ML20003D563
| ML20003D563 | |
| Person / Time | |
|---|---|
| Site: | Yankee Rowe |
| Issue date: | 02/18/1981 |
| From: | YANKEE ATOMIC ELECTRIC CO. |
| To: | |
| Shared Package | |
| ML20003D560 | List: |
| References | |
| NUDOCS 8103270664 | |
| Download: ML20003D563 (13) | |
Text
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t Yankee Atomic Electric Company Annual Report 1980 l
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i 8108270664 u
YANKEE ATOhlIC ELECTRIC CO5fPANY 1671 WORCESTER ROAD FRAh!INGHAAI, AIASSACHUSETTS 01701 Yankee Atomic Electric Compar f, an electric utility company, was incorporated in Atassachusetts in 1954 under the provisions of the Stauachusetts utility law which permits two or more electric companies to join in the construction and operation of a generating plant to serve their common needs.
The organization of the Company was sponsored by eleven New England utilities for the purpose of constructing and operating New England's first nuclear power plant. In addition to its license to generate, buy, transmit and sell electricity, the Company is authorized to conduct research and assist others engaged in a similar business. The eleven sponsoring utilities own the entire common capital stock of the Company and are entitled to and obligated to purchase the output of the plant at a cost equal to total operating exper.ses plus a return on investment.
The Yankee Rowe plant is located on the Deertield River in the Berkshire hills in the Village of Rowe, Manachusetts. The plant was placed in commercial operation in 1%I and has been in full operation since that time except for maintenance and refueling shutdowns. The unit is rated at 185 megawatts (gross), and has generated over 22 billion Kwh of electricity since inception. Currently, the unit is operating at a level of 160 megawatts (gross).
In 1968, the Securities and Exchange Comminion authorized the Company to organize a Nuclear Services Division under the Company corporate structure. The Nuclear Services Division has a staff of approximately 300 engineers who provide engineering services in all aspects of nuclear power plant construction and operation including Nuclear Engineering, Environmental Engineering, Operations, Quality Assurance and Construction Management. Services are performed on a cost basis for the Rowe plant and other power plant projects, principally in New England.
Common Stock Ownership Ownership Shares Percentage Owned New England Po.<er Company 30.0c'o 46,020 The Connecticut Light and Power Company 15.0 23,010 9.5 14,573 Boston Edison Company Central Maine Power Company 9.5 14,573 The Hartford Electric Light Company -
9.5 14,573 Public Service Company of New Hampshire 7.0 10,738 Western Massachusetts Electric Company...
7.0 10,738 Montaup Electric Company 4.5 6,903 Central Vermont Public Service Corporation 3.5 5,369 New Bedford Gas and Edison Light Company 2.5 3,835 Cambridge Electric Light Company -
2.0 3.068 1 _00.0 %
153,400
{ This report is not to be considered an offer to sell or buy }
L or solicitation of an offer to sell or buy any security. J 2
YANKEE ATOh!IC ELECTRIC CONIPANY OFFICERS
' As of December 31,1980)
GUY W. Nicuou, Chairman JAMES E. TntanLE, President and Chief Executise Ofcer DONALD E. VANDENBURGH, Senior Vice President FnEDEnlc E. GuENurN, Clere WENDELL P.JonNsos, Vice President
]AMEs C, NEsatTT,.issistant Treasurer Locts H. HEIDEn, Vice President AnMAND R. SoccY, Juissant Treasurer DONALD E. Rost Treasurer KIPK L. RAMsALEn..fssistant Clerk BOARD OF DIRECTORS
( As of December 31.1980)
JoAN T,
- Box, Vice Chairman.
Netu Guy W. NicuoLs, Chairman of the Company; England Electric System. IVestborough.
Chairman. President and Chief Executise Manschusetts Ofcer. New England Electric System.
- "'0 '* " " ' N"" """'
WituAM F. Bunt,.fuinant to President. NEGA Sersice Corporation. Cambridge. Stassachu.
DONALD C. SwtTzEn, Vice Chairman. Northeast setts Utilities. Hartford. Connectics, JOHN F G. EscHons. JR., President and Chief WituaM C. TALLuAN, Chai> man and Chief Exec.
Executise Ofcer. Eastern Utili:ies Associ.
utise Ofcer. Public Sersice Company of ates. Boston, Menachusetts New Hampshire. 3ianchester. New Hamp.
'N 5
WILLIAM B. Etus. President and Chief Operating Ofcer. Northeast Utilities. Hartford Con-ELwns W. Tuentow President and Chief Execa.
necticut tise Ofcer. Central Maine Power Company.
'5"'"" # #5"'
JAMES E. GalFFis, President and Chief Executive Ofcer. Central Vermont Public Sersice Cor.
Jruts E. TntanLE, President and Chief Executise por tion. Rutland. Vermont Ofcer of the Company JostPu P. TYnnELL, Senior Vice President.
Boston Edison Company.
- Boston, Manachusetts COOPERS & LYBRAND REPonT OF INDEPENDENT CENT!FIED Penue AccocNTANn YANKEE Atomic ELECTRIC COMPANY FnAMrsonAM. SIAssAcuestrrs We have examined the balance sheets of Yankee Atomic Electric Company as at December 31,1980 and 1979 and the related statements of inccme and retained earnings and changes in financial position for each of the three years in the period ended December 31, 1980. Our examinations werc made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting recoras and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the financial statements referred to akve present fairly the financial position of Yankee Atomic Electric Company at December 31,1980 and 1979 and the results of its operations and the changes in its financial position for each of the three years in the period ended December 31, 1980, in conformity with generally accepted accounting principles applied on a consistent basis, after restatement for the change, with which we concur, in the basis of prescatation as described in Note A.! to the financial statements.
Boston, Sfassachusetts COOPERS & LYBRAND February 18.1981 3
YANKEE ATOMIC ELECTRIC CO. lPANY
\\
Selected Financial Data (in thousands except per share data)
Year Ended December 31, 1980 1979 1978 1977 1976 Operating revenue Electric sales
$34.813
$26.468
$21,2'93
$20.011
$18,229 Engineering services to others...
17.883 12.094 8,920 7,198 6.487 Total operating revenues 52.6 %
38.562 30,213 27,209 24.716 Operating income 4,181 3,562 4,209 2,983 2.976 Net income -
1,672 1,912 2.628 2,247 2,129 Common dividends 1,879 2,148 2,454 2,186 2,186 Net generation (millions of Kwh)..
292 1,232 1,193 1,022 1,248 Total assets..
51,000 57,879 49,551 42,834 40,252 Long-term debt 10,000 10,000 10,00v Short-term debt 11,500 14,500 11,400 15,800 14,900 Earnings per share 10.90 12.46 17.13 14.65 13.88 Financial Revieto The Company has power contracts with its stockholders throughJune 1991 which provide that these utilities must purchase all of the electrical output of the plant at a cost equal to total operating expenses plus a return on investment whether or not the plant operates. The Company also operates a Nuclear Services Division which furnishes engineering services to the Rowe plant and to other power projects at the cost of such services. Increases in revenues are related to the pa2s-through of increased operating and eng neering expenses under the provisions of the power contracts and engineering service contracts.
During the year 1980, the liowe plant was shut down from February 14,1980 through October 30,1980 for repairs to the turbine generator. Fuel expense decreased by $4,650,000 in 1980 because of reduced fuel consumption resulting from the plant shi.:down. The increase in the engineerini expense for the years 1980,1979 and 1978 are primarily attributable to inc.enes in payroll costs and contracted i echnical services due to increased regulatory requirements. Maintenance expme increased by $6,272,000 in 198C primarily as a result of repairs to the turbine generator, costs of which may be partially recovered through an ins 2rance claim.
Net earnings were reduced significantly in 1979 and 1980 because, under rates then in effect, net earnings were inversely related to short term interest costs. A rate case currently an file with the Federal Energy Regulatory Commission would divorce earnings from interest costs beginning March 1,1981.
Short. term debt consists entirely of commercial paper notes which are sold directly to a commercial paper dealer. The Company has a formal bank line of credit in the amount c{ $18,000,000 in support of commercial paper. This credit line terminates on May 31,1981 but it is expected to be renewed. The Company has regulatory approval to increase short-term debt to a maximum amount of $21,000,000 in 1981.
The Company's Rowe plant is licensed and regulated by the Nuclear Regulatory Commission, an agency of the United States government. Therefore, operation of the plant is, to a substantial degree, subject to regulatory control.
4
YANKEE ATONIIC ELECTRIC COAIPANY Statements ofIncome and Retained Earnings Year Ended December 31.
1980 1979 1978 Operating revenues (Notes A and F):
Electric sales.....
$34,813.205
$26.467,525
$21.293.156 Engineering services to others 17.882.665 12.094.327 8.919.671 Total operating revenues -
52.695.870 38,561.852 30.212.827 Operstir4 expenses (Note A):
Fuel (Note E) -
2.563,510 7,213,665 5.643.645 Operations..
6.924,654 4,598,578 3.454.854 Engineering 25.499,539 15,953,822 11.666.717
.\\taintenance 8,590.235 2.318,404 2.171,282 Depreciation (Note F) 2.551,565 2.221,871 179,656 Taxes, other than federal income-1,302,386 1.207.929 984.694 1.082.591 1.485.424 1.902.527 Federal income taxes (Notes B and F)
Total operating expenses -
48.514.480 34.999.686 26.003,375 Operating income 4,181,390 3.562.166 4,209,452 Other income-net (26.591) 1.554 5.045 Operating and other income 4.154.799 3.563.720 4.214.497 Interest:
Interest on short-term debt (Note C).....
1.778,550 1,075,025 1,133,689 Interest on long-term debt 889,581 887,153 435.% 9 Other (Note F) 1,081 1,100 89,628 Allowance for borrowed funds used during construction-credit (Note A)..
(185.999)
(311.013)
(71.792)
Totalinterest 2.483.213 1.652.265 1,586.594 Net income.
$ 1.671,586
$ 1,911.455
$ 2.627.903 Retained earnings:
Retained earnings at beginning of year 5 5,136,776
$ 5.372,921 5 5,199,418 Net income....
1.671,586 1.911.455 2,627.903 6,808,362 7.284,376 7.827.321 Dividends declared _
l.879.150 2.147.600 2.454.400 Retained earnings at end of year
$ 4,929.212 5 5.136.776
$ 5.372,921 Per share data:
Earnings per share
$10.90
$12.46
$17.13 Dividends per share
$12.25
$14.00
$16.00 The accompanying notes are an integral part of these financial statements.
5
YANKEE ATOhtIC ELECTRIC COSIPANY Balance Sheets December 31.
ASSETS 1980 1979 Electric plant, at original cost (Note A)
$56,860,602
$53,673,628 Less accumulated depreciation..-.
36.814.620 34.263,055 20.045,982 19,410.573 Construction work in progress (Note G).
622,390 3,399,431 Nuclear fuel, at amortized cost (Not s A and E)-
19,489.378 21.018,394 Net utility plant.
40.157,750 43.828.398 less accumulated depreciation of $159,875 Nonutility property,te A).
and $110,931 (So 819,002 867,946 Current assets:
Cash, including temporary cash investments of $5,300,000 in 1979 -
397,056 5,496,285 Accounts receivable:
From sales of electrie energy.. <
4,015,989 3,825,426 From engineering services to others (Note A) 3,704,525 2,159,545 Other 60,050 117,332 Materials and supplies, at average cost.......
1,566,776 1,237,254 279,356 346,348 Prepayments Total current anets -
10.023,752 13,182,190
$51,000,504
$57,878,534 CAPITALIZATION AND LIABILITIES Capitalization:
Common stock, par value $100 per share; 153,400 shares authorized and outstanding
$15,340,000
$15,340,000 4,929,212 5,136,776 Retained earnings 8%% Installment note (Note D) 10,000,000 10,000,000 Total capitalization..~.
30,269,212 30,476,776 Current liabilities:
Short-term debt (Note C)..
I1,500,000 14,500,000 Accounts payable...
3,606,352 6,791,926 Accrued federalincome taxes (Note B) 431,831 690,769 Accrued interest.
455.285 442,362 Total current liabilities 15.993,468 22,425.057 Deferred federalincome taxes (Note B)..
3,605,905 3,974,888 Unamortized investment tax credits (Note B) -
1,131,919 1,001,813 Commitments and contingencies (Note G)
$51,000,504
$57.878.534 The accompanying notes are an integral part of these financial statements.
6
YANKEE ATO.N!IC ELECTRIC CO.\\tPANY Statements of Changes in Financial Position Year Ended December 31, 1980 g
1978 Scurce of funds:
From operations:
Net income
$ 1,671.586 5 1.911.455
$ 2.627.903 Depreciation 2.551.565 2.221.871 179.656 Amortization of nuclear fuel 2.563,510 7.213.665 5.643.645 Deferred federalincome taxes.
(368.983)
(233.395) 690,710 Investment tax credits-net 151.106 68.142 158.575 Allowance for borrowed funds used during construction-credit (185.999)
(311.013) 171.792)
Total funds from operations-6.382.785 10.870.725 9.228.697 From financing transactions:
Net change in short-term debe -
(3.000.000) 3.100.000 (4.400.000)
Proceeds from long-term debt -
10.000.000 Total funds from financing transactions (3.000.000) 3.100.000 5.600.000 From other sources (net) 27.943 49.150 127.178 Total source of funds
$ 3.410.728
$14.019.875
$14.955.875 Application of funds:
Construction expenditures, excluding allowance for borrowed funds used during construction-
$ 223.934
$ 3,494.756
$ 3.330.477 Nuclear fuel purchased 1,034.493 8.151,483 7.938.044 Dividends on common stock 1.879.150 2.147,600 2.454,400 Net increase in Working capital excluding short. term debe 273.151 226.036 1.232.954 Total application of funds -
$ 3.410.728
$14.019.875
$14.955.875 Increase (decrease) in components of working capital:
Cash -
$( 5.099.229)
$ 4,682.478
$ (210.594)
Accounts receivable
.1.678.261 1.080,926 1.358.543 Materials and supplies 329.522 178.521 177.793 Prepaymats (66.992)
(87.667) 1.167 Accounts payable 3.185.574 (5.252.711)
(684.904)
Accrued federalincome taxes 258.938 (391,656) 1.040.173 Accrued interest-(12.923) 16,145 (449.164)
$ 273.151
$ 226.036
$ l.232.954 The accompanying notes are an integral part of these financial statements.
7
YANKEE ATOAIIC ELECTRIC CONIPANY Notes to Financial Statements NOTE A-Summary of Accounting Policies:
1.
Basis of Presentation Effective December 31,1980, the Company, an electric utility subsidiary of two registered holding companies organized under the applicable rules and regulations of the Public Utility Holding Company Act, revised its presentation of the statement of income and retained earnings from one which reRected only operations of the Rowe plant to one which redects operations of both the Rowe plant and the Nuclear Services Division.
Management believes that this new statement format provides a more nicaningful presentation of the Company's total operating and engineering effort. The accompanying statements of income and retained earnings for fiscal 1979 and 1978 have been restated to conform with the fiscal 1980 presentation.
The Nuclear Services Division is organized for the purpose of furnishing nuclear engineering servicer st the cost of such services, to the Company and to other nuclear power facilities.
The costs of such services provided to the Company's Rowe plant, which amounted to
$8,593,931 in 1980, $4,536,885 in 1979, and $3,250,535 in 1978, are included as engineering costs in the accompanying statements of income and retained earnings.
Nonutility property consists of facilities used in rendering a portion of the above servu.
2.
System of Accounts:
The accounts of the Company are maintained in accordance with the Uniform System of Accounts prescribed by regulatory bodies having jurisdiction.
3.
Plant:
L The Company capitalized as a part of construction costs, a non-cash item called allowance for borrowed funds used during construction at 14.3% in 1980,12.2% in 1979, and 8.4% in 1978 which approximated the pre-tax cost of short term debt.
Costs of current repairs and minor replacements of plant and properties, which do not extend the current life of the plant, are charged to maintenance expense accounts as incurred. Plant retired or otherwise disposed of, together with costs of removal less salvage, is charged to accumulated provisions for depreciation.
4.
Depreciation:
The Company provides depreciation on a remaimng life basis effective with the settlement of a rate proceeding in 1978. Bned on such settlement the estimated weighted average remaining life at December 31,1980 is approximately eight years. Previously, depreciation was provided on j
a straight line basis by charges equal to 5% of the cost of depreciable assets. Depreciation i
expense for 1978 under the remaining life method, $1,952,813, was reduced by $1,773,157 due l
to a retroactive adjustment as a result of a rate case settlement (see Note F).
8
YANKEE ATO.\\flC ELECTRIC CO.\\tPANY Notes to Financial Statements 5.
Nuclear Fuel:
The Company expenses nuclear fuel as follows (see also Note E):
The cost of nuclear fuel is amortized to zero value on a unit of production method at rates based on estimated kilowatt hours to be produced. Amortization of the current core also includes a prevision for the permanent storage of spent fuel.
The salvage value for cores burned prior to 1976 has been ratably amortized and fully charged to fuel expense through i980.
6.
Retirement Plan:
The funded plans are noncontributory and provide retirement benents for substantially all employees. Current service costs are funded annually; prior service costs. commencing in 1977, are being funded over a 15 year period. Total pension expense, including amortization of prior service costs charged principally to operating expenses of both the Rowe plant and the Nuclear Service Division. was $626.000 in 1980. 5666.000 in 1979 and $558.000 in 1978.
In 1983 a restructuring of pension fund assets was accomplished and a large portion of fund assets were invested in fixed term guaranteed rate investments. This resulted in an increase. from 5.5" to 8.5Fe, in t e estimated return on fund assets. At the same tirac. the assumptions for A
salary increases arid Social Security escalation were also increased. The net esect of these changes reduced pension contributions in 1980.
The Company participates in the plans with subsidiaries of New England Electric System. As a result, a comparison of the market value of pension fund assets with the actuarial present value of arcumulated benefits cannot be separately presented for the Company.
.9
YANKEE ATOAIIC ELECTRIC CONIPANY Notes to Financial Statements NOTE B-Federal Income Taxes:
Federal income taxes consist of the following components:
1980 -
1979 1978 Current federalincome taxes 31,299.675
$1,652,000
$1,057,900 Deferred federalincome taxes -
(368,983)
(233,395) 690,710 Investment tax credits-net 151,1 %
68.142 158.575
$1,081,798
$1,486,747
$1,907,185 Total federal income taxes difier from the amounts computed by apply;ng the statutory tax rate to income before taxes. The reason for the difierences are as follows:
1980 1979 1978 Computed tax at statutory rates--
$1,266,557
$1,563,173
$2,176,843 Increase (reductions) in tax resulting from:
Amortization of investment tax credits (145,823)
(263,483)
(230,620)
Provision for permanent storage..
84,612 357,109 9.519 Allowance for borrowed funds used during construction -
(85,559)
(143,vuos (34,402)
Other (37,989)
(26.986)
(14,155)
Federalincome tax provisions (including $(793), $1,323 and
$4,658 charged to other income)
$1,081,798
$1.486.747
$1.907.185 Effective federalincome tax rate.
39.3%
43.8%
42.1%
The Company has adopted comprehensive interperiod tax allocation (normalization) consistent with regulatoiry approval. The following table details the components of deferred federal income taxes.
1990 1979 1978 Excess tax depreciation...
$ 123,493
$ 50,025
$ 977,122 Amortization of nuclesr fuel salvage value (see Note A)
(492,476)
(283 120)
(286.412)
$(368,983)
$(233,395)
$ 690,710 Investment tax credits are deferred and amortized over the estimated lives of the property giving rise to the credits. Investment tax creditenet reflects increases in federal income taxes attributable to such investment tax credits which have been deferred.
Federal income tex returns for the Company have been examined and reported upon by the Internal Revenue Service through 1976.
10
YANKEE ATOMIC ELECTRIC COMPANY Notes to Financial Statements NOTE C-Short-Term Borrowing Arrangements:
1 The Company has available a line of credit with a bank totaling $18,000,000, the terms of which provide for borrowing at the prime rate plus a fraction thereof. In lieu of formal l
compensating balance requirements, the Company is obligated to pay a quarterly com-mitment fee to support bank borrowings. Information as to short-term borrowings is summarized as follows:
r l
1980 1979 1978 Commercial paper outstanding at end of year
$11,500,000
$14,500,000
$11,400,000 l
Weighted average interest rate of l
borrowings at end of year -
19.5%
13.9 %
10.5 %
.\\faximum amount of borrowings at any month end -
$13,900,000
$14,500,000
$19,600,000 Weighted monthly average borrowings during year
$12,208,000
$ 9,199,000
$13,677,000 Weighted average interest rate during year--
14.6 %
11.5%
8.3%
NOTE D-8%% Installment Note:
The Company has an unsecured long-term note for $10,000,000 with an 8 3/4% interest rate maturing on January 2,1988. Beginning on July 1,1982 and continuing semi-annually thereafter, the Company will prepay $900,000 principal amount for 10 consecutive in-stallments and $500,000 principal amount for the last 2 installments of the note.
NOTE E-Nuclear Fuel:
Nuclear fuel consists of the following items-l 1980 1979 1978 l
In process --
$14,263,954
$13.229,461
$ 4,650,296 Assemblies in reactor.
17,151,717 17,151,717 17,151,717 Spent nuclear fuel -
17,54,949 17,557,949 17,557.949 Gross nuclear fuel 48,973,620 47,939,127 39,359,% 2 Less accumulated amortization of nuciar fuel:
Assemblies in reactor 11,926,293 10,363.104 3,765,570 Spent nuclear fuel-17,557,949 16,55' 529 15,941,498 Net nuclear fuel-
$19,489,378
$21,018,394
$19,652,894 The following table details the components of fuel expense:
1980 1979 1978 Current Core:
Amortization of cost-
$1,379,250
$5,821,210
$5,027,123 1-Provision for permanent storage.....
183,939 776,324 19,831 1,563,189 6,597,534 5,046,954 l
Prior Cores:
Amortization of salvage value......
1,000,321 616.131 5 %,691 Fuel expense -
$2,563,510
$7,213,665
$5,643,645 11
YANKEE ATOMIC ELECTRIC COMPANY Notes to Financial Statements NOTE F-Rate Proceedings:
On February 22, 1978 the Federal Energy Regulatory Commission accepted a filing by the Company revising its rates as of June 2,1975 in compliance with a Commission determina-tion on July 20,1977. A refund to customers of $1,083,735 (including $88.985 of interest expense) was made and recorded in 1978 representing the net effect of reductions of
$1,773,157 in depreciation, increases in tax expenses of $354,223, and an increase in the rate of return of $424,184 since June 2,1975. Because of the billing provisions of the power contracts, this increased rate of return less interest increased net income in 1978 by $335,199.
The revised rates place into effect a 9.72% overall rate of return on net plant and remaining life depreciation rates, in lieu of a rate of return varying pursuant to a formula and a composite depreciation rate of 5%.
On July 31,1980 the Company filed a revised rate schedule with the Federal Energy Regulatory Commission. The new rates will become effective.\\tarch 1,1981, subject to refund. Under the proposed rate structure, rates will be increased to reflect an increase in depreciation expense, the inclusion of a provision for the future decommissioning of the nuclear power plant (see Note G) and a higher return on equity.
NOTE G--Commitments and Contingencies:
(1) ' The Company has contracts for the fabrication, conversion and enrichment of nuclear fuel through the year 2000. Contractual obligations under these agreements amounted to approximately $4,700,000 at December 31,1980, of which $278,000 is rcheduled for 1981.
The Company has contracted for uranium through the year 2000. At December 31, 1980, assuming 1980 dollars, total commitments under these contracts are estimated to be as follows:
1981
$ 5,917,000 1982 3,987,000 1983 4,310,000 1984 4,491,000 1985 4,080,000 1986 1990 19,929,000 1991-1995 9,684,000 1996-2000 6,307.000 i
$58,705,000 The above table includes minimum payments aggregating $17,%1,000 through 1993, some or all of which will be required under a contract for uranium.if specified levels of production are not achieved by a supplier.
(2) The Company estimates the cost of decommissioning, utilizing the immediate dismantlement and removal method, at approximately $30,000,000 in 1980 costs. If the Company's rate filing is approved (see Note F), such decommissioning expense would be added to power costs during the life of the power contract. which terminates on June 30,1991.
12 i
I
YANKEE ATOMIC ELECTRIC COMPANY Notes to Financial Statements (3) The Company maintains the maximum amount of public liability insurance, currently
$160,000.000, available from private insurers. A Federal stature, the Pnce-Anderson Act, mandates an industry wide program under which nuclear facilities could be assessed in the event that a nuclear incident resulted in damages exceeding the $160,000,000 of private coverage. Under this Act, each nuclear reactor may be assessed a retrospective insurance premium of up to $5,000,000 for each nuclear incident within the United States. In the event of more than one incident per year the maximum annual assessment per reactor is
$10,000,000. Under the billing provisions of the power contracts, the retrospective insui ince premium would be includable in the cost of power.
(4) At December 31,1980 and 1979, the Company had leases covering its office facilities and certain equipment and vehicles. Such rentals are included in and recovered through the billings of the Nuclear Services Division and therefore have no effect on net income. Some of these leases are " capital leases" as defined by the Financial Accounting Standards Board. Because these " capital leases" are treated as operating leases for rate purposes, such leases are not capitalized for financial statement purposes. Had the Company capitalized these idenuned
" capital leases", the additional amount of nonutility property that would appear on the balance sheet would be $1,327,000 in 1980 and $1,399,000 in 1979. Total rental expenses for these " capital leases" and operating leases amounted to $1,183,000 in 1980, $878,000 in 1979 and $745,000 in 1978, respectively. Estimated future minimum annual rental payments, exclusive of taxes and insurance, for non-capitalized financing leases and operating leases are as follows:
Non-capitalized Operating 6nancing leases leases Total 1981
$ 333,000
$ 679,000
$1,012,000 1987 314,000 679,000 993.000 1983.
299,000 679,000 978,000 1984 276,000 679,000 955,000 1985 184,000 679,000 863.000 Later years 331,000 331,000 Total
$1.737,000
$3,395,000
$5,132,000 (5) The Company,in common with other utilities,is subject to current and future regulations relative
.to nuclear power plant licensing. The Company estimates that plant capital expenditures, related primarily to licensing requirements, will be approximately $4,000,000 in 1981, excluding allowance for funds used during construction. This program is subject to periodic review and revision, and actual construction costs to be incurred may vary because of revised estimates.
13