ML20029C603
| ML20029C603 | |
| Person / Time | |
|---|---|
| Site: | Fort Saint Vrain  |
| Issue date: | 12/31/1993 |
| From: | Hock D, Warembourg D PUBLIC SERVICE CO. OF COLORADO |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| P-94033, NUDOCS 9404150093 | |
| Download: ML20029C603 (27) | |
Text
{{#Wiki_filter:--- f t G- eueiicservice' =:::=.- P.0, Box 840 Denver. CO 80201- 0840 16805 WCR 191/2; Platteville, Colorado 80651 April 5,1994 Fort St. Vrain , Unit No.1 l P-94033 l U. S. Nuclear Regulatory Commission l ATrN: Document Control Desk Washington, D. C. 20555 j l 1 Docket Nos. 50-267, 72-9
SUBJECT:
Annual Financial Report i Gentlemen: Enclosed are ten (10) copies of the 1993 Annual Report for Public Service Company of Colorado, including the certified financial statements for 1993. This document is submitted for your information and use in accordance with 10 CFR 50.71(b), and with 10 CFR 72.80(b). , If you have any questions regarding this submittal, please contact Mr. M. H. Holmes at (303) 620-1701. Sincerely, 10 Don W.'7YWaren JYea(bourgJwnh Decommissioning Program Director DWW/SWC Enclosures : 1 cc: Regional Administrator, Region IV l
} l0 9 N4150093 931231 l s; - PDR ADOCK 05000267 I PDR
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l 1 n - c - J l i s Contents Finanaal and Operation Highlights . .. .. .. ... . ... . 1 j Chairman's Letter . . . . .. 2 Heating Up . . . .. . . 4 )1 Transforming Mass . . . . , . . 7 Driving Solutions . . . . . . . . 8 l Generating Currents . . . . . . ... . 11 l 1 Operating Statistics , ,. . . .. 14 J Management's Discussion and Analysis . . ., .16 Report of Management . . . . .. . 21 , l Reports of the Audit Committee and
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Independent Public Accountants. . . . . . . 22 ' Consolidated Financial statements . . . . . . .. . . . 23
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Notes to Consolidated Financial Statements . .. . . 28 Shareholder information . . . . , .. .. .. 52 Board of Directors and becutive Ofkers listed on the inside back cover
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'?! Thl f E b) .h L at ma utsk 1993 1992 % Change Financial --- -
$2.16 12.5
$2.43 Famings Per Weighted Average Share -
$2,00 $2.00 Dedends Per Share Return on Average Common 8.5 12.7% i I .7%
Shareholder Equity Common Shareho! der Equity- 3.7 41.7%_ _ _ _ , , ._40.2% _ _ _ _ _% __ of CapftaWaten _(ypaqend) _. .. 7.3
$ I,998,685 $ 1,862.273 Operatcng Revenues (000) $ 1,612.646 6.5
$ 1,717,752 Operat.ng Expenses (000)
$ 157,360_ _ _._ _$ l.36.623 _ 15.2 Net income (000) _ . _ _
12.2
$ 293.515 $ 26L666 Constructon Expend,tures (000)
- $ 265,385 -
Co!arado.Ute Asset Acquisition (000) 4.1 55,010,063 $4.8 l 4.204 Gross Plant lovestment (000)- - . . 6,507. . - - . - 6.568 (0.9) Number of Employees 54,431 56.274 (33) Common Stock Shareholders Common Stock Shares 58.477 34 60,457 Outstand ng (000) _ _ __ Operations . . .
$ L260.769 61 l
$ 1,337,053 Electnc Revernes (000) 2 L815 6.4 l 23,210 Kdowatt. Hour Saks (m lhons) l.015.290 7.9 1,095,722' - .-. . .-.--
Electnc Customers ..
$ 628,324 $ 568.886 10.4 Gas Reenues (000; 244,956 14.9 281,396 Mcf Dehvenes (000) 895,338 f.3 907,375*
Gas Customers l
- Tm eweca fx cwu g cuund w u n co%f esv g 199) u:b me vnp emerteen of a new Ce.tomr bfe'at un sWem YEAIMND STOCK PRICE RETURN ON EQUITY EARNINQ5 AND DIVIDENDS PER SHARE AND DIVIDEND YlELD
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( E Earnings pee share . : f3 Industry' average (1993 Nt.) _
- D Dividends paid per share ; ; O DMdend ylvki
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$1,00 i 43%
$2.50 - $30/10%
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v - - i. 83 89 90 f f. 92 93 $3 49 90 98. 93 93 l 43 89 90 98.91 93 _ 1
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i Heating s Up* m .: 2 s4 1, wi j 4 { ( Few years so clearly close one era and open another as did 1993. We made . progress on our commitment to return to our core businesses by selling some of
%w s the assets of our Fuelco oil and gas exploration and production subsidiary. We timiA New Realit
@pg9 also reached a milestone in decommissioning the Fort St. Vrain nuclear plant. {
A :y k where a major part of the plant's reactor vessel was dismantled and safely shipped away to a low-level waste disposal facility in Richland, Washington. Decommis-sioning continued on-schedule and on-budget. We also submitted a plan to the Colorado Public Utilities Commission to re-power the plant with natural gas. As we put those issues in our past, new ones arose to define our future. i Federal moves deregulated the supply segment of the natural gas business, and the electric business is on the s erge of similarly dramatic change. 1 i i State regulatory action reduced our authorized rate of return on equity from a requested 13% to 11%. We expected the reduction in light of declining ! interest rates and industry trends. We were disappointed, though, that the CPUC declined to establish rates on a requested future test year, which would have brought rates more in line with actual costs. The CPUC did take , a progressive step by showing a willingness to consider a current test year (instead of a historic one) in our next case. , Against this backdrop of trial and opportunity, we acted to bring costs in
' line with revenues. Our employees reduced 1993 operating and mainte-nance expenses by about 5%, some 524 million below budget. They showed that they have the will and wherewithal to continue to keep expenses in line j
with revenues, maintain excellent service and generate the total return shareholders expect. Rigorous cost control will be on!y one aspect of an environment characterized l j by accelerating change. In response to structural changes in the natural gas l industry, we a continuing to concentrate our efforts on opportunities in the gas distribunon business. We have created gas supply and long-term facility strategies to ensure high-quality, low-cost gas service into the ncxt century. Our electric business is ripe for similar dramatic change as market and tech-nological forces portend new ways to meet the demands of an increasingly competitive marketplace. Whi!c the company has always developed an annual plan to meet our future resource needs,1993 marked the adt ent of an electric Integrated Resource Plan, a formal document filed with the CPUC in October. l The plan details how we will continue to meet customers' electricity needs for the next 20 years, and do so with an objective of keeping price increases l less than the rate ofinflation. At the same time, the plan provides for resources that slow the rate of overall system-wide plant emissions, even with growing l i demand for electricity.
' The events of 1993 serve only to foreshadow what will change the face of j our industries and our company.
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l Today, many of our customers have more energy supply options. To Dr l succeed in this new market environment, we are focusing on fully under- WO6# standing the needs of our customers and creating energy services solutions ! to meet those needs. Much of the transformation from a monopoly to a market-driven energy services provider is already occurring In the recent past, we have exited } ,,,;,,, - non-core businesses such as oil and gas exploration and real estate. We . merged our WestGas pipeline company into the parent company to better take advantage of the opportunities inherent in the restructuring of the natural gas industry. The Colorado-Ute Electric Association acquisition continues to meet our expectations. Besides giving us opportunities to reduce costs through synergies ] between the two systems, the Ute acquisition also meant that we obtained j new wholesale markets serving some of the state's fastest-growing areas, including the Vail ski area and Douglas County, south of Denver. Our future success wdl be marked by how well we respond to customer needs. Knowing that acceptable results for shareholders wdt be achieved by , meeting the needs of customers underscores the necessity for us to become a fully market-driven enterprise. For shareholders, that means taking the actions necessary to assure a continuous improvement in the total return on their investment. For employees, it means finding ways to identify and overcome barriers that impede excellent performance. For customers, it means becoming their partners to create energy solutions. This year, for example, it meant finding ways for ski areas to minimize energy costs during early-season snowmaking. and developing innovative energy solutions to help manage the cost of health care in Denver hospitals. By seeing ourselves as our stakeholders see us, and by better understanding the energy and economic needs of our customers, we transform ourselves l from an energy supplier to an energy services partner, creating benefits for customers. employees and shareholders alike, i
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w t t g* , . ;s M u l l Public Service Co. Is well positioned to thrive in the energy services business. While rigorous cost control is a critical element of our success in the near-
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customers' perspective.
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u i 4 Our experience with CFal Steel, L.P., a steelworks located in Pueblo, ! Colorado, and its new parent company, Oregon Steel, exemplifies the way , we plan to meet market needs to retain and grow our customer base. CF&l was in Chapter 11 Bankruptcy, facing closure of its plant. This would be a blow to Colorado, mean the loss of 1,500 jobs and cost us a large and valued 1 customer. By repricing electricity costs to encourage their investment of some 570 miliion for plant efficiency upgrades, energy consumption per ton e of steel will drop from 760 to 570 KWH. or 25%. As the total cost per ton ~ of steel goes down, total prodxtion will rise, thus increasing our revenues. j The flexibility to structure such arrargements results in residential and other l small customers being better protected economically than if the industrial l customers are lost to competition, leave the state or cease operation. i l All the resources are in place to justify optimism about the future. Colorado is the nation's third-fastest-growing state, with a population growth rate in ; 1993 that had not been seen since the 1970s. Population is growing at , three times the national rate. The economy is growing at 2% a year. The l 1994 opening of Denver international Airport (with its estimated 90 MW load) and the approval of the North American Free Trade Agreement offer Colorado the potential to be the Western Hemisphere's pre-eminent trading
- center. Colorado is rich with the resources the company needs, and the company, in turn, has the necessary financial resources to serve present and future energy services markets.
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Q] c p{%d a e'/ Tb% p -4 d in - * - d%9$:g~qf() Ge%)GJ neratmg[QYllurre%ll1bMC&. nan blbi L[C ns esW , %p f a Vi, 'b)yn % M & (W u% 2V O W U S M ks w' As a combination company, we are in two basic industries, each moving at different speeds Our gas business was the first to see the break-up of the traditionalindustry structure. Our electric business- now composed of generation, transmission and distribution- will be next. These may well be different businesses with different customers operating under different . conditions. The closer we get to this "unbundling,' the more opportunity appears. For instance, we have a new information system for gas management- ; / essentially an electronic bulletin board- that gives us data on what customers 1s.! , are using. what time they are using it, and other valuable information This [.[ i:# l raw data is central to defining the real needs of our customers. In this way, . Public Service Co. is an energy information company as well as an energy services company. Our future wdl be shaped by two forces market needs and technology. It is probable that the explosion in technology and services that followed the restructuring of the telephone industry will be replicated in ours. As the structure of the industry evolves, so must our corporate structure. We plan restructunng in 1994 that will position us to compete in the evolving cnergy services industry. Restructuring will be based on a newly defined strategic directioa, it will delve into how we are now organized to serve our customers and how we might best reorganize to more effectively meet customer needs while retaining high-quality, low-cost service. As the dynamics of the industry evolve, so should the dynamics of regulation. Without the regulatory flexibility to allow us to compete with non-utility generators. independent power producers and even self-generation-particularly in the industrial market- more costs will be forced on to smaller customers This will make us less competitive in those markets. We welcome compet: tion because competitjon is what the rnarket wants. We similarly welcome l regulation that recognizes the reality ofincreas;ng market competition. By forging the kinds of partnerships with regulators that we have formed with customers and by increasing the reliance on the talent and energy of our employees we will continue to provide shar eholders with growth in their investment and become the premier energy services provider our every effort is intended to achieve. 11
About Public Service Company of Colorado Public Service Company of Colorado is an investor-owned electric, natural gas and thermal energy utility, which serves approximately 2.7 million people throughout Colorado and the Cheyenne, Wyoming area. Headquartered in Denver, Colorado, the company operates eight steam-efectric plants, six hydroelectric facilities, a downtown Denver thermal energy service and an extensive natural gas system that includes more than 13,900 miles of natural gas distribution mains. The company's consolidated financial statements include the results ofits subsidiary operations: Cheyenne Light, Fuel and Power Company, an electric and natural gas company serving the Cheyenne area: , Fuel Resources Development Co., an oil and natural gas exploration, development and production company with operations throughout the Rocky Mountain Region; i j Natural Fuels Corporation, a compa > is building the infrastructure l for natural gas vehicles and sells comp. _ m m + ural gas as a transportation j fuel; WestGas Interstate, Inc., a natural gas transmission company operating in Colcrado and Wyoming; I WestGas Gathering. Inc., a natural gas gathering and processing company operating in Colorado; WestGas TransColorado, Inc., a subsidiary which holds a one-third interest in a natural gas transmission company which will operate in Colorado, Welton Properties, a company that owns and rnanages real estate for
- utility operations; and
, PS Colorado Credit Corporation and P.S.R. Investments, Inc., two l finance subsidiaries. Percentage of Male, Asian / Female and Minority Native Pacific Total
"* '*"' #"* ^'*" ""#'" " "" "' " " * " * '#
Employees at Year. -- ( "" b"" 'IN 'I "" " " End 1992 and 1993
%,m%
g 4w 4 4 i tsos i 96 44 53 r37 se a74 87a ac9 37: t379 t392 5 is9 3;is 6s6e 6.so7
% c' % 75 5 75 5 24 5 245 08 08 13 13 !33 E35 56 58 2iG 2'4 79 0 78 6 '00 ICC tw u me- se) 66 0 0 -< 3 3 n 46 49 .' 19 8! 8i 71i 6H 792 77s
'i. of %gement De 2 859 138 I4, 04 Q4 !4 r3 58 63 27 25 t02 tOS 818 99.5 IOC r00 tent' ram m 4 2 7 7 4,145 L4 39 : W 46 50 70 7o ttM UM .98 356 L249 ! 3114478 4 42i 5.776 5.732
[ t, c,r %r.tvag.w MD 74 ) 60 259 08 09 13 13 !41 !45 60 62 22 5 22 9 77 5 77 : ICC 100
i ; )?> 13 ii; r,; ? _
-- F.d,'inancial Informat. ion i
i 1 13
OPERATING STATISTICS Pubic Service Company of Colomda and Sub8 danes NATURAL GAS SERVICE STATISTICS 1993 1992 l991 1990 1989 1988 1983 -
~ ~
Bcf Gas Deliveries 28 ti 2450 232.7 2iO 9~ 2012 19'i5 ~ ~l776
% Charge 14.9% 53 43 40 10;3 .. .
, 8} J64)%
Customers (000) 907.4 895 3 , 878 6 865 4 853 I 84I4 744 3 - -
% Ounge( . , . l.3% l .9 1.5 IA IA 1,1 36%
Average Annual Residential Mcf Usage 120.9 109.5 116.8 182 0 112.7 116.3 120 2
% Chpe 10.4% (6.3) .,_3 4
. (0 6) , .
(3 i) 6.2 _(4;0)% Annual Heating Degree Days 6,217 5.359 5.914 5.575 5.810 5.958 6 429
% Chang l 6.0% (9.4) 6I (4 0) 96
_ (2.5) _ _ 52% Average Residential Revenue Per Mcf $3.73 3 76 3 ?4 3 78 381 3 82 $4 6 t
% Charr (0.8)% 0$ (1.1) (0 8) (0 3) (i 5) I22%
Average Annual Revenue Per Residential Customer $450 4i2 437 420 430 441 $554
,% Charge 9.2% (5 7) 40 _
(2 3) (2.5) 38 8.0% Daily Availability-(MMcf) I,506 1.596 1101 1.575 1.595 1.517 i A59 Maximum Peak-Day Sendout (MMcf) ~l,236 'I.252 1,258~ 'l.575 ll49/ ~ ' l .170 i.356~
% Chr + (1.3)% (0 5) (20 I) 5.2 279 6.9 4.1 %
ELECTRIC SERVICE STATISTICS 1993 1992 1991 1990 1989 1988 1983
~
Kilowatt' Hour Sales (millions) '
~ 23,210 ' 2 l .8 i 5 20A52 20.i48 ~ 19.7i6 19.194 IL654
% Change 6.4% 6.7 2.2 46 1.5 2.7 I4%
. ~ . , .
Customers (000) 1,095.7 . 1.015 3 t 000 7 990 6 983.6 974 0 892 6
% Chans
- 7.9% !5 1.0 0.7 1.0 0.7 32%
~
Average Annual Residential Kwh Usage 6,717 6.533 6.563 ' ' 6,44 5' ' d48 6503 ' 6'.05 y Change . . 2.8% (0 5) l .8 1.5 (0 9) 2.3 1,9% Average Residential Revenue Per Kwh 7.26 < 7.20 7.07 7.02 7ai 7.18 6 45 g
% Cha v 0.8% 18 0.7 (4.3) ( 1.0) ( 1.1)%
Average Annual Revenue Per Residential Customer $488 470 464 453 451 460 $392
% Chang 3.8*4, l .3 24 04 (2 0) 2.5 08%
Net Dependable System Capability at Time of Peak-Megawatts 4,722(s) 4,658(s) 4.1680) 4 327(4) 3.912(s) 3.911(s) 3.512(w) Net Firm System Peak Load (Mw) 3,869 3757 3.568 3.589 1484 3,362 2.968
% Ourge 3.0% 53 (0 6) 30 36 26%
Reserve Margin at Time of Peak 19 , . 22.0% ? 4.0 16.8 20.6 12 3 16 3 18.3 % Generation by Class of Fuel: Cox 98.5% 93 7 98 1 98 3 92 9 91.! 934% Natud Gu 1.5% l .3 I7 16 2.9 35 09% 01 - 02 01 0.2 0.1 OA% Noctear - 40 5.3 5.3% Average Cost Per Unit of Fuel: Coa' ron $21.03 21 14 2240 llA4 1141 22 39 $23.87 Natural Gr Mcf $ 2.32 207 1 98 2.07 2.16 2.27 5 407 01 Brrel $29.50 2684 2716 2785 30.3l 28.65 $27,35 Average Fuel Cost Per MMBTU
~
$ l .10 ' ill i ~ IL20 'l .'i 7 US T1.23 l}i7~~
me mm w countn cuuomem e, mod f ed d#ng 1993 wth the implemeniat<on of a new Cutorner Informabon 5ptem. (5) summer peak load (w) wr.tcir pNL. lWd 4 . _
FINANCIAL AND STATISTICAL DATA Publ;c Serwe Company of Cc!arado and Subsaanes - (MAars cd DoPao ( cep+ s Noted) f4-1993 1992 l991 1990 1989 1983 198' Operating Revenues: [ler +nt $ 1,337.1 12608 I IBO 5 U 45 9 Ll 39 5 1.116.0 $ 8337 628.3 5589 SSP t; 561.7 577.3 591.4 761.6 i Gn Other 33.3 32t 26 8 263 219 230 13.3 l 1.733 9 L740 7 L 7 '> . , Total Revenues $ 1,99 8.7 f .8 62. 3 f . 794.9 .$in28 6 M97 !488 125 0 $ 106 4 Net income $ 157.4 1366 146 l a Preferred Dividend Requirements 12.1 12( l22 124 12 6 l28 16 7 E Earnings Available for Common Stock $ 145.3 124 5 137.5 1337 1362 1122 $89 7 Earnings Per Weighted Average Share $2.43 2 16 2 46 24) 2% 2 14 $ l .86 Dividends Per Share: h I Pa d $ 2,00 100 2 ')0 2 00 2.00 As $ l .82 Derwed $2.00 2 00 2 00 2 00 200 2 00 $l84 Common Stock Outstanding: W 7ted a,erge (OCO) 59,695 57.558 55 A71 53626 52.559 52A57 48.135 t Yearend(000; 60,457 58,477 Mi94 54.320 52107 52A58 49.182 Total Assets $ 4,'058 NA0 3363 3734 ' t054 2595 $2.665 Common Equity $ 1,184 !.101 Q34 464 205 865 $ 821 Preferred Stock: 43 43 44 46 49 52 88 5 tcec, to m.v.dm> reene on at pr m 140 I40 140 140 140 140 14' Not sutye ' a ru"J oy eede ; Long. Term Debt 1,135 l.107 900 896 913 944 8% 338 25- 297 259 186 162 44 Short Term Borrowings* Total Capitalization $2,840 2.737 2 AIL 2.305 2.193 Ll63 $ l .9 79 Capitalization Ratios-Year End: Comrnon eqwty 41.7% 40 2 42.8 41 0 4i ? 40.0 4L5% Pr efened stW OntL d.;c o th n I yr.) 6.5% 68 77 82 86 89 1( 6% I on; term debt (lnd due utM I r ) <4 2.0% 438 41.2 40.7 4l 7 436 459 % Nmes parax rd comroerc:a op 9.d% 9.2 83 9.3 85 7.S I0% Construction Expenditures $293.5 261 7 260 7 261; 1744' ' lh2 8 $55 5 10.3% 96 10 8 11.3 8.0 7.5 9.9% S of f otat taWzcor Cash Generated Internally" $ f 49.1 1463 177.7 I74 6 I72 3 192 8 $ I 32 6
% of Canacton e,pe,d ar-;'" 52.2% 57 5 69 4 67 7 99 7 I18 8 71 0 %
~
Rates of Return Earned: T niai caatm z mon (Ope . 'nceme) 9.9% 9. 4 ! 0.1 10.3 :13 !02 92% I 2.7% i l.7 13 8 14 3 15 4 13 0 i 1.2 % A g wmmon ecc.ay (Net to common) Pretax Coverage ofInterest Expense 2.54 x 243 2.94 307 302 ? SI 342x 28% 28 32 34 31 33 46.8% Effective income Tax Rate Payout Ratio on Dividends Paid 82.3% 92 6 30 6 80 1 772 935 97 8 % Bool< Value Per Share-Year-End $ 19.59 l883 18 38 1 7.74 t7:3 16 49 $ 16 70 Market Price Per Share-Year End $ 32% 284 ?7 23 26 71- $ 18? Number of Employees-Year-End 6,507 6168 &565 66)i 6.636 6559 6 857
- Induo , acM 4..e won om yenr. nacs on Mrc and c c~rea paper ar d prefered stod subect to mandato9 redempton wth:n one year.
" Ca,h rvorded 90m overce oro er of ; n.h umd fm d.odends.1983 caWated as f ed; prnerated inteWv
"* C Ainted E ca t prov:de6 I:rr' o;m Mr1 ret of cair umd for d.v.derd , d-eded of conmur'nn cepend i/e1 r + t of MDC eclub component.
198 3 c a 'u:Med nfu i F 5- i+ed .rt r ' < n a t of net to: Net'on ewd v5
!5
MANAGEMENT'S DISCUSSION AND ANALYSIS Public Service Company of Colorado and Subsdanes Overview Concun ently and from a longer-term perspective, the Com-pany has initiated an extensive review ofits business pro-Ubin Operations cesses to better position itself to more effectNely address During 1993, Pubhc Service Company of CcJorado (the the changes in the industry and the energy marketplace as Company) cont;nued to pursue the strategy of focusing on well as the diverse needs of its customers. rts core e!cctric and gas businesses. Such businesses are in a transition penod as. in genera!. they are expected to be in. Although the Company is operating in an increasingly com-creasingV compet:twe as a result of a vanety of regulatory, petitive environment, It bebeves rt will continue to be subject e to traditional rate-regulated principles, which include cost-economic and techno!og. summary h:ghhghts several eventscal that developments. have occurred wh The focowin$ch f-service regulation and the recovery of a!I costs previously serve to contribute to this changing environment deferred in accordance with regulatory approvals for the foreseeable future. Furthermore, the Company is actively The Compan/s retal electnc business faces increasing u e partiopating in CPUC dockets addressing changes to the petition due to the abaty ofindustrial and large comme: aa! current regulatory environment. The CPUC has opened custorrers to generate their own electric energy require- separate dockets to investigate issues relating to incentive ments. to substitute fuels such as natural gas for heating regulation and integrated resource planning. In addition. the and/or cochng purposes or to relocate inerr faahties to a Company has developed and implemented, following CPUC lower cost environment The Compan/s retad natural gas approval several demand-side management programs. business, in the industnal and large commen:ial sectors, has undergone a transition from sales of gas to transportation of N nutky Assets gas sold to othe 1 wthout any significant effect on net Fcdlowing approval by the Company's Board of D rectors, income to date the divestiture of a substantial portion of Fuel Resources Development Cols (Fuelco) (an oil and gas exploration and On November 26.1993 as part of a general rate case fded production subsidiary) oil and gas related production prop-carher in the yev The Pubhc Utthties Commisuon of the erties has been completed. A purchase and sale contract for State of Colorado (CPUC) issued its final wntten deosion, the remaining property is being negotiated with clos;ng reduang the authon:ed level of the Company's total annual anticipated no later than the end of the first quarter of 1994. base electnc. gas and steam rate revenues by apprommately in December 1993, the Company recorted the effects of
$5.2 maken on a basis of a rate of return on regulated rate the disposition of all properties, including the 1994 antici-base of 9 4% including a rate of return on regulated com-pated sale, and additional costs expected to be encurred mon equ:ty of i 19i The new rates became effective Dec-through the close of operations. The effects of these trans-l ember I,1993 The Company had requested an $81.6 actions had no matenalimpact on the Company's 1993 l
mdl.on increase in electric, gas and steam revenues on the r esults of operations or finanaal position, bams of a rate of return on mgulated rate base of 10 5% in-cluding a rate of return on regulated common equity of 13% Additiona!ly. dunng 1992 as part of an effort to divest The CPUC rejected the Company's pmposed use of a fully nonutihty investments, the Company discontinued its partici-forecasted future test year in the estabhshment of revenue pation in Synhytech, a methane gas conversion project, and requmements and instead continued the use of an histoncai sold its downtown Denver real estate properties owned by test year using the twelve months ended September 30.1992. Bannock Center Corporation (BCC). As a result, the Com-pany recognized two signMcant charges totalhng $25.2 million In response to the outcome of the 1993 rate case and in after tax, or 44 cents per share, in 1992. During 1993, both order to operate more effectively in a competitwe environ' subsid: anes were dissolved. ment, the Company has adopted certain short- and long-tenn strategies to lower operating costs and achieve adequate The following discussion refers to the consolidated financial earnings levels, GeneraHy. the short term strategies include statements and related notes of the Company and should the implementation of cost reduct.on programs designed to be read in conjunction with such statements and notes. rrduce operating and maintenance expenses. at a nun! mum, to the approximate level included in the recently estabhshed Earm,ngs rates. On January 25,1994, as part of this short-term strat. Earnings per share were $2.43. $2.16 and $2.48 during 1993, egy, the Company's Board of Directors approved an early 1992 and 1991 respectively The full-year eifect of the April, retirement / severance program under which apprommately 1992 addition of four new wholesa!c electric customers, 600 emp!oyees are ehg.ble to partiopate. Addit,onally, vol. coup!ed with the positive impact of weather-related factors untary and involuntary programs wdl be instituted following during 1993. served to increase electric saies and gas dehv-the implementation of the early retirement program. The enes. The pos:tNe impact resulting from higher electnc Kwh estimated cost of the early retirement / severance programs sates and gas Mcf deliveries in 1993 wem offset, in part, by range from $25 to $32 mdhon. The Company intends to incmased operating and maintenance expenses. The posi-amortae such costs to expense over a penod not to ex. tNe effects in 1992 ofincreased revenues from higher elec-cced approximate!y five years in accordance with antrapated tric sa'es as compared to 199 l. pnman!y associated with regulatory treatment. the four new wholesaic electric customers and decreased 16
other operating expenses, were to a large extent offset by fuel used in generation and purthased power costs and the charges to carnings related to the divestiture of the atlow recovery of such costs on a t:mely basis. As a result, Company's nonutAty investments, discussed above. the changes in revenues associated with these mechanisms Electric Sales, Revenues and Energy Costs Electric operating revenues increased $76.3 mdhon in 1993 Total electnc energy costs increased 7.7% in 1993 when com-and $80.3 mdhon in 1992, when compared to the respective pared to 1992. Purchased power expense increased in 1993 preceo:ng years, reflecting increased sales volumes to both due to a 10.7% increase in Kwh purchases, with minimal reta:t and wholesale customers and the net effects of the change in the energy cost per Kwh. The increase in fuel used Electnc Cost Adjustment (ECA) mechanism on pnces of in generation expense was primanly due to a 3.3% increase units sold The followind table detads the annual changes in in generation at the Company's power plants Generation revenues when compared to revenues for the pr eceding levels for 1993 and 1992, when compared to the respective l preceding years. increased primarily due to the Apnl.1992 l year for these components. Purchase of add:tional generating fachties from Colorado-(M-itons of Dan) Ute. Total electric energy costs increased 9.5% in 1992, 1993 1992 when compared to 1991, primarily due to an increase in hednc rewnues Base rate changes $ 4.4 $U70) generation and higher per unit costs for power purchased. Rate ner fcnewmmoon;ry 6.8 The Company has continued to expenence moderate
~
hectnc car. admstment 2.2 378 Nm wh*sde astomers 27.0 430 growth in customers in both 1993 and 1992. The Company saMs volume and other chrges 35.9 . 145 antiapates that further customer growth wdl be in the 1.2% Not :n< < ce $76.3 $ 801 range in the near-term. Gas Sales, Revenues and Purchased Costs Base rates ar e only changed through r ate proceedings with Gas operating revenues increased $59.4 mdlion in 1993 and the Company's e egulatory agenacs. Effective July I,1993 a deavased $ 18.7 mdhon in 1992, when compared to the 1.29% elecinc revenue increase (an approomate $13 9 mit-respective preceding years. pnmanly due to changes in tota! lion annual revenue increase) associated with the recovery gas sales. The foUowing table detads the annual changes in of nuclear decommissionrng costs was imp!emented (see revenues when compared to revenues for the preceding Note 2. Fort St. Vrain Nudcar Generating Station in the year for these components: Notes to Conschdated Finanaal Statements) Over the past several years. the Company has been involved in numerous (M*ons or Dones) settlement agr eements with the CPUC and other parties _ _ _ 1993 _ 1992 which generally have reduced electric revenues Pnor to Gas revenuez Bre tre changes 50.4 $ - December I,1993 and dunng 1992 and 1991,there were 12 2J two separate electric revenue reductions in place. a 1.41% Cd5 *" 4'unwn! reduction designed to adjust for an camings imbalance between the electoc and gas departments and a 3.38% n [ sees voturne and 0:her changes 5.1 53.7 O (250)
~
' $59 [ U85) reduction t elated to the settlement of a rate case fded in 6 ,ncrease W N a N ~~
early 1991. On November 26.1993, the CPUC issued its final rate case deasion which requires an overaH revenue Hgher gas revenues in 1993 were attnbutable to a 10.5% in-reduction of approximately $5.2 muon, after gwing effect t crease in sales due to colder weather expenenced in 1993 the reductions under pnor rate settlements. Such reduction as compared to 1992. The dechne in gas operating revenues is compnsed of a $13 I mdhon electnc revenue decrease in 1991 as compred to 1991, was pnmanly due to a 5 2% offset by a $7.I muon gas revenue increa;c (discussed decrease in gas sales caused by warmer than-normal weather. below) and a $0.8 mimon steam revenue increase. Total gas dehveries (which indude gas sales) increased 14.9%
.fhe inorases in electnc Kwh sa!cs of 6 4%. and 67% for in 1993 and 5.3% in 1992, when compared to the respective 1993 and 1992, when compared to the respective preced- preceding years, primarily due to increased gas gathering ing yeariis pnman!y due to the Apnl.1992 addition of the and transport volumes. Although gas sales have fluctuated in four new wholesaie customers previously served by Colo' recent years, the Company continues to experience grc wth rado Ute Uectric Association, Inc. (Colorado Ute) In add'~ in transportation services and gathenng and processing acti-tion, colder weather expenenced dunng 1993 as wc!! as an e The per unrt fee charged for transportation services, increase :n economy sales to other utit,es also served to whde signif4cantly less than the per unit fee charged for a sale increase electnc Kwh sales Generally, however, economy to a sdar customer, prowdes an operating margin approxi-sales provide a sma!Ier profit margin than sales to the Com- mately equiva!cnt to the margin earned on gas sold. In addL pany's other dasses of customers. tion and similar to gas transportation services, the per unit fee charged for gathenng and processing activities is also sig-The Company and Cheyene Light, Fuel and Power Company nJ<antly less than the per unit amount charged fcr the sale (Cheyenne) have cost adjustment mechanisms which recog-nue the majonty of the effects of increases and decreases in
!7
MANAGEMENT'S DISCUSSION AND ANALYSIS conmued lPubhc Service Company cf Colorado and Subsidiones of gas. Therefore, increases in such activrties win not have as of Statement of Financial Accounting Standards No.109-great an impact on gas revenues as would incmases in deliv- " Accounting for income Taxes" ($FAS 109). The decline in cries from the sale of gas, but will have a positive impact on income tax expense in 1992, when compared to 199 I, was operating margin. As a result of the Company's 1993 rate primarily attnbutable to lower pre-tax income. case discussed above, gas base rate revenues are expected to increase $7.1 milhon (or approximately 1.2%) on an an- Interest on long-term debt incmased $5.5 miHion in 1993 nual basis, effective December I,1993. ver 1992, reflecting the effect of the issuance of $250 mil-lion in First Mortgage Bonds in April,1992 to finance the The Company and rts regulated subsidiaries have in place Colorado-Ute asset acquis; tion as well as the issuance of Gas Cost Adjustment (GCA) mechanisms for gas sales, $50 million in medium-term notes during the fourth quarter which recognize the majority of the effects of changes in the of 1992, offset sfightly by the effects of certain 1993 long-cost of gas purchased for resale and adjust revenues to re- term debt refinancings at lower interest rates. The increase flect such changes in cost on a timely basis. As a result, the in interest expense in 1992, when compared to 1991 was changes in revenues associated with these mechanisms in the result of the debt issuances noted above. 1993 and 1992. when compared to the respective preced-ing year; had little impact on net income. However, the fluc Recently Issued Accounting Standards
. tuations in gas sa!es affect the amount of gas the Company Not Y: : Adopted must purchase and, therefore, affect gas purchased for resale In November 1992, the Financial Accounting Standards Board expense along with increases and decreases in the per unit (FASB) issued Statement of Financial Accounting Standards cost of gas. The increase in gas purchased for resale for No. I 12 " Employers' Accounting forPostemployment Bene-1993, when compared to 1992, reflects an increase in the fits" (SFAS I 12), which establishes accounting standards for amount of gas purchased, primarily attributable to the in. employers who provide benefits to former or inactive em-creased gas sales, as well as a slight increase in the per unit ployees after employment but before retirement (post-cost of gas The deckne in 1992 purchased gas costs was due employment benefits). SFAS I l2 became effective January l, to lower sales offset by an increase in the per unit cost of gas 1994, and +he Company has estimated its benefit obligation when compared to 1991. to be appn.,ximately $32 million, assuming a 7,5% discount rate. The Company believes it is probable that rt wiii receive The Company continued to experience moderate growth in CPUC approval to recover these costs in future rates and,.
customers in 1993 and 1992. The Company anticipates that therefore, the application of the new standard wiH not have further customer growth will be approximately I .9% during a material impact on the Company's results of operations or the near-term. financial posrtion as a regulatory asset and a corresponding Non-Fuel Operating Expenses Other operating and maintenance expenses increased for Commitments and Contingencies 1993 primanly due to increased labor and benefit costs and Issues relating to Fort St. Vrain, environmental matters and a $3 I milbon after-tax write-off of the Company's invest- postretirement benefits other than pensions are discussed in - ment in the Templeton Gap methane recycling facihty. The Notes 2,8 and 10, respectively in the Notes to Consoli-dedine in other operating expenses in 1992, when com-dated Financial Statements. pared to 1991, is primanly attributable to certain cost con-tainment efforts instituted throughout the Company coupled As previously discussed, on November 26,1993, the CPUC 'i with lower nuclear related costs. This decline was offset to a issued its final decision in connection with the 1993 rate certain degree by costs incurred to operate assets acmired case denying the Company any rate relief and lowering the i as part of the Colorado-Ute asset acquisition. Other non. Company's overaH revenue requirements by approximately fuel operating expenses in 1992 also included the recogni. $5.2 million. The Company is implementing strategies which tion of charges to camings associated with the Synhytech include, among otherthings, endeavoring to reduce operat-and BCC transactions of approximately $26.9 mil! ion and ing expenses, at a minimum, to the historic test period level.
$ 11.4 mdhon, respectively. It is possible, however; that despite such efforts, the Com-pany could be required to issue increasing amounts of short-Higher !993 and 1992 depreciation and amortization ex-term and long-term securities to fund cash requirements pense, when compared to the respective preceding years, and that the Company's results of operations and financial' reflects the effects of addctional assets acquired from Colo-position could be adversely affected over time.
rado-Ute and other property add <tions. The 1993 deprecia-tion and amortization expense also includes the amortization The level of dividends on the Company's common stock is of the decommissioning regulatory asset associated with dependent upon the Company's results of operations, finan- !. Fort St. Vrairn which began July I,1993, along with the col- cial position and other factors and is evaluated quarterfy by ! lection of such costs. the Board of Directors. The Company is subject to numer-ous uncertainties, particularly the success of implementing The incmase in income tax expense for 1993 reflects a 1% strategies adopted as a result of the 1993 rate case which
. increase in the Federal tax rate and higher pre-tax income, was discussed above and issues re!ating to Fort St. Vrain, offset by the $1.9 million benefit realized from the adoption the resolution of which could influence such evaluation. q 18
i
Liquidity and Capital Resources Prospective Capital Requirements and Sources At December 31,1993, the Company and its substd: anes Cash Flows estimated the cost of their constructbn programs. includ-Net cash provided by operat ng actuttes increased $7.1 mii- ing Anowance for Funds Used Durino Construction hon during 1993. pomanly due to increased earnings and (AFDC) and other capital requirements in 1994,1995 and l hrgher deoreciation and amorteaton r e!ated to property 1996 to be as foHows: addeons indud.nz the acquisition of the Colorado-Ute b assets. A!tnough tbe Company cohected apprommateir $6 1994 5 I mahon in accommisstomng costs from customers in 1993. yearly expend %res of apprommateiy $50 mAon associated [,_ [Y wth the decomm:sboning of Fort 51. Vrain wd continue to R Wuccoe $ 121.260 $l44.035 $ 94.027 Frans, mon 44.575 84 476 47,728 reduce operaung cash tiom through 1995 D>stoba o, 69.19i 69.073 66.980 Gv 62.660 77.233 78.146 Cash u<ed in investina actmt8es decreased $192 6 maon for 1993 pomanly due tb the 1992 acquetton cf Colorado-Ute Gnw 6B74 86M 3 jgp82 msets. In add < tion. in 1993 inree new whotesa'e costerners saw M3 780 46 L630 326963 s w ams M M L 24297 prepa:d 1009, or apprommate!y $24.9 maan of their sur. co, 476,487 353.170 chan;'e assoaated with tne Colorado-Ute acquisition. M com- To J m 37R735 tev MDC l 1.470 18.580 13.974 panng 1993 to 1992, noweser. th s nas offset by the 1992 MS M M m m oves 365.221 38.703 80982 rece:ot of apprcxmatdy $75 muon in loan proceeds from f.m w, st van mam , ccm 40.748 . 42391 _; insurance polc es bj one of the Company's subsid.ane> gg % regrmgs p73 7 34 g539,4ai $470 i73 Cash prowded by f.nanann actees decreased apprommatei f
- Cry rc@ee 3 for Rctn': Producton indude $74 mnon
$247.7 rnnion dunne 1993 pnman!y due to the 1992 rssu-ance of $250 nmihon of F:rst Mor tgage Bonds related to the
.. (( , y gg,y
~
.[yyys en m W We a acqu's ton of the Colorado-Ute assets. On Apni 20. July I.
and Nosember 23,1993. the Company issued $79.5 mean .
.The construction programs of the Company and its sub-j and $50 moon of F.irst Mortgage Bonds, and $1343 maon .
sidanes are subject to continuing review and adjustment. ( of Fe st Coh.ateral Trust Bonds. respectrvely AH 1993 bond i,n part;cular, actual construction expendrtures for the elec-proceeds were used to refund outstandtrg h!gher cost long- tric system may vary from the esttmates due to changes in term debt and, therefor e, resulted in m:ntma! tmpact on the r , projected load growth. the des: red reserve margin and the fnanan'g cash hows of the Company An add.tional debt reft avalabaty of purchased power as weh as alternative plans nanan l for meeting the Company.s long-term energy needs. In early994' 1'g of apprommately $21,c7 muon was comp eted in addition, actua! decommissioning and defuehng expenses may exceeo the estimates due to a variety of factors dis-COMMONEQUITVRAMO cussed in Note 2.n the Notes to Conschdated Finanaal f bEWRMIO u esco l D rsco a indu iry ver.g. (i993..c.) E industry average (1993 e.c.) At De: ember 3 l,1993, the Company and its subsidianes essmated tnat their 1994-1996 cap:tal requirements would 53% 42% _ be met ponapany wth a cornbination of funds from exter-na! sources and wrth funds from operations. The Company and its subs'dianes may meet their external capital requrre-sn _ 40% _ ments through the issuance of f:rst coHateral trust bonds, sis 3s% _. preferred and/or common stock, by increasing the level of borroung under P5 Colorado Cred:t Corporation's ns PSCCC) med;um-term note program or through short-
. so% _ _ _ _ _ _
term borrowing under committed and uncommitted bank borrowng arrangements d1scussed below The f;nanang 49% _ 34% _ needs are subject to continu>ng review and can change dependina6 on marl et and business cond:tions and 48h 32% - ~
- ~
changes,if any. in the construction p!ans of the Company and its subsidianes. 83 s9 to 9: 92 93 s3 s9 90 91 92 93 The Companys Automatic Dividend Reinvestrnent and wopyw or do,ro.ca runas to is, snaresofders' .nvenment as a pe,. Comm M&3 b@am % abe a hMh m to amounc moeirca .n ce. cene of is, totai mount moeited in purchase additiona! shares of common stock of the Com-compwy ine compac.y. pany through the re:nvestment of cash dividends and the purchase of add <tional shares of common stock with op-tional cash payments The proceeds from the dividend s9
MANAGEMENT'S DISCUSSION AND ANALYSIS cononved Pubhc Service Company of Colonado and Subsidianes reinvestment plan will also provide funds to help meet the Indenture are to be issued on the basis of property addi-cap:tal requirements of the Company tions, Orst collateral trust bonds may be issued under the At December 31,1993, the Company and its subsidiaries 1993 Indenture only if net earnings before depreciation, had temporary cash investments of $9.57 mdhon. taxes on income, interest expenses and non-recuenng charges for a recent twelve-month period are at least 2 As of December 31,1993. PSCCC had borrowed $167.3 times annuai interest requirements on all first mortgage mllion in short-term debt, for use primarily in the purchase bonds (other than bonds held by the trustee under the of the Company's customer accounts receivable and fossd 1993 Indenture) and all frst collateral trust bonds to be fuel inventones. PSCCC may periodically convert short-term utstanding. As of January 31,1994, coverage under the net debt to medium term notes. As of December 31,1993, earnings test was in excess of 5 times such annual interest PSCCC had no med:um-term notes outstanding. The level mquirements. of Enancing of PSCCC is tied directly to daily changes in the level of the Company's outstanding customer accounts re- The Company's Restated Artides ofincorporation prohibit ceivable and monthly changes in fossil fuel inventories. The the issuance of additional preferred stock without preferred shareholder approval, unless the gross income available for Company expects that the amount of financ ng associated the payment ofinterest charges for a recent twelve-month with PSCCC wdl vary minirna!!y from year-to-year although period is at least 1.5 times the total of l} the annual intemst seasonal fluctuations in the level of assets will cause corre-requirements on an indebtedness to be outstanding for more sponding fluctuations in the level of associated fnancing-than one year and 2) the annual dividend requirements on in 1990, the Company fUed a registration statement with the U preferred styk to be outstanding. At December 31, Securities and Exchange Commission (SEC) for the issuance 1993, gross uxome avadable under this requirement would of $500 muon pnncipal amount of frst mortgage bonds of permit the Company, ,fi a4cwed under the provisions of the which $200 milhon was designated for a secured medium- Companys Restated Articles ofIncorporation,to issue ap-term note program. As of December 3 I,1993, $14 L5 md- pr xim tely $2.2 billion of additional preferred stock at an lion pnnapal amount of rnedium-term notes had been assumed annual d:vidend rate of 6.5% Coverage of gross issued and $250 milhon of frst mortgage bonds had been income to interest charges was 4.3 at December 31,1993. issued. In 1993, the Company filed a registration statement The Company's Restated Articles ofincorporation prohibit, with the SEC for the issuance of $322.667 milhon pnndpal without preferred shareholder approval, the issuance or amount of first collateral trust bonds, for the purpose of assumption of unsecumd indebtedness, other than for re-refunchng outstanding debt securities and for the payment of short-term indebtedness incuned for such purposes, of fund;ng purposes, greater than 15% of the aggregate of I) the total principal amount of all bonds or other secunties which $212.667 mhon pnncipal amount has been issued. representing secured indebtedness of the Company, then The Company's 1939 Incenture, which is a mortgage on the outstanding, and 2) the total of the capital and surplus of the Company s electric and gas properties. permits the issuance Company, as then recorded on its books. At December 31, of additional first mortgage bonds to the extent of 60% of 1993, the Company had outstanding unsecured indebted-the value of net add:tions to the Compan/s utility property, ness, including subsidiary indebtedness with the cred,t sup-provided net earnings before depreciation, taxes on income p rt of the Company, in the amount of $109.6 mdlion. The and interest expense for a recent twelve-month penod are maximum amount permitted under this bmitation was ap-at least 2.5 times annual interest requirements on a!! bonds pr ximately $375.6 rniUion at December 3!,1993. to be outstanding. The 1939 Indenture also permits the issu-At December 31,1993, the Company and certain of rts sub-ance of add:tiona! bonds on the basis of retired first mort-gage bonds, in some cases with no requimment to satisfy sidiaries had arrangements for bank hnes of cmdit totakng
$300 mdlion in committed hnes, of which $23.1 million was such net earnings test. At December 31,1993, the amount of net additions would permit (and the net earnings test then available. On January 3,1994, the Company established would not prohibit) the issuance of approximately $ 103 mil- uncommrtted knes of credit totahng $25 million. which expire on December 31,1994. The Company could generauy bor-lion of new bonds (in add' tion to the $200 mdhon pnnapal .
row under the uncommitted pre-approved lines of credit amount of secured medium-term notes discussed above) at upon request; however, the banks have no firm commitment an assumed annual interest rate of 7.6% At February 22, to make such loans. 1994. the amount of retired bonds would permit the issu-ance of $834 milhon of new bonds On November 22,1993, the Company, PSCCC and certain in 1993, the Company entemd into a new Indenture, which subudianes extended the cred;t facihty jointly entered into on February 8,1991, and as subsequently amended. The is a second mortgage on the Company s electric properties. cred:t facihty wrth several banks provides $300 milhon in com-GeneraHy. so long as the Compan/s 1939 Indenture remains in effect, first coliateral trust bonds will be issued under the mitted bank hnes of credit. The credit facihty, which is used 1993 Indenture on the basis of the deposrt with the trustee primanly to support the issuance of commenial paper by of an equal pnncipal amount of f:rst mortgage bonds issued the Company and PSCCC. attematively provides for direct borrowing thereunder Under the current extension, Chey-under the 1939 Indenture. If the bonds issued under the 1939 enne, I 480 Welton. Inc., Fuelco, PSR Investments, Inc. and 20
WestGas Gathenng, Inc. were provided access to the credit facihty under a $125 milhon aggregate sub-hmit with direct borrowings guaranteed by the Company. G .aerally, the banks participating in the credit facihty would have no ob!i-gation to continue their commitrnents if there has been a matenal adverse change in the business or financial condi-tion of the Company and its subsidiaries taken as a whole that would prevent the Company and rts subsidiaries from performing their obhgation under the credit facihty. The credit fachty expires April I,1994. However the Company expects to renew the credit fachty at that time (see Note 7. Bank Lines of Credit and Compensating Bank Batances in the Notes to Consohdated Financial Statements). Natural Fuels Corporation had a committed hne of credit in the amount of $4 mdhon, which expired March I,1993, and was not renewed REPORT OF MANAGEMENT Pubioc Service Company of Colorado and Subsidiaries Report of Management The accompanying financial statements of Pubhc Service tunities for improving the system as they are identified. The Company of Colorado and subsidiaries have been prepared board operating through its Audit Committee, which is by Company personnel in conformity with genera!!y ac- composed entimly of directors who are not offcers or cepted accounting pnnciples consistent with the Uniform employees of the Company, provides oversight to the finan-System of Accounts of the Federal Energy Regulatory Com- cial reporting process. mission. The integnty and objectivity of the data in these There are inherent hmrtations in the effectiveness of any finanoa! statements are the responsibility of management. system ofintemal control,induding the possibility of human Finanaal information contained elsewhere in this Annual error and the circumvention or overriding of controls. Report is consistent with that in the financial statements. Accordingly, even an effective intemal control system can The accompanying financial statements have been audited provide only reasonable assurance with respect to financial by Arthur Andersen & Co., independent public accountants. statement preparation. Further, because of changes in Management has made available to Arthur Ardersen & Co. conditions, internal control system effectiveness may vary all the Company's and its subsidianes' financial records and over time. re!ated data and has provided to them representations we The Company assessed its internal control system as of beheve to be vakd and appropnate. December 31,1993 in relation to criteria for effective inter-The Company maintains a system ofinternal control over nal control over financial reporting described in " Internal financial mport:ng, which ts designed to provide reasonable Control-Integrated Framework" issued by the Committee assurance to the Company's management and Board of of Sponsoring Organizations of the Treadway Commission. Directors regard:ng the preparation of rehable pubhshed Based on the results of its assessment, the Company be-ftnanaal statements. The system includes a documented heves tha* as of December 3 !,1993, the Company's system organizationa! structure and division of msponsibihty. estab- of intemal control over external financial reporting met Oshed pohcies and procedures including a code of conduct those criteria. to foster a strong ethical chmate. which are communicated throughout the Company, and the careful selection, training and development of our people. Interna! auditors morstor dd ~~ i:b- ._ the operation of the intemal control system and report find-W. Wayne Brown D. D. Hock. ( ings and recommendations to management and the Audit Princpd Account <ng OEcer Cb:ei becutive OEcer Committee of the Board of Dimctors, and corrective actions am taken to address control deficiencies and other oppor- Februwy 16. t 994 h ___
- REPORTS OF THE AUDIT COMMITTEE AND INDEPENDENT PUBLIC ACCOUNTANTS Pubnc Service Compmy of Colorado and Subsidanes Report of the Audit Committee counting prinades used and signicant estmates made by of the Board of Directors management, as well as evaluating the overa!! finanaal state-The BoaM of Directors of the Company addresses its over- ment presentation. We beheve that our audits provide a sight respons6hty for the consolidated f,nanaal statements reasonable basis for our opinion.
the ough its Audd Committee. The Audt Comm:ttee meets in our op nion, the financial statements refened to above regularly with the independent certfed pubhc accountants present fairly, in a!! material respects, the Gnannal position of and the intemal auditor to escuss results of their aud.t work Pubhc Scruce Company of Colorado and subsidianes as of and their evaluation of the adequacy of the interna! controls December 31,1993 and 1992, and the results of their oper-and the qunty of Onancal reportin8 ations and their cash flows for each of the three years in the in fuifiihng its respons6ht!cs in 1993 the Au6t Committee penod ended December 31,1993, in conformity with gen-recommended to the Boarrf of Directors, subject to share- eraHy accepted xcounting principles. ho! der approval, the selection of the Company's indepen-As more faHy d:scussed in Note 2 to the consokdated finan-dent certMed pubhc accountants. The Audit Committee c!al statements, reahzation of the Company's investment in reviewed the overali scope and speofec plans of the inde' pendent certMed pubhc accountants' and internal aud: tor's its Fort St. Vrain Nuclear Generating Station (approximately
$63.4 m;ihon at December 31,1993), as weh as ttm regula-respective aud t pbns, and dscussed the indept:ndent cert" tory asset representing the tax effects of prev ecog-f>ed pubhc accountants' management Ictter recommenda-tions, approved their general audtt fees, and reviewed their need tax deductions associated with such invs for which no defened taxes were required to be t a non audit servces to the Company.
(approximately $ 12 4 milhon at December 3 l, I > a), is pn-The committee meetings are desened to faoktate open manly dependent on the Company's abihty to repower the communications between mterna auditing. independent faahty as a natura! gas fired plant, the eventual outcome of certfed pubhc accountants. and the Aucht Comm:ttee. To which cannot be determined at this time. In addition, as ensure auchtor independence. both the independent certe m m f y dscued in Note 2 to the consohdated finanaal f1ed pubhc accountants and internal audtor have fuH and statements, the adequacy of the Company s recorded habihty free accen to the Audit Committee. for defuehng and decommissioning its Fort St. Vrain Nudear Generating Station (approximately $93.1 mdhon at Decem-
, f d ber 31.1993) s primanly dependent on assurances that tne dsmantlement and decommissioning of the Fort St. Vrain p$.#g [## %~u'- Nudear Generating Station can be accomphshed at cur-f Med %m Chamin rently estimated costs and that the spent fuel storage and Aurrt Cone sh:pment issues are successfuMy resolved. The outcome of Februry i 6. l994 the above bsues cannot be determined at this time. The accompanying financal statements do not indude any adjustments that might result fmm the outcome of these uncerta:ntres.
Report ofIndependent Public Accountants As more fuhy discussed in Notes 10 and 12 to the consoh-The Board of Directors and Shareholders dated Enanaal statements. effective January I.1993, the of Public Service Company of Colorado Company changed its methods of accounsg for postretire-ment benefits otherthan pensions and for income taxes We have audted the accompanying conschdated balance sheets of Pubhc Service Company of Colorado (a Colorado corporat:on) and subsidanes as of December 31.1993 and p b 1991 and the related consoi dated statements ofincome, twt. w ret Ained ear nings and cash f'ows for each of the three years Adhz Ande sen & Co in the penod ended December 31,1993 These fnanaal 7en,c; CdoMo statements are the respon9bsty of the Company's manage-ment. Our respons.bAty is to express an opinion on these hbwy 16. i994 finanaa! statements based on our audts We conducted our audts in accordance with generahy ac-cepted auditing standa-ds. Those standards require that we pfan and perform the audit to obta:n reasonable assurance about whether the f.nanoa! statements are free of material misstatement. An audt indudes examining on a test basis eddence supporting the amounts and dsdosures in the f,- nanaal st uements An audt ako indudes assessing the ao n - -
CONSOLIDATED STATEMENTS OF INCOME l Pubi:c Serwce Company of Ccdomdo and Subs!6cnes Years ended December 3!, I993, I992 & I991 (Thouands of DoPars Except Per Snxe Data) 1993 1992 1991 Operating Revenues: Eiectric $ 1,337,053 $ 1,260,769 $ 1,180.501 Gas 628,324 568.886 587,609 Other 33,308 32,6I8 26.794 1,998,685 1.862.273 1,794.904 Operating Expenses: Fue! used in generat on I94,918 I82,832 177.365 Purchased power 396,953 366.949 323.793 l Gas purchased for resa!e 384,393 343,188 365,991 Other operat;ng expenses 376,686 346,368 361,610 Mamtenance 76,229 72,540 67.216 Termnatan of Synhytech project (Note 3) - 26,893 - l Loss on sa!e of real estate investments (Note 3) I l.370 - Deprecation and amortization 140,804 127,317 I I I,728 l i Ta<es (other than income ta>cs) (Note 13) 86,775 82.040 74.335 60,994 53,149 69 288 locome taxes (Note i2) _ l,717,752 . _ . .
!,612.646 1,551,326 Operating income 280,933 249.627 243.578 Other income and Deductions:
Allowance for equrty funds used dunng construction (Note 1) 8,119 7.378 4.763 Misce!:aneous income and deduct;ons-net (1,355)- - - . - 734 . 2,889 287,697 257,739 251,230 Interest Charges: Intemst on long-term debt 98,089 92.581 81,666 Amortaation of debt d<scount and expense less prernium 2,018 I,790 1,827 Other interest 34,778 30.669 22,718 AUowance for borrowed funds used during construction (Note I). . _ ___ (4,548). _ . _ . _ . (3,924) . . _ _ _(4,674)
.130,337 12l,116 101.53'7 Net income 157,360 136,623 149,693 Dividend Requirements on Preferred Stock 12,031 I2.077 12.234 Earnings Available for Common Stock $ 145,329 $ 124,546 $ 137.459 5 hares of Common Stock Outstanding (thousands):
Year-end 60,457 58.477 56.294 Weghted average _ 59,695 57.558 . 55.471 Earnings Per Weighted Average Share of Common Stock Outstanding .. .. - . . _ -.. .- .
$ 2.43
$2.16 $2.48 Dividends Per Share of Common Stock:
Paid $2.00 $2.00 $2.00 Declared . __. .-_. _
$2.00 __
$200 . _ _$2.00 ._
J
.E s l,
' 2 . g,s 1 [,4 & i ,
.( k ( l 23
CONSOLIDATED BALANCE SHEETS Pubhc Service Company of~ Colorado and Subsidiaries December 3I, I993 & I992 (Thousands of Dollars) Assets 1993 1992 Property, Plant and Equipment, at Cost: Electric $3,390,442 $3,231,876 Gas 929,7I8 898,952 Steam and other 75,288 87,458 Common to a!! departments 356,633 280.416 Construction in progress 178,959 236,179 4,931,040 4,734,881 Less: Accumulated depreciation 1,801,323 1,719,913 3,129,717 3,014,968 Fort St. Vrain related property (Note 2) 79,023 79,323 _ . _ _ _ . _ _ .Less: Accumulated depreciation 15,604 I6,782
---Total Property, Plant and..-.Equipment - - _.- - - _.-. .-
3,193,136 3.077,509 Investments, at Cost 12,668 19,225 Current Assets: Cash and temporary cash investments 18,038 51,155 Accounts mceivable, less reserve for uncollectible accounts ($3.276 at December 31,1993; $3.388 at December 31,1992) 155,456 15l 643 Accrued unbmed revenues (Note 1) 76,983 72,795 Recoverable purchased gas and electric energy costs-net (Note 1) 60,692 45.640 Materia!s and supphes, at average cost 77,732 81,002 Fuel inventory, at average cost 35,484 33,573 i Gas in underground storage, at cost (UFO) 41,130 14,393 Prepaid expenses 12,716 20.984 4 Current portion of accumulated deferred j income taxes (Note 12) 4,201 - j Current portion of recoverable nuclear decommissioning costs (Note 2) i1,125 6.l51 j Other 864 2,191 Total Current Assets 494,421 479,527
~ ~ ~
~
; Deferred CI5Eg'es:~~
Unamortized debt expense 28,985 20,361
- Regulatory assets:
Recoverable nuclear decommissioning costs (Note 2) 107,294 118,293
- Income taxes (Notes 2 and 12) 132,647 -
l Employees' postretirement benefits other than pensions (Note 10) 25,855 - Penston benefits (Note 10) 23,149 !5,629 Other 39,445 29.039 The accom,nny:ng not.es to consondated financat sta:ements am an integra! part of these finanaal statements. 24 l
(~ihousands of Dollars)
. . - -Capital and Liabilities. . . - - 1993 1992 Common Equity:
l Common stock (Note 4) $ 910,848 $ 853.322 Retained earnings 273,335 247,725 l __ l 1,184,183 1,101.047 Preferred Stock (Note 4): Not subject to mandatory redemption 140,008 140,008 Subject to mandatory redemption at par 42,878 43.078 Long Term Debt (Note 5) 1,135,344 1,196,959
- _ . - - . - . - 2,502,413 -
2,481,092 Noncurrent Liabilities: Defuchng and decommissioning liability (Note 2) 45,220 88.124 Employees' postretirement benefits other than pensions (Note 10) 28,145 -
..._._ 73,3 6 5__ 88.124 Current Liabilities:
Notes payable and commeraal paper (Note 6) 276,875 250,626 Long term debt due within one year 58,324 2,820 Preferred stock subject to mandatory redemption within one year (Note 4) 2,576 2.576 Accounts payable 214,599 182.690 Dividends payable 33,234 32,248 Customers' deposits 16,225 I6.907 Accrued taxes 70,796 80,312 i Accrued interest 29,507 3I,032 Current portion of defueling and decommissioning habihty (Note 2) 47,887 52.896 Other 64,664 54,512 Total Current Liabilities 814,687 706,519 Deferred Credits: Customers' advances for construction 76,204 59,867 Unamortaed investment tax cred:ts 124,331 129,248 Accumulated deferred income taxes (Note l 2) 445,530 275,247 Other 21,070 19,486 667,135 483,848 Commitments and Contingencies (Notes 2,8 and 10) Total Capital and Liabilities $4,057,600 $ 3,759,583 25
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS -~ - Pubbc Scrwce Company of Colorado cod Subscanes Years ended December 3! I993. I992 & I99I (Thousands of Douar3) 1993 1992 1991
^~
Retained Earnings at Beginning of Year $247,725' U38.315 $2 I 2.514 5 Net income 157,360 136,623 149.693
~
'405,d85 ' 375.338 3U.2.03 Dividends:
On cumu!ative pr eferred stock
$ 100 par va!ue:
4 20% serks 420 420 420 44 senes 744 744 744 4a% senes 293 293 293 4 64% senes 742 742 742 4.90% ser ,es 735 735 735 4 90% 2nd senes 735 735 735 7.15% sene, 1,787 1.787 1.787 7.50% senes 1,620 1,620 t.665 8 40% ;enes 2,012 2.05i 2.139
$25 par va ue.
8 40% senes 2,940 2.940 2.940 I2,028 l 2.067 12.200 On common stock
$2.00 per share in 1993.1992 and 199I I i 9,722 I15,546 I I l.292 I31,750- - -127,6I3 -. 123.492 Retained Earnings at End of Year $273,335 $247.725 $238.715 The accompany: i, note; to can,0 dated f.nancai s*a:cerent; are an <nte,;ra! prt cf these inanad statements.
26
i. L CONSOLIDATED STATEMENTS OF CASH FLOWS l Pubhc Service Company of Colorado and Subs:dianes Years ended December 3!, I993, I992 & I991 l (Thousands of DoMar3) 1993 1992 1991 Operating Activities: Net income S 157,360 $ 136.623 $ 149,693 Adjustments to reconole net income to net cash provided by operating activites: Dept aat>on and amortization 143,940 134,335 l18.943 Termination of $ynhytech project - 26.893 - Loss on sa!e of real estate investments - l 1,370 - j Amorteation of investment tax credits (4,917) (5,138) (5,230) Deferred income taxes 33,435 23,766 26,122 Allowance for equity funds used dunng construction (8,119) (7,378) (4,763) Change in accounts rece:vab!e (3,813) 10.380 (17,024) Change in inventones (25,378) 6.024 (8.570) Change in other current assets (14,619) (24.670) 21,81 l Change in accounts payable 31,909 10.373 (5,948) Chan2e in other current habaties (5,439) (16.101) 12.630 Change in deferred amounts (17,483) 23,01I (121,665) Change in other noncurrent habiht.es (14,759) (57,207) l 32,134 i Other 7,762 52l 2,134
~ '
' Net Cash Provided by Operating Activities _ .
279,879 U2Q 300.2[7[ Investing Activities: Construct >on expend;tures (293,515) (261.666) (260,704) Colorado-Ute asset acquisition - (265,385) - Allowance for equ;ty funds used dunng construction 8,119 7,378 4.763 Proceeds from (cost of) disposition of property piant and equipment 43,120 (3,187) 5,893 Purchase of other investments (5,660) (6.348) (! I,396) Sa'e of other investments 8,678 97.357 15,002 i Net Cash Used in investing Activities _ __(239,258) . (431,851) , (246,442) , Financing Activities: Proceeds from sa e of common stock (Note I) 47,894 48,914 39,305 Proceeds from sale oflong-term notes and bonds 257,913 296,476 97,204 Redemption oflong-term notes and bonds (274,829) (94,197) (42,918) Proceeds from short-term bonowings 1,047,749 831,290 690,645 Repayment of short term borrowings (1,021,500) ('78I,304) (703,838) Redemption of preferred stock (200) (714) (2,576) Drodends on common stock (I I 8,732) (1i4,454) ()10,306) Dividends on preferred stock _.(12,033)_ . _ _ (12.081) _ _ _ _ _ _ . _(12,251) Net Cash Provided by (Used in) Financing Activities (73,738) 173,930 (44,735) Net increase (Decrease) in Cash and Temporary Cash investments (33,117) 14,881 9.090 ' ' Cash and Temporary Cash investments
-.at Beginning of Year -. - - - ._ .-. - . - - - .
- . .51,155- . . _ .36.274 . . - . . - . . 27,l84 ----
Cash and Temporary Cash investments at End of Year $ 18,038 $ 51,155 $ 36,274 The a:companyng no:es e conn dated finance uaternena are an oter part s of these f,nancia: staements. y/ _ . . . - . . . _ _ _
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Pubhc Service Company of Colorado and Subs;dianes
- 1. Summary of Significant Accounting Policies cash investments to be cash equivalents These temporary cash investments are secunties having original matuntres of Business and regulation three months or less or having longer matunties but with Pubkc Service Company of Colorade (the Company) is an put dates of three months or less.
operatng pubhc ut:hty engaged, together wrth :ts subsidianes, prinapaHy in the generation. purchase, transmission, distri. Income taxes and interest (exclud;ng amounts capdaleed) pad - bution and sale of electnaty and in the purchase, transmis- (Thousands of Douani) sion, distnbution. sale and transportation of natura! gas. The 1993 1992 1991 Company is subject to the jurisdiction of The Pubhc Utdities income tam $ 49,196 $ 38.624 $ 44.418 Commission of the State of Colorado (CPUC) with respect !r terest $ 129,844 $ I 12,695 $96.010 to its retad electric and gas operations and the Federal Energv Regulatory Commission (FERC) with mspect to its whole' Ncn-cash transacDons-sa!e electnc operations and account:ng pohcies and practices. Shares of common stock, (329.220 in 1993. 333.418 in 1992 Cheyenne Light. Fuel and Power Company (Cheyenne) and and 242.674 in 1991), valued at the market price on date of WestGas Interstate, Inc. (WGI) are subject to the junsdic- ,ssuance (appmximately $9A mWien in 1993, $8.7 mmion in tions of The Public Service Commission of Wyoming 1992 and $5.3 m&on in 199i) were issued to the Em-(WPSC) and the FERC. respectiveh . p;g,ges Sav:ngs and Stock Ownership Plan of Pubhc Service The Company and its regulated subsidianes prepare their Company of Colorado and Partiapating Subsidiary Com-f!nanaal statements in accordance with the provisions of panies. The estimated issuance values were recognaed in Statement of Finanaal Accounting Standards No. 7l- other operating expenses dunng the respective preced:ng
" Accounting forthe Effects of Certain Types of Regulation" years. Fhese stock issuances were not cash transactions and (SFAS 711 In general SFAS 71 recognizes that acc$unting are not reflected in the conschdated statements of cash flows.
for rate regulated enterprises should reflect the relationship Depreciation of costs and revenues introduced by rate regulation. As a The Company and its subsidianes use straight 4ne deprecia-result, a regulated utihty may defer recognition of a cost (a tion for finanaal accounting purposes. Composite rates am regulatory asset) or recognize an obhgation (a regulatory ha' used for the various classes of depreadbie assets. Depreci-bihty) ifit is probable that. througn the ratemaking process, ation rates include provisions for disposal and removal costs there wdl be a corresponding increase or decrease in rev-of property, plant and equipinent. Total deprecation ex-enues. To the extent the Company concludes that collection pense approximated an annual rate of 3 0% on the average of such revenues (or payment of habihties) is no longer prob-cost of depreciable properties for the years ended Dec-abie, through changes in regulation and/or the Company's ember 31,1993,1992 and 199l. competitive positon, the associated regulatory asset or ha-b:hty will be reversed with a charge or cred't to income. Replacements and betterments representing units of prop-erty are capitahzed. Items that mpresent less than units of Accord:ng!y. the Company and its regu!ated subsidiaries pmperty are charged to operations as maintenance. The ha<e deferred certain costs, which are being amortized over cost of units of property retired, together with cost of vanous periods. related to nuclear decommissioMng. income removal, less salvage, is charged against accumulated de-tees, employees postretirement benefits other than pen' preciation. sions. demand side management and unamortted debt expense (see Notes 2, S. 8.10 and 12). Fuel Resources Development Co. (Fuelco) uses the unit-of-production depreaation method for producing oil and gas Consolidation properties. For income tax purposes, the Company and rts The Company fo subsidiaries use accelerated depreciation and other elec-counts ofits sign +gows cant subsid anes. the AU practice ofitems intercompany consohdating the ac-tions provided by the tax laws. and transactions have been ehminated. Effectwe January I, 1993, Western Gas Supply Company (WestGas) was merged Allowance for funds used into the Company and the three pre-existing WestGas during construction (AFDC) subsidiaries. WGL WestGas Gathering. Inc. (WGG) and AFDC, which does not represent current cash earnings, is WestGas TransColorado. Inc.. became whony-owned sub- de6ned in the system of accounts prescnbed by the FERC sidianes of the Company- and the CPUC as the net cost during the period of con-struction of borrowed funds used for construction pur-Revenue recognit. ion poses, and a reasonable rate on funds derived from other The Company and Cheyenne accrue for estimated unbdled sources. The Company capitahzes AFDC as a part of the revenues for services pmvided after the meters were last cost of utikty plant. The following rates or ranges of AFDC read on a cycle bdhng basis through the end of each year rates were used for the years 1993.1992 and 199I: Statements of cash flows 1993 1992 1991 For purposes of the conschdated statements of cash flows, AFDC rates 10,21% 895%I021% 8.76L 10.21 % the Company and its subsidianes consider a?! temporary 28
Income taxes Cash surrender value oflife insurance policies The Company and its subsidiaries file consolidated state and The following amounts related to corporate-owned Irfe ,. Federal income tax returns. Income taxes are allocated to insurance contracts, with one major insurance company, are the subsidiaries based on separate company computations recorded as a component ofInvestments, at cost, on the l of taxable income or loss, consohdated balance sheets: Effective January 1,1993, the Company and its subsidiaries ,9hbousands of Do adopted Statement of Financial Accounting Standards No. Cash surrender vaive of contracts $228,195 $ 192.855 109 " Accounting for income Taxes" (SFAS 109). In accor-B ads apnst c ntr cts 226,429 190,784 dance with SFAS 109. an increase in the net accumulated N e ent in hfe insurance deferred income tax liabikty and a corresponding regulatory
' asset were recognized on the consolidated ba!ance sheet to give effect to temporary differences for which deferred taxes were not previously required to be provided (see Note 12). Reclassification .
Effective December I,1993, pursuant to the CPUC rate Certain items in the 1992 and 199 I consolidated financial case deosion (see Note 8). the Company adopted full in. statements have been redassified to conform with the 1993 manner of presentation. come tax normahzation for rate regulatory purposes with a 13 year amortization of prior flow-through amounts. Prior to December I.1953. the Company and its regulated sub-
- 2. Fort St. Vrain Nuclear Generating Station sidiaries provided for deferred income taxes to the extent Investment in Fort St. Vrain aHowed by regulatory agencies, including deterred taxes ans-n 1989, the Company announced its decision to end nuclear ing from the use of accelerated depreciation, accelerated o erations at Fort St. Vrain. The decision was based on the ,
con recovery, quahfying acceferated amortization and timing financial impact of an anticipated lengthy outage necessary chfferences due to unbilled revenues which include deferred to repair the plant's steam generator system coupled with gas and electnc costs In addition,the Company provided for the @t's history of reduced levels of generation. The Com-deferred taxes on book-tax timing differences arising from pany has completed defueling from the reactor to the Inde-rtems associated with the Fort St. Vrain Generating Station pendent Spent Fuel Storage Installation (ISFSI) as discussed (Fort St. Vrain) (see Note 2). from certain customer refunds below in the section entitled "Defueling" and commenced and for all book-tax timing differences includeo w FERC the decommissioning process as described below in the sec-jurisdictional rates. tion entitled " Decommissioning". The Company's non-regulated subsidiaries provide for de-During 1986, the Company er&ed into a Stipulation and ferred taxes arising from all book-tax timing differences. Settlement Agreement with Me CPJC, M Colorado Office Investment tax credits have been deferred and are being of Consumer Counsel (OCC) and the other parties in-amortized to income over the productive hves of the re_ volved in htigation and administrative proceedings related to lated property Fort St. Vrain's history of hmited operations. As a result, the j Company's investment in Fort St. Vrain was removed from : Recoverable purchased gas and electric rate base and certain charges were recognized including the I energy costs-net write-down of a substantial portion of such investment and 1 The Company and Cheyenne (and WestGas prior to the the recognition of the then estimated future unrecoverable merger effective January l, l993) recover certain purchased defuehng and decommissioning expenses. gas and electnc energy costs. in excess of amounts necov-ered through base rates, from their retail customers through The recovery of the remaining investment in Fort St. Vrain vanous gas and e!ectric cost adjustment tanffs (see Note 8). (approximately $63.4 million at December 31,1993), as ; These cost adjustment tanffs, which include a provision for well as the regulatory asset estabbshed to reflect the effect the col!cction of deferred purchased gas and electric energy of reviously P recognized tax deductions associated with such L costs, are revised periodically as prescnbed by the appropri. investment for which no deferred taxes were required to be ate regulatory agencies. The deferred costs are the differ. provided (approximately $ 12.4 mWion at December 31, , ence between actual costs incurred and the amounts l993), is pnmarily dependent on the Company's abihty to currentfy recovered from customers. A substantial portion repower the facihty As part of the Integrated Resource Plan 'l ' of this defen,ed amount mpresents the costs incurred to (IRP) the Company is continuing to pursue the repowering provide gas and electric energy which customers have used of Fort St. Vrain in a phased approach. The Company has but for which they have not yet been bWed. fHed an apphcation for a Certificate of Public Convenience and Necessrty (CPCN) with the CPUC to repower Fort St. Gas in underground storage Vrain as a 471 Mw gas fired combined cyde steam plant con- 1 Gas in underground storage is accounted for under the last- sisting of two combustion turbines and two heat recovery ( in. f,rst-out (" UFO") cost method. The estimated replace- steam generators The completion of the first unit, a 130 Mw l ment cost of gas in underground storage at December 31, combustion turbine, is scheduled for 1996, which wiu be fol- l 1993. exceeded the LIFO cost by approximately $8.S million. Iowed by a 102 Mw heat recovery steam generator in 1998 l 1 29 e
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS conmued Pubhc Senace Company of Colorado and Subs:cbanes and a 130 M a combustion turbine and a 109 Mw heat The Company has been notified by the decommissioning recovery steam generator in 1999. Total cost of the new contractors of several add,tional potentia! work scope - facility (exdad ng the current investment) is estimated to be changes. Final resolution of the potential work scope changes approximately $200 mdhon (in 1993 dollars). A final decision wd! require among other things, further investigation of the from the CPUC is expected no later than July 1994. If it radiation levels present in the reactor core. Such investiga-becomes probab'e that all or a portion of the Company's tion is currently being conducted. At this time, the Company current investment and/or the related regu!atory asset asso- cannot predict the hkehhood, timing of recognition. or the c!ated wth deferred income taxes wdl not be recovered, the amount of additional costs,if any, that may result from such Company wW recognize an expense equal to the unrecover- potential work scope changes. able amounts at the trme such unrecoverable amounts can be reasonab!y estimated. Followng is a reconceation of the recorded defuehng and decommissioning cost estimatef rom September 30.1986. Decommissioning when the plant was removed from rate base, to December On December 27.199 I, the CPUC appmved a Supple- 31,1993: menta! Sett'ement Agrcement (the " Agreement") to the (Thoumd5 of DMm) 1986 Fort St. Vra:n St:pulation and Settlement Agreement.
' ~
~
Debehrg and decommisdrg allowing the Company to continue with the early drsmantle- Lat9tc9!30/86 $ 95A04 ment /decommissron ng of Fort St. Vra.n. Erly d:smantle-Res scon n estmate-9/30/88 6'.764' 3 ment / decommission:ng assumes that following the removal Fewon m esnma e 3'3 U91 13.099 of the spent fuel segments from the reactor (defuehog), the rad:cactive cormonents of the reactor wdl be d:smantled 37((* """# 36A28 CPUC am%ec addional cost and removed o e an apprommate three year pened. Effec- <ecav.n - 12/3 m 1N 444 tive jufy l.1993, pursuant to the Agreement, the Company Revmon ,n estma+ey 2J 31/92 ._ __ _ _ (i .3 5_0) began recosenng from customers approx:mately $124A 331,789 m@on. ofus a 9% carrying cost oser a twelve year period DeMng emendMs through 12/31/93 (147,l l 5) This amount represented the inCation adjusted estimated Decom%ceng egend tures remaining cost of the caHy dismantlement /decommissionmg :Mugh 12/3 U93 _ _ (91.S_67) j actenties not previously recognized as expense At Decem- Dewrg ca cecomrmssiontrg l ber 31,1991 approximately $1 IBA m4an of such amount MMtM 2/31/93* $ 93.10, rema:ns to be couccted from customers and. therefore, is *Minaning ed cefsehrg the ISFSI $ 10.578 refected as a regulatory asset on the conschdated balance Decommiss>ong _ _ _ _ 82.529 sheets. The annual amount recovered frorn customers each S 93.!07 year wW be apprommately $13.9 mi!! ion. On Nosember 2 3.1992. the Nuclear f egulatory Commis- Because of the possibaty of further changes in the decom-son (NRC) approsed the Company's early d;smantlement/ missioning work scope, changes in apphcable regulations decommission'ng plan The Company has contracted with and/or the uncertarnties related to the final disposal of spent West:nghouse Electnc Corporat:on and MK-Ferguson. a fuel there can be no assurance that the actual cost of defu-dmsion of Mornson Knudsen Corporat,on, for the early dis- ehng and decommissioning will not exceed the estimated mantlement'decomm6sion:ng cf Fort St Vra3n. Since defu- habMty The Company could be required to revise the esti-ehng has been completed from the reactor to the ISFSI mated cost of defuehng and decommissioning as a result of (discussed below) and the NRC decommissioning order has any such matters. I been recersed, the Company and the contractors hase pro- I ceeded wth decomrreon:ng activities. At December 31 Defueling l 1993, apprommately 44% of the decommissioning process In 1965. the Company. the Atomic Energy Commission l has been per'ormed wth finai comp!ction of sutb actmties (now the Department of Energy (DOE)) and General Dyn- l antiapated during 199S arnics entered into an agreement to construct fort St. Vrain. ) The 1965 agreement, as amended and modded. requires The decommtssioning contract st' pub!cs a fixed pnce, based the DOE to designate a facihty for the temporary storage on a def:ned work scope; however, such pnce has been and and reprocessing of fort St. Vrain's first eight spent fuel seg-could be further mod,fied due to changes in work scope or ments and additional spent fuel segments at the DOE's dis-apphcable regulatrons. Wh,le the Company has agreed to cretion. Pursuant to the terms of an agreement dated Apnl I, three substantive changes in work scope since the initiation 1980, among the Company the DOE and General Dyn- , of decomm:ssion.ng activit:es. a revision in the defuehng and amics. the DOE designated the Idaho National Engineenng decomm'ssion:ng habihty to date has not been required as Laboratory (INEL) for receipt and temporary storage and the ongnal estimate included a contingency provision. Such reprocessing of the Fort St. Vrain first eight spent fuel seg-contngency provision, however, has been reduced as a re- ments. On June 24,1983, the Company and the DOE suit of the agreed upon work scope mod;f; cations. entered into a contract for the disposal of spent nuclear fuel and/or high level radioactive waste from Fort St. Vrain be-30 -
pnning wth fuel segment 9. in the event the DOE does not Whde the Company intends to pursue all avadable legai accept segment 9 under the provwoos of the 1965 agree- actions to enable it to ship the spent fuel to Idaho, the even-ment. as amended and moddied T he Company intends to tual outcome of this issue. and its timing at e uncertain. If, pursue with the DOf the storage /reproces9ng of the because the htigation d<scussed above is not resolved or equNatent spent fuel e!cments of segment 9 at the INFL because of other uncer tainties, it becomes probable tnat in conjunction wth the storage / reprocessing of the first storage of the spent fuel in the ISFSI wm be requbed untd eight segments 2020 (which the Company assumes is the earhest that a Federal repository could take such fuel). the Company in addtion to its contractual obhgations to proude for tern ~ would be requ: red to recognize an additional incremental parary storage and reprocewog of For t St Vrain spent fuel opense of approximately $17 md! ion, detern6ned on a pre-segments the DOE !s required try Fedral st.ttute to prov:de sent value basis. These expendtures have been escalated for a repository fx the permanent storage and dmposal of inflation uvng an average rate of 3.2% and discounted to spent nudear fuel beginning in 1998 However the DOE present vatue at a rate of 7 St The Company has assumed, cunent!y estimates that such a repository voll not be avath conmtent wth the Nudear Waste Pohcy Art, that costs abie untd 2010 Absent other arrangements wth the DOE assoaated mth the sh:pment of the fuel from the ISF Si to as dscussed abose. the equivMent spent fuel element , of the f ederai repository in 2020 are to be the responsibihty of segment 9 wd be stored at the 6FSl Whde the p! ant was the DOE and such costs are, therefore exduded from th6 operaung and as p u t of routme refuehng procedures, thice est, mate. At thG time, the Company cannot predct the hke-spent fuet segments ee transported to the INEl. After hhood. t: ming of recognition, or the amount of such add-cewahon of operatons at f art St Vra:n. defuebng actmties tional costs to be recogneed,if any were antated and authon/ation from the DOE to com-mence the Apment of the spent nodear fuel to the INEl. Funding was recewed in f ebr uary 199 i. Under NRC regulations. the Company b required to make fihngs with. and obtain the approval of, the NRC regardng Desp,te the Compan/s arrangements wth the DOE se* certain aspects of the Company's decommssioning proposals, eral parties conteacd the shipment of f ort St Vram spent mdudnp funde On pusy 2 7,1992, the NRC accepted nudear fuel to the State ofIdto As a result. sescrat law the Conkpany's 'fundng aspects of the decommissioning plan. su'ts were fded dunng 199I by and among the Company. T he Company has ako obtained an unsecur ed rrevocable the DOF, the State ofIdao and the Shoshone @annock letter of cred : totahng $125 mi!! ion that meets the NRC's bdan Tnber whose re,er vahon o !acated near the INfL mpulated fundng guid'chnes indudng those proposed on Whde the Compart, wm ab!c to ship some fuel ecments to August 21,199I that address decommesioning fundnp ' the INEl fo!!owing the tn:t.ation of htphon. no shipments umem fs nWes pow mactor s that have bedn haw been made ;nte Oc tober 1991. In1tdy. th6 was be pr emat4 At dom b nordince wth the NRC fund-tause of an inpm t en whmh was subsequently set as& mg WeMe the Compam 6 dowed to reduce the bah that piecluded the DOE from recer < spent fuel at th" ance of the letter of credt based upon mdestone panents ML Most necenth the U.S Distnct Cour t for the Dntnct made under the fNed price decomnww~c contract. As a ofIdaho orde<ed the DOE to pr ep u e an Enwonrr ntal red of wh pqments, ayanuary 17,1994, the letter of Impa:t Statement $15) relatNe to, among other thop, the Uedt Wd bn reduced to $92 tblhon. rec e pt and storam of spent fud at the INE! Accorchng!y. the DOE Mi not accept any more shipments of spent fue! T he Company had set aside appro>umately $30 mdhon in und th" f l$ 6 comp leted f he DOE has , sued an imp e- t tr ust & counts for decommNsioning the reactor Since de-rnentanon plan for the f !S which anDopates nsuame of the commmoning actmties have commenced the Company fmat E!$ by June 1995 In addtion. the Company beheves a completed wthd%ving funds from the trust accounts dur-faakty readne G icvmw may be requued Such rewea 6 a ing the mcond quarter of 1993. As previomly 6scussed, on standrd DOE procedure requred to whdate the read ne , July 1,1993, the Company commenced coHection of the of equipment fodoung a shut-dcwn pened If svh a rev:cw remmning decomm690ning costs from customers.
- , r equaed. it n unc ertain whether the rev ew wdl be con-duc.ted concurrentir uth or subsequent to the complet:on h addtion, the Company has estabhshed a separate decom-of the EIS Ihe Company currentiv antopates that it wd! mmoning trust for the ISFSI which had funds of appt os begn shipment of the spent fuel to the INE t in 1995 with mately $1.6 mCl on at December 31,1993 it is anticipated espected comp lcton in 1997. that tnm amount. together with the expected camings on the funds. m9 be suffiaent to decomm6sion the ISI Si in 1997.
The Company c onstrmted the ISI SI for the intenm storaja of spent fur! secments 49 in or der to safquai d earnst Costs for ma<ntain:ng the ISf 51 an<J removing fuel from the proceu Accord. O Sh Wuch the Company a not required to prefund wd be any ingy, onpcten' al futum December M 1991, ddan in the defuehng$y beganpa:d the Compa detuchng from a ccanbination of operatin;, funds of the Company the rextor to the N Sl and comoleted such activ:tres on and a wbWune andor me Muance of wantss june 10.19R D
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ccmroed Pubbc Serwce Company of' Colorado and Subsidranes Nuclear insurance with wnting-off rts entire investment in the Synhytech plant The Pnce Anderson Act, as amended. hmits the pubhc hab6 and reccgneng certain additional costs which were incurred ity of a hcensee for a single nuclear inodent at its nudear in connection wth the termination of this project. power plant to the amount of f:nanoa! protection availabie through habity insurance and deferred premium assessment On May 20,1993, the Synhytech assets were transferred to charges. currently approximately $7.8 bHhon, which includes Rentech, int in exchange for resolution of all claims be-a 5% surcharge Finanoa! protection for this exposure is pro _ tween the Company and Rentech, Inc. that had been or vided by pnvate insurance and an indemnity agreement with could have been asserted with respect to the Synhytech the NRC. Since July 1, l989, the Company has maintained plant and related technology Rentech, Inc. had been in-approximately $200 maan of private insurance, the amount v !ved with various aspects of the Synhytech project since requ; red by the NRC. in the event of a nudear inodent in. the project's inception. Fuelco's subsidiary, Synhytech, Inc., vcMng a Nensed commeroa! power piant in the United was sssolved effective December 31.1993. States that resu!ts in damages in excess of the pnvate habihty hestment rn Templeton Gap insurance, each reactor hcensee. including the Company, is required to share 'n the habd.ty up to the maximum amount in June 1993, the Company decided to terminate its involve-through a deferred premium assessment. The maximum ment in Fuelco's Tempieton Gap methane recychng facihty amount the Corrpany would be requ: red to pay in respect The fachty recydes landfW gas into usable natural gas that is of each inodent at a Un,ted States nudear p! ant would be sold to the City of Coiorado Springs. In connection with this approx. mate!y $79 3 mAon (which indudes a 5? sumharge). deosion Fuelco recognized an expense of approximately indexed every f ve years for inflation. provided that not $44 mil bon ($3.1 meon after-tax) assocated with writing-more than $10 maan would be payable per inodent in any ' off 'ts ent1re investment in the fachty and recognizing certain one year. addrtional termination costs. T he Company is pursuing the saie of this fachty On February 25.1993, the Company requested a revision to the Pnce Anderson indemn:ty agreement with the NRC h estment in OJ and Gas Production Properties to mduce the enount of pnvate habihty insurance from On June 22.1993 the Company's Board of Directors ap-
$200 m&on to $50 muon and to deiete any secondary proved pursurng the divestiture of Fuelco's remairing oil and responsibMty to share in the habity for a nudcar inodent at gas related production propert;es. While the properties another po,ver plant Th's reduction in habihty coverage were origina!iy marketed as a total package, disaggregation would reflect the shutdown and defueled cond' tion of the into four major asset groups occurred. As of February I.
plant and the reduced nsks of acodents resulting in radiolog- 1994, the sale of three of the four asset groups was com-ical releases. The NRC is reviewing tne Company's request p!eted. A purchase and sa!e contract for the remaining asset gr up, the San Juan Coal Bed Methane properties, is being In add; tion to the Compan/s habdity insurance, Federal re*m negotated with dosing anticipated no later than the end of ulations reqJre the Company to ma:r;tain $! 06 bfhon in the f;rst quarter of 1994. Subsequent to the final asset dis-nuclear property insurance. Effect ve rebruary 1,1991' osrt:on, the Company wm bnng Fuelco's operations to a however, the NRC granted the Company's exemption close thrcugh realization of the remaining other assets and request to reduce the nudear property insurance coverage the funding of any remaining other habihties. from $ l.06 buon to a minimum of $l 69 meon Th4s lower hm:t would cover stabil zatton and decontam: nation In December 1993, the Company recorded the effects of expenses result:ng from a worst case acadent. The the disposttion of a!! properties, including the 1994 antici-Company cur renty msnta ns $281 maan in property pated sale, and additional costs expected to be incurred insurance coverage. The add:tional insurance coverage through the close of operations. The effect of these transac-above the $ 169 muon is necessary to provide coverage for tions had no matenal impact on the Company's 1993 results the estimated deprecated rep!acement va ue of the p! ant of operattons or fnancia! pos, tron. assets that wdi be used :n the repowenng of Fort St. Vra n. Bannock Center Corporation (BCC)
- 3. Divestiture of Nonutility Assets In December 1992, BCC sold substantia!!y a!! ofits rea!
estate properties located near downtown Denver for $6 As part of the Company's strategy to focus its efforts on the mAon, resulttog in a loss of approximately $ 11.4 milhon core e<ectnc and gas bus:nesses, the Com;>any has d: vested ($8.4 mson after-tax). Effective November 30,1993, BCC certarn nonutmty investments was dissolved Fuel Resources Development Co. hesurent m Synhytech Project in December 1992. the Company term:nated its invo!ve-ment in f'ue!co's Synhytech fuel convers,on techno!cgy project. As a resu!t. Fuelco recogn: zed an expense of ap-proximate!y $26.9 mAon ($ 16 8 m&on after-tax) assocated 32
- 4. Capital Stock Common Stock 1993 l992
_._ -_ _ -. _ _. _ __ _ ~ _ . _ Sharn _ Amount, _ Sharts_ _ Amount (Thousands (l housands of Dollars) of DoMars) Common stock, $5 par value: I40,000,000 140,000.000
- l. Authonted t- Issued and outstanding 60,457,375 $302,287 58A 76.805 $292.384 L , Prem>um on common stock _ .
_ ,_608,561_ _ _ _ _
, _ 560.938_
$910,848 1853,322 Changes in common stock and premturn on common stock for the three years ended December 31,1993 are as follows.
(Thousands of Douars) Average Premium Price Per Common on Common Share . Stock _ Stock BWance, unue/ i, i 99 i $271,601 $479,548 242.674 shares moed unoer the E rnpioyeef Sawngs Pbn $2169 1.214 4,050 _l.730,603 shses isped under the Dwdend Re:nvestment Fhn _
$?2 71 _ 8 653, , . _30 652 Balance, December 31.1991 281 A68 514 250 3R418 shares eued under the f mployees' Savcgs Pian 126.06 1.667 7.022
_M;862 ges gepg!qer the Dmdend Re.nyestment P'an _ .$26A4 9,2,49 _ 39166 Balance, Deumber 3 I,1992 292,384 560,938 329.220 shwes mued under the Emp!oyees' Sav:rg Pun 128 44 ),646 7,716 _.h651.350 pys,guyd_ under the Dedenqnvestment Plan _ __ $29 i7 _ _ _ J25_7__ _ 39.90_7
$302.287 $608,561
. Balance. December 31,1993 On December 7,1992, the Company fded a registration in the event a takeover results in the Company being statement w,th the Securities and Exchange Commission merged into an acquiror, the unexcrused rights could be (SEC) re!ating to the registration of 1,000,000 common used to purchase shares in the acquiror at 50% of market stock shares. $5 par value, and 1,000.000 common share pnce Subject to certain conditions,if a person or group purchase nghts. These shares and rights are assocated acquires 20% but no more than 50% of the Company's with the Company's Omnious incentwe Plan d:scussed in common stock, the Companyi Board of Directors may Note 10. exchange each right held by shareholders other than the acquiring person or group for one share of common stock During 1991, the Company's Board of Directors declared a (or its equwalent).
dwidend of one common share purthase nght ("nght") on each outstanding share of the Company's common stock. If a person or group successfully acquires 80% of the Com-All future common shares issued wdl contain this right. Each pany's common stock for cash, after tendering for all right stipulates an instral purchase pnce of $55 per share of the common stock, and satisfies certain other cond:tions, and a'so prescribes a means whereby the nesulting effect is the nghts would not operate. The rights expire on March such that, under the arcumstances descnbed below, share- 22,2001; however, each right may be redeemed by the holders would be entitled to purchase additional shares of Board of Directors for one cent at any time prior to the common stock at 50% of the prevaihng market pace at the acquisition of 20% of the comm an stock by a potential , time of exerase. The rights are not currently exerosable, acquicon 1 but would become exercisable if certain events occuned related to a person or group acquiring or attempting to ) acquire 20% or more of the outstanding shanes of common stock of the Company I 33 , l
,-~ -. n . -. - . -,. _ , -_
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS connnued Pubhc Service Company of Colorado and Subsidianes Preferred Stock 1993 1992
- - Shares.. -- Amoun.t..
.-- . Shares - - .
Arnount (Thousands (Thousands of Dollars) of Do!lars) Cumulative preferred stock, $100 par value: Authenred 3,000,000 3.000.000
% sued rd outed r g Not si br act to mar:datory redemp$on-4 20% 3cnes 100,000 $ 10,000 100 000 $ 10.000 4 e seres Onck. des $7.500 prem um) 175,000 17,508 175.000 17.508 4A seres 65,000 6,500 65.000 6.500 4.64 senes 160,000 16,000 160.000 i6.000 4 90s senes 150,000 15,000 - 150.000 15.000 4 90% 2nd senes 150,000 15,000 l50.000 15.000 7 t 5% ser es 250,000 25,000 250,000 25.000
' TcW ~1,050,000 $ 105,008 - ~T.0M0(XF TiO5:008 Sutyect to rtandatan, e edemp:ron.
7.50% senes 216,000 $ 21,600 216.000 $ 21.600 8 40X senes 238,545 23,854 240,545
~
24.054 454,545 ~~ 45,~4 54 ~ ~ 75kS45~ ~ ~ 5354 4 Lew Pmfened stoe subicct to mancatayedempt:on uth qone year _ (25,760)_ (2,576) (25.760) (2,576) I Tod 428,785 $ '42,878 ~~d30.I8 b $ 5 05 Cumulative preferred stock, $25 par value: Authonzed 4,000,000 4.000.000
!ssued and ountard ng Not subject to rna rdatog redempton 8.40% senes 1,400,000 $ 35,000 1.400.000 $ 35.000 The preferred stock may be redeemed at the option of the in 1994 and in each year thereafter, the Company must offer Company upon at least 30 but not more than 60. days' to repurchase 12,000 shares of the 7.50% series subject to notice in accordance with the fahowing schedule of prices, mandatory redemption at $ 100 per share. plus accrued divi-plus an amount equal to the accrued dMdends to the date dends to the date set for repurchase and I 3.760 shares of bed for redemption: the 8 40% senes subject to mandatory redemption at $ 100 Cumulatrve preferred stock, not subect to mandatory per share, plus accrued dividends to the date set for repur-chase. Consequently, this preferred stock to be redeemed is redempnan:
classified as preferred stock subject to mandatory redemp-
$ !00 par value. all senes: $ 10i per share, tion wrthin one year in the December 31,1993 consolidated $25 par value,8AO% senes: $25 25 per share. balance sheet. In 1993. the Company repurchased 2,000 shares of the 8A0% cumulative [7eferred senes subject to Cuma!ctme preterred stock, subject to mandatory mandatory redemption. In 199? the Company repurchased redempoorr 7.135 shares of the 8.409o cumtlative preferred series sub-7.50% serier $102.50 per share on or pnor to August 31, ject to mandatory redemption. In 1991, the Company 1994, reduang each yearthereafter by $025 per share unta mpurchased 13,760 shares of the 8A0% cumulative pre-August 31,2003. after which the redemption pnce is 1100 ferred series and 12,000 shares of the 7.50% cumulat!ve per share: SAO% senes: $ 102.75 per share on or pnor to preferred senes subject to mandatory redemptions. No July 31,1994 and reduang each year thereafter by $0 25 other changes in preferred stock occurred in the three years per share untd July 31,2004, after wha.h the redempt:on ended December 31,1993.
price is $ 100 per share. 4 34
5 Long-Term Debt (Thousands of DoW2) I993 - 1992 Public Service Company of Colorado: First Collateral Trust Bonds: 6%% series, due November 1,2005 $ l 34,500 $ - First Mortgage Bonds: 45 series. due June 1,1994 35,000 35.000
- Sh% series, due May 1.1996 35,000 35,000 5lG senes. due July I,1997 35,000 35,000 6k% series, due July 1,1998 25,000 25,000 8'S senes, due September I,2000 - 35,000 7x% senes, due February 1,2001 40,000 40.000 7x% series. due August I,2002 50,000 50,000 7M4 senes due June I,2003 50,000 50,000 8ha series. due March I,2004 100,000 100,000 9lG series, due October 1,2005 - 49,500 84 senes, due November I,2007 49,500 50,000 94 senes, due October I,2008 - 50,000 9:4 senes, due July 1,2020 75,000 75,000 8k% senes. due March I,2022 150,000 150,000 Pollution Control Series A, S'&, due March I,2004 24,000 24,000 Pollution Control Series B:
7'06, due December 1.1995
- 2,500
- 35,000 8% due December t. 2004 Pollutron Control Senes C:
7396, due October I,2004 - 15,000 7 66. due October 1,2005 - 1,960 7a%, duc October I,2006 - 2,105 7h% due October I,2007 - . 2.260 7h% due October I,2008 - 2,425 7 G, due October I. 2009 - 26.250 Pollution Control Series E,
- 94. due May I,2013 - 42,000 Po!!ution Controt Series F, 74% due November I,2009 27,250 27,250 Pollution Control Series G, 5X% due April I,2008 18,000 -
SW6, due Apnl I,2014 61,500 - Pollution Control Series H, j 52% due June I,2012 50,000 - j Secured Medium-Term Notes, Series A: -l 8.3896, retired January 12,1994 10,000 10,000
]
8.37596, retired January 17,1994 10,000 10.000 1 8 55% due January I I,1995 20,000 20,000- ! 8.82% due January 15,1996 15,000 15,000 8.90%, due August I,1997 5,000 5,000 8.90% due August 15,1997 5,000 5,000
')
6.66% due October 30, !997 20,000 20,000 i 6 66% due October 30,1997 5,000 5,000 9% due April I,1998 5,000 5,000 10,000 10,000 9.08% due March 15.1999 8.90% due August 10,1999 5,000 5,000 7.23% duc November I,1999 10,000 10,000 9.25% due March 27,2001 6,500 6,500 35
-- .. . - _ _ - - _ - _ - - h
INOTES TO' CONSOLIDATED FINANCIAL'. STATEMENTS cononced b Public Service Company of Colorado and Subsideries (Thousands of Douars) 1993 1992 Pubtic Service Company of Colorado: (cononued) First Mortgage Bonos:(condnued) Secured Medium. Term Notes Series A-(condnued) 7.28A'due October 22,2002 $ 5,000 $ 5,000 7.28% due October 22,2002 . 5,000 J 5,000 7.65% due October 30,2002 5,000 5,000 Unsecured prom'issory notes: 7R% due December 1,1997 20,000 20,000 10.35% due in installments through December I,1999 1,333 -2,667 Il.60% due May 1,2015 5,000 5.000 12.875% due May I,2025 10,000 10,000-Unamortized prem;um 157 485-Unamortized discount (3,686) (2,l36) Capital lease obligations, 8.40% I 4.65% due in instahments throu2h August 31,1998 1,112 1,649 1,135,166 1,139,415 Cheyenne Light, Fuel and Power Company: First Mortgage Bones: 7%% series, due April I,2003 4,000 -4,000
; Industrial Development Revenue Bonds,7.25% due September I,2021 ,7,000 7,000 s 10.70 % unsecured notes, due September I,1995 8,000 8,000-1480 Welton, Inc.:
1250% secured promissory note, due in insta!!ments through March 1,1998 6,766: 7,903 13.25% secured promissory note, due in installments through October I,2016 32,320. 32327 Fuel Resources Development Co.:
- Capital lease obhgations, 7.09% due in installments through May I,1996 303 781' ,.
Natural Fuels Corporation: 12.25% secured note, due in installments ' thmugh May 23.1994 2 6 Capitaf lease obhgations, 8VM due in _jnstgmegts through August 31,1996 lit 147-1,193,668 1,199,779' he5F Matur3Les due wjthjn engat__ _. _ _ _ _ _ 58,324 2,820.
$ I,135,344 $ 1,196,959 - In 1990, the Company filed a registration statement with the amount of First Collateral Trust Bonds for the rednancing of .
SEC relating to a $500 mdlion principal amount of First First Mortgage Bonds. During 1993, $1345 mdhon of the Mortgage Bonds of which $200_milhon was subsequently First Collateral Trust Bonds were issued. In January 1994, ; i
? designated for effenng pursuant to a secured medium-term the Company issued $212.7 million aggregate principal note program. At December 31,1993. $50 mi!kon of First amount of 7-year and 30-year bonds at interest rates of 6% . - Mortgage Bonds and $585 million of medium-term notes and 7.25% respectively The Company will continue from remain available forissuance, '
time to time to offer such secured medium-term notes and bonds based on market conditions and other factors. On October 7, .1992, the CPUC approved the refinancing of certain outstanding bonds with new issue, lower cost debt in January 1994. Cheyenne refinanced its 10.7% unsecured ' , secunties at the Company's distnetion prior to December 31, note with 30-year First Mortgage Bonds. 7%% series. 1995. During 1993, the Company refinanced $1295 milhon of its fbilution Control Bonds. At December 3 l,1993, PS Colorado Credrt Corporation (PSCCC) had in place a program to seil its private medium- ' n In' 1993, the Company fded two registration statements with terrn notes, wrth maturities from nine months to ten years, Ethe SEC relating to an aggregate of $457.2 milhon principal up to an amount of $100 million outstanding at any one time. 36
l There were no amounts outstanding under this program at The aggregate annual matur; ties and sinking fund require-December 31.1993 or 1992. ments dunng the five years subsequent to December 31, 1993 are (in thousands of dollars): Substantia!!y a!! propertres of the Company and its sub-Sinking Fund sid. aries, other than expressly excepted property, are sub- ' U ject to the liens securing the Company's First Mortgage Bonds and First Collateral Trust Bonds or the mortgage hj"' 1995 [ A9"f3""["" -- 30.667 3A10 h*3z 34.077 bonds and notes of subsidiaries. Add:tiona!!y. there is a sec- 1996 51.310 3.060 54.370 1997 91,205 2.710 93,915 -{ ond tien on the electric property securing the Company's 1998 29.928 1460 3a988 First Collateral Trust Bonds. The Company's First Collateral ] Trust Bonds are additionally secured by an equal amount of First Mortgage Bonds which bear no interest. The Company expects to satisfy its sinking fund obligations through the application of property additions, and Chey- ; enne expects to satisfy $60,000 ofits sinking fund obliga- l tions annually through the apphcation of property additions. l l 6. Notes Payable and Commercial Paper .j l Infermation regarding notes payable and commercial paper forthe years ended December 31,1993 and 1992 is as follows: ) (Thousands of Dollus) .] 1993 1992 1
.~- . _ . . . . ..
_ Notes payable to banks (weighted average interest rates of 3.69%- . . . _ . at December 31,1993 and 4.05% at December 31,1992) $ 46,100 $ 95,800 3 Commercial paper (weighted average interest rates of 3.58% j at,Decemberg 1993 and 4.09 Eat _ December 31.1992) _ __ 230,775 _ _ 154,826 1 ___$ 276,875
$ 250.626 )
f Maximum amount outstanding at any month-end '/ I during the perio<l $ 276,875 $ 259.8 l I Weighted average amount (based on the dady outstanding balance) outstand;ng fo> the pmd (weighted average interest rates of 3.325% for the yer ended Decerser li,1993 and 4.24% for the year ended December 31,1992) $ 237,526 $ 23 l,770
- 7. Bank Lines of Credit and Compensating Bank Balances Arrangements by the Company and its subsidianes for com- dition, operations, business or otherwise, that would prevent mttted hnes of credit are maintained entirely by fee pay- the Company and its subsidiaries from performing their obh-ments in heu of compensating ba!ances. Arrangements for gations under the facihty The facihty expires April 1,1994.
uncommitted lines of credit have no fee or compensating The Company had no individual arrangements for uncom-balance reqwements. mitted bank knes of cnedit at December 31,1993. The On November 22.1993, the Company PSCCC, and certain Company and its subsidiaries generally may borrow under l subsdiaries extended a credit facaty with severa! banks pro- uncommitted pmapproved hnes of credit upon request; i viding $300 mdhon in committed bank lines of credit. The however, the banks have no firm commitment to make such _l credit facihty which is used pnmanly to support the issuance loans. On January 3,1994. the Company estabkshed uncom- ) of commercial paper by the Company and PSCCC, alterna- mitted knes of credit totakng $25 million, which expire on tive!y provides for d: rect borrowings thereunder Under the December 31,1994. current extension, Cheyenne,1480 Wetton, Inc., Fuelco. PSR investments, Inc. and WGG were provided access to 8. Commitments and Contingencies the credit fachty under a $ 125 million agp egate sub-limit wito direct borrowings guaranteed by the Company. Regulatory Matters At December 31,1993 there were $300 mahon in available 1993 Rate Case l commitments of which $23.1 miilion remained unused Gen- On January 20,1993, the Company fded a general rate case era!!y, the banks as partiopants in the facihty would have no with the CPUC. In rts filing the Company requested in-obligation to continue their comm;tments if there has been creases in electric, gas and steam rates designed to produce a matenal adverse change in the conschdated finanoat con- an increase in total annual base rate revenues from the level 37 i _ _ _ _ _ _ _ _ _ _ _ _ _ . _ _ . _ _ _ _ _ . _ _ _ _ . _ _ _ ._ _ l
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ceed Public Service Company of Colorado and Subsidranes of such revenues then authorized and in effect (after giving appea! wdl no' have a matena! effect on its financial position effect to the $3 mdhon per month reduction discussed or results of operations. below under "Pnor Rate Settlements") of $81.6 rn@on, or 4.7% on the basis of a rate of retum on regu!ated rate base Pnor Rate Setdements of 10.5% :nclud:ng a rate of retum on regulated common On January 31,1991, the Company filed a rate case with the equity of 13% The Company requested, among other pnn- CPUC requesting an increase in revenue levels among other ciples, the use of a fully forecasted test year ended June 30. things. During June 199 l, the Company. the OCC and other 1994 in estabbsh:ng revenue requirements and the full nor- parties signed two $cttlement Agreements and filed a joint mahzation method of accounting for income taxes. motion to dismiss the Company's rate case. The terms of On No< ember 26.1993, the CPUC issued its final wntten the Sett!cment Agreements and the dismissal of the rate case were approved by the CPUC on July l7,1991. One of decision which reduced the authonzed level of the Com-these Settlement Agreements, addressing revenue require-pany's total annual base rate revenues (after giving effect to ments, provided, among other things: (1) for a $22 mdhon the reduct<ons under pnor rate settlements) by approx" refund to electnc customers in August 1991:(2) that the mately $5.2 mAon on the basis of a rate of return on regu-Company would fde a rate case on November 2.1992 and lated rate base of 9.4% induding a rate of return on regu!ated common equity of i 1% The new rates became it would not seek an increase in base rates to be effect've pnor to juiy 1,1993, and (3) for a reduction in electnc rates effective December I.1993 Proceed ngs wdl be held in 1994 to determ!ne cost anocation issues and the speoftc of 3 38% or approximately $3 milhon per month, for the rate changes for the vanous customer classes- penod beginning January 1,1992 and cod ng on the effec-trve date of new rates. The CPUC rejected the Company's proposed use of a fully forecasted test year in the estabhshment of revenue require-Other Regulatory Matters ments in fasor of an h:stoncal test year ended September Demand Side Management (DSM) l 30,1992. In addition, as part of the final decision, the follow- i ing signif, cant issues were addressed Oc the past few years, the Company has developed DSM l programs, including incentive and recovery mechanisms. The the adoption of full income tax normahzation with a 13 programs, developed under a collaborative process. among year amortization of pnor fbw through amounts currently the Company, pubhc interest groups, consumers and indus-renected as a regulatory asset on the ba!ance sheet, try. were proposed to the CPUC on february 16,1993 and a continued inclusion in rate base of the Pawnee Steam Elec~ approved on May 5,1993 with a schedule to be implemented tnc Generating Station. Unit 2 (proposed) engineering over a three-year period. Effective July I,1993, ht e Com-costs ($ 18 meon) and the investment in Southeast Water any placed into effect a Demand Side Managen ent Cost Pagnts ($28 m6cn), but wrth an ahowed rate of return on Adjustment (DSMCA) clause which permits it to recover such assets based on the Company's weighted cost of debt nondabor incre. mental expenses. capital expenditures with and preferred stock, and carry ng costs and certain incentives assoaated with the a roved DSM progcams Under a separate CPUC order retention of the Company's Electric Cost Adjustment issued in December 1992. the Company is implementing a (ECA), allo,ving the continued pass-through of electnc Low 4ncome Energy Assistance Program. The costs of this energy costs to customers, and the opening of new energy conservation and weathenzation program for low-dockets in the future to reevaluate the ECA and the Gas income customers wdl be recovered through the DSMCA. Cost Adjustment (GCA) mechanisms The total capitahzed/ deferred DSM costs were $10.4 milhon As part of its ort!er, the CPUC advised the Company ofits nd $3.6 milhon at December 31,1993 and 1992. respectively concerns mgarding the Compan/s need to more fully docu~ Incentwe Regulation ment the prudence of expend.tures incurred for its new computenzed Customer Information System. The system, The CPUC has opened a separate docket to ir.vestigate which cost approsmately $65 mdhon. becamu nerational issues relating to the adoption and irnplernentation ofincen. in August 1993 As a result, the Company wdl address this tive regulation which may include decouphng. forthe Com-issue at the tirne it seeks rate recovery for these costs as it pany's earnings, and additional DSM incentives. On February wdl be the Company's burden to estaNsh that such costs 10.1994 the parties to this docket fded a settlement with were prudently incurred the CPUC, which is intended to settle a!! issues in this docket. The hearing on such settlement was held before the CPUC On December 27,1993. the OCC fiied in the Distnct on February 14,1994, and the CPUC is expected to issue Court in and for the City and County of Denver (Denver its deosion on the acceptabihty of the settlernent by mid-District Court) an appeal of the CPUC deasion T ne OCC March 1994 The settlement provides for a continuation of has claimed that certa;n of the CPUC's deosions. which are DSM incentives for the Company's pursuit of DSM re. pnmanly income tax related issues, were not supported by sources through 1998. From the Company's perspective, substantial evidence. The Company wdl partic pate in the this settlement is intended to keep the Company whofe appeal The Company beheves that the resolution of this with respect to revenues lost as a resutt of the imp!cmenta-tion of DSM programs and also provides a modest incentive 38
1 for the encouragement of the Compan/s continued pursuit the CPUC approved the QFCCA recovery of such costs of DSM resoun es. may be subject to an earn:ngs test wh!ch has not yet been integrated Rescarce Plann,ng in December 1992. the CPUC issued the Electric Integrated Environmental issues Resource Planning Ru!es estabbshing speo8 ic rules for the Enwronmenu! See Oconup state s utilities to foflow in preparing efectnc load forecasts and in secunng broad pubhc partiopation for assessing both Under the Comprehenisve Environmental Response, Com-supply- and demand-side options On October I.1993, the pensation and Liabihty Act, the Envnnmental Protection Company fded its plan with the CPUC. which descnbes the Agency (EPA) has identied and a Phase ii environmental mix of resources to be ut>hzed and/or acquired by the Com. assessment has revealed. Iow level, widespread contamina-pany over the next three years induding the repowering of tion from hazardous substances at the Barter Metals Com-Fort St. Vrain as a gas f red combined cycle steam plant. In pany propertes located in centraf Denver. For an estimated adition, certain DSM measures have been identifed to re. 30 years, the Company sold scrap metal and e!ectncai duce the amount of add tional capacty r equired to be sup. equipment to Barter for reprocessing. The Company. which phed by the Company in the future. The Compan/s IRP is is one of several PotentiaHy Responsible Parties (PRPs),is schedu!ed to be heard before the CPUC in Apnl 1994 and involved in thc deanup of this site which began in Novem-a deosion is anticipated by the end of May 1994. ber 1992 and is expected to be completed during 1994. The total project cost is currently estimated to be approxi. GCA mately $6.0 mdbon, of which $4.0 mdkon has been incurred at December 31. l993. The Company beheves rt is probable On September 30.1993, the Company Ged an apphcation with the CPUC requesting a $50 mdhon revis;on in its GC A that a significant portion of these cleanup costs will be re-cosered through claims made against the Company's insur-to cover the increased cost of natural gas purchased from ance companies. Lawsuits against these insurance companies suppbers over the next twelve months. In general, the higher costa are related to nationwide industry and marketplace have been fi!cd in the Denver District Court To the extent adjustments to a new. deregulated gas industry and the higher such costs are not recovered by insurance or from other pnce of gas at the weHhead. More'spoofcahy, the increase is PRPs the Company intends to pursue recovery of those re!ated to: i ) rate increases by the Company's major gas costs through the regulatory process. suppher effective October I.1993. 2) new costs from the Extensive Polychlorinated Biphenyl (PCB) presence has restructunng of services on interstate pipelines in response been identifed in the basement of the Denver Gas and to the implementation of FERC Order Nos. 636-A and Electric Budding, a histonc ofEce building located in down-636-B (FERC Order 636), and 3) an increase in gas com- town Denver The PCB presence possibly occurred in the modity pnces as the gas surpius that resu!ted in lower gas early 1970 s and mid-1980's during routine transformer pnces in the mid-1980s and early 1990's has diminished' maintenance activities The presence of PCB's may also have The apphcation was granted by the CPUC in an order is- been caused or contnbuted to by the operations or activi-sued on October 28.1993. Beg!nn;ng in 1994. the CPUC ties of the building owners or service providers to the Den-we conduct an annual review of the Company s GCA ad' ser Gas and Electnc Budding. The Company was negotiating justments for the purpose of rev: ewing the justness and rea~ the future deanup with the current owners; however, on sonableness or these adjustments. October 5.1993 the owners fded a civd action against the Company in Denver District Court. The action a!!eges that ECA and Quah@ng Faches the Company was responsible for the PCB releases and Copaaty Cost Adjustment (QFCCA) add:tionally claims other damages in unspeofed amounts. l The Company's ECA mechanism has been revised and a Prehminary estimates of cleanup costs are approximately new QFCC A mechanism was implemented on December $4-$5 million. A jury tnal has been set for Aur,ust I S.1994. l.1993, a!ang with the base rate changes resulting from the The Company believes that it is probable that it wdi recover rate case. Under the new ECA, fuel used for generation and all costs incurred through insurance claims and/or the regu- - purchased energy costs from utihties. Quahf fing Facihties l latory process. l (QFs) and Independent Power Production Facikties (IPPF's) (excluding a!I purchased capacty costs) to serve retad cus- The Company is pursuing reoccupation ofits former Head-tomers, are recoverable. Purchased capacity costs are re- quarters Offce Budding. however, the facibty contains q covered as a component of base rates, except as descnbed asbestos. As a resu!t. asbestos abatement / removal at the site below The ECA rate is revised annually on October I. has been initiated. The estimated cost of the cleanup is ap-Recovered energy costs are compared with actual costs on proximatel f$9.0 mdlion of which $0.3 milkon has been a monthly basis and dferences, including interest. are de- Incurred at December 31.1993. The abatement / removal is ferred. Under the new QFCCA. all purchased capaaty costs expected to be completed during 1994. The Company has from new QF projects, incurred subsequent to December recorded a habikty and a related asset for the total estimated I.1993, are recoverable simdar to the ECA. These capacity cost and intends to pursue recovery of these costs through costs are not refected in the Company's base rates. Whde the regulatory process. 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS connnued Public Service Company of Colorado and Subs: diaries The proposed Ehtch Gardens Amusement Park site near to reduce 50 and 2 NOx emissions. The Company contin-downtown Denver has revealed low level, widespread con- ues to research and implement various 50 2 and NOx tanination. The Company had used the site in the past as a emissions reduction projects, includ ng two Oean Coal manufactured gas plant site and is one of three PRPs. An Technology lli (CCT3) pnajects. Reserch and implementa-agreement has been signed by Trillium Corporation, a PRP tion continues on the two CCT3 projects, which involve the Ektch Gardens Co. and the Company, reteasing the Com- Arapahoe Steam Electnc Ger erating Station Unit 4 and the pany from responsibihty for the first $2 mdlion of cleanup Cherokee Steam Electric Generating Station Unit 3. Testing costs. Any costs exceeding that amount wdl be the responsi- is expected to be completed at both units by mid-1994. bikty of the Company however; the Company could then pursue recovery of the incurred costs from Burhngton The Company beheves that, consistent with historical regu-Northern Railroad, the third PRP and/or through insurance latory treatment any costs to comply with pohution control claims. The Company believes that the total cleanup costs regulations would be recovered from its customers. How-wdl not exceed $2 mukon. ever, no assurance can be given that this practice will con-tinue in the future. In addition to these sites, the Company has identified several sites where cleanup of hazardous substances may be re. Purchase requirements quired. WhQ octantial habihty and settlement costs are stdl Cod under investigaten anci negotiation. the Company beheves that the resolution of these matters wdl not have a materia! At December 31,1993, the Company had in place long-effect on its financ al position or resUts of operations. The term contracts for the purchase of coal for existing power Company fu!!y intends to pursue the recovery of ali signig plants through 20l7. The minimum remaining quantities to cant costs incurred for such projects through insurance be purchased under these contracts total 99 milhon tons. claims and/or the rate regu!atory process. To the extent any The coal purchase pnces are subject to penodic adjustment costs are not recovered through the options hsted above. for inflation ar4 market conditions. Total estimated obliga-the Company would be required to recognize an expense tions. based on current prices, were approximately $1 billion for such unrecoverable amounts. at December 31.1993. Other Environmentd Matters Coci transportation On November 15.1990, President George Bush signed into The Ccmpany has entered into long-term contracts for the law the Federa! Clean Air Act Amendments of 1990 transportation of coal by radroad in Company-owned or (Amendments). The Amendments require coa! burning leased raucars to existing power plants. These agreements, power plants to reduce SuNr Dioxide (502) and Nitrogen expiring in 1997, provide for a minimum remaining transport Oxide (NOx) emissions to smfed levell The Company is quantity of 20 m3 hon tons. Coal transport contract prices currently meeting the emission standards placed on 502 are negotiated based on market conditions and are adjusted through the use oflow sulfur coal and the coeration of pol. periodically for inflation and operating factors. Total esti-lution control eauipment on certain generation facilities. mated obligations, based on current prices, were approxi-The Company wdl be required to modify certain boders by mately $ 105 miHion at Deuember 31,1993. the year 2000 to reduce NOx emissions at an estimated total future cost of approximately $25.8 mimon. The Com- Natural gas purchases and transportation pany is studying its options to reduce SO2emissions and The Compan/ and Cheyenne have entered into long-term currently does n't anticipate that these regulations will sig- contracts for the purchase, frm transportation and storage nifcant!y impact its operations, of natural gas which expire on various dates through the year 1998. In compliance with the rules estabbshed by FERC On August 18,1993, a conservation organization fded a Order 636, the Company has renegotiated the contracts complaint in U.S. Distnct Court for the Distnct of Colorado- with its twc primary gc_s pipeline suppliers and has com-pursuant to Section 304 of the Federal Clean Air Act, against mrtted to continue purchasing gas for the next three years. the Company and the other joint owners of the Hayden The Company will not incur any gas supply realignment Steam Electric Generating Station (Hayden). The plaintiff al- costs otherwise applicable under FERC Order 636. At Dec-leges that, on certain occasions, the station exceeded opac- ember 31,1993, the Company and Cheyenne have mini-ity limrtations during the past several years. The complaint mum ob1gations under such contracts of $279 mdlion in seeks. among other things, civil monetary penalties. At this l 994, dechning thereafter for a total estimated commitment time the Company is not able to estimate the amount, if any- of $685 million. of its potential liability or whether additional particulate con-trol equipment wik be required. The suit is in the early dis- Purchased power covery stages and a trial date has been set for August 1995- The Company and Cheyenne have entered into agreements The Metro Denver Brown Cloud !! study, designed to inves- *'th utibtres and qualifying fachties for purchased power to tigate the formation of secondary particu!ates, was com- meet system load and enet gy requirements, to replace gen-pleted during the third quarter of 1993. The results of the cration from Company-owned units under maintenance and study have not aftered the Company's current programs 40 _ _ _
outages, and to meet the Company's operating reserve obli. Historicany, all minimum coal, coal transportation, natural gation to the Inland Power Pool. gas, and purchased power requirements have been met. The Company has vanous pay-for-performance contracts Other purchases wrth QF's having expiration dates through the year 2025. In Commitments made for the purchase of materials, plant l general, these contracts provide for capacity payments, sub- ' and equipment and other various rtems aggregated approxi-ject to the QFs meeting certain contract obhgations, and mately $428 milhon at December 31,1993. energy payments based on actual power taken under the contracts The energy and capacity costs are recovered Employee Litigation
- l. through the ECA and QFCCA mechanisms. Additionally. Several employee lawsuits have been fled against the Com-the Company and Cheyenne have long-term purchased pany invoMng alleged sexual / age discrimination. In addition, l power contracts with vanous regiona! utihties expiring certain em^ vees terminated as part of the Company's L through 2022. In general, these contracts provide for capac- 199I/* nizational analysis have asserted breach of ity and energy payments which approximate the cost of the contract missory estoppel with respect to job secu-sellers. These costs have historically been recoverable nty and bream of the covenant of good faith and fair dealing.
, through ECA mechanisms; however, effective December I, The Company is actively contesting the lawsuits and believes l 1993, the Company's capaaty costs were refected in base the ultimate outcome will not i' ave a material impact on the i rates. Total capacity and energy payments associated wrth Companyi results of operations or fnancial position. such contracts were $366 milhon 5332 milkon and $254 milhon in 1993,1992 and 1991. respectively Fort St. Vrain See Note 2 for certain co- s relating to Fort St. Vrain. At December 31.1993. the estimated future payments for capaaty that the Company and Cheyenne are obhgated to Leasing Program purchase, subject to avadabikty, are as fo!Iows: The Company has in place a leasing program which includes a provision whereby the Company indemnifies the lessor for (Thousands of DoLvs) Year QPs Regional Utilities Total all liabilities wh;ch might arise from the acquisition, use, or Ending December 31 disposition of the leased property See Note 15 for additional j 1994 $ I i 1.569 $ i75.543 $ 287.112 discussion ofleasing information. I 1995 151809 176.233 330.042 f 1996 157.637 182.442 340.079 l 1997 157.637 184.141 341,778 157,353 { 1998 183.048 340.401 ! 1999 and thereafte' l.667,155 2.411.244 4.078.399 Total $2.405.160 $3.312.651 $5.717.811 . 9. Jointly-Owned Electric Utility Plants l On .Apnl 15.1992. the Company. Tri-State Generation and fired plants in northwestern Colorado, were divided among Transmission Association (Tri-State), PaafrCorp. and Inter- the Company, Tri-State and Pacif Corp. The Company , mountain Rural Electric Association completed the acqui- acquired approximately 33 l Mw of net dependable generat, j sition of assets of Colorado-Ute Electric Association Inc., ing capability. Other property acquired included transmis- {' (Colorado-Ute) pursuant to the joint Plan of Reorganization sion and distribution knes and facilities. as fded and approved in the Chapter i i reorganization of Colorado-Ute in the U.S. Bankruptcy Court. The total As a result of the acquisition of Colorado-Jte assets, the acquisition cost to the Company was approximately $265 Company is responsible for its proportionate share of oper-mdhon. ating expenses (reflected in the 1993 and 1992 consolidated statements ofincome) and construction expenditures. Fol-The generating assets of Colorado-Ute, primanly the Craig lowing is the Company's investment in jointly-owned plants Steam E!ectric Generating Station (Craig) and Hayden coal- and its ownership percentages as of December 31,1993: Plant Construction in Accumulated Work in Service Depreciation Progre,s Ownership % (Thousands of DoHars) l Hayden Un: $ 34.507 $ 28.471 $1377 75.50 Hayden Un 57.208 27.826 210 37.49 Hayden Ccn . ac+t es 1.599 f212 1.756 53.10 Cra g Un,ts ! . 56.718 19.470 245 9.72 Cra<g Commen f acees Unis I & 2 7.398 2.562 570 9.72 Cra g Common Fackes Un:ts I. 2 & 3 8.125 2.721 561 6,47 _ Trgmggygegngr3 ubstat:ons S 70.407 18.416 - 42.0-73.0
$235.962 $100.678 $4.519
. _ _ _ _ - __ .b
i NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ccenued Pubhc Serv:ce Company ofColorado and Subsidiaries
- 10. Employee Benefits Pensions The net pension expense in 1993,1992 and 1991 was com-The Company and its subsidianes (exduding Natural Fueis) posed of.
maintain a noncontributory defined benef t pension plan (Thousands of Donars) covering substant;aHy all employees. During 1993, the Board 1993 1992 199I
~ ~~ ~~
of D! rectors of the Company approved amendments that: iervtce co $ 15','868 $IU8U U2$i5 l) ehminated the m;nimum age of 21 for receiwng credrted interest cost on projected service,2) provided for an automatic increase in monthly benefit obogeon 38,106 35695 33,322 payments to a retired plan member in the event the mem_ Retum on plan assets (52,369) (34,317) (79,467)
" ans: ton ber's spouse or other contingent annurtant dies poor to the ^} (d on member. and 3) provided for Average hnal Compensation Statement of FinancJ to be based on the highest average of three consecutive Accounting Standards years compensation. These pian changes increased the pro. No. 87 (3,674) (3,674) (3.673) jected beneft ob!igation by $24.6 mdhon. Oter tems 8,219 (6.317) 39.907 Net censon ewpense $ 6,150 $ 6.175 1 2.185 The Company and its subsid: aries' funding pohcy is to con-tnbute annudy at a m:nimum, the amount necessary to sat-tsfy the Internal Resenue Service (IRS) funding standards. 5,gnificant assumptions used in determining net penodic pens:on cost were:
1993 1992 1991 D;scount rate 8.2% 82% 8.9% Expected iong-tenn tocrease rn compensaton levei 5.5% 5.5% 5.5% Expected we:ghted average song tem rne of Ttum
" 355?t5 _ _ _ . _ _ _ _ !1% _ _ J% _ i% l Variances between actual experience and assumptions for costs and returns on assets are amorteed over the average rema:ning serv ce hves of emp!oyees in the plan.
A companson of the actuanally computed benefit obhga-tions and plan assets at December 31.1993 and 1992. is presented in the fol low:ng table P!an assets are stated at fair value and are comprised pnmardy of corporate debt and equ;ty secunties. a real estate fund and government securi-ties held either d:rectly or in comming!ed funds. (Thousands of Douars) 1993 1992 Actuarial present va!ue of benefit obligations: Vested $ 392,623 $ 336,632 _ Norgested_ _ __ _ _ __ _ _ _ _. _ __ _ _ 3 9,3 4 3_.. 29.800 431,966 ._ 366,432 Effect ofprojected future sa!aryincreases_ _ . . _. __ _ __ __ _28,294 l __ i 10.776 ' . Projected benef t obligatron for service rendered to date 560,260 477,208
, Plan assets at fair va!ue __ _ _ _ _ _ _ _ _ _ ,_ . _ _ _ ,
__ _(5 2 3,5 4_8), _ _ _(483.94l) Projected beneft obbgation (in excess of) less than plan assets (36,712) 6.733. Unrecogneed net loss 58,252 34,763 Prior service cost not yet recognized in net penodic pension cost 34,673 10,870 Unrecogneed net transition asset at January I,1986, being recognized _ pver 17 years __ _ _ _ _ _ _ _____ _ _(3 3,064)_ _ _(36;737) Prepa:d penson asset $ 23,149 $ 15.629 42 c
)
_ _. 1 Sign:ficant assumpt ons used in determin;ng the benefit obb- tiement Agreement stipulated that the Company would
- gat.ons were: continue to recover such costs as paid untd the date new rates are effectn,e. The Fort St. Vrain Supplemental Set-N m2 tiement Agreement stipulated that. on the effective date of D smurt we 7.5% 8R new rates (December i,1993) the Company would be al-Emected iorgtem ncrene e
lowed to recoverthe costs of postretirement benefits other n mr penut:on me< 5.0% 553 than pensions as accrued in accordance with the provisions of SFAS 106, modifed as follows: On bnuary 25,1994, the Board of Directors approved an ' amendment to the Plan which offers an incentive for early . the actuanal calculation of such is.bikty would include a retirement for employees aZe 55 with 20 years at service as return on assets that reflects monthly contributions net of wen as a Severance Enhancement Program (SEP) option for beneft payments throughout the year; these same chg:ble employees. The. Plan amendment and the attnbution period would reflect each employce's ex-the SEP are effective for the penod February 4,1994 to pected retirement date rather than the full engibihty date: Apnl 1.1994. The Plan amendment generally provides for the fohowing ret 3rement enhancements: a) unreduced early a forty-year levelized prinopal and interest amortization retirement bene rts. b) onree years of additional credited ser- *'ll be used for the transrtion obligation; and vite. and c) a suppiement of either a one-time payment the accounting and regulatory treatment for life insurance equal to $400 for each fuh year of service to be paid from benefits would remain on an as paid basis. general corporate fands or a $250 sooal secunty supple ^ Pursuant to the Fort St. Vrain Supplementa! Settlement ment each rnorth up to age 62 to be pa:d by the Plan. Agreement, the Company had anticipated that any difrer-The SEP provides for: a) a one-t:me severance rang ng from mce in expmse res&ng from the CPUC prescnbed
$20.000-$90.000. depending on an emp!cyee's organization approach and the expense required by SFAS 106 would level b) a continuous years of service bonus (up to 30 years). be ref!ected as a regulatory asset in the consohdated bal-and c) a cmh t>ene'it of $10.000 ance sheet and would be recovered from customers over future penods.
Ebg:ble emplo<ees may elect to partiopate in either pro-
~
gram. Tne total cost of the programs is estimated to range In January 1993, however, the Emerging issues Task Force between $25 to $32 mEon. The Company intends to (EITF) provided gu; dance as to what add;tional criteria or amort!ze such cost to expense over a penod not to exceed evidence is needed for a rate regulated enterprise to recog-approximately fue years in accordance with antiopated reg- nize a regulatory asset equal to the amount of OPEB costs datory treatment of such costs. for which rate recovery has been deferred. Generally, a util-Ity must determine that it is probable that future rates will Postretirement benefits other than pensions aHow for the recovery of this OPEB regu!atory asset. In ad-Re Company and as subsdanes provide certain health care d: tion, no later than approx;mately five years from the date . aM hfe insurance benefts for reted employees. A signifi- of adoption, rates must include fu!I SFAS 106 costs and the cant portion of the employees becorne chgible for these recovery of the regulatory asset established during the benefts if they teach either early or normal retirement age deferral penod must be accomplished within approximately whb worieng for the Company or its subsdanes H stor- twenty years. The EITF's conclusions do not include the icany the Company has recorded the cost ofinese benef ts CPUC approach prescribed in the Fort St. Vrain Supole-on a pay-as-you-go bases, cons' stent w th the regulatory mental Settlement Agreement. treatment. Effectise January 1,1993, the Company and its subsdaries adopted Statement of Finanaal Accounting As a resub., and under the provisions of the Fort St. Vrain Standards No.106' Employers' Account ng for Postretire- Supplemental Settlement Agreement, the parties to this Agreement have initiated discussions and negotiations fo-ment Benefes Other Than Pensions" (SFAS 106) which re_ quires the accrua!, dunng the years that an employee cused on resolving this issue to the mutual acceptance of all renders seWice to the Company, of the expected cost of parties without disrupting the overall Agreement. These provdng postret:rement benefits other than pensions to discussions are continuing, and the Company beheves it is the emp i cyee and the employee's beneficanes and covered probable that the matter will ultimately be resolved in a man- - -~; dependents. The additional other postretirement employee ner that will comply with the conclusions reached by the benefits (OFEB) costs in 199 3 resu! ting from this new ac- EITF re!ative to the recognition of OPEB regulatory assets count;ng standard. v hich exceed amounts being recovered f r which rate recovery has been deferred. Should the cur-throug'n rates, have been deferred for future recovery rent ly approved methodology not be modified to conform . with the EITF consensus, the Company would be required Dunng 1991, the CPUC appr oved a rate Settlement Agree. to record as an expense the d:fference between the amounts ment (see Note 8) and the Fort St. Vra.n Supplementa! Set- allowed in rates and that required by SFAS 106. tiement Ag eement (see Note 2). both of which addressed the account ng and regulatory treatment of the costs of postretament benef;ts other than pensions. The rate Set-y __ L .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ccronced , Pubhc Ser vice Company of Colorado and Subsidiaries l Effective December I,1993. the Company began recovenng The net periodic postretirement benefit cost in 1993 under such costs based on the level of expense determined in ac- SF/s5106 was comprised of: cordance with the CPUC approach in the Fort St. Vrain Supp!cmental Settlernent Agreement (approximately $18 (Thousands of Docars) 3993 m:hion on an annua! basis for retM jurisdiction). Dunng 1993. Sevc, cost 3 4,943 the Company deferred $25.9 mdhon of SFAS 106 costs for eterest cost on preieced beneEt ebbgation 20,828 future recovery The Company plans to fde a FERC rate case Retum on plan assets (164) in 1994 which wdl include a request for approval to recover Amort:nton of net trans: ton obhpton at a!l wholesa!e junsdiction SFAS 106 costs. Effective January I. januay h 1991 assummg a 2u year 1993. Cheyenne began recovering SFAS 106 costs as ap- E F "R*' d - - - - - 2M proved by the WPS'C. The Company and Cheyenne intend f9j3TP e e ;jd ' to fund this plan based on the amounts reflected in cost-ot Wth cunent regulaton ~ (12,462) service, consistent with the rate orders. - ~ ~ ~ Re]Jat&Jfse VDecerserlI7iV93 ~5 25355 The OPEB expense on a pay-as-you-go basir was $9.1 mil-
~
lion and $8 mdhon for 1992 and 1991. respectively The funded status of the plan at December 31,1993 and January I.1993 is as fo10ws: (Thousands of Do!;ars) December 31,1993 January I,1993 Accumulated postret:rement benefit obhgation: Retirees and ehgible beneficianes $ 86,718 $ 79,692 Other fully ehgible plan participants 95,103 95.262 Othe_r actiye pJan partypants 9_8,342 79.238 Total 280,163 254.192 P(an. asset _s at fair value _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ __(4_76)__ _ - Accumulated benefit obhgation in excess of p!an assets 279,687 254.192 Unrecognizeo net loss (10,059) - Unre ognized trans. tion objgatjon _ __ . _ _ _ _ _ _ _ _ _ _ _ __ _ (241,4_83)__(254. l_92) Accrued postretirement benef;t obhgation $ _28,145 $ - Significant assumptions used in deterntning the accumulated postretirement benefit obhgation were: December 31,1993 January _l,1993 Discount rate 7.5% 8.2% i U!timate health care cost trend rate 5.3% 6.0% i _ Expected long _ term increase in compensation level. _ _ . - - _ . _ _ _ . _ _ 5.0% 5.5% 1 The assumed health care cost trend rate for 1993 is 12%. discount rate. The Company beneves it is probable that it decreasing to 5.3% in 0.5% annual increments A 1% in- wdl receive CPUC approval to recover these costs in future crease in the assumed health care cost trend wdl increase rates and, therefore, the application of the new standard will the estimated total accumulated benefit obligation by $37.7 not have a matenal impact on the Company's financial posi-million, and the service and interest cost components of net tion or results of operations as a regulatory asset and a cor-periodic postretirement benefit costs by $5.2 mdhon. respond ng liabihty wdl be established on the consohdated balance sheet. Postemployment benefits in November 1992, the Financial Accounting Standards incentive compensation Board issued Statement of Finanaal Accounting Standards The Company's shareholders appmved the Omnibus in-No. I I 2 " Employers' Accounting for Postemployment centive Plan at the 1992 Annual Shareholders Meeting. The Benefits" (SFAS I 12) which estabhshes the accounting stan- Omnibus incentive Plan provides for annual and long-term dards for employers who provide benef ts to former or inac- incentive awards for of5cers and management employees. tive employees after employment but before retirement One million shares of common stock have been authorized (postemployment benefits). This statement became effectree for awards under the Plan as it a! lows for the issuance of January 1,1994 and the Company has estimated its benefit stock options and/or restricted shares. The Stock options are obhgation to be approximately $32 mahon. assuming a 7.5% issued at the fair market value of the Company's common 44 -
stock at the date ofissue and vest over a three-year period. was effective begtnning in 1993, provides for a cash award to Options were granted to chgible off.cers in 1993 Cash and employees if annual corporate performance goals art met. restricted stock awards were made under the Omntbus In. Performance goals were met in 1993, and a cash award was centive Plan in 1994, since goals were met in 1993, paid in early 1994. During 1992, the Company estabhshed the Employee in. The expenses accrued under both the incentive plans centive Plan which recognizes the contnbution of all em- tota!cd $5 2 mmion in 1993 and $0 in 1992. ployees toward corporate finanaa! goa!s. This plan, which
- 11. Financial Instruments Fair value of financial instruments l The estimated fair va!ues of the Compan/s f,nanaa! instru.
l ments are as fo!!ows' l l (Thousards of Dows) l 1993 __ _1992 _ _, l Carrying Fair Carrying Fair Amount Value Amount Value ! Assets Cash and temporary cash investments $ 18,038 $ i8.038 $ 51,155 $ 51,155 investments, at cost 6.595 6.642 15.221 16.535 Uabihties Notes pyable and commeraal paper 276,875 276.418 250.626 249,760 Preferred stock subject to mandatory redemption. 45.455 46.650 45.654 45,895 Dmdends payable 31234 33.234 32.248 32.248
- Accrued interest 29.507 29.507 31,032 31,032 Customers' deposits i6.225 I6.225 I6.807 I6.807 l Other depos!ts 6.231 6.231 5,644 5.644
.Long-term debt 1,195,669 1.255.768 1.!98.007 1,218,998
- -. . - . . ~
The following methods and assumptions were used to estr Preferred stock subject to mandatory redempoon rnate the fa:r va!ue of each class of finanaal instrument. The far value is based on quoted market pnces for s:mdar Cash and temporary cash investments, dudends payuble and onstruments. accrued interest Customers' deposits The carrying amount is a reasonab!c approximation of fair Due to the nature of these deposits, the carrying amount is value due to the nature and short-term matunty of these a reasonable approximation of fair value. f:nanaal instruments. , Other depos:ts invcstments, at cost ' Other long-term deposrts from third parties are included in The fatr value of the majonty of these investments is esti- other deferred credits. Due to the nature of these deposits, mated based on quoted market pnces for sim:lar invest' the canying amount approximates fair value. ments. For the remain:ng investments, the carrying amount is a reasonable approximation of fair value due to the nature [ong-terrn debt of the instruments' The estmated fair value of the Compan/s debt was based Notes payable and commercd paper on quoted maricet pnces of the same or similar securities. Anticipated regulatory treatment of the difference between The carrytng amount of notes payable is a reasonable ap-carrying and fair value of the Company's long-term debt, if in proximation of fair va!ue due to their nature and short-term fact rt were settled at amounts approximating those above, matunty. For commenaal paper. the fa.r value was estimated would dictate that these amounts be used to reduce or based upon the carrying value less unaccreted interest. increase the Compan/s rates over a presa bed amortiza-tion period. Accord.ngly. the settlement would not result in a material impact on the Company s financial cosition or results of operations. 45 --
I
! NOTES TO CONSOLIDATED FINANCIAL STATEMENTS conmued Pubhc Service Company of Colorado and Subsidiaries Othernems Concentration of Credit Risk in accordance with NRC decommissioning funding require. The Company is mquired to provide sersice and grant
- ments for nuclear power mactors, the Company has credit to a diverse customer base within its service terntory obtained a $92 mdlion irrevocable letter of credit which The Company may require secunty deposits prior to pro-bears a market interest rate. The NRC is the beneficiary of viding service to customers depending upon an assessment this letter of credtt. At December 31,1993 and 1992. no of credit worthiness. The Company reviews customer amounts were outstanding under this letter of credit. In gen- accounts receivable on a regular basis and has in effect an eral, such letter of credit may be exercised by the NRC in uncollectible accounts policy No individual customer or the event the Company is in defautt ofits performance obh. group of customers engaged in similar activities represent a j
!L gations underthe decommissioning plan. matenal concentration of credit risk to the Company '
- 12. Income Tax Expense income tax expense consists of the fo!!owing:
(Thousands of Dollars) 1993 1992 1991 : Current income taxes:__ Federa! $34,684 $34.265 $40,156
.. State ___ __
(2,208) I,513 '8.240 Total current income taxes 32,476 35,778 48,396 Defen ed income taxes 33,435 22.509 26.122 .; investment tax credits-net ____ (4,917) (5.138) (5,230) Total provision for income taxes $60,994 $53,149 $69,288 The Company and its subsidiaries adopted SFAS 109 on Jan- to temporary' differences for which deferred taxes were not uary 1,1993, the effective date of the new statement. SFAS previously required to be provided. The mgulatory asset 109 requims that the habdity approach be used to account represents temporary differences primarily associated with for income taxes. In general, under this method deferred tax pnor flow-through amounts and the equity component of - _ liabilities and assets are determined based on the temporary allowance for funds used during construction, net of tempo-
' differences between the financial statement and tax return rary differences related to unamortized investment tax bases of assets and liabilities using enacted tax rates in effect credits and excess deferred taxes that have resulted from for the year in which the differences are expected to m- historical reductions in tax rates.
verse. As discussed below, the impact of the adoption of
$FAS 109 is not material to the Company's results of opera. Effective December I, l993, pursuant to a CPUC order, the :
tions and, therefore, has not been reflected as the cumula_ Company adopted full income tax nonnalization for rate reg-tive effect of a change in accounting pnnciple. As a result, ulatory purposes with the regulatory tax asset being recov-the effect of adoption is included in income tax expense in ered over a thirteen year period. the accompanying consolidated statement of income for the The effect of the adoption of SFAS 109 on nonregulated year ended December 31,1993. activities increased net income by approximately $ 1.9 million'. The Company and its regulated subsidiaries have historically during the year ended December 31,1993, primarily due to provided for deferred income taxes to the extent aUowed the adjustment to deferred income taxes on nonregulated - by their regulatory agencies whereby defen ed taxes were activities accrued in prior years at tax rates in excess of the - not provided on all differences between financial statement current enacted tax rates. During 1993, the Federal statu-and taxable income (the ficw thmugh method). However, tory income tax rate was raised fmm 34% to 35%, retroac< as ofJanuary 1,1993, in accordance with $FAS 109, a tive to January I,1993. The impact of this tax rate change
$ 118A milhon increase in the net accumulated defermd in, on the Company was to increase the net deferred income .
. come tax liabihty and a corresponding regulatory asset were tax liability by $ 16.8 million, of which $ 16.7 million increased l recognized on the consolidated balance sheet to give effect the regulatory asset related to income taxes.
46-
, The sources of significant timing d.fferences wh:ch gase nse l to deferred income ta<cs for years prior to the adoption of 5FAS 109 were as follows: (Thousands or Dohrs) 1992 199i
~' ~
Contnbutions in a.d of construction $ (8.006') ~$ (4,'789) Accelerated depreuation 17,789 20l721 Net unbilled revenues (914) (7.552) Fort St Vrain defuehng and decommismaning 15.831 12,531 Term: nation of Synhytech project (10,063) - Loss on sa!e of red estate investments 7,986 - Alterriative min: mum tav i45 2.231 Other book: tax timiryg diUcrences . (259) ._ 2880 Total deferred :ncome tax expense _$_ . _ 22.509 $ 26.122 The components of accumulated deferred income taxes as of December 31.1993 and J1nuary 1,1993 were as follows-(lhousands of Douars) December 31,1993 January 1,1993 Current portion of accumu!ated deferred income taxes: Deferred tax assets $ 14,414 $ 21,930 Deferred tax habehties . (10,213)_ _(345) Net currrnt deferred tax assets 4,201 ' ~~21.585 AccumOated cjeferred income taxes Deferred tax habstics 582,780 461.727 De' erred tax apets _ . (137,250) (48.350) Net accumulated deferred tax haNhties 445,530 _.413.377 Net defened income tax h'abity $ 441,3 29' '$ 39 I,792 The tax effect of 9gnificant temporary differences repr esenting deferred tas nsets and liabMttes as of December 3 L 1993 and January I,1993 were as follows: (Thousands of Do%s) December 31,1993_ january 1,1993 Deferred income tax habet:es (assets) Acc eterated depreaation and amorteation 5313,275 $ 283,819 Piant bass docrences (pnor flow-through) 199,820 175.588 APowInce for equity funds used during, construction 51,500 44,617 Pens,ons 31,689 26,172 investment tax oedts (76,841) (76,689) Contnbutions in a:d of constructon (33,063) (27,177) Other- net ._ __ _ (45,051) _ _ _ _ (34.538) Net deferred income tax habthty $ 441,329 _$ 391,792 A valuat!on #caance has not been recorded at December As of December 31.1993, the Company has cumulative 31.1993 and January 1, l993, as the Company expects that AMT carryforwards of approumately $6.3 mdlion. a!! deferred !ncome tax assets wili be reabred in the future. 47
' NOTES TO CONSOLIDATED FINANCIAL STATEMENTS coor;nued Pubbc Service Company ofColorado and Subsidianes 1 A reconciliation of the statutory U.S. income tax rates and
,the effective tax rates follows:
(Thousands of Douars) 1993 1992 1991 Tax computed at U.S. statutory rate on pre-tax accounting income $76,424 35.0% $64,522 34.0% . $74,454 ' 34.0% Increase (decrease) in tax from: A!!owance for funds used during construction (4,369) (2.0) (3,827) (2.0) (2,767) (l .3) ' Amortization of investment tax credits (4,889) (2.2) (5,128) (2.7) (5.095) - (2.3) State income taxes. net of federal income tax benefit (1,435) (0.7) 997 0.5 5,431 2.5' Capitalized software, net of amortization (4,820) - (2.2) (7.115) ' (3.7) (5,533) (2.5) Capitalized overheads 7,170_ 3.3 7,l12 3.7 4,732 2.l Lease amortization 3,692 1.7 3,407 1.8 2.992 1.4 Cash surrender value of life insurance po!icies (6,386) (2.9) (4.620) (2.4) (2,572) . (1.2) ~ implementation of SFAS 109 (1,9 l I) . (0.9) - - . Other-net (2,482)_(f.1)__(2,199) (1.2) (2.354) (1.1)
. Total income taxes $60,994 28.0% $53.149 28.0% $69,288 31.6%
l-
.13. Supplementary income Statement Information (Thousands of Douars) 1993 1992 1991 Taxes (other than income taxes)
Real estate and personal property taxes $55,238 $51,378 $43,746' Sociaf secunty taxes 21,226 20,752 20,398 Crty and state use taxes 8,895 8,072 8.397 . Miscellaneous taxes 7,398 7,839 7,045
$92,757 $88.04 l $79.586 Charged:
Directly to income: Operat ng i expenses . $86,775 $82,040 - $74335 Other 128 155- 138- _ Toproperty, plant and eauipment and various other accounts 5,854 5,846 5,113-
$92,757 $88,04 l $79,586 The amounts of maintenance and repairs charged to clear- were no charges for myalties. The amounts of advenising ing and other accounts and not shown separately in the costs were less than 1 % of gross revenues.
consolidated financial statements were not material. There i
' 40 _ -.
- 14. Segments of Business Segment information for the year ended December 31,1993 is as fokows (Thousands of Dohars)
.__ ._ ~
Electric Gas Other Total _ _ . _ . _ . . . _ _ _ _ _ _ _ _$_l.337,053 _ _ . _ _ .$ 628,324 Operaprw re.enues ._..$ 33.308 . $ l .998.685 Operating expenses < exciud<ng deprecat;cn and income taxes 953.049 560,593 2.312 1,515,954 Depreciation and amortization 109,958 28.305 2.541 140,804 _ Total operating eypenses' l.063.007 588,898 4.853 I,656,758 Operating income * $ 274.046 $ 39,426 $ 28,455 $ 341.927 Pl ant construction expend;tures" $ 205,153 $ 86,867 $ i,495 $ 293.515 Ident flable assets. December 31,1993: Property. plant and equipment" $ 2,413,580 $ 695,456 $ 84,100 $ 3,193.136 Matenals and supphes 3 64.674 $ 12,993 $ 65 77,732 Fue! inventory $ 35.337 $ -
$ I47 35,484 Gas in underground storage (1) $ -. $ 41,130 $ -
41,130 Other corporate assets 699,146
$ 4,046,628 (l) Add t ona! p svag: was unhased as pa 1 of the Compan/s imp!crrenta ,on strateu assocated with FERC Order 636.
Segment information for the year ended December 31.1992 is as fcifows-(Thousands of Douars) Electric Gas (2) Other (3) Total Operating revenues __ _.. __ _$J,26_0]69 _$ 568.886 $ 32.618 $ 1.862.273 Operating expenses. excluding " depreciation and income taxes 886.215 529,215 16,740 1,432,180 Depreciation and amortization 97.274 27,621 2,422 127,317 Jp;ar operating expenses
- 983.489 556.846 19,162 1.559.497 Operating income' $ 277,280 $ 12.040 $ 13.456 $ 302,776 Plant construction expenditures ** $ 185.170 $ 73.685 $ 2.81! $ 261,666
!dentMab!e assets, December 31.1992.
Property, plant and equ:pment" $ 2.331.116 3 653.898 $ 92,495 $ 3,077,509 Materiais and supphes $ 67,618 $ 13.302 $ 82 81,002 Fue! inventory 3 33.384 $ -
$ I89 33,573 Gas in underground storage $ -
3 14.393 $ - 14,393 Other corporate assets __ _ ._ _ _ ._ _ _ _ _ 553.106
$ 3.759.583 (2)inciudes addtond expense of approx.n' ate:y $26.9 m, ikon assocated we the term;nat:on of the Synhytech projec+.
(3)IrcLdes aMt orW exper'se of aprox: mate!y $ 1 l A me.cn assocated wth the loss on sa e of BCC real enate properties.
- Before -ncome wel
** lrtckdei Cort on of Common ui, 'y prope'1y.
49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ccnnuce - Public Service Company ofColorado and Subs +dianes Segment information for the year ended December 31.1991 is as fodows: (Thousands of Douan) Electric .. .- Gas . . . Other Total Operat:ng r evenues , __ _ $l.180501 _$ 58_7.60_9 . $ 26.794_ $ 1794.904 1 Operat:rg expenses, exclud:ng deprecation and income taxes 847.798 518.157 4.355 1,370,310 Depreaation and amortization _ __ _ 83.416 _ 25.831 _, _2.481 ___ _ lIi728 Total operating expenses
- 931.214 _ , 543.988 __._ 6.836 _ l.482.038 Operating income' $ 249.287 $ 43.621 $ 19.958 $ 312.866 Plant construct:on exoend.tures" $ 155.457 $ 99.771 $ 5.476 $ 260.704 Identrfiable assets. December 31.1991:
Property. plant and equipment" $ 2.006.776 $ 637.083 $ 101.941 $ 2.745.800 Matenals and supp!;es $ 65.242 $ 13.059 $ 66 78.367 Fuel inser: tory $ 34.238 $ -
$ 209 34.447 Gas in underground storage $ -
$ 14.803 $ -
14.803 Other corporate assets _ _ _ _ _ _ _ _ _ _ 5_89.25l_
$ 3.462.668 acbencome taes *
- IPCIudes ahCCd! On Gf CCTnmOn Ut.!.t < DrC?cty.
- 15. Operating Leases The Company and its subsidianes maintain operating leases mated future minimum rental payments apphcable to non-for equipment and faahties used in the normal course of cancelable operating leases were as follows:
business The ma;onty of these operating leases are under a , _ _ jThousands of Docan) leasing program that has inital noncancelable terms of one Yean end.cg December 31 year, whde tne remain'ng operating leases have vanous 1994 $ 22.345 terms These leases may be renewed or replaced. No mate. 1995 R310 nal restnctions eost in these leasing agreements concerning j'9j dudends, additional debt, or further leasing Psental expense 1998 12.109 for 1993.1992 and 1991 was $28.1 mdhon. $25.1 million i999 and there3 ter 5 33.569 and $2).7 m,lhan. respectsely. At December 31.1993, ests 7nti m,ngum ce;tal smeris~ ~ ~ ~ - III35 50 --
- 16. Quarterly Financial Data (Unaudited)
The foHovAng summarized quarterly information for 1993 the penods. Information for any one quarter!y penod s not and 1992 is unaudited but includes all adjustments (consist- necessanly indicative of the results which may t;e expected ing only of normal recurring accruals) which the Company for a twelve month pened due to seasona! and other factors considers necessary for a fair presentation of the results for (Thousandr exept per %re data) 1993 Three Months Ended March 31 June 30 September 30 December 31 Operating revenues $ 607.389 $ 448.001 $422.353 $520.942 Operating income $ 88.014 $ 49.681 $ 56.575 $ 86.663 Net income $ 58.687 $ 20.435 $ 25.527 $ 52.71 i Earnings avadable for common stock $ 55.678 $ 17.426 $ 22.519 $ 49.706 Weighted average common shares outstanding 58.997 59.535 59.925 60.324 Earnings per weighted average common share $0.94 $029 TO 38 $0.82
, t,thow,nds--cm em per share datil 1992 Three Months Ended March 31 June 30 September 30 December 31 Operating revenues $ 526.874 $ 422.489 $ 407.326 $505.584 Operating income $ 71.504 $ 58.282 $ 61.323 $ 58.518 Net income $ 46.204 $ 28.948 $ 29.840 1 31.631 Earnings avalable for common stock $ 43.180 $ 25.924 $ 26.820 $ 28.622 Weighted average common shares outstanding 56.701 5',7.382 57.840 58.308 Earn:ngs per weighted average common share $0.76 $0.45 1046 10 49 e
r 51 _ . . _
l SHAREHOL, DER INFORMATION
' Pubhc Service Company of Colorado and Subsidiaries l . Where to Buy Stock Shareholder Inquiries The company's common and preferred stock may be pur- Inquiries regarding stock transfer requirements, direct chased through a brokerage frm. A shareholder of common deposit of dividends, lost or sto en checks or certificates, stock registered in their own name may also purchase addi- address changes or other matters should be directed to the tional shares through the Automatic Dividend Reinvestment Shareholder Services Dept The following telephone num-and Common Stock Purchase Plan (DRP) ber is available during business hours, which are 8:00 a.m.
to 5:00 p.m. (MST)(303) 294 2566. Dividends on common stock, as dedared oy the Board of Quarterly Report Mallings Directors, are generaRy payable on the first of February. May. Shareholders whose stock is held in street name by their August, and November of each year. The company pays reg- broker do not receive quarterly shareholder reports, if your ular quarterly dividends on rts preferred stock on the first of stock is held in street name and you want to receive quar-March. June, Septembec and December of each year. terly mports, please contact the Shareholder Services Dept ! to place your name on a mailing list Dividend Reinvestment Plan The company's DRP provides common stock shamholders Headquarters f of record an economical and convenient method of pur- Public Service Company of Colorado chasing additional shares of common stock Participants in 122517th Street, Post OfEce Box 840 the Plan may reinvest cash dividends on a!! or a portion of Denver. CO 80201-0840 their shares and/or make optional cash payments. Telephone: (303) 571-751 l Common stock shareholders whose stock is registered in Transfer Agent, Paying Agent and names other than their own rnay participate in the DRP for Registrar for all Classes of Stock and reinvestment of dividends, provided the broker or fiduciary Dividend Reinvestment Plan Agent who holds such stock in nominee name is wi!hng to partio-Public Service Company of Colorado pate in the DRF. . Shareholder Services Dept. Sarckeeping Post Office Box 840, Suite 300 Shareholders may request safekeeping of stock certificates. Denver, CO 80201-0840 thus gu arding against loss or theft To participate, mail your Telephone:(303) 294-2566 stock cert <ficate by insured mail with a note requesting safe. FAX Number: (303) 294-2583 keeping. An internal record of the shares win be maintained. Transfer Agent and Registrar if a stock certificate is required at a future date, notify our office that issuance is desired. for Lon8 Term Debt Morgan Guaranty Trust Company of New York Address Changes Ccmporate Trust Operations When an address change is required, notify the Shareholder 55 Exchange Place
- Services Dept, in wnting. as soon as possible. Please pro- New York. NY 10260 vide your account numbec account name, new address and (303) 294-2592 Stock Symbols Fees are charged for certain services such as copies of 1099 Common Ticker Symbol: PSR DIVs. paio checks and duplicate DRP statements. For infor-Newspaper Listing:
mation regarding any charge or n:scarch fee, please contact ggg gg g
- the Shareholder Services Dept. ' Stock Trading Annual Meeting Wednesday, May i I,1994 1The company's common stock is listed for trading on the am New York. Chicago, and Paofic Stock Exchanges. Three series of cumulative preferred stock are actively traded:
1550 Court Place 4.25% ($100 par value) on the American Stock Exchange; Denver Colorado 7.15 % ($ 100 par value): and 8.40% ($25 par value) on the New York $tock Exchange The other senes of preferred stock are not actively traded and are not listed on an exchange.
'52 -
Li Ycur cpinien is valu:d. Please take a few minutes to complete and return
'n the pre-addressed, postage-paid, survey card below. This information will '
help us to better meet your needs, wants and expectations in the future, SHAREHOLDER SURVEY
- 1. Please indkate your interwst Iri the following issuen 3. Which of the thwing communkations did you use -
Please circle o number for each issue. last y eari Not Very Pleasa rank f am most valuable (1) to least valuable (7). hygged Intereyt,ed, Regulaton 1 2 3 4 5 _ Qwrterly Reports fort St. Vraan 1 2 3 4 5 _10 K Competition 1 2 3 4 5 ,,, t o Q Customer retention / growth 1 2 3 4 5 Drect Phone Communkation Devsiend- secunty/ growth 1 2 3 4 5 _ investor Club Presentat>ons Emerging technobgres 1 2 3 4 5 Other Serv.cc terntory economics 1 2 3 4 5 Environmental- 1 2 3 4 5 4. If available. which communkations would be ofInterest!- energy conservation Please check the oppropriate box (es).
- 2. Whkh factors influence your Public Servke Co. of O PSCo stuk price phone hotline Colorado investment decision!
O kg nalshareWer memgs O Current issues updates (fact sheet) Please rank from most Important (f) to least important (7) O Colorado economy updates (fact sheet) _ Dividend O Dectrorhc bulletin board of financial / company news _5tability of industry _ Management / Competition 5. If available, which services would be ofinterest! Stock prke appreciat:on Please ched the oppropriate box (es). .; ' Service territory economks O Initia! urchase P of stock directly from PSCo Comtansten electrk and gas utmty vs. O Sale of stuk directly to PSCo single server company
~g C Automatk monthly investment /clectronic stock purchase '
O Book entry ownership only (no cert fkate issuance) j{ l l SHAREHOLDER PnuFILE j Please circle one answer to each question. What is your interest in P$Co! Please indicate type of work: j
- 1. Individual sharehokier 5. PSCo employee 1. Professional / technical 6. Business /managerW {
- 2. Institutional shareholder 6. NAlC member 2. Clerkal/offke/ sales 7. Government /mtlitary j
- 3. Financial analyst 7. Potentialinvestor 3. Retired 8. 5tudent 1
- 4. Stockbroker 8. Other 4. Proprietor 9. Unemployed = I 5, Domestic / homemaker 10. Other ]
Age category! 1
- 1. Under 25 3.45-64 .j 2,25-44 4. 65 or over What is your biggest concern regarding P$ Col PSCo shares owned? (include dividend reinvestment) f 1.Under 50 4.501-1.000
~i 2.50 100 5.1.001-2.000 3.101-300 6. Over 2.000 How long have you been a PSco shareholder! ,
- 1. Less than 1 year 4. 4-10 years )
2.1-2 years 5.1120 years What is your zip code! j
- 3. 3-5 years 6. CNer 20 years a i
I " #' ""I 9" "* ' ' ' Principal reuen for holding PSCo stocki I
- 1. Dividend income 3. Prke appreciat on Shareholder administration / shareholder account j
- 2. Income plus pnce appreciation 4. Other j (303)294-2566 1
Company @dusW hsues 'q
' Which most influenced you to acquire PSCo stock? .
- 1. Personal research (303) 294-2592 j
- 4. Gft/anhentanc.e r 2. Stockbroker 5. NAIC j
- 3. Friend or relative 6. Other
(%gew a;opa; aaaq pawp Wr asegg) NO POSTAGE NECESSARY IF MAKED IN THE UNG ED 5TATES BUSINESS REPLY MAIL FIR $T CLASS Mall PERMIT NO,265 DENVER, COLORADO POSTAGE WILL BE PAID BY ADDRESSEE: PUBLIC SERVICE COMPANY OF COLORADO INVESTOR RELATIONS, SUITE 600 P.O. BOX 840 DENVER, CO 80201-9715 Iliilillmi,lilli iiiiillliliiliiiiiiillil,1,1,,ill . l .. . _ _ _ .i
I~ l' ! BOARD OF DIRECTORS AND EXECUTIVE OFFICERS BOARD OF DIRECTORS EXECUTIVE COMMITTEE James H. Ranniger Mary M. McMillan V'ce Presdent Front Range D. D. Hock D D. Hock Dons M. Drury Pa+es d ms Age 40 09 Denver, CO (1985) Chuman of the Board, George B. McKnley gSg 3I Phillip L Noll Pres dert and W4 F. Nicholson. Jr. Philip D. Shaffer Mcuntain Dusion Chief Execut;ve OfEcer Robert G Tointon Vice Prestdent Age 54 (35) Age 58 D son Customer Operat.ons V. Clark Stephens, Jr. Collis P. Chandler, Jr. g (0) Southeast Metropohtan DMsen Denver. CO 0985) AUDIT COMMITTEE Marilyn E. Taylor Age 56 (33) Chanran of the Board and J. M,chael Powers Vice Pmsdent Administratwe Semces G A Senku CNef Executue 0"icer Tnemas T. Fecy SENst thetmpo un Region Chander & A stocatrs. Inc Age 51 (6) Gare L Greer Age 57 (26) Age 67 Thomas E. Rodnguez Ralph Sargent Illtt Doris M. Drury, PhD Vice Pres dent Danver. CO (1975) finance. Flanning and PRESIDENTS Regs Celiege PENSION INVESTMENT Ccmmunicat.oo and Treasurer SUBSIDIARY COMPANIES
- 5pecal Assistant to the Prevdent; COMMITTEE Age 44 (t5)
Present. Center for Bwness D. D. Hock W. T. Stephens !430 WeMon. Inc. and Econornc f a east:ng. inc A Bany Heschfeld ces pmerit Co. Age 67 OTHER OFFICERS Rodney E Shfer Green and Clear Lakes Company ' Thomas T. FarleY Thomas W. Hess Natural Fuels Corporation Pueblo. CO (l983) Assistant Secretary PS Colorado Credt Corporaton Ammey at t_a* COMPENSATION Age 44 (21) PSR investments. Inc Pew & Fonda COMMITTEE Wes+. Gas Gathering. Inc Professional Corp, Edward L Meaders WestGas interstate. Inc
. Age 59 Dons M. Drur> Ass:stant Secretary WestGas TransColorado. Inc George B McKinfey Age 37 (l4)
Gayle L Greer Wa F. McFohon, jr ^8 0OU Denver CO O 986) W. T. Stephens
*' ""'"" Philip D. Shaffer Vice President. us t 5ecetary g (gj Robert G Toenton Trne Wamer C#x,e s (7) and Pcmer mpany Age 52 J. Anthony Terrell Age 48 (20) l' A. Barry Hirschfeld Assstant Secretary and EXECUTIVE OFFICERS Assistant Treasumr
- E Tectue November 30,1993, Demer. CO U989)
H ck Age 50 (3) Bannock Center Corporation 1 Presdent. eBsd A. & Hntf6d Press. Inc Age 51 a[f Stephen H. Whitcomb Assistant Secretary was 6ssolved 1 Cber Executve 0%cer i Dected Comorate Secretary. George B. McKlatey Age 58 (31) ^4e43(IB) effect-u e November 23.1993 banston, WY (1976) Clark B. Ewald William E. Lewis Sens r V>ce Presdent st t Treamrer N Dected Vce Pres dent. Finance, {'}d" ' Oh 8 ) Punning and Communication. Fint Nitonal Bank of Evanstan. Aga 59 QS00 Michael D. Pritchard ePectse My 27,1993 Presdent, hrst Mchniey Corp. Age 66 Richard C. Kelly Assistant Treasurer Sen4or Vice Prescent A#c 47 (22) S "*h Finance and Adminis+ rat on Debra L Sago AUDITORS
"! '"^" r Amstant Treasurer Chaimun, Presdent and Arthur Andersen & Co.
Chief Executna OTcer ge (25) Age 3g (;4) 717 - 17th Snet. Su:te 1900 1 Colorado Nat.ma! Bsebares, Inc Patrick W. McCarter Denver. Colorado 80202 ' Senor Vice Presdent q- Age 64 Ecctnc Operat:ons
- j. Michael Powers Age 56 (34) MANAGERS.
W. Wayne Browny GEOGRAPHIC DIVISIONS rs P e tacts Co. and Powers Bnck and Tde Comorate Secretary S. G. Arnold AgeSi and Controtler Foothd5 Regen and Age 43 (2 I) Boulder Ovsion Thomas E. Rodriguez Age 40 U D
- Denver, CO (1986) A. C. Crawford President. Thomas L Rodngue.t Vce Presdent Bill L Croley
& Ancoates, P C. E!ectnc Producton Denver Metropoktan Age 49 Age 61 (4) Age 53 (21)
Rodney E. Silfer Dale V. Fetchenhler David P. Davia Va:1, CO U 9N) V(e Pres; cent Northern Metropohtan Reg,on Partner Informat,on Technoregv Age 49 (25) Shfer, Smah 5 Fram Won and Semces
~
Age 60 (36) Anthony J. De Novelb.s Age 59 Southern Region W. Thomas Stephens Ross C. King,Jr. & Pueblo Dvsion Denver.CO 0 989) V<e Pres. dent Age 45 (23) Charman. Presdert ar4 Metropcetan Customer Operations ! b Chief Executse O%cer Age 52 (27) Michael J. Gelfe I rb Man ljeComoraton William J. Martin Ae I ) F' vice President W. Bruce Hansford 6( Greciey. Robert G.Tointon CO 09rse) Dettnc Enreenng and P'anNQ Northem Dusion g Age 52 (25) Fmade-t and Age 62 (35)- Cb ef Equtive 06cer Earl E. McLaughlin, Jr. Douglas C. Lockhart y Phets Ic2ntart inc yc, orevdent Westem Pqan Age SI (29 f j . A '@ S Me*etrg. Customer Seneces ( ) Denotes years of sersce or assocatm web the Lompany and Support Semces [. g Age 53 (33) Joseph O. Marquez San Lu4s Vauey through December.1993 Age 56 (33) Ages as r;f December 31,1993
, ' ' .' ' ;.s *' ', - f
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