ML19351G215
| ML19351G215 | |
| Person / Time | |
|---|---|
| Site: | Bailly |
| Issue date: | 01/30/1981 |
| From: | NORTHERN INDIANA PUBLIC SERVICE CO. |
| To: | |
| Shared Package | |
| ML19351G214 | List: |
| References | |
| NUDOCS 8102230283 | |
| Download: ML19351G215 (43) | |
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Annual Report Table of Contents Northern Indiana On cers.
ins.de montCover Public Service s'an e s-Letter to Sharenoiders 23 g
Productivity 4-5 1980 in Review 6-13 Territory Maps 14-15 i
f Division.
District and Loca Mana ;ers 15 Financ:ai Revtew 16-18 g
Statement of Income 19 i
Edmund A Schroer saiance Sneet 20-21 Chairman. President Statement of Capaa.izatnan 22 and Cn,ef Executwe Ott.cer Statement of Long-Term Dect 23 Eugene M. Shorb 3
Statement cf Sources of Funcs Executwe Vice Presroent Use for Cap:tal Expenditures 24 James F. Purcell Staternent of Reta:ned Ea'nings
.25 Sennor Vice Prevdent Nctes to Financial Statements 25-38 Forrest G. Hiple inaepenaent Aucttors Repcrt 38 V'ce President. Electrrc Operat ons Financial Ccnc.t.cn and Resutts Thomas R Howarth at Oce at ons 39 Voce Presodent. Gas Operations and Fuel Procurement Statst>cs.
40 Directers
. inside Back Cove, Horace P. Lyle Vice President. Electric Production John E. Nickoloff Voce Fresident. Division Operatoons Allen H. Petersen Vice President. Finance M~:~ 1 tra J. Robeds e
4 T-Voce Presroent. Marketing l
and Contracts Jack W. Stine Vice President. Customer Services and Purchasing l
Robert Zeldenrust Vice President. Industnal Relations
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- I Jerry M. Springer i
Contro!!er Our Cover Story Jonn E. Reii 7masurer Obihious to his precarivis perch, a painter puts the hnishing Mildred J. Mikulas touches on our new LNG Secretary facility in LaPorte (pictured Ruth G. Wolters above).The job required Assistant Treasurer three coats-more than 1,450 Dorothy S. Gall gallons of paint per tank.
Assistant Secretary 0}
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HIGMLIGHTS OF 1980 industnal 60 BC y
- Operating revenues exceed
$1.366 billio.1, an increase of o,ne,3 4,
$170 milnon over 1979.
1.n
- Net income declines to commerciai s.4c-
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S72.2 million, down 0
54.6 million from 1979.
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- Average common shares Residentiai 27.4e
~bc' outstanding increase l
5,456,987 to 37,429,554.
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- Earnings per common WHERE EACH 86 in 9N9 NIPSCO DOLLAR CAME FROM Fuel and
- New gas peak sendout of 1.356 billion cubic f eet Taxes 72c, g[,,gp6,g u
s set on December 20,1980.
Dividends 5 sc
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- Internally generated y,7n*l,"l,n"c',*7]e i
electricity requirements
~ ' ^i increase from 62 percent in
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S 1979 to 74 percent in 1980.
Deductions a eD
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- Five-year construction program set at $2 billion.
Payroll 8 7C 9
- An 11.2 percent electric rate' increase granted g,1,,ne,,n :n, August 27,1980.
Business -0 2C
- Construction of Units 17 and 18 on schedule for WHERE EACH operation in 1983 and 1985.
NIPSCO DOLLAR WENT Q
O o w n o N. R %%
To Our I
Shareholders:
Substantial improvements in gas supply, in operating and service capabilities, and large revenue increases were not enough to overcome obstacles which made 1930 an exceedingly difficult year for Northern Indiana Public Service Company. Negative external and internal factors materially reduced earnings.
4 The principal external forces were the 3
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uneven pressures of double-digit inflation and its attendant high cost of money on I
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NIPSCO, a capital-intensive enterprise, and 3
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the detrimental effect of a national 3
recession in our heavily industrialized i
service area.
1 While the inflation rate in both the near and long term is difficult to predict and only minimally controllable, it is imperative that the Company nevertheless continue its i
substantial construction program on current schedules to meet existing and expanded service requirements.
8 4
Economic recovery, particularly by heavy industry in our service territory, is occurring.
Edmund A. Schroer it is essential that we meet their energy demands, as we!I as those of our residential and commercial customers. Although gas and electric usage was down in 1980, there is now a clear improvement.The underlying strength and confidence of industry in our service territory is demonstrated by the major projects described in this report.
Their returning strength bodes well for our service area and Company.
The principal internal factor, which made 1980 a difficult year, was an eight-month strike by our approximately 4,200 bargaining 2
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unit en'ployees. l' vas unfortunate for The much litigated Bailly Nuclear One all that local Union leadership did not accept project continues to be economically and our offe.r to allow Union employees technically viable notwithstanding ever to continue to work under collective escalating cost estimates. However, some-bargaining agreements which expired times seemingly interminable delays i
May 31,1980, while new contract conditions and an adverse interaction of nontechnical, were being negotiated.
political and social perceptions make for carefully considered and guarded Productivity is a key to the '80s, and it was commitment in resumption of construction.
essential to the Company that meaningful It will be necessary to secure substantial changes be made in work rules. On balance
- electric rate relief annually so long as the new agreements reached in late high inflation and heavy capital expendi-January 1981, which are in effect until May tures are necessary. Gas rate increases are 31,1984, are reasonable. Economic being carefully considered and timely relief of considerable magnitude is afforded relief will be sought consistent with need.
for both the Company and bargaining unit employees in those agreements.
While 1980 has been difficult, substantial Productivity improvements should improvements in the economy of our-be achievable as numerous work rule and service area; in our internal generating labor relation matters have been favorably capability;in the availability of gas supplies, and firmly resolved for a substantial together with resumption of normal period of time.This is particularly important relations with our bargaining unit employees to implement the policy of transition under more productive work rules, make from substantial purchases of power to us confident that in 1981, and the years to reliance on internal generation. Changed come, we will be better able to serve availability and costs of purchase power customers, shareholders and employees.
mandate that policy.
On behalf of the Board of Directors, The dedication, loyalty and talent of our I
I non-union employees during the long strike l
cannot be overstated. Approximately
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2,000 of them maintained reliable gas and electric service to ali of our customers Chairman, President under extreme adversity, including periods and Chief Executive Officer of severe storms. Details of cperational changes and projects to insure our ability to January 30,1981..
continue to render reliable service and increase productivity and efficiency are set forth in this report.
3
GuQ%MN,LI3aC3 L~<
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CKe to the Becade of th, e '80s increased productivity, which means work-Many factors have contributed to the ing smarter as well as more efficiently, is a deteriorating productivity picture in this must for any sustained economic recovery.
cG untry, including:
i It will be impossible without sufficient avail-
- a slowdown in the rate of capitalforma tion, ability of reliable sources of energy.
We in the business of providing energy e less rapid technological advancements, are looking for clearer signals as to how the e reduced opportunities 10. economies of energy requirements of this country are scale, at least in part because of violent to be assessed and how realistically these swings in the business cycle, and needs can be met with current resources e the explosive increase in government and within current political and economic regulation in the areas of the environ-r
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realities-ment, worker and product safety, all of A key to 1981, and the rest of the decade which have increased costs without a for that matter, is to revive lagging produc-commensurate increase in output.
tivity After decades of steadyimprovement, U.S. productivity peaked in the period be.
To these above quantifiable factors some tween 1948 and 1966, improving at an would add a subtle change in the attitudes of many workers toward the traditional average annual rate 013.2 percent. Since
" work ethic."
1966, the rate ofimprovement has trended steadily downward, culminating in a nega.
Our political and economic future is j
tive 1 percent rate of growth in productivity inextricably interwoven, and we must have during 1979. Little, it any, improvement soundpolicies in both, together with a work ethic oriented society. That has been the occurred in 1980 due to the recession.
i foundation of our success in the past and l
Simply defined, productivity is the rela-tionst'ip between output and the amount will provide opportunities for present and of labor, capital and materials used to future generations. We also need to rees-I l
achieve that output. The traditional defini.
tablish our development of and reliance tion of output per labor hour sometimes on technology.
causes confusion because productivity is not simply a measurement of labor effi-What is NIPSCO Doing ?
ciency, but rather a measurement of all Faced with soaring fuel costs and the in-those factors involvedin achieving a given creasing antipathy over inevitably rising j
level of output.
utility bills, improved productivity is espe-4
t I
cially important for NIPSCO. We are hope-Informat.on Services department. This re-
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ful that our new labor agreement will result organia 'd entity provides centralized in improved productivity. A number olsteps data-be ud information to all corporate to increase productivity have been taken, units, rs.alting in a faster response and i
including the creation of new departments greater efficiency in operations.
l I
whose ultimate responsibility is the maxi-Purchasing and Accounts Payable mization of Company resources to insure During 980, we began developing a com-i that we can continue to provide the best prehensive Purchasing and Accounts l
possible service at the lowest reasonable y ble system uHHzing cunent electrom_c cost to our customers.
data processing technology. The overall Corporate Planning Department goal of the new system, which should be Recently, a new Corporate Planning depart-operational by mid-1981, is to improve the ment was established. This department, servicing of suppliers' accounts and to supported in its initial development by an enable the Company to make more favor-l independent consulting firm, has success.
able purchase commitments.
fully developed operational and financial Work Rules forecasts using the latest computer tech-Our commitment to eliminate waste,
"*I*9Y improve efficiency and increase produc-Through the use of sophisticated com-tivity was one of the centralissues of the l
puter models, together with additional 1980 strike.The modification o'a number of l
models currently being developed, the work rules, including bidding procedures I
Company is now able to produce more com-for new jobs, power plant assignments, prehensive financial projections, plus gas overtime practices, mealmoney reimburse-and electnc energy forecasts and demand ment, Construction department designated
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- headquarters and overtime equalization, Department of Management and sick-leave practices were among the System Control matters in which substential prograss was made.
in March 1980, the department of l
Management System Control was formed.
From the very beginning, Company I
The creation of this department was the negotiators insisted that these critical issues be addressed. Regrettably, for a outgrowth ot recommendations byan inde-pendent consulting firm. The firm worked prolonged period, the Union leadership refused to even discuss them in any mean-1 closely with NIPSCO statt members to develop management systems which will ingful way.
In the eventualsettlement, however, we improve productivity and enhance effi.
achieved significant relief, and with these ciency.
modifications, we are confident that future Information Services operations will be more efficient and pro-During 1,980. Our Electronic Data Pro-ductive, thus giving us the means to con-cessing and Methods and Procedures tinue to provide our customers with safe, departments were combined to form the reliable service at the lowest possible cost.
5
198G IN ret IEN nere is no doubt that 1980 operations reflected its service Steadily improving gas sup-Twas a difficult year for the area's general economic con-plies and increased storage economy of northern Indiana and ditions. Our decline in earnings capacity made it possible for the for Northern indiana Public was further exacerbated by a Company to apply for and Service Company. Although we milder winter than in 1979, a high r eceive (effective July 7,1980) continued to move ahead on level of maintenance expense permission from the Public several projects which will help at our generating stations, and Service Commission of Indiana us in our efforts to continue the continuing adverse effect of (PSC)to selllarge quantities of to reliably serve the gas and double-digit inflation.
gas to schools, hospitals.
electric needs of customers Because of unusually cold governmental agencies, and and to achieve energyself-weather in late December, limited service customers sufficiency, the retrenchment of unrecovered gas purchased (primarily new or expanding the national economy and its costs (due to the time lag industrial customers whose ad 7 effect on steel and steel-related between gas sendout and tional gas requirements would incustries, together with customer hilling) were substan.
exceed the current limitation of persistent double-digit inflation, tially greater in 1980 than 40,000 cubic feet per day).
the high cost of money, a maze in 1979, resulting in a negative Studies are being mace in con-of confusing and conflicting effect on earnings. Net income templation of a request to government regulations, and a for the year was $72.2 million, further relax service restrictions.
long work stoppage, toc't or $1.47 per share.
their toll on our operatio is.
Marketing St**' '"d"St'Y
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GAS OPERATIONS Our improved gas supply outlook nortnwest Indiana were re ison-will result in an attractive ably f ullin the early months of the Our gassupply showed continued marketing position for the year. but by March steel orders improvement during 1980.
Company, particularly if went into the swiftest, deepest For the year, gas availability from incremental pricing is repealed plunge in memory. Steel our five pipeline suppliers which would also increase production levels and the improved to the point where our supply reliability.
general economy of our service total contracted suppQ of area did not turn upward until approximately 316 bdlion cubic Last year we added approxi-j late in the year when they were feet was reduced onFj about mately 8,200 new gas customers, dampened by the prime rate 10 percent, compared to reduc-including initial hookups and hitting an all-time & of 21%
tions of 16 percent in 1979 and residential conversions to percent in December.
25 percent in 1978.This trend of gas from other fuel sources.
Other industries in our service increasing supplies, which While the recession caused a territ6ry, including housing.
we expect to continue, reflects slowdown in new construction, automotive equipment and increased economic incentives the pace of residential con-recreational vehicles, were for exploration and production, versions improved in northern also adverselyimpacted by the availability of intrastate gas in Indiana, as natural gas con-inflation and rising interest rates.
the interstate market, and con-tinued to enjoy a substantial Throughout the first nine servation by residentia!. industrial price advantage over alternative months of the year NIPSCO's and commercial customers.
heating sources.
6 i
l Exploration Activities We are hopeful that construction for use in tne 1981-82 w:nter The Anschutz gas exploranon will begin in 1981.
neanng season Developmental work continued i
project yielded its first gas flow Tnrough our exploration on our Mount Simon under-in 1980 We jcmed tnis project subs: diary-N EXCO-we initiatly ground gas storage formancn, t in 1976 by providing an interest-invested almost 516 mdlion our Royal Center storage fie:d free loan of more than $1.3 in two separate projects in the Tmee bilhon cubic feet of usable mdlion for the exploration anc Gulf of Mexico. cffshore natural gas should be in storage i
cevelopment of new gassupphes Texas and Louisiana As of in that formahon by 1984 in the CNerthrust Bett area December 31.1980. we have supplementing the 4 5 bdhcn cf Utah andWyoming Based on recovered $2.757.000 from cubic feet of usable storage tne progress to cate. the these projects Of the 12 tracts avadatte in the Trenton fermation Company has entered into in the first project. eight are an amended agreement witn the now producing Of the 31 original incremental Pricing same sames and has loaned an tracts in tne second preiect.
l Dunng 1980. we joined with the addstona! 513 mdh;n to two are nca producing American Gas AssoctaDon Anschutz for continued explora.
(AGA! and maic industr:es in i
tion and development Gas Storage launching an extensive drive to l
The Natura! Gas Pipeline repeal the incremental pncing Ccmpany cf America. our Construction of a second hauefied secten of the NaturalGas Pohcy largest succher and a partici-natural gas (LNG) storage of W8 WM Oc pant in the Anschutz prciect.
f acihty near LaPor'e. Indiana.
Company was in the vanguard I
along with other companies-p!ans which wall increase our LNG o
SeHon to budd a 0:0ehne to be known storage capacity from 2 bdhon to Specifically. the incremental l
as the Trailblazer System 4 bdlion cubic feet neared F#9 S*0D0' OI ** #A to transport this anc cther newly comp!etion during 1980 The reases that Werstate p:pehne
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c:scoverec gas *o market plant should be procucmg and local distnbunon companies l
Federal accreval was sought LNG for storage carry in 1981 pass on the ~ nigher cost" cf m 1980 and is still cenomg with the stored g. s avadable new gas to industrial facdities in the form of a surcharge NtPSCO personne! ren'acmg sectron of gas e peline near Rochester.
In view of the much improved f//
Supply picture. there is no justification for the ccntinuation
/g of discriminatory pncing of natural gas for industnal
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customers.Theref ore. dunng 1981 we wdi continue to work vigorcusly for the repeal of f
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k incremental pricing
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Another top legislative prionty y _
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for the year ahead is repeal T-
-J of the Fuel Use Act ban on the f-A>
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use of gas by major fuel-p w,g,g$ N
- n ir P e b
GG burning installations.
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Mme Eq g Peak Gas Sendout
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p.4 A new peak-day gas sendout was "Y
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Q reached for the 24-hour period
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ending noon. December 20.1980.
xM MM c c ff when 1356 bdhon cubic feet
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of gas was distnbuted That
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surpassed the cid rece'd of 1340
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[j billion cubic feet set on S
M January 24.1980 I
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ELECTRIC se17 miiiion from tne estimated assigned to environmentai construction expenditures facilities. Environmental OPERATIONS for the previous five-year budget equipment has become an period (1980-1984). reflecting increasing financial burden During 1980, we generated mainly the extension of the even though it produces 74 g ercent and purchased 26 in-service date of Bailly Nuclear no electricity and adds sub-percent of our electric energy One from 1987 to 1989 and the stantial maintenance expense.
reatirements.Thiscomparedwith delay of a proposed generating 62 percent generated and unit of undetermined location Bailly Nuclear One 38 percent purchased in 1979.
and capacity from the late 1980s Opposition to the construction The improvement resulted to the early 1990s.
of Bailly Nuclear One continued from the full-year's production included in the $2 billion to intensify.
of a 472-megawatt coal-fired constructic, budget are monies On November 26.1980, we unit and use of the two new for the completion of Units 17 further amended our request combustion turbine units (with a and 18 presently under con-to extend our construction combined summer rating of struction at the Schahfer permit for Bailly Nuclear One to 155-megawatts) at our Rollin M.
generating station in Jasper December 1.1989. Little Schahfer Station. We expect CouFy. Both units will burn progress has been made by the i
to internally generate a larger Mic; western high-sulfur coal and NRC to determine whether share of our total electriL will include flue gas desulfuri-the construction permit should requirements in 1981.
zation plants. Construction of be extended. Regulatory delays Internal capacity comes from these two units, each with a have not only delayed con-our four fossil-fueled plants-capacity of 344.000 kilowatts, is struction of Bailly Nuclear One Michigan City Station. Dean H.
on schedule. proceedin9 and increased the total cost Mitchell Station in Gary, toward our original June 1983 of this project, but have Bailly Station near Burns and June 1985 commercial also made it difficult to plan Harbor, and Rollin M. Schahfer operating dates.The reduction in other generation additions Station near Wheatfield. We also growth forecast will have no to meet the f uture electric needs have two small hydroelectric effect on the construction budget of our customers, plants near Monticello.
as it relates to this project.
We continue to believe that the Electric dernand growth in Some 5365.3 milhon of the construction and operation northern Indianais now estimated five. year budget is being of Bailly Nuclear One is in the at 4 percent annually. down from the previous estime m of 5.5 NIPSCO linemen put finishing touches on transmission line feeding Int nd Steen nw M substation.
percent.This compares with an estimated national growth L ~
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p rate of 3.5 percent.The downward adjustment reflects continued conservation and an anticipated reduction in the rate of growth actually experi-enced during the last 10 years.
Five-Year Construction Program In November we announced our five-year construction
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progr*am for the years 1981 ka o*h through 1985, which will result i
in an additional investment w
of almost $2 billion, including outlays of $489.8 million in 1981 and $466.7 million in 1982.
This represents a reduction of
p.M*W" mately $65.6 million based on in May and August 1980, the the 1979 test year. In the original Indiana Air Pollution Control i !
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petition to the Commission.
Board issued notices of violation filed Fcbruary 20.1980. an for opacity and particulate s
1 increase in electric revenues of emissions at the Schahfer gen-9 approximatWy $70.9 million erating station. followed in
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August by a similar notice from o N' Y The new rates were based on EPA. Another notice was E
"f adjusted 1979 costs. It will issued by the Indiana Air Board be necessary to file fo' another in January 1981.
k general increase in electric The problem cited in the g-rates early in 1981 to help offset notices of violation results from g_
the relentless upward spiral technological limitations.The m' "NAW A ch in operating costs and enable the program we have proposed as a A_
Oh, Company to achieve a f air and remedy is experimental in reasonable return on its plent nature. We are attempting to and facilities and to attract negotiate a settlement with the capital at reasonable rates regulatory agencies We cannot predict the outcome Environmental Activities of these negotiations.
Environmental eff orts at the An environmental project federal level during 1980 were completed during 1980 was a Power lines leaving Michegan City directed toward the regulation of multimilhon dollar wastewater Generating Station. one of our hazardous wastes and toxic treatment installation at the takefront plants.
Substances which can place an Bailly Station.This facility was additional!ayer of controls placed in service, along with best interest of our customers and costs on our operations _
the lining of wastewater ponds.
and shareholders.We recognize.
Intensified federat involvement to avoid seepage from the Bailly however that political and n the regulation of polychlo.
site into the adjacent Indiana emotional f actors. litigation rinated biphenyls(PCBs)resulted Dunes National Lakeshore Park.
delays. regulatory delays, in our development of a pro.
One set of wastewater ponds and other hostility, if continued was lined in 1980 and the giam to gradually phase out the in the future, may prevent use of this material between other set will be kned in 1981.
the construction of Bailly Nuclear 1981 and 1986 at an estimated New precipitators at Bailly One.The Company anticipates cost of $4 million.
Station's fossil-fired Units 7 and j
resumption of construction; in March 1980. EPA charged 8 will improve the collection however, when the pile driving the Company with violation of of particulate matter and further suspension is resolved. con-opacity standards at our Mitchell reduce dust emissions to struction will proceed only after station.The Company pro-the atmosphere. Changes in both the Company evaluates the ceeded to voluntarily install a s qits to cor. vert to balanced status of the extension of its different type of flue gas d; 9ft systems should contribute construction permit and related conditioning system on one of to,vard better generating matters, and determines that the Mitchell units. Because of equ.? ment availability.
reasonably foreseeable favor-the improved pa ticulate On Jaauary 16,1981, the able action will be taken collection evider ced by this Sierra C ub sued the Company on those,tems.
i installation. we are now in for alleged air standard viola-the process of installing this type tions at the Bailly generating Electric Rate increase of system on all units at the station.The Company believes it On August 27,1980, the PSC Mitchell station. Details of an is in compliance with the l
approved an 11.2 percent agreement with EPA covering applicable regulations since electric rate increase. which will the r'otice of violation and the their suit is based on a regulation j
increase annualrevenues from remedies instituted are currently that the indiana courts have electric operations approxi-being discussed.
held to be invalid.
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i Electric System Improvements 4;
in 1980. substantial construction W
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was completed to serve Inland 7
Steel Company's new 138-kv l
substation which provides
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energy for their recently dedi-NEShkMfIf l
cated blast furnace and other yYIDM Mf[
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new production facilities.
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substatiorm.. 3 constructed A major system substation T
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serves the Gary Sanitary District 1
plant ano surrounding area.
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with another serving the growing n
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reMdential load in the com.
munities of Dyer. Schererville.
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7-j Highland and Munster.Three Y-
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l substations were expanded to
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meet the growing electrical l
needs of industrial customers in
- f,X g.pgis Valparaiso. Warsaw and Goshen.
Transf ormer capacity was n
increased at several substations r /-y S I^'
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throughout our service area.
Sevoral electric distribution g
systems were converted from 4-(
kv to 12.5-kv to accommodate
.W increasing loads with new 34-Kv
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to 12.5-kv substations built to serve these conversion areas.
Additional towers were installed
- 88 "
8
- # U" to improve the reliability of rear Wheatfield, as seen from the cockpit of a helicopter our microwave system.
Also a new operating head-establishing precise service
" hold-card" system to quarters and repair garage area boundaries.
protect employees doing was completed in Plymouth, and We anticipate a net loss in maintenance or iapair work on l
I a new commerciai office w is number of customersserved,but power-driven machinery in occupied in Warsaw.
no materialloss of revenue our generating stations consti-since we will be serving addi-tuted a safety hazard. Judge REMC lssues tional high demand customers.
Maxwell said, in pertinent part.
A 1980 Indiana statute sh Juld
. statistically, the existing clear up long-standing service hold-card system at NIPSCO has area problems between Rural Landmark OSHA Decision worked impressively well. It is Electric Membership Corpora-On October 2,1990, in a even more impressive when we tions (REMCs), municipal precedent-setting decision, consider its frequency of use.
l utihties and investor-owned Occupational Safety and "During the 18 years it has been electric companies. Under Health Review Commission in use at NIPSCO, involving the supervision of the PSC. dis-judge Ralph B. Maxwei:
tens of thousands of instances l
putes concerning areas vacated a 1978 Occupational when it was relied upon for l
recently annexed by cities and Safety and Health Administration worker safety. it has not pro-l towns will be resolved, and (OSH A) citation. OSHA had duced a single instance of l
the entire state will be mapped charged that the Company's injury or fatality."
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here expect their key transpor-turing facility at Lever Bros.
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tation and energy costs to was opened in Hammond. and
-4 remain relatively low, helping Hoover incastries announced 4s their competitiveness and the planned relocation of
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g profit prospects "
its facilities to Fort Wayne m
"- ki Jones and Laughlin announced Miles Labcratories, head-a feasibility study for a multi-quartered in Elkhart, announced million dollar expansion projec'.
plans for a $30 million enzyme g{[g and U S.Steelbroughton stream company's existing properties.
T at its northwest Indiana facility.
plant to be constructed on the
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two modernized coke furnaces Major newcommunity projects J.
t One of many new residennal at its Gary Works. Later in the included the Gary Civic Center developments in our service area.
year, U.S. Steel announced two (Genesis Center); a new terminal multimillion dollar expansion at the Michiana Regional projects for its Gary mill, both of Airport in South Bend; the ECONCMIC wnien nave seneduied com-opening of the new eiknart Civic RECOVERY P'etion dates in 1982.These and Center, as well as downtown other major expansion projects, revitalization projects in South AND OUR eitner planned or currently Bend. Hammond and FortWayne.
SERVICE AREA under w y, ddt the already These projects together substantial industrial base with others currently on drawing The pace and quality of economic of our service territory and indi-boards, point to renewal of recovery in 1981 and beyond cate the level of confidence economic expansion throughout willlargely depend upon the in the region.
our service territory.
actions taken by the new Although the outlook for the administration in Washingten entire steel industry is somewhat Public Commun.ications and by federal and state undefined at this time, there legislators.The economic are tnarket areas that are During 1980, we launched a new momentum of our service area prornising. Among them are the program aimed at r pening an should gradually accelerate oil and g?3 industry which ongoing dialogue.]etween the as the year progresses.
continues to consume pipe and Company and the various other tubular products faster communities it serves.Through Steel Expansion than being produced and the establishment of Consumer During 1980, Inland Steel the energy industry which has Advisory Panels (CAPS) in Company completed a $1 billion.
a heavy use for steel plate.
each of NiPSCO's seven six-year expansion program operating divisions, a forum now at its Indiana HarborWorks which exists for an exchange of ideas will increase the company's Broad industrial Mix between the Company and vari-annual steel-making capacity by While the economy of northe n oss organized consumer groups.
13 percent. Upon the dedi-Indiana is greatly influenced by While the CAP program was cation of Blast Furnace 27. The the steel and steel-related temporarily interrupted due to Christian Science Monitor industries, our service territory the work stoppage, it will be reported."-The new furnace contains a broad mix of resumed and expanded during standsatthecenterr
- leworld's businesses ard industries. On the upcoming year. While majcr steel production area, balance, economic expansion we may not be able to stop rising which supplies 27% of U.S.
throughout NIPSCOland rates, we can at least explain output (compared with 17.5% for moderated during 1980-largely why bills are going up and what the Pittsburgh area). Because reflecting the business NIPSCO is doing to serve the northwest indiana steel slowdown felt nationwide-and orotect the interests of plants are in the heart of the main bt growth was not stagnant.
its customers.
U.S. raarket and at the cross-In addition to the major Our expanded newspaper and roads of rail-carried coal expansion completed at inland advertisag program, which and Great Lakes ship-carried Steel in East Chicago, a new began in 1979, was continued ore supplies, steelmakers highly automated soap manufac-during 1980.Through these D**]D
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I efforts. we apprised customers Home Energy Audits for forecasting requirements of stores items and the determi-of the various Company state The pla.1 for home energy nation of economic order and federal programs available to conservation audits, required cuantities. will greativ facilitate assist in the areas of weather-under the National Energy the task of maintaining optimally ization. bill payment assistance.
Conservation Policy Act of 1978.
efficient Quantities of supplies and third party aid-has been drafted by the Indiana and materials We participated in the Department of Commerce's A large central storeroom was State Assistance For Energy Energy Group and has been authorized for construction (SAFE) project.Th ough approved by the federal to begin ire 1981.This f acility will this program, economically goverament. We will begin enable uk ' J reduce our total disadvantaged Indiana residents implementation of our program material and supply inventories can receive assistance in about June 1.1981. utilizing and improve service capability paying fuel and utility bills during outside contractors to conduct to our geographically dispersed the winter heating season, the energy audits, working user departments.
As pa-t of our continuing in conjunction with computer program to Etrengthen communi-models to assist customersin the aMg cations with the communities formulationof acomprehensive The increasingly complex nature we serve, we held a regular energy conservation orogram.
Board of Directcrs' meeting at of the utility business makes Monticello in September On General Stores it essential that employees be that occasion, we invited local in December 1980. a new com-given specialized training business and civic leaders puter-based inventory control to improve their basic skills and to meet with our officers and system for our General Stores keep them abreast of tech-directors to hear a presentation department was substantially nological changes.
on the futre of energy and our completed This new system.
During 1980, a total of 1.031 Company s plans for meeting the which features the use of com-employees received classroom needs of its service territory paterized statistical techniques instruction at our modern Revitalization of downtown South Bend. as seen from the air.
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A settlement was finally benefit programs received fe reached late in January, with major attention from our Union employees scheduled industrial Relations department.
b to ridurn to work February 2.
During the year, operating 1981.The new 40-month procedures and safety rules were contract, which will be in effect reviewed and irnproved where until May 31,1984, provides possible.These efforts. along 1
the Company with sign'ficant with those of our employees, have relief in the critical work rules resulted in a substantial area and inc' #es a first year reduction in all categories of wage increau of 6 percent.with job-related accidents.
Second, third and fourth year Our college recruiting increases of 5% percent.
schedule has been expanded to Cutting a section of gas pipe 4 percent. and 3 percent, con-include 42 colleges and uni-tinuation of the cost-of-living versities. We are an equal Training and Utilization Center in adjustment clause, broadened opportunity employer. seeking LaPorte. Another 410 employees health care coverage, including any and all aualified applicants.
were given field training new dental and vision pro-In addition to Company grams. an improved life insurance O
Ch employees. Our training facilities plan, one additional day of were utilized by 256 repre-paid vacation, another paid At a regular meeting of the sentatives of civic and holiday, plus a number of other Board of Directors on January 27, community groups. including bEsic improvements.
1981. Eugene M. Shorb was Purdue University, the Boy We wish to express our deep elected executive vice president Scouts. Indiana vocational apprpiation to our more than and chief operating off:cer.
Technical School. and firemen 2.000 management. supervisory.
M r. Shorb, a 1949 engineering from surrounding communities.
technical and professional graduate of Purdue University.
Strike Ends After
- '"T'wees who maintained con.
will have responsibi;ity for tinu ?*of reliable gas and the Company E electric, gas Eight Months electric Service during the long, and division operations,in cluding At n"dnight on May 31,1980.
difficult strike period, and we engineering. and is the more than 4.200 Company welcome back our employees executive in authority next employees. members of locals of locals 12775 and 13796.
to the president.
12775 (physical) and 13796 it is still too early to calculate (clerical). United Steelworkers the financialimpact of the What Lies Ahead?
of America. AFL-CIO-CLC.
work stoppage on the Company.
went on strike.
but preliminary estimates UnquestionaD!y. we have gone We offered to extend the old indicate that the added costs and through a difficult period, contract on a day-to-day expenses incurred during but we are confident that the basis while bargaining continued-the strikewilllargely if not to' ally, foundation ha-been firmly The offer provided that either offset the savings in wages laid for a more prosperuuc side could give the other a not paid to striking employes s.
future. Natural gas supplies are 72-hour written notice of termin-increasing, our industrialized ation. If it had been accepted.
semce territory is recovering.
it would have allowed our Union Our EmployeOS a number of programs have been employees to remain on the We have approximately 6.200 implemented to increase job. with all wages and fringe employees. More than 54 Company produchvity, and our benefits provided for in the 1977 percent have 10 or more years of Union workforce is back on contract continuing in effect.
service with the Company the job with a contract in force Regrettably. the Union leader-More than 17 percent have over until mid-1984. While the ship rejected that offer.
25 years of service.
future is not without potential During the ensuing period.
Despite thelong strike. college pitfalls, we look to 1981 and numerous bargaining sessions recruiment, safety practices, the entire decade ahead with were held.
and the implementation of fringe tempered optimism.
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@-PuSLic SERvtCE C04sPANY OF INDIAfsA,lesC, s-consuutRs powtR consenny Serving Northern Indiana Northern Indiana Public Service Company is an investor-owned public utility engaged in supplying electrical energy and natural gas to customers living in a 12.000 square mile service area in the northern third of the State of Indiana.
The territory has an estimated population of 2.124.000 and extends from filinois to Ohio and from FAichigan to slightly south of theWabash River.
Organized as an Indiana corporation on August 2.1912.
NIPSCO is the state's largest gas distribution utility and one of its five major investor-owned electric companies.
Corporate headquarters are located at 5265 Honman Avenue.
Hammond. Indiana 46320. For operating purposes, the service area is divided into seven geographical divisions, which are subdivided into 22 districts. Although each district possesses its own distinct economic. social and cultural traits, together thev form a growing territory that we take pride in ser dng.
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INTER $ TATE GAS PtPfLPeE ConspasmES GAS uset$
TNM wm 8 L6QUEFIED NATURAL GAS PLANT g unoc=Gaou=o gas sTonAGc neto e PURCHASING PolNTS DIVISION MANAGERS District and Local Managers James D. Breed Robert R. Hart Richard D. Kitt James 'M. Melton Calumet Division
' own Point Plymouth Kentianct Edward H. Bowles Frank S. LaMantia Charles A. Heim Richard B. Humphrey Gary Division Hobart Warsaw Angola Michael J. Pryor Charles L. Hazlett Domer R. Long John L. Metz Dunes Divis*on Valparaiso Nappanee Bluftton Thomas W. c3ucher Carl A. Shakley Jay P. Peff ey Keith M. Byer St. Josepi, L' alley Division laPorte Syracuss Decatur Harry H. Joanson C. Eduard Hewitt Jr.
Hal C. Jaltice Donald C. Heiden Goshen Division Chesterton Peru Columbia City John W. Gastel John R. Karch William F. Smith Henry S. Platts Southern Division Elkhart Wabash lagrange Paul E. Seybert Louis P. Gryp Arthur W. Bramble Fort Wayne Division Mishawaka Logansport D**D
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Financia[ Review 1980 Total operating revenues in 1980 exceeded Expenses
$1.366 bil"on, or 14 percent over 1979, however.
Our vulnerability to the adverse effects of net income decreased by $4.6 million, some inflation was particularly evident during 1980.
6 percent below the previous year.
Prices for almost everything we bought to After deducting preferred and preference provide service to our customers advanced sub-stock dividends, there remained a balance of stantially during the year.These include
$55 million, equal to 51.47 per share on the maintenance costs, as well as coal to generate 37,429,554 average common shares outstanding electricity, gas from suppliers, borrowed during the year.
money, vehicles, wages, fringe benefits and Gas revenues were higher in 1980, rising to insurance. In addition, the strike of our Union 5728 million, some 15 percent over 1979.This employees, which began June 1,1980, and increase was due to the recovery of gas purchase continued through the end of the year, resulted and storage costs through rate adjustment proce-in unusual costs to maintain service.
dures even though gas sales were down 3 percent.
Total operating expenses, including maintenance Electric revenues advanced 14 percent to $638 and depreciation, increased $157 million, or million. an all-time high, reflecting general retail 16 percent over 1979.
rate increases that became effective July 19,1979.
Gas purchased costs increased $106 million and August 28,1980, and the tracking of fuel This was the result of an increase in the avetage costs which offset the reduced kilowatt-hour sales.
cost of gas purchased from $1.73 per Mcf in which were down 8 percent for the year.
1979 to $2.21 per Mcf in 1980. Because of year-end The revenue and utility operating income weather patterns, unrecovered gas purchased derived ftom the sale of gas and electricity is costs (due to the time lag between gas sendout and reported in the notes to the financial state-customer billing) were substantially greater in ments as" Segments of Business.'
1980 than in 1979.
UTILITY PLANT INVESTMENT OPEF.ATING REVENUES
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Fuel for electric generation increased $30 A public offering was made by the underwr:ters.
million due to additional generation and an Net proceeds to the Company were $ 59.C09.778.
increase in the average cost per ton of coal.which On October 7,1980, the Company issued was $33.65 in 1979 and increased to 539.26 and sold to underwriters 3 million shares of in 1980.
common stock with net proceeds to the Company Depreciation and amortization expenses were of $33.686.637. A public offering was made uo $10 million, reflecting additions to property by the underwriters.
including Unit 15 at the Schahfer station for a full On December 19.1980. the Company executed year. Allowance for Funds Used During a three-year Credit Agreement with 15 inter-Construction decreased $7 million due to Unit 15 national banks under which the Company may behg placed in service October 31.1979.
borrow up to 575 million at interest rates varying Interest expense increased $13 million, from time to time with the London Interbank reflecting continuing high levels of conttruction Offered Rate (LIBOR). An initial borrowing of 576 expenditures which required issuance cf addi-million was made on December 19.1980. for an tional debt securities.
initialinterest period of 2 months at an annual rate f 22% Net r eeds ammnted to $N,754535.
Taxes During 1980,, e issued commercial paper from Tax provisions charged to operations time to time as short-term financing. Our bank amounted to $99 million in 1980, some 7 lines of credit, which stood at $212.2 million at the percent of operatm, g revenues.
end of "80, fully support our commercial paper.
There was no short-term debt outstanding at Financing December 31,1980.
During 1980, we raised almost $193 million The Company exercised its option to redeem in external f unds for application to our construction 16,000 shares of 11.64% cumulative preference program, as listed below:
stock. 550 par value, in addition to the 16,000 On June 12,1980. the Company issued and shares required to be redeemed through the sold to underwriters 2 million shares of common SWng fund on Septeder 1,1981 stock with net proceeds to the Company of
$ 25.269.481. A public offering was made by Plant investment the underwriters.
Our total plant investment on December 31,1980.
The Company issued and sold to underwriters was $2.6 billion, which is more than double
$60 million principal amount of 30-year, Aa and the plant investment in 1973. Additions and AA-rated. First Mortgage Bonds Series DD.11XL replacements in 1980 amounted to $255 million.
GAS SALES ELECTRIC SALES Bacts e nor,s g CuteFeet Kwa 280 m
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3 8.500 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 iI
Shareholders As a re tult of the sale of common stock during 1980 H:gh LOW Dividend I
1980. o ir total number of chareholders passed the F rst Quarter.
14M 10%
374c 84.000 i tark by the end of the y ear.
Second Quarter.
14%
11 %
37Mc At that time. we had 79.052 common stock-Third ~ arter.
14 11M 37MC holders. 3.960 holders of preferred stock, and Fourth Guarter.
12%
10 37Mc 1,140 holders of preference stock.
Whi e this ownership extends into every state t
1979 of the union and many foreign countries, as an Indiana corporation, we have long encouraged First Quarter.
16%
15%
37Mc local ownership of our stock.The largest con-Second Quarter.
16%
14%
37Mc centration of our shareholders lives in Indiana.
Third Quarter.
16%
15%
37Mc Our common stock is listed and traded on both Fourth Quarter.
154 13 37Mc the New York and Midwest stock exchanges.
The table at the right indicates the high and losv sales price of our common stock. on the composite For the convenience of shareholders, we plan to tape. during the periods indicated. Dividends per establish three toll-free telephone numbers share are also shown for the ye.rs 1980 and 1979.
connected to our Shareholder Relations depart-Our Automatic Dividend Rei ivestment and ment, which can be used v.5en inquiring about ock Purchase Plan continued to receive strong holdings.These numbers will be in place during r.,srticipation by stcckholders.
the first quarter of 1981.
CAPITAllZATION RATIOS EARNINGS AND DIVIDENDS PER COMMON SHARE E LONG-TERM DEBT E COMMON STOCK EQUITY B EARNINGS PER SHAFii Pe m a PREFERREC AND PREFERENCE STOCK 5 DIVIDENDS PER SH ARE.
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will be reQues*ed by the Board of will be provided without charge to any shareholder or Directors in the proxy statement. notice beneficial owner of shares of the Company s stock and form of ortxy to be mailed to upon wutte1 request to M J. Mikulas. Secretary common shareholders on or about Northen) Indiana Pubhc Service Company, March 6.1981 5265 Ho.1 man Avenue. Hammond. Indiana 46320 18
Northern Ind:ana Public Service Company
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Statement ofIncome Year Ended Decerber 31 1980 1979 1978 (Dai;ars in thousanas)
Operating Revenues:
Gas S 728,638 5 636.160 5440.483 Electric.
637,887 560,084 509.790
- 1. 66,525 1.196.244 950 273 Opera!!ng Expenses and Taxes:
Operation-Gas purchased for resale 554,806 448.511 300.016 Power purchased 99.855 109.229 125,181 Fuc lor electna generation.
203,273 172,900 145.026 Other operation.
133,886 122,337 97,593 Maintenance 82,122 74,673 53.388 Depreciation and amortization 68,821 58.393 50.023 Taxes (except income]
45,070 45.430 41,242 Income taxes-Federal-current.
4,592 3.895 3.296 State-current.
2,173 2,175 2.064 Deterred federal. net.
32,606 31.260 21.897 De' erred state. nel 1,725 1,736 1,022 Deterred investment tax credits. nel 12.772 15.897 14 197 1,241,701 1.086.436 854.945 Operating income 124.824 109.808 95.328 Other income:
Allowance for funds. Other than borrowed funds.
used during construction.
14,338 19.577 15,546 Other net.
2,244 1,835 1,815 16,582 21,412 17,361 income Before Interes. Charges.
141,406 131.220 112.689 Interest Charges.
Interest on long-term debt.
74,090 61.290 58,308 Otherinterest 5,795 5.686 1,630 Allowance for borrowed funds used during construction.
(11,205)
(13.052)
(10.256)
Amortization of premium, reacquis; tion premium, discount and expense on debt. net -
496 437 426 69,176 54.361 50,108 Net income 72,230 76,859 62,581 Dividend requirements on preferred and preference stocks 17,203 17,369 15.832 Balance for Common Stock.
55,027 5
59.490 S 46.749 Average common shares outstanding.
37,429,554 31,972,567 28,951.104 Earnings per share on average common shares outstanding.
$ 1.4 7 St86 S1 61 The accompany,1g notes to f>nancial statements are an intaryalpart of this sta'ement l$
( ) Denotes deduction
Northern Indiana Pubbc Service Company Balance Sheet Decemw 31.
1980 1979
[L)Ouars in inousanas]
Assets Utility Plant. at onginal cost (including total construction work in progress of $438.862 and S295.171 respectively which includes S198,964 and S179.444. respectively for Bailly Unit N1-see Nuclear Generating Unit note]:
Electnc.
$ 1,936,618 S1,732.997 Gas.
572,590 542.453 Common.
78,759 65.106 2,587,967 2,340.556 Less-Accumulated provision for depreciation and amorti:ation.
449,964 387.654 2,138,003 1.952.902 Investments-Subsid:ary companies not consolidated. at equity 14,533 16.265 Other at cost.
2.911
.546 17,444 17.811 Construction and Other Special Funds.
9,707 9.482 l
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Current Assets:
Cash.
17,762 19.357 Accounts receivaDie, less reserve of S1.500 and $971 respectively.
137,929 122.259 Fueladjustment clause balance.
1,742 Matenals and supphes, at average cost.
51,546 36.672 Electnc production fuel, at average cost.
107,826 110.346 Natural gas in storage, at last-in, first-out cost.
36,665 34.405 Prepayments and other.
6,057 4.048 357,785 328.829 Deterred Charges:
Unamortized reacquisition premium on debt and debt expenses.
9,310 9.294 Other 6,766 883 16,076 10.177 52,539,015
$2.319.201 20 rne accompant,no nores to 1,nanc,aistatements are an,nieg,,ivarr or in:s srarement i
1980 1979 (Da:es :n thousanas:
Common Stockholders' Eautty.
Preferred ac Preference Stocks and Liab:ict:es Cap ta:ization (see page 22):
Common stock-no par value-authonzed 55.000.OOO and 40.000.000 shares. respective ly-tssued and outstanding 41.127.000 and 35161.492 shares respective ly.
S 583,013 S 510.095 Retained carn 'ngs 132,009 137.916 Totalcommon stockholders eau:ty 715,022 648.011 Preferred and preference stocks:
Senes without mandatory redemption provisions.
141,392 141,392 Series with mandatory redemption provisions.
90,798 92.215 Long-term debt 1,029.845 900 302 Current Liabil: ties ^
Obligations D;e W,th:n One Year boected to be Refinanced-Commercial paper 22.000 Senes E Bonds. 2%;, due March 1,1980 9,C55 Senes F Bonds. 2'J. due May 1.1980.
8.360 Other Current Liabilities-39415 Accounts payable 132,134 129.564 Sinking funds due within one year.
900 1.010 D:viaends declared 19,642 17.451 Customer deposits.
5,046 5.188 Taxes accrued.
30,938 35.047 Interest accrued.
19,251 18,350 Fuelad;ustment clause ba!ance.
954 Gas refunds due customers w: thin one year.
14,173 5.161 Other.
9.812 8.807 232,850 220 578 Total current liabflities.
232,850 259.993_
Other:
Defe'rred income taxes.
217,981 183.376 Deferred investment tax credits. being amortized over life of related property 96,296 85.567 Deferred credits.
12,975 6.774 Other reserves.
1,856 1.571 Comm:tments and Nuclear Generating Unit (see notes)
$2,539,015 S2.319.201 2!
f'orihern Indiana Pub!c Service Company Statement of Capitalization 1980 19l9 De:e-w 3r (DO::a's m (MusanoC Common Stockholders ' Ecuity Common stock -no par va!ue-a utnanzed 55 000.000 and 40 C00 000 snares respectively (3.954.367 shares resened)-ossued and omstand ng 41,12 7.000 end 35161.492 shares, respectively.
s 583,013
$ 510.095 Retained earnings 132.009 137.916
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Total Common Stockhoiders Ecwty 715.022 36.2%
648.011 36 4; l
Preferred and Preference Stocks. which are redeemable 1
sole!y at cpt;on of tre is. suer-Cumulative preferred stock-5100 par value-4's ? series-211,380 shares outstanding 21,138 21.138 4W senes-80.000 shares outstand:ng 8.000 8.000 4 22% senes-120.000 shares outstand:ng.
12,000 12.000 4 BBR senes-1C0.000 shares outstand:ng.
10,000 10,000 7 44 % senes-3OO.OOO shares outstand:ng 30,000 30.000 7 50'senes-300.000 shares outstand ng 30,000 30 000 Premium on preferred stock 254 254 Cumulative preference stock-550 par va'ue-8 36; ser>es-600,000 shares outstand:ng 30.000 30.000 141.392 7.1 %
141.392 79i Redeemable Preferred and Preference Stocks.
subiect to mandatoy redempt:On requirements or whose redemption is outside the control of the issuer-Cumulative preferred stock - S100 par value-8 85 % senes-250.000 shares outstanding.
25,000 25.000 7k senes - 100.000 shares outstand:ng.
10,000 10.000 8 35 % senes-100.000 shares outstand ng.
10,000 10.000 7Y series-200,000 shares outstand:ng 20,000 20.000 Cumulat:ve preference stoch 550 par value-1164 b senes-208.000 and 240.000 shares outstand ng, respectreely.
10,400 12.000
- 6. 70 % senes - 300.000 shares outstanding (convertible into not more than 821.917 shares
, of common stock) 15,398 15 215 90.798 4.6 %
92.215 52*
Cumulative Preferred Stock-no car value-authorized 3.000.000 shares-none issued.
Cumulative Preference Stock-no par value-authorized 3.000.000 shares-none issued.
Long-term Debt (see page 23).
1,029,845 52.1 %
900.302 50 Sh Total Captalization
$ 1,977,057 100.0%
51.781 920 1000 22 The acco.~oany:ng notes to financet statements are an negrarcan of thrs statement
Northern Ind:ana Pubhc Service Company Statement of Long-Term Debt Decem:w 3 L 1980 1979 (Dows..> tnousa,cs First Mortgage Bancs-Sene.s G.
3':L-due March 1.1982 5
7,600 5
7.600 Senes H.
3'e :-due July 1.1984.
7,700 7,800 SenesI.
5"'
-due August 15. 1987 17,190 17.400 Senes J.
J':':-due January 15 1989 20,731 20.976 Senes K.
4=~^ -due February 15.1990.
12,488 12.738 Series L.
Ah '-due March 15.1992.
17,200 17.200 Senes M.
- =-due Anni 15.1993 26,091 26,380 Senes N.
4 5 = -due May 15,1995 26,692 26.992 Senes O.
6h *-due Sectember 1.1997 32,183 32.533 Senes P.
6's ' -due October 1.1998.
18.572 18 7 %
Senes S.
8% :-due May 1 2001 47,491 47,976 Senes T 71: ^:-due Apn! 1. 2002 47,975 48.500 Senes U.
8: = h -due July 15.2003 72,750 73.500 Senes V 8 90F=-due Av t 1,2004 73,450 74.200 n
Seres W.10 40R-due September 1. 2004 12,962 13.145 Senes X.
84 '-due Ju!y 15.1983 80,000 80,000 Series Y BV-due October 1* 2006.
60,000 60.000 Ser es Z.
8% :-due August 15,2007-50,000 50.000 Senes AA. 8%-due November 1, 2007.
65,000 65.000 Senes BB. 9'^-cue June 15.2004.
45,000 45,000 Senes CC.112n-due December 15.2009.
60,000 60.000 60.000 Series DD.11 %-due June 1, 2010.
. 861,065 805,739 Series A Notes (Po!!ution Control)-
City of Mich gan City -5. 70?= due October 1. 2003.
23,500 23.500 County of Jasper-S10,000 @ 6 40% due February 1.1985.
524.000 @ 7:= L dJe Februa'y 1, 2005.
34,000 34 000 57,500 57.500 Senes 1978 Note (Pollution Control)-
County of Jascer-6. 70 % due November 1, 2008.
18,000 18.000 Notes payable-due December 19.1983 (see note].
75,000 Convertible Debentures -
42-due February 8.1992 (each 5100 Debenture presently convertible into four shares of common stock upon payment of $2.16 cash, subject to adjustment in certain events).
20.349 20 38*
Unamortized Premium and Discount on Long-term Debt. net (2,069)
(1,325]
TotalLong-term Debt, excluding amount due within one year.
51,029,845
$900 302 Itw aCCompa. png notes to frnancelstatements are an integralpa?? Of this statement
( ) Denotes deduction 23
Northern Ind:ana Pubhc Service Company Statement of Sources of Funds Used for Capital Expenditures 1980 19 79 19 78 Year Enced Decemoer 3 t (Dcitars on thousands)
Funds Provided Internally.
Retained earnings-5 72,230 S 76,859 S 62,581 Net income.
Less Cash dividends on preferredandpreference stocks.
16,990 17.179
_ 15.908 Net income available for common stock.
55,240 59,680
<,6 73 Less Cash dividends on common stock.
58,141 49.406 44,346 Total.
(2,901) 10,274 2.327 Principal non-cash items-Depreciation and amortization 68,821 58,393 50.023 Deterred fecetal and state income taxes, net.
34,331 32,996 22,919 Deferred investme,;* !ax credits (excluding ESOP). net 10,729 i5.793 12,691 Allowance for funds, ott,er than borrowed funds, used (14,338)
(19 577)
(15,546) during construction Tota!.
99,543 87.6_0_5 70.087 5
Total provided internally.
96,642 97,879 72,414 Less. Sinking fund retirements.
6,944 6.74 1 54E2 Total 89,698 91,138 66.932 Funds Obtained From Outside Sources:
Sale of bonds.
60,000 105,000 Sale of preferred and preference stocks.
45,000 Sale of common stock.
61,750 59,250 34.500 Sale of notes.
75,000 18.000 Otherissues of common ctock.
11,168 7,312 4,372 Net changes in construction and other special funds.
(225)
(712) 2,188 Net changes in commercialpaper.
(22,000) 22,000 Net changes in bank loans.
(45,00C) 45.000 Net changes in J S. Government secunties.
10,008 34,918
_ 23.378)
(
Other; including changes in other net current assets.
(16,205)
(41.277)
Total.
169,488 116,581 160,600 Less: Retirement of bonds, debentures and preference stock.
16,894 14 10.013 Total.
152,594 116,567 150,587 Total Above Funds.
242,292 207,705 217,519 Allowa' ce for Funds, Other Than Borrowed Funds, Used n
During Construction.
14,338 19.577 15.546 Total Available for Capital Expenditures.
5256,630
$227,282 S233.065 Capital Expenditures:
5 1,366 S
S 8.400 Gas supply exploration.
255,264 227,282 224.665 Construction expo' " ires.
5256,630
$227,282 S233.065 Total Capital Eg
. as.
The accompanying notes to lunancial statements are an integralpart ofInts statement 20
( ) Denotes deduction
Northern Indiana Public Service Company Statement ofRetainedEarnings Year Encea December 31.
1980 1979 19 78 (Doliars in thoussnds)
Balance at beginning of year.
$ 137,916 5130,140 5130.512 Net income.
72,230 76.859 62.581 210,146 206.999 193.093 Deduct:
Dividends on preferred and preference stocks.
16,990 17.179 15.908 Dividends on common stock.
58,141 49.406 44.346 A mortization of discount and expense cn pre lerence stock.
206 206 34 Write-off capital stock expense.
2,800 2.292 2,665 78,137 69.08' 62.953 Balance at end of year.
5132.009 5137.916 5130.140 Notes to FinancialStuements Nuclear Generating Unit evaluates the status of the extension of its construction permit and related matters. a nd determines that reasonably Current Status foreseeable favorable action wdl be taken on those items.
Construct:on of a 644 000 kt!aaatt nuclear generanng un;t The Company cannot predct the duration of the delay (Ba'ily Und Ntj at the Company's Badly Generating Stanon in construction or estimate the addnional costs asso-on the south shore of Lake Michigan in Porter County ciated therewith Indiana has been effective!y halted since September 28 The Company continues to believe that de constmo 1977, pending comp ehon of the Nuclear Regulatory tion and operation of Bailly Und N1 is in its best interest Commission (NRC] Sta'f safety review of the proposed and m the best interests of as customers, shareholders.
one placement method. Complenan of Bailly Und Nt is employees and the territory which it serves The Company cependent upon the successful resolution of the currently outstanding issues descnbed below and ofissues whch recognizes however. that nolitical and emotional factors, may anse in the future The currently outstanding issues Idigaton delays, regulatory delays and other hostdity if I
include the NRC revies of ode placement methodology continued in the future, may prevent the construction of and the appea! before the Unded States Court of Appeals Bailly Und Nt for the D: strict of Columbia Circwt conceming whether a The Company cannot predict what other events may hearing should be held on the pile design: the construction occur which could continue to delay or hatt the project permit extension. including the issue of whether a Supple-nor the economic impact of such events.
mental EnvironmentalImpact Statement is required the I
Poner County zoning appeal. the request of severalinter-Estimated Costs venors to suspend or revoke the construction permit: and
. Approximately $19d.964.000 has been expended by the impact of the Three Mile Island incident on design the Company on this project as of December 31,1980.
j and construction-Dunng the delay in construction, hmited expenditures The NRC is considering instituting a proceeding to continue to be made on the project in addition to the con-l require the Company to show cause why the construction tinuation of capitalization of allowar,ce for funds used l
permit for Bailly Unit N1 should not be modified. suspended during construction which amounted to $10.765.000, or revoked The Company cannot predict the outcome of
$12.477.000, and $13 403.000. respectively for the years this consiceration or the scope of any proceeding which 1978.1979 and 1980. The Cc;npany antcipates that the might be ordered cost of Bailly Unit N1 wdl be recovered over the service Ide of the unit.
Rep Toby Moffett [D -Conn ). Chairman of the House Subcommatee on Environment. Energy and Natural If an event or events occur which would prevent con-Resources. by letter dated January 5,1981, has requested struction or operation of Bailly Unit Nt it is uncertain. at the NRC to recuire now that adequate emergencyplanning this time. what 3ddnionalcosts could beincurredbecause for the sne be made or to direct the Company to abandon of contract cancellation. what part of the Company's total the project expenditutes would be recoverable and what the extent The Company is of the opinion that the November 8.
and timing of the resulting adverse economic impact on 1976 Unded States Supreme Court ruhng discussed the Company would be.
below allows it to 90 forward with construction of Bailly The Company's most recent cost estimate. made as Unit N1 The Company an'icipates resumption of con-of October 30,1979 and based on a 1987in-service date.
struction: however, when the pile dnving suspension is amounted to $1.1 bilhon. exclusive cifuel and fuel ennch-resolved. construction wdlproceed onlyatterthe Company ment costs This was an increase over the prior estimate Lg
Northern Indiana Public Service Company Notes to Financial Statements (Continued) of the cost of the project. and the increase was genera y petdions. On September 6.1979 the Court of Appea!s due to infiatcn. Because the 1:.-service date of Ba9y Und affirmed the Apn120.1978 decision of the Commissioners N1 a d!be delayec to 1939. t is anncipated funner increased On September 28.1977' pae dnving activ: ties a ere s us-costs wdi be expenenced, in amounts which haye not yet pended at the request of the NRC unn! add:nona! ground been esnmated A new cost estimate forthe 19891n-service sater mondanng wel!s were installed and a NRC staff date wi:l be completed in the sonng of t991 revoes comp:eted on October 3.1977. the NRC sta!!
adv: sed that resumption of pde placement was also con-tingent upon a favorable safety review of the proposed ode History of Proceeding pl cement method The Company has submnted com-in August.1970. the Company apphed to the Atomic prehensive data supponing mechanica! Dile placement Energy Commiss:On [AEC now the NRC) for a construc.
On AugusM 1978. the NR%3Haumonzedthe Company tion perm:t and coe"anng bcense for Ba.Ily Und N1 The topr ceeM n&atow!Mnwg7 gr mt conHm Company present!y has fossa bred unds wth a net capa-the acceptabddy of the Companys proposed memod of Dd.ty of 523 900 kaosatts at its Badly Generating Stanon_
pae dnving The Company completed the indicator pae The Porter County Cnacter of the Izaak Wa ton dnving program and fded as report wdh the NRC sta!! on League of America Inc. Concerned Caizens Against December 41978 The report. in the Company s opinion Bai;iy Nuclea" Ste. Businessmen for the Public Interest.
susta:ns the adequacy of the proposedpde dnving method inc and others who are opposed to the construchon of The NRC sta't has requested the Army Corps of Engineers Bacy Un,t Ni (the Joint Intervenors] sere permitted to to review the proposed pile dnving method The review is intervene in tne proceedings before the AEC currently in progress The Company is awading the com-On May 3.197d the AEC issued a construchon per-pleticn of the NRC staff s teview of the Company's proposa!
ma The issuance of the permd was challenged before the As hereina *ter stated the Compa ny ca nnot predict the dura -
Atomic Safety a~' Licensing AppealBoa'd in the Unded tion of such review or the costs associated therew th. The States Court of Appea:s for the Seventh Circuit and in the Company is concerned by the fanure of the NRC sta!! to Unded States Supreme Couti by the Joint Intervenors. The move more expeditiously on this matterand other matters State of liiinois and the my of Gary Ind:ana. icined the re:at ng to Bad ly Joint Interdenors in the court proceedings On Apnl 1, in November.1978. Joint Intervenors. the State of 1975 the Court of Appeals set aside the AEC order.
Ithnois the Cay of Gary the Lake Michigan Federat?on and enioined construction of Bad!y Unit N1 and orde ed ite Local 1010. United Steelworkers of Amenca. filedpetitions excavanon therefor h!!ed On November 11,1975, the which requested the NRC to instdute heanngs and stay Un:ted States Supreme Coun reversed the Apol 1,1975 construction pending the outcome of the heanngs relann; decision of the Court of Apocals and remanded the case to the Company's pae dnving method Local 1010 repre-for cecision of issues not decided by the Court of Appea!s-sents the employees ofInland SteelCompanyat as inc6ana On Anni 13. 1976. the Court of Appeals decided such Harbor Works On December 12, 1979. the NRC denied issues and denied the Joint Intervenors' " Petition for allof these petinons On February 7,1980, the petitioners.
Reitew of Fina: Orders of the Atomic Energy Commission' except the Cny of Gary fded in the United States Court of oppcsing the construction permd held by the Company Appeals for the Distoct of Columbia Circuit a pet. tion to The Joint Inte"venors and others hied perinons for rehear-review the December 12.1979 ruling The Company is ing of the April 13.1976 decision, which were all denied opposint :he petition.
by the Coun of Appeals on June 1.1976 On Augt.st 27 On February 71979. the Company requested the 1976. the Joint Intervenors, the State of flunois and the NRC to extend the latest completion date in the construc-City of Gary Indiana. fded with the Unded States Supreme tion permd for Badly Und N1 from September 1.1979 to Court a Petdion for a Wnt of Cemorari The issuance of Septe.nber 1.1985 On August 31. 1979, the Company the construction permit was ulumate!y sustained by a ruhng amended as request to ask that the ratest comprenon date of the United States Supreme CoJrt on November 8.1976 be extended to December 1.1987 On November 26 1980.
SuDsequent to the Supreme Court ruling Joint Inter-the Company further amended as request to scer a latest venors. the State of Ilhnois. the C,ty of Gary and others completion date of December 1,1989. due to the continu-Ideu w th the NRC a request to instdute a proceeding and ing delays discussed herein. In 1974 when the Company
' uspend and revoke the Company's construction permit received as construction permit for Badly Und N1. a was On Apnl 15,1977 the Director of the Office of Nuclear an!cipated that construction would be completed no later Reactor Regulation of the NRC denied the request in its than September 1.1979 However because of the various entirety On April 20.1978. the Commissioners of the NRC delays due to legat proceedings and regulatory review also denied the requestin its ennrety Under date ofJune 14 delays in pile placement. the continuing effects of the events 1978. the Joint Intervenors ided in the united States Court at Three Mde Island (see below) and the NRC's report of Appeats for the Distnct of Columbia Circun a petition to that longer periods of hme are now needed to construct review the April 20.1978 order of the NRC Subsequently facihties, it is necessary to extend the comp;etion date 26 ine State of iihnois. tne Cdy of Gary and others ided simdar establisned by the construction permit
Northern Indiana Public Serwce Company Notes to Financial Statements (Continued]
Joint Intervenors. State of Illinois and Local 1010 each events have precipdated a review of safety standards and petaroned the NRC for a hearing on the extension of the procedures and related equrpment for the construction construction permit On November 26. 1979. the NRC and operation of nuclear generating units The Company's issued its Nonce of Opponunny for Hearing relat've to the B31lty Unit N1 wdl be a boding water reactor. different in construction permit extension, and severa! groups and design and manufacture from the pressurized water reac-individuals idedpetitions requesting hea nngs and opoos ang fors at Three Mde Island The President's Commission on extension of the construction perma On May 30,1920.
the Accident at Three Mde Island and the NRC's Special after a preheanng conference, a provisional order was Inquiry G roup have both issued finalrepons which, among issued to whch theparttes filed ob;ections andcomments other things, contain extensive recommendations on A f.nal order was issued by the Atomc Safety and Licensing aspects of nuclear power, and on December 7,1979 the Board (Leensing Board) on August 7.1980 The order President announced his agreement with the spint and adm ited some of the petit:aners as parties and provided intent of these recommendations and his initiation of steps that a heanng wdl be held The City of Gary United Steel-toward their implementanort These events have diverted woricers of Amenca Loca! 6787 (Local 6787 represents NRC staff people who were reviewing Bailly Unit N1 matters empicyees of Bethlehem Steel Companys Bums Harbor to reviews of Three Mde Island issues. which has delayed Plaat] the Bai!y A!!iance. Save the Dunes Councd. Critical the resolution of pile placement as descnbed above and Mass Energy Protect and George Shu!!z [ Gary Petitioners).
has affected the NRC's processing of the Company's who were denied party status by the Licensing Board.
pending request for an extension of the completion cate appea!ed to the Atomic Safety ana Licensing AppealBoard for Bailly Ur.it N1. The NRC has adopted new regulations (Appeal Board) The AppealBoard on November 20.1980 regarding emergency planning and an intenm policy on affirmed the Licensing Board order, and the Gary Pett-plant operanons The Company cannot predict what new tioners appealed the Appeal Board orcer to the fu!l NRC statutes. further regulations or cntena may be adopted on December 8.1980 whether design changes applicable to nuclear facdities n w under construction willbe required. or what effect the On August 12,1980. the federal Counca on Environ-Three Mde Island accident and the vanous investigations m enta! Oua isty responde d to a letter from the State ofillinois nd actions which have resultedtherefrom mayhave upon regarding the applica on of the National Environmental the construction schedule, licensing. in-service date or r
Pol:cy Act (NEPA) to the extension of the construction cost of Badly Unit N1.
permit The Councilstated its conclusion that under NEPA
'the NRC should prepare and circulate a supplement to A resident of Porter County Indiana, by letter dated the (Environmental Impact Statement) on the Badly N-1 February 25.1980, requested the Porter County Board construction permit poor to rendenng a decision on the of Zoning Appeals (BZA] to declare that the improvement pending request for a permit extension " By letter dated locanon permit issued on 1974 for Badly Unit Nt is in viola-September 24, 1980. the National Audubon Society.
g,op of the County zoning ordinance and that the permit National Wddlife Federation. Sierra Club Legal Defense should be revoked and construction halted The request Fund. Izaak Walton League otAmenca. NaturalResources claims that a special exception to the Porter Ccunty Defense Councd. and National Parks & Conservation zoning ordinance was required prior to the issuance of l
Association have also requested the NRC to prepare a the improvement location permit in 1974. The request I
supplementalenvironmentalimpactstatement(SEIS) On asserts that a special exception was required because i
October 3.1980, the Secretary of the Interior sent a letter nuclear fuelis listed in a section of the ordinance with to the Chairman of the NRC requesting a SEIS because other matenais, the use and storage of some of which of alleged dewatenng effects on the Indiana Dunes require a special exception under a different section of the National Lakeshore The decisions as to whether a SEIS ordinance On August 18.1980, the BZA upheldissuance is prepared and the scope of any such supplement willbe of the permit in 1974. but indicated that it may require l
made by the NRC. The NRC staff has announced it will that the Company obtain a special exception at a later prepare an environmentalimpact appraisal before deter-stage in plant construction in ?he opinion of counsel for mining whether a SEIS should be prepared.
the Company the sections of the ordinance relied on in The Company cannot predict the length or the out-the request do not provide that e special exception was come of the permit extension proceeding but it believes required prior to issuance of thL stwovement location permit for Bailly Unit N1 or would b* required later and that the requested amendment extending the construction completion date will be granted The Company is con.
the storage and use of nuclear tuel are solely within the cerned by the undue length of time being taken by the jurisdiction of federallaw On September 15,1980, the NRC to complete its review of the requested extension Porter County Citizens Concerned About Bailly Save the Dunes Council Local 6787, the Town of Porter. Indiana Beginning March 28,1979. Unit 2 at the Three and others filed a petition for review against the BZA and fdile Island nuclear generanng station near Harrisburg.
Company in the Porter (County) Supenor Court, seektrg Pennsylvania expenenced severe operating problems to reverse the August 18 decision and enjoin construc.
resulting in damage to and shutdown of the station. These tion of Bailly Unit N1.
?I.
Northern ind ana Pubbc Service Company Notes to Financial Statements (Continued]
On Ju e 9 1950. the Company receved a ccpy of Fuel Adjustment Clause n
a Request for Act:an to Suspend or Re>cke Construc-A:! me:erec e:ectnc rates conram a prov:s<on tar asus:-
tion Perm : 1:ed w:n :ne NRC ty the Cet of Gacy Lcca' ment in charges for e'ecirc energy to retect increases 67E7 the Basi'y A! Lance Saue the Du"es Counc.i and the ana decreases in the cost of fue and :he fuel ccs: cf Cr::.ca! Mass Energy Prc;ect wh:ch asserts tha: cons:ruc^
purchased poner through coeraico of a fue!ac,us!'rEn!
pon should no: be resumed at the B34 Sie unp' the NRC clause As prescribed by order of the Pub!c Se'v:ce Con cons >ders ahe:her the surrountng popu'arcn can be mission of inc ana (Ind>ana Commission) acchcabie to evacua:ed in case o'a nuc! ear acc! cent and sh?ch seeks me:ered retaa rates the adjustment fac:cr is calculated to to n an ea'!:er tet:e recuest at the State cf li:.ncis On based on the est'maed cost of fuel and the fue! cos cf Oc:cter 30 1931 the NRC sta't sa d. in response to purchase 3 poser in a fa ure three month penod Any ns er NRC c rectse app y'ng to a!!p: ants ath cons:ruccon per-or uncerrecovery caused by vanances betaeen es :ma:ed mas, it a:u ce: ermine whe:he' Bai y is one of the sees and actual cost in a given :hree month pecicd am te amch
- might aa'ran: ea'iy ccns.ce ation of e:her add-inc'ucedin a futureinng The Companyrecords anyu der n
tona' features or other acbons an:ch would prevent or or oserrecovery as a current asset or babady untd such mvgate the ccnsecuences of senous accidents. and:ha!
1:me as it is b?ed or refunded to as customers The fue!
"The cutcor"e of any such canaderat on wJ: form a pa't ac;ustment charge is subject to a heanng by the Ind.ana of the Dorec:or of Nuc; ear Reactor Peguianon s eva!uat.on Comm ss,on every three months andadiustments remwn of the pena.ng reauest of the State of Ic no.s and the Cav in e'!ect tcr a three month penod of Gary for ac:cn regard.ng Ba ny ' The Ccmpany be!eu es Gas in Storage the request to be w:mou ment andis coposing the request Ef'ective January 1.1979. the Company changed from ine but cannot premc: ahar action me NRC umma:e'y may average cost method to the last-in, f,rst-out (LIFO) cos:
take a1h respect tnereto meincd of accountng for ns inventory of gas in s:Orace lhis charge was made concurrently ach the acc:' on
+
Summary of Significant by tne Inc ana Commission ofine urO cos: meer rate making purposes As a resu't. This change c ~
Accounting Policies nave a me ena e~ect on the f nancias sia:ements for e s
and 1979 and ts not expectea to have a ma:ena! effect cn Depreciation and Maintenance the f.nancial s atements in any fatJre penod Based on the
,he picv?sions for depreciat.on. ahich were appronmately average cost of gas purchased in December.1950 and a
3 6 i, 3 6-; and 3 3 a of the ccst of cepreciab!e utlayplant 1979. the estimated cost of gas in storage (current and fcr the years ended December 31,1980.1979 and 1976.
non-current) at December 31.1980 and 1979 exceeded respective'y are made cn :he stra<gn:-tine method ove' the rated LIFO cost by approximatWy $30,000.000 and average service lives of the property The elecinc rate order
$go_000 000,,ggpecpyg!y of September 27. 1977 increased :he cepreciation rate Employee Relations for e:ecinc and common prcoerty (other than automotse Approximately to of the Company's employees 'the equ:pment) to 3 36 T and 2 93i ; respective!y and the gas DhyS' cal and c'enca! employees) are represented by iso rate order of November 22,1978. increased the depreci-locals of the Unned Steelworkers of Amenca. AFL-CIO-anon rate for gas prcoerty (other than automotrie CLC Co!:ective bargaining agreements for both the equipmsn!)to 3 67p physica' and cienca' employees exp: red May 31.1980 A The Company fo!!aws the pracoce of charging main' sinke of the employees represented by each loca' began tenance and repairs. including the cost of reneaals June 1.1980 a'ter the parpes were unable to reach new of minor items of property. to maintenance expense agreements The emplo,ees of the Company not reprn accounts except that repairs oitranspananon and service sented by the loc :s operated as facilit es durag :he strA e equ:pment are charged to cleanng accounis and redostn-New agreements were reached late in Janary 1991 buted to operating expense and other accounts When incremental costs. Other than labor incurred as a propert; which represents a rebrement unit is replaced result of the sinke. have been de' erred and are being or removed. the cost of such propertyis cred ted to utddy amoitized over the hfe of the newagreer 1ents which exp're p! ant and such cost together with the cost of removal May 31.1964 The ne: amount deterredas of Dec ember 31, less salvage. is cha'ged to the accumutated provision 1980 is approximately 56.600.000 The Indiana Commis-I ' 0*D'*C' '*"
sion has in the pas: allowed recovery of such de*ctrec costs through amortization in the cost of service Tl'e Company Operating Revenues beheves that recovery of the current costs will also be in accordance with industry pracHce, the Company a!!caed by the Ind:ana Commission records in its accounts. revenues as bt!ied toits customers income Taxes and does not recogn:ze any unbi!Ied por:!an which exists at the end of an account ng penod Purchased gas costs Prcvisions for deferred income Ines are recorded on-N are expensed as oncurred marily as a result of the use of in? Ome tax law provisions
Norinern Inc ana Put!>c Sevce Company Notes to FinancialStatement.s Continued anch a'c,y ce:acion c! :tems as empense in ice 131 reW:rg t'cm :ne ate,e are cu rer:) be ~g charged to r
return cror :c lre r ts ng reccece2 as esce se on :~e
>ncome anc such tases atxn nave tseo ce'e'reJ rn o' ?
bcc s c' ~e Company T~e ce'e? rec tar pecesons se yea s a'e oca bemg crec:e: to n:ome as ~e : ng c^
'o'tr te!ca a'e recogn:e: as cos:s in :~e rate maV; te'ences re.e'se A summa'y c' ~e ::m ng d *erences crocess Dy tre Comm ss cns naen;iu'*sc :: on c,e* lre a ~:n g.e r se to ce' erred tecera! ard s ate income fases rates crarge ty tre Co "cany 7?e ce'errec <nco etaaes and tre re'are: am:unts :s as fo::Da^s 1990 1979 19??
(Dya s r tv sr:s L tera':ed cecre: aren anc c; ass i'e asse: decre~a an ra ge s,ste'n 519.620 516.905 S:: 0 73 D'sma-?bng costs 1,515 2 :'5 2 459 Det:ccm:crent of a9:aance for t ncs use:cann; constru
.cn*
5.336 6 216 5 C20 Cee'rea:s cap ra uzec*
9.299 9 246 6 601 De'e' red %e! tra:&ng costs (1.283) 3 242 (3 466]
Gas storage and s:ccage :rantxcat:an ccs:s 349
[1645)
(450 Cc'e'rea acr= s :cca;e cars 3.135 O:rer 796 (33 G 939 m:Ome : ave 3 cete're: m poor yea's crec:
__L43_6)
__,f2 952)
(2 PE 7) 532 GM S22 9'?
_S34,331
- Corn ment ng : December 197E en acccccacce tar tunas used duong construct.on cve heaas caa:Ta'::ec acn an crce' of :re in:ana Comm ss on aco':v:ng an anc cena a c:ee- : ems re'st:rg :c gas c: era :cns increase on gas ra'es. :ne Co~pany began picwa ng an r
- re
- c., pat o, c ao arcant corpu ga v, accyng fe' rec encome ta<es for a ::m.ng c "ereaces (tu7 norma *-
gpg g:a u: cry pegg,a: income :an rare to pretau incorre u
- at:on) Pr:or to :na:iee no de'errec :n:ome ta es sere to to:at tar expense :s as to:oss prosceu cn inng a "e'entes acp%:at'e to rre a':Os anc e 1980 1979 1978
[D :a's.n trasanat Neilncome 5 72,230 5 7E B59
! E2 581 Ada Curren: income : anes Fecera!
4,592 3.895 3 296 S: ate 2,173 2.1 75 2.064 Feceralancome tax appicab:e io non-ope'atong a::?.::es rnet 206_
359 426 6,971 6.428 5 756 i
Ce'e' red mcome ta es net l
Feaera!
32.606 31 260 21897 5:a:e 1,725 1.736 1022 De' erred investmenitax creacts re:
12.772 15 997 14 197 Tc:a!
54,074 55 321 42 922 Net income before incorre tares
$ 126.304 5132 180 5105 453 Amount cerried by mubo!yrg pretas income by statutory rate (46 =. 46% and 48% respect;ve'y]
5 58.100 5 60.833 S 50 632 Peconcd:ng items mumptied by the s:a utory rate Ecu.ty component of a:!asance for funcs used dunng constru Lon-(6.595)
[9 006)
(7669)
Taxes and payro!! re:a:ec construct,on costs capaatzed in the accounts. Ou:
Ceduc:ed currently-gas (see
- aoave)
[1BE6)
[
Bock ceprecia >on over re'a:ed tan cepreciaticn 3.131 3 229 2.923 Amor::zaison of deferred investment tax crects.
(2,888)
(1.917)
[1.74 0)
O:ner. net 222 100
[962)
State income ta xes net of Fe: era! income taw bere':'
2,104 2 112 1 604 Tota! ncome taxes
$_5LO74 S 55 321 5 42 902 l
i
(
( ) Denotes deduc: ton Investment tan credits have C+en deferred and are Pension Plan being amomzed to income over the ite ci the related The actuana:ty cetermined cost of :ne Companys non-l property Unused inves: ment tax creces (exclud:ng ESOP) coninbutory pension plan, which covers substantia"y a9
\\
carnec foraard to future years were approximate!y employees, was $17.044.000 in 1980. 513.46 7 000 in 55.700.000 a: December 31.1950 1979 and $11.575.000 in 1978. ancluding amort;za cn of c: ~
[
Northern Ind:ana Pubhc Serwce Compuny Notes to Financial Statements (Continued) untunded past serwce cost incurred pnar to January 1.
pension costs accrued A statement of accumu!atedplan 1977 for a cenod of 40 years and unfunded past serwce beneMs and pian ret assets. as of January 1.1980 and cost incu? red beg nn,ng January 1,1977. for a penod of 1979 is presented below 30 years The Company to!!aas a po!cy of fund.ng a!!
January 1 1980 1979 Actua'ta!present va!ue of accumulated o!an benetis Accrued vested
$ 118.376,488 591 982 865 Accrued nonves'ed 4,570,504 2 790 948 5l22&46,902
$94 773 8 Q Net assets avaoaD e for bene':s (market va!ue)
$_ 91,952,3 75
$ 77 20? 045 The mvestment return assumphon of 7^ ' and the inc, NIPSCO Fuel Company Inc, and Shore Line Shops investment return assumpt:On used by the Pension Benet:t Incorparated Income / loss in connection weh these ccm-Guaranti Cc?poranon. as of Janua'y 1.1979. 7 25% for pan'es in 1978.1979 and 1980 is immaienal in 1973.
im med ate annul es n as used in ceterman.ng theactuana!
the Company organized NIPSCO Exploranon Company present va'ue o! accumulatedplan benefas as ofJanuary 1.
Inc (NEXCO), a wholy owned subs' diary The Company 1980 and 1979. respechve'y Changes sn actuar,atassump-has been authonzed by the Ind:ana Commission to invest 1ons used to determ.re the 1980 cost of the pian aere as up to $31.760.000 in NEXCO. As of December 31 faticws the investment return was increased from 4 75' 1980. ibe Company s investment in NEXCO a mounted to to 7 the mocaity tab'es sere updated the rates of
$ 13.994.000 Initsa!!y the Company had invested d:sabat;and re!reme"* aere revised andthe sataryscate
$15.998.000 relahng to two separate projects The first and Socsai Secur;ty pro?ct ons aere changed to incluce pro,ect is participation by NEXCO with others in It'e acqui-a 4 ; in!ran ! actor sinon of interests on leases sold by the Department of Allowance for Funos Used During Construction Intenor 1r. the Gu:t of Mexico. offshore Texas and Louisiana A!rowance for !unds used dunng construction (AFUDC]
Of the mon:es invested by the Companyin NEXCO. it t'ad is charged to construchon work m progress dunng the mvested 57.598.000 in this protect The second protect is penod of construct:on and represents the net cost of bor-parncipanon by NEXCO with others in explonng and deve;-
tcwed tunds used for construction purposes and a oping oil and gas leases in the Gulf of Mexico. offshore reasonaD;e rate upon other (equity) tunas ahen so used Texas and Louisiana NEXCO is authonzed to inves Unaer estab!:shed regulatory rate prachces. after the con-S15.000,000 in this project and had invested 58.400,000 struction protect is piaced in service the Company is The balance authorized for investment in this project must permated to include in the rates charged for util,ty services be denved from NEXCO's share of any prof ts from the (1)afa:r return on and (2) deprecsabon of such AFUDC exploranon and development venture The Company inc!uced in plant in service hopes to imorove its future gas supp!y through NEXCO.
The Fecerat Energy Regulatory Commission (FERC]
but is not able to predict the outcome of these ventures has prescnted a formula to be used for computing sepa-As of December 31.1980. NEXCO has recoveredappron rately the mammum amount of AFUDC apphcable to bor-mately $2. 757.000 from these projects
*"*""s""'"*""'
"'h*'"'"**'"
Preferred and Preference Stocks the AFUDv apo icabie to borrowed funds is reported as a The authonzed classes of par value cumulavve preferred s
reduchon of the related interest charges and the AFUDC and preference stochs are as tollows appbcable to other (equ!ty) funds is reported as Other income The AFUDC for other (equity) funds is a non-2.40G.000 shares-Cumulative Preferred-S100 par value cash dem and does not contribute to current cash flow to 2,000.000 shares-Curnulanve Preference- $50 par value the Company. accord:ng!y in the Statement of Sources The redemption prices at December 31,1980 tar the of Funds Used for Candal Expenditures. this pornon of cumulative preferred stock, which are redeemable solely AFUDC has been excluded in arriving at the amount of at the option of the Company are 4% cenes. 510120.
funds provided interna!!y The respective am ounts for 1979 4i2% series. $100 00. 4 22%senes. 5101.60:4 88^:senes.
and 1978 have been revised n a comparable basis.
$10200. 744 % senes. $105 00. and 750 > senes. $105 00 Dunng the penod from hnuary, 1978 through The redemption once at December 31,1980 for the December.1978, an a!!er tax rate G! 8% was used for gas 8 36% Cumulative Preference Stock, which is redeemable construct.on and a pretax rate of 10% was used for electric soiety at the option of the Company is $54 18(not redeem-construction Since slanuary 1.1979. the Company has able poor to June L 1982 through refunding at u etfective been using a pretax rate of 10 % for all construcnon interest cost or ress than 8.36%per annum)
Subsidiary Companies Dunng the penod January 1,1978 to December 31 The Company beireves that its financialposition and results 1980. there were no changes in the preferred and of operations are clearly exhibited without consohdating its preference stocks redeemaD!e solcly at the option of 3-insegnifcant subsidianes NIPSCO Exploration Company the Company n
Nortnern Indana Pubhc Serwce Company Notes to Financial Statements [ Continued)
The pre' erred and preference s:ocks Mhout manda-average life than the rema:ning L!e cf the 8 35 = ser:esl tory recemonon requ:rements are redeemab:e in who e The reaemonon orce at December P 1980 c 5:0786 cr in pan at anv t me upon 30 days' nonce at the opt on The 72 ' Cumutanve Preferred S:ock es en::ed to a of the Company at the redempson onces sta:ed above-sink,ng fund su*' cent to redeem 4t'.000 sha'es on or encepitnattneredemononcoces fortne 7 44 x 7 50 "and before Oc:ober 14 in each year begmn<ng on 1954 (not
- he 8 36'senes Mi be reduced pened ca4y in the future
,gggergy:e poor to October 15.1983]
Pre'errec1odoreference stocks subiecita rrandatory The 7k: Cumula%e Preferred Stock is e":a:ed to reaempson reQuiremen:s or ahose recempnon is ou: side a Svlung fund suffcen: to redeem 2.777 shares on or the con:ro: of the Company issued dur,ng the cenod beto,e December 1 in each year begen:ng in 195 7 w th Ja nuary 1.1978 to December 31,1950 a ere 510 000.000-2,805 shares set as de for redempt.on cn the hnat se
'g 8 35" Preterred in Jane 1978 520.000.000. 7:i : Pre ~
fund date At its cot on. the Ccmpany may receem inrough ferred in July 1978 and $15 000 000. 6 704 Pre!erence the sinUng fund on or bo! Ore December 1 in each year not issued in connecnon win the reprement of 510.000.000-more than 2. 777 add.: onal sha'es whicn nght to redeem 6: Preference in Nowember 1978 such actt ona! shares sha? no: be cumulatre and sha'i The 1164' Cumuta:~.e Preference Etock is entdied n.at reduce the sinking fund recurrements in any subse-to a sunbng funo sutt cient to redeem a minimum of C'eni Yea' (not reat emab'e onor to DocemDer 1.1987 16.000 sha?es on or be' ore September 1 in each year a:
I'om the proceeds of any incebiedness ha ving an effect ve the par sa:ue plus accrued dwcen:s At its 00:'07 the cost cf less tnan Tw - per annum nr having a shoner awage L!e than the rema nng hfe of the 7'a senes: The Company may reccem through the sinking fund on or redemonon orace a: December 31.19501s $10723 be' Ore September 1 in eacn such year not more inan 16.000addeona! shares OnJune 12.1983 byPeso!upon The redeemab:e pre! erred and preference stocks are c? the Board otDeectors. tt;e Company exerc: sed.:s op: an redeomatie in s ho:e or in can at any nme upon 3O days to redeem 16 000 shares in add non to the 16.000 shares nonce at the ophon of the Company at the reaemo:on required to be redeemed on Sep: ember 1.1980 The ngn:
paces shown. e< cept that the redempson onces for :ne to receem such add:nora shares sha:t not be cumutane 8 85" the 7W the R 35; the Tu - (5103 333 com-r ano sha:l not reduce the sinhng fund requ:rement in any mencing October 15.1953) and the 1164, senes mll subsequent ye~ The rec'emption once at December 31.
be reduced penod:cally in the future 1990is 55750 Senhng fund recurrements wth respect to redeem-Tne 6 70 h Cuma:ahe Pre'erence Stock is convem-able preferred and preference stocks outstand.ng a:
b:e. on and a':er October 1.1951.10 andinclud,ng October December 31.1980, for each of the four years subsequent to Decernber 31.1981. are as fo!! ass 31.1983. into not more than 821.917 shares of Cominon Stock The 6 70L Cumulante Preference Stockis redeem.
Year Ended December 31 ab:e at the cc: ion of the Crnpany or at the option of the 1992 1983 1994 _
'985 holder. commencing Notember 1.1983 at the once of 5800.000 5800 000 56 150 000 56 150 000 553 065 per share. ofui all unpard cumutake d:vidends Long-Term Debt accrued tnereon ta ine ca, ct redempt:an The sinking fund requirements oflong-term debt (includ-The 8 85. Cumu:anve Preferred Stock is enntied t ing the maturity of First Mangage Bonds. Senes G. 3:r a s:nhng fund suf'icient to redeem 12.500 shares on or yg,en,_ gggg ggngg x gy 3,,, g5_ ygg3 gnggg,,gg y before Apnl 1 in each year beginning in 1984 (not redeem-3 y yyyy,ygg,;angypg yoygg pgygg,g 375 g99.999 y
able pnor to October 1.1956 from the proceeds of any due December 19.1983 and the Ser'es A Note. County indebtedness having an effective cost of less than 8 85' of Jasper Indiana. 510.000.000. 6 40 v. due February 1 per annum or having a shorter average hfe than the y ABS), outstand:ng at December 31.1960. for each of the rema nmg hfe of the 8 85m senes) The redemonon once four years subsequent to December 31.1991. a re as fol!ows '
at DecemQer 31.1980 is $1073S Year Ended December 31^
The B 35b Cumulanve Preferred Stock is entit:ed to 1992 1993 1994 y995 a sinking fund suffcent to redeem 1.000 shares on or 3,, 93p 999 3,5g gg, 459 $ 7, gg,,59 3,g g3, 459 before July 1 in each War beg nn:ng in 1984. 3.000 shares in each year beginning in 1994, and 6.000 shares in each Unamortzed debt expense. premcum and discoun:
on long-term debt app! cable to outstand:ng bonds is i
year beginning rn 2004. which amounts may be doub'ed at the opnon of the Company in any such year, which nght being amortized over the ide of such bonds The reacauis-to redeem such additionalshares shallnot be cumulative trion premium of the Senes W Boncs is bmng amortized over the hfe of the Senes AA Bonds and sha!! not reduce the sinking fund requirements in any subsecuent year (not redeemable pnor to July 1.1988 The Company's Deed of Trust. dated August 1, from the proceeds of anyindebtedness having an effective 1939. as amended a"d supplemented secunny the Furst cost of less than 8 35% per annum or having a shorter Mortgage Boncs ned by the Company const:!utes a D))D "D3'}ISG M"
d SN
Nonhern Indiana Public Service Company i
Notes to Financial Statements (Continued]
- * " "9 9 e " " " * " b* ' "" "' " D' ""'
Short-Term Borrowings and franchises. Other than expressly excepted property owned by the Company Company has hnes of cmm teatmg $142,2M00 On June 19. 1980. the Company issued and sold
'O'"#'Y
- "Y'"
to underwriters $60,000,000 anncipalamount ofits First
- "~' #'
Mangage Bonds. Senes DD' 11% due June 1. 2010 exceed one year The Con aany has ad@tionallines for A pubic offering was made by the underwnters
$50.000.000 and $20,000 v00 with the same rate terms On December 19.1980. the Company esecuted a three but with a period not to erceed 9 and 12 months respec-year Credit Agreement with 15 international banks unaer lively Although there are no commitment fees or formal whch the Company may borrow up to $75.000.000 for compensating balance recuirements. the Company has interest penods of one. two. three or six months at rates agreeo' to maintain balances which are mutually satss-of h of 1% over the London Interbank Offered Rate factory to the banks and the Company The lines of credit (LIBOR) to December 18.1982 and n of 1% over LIBOR are also used to support commercial paper which the to December 19,1983 An inta! borrowing of S 75.000.000 Companybegan toissue on February 23.1979 Ad6tional was made on December 19,1980 for an incal interest information regar6ng short-term borrowings is as fo!!ov,s penod of two months at an annualrate of 22 ? v We<ghted Maximum Average Weighted Ba'ance Average Amount Amount Average at Interest Rate Outstan6ng Outstanding Interest Rate December 31.
at December 31.
Dunng the Penod Dunng the Penod Dunng the Penod 1980 (a)
$ 73.100.000 542.638.150 12 51 ~
1979 22,000.000(a) 13 42 100.000.000 39,589.685 11.69 (b) 45.000.000 6.534,247 11 75 1978.
45.000.000(b) 1i 75 45.000.000 12.260,274 1047 (a) Commercialpaper effective February 23.1979 and thereafter (b) Notes payable to Bank Rate Matters increase to the REMCs unde... e agreements became effective Apnl 15, 1960 and is estimated to produce Electnc Rates approximately $524.000 of ad@tional revenues annually On August 27,1980. the In6ana Commision approved based on the test year The agreements were approved an increase in electnc rates. which based on the test year by the FERC on October 11,1979 and the refunds were ended December 31,1979. would produce ad@tional made in late October,1979 I
annual elecinc revenueu of $55.578.000. The increased Allmetered electnc rates contain a provision for adjust-rates became etfective August 28. 1980 The Company ment in charges for electrc energy to reflect increases commenced its e!ectnc rate case on February 20.1980 and decreases in the cost of fuel, and, in the case of its request, based on the test penod, would have produced metered retail rates, inco ases or decreases in the rates o
ad6tional annual electnc revenues of $70,955,000 The for firm pumhases of eleanc power previously effective electnc rates were made effective July 19.1979 Gas Rater On July 27.1978. the Company fded es petition with On November 22,1978, the lndiana Com mission approved the FERC requesting the approval of new wholesale elec.
an increase in gas rates, wh@. based on the test year inc rates which would have increased the Company's 1977. would produce additional annual gas rever ues of revenues from electnc wholesale service byapproximatrly
$3 7,320. 764 after adjustments for purchased gas gas 58.381.000 annually based on the pro lected 1978 test storage and storage transportation costs The increased year The wholesa e customers intervened in opposition rates became effective November 27,1978.
r to the increase The rates were put into effect on January 23.1979. subject to refund The Company andits whole-All metered gas rates contain an adjustment clause sale customers reached agreements on increased rates, which requires the Company to reflect changing costs of which would produce in the first year approximately purchased gas and contractual gas storage and storage
- 55. 700.000 of ad@tionalrevenues based on the protected transportation charges from the Company's supphers 1978 test year. The agreements provide forthree additional regulated by the FERC upon thirty days' notice by the increases to the Rural Electoc Membership Corporations Company and, except for one industnal rate, upon 3w9 (REMC] over a three year period The hrst additional approval of the Indiana Commission.
k
Northyn '%ana Public Service Company Notes to Financial Statements (Continued]
Other Rate Matters On August 14 1980 the un:On loca's represent;ng the Because of the effect of other changes in revenues and Company s barga ning un:t employees ided a pett:an win changes in expenses, the rate increases oescnbed above tne ind:ana Comm:ssion requeshng a 9 59 reduchon in are not necessardy indcative of future earnings the Companys rates for uti!.ty servce because cf a!ieged
$yjfy( gjgyjgg ggmgygl Sygggm sav:rgs accru:ng to the Company due to the ongoing stra e The Company 1:ted a motion to a smess the petition In 1973 the Company en:ered into a contract s.th the The pres:d:rg Commiss oner. on October 1 1990 rejected federal Environmental Protection /gency (EPA) to con-the un:On s request. but d d not ac, ss the pettron as struct a suitur dioxide removal system. designed to requested by the Company The Company bereves that the demonstrate the satisfactory control of sulfur cioxide Commiss:on cannot determine rates based upon a change emissions from the burning of high sulfur content coal. on in a sing:e dem of expense The prestd ng Commissioner a 110.000 lo:caa:t generanng unit at the Dean H M:tchell ind ca!ed agreement w'th this posthon and C%rected the Stanon in Gary Indiana The captal cost of the protect sta?! 10 ana'y e the 1,nanc:a! effect of the sinke and to was approx:mately $18.000.000 of whch approximately determone. among otherthings whether the Company is SS 500.000 was pa'd by EPA The EPA and the Company ea ning more or less than the rates of retum authonzed have concluded after acceptance tests were como:e:ed in as most recentgas and electnc ra:e cases The Company on September 14.1977. that the demonstration plant met bei: eves the staff inqurry w.it show that the Company has the standards for su! fur dioxide and particutate em:ssions not bene'tted by reason of the wages not pa d to sinking dur,ng the test The Company is presently operahng the employees, and that it is eaming less than the a'!Oned protect and is continuing to study the technical feasibildt rates of return on as gas and elecinc operat ons On ano economics of th:s type of flue gas scrubbing system OctoDer 20.1980. the Union fded a pettion for reheanng however. there is no assurance of success of the subsect by the entire Comm:ssion. On November 10.1980. the project in commercialoperation The und capabdty of the ent re Comm:ssion re;ected the Union s pennon and also generating unit to whch the removal system is attached found that as accounnng sta'! shall ana y:e and report to l'as been decreased by appronmately one-third when the r
the Commission on the effect of the strike on Company system is operavng. and avadabdity of the generahng une opera tons a hen tne work stoppage ends On December 8 may be adversely affected by the addition of the system 1980, tne Union appea'ed the Commission order to the Common Stock Court of Appea!s of Ind.ana The Company has fded a moton to cismiss the appeal and believes that the Com-The following table shows the changes in common stock mission ~s order wdlbe sustained outstanding for the years 1980,1979 and 1978:
1980 1979 1978 Shares Amount Shares Amount Shares Amoun!
[Dolvs en tDoiia rs in (Do!'es in thousands) thousands) thousaacs)
Ba!ance beginning of year 35,161,492 5510,095 30,656.083 5443.533 28.40C,628 5404 661 Sale of common stock 5,000,000 61,750 4.000.000 59.250 2.000.000 34.500 Employee stock purchase plan.
76,709 945 64.016 904 51,116 859 Automahc dividendreinvestment and stock purchase plan.
842,093 9,622 319.878 4,540 101,767 1,741 Employeestock ownersh:pplan 45,162 561 120 931 1.851 102.052 1,756 Conversron of debentures 15_4_4_
40 584 17 520 16 1
Balance end ot year 41.12L000 5583 M3 35.161.492 5510.095 30 656.083_
$443.533
- The fo!! awing shares of common stock were reserved at the dates indicated:
December 31.
1 1980 1979 For the conversion ofh % convertible cet entures.
813.956 815 500 821,917 821.917 For the conversion of the 6 70 t cumulanve preference stock.
460.793 37.502 For the employee stoc k purchese plan For the automanc divicend reir testment and stock purchase plan. '
1,387,232 229 325 For the employee stoOs owneruhip olan.
500,469 45 631 3,984,367 1,949 875 y
Northern Indiana Public Service Company Notes to Financial Statements (Continued]
Quarterly FinancialData The following data summarize certain operating results for c ?cio ol the quarters of 1980 and 1979 1980 Quarters Ended
?..dtch 31 June 30 Sept. 30 Dec.31 (Dollart on thousanos)
Operatong revenues.
S421,284 S300,279
$277,037
$367,925 Operating expenses and taxes.
381,265 268,148 252,416 339,872 Operat,ng income.
40,019 32,131 24,621 28.053 Other income.
3,432 4.587 3,911 4,652 Interest charges.
16,286
_ 16,969 17,752 18,169 Net income S 27,165 5 19,749 S 10.780
$ 14.536 Earn:ngs on common stock S 22,r48 5 15,433
$ 6.479 5 10.267 Earnings per snare on average common shares outstanding
- S.65 S.43 S.17 S.25 1979 Quarters Ended March 31 June 30 Sept 30 Dec 31 (DOiiars in !Housands)
Operating revenues.
$343,101 S274.785 S255.708 S322.650 Operating expenses and taxes 303.356 246.771 237.058 299.251 Operating income.
39.745 28.014 18.650 23.399 Other income.
5,535 5,693 5,732 4.452 Interest charges 12.886 12.484 12.985 16.006 Net income 5 32.394 S 21.223
$ 11.397 5 11.845 Earnings on common stock 5 28 031 S 16.860 S 7 Ode S 7.551 Earnings per share on average common shares outstanding
- S 91 5 54 S 21 S 23_
- Because of tne combined mathematcal ettect of new common stock issues and the cychcal nature or, e income dunng the year the Sum of Elan,ngs per Share for any four quarterly per Ods may vary slightly from the earn.'ngs per ShaA for the aQuvalen! tselve as month penod
Novemnc:a,a Pubuc Se v:ce Ccmpany Notes to FinancialStatements (Continued)
Segments of Business The Company is a cubi c ut !.ty coerat.ng company engaged in d:s:nbut:ng e:ec:ncalenergy and naturat gas Tne reacriaD'e items !ct e ecir:c and gas cepa'imen:s for : 'e years 1980.1979 and 1978 are as fc"o,ys 1980 1979 19 78 Opera:,ng intcrmanon -
(c.gs,,.,u 3 g Gas opera!>cos Operating revenues S 728.638 5 636.160 5 440 483 Opera:irig expenses exclud,ng orcvision farincome taxes.
666.697 558 362 359 833 Pretar operat ng :ncome 61,941 77,795 50.650 A!:caance for tunas used dunng construction [AFUDC) 1.322 699 469 Pretax coera ng income incluc ng AFUDC 63.263 5
78 497 S
51.119 Eiecinc opera!.ons Oce a::nc resenues S 637.887 5 560 054 S 509 790 Operat.n?g expenses enciuc.ng prav sion tarincome taxes 521.136 473 111 422 636 Preta>< cperat ng sncome 116.751 86 973 57.154 si cs ance for funds used cunng construct on (A FUDC) 24.221 31.930 25 333 Pre:ax coe-at:rg inccme incluc:ng AFUDC
$ 140,972_
S 118 903 S 112 457 Tc:a ?
5 204.235 S 197.400 5 163 EC6 C:ner income. ne:
2,244 1.835 1 815 Less interes: charges 80.381 67413 60.354 Less prov:sion for income taxes 53.868 54 963 424~6 Net income per statement ofincome S
72,230 5
76 859 S
62.55:
0:her informa:ron -
Georecianon and amcrnation expense Gas.
19.116 S
1212 S
12.857 E:ecinc 49.705 O 181 37.166 Tara!
S 68.821 5
58.393 5
50 023 Caciate, end: u es Eiec::
5 218.633 S 180.704 5 187 435 Gas 37.997 46.578 45.630 Tota!
S 256.630 5 227.282 S 233G65 investment inf rmation-Icent;t,ac;e asse:s la)-
E;ectnc S1,801,244 S t.626 310 51 444 642 Gas.
549.523 525 380 490 571 To al 2,350,767 2.15 t.690 1.935 213 Assets u:1! zed for aera!! Company operations 188.248 167.511 150287 Totalassets 52,539,015 S2.319 201 S2 CE6 200 Maior Customers in and 9ee! Company Uni:ed States SteelCorporat:an Year ended December 31 Gas tiectnc Total Gas Electnc Tota!
(DG*a's an thCJSanc5) 1950-Revenue from customer S87,124 S57.239 S144.363 567.281 564.481 S131.762
-Percent of Company revenue.
129 99 11b 9'
10' 10' 1979-Revenue from customer
$65.648 552,173 S117.821 561.803 S61.655 5123.458
-Percent of Companyrevenue.
10h 9+
10
- 10' 11' to:
1978-Revenue from customer.
S40.964 S46,062 5 87.026 545.096 S59.927 S105 G23
-Percent of Companyrevenue.
9?
9 9'
10:
12' 11; la) un4 pa~ iess a: car uwee owson tar ceorecean ano aronza:an. r arenatanc su:w>es eecirc procxton tue' cera' gas s
in S*:rfage. an: cd5 Su:Dy 6xDDr&k^n fv6$!":enf5 s
J
^%rthern Indana Pub!ic Service Company i
Notes to Financial 5atements (Continued)
Construction and Commitments Other SpecialFunds The Comoa ny estima:es ina t a=pronmate?y s1984 oooooo wal be e:: pended for construction purposes for the period Funds from the proceecs of the Senes "A" anc Senes from January 1.1981 to December 31.1985 Substan::at 1978 Nctes (Potiut.on Contro0 have been deposited arth commi:ments hase been mace by the Companyin con-the Trus:ee the desgnated c"sbursing agent Montes in nection wi:n this program the funcs have been acolted to pay among other costs.
the cost of constructing and equ poing the a plicab;e po!-
lution control protects a: the Companjs Mch:gan City and Rai ?n M. Schahfer e:ectic generat:ng stations Excess funcs a':er the payment of construction costs weil be used to re:tre the Notes when due Changing Prices and Selected Financial Data [Unaudited)
STATEMENT OF INCOME FROM CONTINUING OPERATIONS ADJUSTED FOR CHANGING PRICES (in thousands of average 1980 dollars)
Year ended December 31.1990 Constant Current Do::a's Cost income from continuing coerations, avadab:e for common stockholders. as reported on the statement ofincome S 55.027 5 55.027 Adjustments to restate costs for the effects of changing prices-48 365 60533 Deprecsanon and amortization expense.
income (loss) from continuing operat:ons, avar!able for common stockholders. adjusted for S
6.662[a] S (5 506) changing onces excluding reduction to recoverable cost Excess of increase in general once level[5430 250) over increase in specifc onces (S292.897) of u%ly piant held dunng (? e year [b].
$(137 353)
Reduction to recoverable cost 5(164.663)
(35.142]
Reduction of purchasing power loss through debt and preferred and prete ence 152A97 152 497 stock financing 5 (32.166)
S [19.998) j Net (a) If the recuction to recoverabie cost of $184 663 in average 1980 constant do!!ars had been deducted in determining income from continuing coerations avaaab'e for common stockhoiders, such income would have been a $178.001 loss in average 1980 Cunstant dollars (b) At December 31.1980 the current cost of net utny p; ant was 53,628 2t9. wnde net historicalcost was 52.138.003 I
36
Northern Indiana Publ:c Serwce Company Notes to Financial Statements (Continued]
FIVE-YEAR COMPAl RON OF S sECTED FINANCIAL DATA AND DATA ADJUSTED F.T.;-FLCTS OF CHANGING PRICES (In thousands of average 1980 dailars]
Year Ended December 31 1976 1977 1978 1979 1980 Income from ccnnnuing c - "abons
~
-histanca!
S 68 973 5
67.164 5
62 581 5
76.859 5
72,23_0_
S2 086 200 S2 319 201 52,53QO15 Totalassets-h:stancal S t 625. 748 51 890.835
~S 81F35i
~ 3 DD]DN K029l$IS
~~50Df5 Long term cebt-histonca' 5 730'~fID S
S Redeemable preferred anc pre'erence stock - histancal
! 51100
$ 60 20_0_
93f31 5 92.215 5
9_0D8-Operating res enues -histance S 647.994 S 806 731 S 950.273 51.196 244 51,366.525
-ac ustea S 938 356 S1097A21 S1 200.729 5;,358.568 51.366.525 Historical cost information adjusted for generalinflation:
Income trcm conhnu,ng operat.ons ava 'abie tor common stock ho!cers ex-c!ud ng recuct on to recoverab e cost 5
18 205 5
6.662 Inccme from con!nuing coerations per common share exclud.ng reduct on to recoverab:e cost 5057 50.18 Current cost information:
Income (icss]from continuing coerat ons a vailab e for com mon stocxho:cers. ex-cluc,ng reduct'on to recov erable cost 5
(650) 5 (F,506)
Income (Icss) from cont:nuing operabans per common st'are exclud-ing reduchon to recoverab;e cost 5:0 02l 5(0.15)
Excess of increase in generalonce level over increase in spec;hr onces after reduchon to recoverab'e cost 5 185.214 5 172.495 Net assets at year end at recoverable cost S 697.143 5 682.408 Reduction of purcha:ing power loss through debt and pre' erred and preference stock financing S 168 065 5 152,497 Cash dividencs declared per common share-h storica!
S'40 S! 44 51 50 S t.50 51.50
-adiosted
.. J3 51 96 S1 90 S1.70 51.50 Market once per common share at l
year end-histonca!
$19 875 519 125 S15 75 513 75 511.50
-adiosted 528 15 52537
$1917 S14 77
$ 10.98 Average consumer pnce index 170 E 181.5 195.4 2174 246.9 The supplementary presentation above, made pursuant to Statement No 33 of the Financial Account ng Standards Board. is antenced ro set tonh the etfectc ofinitation considering the economic ettects imposed on the Companybyregulatory authonties !! should be viened as an estimate of the approximate effect of inflabon, rather than as a precise measure.
This informahon is presented above on two bases not available. appropriate Bureau of Labor Statistics constant doitar anc current cost Constant dollar amounts Indexes. soecial custom indexes and the Consumer Pnce represent histanca' cost stated in terms of doliars of equal Indet for AII Urban Consumers were used Current cost l
purchasing power. as measured by the Conaumer Pnce does not necessarily represent the replacement cost of index for All Urban Consumers Current cost amounts productive capacity because utihty plant is not expected l
reflect the changes in specohc paces of plant from the to be replaced precisely in kind date the plant was acqu: red to the present, and differ from Depreciahon expense for both constant dolla' and cons! ant dollars to the extent that specific pnces have current cost. was determined by applying the Company s increased more or less rapidly than onces in general depreciation rates lo the indexed olant amounts The con-The current cost of plant was determined principally stant dollar and current cost accumulated depreciahon as by indexing the surviving plant by the Handy-Whitman of December 31.1979 and December 31,1980. lor those index of Pubhc Uthty Construction Costs For a small categones of plant for which mor*ahty dispersion curves portion of plant for which Handy-Whitman Indexes were are not available, was determined by applying the reserve O
Northern Ind.ana Pubhc Servue Company Notes to Financial Statements [ Concluded]
ra::o on an ongina! cost basis to the constant doi:ar or of constant do!!ars or current cost hat esceeds the h:s-currert cost ba:ances A theoretcal reserve for deprect-torca! cost of plant is not recoverab'e in revenues as at:On was computedforthe majontyof accounts for shch deprecatron Asaresunofsuchratemahng theComcany mo'tahty c?sperston charactenstics Dowa Cur es] have expenenced a loss equiva!ent to the e!'ect of int at'on on been cete' mined by sta!:stcal ana!ysis all of its piccerty Whde the use of debt and preferreo and preferem stoc k t.na r,c.ng recuted the et'ect otth s loss on Under the Company s fue! and gas adjustment ommon stockhoiders. earnings were not aama:e to c%
clauses. increases in the cost of electnc genera:.ng fue!
sei the erosion in the ourcha sing power of the'r investment.
and gas purchased for resaw are recoverable in tuture re enues dunng subsequem enous Such increases a'e The cost to ma:ntain the purchas?ng pcaer of the e4ectively rece vab.es from tuture customers Therefore common stockholders' equity is summanzed as torows such increases are not included in income from con-t,nuing opera::ons but instead are trea:ec as monetary Averago 1GSO Do!!a's assets the purchasing pcae' loss in these monetary assets has teen ct' set through deb;' and pre' erred and CoYa'N" $$$
pre'erence stock 1:nancrng Since on>y n:stanca* costs are Dollars Cos?
cecuct b!e for income ta r purposes. the income tax Aad :nna! prov:sion tor emense was not ac,usted deprecia!.on
$45.365 S60 533 Under rate making prescnted by the regulatory com-Net of other infia::on miss?cns to whth the Companyis subject onlythe historic ad;ustments above 32 166 19 995 cost c? p; ant is recoverable in revenues as depreciat:on
$50 531 SSOE31 The efcre. the excess of tne cost of plant statec in terms Independent Auditors' Report TO THE BOARD OF DIRECTORS OF NORTHERN INDIANA PUBLIC SERVICE COMPANY.
We have examined the balance sheet and tratements of capitalization and long-term debt of NORTHERN INDIANA F UBLIC SERVICE COMPANY (an Indiana corporation) as of December 31.1980 and 1979. ancWhe related statements ofincome. retained earnings and sources of funds dei for l
capital expend:tures for each of the years in the three year peyx! ended December 31.1980 Our examinations were made in accordan& wiin generally accepted auditing standards and. accordingly, includeYsuch tests of the accounting records and such other auditing procedures a; we considered necessary in the circumstances in our opinion, the financial statements referred to above preseit fairly the financialposition of Northern Indiana Public Service Company as of December 31,1980 and 1979, and the results ofits operations and sources of its funds used for capital expenditures for each of the years in the three year period ended December 31,1980. in co. 'ormity with ge iera!!y accepted accounting principles applied on a consistent basis i
Chicago. Illinois.
Arthur Andersen & Co.
30 January 30,1981.
l L
Northern Inaiana Pubhc Service Company Financial Condition and Results of Operations Altnough total operat.ng revenues,n 1980 reached a new Because of the capitalintensive nature of ourbusiness high of $1.367 b!iton or 14' over 1979, net income and the financing that is lequired to pay for large Con-decreased to S72.230 m1Hion, some 6 D below 1979 Eam-struction requirements. Our Company, hVe most other ings per share on average common shares outstand,ng utdities. is greatly af*ected by the fluctuattons of interest feli to $147 in 1980 from 5186 in 1979. wdh almost rates While a porton of theinterest costsandareasonable 5 5 m? non more average common shares outstand,ng rate upon other funds (allowance for funds used dunng i
The dechne in eamings a nd eamings per share reflects construction)is charged to construction work on progress a 3 percent decrease in totaltherms of gas sold an 8 per-during the period of construction. rising interest rates ha ve cent cecrease in total knowatt-hours of e:ectncty sold due an adverse elfect on the Company's earnings The interest pnma'ay to economic cond tions in the Company's serwce rates for long-term borrowings in 1978 nas 6 70% for the Senes 1978 potiution controt note:in 1979 9:e % for the terntory and double-digit inflatron's adverse e"ect on our Senes BB Bonds ana 11 h% for the Series CC Bone; and coerating costs, together wnh higherinterest rates on new debt secunt es and adadional dividends resulting frcm the in 1980 t r u % for the Senes DD Bonds and the inim i rate sales of common stock in connection wah the financing for the floating rate 3-year notes was 22%
of cur construction program' The average interest rates for short-term borrowings The dechne in earnings would have been greater in 1978 was 10.47% in 197911.69% andin 198012 51h except that operating revenues reflected electnc rate Tne ptices per share to the pubhc of new issues olcomm on increases, approved by the Pubtc Servce Commission stock sere as fonows: in 1978. 2 mahon shares at $1725, on August 27 1980 and July 18. 1979. Tt,e Company in 1979. 2 mubon shares at $15 25 and 2 milhon shares rea!2ed e;ectric res enue increases of S53 6 mitilon in 1980.
at $14 375 and in !980. 2 milhon shares at $13 25 and
$26 2 manon in 1979 and 539 7 minion in 1978 as a resutt 3 milhon shares at $11.75 During this 3-yearperiodended of retari rete increases effective August 28.1980, July 19-1980. two 30-year bond issues with low interest retes were 1979 and Sectember 29,1977. and reahzed gas revenue refinanced. Series E. 2% due March t 1980and Senes F increases of 546 8 m#on in 1979 and 53 6 m#0n in 1978 2h h due May 1,1980 During the coming 5-year pencd as a resut cf a rate increase effective November 27.1978-1981 1985, the following long-term borrowings willhave Total tubor costs were approximate y 5138 mill:on in to be refinanced: Series G bonds. 3 % due March 1,1982.
r 1980. $130 mahon in 1979 and $112 im! hon in 1978 In Series X bonds. 8M. due July 15.1983; Notes payable 1979. labarcosts charged to expense oncreased 514 mation with a floating interest rate, due December 19. 1983; and labor costs associated with construction and retire-Senes H bonds, 3%% due July 1,1984: and Senes A ment of property increased 54 mdlion These increases Note (pollution control) Jasper County. 6 40%. due were pnmanly due to higherlabor rates.
February 1,1985 Whde the Companyexpects no ditfculty
&ancmg me e ecunw a is My mat We Mew l
lPough total payrol: costs decreased during the cost in most instances wdlbe higher.
\\
s!nn :our union employees which began June 1,1980.
\\
and continued through the end of the year, the additional Capaal expenditures by the Company for 1980 payroll costs necessary to maintain service to our cus-amounted to $257 mdiion compared to $227 mi!! ion in 1
tomers dunng tne strike, together wah a reduced level of 1979. The Company's total capdal expenddures for the construction activny. resulted in an increase in payrollcosts
- 5. year period 1981-1985 is estimated to be almost S2 bd-Charged to expense of $21 mdlion, for the year 1980 bon including cullays of $489.8 millionin 1981 and $466 7 Labor costs associated with construction and retire-mahon in 1982. Included in the 5-year estimate are costs ment decreased $13 mahon in 1980 due to a reduction for Unas 17 and 18 expected to be in service in 1983 and in construction activit;es dunnq the sinke 1985 The Company has been able to generate the funds necessary to finance its past construction program and incremental costs of $8 2 million. Other than labor expects to be able to meet its future commitments incurred as a result of the sinke, have been deferred and l
are being.amortided over tte hfe of the contract which See Notes for a discussion of the effect of changing expires May 31,1984 The set amount deferred as of prices on the Company and the current status of the December 31,1980 is approxirrately 56 6 mditon.
Nuclear Generating Unit.
l i
I l
3c
]
Northern Ind;ana Public Service Company Statistics Year Encea December 31 1980 1979 1978 J 8S:
Operating Revenues (thousands):
Residential (including home heating) 228,822 S
208.451 S
163,787 Commercial.
77.575 70.173 54.818 Industnal 418,444 354.053 219.048 Other.
3,797 3.483 2.830 Total.
5 728,638 5
636.160 44G 483 Sales in therms (thousands):
Residential (including home heating]
703,050 753.895 753.308 Commercial.
250,883 266,455 266.844 Industrial.
1,596,713 1,602.204
- 315.106 Other 6,656 7.337 7.769 Total.
2,557.302 2.629.891 2.343.027 Cristomers Served:
Endof Year:
Residential (including home heating].
482,179 474.721 463.169 Commercial.
36,826 36.106 35.358 Industnal 2,739 2.730 2.724 Other 26 24 37 521,770 513,581 501.288 Total Electric:
Operating Revenues (thousands):
Residential.
5 145,350 S
120,700 S
114.809 Commercial.
36,924 31.861 29.769 Industrial 412,585 370,614 336.923 Street lighting -
5,151 4,286 3,839 Sales for resale.
32,559 27,684 20.583 Other.
5.318 4.939 3.867 Total 637,887 560.084 S
509.790 Sales in kilowatt-hours (thousands):
Residential.
2,267,369 2.214.660 2,248.012 Commercial.
482,906 485.524 481,090 industrial.
9,197,846 10.303.535 10.121,217 Street lighting.
84,691 84,838 84.178 Sales for resale.
842,627 825.857 799.149 Other.
67,075 82.697 63.278 Total.
12,942,514_
14.007.111 13.796.924 Customers Served' End of Yer Residential 322.166*
322.283 318.756 Commercial.
29,200*
29.273 29.222 Industnal.
9,386 9.216 9.006 Othar.
831 820 807 Total.
361,583 361.592 357.791 40 provecry e ci,ange sunno 19aa n,en xose,usxa countin e.u c resuites,n a ner ioss of 1.s rs res,sent,aiana co commercaicustomers
i 1980 ANNUAL t3EPORT BULK RATE NORTHERN INDIANA PUCLs0 SERVICE COMPANY 5265 Hohman Avenue U.S. POSTAGE H:mmond, Indiana 46320 PAID Permit No.377 Hammond, Indiana l
Transfer Agents Continental libnors National Bank and Trust Company of Chicago 30 North LaSalle Street Chcago. tilinois 60693 The Chase Manhattan Bank N.A.
1 New York Plaza New York New York 10081 Registrars The First National Bank of Chcago One First National Plaza Chicago. Ilknois 60670 Morgan Guaranty Trust Company of New York 30 West Broadway New York New York 10015 Stockholder Records and Dividend Disbursing Office j
Shareholder Relations Northern Indiana Pubic Serwce Company l
5265 Hohman Avenue Haminond. Indiana 46320 This recort os ossvedsotery for the purpose of provoorng ststast>ca!informstron. It is not a representatron.
prospectus or circular un respect to the stock or l
securuties of thos corporation. and os not transmitted sn connect:on wuth any : ele or otter to seII or buy l
sny stock or security now or hereafter to be issued.
i or w:tn any preremmary negotoat on for such sale.
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Lt?**C A v s a WCSSfM&G & CC#8*N* 88C
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1 Directorr Edmund A. Schroer Chairman. President and Chief Executive Otticer Northern Indiana Public Service Company Dr. Carl H. Elliott President. Tri-State University Angota. Inc.ana William J. Johnson Chair. nan of the Board Goshen Rubber Company Inc.
Goshen, Indiana John Allan MacLean <netirea)
Former Vice President and Director Reliance Electnc Company Cleveland, Ohio and President of its Dodge Manufactunng Division Mishawaka. Ind.ana Dean H. Mitchell < net >r.o)
Former Chairman and Chief Executive Otticer Northern Ind ana Public Service Company NIPSCO Consultant
'h Paul H. Neininger Chairman of the Board State and Savings Bank of Monticello, 'ndiana James F. Purcell Senior !% Prssident Northern Indiana Public Service Company W
William J. Riley gl. -
3
.3; Chairman and Chief Executive Officer ui+
'?
First National Bank of East Chicago, Indiana and Riley Company Inc.
lan M. Rolland
^
s President and Chret Esecutive Otticer Lincoln National Corporation, and Lincoln National Life Insurance Company Fort Wayne, Indiana ll
_