ML20009B621

Annual Financial Rept 1974

ML20009B621
Person / Time
Site:	Grand Gulf
Issue date:	02/14/1975
From:	MISSISSIPPI POWER & LIGHT CO.
To:
Shared Package
ML20009B613	List: ML20009B612 ML20009B614 ML20009B615 ML20009B616 ML20009B617 ML20009B618 ML20009B620 ML20009B621 ML20009B623
References
NUDOCS 8107160451
Download: ML20009B621 (16)

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Mississippi Power & Light Company 1974 Annual Report n meoas m e o~

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Officers and executive department heads of the Company arc, scated from left: tV. }l. Casper, 'Ircosurer; f)onald Colmer, Vice-President, Public Affairs and Environmental 31atters; Alex 31cKeigney, Vice-President, Informational Scrcices; Alex Hogers Senior Vice-President Chief Financial Officer; It. Haxter \t'ilson. Chc.irman of the Hoard; I)onald C. Lufken President and Chief Executsce Officer; Joe li. Hox, Senior Vice-President, Production, Engineering and Construction; llubert Q. Pray, VicePresident, Consultant to the President; John 11. llolland, Yucc-President, Central (htision; Norris L. Stampley, Vice-President, Production; back rou', from Icft: James H. Alartin 1ssistant Treasurer; Allan H. Slapp, Assistant Secretary; Frank S. York, Jr., Secretary; f)onald E. 31ciners, 31anager,1)icision Operations:

Thomas A.1)allas, Alanager, Engineering, System Operations and Constructitm; C. lamar Stephenson,1)irector, Personnel; George It)nne. Director, 31arketing ami Decciopment; and 31arion Totensend. Chief Engineer.

Highlights of 1974

-Total operating revenues reached an all-time high, --The Atomic Energy Commission granted a fell

$ 17 M,1 11,000, but were largely offset by record-breaking construction permit for Crand (;ulf Nuclear Station on expenses, $150,236,000. September 1, to MP&L and Aliddle South Energy, Inc., the

--The major increase in expenses was for fuel and purchased latter being the new generating subsidiary of hliddle South po wer, 89 2,973,170, up S16,516,3G1, or 100"; oser the Utilities Inc., which will finance and own the facility.

presious year. -The 750,000 kilowatt (;erald Andrus Steam Electric

- A modest rate increase, approximately 10";, was filed with Station at Greenville was completed in ih comber, gising the the Public Service Commission on January 17, but was MP&L s> stem a total capability of 2,752,000 kilowa is from subsequently denied. It remains in effect subject to refund, fise plants.

and at year's end, the case was stdl before the Ilinds County --The aserage kilowatt-hour usage by residential customers Chancery Court. dropped to 9,717, compared with 10,615 KWil the year

--l! ate increases were filed for wholesale power supplied to before.

four municipalities and sesen rural ch etric cooperatises. The -Industrial deselopment continued at a rapid pace, a total increases,27'; for munit.palities and 23'; for the cooperatises, of 85 new and expanded indus*s being recorded in 1971, were allowed to be placed in effwt Ihsember 7, subject to one less than 1973.

<efund. depending upon final action of the l'ederal Power .-A $160 million damage suit against United Gas Pipeline Commission. Company and the Penndi Company was filed in October, on

-Net income for 1971 was $20,151,000, up S3.1 million grounds the Orms failed to f ulfill the firm natural gas delisery over 1973. contract made with MPAL.

General Offices About Our Cover Ekrtnc liuddmg, Jackson, Miwissippi 39205 " Electricity-The Foreser Energv!" 'lhati the slogan itegistrar (for preferred stock) developed by M P& L's Marketing and Devt 'opm ent Deposit Guaranty National llank, Jackson, Mississippi Department, as it looks to the total-ch ctric economy which Transfer Agent becomes more evident as the energy crunch broadens.

First National ikmk of Jackson, Jackson, Mississippi Transportation is one area under study, md the Conipany has This report is prepared for the information of security in its day-to-d,y operations two electric passenger cars and an holders, employ ees and other interested persons. It is not electric com mercial san. Show n on our coser, are t h ree transmitted in connection with the sale of any secunty or employ ees insolsed with the pront, from left: Will Lenore, a offer to sell or offer to buy any secunty. meter reader: A. W. liardm, manager of program research and desetopment; and Miss itebecca Lu ter, ehrtric living b3Onlen[S consultant.

Managment's letter . 3 Directors .13 Financial Statements . 5 liecord of Pronress . I l 15

To Our Stockholders and Members of Our Organization MP&L faced many complex, difficult and perplexing conservation, and the mild weather conditions. Total electric problems during 1974, and our 51st year will go down in residential customers on Company lines numbered 34,914, an history as one which presented constant challenges in all areas increase of over 8,000 over the previous year. De peak of operations. demand for 1974 occurred at 4 p.m.. on July 22, at 1,640,000 MP&L was generally successful in meeting each challenge of kilowatts,75,000 kilowatts more than 1973.

the year. On fulfilling the first objective listed in the Totai energy sales for 1974 amounted to 7.1 billion KWii, Company's official policy statement-that is, " furnish an increase of 27 million KWII; however, energy sales to dependable service"-we were 100% successful. MP&L met ultimate customers only reached 5.7 billion KWil, a decrease every request for electric senice from the more than 275,000 of 1.7% as compared with 1973.

customers it is privileged to serve.

It should be emphasized that the two big "F's"in electric utility operations, fuel and financing, remained paramount, Expenses Climb and will obviously continue as major problems for several Inflation, construction of new facilities and increased fuel ye2rs, ney are challenges which must be solvedif our society costs helped boest total expenses for the year. They were up is to advance and our system of free enterprise is to survive. 47% over 1973.

The expense dollar, by percentages, was divided as follows:

f ael for power generation, 447c; taxes,107c; payroll and Operating Revenues & Expenses employee benefits,107c; material and supplies, rents, etc.,97c; While operating revenues reached an all-time high, Power purchased from other utilities,187c; and depreciation of

$178,441,000, so did operating expenses, $150,236,000. He plant and facilides,91 higher operating expenses largely offset higher revenues, with fuel and purchased power alone for the year showing a 100%

increase, $92,973,170, as compared with $10 416,809 the H"""'I' T year before. Operating revenues also included approximately New capital necessary to carry out the construction

$10,000,000 collected from the rate increase put into effect program and provide other facilities in 1974 was provided as on February 17, 1974. The rate increase was sulsequently foll0WS:

denied by the Mississippi Public Senice Commission, but In April, 435,000 shares of common stock were sold to remains in effect subject to refund, with the courts to Middle South Utilities for $10,005,000.

determine the outcome of the case. Fuel oil purchases for the In July, Washington County sold $9,400,000 of pollution year were up, due to the unavailability of natural gas. Fuel oil control bonds to finance environmental protection facilites consumed amounted to 4,754,214 barrels, compared with being installed at the Gerald Andrus Steam Electric Station, 3,641,914 in 1973. and in October, Warren County sold $8,575,000 of pollution On October 9, the Company filed for rate increases to the control bonds to finance environmental protection facilities in four municipalities and seven rural electric power associations connection with the conversion of the Baxter Wilson Steam which MP&L serves at wholesale. These rates became effective Electric Station to burn fuel oil. The principal and interest on December 7, and are being collected subject to refund, these bonds are being paid by MP&L under terms of pending hearing and subsequent decision of the Federal Power installment sales agreements between the respective counties Commission. The increase to municipalities amounted to and the Company.

approximately 27% and to cooperatives approximately 237c. 'Ihe short term debt issued by the Company decreased from Despite the problems in the fuel and financial return areas, $15,100,000 at the beginning of 1974 to $3,700,000 at year's the Company's net income for the year, due principally to the end. This was the result of new financing and the sale of the retail rate increase, was up $3.1 million over 1973. This Grand Gulf Nuclear Station to the new Middle South Utilities, increase in net return was essential to keep the Company in a lue., subsidiary, Middle South Energy, Inc., and the sale of sound financial position. Increaseo net income will be certain fuel unloading, storage, and handling facilities to necessary to improve coverage of iverest and preferred System Fuels,Inc.

dividend requirements at a level sufficient to maintain the On September 1st, the Company retired $12,000,000 of investment grade of present capital and to insure financing of First Mortgage Bonds of 31/8% series, which matured.

facilities and construction required to meet customers' service Total construedon expenditures for 1974 amounted to needs. $79,738,000. After reflecting the sale of facilities to Middle Customers numbered 275,679 at year's end, or 7,803 over South Energy, Inc., and System Fuels, Inc., and minor the year before. But for the first time since 1951, the average adjustments, the net construction expenditures amounted to kilowatt. hour usage by residential customers declined. These S41,171,000.

customers used an average of 9,717 KWil in 1974, compared with 10,615 the year before. The decrease was due in part to Grand Gulf and Gerald Andrus the con tinuous ' educational campaign encouraging Two maior milestones that will help assure dependable 3

electric service to customers in the future occurred during the bank, and an MP&L director since 1969, was named to the year. One was the granting of a construction permit for the advisory board.

2,500,000 kilowatt Grand Gulf Nuclear ';tation near Port Twenty.four c. magerial changes throughout the Company Gibson, by the Atomic Energy Commission on September 4, were made due to retirements, promotions and deaths.

1974. The $1.2 billion facility will be financed and owned by Our Company " family" now consists of 1,401 employees, Middle South Fnergy, Inc., the Middle South generating with the average tenure of service being 14 years. Without the subsidiary, but wih be constructed, operated and maintained loyal and dedicated service of these fellow workers, we would by MP&L. A Ilmited work authorization was granted on May not have met the challenges of the past year. They assisted 3, and site preparation started then. At year's end. site "beyond the call of duty" in patiently explaining such preparation was 75% complete. complex and hard to understand topics as " fuel cost Another milestone reached was corapletion of the 750,000 adjustment" and "high bills", as well as carrying out assigned kilowatt Gerald Andrus Steam Electric Station at Greenville in du ties.

December. Costing some $107 million, the plant is the fifth in With the continued sup, art of our employees, our the Company system and the first built to burn fuel oil on a customers, and our investors, we are confident future permanent basis. challenges will be overcome.

Company leadershi t.

On May 22, Robert E. Kennington, H, president and chief '

executive officer of the Grenada llanking System was named to the board of directors. lie is one of the state's leading h~tistor4% f l business and civic leaders. In January,1975, J. IIerman Ilines, chairman of the board of the Deposit Guaranty Corporation R. Ilaxter Wilson Donald C. Lutken I and the Deposit Guaranty National Bank, was named to the Chairman President and MP&L board, and Russ M. Johnson, retired offical of the same Chief Executive Energy $ ales t Billions or Kilowatt -houre kM 11 Per Residential Customer Construction Expenditurse O houwnds of Kilowatt-hourO t \fillions of Dollare D

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l 1974 Financial Review Summary of Significant Accounting Policies A. SYSTEM OF ACCOUNTS Company is to fund pension costs accrued.

The accounts of the Company are maintained in ne Company is studying the Employee Retirement accordance with the system of accounts prescribed by Income Security Act of 1974 and preliminary studies the Federal Power Commission. indicate it will have no significant effect on the pcnsion B. REVENUES The Company records revenues as billed to its E. INCOME TAXES customers on a cycle billing basis, which revenues are The Company joins its parent in filing a consolidated adjusted for the difference between estimated fuel costs Federal income tax return and income taxes are used in billings and actual fuel costs incurred. Such allocated to the Company in proportion to its differential is subsequently billed or credited to contributions to the consolidated tax liability.

customers. Revenue is not accrued for energy delivered Deferred income taxes are provided for differences but not billed at the end of the fiscal period. between book and taxable income to the extent C. UTILITY PLANT AND DEPRECIATION permitted by the regulatory bodies for rate-making purposes.

Prircipally all of the utility plant is subject h the Investment tax credits utilized are deferred and tiens of the First Mortgage Bond indentures.

amortized over the average useful life of the related Utility plant is stated at original o t. He cost of property.

additions to utility plant include contracted work, direct labor and materials, allocatie overheads, and an F. ALLOWANCE FOR FUNDS USED DURING allowance for the composite cost of funds used during CONSTRUCTION construction. The costs of units of property retired, In accordance with the regulatcry system of accounts, replaced, or renewed, are removed from utility plant and the Company capitalizes an allowance for funds used such costs plus removal costs, less salvage are charged to during construction representing the net cost of funds accumulated deprecia' ion. Maintenance and repairs of (interest on borrowed funds and a reasonable rate on property and replacement and renewal of items other funds) used to finance construction, with a determined to be less than units of property are cha:ged corresponding credit to nonoperating income. This to operating expenses. practice recognizes these amounts as an appropriate cost Depreciation is computed on the straight line basis at of utility plant which, in accordance with established rates based on the estimated service lives of the various regulatory practices, are recovered through utility classes of property. Depreciation provided in 1974 and charges to customers. A composite rate of 7-1/27c per in 1973 amounted to approximately 3.07c on average annum was used in 1974 and 1973 in calculating the depreciable property. allowance for funds used during construction.

D. PENSION PLAN G. RESERVES The Com pa ny has a pension plan covering It is the policy of the Company to provide reserves for substantially all of its employees. Pension costs in 1974 uninsured property risks and for claims for injuries and and 1973 amounted to $1,209,000 and $977,000, damages through charges to operating expense on an respectively, including amortization of unfunded prior accrual basis. Rese reserves are established on the basis service costs over a period of ten yeen. The policy of the of historicalloss experience of the Company.

73

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I -Accountants' Opinion- # '

iw MISSISSIPPI POWE R & LIGHT COMPANY '2

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, We have examined the balance sheet of Mississippi Power & Light Companyy of December 31,1974 j and 1973 and the related statements of income, retained earnings, and source of funds for utility plant -

additions for the years then ended. Our examination was made in accordance with genirally accepted _

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[ auditing standards, and accordingly included such tests of the accounting recordJ and such other auditing . j s

procedures as we considered necessary i_n the circumstances. .. . f . .. . . . .

y a As discussed in Note 6 to the' financial statements, the Company has placed in effect, durir.g 1974, rate - ,

increases which are subject to refund, with interest. .

W . . _ .

O In our opinion, subject, as to 1974, to th'e final settlement of the rate matters referred to above, the above mentioned financial statements present fairly the financial position of the Company at December 31' , .,

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1974 and 1973 and the results of its operations and the source of funds for utility plant additions for the :

years then ended,in conformity with' generally accepted accounting pnnciples consistently applied.'-

j 1 New Orleans, I ou'slana February '14,1975:

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Mississippi Power & Light Company l

Balance Sheet i

December 31,1974 and 1973 1974 1973 ASSETS in Thousands UTILITY PLANT: c, 0 $ 5%,409 $ 431,743 Electric plant ... . ...... .... . . . . . .. ..

121,908 Construction work in progress .. .. .. . . .. - ' l16,8 N Electric plant acquisition adjustments . ... . . ... >3.2Bf 3.067 W $96,6703 556,718 Total . . . .. . ..... .. .. ..

112.930 Less accumulated depreciation . . .... ..

. . . . . f@l23.631]

Utility plant-net . . .. . .. . . . W473M 443.788 OTHER PROPERTY AND INVESTN1ENTS-At cost:  % . a, 5,039 investment in associated company . . . . ..

?9,Mel

'L23Si 220 Other .. .... . .. . ..... . .. .

Total . . .. . .. . . . .. .. . . ...

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5.259 L. ..

CURRENT ASSETS: 0 ...T 2,537 Cash (Note 2) .. . . . . .. . .. . .. .. .. .. m* 12,418,

'5778] 802 Special deposits . . . . . . . .. . ... . ..

Accounts receivable: ,

j Customer and other-less allowance ,9 R* .~ll,480? 9,523 for doubtful accounts of $154,000 .. . . .. ..

Associated companies .. .. . . .. . , 'lSli l14 hiaterials and supplies-at average cost:

,'a . . ,

yZ Fuel . .. .. . . .. .. . . .. . . . .f. #4,667 1.503 M a ?6,3631 4,512 Other .. . . .. ... ..

.E;' 1250! 295 Prepayments .. . . . .... .. . .

852 Other .. .

.. .h ' 2,208j 628,2384 '0,138 Total .. . . . . .

DEFERRED DEHITS: . .{b 11,5231 .M Advances for fuel oil purchases . .F -

Advances for gas purchases . . . .

. .% 71,344I 1,437 Accumulated deferred income taxes . . . . _

't,205) -

Unamortized debt expense . . ..

. -[ ;1,177.] 574 1,440 Other . . . . .... . .F ' "I,139.;

Total . .. . . . . . . . .b M6,388) 3,451 p - . ,

t TOTAL . . . . .. .

4f - 5'517,642) e 5 472,636 kwaul See Notes to Financial Statements.

G j 1

l LI ABILITIES 1974 1973 CAPITALIZATION: In Thousands Proprietary capital:

Preferred stock and premium (Page 9) . . . .. $ 38,077 Common stock, no par value (stated value

$23 per share) authorized 5.000,000 shares; outstanding 4.540.000 shares in 1974 and 4,105.000 shares in 1973 ... .... . .. . . .. 94.415 Paid-in surplus ..... .. .. .. ..... . . . 5 Retained earnings (Note 5) . .. .... . .. .. . . ... 30.815 Total proprietary capital . .. .. . .. 163,312 Long-term debt (Page 9) . .. .. . .... 230.753 Total . .. ... .. .. . . . . . . 394,065 e

CURRENT LIABILITIES: [u Notes payable--commercial paper (Note 2)

Accounts payable:

.. .. . y 15,100 h

Associated companies . .. ... . . ... .. . .. ff 3.315 Other . . . . .

Customer deposits fi 3.664 4,152 L.

Taxes accrued . . . ...... . .. . . 4 10,584 Interest accrued *

$ 5,529 Dividends declared . .. . . . . . .

596 Other .. . . . . . .. 830 Total .. . . . . . . .

T 6 43,770 DEFERRED CREDITS: 6 h Accumulated deferred income taxes . . .. . O$. I 25.276 Accumulated deferred investment tax credits . . .

[$!A t 6.759 Other . .. . .. . . . .

.k 17,346 a

Total . . . . . ..h $51,2691 46.857 e -

A DEDUCT: b ~ /j Dividends-cash: p: e . . ff] 2,356 Preferred stock-at prescribed rate of each series .p W 2,384t:{

Common stock * . . .[ ' 12,451 j 13.686 Total . . .h -14,792 j 16.042 RETAINED EARNINGS, DECEMBER 31 (Note 5) . $ 0 36,477 9 5 30.815

• 1973 includes a special dividend of $3,105,tWM which v as concurrently reinvested in the Company's common *,tock.

L__d See Notes to Financial Statements.

( _

Mississippt Power & Light Company Schedule of Preferred Stock and Long-Term Debt December 31,1974 and 1973 Current Shares Authorized Shares Outstanding Call Price 1974 1973 1974 1973 Per Share PREFERRED STOCK Cumulative, $100 Par Value r~ v m '1 m wm 4.36% Series .. . ... 9 60.000 ] 60.000 D;59,9203 59,920 5 103.86 4.567e Series . . .... . .. 44,476 1 44,476 T 43,888 4 43,888 107.00 4.92Fe Series . . .. . . [ 100,000 l 100,000 I ' .100,000100,000 l 104.38 9.167c Series . . . ... .. . p-l 75,000 { 75,000 . ~ 75,000 j 75,000 110.93 7.447c Series ... . . . . . . . . . !L 100,000 ; 100,000 [i-'100,000 4 100,000 108.39 Other Series .. . . .. ..! /75,000 1 75.000[

3 Total . . .. . ... . I 454,476 j 454,476 f 378,808 j 378,808 w.,as t, . >

r.  : In Thousands Stated at S100 a Share . ... . . ... . . . '$I37,8813 5 37,881 Premium on Pieferred 5tock . . . . .. ..... .[ ' 1% ! 196 Total . . ... ... . . . . ... . ... . . . [$: 38,077j $ 38,077 -

v, q LONG-TERNI DEBT . l?

First Stortgage Bonds: b j 3%7c Series due 1974 . . . . . . . .. . . . . . . $; -j $ 12,000 2%7c Series due 1977 . . ... . . ..

x 8,498j 8,498 3%9c Series due 1979 ..... .. ... , M7,500 j 7,500 2%7c Series due li80 ... . . ....... . .E- _ ~ 7,5001 7,500 3%7c Series due 1983 .. ... .

12,000

. ,;[ 15,00012,000 j 4%7c Series due 1988 . . . .. . .. . 3 15,000 4%% Series due 1995 . .. . ..}3 ;20,000 i 20,000 5%7c Series due 1996 t: 25 25,000 6%cA Series due 19% . .

. I i ,000 10,000 ?i 10,000 9%7c Series due 1999 .. . .. .. . F 120,0001 20,000 9%7c Series duc 2000 .. .. . . [ 117,500 j 17,500 7M7c Series due 2002 ...

. is 15,000 ; 15,000 7M7c Series due 2003 .. ... . .

... . I ,30,0001 -

30,000 849c Series due 2003 .. .. . . .. ..

. h - 20,0003 20,000 9%7c Series due 2004 . .. .. .

.[ 25,000 j -

219,998 l :232,998j!

Prir cipal Amount of Capitalized Lease- l 87c, due serially through 1993 , .. .; - 9,292 L 9,500 Pollution Control Bonds; Ii 'j 7h7c due 2004 (net of $113,000 cash held by Trustee) . 1: 9,287 j -

8%7c due 2004 (net of $3,504,000 cash held by Trustee) . [ 25,071 ] -

1,434 u 1,255 Unamortized Premium on Debt . . ...

Total ( Annual sinking fund requirements, - r l which may be met by certification of b d proper., additions at the rate of ,. l 1677c of such requirements, amount to i 52.505,000 for 1975.) .. . $ 258,082 f,5 230.753 L - ud See Notes to Financial Statements.

9

Mississippi Pcwcr A Light Company Statement of Source of Funds For Utility Plant Additions For the years ended December 31,1974 and l':F3 1974 1973 In Thousands SOURCE OF FUNDS: h From operations: 4 Net income .. . . ...... .... $120,454 ,_.h,,, $ 17,346 Less--dividends Jeclare3:

.p:fo Pre ferred stock . . . . . . . . . . . . . . . . . . . . . . . . . .. .

.h ~;12,408 2,384 4 2,356 Common stock * .. . .. .... . ... .

...[  ? 13.686 Total ........ ..

. ...... .. . .. . . . . . . . f : 14,793 ]j16,042 Remainde.- . .. ... .. . ............ ....... . . 5,4621 1.304 Depreciation ... ...... .. ... . . ... ...... ' ? l2,996 7 12,286 Deferred income taxes and investment tax credit adjustments-net . 17,6*4 Q 2,496 Allowance for funds used during construction . .. ... . . . . pC(8,883)T (5.453)

Total .. . ... . . . . ........ .. . . .e[ " l6.835 S 10,633 From sale of securities:

Common stock * ... .. ........ ... . . . . . . .

f *g

. . . g i10.005 j 23,115 Preferred stock . . ......... ... . . ... .... .... . .;7 10,000 First mortgage bonds (net after retirement of $12,000,000 in 1974).50,000 .f@ ,:1 Pollution control bonds ... .... .... . .. .. . .. . . . . . @ . ~ l4,358fg -

Principal amount of capitalized financing lease 9,500 Short-term notes (net) .. . . ..... ... .. ... .. . . . . . %(A[(2lE).)

.fc E II, W )jg 1.750 Total .... .. .. . ... .. . ... .. .

. @> 25,755] 94.365 From changes in working capital 4 7 _.

5 (2,242)

(excluding short-term debt) (a) . ...

Less funds used for:

f*'  :(2,924)]f Investment in associated company . .. .. . .. (3,429)

.Y(4,725)q@

Advances for fuel oil purchases ...... ... . .. . .n I(i'323) .

Other-net .. ... . . .... . . . . 6 '(1,130) i (1,451)

Total . . . . ... . . . . k (10,302)1 (7.122)

TOTAL . . ..

.f $ < 32,288 ] $ 97.876 U

a UTILITY PLANT ADDITIONS:

Construction expenditures (exclusive of allowance for funds h_

' dl}j used during construction) .. ... .. . . . . f $ 170,855 d S 77 656 Less sale of fuel handling and storage ' ~U$

facilities to System Fuels, Inc. . . .p

[f ' L(9,000)d

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il -

Less transfer of Grand Gulf Nuclear Station facilities to Middle South Energy. Inc. .I f(29,988)ti -

Acquisition of Capital Electric Power Association properties .% L421d 10.720 Capitalized financing lease . . . .. . ..F -

~ 9.500 TOTAL . .

. . . l' $?32,2884

97,876-r 3 V - ;G (a) (Increase) decrease in working capital (excluding short-term debt): [..  : .d Cash . ... .E$4 ; i19 %- $ (497)

Accounts receivable .f' 1(1.924)]j (2.417)

.\taterials and supplies: F e , : -a Fuel O _(3,164) 591

. [ f (1,851) j]

Other .... (1.547)

Accounts pa able: E: _e M Associate companies .}gN- 48 TI (712)

Other . .FF x 1,3481 (702)

Accrued taxes . % N'(2.535) j 186 Accrued interest .M ~. 834 9 1,799 Other-net .

4,201$j l.057 TOTAL . k$ i(j,924) 5 (2.242) eu~ aa --

'1973 includes a special dividend of $LIOS.00n which was concurrently reinvested in the CompanyN common stock.

See Notes to Financial Statements.

10

Notes to Financial Statements  ;

t i l amounts of bank loans outstanding. De amount of unused j j 1. . INCOME TAXES Income taxes (including amounts attributable to Other income . lines of credit as of December 31,1974, was $12,000,000.

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end Deductions - Miscellaneous, $468,000 in 1974 and he notes payable to banks and holders of commercial paper i I

$313,000 in 1973) consists of the following: are unsecured short term loans wah various maturity dates not l 73 j

3'74 in excess of nine months. The average interest rate on current income tax expense: commercial paper outstanding at December 31,1974 is 10.1%.

Federal . . . . . . . . . . . . . . . . . . . . . . . . $ ( 2.2 51.000) $ 6,240,000 The interest rates on bank loans are the prime rates in effect siste ........................ 283,000 615,000 from time to time of the lending banks. During the twelve Totas........................ (1.968 0001 6 855 000 months ended December 31, 1974, the maximum aggregate Deferred income tax expense - nec amount of short term borrowinjp outstanding at any one time Fe der al . . . . . . . . . . . . . . . . . . . . . . . . 2.230 000 2,069 000 was $37,34 8,000. The average amount.of short term state 83,000 168,000

........................ borrowings outstanding during the twelve months ended To t al . . . . . . . . . . . . . . . . . . . . . . . . 2.413,000 2,237 000 December 31,1974 (based on the average of the sum of daily

' investment tax credit adjustments - net 4,647,000 - 2 s9,0c0 outstanding principal balances) approximated $1,286,000 of d W e .N d Nme pag. h total . . . . . . . . . . . . . . . . . . . . . . . $ 5 .09 2,000 59.351,00o approximate average interest rate (determined by dividing the De provision : for current income tax expense reflects net actual interest expense on short-term borrowings during the reductions resulting from: year by the average short-term borrowings) was 10.9% for (a) the utilization, for income tax purposes, of libera)ized banks loans and 9.7% for commercial paper. 'i depreciation (including the class life method provided by 3. LEASES

'the Internal Revenue Code) and accelerated amortization. e total rentals charged to operating expenses for 1974 and ,

The net provision for deferred income tax e* pense 1973 were $888,000 and $807,&J0,respectively.

+- principally represents an amount equhalent to the tax on I the excess of such liberalized tax depreciation and At December 31,1974 there were non-cancellable leases with amortization over the straight-line tax depreciation and minimum rental commitments as follows:

! amortization, less (beginning in 1974) an amount 1975 $1222,000 i equivalent to the taxes associated with certain revenues 1976 1 204 000 recognized for income tax purposes in advance of their 1977 1 185,000

~ being recognized for financial reporting purposes. Such 1978 1'143,000 i 3- - revenues relate solely to meters read before the close of an 1979

[, ' accounting period for which billings are made to cus*omers 1980 84 1[015,000 2 056,000 4 in the next succeeding accounting period, 1985 89 768 000

?

(h) the exclusion from taxable ince n! the allowance for 1990 94 641,000 funds used during construttion, Re:nainder 713.000 (c) the effects of currently .,, certain overhead Total $9.947.000 costs, which for book purposes ar%2pitalized as part of the ,

3 cost of utility plant, The total minimum rental commitments is applicable to

! (d) the deduction, currently, of the cost of removal of transmission and distribution properties (50%), transportation

- utility plant retired which for book pumoses is charged t fleet (33%), and other (17%).

accumulated depreciation, and (e) the utilization of investment tax credits which for book The aggregate of noncapitalized financing leases was immaterial.

purposes are deferred.

4. COMMITMENTS ANDCONTINGENCIES The effective income tax rates for 1974 and 1973 were 20%

rnd 35%, respectively. The Company's construction program contemplates i

he Federal income tax returns for the years 1967 and 1908 expenditures of approximately $54,000,000 in 1975.

have been examined and assessments have been proposed by The Company has a 19% interest in System Fuels, Inc. (SFI), a .

- the Internal Revenue Service which are under protest; also, the jointly-owned subsidiary of four of the principal operating years 1969-1974 remain open. Management is of the opinion subsidiaries of Middle South Utilities, Inc. (SFI stockholders).

that adequate provisions have been made for any taxes that SFI operates on a non-profit basis in planning and may ultimately be assessed, imp!ementing programs for the procurement of fuel supplies l 2. - LINES OF CREDIT AND SHORT. TERM BORROWINGS for the generating units of these operating companies;its costs

're rec vered through charges for fuel delivered.

! ' he Company has obtained regulatory authorization to make j short term borrowings of $40,000,000 through bank loans he Company has made loans to SFI to further its fuel supply l- (not to exceed $12,000,000) and the sale of commercial business under certain loan agreements which provide for SFI

j. paper. Accounts are maintained with the lending banks and to borrow from its stocknolders up to $30,000,000 through

~a lthough immaterial balances in some of these accounts may December 31, 1973 and up to an additional $90,000,000 i be deemed to be compensating balances, most of these through December 31,1975. As of December 31,1974 the accounts are .worldng accounts and fluctuations in their Company had loaned $9,761,000 to SFl pursuant to theloan

- balances 'do not reflect or depend upon fluctuations in the agreements, and the Company's share of the unused loan e

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commitment is $11,4 75,000. Loans mature in ten years from 7. FUEL SUPPLY

'he date of borrowing under the initial agreement and in 25 in recent years, the Company has experienced severe years from the date of borrowing under the second agreement. curtailments of conu& d for natural gas supplies pursuant to in connection with certain bank borrowings by SFI, totaling Federal Power Commission procean.s., ,,hneby priorities have

$12,812.000 at December 31, 1974, the Company and the been established for end use of natural gas, with boiler fuel other SFI stockholders have covenanted and agreed severally being given a low priority. As a result, the Company is in accordance with their respective shares of ownersl.*p of modifying extensively its major generating units in order to SFI's common stock, that they will take any and all action use fuel oil as a primary source of fuel. The Company is necessary to keep SFI in a sound financial condition and to actively seeking sources of fuel for proent and future place SFI in a position to discharge, and to cause SFI to =enerating units %ough SFI (Note 4), from spot purchases discharge its obligations to the lending banks. and short.te;m contracts, and from intrastate natural gas D aring 1974 SFI entered into a contact with ECOL Ltd. SupPliers.

(E(,OL), a non. affiliated company, to purchase over a 8. RECLASSIFICATIONS twenty-year period up to 50,000 barrels per day of No. 6 fuel In accordance w..h orders of the Federal Power Commission ,

oil to be produced in a refinery to be constructed by ECOL in which beame effecthe January 1,1974, the balance in l Louisiana. Deliveries of the refined oil to SFI are scheduled to contributions in aid of construction as of December 31,1973, I commence in 1977. The construction of the refinery is to be was credited to utility plant and to accumulated depreciation financed in part by advance payments for oil by SFI as applicable. Similarly, the balance of unamortized premium aggregating M7,500,000. Rese funds will be supplied to SFI on long-term debt was reclassified to long-term debt. He 1973

, by the Company and the other SF! stockholders as amounts relating to these items and certain other items have prepayments for future deliveries of oil. He Company's share been reclassified to conform to the current classification.

of the prepayments is $12,825,000 of which $1,478,000 had l

been advanced through December 31,1971. He prepayments 9. NEW GENERATING UNIT '

plus interest thereon are to be repaid through fuel oil deliveries through the tenth contract year. The 750,000 kilowatt Gerald Andrus Steam Electric Station at l

reenville was e mpleted in December,1971. Since this unit is '

5. RETAINED EARNINGS in commercial operation, capitalization of allowance for i The indenture provisions relating to the Company's longderm funds used during construction will cease with respect to this I debt restric; the amount of retained earnings available for cash unit and depreciation will commence as operating expenses.

dividends on commcn stock. As of December 31, 1974 During the year 1974, such allowance with respect to this unit

$ 18,712,000 of retained earnings are free from such a m ou n t ed to $6,517,000. The reduction in allowance for restrictions. funds and the increased operating expenses for depreciation

6. RATE INCREASES are expe(ted to be offset by an increase in operating income 1 Operating revenues for the twelve months ended December 31, 1974 include approximately $10,082,000 from increases in electric rate schedules piace.l into effect during 1974 subject 10. _. 0UNTLNG POLICIES to refund with interest. Reference should be rnade to page 3 ne summary of significant accounting policies on page S is an for information concerning rate increases applied for 111974. integral part of these notes to finamial statements.

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De 750,000 kilouett Gerald Anarus Steam Electric Station, locatedjust south of Greenville, was completed during the year. It '

is the fifth generating station in the Company system.

l l l 1

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Directors R. Baxter Wilson Jackson, Chairman of the Board Donald C.' LutLen Jackson, President and Chief E.xecutive officer of the Company G. Lawrence Adams Natchez, Attorney-at Ixw

Robert P. Cooke Hernando, chairman of the Boardand President, The Hernando Bank l Norman B. Gillis, Jr. Siccomb. Attorney-at Ixw I Robert M. Iicatin Jackson, Chairman of the Board and Chief Executive Officer, First National Bank J. Ilerman Ilines* Jackson, Chairman of the Board and Chief Executive Officer, Deposit Guaranty National Bank l lluss M. Johnson *

• Jackson, Retired Chairman, Deposit Guaranty National Banh

' J. H. Johnston, Jr., M.D. Jackson Robert E. Kennington, II Chairman and Chief Executive, Grenada Banking System Floyd W. Lewis New Orleans, President, Sliddle South Utilities, Inc.

LeRoy P. Percy Greenville, Planter

' Elected to the Board in January,1975

• • Retired from the Board and named to the Advisory Board in January,1975 3

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! 13

Mississippi Power & Light Company Record of Progress 1964 -1974 re vs hf1974"',j 1973 1972 ELEC'IRIC OPERATING REVENUES (000s 0%IITIED) .

. .. a Residential . . . . . . .. . .. . .. $ 47,473 $ 38.096

[( 3 . g7,g30 Commercial . . .. .. . . .. $$D ' 31.294 25,701 Industrial . . . . . . . . .... .. . . .. .

[ 43,743 J 43, 26,852 22,399 Gosernment & hlunicipal .. . .. . 6,868 3,975 3.193 Cooperatives & hlunicipalities . . 33,363 ]1 9.915 9,884 Total From Energy Sales (kliss. Area) . . . . f ' ' 373 St?;j 119,509 99,273 Sales to Other Public Utilities . . ..

[ 'qj 6,684 15.223 Total From Energy Sales . . . . . [ -183,498 7 126,193 114,496 hiiscellaneous Revenues ... .... . . . t -9741 449 374 Deferred Fuel Adjustment Revenues * . .. . . . ... I~ (SetW -

Total Electric Operating Revenues . . . . t 373,44t; b.$ -

$ 126,642 5 114,870 El ECTRIC ENERGY SALES (SIE%ill Residential . . . ..

• 5/ 3,360,90s 1 2,356,073 2,032,670 Commercial . . . . .

p 3,336,873 3 1,380,035 1,113,432 Industrial ......., ... . [ 3,733,gg 4 1,787,741 1,677,137 Gosemment & hlunicipal . . . 5 373,333 i 262.645 238,624 Cooperalises & hiunicipalities . . .. (.- 93g d 948,351 1.089.349 Total Energy Sales thliw. Area) 4,437,439 ? 6.774,845 6.251,212 Sales to Other Public Utilities . .

- 437,897 q 312,454 I,269,927 i

Total Electric Energy Sales e 7,314,717 7,087,299 ,521,139 FII CTRIC CUSTONIERS (END OF PERIOD)

Residential . 229,761 206,227 Commercial l' 337,005 )

30,629 33,g74 33,309 3,168

~

Industrial ....... . . 4 3,ggy 3,233 Government & hlunicipal... . . g,733 3,733 1,618 Cooperatives & hianicipalitics t 43- 61 74 Total Customers (hfin. Area) 267,875 241,711 Other PuNic Utilities h

[ 373,gM} 3 I 2 Total Electric Customcrs .

k 378,679 j 267,876 241,713 SYSTE%I INPUT (3IKMID -

Aliwiwippi Area [ 7.349,896 h 7,378,216 6,906,300 Other ,

t : 4,383,473 j 4,160,152 5.081,123 Total Sy*. tem Input .

( 33,403,869 j 11,538,368 11,987,423 PEAK LOAD (%11SS. AREAWKW 1,565,000 I,476,000 0[41,605,000 { i LOAD FACTOR (%IISS. AREAWPER CENT f,$ - - 49 4 54 53 NET Pl. ANT CAPAltll.ITY-KM ,

Owned . 3,753,000 2,002,000 2,002,000 1 1 cased .- m; _ - i Total .

3,733,g33 4 2,0c2,000 2,002,0'K)

CIRCUIT Sill.ES OF ELECTRIC LINES . . I ~ c 17,461 3 17,146 14,279 1 i TOTAI. ELECTRIC UTILITY PLANT (0005 03flTTED)

0. ]3 1 Production .. . . . .. .. [$ 1396,836] $ 175.217 $ 166,537 l Transmiwion . . . L 305,636 3 01,533 91,068 1 Distnbution . . . . . ,

l.. :;198,156 1 148,492 130,191 i General & Other 14,355 13,598 l 14 15_3 i 430,599 Total Utility Plant Completed .. 401,394 l Plant field for Future Use .

b, .S78,470 > lJi9 i $ I,144 1.146  !

Construction M ork in Progress ...... . . , F / 121,908 50,070 l Electric Plant uquisition Adjustments f ' 16,680 3,293 3 l 3.067 - l Total Utility Plant E S - 996,679 ) $ 556,718 5 452,610 a.ma

• See Item 11 to Summary of Significant Accounting Policies.

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1971 1970 1969 1968 1967 1966 1965 1964

$ 32,499 $ 30,097 $ 27,353 $ 24,528 $ 21,573 $ 20,389 $ 19,006 $ 18,051

> 22,126 20,290 18,507 16,797 15.126 13,939 13.348 12,702 19,*39 17,535 17,076 15,979 15,037 14,228 13,661 13,127 2,842 2,707 2,437 2,194 2,003 1,876 1,476 1,344 7,914 7,027 6,299 5,592 4,796 4,446 4.114 3,760 C4,M20 77,656 71,672 65,090 58,535 54,878 51,605 48,984 9,423 4.911 5,090 4,452 4,929 426_ 229 I,647 94,243 82,567 76,762 69,542 63,464 f5,304 51,834 50,631 393 364 342 309 279 276 266 239

$ 94,636 $ 82,931 5 77.104 $ 69,851 $ 63,743 $ 55,580 $ 52,100 $ 50,870 I,802,675 I,674,415 1,470,430 1,274,923 1,069,029 991,362 890.865 790,567 l.091,553 1,007,557 907,9:2 823,035 738,521 677,002 659,009 595,765 1,624,499 I,464,602 1,410,912 I,351,195 1,345,938 1,267,425 1,1*8,664 1,082,012 219,463 210,951 179,178 157,279 142,904 136,781 98,118 96,592 966,019 959,649 860,842 765,837 659,025 601.110 547,959 496,527 5,704,203 5,387,174 4,829,2/4 4,372,269 3,955,417 3,673,680 3,384,615 3,061,463

- 1,28P,153 984,933 1.143,398 870,335 832,157_ 108,742 58,217 330,429 6,926,358 6,302.107 5,977,672 5,242,604 4,787,574 3,782,422 3,442,832 3,391,892 198,435 191,529 187,670 183,538 180,415 IM,783 173,570 169,857 29,453 28,419 28,109 27,532 26,941 26,149 25,568 25,006 3.209 3,140 3,022 2,990 2.892 2.816 2,757 2,712 1,550 1,514 1,447 1,393 1,347 I,318 1,228 1,226 75 71 70 67 64 63 57 57 232,730 224,673 220,318 215,520 211,659 207,129 203,180 198,858 3 4 4 4 2 2 2 2

-232,733 224,677 220,322 215,524 211,661 207,131 203,182 198,860 I 6,246,040 5.875,777 5,326,174 4,783,640 4.337,494 4,062,033 3,730.378 3,368,266 4,700,057 4,429,887 4,937,040 3,677,783 2,318.574 334,842 58,217 330.429 10,94G,C97 10,305,664 10,283,214 8,461,423 6,656,068 4,396,875 3,788,575 3,698,695 1,341000 1,238,000 1,I76,000 1,005,000 924,000 887,000 788,000 718,000 53 54 41 53 54 52 54 53 2,002,000 1,231,000 1,231,000 1,231,000 1,220,00r 1,220,000 683,000 683,000

- - - - - - 3,000 3,000 a 2,002,000 1,231,000 1,231,000 1,231,000 1,220,000 1,220,000 686,000 686,000 14,061 13,892 13,783 13,588 13,418 13,103 12,828 12,716

' $ 166,364 $ 106,319 $ 106,434 $ 106,582 $ 106,030 $ 105,379 $ 61,444 $ 61,599 85,074 79,225 79,218 7C,988 71,350 56,415 33,684 32,659 134,523 119,I98 113,428 108,049 102,827 97,968 91,664 86,447 13,372 13,283 12,401 11,765 8,429 7,689 7,331 7,705 389,333 318,125 311,481 303,384 288,636 267.451 194,123 188,410 594 564 564 511 396 394 152 -

12.396 53,257 16,445 3,524 6,844 13,612 34,765 5,395

$ 402,323 b71,946 $ 328,490 $ 307,419 $ 295,870 $ 281,457 5 229,040 $ 193,805 15

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'J A PAID haddsmeng >Acks0N. Miss Permit No 24 Mississippi Power & Light Company P. G. Box 164J -

Jackson Mississippi 39205 l

toog pasos sm:11113 oIPP3

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