ML20009B614
| ML20009B614 | |
| Person / Time | |
|---|---|
| Site: | Grand Gulf  |
| Issue date: | 02/13/1981 |
| From: | MISSISSIPPI POWER & LIGHT CO. |
| To: | |
| Shared Package | |
| ML20009B613 | List: |
| References | |
| NUDOCS 8107160428 | |
| Download: ML20009B614 (20) | |
Text
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1 I Mississippi Power & Light Company l Annual Report l l l About the Cover , I
'Ihe hottest summer in the 57-year history TIIE COMPAWS 1980 ANNUAL REPORT of h!P&L, put emphiyees to the test as they TO TIIE SECURITIES AND EXCIIANGE worked to supply electric service to over COMMISSION ON FORM 10-K (INCLUDING 300,000 customem in Western Mississippi. FINANCIAL STATEMENTS AND Artist Patricia M :Nea! ofjackson pictured FINANCIAL STATEMENT SCIIEDULES)lS one employee who coped with the heat in AVAILABLE TO ANY STOCKIIOLDER order to do hisjob. One way customers were
{ UPON REQUEST WITIIOUT CIIARGE. ; able tosave money during the intense Persons interested in obtaining a copy i summer was through the " Saver Switch" should write to Frank S. York,Jr.,Vice t program,a radio controlled device which President and Secretary, at the address , permits the managed interruption of below: compressors on air conditioners during the MISSISSIPPI POWER & LIGIIT COMPANY four months ofJune through September. P. O. Box ifA0 Approximately 7,450 switches were Jackson, Miss ippi39205 installed in 1980 in the homes ofG,725 customers with a total of 43,000 KW under (601) 969-2311 ( rol REGISTRAR (for pretierred stock): Powe'r plant unit availability and Deposit Guaranty National Bank efficiency have always been iniportant to the Jackson, Mississippi ; comp:my; In recent years the rapid increase TRANSFER AGENT (fbr preferred stock): J in fuel costs, along with high inflation rates, " int National Bank ofJackson have made these two items even more Jackson, Mississippi i important. Re search studies in this fic!d, & where substantial results are being Systeni Map achieved, comprise one of the many research projects invoh ing MP&L peopk . l General Offlees d 'l.- ' s" Electric Building, Jackson, Mississippi 39205
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! [ i GeneralInformation i f d. ~
c-r. MISSISSIPPI POWER & LIGIIT COMPANY is a regulatec electric utility operating in 45 [.*""Y~)
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counties of Western Mississippi. At - ) y~ . \ (. December 31,1980, the Companv fbrnished ~ it i /! electric ener,y, at retail, to 307,373 customers and, at wholesale, to 39 jlk)!(g \ '[ cooperatives and municipalities. The GG Cr.mpany is one of the principal operating
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subsidiaries of Middle South Utilities,Inc. " 7"g4 and its system is interconnected with and operated as a part of the Middle South j
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Utilities System, which supplies the electric ""N fj energy raluirements of more than 1.5 Q h ,. million customers in a 92,000-square mile area ofArkansas, Louisiana, Mississippi and Missouri. " EL-W.*t. f 1 i l
President's Letter To Our Shareholders: h!P&L under contract with 51SEI. De ' biggest real estate transaction ever For 5tississippi Power & Light Compam, as for oJter h!ississippi businesses and
"'mrnng m ississippi was mnsunimatal ,
industries,1980 was a year which reflected wlwn m, negotiated a sale fbr htSFI of , j ten percent of GGNS to the South hiississippi the difficult times in which we live. But,even thou Electne Power Association for about a third of a billion dollars. 7 %j _ posed some us serio'gh 1980 waswas a veara year which
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\2 in which 51P&L recorded an appreciabic w to the ever escalating cost and tmcertamties of supply ofoil and natural gg L- ,,
degrec of progress.
,,,g s Qq Elississippi Power & Light Company gas, m, must mow knvan(s nuclear nd cntered 1980 in a seriouslhveakened mal generating stations fbr its oase load .,( -
financial condition. Earn'ings were down by needs m the future. This past year the g 22 percent, and our bonds ivere given a minpany rnade plans to aatuire a larger
. {5 g& & [s lower rating, moving from A to $3BB+ by portion of dw output of Graml Gulf dian N } d qQ 'y one of the major rating agencies. Our - was ongmaHy mnt(mplatal. yhen both m M g {pg 4 commercial paper notes were also units are completed,it is anticipated that , ;
e e < . g gjj f downratal from Prime-1 to Prime-2, so the 5!P&Ls allocation will be more than 800 '
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company had simply reached the point where riite relief wa's the only answer.
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#""* "IS""Y.ing to acquire 2a ffq % j!.
(YM[ - In November the h!ississi}ipi Public pemnt ownmlup intemst 1n dw i , ' k~, g ; \,.{' Senice Commission grantal the company Independencc . Steam Electne Station now 4 S48.3 million, only 70 percent of the $68.8 beingbuilt in northeast Arkansas.Thu , p - t million requestedin rate relief, and we have pr posed purchase will give our customers p,j' ; , the advantage of about 400 megawatts of 4 subsequentiv appealed this decision to the Ilinds Coun'v t Chancery Court. The full e al-fired capacity.Thus sigmficant steps 1 amount of tl$e rate increase was placed in will be taken in the direction of a balanced pnxluction capability with uranium and g gg 4]g ,. g effi et under bond onJuly 1, and collections will continue to be made on this basis until ""I Supplementing our present gas and t the courts make final disposition of the case. "b.Y* C"I> ability. We feel that the dn m fwat. ion ofour fuel mix is essentialif During 1980, Western Alississippi experienced the hottest summer in the we am to continue to provide reliable service our mstomers at the lowest possible cost. 57-year history of the company. Extremely We are confident that AIP&L is orgtmized, hot temperatures contributal significantly to increased electric usage in res'idential and structured,and notivated to meet the many wmmercial customer categories, and a new gra e challenges facing the electric utility system peak demand of 2,078,000 kilowa tts industry talay Perhaps one of the most ! was reached inJuly,8.6 percent over last important of these challenges is to develop and maintam pubhc understanding and year's p ak.When 155,000 kilowatts of peak load transfitred to South htississippi confidence. One ofour top pnonties, dwnfbre,is communication with Electric Power Associvionjust prior to the 1980 peak are considered, the comparable mstmum and dw puNic gennaHy so they will better understand the complexities of peak would have been 2,233,000 kilowatts our business and the necessity fbr adequate or 16.7 peu ent over 1979. Net income for the year was $3 ,9F J00, earnings s the essential ingredient m h ramng capital fimds at competitive rates in as compared to the dilappointing 6 $22,531,000 fbr 1979. This inci 4 wa- ?>ie onler that the company may continue to to the record setting sumn' a - m in a provide dependable electric service. and the granting of the b .itiv neen ;- - On behalforthe management and the relief that is allowing us o r'e-establish our Boani of Emtors, I express appreciation intergrity in the fina'noal market and thus for the continuing suppor t ofinvestors and be able to issue and sell stocks and bonds on employees. A1P&L people are dedicated to reasonable terms, using dw best of their collective capabilities Progress continued to be made at Grand ir3 well planned and continuing et! orts Gulf Nuclear Station (GGNS), one of the """"'"# 6 thening our company. largest construction projects ever undertaken in the southern United States. Sincereh, /d - /
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Ch f/ The plant is owned by N!iddle South Energv, Inc. (NISEI), with cor$struction supervision /U Mt and plant operation being carried out by Donald C. Lutken 2
Year In Review Energv Sales Up ne company enterniits second year oa its .__ load management control program which was Total enen v sales fbr the vear amounted to launched under the nenne of Saver Switch.'"Ihis 12.9 billion ki;lowatt hours, an increase of 5.7 radio controlled device permits the managni percent compared with the previous year. Energv interruption ofcompressors on air conditioners sales to ultimate customers anmtmted to 7.6 during the fbur nwnths orjune thmugh , billion kilmvatt hours, an increase of tbut percent September, for not more than 15 minutes ofeach
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over the presious year. Residential usage fbr the hour during the hours of hi h usage. The i Q year was 10 percent over 1979, the average n>idential customer using 886 kilowat t hours customer is allown! a mont dy crecht of 51.00 ptr kilovolt ampere ofcontrolled cooling during the <r [k. j [# tM - 4%, 4 more in 1980, or 11,667 kilowatt hours as fbur months. Some 7,450 switches Eere initallni 'N e. com}ured with 10,801 ki!mvatt hours fbr the year betbre. Usage by commercial customers was 'up five percent while industrial customers usage in the homes of G,725 customerswith a total of 43,000 KW under control. This wouhl result in a net peak rniuction of over 10.800 KW. ByJune,
*g%K' y[W ht[sdwggg.*.ph decrea3cd three percent, reflecting the effi cts of 1981, an achhtional 10,000 switches will tw the national econonm installed, and by 1982, Saver Switches will be Total customers a t year's end numben d available in all ilitisions of the com}uny.
307,414, an increase of 3,691 fi>r the year. MP&L is pioneerin Customers by classification were: residential, marketing tic!d byering ot!'gtwo intypes the elec;ric of heat utility 263,850; commercial,38,115; industrial,3,276; pump water heaters to customers on an government and munici}ul,2,132,; cooperatives mstallment purchase plan that includes service. and municipalities,39; and other public utihties, The company also offers hea t recovery water
- 2. heating devices to heating and air conditioning An extremely hot summer, resulting in a installers. These two special water heating higher demand fbr cooling, was prinunly programs are designed to maintain MPeeth responsible for the higher than usual increase in existing, strong, electric wa ter heating customer peak demand. The vear's peak was 165,000 base.
kilowatts over 1971i, and was reached at 4:00 The company continued an aggressive p.m. onJuly 15,1980, at 2,078,000 kilowat ts, even program to aicf customers, with emphasis being after the transfer of155,000 kilowatts of hud to placed on etlicient use and sensible conservation the South Missi3sippi Electric Power Association. measures. Cam}uigns were continued in support ofsuch proven energv-saving programs as the Operating Revenues UP heat audits,pump, promotiontheofinsu
" Zip-Up brogra m, energvtihn, the r3 (energv Total operatin efficient electric) home construcuon plan, a nd new high, $532$g 88,000,revenues as compied fbrwith the year reached a heater research.
solar water $436,524,000 in 1979. The record summer usage a_nd the company's new rates were two reasons Expenses Up Also for the mcrease. A thin! major factor was the high cost of fbel fbr power genera tion and opera ting expenses shown! an increase, purchased power costs, reflected in part in totaung $481,985,000 lbr the year. This was an cu tomers' bills through the fuel cost adjustment. increase of 22 percent, or $85,447,000 more than Textav fuel andpun based power account fbr 66 the year befbi e. Fortunateh, in 1!60, the percint of the dollars MP&L collects from its coni}uny was able to purchase more natural gas customers. ne com}uny realizes no profit on Ibr generation than theyear befbre,and this increasn! ibel costs. along with purchased power, helped reduce fuel ne distnbution of the company's 1930 rwenue oil purchases 48 penrnt, down to 5,045.118 dollars was as ibilows: barrels fbr the year. This had a mcxterating Amount influence upon the rise in f uel costs. Even so, fbcl (in thousands) % and purchased power accountal fbr the greater Fuel.. ... $267.685 50.22 part ofexpenses, amounting to $353,467,000 for Pun hased Power 85.782 16.09 a 23 percent increase over 1979. . Total Fuel and Punha ed Power Taxes .
$353.467 36.618 66.31, 6.8 COHStruction M Pa)Tull t s 25,311 4.75 Expenditures fbr construction during the year were $31,020,000, a decrease of $2.2 mlllion' g- \'. ' '
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f and Dntuctions 40.825 7.66 under 1979, due to the f act that some prgects ,x Cmt ofCa iital: were deferred to 1981. gi j ' Cost of ebt (Interest) 20 t41 3.78 Some of tbe major projects during theyear Gd - - g g' Net income (Cust of- included; completing the 115,000 volt Vertac 11 ,, n Preferrni and Cliemical Com}unv Substation in Vicksburg and ff0fe{ h i % e g Common Stoc kl . TOTAL REVENUE 33.954
$532.988 6.38' 100.00 thc 230,000/115,000 volt Substation a t Tilla' tolu; making a 115,000 volt interconnection with
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plg ) "mimi ral a rr+a t amd *.4 m ral-='m dat nd . V"*"". City Municipal Utilities; completing major ; j g$ - I J m(xlifications of the Rex Bnnvn SEs and south m r-.wa m sw i.. nmiemer, Jackson 115,000 volt > Ntations; adding 115 M0 hg
+7 volt capacitors at Colonial Pipeline,IIorn Lake : }' .
AI(IIng CUSiOmers ana mmica sub,tations. Ten 13.800 volt fiederand bus sections were g g3 - 6 [- %i g A program was started in 1980 to analyze customer complaints in an ettbrt to gt t a better added in various substations throughout the system, and 230,000 volt oil circuit' breakers were
' h WJ understanding ofcustomer problems and ddded at Indianola and Tillatolu Substations. i 4 .7 N V"- k Vi Ya concerns.
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Other pmjects included completing 115,000 in onier that all available resources can be volt lints from the Airport to Brandon, fondren directed toward completion of the No.1 unit. to Medical Center and Spencer Potash to Vertac Aggressive recruiting activities have continued Substations; finishing a major 230,000 volt in order to comolete the statling to a level which interconnection between Indianola and will enable MP5L to safilv operate and nuintain mllatolu; and working on the comersion of the the plant. Presently, out of'the managerial, 115,000 volt transmission line hetween Ulla toba supervisory and professional level employees, and natesville to a 230,000 volt line. over 30 have had nuclear power expenence prior A 115 000 volt transmission line from Brandon to mming to work thr the company. The plant to Brandon Suitching Station was reconductored 3taff organization has approximately 75 percent and work was begun on the reconductoring of ofits projected strength of 3% and expects to the two,115,000 volt transmission lines from recruit the renuinder ofits staff uithin the first Nattbez SFS to the Natchez Substation. six months of1981. The conductor was removed from the 115,000 volt abandonni river crossing at Vick3 burg, and all the site work and 95 percent of the Independence Coal fiiundations were completed at the McAdams Because of the continuin 500,c00 volt substation. price and uncertainties ofs'g upply andescalation regulatorv of the A new othee buihimg was completed at the restrictions on the use of oil andgas for boiler ' Western Division IIcadquarters in Vicksburg. tiwl, MPGL s pursuing the manIngement objective of mming toward increami use of SMEPA and MEAAI nuclear a nd coal. fired base load generation. The company has entered into a contract to When the company and Middle South Energe, acquire a 25 percrnt ownership interest in two Inc. were issuni permits by the Nuclear coal-fired generating units under construction by Regulatory Commission (NRC) to construct the Arkzmsas Power to Light Company scheduled fbr Grand Gulf Nuclear Station, thy were required completion in 1983 and 1985. The' purchase is to agree to offer to sell part of the plant to other sul tject to receipt of the necessary regulatory utilities in the MP&L senice area. approvals,and MP&L has on file with the i in 1972, South Mississippi Electdc Power Mississippi Public Service Commission a petition Association (SMEPA),and West Mississippi fbr a Certificate of Public Convenience and Electric Power Association (WMEPA), expressed Necessity for this transaction which is expected a desire fbr an ownership interest in GGNS. to be heard in 1981. WMEPAjoined SMEPA,and in Mav of t980 SMEPA executed an agreement to anpiire a 10 percent undm,ded ownersh,p i mtere nt in the PURPA (Public Utilit.y Rebfulator.y Grand Gulf plant. In connection with the sale, Policies Act) the company im taped an interconnection with . . SMEPA and'a.y ecd to a schedule for surrender to In 1978, President Carter signed the Pulyh. c SM EPA of the company's power suppiv contracts Utility Regulatory Pohcies Act as part of his with member c xipera'tives of SMEPA: beginning en7 program. Dus unfortunate pwge of injune 1980. Afier eight vears, negotiatio'ns wer'e I"$ d 'i"" 1'"*P'8 8" i"P"S" fCdC' I ' ,'i"' IVC 8 finidiv concluded and th'c transaction closed on n dw Mas and gum ht Me stak #w Octofer 31.1980. service commissions must hold hearings to in ID, the cities #Clarksdale and consider fixleral standards set out m the law. Greenw(xx1, claiming rights under the NRC These standards cover six areas relating to Cmistruction Permit's, demanded that thev, too, time-of day rates, cost of senice studies, be allowed to antuire a part of the Grand' Gulf declining block rates, seasonal rates, plant. Although the company fiIt that tL s interruptible rates and hiad management. mdication ofinterest was too late,it nevertheless There are five senice standards set out in decided, subject to certain conditions, to offi r PURPA. They include termination of service, 2.48 percent of Grand Gulf to a newiv fbrmed automatic adjustment clauses, advertising, association ofeight munici ialities in the MP&L master metering,and infbrmation to consumers. service area, of which Clar tale and Greemuxxl Generic hearings on the PURPA standards are are members. This association is known as now under wav before the Mississippi Public MrAM, the Municipal Energy Agency of- Scru.ce Commissmn. Mississip i. Negotiations th'r the aeqinisition are The State of,Mississip ii, the Mississi i Pubh,c in the car v stages. Senice Commission an( MP&L have c llenged the constitutionality of PURPA in federal court. Grand GulfNuclear Station The timely completion of Grand Gulf, Production Plaut Insprovernent particulariv Unit No.1,is ofutmost im iortance to MPSL and to the entire Middle Sout Svstem. Power plant unit availability and efficieng The Svstem portion of this project is being have always been important to the company tir.anced bv Middle South Energv, Inc. through flowever,in recent years the rapid increase in borrowed ihnds (d5%) plus fu ids from sedes of thel cost, along with high inflation rates have common stock by MSEI to Middle South Utilities, made these two items even more important. Inc. (33% It is dot being financed bv, nor During 1980 plant availability increased 14 included in the rate base of, MP&L nor any of the percent over 1979. This availability tran31ates into ) other operating companies.
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approximatelv $7,000,000 of sinings by At year end Grand Gulf No. I was more than minimizing the purchase of more expensive as pc'rcent complete and plans have been nude replacement power. The overall efficwng of the to hiad nuclear thel, the first ste i in actuid MP& L >lant8 improved 1.8 percent in 1980 over start-up,in December of1981. L nit No. 2 was 1979. 'I iis seemingly smidl increase in cf ficiency reflects wings to customers ofipproximately l about 20 percent complete and no major $4m00 in fuel em t. constructwn is currently being done on this unit 4 l
N 1 M'Inagenlent Changes waitm T. wix xis,Jr., director orGeneral Property & Senices, was promoted to vice A number ofchanges were made during the president. year to strengthen the company's leaden, hip James P. AlcGaughy,Jr., director ofProduction, team. Among them were: was namni assistant vice president, Nuclear John P hlaloney, chairnun of thelxurd and Prmluction. chiefexecutive otlicer of Deposit Guaranty Other organizational cha nges include National Bank,joinal the company's Board of promotions forJames R. Rider, maruger of Fossil Directors. IIe succeedalj. IIernun flines. Prrxtuction, who was promotal to director of Norris L. Stampley, formerly senior vice Fossil Pnxluc tiom and 51arion N. Townsend, president Engincenng, Prculuction, System chief engineer, who was promotal to director of Operations and Construction, was named serior Engineering. vice president, Nuclear,and has been released George Rogers, who was emphwed by Aliddle from all non-nuclear related duties so that he can South Senices, Inc. in New Orleans, transferred devote full time to the Grand Gulf Nuclear to 51PGL as site manager of Grand Gulf Nuclear Station project. Station. He will be res[xmsible fbr GGNS Thonus A. Dallas, director of Engineering, Construction, Start-Up and Fich! Engineering. ) System Operations and Construction, was named vice president and chiefengineer. In addition, he David Gnnans, manager at Carthage, transferred to Belzc ni as manager, and Chark s f 45 h ' is responsible for all Fossil Fueled pr(xluction. Young, engineering aide at Southaven, was promoted to manager at Cirthage. , /'~+ , , 1 -
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W. DONALU COL 3tER Vice President j , ' , . Public Affairs and
<N :m iromr. ental 3fattern Tit 03tAS A. DALLAS FRANK S. YORK.JR., T- 4s,g A. 3p . -
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Mississippi Power & Light Company 1980 Financial Review Report ofManagement The management of the company has The board of directors pursues its prepared anil is responsible fbr the financial responsibility fbr reported financial statements and related financial inf ormation through its audit conrn tree, information included in this annual report. composed ofoutside directors. The at dit The financial statements are based on committee meets periodically with generally accepted accounting principles. numagement, the internal auditors, ar.d the consistenfly applied. Financial information independent public accountants to disc uss included efsewhere in this report is auditing, internal control, and financia; i consistent with the financial statements. reporting matters. The independent pul lic To meet its responsibilities with respect to accountants have free access to the audii financial infbrmation, management conunittec at any time. maintains and enforces a system ofinternal The independent public accountants accounting controls which is designed to provide an objective assessment of the provide reasonable assurance, on a cost degree to which management meets its effective basis, as to the integrity, objectivity responsibility fbr fairness of financial and reliability of the financial records and reporting. Tluy regularly evaluate the as t a the protection of assets. This system system ofinternal accounting control a nd includes communication through written perform such tests and other procedures policies and procedures, and an they deem necessary to reach and express an organizational structure that provides fbr opinion on the fairness of the financial appropriate division of responsibility and statements. the training ofpersonnel. This system is also We believe that these policies and tested by a comprehensive internal audit procedures provide reasonable assurance program, that our operations are carried out with a high standard of business conduct. Auditors' Opinion Mississippi Power (* Light Company We have examined the balance sheets of Mississippi Power 64 Light Company as of December 31,1980 and 1979 and the related statements ofincome, retained earnings, and changes in financial position fbr each of the three rears in the period ended December 31,1980. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered recessary in the circumstances. In our opinion, the above-mentioned financial statements presert fairly the financial position or the Companv a t December 31,1980 and 1979 and the results ofits opera tions and the changes in its financial position fbr each of the weeyears in the period ended December 31,1980,in cenfbrmity with generally accc- d accounting principles applied on a consistent basis. V february 13,1981 New Orleans, Louisiana 6
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r s l l Alississippi Power & Light Colnpany i Balance Sheets Deccinher 31,1980 and 1979 ASSETS 1980 1'79 In Thousands UTILFI Y PLANTI Electrie plant . . . . .... . . . . . . . . . . S 760,885 $ 724,3(M Construction work in progress . . .. . . . . . . . 17,702 . 5,913 Electric plant acijuisition adjustments . . . . . .. . 2.225 2.40G Total .... . . . .. .. .... . .. .. 780,812 752,623 Less accumulated depreciation . ... . . .. . ... . . . . 239.534 218.476 Utility plant-net ... . .. .. . .. 541.278 534.147 OTIIER PROPERTY AND INVESTN!ENTS Investment in associated company, at ecp;ity (Note 6) . .. . . . 16,644 16.984 , Other . .. . ... . . .. . .... ....... . .. . 962 905 Total .... . . .. . . . . . . . . . . . 17.606 17.889 CURRENT ASSETS: Cash (Note 7) . . . . . . 2,478 1.373 Special deposits . . . . ... . .... . .... .. .. .. .... M 736 Temporary imrstments,at cost which approximates market .. 33,000 1.000 Accotmts receivable: Customer and other-less allowance for doubtful accounts ofS154,000. . . ... .. . .... 23,744 22.820
/.ssocia'ed companies . . . . . . . . . . .... . . 10,596 8,014 h!a.crials 4.nd supplies-at average cost:
Fuel . . .. ... ... .... . . 5.321 6.238 Other . . ... .. ........ . . . 9,104 9,805 Other . . . . . . . .. . 4.203 2.189 Total . . . . . . . . .. 88.530 52.175 DEFERRED DEBITS: Preliminary Survey and Inve.stigation Charges . ..
- 1,717 Unamortimi debt expense . .. .. . .. . . 1,037 1,092 Other . . . . . .. . . . 650 623 Total . . . 1.687 3,432 TOTAL . . . . $ 649.101 $ 607.43 l
See Notes to Fin.mcial Statements. l l l i
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LIABILITIES 1980 1979 In Thousands CAPITALIZATION: Common stock, no par value (stated vaiue $23 per share) , authorized 5,000.000 shaces; outstanding 4,MO,000 shan s . . ... $ IN,420 $ IN,420 Retained earnings (Note 8) . . . 74.985 G5.389 The common shareholder's equity 179,405 169,809 Preferred stock, without sinking fimd (Note 4) .. 38.077 38,077 Long-term Jebt and premium (M-te 5) 2G2460 263.380 Total . . . 480.342 471.266 CURRENT LIABILITIES: Long-term debt currently maturing . 45G 7.929 Accounis payable: Associated companies . . . 7,687 10,5GG Cuatomers (Note 2) . . . . 10,360 - Other . . . 25,265 13,609 Customec deposit 3 . . 9,734 9,085 Tiues accrued .. 24,740 12,840 Interest accrued .. . G,994 G,279 Dividernis declared .. . 5,485 596 Other . . 2308 2.960 Total . 93.529 63EM DEFERRED CRED ' S: Accumulated de: erred income taxes (Note 3) 49,453 51,804 Accumulated deferred investment tax credits (Note 3) . 21,071 17,763 Other 452 50G Total .. . . 70.976 _ 70.073 RESERVES 4.254 i 440 CONIA!!TMENTS AND CONTINGENCIES (Notes 2 and 6) - TOTAL .J M9.101 $ 607 M3 i See Not a to Fin.inchil Stratements. l I 8
r 5 i l Mississippi Power & Light Cornpany Staternents ofIncorne for the Years Ended Decernher 31,1980,1979 and 1978 l 1980 1979 1978 In Thousands OPERATING RITENUTS (Note 2) .. . . S 532.988 $ 436.524 $ 400.276 OPERATING EXPENSI3: O}v 7 tion: f uel . . . 267,685 217,160 206,161 Power purchased . ... . 85,782 69,094 40,N9 Other . . . 43,207 38,638 32,102 5!aintenance . . . . .. . .. .. :6,021 23,500 16,997 DepreciMion . 22,672 21,974 20.528 Taxes other than income taxes . . . 18,012 16,177 14,950 Income taxes (Note 3) . . . 18,606 9,995 23,492 Total . . . 481.985 396.538 353.279 OPERATING INCOh!E . . .. 51,003 39.986 46.997 OTIIER INCOh!E AND DEDUCTIONS: Allowance for other funds used during construction . 923 747 82G h!iscellaneous-net . . . 3,600 2.900 2,286 Income taxes (Note 3) (1,431) (1,145) (916) Total . . . 3.092 2.502 2,196 INTERTST ClIARGES: Interest on long-term d"bt 19,454 19,586 19,N2 Other interest-net ofdebt premium 1,131 G51 852 Allowance for borrowed funds used during constmetion (444) (330) (346) Tend . 20.141 19,9a~ 20,348 , NLT INCOh!E (Note 2) . $ 33.9M $ 22.581
$ 28,845 l
I Staternents ofRetained Earnings {or theyears ended Decernber 31,1980,1979 and 1978 l l RETAINED I'ARNINGS.JAN'J ARY 1 $ G5.389 $ N,623 $ 55,959 l ADD-Net income . 33,934 22,581 281M5 Total . . 99.343 87.2N 84.804 D?.DUCP.
')ividends-cash:
Preferred stock 2,384 2,384 2,384 Common stock . . 21,974 19.431 17,797 Total 24,358 21.815 20.181 RETAINED EARNINGS, DECD1BER 31, (Notc 8) $ 74.985 $ G5.389 $ G4,623 See Notes torituncial Statements. 9
/ Mississippi Power & Light Company Statements of'Cllanges in Financial Position For theyears ended Decentber 31,1980,1979 and 1978 1 i 1980 1979 1978 In Thousands TUNDS PROVIDED BY: Operations: Net income . .. ... $ 33,9M $ 22,581 $ 28,845 Depreciation . ... . .. 22,672 21,974 20,528 Deferred income taxes and investment tax credit adjustments-net 957 G,620 4,572 Allowance fbr fitnds used during construction . . (1,367) (1,077) (1,172) lbtal funds prosided from operations . 5G,21G 50,098 52,773 Other: Decrease in working capital * .. . 32,783 - - Allowance fbr funds used during construction . .. 1,367 1,077 1,172 Decrease in short term irwestments-net . .
- 23,500 -
Decrease in investment in associated company . . . . 340 - 1,070 Miscellaneous-net . .. . . 4,601 1,3N 4,144 Total fiinds prosided .
$ 95,307 $ 76,069 $ 59.159 IUNDS APPLIED TO:
Construction expenditures fbr utility plant (includes allowance fbr funA used during construction) . ,
. $ 31,020 $ 33,218 $ 24,38G Disidends declared on common stock . . . 21,974 19,431 17,797 Disidends declared on prefirred stock . . 2,384 2,384 2,384 Retirement of First Mortgage Bonds .. . 7,500 7,500 -
Retirement of other long-term debt . . . 429 405 106 Increase in short-term investments- net . . . 32,000 '500 , Increase in investment in associated company - G,715 - Increase in working capital' . .
- 4,545 11,986 Miscellaneous-net . .. - 1,871 -
Total fiands applied . . $ 95,307 $ 7G.069 $ 59,159
- Working capital excludes short term semrities and current nuturities orlong-term debt; theltE0 net decrease is due primarily to increaws in amnmis payable and accrun t i ncome taxes; the 1978 net inc. case is due primarily to a decrease in accrued income taxes.
See Notes to Finantial Staternents. i I l 1 I 10
R Notes to Financial Statements i
- 1. Suttunary ofSlguillrant Accoutating Policies the appnixinute net com;w mite inten% cost of borrown! tunds ,
"" I"'""'"Tnp> c n union du oputy hnuts u3nt for J A. SYSTEh! Of ACCOttNTS #""*"'"""'".""
The accounts of the Com;uny are nuintainnt in accontmce P"" *"'"'" I" I"'""I"I .i nmontoni d u- ]
"*"##"""'"' #"' " '" ' "I I "" "'3 "Ndic l with the svstem of .wcounts prix rilm,1 by the federal Ener,y n n on pnigram and nyub m."*tneng We M.Wagis in RequLitory Oimmission.
- the same manner as constniction 1.d nir arul nuterial a ots. As l non-cash items, the e crohts to the income statement have no II. REVEN1'13 The Com;uny recortis n ver:ues as billeil to its notomers on a cfin t on ctirrent cash earnings. Aller the property is plarnt in cycle bilhng ludis. Revenue is not accrunt fier enery <!cliverni Init 3cnice the Al IX:( hargni to condtruction nots is rennrrable from n'of billnlat the end of the fi3 cal perisul. The rates of the Gimjuny customers through depreciation pn nisions int ludeel in rates int lude liiel adjustment (lau3cs uruler u hit h !url costs above or ~ ( hargeil for utility senice. The eticctive nimposite Al IX: rates um 7.3%,7 7% and 7m b for 1:k1O,1979 and 197tl, below the lu3e les cls alhiweil in t he various ra te s( hedules are respectively.
[wrmitted to be bilh11 or rn[uirn! to be crnlital to customers.
'the Osmpany continues to capitahze alknvantr fiir f unds usal C. UTII.IIT PLANT AND DEPRECIATION during construction on projects during periods of interruptn!
l'tih ty plan t is sta tnl at original ciwt. The costs of additions to consinn tion u hen sut h interruption is temporary and the utihty plant include contracted wor k,dinit talxir and materials, continuation can be ju3tilini as being reasonable 'under the allocable overheads and an allowance fiir the comixisite not of cirnimstances. finuls u3nt during con 3tniction. The ciots of units ofpro;rrty retin,1 are remocett from utility plant, and such costs plus rennwal G. RESI:RV13 o ots,less salvage, are cha rgni to accumula ted deprecia tion. It is the juiluy of the Gimluny to pnnide reservis f or uninsurnt htaintenance and repa'r3 ofproperty and replacement and prointty risks and ihr tlaim3 fiir injuries and damages through renewal ofitems determineil to be less than units ofproper ty are chargid to operating expen:.c on an accrual lusis. An ruals f or cnargni to ogxTating ex]wnses. Print ipally all of the utility plant is ihese reserves have Irrn aHownl tor rate-making purposes. sulyct to the hen of the Gimpany's first mortgage borul indenture. Deptreiation is computo1 on the straight-line Iu3i3 at rates Iuseil on the estimated senice lives of the various (lasses of 2. Ibite M4itters property. Depreciation prinidn!in !!W10,1979 and 1971) amountnl to approximately 3.3 % on average depreciable property. In May !!v'O, the Gim;uny filnl with the Miriwippi Public Senice Commi* ion ( M PSC) a notice ofintention to a hange rates D. PENSION PLAN that wouhl produce mhhtional annuat rn enues of approiimattiv The Company has a pension plan onrring substantially all ofits $Q5.800. tux). The proju octl rates were put into eff cct, under twinil, emphyers. The policy of the Com;uny is to fmul pension costs as with bills rendern! on soul afterjuh- 1,1:450. 01 November 24. accrunl. 1980, the MPSC issued its onler authorizing the Company to file new rativ that woubl proiiuce mhhtional annuat rnrnues of E. INCOMETAXES The Comlunvjoins its jurent in filing a consolidatnl I'nleral "PPf"U"*I "3""#
" , w orny &ntTal oNw Mate of.
income f at rrtu'rn. Income tauw are alhicateil to the Company fis3i3sipp.i and others filed appeals in the Chancerv Giurt of Ilind3 (generally gg in proportion to its contninition to the consolidatol' Lounty serkhyg fatmoditwations to the MIR s onler. In Managnuent 3 opnuon lusal on the opinion oflegal counsel, Defi! rrniincome taws are providal fiir diff errnny betwern " ""' I""""""ful atul thent in dw Dim}uny is Imok and tasable income to the extent jrrmittnl by the regulatory '
""" " PP""
lxxlies for rate nuking purposes. "T"rdmg revenue lusnl on the MPSC's onter. c mjunW rnlu nq dut the f uH ate innraw sougM tr Investment tax crn bis albicated to the Company are deferred .
" "PP""Iing the MPSC3 dn dion on rate of return. the l mul amortizni over the average usefiil lifi of the r'elatal property owanw of.conmuchon work in progress in rate tuse, and the beginning with the year utiliznlin the (onsolidatal tas return. -
q""""llou disa ance of a portion of the working j E AI.I.OWANCE FOR FUNDS l' SED DL' RING CONSTRL'CTION Com}uny is continuing to bill cu3tomers using rates filed in May l In accordance with the regulatorv 3ystem of accounts, the Itkin pending final determination of these appeals. These rates ] Qimjuny capitalizes,as an appropriate cost of utility plant,an pnxluced an additional $33,00().1X)O in the year endal Decemlrr allowance thr funds uwd during construt tion ( AFIX:). L'nder this 31, !!W10. The amount of $23.000.000 as authorizni by the MPSC utility itulustry practice, construction work in prognws on the was reconfed as rewnne. The remainder is ren.nini as a liabihty. lulance sheet is c hargeil and the income statement is credireil for i l l l l 11
/
- 3. Incotne'Ihmes Income tax experde cordir,ts of the fblhming: I# IUD 1970 In Thousands Current Federal $16,828 $ 3,748 $15,410 Sta te 2,252 772 1,42G Total 19,080 4,520 1G,83G Ikfi trn! - Net Revenue subject to refund (4,989) - -
Unbillal revenue (1,G17) 524 357 Liberabzn! depreciation 4,827 4,617 5,139 l Other . (572) 193 (17) Total , (2351) 5334 5,479 Inwstment tax credit adjustments - Net 3308 1,28G (907) Total i icome taxes $20,037 $11,140 $21,408 Chargni to operations $18,G06 $ 9,995 $20,492 Charged to orher income , 1,431 1,145 916 Total income taxes $20.037 $11,140 $21,408 Total income taus diffi'r from the an g>unts computed by applying the statutory Federal income tax rate to income beibre taxes. The reasons ibr the diffirences are as fbilows: 1980 1979 1978 In nousemds
% of % of % of Pre-Tax Pre-Tax Pre-Tax Amount Income Amount Income Amount Income Computal at statutory rate $24,83G 4G.0'b $15.512 4G.0% $24,122 48.0%
Increases (reductions)in tax resulting I' rom: Ten sa ings due to filing consolidatnl return (4,792) (8 9%) (3,200) (9.5%) (1,900) (3.8%) Other - net (7) - (1,172) (3.S b) (814) (1.6%) Recorded income taxes $20,037 37.1% $11.140 33.0% $21,408 42.6% Unused investment tax crnlits at December 31,1980 amounted to $5,039,000, ofwhich $2,331,000 may be carried ihrward through i 1984, and $2,708,000 tbrough 1!vi5. Prior to 1979 the investment tax crnlit utilized in the consolidated tax return was alhicated to each System Companyon the basis of the crnlit contnbutt d by each Company. Effective with 1979 the meth,xt ofalkicating mwstment tax credit was changni wherrby each Company is alhicatnl the credit allowable based on its portion of the consolidated tax liability Any additional consolidatnl credit utilized is ; alkrated on the basis of the remaining tax crnlits. '
- 4. Preferred Stock 5. Long-Term Debt P efi rrni stock, without sinking fund, at December 31,1980, Long-term debt at December 31,1980 and 1979 consistal of the 1979 and 1978 consie,ted of cumulative, $100 par value stock as following:
I"U""* Current 1980 1979 Call Price IT st Mortgage Bonds: In noustmds Au:horizal outstanding Per share 3-5/8 b Serics due 1983 $ 12,000 $ 12.000 Series: 4-1/8 b Series due 1988 15,000 15,000 4JG% G0,000 59,920 $ 103.86 4-5/8 b Series due !!PJ5 20,000 29,000 4.56 % 44,47G 431588 107.00 5-1/8'b Series duc 199G 25,000 25,000 4.92'b 100,0N 100,000 102.88 10,000 G-3/8% Series due 1996 10,000 9.1G% 75,000 75,000 10GJ5 9-5/8% Series due 1999 20,000 20,000 7.64 b 100.000 100,000 106.53 9-1/4% Series due 2000 17,500 17,500 Other 325,000 - 7-3/4% Series duc 2002 15,000 15,000 Total 7al,47G 378,808 7-3/4% Series due 2003 30,000 30,000 8-1/43 Seria due 2003 20,000 20,000 In 9-7/8% Series duc 2004 25,000 25,000 Thousands 10-7/8"o Series due 2005 25,000 25,000 Statal at $100 a share 5, 37,881 234,500 234,500 Premium on Preferral Stock _ 19G Total $ 38.077 12
r y Principal Amount of Capitaliin! Israe The O >mjuny, together with the other htiddle South System 8%,due serially through 1993 7,292 7,N8 operating companies,is obligarni under agn ements with h!iddle Pollution Qintrol Bonds: South 1:neny,Inc. (htSI:) to make guyments or subonlinatni 7-1/2% duc 20N 9,400 9,400 adva nces adequate to ct wer all of the opera ting expenses and 8-1/2% duc 2004 . . 8,575 8,5, a capital costs of 5151 and,in return,is entitled to receive the ptmrr 6-1/4% to 8-1/2% due !!E2 available to StSI: f rom the Grand Gulf Plant. Through 1100 $1.8 to 1995 2,000 2,100 billion had Iren expendn! by atSL: on the Grand Gulf Plant's two Urumortizal Premium units which are schnlu!nl for completion in 1982 and 1986. Under on Debt , 1,093 1,157 certain cirnimstan vs. [uyments may Ie required to be nude Total ( Annual sinking fund rnluirements, commenting Decrmirr 31,1162,if the first unit of the Grand Gulf which may be met by certification of Plant has not been completal by that date .iri "C3 the property acklitions at the rate of operating companies agreal in principle to . pernunent allocation 1675 ofsuch retiuirements, amount to of the Grand Gulf Plant's capability. I'nder this arrangement those
$2,304,000 fiir 1981 a nd 1102, comjunics receiving allocations, Louisizma Power & Light and $2,148,000 fi>r 1983, Onn}uny, New Or lea ns Public Senice Ine., and the Com;uny, will 19N c.nd 1165.) $262A60 $ 263,380 assume,in proportion to such alhications, all responsibilities azul obligations related to the Grand Gulf Plant,and Arkansas Power (s Light Gim}unyand Arkansas-hfissouri Power O>mjuny which did G. C,ommitments aml Financing -
not receive allocations will relinquish their nghts m. the ptmt. 'lhe The Onnjuny's 1981 construction program contemplates proposal realhication is sut ject to the receipt of the approval of expenditures ofapproximately $M million, excluding $103 million regula tory agencies and of all other necessary appnivals. expected to be reimbursed by the Company to Arkansas Power (* The Faleral income tax returns ihr the years 1971 through 1976 Light Company (APG L) in 1981 as an imtial payment in have been examinn! by the Internal Entnue Senice (IRS) and conjtmetion with the Com;uny's proposed purchase of a 25% adjustments hent leen pn>posal. ne princi ul l issue is whether interest in a coal-firn! generating station currently Iring customer ch In >>its are inclothble in taxable income. A fbrnul constructed by APGL The consummation of this purchase is written protest has tren filed and ninferences are being he id uith dependent u; win the receipt ofvarious regulatory approvals. an Appeals Officer of the IRS. Any finalliability fiir taws trsulting Construction expenditures for 1982 and 1163 are estiinated to be from settlement with the IRS would not have a material cffitt on
$SD million and $69 million, respectively net income. Income taxes on cu tomer deguisits wouhl be The Gimpany has a 19% interest in Sptem fuels,Inc. (Srth a normalizal. Atost of the other issues have been setilni and jointly-ownni subsidiary of the fbur principal operating adaluate pnnisions have been reconic 1.
subsidiaries of hiiddle South Utilities,Inc. Srl operates on a non-profit lusis in planning and implementing programs fir the -
"* U" precurement of fuel supplies fbr the generatin[g units of these
'* """ "' "" "' "N' opera ting companies, its costs are primarily rec (ntrn! through At December 31,1980 the Company had $20.1 million in lines of charges f or fuel deliveral. credit with hiississippi tunks. Additionally, the ComIuny has The parent companies of Sr! have made loans to SFI to fina nce joinni with three other Sliddle South Svstem operating comIunies its fuel supply business under a loa n agreement datedJanuary 4, in establi3hing $253 million in lines ofcrnlit with bruus v tside 1978, as a mendedJanuary 1,1981, which provides fbr Srl to h >rnnv ihe afiddle South System senice area. The Onniu ny may lx>rrow up to $261,500,000 from its parent companies through December any portion of these lines and/or issue conunercial paper subject 31,1981. As of December 31,1980, the Gimpemy had loaned only to its maximum authorizn! level of 3hort. term borrowings as
$9,265,000 to Srl pursuant to this hun agreement and the specified below. These hnes require a Tb compensating lulance Company's share of the unusal hun commitment is $33,120,000. and an additional ?L on the anunmt of outstanding h>ans. There Notes under this agreement mature December 31,2006. In were no short-term borrowings at December 31,1980,1979 and addition the O>mpany had hianni Srl $7,375,250 under pnvious 1978.
hum agreements. Notes mature in to and 25 years from date of The short-term borrowings and the applicable interest rates borrowing under the provisions of the presious hian agreements. Netermined by disiding the actual interest expense during the In connection with certain ofSrfs borrowing arrangements, year by the average anunint outstanding) were as fbilows (all SITS parent companies, including the Company, have covenentu! commercial paper): gggg gg7g 3g 3 and agrent severally in acronLmce with their respective shares of In 'IEmds ownership ofSFrs common stock, that they will take any and all hinmm M oMr $10m00 $9.000 - action necesary to keep Sr! in a sound fintmcial condition and to Average borrowing $ 1,993 $1,153 - plaec SFI in a position to discharge,and to cause Srl to discharge Average interest rate 123 11.2% - its obligation under these arrangements. At December 31,1980, the total hxm commitment under these arrangements amounted The Company has received authorization f rom the Securities to $221,196,000 of which $128,224,000 was outstanding at that and F.xchange Gimmission under ihe Public l'tility Mohling date. Also Srrs parent companics. including the Company, have Gimpany Act of l933 to ha re outstardog short. term lorrowings made similar covenants and agrnrnts in connection with in the maximum amount at any one time not excenling the h sser long. term leases by Srl of oil storage and ha ndling facilities and of $45 million or 10% of the Oimiuny's capitalization. cual hopper cars. At December 31,1980, the aggregate discountnl value of these lease arrangements was $39,150 000. 8. Retaineal Earnings In Decernber,197G,STI entered into a contract with a . . . m enture pnnisions relating to the C.ompany s long-term venture fbr a supply ofcoal from a mine tolinbe developa' joint
&bt pnnide ibr restrictions on the payment of cash dividends on Wroming. The Contract is expectal to pnnide an estimatal 150 to
' conunon cd As of Denmber 31 MO. $53,3Ma00 of nqainn!
21'O mdlion tons ofcoal over a peri x! of 26 to 42 years; the crut supplini is expectal to be usa 1 a t a ibture APsl' power plant. Srrs
""'"i"E' "'" I'"" I'"m such restrict ions.
pan nt comiumics,includmg the Gimpa ny, each acting in acconlance with their respective shares of ownership orsrfs 9. Transactions with Affiliates common stock. joined in, ratitini, confirmed and adoptal the The Company buys from and sells electricity to the operating contract and the obligations of Srl thereunder. Subsidiaries of N!iddle South Utilities,Inc.,its parent, under - . 13
f l schalules filed with the Federal Energy Regulatory Commission. In The weighted average assumni rate ofreturn used in addition, the Gem}uny pur hases thel from System TucIs, Inc. determining the actuarial present values of accumalatal plan 1980 1979 1978 benefits was 7% for 1980 and 1979. In Thousands Sales to Afliliate3 $132,417 $m,959 $82,899 11. Quarterly Results (Unautliteel) Purchases from Afliliates: l'naudited operating results by iluarters fbilow (in thousands): 1 Fuel $115,955 $134,552 5145,276 Power 21,400 26,750 19,084 Qurter Ended htarch June September December Total $137,355 $161,302 $14.360 _1960 Operating
- 10. Pension Plan revenues $113.063 $ 106,455 $ 191,202 $122,268 Pension costs in 1980,1979 and 1978 amounfed to $3,543,000, i
, "E' 9,703 7,129 22,265 11,9n6
$2,712,000 and $2,402,000, res} ectively, which meludes Net income 5.477 2,948 18,009 7,520 amortization of unfunded prior service costs over a period of10 years. A comjuri on ofaccumulatalplan benefits and plan net
-g assets is presental below: January 1. nu $99,000 $97,145 $ 136,005 $104.374 1980 1979 Operating In Thousands income 11,389 7,219 13,133 8,245 Actuarial present value of Net income 6,938 2,881 8,725 4,037 accumulated plan benefits:
\ ested $25,4G3 $21,151 The business of the Comjunt is subject to seasonal fluctuations Nom ested 443 w th # Friods ocnirring'during the summer months, 3G9
- Accordm. gly, carnings infbrmation ihr any three-month period Total $25.906 $21,520 should not be considered as a basis fbr estimating the results of Net assets (hlarket value) operations fbr a ibll year, available ibr benefits $30,15G $26,145
- 12. Effect ofInflation on Operations (Unantlitect) ne fbilowing supplementary information about the efficts ofchanging prices on the Company is providal in accordance with the rnluirements ofstatement of Financi.d Accounting Standmds No. 33,' Financial Reporting and Changing Prices", It should be viewn! as an estimate of the effi.ct ofchanging prices, rather than as a precise measure, Statement ofIncome from Operations and Other Financied Data Adjustal fbr Effects of Changing Prices ibr the Year Ended Decemler 31,1980 (In Thousands)
Adjustal for As Reported In Adjusted For Changs In The Firuncial GeneralInflation Specific Prices Statements (Constant Dollars) (Current O mts) Operating Revenues $532,988 $532,988' $532,988' O[rrating expenses f excluding depreciation) , 459,313 459,313' 459,313' Depreciation 22,672 46,151 48,753 Total operating expense 481,985 505.4G8 508,0GG O}rratipg income 51,003 27,524 24,922 Other income 3,092 3,092' 3.092' Interest 6 other charges . 20,141 20,141' 20,141' Ineome f rom operations (excluding reduction to net recoverable cost) . $ 33,954 $ 10.475' $ 7,873 Increase in specific prices (current cost) of property, plant, and equipment held during theyear' $116,059 Rnluction to net recoverable cost $ (38,317) (19,363) Effi et ofincrease in general price level (132,411) Envos of increase in general price level over increase in specific prices afler reduction to net recoverable cost (35,715) Gain from decline in purchasing power of net a mounts own! 42 A48 42 N3 Net S 4,531 $ 7,133
' Assumed to be in "awrage fbr theyear" dollars and thus are not restatal.
' Including the reduction to net recoverable cost, the loss from operation on a censtant dollar basis would have been $27,842 fbr 1980.
'At December 31,1980, current cost of property, plant, and njuipment, net of'accumulatal depreciation was $1,177,715, while historical cost or net cost recoverable through depreciation was $539AGO.
14
h Fii e-Year Comparison of Selectal Supplementary rinuncial Da ta Adjustn! fbr Effirts of Changing Prices i l (In Thousands ofAverage 1980 Dollars) J Years Ended December 31, 1 1980 1979 1978 1977 197G Operating revenues . $532,tm $495,557 $505,569 $496,790 $446,955 Illstorical cost Information adjusted for generallutlation Income from o[crations (excluding rnluction to net recowrable act) . $ 10,475 $ 4,720 Net assets at year-crut at net recoverable crmt . $171.MO $182,GB8 Current cost Information Income from operations (excluding reduction to net renwerable c et) . $ 7,873 $ (2,971) Excess of increase in general prim level enrr increase in specific prices afler reduction to net renwerable cost $ 35,715 $ 45,430 Met assets at year-end at net recoverable cost . $171,350 $182 R38 GeneralInforsnation Gain from decline in purchasing pnver of net am<nints own! $ 42Ju8 $ 50,238 Average consumer price index . . 24G.8 217.4 195.4 181.5 170.5 Note: The statement requires that historical cost information adjusted fbr general inflation and current n>st intbrmation le pnnided fbr 1979 and subsn[uent years. Ccmparable infbrnution is not readily available fbr theyears prior to 1979 and thus is not pnwided. Constant dealar amounts represent historical costs adjusted ihr the effi cts ofgeneral infla tion. The ettects are determined by comvrting these costs into dollars of equal purchasing pnver using the Consumer Price Index tbr all Urban Consumers (CPI-U). Current cost amounts reticct the ch3 .p in specific prices of property, plant and nguipment from the year of acquisition to the present. The current costs of property, plant and n[uipment, which represent the estimatal costs of replacing existing plant assets, aie determinni by applying the llandyMhitman Index of Public Utility Construction Costs (llWI) to the cost of the surviving, olant by year of acquisition. Iand and certain other plant assets which are not included in the IIWI were converted using the CPI-U. The thtfirence between current cost amounts and constant dollar am<nmts results from specific prices of property, plant and equipment (as measured by 6e llandyMhitman Index) changing at a rate difli rent than the rate of general intiation (as measurn! by the Consumer Price Index). The current year's depreciation expense on the constant dollar and current cost amounts of property, plant and niuipment were determined by applying the Company's depreciation rates to the indexed amounts. Fuel imentories and the cost of fuel usal in generation have not been restatal from their historical cost in nominal dollars. Regulation limits the recovery of fbcl costs through the operation of adjustment clemses or adjustments in basic rate schntules to actual nests. For this reason fuel imentories are effi ctively monetary assets. As prescriled in Statement of Fin.mcial Accounting Standani No. 33, income taxes wen not adjustal. The ragulatory commissions to which the Company is subject allow only the historical cost of plant to be recoverni in rttenues as depreciation. Therefore the excrss cost of plant statal in terms of constant dollars or current cost mrr the historical amt of plant is not presently recoverable in rates. This excess is redectal as a reduction L ..et rec nrmble cost. While the rate-nuking pnress gives no recognition to the current cost of replacing property, plant and equipment, the Company believes, basal on past experiences, that it will be allown! to earn on the increased cast ofits net investment when replacement of facilities actually occurs. To properly reflect the economics of rate regtdation in the Statement ofIncome from Operations presental above, the reduction of r.et property, plant and aguipment to net recoverable amt is offset by the gain from the decline in purchasing pnver of net amounts own!. During a pericxl ofinflation, holders of monetary assets suffir a loss of general purchasing power while holders of monetary liabilities experience a gain.1he gain from the decline in purchasing power of net amounts own! is primarily attributable to the substantial amount of debt which has been usal to finance property, plant and equipment. Since the depreciation on this plant is limitnl to the recmyry of historical costs, the Company does not have the opportunity to realize a holding gain on debt and is limital to recovery only of the emtn dded cost ofdebt capital. 15
Mississippi Power & Light Company Management's Discussion and Anal.ysis ofFinancial CTndition and Results ofOperations I. FINANCIAL CONDITION 1981 with the acquisition ofa share of the Independence Steam The tiruncial condition of the Com1mnv impmved materially in Electric Station, which is subject to the approval of regulatory 1980 chietiv as a result of ra te relief grant'n! by 1he Mississipp authorities. The Company made mininul use of short term Publi: Service Commission (MPSC). Although the MPSC granted borrwing in 1980, with the maximum amount of $10.0 million only $48.3 million, about 70% of the SG8.8 rnillion applied for by - being utilized of approxinutely $45.0 million authorized by the the' Company (see " Note 2. Ra te Matters" in the Financict kcurities and En hange Commission. The Company presently St itements) the allownl amount enabled the Com}uny to recover expects to fund apprmimately $80 million ofits expectal $101 from the subnormal return on imrstal capital earnnt in 1979. For rnillion ofexternal cash requirements in 1981 through the issuance example, the decline in net income from $28.8 million in 1978 to nd sale of first mortgagelx>nds, preferred stock and common
$22.6 million in 1979 was turnni around and fbr 1980 net income stm k. It is ex[wcted that the remaining $21 million of the was almost $34.0 million. As a result, covera Company's rnjuirements wouhl be securnt through short-term in the review and rating of the Company's bo'ge ratios nds and preferred 'imjurtant borrowings or issuance of athlitional occurities, depending upon stoch by imestment an\lysts) improveti. For example, the arket conditions.
Comjunv's pre-tax carnings coverage ofixmd intemst requirements, which decl'nali fronk 3.89 times in 1978 to 3.00 III. RESULTS OF OPERATIONS times in 1979,irvTeased to 4.19 times in 1980. The coverage of Operating results for the year 1980 improved substantially mvr interest chargu and fixnl prefi rral stock dividend requirements, 1979, due princigully to the' rate increase placed into eff ect onJulv which declined from 2.11 times to 1.87 times in 1979, increased to 1,1980. Without this increase r.et income fbr 1100 wouhl have lEen 2.34 times in 1980. These were much needed improvements, sina apprmimately $22.C million, $11.9 million less than recorded fbr the Q>mpany wouhl be legally precluded from issuing athlitional the year. The decrease in net income which would have ocnirral bonds shouhl the coverage be less than 2.0 times the total of the primarily reflects the etli>ct ofintiation upon the Gimpany's interest rn[uirements for the present bonds plus the acklitional operations as well as the mided costs ofoperating its gene'ra ting bonds. The similar requirement fbr additional prefi rral stock is plants with a fuel (No. G Oil) which thev were not originally 1.5 times. Any incursion towant these limits influences the designal to burn. investment quality and therefbre market value of the Compan/8 The cost of fuel and Purchased Pmver continues to be one of the existing innds and prefi rred stock, as well as the Q)mpany's Company's ma ability to rai3e additional capital on reasonable terms and with revenues'from'jor costs,Fuel customers. accounting adjustmentfbr moreinthan clauses the two-thirds ofits vaning options, depending upon market conditions. Company's retail rates provide recovery on a current basis of anticipated fbel costs, with subsequent adjustment fbr actual results. Such clauses in its wholesale ra tes provide recovery of II. LIQUIDITY AND CAPITAL RESOURCES actual costs with a two-month lag. L. scala ting ibel costs, such as The unupany's construction program fbr the past threeyears the Company has experienced mrr the pa3t twoyears, have has been relatively small and has been more than covered by produced distortions in the Company's fuel expenses and related internal cash generation. As a result, the Company ended theyear revenues. However, these factors tend to cancel out and have a 1980 with a total of$35.5 million ofcash and temporary cash negligible effect on net income. The etli ct ofinflation is felt more imestments. Also, the improvement in carnings in 1980 has in the area ofwages, interest rates, materials and supplies and strengthened the Company's financial position by placing it in a other goods and services which the Company acquires from position ofbemg able to raise about $122 million of first mortgage outside suppliers. Such price pressures are expected to continue to bonds or about $83 million ofprefi rred stock in 1981, assuming exist and will require the Company to file fbture rate increases the continuation of such earnings level, an interest and preterred with the Mississippi Public Senice Commission on a regular basis. dividend rate of 1G% and the availability of ftmdable property. The ability of the Company to secure adequate and timely rate The O>mpcmy's construction program fbr 1981 is expected to be relief from its regtdators will have a material effi ct upon its ability f44 million,ex luding $103 million anticipated to be paid to to remain fina ncially viabic and able to finance its operations on a Arkansas Power & Light Company ( AP&L) as reimbursement by reasonable basis. the Company to AP&L as an additional pavment in 1981 in conjunction with MP&Cs proposed acquistion of a 25% interest in IV. EITECT OF INFLATION the Independence Steam Electric Station (See " Note 6. Commitments and Financing"in the Financial Statements.) 'Ihe Intiation has had a significant impact on the Company's Construction Program ihr id82 is projected to be $90 millic,n for operations in recent years (see Note 12 to the Financial Statements
- Eff ct ofInflation on Operation 3').
1983 to be $G9 million.
'Ihe Statements of Changes in Financial Position ihr the years endnI December 31,1980,1979 and 1978 graphically illustra te the V. SUAIMARY improvement in the Onnpany's operations resulting from the 1980 As indicated. the ability of the Company to reach aad maintain rate increase. runds arising from operations fbr 1979 declined to a sound financial position and thus be able to pmvide the $50.1 million from the $52.8 million in 1978 but recmtred to $56.2 ' generating capacity and other resources necessarv to serve the million in 1980. De improvement in internal generation of cash present and tbture' energy requirements ofour customers at was in net innune developn! as a result of the rate increase. reasonable costs depends upon the granting of timch, fair and Ibring thc year 1980 the Company decreasniits working capital sutlicient rate reliefby the regulatoitlx= lies to whicii the by apprmimately $32.8 million, but increased its temporary cash Company is subject.
imrstments by $12.0 million. The modest construction expenditures of the Gimpany, absent the necessity to build and finance luse hud generating capacity, were more than met with internally genera ted f unds. This situation is expected to cha nge in 1G
Mississippi Power & Light Company Record ofProgress 1970-1980 1980 1979 1978 SELECTED I'INANCIAL DATA (000*n OhlITTED) ELECTRIC OPERXIING REVENUES: Re idential . $ 153,397 $ 120.246 $ 110,705 100,471 83.5G2 73,N2 Commercial Industrial .. ... 94,834 83,491 7030G G< nrrnment (4 h!unicipal 16,601 13.433 11A(4 Cmperatiws(e hiunicipalities 34,377 39.423 3G.591 399,680 340.155 302,948 Total from Energv S.dc3 (hhss. A~ea) Sales to Other Pubhc Utilitics 139,07G 93347 93.701 Total from Energv Salas 538,75G 433,'>02 396f49 h!i cellaneous Iktenues ... (G,877) 4,5fA 3.187 Deterred fuel Adjustment IUTenues' 1,109 ( 1.MG) 440
$ 332,988 $ 436.524 $ 400,276 Total Electric operating Revenues NETINCohtE $ 33,954 $ 22,581 $ 28345 TOTAL ELECTRIC UTILITY PE WD Production $ 355,084 $ 352.62) $ 351/46 Tran3 mission ,
171,810 149387 14G227 Distnbution . 212,033 201361 190 420 GeneralG Other . 18,G41 17,128 16254 Total Utihty Plant Completett 737,570 721.034 7(4.947 Plant licht for Future Use 3,316 3270 3270 Construction Work in Progress 17,702 25,913 10320 Electric Plant Aci[uisition Adjustments 2,224 2.4] 2.388 Total Utihtv Plant $ 780,812 $ 752f23 $ 721.625 TOTAL ASSETS $ G49,101 $ 04)7f43 $ 603A12 LONG-TElt3I DEllT $ 262,860 $ 2G3380 $ 271374 OTIIER DATA I:LECTRIC ENERGY SALES ( AIKWII): Residential . 3,069,404 2,787,432 2456.73G Commercial 1,918,334 1432.4G2 1,781381 Industrial ... ... 2,217,84 G 2,285.120 2,187.020 - Government (< h!unicipal 385,133 369.441 371All Cooperatives (e 51unicipalities 986,(163 1.270.N4 1280.949 Total Energe S. des (htiss. Area) 8.57G,780 8,545.039 8.478 397 Sales to Other Public Utilitms 4.343,224 3.fA13tM 4.334.425 Total Elet tric Encrgv Sale > 12,920,004 12 226,937 12332322 ELECTRIC Ct'STO3IERS (END OF PERIOD): Residential . 263.850 260.421 255,174 Commercial 38,115 37,919 37.405 Industrial ... 3,276 3.230 3245 Gostrnment & h!unicipal 2,132 2.087 2/49 Cooperativt5 (e h!unicipalities 39 C4 CA Total Customers (h!iss. Area) 307,412 303.721 297,939 Other Public Utilities 2 2 2 Total Electric Customers 307,414 303,723 297.141 SYSTESI INPI'T ( AIKWH' 511ssi33ippi Area 9,407,985 9309.449 9299.633 Other 7,033,874 7.1 ~7.690 8.in3.780 Total Svstem lnput ... 1G,441,859 16.487.139 17.403.433 2,078,000 1,913D 0 1 A99,000 PEAK LOAD (3IISS. AREA)-KW LOAp rACTOR (311SS. AREA)-PER CENT . 52 56 56 NET PIANT CAPAllILITY-KW . 2,7G3,000 2.763.f 00 2.763.000 CIRCI'IT SIILES OP ELE ("rRIC LINES 18,855 18,5(4 18334
'See Item B to Note 1-Summary of Significant Accounting Policies. ' Includes $10,360.000 adjustment for nvenues billed sul@ ct to refimd. See Note 2 to l'inancial Statements.
17
i 1977 y 1975 1974 1973 1972 1971 '1CO
$ 106,520 $ 91,N9 $ ~42fNi $ 67,690 $ 47,473 $ 38,09G $ 32,499 $ 30,0'r 69,114 60,855 47,484 43,559 31,2N 25,701 22.126 20,290 G7,Na 58,04 5 42,863 41,743 26,852 22,399 19,439 17,535 11,158 9,899 7,022 6,163 3,975 3,193 2,N2 2,707 34,073 25,622 21 310 13362 9,915 9,884 7,914 7,027 288,813 246470 193,064 172,51~ 119,509 99,273 84,820 ~7,0G6 7",732 57298 43,084 10,484 6,064 15,223 9,423 4.911 304,545 304,106 236,148 183,001 126,193 114,496 fM,243 82,04~
1,441 1,113 838 574 449 374 393 304 ( 2,04 0) 3,495 3,071 (3,134) - - - -
$ 365346 $ 308,7~G $ 240,057 $ 178,441 $ 126,042 $ 114 470 $ 94,636 $ 82,931 $ 25,027 $ 25,745 $ 20403 $ 20,454 $ 17,346 $ 18,101 $ 15,106 $ 13,~28 $ 349,195 $ 338,118 $ 299,583 $ 292,491 $ 176,217 $ 104,537 $ 1G6364 $ 106,419 13,906 118,137 118,450 109,100 91,535 91,004 85,0~4 79,225 180,035 1~1,955 104,590 158,256 148,492 130,191 124,523 119,198 16.154 15,727 15304 14,763 14,355 13,598 13372 132&3 678,350 043,937 599,989 575,470 430,599 401,3N 389,333 318,125 3270 3.270 4,070 1,219 1,144 1,14G 5M 504 15,ESO 28,061 35,7~2 16,068 121,908 50,070 12,3 % 53,257 2,769 2.931 3.113 3.293 3,06~ $ 700,N9 $ 678219 $ 042 N4 $ 596,672 $ 556,718 $ 452,610 $ 402,323 $ 371,NG $ 5N ,985 $ 064,022 $ 559,009 $ 516,437 $ 473,N3 $ 373,752 $ 332,129 $ 315,~56 $ 279,073 $ 278,029 $ 286,060 $ 258,082 $ 229,498 $ 169.998 $ 154,998 $ 154,998 2,~27,718 2,491,t07 2,440,460 2,206,954 2,356,0~3 2,032,670 1402,G75 1,674,415 1,C17,919 1,53~,169 1,457,505 1,356,173 1,380,035 1,213,432 1,091,553 1,007,557 2,0~1,093 1,935,573 1,751,N2 1,793,055 1,787,~41 1,6~7,14 1,624,499 1,464,G02 344,634 326,275 302,319 271 233 262,04 5 238,624 219,4&3 2'O,951 1,217,042 1,06 ,63G 990 309 938 205 988 351 1,089349 fE6,015 959,049 8408,606 ~,354 .20 6,941,635 6,627,620 6,7~4,N 5 G,251,212 5,704,205 5,317,1~4 3Jo0,571 2,G24,001 1,638,144 487,097 312,4M 1 269,927 1,282.153 984,933 11.568,9~7 9.978,721 8,579,/~9 7,114,717 7,087,299 7,521,139 6,986,358 630?,107 i
269,889 245,384 241,739 237,085 229,7G1 206,222 1 0,435 191,929 35,922 34,718 33,801 33,474 33,109 30,629 !9,453 28,419 3301 3247 3247 3267 3,213 3,106 3,209 3,140 ISS5 1,920 1479 1,789 1,731 1,618 1.5To 1,514 67 67 04 63 61 ~4 75 71 l 291,144 285,336 280,732 275,678 267,875 241,711 232,730 224,673 2 2 1 1 1 2 3 4 291,146 285,338 280,~33 2~5,679 267,876 241,713 232,733 224,677 8,~39,930 ~,995,184 7,Te3,971 7,249,896 7,378,216 6,906 300 G,246,040 5 375,777 7,422,162 6275K4 53G9,242 4 353,673 4,160,152 5,081.123 4,700 357 4,429,887 l 16,1G2,0f 2 14271,No 12,953,213 11,603,569 11,538,300 11,987,423 10,NGB97 10,305,004 1,7844L0 ~ 1,733,000 1,G42,000 1,040,000 1.565,000 1,476,000 1,343,000 1,238,000 56 53 52 51 54 53 53 54 i 2,763 400 2.752,000 2,~52,000 2,752,000 2,002,000 2,002,000 2,002,000 1,231,000 i 18,109 1~,859 17,713 17,4G1 17,146 14,279 14,061 13392 18
s Board of Diredars and Executive Staff B<Crtl of Directors: tbr.ald C. Luth-n.1 ukson, Present ami ChiefI emtive Otliwr G. LawTence Adams, Partner, Adams,Torman,'l uly, Want, Smith and Bramlette, Attorneys.at. Law, Natchez Morman II. Gillis,Jr., Attorng.at. law, htcComb Robert hf. licarin, Chairman of the Boaal arul Chiefikecutive ollicer, rirst National Bank,Jackmn J. II.Johnston,Jr., ht. D., Jackson Robert E. Kennington,ll, Chairman of the Board and Chief Exemtive otticer, Grenada Banking System, Grenada rioyd W. Irwis, Chairman of the Ibard and President, hiiddle South t'tihties,Inc., New Orleans John P. Afaloney, Chairman of the Ibard and Chief Exemtiw Offiwr, Deposit Guaranty National Bank,Jatkson Richard D. NfcRae, President. htcRach inc., Jackson Le Roy P. Percy, Planter, Greemille Dr. Walter Washington, President, Alcorn State University, Lorman Robert ht. (Dob) Williams,Jr., Partner, Reeves. Williams Builders,Southaven Executive Staff: Donald C. Lutken, President and Chief Exemtive Officer Morris t.Stampley. Senior Vice President. Nuclear Alex htcKeigney,Vice President,Infbrmational Services Frank S. York,Js.,Vice President, Chief Financial Otticer and Secretary J. Stewart Frame,Vice President, Personnel arul Administratwe Servues W. Donald Colmer,Vice President, Public Affairs and Emironmental h!a tters Thomas A. Dallas Vice President and Chief Engineer ibnald E. hiciners,Vice President, Customer Services John D. Ifolland,V;ce President. Area Affairs Walton T. Woods,Jr.,Vice President, General Property and Sernws James P. SicGaughy, Assistant Vice President, Nuclear Prmluction George bl.Ledlow, Director, Internal Auditing James L. htmire, Director, htarketing and Area Development James R. hlartin,Reasurer and Assistant SetTetary Allan !!. hlapp, Assistant Reasurer and Assistant Secretary James R. Rider, Director, Fossil Pnxtuction afarion N. Townsend, Director, Enginer ring Dorris H. Rodgers.Exemtive Assistant Dis iston Managers: Thomas h!. Box, Delta, Clevela nd David i. Hridgers, Western, Vicksburg Ucrt h!. Camtrell, Southern, hicComb John R. Craft. North Central, Greenville Robert C. Ioflin, Southwestern, Natchez John E.Sherrod, Central. Jack %m Graham 11. Tempel, South Central, Brook haven T. Ray Tomlinson . Nor thern, Senatobia Plant Managers: htalcolm Allred,B.nter u%on,Vicksburg Richard Denman, Natchez, Natt hez A.T.Johnwn, Rex Brown,Jackssa Kenneth htcCoy, Grand Gulf Nuclear. Port Gib3on Alan schren, Gerald Andrus, Reemille Rex Shannon, Delta, Clevelawl BULK RA rE U. S. POSTAGE
' 3' Mississippi Power & Light Coinpany py^, ., 3,s.
Post Office Box 1G40 PcRhtrr Nom Jackson, M.aalssippi 39205 _-}}