ML20044D318
| ML20044D318 | |
| Person / Time | |
|---|---|
| Site: | Beaver Valley |
| Issue date: | 12/31/1992 |
| From: | Rogers J OHIO EDISON CO. |
| To: | |
| Shared Package | |
| ML20044D300 | List: |
| References | |
| NUDOCS 9305180490 | |
| Download: ML20044D318 (39) | |
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i Corporate Profile The Ohio Edison System is the - 1
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, 18th largest investor-owned - l l ekoric system in the United States, based on total kik> watt- '-
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hour sales. Ohio Edison Company , 'V - is headquartertti in Akmn, Ohio, . . and its wholly owned subsidiary, a . , Ibnnsylvania Ibwer Company, is 1 o
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based in New Castle, Ibnnsyl-vania. The mmpanies pmvide
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ehTiric SeIYi(1' to nie . one Inillion customers wittiin
Dear Fellow Stockholders:
9.000 square miles of central ,,,s been my priviiege to serve as ohio Edison's chief executive officer for the past 13 years. My and northeastern Ohio and sincere thanks go to all who supported me and to those who served with me. Western Ibruisylvania. Togeener, we accompiished a greor deai_stee,- ing our Company through some rough water and setting it on a course that has positioned us well for the future. I know you will provide the same level of support to my successor, 1 Will Holland, as he guides Ohio Edison toward the next century. The future will bring continued change and a wide array of challenges to our industry. How-ever, none of those challenges will be any greater than the ones we've handled in the past. I made my decision to retire and pursue a variety of outside personalinterests at this time knoning that you will continue to be served by as fine a management team as exists anywhere in our industry. Alemarr to Stocusalders 1
\. 7 i992 in is't -ieu' .I -? \3r g l ~:_ ll ,y t -
1i un ncial }&'neu- ld -) L,)
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StocU.oldi r lu fverna tion }}i Dtvrctors and 31arinyna nt di ; l: l
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2 o . t 4 Willard R. Holland President and Chief Execouve Officer
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oMo raison Company In 1992, we built a strong foundation for future gmwth. AfCSSag6 (O We initiated a long-term service area development program, estab- Stockho[ders lished a sound and flexible strategy to comply with new clean-air standards and continued to hold the line on costs. Earnings up Our common-stock earnings reflected solid performance, increasing 10 &nts per share over 1991 earnings to $1.70 per share for the year. In addition, the market value of our common stock increased nearly 13 pertent in 1992, msulting in a total return of 20.9 pement-outperfomung both the Standard & Ibor's (S& P) 500 Composite Stock Index and the S&P Electric Utilities Index. Higher sales contributed to our earnings. Despite an unusually cool summer and mild winter, we increased total sales for the year by pmmoting new business activity in our service ama, pursuing new markets for our l product and expanding sales to other utilities. l Positionedfor We also positioned oun; elves for future sales gmwth by initiating a Rate 1 Future Sales l Crowth Stabilization and Service Ama Development Program. The pmgram is designed l to fmeze our rates until 1997 and to pmvide $75 million in efficiency prop for our customers. This far-reaching initiative will help keep us competitive in the years ahead while improving the energy efliciency and productnity of our customers. Our service area development program works hand in hand with efforts to improve the value of service we provide our customers. Whether we're meeting the special needs of a customer on a fixed income or sharing i our technical expertise with a major manufacturer, we recognize the impor-tance of value-added customer services. We also recognize the importance of environmental protection. 'Ibward that end, we initiated a cost-effective strategy in 1992 for complying with the Clean Air Act Amendments of 199(1 For example, our compliance plan for meeting emission standards that take effect in 1995 could produce an average annual reduction in sulfur dioxide of more than 100,000 tons with i an increase of only 1 percent, or $14 million, in our annual operating costs. Our strategy recognizes the need to remain flexible in meeting new I regulations, especially more stringent standards that take effect in the year 2000. And we're achieving this flexibility through our leadership role in promoting the emerging market for emission allowances, which become available for trading when companies reduce their sulfur-dioxide emissions below levels required by law. In June, we reached an agreement with Alcoa Generating Corporation to purchase 5,000 emission allowances annually during a five-year perioci beginning in 1995. The agmement marked both l the first such transaction by an Ohio electric company and the first in the nation between an ekcric utility and an industrial company. 1
Cost Control Other actions taken in 1992 reflect another top priority at Ohio
" 4 Edison-cost control; e We took advantage of favorable market a>nditions to aggressively refmance debt, mducing our annual interest expenses by nearly $15 million:
- We restructured a sale-leaseback transaction involving our owner-ship share of Beaver Wlley 2-saving us about $64 million over the remain-mg 24 years of thelease; and
= We offered voluntary retirement programs in 1992 and early 1993 that should produce annual savings of about $10 million through reduced staffing in our Production Department-reductions made possible by new technologies and the streamlining of operations at our power plants.
In addnion, we recently announced the closing of six old, coal-fired generating units with a combined output of 317 megawatts, and we may convert a seventh unit to bum natural gas. This move will reduce our operat-ing expenses by another $15 million annually and capital requirements over the next five years for environmental and other equipment upgrades by some $100 million. An Era of Change These and other cost-saving measures will surely grow in importance in the years ahead as we enter an era of unprewdented change and increased competition in the utility business. Passage of the Energy fblicy Act of 1992 makes it easier for independent power producers to enter the energy market and compete with investor-owned utilities for bulk-power sales. The U.S. Emironmental Protection Agency is developing new guide-lines for nitrogen oxide emissions that could incmase the cost of complying with clean-air regulations. And, like all major energy suppliers, our costs could be affected by the new Administration's proposal to enact a broad-based energy tax and increase the corpomte income tax rate. Despite these uncertainties, we remain confident in our ability to meet the challenges that lie ahead and to stay competitive in the energy business. Obviously, one of the main reasons we are positioned so well for future growth is the solid leadership provided by Justin Rogers I'm fortunate to take charge of a company that has benefited from the many achievements spearheaded by Justin and our very capable management team durmg his tenure as Pmsident, and then Chairman. I'm sure you join me in wishing Justin the best in his retirement. In the years to come, our team will make every effort to keep your Company on a strong and steady course-one that will enhance the value of j yourirwestment in Ohio Edison. l i
\
s!& Willard R. Ilolhmd President and Chief Executive Officer March 2,1993 2 l
( . a.run commy ; t
~~*~'*"'"c 1992 in Review: Pbsitionedfor the Futwv programs that add l value to the service we Ohio Edison took a number of steps in 1992 to prepare for P'*"'d**"'*"*****-
On-Une Cash, a new the significant challenges facing our industry. method of handiine biti Passage of the Energy Policy Act will certainly increase f,*,$*,",[, [,1*,,*),'. competition among investor-owned utilities and other electricity '*d erstem that ; ensures the most effi- ! suppliers. And the adoption of new clean-air regulations will cient processins of increase the cost of doing business for electric companies throughout the nation, particularly those in the Midwest. Ohio Edison is well-positioned to meet these and other challenges that lie ahead. We've set the stage for the 1990s through new programs and strategies that should improve , future earnings, promote the wise use of our product and keep our electric rates stable through the rest of this decade. [ TotalSales Up !n the area of sales, the most serious challenge was the weather. We experienced one of the coolest summers on record, which reduced customer use of our product. Nonetheless, total kilowatt-hour sales were up 1.5 percent in 1992, mainly because of economic recovery in our service area and increased demand for our product by other utilities. I% EU'"- We continued to take advantage of the market for bulk $** ' power. Sales to other utilities in 1992 were up 10.1 percent from I the previous year. Over the past five years, these sales have accounted for nearly $1.2 billion in revenue. E 3 Industrial sales increased 1.6 percent as manufacturers in g our region began to recover from the recession. Most of the gains came from smaller manufacturers and from companies that produce steel, rubber and plastics. With unseasonably cool weather reducing air-conditioning use, commercial sales were down 1.9 percent and residential sales fell 2.8 percent. As a result, retail sales in 1992 were off g g y 0.8 percent from the previous year. 3
seryke Arve Ne've placed ourselves in a strong position for futum growth o m bpment Program through our Company's Rate Stabilization and Service Area Development Program, which is designed to fmeze base electric rates until at least 1997 and to provide $75 million to help fund additional energy-efficiency projects for our customers. We also established a corporate goal aimed at extending the freeze until the year 2000, barring significant changes in - regulatory or legislative requirements. These initiatives would ! keep current base prices, which have been in effect since 1990, , in place for about ten years. l Our pmgram will make us more competitive in the years ahead by offering a wide range of benefits to our customers and ! stockholders. ; l Price stability helps the businesses and industries we serve l plan for the future. Stable rates also are important to our resi-dential customers, especially those on fixed incomes. And, by ; keeping our prices affordable, we make electrical applications more attractive to all of our customers as they make energy choices for the future. ! Our program also includes several accounting modifi-5""" cations that will reduce our reported expenses. Approved by
= the Public Utilities Commission of Ohio (PUCO), these modifi-E cations include changing the periods for depreciating some of g our facilities and for amortizing certain deferred taxes, as well as continuing to capitalize interest on deferred expenses for i Beaver Valley 2.
The program provides up to $50 million in long-term loans to assist business and governmental customers with maldng I improvements in the energy efficiency and productivity of their t operations. Repayments will be made from energy savings and productivity gains achieved by participating customers. 90 91 92 In addition, we will provide $25 million for residential energy-efficiency programs, which could include rebates on the purchase of energy-efficient electrical equipment, insulation i and lighting. Part of this amount would be dedicated to assisting l 4 l -. . .__ . . - . . - -. .- -- - _- .
l ONo FAmn Ce;any I low-income customers, possibly by providing weatherization E=Ployee safety is key i to maintaining a high- ! materials, low-flow shower heads, water heater blankets and qu e ty,prooueci,e other energy-saving items. ""*"**"**"*'" 1992, employees sus-tained 1.63 in}uries I _Tgeg We re also positioning ourselves for the future "*i'(([,"[," through,"",, Progmms targeted marketing strategies that improve sales while control- '**er **a me previous year.
- ling the amount of electricity our customers use during times of l peak demand.
In 1992, we exceeded all of our marketing goals by adding 3,853 electrically heated homes, 5,396 residential water heaters, and more than 200 million kilowatt-hours of new commercial and industrial cooking and heating business. We also promoted economic growth in the communities we serve through an ongo- l l ing program that offers special, five-year meentive rates to new t l or expanding businesses t hat meet criteria related to increased l employment and electric sales. Last year,18 companies quali-l fied for these rates, creating more than 750 jobs and adding
$6 million in new annual revenue.
At the same time, we introduced several programs that will encourage the wise use of electricity, helping customers save energy dollars as we delay the need for new power plants. Our Youngstown Division is offering a new program l free of charge to low-income customers in Malmning and Columbiana counties. Through the Energy Fitness Weather-ization Program, qualifying customers with electric space or l water heating are offered an energy audit and installation of weathuization and energy-saving items such as vinyl storm windows, water-heater insulation blankets and compact, fluorescent lights. l l Another pilot program is helping residents in and i around Lorain County save money on electric water heating. Offered through our Lake Erie Division, the program enables customers to purchase a hot-water efficiency kit at I a minimal cost. The kit contains a water-heater insulation
l blanket, pipe wrap, a low-flow shower head, and bathmom and kitchen faucet aerators. Ohio Edison also participated in a promotion with Akron-area Acme Super Centers and Sylvania that offered com-pact, fluorescent light bulbs for about half their list price. The 18-watt bulbs have the same brightness as 75-watt incandescent bulbs, but operate for about one-fourth the cost and last more 1 than ten times longer. If pilot efforts like these prove to be cost-effective ways of helping customers better manage their energy use, the programs will be extended to other communities we serve. In November, Ohio Edison hosted a national seminar on thermal energy storage systems conducted by the Thermal Storage Application Research Center, ar. agency of the Electric Power Research Institute. When used for cooling, thermal energy storage can reduce peak electric loads during summer weekdays. These systems create ice or chilled water during off-peak hours and use the stored energy for space and process cooling applications during regular working hours, when demand for electricity is high. Thermal energy storage is one of twenty-seven demand-side management programs that we currently offer our cus-tomers. These prognuns are filed with the PUC0 as part of our Integrated Resource Plan, which ties Ohio Edison's supply-side strategies together with efforts to better manage customer demand for our product. clean-Air Over the past rew years, Ohio Edison has positioned its Compliance system to meet the challenge of new regulations under the Clean Air Act Amendments. For example, new coal contracts signed in 1991 provide us with additional flexibility by enabling us to specify the sulfur content of coal we receive from our suppliers. In 1992, we took an active role in promoting the emerging market for emission allowances. Under the Amendments, an 6
I ohio rAmn canpany f l ! t emission allouance enoles a company to emit one ton of our emptorees share a ;
. strong tradition of i sulfur dioxide. 'l ne adowai:ces become available for trading ,,,,, %,nn., j when companies reduce their sulfur-dioxide emissions below ****'*****'"" i teoring at the annual j levels required by law. n. enn. s.ii on-A-r.ir ;
In June, our subsidiary, OES Fuel, Incorporated, reached "'*Z"*(("
"arknar aea *ad f
an agmement with Alcoa Generating Corporation to purchase women find the time to 5,000 emission allowances annually during a five-year period ge,e . etning h.a to ; beginning in 1995. The agreement marks both the first such ***""""*"*** transaction by an Ohio utility and the first in the nation l between an electric utility and an industrial company i Like Alcoa, Ohio Edison expects to overcomply with i Phase I sulfur-dioxide regulations and accumulate emission l t allowances that we may sell to other companies or use to ; meet future requirements. Phase I mgulations take effect in i 1995, and Phase Il standards are set for 2000. ! These innovative approaches are part of our cost-effective and flexible strategy for complying with the Clean Air Act l Amendments. The law is aimed at reducing the nation's emissions of sulfur dioxide by 50 percent, or 10 million tons annually. l l
'Ib comply with Phase I regulations, our plan calls for the 3,,,, ;
use of lower-sulfur coal at Units 5,6 and 7 of the Sammis Plant, ==m commes ! Served per impkwee) ;
- increased reliance on generating units with lower emission rates E l l for sulfur dioxide and nitrogen oxides, and the use of emission l
allowances. _ e Our Phase I compliance plan is expected to produce an average annual reduction in sulfur-dioxide emissions of more than 100,000 tons with an increase in operating costs ofless a than 1 percent, or $14 million annually. We have not finalized our Phase Il compliance strategy yet because of a number of uncertainties, such as possible advances m the design and operation of clean-coal technologies, the con-tinuing development of an emission allowance market, and the prospect of future changes in environmental regulations. 1 All operating coal-fired units on our system will be subject l l to new nitrogen-oxide (NOx) requirements under the Amend- ! l i i 7
- . . . . . - , _ .-- , - - - - . . - - - - - - , . - - , . , . --.-..~-..-.'
j l ments. Three of our units already are equipped with low-NOx burners, and installations at more units are schMuled for 1994 and later. We won't be able to determine our total cost for l nitrogen-oxide ccmpliance until the U.S. Environmental Protec-tion Agency issues its final regulations. In addition, we are installing continuous emission monitor-ing systems on all of our coal-fired generating units. These moni-tors, which accurately track plant emissions, must be installed by the fall of 1993 for Phase I units and about one year later for PhaseII units. Environmento, Our clean-air compliance plan benefits from a strong tradition Leadership of environmental leadership at Ohio Edison. For example, we've spent nearly $2.4 billion on envimamental protection since 1975, and we've participated in mom clean-coal research pro-jects than any other utility in the nation. Last year, we continued exploring an important new envi-ronmental field-turning waste into energy. 'Ibsts conducted at : I our New Castle Plant explored the possibility of burning small pellets of refuse-derived fuel, mostly paper left over after recy- ; oe=* as u* cling municipal trash. Additional tests with this type of fuel will l E"".'YE"Ue'" . I be conducted at our Niles and Burger plants m 1993. And we um are continuing to study the use of tires as boiler fuel. Using Eg experience gained at our Tbronto Plant, where we installed the a 8 first fully automated system in the nation to burn whole, scrap tires with coal, we are test-burning chipped tires as boiler fuel at our Niles Plant and whole tires at our Burger Plant. In addition, a project being developed by Ogden Martin Systems, Inc., could result in a new waste-to-energy facility i at our Mad River Plant. Ogden Martin plans to build and I opemte a facility capable of processing up to 1,750 tons per day of municipal trash that otherwise would be landfilkd. j Ogden Martin is leasing part of our phmt site and will pay to refurbish the plant's existing turbine generators.The steam Ohio Edison will purchase from the facility should l I , 8
os re corn.v generate enough electricity to meet the needs of nearly 30,000 we are iastaniac = new com;nsterized residentialcustomers. c.iepho .yst nen.c incr ch. m n.r of customer cales we towering costs We made significant progress last year in our ongoing efforts c., n rio, to cut costs. These efforts will help strengthen nur financial ((,'"* position throughout the 1990s and achieve the rMtive edge throush th. . rete ='s i.e.r.ctiv. voic. r.- we need in a changmg electricity market. ,,,,,,,,,,,,,,, in 1992 and early 1993, we offered voluntary retirement ==d br our =*e cr ton.iprutor. programs to qualifying employees in our production group. - = quicwy . Reduced staffing has become possible in recent years because ***** of new technologies and the streamlining of operations at our power plants. The first pmgram reduced our work force by 146 employees and should produce savings of about
$6 million annually. The second program is being offered to 98 employees and could save $3.5 million annually.
At the end of 1992, we were operating with about 1,600 fewer employees than we had in 1982, while serving nearly 90,000 more customers. In January 1993, we announced the closing of six old, coal. fimd generating units with a combined output of 317 mega-watts, and we may convert a seventh unit to burn natural gas. wi.unterest. Expense This move will reduce our operating expenses by $15 million 3 ,, annually and capital requirements over the next five years R. for environmental and other equipment upgrades by some
$100 million. R We continued to take advantage of favorable market condi-tions by refinancing more than $800 million of securities in 1992, saving nearly $15 million in annual interest costs. As a msult of these and other efforts, we have lowered the average j cost of our long-term debt from 10.3 percent in 1986 to 8.5 percent today. In addition, we completed the refinancing of the sale-leaseback of our ownership share in Beaver Valley 2, reducing net rental payments by about $64 million over the w m 92 remaining 24 years of the lease.
We also negotiated labor agreements through 1994 with l the Utility Workers Union of America and the International 9
Brotherhood of Electrical Workers, enabling us to undertake a majer restructuring of our health-care benefits. Through our new Flexible Benefits Plan, employees can select a number cf options in health-care coverage that serve their specific needs. One new feature enables employees to use before-tax dollars to pay for day care as well as medical and dental expenses not covered by our health-care plan. These changes will help us orovide a competitive level of reasonably priced health-care benefits for employees. Our cost-cutting efforts often lead to new revenue opportu-nities. For example, we're reducing expenses at our Niles Plant through a program that recycles coal slag-a by-product of coal combustion -into a marketable custom abrasive used for sand-blasting. Recycling coal slag will lower the plant's operating costs by approximately $800,000 each year and will benefit the environment by providing a useful alternative to landfill dis-posal. Under a long-term contract, Reed Minerals is operating a state-of-the-art facility at the plant that will process about 35,000 tons of coal slag annually. lacreasing As we reduce our overail expenses, we are working in a num-Productivity ber of areas to improve the productivity of our operations-another top priority in the years ahead. In 1992, we initiated a Job Training and Skills Demoi.stra-tion Program to enhance the skills of employees in our Produc-tion Department. Through the program, we evaluate the performance of our production personnel in their assigned responsibilities and provide training where additional skills are needed. , One of the ways we track our progress is through the rate of unscheduled outages at our power plants. In 1992, we kept forced outages to a rate of seven percent for the year, down from ten percent the previous year. Lowering the outage rate reduces our occasional purchases of off-system power, delays the need for new generating capacity and provides the dependability that other utilities count on when they purchase bulk supplies of our electricity.
ohm mmcomany During the year, the availability of our fossil-fuel generating Protecting the environ-mentis nimportant units averaged more than 83 percent. In contrast, generating so.i. ohio cai,on.in unit availability averaged about 60 percent in the late 1970s. '*''**'**'*"' formal mission state-In addition, we're continuing to explore new technologies ment we'reinbusiness that can help us save time and money. For example, our substa- 7,,"C,[**"* ,
"**d* *' '"'** ** by tion inspectors now use hand-held computers to monitor the
" producing and distrib-condition of circuit breakers, transformers, voltage mgulators using eiectrwty in .
and other equipment at our suostations. This information is j'
'*j, '*[*l* *"# *"[,
transferred electronically to personal computers in our divisions manaer.- : and general office. The computers help reduce paper work and stmamline the evaluation process while saving our Company l
$137,000 each year.
Working closely with th'e Electric Pbwer Research Institute, we're supporting the development of computer software that helps us analyze the economics of bulk-power sales and pur-chases. Business decisions are based on a number of variables, such as costs, scheduling, market conditions and associated I risks. By taking into account these uncertainties, the software l helps our managers thoroughly examine the merits and draw- l backs of various options before reaching the best decisions on future bulk-power transactions. ** c'*,,gggo,, j u.n.i,mer (Pemem) Value-Added Few suppiiers in the energy business can match the wide Cc::tomerServke range of customer servi programs already offered by Ohio 5 j Edison and Penn Pbwer. Last year, we initiated several new pro-grams that will continue to add value to the service we provide our customers without adding significantly to our costs. Customer payments are now immediately entered into our computer system through On-Line Cash, a new method of - handling bill payments at our w alk in offices. The new system enables our tellers to scan a customer's bill, check a computer screen to see information on the customer's account, insert the accompanying check into a machine that automatically endorses a m 92 it, and receive a printed receipt-all in less than a minute. To .nake contacting us more convenient, we've extended Ohio Edison's telephone customer service hours fmm 11
. . _ ~ _ .- __ _ , -_ _ __ -,_ -
1 l 7 a.m. to 9 p.m., Monday through Friday. Customers who call our division offices during these hours receive quick and accu-rate responses to questions concerning customer accounts and service-related problems. We're also installing a new Trouble Call System that increases the number of customer calls we can handle during power outages. In 1993, we will add a toll-free 800 telephone number that customers can use to reach the system's interactive voice response unit, which records information about the loca-tion of an outage. The information will be used by our service crews to help restore power as quickly as possible. Another new program helps senior and disabled customers who mceive monthly retirement or benefit checks. Depending on the due dates for household bills, some customers with once-a-month incomes face late-payment charges because their bill payments are due just befom their checks arrive. By taking advantage of our due-date extension plan, these customers can pay us after they receive their monthly checks and avoid a late-payment charge on their electric bills. In addition, we've increased our Company match for Project Reach, the customer assistance program that helps keep energy in the homes of people who are low-income, disabled or unemployed. Originally a home-heating assistance program, Project Reach has grown into a year-round effort that has helped some 29,000 families with more than $2.2 million in assis-tance-mostly contributions from our customers and employ-ees. In 1992, Ohio Edison increased its dollar-for-dollar match of those donations, from $100,000 to a maximum of $250,000 each year. i 12
ohio rAson Com;any
*"w"""t ****rt Financial Review The consolidated fmancial statements were pre-pared by the management of Ohio Edison Company, who takes responsibility for their integrity and objectiv-ity. The statements were prepared in conformity with generally accepted accounting principles and am con-sistent with other fmancial information appearing elsewhere in this report. Arthur Andersen & Co.,
independent public accountants, have issued a report on the Company's fmancial statements in which they comment on the recoverability of the Companies' ltrry Unit 2 investment. The Company's internal auditors, who are respon-sible to the Audit Committee of the Board of Directors, review the results and performance of operating units within the Company for adequacy, effectiveness and reliability of accounting and reporting systems, as well as managerial and operating controls. The Audit Committee consists of four nonem-ployee directors whose duties include: consideration of the adequacy of the internal controls of the Com-pany and the objectivity of financial reporting; inquiry into the number, extent, adequacy and validity of regular and special audits conducted by independent public accountants and the internal auditors; the rec-ommendation to the Board of Directors ofindependent accountants to conduct the normal annual audit and special purpose audits as may be required; and report-ing to the Board of Directors the Committee's fmdings and any recommendation for changes in scope, meth- 1 ods or procedures of the auditing functions. The Audit Committee held four meetings during 1992. 7 H.P. Burg h Senior Vice President Chief Financial Officer H. L Wagner Comptroller 13
Management's Disczssion And Analysis Of Results Of Operations And Financial Condition REstus OF OPERATIONS 'Ibtal kilowatt hour sales in 1992 increased 1.5% over Earnings per share of common stock in 1992 were 1991 due primarily to a 10.1 % increase in sales to other up 6.2% compamd to 1991 principally due to lower operat. utilities. Kilowatt-hour sales to residential and commercial ing costs and interest charges. Along with the inemased customers decmased 2.8% and 1.9%, respectively, while earnings, the return on average common equity increased sales to industrial customers increased by 1.6%. Reduced to 10.8% from 9.9% in 1991 and 1990. The comparison of sales to residential and commercial customers in 1992 earnings in 1991 with 1990 is affected by the write +ffin reflect milder weather conditions compared to conditions 1990 of approximately $27,000,000 of previously deferred during 1991. 'Ibtal kilowatt-hour sales were down 1.3% in Beaver Valley Unit 2 msts disallowed by the Public Utilities 1991 compared with 1990 primarily due to a 9.8% dmp in Commission of Ohio (PUCO), which reduced net income sales to other utilities. by approximately $17,600,000 ($.12 per share of common l'uel and purchased power costs in 1990 included a stock). charge of appmximately $16,374,000 by Penn Power re-The Companies have a continuing program of cost sulting from an advene regulatory decision concerning the reduction as exemplified by the voluntary mtirement pro- recoverability of certain purchased power costs. This gram offered to production department employees in the charge reduced net income in 1990 by appmximately second quarter of 1992 and the substantial refinancings $9,994.000 ($.07 per share of common stock) and was the which were completed during the year. A similar voluntary principal reason for the 1991 expense reduction compared retirement program is being offered to eligible employees with 1990. in the first quarter of 1993. In addition, six generating Nuclear operating costs have declined in each year units are scheduled to be closed in the first half of 1993, since 1989 The reduction in 1992 reflects lower operating which wdl further reduce operating costs; more signifi. costs combined with lower lease costs due to the Ftrry cantly, this action also reduces future capital outlays by Unit I and Beaver Valley Unit 2 sale and leaseback refi-about $100,000.000. nancings completed in the fourth quarters of 1991 and The following summarizes the sources of changes in 1992, respectively. The Company stopped deferring operating revenues during 1992 and 1991 as compared to nuclear unit operating costs mncurrently with the imple-the previous year: mentation of new electric rates in August 1990, when l im 3 ,3 recevery of previously deferred nuclear unit operating l
<in cw costs and interest expenses began. Other operating costs 0: hNEes (2ia) y a b mmpad wu M phpaHy h m a sales to wholesale customers 2.0 099) one time charge for the early retirement program offemd ahn (2 3) 98 to qualifying employees and to an increase in the pmvision wtinease(Deease) s(26 4) sus 3 for uncollectible accounts.
Increased general taxes in 1992 compared with 1991 are due primarily to higher pmperty taxes resulting from Empiore.Le eis wudeer oper.ung Costs is Udh0n$) 5 5 S 14 I1 90 91 92 90 91 92
increases in taxable property values and increased tax ing for other postretimment benefits, resulting in a sub-rates in certain tax jurisdictions. The Financial Accounting stantial increase in the annual expense charged to income Standards Board (FASB) has issued Statement of Fmancial for such benefits. The Companies expect to defer a portion Accounting Standards (SFAS) No.109, " Accounting for of the incremental costs resulting fmm SFAS 106 in accord-Income Taxes," which the Companies will adopt in 1993. ance with applicable regulatory commission authoriza-As discussed in Note 1 to the Consolidated Financial State- tions, resulting in no material effect to net income. This ments, this change is not expected to have a material effect accounting change is described more fully in Note 1. on net income. CAPITAL RES0 aces AND LlQUIDnT Other income increased in 1992 principally due t During the last five years, the Companies have taken amortization ofinvestment tax credits associated with sive action to reduce their embedded capital costs. disallowed Ittry Unit I and Beaver Valley Unit 2 construc-tion costs, as described in Note 1. The increase in 1991 long term debt outstanding (including amounts due within one year) decreased by appmximatelv $200.000,000 during from 1990 was pnmarily attributable to interest on loans ' ' that period. In addition, the Companies have taken advan-to the Empk yee Stock Ownership Plan Trust (ESOP) tage of opportunities to optionally redeem high-cost debt, described in Note 4. reducing the cost of debt outstanding from 10.2 % at the The decline in allowance for borrowed funds used end of 1987 to 8.5% at the end of 1992. Also during that during construction and capitalized interest is due to re-period. the Companies optionally redeemed high-cost duced levels of nuclear material in process of conversion, preferred and preference stock which reduced the cost of ennchment and fabrication into fuel assemblies. Decreased preferred and preference stock outstanding from 9.4 % at interest expenses in 1992 and 1991 compared to 1991 and the end of 1987 to 7.3% at the end of 1992. As a result of 1990, respectively, resulted principally from long-term these actions, the Company s common equity base has debt refinancings at lower rates and reduced short-tenn been strengthened over the past five years, comprisinc borrowing levels 42.3% of total capitalization (excluding the accounting , The ek ctric utility industry is subject to inflationary reduction related to the ESOP investment) at the end of pressures similar to those experienced by all other indus-1992 compared with 40.6% at the end of 1987. tries. Tb the extent that the Companies incur additional The Companies had approximatelv $14,000,000 of costs or receive benefits resulting from the effects of infla-cash and temporary investments and $152,000,000 of tion, it is anticipated that those effects will ultimately be short-term indebtedness at December 31,1992. OES Fuel mflected in the Companies' electne rates. had approximatelv $255,000,000 of unused borrowing ' The FASB has issued SEAS No.106, " Employers' capability at the end of 1992 which was available for reloan Amounting for Ibstretirement Benefits Other Than Ibnsions," to the Company. The Companies also had available which the Companies will adopt in 1993. The standard
$ 120,000,000 of unused short-term bank lines of credit. In regmres the Companies to change the method of account-addition, $89,000.000 of bank facilities which provide for borrowings on a short-term basis at the banks' discretion was available. OES Capital had approximately $ 19.000,000 gredded cost of of unused short-term borrowing capability at December 31.
1992. M During the last five years, the Companies spent ap-E proximately $1,000.000.000 in connection with their con-struction programs (excluding capital leases and nuclear C ,., fuel). During that period. the ESOP was funded with 0 $200,000,000. In addition, internally generated cash as a percentage of construction expenditures (excluding nuclear fuel) increased to 168.8% in 1992 from nearly zem in 1987. The Companies' construction programs and capital lease requirements for the period 1993-1997 am currently esti-mated to be appmximately $1,600.000,000 (excluding nuclear fuel), of which approximate!y $275.000,000 applies to 1993. The Companies have additional cash 93 91 92 15 l _ _ - - _ _ _ _ _ _ _ - _ _ _ - - - - _ _ _ _ _- _ _ - _ - - _ - - - - _ _ - - - -
requirements of approximately $1,208,000,000 for the fications. The accounting modifications, whi:h were effee-1993-1997 period to meet maturities of, and sinking fund tive July 1,1992, include reduced depreciation rates to requimments for, long term debt and preferred and prefer- better reflect current maintenance practices, accelerated ence stock; of that amount, approximately $305,000,000 amortization of certain deferred income taxes (which were applies to 1993. capitalized to utility plant through the use of a net of-tax Investments for additional nuclear fuel during the allowance for borrowed funds used during construction 1993-1997 period are estimated to be approximately rate) and continued capitalization of carrying charges
$182,000,000, of which approximately $22,000,000 applies which were previously authorized through 1993.
to 1993. During the same periods, the Companies' nuclear The Energy blicy Act of 1992 was signed into law on fuel imestments are expected to be reduced by r sproxi- October 24,1992. This legislation amends portions of the mately $274,000,000 and $65,000,000, respectively, as the Public Utility Holding Company Act of 1935, providing nuclear fuel is consumed. Also, the Companies have oper- independent power producers and other nonregulated ating lease commitments of approximately $536,000.000 generating facilities easier entry into the electric generation for the 1993-1997 period, of which appmximately markets. The Act also amends portions of the Federal
$102,000,000 relates to 1993. The Companies recover the hwer Act, authorizing the Federal Energy Regulatory cost of nuclear fuel consumed and operating leases through Commission, under certain circumstances, to mandate their electric rates. access to utility-owned transmission facilities. The Sales by the Company of first mortgage bonds against Companies are currently unable to predict the ultimate property additions and of preferred stock requim that effects resulting from this legislation.
applicable earnings coverage tests be met. With respect to The Clean Air Act Amendments of 1990 require signifi-the issuance of first mortgage bonds under the Company's cant reductions of sulfur dioxide (SO,) and oxides of nitro-first mortgage indenture, the availability of property addi- gen from the Companies' coal-fired generating units. tions (excluding Perry Unit 2)is more restrictive than the Compliance options include, but are not limited to, install-earnings test at the present time and would limit the ing additional pollution control equipment, burning less amount of first mortgage bonds issuable against pmperty polluting fuel, purchasing emission allowances from others, additions to $521,000,000. The Company is currently able operating existing facilities in a manner which minimizes to issue $753.000,000 principal amount of first mortgage pollution and mtiring facilities. As part of the Company's bonds against previously retired bonds without the need to compliance plan submitted to the PUC0 and to the Envi-meet the above mstrictions. Based upon earnings for 1992, ronmental Pmtection Agency, OES Fuel entend into an the Company would be permitted. under the earnings agreement to purchase, from an unaffiliated party,5,000 coverage test amtained in its charter, to issue emission allowances annually from 1995 through 1999,
$873,000,000 of preferred stock at an assumed dividend at a price of approximately $250 to $350 per allowance.
rate of 8.25L If the Company were to issue first mortgage During that period the Company also plans to achieve bonds or other debt at or prior to the time it issued prefer- the required SO, reductions by burning lower sulfur coal red stock, the amount of preferred stock which would be at some ofits generating units and generating more elec-issuable would be reduced. tricity at its lower emitting plants. Achieving the required Nnn hwer implemented a base rate decrease approxi- reductions for oxides of nitmgen will result in additional mating $44,000,000 on an annual basis in the second quar. capital expenditures and increased operating costs. The ter of 1992, which bmught its four year phase-in plan to Companies are also testing and analyzing compliance an end. Nnn Nwer's electric rates now mflect the same options for reductions required by the year 2000 for feasi- < rates that would have been placed into effect in 1988 with-I out the phase-in plan. There is no material effect to net bility, cost-effectiveness and degree of flexibility. As discussed in Note 6, the Ocmpanies have invested
)
income resulting from this mte reduction since revenue approximately $343,000,000 in Perry Unit 2, a nuclear ; was recognized under the phase-in plan as if the full reve- generating unit whose construction was suspended in nue level had been placed into effect in 1988. 1985. Options under consideration include, but are not On October 15,1992, the PUC0 approved the Com- necessarily restricted to, resumption of construction, con-pany's Rate Stabilization and Service Area Development tinued suspension or termination. If construction wem to Program. Under this program, base electric rates will be resume during the 1993-1997 period, the Companies' frozen at pnsent levels until at least 1997, absent any capital expenditures would be higher than the amount significant changes in regulatory, environmental or tax disclosed at>ove for that period. If termination were to requirements. Among other things, the program also occur and costs were not recoverable from FUC0 jurisdic-provides for the adoption of demand-side management tional customers, the Company would have to write off as programs, a tariff option for customer retention and service much as $210,000,000 after income taxes. area stabilization, and certain regulatory accounting modi-16
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Selected MooncialDoto Ohio Eden Company on ihn. sands, except per shan ammmes) 1992 1991 1990 1989 1988 O!erating Revenues 82,332,378 $2.358,946 $2,240,646 12,162,720 $2,151,385 i Operatingincome $522,115 $550.452 1510,279 $543.659 $496,996 I Netincome 8276.986 $264,823 $281,676 $361,026 $218,888 f Earrungs on Common Stock 8253,060 $240,069 $254,048 1332.932 $186,170 i Ea ning:s x Share of Common Stock 81.70 $1.60 $1.67 $2.18 $1.22 Dividends Declared per Share of Common Stock 81.50 $1.50 $1.73 $1.96 $1.96 ;
'Ibtal Assets $7,830,026 $7,812,345 $7,841,621 $7,722,896 $7,555,523 '
Preferred and Preference Stock Subject to Mandatory Redemption 859,862 $65,582 162,822 $89,562 196,802 Long Term Debt $3,121,647 $3,243,167 $3,105.248 $3,073,796 $3,208,553 i i Common Stock Doto I t" The Company's Common Stock is listed on the New York and Midwest stock exchanges and is traded on other registered exchanges. PRICE RANGEOFCOMMON SIDCK 1992 1991 , First Quarter High-low 20-7/8 18-3/4 1S.7 '8 1633 ! Second Quarter High-low 21 19 19-1/8 17-33 Third Quarter Hgh-Low 22-3/4 20-3/4 19 3'4 17-7/8 Fourth Quarter High-tow 24 21-1/4 20 1/2 19-3B Yearly High-low 24 18-3/4 OM 1633 l Pnms are tawd on reports pubhshed in 7he EllStrwr Joternal for New brk Stock Exchange Composite Transact:ms. OosslReation Of NoMers Of Common Stock As Of December 31,1992 Holders of Record Shartsileid Numler % Number % Indinduals 136,520 84 43 58,554.154 38.38 Fiducianes 22,893 14.16 8,483,069 5.56 Nominees 94 0 OS 83,553,570 54.76 A110ders 2.179 1.35 1,978,614 1.J0 Total 164,686 100.00 152,569,437 100 00 As of January 31,1993, there were 160.879 holders of Quarterly dividends of 37.M pr share were paid on the Company's Common 12,569,437 shares of the Company's Common Stock. Stock durug 1993 and 1991, Information regardug retained earnmgs available for payment of cash dindends is given in Note 4a. i l l l l l 17
Conso#dertedStatements Of fecome Ohio F&on Company (in thousands, ex&pt per share anx,unts) Ebr the Years Ended Decemler 31, 1992 1991 1990 , OPERATING REVENUES s2,332,378 s2,358,946 s2.240,646 I OPERATING EXPENSES AND TAXES: Eueland purchased power 463,599 467,657 491,858 Nuclearoreratingcosts 274,719 291,551 295,907 i Other operating costs 440,425 412,476 4C6,638 .
'Ibtal operation and maintenance expenses 1,178,743 1,171,6S4 1,194,403 j Provision for depreciation and amortzzation 225,874 236,47C ~ 224,250 :
Generaltaxes 229,332 217,758 212,212 Amortization (deferral) of nuclear unit costs, net (Note 2) 15,956 15,892 (66,070) . Income taxes 160,358 166,654 165,572 !
'Ibtaloperatmg expenses and taxes 1.810,263 1,808,434 1,730,367 OPERATINGINCOME 522,115 550,4b2 510.279 ,
ODIERINCOME 36,283 18,725 3.207 TOTAL,1NCOME 558,398 569.177 513,486 NETINTEPIST AND OTHER CHARGES: Interest onlong term debt 275,835 ?88.599 293,993 ' Deferred nucicar unit interest (Note 2) (8,392) (8,387) (78,514) Allowance for borrowed funds used during construction and capitalized intertst (6,488) (11.276) (19,196) Otherinterest expense 13,958 27,696 25,545 Subsidiary's preferred stock dividend requirements 6,499 7,722 9,982 Net interest and other charges 281,412 304,354 231,8!0 NETINCOME 276.986 264.823 281,676 PREFERRED AND PRFFJINCE STOCK DIVIDEND REQUIREMENTS 23,926 24,754 27.628 , EARNNGSON COMv0NSTOCh s 253,060 s 240,069 $ 254,048 EAPSINGS PER SHARE OF COMMON STOCK s1,70 s1.60 s1.67 , DIVIDENDS DECIARED PER SHARE 0F COMMON S'IDCK s1.50 s1.50 s1 73 f The accompanying Notes to Conschdated Financial Statements are an integral part of these statements. . i
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.~ .- - - - . - .
ConsoNdated Sofonce Sheets Ohio Edson Company { (in thousands) At Decemter 31, I 1992 _ 1991 ASSETS UTILrnPLANT: In servi &, at original cost 87,931,403 $7,736,536 : less- Accumulated provision for depreciation f 2,550,400 2,360,614 ! 5,381,003 5,375,922 , Construction work m progress-Electric plant (Note 6) 479,289 503.956 ', Nuclearfuel 73,118 105,537 557,407 - te9,493 ; 5,938,410 5,985,415 OTHER PROPERTY ANI)lNVESTMEN'Is 152,118 129,515 CURRENTAssETS: ! Cash and cash equivalents 14,212 53,798 Receivables-r Curu ners (less accumulated provisions of 86,432,000 and $5,312,000, respectively, tcr uncollectible actnunts) 203,929 207,073
- Other 39,074 37,623 Currently receivable accrued customer revenues - 19,517 Materials and supplies, at average <nst-Fuel 70,127 65,353 Other 100,542 90,427 Prepayments - 86,040 76,466 513,924 550,257 DEFERRED CHARGES: f Deferred nuclear unit costs (Note 2) 786,210 793,774 !
Unamortized sale and leaseback costs 148,846 116.063 ! Property taxes 109,621 104,911 j Unamortizedlosson reacquired debt 94,254 73,194 Other 86,643 59,216 1,225,574 1,147,158
$7,830,026 $7,812,345 CAPITAllZATION ANDLIABIIJTIES l CAPITAUZATION (See Consolidated Statements of Capitalization):
Common stockholders' equity
$2,408,164 $2,371,946 Preferred stak-Not subject to mandatory redemption 312,335 312.335 Subject to mandatory redemption 25,000 25,000 Preferenn stock subject to mandatory redemption 4,500 6,300 Preferred stock of consohdated subsidiary-Not subject to mandatory redemption 41,905 41,905 Subject to mandatory redemption 30,362 34,282 l
long term debt 3.121,647 3,243,167 5.943,913 6,034.935 I CURRENTIJABIUTIES. Currently payable preferred and preference stock and long-term debt 305,465 276,292 Short term barrowings(Note 5) 151,571 94,855 l Accounts payable 112,128 135,345 l Aarued taxes 126,414 117,435 i Amrued interest 72,563 87,414 , Other 97.917 82,252 j
$66,058 793.593 j l
DEFERRED CREDrrS: Amumulated deferred income taxes 603,123 584,902 Accumulated deferred investment tax credits 240,208 25B,065 Property taxes 109,621 104,911 Other 67,103 35.939 l 1,020,055 983.817 COMMITMENTS, GUARANTEES ANDFONTINGENCIES(Notes 3 & 6) 87,830,026 $7,812,345 The amompanying Notes to Consoixiated h'inancial Statements are an integral part of these balance sheets. l _. . . , - _ - . , - . _ , , , _ - _ . _ . . _ - . . . . . . . - - , - . - . . _ . 19
ConsoNdated Statements Of CapiteNaation Ohio ntwn company (!sts in thomancis. ermpi n r shaw a:rumnts) At Decemter 31, 1992 1991 COMMON SNCKHOLDERS'EQtTli ' Common stoci, 39 par value, *.uthorized 175,000 000 shares-152,569,437 shares outstandmg $1,373,125 11,373.125 , Other paid in capital 731,793 731,793 Retained earnirgs(Note 4a) 490,564 462.087 Una!kicated employee stock ownership plan common stoct- l 9,978,695 and 10.390,862 shares, respectively (Note 4b) (187,318) (195,059) Tota' common stcctholders' equity 2,408,164 2,371,94f> > Optional ! Numter of Shares Outstandmg Redemption Pnce 1992 1991 PerShare Aggregate i PPiTERRED ST(K'E (Note 4c) Cumulative, $100 par value- : Authortzed 6.000,000 shares l Not Subject to Mandatory Redemption: 3 90% 152.510 152,510 $ 103.63 1 15,804 15,251 15.251 ' 4.40 % 176.280 176.280 10s00 19,038 17,628 17,628 4.44 % 136,560 136,560 103 50 14,134 13,656 13,656 4,56 % 144,300 144,300 103.38 14,917 14,430 14.430 4 65% 500,000 500,000 100 00 50.000 50,000 50,000 7.24% 363,700 363,700 101.98 37,090 36,370 36,370 7.36 % 350,000 350,000 102 84 35,094 35,000 35,(00 820% 450,000 450,000 103 30 46,485 45,000 45,000 ! 8 64 % 400,000 400.000 102 16 40.564 40,000 40,(KO 9.12 % 450,000 450,000 104.56 47,052 45,000 45,000 ,
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Total ru sutrct to mardatory rt4mpton 3.123,350 3.123,350 $321.378 312,335 312,335 ; Subject to Mandatory Redemption (Note 4d): } 8.45 % 250,000 250,000 25,000 25,(KO t PREFERENCE stock (Note 4er Cumulative, no par value- l' Authorized 8,000,000 shares Subject to Mandatory Redempton (Note 4d): 10.25% 5,400 7,200 $1,040.00 $ 5,616 5,400 7,2t0 1 Redemption within one year (900) (9(0) { Total subject to mandatory redemption 5,400 7,200 $ 5.616 4,500 6.3(0 PREFERREDSTocK OFCONSouDATED SL'BSIDIARY (Note 4c): Cumulative,3100 par value-Authorized 1,200.000 shares Not Subject to Mandatory Redemgion: 4 24 % 40,000 40,000 $ 103.13 $ 4,125 4,000 4,(KO , 4 25 % 41,049 41,049 105 (0 4,310 4,105 4,105 i 4.64 % 60,000 60,000 102.98 6,179 o,000 6,0(0 7.64 % 60,000 60.000 102 56 6,154 6,000 6,(00 8 00% 58,000 58,000 102 07 5,920 5,800 5,800 B.48% 80,(KO 80,000 103 08 S,246 8,000 8,0rn 9 16 % 80,000 80.(00 10229 8,183 8,000 8,000 f Total not subject to mandatory redemptnn 419.049 419,049 3 43,117 41,905 41,905 l
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Subject to Mandatory Redemption (Note 4d): 7.625 % 150,000 - 8 107.63 $ 16,144 15,000 - 8 24 % 45,000 50,000 102 06 4.593 4,500 5.000 ; 10.50% - 100,000 - - - 10.000 11.00 % 11,616 19.616 102.75 1,194 1,162 1,962 i IIR)% 60,(K0 75,000 103.29 6,197 6,000 7,500 13 00% 70,000 80,(K0 107.80 7.546 7,000 8,0C0 15.00 % - 54,400 - - - 5,440 Redemption within one year (3,300) (3.620) , TotalsubjKt to mandatoq redemption 336.616 379,016 $ 35,674 30,362 34,282 l
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ConsoHdated Statements Of CapitaHzation (Cont.) ohwIk n company On umusantis) At Demmler 31, 1992 1991 LONG-TERM DEBT (Note 4e). First mortgage Londs: Ohio Edison Company-9.81 % weighted average interest rate, due 19921997 8 259,050 5 316.215 737% weighted average interest rate, due 1995 2002 667,365 316,998 8 46% weighted average mterest rate, due 20lG2007 316,068 374.518 9.50% weighted average interest rate, due 2008-2012 - 111,4(0 10.50% weighted average interest rate, due 2013 2017 - 125,000 9.35% weighted average interest rate, dbe 2018 2022 250,000 150,(KO 1,492,483 1,394.131 Pennsylvania Power Company-B.29% weighted average internt rate, due 19921997 59,000 120,036 8 00% weighted average interest rate, due 1998-2002 49,409 frS593 S.00% weighted average interest rate, due 2003 2007 59,870 19,870 9.74% weighted average interest rate, due 200S-2012 4,870 29,S70 9 74 % we$ted average interest rate, due 2013-2017 4,870 4,870 S.55% weighted average interest rate, due 2018-2022 51,981 1,981 230,000 245.220 Total first mortgage bonds 1,722,483 1,639,351 Secured notes and obligations: Ohio Edison Company-8.26% w eighted average interest rate, due 1992-1997 280,862 441,094 ; 7.30% w eighted average interest rate, due 19980002 2,697 7,696 . 7.30% w eighted average interest rate, due 2003-2007 963 40,463 ; 5.70% weighted average interest rate, due 2008-2012 - 5,(K0 ; 9.46% weighted average interest rate, due 2013-2017 197,725 261,525 l 7.03% weighted average interest rate, due 2018-2022 95,943 95.943 . 7.77% weighted average interest rate, due 2023 2024 188,000 188.000 l 766,190 1,039,721 I Pennsylvania Power Company-9.59% weighted average interest rate, due 1992-1997 57,998 58,134 ! 6.56% weighted average interest rate, due 199S-2002 4,453- 18,953 + 4 6 66% weighted average interest rate, due 2003 2(U7 8,987 8.987 8 85% weighted average interest rate, due 2013 2017 50,075 50,075 ;, 7.64 % weighted average interest rate, due 2018 2022 29,982 29,982 i 6.45% w eighted average interest rate, due 2027 14,500 - i 165.995 166,131 ; OES Fuel -4.09% weighted average interest rate 169,416 223,555 I Total secured notes and obligations 1,101,601 1,429,407 Unswured notes: Ohio Edison Company-6.997i, w eighted average interest rate, due 1992-1997 331,000 125,(KU 6 47% weighted average interest rate, due 2(XIS 2012 50,000 UMKO 6.12% weighted average interest rate. due 2013 2017 50,000 100,0t0 5 35% weighted average interest rate, due 301B 2022 57,100 113,100 3 75% weighted average interest rate, due 2032 53,400 - Total unwcured notes 541,500 388,100 Capitallease obligations (Note 3) 65,274 66,590 M1 unamortized discount on debt (7,946) (8 509) long term debt due within one year (301,265) (271,772) Totallong-term debt 3,121,647 3,243,167 TOTALCAPITAUZAT.10N 85,943,913 $6,034,935 The sceompanying hies to Consohdated Financial Statements are an integral part of these statements. I 21 I i I
Conso#dered Statements Of Metoined formisps ohio Ediun company (In thousands) Ebr the Years Ended Demmler 31, 1992 1991 1990 l Balance at tegmnmg of year 8462,087 5449.810 8459,638 Net inwme 276,9f>6 264,623 281,676 Tax benent from ESOP dividends 5,592 3,404 - 744,665 718.037 741,364 Cash dwidends on preferred and preference stock 23,874 24,333 27,609 Cash dwidends on mmmon stock 228,855 228,855 263,945 Premium on redemption of prefened stock 1,372 2,75' 254,101 2fu9fo 291/a54 Balance at end of year (Note 4a) 8490,564 5462.087 $449.810 Consondated Statements Of CapitalStock And Other fald-in Capital Preferred and Preferena Stock Not Subject to Subject to CommonStock Mandatory Redemption Mandatory Redempton Nhed - Other ESOP Par or Par or Number Par Paid in Common Number Stated Number Stated ofShares Value Capital Stock ofShares Value ofShares Value
]
(Duliars in thousands) Balance, January 1,1990 152,569,437 !!,373,125 3733,093 $ - 5.042,399 $354,240 S43,616 $94,082 , ESOPPurchase Transacuans (10.857) Ecdemptions-
$102 50Senes (1,800) (15A) 814% Series (5,MO) (f/0) 11.(0% Senes (8,000) (KO)
II.50't Senes (6) (30,000) (3,MO) 13.00% Series (4) (10,MO) (1,&O) 15.00% Senes (2) (6.400) (640) Balance,Decemter31,1990 152.f69,437 1,373.125 733,081 (10,857) 5.042,399 354,240 782,416 86,342 GOPPurchaseTransacuons (189.143) Allocanon ofESOPShares 4.941 Sale of Market Auction Preferred Stock (1,140) 500,000 50,KO Saleof 8 45% Preferred Stock 250,000 25,(K0 Redempuons-Senes B (2,(KO.000) (50,000) 1102 50 Series (1,800) (l.MO) 824% Senes (5,WO) ($(0) 11001 Senes (8,MO) (800) 11.50% Series (148) (165,(X0) (16,5(0) 13 00% Series (1050) (1#0) 13 50% Series (2(0FJ0) (20.000) 15.00% Series (6,400) (640) Balance, December 31,1991 152,569,437 1,373,125 731,793 (195,059) 3,542,399 354,240 636,216 /0,102 Allocanon of ESOP Shares 7,741 Saleof 7.625% Preferred Stock 150,000 15.0(0 Redemptions-
$102.50 Series (1,800) (1,800)
S04% Senes (5,(KO) (500) 11.00% Series (8,000) (SCO) 15 (0't Series (54,400) (5,440) 10 50% Senes (100,000) (10,KO) i1.50% Series (15,000) (1,5(0) 13.00% Senes (1,(ke) (1050) Balance December 31,1992 152.569,437 11.373.125 $731.793 3.542.399 1354.240 1:187.318) 592.016 564.062 The accomparwing Notes to Consolidated I'mancial Statements are an integral part of these statements. 32-=
Consondated Statements Of Cash Rows ouso rdwsn compare (In thousands) Fbr the Years Ended Decemter 31, 1992 1991 1990 CASH FUNS FROM OPERATING AcrI\TrIES: Netincome 8 276,986 5 264,823 $ 281,676 Adjustments to reconcile net income to net cash from operating activities: Depreciation and arnoruzation 225,874 236,476 224,250 Nuclear fuel and lease amort:zation 85,419 85,754 79,627 Deferred income taxes, net 1B,221 58.964 60,9(0 investment tax credits, net (17,857) (2,776) (4,878) Deferred (accrued) revenue, net 19,517 37,757 (4,675) Allowance for equity funds used durmg construction (3,025) Q,050) (1,238) Deferred fuel costs, net 5,130 1,411 20,375 Amoni::ation (deferral) of nuclear unit costs, net 7.564 7,505 (144,5B4) Internalcash before dividends 617,829 686.864 531,453 Receivables 2,278 (21,231) (3,248) Materials and supplies (14,889) (2,874) (26,641) Accounts payable (19,986) (4,042) 603 Other 4,727 18,359 (36,874) Net cash provided from operating activities $89,959 677,076 465,293 CASH FLOWS FROM FINANC'NG ACTlvlTIES: New Financing-Preferred stock 15,000 73,863 - long term debt 937,797 1,034,801 919,667 Shon term borrowings, net 56,716 - 204,039 Redemptions and Repa3nents-Prderred and preferen& stock 22,412 94,063 7,740 long-term debt 1,065,377 756,520 1,079,397 Shon term bonowinp, net - 227,184 - Dividend Payments-Common stock 234,188 229,686 272.255 Preferred and preference stock 23,786 23,699 27,5S6 Net cash used for fmancmg aaivities 336,250 222,688 263.273 CASH FWWS FROM INVESTING ACTI\TrIES: Property additions 241,508 226,153 256,218 Investment in employee stock ow nership plan - 160,000 40,(00 Sale and leaseback restructunng fees 37,654 23,723 - Other 14,133 15,062 11,285 Net cash used for investing activities 293,295 424,938 307,fh3 Net increase (decrease)in cash and cash equivalents (39,586) 29,450 (105,482) Cash and cash n;uivalents at begm ting of year 53,798 24,348 129,830 Cash and cuh equivalents at end of year s 14,212 $ 53,798 $ 24.348 SUPPU: MENTAL, CASH FwWS INFORMATION: Cash Paid Puring the Year-Int eres' (net of amounts capital:cd) $ 290,420 $ 286,(05 8 290,355 Irn74 taxes 134,768 113,712 87,953 The accompanymg Notes to Consolidated rmancial Statements are an integral part of these raatements. I 1 23
Consohdated Statements Of Taxes oh,o Ts,n comtm (ln th nr.antl>) For the Wars Ended Decem!+r 31 1992 1991 1950 { l l GENERALTAXEs ! ' I l I Real and personal property $1I1,533 ' 1103 298 I 97.366 I State g oss receipts 94,415 90,961 93.226 Sonal secunty and unemployment 15,166 14.494 14.126 (ther i 8,218 l 9.(U5 7.494 Total general taxes I
$229,332 ; 1217J5% $212.212 i
PROVISloN FOR INCOME TAXES: Currently payable-Federal $ 132,712 1102,017 $ SS.M2 State 14,331 15.520 6.4k0 147,043 117.537 94.782 IVferred, net (see below )- Federa! 17,586 , 62.480 79.51h State 635j (3.516) 1.382 18,221 EAM4 80.900 innstment tax endits net of amorte.ation (17,857) (2576) (4.875) Total provision for inmme taxes $147,407 $173.725 1170,504 INCOME STATEMENT CIASSIFICATloN OF PRovisloN FOR INCOME TAXE5 0;eratmg inmme #160,358 f166.684 , Other income 8165.572 l (12,951) 7.041 5,232 l t Total provision for inmme taxes $147,407 5173 725 $170,804 j SOURCES OF DEFERREDTAX EXPENSE: ! Exmss of tax over book deprenauon. net 8 27,627 Ikferred fuel costs, net (1,832) fe.3% l $ (7,740) 5 (2.453) 60.915 l l1 Amortr.auon of deferred mterest on leased nuclear fuel (6,054) (4.555) (5.017) : Pension msts 5,952 5.497 S.821 Property taxes (1,370) (26,731) (237) Deferred nudear umt costs (2,423) (2.2'15) 44.805 Dtfference letu een tax and tmk revenue, net (9,084) (3,104) (19.292) Alt 4 rnauve miramum tax credits utiked 12,467 29J49 S.090 t Defernd loss on reacquired debt. net ! 7.353 713 Other, net 1.914l (14,415) (7,196) t i,053) l Net deferred tax ex;ense s 18,221 154M4 $ 60JM { RECONcalATioN OF FEDERAL INCOME TAX EXPENSE AT SunwRY ! t RATE To TOTAL PRovisloN FOR INCOME TAXES ! Ikk income lefore provision for income taxes $424,393 $438.548 $452.450 I Federalincteme tax ex;ense at statutory rate $144,294 1143.106 $ 153.843 Increases (reductians)in taxes resultmg from-Exass of tmk over tax depreciauon l 19,741 20,043 24J83 Amortcanon ofinvestment tax eredas (32,092) (8,2k4) (11.142) State income taxes net of federal income tax tenefit 9,878 7.923 5,189 other. net 5,566 4,9J7 (1.569) Total provision for income taxes $147,407 $173325 1170 804 l T!* accompanying Nales to Convihdated Fmancial Statements are an mtegra! part of these statements 24
Riates To Consolidated Financial Statements
- 1. S'JMMARY OF SIGNIRCANT ACCOBTING POUCIES. The Companies recognize estimat ed future decommis-The consolidated financial statements include Ohio sioning costs applicable to t heir ownership and leasehold Edison Company (Company) and its wholly owned subsidi- interests in nuclear generating units as a component of aries, Ibansylvania Power Company (Penn Power), OES depreciation expense. The Companies' sham of the future Capital, Incorporated (OES Capital) and Cf S Fuel, Incorpo- obligation to decommissbn these units in current dollars is rated (OFS Fuel). All sigmficant intercompany transactions approximately $247,000,000, based on estimates used in have been eliminated. The Company and Ibnn Ibwer the Companies' last rate filings. The Companies have (Companies) follow the accounting policies and practices recovered approximately $38,000,000 from customers prescribed by the Public Utilities Commission of Ohio through December 31,1992; approximately $24,000,000 (PUCO), the Ibnnsylvania Public Utility Commission has been invested in external trusts. Inhe actual costs of (PPUC) and the Federal Energy Regulatory Commission decommissioning the units exceed the accumulated (FERC). amounts recovered from customers, the Companies expect REVENUES-The Companies' retail customers are me- that difference to also be recoverable from their customers.
tered on a cycle basis. Revenue is recognized for electric The Companies have also recognized an estimated liability service based on meters mad through the end of the month. of $20,500,000 related to decontamination and decommis-Receivables from customers include sales to msiden- sioning of nuclear enrichment facilities operated by the tial, commercial and industrial customers located in the United States Department of Energy (DOE), as required by Companies' service area and sales to wholesale customers. the Energy Iblicy Act of 1992. The Companies expect to There was no material conceritration of receivables at recover these costs from their customers. December 31,1992 or 1991, with respect to any particular ComioN OWNERsinP DF GENERATM FAcurIEs-The segment of the Companies' customers. Companies and other Central Ama Ibwer Coordination FrEL Cogrs-The Com panies meover fuel related costs Group (CAPCO) companies own, as tenants in common, not otherwise included in base rates from retail customers various power generating facilities. Each of the companies through separate energy rates. Any over or under collec- is obligated to pay a share of the construction costs of any tion resulting from the operation of these rates are included jointly owned facility in the same proportion as its owner-as adjustments to subsequent energy rates. Accordingly, ship interest. The Companies' pertions of operating ex-the Companies defer the difference between actual fuel- penses associated with jointly owned facilities are included related costs incurred and the amounts currently recovered in the corresponding operating expenses on the Consoli-from their customerx dated Statements ofIncome (see Note 2 with respect to the UT'LtTV PLANT AW DEPRECIATloN-Utility plant reflects deferral of Ibrry Unit 1 and Beaver Valley Unit 2 costs). the onginal cost of construction, including payroll and The amounts reflected an the Consolidated Balance Sheet related costs such as taxes. pensions and other fringe bene- under utihty plant at December 31,1992, include the fits, admimstrative and general costs and allowance for following: funds used during construction ( AFUDC). c,_ The Companies generally provide for depreciation en me womaceae o-* wa na mm um a straight-hne basis at various rates over the estimated cm c us m s. 9,,o p. mmo lives of property included in plant in service. The annual u_, composite straight-line rate for ekttric plant was approxi. W R femis #7 s 272S0 s 74No s 3300 M 801 mately 3% in 1992,1991 and 1990, respectively. The "j 733 , 3gg 33 g Company recorded depreciation expense applicable to Mr vm Ibrry Unit 1 on a units of production basis during 1990, as #1 and #2 1,67130 416N0 Ilye 47 Ils authorized by the PUCO. In 1991, the PUCO authorized h rry #1 and Common Faribnes 1 A33 500 1735 0 3,3fo 35 24 % the Company to revise its depreciation method for Ibrry nny r2 - - N3Mo an.n Unit I from units of production to straight-line. This revi~ TM R1ww mo No sion had no material effect on the total provision for depre-ciation or net income in that year. NrcLEAls FUEL-Nuclear fuel is recorded at original cost, which includes material ennc hment, fabrication and interest costs incurred prior to reactor load. The Companies amortize the cost of nuclear fuel based on the rate of consumption. The Companies' electric rates include amounts for the future disposal of spent nuclear fuel based upon the formula used to compute payments to the DOE. 3
Notes continued AUMANCE FOR Frsos USED DURNG CONSTRUCDON- collected from their customers when the taxes become AFUDC represents financing costs capitalized to construc- payable, an asset will be recognized for that probable fu-tion work in progress (CWIP) during the construction ture revenue. The Companies are not requimd to adopt period. The borrowed funds portion reflects capitalized SFAS No.109 until 1993. However, if the Companies had interest payments, and the equity funds portion repmsents ado;)ted the standard as of December 31,1992, total assets the noncash capitalization ofimputed equity costs. AFUDC would have increased by appmximately $950,000,000 with varies according to changes in the level of CWIP and in the no material effect to net income. sources and costs of capital. The composite AFUDC rate REDREMENT BENEFD'S-The Companies' trusteed, (excluding nuclear fuel interest) was approximately 9.5% noncontributory defined benefit pension plans cover al-in 1992,1991 and 1990, respectively. Capitalization rates most all full-time employees. Upon retimment, employees for interest on nuclear fuel were 4.5%,6.6% and 8.4 % in receive a monthly pension based on length of service and 1992,1991 end 1990, respectively. compeneation. The Companies use the projected unit INCOME TAXES-Details of the total provision for income cmdit method for funding purposes and were not required taxes are shown on the Consolidated Statements of Taxes. to make pension contributions during the three years The deferred income taxes result from timing diffemnces ended December 31,1992. in the recognition of revenues and expenses for tax and The following sets forth the funded status of the plans accounting purposes. Investment tax credits (ITC), which and amounts recognized on the Consolidated Balance were deferred when utilized, are being amortized over the Sheets as of December 31: estimated life of the related property. ITC amortization in *
- 1992 included $21,300,000 associated with portions of the on th-6)
Company's investments in Perry Unit I and Beaver Valley """# "*"# ##** Q"*" g , Unit 2 which are not ecoverable from retail customers. wnvested tenents 21.740 20,309 for income tax purposes, the Companies claim liberal-ururnulated teneru obiutamn s40s.927 s377.931 ized depreciation and, consistent with the rate treatment, generally provide deferred income taxes. The Companies expect that deferred income taxes which have not been (($l.b pmyct,,t,,ng, obligauon 489,985 461,080 pmvided will be collected from their customers when the Plan assets in exmss or pmrcted tenera taxes become payable, based upon the established rate womn 220 ass 2232n making practices of the PUCO, the PPUC and the FERC. I As of December 31,1992, the cumulative net income tax t IiriI m enn.cognm.o net transimn asa.t timing differences for which deferred income taxes have (asn.o (73309) senension asma s 93 on s 72.200 not been provided were approximately $500,000,000. The Financial Accounting Standards Board (FASB) The assets of the plans consist primarily of common issued Statement of Financial Accounting Standards (SFAS) stocks, United States government bonds and corporate No.109, " Accounting for Income Taxes " which, among bonds. Net pension costs for the three years ended other things, requires a change in the method used by December 31,1992, were computed as follows: enterprises to account for deferred income taxes. Under N N
- this standard, deferred income tax liabilities must be recog. e th==ns) nized at the statutory income tax rates in effect when the liabil. ties are expected to be paid. The standard also re-S T/gt*j*"d ,7 , 33 , 3 , 3y3 , 3g3 Inten st on pmmed ten.nt quires recognition of a deferred tax liability for tax benefits w omn 40,291 as ois 36 m that have previously been flowed thmugh to the Companies' murn on plan asyns (59297) (124 M 2m7 customers and an assumed deferred tax liability applicable @2#% ** ("#
to the equity component of AFUDC. Since the Companies (dl ""l'["] emann exren* us9 - - expect that the additional deferred tax liabilities will be set pension c6st saem sa9.n4) sc30.449) ; The assumed discount rate used in determining the actuarial present value of the projected benefit obligation was 9% in each year.The assumed rate ofincrease in fu-ture compensation levels used to measure this obligation was 4.5% in 1992 and 5.0% in 1991 and 1990. Expected long-tenn rates of return on plan assets were assumed to be 11% in each year. 26
The Companies provide a minimum amount of non. paper transactions, which are reflected as long-term debt contributory life insurance to retired employees in addition on the Consolidated Balance Sheets (see Note 4e) but have to optional contributory insurance. Health care benefits, irutial matunty periods of three months or less, are reported which include certain employee deductibles and copay- net within financing activities under long-term debt. ments, are also available to retired employees, their All terrowings with initial maturities ofless than one dependerts and, under certain circumstances, their year and $30.072,000 of investments other than cash and survivors. The Companies pay insurance premiums to cash equivalents at December 31,1992, which are defined cover a portion of these benefits in excess of set limits; as financial instruments, are reflected at their appmximate all amounts up to the limits are paid by the Companies. fair market value. The approximate fair market value of all Expenses associated with health care and hfe insurance other long-term debt and preferred and preference stock benefits for retirees are charged to income during the appli- subject to mandatory redemption exceeded the carrying cable payment periods, and amounted to $9,6S9,000, cost of those financialinstruments by approximately $8.280,000 and $7,255,000 in 1992,1991 and 1990, $130,000,000 and $2,500,000, respectively. The fair value respectively. of these instruments reflect the present value of the cash The FASB has issued SFAS No.106, " Employers' outflows relating to those securities based on the current Accounting for Postretirement Benefits Other Than call price, the yield to matunty or the yield to call, as Pensions," which modifies the method to be used by deemed appropriate. The yields assumed were based on enterprises to account for other postretirement benefits. securities with similar characteristics offered by a corpora-Under the standard, the Companies will be required to tion with credit ratings similar to the Companies' ratings. recognize the expected cost of providing other postretire- 2. RECOVERY OF NL' CLEAR UMT COSTS ment benefits to employees and their beneficiaries and The PUC0 authorized the Company to defer nonfuel covered dependents from the time employees are hired o eration and maintenance costs relating to krry Unit I until they become eligible to receive those benefits. The from its in-service date for rate making purposes until Companies will adopt this standard prospectively in 1993. February 2,1988, when Perry operating costs were recog-Based on current plan demographics, it is estimated that nized in the Company's electric rates. It also authorized annual postretirement benefit expense will increase by the Company to defer nonfuel operation and maintenance approximately $22,000,000. The PUC0 authorized the expenses, depreciation expense, pmperty taxes and inter. Company to defer incremental costs associated with SFAS est expense associated with Beaver Valley Unit 2, fmm its No.106 applicable to retail customers as part of its rate commercial operation date until August 23,1990, when stabilization and service area development program. these costs were also recognized in the Company's electric EARNINas PER SHARE OF COMMON SMCK-Earnings rates. The Company also began to collect Wrry Unit I and per share of common stock shown on the Consolidated Beaver Valley Unit 2 deferred costs in connection with the Statements of Income for the three years ended August 1990 rat e order. The PUCO has authonzed the December 31,1992, were comp ed as foll s: Company to defer interest expense on approximately SS2,600,000 of accumulated Beaver Valley Unit 2 deferred
> twiana emm se an=nia rargs: costs (excluding previously deferred interest) which were Net income 1276 986 s264,823 1281.676 not included in rate base in the August 1990 rate order, until the date certain in the Company's next base rate case.
n en Ements (23.92 0 (24.rs4) (27.629 m benera tram empicyee As part of the August 1990 PUCO rate order, the PUC0 stmi ownership plan dividends s,592 3.404 - reduced the amount of aeferred Beaver valley Unit 2 costs s2s8.cs2 243,473 s254h48 which could be recovered from the Company's customers. shares: The PUC0 denied a rehearing on this issue in October 1990, accordingly, the Company wrote off approximately
$NIon#5 sE g 152.sc9 152.s69 1s2.569
$27, r2rnings per share of common sie si 70 si so :i c7 E f pmi py d&rred costs, u hich reduced net income by approximately $17,600,000 (12 cents per SITPLEMENTAL CASH FtirKS INFORM ATluN - All t emporary share of common stock)in 1990. On May 6,1992, the Ohio cash investments purchased with an initial maturity of Supreme Court affirmed the PUCO's decision in this matter.
three months or less are reported as cash equivalents on the Consolidated Balance Sheets. The Companies record temporary cash investments at cost, which approximates their market value. Noncash financing and investing activi-ties included capital lease transactions amounting to
$5,831,000, $10,467,000 and $8,768,000 for the years 1992,1991 and 1990, respectively. OES Fuel commerrial 27
I Notes contiwd i
- 3. LEASES: The future minimum lease payments as of- l The Companies lease a portion of their nuclear gener. December 31,1992, are:
ating facilities, certain transmistan facilities, computer equipment, office space and other property and equipment cc,i.ai om 3"5 i t under cancelable and noncancelable leases. M-aN , in 1987, the Company sold a portion ofits ownership *
- interest in Perry Unit I and Beaver Valley Unit 2 and simul-
$3 f 1993 1333 we,933 taneously entered into operating leases on the portions 199c 13370 109.1s4 i sold for basic lease terms of appmximately 29 years. Dur- 1997 12.7s5 113.676 ing the tenns of the leases the Company continues to be wan enor [
121.c72 2mo.779 r responsible, to the extent of its combined ownership and w mnalean mwna 198 398 83.197.219 ; leasehold interest, for costs associated with the units in- f"*"""*' 45 " 8 ' cluding construction expenditures, operation acid mainte- *t " a " le** Parmenu 153 450 nance expenses, insurance, nuclear fuel, property taxes 3"* * *P * " " I" f and decommissioning. The leases provide for adjustments Prennt sh dnet nana leaw mmu E 274 to the basic rental payments for possible future federal tax ! law changes. The Company has the right, at the end of the "*""*"" ** * ' respective basic lease terms, to renew the leases for up to 4. CAPITAllZATION: l two years. The Company also has the right to purchase the (a) RETAINED EARNINGS-Under the Company's first ; facilities at the expiration of the basic lease term or renewal mortgage indenture, the Company's consolidated retained ; term (if elected) for a purchase price equal to the fair market earnings unrestricted for payment of cash dividends on valueof thefacilities. the Company's common stock were $418,517,000 at { Consistent with the regulatory treatment, the rental December 31,1992. payments for capital and operating leases are charged to [ (b) EMPimEE Snx K OW.NERSMP PLAN-The Employee operating expenses on the Consolidated Statements of Stock Ownership Plan Trust (ESOP) was established in , income. Such costs reflected on the Consolidated State- October 1990 to fund the matching contribution to the ments of Income for the three years ended December 31, { Companies' existing 401(k) savings plan. All full. time - 1992, are summarized as follows: employees eligible for participation in the 401(k) savings ; a m m plan are covered by the ESOP. The ESOP borrowed on o.s.ny $200,000,000 from the Company and acquired 10,654,114 operatme**5 l shares of the Company's common stock on the open mar-
$7 "I""* o r capnallea*s
" f3 $ "l((2 ket. In 1992 and 1991,412,167 and 263,252 shares, respec- l tively, were allocated to employees with the corresponding ;
7""' $ $ $ expense meognized based on the shares allocated methci 7btai rental paynents 837.57 144.431 145.s77 %tal ESOP relaled compensation expense was calculated as follows: i 1992 1991 I Base compensaten 8 7.741.0(0 8 4.9:IMO ' Interest on ESoPdebt 19,955.M0 12.700.M0 Dividends on common stock held by J the ESo? and used to serykt debt (15.970.000) (9.735.000) Interest earned by the EsoP (1.708,o:0) (317.000) 8 11.439.M0 $ 6.204.0l0 (c) PREFERRED AND PREl'ERENCE STDrK-Penn Ibwer's 13% series of preferred stock has a restriction which pre-vents early redemption before July 1994 through new issuances of securities having interest or dividend rates less than the dividend rates of the series being redeemed. Penn Ibwer's 11.5% and 7.625% series of preferred stock have restrictions which prevent early redempti on prior to July 1993 and October 1997, respectively. The Company's 8.45% series of preferred stock has no early redemption provision. All other preferred and preference stock may be redeemed in whole, or in part, with at least 30 days but not more than 60 days notice. The optional redemp-28 I
, tion prices shown on the Consolidated Statements of Amounts shown on the preceding table for 1993 Capitahzation will dedine to eventual minimums per indude $8J50,000 of first mortgage bonds to be optionally share acconfing to the Chaner provisions that establish redeemed in March 1993. The weighted average intemst each series. rates shown on the Consolidated Statements of Capitaliza-
@ PREFERRED AND PREFERENCE SECK SmJEct 'Ib tion relate to long-term debt outstanding at December 31, MANDAERY REDEMPTION- Annual sinking fund provisions 1992 (December 31,1991 if a series was not outstanding at for the Companies' preferred and preference stock are the end of1992).
as follows: The Companies' obligations to repay certain pollution
% , , % control revenue bonds are secured by several series of first om , mortgage bonds and, in some cases, by subordinate liens -
Wefened stock 8.45s 50.000 september ts 1997 on the related pollution control facilities. A portion of the heferenc* Stock 10Z% 9(0 July 1 (i) n nn n=er- Unsecured notes outstanding are entitled to the benefit of heterred Stack 7 625 % 7.5(0 october 1 2002 irrevocable bank letters of credit of $338,831,000. 7b the B.24s 5.000 December 1 (0 extent that drawings are made under those letters of credit
! 1 J[1 to pay principal of, or interest on, the pollution control 13mt 5.000 July 1 (0 revenue bonds, the Company is entitled to a credit on the m smung rano pm-run in enect notes. The Company pays an annual fee of 5/8% to 8/10%
Preferred and pmference shares are retired at $100 of the amounts of the letters of credit to the issuing banks and $1,000 per share, respectively, plus accrued dividends. and is obligated to reimburse the banks for any drawings The sinking fund requirements for the next five years am: thereunder. The Company is party to a currency exchange agree-Q3 ";.Q. ment to reduce potential risks arising from exchange rate 1995 s,4aomo fluctuations for payments of interest and principal on its y y' 'RS Swiss Franc Note, SFr. 81,000,000 principal amount ($44,000,000) due May 1993. Under the currency exchange Amounts shown above for 1993 indude $400,000 of agreement, the Company and the counterparty exdiange preferred stock optionally redeemed in January 1993. dollars for Swiss francs to meet all obligations under the (e) LONG. TERM DEBT-The first mortgage indentures note. In the event of nonperformance by the counterparty, and their supplements, which secure all of the Companies' the Company is relieved from its obligation of payment first mongage bonds, serve as direct first mortgage liens pursuant to the agmement and would have to satisfy inter-on substantially all property and franchises, other than est and principal payments by purchasing Swiss francs at specifically excepted property, owned by the Companies. the spot ratein effect at that time. Based on the amount of bonds authenticated by the Nudear fuel purchases are financed through the issu-Trustees through December 31,1992, the Companies' ance of OES Fuel commercial paper and loans, both of annual sinking and improvement fund requirements for all which are supported by a $425,000,000long-term bank bonds issued under the mo:tgages amount to $30,611,000. credit agreement which expires Mardi 31,1995. Accord-The Company expects to deposit funds in 1993 which will ingly, the commercial paper and loans are reflected as be withdrawn upon the surrender for cancellation of a like long-term debt on the Consolidated Balance Sheets. principal amount of bonds, which are specifically authenti- OES Fuel must pay a facility fee of 3/16% on the total cated for such purposes against unfunded property addi- line of cedit and a commitment fee of 1/16 % on any tions or against previously retired bonds. This method can unused amount, result in minor increases in the amount of the annual sink. 1 ing fund requirements. Penn Power expects to satisfy its ( requirements in 1993 by certifying unfunded property additions at 166-2/3% of the required amount. Sinking fund requirements for certain series of first mortgage bonds and maturing long-term debt (excluding capital leases) for the next five years are: 1993 294.223.0w 1994 124,219.000 1935 361,620.0(0 1996 226.414.000 1997 150 350.0(0
Notes continued l , n. SHOKr. TERM BORROWINGS AND BANK llNES The Company cannot now pratict whether its invest-l OF CREDrr ment in Unit 2 applicable to its PUC0 jurisdictional cus-Short-term borrowings outstanding at December 31, tomers would be recoverable if construction of the Unit 1992 include OES Capital debt which is secured by cus- were terminated. If no means of mcovery of the costs of tomer accounts receivable. OES Capital can borrow up to Unit 2 were available to the Company Imm its PUC0 juris-
$120,000,000 under a receivables financing agreement at dictional customers and no other basis for recovery could mtes based on certain bank commercial paper. OES Capital be found or anticipated, the Company would be required l is required to pay a fee of 1/2% on the amount of the entire to write off the portion ofits investment applicable to its finance limit. The receivables financing agreement expires PUC0 jurisdictional customers. As of December 31,1992 May 25,1993. the Company estimates that the maximum amount of such The Companies have lines of credit with domestic a write-off would be approximately $210,000,000, net of banks that provide for bormwings of up to $135,000,000 income tax effect. The Company does not presently antici-under various interest rate options. Short-term borrowings pate that a write-off of es en this magnitude, if required, may be made under these lines of credit on the Companies' would ofitself affect its ability to pay common stock divi-unsecured notes. To assure the availability of these lines, dends at current levels, and studies indicate that the mag-the Companies are required to pay commitment fees that nitude of any such write-off could be much smaller. Based vary from 1/S% to 1/2%. These lines expire at various on Section 520 of the Pennsylvania Public Utility Code, times during 1993. Penn Nwer believes it could recover its investment in
- 6. ComENTS, GUARANTEES AND CONTINGENCIES: Perry Unit 2 with respect to its PPUC jurisdictional l CONSTRUcnos PnocRAM-The Companies' current customers if the Unit were terminated. j budget forecasts reflect expenditures of approximately If a decision were made to terminate Perry Unit 2, ,
$1,600,000,000 for property additions and improvements consolidated net income would be reduced at that time by I from 1993-1997, of which approximately $275,000,000 is the difference between the cost of Perry Unit 2 and the applicable to 1993. present value of revenue to be collected Imm retail juris-The status of Perry Unit 2 continues to be under re. dictional customers applicable to the Unit. The FERC has view. Currently, no significant work is being performed on revised its policy with respect to recovering the costs of the Unit and the Companies do not capitalize AFUDC. terminated construction pmjects. As a result, if Perry Unit Until review of the status of Perry Unit 2 has been com. 2 were terminated, the Companies would be required to pleted, there will be no defined schedule for its completion; write off one-half of their respective investments applicable the construction estimates for the 1993-1997 period do not to their FERC jurisdictional customers if and to the extent ,
include any amounts applicable to Perry Unit 2 if construe. that the FERC revised policy is applicable. Under such ! tion of the Unit were to be resumed. Possible alternatives circumstances, the remaining costs, plus a return on the l being reviewed with respect to Unit 2 include indefinite unamortized investments, would be recovered from their l suspension of construction on the Unit, resumption of FERCjurisdictionalcustomers. I work on the Unit and termination of the Unit. In accord- NUCLEARINSURANCE-The Price-Anderson Actlimits ance with the CAPCO arrangements, none of these alterna- the public liability relative to a single incident at a nuclear tives may be implemented without the approval of each of power plant to $7,508,000,000. The amount is covered by the owners of the Unit. a combination of private insurance and an industry retro-As of Dmmber 31,1992, the Company and Penn spective rating plan. Based on their pmsent ownership and Pbwer had invested approximately $295,000,000 and leasehold interests in Beaver Valley Units 1 and 2 and
$48,000,000, mspectively, applicable to Perry Unit 2. Delay Perry Unit 1, the Companies' maximum potential assess-in the completion of the Umt can be expected to increase ment under the industry retrospective rating plan (assum-its total cost by amounts which are not presently deter- ing the other CAPCO companies were to contribute their minable. Pending completion of the ongoing review, the proportionate share of any assessments under the retro-Company is unable to predict whether the construction on spective rating plan) would be $81,700,000 per incident Unit 2 will be resumed or, if resumed, on what basis such but not more than $13,000,000 in any one year for each continuation will proceed. incident. The Companies are also subject to an additional surcharge assessment under this plan aggregating approx-imately $4,100,000.
The Companies are also insured as to their respective interests in the Beaver Valley Station and the Perry Plant under policies issued to the opemting company for each plant. Under these policies, up 'o $2.625,000,000 is pro-vided for property damage and decontamination and de-30 l . . . -. - - - -
commissioning costs. The Companies have also obtamed ing fuel, purchasing emission allowances from others, appmximately $329,000,000 of insurance coverage for operating existing facilities in a manner which minimizes replacement power costs for their respective interests in pollution and retiring facilities. In compliance plans sub-Beaver Valley Units 1 and 2 and Perry Unit 1. Under these mitted to the PUC0 and to the Environmental Protection policia the Companies can be assessed a maximum of Agency (EPA), the Company stated that reductions for the approximately $ 16,600,000 for accidents occurring during years 1995 through 1999 are likely to be achieved by burn-a policy year which are in excess of accumulated funds ing lower sulfur fuel, generating more elect ricity at its available to the insurer for paying losses. lower emitting plants and'or purchasing emission allow-The Companies intend to maintain insurance against ances. Plans for complying with the year 2000 reductions nuclear risks as described above as long as it is available. are less certain at this time. In addition, the EPA is re-Ib the extent that mplacement power, property damage, quired to perform studies, the first of which is due by decontamination, decommissioning, repair and replace- November 1993, of the potential hazards to public health ment costs and other such costs arising from a nuclear anticipated to occur as a result of the emission by electric incident at any of the Companies' plants exceed the policy utilities of certain potentially hazardous air pollutants. The limits of the insurance from time to time in effect with EPA is to submit the results of these studies to Congress respect to that plant, to the extent a nuclear incident is together with mcommendations for further control require-determined not to be covered by the Companies' insurance ments, if needed. policies, or to the extent such insurance becomes unavail- Violadons of federally approved 50, regulations can able in the future, the Companies would remain at risk for result in injunctive alief, including shutdown of the gener-such costs. ating unit involved, and 'or civil or criminal penalties of up GEARBTEEs-The Companies, together with the other to $25,000 per day of violation. The EPA has an interim CAPCO companies, have several guarantees of certain debt enforcement policy for the SO, regulations in Ohio which and lease obligations in connection with a coal supply allows for compliance with the regulations based on a contract for the Bruce Mansfield Plant. As of December 31, 30-day averaging period. The EPA has informed another 1992, the Companies' shares of the guarantees (which Chio electric utility of changes in the interim enforcement approximate fair market value) were $115,078,000. The policy, including a revision of the method of calculating price under the coal supply contract, which includes emissions. While the Companies do not agree with the certain minimum payments. has been determined to be EPA's position in the matter, they expect to comply with sufficient to satisfy the debt and lease obligations. The the policy. The Ccmpanies cannot predict s -hat action the Companies' total payments under the coal supply contract EPA may take in the future with mspect to the interim amounted to $103,657,000, $107,069,000 and enforcement policy.
$114,077,000 during 1992,1991 and 1990, respectively. In April 19S8, several states, the Province of Ontario, l'nder the coal supply contract, the Companies' future and several environmental groups petitioned the EPA to minimum payments are: conduct a rulemaking under Section 115 of the Clean Air Act. Section 115 is that portion of the Clean Air Act which im sau m addresses pollution across international boundaries. The im 35.im petitioners claim that the EPA has already determined that sources in midwestern states contribute to air pollution Idmerewr QQ which they allege is endangering public health and welfare in Canada. The EPA is being asked to officially confirm this ENvmONMENTAL MATTERS-Various federal, state and determination. The EPA has informed the petitioners that kral authorities regulate the Companies with regard to it does not currently have sufficient information to act on air and water quality and other erwironmental matters.
the petitions. The Companies are unable to predict the The Companies have estimated additional capital expend- outcome of these proceedings. itures for envinmmental compliance of approximately
$215,000,000, which is included in be construction fore-cast given above under " Construction Program" for 1993 through 1997.
The Clean Air Act Amendments of 1990 require signi& cant reductions of sulfur dioxide (SO ) and oxides of nitro-gen from the Companies' coal-fired generating units by 1995 and additional emission reductions by 2000. Compli-ance options include, but are not liinited to, installing additional pollution control equipment, burning less pollut-31
1 Notes continued i 1 ! During the past several years, the U.S. Court of 7. Sl'MMARY OF QUAIGT.RLY I'IN ANCI AL DATA l Appeals for the District of Columbia reversed several (UNAIMED)- significant portions of the EPA's regulations on the methods The folk) wing summarizes certain consolidated operat-l used by the EPA to determine the amount of stack height ing results by quarter for 1992 and 1991. j credit for establishing individual source emission limits for w ai. a. a senweran. imna rst. j S0..3 Pbrtions of the latest EPA regulations were reversed nm uantra rm tw2 inz iwa inz j and remanded by the Court in January 1988 as a result of on u==ne. memer e, amounto appeals by the Companies and others. After the EPA Olemung kn nes ss7,m ss5S21 smis3 55n 437 Operatmg Egenses
- promulgates new regulations in conformity with the final and hes 453.220 445.036 459.430 452.5U Court decision in this matter, Ohio and Pennsylvania must operaunginmme 134w 120.sss 142,103 124.800
) then review their emission limits to ensure conformance y,[itNEd 3 with the new EPA regulations. Such review could result in Other Chuges 71.014 70.002 U.255 69,143 more stringent emission limits for some existing plants and Netincome s 73.138 s 59.781 s 79.138 s 64.929 ; i increased capital costs and operating expenses. The Earnmgs on Companies are currently unable ta predict the outcome of common stock s 67.052 s 53.ns s 73.240 s s8.992 l these proceedings. Earnmas xr shme in June 19S'7, the EPA announced regulations covering of conan sud s 45 s 36 s.49 s 40 j small particulate matter emissions from utility boilers. , ,y y g g ,, y ., g Although the Companies have power plants in one of the n- monom rm m mi e mi ! two counties in Ohio where epa computer modeling pre- (in thousnds except per share amounts) 01waurg Rees sM3.M $5M R2 H2iNI s577,642
- dicts that excessive small particulate emissions will be operatmg Egenses found, the Companies are unable to predict the ultimate andmes 449.833 433.321 474.069 451.271 ,
effect of these regulations. on.ratmgincome 143.us m281 146.932 12s.3n I j In July 1992, the Ibnnsylvania Department of Environ. other inome 2.998 s 44s 4,121 s, iso j Net interest and i i mental Resources issued final regulations dealing with the Other Charges 74.300 73.053 82,623 74,378 I storage, treatment, transportation and disposal of residual Net inome s 72.scs s usn s 68.430 s 57,153 ! l waste such as coal ash and scrubber sludge. These regula- % ,, [' j tions impose additional requirements relating to permit- comnon stcd s 65.631 s so.or,4 s 63.076 s 51.298 ting, ground water monitoring, leachate colkttion systems, Emmngs v.r shme f or common st<d s 43 s 40 s 42 closure, liability insurance and operating matters. The s 3s l Companies are developing and analyzing various cornpli- l ance options and are presently unable to determine the ; ultimate increase in capital and operating costs at ; existing sites. With mspect to the environmental matters described l above, the Companies expect that any resulting additional j capital costs which may be required, as well as any re-. l quired increase in operating costs, would ultimately be recovered from their customers. 1 i J $ f f, f t 32
Report Of Independent Public Accountants Tb the Stockholders and Board of Directors of Ohio Edison Company: We have audited the accompanying consolidated bal. ance sheets and consolidated statements of capitalization of Ohio Edison Company (an Ohio corporation) and subsidi-aries as of Decemler 31,1992 and 1991, and the related consolidated statements ofincome, retained earnings, capital stock and other paid-in capital, cash flows and taxes for each of the three years in the period ended December 31,1992. These fmancial statements am the msponsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assur-ance about whether the fmancial statements am free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclo-sums in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall fmancial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the fmancial position of Ohio Edison Company and subsidiaries as of December 31,1992 and 1991, and the results of their oper-ations and their cash flows for each of the three years in the period ended December 31,1992, in conformity with generally accepted accounting principles. As discussed in Note 6 to the consolidated financial statements, the status of Wrry Unit 2 continues to be under review. Nssible alternatives being considered include indefinite suspension, resumption of work and termination of the Unit. Because the Companies are unable to predict the results of the review, they cannot now predict if con-struction of Wrry Unit 2 will be terminated and, if termi-nated, to what extent the Companies' investments will be recoverable. Lib. ; ARTHUR ANDERSEN & CO. t'ew York, N.Y. February 2,1993 33
i ohw Ednon company Consolidsted FinancialStartistics (IMlars m tavaare, exmpt ger shart amounts) !
- i 1992 1991 1990 1989 19S8 19S7 1982 i
GENERALFINANCIALINFORMATION f Operatmg Revenues 82,332,378 $2.358,946 12.240,646 32,162,720 82,151.385 81,755.296 81,438,997 ; Operating income 8 522,115 8 550,452 8 510,279 8 543,659 8 495,996 8 397.468 5 269.640 , Earnmgs on Common Sud 8 253,060 $ 240.069 8 254,048 5 332,932 8 156,170 3 364,657 8 181,496 I l SEC Ratn of Earnings to fixed Charges 2.01 1.95 1.97 2.03 1.65 2.30 1.90 .
$5,938,410 $5,985.415 56,049,219 $6,0S1,737 36.336.099 54.522.733
) Net l'tihty Plant at Decemter 31 8 252,592 8 258,041 56.048.034
$ 221,583 3 705.242 5 774,233 3 Capita! Expenditures 5 235.622 8 270.993 l Capitahzatun at Iktmter 31: l j Common Stadmiders' Equity 82,408,164 $2,371.946 12.545,159 82,565.90S 12,530,975 32.651,325 11,458,371 y
, Preferred and Preferenx Stot k Not Subject to , Mandatary Redem;>ty n 354,240 354.240 354.240 354,240 354.240 404 340 354.240 j Preferred and Preference Sud Sutyct ta 65,582 62,822 89,563 96.802 145.351 152,560 Mandatory Redemption 59.862 3,121,647 3.243,167 3,105.24B 3,073,796 3.208.553 3.332,858 2.662,091 a long Terrn Debt l 55,943,913 86,067,469 $6.0S3.504 $6,190.570 36.533,774 $4.657,262 TotalCapitaleaton 86.034.935 I Capital:aten Rados at Decemter 31. Common Stockholders' Equity 40.5 % 39 3 % 41.9 % 42.2 % 40 9 % 40.6 % 32 0 % Preferred and Preference Strd Nat , Sutyct to Mandatory Redemption 6.0 5.9 5.9 58 57 6.2 7.6 , l Preferred and Preference Strk l Sutyct to Mandatory Redemption 1.0 1.1 1.0 1.5 16 2.2 33 : Long Term Debt 52.5 53 3 51.2 50.5 51.8 51.0 57.1 l TotalCapitali:auun 100.0 % 100 0 % 100 0 % 100.0 % 100.0% 103 0% 100 0 % Cost of Preferred and Preferena Sta k 9 35 % , Outstandmg at Decemter 31 7.32 % 7.60 % 8.59% SJ2% Bilt 9 17 % Cust oflong Term Debt Outr.andmg . at Iwtmter 31 8.53 % B35% 9.26 % 9 67 % 10.26 % 10 22 % 10 66% ! COMMON stock DATA ! Earmngs per Share 81.70 81.60 11.67 12.1S 8132 12.40 12 13 i Return on Average Common Equity 10.8% 9.9% 99% 13 0% 7.0% 13 S % 13 5% Divdends Paid per Share $1.50 11.50 $133 81 96 11 96 $1.96 8116 Common Sicd Dividend Payout Ratn 86 % 94 % 104 % 90% 161% 82% . 83% i l Common Sud Dividend Feld at Denmter 31 6.5 % 7.3% 8.8 % 8.3% 10 4% 91% 12 6 % Priw Earning Rauoat Deamter 31 13.6 12.8 10.3 10.9 15.5 84 66 Shares of Common Stook Outstandmg at Decemter 31(701 152.569 152.569 152.569 152,569 152.50S 152.39B 96.082 f y Ed Value per Common Share at Decem!er 31 81538 115 55 316 68 816.82 $1660 $17.40 115 49 i , Market Pnce per Common Share ' at Decemter 31 823,125 120.50 317.125 $2335 818.875 120.125 314.03 i Ratie of Market Pnce to kok Va!ue per Shee a Decemter 31 147 % 132 % 103% 141 % 114 % 116% 90 % v i i l i i I t l i i 1 34 ;
Consolidated Operrelag Statistics oruo won compay. 1992 1991 19M 19S9 1958 1987 1982 RDUCE FROM EIICTRIC SAIIs(Thousands): Residental 8 820,687 3 S39,3S7 4 766.226 8 749.345 8 728,410 8 622.34S I 497.941 Commercial 616,261 62",418 $$6.947 558,524 533,825 454J06 Industral 3f.S.325 606,809 601J60 f,80,624 554.037 537,165 4 2 ,564 362,535 Other 14,037 15.392 16.491 17243 17.269 17.293 12.839 TotalRetail 2,057.794 2.086.957 1.9f22SS 1,616.669 1.879.149 1.54E911 1 250.640 Utihues 226,960 222,0 % 242J92 235 536 262.SE5 162,3'3 111,059 Mumcipahties 12,703 15.694 14 S42 16J20 45J4 51.lSI 54.9S9 Total Wholesale 239,663 237J00 252,626 257.634 308.861 213.554 166.048 To:al 82.297.457 82.324.657 82.209.922 32.131 175 12.125.fJJ $1J6(L465 11.416 /4 9 RDUCE FROM ELECTRICSAILS: Residenual 35.7 % 36.1 % 34 St 35.1 % 34 3 % 35 4 % 35.1 % Commercal 26.8 27.0 26.5 26 2 25.1 25 8 25.2 Industral 26.4 26 0 26 3 26 0 25 3 25 1 27 1 Other 0.6 07 01 OS Total Retai! 89.5 0.8 J 09 89 5 88.3 811 S5.5 S7.9 85.3 Utihties 9.9 96 11.0 11.1 12.3 92 7.8 Municipaliues 0.6 06 01 0.5 2.2 2.9 39 Total Wholesale 10.5 10 2 11J 11.9 14.5 12 1 11 i To:al 100.0 % 100 0% 1000% 10001 100 0% 10(104 100 0% K!!DWATT HOl'R SAIIS(Milbons): Resdendal 7,665 7,f27 7 538 ".619 7.626 7299 6,733 Commercia! 6,479 6,60S 6.3~0 6334 6V30 5J82 4.996 Industrm! 9,750 9.59S 9,872 9 "95 9,S 2 9.06" 7J05 Other 145 143 144 139 143 147 16S Tota! Retail 24 059 24.257 23.913 23J87 23J03 22295 19.605 Utihties " 12v 7.203 7.956 8.2"6 11,43S 6,fa9 Manicipahties 3.680 7 253 224 218 1.016 1.163 1.059 TotalWholesale 8.126 7.456 8.210 8.494 12.454 7.692 4J39 Total 32.185 31J13 32.123 32.251 36.157 29.9S7 21.344 CUSTOMEPS SERVED AT DECEMBER 31: Resdendal 944.927 935.547 928.026 919,935 911.158 932 166 Commere:a! S73.677 105J92 104.462 103.297 102.055 100,80S 9' 22 industnal 3,467 89J06 3,361 3,032 2,836 Other 2.624 2.452 1,045 1,151 1.094 l ysl 883 918 861 724 Total 1,055,337 1.044.464 1.035.416 1.025J09 1.015.50S 1.035.121 955.355 Average AnnualResdentialkWh Usage 8,182 8,498 6,159 8,336 B.425 6,140 7,723 Average Retail Pri& per kWH 8.63t 8 75: 8 l!' 7J98 7.54' 6 944 6.3ht Cost of Fuelper Milhon Btu 81.26 31.27 $1.27 31 26 31.30 Generating Capabihty at December 31: 11 32 31 67 Cod 77.7 % MIL U 9% U.9% 77.9% U 9% 8621 Oil 2.7 27 21 23 Zi 2" 63 Nuclear 19.6 19.6 19 4 19 4 194 19 4 7.5 Total 100.0 % 100 0% 100 0% 100.0% 1(00% i 1(0 Ot MeOi SOURCES 0F EIICTPJC GENERATION: Coal 75,0 % 75 4 % U.3% 8211 77.0 % 8744 93B1t 02 - - - - - Nuclear 0.1 25.0 24 6 22 1 17.9 23 0 12.6 6.1 Total 100.0% 1000% 100 0% IM 0% 100 0't 1000t 100 0% Peak load Megawatts 5,247 5,513 5.394 5,152 5.027 4.5"9 Number ofEmployees at December 31 6,263 4.0f3 6.481 6392 6.905 7.180 7.266 7.8h5 l 35
InvestorServkes nons erAgentand Registrer brStock - For assistann or infonnation, stockholders and first and Mrst Mortpope Bonds mortgage bondholders can write to investor Servias. Ohio Edison Company Ohio Edison Company,76 South Main Stnet. Akron, Transfer Agent and Registrar Ohio 4430S 1890, or call one of the follow mg toll Int 76 South Mam Street telephone numters. Akron, Ohio 4430S-1890 lb change an address or tax identification or i transfer stock or re; ort a lost certincate: Audb Moo W @ m ! l-800 736-3402 Imtstors with impaired vision can obtain free audiocas-For dividend reinvestment plan assistanx, dividend!
# #8 *E "b "" # "" * "#8 interest check ingmries and other information: ,
1-803736 3403 Mult@fe AmmeolReports The toll free numbers are valid in the United States, You may be rutiving more than one mpy of the armual Canada, Puerto Rico and the Virgm Islands. Business report if you have more than one stock account. If you a hours are 8 a.m. to 4:30 nm., Eastern time, Monday want to mamtain separate stock accounts but eliminate j thmugh Friday. Investors who have personal mmputers multiple copies, please write to investor Serviws and and modems can call our Bulletin Board service weekdays request that we stop mailing an annual report to a particu- i between 5 p m. and 7:30 a m., and on weekends at lar acteunt. Be sure to provide the extif registration of 216-3S4-7937.This service features daily stock prices the stack account for which you want ine annual regort and financialdata. mailing stopped. Dividends and proxy material will con-tmue to le sent for each amount. If you want to combine Dhidend Nedevestment and Stock your accounts, please write or call Imtstor Sen ices for Purthose Pfos instructions. The Company's Dividend Reinvestment and S:ack Pur. chase Plan pmvides an opportunity for registered stock-Instkutionalkwestor/SecW holders to acquire shares of Ohio Ediscm Common Stock Ano%stingelrks Partici;> ants may imest all or some of their dividends or institutional im estors and security analysts should direct make optional cash payments of up to $40h00 annually. inquiries to. At the end of 1992, about 60,000 stockholders were Richard H. Marsh Theodore E Struck Il participating in the plan. Treasurer Assistant Treasurer 216-384-531S 216 384-5202 For federal inmme tax purposes, all dwidends paid by Monopement/Soord Changes the Company in 1992 are taxable. Pmposed dates for Presidern Willard R. Holland was ek cted Chief Executive the payment of common stock dividends in 1993 are Offimr, effective March 1,1993. Mr. Holland sumeeds as follows: former Chairman Justin T. Rogers, Jr., who retired after Ex Divi *nd Date Red Date P:wment Date more than 34 years of distinguished service. Mr. Rogers' March 1 March 5 March 31 many achievements Mclude strengthening the Company's June 1 June 7 June 30 fmancialIosition,enhancmgcustomersen-iceand Septender 1 September 8 September 30 impmving relations with state and federal regulators. He Denmber 1 December 7 Dntmter 31 helped establish Ohio Edison as a leader in environmental protection and oversaw the mmpletion of the Company's Stock Listfey and Dodist construction pmgram for base k>ad generaticm. Ohio Edison Common Stock is listed on the New York and Douglas W. Tschappat, farrner vice chairman of the Midwest stock exchanges under the "OEC ' tradmg sym' Ibard, retired fmm the Peard in June 1992 after more bol. Newspapers usually use "OhioEd
- in their hstir# than 41 years of outstanding service with the Company.
Mr Tschappat oversaw the construction of the Bruce Form 10-K AasselReport Man e argest mal Emd Nant on our syskm, ans Form 10 K, the Annual Report to the Securities and an me n ma mm mnte Exchange Commission, will be sent without charge * "*"" *"' * * ""* upon wntten request to Gregory E LaFlame, Secretary OhioEdisonCompany,76 South MainStreet Abun, ' a y u an an nm wr M 8 "" F"* Ohio 44308-1890. AnnualMeeting ofStockholders We invite stockholders to attend the 1993 Armual Meeting of Stockholders on Thursday, April 29, at 10 a.m., in the Company's General Office in Akron, Ohio. Registered holders of common stock not attendmg can vote on the items of business by filling out and returning the proxy card that is mailed about 30 days before the rnecting. Stockholders whose shares are held in the name of a broker can attend the meetmg if a letter from the broker is presented indicating ownershi;) of Ohio Edison Com-mon Stock on March 5,1993. 36
Board of Diretters OmcerO i Donald C.Blasins,63 GkanH. Meadows 63 Willard R, Holland .l hident of V'hite Consolidated Retired, formerly President and President and ! Industries,Inc., Cleveland, Ohio Chief Executive Omcerof McNeil Chief Executive Omcer i (home and commercial appli. Corporation, Abun, Ohio Anthony J. Alexander ; anws, outdoor and industriat (manufactured pro 6a ts). Senior Vice President and i pmducts). Chairman, Nomin/ ng Chairman, Audit Committee; General Counsel ( Committee; Member, Finance Member, Compensation Commit- H. Peter Burg Committee. Dected 1991 tee. Dected 1981 Senior Vice President and H. Peter Burg,46 Paul J. Powers,58 ChiefFinancialOmcer , Senior Vi& President and Chairman of the Board and Robert J.McWhorter l Chief FinancialOmcer of Chief Executive Omcer ofCom. Senior Viw President 1 Ohio Edison. Member, Fi..ance mercialIntertech Corporation, Arthur R. Garfield Committee. Dected 1989 Youngstown, Onio(engineered Vice President + metal components)- John A. Gill Robert H.Carlson,66 Deeted 1992 ViceIYesident j Retired, formerly President and Chief Executive Omcerof Charles W.Rainger,59 Anthony N.Gorant Universal Rundle Corporation, President of Sandusky Interna. Vim President l Neu Castle, Pennsylvania tionalInc., Sandusky, Ohio Barry M. Miller ; (plumbing fixtures). Member, (wntrifugal castings). Member, Vice President . l Audit Committee. Dected 1987 Nominatirq Committee. Dav d L.Yeager ! s nt j Dan R.Carmichael,48 ! President and Chief Executive George M. Smart,47 Daniel P.Zeno , President and Chief Executive Vice Pmsident ; Omcerof Associate P&C Hold. ings, Inc.. Indianapolis, Indiana, O!Nr of Central States Can Co., Gregory F. LaFlame , the holding company ofThe Massillon, Ohio (rigid entainers). Secretary ! Shelby Insura.nw Company, Member. Finance Committee- Richard H. Marsh ; Shelby, Ohio (diversified insur. Elected 1988 Treasumr , ance). Member, Compensation Harvey L. Wagner i Frank C. Watson,68 - ' Committee. Dected 1990 Comptroller Retied, formerly President l Dr. Crol A.Cartwright,51 of The YoungstownWelding Nancy C. Brink [ l Presioud. Kent State University, and Engineering Company, Assistant Secretary l Kent, Ohio. Member, Nominating Youngstown, Ohio (nonferrous Theodore F. Struck H l Committee. Dected 1991 alloys). Member, Audit and AssistZTreasurer Dillard R. Holland,56 Howard J.Tubn Elected 19H Ass 5 tant Comptroller . President and Chief Executive l l Omcerof Ohio Edison and Chair. Jesse T. Williams, Sr.,53 l i man of the Board and Chief VicePresident,Cor pensation pygg y,97, Executive Omcer ofits subsidiary, and Employment Practices of Pennsylvania Power. Member, The Goodyear Tire & Rubler Mark T. Clark ) , Finance and Nominating commit. Company, Akron, Ohio (tires and Akron }. tees. Deeted 1991 rubber-nlated products). Member. Gary M.Stalr - Compensation Comr.2ttee. Bay Robert Llaughhead,63 Elec'.ed 1992 -l Retired, formerly Chairman of Charles E. Jones the Board, President and Chiet Lake Erie : l Executive Omccrof Weirton Steel Fred M.Isntz ! Corporation, Weirton, West Mansfield l Virginia (steel products). Chair- Fred K. White ! l man, Compensation Committee; Marion i l Member, Audit Committee. Thomas A. Clark l Dected 1980 Springfield R. Joseph Hrach l ' l Stark 5'dward T.Beil Warren EarlT.Carey '1 Youngstown I . n-37 .
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