to time on a short-term basis, generally for periods of less than one month.
Average short-term borrowings outstanding amounted to $87,000,000 for the twelve months ended September 30, 1975, and the weighted average interest rate was 9 10% excluding the effect of compensating balances.
The maximum amount outstanding at any one time was $152,200,000.
(7) LIMITATION ON DIVIDENDS At September 30, 1975, retained earnings in the amount of $102,337,000 are not available for the payment of cash dividends on Common Stock under provisions of the Articles of Incorporation of the Company which, except under certain cir;:umstances, prohibit the payment of Common Stock dividends in cash which would reduce the percentage of Common Stock equity to total capitalization belov 25%. There are also other restrictions as to payment of dividends on Common Stock which, how-ever, are presently less restrictive than the limitation mentioned above.
(8) PREFERRED STOCK AND PREFERENCE STOCK Preferred Stock is represented by:
Redemption Price per Share September 30, 1975
$h.50 - 5h7,788 Shares Outstanding $110.00 $ 5h,778,800
$h.52 - 119,550 Shares Outstanding 10h.725 11,955,000
$h.16 - 100,000 Shares Outstanding 103.25 10,000,000
$7.h5 - 700,000 Shares Outstanding 108.00 70,000,000
$7.72 - 700,000 Shares Outstanding 108.00 70,000,000
$7.76 - 753,000 Shares Outstanding 109 19 75,000,000
$7.68 - 550,000 Shares Outstanding 108.00 55,000,000 Tets1 Preferred Stock $3h6.733,800 The Preferred Stock of the Company is redeemable as a whole or in part, at the option of the Company, at the above redemption prices plus accrued dividends to the date of redemption, except that prior to April 1, 1978, July 1, 1977, June 1, 1978 and November 1, 1978, the $7.h5, $7.72, $7 76 and $7.68 Preferred Stock, respectively, may not be redeemed through cer-tain refunding operations.
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A-9 Page 6 of 11 NOTE 3 TO FINANCIAL STATDENTS (Contd)
The Company is required to endeavor to purchase and retire annually h,000 shares of the $h.52 Preferred Stock at a price per share not to exceed $102.725 plus accrued dividends. Such purchases of Pre-ferred Stock resulted in a net gain of $219,731 for the 12 months ended September 30, 1975 which was credited to capital in excess of par value.
In August 197h, the company sold 600,000 shares of $6.00 Preference Stock, convertible into Common Stock on and after November 1, 19Th at four shares of Common Stock for each share of Preference Stock.
At September 30, 1975, 1,730,052 shares of Common Stock are reserved for conversion of the $6.00 Preference Stock.
In June 1975, the Company sold 1,000,000 shares of $5.50 Preference Stock, convertible into Common Stock on and after October 1, 1975 at a conversion price of $15.50 per share (equal to approximately 3.225 shares of Common Stock for each share of Preference Stock).
At September 30, 1975, 3,225,806 shares of Common Stock are re-served for conversion of the $5 50 Preference Stock.
(9) LONG-TERM DEBT
.Long-term debt at September 30, 1975 is represented by:
First Mortgage Bonds, secured by a mortgage.and lien on substantially all property -
8-3/h5 Series due 1976 $ 60,000,000 2-7/8% Series due 1977 2h,010,000 9-3/h% Series due 1980 T5,000,000 35-h-3/h% Series due 1981-1991 250,989,000 11-1/h% Series due 1982 50,000,000 11-3/8% Series due 199h -
60,000,000 5-7/8%-6-7/8% Series due 1996-1998 2h6,0h2,000 11-1/2% Series due 2000 75,000,000 7-1/2%-8-5/8% Series due 1999-2003 h70,000,000 Tota.1 First Mortgage Bonds $1,311,0hl,000 Installment Sales Contracts Payable (Net of $3,221,939 held by trustee pending completion of construction) $ 70,h78,061 Sinking Fund Debentures, h-5/8%, due 199h 36,h00,000 Term Bank Sean at 115% of Bank's Prime Rate, Due 1981 50,000,000 Other 8h,283 Unamorti:sd Net Debt Premium (Discount) (1,159,708) total $1,h66,8h3,636
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A-10 Page 7 of 11 NOTES TO FININCIAL STATEMENTC (Contd)
Deduct - Current Maturities and Sinking Fund -
First Mortgage Bonds, 8-3/k%, Series due 1976 $ 60,000,000 Sinking Fund Debentures 600,000 Other 8h,283
$ 60,68h,283 Total Long-Term Debt $1,LO6,159,353 (10) LEASE OBLIGATIONS The Ccmpany has executed a Nuclear Fuel Lease, dated as of November 19, 197h, whereby the Lessor has acquired a 100% undivided interest in nuclear fuel which will be utilized at the Palisades Nuclear Plant. Lessor's re-maining investment in the fuel at September 30, 1975 was approximately
$29,300,000. The fuel lease provides for a term ending on November 18, 1979, with provision for one-year extensions from time to time to a date not later than November 19, 2029, subject to earlier termination in cer-tain events. The quarterly lease. charges consist of a fuel factor com-puted on the basis of heat production plus interest costs and administrative fees and expenses incurred by the Lessor, and, in the event of termination of the fuel lease, an amount equal to the Lessor's remaining investment.
The Company is also responsible for payment of taxes, maintenance, oper-ating costs, risks of loss and insurance.
On June 25, 1975 the Company entered into sale-and-leaseback transactions aggregating $26,000,000 vith respect to two of the Company's general office buildings. The leases have an initial term of 28 years with two five-year renewal options subject to escalation clauses and a third five-year renewal option at the then fair market rental value with the option to purchase at the expiration of the basic term or any renewal term at the then fair market sales value. Annual rentals under the leases are subject to quadrennial escalation and currently approximate $2,316,000. l Taxes, insurance and other operating costs relating to the buildings are required to be paid by the Company.
If all noncapitalized financing leases were capitalized, the effect on net i income would not be material. '
(11) RATE MATTERS l
On May 28, 1975, the Company submitted an application to the MPSC to increase its rates for electric service so as to produce at least $118,000,000 an-nually in increased revenues and at the same time the Company asked for partial and interim rate relief of not less than $73,500,000 annually. The Staff of the MPSC in this proceeding has recommended, in the alternative, a rate increase of $50,043,000 annually using a 197h test year or a rate -
increase of $60,h19,000 annually using a 1975 test year and the Attorney General of Michigan has recommended a rate decrease of $51,906,000 annu-ally. On November 7,1975 the Compsny modified its request for final relief to $106,663,000 and on November 10, 1975 modified its request for interim relief to $66,769,000, both to reflect the effect of the Michigan Single Business Tax. Hearings on-the proceeding are continuing.
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On January 23, 1975, the MPSC autho'rited an increase in the Company's electric rates of $66,231,000 on an annual basis which included an interim increase of $27,624,000 cuthorized September 16, 197h. The Attorney General of Michigan and the UAW-CAP appealed the order of the MPSC authorizing the increase in rates to a Sts'o court and re-quested the Court to restrain and enjoin the ine-ssse y electric rates during the pendency of the litigation. Fo actica ise been taken by the Court with respect to such request.
In November 197k, the Company submitted an applicatica to the M?SC to increase its gas rates by not less than $54,157,000 annually and at the same time requested partial and interim relief in the amosnt of $39,559,000 annually. On June,2, 1975 the MPSC approved an interim increase of $29,194,000. The Staff of the MPSC has reccenended a rste increase of $h0,hh8,000 annually. :The presiding Administrative Law Judge, on November 10, 1975, issued a Proposal for Discussion recem-mending an increase of $h3,566,000., including the previously granted interbs increase with a portion thereof subject to refund pending resolution of any and all disputes between the Company and the engineer -
constructor of the Marysville Reforming Plant. The Proposal for Decision also recommends that there be excluded from the Company's gas rate base a portion of the total expenditures and obligations incurred by the Company in respect of the Marysville Gas Reforming Plant. The MPSC's decision on final relief is expected later in 1975 Litigation is pending with respect to electric and gas rate increases which became effective in 1969 and which are subject to refund relating to the reduction and elimination of the Federal income tax surcharge.
In October 1975, an Appellate C^urt upheld earlier rulings of a lower court which held in favor of the MPSC with respect to the income tax surcharge issue and ordered the Company to refund $2h,5h3,000, together with interest thereon, to the electric and gas customers. The Company has establishe a reserve stated net of related income taxes in the amount of $11,868,000, and believes that the amount of such reserve is adequate to cover the refund obligation, exclusive of interest charges which, if applicable, are preserstly estimated to be approximately $7,200,000, based upon the statutory interest rate of 6 percent. The Ingham Court may order a different interest rate. The Company has filed an application with the Michigan Supreme Court seeking leave to appeal the rulings directing that a refund be made. The litigation also involves a claim with respect to the legality of the electric rate increase, which became effective in 1969, on the grounds that the increased rates became effective by Court Order in October 1969, that the MPSC did not issue an order approving said rates until April 1970 and that as a result, the electric rates charged during the period are subject to refund in an amount of approxi-mately $7,763,000, plus interest charges for which no reserve has been provided.
On July 21, 1975, the MPSC issued an Opinion and Order reaffirming the Canpany's fuel cost adjustment clause applicable to its electric rates and consolidating the Company's application for authority to amend this clause with the pending general electric rate proceeding.
The Attorney General of Michigan has appealed the Opinion and Order, requesting the Court to enjoin and restrain the operation of the
, Company's. existing fuel cost adjustment clause and seeking a refund of at least $12,789,000 of alleged overrecoveries under the existing clause, plus interest. No action has been taken by the Court with
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'~ , A-12 Page 9 of 11 NOTES TO FINANCIAL STATEMENTS (Contd)
(12) PENSION PLAN The Company has a trusteed noncontributory pension plan under which full-time regular employees within specified age limits and periods of ser-vice.are qualified to participate. The contributions to the plan were
$15,9h7,000 for the 12 months ended September 30, 1975 Of this amount
$12,566,000 was charged directly to expense accounts with the remainder being charged to various construction, clearing and other accounts.
As of January 1, 1975, the date of the most recent actuary's report, the actuarially computed value of vested benefits was $18h,h00,000. The market value of the assets of the plan was $159,616,000 at September 30, 1975 If the market value of the assets of the plan remains below the vested benefits, the actuarial method used in determining the annual contribution vill fund this amount over a period of years.
The enactment of the Employee Retirement Income Security Act of 197h will not significantly increase the Company's future annual contribution since the Company's present plan generally conforms to minimum require-ments.
The unfunded prior service cost at January 1,1975, the date of the most recent actuary's report, amounted to approximately $21,031,000.
(13) INCOME TAX EXPE'ISE Income tax expense is made up of the following components:
September 30, 1975 Charged to utility operations -
Current Federal income taxes $ 3,789,981 Current State income taxes 3,766,hlh Deferred Federal income taxes, net 22,091,135 Deferred State income taxes, net 4,153,896 Charge equivalent to investment tax credit, net 18,218,866 Total (See Statement of Income) $52,020,292 Charged to nonutility operations - current __
2,633,376 Total
$5h,653,668 For 197h the Company had a net operating loss which, when carried back to prior years, results in a refund of $19,061,000, which includes interest of $652,000.
A-13 Paga 10 of 11 NOTES TO FINANCIAL STAT 94ENTS (Contd)
The Company utilizes liberalized depreciation and the " class life asset depreciation range system" for income tax purposes. Income tax de-ferred due to the use of these methods is charged to income currently and credited to a reserve for deferred income taxes. As income taxes previously deferred become payable, the related deferrals are credited to income.
Certain costs, principally interest, capitalized in accordance with the provisions of the Uniform System of Accounts, are expensed for income tax purposes and the tax reduction resulting therefrom is reflected in the income statement currently as ordered by the Michigan Public Service Commission.
The investment tax credit and job development investment credit utilized as a reduction of the current year's income tax is deferred and amor-tized to operating expense over the life of the related property. As of December 31,19Th, the Company has unutilized investment tax credits of approxviately $20,626,000.
The total income tax expense as set forth above produces an effective in-come tax rate of 38.1% for the 12 months ended September 30, 1975 The following schedule reconciles the statuto1y Federal income tax rate of h8% to such effective income tax rates.
September 30, 1975 Amount Rate Computed " expected" tax expense $68,Th8,968 h8.0%
Increase (reduction) in taxes resulting from:
Certain capitalized construction costs, principa.ly interest, deducted currently for income tax purposes for which no de-ferred taxes are provided in accordance with the requirements of the MPSC (16,410,h90) (11 5)
State income taxes, net of Federal income tax benefit h,300,573 3.0 Amortization of deferred investment tax credit (1,290,286) (,9)
Other miscellaneous items (695,097) (.h)
Actual tax expense $5h,653,668 38.2%
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(1h) ALLOWANCE FOR FUNDS USFL DURING CONSTRUCTION The allowance for funds used during construction is being capitalized at a rate of 8% in 1975 and was capitalized at 7-3/h% in 1974. Based on the Company's source of funds for gross property additions, and assum-ing that the cost'of financing other than common equity financing was equivalent to the current cost of long-term and short-term debt (before income tax effect), preferred stock and other sources, available in each year, the estimated common equity component of the allowance for funds-used during construction amounted to 8.7% of net income available for common stock for the 12 months ended September 30, 1975 (15) NORTHERN MICHIGAN EXPLORATION COMPANY Northern Michigan Exploration Company (Northern), a wholly-owned subsid-iary of the Company, is engaged in gas exploration programs in northern Michigan and the southern United States. The Company's Board of Direc-tors has authorized loans to Jorthern up to a maximum of $20,000,000 and has authorized a total common stock investment of $20,000,000.
Northern has filed an application with the Federal Power Commission (FPC) for approval to sell gas frem certain offshore Louisiana properties to Consumers Power Company. Northern was granted authority to. sell this gas supraly to Trunkline Gas Company, which authority vill be cancelled if the FPC approves Northern's request to sell this gas supply to the Company. An Initial Decision by the Administrative Law Judge has been issued approving Northern's request. The FPC Staff has filed exceptions to the Initial Decision and the matter is before the FPC for decision.
Northern follows full cost accounting for financial reporting purposes including a policy of capitalizing interest costs related to properties in process of development. Interest capitalized amounted to $919,000 for the 12 months ended September 30, 1975 Had these interest costs not been capitalized, the Company's net income would have been reduced ap-proximately $hh0,000 for the 12 months ended September 30, 1975 Sum-marized financial information of Northern is shown below:
12 Months Ended Sectember 30, 1975 Operating Revenues $21,Th7,000 Net Income 6,770,000 At Seotember 30, 1975 Gas and Oil Properties $59,h79,000 Total Assets 71,h57,000 Stockholders' Investment 28,019,000 Production Payment 27,h71,000
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Appendix l UNITED STATES OF AMERICA +" *%,
rEDERAL POWER COMMISSION Y
Before Commissioners: John N. Nassikas, Chairman; William L. Springer, and Don S. Smith.
Consumers Power Company ) Docket No. ER76-45 ORDER ACCEPTING FOR FILING AND
' SUSPENDING PROPOSED RATE INCREASE, GRANTING INTERVENTIONS, PROVIDING FOR HEARING ESTABLISHING PROCEDURES, DENYING MOTION TO REJECT AND PROVIDING FOR RESPONSES TO MOTION FOR
SUMMARY
DISPOSITION (Issued August 29, 1975)
On July 30, 1975, Consumers Power Company (Consumers or Company) tendered for filing revised tariff sheets containing superseding rate schedules which would increase the Company's wholesale service rates to named partial and full requirement customers (Customers). 1/ The proposed rates would increase revenues fran Customers by $5,065,-720 (33%) for the twelve monrh period ending December 31, 1975. Concurrently, Consumers jg tendered for filing a Schedule of Rates Governing Wholesale For Resale Electric Service (Standard Service Agreement) which Consumers intends to serve upon all customers upon expiration of their present agreements. The rates contained in the Standard Service Agreement are the same as those in the super-seding rate schedules referred to above, and provide for interim compensation to Consumers for the installation or modification of facilities necessary to serve particular customers. This Standard Service Agreement is proposed to be substituted for the existing individual contract form of rate schedule in order to standardize Consumers wholesale rate f onn 'and terms and conditions of service, in order to permit -
more efficient administration of its wholesale business.
Consumers proposes that its filed Standard Service Agreement be made effective for each of its wholesale for resale customers upon the expiration or termination of the customer's presently
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, 3 m, Docket No. ER76-45 Consumers proposes effective wholesale for resale contract.
to make the superseding rate schedules effective on August 30, 1975.
Consumers states that the reason for the increase in rates is that the Company's present earnings from its whole-
- sale electric service are inadequate as a result of ongoing inflation, and that the rate of return from its wholesale business will be only 2.59% based upon forecasted '1975 )
conditions. Consumers states further that in order to meet the requirements of its customers, it will be required ,
to expend approximately $3 billion in construction activities during the five-year period 1976 through 1980 and that much of this construction expenditure must be financed with outside capital. Consumers states that the new rates, which modify .
the demand and energy rate structures and charges, are necessary if the Company is going to be able to finance this necessary construction program. The Company in its new rate filing is also proposing to eliminate the rate differential between total requirement purchasers and partial requirement purchasers in its wholesale for resale rate by the adoption of a single
<3 schedule of rates for all of its wholesale customers, and to J revise its fuel cost adjustment clause to comply with FPC Order No. 517, issued November 13, 1974.
Notice of Consumer's filing was issued on August 7,1975, with comments, protests, or petitions to intervene due on or before August 25, 1975.
On August 19, 1975, a Petition to Intervene was filed by Edison Sault Electric Company (Edison) . Edison stated that it purchases electric energy from Consumers and serves customers at retail and also sells electric energy at wholesale to one ;
customer, Cloverland Electric Cooperative. Edison alleges, inter alia, that it is presently purchasing 'from Consumers electric energy for resala under a contract entered into ,
between the parties dated December 1, 1966. However, Edison and Consumers have entered into a new contract dated
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l November 21, 1974, which will become effective when Edison's new submarine cable is placed into service, which date is anticipated to be October 1, 1975. Upon the effective date of the new contract, the contract between Edison and Consumers dated December 1, 1966, and all amendments and supplements C3 o
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Dccket No. ER76-45 thereto, will be cancelled. The new contract was tendered to the Commission for filing by Consumers on April 11, 1975, with a regi.est for waiver of notice requirements, but it has not as yet been accepted. Edison's position is that it is inappropriate for Consumers to now propose new rates when it has an agreement pending before the Commission with Edison which has not yet become effective. Edison stat,es further that under the proposed rates, its cost of power from Consumers would increase 41.5% or $510,379 for the twelve months ended August 31, 1975.
On August 20,,1975, a Petition to Intervene was filed by Alpena Power Company (Alpena), who states that it receives a major portion of its energy requirements from Consumers, and it is Consumers' largest wholesale customer, and therefore a substantial portion of the proposed increase will have to be borne by Alpena.
On August 25, 1975, a Petition to Intervene was filed with a motion entitled " Motion to Reject Filing, ' Motion For Summary Judgement , Protest and Petition to Intervene of Twelve Publicly-Systems urge that the
~ Owned Wholesale Customers" (Systems) 2/.
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' filing be rejected because the Period II cost data submitted by Consumers is not substantiated. We have reviewed' Consumers' g Period II data and find it substantially' complies with our filing requirements. However, the burden will be upon Consumers in the hearing hereinafter ordered to " establish the validity and
. accuracy of each of their cost estimates" (Order 487, mimeo .at
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2/ Cities of Bay City, Chalevoix, Coldwater, Harbor Springs, Hillsdale, Marshall Petoskey, Portland, St. Louis and Union City,
- the Village of Chelsea and the Southeastern Michigan Electric Coop'erative, Inc. ; all located in Michigan. .
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a-4 D:cket No. ER76-45 Systems urges that summary judgement be granted on that
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portion of the rate filing reflecting Consumers' proposal to adopt normalization of the tax e.ffect of liberalized depreciation as well as comprehensive interperiod tax normalization of the items covered in Order No. 530. 3/ Systems argue that in order to adopt normalization for rate purposes of the i' ems in Order -
No. 530 as well as for liberalized depreciation, Consumers must -
show tax deferral rather than a permanent tax savings. Systems argue that Consumers direct evidence fails to show a tax deferral 5 and therefore its request for normalization of the tax effect of liberalized depreciation as well as the items covered in order No. 530 must be summarily denied.
Because of the importance of this issue, we believe it appropriate to provide an opportunity for all parties, including the Commission Staf f, to respond to Systems motion for summary disposition concerning the normalization proposals of Consumers.
Accordingly, we shall delay action on Systems motion to allow all parties 15 days from the date of issuance of this order to respond to Systems motion for' summary disposition of the normali-zation issues, pursuant to Section 1.12(c) of the Commission's R'egulations.
Systems also argue that certain items underlying Consumers
proposed rates are excessive including, inter alia., its request for a 9.95% overall rate of return which yields a 15.5% return on common equity, allegedly excessive maintenance expense allegedly improper allocation of fuel stock, and improper rate design by the addition of more demand blocks. We believe the allegations made by Systems, while not sufficient to cause rejection of the filing, raise issues which may require development in the evidentiary pro'ecedings hereinafter ordered.
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3/ FPC issued June 18, 1975, in Docket Nos. R-424 and R-446.
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8~5 Dock t No. ER76-45 As a further basis for rejection of Consumers' filing,
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Systems argue that the proposed rates would create an unlawful
" price squeeze" by foreclosingThis Systems from competing Commission with has consistently Consumers for retail loads.
held that it must utilize a cost plus fair return standard for establishing the justness and reasonableness of the whoicsale rate and does not have the authority under the Federal Power Act to set the wholesale rate predicated upon retail rates over which we have no jurisdiction. 4/ We shall therefore limit this proceeding so as to exclude consideration of the price squeeze issue. We are aware of Systems ' reliance upon However, Conway Corporation v. F.P.C., 510 F.2d 1264 (1975) .
the Court in Conway stayed its mandate pending appeal by the for Commission. Accordingly, Systems may renew their request consideration of the price squeeze issue when and if the .
Conway decision becomes final.
In addition to the " price squeeze" issue, Systems raise allegations of other allegedly anti-competitive allegations involving, inter alia . , the appropriateness of certain contract
. language, pooling, arrangements of interchange and coordination In order to fully investigate which Consumers is a member.
j) these allegations, we shall institute a separate phase (Phase II),
which will be the subject of a hearing and decision separate and apart from the investigation of the rates we have ordered below for the purpose of developing a comp] ate evidentiary record concerning allegedly anti-competitive language contained in Con-sumers' currently effective rate schedules proposed to be continued in the rate schedules filed herein. 5/
4/ See e.g. , Virginia Electric and Power Company, Docket No.
E-9147, order issued January 22, 1975, Carolina Power and Light Company, Docket No. E-8884, order issued August 26, 1974; Wisconsin Public Service Corooration, Docket No. E-8867, order issued August 23, 1974, and Paci'fic Gas and Electric Company, Docket No. E-7777, order issued March 14, 1974.
5/ See orders listed in Footnote 4 above.
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' Dccket No. ER76-45 All of the Intervenors urge that suspension for the full five-month statutory period is proper in this case. The Com-mission must utilize a cost plus fair return standard for octablishing the justness and reasonableness of the proposed wholesale rates. We believe that the circumstances of this case indicate thirty day suspension is proper. Municipal Licht Boards of Reading and Wakefield, Mass. v. F.P.C. , 450 F.2d -
1341 (D.C. Cir. 1971) , cert. denied, 405 U.S. 989'(1972).
Evidence relevant to the issues raised by the instant -
filing should be submitted by all parties including the Commission Staff. Consumers is requesting herein that it be allowed a Period II rate of return on common equity of 15.50 percent and an overall rate of return of 9.95 percent. We note that Consumers is requesting the -increase in part to finance approximately $3 billion in construction activities during the five year period 1976 through 1980. All parties, including Staff, are directed to present evidence as to how their rate of return recommendations relate to Consumers' elleged financing requirements and should address themselves specifically to Consumers' statements that its return at
) present rates is 5.05 percent; that its price earnings ratio has declined from 22.3 in 1965 to 10.9 in 1973; that its common otock, yielding approximately 14 percent in current dividends, was selling at 50 percent of book value in May, 1975; that its O
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B-7 7-Docket No. ER76-45 stock earnings per share decreased from $2.41 in 1973 to $1.34 in 1974, and dividends have not increased since February, 1970; and that allowance for funds used during construction were 62 percent of 1974 carnings.on common equity.
A review of Consumers' submittal indicates that among other things, it has normalized the tax effect of interest associated with construction work in progress in the income tax calculation, and made direct assignment of trans-mission facilities and related costs.
Our review of Consumers' proposed rates filed herein indicates that the proposed rates have not been shown to be ~
just and reasonabic. We shall, therefore, accept Consumers' tendered tariff sheets and Standard Service Agreement for filing and suspend the use thereof for thirty days, when the tariff sheets will be permitted to become effective, and the Standard Service Agreement will be permitted to be substituted for the individual agreements as they expire, subject to refund.
.We shall also provide for an evidentiary hearing to test the lawfulness of the proposed rates as contained in the filed tariff sheets and the Standard Service Agreement.
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The Commission finds: .
(1) Consumers' filing should be accepted for filing and suspended for thirty days, as hereinafter ordered.
(2) It is necessary and proper in the public interestthe and to aid in the enforcement of the Federal Power Act that Commission enter upon a hearing concerning the lawfulness of Consumers' proposed rate changes.
(5) The participation of Edison, Alpena, and Systens in these proceedings may be in the public interest.
The Commission orders:
(A) Consumers' filing is hereby accepted for filing and suspended for thirty days until September 30, 1975, when the proposed rates will gc into effect, subject to refund and the Standard Service Agreement incorporating these rates may be
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substituted- for the individual contract forms as they expire lh or are terminated.
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Docket No'. ER76-45 .
h (B) Pursuant to the authority of the Federal Power Act, particularly Sections 205 and 206 thereof, the Commission's Rules of Practice and Procedure, and the Regulations under the
, ,Fcderal Power Act (18 CFR Chapter I), a public hearing shall ,
be held on November 27, 1975, at 10:00 A.M., in a hearing room of the Federal Power Commission, 825 North Capitol Street, N.E., '
Wcshington, D.C. 20426, concerning all issueh, other than those isques to be considered in Phase II of these proceedings here-inafter ordered, which bear on the lawfulness and reasonableness ,
of the rates and charges proposed in Consumers ' filing (Phase 1).
Phase I shall be subject to the procedures set forth in Ordering Paragraph (C) below.
(C) On or before October 16, 1975, the Commission Staff shall serve its prepared testimony and' exhibits. Prepared tastimony and exhibits of intervenors, if any, shall be sarved on or before_0ctober_3R,_1975. Company rebuttal shall ba served on or before November 13, 1975.
(D) A second phase (Phase II) of this proceeding is hereby instituted for the development of a complete evidentiary record g concerning the anticompetitive provisions of Consumers' contracts cnd over which this Commission has jurisdiction to grant relief.
Intervenor evidence in support of their allegations as to these enticompetitive provisions in Consumers' contracts shall be filed on or before December 9._1975. Staff evidence, if any, shall be filed on or before January 20,_1976. Consumers shall file its prepared evidence on or before FebruM,_19]6. Any intervenor rebuttal evidence shall be filed on or before February 24, 1S2,6. A public hearing for the purpose of cross-examination ol_
the filed testimony and exhibits shall commence on Marchr _9.,.197,6, in a hearing room of the Federal Power Commission, 825 North Capitol Street, N.E., Washington, D.C. 20426, at 10:00 A.M.
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(E)
A Presiding Administrative Law Judge to be designated I by the Chief Administrative Law Judge for that purpose, i (See Delegation of Authority,18 CFR. 3.5(d)), shall preside at '
the hearing in this proceeding, shall prescribe relevant i procedural matters not herein provided, and shall control this proceeding in accordance with the policies expressed in ;
the Commission's Rules of Practice and Procedure.
(F) Nothing contained herein shall be construed as limiting the rights of parties to this proceeding regarding the convening of conferences or offers of settlement pursuant to Section 1.18 of the Commission's Rules of Practice and Procedure.
(G)
Edison and. Alpena are hereby permitted to intervene "
in these proceedings, subject to the Rules and Regulations of the Commission; Provided, however, that the participation of such intervenors shall be limited to matters affecting rights and interests specifically set forth in .their petition to intervene; and Provided, further, that the admission of such intervenors shall not be considered as recognition by the Commission that they might be aggrieved because of any order
) or orders issued by the Commission in this proceeding.
(H)
Pursuant to Section 1.12(c) of the Regulations, all parties shall file responses, within 15 days of the date of j issuance of this order, to Systems' motion for summary' disposition concerning Consumers' rcqucst to reflect in its rates compre-hensive interperiod tax normalization, and normalization of the tax effect of liberalized depreciation. Pending such responses, j we shall withold action on Consumers motion.
(I) Systems' motion to reject Consumers' filing is denied.
(J) The Secretary shall cause prompt publication of this order in the Federal Register. .
By the Commission. .
(SEAL)
Kenneth F. Plumb, (I Secretary.
'; APPENDIX A B-10 Docket Nao ER76-45 Pzge 1 of 3 Consumers Power Company - Docket No. ER76-45 Customer List and Proposed Rate Schedule Designations Filed: July 30, 1975 Customer Description Designations .
Supplement No. 4 to City of Bay City Rate WR (1)
, . Rate Schedule FPC No. 1 , ,
(Supersedes Supplemant No. 3 to Rate Schedule FPC No. 1)
(2) Supplement No. 5 to City of Eaton Rapids Rate Schedule FPC No. 4 (Supersedes Supplement No. 4 to Rate Schedule FPC No. 4)
(3) Supplement No. 4 to' City of Harbor Springs Rate Schedule FPC No. 5 (Supersedes Supplement No. 3 to Rate Schedule FPC No. 5)
) (4)' Supplement No. 4 to City of Hillsdale Rate Schedule FPC No. 6 (Supersedes Supplement No. 3 to Rate Schedule FPC No. 6)
(5) Supplement No. 5 to City .of Marshall Rate Schedule FPC No. 7 (Supersedes Supplement No. 4 to Rate Schedule FPC No. 7)
(6) Supplement No. 4 to Village of Chelsea Rate Schedule FPC No. 9 (Supersedes Supplement No. 3 to Rate Schedule FPC No. 9) ,
Supplement No. 4 to Southeastern Mithigan (7)
Rate Schedule FPC No. 12 Rural Electrification (Supersedes Supplement No. 3 Cooperative, Inc.
to Rate Schedule FPC No.12) 9
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j Docket No. ER76-45 APPENDIX A '
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} Consumers Power Comp'any - Docket No. ER76-45_ ,
Customer Descriptior.
- Designations Rate WR Suppicment No. 6 to Alpena Power (8) Company Rate Schedule FPC No. 13 (Supersedes Supplement No. 5 to Rate Schedule FPC No. 13)
(9) Supplement No. 5 to Edison Sault Electric Company Rate Schedule FPC No. 14 (Supersedes Supplement No. 3 to Rate Schedule FPC No. 14) ,
(10) Supplement No. 4 to City of St. Louis, Rate Schedule FPC No. 17 Michigan (Supersedes Supplement No. 3 to Rate Schedule FPC No. 17)
(11) Supplement No. 3 to City of Coldwater 5 Rate Schedule FPC No. 29
/ (Supersedes Supplement No. 2 to Rate Schedule FPC No. 29)
(12) Supplement No. 3 to Wolverine Electric Rate Schedule FPC No. 30 Cooperative , Inc.
(Supersedes Supplement No. 2 to Rate Schedule FPC No. 30)
(13) Supplement No. 3 to City of Portland Rate Schedule FPC No. 32 (Supersedes Supplement No. 2 to Rate Schedule FPC No. 32)
. (14) Supplement No. 2 to City of Charlevoix Rate Schedule FPC 'Jo. 36 (Supersedes Supplement No. 1 i~ to Rcte Schedule FPC No. 36)
(15) Supplement No. 1 to Village of Union City "
Rate Schedule FPC No. 38
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APPENDIX A ,
Docket No. En76-45 Page 3 of 3 Consumers Power Company - Docket No. ER76-45 Designations Customer Description (16) Supplement No. 1 to City of Petoskey Rate WR Rate Schedule FPC No. 40 -
I Designation- Description FPC Electric Tariff Unexecuted Tariff Original Original Volume No. 1 Sheet Nos. 1 through 24 G
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p Appendix C
- STATEMENT OF SOURCE OF FUNDS FOR GROSS PROPERTY ADDITIONS 3 Months Ended Source of Funds for Gross Property Additions September 30, 1975 Funds Generated From Operations:
Net Income After Dividends on Preferred and Preference Stock $ 14,765,842 Principal Noncash Items Depreciation and Amortization Per Statement of Income . 19,645,548 Charged to Other Accounts 1,614,959 Deferred Income Taxes, Net 6,315,802 o Investment Tax Credit, Net 6,326,037 Allowance for Funds Used During Construction (6,199,243)
Undistributed Earnings of Subsidiaries (2,838,895)
$ 39,630,050 Less:
Dividends Declared on Common Stock $ 13,382,266 Reacquired Long-Term Debt 6,049,000
$ 20,196,764 Funds Obtained From Financing:
Issuance of Long-Term Debt $150,000,000 Net Proceeds Frem Installment Sales Contracts Payable 171,599 Retirement of 1st Mortgage Bonds (86,324,000)
Decrease in Notes Payable (20,900,000)
$ 42,947,599 other Sources (Uses) of Funds:
Change in Net Current Assets and Current Liabilities (Excluding Obligations Expected To Be Refinanced)
Accrued Utility Revenue $ (8,590,798)
Accounts Receivable 26,149,o49 Materials and Supplies 2,106,692 Gas in Underground Storage (42,616,007)
Prepaid Real and Personal Property Taxes 6,117,281 Bankers Acceptance Drafts (9,600,000)
Current Maturities and Sinking Fund - LTD (5,491,143)
Accounts Payable 10,515,597 Accrued Interest 2,357,419 Other (311,408)
$(19,363,316)
Lease of Nuclear Fuel
- 3,378,566 Other, Net , (1,647,838)
$(17,632,590)
Total Funds for Construction From Above Sources $ 45,513,793 Allowance for Funds Used During Construction 6,199,243 Gross Property Additions $ 51,713,036
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