ML20009B615
| ML20009B615 | |
| Person / Time | |
|---|---|
| Site: | Grand Gulf  |
| Issue date: | 02/15/1980 |
| From: | MISSISSIPPI POWER & LIGHT CO. |
| To: | |
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| ML20009B613 | List: |
| References | |
| NUDOCS 8107160433 | |
| Download: ML20009B615 (20) | |
Text
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MISSISSIPPI POWER & LIGHT COMPANY 1979 ANNU AL REPORT
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.. - U#wer Cortstruction Proposed Power source About the Cover General Offices The energy picture is not a simple one, and for our 1979 Electric Building, Jackson, Mississippi 39205 annual report cover Artist Sandy McNeal brings into focus llegistrar (for preferred stock) some of the activities by MP&L during the past year which Deposit Guaranty National Bank, Jackson, Mississippi were intended to shed more light on the national energy pro.
Transfer Agent blem. Some projects portrayed within the borders of our flag First National Bank of Jackson, Jackson, Mississippi are such things as: the Centennial of Light, in observance of This report is prepared for the information of security Edison's invention of the incandescent light; the need of holders, employees and other interested persons. It is not utilizing coal and nuclear resources for electricity, as shown transmitted in connection with the sale of any security or within the bulb; organization of Nuclear Energy Women offer to sell or offer to buy any security.
(NEW); staging informational coffees over the operating area on Nuclear Energy Education Day (NEED), along with the sponsorship of such nationally known supporters of nuclear power as Dr. Margaret Maxey;and formation of citizen groups backing a sound energy policy through the Your Energy Solu-tion (YES) program in Mississippi.
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To Our Stockholders and Members of Our Organization Since an annual report is basically a financial report, it after the Three Mile Island incident, work on the second unit should be pointed out at the beginning that during 1979, of the Grand Gulf Nuclear Station near Port Gibson was being MP&L's f,6th year, the Company experienced a sharp decline slowed at the end of the year. IIere again, plans for the second in earnings. Net income for the year dropped to $22,581,000, unit are not being abandoned;instead, major emphasis is being approximately 22 percent under earnings for 1978. The down-placed on comp'etion of the first unit. (See Grand Gulf pro-card trend was gainingmomentum atyear' send and conditions gress section later in this report.)
now indicate that time is approaching when rate relief must be requested in order to keep the Company financially sound.
Ice Storm and flood While 1979 was not the best year in history,neither was it the worst. There were definite achievements, but most were Two unusual weather conditions clearly proved the deter.
Ettained under trying, and sometimes confusing, conditions.
mination and ability of the Company to provide senice under it is especially good to report that MP&L maintained its record trying conditions during the year, one being a major ice storm of meeting all electrical requirements of its customers in the in January and the other being the Easter flood of the Peart 45 county area of western Mississippi in which it operates.
River in the Jackson area and downstream.
The most disheartening aspect of operating results for The* major ice storm struck the northwestern portion of 1979 lies in the fact that most factors bringing about a weaker the service area on January 6 7, and was rated as the worst financial picture were, and continue to remain, beyond con-since 1951. Between 20,000 and 30,000 customers had their trol of management. Ranking high c,n the list of uncontrolla-service interrupted during that time, with the hardest hit ble factors are such things as: gal'oping inflation which im.
areas being in and around Rosedale, Cleveland, Shelby, Clarks.
pacted all areas of operations; unrealistic and unreasonable dale and Tunica. Over 60 additional crews and 20 additional government and bureauerntic regulations and restrictions; senice supenisors helped regular crews restore service in the and an uncertein fuel supply situation compounded by high hard hit areas.
fuel costs. The latter was agitated by world unrest, continued The devastating Pearl River flood, worst in history, struck dipendence upon foreigt. oil, and a vacillating national energy MP&L's service area beginning on Good Friday, April 13th, policy inhibiting development of alternative energy resources, and by the following Friday had seriously affected the Jack.
Also causing additional problems for the electric industry, son. Pearl, Georgetown and Monticello areas. Ilardest hit was and the energy outlook in general, were such things as the the Jackson. Pearl area, where 3,000 customers were forced Three Mile Island incident; the lagging development of coal to flee their homes due to high water. Six substations had to cnd nuclear resources; the general confusion of the public he taken out of senice, most of them in the Jackson area.
as to the true status of our energy supply; and the probable The taost heroic performance, perhaps, was saving two effect of future shortages.
Vital substations in Jackson by erecting levees around them Due to these factors, our Company, along with the rest of in record time. Employees from company heacquarters in the electric energy industry, spent a great deal of time and the Electric Building and the Central Division were joined effort in developing and carrying out educational campaigns by employees from other areas and several thousand volun.
to equaint customers and the public with the need for more teers in the IIerculean effort. They worked around the clock, enerry production, especially from coal and nuclear, while often in shifts. The major " impossible task" performed was at tne sarde time calling for sensible conservation and the construction of the levee around the East Jackson substation, efficient use of availabla energy. There was definite progress in and the Jefferson Street division headquarters building which these areas of public understanding.
houses the Jackson Sales, Senice and Accounting offices.
While the floodwaters rose rapidly, a levee around this sub-Coal Unit Deferred statior cias built to a height of 18 feet in places. Without it, service to the vital downtown Jackson area could have been Due to new forecasts predicting slowerload growth for the cut off for an indefinite time. Over 100 trucks hauled clay company system, it was decided in mid-year to defer for and sand for three days,24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> a day, to provide material several years start-of<onstruction of the pro' posed coal-fired for the levees.
steam electric station in DeSoto County. The delay does not The other major facility saved by a hastily built levee in me:n plans for the plant have been abandoned, but that it Jackson was the Old Canton Road substation.
will be postponed for the time being. Need for the plant in Part of Georgetown was evacuated during the flood, as the original time frame was affected by both the projected was a portion of Monticello. The flood lasted,in some degree, donnturn in the economy and the efforts of our customers for almost two weeks, and it took most of the remaining year to conserve energy.
for many homes and businesses to be restomi.
Also, due largely to the uncertain regulatory climate of The cost to MP&L of both these major weather events, ice th? Nuclear Regulatory Commission, following some organi-storm and flood, was in the neighborhood of two z:tional changes and the revamped building requirements million dollars.
Th re was one other reather situation affecting s:ctions Expenses Up Also cf the Company during th3 yrar. A hurricane raked the Gulf Coast in mid. September, and some damage was experienced Operating expenses showed a biggerincrease than operating along MP&L's eastern border in the Southem, South Central, revenues, totaling $396,538,000 for the year. This was an in-Central and North Central divisions.
crease of 12 percent, or $43,259,000 more than the year be.
fore. Fortuna*ely,in 1979 the Company was able to purchase Energy Sales Down more natural gas for generation tnan the year before,and this, along with purchased power, helped reduce fuel oil purchases Total enere sales for the year amounted to 12.23 billion 36 percent, down to 9,692,6G4 barrels tor the year. Even so, kilowatt hours, a decrease of five percent compared with the fuel and purchased power accounted for the greater part of previous year. Energy sales to ultimate customers amounted expenses, amounting to $286,254,000, for a 15 percent in.
to 7.3 billion kilowatt hcurs, an increase of only one percent crease over 1978.
over the previous year. Residential usage for the year was two percent under 1978, the average residential customer using Aiding Customers 529 kilowatt hours less than in 1978, or 10,801 kilowatt hours as compared with 11,330 kilowatt hours for the year before.
The Company carried out an aggresive program to aid Usage by commercial customers was up only three percent, customers, with emphasis being placed on eff'cient use and while industnal customers usage increased five percent.
sensible conser ation measures. Campaigns were continued in Total customers at year'c end numbered 303,723, an support of such proven energy-saving programs as the heat increase of 5,782 for the year. Customers by classification pump, the " Zip Up" program, energy audits, promotion of cere: residential. 260,421; commercial, 37,919; industrial, insulation, the E3 (energy efficient electric) home construe.
3,230; govemment and municipal, 2,087; cooperatives and tion plan, heat recovery and beat pump water heaters, and municipalities,64;and other public utilities,2.
solar water heater research.
A milder than nonnal summer,resultingin alower demand A new program designed to benefit customers and at the for cooling, coupled with conservation by customers, was same time pennit load management control was launched primarily responsible for the lower than usual increase in the under the name of " Saver Switch." This device permits the peak demand. The year's peak was only 14,000 kilowatts over managed interruption of compressors on air conditioners 1978, and was reached at 5:00 p.m. on August 8,1979, at during the four months of June through September, for not 1,913,000 kilowatts.
more than 15 minutes of each hour during hours of high usage.
The customer is allowed a credit of $1.00 per kilovolt ampere Operating Revenues Up of controlled cooling during the four months. Some 30,000 such switches are expacted to be installed on tne system by Total operating revenues for the year reached a new high, 1982.
$4 36,524,000, as compared with $400,276,000 in 1978. liow.
Another project designed to aid customers in their conser-svir, the continued climb in the cost of fuel for power genera-vation efforts was the infrared flyover tested in the Jackson tion accounted for most of the increase, since fuel and pur.
area. The resulting thermogram pictures were placed on dis-chased power costs above those included in the bast rate are play so homeowners could cf uk the general energy efficiency included in customers' bills in the form of fuel cost adjust-of their residences.More than 2,100 checked the thermograms.
m:nt.
A far-reaching project of interest to customers is a feasi-bility study for a possible coal gasification plant to be located in DeSoto County. The Company, in cooperation with the Distribution of Revenue state and others, proposed the study to the Depart *nent of Energy, which announced a $145,000 grant for the project. It The Company's 1979 revenue dollars were spent as shown will explore the possibility of using Mississippl lignite for coal in this tabulation:
gasification.
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Amount (in thousands)
Construction Fuel.
.5217,160 49.75 fr construction during the year were E,xpenditures o
Purchased Power.
69.09 t 15.83
$33,218,000, an increase of almost $9 million over 1978.
Total Fuel ad Purchased Power.
.5286,254 65.58 Some of the major projects completed during the year in.
Taxes 26,172 6.00 cluded:
Payroll..
22,042 5.04 The new Medical Center 115,000 volt Substation in Jack.
Depreciation..
21,974 5.03 son, along with the transmission line between it and the Fon.
Other Expenses & Deductions 37,264 8.54 dren Substation; rebuilding the Byram Substation; modifica-Cc:t of Capital:
tion of the Georgetown Substation; and finishing the 500,000 Cost of Debt (Interest).
20,237 4.64 volt transmission line between the Grand Gulf Nuclear Station Net Income (Cost of Preferred and the Baxter Wilson Steam Electric Station at Vicksburg.
& Common Stock).
22,581 5.17*
Also major additions and improvements to substations in the Port Gibson, West Jackson, East Jackson, Natchez and TOTAL REVENUE.
.S436,524 100.00 Vicksburg aruc were completed.
A major inte. connection during the year was completion of the 115,000 V)lt transmission tie with the South Mississippi C.55% paid as preferred dividends, 4.45"6 paid as common Electric Power Association near Magee. A new interconnection dividends, and.17% reinvested in facilities to serve customers is being planned with Yazoo City.
Plans were completed in 1979 for the new 500,000 volt Central Division post. liirim Walters, former division mans-Substation at McAdams, and preliminary construction was ger at Grenada, was named to succeed Sherrod, while Frank stirted. Design and plans for the new 115,000 volt trans.
Buchanan, division superintendent at the Greenville office, mission line between Silver Creek and Magee were completed, was named manager of the district office in Grenada.
and a contract was awarded for construction of a 230,000 Jim Pilgrim, formerly manager at Brandon, was made volt transmission line between Indianola and Tillatoba. Sub.
manager of the Pearl Brandon district, and Ted Walker of the stantial progress also has been made in the planning, design, Central Disision staff was made manager of the Brandon location and rights-of way acquisition of other needed trans.
office. Other new managers named included: Charles M.
mission lines.
Brown, of Greenville, to the Marks office, succeeding Bob A new office building was completed at Gloster, and an Weatherly, who moved to Port Gibson to become assistant existing building was remodeled to house the district office to the manager of the Grand Gulf Nuclear Station; Wayne in Peirl. The Jefferson Street office was improved following Johnson, of Shelby, to Kosciusko, succeeding John Garner, the flood,with the addition of two new drive-in windows.
who was moved to the Marketing Department at McComb; and Paul Powers, of Jackson, to manager at Shelby.
Grand Guli Progress Charles " Skip" Stewart, for 11 years with Niagara Mo-hawk in New York, was named assistant plant manager at At year's end, the first unit of the Grand Gulf Nuclear Sta-Grand Gulf.
tion wa; about 80% complete. Higher construction costs and other factors have pushed the estimated cost of both uni.s The Coming Decade to some $3-billion. The project is the largest in Mississippi's history. During the year, peak employment was over 4,500.
To infer that the outlook for the decade of the '80's is The first unit is slated for completion in 1982, with the se-encouraging, especially from an energy standpoint, would be cond unit to be in service by 1985. As pointed out earlier, misleading and would fly directly in the face of most every major emphasis is now being put on completion of the first reliable indicator. Never in the history of the electric industry unit.
have so many obstacles been thrown in its path, and each year Each unit of the Grand Gulf Nuclear Station is to have a they seem to mount. On the national level, the energy ques.
generating capability of 1,250,000 kilowatts, or a total of tion has become too much of a political question. No longer 2,500,000 kilowatts from both units. This will make it the is the matter of developing and producing needed energy left largest generating station in the a 'ste, and one of the largest principally to those with expertise in the field. If it were, the in the world.
nation no doubt would be well on the road to solving the To give full support to nucit. :.ergy, the Company carried energy crisis by relying less on foreign oil and proceeding as out an accelerated informational campaign to acquaint the fast as possible in the development of resources we already public with facts about the necessity of using the atom to help possess-mainly coal and uranium. Instead, our energy future solve the energy crisis. In addition to the numerous appearances is being dangerously hampered by such things as consumerism, before groups by members of the speakers bureau, the Com-political opinion polls, idealistic and unreasonable environ-pany spearheaded the national NEED (Nuclear Energy Educa-mentalists most often opposed to any growth, and bureau-tion Day) program in the state on October 18th. In the MP&L cratic bungling at numerous levels of government.
service area, there were 57 " coffees" held to explain nuclear Until these drawbacks to energy development are lifted, power. Also, at Port Gibson the Company helped stage an our energy future will continue to be cloudy with the result Energy Fair for the area, and cooperated with the Vicksburg being even higher prices, and eventually critical shortages, Chamber of Commerce in holding Energy Awareness Week a situation which will stagnate, at d fmally defeat thb great there in October. Additionally, the Company supported the nation. Y et us work to avert such a calamity.
appearances in the state of such nationally known figures Despite the gloomy outlook, we are convinced that free in energy as Dr. Margaret Maxey of the University of Detroit nen and women, working in a free economy can tum our and Dr. Frank Iddings of Louisiana State University.
nation, and the crisis around. This we at MP&L are working to accomplish. On behalf of our employees, directors and in-Management Changes vestors, we want to thank you for your help. Let us dedicate ourselves to the task ahead.
A number of executive and managerial changes were made Sincerely, during the year to strengthen the Company's leadership team.
Among them were:
[.Cg James L. Moore, formerly Central Division manager, to
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head the new Marketing and Area Development section in Customer Services. John Sherrod, former head of Distribu-tion Operations in Customer Services, was named to the Donald C. Lutken President and Chief Executive Officer
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Robert ht,llearin J.lierman flines Natchez htcComb Jackson J ackson A tt orne y et-Law A t torney e t-Law iloard Casirman l'ormer floard Chairman Chief 1:xecutive Ch ef Laccutive First National Bank Deposit Guaranty Nat'l. Ilank kb[{,I* ')jl
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Jackson Jackson Chairman Chairman Retired Chairman Chief Fxecutise Sliddle South Utilities,Inc.
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J ackson Greenville Alcorn Southasen Presiden t, hlc R ae's, Inc.
Planter Presiden t Partner Alcorn State University Reeses-Williams liuilders
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Mississippi Power & Light Company l
1979 Financial Review l
Summary of Significant Accounting Policies A.
SYSTEll OF ACCOUNTS tively, including amortization of unfunded prior service The accounts of the Company are maintained in costs over a period of 20 years. The policy of the Com.
accordance with the system of accounts prescribed by pany is to fund pension costs as accrued. Assets of the the Federal Encrgy Regulatory Commission, plan are in excess of vested benefits.
B.
REVENUES E.
INC'051E TAXES The Company records revenues as billed to its cus.
The Company joins its parent in filing a conse.idated tomers on a cycle billing basis. Revenue is not accrued Federal income tax return. Income taxes are allocated for energy delivered but not billed at the end of the to the Company generally in proportion to its contri.
fiscal period. The rates of tle Company include fuel bution to the consolidated tax liability.
adjustment clauses under which fuel costs above or be.
Deferred income taxes are provided for differences to.y the base levels allowed in the various rate schedules between book and taxable income to the extent per.
are permitted to be billed or required to be credited to mitted by the regulatory bodies for rate-making pur.
customers.
poses.
Investment tax credits allocated to the Company are C.
UTILITY PLANT AND DEPRECIATION deferred and amortized over the average useful life of Utility plant is stated at original cost. The costs of the related property beginning with the year utilized in additions to utility plant include contracted work, the consolidated tax return.
direct labor and materials, allocable overheads and an allowance for the composite cost of funds used during F.
ALLOWANCE FOR FUNDS USED DURING construction. The costs of units of property retired are CONSTRUCT:ON removed from utility plant, and such costs plu removal In accordance with the regulatory system of accounts, costs,less salvage, are charged to accumulated deprecia the Company capitalizes, as an appropriate cost of utility tion. hiaintenance and repairs of property and replace.
plant, an allowance for funds used during construction, ment and renewal of items determined to be less than This allowance (a non-cash item) represents the net units of property are charged to operating expenses. Prin.
cost of funds used to finance construction. The effective cipally all of the utility plant is subject to the lien of the rates of such allowances were 7.793 and 7.35"e for Company's first mortgage bond indenture.
1979 and 1978, respectively.
Depreciation is computed on the straight-line basis at rates based on the estimated service lives of the various G.
RESERVES classes of property. Depreciation provided in 1979 and It is the policy of the Company to provide reserves 1978 amounted to approximately 3.3 % on average for uninsured property risks and for claims for injuries depreciable property.
and damages through charges to operating expense on an accrual basis. Accruals for these reserves have been D.
PENSION PLAN allowed for rate making purposes. Effective January 1, The Company has a pension plan covering substan.
1979, the Company commenced recording deferred tiilly all of its employees. Pension costs in 1979 and taxes on the reserve for uninsured property risks.
1978 amounted to $2,712,000 and S2,402,000, respec.
c httSSISS!PPI POWER & LIGIIT C051PANY We have examined the balance sheets of 51ississippi Power & Light Company as of December 31,1979 and 1978 and the related statements of income, retained eamings, and source of funds for utility plant additions for the years then ended. Our examinations were made in accordance with generally accepted auditing stand.
ards and, according'y, included such tests of the accounting records and such uher auditing procedures as we considered necessary in the circumstances.
In our opinion, the above. mentioned financial statements present fairly the financial position of the Company at December 31,1979 and 1978 and the results of its operations and source of funds for utility plant additions for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.
February 15,1980 New Orleans, Louisiana DELOITTE IIASKINS & SELLS 1
Mississippi Power & Light Company Balance Sheets December 31,1979 and 1978 ASSETS 1979 1978 in Thousands UTILITY PLANT'.
Electric plant
$ 724,304
$ 708,217 Construction work in progress 25.913 10.820 Electric plant acquisition adjustments 2,406 2,588 Total 752.623 721,625 Less accumulated depreciation 218.476 197.299 Utility plant-net...
534.147 524.326 OTHER PROPERTY AND INVESTMENTS-At cost:
Investment in associated company (Note 3) 16.984 10,269 l
Other 905 930 Tot al..................
17.889 11,199 CURRENT ASSETS:
Cash (Note 2).....
1.373 445 Specialdeposits.
736 891 Temporary investments, at cost w hich approximates market.
1,000 24,500 Accounts receivable:
Customer and other-less allowance for doubtful accounts of $154.000..
22,820 16,261 Associated companies.....
8,014 4,724 Materials and supplies-at average cost:
6,238 5.439 Fuel Other..
9.805 7,185 O th e r.......
2.189 6.683 52.175 66.128 Total..
DEFERRED DEBITS:
Preliminary Survey and investigation Charges l 717 1,092 1,149 Unamortized debt expense 623 1.010 Other.
Tu al.
3.432 2.159 TOTAL
$ 607,643
$ 603,812 See Notes to Financial Statements.
2
t LIABILITIES 1979 1978 In Thousands CAPITALIZATION:
Common stock, no par value (stated value $23 per share) authorized 5,000,000 shares; outstanding 4,540,000s h a re s...................................... $ 104,470
$ IN,420 Pai d-i n s u rpl u s..................................................
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Retained earnings (Note 4).........................................
65.384 64.618 Total common shareholder's equity...........................
169.809 169,043 Preferred stock, w ithout sinking fund (Page 6).........................
38,077 38,077 Long-term debt and premium (Page 6)...............................
263.380 271,374 Tota!......................................................
471,265
___ 478,494 CURRENT LI ABILITIES:
12mg-term debt currently maturing..................................
7,929 7,905 Accounts payable:
A ssociat ed compa nies..........................................
10,566 6,776 Other.........................................................
13,609 11,122 Customer deposit s..............................................
9,085 8,303 T.n e s a cc ru e d...................................................
12,840 15,528 I n t e re s t a c c ru ed.................................................
6,279 6,%1 Divi d e n d s d eclared..............................................
5%
5%
Other.........................................................
2,960 1.649 Total...................................................
63.864 58.840 DEFERRED CREDITS:
Accumulated deferred income taxes (Note 1).........................
51,8N 47.369 Accumulated deferred investment tax credits (Note I)................
17,763 16,478 Other..........................................................
506 344 Total...........................................
70.073 64.191 R E S E RV E S.....................................................
2.440 2.287 COMMITMENTS AND CGNTINGENCIES(Note 3)
TOTA L................................................ $ 60164 3
$ 603.812 See Notes to l'inancial Statements.
3 m.
Mississippi Power & Light Company Statements ofIncome For the years ended December 31,1979 and 1978 1979 1978 in Thousands OPERATING REVENUES
$ 4 3 6.5 24
$ 400.276 OPERATING EX"ENSES:
Operation:
Fuel.....
217,160 208,161 Power purchased 69,094 40,049 Other 38,638 32,102 Alaintenance....
23,5'X) 16,997 Derreciation 21.974 20,528 Taxes other than income taxes..............
16.177 14.950 Income taxes (Note 1).
9.995 20.492 Total........
396.538 353.279 OPERATING INCOh!E.
39.986 46.997 OTIIER INCOh!E AND DEDUCTIONS:
Allowance for other funds used during construction 747 826 Niiscellaneous--net 2.900 2.286 Income taxes (Note 1)
(1,145)
(916)
Total...........
2.502 2.1%
l INTEREST Cli ARGES:
Interest on long-term debt 19,586 19,842 Other interest-net of debt premium 651 852 Allowance for borrow ed funds used during construction (330)
(346)
Total 19.907 20.348 NET INCONIE 22.581
$ 28,845 1
i Statements of Retained Earnings For the years ended December 31,1979 and 1978 RETAINED EARN:NGS.J ANUARY l
.S 64,618
$ 55.954 A DIL-Net income 22.581 28.845 Total 87.199 84.799 DEDUCT:
Dividends-cash:
Preferred stock 2,384 2.384 Common stock 19.431 17.797 Total.
21.815 20.181 kcTAIN ED EARNINGS, DECENIBER 31.(Note 4) 65.384 5 64.618 See Notes to Financiil Statements.
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4
Mississippi Power & Light Company Statements of Source of Funds For Utility Plant Additions For the years ended December 31,1979 and 1978 1979 1978 SOURCE OF FUNDS:
In Thousands From operations:
N e t i n co m e.................................................... $ 22,581
$ 28,845 Dep reciati on...................................................
21,974 20,528 Deferred income taxes and investment tax credit adjustments-net....
6,620 4.572 Allowance for funds used during construction......................_ (1,077)
(1.172)
Total.....................................................
50.098 52,773 Less-dividends declared:
P referred s t oc k............................................
( 2,384)
( 2.384)
Co m mo n s t oc k...............................................
(19.431)
(17.797)
Funds retained in business...................................
28.283 32.592 Fromincrease in working capital (excluding short-term securities and current maturities oflong-term debt)*..........
(4,545)
(II 986)
Investments in associated company.................................
(6.715) 1,070 Miscellaneous-net..................
( 477) 4.144 Total......
16,546 25.820 Financing transactions:
First mortgage bonds (retirements)................................
(7,500)
Other long-term debt...................
( 405)
( 106)
Short-term securities-net..................
23,500 (2.500)
Total.................................................
15.595 (2,606)
UTILITY PLANT ADDITIONS (excludes allowance for funds used during construction)...........
$32.141
$ 23.214
- The increase in working cari'al in 1978 is primarily due to a d,: crease in accrued income taxes.
See Notes to Financial Statements.
5
Mississippi Power & Light Company Schedules of Preferred Stock and Long-Term Debt December 31,1979 and 1978 Current Shares Call Price Authorized Outstanding Per Share PREFERRED STOCK, without sinking fund Cumulative, $100 Par Value 4.3 6% S eri e s.............................
60,000 59,920
$ 103.86 4.5 67c S e ri e s.......................................
44,476 43,888 107.00 4.927c Series........................
100.000 100,000 102.88 9.16% S e ri e s....................................
75,000 75,000 108.64 7.44% S eri e s......................................
100,000 100,000 106.53 O t h e r S e rie s.....................................
325.000 Total.............................................
704.476 378.808 in Thousands Stated at $100 a Share.................
$ 37.881 Premium on Preferred Stock..........
196 Total........................................................
$ 38,077 LONG-TERM DEBT AND PREhllUhl 1979 1978 First Mortgage Bonds:
In Thousands 2%% S eries du e 1980..............................
7,500 3%% Series due 1983..............
12,000 12,000 4%% Series due 1988.............
15.000 15,000 4%7c Serie s due 1995............................
20,000 20,000 5%% Series due 1996..............................
25,000 25,000 L
l 6%7c Series due 1996..................
10,000 10,000 l
9%% Series duc 1999........
20,000 20.000 9%% S erie s d ue 2000...........................
17,500 17.500 l
7M% Series due 2002...................
15.000 15,000 7%7c Series due 2003......
30,000 30,000 8%% Series due 2003..
20,000 20,000 25.000 25,000 9%7c Series due 2004............
10%7c Series due 2005.....
25,000 25.000 234,500 242,000 Principal Amount of Capitalized Lease-87c, due serially through 1993...
7,648 7,977 t
Pollution Control Bonds:
7H7c due 2004.
9.400 9,400 l
8 H% d u e 2004................................
8,575 8,575 6%% to 8H9c due 1981 to 1995..
2,100 2.200 Unamortized Premium on Debt 1.157 1,222 Total (Annual sinking fund requirements, which may be met by certification of l
property additions at the rate of 167% of such requirements, amount to
$2,304,000 for 1980.)...........
$ 263.380
$ 271.374 6'
1 v
Notes to Financial S;tatements
- 1. INCOME TAXES 1(n on the amount of outstanding loans. The lines of credit were unused at December 31,1979 and 1978.
Income tax expense consists of the following:
Subsequent to December 31, 1979, the Company has in-
- 197, Ign creased its lines to $34,000,000, substantially all ef which requires a 7"c compensating balance and an additional 7'"e on
,, 3,,,3 the amount of outstanding loans. The Company maintains, c,,g t ed erat.
.5 3,74s s i s,4 o with the Mississippi banks, average daily operating balances State 772 1.426 adequate for their requirements. The non-Mississippi bank requires the maintenance of compensating balances.
a lotai.
4.520 16.836 The bank notes and commercial paper notes are unsecured short term notes with maturity dates not in excess of nine Deferred - Net ut>eratised derreciation.
4.617 s,139 months. During 1979, the maximum aggregate amount of Ot her,
117 340 commercial paper outstanding at the end of any month amounted to $9,000,000. The average amount of commercial 83./.34 8'47' I'*
paper outstanding during 1979 (based on <ne average of the Investment tax caedit adjustments - net.
1.286 (907) sum of daily outstanding principal balances) approximated
$1,153,000. The approximate an tage uterest rate for com-Totalimome eases.
.511,140
$ 21.40 s mercial paper (determined by dividing the actual interest expense during the year by the average amount outstanding) charged to urerations
.5 9,995 520.492 RR nm um m Ma bm My MR hm Charged to other income.
I.145 916 were no short term borrowings during 1978.
Totauncome taxes.
.s t i.140 52 n.40s
- 3. COMMITMENTS AND CONTINGENCIES The Company's consttuction program contemplates ex.
penditures of approximately $47,000,000 in 1980.
Total income taxes differ from the amounts computed by The Company has a 19Po interest in System Fuels, Inc.
applying the statutory Federal income tax rate to income (SFIj, a jointly-owned subsidiary of four of the principal before taxes. The reasons for the differences are as follows:
operating subsidiaries of Middle South l'tilities, Inc. SFI operates on a non-profit basis in planning and implementing programs for the procurement of fuel supplies for the genera-
,97, ting units of these operating companies;its costs are primarily recovered through charges for fuel delivered.
% or
% or The Company has made loans to SFI to further its fuel l're Tax Pre-Tax supply business under certain loan agreements which pro-Amount income Amount income vide for SFI to borrow up to $213,000,000 from its stock-computed at sratutory rate
.s i s,s s 2 46.0% $ 2 4.12 2 4 s.0%
holders. As of December 31, 1979 the Company had loaned incream (redurtionsl in tax
$16,980,250 to SFI pursuant to the loan agreements, and
'""Iti"8 f'"* :
the Company's share of the unused loan commitment is iSa e$retu approximately $19,890,000. Loans mature in 10 and 25
. (3.2 00)
(9.s %) (1,900) (3.8 %)
con Other - net
. (1,17 2 )
( 3.5 %)
(814) (1.6%)
years from the date of borrowing.
In conr.ection with w rtain financing arrangements t y Recorded income taxes.
.511.140 33.0% $ 21,408 42.6%
SFI totaling $91,723,000 at December 31, 1979, the Com.
pany and the other SFI stockholders have covenanted and Unused investment tax credits at December 31. 1979 agreed severally in accordance with their respective shares of amounted to $5,0G0,000, of which $2,352,000 may be ownership of SFI's common stock,that they will take any and carried forward through 1984, and $2,708,000 through 1985.
all action necessary to keep SFIin a sound financial condition Prior to 1979 the investment tax credit utilized in the con-and to place SFI in a position to discharge, and to cause SFI solidated tax return was allocated to each System Company to discharge,its obligations.
on the basis of the credit contributed by each Company.
SFI has entered into a contract with a joint venture for a Effective in 1979 the method of allocating investment tax suppiv of coal from a mine to be developed in Wyoming which cr:dit was changed so that it is allocated on the basis of each is expected to provide 150 to 210 million tons oser a period Comp.
. contribution to the consolidated tax liability; of 26 to 42 years.
any additional consolidated credit utilized is allocated on the The Company, together with the other System Operating basis of the remaining tax credits.
Companies, is obligated under arrangements with Middle South Energy, Inc. (MSE) to make payments adeq' tate to
- 2. LINES OF CREDIT AND SiiOitT. TERM BORROWINGS cover all of MSE's operating expenses and costs of capital The Company had arrangements, not requirii.g commit-and, in return, will receive the power available from MSE's m:nt fees, with certain banks providing for short term borrow.
Grand Gulf Plant. The completion dates of the two units ings of up to $26,000,000 at December 31,1979 and with of the Grand Gulf Plant, on which $1.4 billion has been a commercial paper dealer for the sale of commercial paper.
expended through 1979, were changed by MSE in Decem.
TM arrangement with a non-Mississippi bank required a 1(Po ber 1979 to 1982 and 1985 from 1981 and 1981, respectively.
compensatir.g balance on its line of credit and an additional Under certain circumstances, payments may be required to 7
be made commencing December 31, 1982 if the first unit Operating revenues include revenues from sales to affiliates of the Grand Gulf Plant has not been completed by that amounting to S90,959,000 in 1979 and S82,899,000 in 1978.
date. The Company's liability under these arrangements is Operating expenses include fuel cost and purchased power not prospectively determinable, charges from affiliates totaling $161,302,000 in 1979 and The Federal income tax retums for the years 1071 through
$161,3G0,000 in 1978.
1976 have been examined b3 the Liternal itevenue Service (Ills) and adjustments have been proposed. The principal
- 6. QUAltTEllLY ItESULTS (Unaudited) issue is whether customer deposits are includible in taxable Unaudited operating results by quarters follow (in thousands),
income. A fomial written protest has been filed and con-ferences are being held with an Appeals Officer of the lits.
Any final liability for taxes resulting from settlemen', wit *:
the lits would not have a material effect on net income.
m rch June september necember income taxes un customer deposits would be normalized.
- iny, Most of the other issues have been settled and adequate provisions have been recorded, operating rnenuei 599,000 597.145 5:36,00s s t o4,374 ogwrMmg inmme 11.389 7,219 13,133 8,24s
- 4. ItETAINED EAftNINGS The indenture provisions relating to the Company's long-3,7, term debt provide for restrictions on the payment of cash dividends on common stock. As of Lecember 31, 1979, operating revenues s t u4.0 34 s o n.n94 s i n 9,694 s 94.6s4
$43,768,000 of retained earnings are free from such restric-open ung inwme 12,059 7,629 14,839 12,470 Net inmme 7,564 2,826 n o.349 s,t oo tions.
- 5. TilANSACTIONS WITl! AFFILIATES The Company buys from and sells electricity to the opera-The business of the Company is subject to seasonal flue-ting subsidiaries of Middle South Utilities, Inc., Hs parent, tuations with peak periods occurring during the summer under rate schedules filed with the Federal Energy llegula ory months. Accordingly, earnings information for any three.
e Commission. In addition, the Company purchases fuel from month period should not be considered as a basis for estima-System Fuels,Inc.
ting the results of operations for a full year.
- 7. Cil ANGING Pl! ICES (Unaudited)
The following supplementary information about the effects of changing prices on the Company is provided in acconlance with the requirements of Statement of Financial Accounting Standants No. 33,
- Financial Iteporting and Changing Prices". It should be viewed as an estimate of the effect of changing prices, rather than as a precise measure.
Mississippi Power & Light Company Statement of Income fnt, Operations and Other Financial Data Adjusted for Effects of Changing Prices for the Year Ended December 31,1979 (In Thousands)
Adjusted For As Iteported in Adjusted For Changes In The Financial General Inflation Specific Prices Statements (Constant Dollars)
(Current Costs)
Itevenues
$136,521
$136,521' (436,524' O wrating expenses (excluding depreciation).
374,5GI 374,5Gl' 374,5Gl' l
Depreciation.
21,974 40,397 47,172 Total operating expense 396,538 414,961 421,736 Operating income 39,991 21,561 11,7Xb Other income 2,502 2,502' 2,502'
!rterest & other charges, 19,907 19,907' 19,907' Income from operations (excluding n duction to net recoverable cost).
$ 22,581
$ 4,15g2
$ (2,617)
Increase in specific prices (current cost) of property, plant, and equipment hehl during the year',
$262,692 Iteduction to net recoverable cost.....
$ (46,791)
(110,103)
Effect of increase in general price level.
(192.607)
E xcess ofincrease in general price level over increase in slwcific prices after reduction to net recoverable cost (40,018)
Gain from thcline in purchasing power of net amounts owed.
41,253 44,253 Net
$ (2,511)
$ 4.235
' Assumed to be in " average for the year" dollars and thus are not restated.
' Including the reduction to net recoverable cost, the loss from operation on a constant dollar basis wouhl have been $12,636 for 1979.
'At December 31,1979, current cast of pniperty, plant, and equipment, net of accumulated depreciation was $1,191,991, while historical cost or net cost recoverable through depreciatian was $'i32,574.
8
Mississippi l'ower & Light Company Five-Year Comparison of Selected Supplementary Financial Data Adjusted for Effects of Changing Prices (In Thousands of Average 1979 Dollars)
Years Ended December 31 1975 1976 1977 1978 1979 Operating revenues.
$323,749 $393,712 $137,610 $415,343 $136,521 Ilbtorical cmt information adjusted for general inflation Income from operations (excluding reduction to net recoverable cost)
$ 4,158 Income per common share (after dividend requirements on preferred stock and excluding n&ction to net recoverable cost)...
.92 Net assets at year-end at net recoverable cost.....
$160,925 Current cmt infnrmation Income from operations (excluding reduction to net recoverable cost).
$ (2.617)
Income per common share (after dividend requirements on preferred stock).
(.58)
Excess of increase in general price level over increase in specifle prices after reduction to net recoverable cost..
$ (40,018)
Net assets at year-end at net recoverable cost.
$160,1r25 General Information Gain from declir.e in purchasing power of net amounts owed
$ 4 8.253 Average consumer price index 161.2 170.5 181.5 195.4 217.4 Note: The statement requires that historical cost information adjusted for general inflation and curn.nt cost information be provided for 1979 and subsequent years. Comparable information is not readily available for the years prior to 1979 and thus is not provided.
Constant dollar amounts wpresent historical costs adjusted for the effects of general inflation. The effects are determined by converting these costs into dollars of equal purchasing power using the Consumer Price Index for all Urban Consumers (CPI-U).
Current cost amounts reflect the changes in sp. cific prices of property, plant and equipment from the year of acqt.isition to the preser.t. The current costs of property, plant and equipment, which represent the estimated costs of rephteing existing plant asset s, are determined by applying the Handy-Whitman Index of Public Utility Construction Costs (llWI) to the cost of the surviving plant by year of acquisition. Land and certain other plant assets which are not included in the HWI were converted using the CPI-U.
The difference between current cost amounts and constant dollar amounts results from specific prices of property piant and equipment (as measured by the llandy-Whitman Index) changing at a rate different than t he rate of general inflation (as measured by the Consumer Price Index).
The current year's depreciation expense on the constant dollar and current cost amounts of pniperty, plant and equipment w ere determined by applying the Company's depreciation rates to the indexed amounts.
Fuel inventories and the cost of fuel used in generation have not been restated from their historical cost in nominal dollars.
Regulation limits the recovery of fuel costs through the operation of adjustment clauses or adjustments in basic rate schedules to actual costs. For this reason fuel inventories are effectively monetary assets.
As prescribed in Financial Accounting Standard No. 33, income taxes were not adjustat The regulatory commissions to w hich the Company is subject allow only the historical cost of plant to be recovered in revenues as depreciation. Therefore the excess cost of plant statrd in terms of constant dollars or current cost over the historical cost of plant is not presently recoverable in rates. This excess is reflected as a reduction to net recoverable cost. While the rate-making process gives no recognition to the current cost of replacing property, plant and equipment, the Company believes, based on past experiences, that it w ill be allowed to earn on the increased cost of its net investment w hen replacement of facilities actually occurs.
To properly reflect the economics of rate regidation in the Statement ofIncome from Operations presented above, the reduction of net property, plant and eqmpment to net recoverable cost is offset by the gain from the decline in purchasing power of net amounts owed. De# a period ofinflation. holders of monetary auets suffer a loss sf geneni purchasing power while holders of monetary liabilities
-ience a gain. The gain from the decline m purvhasing power of net amounts owed is primarily attributable to the substantial an at of debt w hich has been used to finance property, plant and equipment. Since the depree:ation on this plant is limited to the recovery of historical costs, the Company does not have the opportunity to realize a holding gain on debt and i< limited to recovery only of the embeddnt cost of debt capital.
- 8. ACCOUNTING POLICIES The summary of significant accounting policies on page 1 is an integral part of these notes to financial statements.
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