ML20030D460
| ML20030D460 | |
| Person / Time | |
|---|---|
| Site: | Waterford  |
| Issue date: | 02/13/1981 |
| From: | NEW ORLEANS PUBLIC SERVICE CO. |
| To: | |
| Shared Package | |
| ML20030D434 | List:
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| References | |
| NUDOCS 8109010423 | |
| Download: ML20030D460 (22) | |
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Dear Fellow Stockholders and Employees:
The year 1980 was, unfortunately, one of frustra-operating expenses for the year were $380.7 mil-tions and financial decline for New Orleans Public lion, or 10% higher than operating expenses in Service. Our Company once again lost ground to 1979. Increased fuel costs, wage expenses, larger the steady impact of inflation and the increasing amounts of taxes and other increased operating cost of doing business during the year. Increased expenses incurred during the year accounted pri-electric and gas rates would do much to alleviate marily for the overall increase in total operating this problem and an application for $32,500,000 in expenses in 1980.
rate relief was filed with the City Council, our The record-breaking hot weather experienced regulatory authority, on April 14,1980. However, at during the summer of 1980 and corresponding the time this is written, our application is still await-high use of electricity for air conditioning resulted ing final decision.
in a 13% increase in electric operating revenues for Because of these and other adverse factors, our the year. Electric operating revenues were approx-Company's net income for 1980 showed a 33%
imately $271.7 million in 1980, an increase of about dechne from the previous year. Net income totaled
$31.7 million over the previous year.
slightly less than $6.7 million for 1980, about $3.3 Gas operating revenues were approximately $79.7 million below net income in 1979. Return on aver-million in 1980, down by 7% from revenues in 1979, age rate base dropped to 6.53% well below the principally due to a mild winter.
authorized 8.33% rate set in November 1975. Other Transit operating revenues exclusive of subsi-important financialindicators declining in 1980 were dies rose from approximately $17.9 million a year return on common equity, which went down to ago to $23.6 million this past year, primarily due to 5.19% and earnings per share on common stock, a 10-cent transit fare increase and a S-cent transfer only 66 cents per share compared to $1.52 a share charge put into effect with City Council approval in 1979.
in January 1980. However, the costs of operating Total operating revenues were almost $335.5 mil-the transit system also rose sharply, requiring that a lion for 1980, a 9% increase largely due to addi-subsidy of approximately $21 million be provided tional electric energy sales, recovery from custom-through the City of New Orleans to meet transit ers of increased fuel costs and a January 1980 transit operating expenses of approximately $43 million.
fare increase. But total operating expenses, beset This subsidy amount, made up of federal, state and by inflation, climbed at an even faster rate. Total local funds, was provided under the provisions of a
Subsidy and Indemmty Agreement with the City of sentative.
New Orleans similar to those which have been The Company granted an 8.75% general wage agreed upon annually since 1977.
increase to all non-exempt employees of fective July A summ ary of the electric, gas and transit opera-1,1980. Additionally, improvements were made in tions of the Company by segment can be found in the employee Hospital-Medical Care Plan and a Footnote 10 of the fmancial statements which are new Middle South Dental Assistance Plan was made located in subsequent pages of this annual report.
available to employees. Both the hospital and den-Despite the year's frustrations, Public Service tal care improvements became effective August 1, employees exhibited outstanding loyalty and ded-1980.
ication in facing up to the challenges. The over-Although 1980 financial results were keenly dis-whelming success of the SPECTRUM suggestion appointing to all of us at Public Service, we are program in generating creative ideas and sugges-optimistic that 1981 will see improvements in our tions to improve cperations and reduce expenses financial situation and help reverse the trend of the was one of a number of hopeful signs during the past 12 months. Granting by our regulatory author-year. Also commendable was the work of each ity of the requested increases in electric and gas department in cutting budgets, controlling costs rates is essential i.f the Company is to regain its and maintaining or reducing personnellevels.
financial integrity in the current year.
There were other accomplishments, too, worthy Another major challenge just ahead is the public of mention. The Company was the recipient of nine hearings which will be held later this year b/ the individual safety awards during 1980 from local City Council on our Company's appliMun for and national industry groups including the Na-approval of a Generation Capability Adjustment tional Safety Council, Southern and American Gas Clause. This request, filed in 1980 with the rate Associations, Southeastern Electric Exchange and increase apphcation, was separated from those hear-Metropohtan Safety Council. In addition, Public Serv-ings by mutual consent to be :aken up after a deci-ice received very favorable public attention for its sion is rendered in the rate matter. The purpose continued work in energy conservation, its plans of this clause is to permit us to bring to our electric for a new residential energy audit program to be im-customers by late 1982 the substential economies plemented in 1981, the solar research project which of lower-cost electricity to be generated at the Grand we co-sponsor with Tulane University and our con-Gulf Nuclear Generating Station in Port Gibsen, tinuing participation in civic and community af fairs.
Mississippi, diminishing our present dependence i
Internally, the Company was gratifie'l with the on higher cost oil &d or natural gas-fired genera-decision of the employees in the Electric Distribu-tion for base electnc load.
tion Department in April 1980 to dissolve their As we face the future, it is gratifying to have the Cooperative Employees' Association.This followed example of the support and understanding we were the decertification of the International Brotherhood accorded by all of you in 1980 as an assurance of of Electrical Workers (IBEW) as representative of your continued loyalty and dedication.
tha employees in the Electric Power Department Sincerely, in 1979. Employees in the Gas Department also voted to decertify their Cooperative Erupbyees' g-Association in May 1980. However,in a September 1930 election, employees of the Transit Maintenance James M. Cain Division voted to retain the IBEW aa their repre-President March 2,1981 1
REPORT OF MANAGEMENT The managemeat of Ne r Orleans Public Service Inc. has prepared and is responsible for the financial statements and related financialinformation included in this annual report.
The financial statements are based on generally accepted accounting principles, consntently applied. Financial information included elsewhere in this report is consistent with the financial stateraents.
To meet its responsibihties with respect to financialinformation, management maintains and enforces a system of internal accounting controls which is designed to provide reasonable assurance, on a cost effective basis, as to the integrity, objectivity and reliability of the financial records and as to protection of assets. This system includes communication through written policies and procedures, and an organizational structure that provides for appropriate division of responsibility and the training of personnel. This system is also tested by a comprehensive internal audit program.
The board of directors pursues its responsibility or reported financialinformation through its audit committee, composed of outside directors. The audit committee meets periodically with manapment, the internal auditors, and the independent public accountants to discuss auditing, internal control, and financial reporting matters. The independent public accountants have free access to the e dit committee at any time.
j The independent public accountants provide an objective assessment of the degree to which management meets its responsibility for fairness of financial reporting. They regularly evaluate the system of internal accounting control and perform such tests and other pro-cedures they deem necessary to reach and express an opinion on the fairness of the financial statements.
We believe that these po'acies and procedures provide reasonable assurance that our operations are carried out with a high standard of business conduct.
1
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a AUDITORS' OPINION New Orleans Public Service Inc.:
We have examined the balance sheets of New Orleans Public Service Inc. as of December 31,1980 and 1979 and the related statements of income, retained earnings, and changes in financial position for each of the three years in the period endea December 31,1980.
Our examinations were made in accordance with generally accepted auditing standards and, accordmgly, included such tests of the accounting records and such other auditmg procedures as we considered necessary in the circumstances.
In our opimon, the above-mentioned financial statements present fairly the fmancial l
position of the Company at December 31,1980 and 1979 and the resalts of its operations and the changes in as financial position for each of the three years in the period ended l
December 31,1980, in conformity with generally accepted accounting principles applied on a consistent basis.
A F
New Orleans, Louisiana February 13,1981
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2
Statements of Income for the years ended Decernber 31,1980,1979 and 1978 1980 1979 1978 (In Thousands)
OPERATING REVENUES (Note 10):
Electric.
.5271,663 $240,032 $191,845 Natural gas.
79,680 85,624 70,013 Transit.
44,112 36,996 36,399 Total.
395.455 362,652 298,257 OPERATING EXPENSES.
Operation:
Fuel for electric generation.
139,043 111,039 72,549 Purchased power.
51,531 50,309 44,S40 Gas purchased for resale.
63,909 68,291 52,439 Other.
68,710 60,505 55,060 Maintenance.
24,965 23,929 22,437 Depreciation.
13,739 13,379 12,290 Taxes other than income taxes.
16,842 15,778 12,805 j
Income taxes (Note 7).
1,956 1,379 7,817 Total.
380,695 344,609 279,937 l
OPERATING INCOME.
14,760
.18,043 18,320 i
OTHER INCOME (DEDUCTIONS):
Allowance for equity funds used during construction.
185 54 100 Miscellaneous-net.
3,532 1,878 1,533 Income taxes (Note 7).
(1,568)
(702)
(706)
Total.
2,149 1,230 927 INTEREST AND OTHER CHARGES:
Interest on long-term debt.
8,760 8,760 7,844 Allowance for borrowed funds used during construction.
(82)
(184)
(36)
Other interest -net.
1,553 688 796 Total.
10,231 9,264 8,604 NET INCOME.
.5 6,678 $ 10,009 5 10,643
.l See Notes to Fmancial Statements Statements of Retained Earnings for the years ended December 31,1980,1979 and 1978 19fD 1979 1978 (In Thousands)
RETAINED EARNINGS, JANUARY 1.
.S 19,309 $ 19,453 $ 18,204 ADD-Net Income.
6,678 10,009 10,643 Total.
25,987 29,462 28,847 DEDUCT:
Cash dividends:
Preferred stock.
2,734 965 965 Common stock..
10,091 9,188 8,429 Total.
12,825 10,153 9,394 RETAINED EARNINGS, DECEMBER 31 (Note 4).
. $ 13.162 $ 19,309,5 19,453 See Notes to Fmancial Statements.
3
1 Balance Sheets December 31,1980 and 1979 4
ASSETS 1980 1979 (In Thousands)
UTILITY PLANT:
Electric....
. 5331,155 0318,377 Natural gas.
7 ;,8TJ 69,772 Transit.
17,535
!9,049 Construction work in progress....
3.415 4,785 Total..
423,978 411,983 Less accumulated depreciation.
171,347 162.293 Utility plant-net.
252,631 249,690 OTHER PROPERTY AND INVESTMENT:
Investment in associated company-at equity (Note 8).
10,037 10,217 Other-at cost.....
49 49 Total..
10,086 10.266 CURRENT ASSETS:
Cash and special deposits..
1,341 1,500 Temporary investments-at cost, which approximates market.
21,700 2,500 Notes receivable..
226 201 Accounts receivable:
Customers-less allowance for doubtful accounts of $475,000 in 1980;
$500.000 in 1979..
20,945 22,976 Other....
7,657 4.564 Materials and supplies-at average cost..
7,725 6.671 Prepayments and other.
3,747 1.683 Total..
63,341 40,095 DEFERRED DEBITS:
Prepayment of rent for motor coaches leased from City of New Orleans.
4,145 4.684 Other.
1,601 1,091 Total..
5,746 5.775 TOTAL..
5331,804 $305,826 See Notes to Fmancia Statements.
4
(
LIABILITIES 1980 1979 (In Thousands)
CAPITALIZATION:
Common stock, $ 10 par value: authorized 7,000,000 shares in 1980 and 6,000,000 shares in 1979; issued and outstanding 5,935,900 shares.
5 59,359 $ 59,359 Retained earnings (Note 4).
13,162 19,309 Total common shareholder's equity.
72,521 78,668 Preferred stock without sinking fund (Note 3)..
20,117 20,117 Preferred stock with sinking fund (Note 3).
14,582 Long term debt (Note 6).
126,519 126,541 Total.
. 233,739 225,326 CURRENT LIABILITIES:
Accounts payable:
Associated companies..
5,666 4,233 25,958 18,468 Other.
Customer deposits.
6,038 4,930 4,359 1,230 Taxes accrued.
Interest accrued.
2,808 2,711 Dividends declared.
3,092 241 Other.
1,997 3.790 49,918 35.603 t
Total.
DEFERRED CREDITS:
Accumulated deferred income taxes (Note 7)..
27,601 26,394 Accumulated deferred investment tax credits (Note 7).
8,657 7,482 1,877 1,760 Other..
Total.
38,135 35.636 RESERVES.
10,012 9,261 COMMITMENTS AND CONTINGENCIES (Notes 2 and 8)
TOTAL.
. $331,804 $305,826 See Notes to Fmancial Statements.
5
Statements of Changes in Financial Position for the years ended December 31,1980,1979 and 1978 1980 1979 1978 (In Thousands)
FUNDS PROVIDED BY:
Operations:
Net income
. 5 6,678 $10,009 $10,643 Depreciation.
13,739 13,379 12,290 Deferred income taxes and investment tax credit adjustments-net.
2,382 2,494 1,718 Allowance for funds used during construction.
(267)
(238)
(136)
Total funds provided from operations.
22,532 25,644 24,515 Other:
Decrease in working capital (excluding short term securities)*
10,268 8,365 Allowance for funds used during construction..
267 238 136 Reduction in investment in associated company.
180 500 Miscellaneous-net..
582 333 419 Total funds provided from operations and other.
33,829 34,580 25,570 Financing transactions:
Preferred stock.
15,000 First mortgage bonds.
15,000 Short term secunties-net.
6,900 10.388 Total funds provided from financing.
15,000 6.900 25,388 Total funds provided.
548,829 $41,480 $50,958 FUNDS APPLIED TO:
Utility plant additions - Construction expenditures (includes allowance for f unds used during construction).
. 516,804 $23,681 $17,825 Dividends declared on common stock.
10,091 9,188 8,429 Dmdends declared on preferred stock..
2,734 965 965 Retirement of first mortg ge bonds.
10,000 Short-term securities-net.
19,200 Increase in working capital (excluding short term securities)*
13,739 Investment in associated company.
3,950 Prepayment of rent for motor coaches.
3,696 Total funds applied.
. 548,829 $41,480 r30,958
- The decrease in workmg capital in 1980 is primarily due to increases in " Accounts Payable-Other" and " Taxes Accrued". The decrease in working capital in 1979 is primarily due to decreases in " Accounts Receivable-Other" and increases in " Accounts Payable-Other" partially offset by increases in " Accounts Receivable
-Customers" The increase in working capital in 1978 is primanly due to increases in " Accounts Re-ceivable-Other" and reduction in " Taxes Accrued" See Notes to Financial Staternents.
B. Revenues Notes to Financial Statements The Company records ele. tric and gas revenues as billed to its customers on a cycle billing basis.
- l.
SUMMARY
OF SIGNIFICANT ACCOUNTING Revenue is not accrueo for energy delivered but POLICIES not billed at the end of the fiscal period. The rate A. System of Accounts schedules of the Company include electric fuel The accounts of the Company are maintained in adjustment and city gate gas cost adjustment clauses accordan ce with the syste:n of accounts prescribed under which the cost of fuel for generation and by the Council of the City of New Orleans (Coun-purchased power and gas purchased for resale above cil),which system of accounts substantially conforms or below the levels allowed in the <arious rate to that prescribed by the Federal Energy Regula-schedules are permitted to be billed or required to tory Cnmmission (FERC).
be credited to customers.
6
C. Utility Plant and Dspreciation The Company capitalizes, as an appropnate cost of Utility plant is stated at original cost. The cost of utility plant, an allowance for funds used during additions to utihty plant includes contracted work, construction (AFDC) which is calculated and record-direct labor and materials, allocable overheads, and ed as provided by the regulatory system of accounts.
an allowance for the composite cost of funds used Under this utility industry practice, construction during construction.The costs of units of property work in progress on the balance sheet is charged retired are removed from utility plant, and such and the income sta tement i:: credited for the approx-costs, plus removal costs, less salvage, are charged imate net composite interest cost of borrowed funds to accumulated depreciation. Maintenance and and for a reasonable return on the equity funds repair of property and replacement of items deter-used for construction. This procedure is intended mined to be less than units of property are charged to remove from the income statement the offeet of to operating expenses. Principally all of the utility the cost of financing the construction program and plant is subject to the lien of the Company's " Mort-results in treating the AFDC charges in the same gage and Deed of Trust" manner as construction labor and material costs.
Depreciation is computed on the straight-line As non-cash items, these credits to the income basis at rates based on the estimated service lives statement have no effect on current cash earnings.
of the various classes of property. Depreciation pro-After the property is placed n service the AFDC vided on average depreciable property in 1980, charged to constructim ccsts is recoverable from 1979 and 1978 amounted to approximately 3.39%,
customers through depreciation provisions included 3.42% and 3.26%, respectively.
in rates charged for utility service. The effective D. Fension Plan composite AFDC rate for the Company was 6.9%,
T te Company has a pension plan covering sub-6.5% and S.8% fe; 1980,1979 and 1978, respective-stentially all of its employees. The policy of the ly.
Company is to fund pension costs accrued.
For ratemaking purposes, construction work in E. Income Taxes progress is permitted in the rate base but AFDC The Company joins its parent in filing a consoli.
must be included in operating income when deter-dated Federalincome tax return. Income taxes are mining the percent earned on rate base.
allocated to the Company in proportion to its con.
The Company's policy is to continue to capitalize j
tribution to the consolidated tax liability.
allowance for funds used during construction on Deferred income taxes are provided for differ-projects during periods of interrupted construction ences between book and taxable income to the when such interruption is temporary and the con-extent permitted by the Company's regulatory body tinuation can be justified as being reasonable under for ratemaking purposes. Investment tax credits the circumstances.
allocated to the Company are deferred and amor-G. Reserves tized, based upon the average useful life of the It is the policy of the Company to provids recory-related property beginning with the year allowed es for uninsured property risks, and for claims for in the consolidated tax return.
injuries and damages, through charges to operat-E Allowance For Funds Used During Construc-ing expense on an accrual basis. Accruals for these tion reserves have been allowed for ratemaking pur-poses.
- 2. REGULATION The Company is subject to regulation by the Franchise and would discontinue its transit opera-Council. The ordinances under which it operates tion by no later than December 31,1976. Begin-provide, among other things, for the regulation, ning in 1977, the Company has operated the transit supervision, control and option to purchase by the system on an interim basis under subsidy agree-City of New Orleans (City) of the Company's prop-ments. Under a similar agreement entered into erties and assets.
with the City, the Company will continue to oper-In July 1976, the Company filed with the Securi-ate the transit system on an interim basis and the ties and Exchange Commission (SEC) an applica-City will continue to subsidize the transit operation tion for approval of a plan for divestiture of its dunng 1981.
transit properties. The City has filed with the SEC In April 1980, the Comp:ny filed an..;. plication a memorandum of law in opposition to the Compa-with the Council for an increase in its retail electric ny's application, and three citizens' groups have rates and its retail gas rates designed to produce requested that the SEC hold a hearing and that annually approximately $23,277,000 and $0,1G1,000, they be allowed to participate. The matter is pend-respectively, of increased revenues based on a pro-ing before the SEC.
jected December 31,1980 test year adjusted for By letter dated July IS,1976 the Company noti-known changes. Public hearings on this rate appli-fied the Council that it was surrendering its Inde-cation have been completed and the matter is terminate Transit Permits and Temporary Transit pending before the Council.
7
- 3. PRL TERRED STOCK Preferred Stock consists of cumulative, $100 par value stock as follows:
Shares Authonzed and Outstandmg at Amounts Current Decer
'21 December 31 Call Pnce 1980 1980 1979 Per Share m
(In Thousands)
Without smkmg fund 4.75% Senes.
77,798 77,798 $ 7,780 5 7,780 $105.00 4.36% Senes.
60,000 60,000 t;.000 6,000 104.58 5.56% Series.
60,000 60,000 6,000 6,000 102.59 Premium.
337 337 Total without smkmg fund.
. 197,798 197,798 $20,117 $20.117 With smkmg fund 15.44% Series.
. 150,000
$15,000 $ -
$115.44 Issr __ expense.
(418)
Total with smkmg fund.
. 150.000
$14,582 5 -
The 15.44% series of preferred stock will be en-share plus accrued dividends.
titled to a sinking fund sufficient to retire =nually.
There were no cnanges in preferred stock in commencing in 1935, a minimum of 7,500 shares 1979 or 1978.
and a maximum af 15,000 shares at $100.00 per
- 4. RETAINED EARNINGS the payment of cash dividends on common stock.
The indenture provisions relating to the Com-As of December 31,1980,53,873,000 of retained pany's long-term debt provide for restrictions on earnings are free from such restrictions.
S. LINES OF CREDIT AND SHORT-TERM BOR-The Company had no short-term borrowings in ROWINGS 1980. In 1979, the maximum short-term borrow-At December 31,1980, the Company had $19 ings were $14,000,000, average borrowings were million in lines of credit with New Orleans banks.
$2,662,000 and the average interest rate was 11.5%
These lines of credit do not require compensating (determined by dividing the applicable interest balances or commitment fees.
expense by the average amount borrowed). In i
Addi+ionally, the Company has joined with three 1978, the maximum short-term borrowings were other Middle South System operating companies
$4,000,000, average borrowings were $1,000,000 in establishing $253 million in lines of credit with and the average interest rate was 9%.
banks outside the Middle South System service The Company has received authorization from area. The Company may borrow any portion of the SEC under the Public Utility IIolding Com-these lines subject only to its maximum authonzed pany Act of 1935 to have outstanding short-term level of short-term borro vings as specified below.
barrowings in the maximum amount at any one Compensating balances are raquired by certain of time not exceeding the lesser of $22,000,000 or these lending banks. The C<3mpany's lines of credit 10% of the Company's capitalization.
were unused as of Decembe 31,1980,1979 and 1978.
8
- 6. LONG-TERM DEBT Sinking fund requirements, which may be met Long term debt consists of first mortgage bonds by certification of property additions at the rate of at December 31,1980 and 1979 as followr 167% of requirements, amount to $995,000 for 1981 1980 1979 and 1982, $935,000 in 1983, $815,000 in 1984 and (In Thousands)
$755,000 in 1985. Bond maturities for the years 4h% Senes due 1983.
6,000 $ 6,000 1981 through 1985 consist of tha 4-1/8% series due 3%% Senes due 1984.
6,000 6,000 in 1983 amounting to $6,000,000 and the 3-1/4%
4"$N,I lf, 3l$
l$
series due in 1984 also amounting co $6,000,000.
gg 4h% Senes due 1992.
8,000 8,000 5%% Senes due 19%.
23.250 23,250 SM% Senes due 1997.
12,000 12,000 10 % Series due 2004.
35,000 35,000 9h% Senes due 2008.
IS,000 1S,000 t
Urnmortized premium and discount on debt-net.
269 291 Totallong-term debt.
. $126,519 $126,541
- 7. INCOME TAXES Income tax expense consists of the following:
1980 1979 1978 i
(In Thousands)
Current:
Federal.
. $1,142 $ (413) $6,129 State.
676 1
Total..
1.142 (413) 6,80S Deferred-net:
Libecahzed depreciation.
1,938 1,860 1,979 Unbilled revenue.
(289)
(434) 51 Property insurance, injury and damage reserves.
(346)
(310)
Other..
(96)
(273)
Total.
1.207 843 2,030 investment tax credit adjustments-net.
1,17S 1,651 (312)
Total income taxes.
. $3,524 $2,081 $8,523
. $1,956 $1,379 $7,817 Charged to operations.
1,568 702 706 Charged to other mcome.
[
Totalincome taxes.
. $3,524 $2,081 $8,S23 l
Totalincome taxes differ from the amounts com-l puted by applying the statutory Federal income l
tax rate to income before taxes. The reasons for the difforences are as follows (in thousands):
l i
1980 1979 1978
% of
% of
% of Pre-Tax Pre-Tax Pre-Tax Amount Income Amount incoma Amount income Computed at statutory rate..
$4.693 46.0% $5.S61 46.0% $9,200 48.0%
Increases (reductions) in tax resulting from:
Taxes capitahzed on books deducted on tax returns....
(388)
(3.8)
(381)
(3.2)
(335)
(1.7) i Difference between book depreciation and tax straight-hne depreciation.
3S4 3.S 536 4.4 400 2.1 Tax savings due to ithng consohdated return.
(420)
(4.1)
(1,677) (13.9)
(S66)
(2.9)
Adjustments resultmg pnncipally from IRS examinations.
(1,179)
(9.7) 0.S Costs in connection with the removal of retired property.
(325)
(3.2)
(1%)
(1.6)
(282)
(1.S)
Amortization of investment tax credits.
(243)
(2.4)
(180)
(1.5)
(312)
(1.6)
Other-net.
(147)
(1.5)
(403)
(3.3) 322
_16 3
$_g g% $8,S23 g%
4
$3,524 g% _
Recorded income taxes.
9
Unussd investment tzx credits at December 31, with 1979 the method of allocating investment tax t
1980 amounted to $2,072,000, of which $694,000 credit was changed whereby each Company is may be carned forward through 1984, and 51,378,000 allocated the credit allowable based on its portion through 1985. Prior to 1979 the investment tax of the consolidamd tax liability. Any additional credit utilized in the consolidated tax return was consclidated credit utilized is allocated on the basis allocated to each System Company on the basis of of the remaining tax credits.
credits contributed by each Company. Effective
- 8. COMMITMENTS AND CONTINGENCIES to be developed in Wyoming. The contract is ex-The Company's construction program contem-pected to provide an estimated 150 to 210 million plates expenditures of approximately $20,000,000 tons of coal over a period of 26 to 42 years; the coal in 1981, $29,000,000 in 1982 and 550,000,000 in 1983.
supplied is expected to be used at a future AP&L The Company has a 13% interest in System Fuels, power plant. SFI's parent companies, including the Inc. (SFI), a jointly-owned subsidiary of the four Company, each acting in accordance with their 2
principal operating subsidiaries of Middle South respective shares of ownership of SFI's common Utilities, Inc. (MSU). The other three owners of SFI stock, joined in, ratified, confirmed and adopted are Arkansas Power & Light Company (AP&L),
the contract and the obligations of SFI thereunder.
Louisiana Power & Light Company (LP&L), and The Company, together with the other Middle Mississippi Power & Light Company (MP&L). SFI South System operating companies, is obligated operates on a non profit basis for purposes of plan-under agreements with Middle South Energy, Inc.
ning and implementing programs for the procure-(MSE) to make pe.yments or subordinated advan-ment of fuel supplies for all of the operating com-ces adequate to cover all of the operating expenses panies; its costs are primarily recovered through and capital costs of MSE and, in return, is entitled to charges for fuel delivered.
receive power available to MSE from the Grand Gulf The parent companies of SFI have made loans to Plant. Through 1980 $1.8 billion had been expend-SFI to finance its fuel supply business under a loan ed by MSE on the Grand Gulf Plant's two units agreement dated January 4,1978, as amended Jan-which are scheduled for completion in 1982 and uary 1,1981, which provides for SFI to borrow up 1986. Under certain circumstances, payments may to $261,500,000 from its parent companies through be required to be made commencing December December 31,1981. As of December 31,1980 the 31,1982if the first unit of the Grand Gulf Plant has Company had loaned $5,470,000 to SFI pursuant not been completed by that date. During 1980 the to this loan agreement and the Company's share of operating companies agreed in principle to a per-the unused loan commitment is $18,630,000. Notes manent allocation of the Grand Gulf Plant's capa-under this agreement mature December 31,2006.
bility. Under this arrangement those companies In addition the Company had loaned SFI 54,564,250 receiving allocations, LP&L, MP&L and the Com-under previous loan agreements. Notes mature in pany, will assume, in proportion to such allocations, 10 and 25 years from date of borrowing under the all responsibilities and obligations related to the provisions of the previous loan agreements.
Grand Gulf Plant and AP&L and Arkansas-Missouri In connection with certain of SFI's borrowing Power Com pany, which did not receive allocations, arrangements, SFI's parent companies, including will rehnquish their rights in the plant. The proposed the Company, have covenanted and agreed sever-reallocation is subject to the receipt of the approval ally in accordance with their respective shares of of regulatory agencies and of all other necessary ownership of SFI's common stock, that they will approvals.
take any and all action necessary to keep SFI in a In a suit pending against the Company concerning sound financial cor.dition and to place SFI in a matters related to the Company's fuel adjustment position to discharge, and to cause SFI to discharge clause in its electric rate schedules, the District its obligations under these arrangements. At Decem-Court has, after trialin December 1979, entered a ber 31,1980, the total loan commitment under judgment in favor of the Company. The plaintiffs these arrangements amounted to $221,196,000 of have appealed. A suit has also been filed against which $128,224,000 was outstanding at that date.
the Company regarding the subsidization of its Also SFI's parent companies, incidding the Com-transit operation with revenues which the Company pany, have made similar covenants and agree-has received from its electric and gas operationa.
ments in connection with long-term leases by SFI It is the opinion of the Company that final disposition of oil storage and handling facihties and coal hopper of these suits will not have a material adverse effect cars. At December 31, 1980, the aggregate dis-on its financial position or results of operations.
counted value of these lease arrangements was In November 1975, the Council authorized a
$59,150,000.
transit fare increase. In a suit contesting the impo-In December 1976, SFI entered into a contract sition of the fare increase, judgment was rendered with a joint venture for a supply of coal from a mino that the Council did not give the required public 10
~
]
notice. An appeal was granted and the Company subsidy agreement with the City, the Company's i
was permitted to continue to collect the increased maximum exposure to loss in this mattter would be fare until November 1977, when the Louisiana Su-70% of the amount of any ultimate liability resulting preme Court refused to review an Appeals Court from this litigation. This matter is still pending; Judgment in favor of the plaintiffs. In a colle:eral however, should any material adjustment be nec-suit petitioners are seeking a return of the fare essary, it will be retroactively applied to the opera-1 increase, or as an alternative, a reduction in the tions of 1976 and 1977 when such fares were col-basic transit fare for a similar period of time. In May lected.
of 1979, the trial court granted plaintiffs' request The Federal income tax returns foi the years for a Summary Judgment against the Company 1971 through 1976 have been examined by the and the Council. The court awarded the plaintiffs Internal Revenue Service (IRS) and adjustments
$5,518,990 (plus jt"'icialinterest), to be paid through have been proposed. The principalissue is whether i
a transit fare reouction, and attorneys' fees of customer deposits are includible in taxable income.
$ 100,000. The Company and the Council appealed A formal written protest has been filed and confer-this judgment. On November 19,1980, the Court ences are being neld with an Appeals Officer of the of Appeal annulled the Summary Judgment and IRS. Any finalliability for taxes resulting from set-returned this matter to the District Court. The plain-tlement with the IRS would not have a material el-tiffs and defendants both sought review of thir feet on net income. Income taxes on customer matter. On January 26, 1981, the Louisiana Li-deposits would he normahzed. Most of +he other preme Coutt refused to hear the case and returned issues have been settled and adequate provisions the parties to the District Court.Under the transit have been recorded.
- 9. TRANSACTIONS WITH AFFILIATES to affiliates amounting to $28,856,000 in 1980,535,-
1 The Company buys from and sells electricity to 546,000 in 1979 and $10,427,000 in 1978. Operat-i the operating subsidiaries of MSU, its parent, under ing expenses include fuel cost and purchased power rate schedules filed with the FERC. In addition, charges f rom affiliates totaling 542,756,000 in 1980, 4
the Company purchases fucl from SFl.
562,714,000 in 1979 and $79,957,000 in 1978.
Operating revenues include revenues from t ales
- 10. BUSINESS SEGMENT INFORMITION City. Segment information about the Company's As an operating public utility, the Company sup-operations is as follows (in thousands):
plies electric, natural gas and transit services in the Electnc Qas Trans3 Total Operating revenues.
. $271,663 $79,680 $44.112 $395,455 l
Revenue from sales to unaffthated customers.
242,807 79,680 44,112 366,599 Operating income (loss) before mcome taxes.
17,779 (2,388) 1,325 16,716 Operating mcome (loss).
14.631 (636) 76b 14,760 Net utthty plant.
199,613 46,277 6,741 252,631 Depreciation expense.
10,490 2,481 768 13,739 Capital expenditures.
13,860 2,751 193 16,804 1979.
Operating revenues.
. $240,032 $85,624 $36,996 $362,652 Revenue from sales to unaffthated customers.
204,486 85,624 36,996 327,106 Operating income (loss) before income taxes.
19,525 564 (667) 19,422 Operating mcome..
16.238 1,046 759 18,043 Net utthty plant.
196.301 46,073 7,316 249,690 Depreciation expense.
10,139 2,128 1,112 13,379 Capital expenditures.
14,686 7,204 1,791 23,681 1978:
Operating revenues.
. $191,845 $70,013 $36,399 $298,257 Revenue from sales to unaffihated customers.
181,418 70,013 36,399 287,830 Operating income before income taxes.
21,729 2,721 1.687 26,137 Operating income.
15,521 2,269 530 18,320 Net utihty plant.
191,790 41,053 6,637 239,480 Depreciation expense.
9,815 1,778 697 12,290 Capital expenditures.
I1,212 5,028 1,585 17,825 i
11 2
r e
Transit subsidy agreements for 1980,1979 and its authorized return on transit operations. Operat-1978 between the Company and the City assured ing revenues included transit subsidies as follows the Company a specified rate of return on transit (in thousands):
operations. The agreements required the Company 1980 1979 1978 to dedicate electric and gas earnings in excess of a Provided by electric and gas specified rate of return to subsidize the transit sys-Bil e7t
' 20358 1'
I y.
tem and required the City to provide the remam-Total subsidies.
. $20,558 $19.067 $19,062 ing balance necessary for the Company to earn ll. PENSION PLAN assets for the defined benefit plan is presented Total pension expense of the Cor.Tany for 1980, below (in thousands):
1979 and 1978 was $4,694,000, 54,761,000 and January 1, 54,269,000, respectively, which includes amortiza-1980 1979 Act"*"al resent value of accumulated tion of unfunded prior service cost. In 1980 the P
lP an ben fits amortization period for unfunded prior service cost was changed from a remaining period of 12 years Nonvested.
2,632 2,078 to 30 years which had the effect of increasing net Total.
. $71.009 $61.855 income for 1980 by approximately $560,000. A com-Net assets available for benefits.
. $81,48J $72,394 parison of accumulated plan benefits and plan net The assumed rate of return used in determining the actuarial present values of accumulated plan benefits was 6.5% for 1980 and 1979.
- 12. QUARTERLY RESULTS (Unaudited)
The business of the Company is subject to Unaudited operating results by quarters follow seasonal fluctuations with peak periods occurring (in thousands):
during the summer months for electric and during Quarter Ended the winter months for gas. Accordingly, earnings Mar. 31 June 30 Sept. 30 Dec. 31 information for any three-month period should not be considered as a basis for estimating the results rating revenues..$94,025 $87,879 $123,217 $90,334 Operating income.
3,911 2,'a 49 6,039 2,061 of operations for a full year.
Net mcome (loss).
1,849 831 4,147 (155) 1979:
Operatmg revenues.582,372 $82,318 $103,049 $94,913 Operatmg income.
4,472 3,487 5,734 4,350 N:t income.
2,487 1,448 3,608 2,466
- 13. EFFECT OF INFLATION ON OPERATIONS Statement of Financial Accounting Standards No.
(Unaudited) 33, " Financial Reporting and Changing Prices". It The following supplementary information about should be viewed as an estimate of the effect of tho effects of changing prices on the Company is changing prices, rather than as a precise measure.
provided in accordance with the requirements of 12
STATEMENT OF INCCME FROM OPERATIONS AND OTHER FINANCIAL DATA ADIUS'IED FOR EFFECTS OF CHANGING PRICES FOR THE YEAll ENDED DECEMBER 31,1980 On Thc,esands)
Adjusted For Adjusted For As Reported In General Changes In The Financial Inflation Specihc Prices Statements (Constant Dollars) (Current Costs)
Operatmg revenues (1)...
5395.455 5395.455 5395.455 Operating expenses (excludmg depreciatic,n)(1).
366,956 366,956 366,956 Depreciation.
13,739 29,308 34,724 Total operatmg expenses.
380,695 396,264 401,680 Operatmg income (loss).
14,760 (809)
(6,225)
Other income-net (1).
2,149 2,149 2,149 Interest & other charges (1).
10,231 10,231 10,231 Income (loss) from operations (excluding reduction to net recoverable S 6,678
$ (8,891)
$ (14,307) cost)(2).
Increase m specific prices (current cost) of property, plant and equipment held during the year (3)...
$ 42,750 Reduction to net recoverable cost.
$ (9,442) 30,234 Effect of increase in general price level.
(77,010)
Excess of increase in general price level over merease in specific pnces after reduction to net recoverable cost.
(4,026)
Gam irom decime m put-hasmg power of net amounts owed.
20,664 20,664 Net.
$ 11,222
$ 16,638 (1) Assumed to be m " average for the year" dollars and thus are not restated.
(2) Includmg the reduction to net recoverable cost, the loss from operations on a constant dollar basis would have been $18,333 for 1980.
(3) At December 31,1980, current cost of property, plant and equipment, net of accumulated depreciation was 5662,847, while historical cost or net cost recoverable through depreciation was $252,631.
FIVE-YEAR COMPARISON OF SELECTED SUPPLEMENTARY FINANCIAL DATA ADJUSTED FOR EFFECTS OF CHANGING PRICES (In Thousands of Average 1980 Dollars) 1980 1979 1978 1977 1976 Operatmg revenues.
. 5395,455 5411,695 $376,714 $368,617 5318,708 Historical cost mformation adjusted for general inflation:
Income from operations (excludmg reduction to net recoverable cost).
(8,891)
(2,935)
Net assets at year-end at net recoverable cost.
69,134 84,635 Current cost information:
Income from operations (excludmg reduction to net recoverable cost).,
(14,307)
(10,252)
Excess of increase in general pnce level over increase in specihe prices j
af ter reduction to net recoverable cost.
4,026 12,641 Net assets at year-end at net recoverable cost.
69,134 84,635 Generalinformation:
Gam from dechne m purchasmg power of net amounts owed.
20,664 23,191 Average consumer pnce mdex.
246.8 217.4 195.4 181.5 170.5 NOTE: The statement requires that histoncal cost information adjusted for general inflation and current cost information be l
provided for 1979 and subsequent years. Comparable information is not readily available for the years prior to 1979 and thus is not provided.
Constant dollar amounts represent historical costs acquisition. Land and certain other plant assets adjusted for the effects of general inflation. The which are not inclucted in the HWI were converted t
effects are determined by converting these costs using the CPI-U.
into dollars of equal purchasing power using the The difference between current cost amounts Consumer Price Index for all Urban Consumers and constant dollar amounts results from specific (CPI-U).
prices of property, plant and equipment (as meas-Current cost amounts reflect the changes in spe-ured by the Handy-Whitman Index) changing at a cific prices of property, plant and equipment from rate different than the rate of general inflation (as the year of acquisition to the present, The current measured by the Consumer Price Index).
costs of property, plant and equipment, which rep-The current year's depreciation expense on the resent the estimated costs of replacing existing plant constant dollar and current cost amounts of proper-assets, are determined by applyirig the Handy-ty, plant and equipment were determined by apply-
- vhitman Index of Public Utility Construction Costs mg the Company's depreciation rates to the in-(HWI) to the cost of the surviving plant by year of dexed amounts.
13
Fuelinventories, the cost of fuel used in genera-believes, based on past experie..ces, that it will be tion, and gas purchased for resale have not been ai%ed to earn on the increased cost of its net restated from their historical cost in nominal dol-investment when replacement of facihties actually lars. Regulation hmits the recovery of fuel and pur-occurs.
chased p a.hrough the operation of adjust-To properly reflect the economics of rate regula-ment clauses or adjustments in basic rate schedules tion in the Statement of Income from Operations to actual costs. For this reason fuelinventories are presented above, the reduction of net property, effectively monetary assets.
plant and equipment to net recoverable cost is As presenbed in Statement of Fmancial Account-offset by the gain from the decline in purchasmg ing Standards No. 33, income taxes were not power of net amounts owed. During a period of adjusted.
inflation, holders of monetary assets suffer a loss of The regulatory commission to which the Com-general purchasing power while holders of mone-pany is subject allows only the historical cost of tary liabilities experience a gain. The gain f rom the plant to be recovered in revenues as depreciation.
decline in purchasing power of net amounts owed Therefore, the excess cost of plant stated in terms is primarily attributable to the substantial amount of constant dollars or current cost over the histori-of debt which has been used to finance property, cal cost of plant is not presently recoverable in plant and equipment. Since the depreciation on rates. This excess is reflected as a reduction to net this plant is limited to the recovery of historical recoverable cost. While the ratemaking process costs, the Company does not have the opportunity gives no recognition to the current cost of replac-to realize a holding gain on debt and is limited to ing property, plant and equipment, the Company recoveryonlyof theembeddedcostof debtcapital CTurrrrmuranz= mar.wr==mmm w
a Manaaement's Discussion
- 2. LIQUIDITY AND CAPITAL RESOURCES The Company's earnings coverage for its first a
and Analysis of Financial mortgage bonds has declined from 3.2 times the annual mortgage bond interest rcquirements in Condition and Results of 1978 to 2.3 times in 1980. Legally, with a minimum O erations earnin9s covera 9e test o' 2.0 times, only S7 million b
of new first mortgage bonds could be sold at
- 1. FINANCIAL CONDITION December 31,1980.
The Company's financial condition at December Earnings coverage for the Company's preferred stock has declined from 1.8 times the annualinter-31, 1980 reflects the urgent need for adequate electric and gas rate relief. An application was filed est charges and preferred dividend requirements in 1978 to 1.3 times in 1980. Since the minimum in April 1980, with the regulatory body, the Coun.
cil of the City of New Orleans (Council), for an earnings coverage is 1.5 times, the Conipany is increase in electric and gas rates designed to pro-prohibited from selling additional preferred stock.
duce, annually, approximately $23.3 million and The Company had authorization to make short-
$9.2 mil! ion, respectively, of increased revenues.
term borrowings of up to $20 million in 1978 and Electric and gas base rates have not been increased 1979 and $22 million in 1980. The average annual since November 1975. Transit subsidy agreements borrowings were less than $3 million for 1978 and for 1978,1979 and 1980 between the Company 1979; there were no short-term borrowings in 1980.
and the City of New Orleans assured the Company Construction expenditures are estimated to be a specified rate of return on transit operations in
$20 million in 1981. The Company contemplates those years. A similar subsidy agreement is in eff act that its construction and other corporate commit-for 1981.
ments for 1981 will be financed through the use of In 1979, the Company earned an 8.31% rate of internally generated funds, temporary investments return on rate base, approximating the 8.33%
n hand at year end 1980, and short-term borrow-return that was authori2.ed by the Council in the ings. No permanent financing is anticipated for 1981.
last rate case. This return dropped to 6.53% in 1980. Return on common equity declined from The Company sold $15 million of first mortgage 11.51% in 1979 to S.19% in 1980.
bonds in 1978 and $10 million of that amount was The need for prompt and adequate rate relief is used to retire bonds due in that year. There were also indicated by the fact that over $6 million of 1980 no permanent financings in 1979. In March,1980, common dividends were paid out of retained earn.
the Company sold $15 million of preferred stock ings.
with a sinking fund.
14
l In 1978, approximately 85% of the Company's Transit operating revenues increased $5 million construction expenditures of $18 million was gen-m 1978,5.6 million in 1979, and $7 million in 1980.
erated internally, but, due to reduced net income, The increases were due to increased amounts of this percentage declined to 58% in 1980 with subsidy necessary to cover increased transit op-construction expenditures of $17 million. For the erating expenses. In addition, a transit fare increase years 1978 through 1980, construction expendi-effective January,1980 helped to defray increased tures averaged less than 10% of capitalization.
operating expenses in that year. Transit revenue In 1980 tne Company embarked on an austerity passengers carried decreased approximately 5%
program to redu' e operating expenses wherever due principally to the fare increase, possible. An e spl nyee suggestion program was Net income in 1980 was $6.7 million, $3.3 million begun whe' oy employees could receive cash or 33% less than 1979. The precipitous decline in awards for ocommending proven cost saving ideas.
the Company's earnings for 1980 resulted primanly Also, travel expenditures have been virtually elim-from the impact of double digit inflation and the inated, a freeze on hiring of new employees has fact that the Company's electric and gas base rates been placed into effect, and the filling of employee have not been increas 3d since November,1975, at vacancies has been deferred.
which time a portion of the electric and gas reve-At December 31,1980, construction work in prog-nue increases were designed to subsidize the total ress (CWIP) was $3.4 million or less than 1% of transit operation. Beginning in 1977, the Company plant in service. For ratemaking purposes CWIP is entered into annual transit subsidy agreements with permitted in the rate base but the amount of allow-the City of New Orleans whereby any electric and ance for funds used during construction (AFDC) gas earnings in excess of a specified rate of return must be included in operating income when deter-on those departments' rate bases were to be used mining the percent earned on rate base.
to subsidize the transit operation; any transit deficit In a further measure to conserve cash, the Com-remaining was to be subsidized by the City. There pany reduced its construction budgets in 1980 and were diminishing amounts of excess electric and 1981 by $12 million and $5 million, respective-gas earnings in 1978 and 1979 which were used to ly. Also, beginning in 1980, the Company entered partially subsidize the transit operation and, due into lease agreements with two companies to lease principally to the effects of inflation, there were no all new motor vehicles rather than purchase these excess earnings in 1980.
vehicles.
The Company traditionally burned natural gas as
- 3. RESULTS OF OPERATIONS its primary source of fuel but has for most of the Electric operating revenues increased $14 mil-1970's, because of curtailments by its gas supplier, lion in 1978, $48 million in 1979, and $32 million in generally burned increased amounts of oil. Fuel 1980, as compared in each case to the prior year.
usage in 1979 and 1980 did not conform to this The increases were due primarily to increased fuel trend because of the increased amounts of natural cost recoveries through the fuel adj ustment clause.
gas available for use i, power plants and the rap-KWH sales in 1980 increased @ proximately 5%
idly rising co't of cil. In 1980, 94% of electric over 1979 due to increased sales to ultimate custo-5sneration m fueled by natural gas. The cost j
mers as the result of the hottest summer on record per million BTU's of natural gas in 1980 was in the Comparrfs service area. Except for 1980,
$2.72, an increase of 58% over 1978. Fuel oil was l
conservatior. on the part of electric customers has
$3.12 per million BTU's in 1980, a 78% increase resulted in a relatively small growth of energy over 1978. It is anticipated that the cost of power sales in recent years.
plant fuels will continue to increase in the future.
Gas operating revenues increased $9 million in The cost in 1980 for natural gas purchased for 1978 and $16 million in 1979, but decreased $6 mil-resale was $2.52 per MCF an increase of 61% over lion in 1980, as compared in each case to the prior 1978. The Company anticipates that this trend of year. The increases in 1978 and 1979 were due to in-increasing costs for natural gas will continue into creased gas cost recoveries through the city gate the future.
adjustment clause. Revenues were down in 1980 Total operating expenses of the Company exclud-because of refunds received from the Company's ing fuel and power purchased, gas purchased for gas supplier which were returned to gas customers.
resale, and income taxes, have risen at an average Also, MCF sales in 1980 decreased approximately ate of approximately 10% per year for 1978 thrcugh 17% below 1979 sales due to an abnormally warm 1980. These increases are due primarily to infla-winter in the Company's service area. The decrease tionary pressures on the cost of wages, employee in revenues was partially offset by increased gas benefits, materials and supplies and services. It is cost recoveries through the city gate adjustment anticipated that operating expenses will continue clause. Because of conservation on the part of gas to rise at this levelin 1981.
customers, the trend has been toward decreased As stated under Section 1, FINANCIAL CON-gas usage in recent years.
DITION, the Company filed an application for $32.5 1S
million of clsctric and gas rate relief in April,1980.
- 4. EFFECTS OF INFL ATION Public hearings on the rate application hatre been Inflation ha<. had a significant impact,n the completed and the matter is pending before the Company's operations in recent years (see We 13 Council. As part of the current rate proceedings, the to Financial Statements "Effect of Inflation on Company has proposed a Generation Capability Operations").
Adjustment Clause which would permit recovery of
- 5.
SUMMARY
the generating capability ownership costs incurred Although the Company's financial condition at by the Company in obtaining nuclear or coal base December 31,1980 reflects the immediate need generation. The purchase of this base generation for additional electric and gas revenues, manage-will minimize the total cost of electricity and pro-ment is hopeful that the Council will provide ade-duce substantial cost benefits to our customers.
quate rate relief in the resolution of the pending This proposal has been separated from the rate rate case. Every step is being taken to place the application by the Council and will be considered Company in a sound financial condition and, at the at a later date in 1981.
same time, to serve its customers in the safest and most efficient manner possible..
e==== w============:=================== :====2 1980 Revenue Dollar SOURCE d
68.99 Electric A
20.0$ Gas T
L W
USE y
7.64 Other Operation and Maintenance 4.3$ Taxes 2.74 Interest Charges (Net) &
. :=
64.79 Other Deductions Fuel, Power 1.74 Net Income Purchased and Gas for Resale n.,
15.64 Employees i
(Payroll & Benefits) 3.44 Depreciation 16 m
DIRECTORS JAMES M. CAIN FLOYD W. LEWIS President of the Company Chairman and President, BROOKE H. DUNCAN Middle South Utihties, Inc.
President, The Foster Company, Inc.
WILLIAM C. NELSON LAURANCE EUSTIS Vice President, Administration President, Laurance Eustis Company and Legal, and Secretary of RICHARD W FREEMAN the Company Chairman of the Board, JOHN B. SMALLPAGE The Louisiana Coca-Cola Bottling Company, Ltd.
President-Secretary, SAM ISRAEL, JR.
Donovan Boat Supplies, Inc.
Vice Chairman and Director, CHARLES C. TEAMER, SR.
ACLI International, Inc.
Vice President for Fiscal Affairs, A. L. JUNG, IR.
Dillard University President, Jung Realty Company JACK M. WYATT President, Louisiana Power & Light Company OFFICERS JAMES M. CAIN DONALD F. SCHULTZ President Vice President, A. J. BRODTMANN*
Corporate Communications Vice President, Finance HARVEY K. HAWKINS JOHN H. CHAVANNE**
Treasurer Vice President, Finance MICHAEL P. BURNS SHERWOOD A. CUYLER Assistant Treasurer Vice President, FLOYD A. HENNEN Public and Regulatory Affairs Assistant Secretary HERO J. EDWARDS, JR.
RODNEY J. ESTRADA Vice President, Operations Assistant Secretary and MALCOLM L. HURSTELL Assistant Treasurer Vice President, Engineenng EDWIN A. LUPBERGER and Production Assistant Secretary and WILLIAle C. NELSON Assistant Treasurer Vice President, Administration DONALD J. WINFIELD***
and Legal, and Secretary Assistant Secretary and Assistant Treasurer
- Resigned due to retirement from the Company on November 1,1980
- Elected Vice President, Fmance, effective November 1,1980
- Will retire March 31,1981 TRANSFER AGENT <ForereferreaStock)
Bradford Trust Company New York REGISTRARS (For Preferred Stock)
Whitney National Bank Chemical Bank of New Orleans New York
%e Company's 1980 Annua 1 Report to theSecunties and Exchange Commission on Form 10-Kisavailable to any stockholder upon request without charge. Persons interested in obtaining a copy should write to William C. Nelson, Vice President, Administration & Legaland Secretary, at the address below:
NEW ORLEANS PUBLIC SERVICE INC.
P.O. Box 60340 New Orleans, Louisiana 70160 17 (504)586-2121
Financial & Operating Statistics Selected Financial Dati 1980 1979 1978 1977 1976 1975 1974 1973 1972 1971 1970 tMillions of Dollarsi 70tal Assets.
5331 8
$305 8
$292 8
$289 8
$282 8
$2689
$262.7
$264 8
$259 8
$255 2
$253 6 Total Utility Plant..
$424 0
$412 0
$394 5
$3803
$3709
$362.7
$352 9
$3431
$3391
$330 8
$3206 Accumulated Provision for Depreciaton.
$171.3
$162 3
$1550
$146 3
$137 6
$1281
$1'>0 4
$113 8
$105 4 5 974
$ 89 8 Capitahzation Long-Term Debt.
$126 5
$126 5
$126 6
$121.7
$121.7
$1217
$1218
$118 4
$118 2
$118 2
$118 2 Preferred Stock with Smking Fund.
14 6 n ferred Stock nithout Smking Fund 20.1 20 1 20.1 20 1 20 1 20 1 20 1 20 1 20 1 20 1 20 1 re Common Stock 59 4 59 4 59 4 59 4 59 4 59 4 59 4 59 4 59 4 59 4 59 4 Retained Earnings 13.1 19 3 19 4 18 2 15 5 12 2 14 8 17 5 151 16 1 16 0 Total
$233 7
$225 3
$2255
$219 4
$216 7
$213 4
$2161
$215 4
$212 8
$213 8
$213 7 Total Operat og Revenues Excluding Interdepartmental;
$395 5
$362 7
$298 3
$2711
$2202
$176 3
$,146 3
$1236 $107 0
$103 3
$1013 Operating income
$ 14 8
$ 18.0
$ 18 3
$ 17.6
$ 17 4
$ 115
$ 102 $ 13 9 $ 10 4
$ 115
$ 13 3 Allowance For f unds used Dunng Construction.
.3 2
.1
.1 2
2 2
2
.1 1
2 Other income and Deductions tNet:
1.9 12 8
.7 9
5
.7 3
.1
.1 3
Icterest Charges 10 3 94 86 79 81 82 71 53 53 53 53 Net income
$ 67
$ 100
$ 10 6
$ 10 5
$ 104 5 40
$ 40 $ 91
$ 53
$ 64
$ 85 Capitahzation Ratios Lnna Term Debt.
54 th 56 2 %
56 2 %
55 5 %
56 2 %
57 0%
564%
55 0 %
55 6 %
553%
55 3 %
E,,, erred Stock with Smking Fund.
6.3 Preferred Stock without Smking Fund 86 89 89 91 92 95 93 93 94 94 94 Comma 5:ock.
25 4 26 3 26 3 27 1 274 27 8 275 27 6 27.9 27 8 27.8 Retained Ea.. cgs 56 86 86 83 72 57
_ 68 81 71 75 75 Total 100 0% 100 0% 100 0% 100 0% 100 0% 100 0% 100 0% 100 0% 100 0% 100 0 % 100 0%
Dvdends Declared on Preferred Stock iMiltons ot Dollarst 5 2.7
$ 10
$ 10
$ 10
$ 10
- 10 $ 10
$ 1.0
$ 10
$ 10
$ 10 gas 0perations ODerat:ng Revences : Excluding Interdepartmental.;
tMillions of Dollars Residential
$ 37.2
$ 37.1
$ 324 5 27.7
$ 22 4
$ 15 2 $ 131
$ 13 8
$ 10 8
$ 10 2
$ 10 7 Commercial 13.2 13 5 11 6 99 73 55 41 41 29 26 2.5 Industnal 14 7 22 3 13 8 12 5 90 65 46 41 31 29 25 Covernment and Municipal.
12.1 12 7 11 1 96 65 46 32 30 22 20 18 Total Revenue from Uitimate Customers.. 3 77.2 5 856 5 689 3 597
$ 45 2
$ 32 8 5 250 $ 250
$ 190
$ 17.7
$ 17 5 Miscellaneous J
11 15 11 0:
10 4
4 3
3 4
$ 85 6
$ 700
$ 612
$ 44 2
$ 33 8 5 254
$ 254
$ 19 3 $ 18 0
$ 17 9 y
Total Sales iExcludmg Interdepartmental-(Bdions of Cubic Feett Residential.
11.6 12.7 13 3 12 9 13 2 11 1 10 9 12 7 11.5 12 4 14 1 Commercial.
47 53 56 54 55 49 48 55 52 53 55 industr'ai 63 96 77 79 81 78 78 84 86 85 84 Government and Manicical.
50 55 62 61 61 54 52 60 58 56 60 Total 27.6 33 1 32 8 32 3 32 9 29 2 28 7 32 6 31 1 31 8 34 0 Customers-Year End (Thousands' Resnitial.
163.9 164 4 165 1 165 3 165 8 165.5 165 4 166 1 167.4 166 5 185 9 Total.
176 5 177.1 177 9 178 0 178 6 178 3 178 4 179 4 180 9 180 1 179 7 Natural Gas Purchased iBillions of Cubic Feett For Resale 28.3 33 8 33f 33 2 33 9 31 2 29 1 33 2 32 9 31 5 33 7 For Fuel m Company's Electnc Ceneratmg Stations 44 1 34 8 14 2 16 6 86 11 3 18 9 28 8 54 2 61 4 63 9 Total 72 4 68 6 47 7 49 8 42 5 42 5 48 0 62 0 87 1 92 9 97 6 Maximum 24-Hour Resale Demand (M llons of Cubic feet).
315 293 272 293 264 254 202 302 236 251 305 Heating Degree Days 1 Note 1t Actual.
1,104 1.445 1.492 1.333 1 565 1.179 930 1.351 1.205 1.140 1.537 Normal.
1,384 1,372 1.379 1.359 1.342 1.330 1.338 1.321 1,324 1.312 1.285 Residential Customer Data Average Annual Use (Thousands of Cubic Feet) 70 38 77 36 80 92 78 01 79 85 67 41 6569 76 48 69.15 74 75 85.10 Average Annual Bill
. $227.06 $225.33 $19602 $167 57 $135 54 $ 9818 $ 79 22 $ 83.06 $ 64 85 $ 61.53 $ 64 95 Average Revenue per Thousand Cubic Feet.
323c 291c 242 215C 170c 146C 121c 109C 94 82:
76C 18
Financial & Operating Statistics 1980
'979 1978 1977 1976 1975 1974 1973 1972 1971 1970
'MC!ric Operati0ns Ot e'anng Revenues Exung Interdenstment@
Ynons c. Del!a:s<
f,cuacotial 3 843
$ 732
$ 65 6
$ f>12
$ 539
$ 48 0
$ 41.7 3 358
$ 315
$ 28 3
$ 27.1 Comeraal 82.8 75 6 66 4 64 8 57.0 43.1 34 6 28 0 22.1 20 5 19 r industral 34 8 31 0 27 0 26 2 23 1 16 4 12.5 65 63 59 58 Gvvemment and Vanicipa!
23 5 25 3 21 5 20 8 18 2 13 3 08 76 60 05 53 total Revenues from U!t' mate Customers.
$231.4
$205 7
$180 7
$176 0
$152 2
$120 8
$ 98 6
$ 80 5
$ 65 9
$ 602 3 579 Pubkc Utd:ty 36 2 38 1 157 130 48 67 10 2 51 94 12 4 12 8 MisceHancous Note 3t 41 (38
_.LJ (11 0) 1 18 1P 10 10 11 10 4
Total
$271.7
$2400
$1919
$178 0
$1571
$129 3 5'C9 8
$ 87 2
$ 76 3
$ 73 7
$ 717 Sales Encludmglaterdepartmental;
- dhof:s of KC*att Houtst Residential 1,685 1.565 1.618 1.587 1.455 1,449 1.426 1.570 1.563 1.394 1.335 Commercial 1,571 1.537 1.537 1,492 1.386 1.339 1.278 1.315 1242 1,141 1.083 Industnal 881 873 875 843 816 769 784 766 742 701 708 Gcvemment and Mumcipal..
673 627 624 602 573 539 489 529 507 470 455 Tctal Sales to Ultimate Customers.
4.810 4 602 4 654 4.524 4 230 4 096 3 977 4,180 4 054 3.706 3 581 Put;hc ut9 tty 909 1 226 559 488 202 290 530 461 1 417 2 596 2 912 1
Total.
5,719 5 828 5 213 5 012 4 432 4 386 4 507 4 641 5 471 6 302 6 493 Customers-Year End (Thousandsi Resdential.
174 8 173 3 172.4 170 8 169 3 168.2 166 9 167 0 167.4 166 0 165 3 Total 195.3 193 8 193 0 191.1 189 5 188 2 187.1 187.4 188 0 186 5 186 1 Summer Net Generating Capabikty 1 Thousands of Kilowattsi..
1,257 1.257 1.257 1.257 1.257 1.257 1257 1.257 1250 1.250 1 250 Maomum Hour Net Demand : Company Area; (Thousands of Kilewatts:
1,091 981 967
%5 917 915 869 936 908 837 810 l
Net Output. Company Area;
- dhons of Kilowait Hours) 5.120 4 867 4.944 4 804 4.467 4.360 4.234 4.441 4 352 3.965 3.790 Net 0utput-Total Vdhons of Kdowatt Hours).
6.070 6.142 5 561 5 352 4.730 4 777 4 846 4 993 5.844 6 635 6.780 Annual toad f actor ' Company hea) 53.4 %
566%
58 4 %
56 8 %
55 5 %
544%
55 6 %
54 2 %
546%
54 1 %
534%
Cochog Degree Days ; Note 2i Actual 3,558 3 031 3.369 3 386 2.410 3 072 2 912 2.91,8 2.835 2.984 2.651 Normal 2.865 2.851 2f20 2.791 2.812 2.809 2.809 2.810 2.802 2,805 2.812 Residentral Customer data Mrage Annuall'se <Kitewatt Hourst 9.677 9.049 9.437 9.347 8 623 8 650 8 538 9 398 9.383 8 431 8 087 Average Annual MI
. 5484.11 $423 32 $383 70 $377.90 $319 21 $286 22 $249 41 $214,61 $189 22 $171.37 $164 56 Aherage Revenie per Kilowatt Hour..
500c 4 68C 4 07c 4 04c 3 70c 3.31c E92c 2 28C 2.02C 2.03c 203c
%les cf Cor'duc9rs Overnead and underground-7.814 7.768 7 730 7.625 7,583 7.675 7.569 7.433 7 368 7.244 7,155 Transit Operations Operating Revenues Excludmg Interdepanmentah
.%1 hens of Dollars) Note 3)
$ 44.1
$ 37.0
$ 36 4 5 31.9
$ 18 9
$ 13 2
$ 111
$ 10.9 11.4 5 117
$ 11.7 Number of Passengers,MJhonst Revenue 54.3 57.3 55 5 54 6 56.5 479 67.1 69 3 72.5 74 0 76.3 Tansfer 29 0 31 9 30 9 32 2 34 0 28 2 39 3 41 5 44 2 46 1 47 8 Total 83.3 89 2 36 4 86 8 90 5 76 1 106 4 110 8 116 7 120 1 124 1 Aserar;e F af e Based on Revenue Passergers.
42.15c 3019c 3029C 30 24c 3067c 2628c 16.11C 15 26C 15 26C 15.27c 1493c Aerage Fare Based on Total Passengers; 27.48C 19 41C 19 45C 19 02c 1915c 16 53c 1017c 9 54c 9 48C 9 41C 918c Vehicle %Ies,Wiions:
14.0 14 0 13 7 14 0 14 0 11 7 14 0 14 3 14 4 14 3 14 7 Operatmg Revenues per Vehicie %1e 315.0c 264 3c 265 7C 2279c 1350c 1128C 79 3c 762c 19 2C 818e 79 6C Whic!es 0*ned of leased
%3 tar Coactes 493 493 458 455 465 466 477 465 458 459 459 Streetcars 35 35 35 35 35 35 35 35 35 7
35 Wes of Track : Sing!e Track Ecuvalcott 15 15 15 15 15 15 15 15 15 in 15 Acute Mnes-votar Coach.
509 488 489 487 470 471 388 374 339 339 338 m n!ues are mdicaMe of the relame heating recuirements and represent the summation of differences between 65oF and actual mean daily atmosphenc 4 bulb temp.ratures for ail days of less inac 65'F. mean Normal represents 20-year running average ended previous year 2; Values as indicatne of the relative cochng reccirements and represent the summation of differences between 65cf and actual mean daily atmosphenc dry bulb temperatures for an days of mcee than 65< F mean Normal represents 20-year running average ended previous year i3) See Note 10 in Notes to Financial Statements regarding the Transit Subsidy Agreement 19
SERVICE AREA /Now Orlaano Public Sorvico Inc.
New Orleans Pubhc Service Inc. serves the City Through their affiliation with Middle South of New Orleans (Orlear.s Pansh), a land area of Utihties. Inc., Pubhc Service and the other Middle approximately 200 square miles. Natural gas and South Utihties System companies gain operating transit service are provided for the entire parish and income tax benehts, a source of common equity while electricity is supplied for all areas of the capital and expert assistance when selhng senior parish except the 15th Ward (Algiers), an 18-square-securities to finance property additions and for mile section on the west bank of the Mississippi other corporate purposes. Interconnections make River. As a pablic utility, New Orleans Public Serv-it possible to provide more dependable electric ice Inc. is regulated by the Council of the City of service with less total generating capacity and to New Orleans, with administrative responsibihty installlarger generating units having lower invest-vested in the Depaitment of Utilities.
ment costs per kilowatt and higher efficiencies.
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The Middle South Utilities System companies provide electric service t
re than 1.5 million customers in a 92,000-square-mile area within SERVICE TERRITORY Arkansas, Louisiana, Mississippi and southeast Missouri. New Orleans Middle South Public Service Inc. also serves gas and tiansit customers in the City of New Orleans. Associated Natural Gas Company, a subsidiary of Arkansas Utilities System Power & Light Company, serves gas customers in parts of Arkansas January 1,1981 and Missouri.
The four System operating companies-Arkansas Power & Light Company, Louisiana Power & Light Company, Mississippi Power & Light Company and New Orleans Public Service Inc.-have served under common ownership and on an inter-connected basis for more than 50 20 years
P.O. Box 60340 BULK RATE Nsw Orleans, Louisiana 70160 U.S. POSTAGE R: turn Requested PAID New Orleans, La.
Permit No.19 f M LIL*J ~ * =f; M n ?
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MlOOLE SOUTH UTILITIES SYSTEM