ML20050B214
| ML20050B214 | |
| Person / Time | |
|---|---|
| Site: | Yankee Rowe |
| Issue date: | 03/30/1982 |
| From: | YANKEE ATOMIC ELECTRIC CO. |
| To: | |
| Shared Package | |
| ML20050B212 | List: |
| References | |
| NUDOCS 8204050106 | |
| Download: ML20050B214 (14) | |
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Yankee Atomic Electric Company Annual Report 1981 I
h 988188 ara 88888, I
YANKEE ATOMIC ELECTRIC COMPANY 1671 WORCESTER ROAD FRAMIN'lHAM, MASSACHUSETTS 01701 Yankee Atomic Electric Company, an electric utility company, was incorporated in Afassachusetts in 1954 under the provisions of the Afassachusetts utility law which permits two or more electric companies to join in the construction and operation of a generating plant to serve their common needs.
The organization of the Company was sponsored by cleven New England utilities for the purpose of constructing and operating New England's first nuclear power plant. In addition to its license to generate, buy, transmit and sell electricity, the Company is authorized to conduct research and assist others engaged in a similar business. The eleven sponsoring utilities own the entire common capital sto(k of the Company and are entitled to and obligated to purchase the output of the plant at a cost equal to total operating expenses plus a return on investment.
The Rowe plant is located on the Deerfield River in the Berkshire hills in the Village of Rowe,
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51assachusetts. The plant was placed in commercial operation in 1%I and has been in full operation 1
since that time except for maintenance and refueling shutdowns. The unit is rated at 185 megawatts (gross), and has generated over 22 billion Kwh of electricity since inception. Currently, the unit is operating at a level of 160 megawatts (gross).
In 1%8, the Securities and Exchange Commission authorized the Company to organize a Nuclear Services Division under the Company's corporate structure. The Nuclear Services Division has a staff of approximately 300 engineers who provide engineering services in all aspects of nuclear power plant construction and operation including Nuclear Engineering, Environmental Engineering, Op rations.
Quality Assurance and Construction hianagement. Services are performed on a cost basis for the Rowe plant and other power plants of the sponsoring companies.
Common Stock Ownership Ownership Shares Percentage Owned New England Power Company..
30.0%
46,020 The Connecticut Light and Power Company.
15.0 23,010 Boston Edison Company..
9.5 14,573 Central hiaine Power Company 9.5 14,573 The liartford Electric Light Company..
9.5 14,573 Public Service Company of New llampshire.
7.0 10,738 Western hlassachusetts Electric Company =
7.0 10,738 hlontaup Electric Company..
4.5 6,903 Central Vermont Public Service Corporation..
3.5 5,369 Commonwealth Electric Company..
2.5 3,835 Cambridge Electric Light Company.
2.0 3,068 f
100.0 %
153,400
{ This report is not to be considered an offer to sell or buy ]
K or solicitation of an offer to sell or buy any security.,ll 2
YANKEE ATOMIC ELECTRIC COMPANY OFFICERS guy W. Nicitors, Chairman JA%1Es E. TRinBLE, President and Chief Exautive Ofcer DONAr.D E. VANotNacRoir, Senior l' ice President ARSIAND R. SoCCY, Treasurer I,ocis II. litinER, l' ice President FREDERic E. GREEN % TAN, ClerE WENDELl, l'.JoilNSON, l' ice President
]A%tEs C. Ntsairr, Assistant Treasurer DoNALp E. Rose, l'iu Pusident KIRK E. RA%15AUER, Assistant Cluh HOARD OF DIRECTORS EowAun A. IluowN, President, New England guy W. Nacilots, Chairman of the Company; i
Power Surice Company, ll'estborough, Chairman, President and Chief Exuutive Afassachusetts Oficer, New England Electric System, li'estborough, Afassachusetts
%, LE.IA%1 V. ISURT, Assistant to Press. dent, C,om.
monwealth Energy Servius Company, Cam.
Witurst C. TAl.L% TAN, Chairman and Chief Exa.
bridge, Afassachusetts utive Officer, Public Service Company of New Hampshire, Afanchester, New Ilamp.
JoisN F.G.1..icitonN, JR., Press. dent and Chief Exuutise Offiar, Eastern Utilities Associ.
ates, Boston, Afassachusetts ELwiN W. TiivRLow, Pusident and Chief Exau.
I WAL*\\ ER Y. Vt E, Exuulive l' ice President, Engi-Augusta, Alasne i
nursng and Operations, Northeast Utils..tues Sersice Company, Hartford, Connaticut JA%1rs E. TRIBBLE, President and Chief Executive Cfur of the Company i
l E. JAstrs VVus.ANu, E.,xecutive I,u.ce President and l
Chief Financial Officer. Northeast Utilities JosEPit P. TYRRELL, Senior l' ice President, l
Servia Company, Hartford. Connaticut Boston Edison
- Company, Boston, jams E. GRivviN, President and Chief Executise
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Officer, Central l'ermont Public Service Cor-paration, Rutland, l'umont r
l COOPERS & LYIIRAND REPORT or INDEPENDENT CFRTIFIED PcnLic AccocNTAN13 YANKEE ATostic ELECTRIC Co%1PANY FR OllNGIIA%1, hl ASSACllUSETTs l
We have examined the balance sheets of Yankee Atomic Electric Company as of December 31,1981 and 1980 and the related statements of income and retained earnings and changes in financial position for each of l
the three years in the period ended December 31, 1981. Our examinations were made in accordance with I
generally accepted auditing standards and, accordingly, included such tests of the accounting records and such
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other auditing procedures as we considered necessary in the circumstances.
In our opinion, the financial statements referred to above present fairly the financial position of Yankee l
Atomic Electric Company as of December 31,1981 and 1980 and the results of its operations and the changes in its financial position for each of the three years in the period ended December 31,1981, in conformity with generally accepted accounting principles applied on a consistent basis.
lloston, Alassachusetts COOPERS & I,YBRAND l
February 16,1982 3
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YANKEE ATOMIC ELECTRIC COMPANY Selected Financial Data (in thousands except per share data)
Year Ended December 31,
_198_1 1980 1979 1978 1977 Operating revenue Electric sales
$46,725
$34,813
$26,468
$21,293
$20.011 Engineering services to others -
18,897 17,883 12.094 8,920 7,198 Total operating revenues..
$65,622
$52,696
$38,562
$30,213
$27,209 Operating income.
$ 5,610
$ 4,181
$ 3,562
$ 4,209
$ 2,983 Net income.-
$ 3,090
$ 1,672
$ 1,912
$ 2,628
$ 2,247 Common dividends....
$ 2,454
$ 1,879
$ 2,148
$ 2,454
$ 2,186 i
Total assets.
$53,030
$51,000
$57,879
$49,551
$42,834
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leng term debt..
$11,100
$10,000
$10,000
$10,000 Short term debt.
. $ 8,900
$11,500
$14,500
$11,400
$15,800 Earnings per share.
$ 20.14
$ 10.90
$ 12.46
$ 17.13
$ 14.65 Net generation (millions of Kwh).
885 292 1,232 1,193 1,022 Financial Review The Company has power contracts with its stockholders throughJune 1991 which provide that these utilitics must purchase all of the electrical output of the plant at a cost equal to total operating expenses plus a return on investment whether or not the plant operates. The Company also operates a Nuclear Services Division which furnishes engineering services to the Rowc plant and other power projects on a cost basis for such services.
Increaws in revenues are related to the pass-through of increawd operating and engineering expenses under the j
provisions of the power contracts and engineering service contracts.
l During the year 1981, the Rowe plant operated routinely. A scheduled refueling was successfully completed on July 30. Fuel expense in 1981 increased to $6,172,000 from the abnormally low level of $2,563.000 in 1980.
The reduced level of fuel exptnse in 1980 was a result of decreased fuel consumption becauw of the plant shutdown which occurred from February 1980 through October 1980 for repairs to the turbine low pressure rotor.
Operations expense in 1981 increased due to the refueling. In 1980, operations and engineering expenws for payroll and contracted technical services increawd because of additional regulatory requirements. Alaintenance expenses increased to $8,590,000 in 1980 because of repairs to the turbine low pressure rotor. Federal income taxes increasc3 to $4,874,000 in 1981 from $1,083,000 and $1,485,000 in the years 1980 and 1979 becauw of mercawd I
taxable income, duc in part to the inclusion of decommissioning accruals as income for tax purposes. The inclusion of decommissioning accruals as taxable income is presently under review by the Internal Revenue Service as a result of a tax ruling request submitted by the Company. For additional information with regard to income taxes
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see Note G.
Net income increawd to $3,090,000 in the year 1981 from the deprered levels of $1.672,000 and $1,911,000 in the years 1980 and 1979, respectively. The improvement in net incorac is a result of the revised rate structure allowed by the Federal Energy Regulatory Commission which became eficctive on Alarch I,1981. For additional information see Notes A and F.
During the year 1981 the Company expanded its available bank credit to $30 million. The terms of the credit c
agreements provide that a maximum amount of $15 million may, at the option of the Company, be converted to a term loan on June 30,1984.
The Company's Rowe plant is licensed and regulaicd by the Nuclear Regulatory Commission, an agency of the United States Government. Therefore, operation of the plant is, to a substantial degrec, subject to regulatory control.
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YANKEE ATOMIC ELECTRIC COMPANY Statements ofincome end Retained Earnings Year Ended December 31, 1981 1980 1979 Operating revenues (Notes A and F):
Electric sales
$46,724,472
$34,813,205
$26,467,525 Engineering services to others =
18.897,489 17,882.665 12,094,327 Total operating revenues..
65,621,961 52,695,870 38,561,852 I
Operating expenses (Note A):
Fuel (Note B).
6,172,270 2,563,510 7,213,665 Operations..
10,859,557 6,924,654 4,598,571 Engineering..
27,161,899 25,499,539 15,953,822 Maintenance..
3,53R701 8,590,235 2,318,404 Decommissioning (Note G).
2,419,350 Depreciation..
2,886,955 2,551,565 2,221,871 Taxes, other than federal income..
2,107,747 1,302,386 1,207,929 i
Federal income taxes (Note G).
4,873,775 1,082,591 1,485,424 Total operating expenses..
60,012,254 48,514,480 34,999,686 Operating income..
5,609,707 4,181,390 3,562,166 Other income-net..
93,503 (26,591)
I,554 Operating and other income..
5,703,210 4,154,799 3,563,720 Interest:
Interest on short. term debt (Note C) 1,913,414 1,778,550 1,075,025 Interest on long-term debt (Note D).
975,040 889,581 887,153 Other interest.
1,072 1,081 1,100 Allowance for borrowed funds used during construction.
credit (Note A).
(276,420)
(185,999)
(311,013)
Total interest..
2,613.1 %
2,483,213 1,652,265 Net income..
$ 3,090,104
$ 1,671,586
$ 1,911,455 t
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Retained earnings:
Retained earnings at beginning of year..
$ 4,929,212
$ 5,136,776
$ 5,372,921 Net income..
3,090,104 1,671,586 1,911,455 8,019,316 6,808,362 7,284,376 Dividends declared..
2,454,400 1,879,150 2,147,600 Retained earnings at end of year.
$ 5,564,916
$ 4,929,212
$ 5,136,776 Per share data:
Earnings per share...
$20.14
$10.90
$12A6 Dividends per share..
$16.00
$12.25
$14.00 The accompanying notes are an integral part of these financial statements.
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YANKEE ATOA11C ELECTRIC COh!PANY Balance Sheets December 31, ASSETS 1981 1980 Electric plant, at original cost (Note A)
$57,852,972
$56,860,602 4
I,ess accumulated provisions for depreciatiorr; 43,556,729 36,814,620 14,296,243 20,045,982 Construction work in progress (Note llL 5,391,332 622,390 Nuclear fuel,at amortized cost (Notes A and B)..
20,989,306 19,489,378 Net utility plant 40,676,881 40,157,750 Nonutility property, less accumulated provisions for depreciation of $208,818 and $159,875 (Note A).
770,059 819,002 Current assets:
Cash, including temporary cash investments of $1,000,000 in 1981.
1,130,475 397,056 Accounts receivable:
From sales of electric energy.
4,837,838 4,015,989 From engineering services to ethers (Note A)..
4,003,261 3,704,525 0ther..
49,8t'0 60,050 Materials and supplies, at average cost..
956,890 1,566,776 l' repayments -
604,746 279,356 Total current assets.
11,583,090 10,023,752
$53,030,030
$51,000,504 cal'ITALIZATION AND 1, LABILITIES Capitalization:
Common stock, par value $100 per share:
153,400 shares authorized and outstanding..
$15,340,000
$15,340,000 Retained earnings (Note E)..
5,564,916 4,929,212 1,ong-term debt (Note D)..
I1.100.000 10,000,000 Total capitalization.
32,004,916 30,269,212 Current liabilities:
Long-term debt due within one year (Note D).
900,000 Short term debt (Note C)....
8.000,000 11,500,000 Accounts payable..
4,980,660 3,606.352 Accrvd federal income taxes (Note G).
1,656,131 431,831 Accrued interest.
463,592 455,285 Total current liabilities..
16,000,383 15,993,468 Deferred federal income taxes (Note G).
3,682,905 3,605,905 Unamortized investment tax credits (Note G).
1,341,826 1,131,919 Commitments and contingencies (Note 11).
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$53,030.030
$51,000,504 i
The accompanying notes are an integral part of these financial statements.
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l YANKEE A TOMIC ELECTRIC COMPANY Statemen.s of Chayes in Financial Position Year Eded December 31, 1981 1980 1979 Source of funds:
From operations:
$ 3,090,104
$ 1,671,586
$ 1,911,455 Net income..
Depreciation -
2,886,955 2.551,565 2,221,871 i
Amortization of nuclear fuel.
6,172,270 2,561,310 7,213,665 Deferred federalincome taxes..
77,000 (368,983)
(233,395)
Investment tax credits-net..
209,907 151,1 %
68.142 4
Allowance for horrowed funds used during construction--credit -
(276,420)
(185,'m )
(311,013)
Net funds from operations 12,159,816 6,381785 10,870,725 From financing transactions:
Changes in short-term debt..
(3,500,000)
(3,000,000) 3,100,000 Long term debt issues..
2,000,000 Net funds from financing transactions..
(1,500,000)
(3,000,000) 3,100,000 From other sources:
Insurance proceeds..
4,703,749 Other..
48,943 27,943 49,150 Other sources..
4,752,692 27,943 49,150 Source of funds..,
$15,412,508
$ 3,410,728
$14,019,875 Application of funds:
Construction expenditures, excluding allowance for borrowed funds used during construction..
$ 6,333,487
$ 223,934
$ 3,494,756 Nuclear fuel purchased.
7,672,198 1,034,493 8,151,483 Dividends on common stock -
2,454,400 1,879,150 2,147,600 Net increase (decrease) in working capital excluding short term debt..
(1,047,577) 273,151 226,036 Application of funds..
$15,412,508
$ 3,410,728
$14,019,875 I
increase (decrease) in working capital:
Cash and temporary cash investments.
$ 733,419
$(5,099,229)
$ 4,682,478 i
Accounis receivable..
1,i10,415 1,678,261 1,080,926 Materials and supplies..
(609,886) 329,522 178,521 Prepayments..
325,390 (66,992)
(87,667)
Accounts payable..
(1,374,308) 3,185,574 (5,252,711)
Accrued federal income taxes..
(1,224,300) 258,938 (391,656)
Accrued interest..
(8,307)
(12,923) 16,145
$( 1,047,577)
$ 273,151
$ 226,036 3
5 The accompanying notes are an integral part of these financial statements.
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I YANKEE ATOMIC ELECTRIC COMPANY Notes to Financial Statements NOTE A--Summary of Accounting Policies:
1.
System of Accounts:
The accounts of the Company are maintained in accordance with the Uniform System of Accounts prescribed by regulatory bodies having jurisdiction.
2.
Nuclear Services Division:
The Company, an electric utility subsidiary of two registered 191 ding companics, operates a Nuclear Services Division under the applicable rules and regue. cions of the Public Utility Holding Company Act of 1935 for the purpose of furnishing nucle.,r engineering services, at th cost of such services to the Company and its sp<msoring utilities. The cost of such services provided to the Rowe plant, which amounted to $9,534,308 in 1981, $8,593,931 in 1980, and $4,536,885 in 1979, are included as erigineering costs in the accompanying statements of income and retained earnings. Non-utility property consists of facilities used in rendering a portion of the above services.
i 3.
Plant:
The Company capitalized as a part of construction costs, a non-cash item called allowance for borrowed funds used during construction at 18.3% in 1981,14.3% in 1980, and 12.2% in 1979 which approximated the pre-tax cost of short term debt.
Costs of current repairs and minor replacements of plant and properties, which do not extend the current life of the plant, are charged to maintenance expense accounts as in urred. Plant retired or otherwise disposed of, together with costs of removal less salvage, is charged to accumulated provisions for depreciation.
4.
Depreciation:
Depreciation of physical property is provided annually on a remaining life basis. The estimated weighted average life at December 31,1981 is approximately eight years.
5.
Decommissioning:
The Company estimates the cost of decommissioning the Rowe plant, utilizing the immediate dismantlement and removal method, at approximately $30,000,000, stated in 1980 dollars. As provided by its most recent rate order, the Company is authorized by the Federal Energy Regulatory Commission to bill and accumulate decommissioning revenues equal to
$30,000,000 during the term of the power contract, which extends to June 30,1991. Such funds are deposited in an irrevocable trust, maintained by a commercial bank, to be used exclusively to discharge decommissioning expenses as incurred. At December 31,1981, funds accumulated in the Decommissioning Trust amounted to $2,162,802, which are invested in Federally guarantee 1 securities.
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t YANKEE ATOMIC ELECTRIC COMPANY Notes to Financial Statements NoTr. A-Summary of Accounting Policies (Continued):
6.
Nuclear Fuel:
The Company expenses nuclear furt as follows (see also Note B):
I The cost of nuclear fuel is amortized to zero value on a unit of production method at rates I
based on estimated kilowatt hours to be produced. Amortization of the current core also includes a provision for the permanent storage of spent fuel.
The salvage value for cores burned prior to 1976 has been ratably amortized and fully charged to fuel expense through 1980.
7.
Pension Plans:
The funded plans are noncontributory and provide retirement benefits for substantially all employees. Current service costs are funded annually; prior service costs, commencing in 1977, are being funded over a 15 year period. Total pension expense, including amortization of prior service costs charged principally to operating expenses of both the Rowe plant and t
the Nuclear Service Div;sion, was $597,000 in 1981, $626,000 in 1980 and $666,000 in 1979.
The reduction in pension costs in 1980 was du to changes in the actuarial assumptions. These changes included an increase in the assumed return on investments from 5.5% to 8.5%
resulting from a restructuring of pension fund assets. Salary and Social Security escalation assumptions were also increased. The reduction in pension costs in 1981 was due to actuarial gains, principally on investments, which are being amortized over a ten-year period.
The Company participates in the plans with subsidiaries of New England Electric System. As a result, a comparison of the market value of pension fund assets with the actuarial present value of accumulated benefits cannot be separately presented for the Company, t
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YANKEE ATOhllC ELECTRIC COAIPANY Notes to Financial Statements Non. Il-Nuclear Fuct:
Nuclear fuel at December 31 consists of the following iems:
1981
_1980 in process..
$ 9,647,011
$14.263,954 s
Assemblics in reactor.
21.966.921 17,151,717 Gross nuclear fuel..
31,613,932 31,415,671 c
I,ess accumulated amortization of nuclear furl:
Assemblics in reattor..
8,736,789 10,946,199 l'rovision for permanent storage.
1,887,837 980,094 Net nuclear fuel.
$20,989,306
$19,489,378 The following table details the components of fuel expense:
1981 1980 1979 Current Core:
Amortization of cost..
$ 5,3>4,527
$1,379,250
$5,821,210 l'rovision for permanent storage..
907,743 183,939 776,324 6,172,270 1,563,189 6,597,534 l'rior Cores:
Amortization of salvage value..
1,000,321 616,131 Fuel expense.
$6,172,270
$2,563,510
$7J13J,65 Nor r C-Short-Term Ilorrowing Arrangements:
At December 31,1981, the Company had available lines of credit with banks totaling $15,000,000, the terms of which provide for horrowing at either the banks' prime rate or the I,ondon Interhank Offered Nate plus a fractic'. thereof at the time of the advance. In lieu of compensating halance requirements, the Company is obligated to pay a monthly commitment fee. Information as to short-term borrowings is summarized below:
1981 1980 1979 Commercial paper outstanding at end of year..
$ 8,000,(NX)
$11,500/HX)
$14,500,0(X)
Weighted average interest rate of borrowings at end of year.
13.2'I 19.5%
13.9 %
.\\lasimum amount of.~. rowings at any month end..
$14,600JEJ
$ 13,900.(XN)
$14,500,(HN)
Wrighted monthly av-rage horrowings out-standing during year.
$10,481JHX)
$12.208,(XH)
$ 9,199JXX)
Wrigh*., I monthly average interest rate during
> ca r..
18.71 14.6 %
11.5%
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YANKEE ATOMIC ELECTRIC COMPANY Notes to Financial Statements NOTE D-Long-Term Debt:
The Company has an unsecured long term note for $10,000,000 with an 8%% interest rate maturing on January 2,1988. Beginning on July 1,1982 and continuing semi-annually
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thereafter, the Company will prepay $900,000 principal amount for 10 consecutive in-stallments and $500,000 principal amount for the last 2 inpallments of the note.
j The Company also has a revolving credit and term loan agreement with banks which provide the I
Company with available credit up to $10,000,000 prior to 1982 and $15,000,000 thereafter.
The revolving credit period runs from January 30,1980 through June 30,1984. When the revolving credit period terminates, any amounts outstanding may, at the option of the Company, be converted into a term loan repayable at the rate of 15% for each of the first four years, and 20% for each of the following two years with final payment required on June 30, 1990. The terms of the Agreement provide for borrowing at either the banks' prime rate or the London Interbank Offered Rate plus a fraction thereof at the time of the advance. In lieu of compensating balance requirements, the Company is obligated to pay a monthly commitment fee. During 1981, the weighted average interest rate on borrowings under the Agreement was 15.2%. At December 31,1981, the interest rate was 14.5%.
I A summary of long term debt, at December 31, is as follows:
i 1981 1980 84% installment Note..
$10,000,000
$10,000,000 Revolving credit and term loan.
2,000,000 Total long term dcbt.
12,000,000 10,000,000 Less: long-term debt due within one year..
900,000 Long term debt-net.
$11,100,000
$10,000,000 l
l Norr F-Restrictions on Retained Earnings Available for Dividends on Common Stock:
i l'ursuant to restrictions contained in the Revolving Credit and Terra Loan Agreement, $4,660,000 of the l
Company's retained earnings at December 31,1981 were restricted as to dividends on common i
stoc k.
NOTE F-Rate Proceedings:
l On July 31, 1980, the Company filed a revised rate schedule with the Federal Energy Regulatory Commission. The revised rates became effective on March 1,1981, subject to refund. On May 28,
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1981 the Federal Energy Regulatory Commission approved a settlement Agreement which resolved l
all issues in the rate proceedings except the rate of acturn on equity. On February 11,1982, the l'ederal Energy Regulatory Commission approved the rate of return on equity thereby resolving all issues in the revised rate structure. Under the new rates, the Company is authorized to establish a decommissioning fund (see Note A), to recover plant investment over the estimated remaining useful life of the plant, and to carn a higher rate of return on equity.
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1 YANKEE ATOMIC ELECTRIC COMPANY Notes to Financial Statements i
NOTE G-Federal Income Taxes:
Federal income taxes consist of the following compontats:
1981 1980 1979 Current federal income taxes =
$4,585,831
$1,299,675
$1,652,000 Deferred federal income taxes.-
77,000 (368,983)
(233,395) investment tax credits-net 209,907 151,106 68,142
$4,872,738
$1,081,798
$1,486,747 1
i Total federal income taxes differ from the amounts computed by applying the statutory tax rate to income before taxes. The reason for the differences are as follows:
1981 1980 1979 Computed tax at statutory rate..
, $3,662,907
$1,266,557
$1,563,173 increase (reductions) in tax resulting from:
Provision for decommissioning..,
1.112,901 Provision for permanent storage..
417,562 84,612 357,109 Amortization of investment tax I
credits..
(288,093)
(145,823)
(263,483)
Allowance for horrowed funds used during construction..
10,092 (85,559)
(143,066)
Other..
(42,631)
(37,989)
(26,986)
Federal income tax provisions (including $(1,037), $(793) and
$1.323 charged or credited to other income).
$4,872,738
$1,081,798
$1,486,747 Eficctive federal income tax rate.
61.2'"e 39.3%
43.8%
In connection with the provision for decommissioning discussed in Notes A and F, the Federal Energy Regulatory Commission has required that, pending final resolution of the Company's revenue ruling request before the Internal Revenue Service relative to the taxability of the provision for decommissioning, the Company provide for taxes associated with decommission-ing revenues. In the event the Company receives a favorable tax ruling, such monics will be refunded to customers.
The Company has adopted comprehensive interperiod tax allocation (normalization) consistent with regulatory approval, The following table details the components of deferred federal income taxes.
1981 1980 1979 Excess tax depreciation -
$ (60,200)
$ 123,493
$ 50,025 g
Allowance for borrowed funds used during
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construction..
137,200 Amortization of nuclear fuel salvage value (see Note A).
(492,476)
(283,420)
$ 77,000
$(368,983)
$(233,395) 12 4
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l YANKEE ATOMIC ELECTRIC COMPANY I
Notes to Financial Statements NOTE G-Federal Income Taxes (Continued):
Investment tax credits are deferred and amortized over the estimated service lives of the property giving rise to the credits. Investment tax credits-net reflect increases in federal income taxes attributable to such investment tax credits which have been deferred.
Federal income tax returns for the Company have been examined and reported on by the Internal Resenue Service through 1978.
NOTE II-Commitments and Contingencies:
(1) The Company has various contracts for the fabrication, conversion and enrichment of nuclear fuel through the year 1993. Contractual obligations under these agreements amounted to approximately $3,900,000 at December 31,1981, of which $1,808,000 is scheduled to be paid in 1982.
The Company has contracted for uranium through the year 1993. At December 31,1981, total commitments under these contracts are estimated to be as follows:
1982
$ 2,692,000 1983 3,006,000 1984 3,374,000 l
1985 2,920,000 1986 2,533,000 1987-1991 14,778,000 1992-1993 3,941,000
$33,244,000 The above table includes minimum payments aggregating $15,572,000 through 1993 which will be required under a contract for uranium if production is not achieved by a supplier. The plant designed to supply such contracted uranium is currently not operating due to operational and financial difficulties and, accordingly, the table above does not assume any shipments under that contract. If the plant renews operations, the Company is committed to purchase uranium produced at pre-agreed prices. Any costs incurred under this contract are recoverable under the terms of power contracts with the Company's stockholders.
(2) The Company maintains the maximum amount of public liability insurance, currently
$160,000,000, available from private insurers. A Federal statute, the Price-Anderson Act, mandates an industry wide program under which nuclear facilities could be assessed in the event that a nuclear incident resulted in damages exceeding the $160,000,000 of private coverage. Under this Act, each nuclear reactor may be assessed a retrospective insurance premium of up to $5,000,000 for each nuclear incident within the United States. In the event of more than one incident per year the maximum annual assessment per reactor is
$10,000,000. Under the billing provisions of the power contracts, the retrospective insurance premium would be includable in the cost of power.
(3) At December 31,1981 and 1980, the Company had leases covering its office facilities and certain
/
eqeipment and vehicles. Such rentals are included in and recovered through the billings of the Nuclear Services Division and therefore have no effect on net income. Son,e of these I
leases are " capital leases" as defined by the Financial Accounting Standards Board Because 13
YANKEE ATOMIC ELECTRIC COMPANY Notes to Financial Statements NOTE il-Commitments and Contingencies (Continued):
these " capital leases" are treated as operating leases for rate purposes, such leases are not i
capitalized for financial statement purposes. If the Company had capitalized these identified
" capital leases", the additional amount of nonutility property that would appear on the balance sheet would be $1,283,000 in 1981 and $1,327,000 in 1980. Total rental expenses for the.e " capital leases" and operating leases amounted to $1,568,000 in 1981, $1,183,000 in 1980 and $878,000 in 1979, respectively. Estimated future minimum annual rental payments, exclusive of taxes and insurance, for non-capitalized financing leases and operating leases are as follows:
Non<apitaiired Operating financing leases leases Total 1982..
$ 408,000
$ 679,000
$1,087,000 1983....
384,000 679,000 1,% 3,000 1984..
344,000 679,000 1,023,000 1985-244,000 679,000 923,000 1986..
I84,000
!84,000 1,ater years _
161,000 161,000 i
Total..
$1,725,000
$2,716,000
$4,441,000 (4) The Company,in common with other utilities,is subject to current and future regulations relative to nuclear power plant licensing. The Company estimates that plant capital expenditures, related primarily to the replacement and installation of the turbine low pressure rotor, will be approximately $11,500,000 in 1982, excluding allowance for funds used during construc-tion. At December 31, 1981, substantial commitments had been made related to the Company's construction program.
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