ML20041E977
| ML20041E977 | |
| Person / Time | |
|---|---|
| Site: | Palisades, Big Rock Point, Midland, 05000000 |
| Issue date: | 02/12/1982 |
| From: | CONSUMERS ENERGY CO. (FORMERLY CONSUMERS POWER CO.) |
| To: | |
| Shared Package | |
| ML20041E975 | List: |
| References | |
| NUDOCS 8203160040 | |
| Download: ML20041E977 (24) | |
Text
,.
- ~....
I l
l N.
/
s, s
\\
\\
\\
\\
('
)
\\
I I
I Consumers Power Company Annual Redort 1981 i
\\'
\\
I
- /
t l
/
l
.I
/
t
./
i l
l I'
i l
8203160040 820311' PDR ADOCK 05000155 t I PDR k
a
..r
...w-1
.w.o.-
,,.m
- -. ~ -
-4
~
- ---r
y r
e
.OV..
Assets f;r tho CI;hties The Company's goal for the 1980s es to develop
]
~"
sts assets-people, plants, facil:t.es-so that the en-
- f
[ [}. ;, g.
y erg / to support an emptoved economy will be avail-
"; ;gy
_g' ;7 able wtien it es needed On the electric side, we will J-p t >
'".T([-I', ' 7'N,'hD*' gd '). M M -1 M 3 y,, 3
, I.
- I.
have a balanced ma of nuclear and fossel genera-t
- W t.on. On the gas side, we will balance conservation
+'/f1
[
with the development and use of additional sources m
'
- 4 u gG W,(,C ' a i
s,
of natural gas required to meet the demands of the h
[
' ' QE J J ky Wi%
0*C 0*
- 8kk;~#W 1r*'t%n2 N I3 Y Dj K 9 7 M W,* E. S.r. w y,. c f.-
-7 v-a i
i
< f r~
t '. ( l r 3 ' },q
- t
- 4 -
c'
"'1'. ~ -
h Top: At the MidlandNucicarPlant, construction was
's g.; ;
l '"
N -$ s b:[ u.m;b, r n f.g 4 75 percent complete at the end of 1981. Un:t 2 is 7
4%
v scheduled to go on-hne In December 1983 and 1: q;Yyy;.
. u,1 Q Unit 1 on July 1984
} L 'q ;
~
M*?? f-gty 1,l ;l
.?
i<
u Bottom: Up to 7,200 tons of coalare burned dady
.ls h ! e i D) '
abdity factor was 87.5 percent on 1981
..[,
~
>l l;j$
at Unit 3 of the Campbell Plant The unit's avad-
'n l
- 4
- ~';
.s
~ *
,~
..,f.
f C:ntents 1,
Consolidated Financial Highlights 1
'~
Company Description 1
- ^ ^
The Decutive Oftco Letter
.2
~, [.
1981 Review.
.4
_.,'..,...'c<_~-_
' _ _ ~
Consolidated Financial Statements.
.8
_,um.._
~
%.s m_
Notes to the Consolidated Financial
%'N Statements.
12 N
tg j
Auditors
- Report.
. 20 N
l Management's Discussion and Analysis 20 Selected Financialinformation.
23
'k.'c,.
j Ouarterly Financial and Common p
Stock Information
. 23 Statement of Management
. 24 Company Directors, Officers, and
-Q ( '
o It e General Managers.
24 1
Service Area Map.
Inside Back Cover
. N hg.
Ii Shareholder Information.. Outside Back Cover k
i j.
<m s
N -.4 0 g
. :33 jm.y
.,w'.g.;.phy,% m..
w
~~~
Qy' p
'?
c.
Q' 'e XVQ.
- W l
m~
q'
?
-N e
r i
y_.
, [. i
,.f 4
%.h g
n:l.
gw,.c v-7, n.gg Q((
\\
. g.
pe
,5
. a ww4 m
- 14 N?
m G:nsumers Power Company 7
s
_, lA T '
p q
- g. '; +. -
212 West Michigan Avenue
.,,fg
.f_. c
-nhe i,04 3' r.
Jackson, Michegan 49201
~9;i) 7 gt.
yw (517) 788-0550 s MM ' '
1
- g.rx4
-; W -
2' W
\\
\\
n.
.. ?
E
l m
l tronzumora Pcwor Eompany Annual R port 101 I
l
{
i CONSOLIDATED FINANCIAL HIGHUGHTS 1981 10M 1979 Thousands. Escept per Sha'e Amounts Op+ratng Revenue
$2,733,973
$2.303.983
$2.021234 f.et income
$ 247.789
$ 223.798
$ 203.787 Earn ngs per Ave' age Common Sha'e 3.12 3 08 5
3 24 Ave age tJamter o Common Shares Outstand +ng 58,099 54251 48.003 r
Cash Div.dends Pad per Common Sha'e 2.36 2.36 2.30 Retarn en Average Common Eau;ty 11.2%
11.1 %
114h G* css Preporty Add,t,ons S 798,557
$ 739.532 5 850.770 Net 'ovestment in Plant at Year-End
$5,877,176
$5 291.485
$4813268 Tuta' Cap.tatzabon a' Year End
$4,831,128
$4.765.103
$4.157.925 Company Description Consumers Power Company was incorporated in M,chgan in 1968 and is the successor to a corporaton of the same name which was organized in Mmne in 1910 and did business en M,chgan from 1915 to 1968 As a combinator, ut.nty Consumers Power suppies electncity or gas, or both, to a servce area witn more than 53 minen I
rescents, including those rn metropohtan centers such as Grand Rapids. Fknt Pontiac, Lansing. Kalamazoo, Muskegon Sagvnar Bay City. Jackson, Traverse City. and Bate Creek, and suburban Detrod.
Industnes in the territory served by the Company include automobiles and automotrve equipment, pnmary meta!s. chemca's, fabocated metal products, pha*maceuticals, machinery, oil ref.ning, paper and paper products, food products. and a diversited group of other industr es Consumers Power a!so serves a large rural area with more than 53.800 farms Overa's the Company has about 1.3 mithon electnc customers and 1.1 millon gas customers Approsimatefy 428.000 of the,e i
l are botn e6ectric and gas customers.
j in 1981 about 51 percent of consoldated operating revenue was derrved from the electrc business about 46 percent was provded by the gas business, and the rema:nder Came from other sources l
The Company has frve wholly-owned subsdares. Northern Mchgan Exploration Company is engaged in the esploraSon, development, purchase, and sale of oil and naturat gas; :t operates within the contiguous 48 states and in severaf foreign countnes Plateau Resources Lirruted rs engaged in the accursition, exploraton, and development of propeites for the mining.
m,lLng. and sae' of uranium. Mich.gan Gas Storage Company is engaged in the purchase of gas from an interstate p pehne suppler, in the transmisson and stor&yr of gas. and in the sale of gas to the Company !Achgan Ut hty Col'ecton Service Co, Inc. rs engaged in a special co"ect on service for past due utihty bills. Ut<hty Systems. Inc., wtuch was formed in earty 1982, is engaged in the rece.pt.
preservaton, and dissem:naton of informaton relating to constructon or other actrvites which may interfere with or a"ect ut.hty services in M.chgan.
1
~._
Dunng 1981 the economy of our service area remained base generation from our new coal-fired Campbell Unit 3 depressed. Auto production declined to its lowest level in and our Palisades Nuclear Plant, and through 1981 construc-20 years. Unemployment, along with the price of just about tion and regulatory progress at our Midland Nuclear Pfant.
everything, went up. Desp:te all this, the Company achieved Midland is currently 75 percent complete and to date $2 a level of earnings that was slightly above that for 1980. We billion has been spent on it. Construction progressed well in sold more gas to out-of-state utilities. We received more 1981, and in recognition of our progress and at our urging, revenue from increased rates. We made improvements in the Nuclear Regulatory Commission (NRC) staff moved up operating efficiency, and we paid careful attention to costs.
the date for issuing Midland's Safety Evaluation Report by two months. In add tion, we As a result, our net income finally reached substantial increased, and earnings per p
agreement with the staff on share amounted to $3.12,in f
E h resolutionof thesoils-rela A
a !i comparison with $3.08 in 1980. While we still have a jf' 4
d licensingissue.
M The project's cost estimate long way to go before we j
j b achieve adequate eamings, dy has risen to $3.39 billion we also reahze we need to "j
g
,T from the $3.1 billion an-N l
nounced in January 1980.
provide our shareholders A
r g
with an improved dividend.
1 l b There areiour basic reasons ha d for the increase. Midland's fy$[
h, ff;d in recognitior, of this fact, on
'1 h$
man.
<lt base cost went up because January 6,1982 the board of miscellaneous changes, of directors encreased the MHQ j
m jy
" sg, IEAnQ additions in engineenng re-quarterly dividend on com-
)
M U quired to meet revised NRC mon shares from 59 to 61 y!
d standards, additional staffing, cents per share.
b.
and projected higherinterest As we enter the first part rates. Corrective soils-related
^
of 1982, we expect sales to John D. Selby James B. Falahee work, new support facilities, remain relatively flat, at least and additional financing until mid-year. But Michigan has the ability and the resources to get moving again: a costs resulting from delays in obtaining authonzation from the large, skilled labor force; tremendous facilities, already in Michigan Public Service Commission (MPSC) to issue secu-place, for the expansion of industry and Commerce; and the nties also added to the cost estimate.
world's largest supply of fresh water. With these resources We now expect to encounter fewer delays and difficulties and with business, labor, and govemment working together, in the financing area as a result of a recent decision by the we sec no reason not to expect a gradual but definite state supreme court. Michigan's attorney general-who op-improvement in our state's economy Our goal, therefore,is poses completion of Midfand-obtained a temporary court l
to develop " assets for the eighties" so that the energy to stay of on August 1981 commission order approving some of support economic recovery will be available when it is the securities requested in our application for 1980 financtng.
However, the Michigan Supreme Court lifted the stay in needed.
l We will have a balanced mix of coal and nuclear genera-October 1981 and in January 1982 issued an opinion con-tion to provide sufficient electric energy for our residential cluding that the commission's inquiry in secunties cases is l
customers, for companies now operating in our service area, limited to the need to issue secunties to obtain funds for a and for new industries which may be attracted to the state lawful purpose. Consequently, we anticipate that prompt if legislative reforms that encourage business activity con-commission action will be forthcoming on our pending and i
tinue to be enacted.We have already made major progress future financing requests.
)
toward reaching this goal through the use of more efficient We are currently meeting customer demand for netural i
1 2
.m.
1 gas through interstate supplier contracts and purchases made in Michigan. However, the partial deregulation-and in operating revenue amounted to $96.3 million and its net in-some cases the removal-of federal price controls on come was $22.5 million.
dom:stic gas discovered since Apnl 1977 is greatly in-Although the economies of our state and the nacon have ctrasing its price. As the percentage of decontrolled gas not recovered, there were signs of possible improvement entering our system goes up, so does our cost-and the during 1981. Inflation-a; measured by the Consumer Pnce amount that 9e must charge customers. In an effort to help Index-decreased from 12.5 percent in 1980 to 8.7 percent
" balance" the energy budget, we initiated several com-in 1981. The President made some progress in cutting prehensive conservation programs for residential customers federal expenditures and reducing taxes. He is also helping dunng the year.
to restore economic viability by encouraging capital invest-But conservation is not a complete solution to the overa!Iment for future productivity and by supporting the develop-problem of long. term oas mry!y Even with the recent expan-ment of nuclear power. At Consumers Pbwer Company, we sion of domestic exploration and dnt:W, 'ctivities, the short-will continue to work toward balancing the energy budget fall in domestic gas reserves cannot be made up without and toward developing assets and facihties that will provide the use of additional sources dunng the next 10 or 20 years.
the energy needed for an improved economy throughout the 1980s.
For this reason, one of our major suppliers has contracted to import liquefied natural gas from Algena, and we expect to have some of it in our system in 1982. In addition, we Sincerely, stand ready to reopen our Marysville Gas Reforming Plant, which we believe will be needed sometime in the mid-1980s.
Through this combination of domestic supplies and supple-mentary sources, we expect to have an adequate amount of natural gas for our customers
- needs throughout the decade.
On the regulatory front, the Company received three rate increases in 1981. In February the MPSC authonzed a
$?4 million operation and maintenance expense adjustment to electric rates and a $76.7 million intenm increase in gas rates. The hearing on our request for a total gas rate in-crease of $114 million annually was concluded in 1981 and John D. Selby the case is now before the commission for decision. In June Chairman of the Board we received an annual t, crease of $18.98 milkon in electric rates for costs ",0ciated with Campbell Unit 3. This in-crease was in addition to the $97.45 milhon increase which became effective when the unit went into service in September 1980. With the issue of Campbell 3 resolved, in l
i Ally we ided a request, based on projected 1982 sales ivcts and costs, for an electric rate increase of $339 mahon l
I annually Heanngs on this request are continuing, and we look for MPSC action in 1982 on our request for an intenm
.ncr:ase of $178 milhon.
Our oil and gas exploration and development subsidiary-James B. Falahee 9orthern Michigan Exploration Company (NOMECO), con-Vice Chairman of the Board inues to expand its operatidns. In 1981 NOMECO's net 3roduction amounted to 1.4 milhon barrels of oil and 12 2 L
thon cubic feet of gas. For the year, the subsidiary's total February 12,1982 3
ASSETS FOR THE E12HTII-1981 REVIEW l
PEOPLE Employees While employees are not included as assets on the balance 1
sheet, the twelve thousand people who work for Consumers l
Shareholders Power are among the Company's most valuable assets. Six Shareholders who invest in Consumers Power provide pa t thousand of them are employed in the eight operating of the capital for the assets that enable the Company to regions; four thousand work in engineenng, electnc and of'er electnc and gas service. At the end of 1981, there gas supply, customer service, accounting, and other depart-were 169,000 common and 44,000 preference and preferred ments of the general offce; and two thousand are involved shareholders. Approximately 54 percent of the Company's with the Company's electnc generating plants. The ratio of shareholders are Michigan residents.
the average number of customers to the average number Common shareholders received $136,432,000, or $2.36 of employees has remained nearly constar,t: 203 to 1 at the per share,in regular quarterly dividends of 59 cents per end of 1981,in companson with 200 to 1 in 1980.
share dunng 1981. Dividends for preference and preferred shareholders amounted to $66,385,000. The Company has estimated that 53 percent of the dividends PLANTS paid on common stock dunng 1981 constituted a return of capital and was not taxable for federal income tax purposes All dividends pd on preference and preferred Electric Generation stock were fully taxable.
Among its assets, Consumers P&er has 2 operating nuclear Participation in the Dividend Reinvestment and Common plants,6 fossil plants,7 combustion turbine plants (for peak Stock Purchase Plan increased 8 percent over that for 1980.
power penods), and 13 hydroelectnc plants-plus the As of December 31,1981,28,000 shareholders were Comoany's share of the Ludington Pumped Storage Plant enrolled. Dunng the year, plan participants reinvested Total system capabihty is 6,667 megawatts. Electnc genera-
$14,655,000 in dividends and made cash payments of tion from these facilities amounted to 24.1 billion kilowa't-
$3270.000 to purchase 1,012.480 shares of common stock hours (kwh) in 1981:69.2 percent of it was provided by without incurnng any brokerage fees or service charges.
coal,16.2 percent by nuclear 8.2 percent by oil and gas, For more information about the plan and possible benefits and 6.4 percent by hydroelectnc power (inc uding
~
under the Economic Recovery Tax Act of 1981, wnte to the Ludington).
Company's Corporate Secretary Seventy percent of the shares entitled to vote-or 50,807,220 shares of common, preference, and preferred Fossil stock-were represented in person or by proxy at the in 1981, the Company's fossil plants were avadab!e to pro.
Apnl14,1981 annual meeting of shareholders in Jackson, vide energy 84.9 percent of the time-lhe highest availabihty Michigan. Shareholders voted to increase the authonzed factor since 1969. An improved maintenance program number of preference shares from 15 milhon to 25 milhon begun in the 1970s is now producing results.
and re-elected all 15 incumbent members of the board of A huge, coal-shoveling bucket wheelis part of CampbeII Unit 3's computerized coal-handling system.
Management
(
Effective management of the Company's assets requires I
both flexibikty and planning, particularly since Consumers g
Power is examining diversification opportunities for the h 3 b'
second half of the decade when construct:on financing requirements will be substantially less.
W Consequently, in March 1981 Russell C. Youngdahl, 8
former executive vice president-energy suppfy, assumed
'a -
the newty created position of executive vice president-7 Y
%y' l
corporate planning. He became responsible for corporate planning activities and for the identification, evaluation, and implementation of diversification oppvitunities presented by bi
[
j~
changes in Michigan's economy and in the utikty industry
.D Q X_ I.
y#
i At the same time, Jack W. Reynolds was promoted to j
the position of executive vice president-energy supply Y
Formerly senior vice president-personnel and pubhc affairs.
- h,
?
Reynolds became responsible for energy supply-including
'~
gas, electnc, and steam production and transmission-and c-for system operations, system planning, and fuel procure-f i
g1- 0 ment, storage, and transportation, t
l Rober1 L Mabolm, who was previously vice president-gQ
, QC,
MM
'8 I
human resources at Memorex Corporation in Santa Clara, nd
,?;'
~~W l
Cahfornia,loined the Company on December 1 as senior M
Q M,, s m,
l vice president-human resources and pubhc affairs.
MA in July, John B. Simpson retired as chief executive of the Company's wholly-owned subsidiary. Northern Michigan Exploration Company (NOMECO). Simpson, who has served as chief executive of NOMECO since it was estabhshed in 7
1967, remains as a member of NOMECO's board of direc-Y, lors. Richard J. Burgess, formerfy executive vice president of NOMECO, was elected president and chief executive
. y/
officer.
W QJ l' y l
2 0-x
.-... _ _.+
~
During the year, the Company's coal-fired units bumed 68 mdhon tons, at a fuel cost of 1.94 cents per kwh. Al in January 1982, the Company announced that the esti-Campbell Unit 3, which went on-hne in September 1980, mated cost for Mediand had r,sen to $3 39 bd!on from the up to 7200 tons of low-suffur coal are bumed each day January 1980 estimate of $3.1 bdhon. The increase can be Coal-handhng equrpment at the ptant is computenzed. In broken down into four categories: base plant, sods, separa'e 1981 the unst was available 87.5 percent of the time-a facihties, and special financing. The project's base cost went remarkable achievement for the first futi year of operation.
up to $3.192 bdlen because of increased engineenng required to complete the des gn and meet current and evolving NRC standards, additional Company stamng and Nuclear expenses, higher pro:ected interest rates, and misce!!ane.
Fuel costs for the Company's nuclear plants, which gener-ous constructon changes. An allocaton for several support ated 3 9 bdhon kwh in 1981, were 0 59 cents per kwh The facihties (most of which were not part of earker plans), costs associated with sods remedial work, ar.d special financing Pahsades Nuclear Rant reached a mdestone when it com.
costs resulting from delays in our financing program also pleted its 176th day of cont:nuous operation on Jufy 11.
contnbuted to the totalincrease of just over 9 percent in The previous 66-day plant record for uninterrupted operaton Midland's cost estimate.
was set in 1977.
Pahsades went off-line in late August for scheduled refuchng and marntenance. In additon to refuehng,20 maior Plateau projects-many of which were modificatons required by the Nuclear Regulatory Commission (NRC) as a resutt of the Additional support for the Company's nuclear operations is Three M,le island accident-were carried out dunng the being provided by a who!!y-owned substd.ary, Rateau outage. The plant returned to full operation in January 1982.
Resources Limited. Rateau currently owns or leases about in April, an avd,1 team from the institute of Nuclear Power 35,000 acres of uranium properties in Utah. It has nearty Operations evaluated operatons at Pahsades and at the completed the constructon of its Henry Mountains uranium miti which wdl have the capacity to process up to 1,000 tons Big Rock Point Nuclear Rant as part of a nationwide program of uranium ore per day Dunng 1981, Rateau and for improving nuclear ptant performance. The inspection covered virtua!!y all plant operating and support areas. In Consumers Power entered into an amended contract its evaluation reports, the audit team concluded that both whereby Rateau wdl suppfy the Company's annual require-plants are being operated safely Recommendatons for ment of approximately 700,000 pounds of uranium con-improvement were made for training, sta%ng, non-safety areas centrates for 15 years.
of the quality assurance program at Pahsades, and coordina-tion between plant staff and supporting corporate groups.
RATES To smprove the quabty and scope of training for all nuclear operatons personnel, a corporate nuclear operatons training department was formed in 1980 and an increased Electric Rate Case manpower plan was approved in 1981.
On July 2 Consumers Power fded for an increase in electne rates of $339 milbon annually. The request, which is based Midland Construction on projected 1982 sa!es levets and costs, has five maior Constructon at the twin-unit Midland Nuclear Rant reached components: $76 mdhon to compensate for tne Company's larger investment in facthtees and its higher capitat costs; the 75 percent completion level by tne end c! 1981. Efforts
$74 mdhon to cover an increase, from 13.5 percent to centered on finishing bulk construction work in all areas of 17 percent, in the authon2ed retum on common equ ty; the plant, on implemenbng design changes resutbng from
$62 milhon to pay for increased coeraton and maintenance Three Mae istand, and on instafhng small pipe and elec.
expenses; $89 mdion to c set the reducten in kwh sates a
trical commod, ties. Approomately 75 percent of the plant's resulting from the eMects of conservaton, tne recesson, and,
wire and cable and 85 percent of its small piping are now in lifehne rates; and $38 mdhon to provide funds for the even-place. Dunng the year, construction of the two turbine generators was completed, and the testing program for tual costs of decommissroning the Companys operating nuclear plants and for the perpetual storage of spent nuclear these Components was begun. In additon,217 of the plant's fuet. The Company has asked for an intenm increase of 855 subsystems have been turned over to the Company
$178 mdlon.
for test.ng Progress was also made in the hcensing area. Last spong, a team of NRC staM members was designated to complete the review of Midland's Final Safety Anatysis Report and prepare the NRC's Safety Evaluaton Report (SER) on the plant The scheduled issuar'ce of the SER an integral part of the operating hcense process, was mov,ed up from ELEMENTS OF ELECTRIC RATE INCREASE REOUEST July 1982 to May 1982. In August 1981, an NRC caseload forecast panel reaffirmed that it essent.a!!y concurs wrth the
^ Q{""1 Company's protected construction completion and fuel
$ 7e 000000 INCREASED CAPITAL COSTS loading dates of Jufy 1983 for Unit 2 and December 1983 a
,%,aa for Unit 1. Consequent!v. the Company now expects that the m
- _,___j gi,gg
' ~ ' '
pubbc heanng for the Mid!and plant operating hcenses will 574.000.000 INCREASE IN RETURN begin dunng the fall of 1982.
a - A -.G Q ON COMMON EOUlTY Other bcensing ac'avity has concerned issues stemming
,m -. m~
q'. s62.000.000oTHER OPERATION ANo is.ss from sods.related problems at the plant. After lengthy and A w-C -4 complex discussons with the NRC, conceptual agreement MAINTENANCE EXPENSE w~mmer q on the major sods-related issues was reached near the ered
' ' i as.ag -
,'f I
""g 189.000.000 LOWER KWH SALES LEVELS of 1981. The pubbc heanng on the matter wdl Continue in
,,7 1982. but the majorJemedial work is scheduled to begin in ApnL The Company wdt provide detaded informaton on this
~gm ao k
work to the NRC at scheduled times and receive NRC n - --*
OEcQuu SsiONING approval before proceeding with certain tasks.
W M O M$-= -*- ~
5
ASTETS FOR TH] EIGHTIES-1981 REVIEW (continued)
Campbell 3 Rate increase NATURAL GAS A* er new asse's-plants, equipment, faciht,es-go into service, and the M.chigan Pubhc Service Commission (MPSC) a' lows tnem to become part of the rate base, the Storage Fields Company and its shareholders are permitted the oppor-Among the assets that he!p ensure a rehable supply of tunty to ea'n "a fa'r return," set by the MPSC, on the natural gas for Consumers Power's gas customers are 14 investment in these assets. An amount to cover this return natural gas storage fields operated by the Company and its on investment is included in rates that the commission subsidiary, Michigan Gas Storage Company. On peak cold author:zes the Company to charge its customers.
days, as much as 70 percent of tne gas sold by Consumers On June 24, the MPSC granted an annualincrease of Power is supplied from the storage fields.
$18 98 mahon in efectnc rates for costs associated with Campbell Unit 3. This final increase was in addition to a
$97.45 milhon intenm increase which became ef'ective in Demand, Supply, and Price September 1980 when the new unit went into service.
Prior to the passage of the Natural Gas Pohcy Act of 1978.
federal controls kept the wellhead price of natural gas at art,ficially low levels. As a result, domestic reserves of Indexing Adjustments natural gas dwind!ed because high exploration and deveL
~
s g
a g s memcat A heanng on an operation and maintenance expense ad1ust-ment equat to the percentage increase in the Consume' Now that controls are being graduaHy removed, supphers Pnce inder for the 12 months ended August 1981 was held are increasing the pnce of all gas d.scovered a'ter Apnl before the MPSC on December 16. With MPSC approval, 1977. With this added revenue, they have begun under-the Company increased its electnc rates for a penod of taking the expense of explonng and dolhng to find new 12 montns, beginning in February 1982, by approximately sources of gas and oil. There are now approximatefy 4,500
$23 3 mdkon. In February 1981, the Company was pe' dnthng ngs at work in the lower 48 states; in 1971, there were less than 1,000.
m t'ed to increase its rates, for a comparable 12-month penod, by approximately $24 mdhon as the result of this However, since 1968 the U.S. has replaced only 60 percent of the natural gas it has consumed. !i demand does not annualindeong adjustment.
increase at all, current proven domest:c reserves will last only 10 years. So, even a resurgence in exploration and Ufeline Rates development of domestic resources will not provide enough natural gas to meet this country's needs in the next LJehne rates mandated by the M.chigan legislature in an several decades.
a"empt to help low-income electn? Customers meet " basic Gas from Alaska won't be available until a pipehne is household needs" and to encourage conservation were completed. Mexico has targe gas reserves but is not selhng piaced into e*fect on September 18. Under the kfehne con.
significant amounts to the U S because of a national poky cept, each customer is entitied to an initial block of energy to convert Mexican industry from oil to gas and thereby pnced at 15 percent below the average cost to all residen.
make addit >ona! od available for export. Canada also taa! customers The size of the initial block vanes according possesses large gas reserves but has decided to ma:ntain to the number of persons kving in a household. Customers a 25. to 309 ear reserve for domestic use, a pohcy which using more than the specified amount subsidize the low-use leaves ht!!c gas for export over the long term. To make up customers through a sharply inverted rate schedule that the intenm dehCit, the nation's-and Consumers Power's-increases the pnce per kwh in increments as consumption supphers have had to seek afternatve sources. One of the increases Company's major supphers contracted,in the mid-1970s, Special anowances have been made for electnc space toimporthauefied naturalgas(LNG)from Algena Consumera hea!!ng Customers dunng the neating season and for Cus.
Power expects to have some LNG introduced into its pipehne tomers wrth electnc water heaters. Additionally, the Company supply in 1982. While the pnce of LNG is currently higher has special rates for senior citizen, farm, and hfe support than that of domestic gas discovered before 1977,it is system customers.
competitive with newer domestic gas supphes now being developed.
In ado 1 tion, the Marysvdie Gas Reforming Plant can be Gas Rate Case made available to provide a supplementa y source of gas.
In February 1981, the HPSC issued an order for an intenm gas rate increase of $76.7 mdhon annuaHy and an increase from 8.84 to 9.58 percent in the overall authonzed rate of
. COMPARISON OF DE MAND FOR NATURAL gas WiTH CONVENiloN A.
return on the Company's gas business. The order preserved
, DOMESTIC SUPPLY 1980 1990 n OOA34 B.LuoN mcfi the status Quo on the Marysvdie Gas Reforming Plant for the time being,it remarns in the rate base although the plant was deactivated in September 1979 when less costly inter-state p4pehne gas supphes became avaitable. Since the Company expects to return Marysvdle to service in the mid-
- ocuau, 1980s, it asked the commission to retarn Marysvdle in the con rate base as plant held for future use. Decisions on the NATURAL Ma3 sWie rate base issue and on the Company's request
- OAs.
~1-for a total annualincrease of $114 milhon (including the
~p
+
4
$76.7 mdhon intenm) in gas rates are pending.
m
~o
%.4.
,~fk SHORTFALL DOMESTIC -
i SUPPLY
. m s
~
e w- - _
m 6
--.,_ _ n
NOnnECO Estabbshed 15 years ago w.th a total cash investment of tncey, tne plan he'ps etMnmers keep their energy bms lower
'nd-through c nserva$cn-e>3encs the overa'l suppry of 514 6 mdhon. Northern t/>chigan Esploraton Compan/s energy asadame to evenone net income for 1981 amounted to $22 5 mdhon. to companson wdh $17.t mdhon for 1980.
Dunng 1981, the subsd ary ofaced its ma,or emphasts We Enem Analysis on new acreage accurs tion in an e' tort to purchase leases For a nominal 510 cha ge, a Consumers Power rescenta' or dnfl.ng nghts on the most economical terms. Whde a' ready hold og esplora$on interests in Austraha, Tonga, ene'gy consu' tant visits i customer's home and check5 in-and Bdze, the company formed NOMECO Lahn Amenca sutabon, apphance use, turnace e"iciency, and other energy-in md year to esp; ore in Soutn and Centraf Amenca in related aspects of the doethng Informaton gainered cunng Pa'aguay, a " permit to prospect" on 7.8 mdhon acres was the a'dc-to-basement survey is telephoned to a computer Which anatyzes a hst of energy saving improvements sug-obta:ned from the government. At the end of 1981. NOf/ECO held interests in approximate!y 37 mdcon gross acres up gested by the consu!! ant and then provides estimates of the from it mdhon g'oss acres at the end of 1980.
potenta' donar savings for each suggested improvement.
The coreputer atso supphes data on the installabon cost-As a result of the passage of legis!abon reopening whether by contractor or the do-it-yourself technique-and Mchigan's Pigeon fhver Country State Forest for oJ and
'nformaton about the income tax trea: ment of conservabon gas development, NOMECO has partepated in oniong e, pend tures. Customers also receive a conservabcn k:t con-which has revealed three new od and gas fields, and these are now produc.ng The company has interests in 276 pro.
taining several easily installed energy-sa,nng devices and duct ve wells located in northern Mchigan. Cahfornia, on.
advice on low-or no-cost steps-such as a schedule for and o" shore Louisiana. M ssiss opi, Texas. New Mexico.
d.ahng down the thermosta!-to conserve energy. Afl resr and Oklahoma. NOVECO's ne! 1981 production (excluding dentai customers of the Company are ehg D!e for tne home energy anal s;s.
i roya't>em amounted to 1.4 mahon barrels of od and 12.2 babon cut.<a teet (bcf) of gas, proven reserves totated 7.5 mdhon barrels of od and 604 bcf of gas.
Insulation Program Under a financing program authonzed by tne MPSC. cus-tomers who heat tneir homes w;th gas and who have no CONSERVATION more than 2.5 inches of ceAng insu!ation may otta.n zero-interest loans from tne Corrpany in amounts of up to 51.000 ter centractor instarted cemng insuladon and $700 Customers for ce Ang insuraton rnstaled by the customer.
Fortne 1,198.719 res, dent a! efectnc customers and the An M'SC-approved insu!aton outreach prog'am pro-1082.064 rescent.ar gas customers serwed by Consumers vides free ceang insulaton to qua!deng low-income gas Power, the Company's rescent a' energy conservadon space heatng and electnc customers whose incomes are program assured'y consMutes an asset for the e,ght es less than the Bureau of Labor Stabstcs low-income stancard Des gned to reduce ine'tcient use of nMuraf gas and efec-or who a'e recemng ass: stance from the Depa'iment of Social Services.
t 3
l y' 'g -
m i m m-**=
..y.,
~
w k
'llNl Y
- M r ;.w.m
. ;i 9.
. De'* y
,/
s v.c y V s
,,t
.s,.
Q Y
N, M ff a
m.),
M~ Q' ~
s, i
d q f hs.( P " ! f. N i$a g
4-c}
' yg;h K4Q -
- g e~
o
,. y e Mf
,. j@k:';Qf i
g&yQ.% W. '
' E.*J;
- N$dNyps:%,psvh$$N@ w
= D57$d V
WM V'
M ? lA K
r
\\
i
\\
- ; m%
- !;lQ. O.,
T. s.ag h
.. :~.m. v g
'%W'
?{*?,, < " v ;
, ;" =
- %p 2
v
.g g
m,F-V,3,3.44
%.. Aq w[g""' ' $
i G jg J.7 3
g *;~ ~.
m7%
q
)gr g c:p s.!
o
.m
,, y uY*,
Kq A simple telephone hookup to a central computer
[
jf
%[ - Q~
makes possible a quick cost-benefit study during each
?p wlQjf.
,,Q
~4 home energy analysis.
- $$ytk d
~.
m
" MQ * :
p g[4 5
%, Q )..
u m
c E
~ Q va.
e.
y 4
lp g fI.
- ,Q O L
l$
- l. ' g:Q h}$,l jhi y :j'i 'gL 7.N i)b L.y g j-A new NOMECO wellnears complevon m ingham r.
' %[$l
^
CounYs White Oak Township 2 y
$ % W T*7 y f 5WM 7
ccuses powea couemy mo suasomts Consolidated Statement of income years Ended December 31 1981 1980 1979 Thousands, Except per Share Amounts OPERATING REVENUE (Notes I and 6)
Electric utility
$1,399,542
$1,273,565
$1,129,565 Gas utility.
1,264,859 986,384 870,316 Other 69,572 44.034 21.353 Total operating revenue
$2,733,973 52,303 983 52 021 234 OPERATING EXPENSES AND TAXES Operation:
Fuel consumed in electric generation 3 478,107 5 418,814
$ 385,944 Purchased and interchange power 145,903 204,427 159,944 Cost of gas sold (Note 1).
864,711 657,249 555,150 Other 358,760 328 906 286 553 Total operation expenses.
$1,847,481
$1,609,396 51,387,591 Maintenance (Note 11) 131,719 117,025 116.120 Depreciation, depletion and amortization (Note 11) 165,707 140,032 128.203 General taxes 143,463 103.465 85,784 income taxes (Note 8) 37,101 15.621 30.585 Total operating expenses and taxes
$2,325,471 51.955 539 51 745 283 NET OPERATING INCOME Electric utility
$ 296,973
$ 235,106 5 200,851 Gas utility.
94,077 71,699 64.950 Other 17,452 11.639 7.150 Total net operating income S 408,502 5 318 444 5 272 951 OTHER INCOME Allowance for other funds used during construction (Nete 1).
S 63,042 5 71,088
$ 66,168 Gain on reacquisition of long-term debt.
4,157 2,910 2.617 Other, net.
5,707 16.007 7.526 Total other income S 72.906 3 90 005 5 76 311 INTEREST CHARGES Interest on long-term debt.
S 272,757
$ 216,553
$ 177.973 Other 54,244 39.234 17,021 Allowance for borrowed funds used during construction (Note 1).
(93,382)
(71.136)
(49.519)
Net interest charges S 233,619 5 184 651 S 145 475 l
Net income.
S 247,789 3 223,798 3 203.787 DIVIDENDS ON PREFERRED AND PREFERENCE STOCK.
66,385 56 747 48 419 Net income after dividends on preferred and preference stock
$ 181,404 S 167.051 S 155.368 AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 58,099 54.251 48.003 EARNINGS PER AVERAGE COMMON SHARE
$3.12
$3.08 53.24 4
i The accompanying notes are an integral part of this statement.
8
CONSUMERS POWER COMPANY AND SCSIDIARIES Consolidated Statement of Source of Funds for Cross Property Additions Years Ended December 31 1981 1980 1979 Thousands of Dollars FUNDS GENERATED Net income FROM OPERATIONS Principalnoncash items:
3 247,789 3 223,798 5 203,787 Depreciation, depletion and amortization -
Per Consolidated Statement of income 165,707 140,032 128.203 Charged to other accounts 3,755 3,553 4,917 Deferred income taxes, net 41,917 33,627 26.549 Deferred investment tax credit, nel 27,895 (24,097)
(5,257)
Allowance for other funds used during construction I
(63.042)
(71.088)
(66 168)
Less:
S 424,021 3 305,825 5 292,031 Dividends on preferred and preference stock 66,385 56.747 48,419 Dividends on common stock.
136,432 127,479 109,698 Retirement of preference and preferred stock and long-term debt.
26.074 24.375 18 198 S 195,130
$ 97,224 5 115.716 FUNDS OBTAINED issuance of common stock
$ 43,538 5 83.015 5 94.830 FROM NEW issuance of preference stock.
50,000 107,000 FINANCING issuance of preferred stock 45.000 Sale of first mortgage bonds 138,479 284,500 138,500 Refunded first mortgage bonds (38,479)
(75.000)
Net proceeds from installment sales contracts 43,855 8.154 337 increase n bank term loans Increase in revolving bank loans 175.000 4,500 38,500 7,000 Increase (decrease) in other long term debt (693)
(1.387) 3.677 Increase (decrease)in notes Layable due within one year193,529 (96.505) 302,583 S 434.729 5 523 277 5 591 927 OTHER SOURCES Changes in net current assets and liabihties, (USES) 0F FUNDS excluding obhgations expected to be refinanced.
Temporary cash investments.
S 5,933 (3,865)
$ 155,312 Accounts receivable.
5,571 (36,463)
(23.4S7)
Accrued revenues.
25,463 (57,801)
(19.560)
Gas n underground storage Generating plant fuel stock (9,817) 13.737 (53.767)
(15,869)
(11.987)
(13,005)
Accounts payable.
Accrued taxes (3,309) 27.641 45.357 22,846 9.387 11,011 Deferred mcome taxes Other, net (34,543) 31,742 10.817 126,876 (26.987)
(41.388)
$ 123,151 5 (54,596) 5 71,290 Sale of portion of generating plant (Note 12) 465 40,859 Property sold under leaseback arrangements (Note 5) 17,532 81.263 16.935 Other, net (35,492)
(19.583)
(12.316)
Total funds from above sources.
$ 105.656 5 47.943 5 75 959 Allowance for other funds used during construction S 735,515 5 668,444 3 784,602 63.042 71 088 66.168 GROSS PROPERTY ADDITIONS S 798,557 3 739.532 5 850.770 GROSS PROPERTY ADDITIONS BY SEGMENT Electric utikty Gas utihty.
S 678,680 5 617.784 5 750,552 L
Other 38,740 63.138 68,032 81.137 58 610 32 lE6 S 798,557
_3 739.532 5 850.770
( ) Denotes deduction.
The accompanying notes are an integral part of this statement.
9
CONSUMERS POWER COMPANY AND SUBSIDIARIES December 31 Consolidated Balance Sheet 1981 1980 Assets Thousands of Dollars PLANT (AT Electric utility
$3,580,105
$3,422.938 ORIGINAL COST) Gas utihty.
1,276.391 1,243.634 Other 312,771 260.675
$5.169,267 54.927.247 Less provision for accumulated depreciation.
1,551,410 1.396.751
$3,617,857 53.530.496 Construction work in progress (Notes 2 and 3).
2,259,319 1.760.989
$5.877.176
$5 2914S5 CURRENT Cash S 28,134 5 25,529 ASSETS Temporary cash investments at cost, which approximates market 4,272 10.205 Accounts receivable, less reserves of $3,359,000 in 1981 and $2,884.000 in 1980 222,343 227,914 Accrued revenues (Note 1)..
160,532 185.995 Cas in underground storage, at average cost.
209,223 199.406 Generating plant fuel stock, at average cost 109.242 93.373 Materials and supplies, at average cost.
98,542 93,682 Prepayments and other.
128.902 111.467 S 961.190 5 947.571 OTHER Pnncipally deferred debits S 33.821 5 37.543
$6,872,187 56.276.596 Stockholders' investment and Liabilities CAPITAllZAll0N (See Consolidated Statement of Capitalization)
Common stockholders' equity
$1,673,732
$1.586.495 Redeemable preference stock.
175,459 128,409 Nonredeemable preference stock 140.000 140.000 Redeemable preferred stock..
137,555 137,955 Non edeernable preferred stock 334,779 334.779 Long-term debt.
2,369,603 2.437.465
$4.831.128 54 765.103 CURRENT Current obligations expected to be refinanced:
LIABILITIES Notes payable due within one year....
S 427,973 5 234.444 3% first Mortgage Bonds, series due 1981 38.479 11%% First Mortgage Bonds, series due 1982 50,000 Revolving bank loans 45.500 Bank ierm loan 175,000 10.000 S E52,973 5 328.423 Current matunties and sinking fund on long-term debt (Note 4).
92,329 33,752 Accounts payable...
230,708 234.017 Accrued taxes (Note 8)....
126,380 103,534 Deferred income taxes (Note 8).
97,165 131.708 Accrued interest 70,937 56,819 Other 133.961 54.880
$1,404,453
$ 943.133 DEFERRED Deferred income taxes (Note 8).
CREDITS AND Deferred investment tax credit (Note 8)...
S 442,181 5 396.142 163,121 135,197 RESERVES Other 31.304 37.021 S 636,606 5 568.360 C'onstruction commitments and contingent liabilities (Notes 3 and 9)
L
$6.872.187
$6 276 %o The accompanying notes are an integral part of this statement.
10
CONSUMERS POWER COMPANY AND SUBSOARIES Consolidated Statement of Capitalization (Note 4)
December 31 1981 1980 1981 1980 COMMON STOCKHOLDERS' EQUITY Shares Outstanding Thousands of Dollars Common stock, $10 par value, authorized 100,000,000 shares.
60,244,101 57,634,040 $ 602,441 5 576,340 Capta:in etess of par va'ue 575.175 555.293 Retained earnings 524,552 479,580 Less captal stock expense 28.436 24.723 L
Total common stockholders' equity
$1,673,732 31,586.495 PREFERENCE STOCK-Cumulative,31 par value, authorized 25,000,000 shares Redeemable:
5 5 50 Ccnvert, tic. 559 stated value. conversion price $15.50 9,186 68.182 S 459 5 3.409 85 00 Nonconvertible. 31,000 stated value 18,000 18.000 18,000 18.000 3 85 Norconver!Me. 527 50 stated value 2,000.000 2,000.000 55,000 55.000 3.98 Nonconvertible,526 stated value 2,000,000 2,000,000 52,000 52,000 4 00 Nonconvertibfe,575 stated value 2,000,000 50.000 Total redeemable preference stock.
S 175,459 5 128.409 Nonredeemable, nonconvertible, $25 stated value:
52 43 2,000.000 2.000.000 S 50.000 $ 50.000 2.23.
2,000,000 2,000,000 50,000 50,000 2 50 1,600,000 1.600.000 40,000 40.000 Total nonredeemable preference stock S 140,000 $ 140.000 PREFERRED STOCK-Cumulative, $100 par value, authorized 7,500,000 shares Redeemable:
5 52 95,550 99.550 $
9.555 $
9.955 9.25 320,000 320.000 32,000 32,000 S 0]
500.000 500.000 50.000 50.000 9.70.
100,000 100,000 10,000 10,000 Ei25 360.000 360.000 36.000 36.000 Total redeemable preferred stock
$ 137,555 $ 137,955 Nonredeemable:
54 50 547,788 547,788 3 54,779 5 54.779 4.16.
100,000 100.000 10,000 10,000 7.45 700,000 700,000 70,000 70.000 7.72.
700,000 700,000 70,000 70,000 7 76 750.000 750.000 75.000 75.000 7.68.
550,000 550,000 55,000 55.000 Total nonredeemable preferred stock.
S 334,779 5 334.7/9 LONG-TERM DEBT First mortgage bonds, secured by a mortgage and lien on substantially all property
$2,078,712 52,001,236 Instabem sa:es contracts. a, crate interest rate 7.8%
171,050 129.745 4%% Sinking Fund Debentures due 1994 32,800 33,400 Bank term loans. at banks' pnme rates and N% above dua 1982 through 1985 360,000 360.000 Revolving bank loans, at 112H% t,: bank's prime rate due 1982 50,000 45,500 Other 3.542 4.235
$2,b%,104 32,574,116 j
Deduct:
i corrent matent,es of tast mortgage bonds 50.000 38,479 Sinking fund for first mortgage bonds -
23,525 22,525 Currer.: mainties of reiolving bank loans 50.000 45.500 Current maturities of bank term loans 190,000 17,500 Current mako!:es of installment sales contracts 2,950 2.550 Sinking fund for debentures 600 600 Otter current matunties 254 577 Unamortized net debt discount 9,172 8.920 Totallong term debt S2.369.603 $2.4 R.405 g
Total capitalization
$4,831,128 54.765.103 The accompanying notes are an integral part of this statement.
11
-. ~...
=
1 CONSUMERS PCNVER COMPANY AND SUBSIDIARIES Vears Ended December 31 1981 1980 1979 1981 1980 1979 Shares Outstanding Thousands of Dollars Consolidated Statement of Capitalin Excess of Par Value of Common Stock Balance at January 1...
57,634,040 52,455,515 47,176,203
$555,298 5516,572 5467,607 Issuance of common stock through[
Sales through underwriters.
2,000,000 4,000,000 4,000,000 15,500 30,720 38,440 Dividend Reinvestment and Common Stock Purchase Plan 225,413 198,982 628,990 1,724 1,472 6,949 Employee Stock Ownership Plan.
57,600 245,042 103,225 426 2,002 1,215 Employees' Savings Plan 177,900 244,900 46,000 1,279 1,932 444 Conversions of $6 00 Preference Stock 80.712 333.252 202 833 Conversions of 55.50 Preference Stock.
149,148 403,889 167,845 820 2.249 923 Net gain on reacquisition of preference and preferred stock 128 149 161 Balance at December 31 60,244,101 57,634.040 52,455,515 5575,175 5555.298 5516.572 Consolidated Statement of Retained Earnings Balance at January 1
$479,580 5440,008 5394,338 Net income.
247,789 223.798 203.787
$727,369 5663,806 5598.125 Less cash dividends (Note 4):
Preferred stock.
35,511 35,529 32.009 Preference stock.........
30,874 21,218 16.410 Common stock (52.36,52.36 and $2.30 per share)...
136,432 127,479 109.698 Balance at December 31 5524,552 5479,580 5440,008 The accompanying notes are an integral part of these statements.
Notes to the Consolidated Financial Statements 1.SIGNIFICANT ACCCUNTING POLICIES sists of construction work in progress expenditures, less previously The accompanying consolidated financial statements include the capitalized AFUDC and certain other indirect, previously capitahz construction costs. Financing costs on the construction financing any (the Compan and allits accounts of Consumers Power Comforation Company, h)ichigan Gas a[rangements (Note 3) are calcula subsidiaries, Northern Michigan Exp Storage Company, Plateau Resources Limited and Michigan Utihty vicusly capitalized, interest, and are being capitalized separatel andincludedinthe borrowed portionof AFUDC.Theallowancefor Collection Service Co. Inc. (together with the Company, the Com-other funds is a noncash item. It contrioutes to future cash flows when n ergr'ounYstorage, wbce aflowed in the rate a ing phici-
)E f
't fit ~ ~
f utikty plant is accorded Plant-in-Service status by the regulatory commission and the Company is permitted a return on and recovery a
of the Michigan Public Service Commission (MPSC), all significant of the capitalized AFUDC in the rates charged for utihty services.
intercompany accounts and transactions have been eliminated.
[9f syn ff8, 8 n a
wa ers tno bI at m nth s end Allowance for funds used du' ring construction (AFUDC) is an Notes 7,8 and 11 contain information on pension plans, mcome j
accounting convention that represents the cost of funds used to taxes and depreciation, respectively.
finance the Company's construction projects. Under estabhshed utihty regulatory practices, AFUDC is capitalized as part of utitty
- 2. NUCLEAR GENERATING PLANTS plant cost. The corresponding credit is allocated between an allow-The Company's investment in the Midland Nuclear Plant, a twin-ance for other (equity) funds and an allowance for borrowed funds.
unit facihty designed to provide 1,357 megawatts of capacity for the These amounts appear on the Consohdated Statement of income Company's electric system and to furnish process steam service to as other income and as a deduction from interest charges, respec-The Dow Chemical Company (Dow), was 52.03 billion at December tively. During 1979 81, most of the AFUDC resulted from electric 31,1981. On the basis of the estimated effects of licensing delays utihty plant construction. It was computed at a rate of 8.50% of and expected design revisions resulting from hcensing requirements, the AFUDC base to September 30,1980, at 9.23% for the remainder and certain other hcensing assumptions, the Company estimates that l
of 1980 and at 10.0% for 1981. The Company's AFUDC tase con-Midland Unit 2 will be in commercial operation for electric service in l
12
Notes to the Consolidated Financial Statements (continued) cmsuucas rowtn couewy mo sueswas December 1983, that Unit I eill be in commercial opert, tion for tions, but increasing costs and inflation could ultimately increase process steam service and electric service in July 1984, and that the the Company's required investment.
plant will cost approximately $3.39 bilhon.
As of December 31, 1981, using an assumed interest rate of The Company's decision to contmue design and construction of the plant assumes that necessary regulatory approvals will be 17%% the Company would be able to issue approximately $181 obtained. The Company is vigorously pursuing efforts to id(ntify million of first mortgage bonds under the Company's indenture.
The Company cannot currently issue preferred stock under the and favorably resolve matters which could cause delays and cost earnings coverage restrictions contained in its Articles of incorpora-increases. There can be no assurance, however, that further delays and further cost increases will not occur. If commercial operation of tion (Articles). The ability to issue first rnortgage bonds (other than the plant for process steam service to Dow cannot begin until after refundmg issues) and preferred stock in the future will depend upon increases in earnings. The issuance of preference stock is not subject December 31, 1984 Dow would have the right to terminate its to any earnings coverage restriction.
l agreement with the Company for such service; however, Dow would During the past several years, the Company has experienced be obkgated to pay an amount estimated to range from $281 million l
at December 31,1981 to 5470 milhon if the plant were completed substantial delays in secunng necessary authorization from the MPSC to issue intermediate-and long-term secunties as a result of at a cost 01 $3.39 bilhon. Should Dow terminate the agreement for intervention in secunties proceedings by the Michigan Attorney such cause, the remaining portion of the investment in equipment allocable to process stes:n service may not be salvageable. That por.
Generaland others opposed to contmumg construction of the Midiand Nuclear Plant. However, in January 1982 the Michigan Supreme Court tion is estimated to range from $203 milhon at December 31. 2981 issued an opinion holding that in secunties proceedmgs the MPSC's to 5340 milhon if the plant were completed at a cost 01 $3.39 bilhyn.
inquiry is hmited to whether there is a need to issue secunties to in 1978, the Company discovered foundation soils problems at the obtain funds for a lawful purpose of the utihty. Accordingly, the Midland Plant and reported the discovery to the Nuclear RegulatoryCompany anticipates that the Midland issue will no longer serve to Commission (NRC). Thereafter, the NRC issued an order which, if protract secunties proceedmgs before the MPSC.
made effective, would modify the plant's construction permits to Presently pending before the MPSC are apphcations filed by the prohibit remedial construction work undertaken to correct the prob-Company in December 1980 and in January 1982 for authonty to lems A Company request for a hearing on the order was granted, issue and sell secunties.
thereby delaying the effects eness of the order, and certam indi-viduals have been permittd, to intervene in the proceeding. Hearings began m July 1981. Some remedial work related to the soils problems and to more stringent NRC seismic requirements is scheduled to SHORT TERM BORROWINGS AT DECEMBER 31,1981 begm in Apnl 1982. Addihonal cost attnbutable to this remedial Obhgation at cork is mcluded in the revised cost estimate for the Midland Plant.
Regulatory Available December 31, An increase, from $31 bilhon to $3.39 billion, in this estimate Authonzation Credit 1981 cas approved by the Company's Board of Directors on January 6 Financing Arrangement Milhons of Dollars 1982. The Company is presently unable to determine whether the Bank borrowingsm
$500
$472
$139 foundation soils problems will result in further delay in initial opera-Acceptance drafts
- 150 150 50 tion of the plant or in further increases in plant costs.
SMECW.
100 100 52 Another pending Midland Plant issue relates to nuclear fuel cycle Construction fmancing rules. The Company does not expect that further review of this issue arrangementsW cill invahdate the plant construction permits.
Oakway IV 200 165 124 Apphcations for full-term, 40-year operating licenses for the Oakway II...
40 40 15 Pahsades Nuclear Plant and the Midland Plant are pendmg before Borrowings of subsidiaries the NRC.
Acceptance draftsH 40 35 Commercial paper 13
- 3. CONSTRUCTION PROGRAM AND SHORTTERM BORROWING ARRANGEMENTS The Companies construction expenditures are estimated at W The Company's available short term lines of credit include $347 of which the Company.llion in 1982 and $3.1 bilhon for 1982 milh n with various domestic banks subject to periodic review by approximately $802 mi s portion is estimated at $755 million and lenders. The Company is generally required to mamtain average 1
l
$2.8 bilhon, respectively These amounts are net ofleased nuclear compensating balances,with the domestic banks, over an un-l tuel. Substantial commitments have been rnade for the construction specihed penod, equal to 10% of the totalline of credit plus 10% of the average borrow ngs outstandin as determined from the banks' program m future years. To fmance this construction program and records after adjustment for uncolfected funds. There are no le to meet debt matunng through 1986, the Cornpany will need to issue substantial additional secunties. The amounts, timing and restrictions on the withdrawal of the compensalmg balance In addition, the Companb foreign banks with the lo nature of these securities have not yet been determined.
borrowed $125 rnilhon (denominated in To meet its operational requirements and permit external fmancm.
U.S. currenc October 198f~) from l g
of its construction program at a reasonable cost, the Company eill need signihcant and timely rate increases. The Company's abihty W Secured by a lien on certain of the Companies' fuel and natural to obtain external fmancing is also dependent upon tirnely approval, gas inventories.
chich is not assured, of its financin apphcations by federal and state regulatory agencies. lf adequate unds cannot be obtained from M An arrangement with Southern Michigan Energy Corporation external financmg and internal sources, the Company will, as in the (SMEC), a special purpose corporation, and a group of banks.
past, curtailits construction program to the extent feasible, although (d) On an interim basis,in order to finance the construction of certain any curtailment may affect adversely the rehabihty of service for facihties which may later be the subject of long-term fmancing, the future customer requirements. In the Company's judgment, deferrals Company has entered into ino similar construction f nancing of planned construction may result in near-term expenditure reduc-arrangements.
13
Notes to the Consolidated Financial Statements (continued)
CONSUMER 3 POWER COMPANY AND SUBSCARIES The first arrangement is in the form of a sale and repurchase
- 4. CAPITALIZATION obligatien with a special purpose corporation Oakway IV, Inc., for Common Stock the purpose of Imancing ct,sts related to the acquisition and/or can'.
At December 31,1981, retained earnings of $53,943.000 out of struction of certain items of major equipment and/or real property total retained earning of $524,552,000 could not be distributed as phile the property is owned by Oakway IV, it is subject to a first cash dividends on common stock under the most restrictive provi-hen in favor of lenders to Oakway IV sion of the Articles or theIndenture. At Pecember 31,1981 common The second arrangement with another special purpose corpora-stock was reserved as follows: 702,689 shares for the Employee tion,0akway ll, Inc., finance.s the construction of a nuclear poner Stock Ownership Plan,431,200 shares for the Employees' Savings training center and trainmg simulators. The Compar.y has assigned Plan,1,847,637 shares f or the Dividend Reinvestment and Common the construction contracts and has sold the real property related Stock Purchase Plan and 29,632 shares for the conversion of the thereto, and is obligated to repurchase or arrange for the lease of 55.50 Preference Stock.
the center.
A majonly of the interest. charges are being capitalized at rates Preference and Preferred Stock All or part, at the Company's option, of its preference and prefe.rred a ounted o 54 m ho d ing 1981.( ot )
issues may be repurchased, either at a fixed pnce or at progressively decreasing prices. Certain issues are subject to restnctions which prohibit repurchase with funds raised from the issuance of secunties ranking prior to or on parity with the repurchased stock and having a lower interest or dividend rate. The Company's $5.50,585.00, 53.85, 53.98 and 54.00 Preference Stock and its 54.52, 59.25, 59.00, 59.70 and 58.625 Preferred Stock are redeemable at mandatory dates and prices.
REPURCHASE AND REDEMPTION FEATURES December 31,1981 Repurchases at Company's Option Mandatory Redemptions Price Restric-Price (Excluding tions in Annual (Excluding Accrued Effective Effect Number Accrued first Dividends)
Through Through of Shares Dividends)
Redemption Redeemable preference:
5 5.50 5 52.50 June 1985 None 50.000W 5 50.00 July 1980 85.00 1.085.00 Sept. 1983 Sept. 1983 3.600 1,000.00 Oct 1954 3.85
- 31.35 April 1985 April 1990 100,000 27.50 May 1985 3 98 o 29.98 Oct. 1985 Oct. 1985 100.000 2E00 Nov 1955 4.00
- 29.00 Nov. 1986 Nov. 1986 100,000 25 00 Dec.1986 Redeemable preferred:
$ 4.52 5 104.725 None None 4.000
$ 102.725 April 1952 9 25 110.00 March 1982 March 1987 16.000 100.00 April 1982 9.00 110 00 March 1983 March 1988 25.000 100 00 Apol1983 9.70*
110.00 Dec. 1984 Dec. 1989 5.000 100.00 Jan.1986 8.625'"
109 00 Dec. 1984 Dec. 1984 72,000 100 00 lan.1986 Nonredeemable preference:
5 2.43 5 26.50 Aug. 1986 None 2.23 27.25 Oct. 1982 Oct. 1982 2.50 27.50 July 1983 July 1983 Nonredeemable preferred:
5450
$ 110 00 None None 4.16 103.25 None None 7.45 103 00 March 1986 None 7.72 106.00 June 1982 None 7.76 107.25 May 1983 None 7.68 106.00 Oct. 1983 None W Mandatory redemptions in 1982 will be limited to the number of shares outstanding (9,186 at December 31,1981). Th i
in the mandatory redemption amounts.
m Issued in May 1980.
W lssued in November 1980.
(d)l$$ygd m Dgggghgg }gg},
M lssued in November 1979.
14
CONSUMERS POWEA COMPANY AND SUBSIDIAR'ES FIVE YEAR AGGREGATE AMOUNTS OF MANDATORY REDEMPTION REQUIREMENTS OF REDEEMABLE PREFERENCE A portion,in the principalamount of $29 million, of the Company's AND PREFERRED STOCK obligations under its installment sales contracts, is secured by a hke amount of first mortgage bonds.
December 31,1981 Under the terms of the Indenture, the Company is requireo by Preference Preferred October 1 of each year to deposit with the trustee cash and/or bonds equal to 1% of the total principal amount of all first mortgage Thousands of Dollars bonds authenticated before the preceding January 1, except refunding 2
5 459 32 series. In addition, a $600,000 sinking fund deposit is due for the 3
4%% Sinking Fund Debentures by September 1 of each year.
1984 3,600 4,511 l
1985 8,950 4.511 FIVE-YEAR MATURITIES AND ANNUAL SINKING 1986 11,450 12,211 FUND REQUIREMENTS OF LONG TERM DEBT.
INCLUDING MANDATORY REDEMPTION FEATURES Should the Company default in the performance of its obligations December 31,1981 under the sinking fund provisior s of the Articles, preferred share-Sinking Fund holders and then preference shareholders have preference over Maturities Requirements o
on shareholders as to the payment of dividends or distribu-The M DM Long Term Debt 1982 3293,204 524,125 1983 18,204 24.125 FIRST MORTGAGE BONDS OUTSTANDING 1984 64,846 24.125 December 31 1985 122,055 24,125 1986 28,243 24,125 1981 1980 Senes Due Thousar.ds of Dollars
- 5. LEASE OBLIGATIONS AND RENTALS 3%%
1981 S
3 38,479 The Company has three leasing arrangements for its nuclear fuel 11 %
1982 50,000 50.000 that provide for a total capability of $250 million, of which the 3%
1984 21,642 21,642 essors' investments in the fuct at December 31,1981 were approxi-mately $225 million. The current term of one lease expires in 4%
19E6 23,928 23.984 November 1985, a second expires in August 1985, and a third 34%
1987 12,576 12,743 lease (for which the lessor's investment was approximately $115 12M 1987 10,000 70,000 million at December 31,1981) expires in May 1982. The first two 44%
1988 27,243 27,361 leases have provisions for one-year extensions from time to time to 4%
1989 18.969 19,306 November 2029 and August 2013, respectively, and all three leases 18%%
1989 100,000 are subject to earlier termination in certain events.
3%
1990 20,755 21,057 Quarterly lease charges consist of a fuel factor, which is based on 4%%
1990 13,932 14.023 heat production, plus mterest costs and administrative fees and 4%
1991 18,084 18,933 expenses incurred by the lessors. In the event of termination of any 15%
1991 38,479 11 %
1994 51,000 54.000 lease, the lessor would be entitled to an amount equal to its remaining Sh%
1996 44,924 46,901 investment. The Company is responsible for payment of taxes, maintenance, operating costs, risks of loss and insurance.
9%
1996 70,000 70,000 6%
1997 58,285 61,374 The Company leases Iwo of its general office buildings. The initial 8%
1997 40 000 40,000 terms of the leases expire in 2003, with two five-year renewal options 6h%
1998 50,559 54,528 subject to escalation clauses and a third five-year renewal option at 9%
1998 25,000 25,000 the then fair market rental value. At the expiration of the basic or any renewal term, the Company has the option to purchase the buildings 6%%
1998 53,439 53,905 7%
1999 50,000 50.000 at the then fair market sales value. The annual rentals are sub ect to t
quadrennial escalation and currentry approximate 32.9 million. Taxes, 1
8%%
1999 55,000 55,000 insurance and other operating costs are required to be paid by the 10 %
1999 78,000 78.000 Company.
t 8%%
2000 50,000 50,000 11 %
2000 71,250 75.000 The Companies also have operating leases for transportation, construction and other equipment, and other assets. Rentals for all 8%%
2001 60,000 60,000 I
7%
2001 59,858 60.000 leases, including amounts charged to clearing and other accounts, f
7H%
2002 67,677 70,000 amounted to 569,146,000, 353,144,000 and $43.323.000 in 1981, 7%
2002 48,112 50,000 1980 and 1979, respectively, of which $15,406,000, 310,485,000 and $11,700,000, respectively, were contingent upon 8%%
2003 75,000 75,000 e
The Companies' minimum rental commitments for all ses will d
9"s 2006 60,000 60.000 approximate 347,517,000 in 1982, $38,641,000 in 1983, 9h%
2006 60,000 60,000
$36,505,000 in 1984, 330,621,000 in 1985, $20.765,000 in 1986, 8%
2007 85,000 85,000 568,663.000 for the period 1987 91, 349,187,000 for the period 8%%
2007 100,000 100,000 1992-96, 330,317,000 for the period 1997 2001 and $21,488,000 9%
2008 75,000 75.000 thereafter.
10%%
2009 100,000 100,000 12 %
2010 100,000 100.000 The Company's lease obligations are accounted for as operating 12%%
2010 75,000 75,000 leases in the rate-making process. Accordingly, financing lease pay-ments are charged to expense as incurred. Had these leases been
$2,078,712 52,001.236 capitalized, the totalassets related to utility plant (net of accumulated depreciation and amortization) that would have been recorded at 15
Notes to tiie Consolidated Financial Statements (continued) ccmsuutas powtn ecwmmo sesomcs Decee.tr 31,1981 and 1980 were 5291,188,000 and $266,836,000,
- 8. INCOME TAX EXPENSE respectivery, and the total habilities related to obligations under capitalleases that would have been recorded were $292,197,000 and COMPONENTS OF INCOME TAX EXPENSE
$271,684,000, respectivel Years Ended December 31 the effect on expense woug if all financing leases were capitalized.
not be material.
- 6. RATE MATTERS in September 1979, the Company announced plans to mothballits Thousands of Dollars Marysville Gas Reforming Plant because adequate supplies of less expensive gas would be available until the mid 1980s. In response, Federatincome the MPSC rolled back 523.9 million of a previously approved $29.2 taxes (cred;t)
$ 2,518 $(16,878) 5 (3,589) million annual gas rate increase and ordered hearings to determine if Deferred income taxes:
further reductions or refunds were to be required. During the hearings, Current, net-the Company took the position that it is entitled to earn a return Accrued revenues.
$(11,769) $ 26,588 5 15.283 on the Marysville Plant net investment (which currently approxim:tes Revenue reserved for
$104 milhon)and to recover its investment over the usefulhfe of the possible refund (25,130)
(591)
(387) plant. Intervenors* positions include allowing the Company no return Other, net 2,356 5.520 1.276 on or recovery of its investment and requiring the Company to refund
$(34,543) $ 31,517 5 16.172 amounts that represent all revenues (up to $239 million) attributable Noncurrent-to operation of the plant since October 1977. Hearings have been concluded and the case is pending before the MPSC.
Accelerateddepreciation' depletion, and Appeals and motions for reheanng of several other gas and electric amortization -
rate orders are pending. These include litigation involving: alleged Deterredin current overconections under the fuei cost adjust r,ent clause; alleged ille~
gality of the purchased and interchange poaer adjustment clause year..
S 41,794 $ 38,609 5 28.663 (PPAC) applicable to electric rates; December 1977 PPAC revenue Reversalof prior years' deferrals (13,333)
(12,858)
(11,647) collected under protection of court order; replacement power costs Other,nel 13.456 7.876 9533 attnbutable to a 1979 Palisades Plant outage extending beyond 90 days; 1979-82 revenues collected under an indexing system where-
. 41,917 5 33,627 $ 26.549 by the recovery in rates of other operation and maintenance expense Deferred investment tax is annually adjusted for changes in the Consumer Price Index; 1980 credit, net S 27.895 $f24.097) 5 (5 257) revenue collected under a generating plant availability incentive S 37,787 5 24,169 5 33.875 system; and a court-ordered electnc rate increase collected from Octaber 1969 to April 1970 The Companyis vigorously Operating S 37,101 5 15,621 S 30.5S5 tory bodies and the courts anfursuing these matters before regula.
in the opbion of management, their Nonoperating 686 8.548 3,290 ultimate resolution should not have a materially ativerse effect upon S 37,787 5 24.169 5 33 h/5 the consolidated financial position of the Companies or the consolidated results of operations for the periods involved.
The 1980 federalincome tax credit includes $43 mi!! ion related to the carryback of the 1980 net operating loss reduced by the loss
- 7. PENSl0N PLANS of $26 milhon of net investment tax credit (lTC) which had been The Companies have trusteed noncontributory plans covering sub-claimed in prior years. The 1979 credit reflects adjustments to prior stantially all employees. Annual contributions are sufficient to cover years' provisions and ITCs.
current service costs, interest on unfunded pnor service costs, and for income tax purposes, the Companies use liberalized deprecia-amortization of prior service costs. Unfunded prior service costs are tion methods which include the class life asset depreciation range being amortized over a 25-year period. Contnbutions to the plans are system and the accelerated cost recovery system. Income taxes made in an amount equal to the pension expense accrued for the deferred under these methods are charged to income tax expense 1
year The pension expenses accrued for 1981,1980 and 1979 were and credited to deferred income taxes. As the timing differences I
$29,558,000,326,742,000 and $24,998.000, respectively.
giving rise to the tax deferrals reverse, the related deferred taxes As of January 1,1981 and 1980, the actuaries' reports, using a are credited to income tax expense.
7.0% assumed rate of return, showed that the present values of ITC used to reduce current income taxes payable is deferred and vested accumulated benefits were $271,344,000 and $234,673,000 amortized over the life of the related nroperty. As of December 31, respectively, nonvested accumulated benefits were 513,819,000 and 1981, unused ITC was approximately $52 million from credits gener-
$13.802,000 respectively, and net assets available for benefits were ated in 1981,552 million from 1980 and $83 million from 1979.
$360,679,000 and $287,166,000 respectively.
1 16
CONSUWECS POWEQ COMPAN7 AND SUBSCARIES STATUTORY FEDERAL INCOME TAX RATES RECONCILED
- 10. SEGMENTS OF BUSINESS TO THE EFFECTIVE INCOME TAX RATES SEGMENT DATA Years Ended December 31 December 31,1981,1980 and 1979 1981 1980 1979 Revenue and Net Operating income by segment are presented on the Conschdated Statement of income. Capital expenditures by Statutory federalincome segment are presented on the Consohdated Statement of Source of tax rates.
46.0 %
46.0 %
46.0%
Funds for Gross Property Additions.
Decrease in taxes from:
(
Borrowed pcrtion of Depreciation, AFUDC and other Depletion income indirect, capitaiized and Taxes identifiable k
construction costs (21.9)
(20.7)
(16.1)
Amortization (Credit)*
Assets Other portion of AFUDC (10.2)
(13.8)
(13.4)
Other. net f.7)
(17)
(2 2)
Thousands of Deflars Effectiva income tax 1931 rates.
13.2%
9.8%
,14 3 %
Electric utility.
$101,794
$(18,819) $4,990,928 Certain of the Compan s indirect construction costs, principally Gas utility..
41,513 39,507 978,082 the borroned portion of Af'UDC, are capitalized for f nan:ial reporting Other.......
22,400 16,413 903,177 purposes in accordance with the provisions of the MPSC's Uniform
$165,707
$ 37,101 $6,872.187 System of Accounts but are expensed for income tax purposes.
Consistent with past MPSC rate-making policies, the resultmg tax 1980 reduction has been reflected currently in the Consolidated Statement of Income. The equity portion of AFUDC, while capitalized for book Electric utihty.
S 84,466
$(10.280) 54.424.242 purposes, is not included in taxable mcome. In a 1980 genenc Gas utikty 37,147 15.707 1,037.939 Other' 18.419 10,194 814*415 order, the MPSC ruled that deferred income taxes on indirect con-struction costs would be recognized in future rate cases, except for
$140.032 5 15.621 56.276.596 those attnbutable to generatmg plants under construction at the time of the order.
1979 Electric utikty.
$ 75,763 5 1,144 53,994,924
- 9. CONTINGENT LIABILITIES Gas utihty 38.904 23.744 1,026.924 In addition to the matters disclosed elsewhere in these Notes to Other.
13.536 5.697 643,598 the Conschdated Financial Statements, the Companies are involved in certain legaland admmistrative proceedmgs before various courts
$128.203
$ 30.585 55.665.446 and governmental agencies and in contractual matters with others concernmg rates, environmental issues, income t]xes, licensing, m income taxes (and other corporate expenses) of the Company obhgations under take-or-pay c are allocated to segments in accordance with the accounting vanous suits and claims ansmg montracts and other rnatters; and requirements of the MPSC and the Federal Energy Regulatory the ordinary course of busm.ess are pending against the Companies. Although the outcome of such C0**'83 0"'
proceedmgs, matters, suits and claims cannot be predicted, manage.
Revenue from sales to General Motors Corporation enounted to ment does not expect that their ultimate effect upon the Companies' 9.1%,8.9% and 10.5% of total operatmg revenue m 1981,1980 results of operations or fmancial condition will be materially adverse.
and 1979, respectively.
- 11. MAINTENANCE AND DEPRECIATION, DEPLETION AND NUCLEAR FUEL AMORTIZAll0N The cost of repairs and minor replacements is charged to rnain-tenance expense. Property additions and major property replace-ments are charged to plant accounts. Property retired or disposed i
in the normal course of business is charged to the provision for accumulated depreciation,less net salvage credits.
The Company's depreciation provisions are based on straight-line and units-of-production rates approved by the MPSC lts com-posite depreciation rates for electric and gas utikty plant r.ere 2.99%
and 4.01% in 1981,3.03% and 3.76% in 1980 and 2.93% and 3.76%
in 1979, respectively Prior to September 1980, the electric rate included an estimate, which the Company non considers to be inadequate, for the decommissioning costs of the Company's nuclear plants. The amount included in past rates was discontinued by the MPSC in August 1980. The appropriate method of fundmg decom-rnissioning costs was the subject of a generic hearing before the MPSC. A decision is now pending.
Other plant is depreciated or depleted on the units-of-production method for capitalized oil and gas etploration and development costs 17 l
-~.,, _. _ _
L
o Notes to the Consolidated Financial Statements (continued) cmsuutas era ccano suesomes and on straight-line rates for the remaining plant. The composite of
- 13. EFFECTS OF CHANGING PRICES (UNAUDITED) these rates approximated 8.46% in 1981,9.b5% in 1980 and 8.35%
inflation, or decreases in purchasing power resulting from in-in 1979.
creases in prices, distorts the information found in traditional finan-in the opinion of rnanagement, the Companies, provision for c al statements because they contain expenses and assets measured i'
accumulated depreciation is reasonably Edequate to cover the re-n historical costs or dollars of varying purchasing power. To assess quirements for depreciation on the enginal cost of plant.
the eff ects of inflatbn on a company's tra ditionalfinancial statements.
I quantity of heat produced for electn.uel expense on the basis of the the Financial Acounting Standards Board (FASB) requires companies Nuclear fuel cost is amortized to f c generation. The amortization to furnish rdain supplementary information adjusted for the effects rate assumes that the spent fuel has no residual value and wi!! require ing prices' of chanfASB prestribes two methods to show the effects o f
perpetual storage. Prior to August 1978, the rate was based upon the The assumptions that spent fuel had a residual Salvage value and would tion. The constant dollar method presents historical costs stated in i
be chemically reprocessed. The MPSC has indicated that the dollars of equal purchasing power, as measured by the Consumer Company will not be precluded from ultimately recovering the rea-Price Index for All Urban Consumers. Measuring the effects of sonable and prudent costs of nuclear fuel disposal.
general inflation in this manner recognizes that a company earns income only after reflecting the cost of maintaining the general purchasing power of its investors' capital.
The current cost method presents changes in the specific prices of plant from the date the plant was acquired to the present. Cur-
- 12. JOINTLY-0WNED UTILITY PLANTS rent cost adjustments are intended to rneasure income after ref;ecting COMPANTS PORT 10N OF JOINTLY 0WNED the cost of maintaining a company s productive capacity Current UTillTY PLANTS cost amounts differ from constant dollar amounts to the extent that December 31,1981 and 1980 spec,g,c prices have increased more or less rapidly than general Ludington inflation. Since a number of judgments and estimatmg techniques Pumped Campbell are used in making the current cost calculation, this information Storage Unit 3 should be viewed as an approximation of the effects of inflation 1973 1980 rather than as precise measurements.
The current cost of plant, which was determ,ned primarily by in service date...
51.0 %
93.3%
i Undivided ownershio interest applying the Handy Whitman Index of Public Utility Construction Net investment (000):
Costs to the plant accounts categonzed by year of acquisition, does, 1981..
$117,093
$550,491 not necessanly represent the replacement cost of the Companies 1980.
119.767 557,953 productive capacity Rather, it is an estimated cost of replacing Accumulated depreciation (000):
8X' sting assets. Nuclear plant amounts were restated by applying the 1981..........
S 23,268
$ 22,468 estimated current construction cost per kilowatt of capacity to the 1980 20,517 4,591 existing plants capacities.
Operation, maintenance and other expenses of the plants are Depreciation and depletion expense was determined by applying shared by the Company and the co-owners in the same proportion the depreciation rates used in the Companies' traditional financial as the ownership interests. The Company's share of these expenses statements to the adjusted plant amounts.
is included in operation and maintenance expense on the Consofi.
Because the cost of fuel consumed in electnc generation and the dated Statement of income.
cost of gas sold are recovered on a reascnably current basis through adjustment clauses or basic rate schedules, these amounts
' lave not been restated. Also, the Companies' inventories have relatively short turnover periods and therefore are not restated.
For tax purposes, only the historical cost of plant can be used to compute the tax deduction for depreciation and depletion. The excess constant and current cost depreciation and depletion amounts reduce income, but there is no corresponding reduction to income tax expense. Without this reduction, income taxes are levied on the Companies at rates which,in real terms, exceed estabhshed statutory rates. During periods of persistent inflation and rapidfy increasing prices, this tax policy effectively results in a tax on stockholders' i
3 investment.
The current regulatory process allows only the historical cost of plant to be recovered in rates as depreciation expense. Therefore.
the excess of the cost of plant stated in constant dollars or current cost over the historical cost is reported as a reduction to net I
l recoverable cost. Although a portion of this reduction is offset by the substantial use of debt and other fixed-rate financing. there is a significant impact on the investment of common stockholders because of inflation.
18
CONSUMERS POWER CCMPANY AND SUBSOAR:ES EFFECTS OF CHANGING PRICES Millions of Average 1981 Dollars, Except As Reported Amounts Constant D3!!ar Current Cost Net income after dividends on preferred and preference stock, as reported.
$ 181.4 5 181.4 Erosion of common stockholders' equity due to changing prices:
Cast in excess of original cost of plant not recoverable m rates as depreciation-Add.tiona! provision for depreciation and depletion.
$ 190.9 5 247.2 Reduction to net recoverable cost Excess of increase in specific prices over general price levelm....
283.7 425.8 r
(202.41 Offsetting effect of fixed rate financing (336.4)
(336.4?
Net erosion of common stockholders' equity 138 2 134 2 Net income after dividends on preferred and preference stock, as adjusted
$_43J
$ 47.2 NAt December 31,1981, plant, net of accumulated depreciation, was $12.7 billion on a current cost basis and 55.9 billion on a historical cost basis.
FIVE YEAR COMPARISON OF SELECTED FINANCIAL INFORMATION AS REPORTED IN FINANCIAL STATEMENTS AND AS ADJtJSTED FOR THE EFFECTS OF CHANGING PRICES Average 1981 Dollars, Except As Reported Amounts 1981 1980 1979 1978 1977 Mallions of Dollars. Except per Share Amounts Operating revenue:
As reported.
52,734.0
$2.304.0
$2,021.2
$1,889.9
$1.636.6 As adjusted for generalinflation Net income (loss) after drvidends on preferred and preference stock:...
2,734.0 2,543.0 2,532.5 2,634.7 2.456.2 As reported.
3181.4 5167.1 5155.4 As adjusted for genera! inflation.
43.2 11.3 (15.7)
(11.7)
As adjusted for changes in specific prices.
47.2 (2.3)
Earnings (loss) per average common share:
As reported.
53.12 53.08 53.24 As adjusted for generalinflation.
.74
(.21)
(.24)
As adjusted for changes in specific prices.
.81
.29
(.05)
Net assets at year end:
As reported...
At net recoverable amount 51,673.7 51,586.5 51,461.3 1 621.5 1.676.0 1 743.2 Offsetting effect of fixed-rate financing.
d336.4 5463.1 s467.1 Excess of increase in specific prices over Cash dividends paid per common share. general prices
$202.4
$4.2 5(432.3)
As reported.
52.36 52.36
$2.30
$2.18
$2.09 e-As adssted for genera! inflation.
2.36 2.60 2.88 3.04 3.13 I
Year-end rnarket price per common share (in year end 1981 dollars):
l As reported.
317.13 516.63
$18.88 522.38 524.13 As adjusted for generat inflation 17.13 18 12 23 16 31 04 36 49 Average consumer price index.
272.4 246.8 217.4 195.4 181.5 19
AnTuun ANDERSEN & CO.
Dr:Taoir MicnioAN To the Board of Directors, i
I Consumers Power Company:
We have examined the consolidated balance sheet and statement in our opinion, the financial statements referred to above present of capitahzation of CONSUMERS POWER COMPANY (a Michigan fairly the fmancial position of Consumers Power Company and sub-cciporation) and subsidianes as of December 31,1981, and 1980, sidiaries as of December 31,1981, and 1980, and the results of and the related consolidated statements of income, retained their operations and source of funds for gross property additions earnings, capital in excess of par value of common stock and for each of the three years in the period ended December 31,1981, source of funds for gross property additions for each of the three in conformity with generally accepted accounting principles apphed years in the period ended December 31,1981. Our examinations on a consistent basis.
were made in accordance with generally accepted auditing standards
/
_ p b, and, accordingly, included such tests of the accounting records and d
- g n,,
~
such other auditing procedures as we considered necessary in the circumstances.
February 5,1982 Management's Discussion and Analysis Results of Operations increased only 0.2 billion kwh or 1.9% over the previous year's The Company's service area was severely affected by the recession low level. The increase in 1981 industrial sales was partially offset by in the auto industry in 1981 and 1980. Increases in net income for a decrease in residential sales, so the increase in total electric sales these two years are primarily the result of rate increases and gas for the year was 0.6%, in comparison with a decrease of 4.8% in 1980.
sales to utilities outside of Michigan. The increases were partially Rate increases granted by the Michigan Public Service Com-offset by the impact of additional financing costs.
mission (MPSC) have had a significant effect on the Company's electric revenues since 1979. The major increases are summanzed Electric Utility Operating Revenue in the following table:
increase (Decrease)
From Pnor Year Effective Date Amount
- Years Ended December 31 1981 1980 Feb. 1979 Nov.1978 cpl adjustment
$12 Thousands of Dollars Nov. 1979 Jan.1979 Interim-general 29 Amount related to sales S 5,305 5(25,024)
Feb. 1980 Nov.1979 cpl adjustment 20 Tanff rate.....
125,252 88,165 Aug. 1980 Jan.1979 Final-general 41 l
Fuel and purchased power Sept.1980 Jan.1979 Campbell 3 interim 97 adjustment clauses (8,102) 78,473 Feb. 1981 Ncv.1980 CPI adjustment 24
/
Other 3,522 2,385 June 1981 Jan.1979 Campbell 3 final 19
$125,977 5144.000 Feb. 1982 Nov.1981 CPI adjustment 23
(*) Estimated annual revenue based on test year sales.
For the past two years, the Company's electric business has been adversely affected by dechning sales levels and rates of unit produc-in July 1981, the Company filed for a rate increase of $339 million tion in the auto industry in 1980, kilowatthour (kwh) sales to indus-annually, including an intenm increase of $178 million. Hearings on trial customers decreased 1.3 bilkon kwh or 11.4%; in 1981 they this request are continuing in 1982.
I i
l 20 l
l
~ ~ -
~
l
f cONSUVERS PCwER COMidtN AND SCSCARIES Power Costs dated request for a totalincrease of $114 million annually (less in 1981, the ability of the Company's plants to provide power that cost the 577 million interim)in gas rates and oq the issue of whether the less than purchased power led to an increase of 14% or 2.8 billion Marysville Plant will continue to remain in the rate base. Final deci-kwh in the number of kwh generated. The Paksades Nuclear Plant sions are pendin before the MPSC.
and Campbell Unit 3, which came on-line in September 1980, were The Company gas rates to customers include an amount to the primary sources of the increased generation. Consequently, the cover the cost 0 gas sold. When the commodity cost of gas sold cost of fuel consumed in electric generation rose by $59 million.
increases above the level established in the last rate case, the Higher coal and oil costs were offset by the use of a lower-cost Company is allowed, through the Purchased Gas Adjustment (PGA) generation mix so that the average cost per kwh generated in 1981 clause, to recover the increase from customers on a current basis.
remained relatively unchanged from the previous year's cost. In Amounts recovered under the PGA clause rose sharply in 1981 and 1980, lower sates, the availabihty of lower-cost purchaseu power in 1980 as a result of increases in the cost of gas sold.
lieu of oil-fired generation, and a scheduled outage at the Palisades Cost of Gas Sold Plant caused a 9.6% decrease in the number of kwh generated.
The cost of gas sold went from 51.65 per thousand cubic feet in Higher oil and coal costs caused the average fuel cost per kah generated in 1980 to increase from 1.76 to 2.11 cents.
1979 to $1.90 in 1980 to $2.35 in 1981 beczuse of sepolier price The amount of purchased and interchange power used by the increases. Continued increases are expected in future years as the Company decreased by 33.5% or 2.6 bilkon kwh m 1981. The impact of further federaldecontrol of wellhead i;as prices takes effect, resultin $69 mi!kon decrease m purchased power costs was offset and as more deregulated gas (as well as liqueQd natural gas im-by a $1 million increase because the average cost per kwh pur-parted by suppliers) enters the Company's supply system. The chased rose from 2.62 to 2.81 cents. in 1980. purchased power cost of gas sold increased $165 million in 1981 and $87 million n 1980 as the consequence of supplier price increases. Remaining _
costs increased $44 million as a reflection of an. increase from 2.31 increases of $42 million in 1981 and $15 million in 1980 resulted to 2.62 cents in the cost per kwh purchased ($24 million) and an from higher sales' increase of 12.7% or 0.9 bilhon kwh in the number of kwh purchased
($20 million).
Allowance for Funds Used During Construction (AFUDC)
The Company's electric fuel and purchased power adjustment increased construction expenditures at the M.idland. Nuclear Plant clauses provide, on a reasonably current basis, for the pass-through and increases in the rates at which AFUDC is capitalized caused of 90% of the increases or decreases in these costs from the levels increases in AFUDC of $14 million in 1981 and $27 milhon in 1980 (see Note 1). The placing of Campbell Uni estabhshe'd in the Company's last general electric rate case.
September 1980 partially offset the Midland Plant m,t 3 in creases ' bottu Gas Utility Operating Revenue years. For the year 1981, the portion of AFUDC conside cd to be increase (Decrease) other income constituted 25.4% of net income; the debt temponeht, From Prior Year which represents interest cost expended, was equivalent to 37.7%
Years Ended December 31 of netincome.
1981 1980 Interest Expense Thousands of Dollars Exclusive of the AFUDC credit, interest expense increased $71 million 023 5 38,912 in 1981 and $61 million in 1980 The increases resulted from addi-Amount related to sales 5 79'982 52, (15.860) tional first mortgage bond sales, long term promissory notes, short-Tariff rate.
Purchased gas adjustment clause.
138,544 90,809 term borrowings, and higher mterest rates.
Other 7,926 2.207 5278.475 5116.068 DD *d %#
"C" The liquidity and capital resources of the Company are most signifi-cantly influenced by adequate and timely rate rehef, the construction While total gas utiht sales increased 22.1 bilkon cubic feet (bcf) program and other capital requirements, access to the long-term
/
or 6.5% in 1981 and d.9 bcf or 3.0% in 1980, the increases were secunties market, and the availabitty of short-term credit facihties.
/
due to off systam sales. In 1981, sales to out-of-state utiht!es in-Rate Relief creased by 43.0 bcf and in 1980 by 13.9 bcf. Sales to all classes The Company's short term liquidity is largely dependent upon the of Michigan customers decreased 20.9 bcf or 6.5% in 1981, mostly achievement of sales levels commensurate with those assumed when t
because of warmer than normal weather and mcreased conservation.
rates are established. During 1980 and 1981 the recession depressed Sales to industrial customers, excluding out-of-state sales, decreased sales be!aw the levels upon which the Company's rates were estab-i 5.9 bcf or 8.2% in 1981 and 9.5 bcf or 11.7% in 1980 principally as lished, especially in the more profitable industrial category, and a result of the recession in the auto industry adversely affected the Company's cash flow and earnings. However, Gas revenue from rates rose in 1981 as the result of a 577 million the Co npany's abihty to generate funds from operations improved interim rate increase granted in February of that year. The Company during 1981, largely because of the rate increases reported in Results received no gas rate relief in 1980. In 1979, after the Company of Operations and because of gas sales to out-of-state utikties.
announced the mothballing of its Marysville Gas Reforming Plant.
The timekness with which rate requests are granted and the ade-the MPSC rolled back 524 million of a 529 milnon rate increase quacy of the increases allowed will have a significant impact on the to reflect the reduced cost of service from the Marysville Plant Company's future short-term liquidity.
closing. Hearings have now been completed on the Company's up-The Company has not been allowed to collect in rates, and therefore
+
/
l x ^
f Manageinentb Discussion and Analysis (continued) consuutas ecwta couaAuv Ano sussicxanics s
has not recorded on its books, deferred income tax expenses related mortgage bonds is dependent upon timely and adequate rate relief to indirect construction costs (see Note 8). These indirect construc-or other increases in earnings (see Note 3).
tion costs have been capitalized on the Company's books but The Company must obtain approval from the MPSC for the issu-expensed for income tax purposes. Customer rates have been lower ance of intermediate-and long-term securities, a task which in recent because they have not reflected the cost of the deferred tax. As a,.
years has been a lengthy and contested process as intervenors result, the Company has not had the benefit of this source of cash opposed to continuing construction of Midland sought to halt the flow. The Company believes that it will recover these taxes in rates flow of dollars necessary for the project. Two partial final orders when plant under construction is placed in service. In 1980, the on the Company's December 1979 application for authority to issue MPSC ruled in a generic proceeding that deferred taxes on indkect securities for its 1980 financing program were issued in 1980.
~
construction costs would be recognized in future rate cases. However, in August 1981, the commission issued an order approving the the MPSC's rukng excluded generating plants then under construction.
remaining portinn of the Company's application. After an appeal by In adddion to its furi, purerased and interchange power, and pur-the state attorneyJeneral, the Michigan Supreme Court temporarily chased gas adjustment clauses, the Company is allowed an annual stiyed the order. The stay, which was lifted in October, caused the Conumer Price Index (CPI) adjustment to cover increases (or cancellation of stock and bond sales in September, created a wari-decreases)in electric operation and maintenance costs (exclusive ness among the investment community, and was partially responsible of fuel, purchased power and generating plant maintenance) equiva-for a reduction in the Company's first mortgage bond ratmg from lent to changes in the cpl. The CPI adjustment has not been fully BBB to BBB-by Standard and Poor's Corporation.
etfective because the base period operating costs used by the MPSC However, in January 1982 the Michigan Supreme Court upheld the were initially inadequate and because sales levels have Deen lower commission's August 1981 order and issued an opinion holding that, than those used by the MPSC to establish the adjustment factor.
in a proceeding under the Michigan utility securities act, the MPSC's The (etwery of increases in other costs-such as generating plant inquiry is hmited to' wnether there is a need to issue secunties to nntenance, a return on higher levels of inventory, and the higher obtain funds for a lawful purpose of the utihty. The Company antici-cost of rnoney-is subject to rate hearings which,in recent years, pates that this opinion will significantly litnit the scope of future have become lengthy and highly contested.
securities nses and that favorable MPSC action will shortly be taken on the Company's 1980 and 1982 applications for its 1981 and 1982 Construction Program and Other Capital Requirements financing programs now pending before the commission.
The Company's construction expenditures for 1982 and 1982 86 are
- The Company plans to continue leasing its nuclear fuel and various estimated at 5755 milkon and $2.8 bilhon, respectively. The Midland ' items of equipment. Additional sources of capital for financing will Plant comprises $584 milhon of the total expenditures estimated for continue to be explored as the Company endeavors to finance the j-1982 and an additional 5776 million until its completion in,1984, completion of the Midland Nuclear Plant on schedule.
dunng which period the Company will have to sell substantial Short Term Credit Facilities amounts of long-term secunties Thereafter, the Company s rehaisce Despite the imposition of increasingly strict cost control measures r
on external sources of fuwg should be significantly reduced.'
and reductions in service enforced to conserve cash, lengthy delays W hile work on some other construction projects has been defured in regulatory approval for the Company's intermediate-and long-term in an effort to reduce cash outlay. the Compan is concentratin its f nancing applications and inadequate rates have forced the Company resources toward bnnging the Midland units on-ne in 1983 and 1 84 to finance a portion of its construction activities through short-term as schedufed. The Compan s fongMidland Plant as scheduled andterm liquidity depends upon its borrowings and other financial arrangements.
abihty to finance and corn te the in order to take advantage of favorable commercial paper rates, on the timely recognition in the Company s electric rates of the invest-the Company has made a:rangements for short-term borrowings mint in the completed plant.
with Southern Michi an Energy Corporation (SMEC), a special In addition to the construction program, !be Company has signifi-purpose corporation. MEC issues up to $100 million of commercial cant matuntics and sinking fund requirements (see Note 4) donng paper and advances the proceeds to the Company. In addition, the the 1982-86 period. To meet these capital requireinents, the Compa Company has in place a $150 million Bankers' Acceptance faciht will need to issue additional long-term secunties over thrs pen.
to finance its fuel inventories. The Company also borrowed 512 Also, significant mcreases in the pnce of j;as purchased from p o ipe-million from 15 foreign banks in 1981 and used the proceeds to line supphers willincrease the inventory value of gas stored under-repay other short-term debt.
ground. As a result, the Company will be required to generate During 1981, under Federal Energy Re ulatory Commission additional funds to cover this higher inventory cost.
borrowing authority, the Company entered nio interim financing
/ Long ferm Securities Market agreements with two other special purpose corporations, Oakway ll, Inc. a.nd Oakway IV, Inc. Oakway ll was formed to finance up to The Company's objective is to obtain a near term capitalization ratio lators. Oakway IV provides.a reve.,ai.ning center a 540 milhon of a nuclear power tr of approximately 50% long-term debt.15% preferred and preference rmg credit facihty of up to 5165 stock. and 35% common equity "EO" P
To provide funds for construction and other corporate purposes, (see Note 3.
the Company tentativel antic' ates issuing approximately $350 million of long-term de t, $1 milhon of preference stock, and inflation 9 milhon shares of common stock in its 1982 financing program.
The estimated effects of inflation on the Company and its sub-
", The maintenance of coverage ratios required for the issuance of first sidiaries are desenbed in Note 13.
y
/>
t 22 t
CONSUMERS POWER COMPANY AND SUBS!DIARLES Selected Financial Information
~
1981 1980 1979 1978 1977 (Thousands of Dollars, Except per Share Amounts)
Total operating revenue
$2,733,973 52,303,983 52,021,234 51,889,861 51,636,610 Net income 247,789 223,798 203.787 185.131 155,007 Earnings per average common share
$3.12 53.08
$3.24 33.21 53.18 Total assets
$6,872,187
$6,276,596 55,665,446 54,991,192
$4.429,400 Long-term debt, excluding current maturities 2,369,603 2,437,465 2,054,601 2,012,738 1,825,786 Redeemab!e preference and prefe red stock.
313.014 266,364 167,279 128,453 66,526 Cash dividends paid per common stare
$2,35 32.36
$2.30 52.18 52.09 Quarterly Financial and Common Stock Information Qu srters Ended 1981 (unaudited) 1980 Mar. 31 June 30 Sept. 30 Der,31 Mar. 31 June 30 Sept. 30 Dec.31 Total operating retenue (000)
$822,618 $611,781 $568,886 3730,688 5708,567 5444,684 5427,317 5723,415 Total net operating income (000) 125,841 88,564 94,481 99,616 92,411 61.741 65.302 98,990 Net income (000) 92,440 52,279 49,195 53,875 65,079 38,680 48,422 71,617 Net income after dividends on preferred and preference stock (000) 75,840 35,708 32,639 37,217 52,201 24,840 33.805 56.205 Earnings per average common share.
31.31 3.62 S.56 S.63 5.99 5.47 5.63 5.98 Cash dividends paid per common share
.59
.59 3
.59
.50
.b9
.59
.59 Common stock prices 9 High.
317h
$19V W
$175
$20%
$215 521 %
$18%
Low 16%
16h ri,
15H 15h 16%
17N 15%
- Based on NYSE -Composite Transactions.
The commor stock of the Company is listed on the New York and Midwest stock exchanges. The Company had approximately 169,000 common sharcholders of record as of December 31,1981.
23
l
@ Power Colisumsrs Compary Statement of Management The management of Consumers Power Company has prepared and ment, exceed the benefits derived. The Company believes its system is responsible for the consolidated financial statements and all the of internal accountmg control appropriately balances this cost-other information, whether audited or unaudited, in this annual benefit relationship.
report, The financial statements were prepared in accordance with Arthur Andersen & Co., the Company's independent public generally accepted accounting principles and necessarily include accountants, have audited the financial statements in accordance amounts that are based on the Company's best estimates and judg-with generally accepted auditing standards. The responsibility of ments, financial information included elsewhere in this annual re-Arthur Andersen & Co. is hmited to an expression of their opinion L
port is consistent with the financial statements.
on the fairness of the financial statements as they are presented in The Company has designed and meintains a system of internal this annuai report.
accounting control, which, among other things, provides reasonable The Company's board of directors has an audit committee con-assurance that assets are safeguarded and that reliable financial sisting solely of nonmanagement directors. This committee recom-records are maintained for preparing financial statements. The mends an independent pubhc accounting firm to the board and Company's internal audit staff continually reviews the system of meets periodically with management, the internal auditors, and the internal accounting control to determine its adequacy. There are independent pubhc accountants to discuss audit, internal account-inherent limitations that must be recognized in considering the ing control, and financial reporting matters. The audit committee effectiveness of any system of internal accounting control. The also reviews the Company's relationship with its independent pubhc concept of reasonable assurance recognizes that the cost of a accountants with regard to their performance of nonaudit services.
system of internal control should not, in tne judgment of manage-Company Directors A. H. AYM0ND W N. HUBBARD, J't, M D.
Counsel, Aymond & Sullivan President Jackson, Michigan The Upjohn Company. Kalamazoo, Michigan (a pharmaceutical and chemical manufacturer)
WA'"R R, BORIS Executive Vice President of the Company DON T. McK0NE Jackson, Michigan Chairman of the Board and Chief Executive Officer Libbey-Onens-Ford Company, Toledo, Ohio E. NEWTON CUTLER, JR.
(a diversified corporation)
Retired New Vernon, New Jersey PAUL S. MIRABITO Former Chairman and Director ROBERT E. DEWAR Burroughs Corporation, Detroit, Michigan Chairman of the Executive and Finance Committees (a producer of business equipment)
K mart Corporation. Detroit, Michigan (a general merchandise retail chain)
JOHN D. SELBY Chairman of the Board. President, and Chief JAMES B FALAHEE Executive Officer of the Company Vice Chairman of the Board of the Company Jackson, Michigan Ja:kson, Michigan JOHN C. SUERTH RICHARD M GILLETT Director and member of the Executive Committee t
Chairman of the Board Gerber Products Company. Fremont, Michigan Old hent financial Corporation, Grand Rapids, Michigan (a manufacturer of snfant food and infant care products)
(a bank holding company)
ROBERT B WHITE MARTHA W GRifFITHS Executive Vice President of Citibank, N A.
Attorney, Griffiths and Griffiths New York, New York Romeo, Michigan RUSSELL C. YOUNGDAHL JOHN W HANNON,JR.
Executive Vice President of the Company President Jackson. Michigan L
Bankers Trust Company and Bankers Trust New York Corporation, New York, New York (a bank holding company) 24
Company Officers JOHN D. SELBY Chairman of the Board, President, and Chief Executive Officer JAMES B. FALAHEE Vice Chairman of the Board RUSSELL C. YOUNGDAHL Executive Vice President, Corporate Planning WALTER R. BORIS Executive Vice President, Finance and Corporate Affairs I
STEPHEN H. HOWELL Executive Vice President, Energy Distribution JACK W REYN0LDS Executive Vice President, Energy Supply ROBERT L. MALCOLM Senior Vice President, Human Resources and Pubhc Affairs LOWELL L. SHEPARD Vice President, Region Operations i
RAYNARD C. LINCOLN, JR.
Vice President, General Services CHARLES R. BILBY Yice President, fossil Operations ROBERT J. FITZPATRICK Vice President, Public Affairs LAWRENCE B. LINDEMER I
Vice President and General Counsel JAMES W. C00h vice Presioent, Projects, Engineenng and Construction MACLAY D. GWINN Vice President, Energy Distribution ROBERT J ODLEVAK Consumers hwer Company's service area, shown in Vice President, Fuel Supply olive green on the map, encompasses 31,535 square SAMUEL N SPRING miles in 67 of the 68 counties in Michigan's lower Vice President and Controller peninsula.
RUSSELL B. DeWITT
'g Vice President, Nuclear Operations
- m 'as e o"ac"**"
~T CORDON L. HEINS y
'f Vice President. System Operations e
PAUL A PERRY
[ '
_4 Secretary 7
RICHARD M. GRISWOLD b.
Treasurer "I b
}
/ F - h-I h _
~-
Northern Michigan Exploration Company f
(NOMECO) 4 RICHARD J. BURGESS i
President and Chief Executive Officer
~
Region General Managers s
(Headquarters cities in parentheses)
.h l
CHARLES F BROWN, Central Region (Saginaw) uscHm
._{
l J. LAURENCE GILLIE, Western Region (Grand Rapids)
-y JOHN G G0ENSE, Northern Region (Traverse City) 4 RALPH HAHN. Southeastern Region (Pontiac)
WILLIAM A. HOLTGREIVE, South Central Region (Lansing) y l
~
STANLEY M. JURRENS, Eastern Region (Fhnt) 9 m
K. EUGENE McGRAW. Southwestern Region (Katamazoo)
.,..h,b _
EUGENE A. WAGGENER, Metro Region (Royal Oak)
' Jackson e
'%g l
3 9
'. M Plant General Managers
~
1
3 i.-
JAMES S. BRUNNER B. C. Cobb, B. E. Morrow & J. R. Whiting Plants
~
'Y
'~
~
ROBERT C. H0FFMAN, D. E. Karn & J. C. Weadock Plants 4
ROBERT W MONTROSS, Palisades Plant I
JEROME M SIMPSON, J. H. Campbell Plant
Con:umers Power Company 212 Wast Michig:n Av:nt:3, J ckson, Michigan 49201 Shareholder Information Transfer Agent
. -. 2. _ +g 1... s nm r
Common, Preference,
.. is and Preferred Stock f'&,,[.~ - K,.,.
. p~ Q #
%,. A *
~
F.T ~~ 3/
~%4
.t
- f g'
deQ3 4 Consumers Poner Company Jackson, Michigan 49201 Common, Prefe,ence,
- g" ~ & :' %
'F. ~A g g Un i
m
,p, M
"[pp'.
Registrar
} y,k.
[T f'
. ^
p 3p qf,-
a and Preferred Stock V ja y,,p F
f p" M
National Bank of Jackson E
3I 7 st i
First Mortgage Bonds f
- 4 E
b Citibank. N A.
'*1 4
~My$ime [I1W"'"$$a %j Box 3297 iM WU 3 _Wn'%V'* % OXQ. 7uJ M JW:A52*AN MN 111 Wall Street W-New York, New York 10043 W
i-Information/ Action Program A truckload of good advice: Consumers Power Company's new Energy Consmadon %n is hued wdh inuminated displays, audio 4sual presentauons, tir par icip t n in t om any Information/ Action hrogram kept up to and a cutaway modelof an energy-efficient house-all designed to explain ways data on economic, political, environmental, to conserve energy at home. Designed and outfitted by Company employees, and socialIssues that affect the Company the van has attracted more than 49,000 visitors at shopping malls, schools, county thsough Entsgy Updatt, the program news' letter Those who requested it also received fairs, and similar events in the service area since it went on the road in July 1981.
Take Action, a publication that offers sug-gestions and matenals for writing to elected officials, nenspapers, and community lead-Amiual Report on Form 10-K*
Financialand.
ers. Shareholders who wish to enroll may Consumers Power Company is required to Statistical Supp,lement*
crite to the Information/ Action Program at file its Annual Report on Form 104 for the A Financial and Statistical Supplement to the Company address fiscal year ended December 31,1981 with the 1981 Annual Report covenng the years the Securities and Exchange Commission.
19711981 is available to interested share-Notice of A COPI.of this report, without exhibits, will holders at no charge.
Annuat Meeting be furnished by the Company at no charge
=
after April 1,1982 to any shareholder who The Annual Meeting of Shareholders of requests one. Requests must indicate that, Consumers Power Company will be held on as of February 26,1982,the record date of Cassette Recording.
Tuesday. Apnl 13,1982, at 2:00 PM Jack-the annual meeting of shareholders, the A cassette recording of the 1981 Annual son time at the Company's Parnall Ottice person making the request was a beneficial Report text is available free of charge to Building.1945 West Parnall Road, Jackson, owner of securities entitled to vote at the shareholders with impaired sight.
Michigan. A notice of meeting, proxy state-annual meeting.
ment, and proxy will be mailed to share-
- Please address all correspondence holders in March 1982. The prompt return to Mr Paul A Perry Secretary Con-of ssgned proves will be appreciated No sumers Power Company 212 HUst regional shareholder meetings will be held Michigan Avenue, Jackson, Michigan in 1982.
49207.
. -. -