Text

Annual Financial Rept 1981
	ML20050C039
Person / Time
Site:	Peach Bottom, Limerick, 05000000
Issue date:	04/05/1982
From:	Joseph Austin, Everett J, Gilkeson R; PECO ENERGY CO., (FORMERLY PHILADELPHIA ELECTRIC
To:	;
Shared Package
ML20050C036	List: ML20050C035; ML20050C039;
References
	NUDOCS 8204080051
	Download: ML20050C039 (43)
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Content 7 2

letter to Shareholders 4

Financial Matters 6

Electric Operations to Nuclear Activities 12 Gas Operations 14 Customer Activities l

1s Technology 19 Communications l

20 Personnel 21 Financial Section

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40 Shareholder Information 41 Officers and Directors Percent Financial Highlights 1981 1980 Change Operating Revenues

$2,433,425,000

$2,123,394,000 15%

Operating Expenses

$2,110,432,000 S1,857,428,000 14%

Taxes Charged to Operations S 274,796,000 S 227,434,000 21 %

Operating income S 322,993,000 S 265,966,000 21 %

Earnings Applicable to Common Stock S 223,761,000 S 174,950,000 28%

Earnings per Aserage Common Share

$2.25 S2.00 13%

Cash Dividends Paid per Common Share

$1.90

$1.80 6%

Average Shares of Common Stock Outstanding 99,557,000 87,302,000 14%

Construction Espenditures S 793,959,000 S 586,481,000 35%

Tiital Assets

$6,304,195,000

$5,702,549,000 11 %

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To Our Sharshnidsrs:

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Our centennial year.1981 w as rewrd amount. I hese f unds w cre apphed prunar-a year of accomphshment, challenge and oppor.

ily to three major proiects in 1981 --the l.imerick tumty for Philadelphia Electric ( ompany nuclear plant. the flue cas clean-up sy stems A number of milestones were at 1.ddptone and Cromby. and the Salem Unit achiesed during the year includmg entouraging No. 2 tinancial resuits Earmnps per share showed an I imerick is our plant of increase of 134 to *2 25. primarily as a result of the f uture Its tuo umts will add low tuel-cost, higher electric rates granted in Apnl. Howeser.

modern base-load capacity pernutting the the return on our common shareholders' equity retirement of old. oil-burmng plants. Although was still only 124. substantially below the 16'i its capital cost will be in cuess 0154 bilhon, return allowed by the Penns>lsama Pubhc Utihty estimated annual fuel sasings will approach one Conunission i PUC) bilhon dollars per year when it is f ully opera-Ettectise September 30. the tional in the late 1980's.

quarterly disidend rate on common stock was Work on the flue pas clean-up increased 114 to 50 cents. or 52 00 per share on sptems. or SO2 scrubbers for our coal-burning an annual basis l he disidend improsement was plants at Eddy stone and Cromby progressed dur-s the first increase in tour years and was warranted ing 1981 The contmued use of coal as a major by nuprosed earnings

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.G John H.

Robert F.

James L Austin, Jr.

Gilkeson Everett 2

source of power, while fully complying with cellent employee organization responded dili-clean air regulations as required by law, is the gently to these challenges.

goal of this project. The scrubbers will be in full The future is one of opportu-compliance with all air quality regulations by nity for your Company. With the completion of December,1982 for Eddystone and early 1983 Limerick and the planned retirement of older for Cromby.

oil-fired facilities, our electric production plant The year 1981 also presented will be modern and efficient. We should require us with a number of serious challenges which no additional capacity until the late 1990's. Our impacted us in many ways. Continuing inflation electric generation fuel supply will increasingly resulted in escalating costs of construction, fuel, rely on domestic uranium and coal, thus mini-wages, operating and maintenance expenses, mizing our use of costly oil.

and in higher costs of money to finance construc-As we review the first tion and environmental programs.

100 years of Company operations, the past As a result of declining finan-prepares us for the future. Development and cial ratios, our security ratings were downgraded application of new technology, adherence to j

again by the rating agencies. A lower rating sound economics in design and operation of our raises the interest rate we must pay to sell our system, and superior services to our customers securities. In September, we sold mortgage will continue to be the keys to success.

bonds rated BBB with a coupon of 18%%, a Our Company has a proud record high interest rate for the Company.

heritage. At the beginning of our second hun-Clearly, improved financial performance will dred years, we again express our appreciation continue to be a top priority in the days ahead.

to our investors, employees and customers.

With this in mind, in July the Company filed a request with the PUC for an

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annual electric rate increase of $344 million. The PUC is expected to reach a decision in the case by June 1,1982. Our ability to improve financial Robert E Gilkeson performance, increase the return on sharehold-Chairman of the Board ers' investment and continue to provide funds for the censtructioa program will depend upon that decision. A steam increase was filed in 1981 and was settled for $3 million in mid-January 1982.

3 Also, a gas rate increase request was filed m

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1981 and is pending.

James L. Everett in other PUC matters, President hearings on the need for and economics of the and Chief Executive Officer l.imetis k pn,jec: concluded in mid-November with a final determination expected in 1982. The Company's testimony clearly demonstrated the benefit of completing Limerick as planned.

We continued many projects to operate the Company more efficiently, to im-prove productivity, and to reduce costs. Our ex.

John H. Austin, Jr.

Executive Vice President and Chief Operating Officer 3

Financial Matters Earnings increase. Common expenses, including those related to the new stock carnings in 1981 were $2.25 per share, Salem Unit No. 2. Your management continued an increase of 13% above 1980 earnings of to hold controllable costs to the minimum, con-

$2.00. Total common stock earnings were sistent with good service. Interest charges in-

$224 million, up $49 million or 28% from 1980.

creased $61 million and preferred dividends Average shares outstanding increaed 14%

increased $2 million.

to 100 million shares.

Rateincreases. As with any The increase in earnings was business in an inflatic tary period, Philadelphia due primarily to the $188 million electric rate Electric Company must regularly raise the prices increase, which became effective in April, and of its products to reflect their current costs and higher gas sales. Electric sales to retail customers value. A continuing and active program of rate were off 2% due to poor economic conditions.

increases is necessary to offset the effects of in-Operating and maintenance expenses were up flation, to improve the Company's financial per-13%, interest charges rose 269, and depreciation formance, to maintain its ability to attract new charges were 6% higher.

capital, to balance supply and demand, and to Common Stock Dividend Raised.

encourage consumer conservation.

On June 22, the Board of Directors voted to in July,1980 the Company increase the quarterly common stock dividend applied for a $304 million electric rate request from forty-five to fifty cents per share effective and the Pennsylvania Public Utility Commission with the third quarter payment. As a result, divi-(PUC) granted $188 million or 62% of the re-dends per share paid in 1981 amounted to $1.90 quest, effective April 25,1981. The major item as compared to $1.80 in 1980.

disallowed by the PUC was a request by the This increase, the first in four Company to begin collecting certain interest years, recognizes the necessity of providing a charges which are now deferred to the future.

competitive return on the common shareholders' On July 29,1981 application investment. In this period of continuing infla-was made for a $344 million, or 17.79, increase tion, the Company must be able to continue to in electric rates. The PUC hearings began on Oe-attract the capital necessary to complete its large tober 13 and were concluded in February,1982.

construction program A PUC decision is expected by June I,1982.

Electric, Gas Sases Rise. Total On September 28, the Com-electric sales increased by 2% to 28.3 billion pany filed a request for a $39 million, or i1.3%,

kWh. The increase was due to the sale of power increase in gas rates whAh has been suspended to equivalent to the Company's share of the output June 27,1982 pending hearings. A request for a from Salem Unit No. 2 to Jersey Central Power

$6 million steam rate increase filed on September and Light.

28 was settled for $3.4 million, effective January Sales to regular curtomers, 15,1982, about 5 months prior to the maximum excluding Salem Unit No. 2, declined by 2% to suspension period.

27 billion kWh. Sluggish economic conditions The Federal Energy Regu-resulted in depressed kilowatt-hour sales to large latory Commission accepted a settlement for commercial and industrial customers, while sub-wholesale electric rate increases to Conowingo stantially cooler summer weather in 1981 held Power Company, a wholly-ow ned subsidiary, down air conditioner usage.

and to the Borough of Lansdale, effective Febru-Gas sales increased by 6% to ary 27,1981. The rates were increased by $1.9 73 billion cubic feet as a result of more custom-million, or 8.4%, for Conowingo and $524 ers and colder weather this year. Steam sales thousand, or 9.59, for service to Lansdale.

dropped 9% to five billion pounds as a result of On August 18, Conowingo continuing conservation by our steam customers Power Company filed a request for a $3.6 mil-and conversion to other fuels.

lion electric rate increase. The request has h en Revenue, Expenses increase.

suspended by the Maryland Public Service I

Total operating revenue amounted to $2.4 billion, Commission pending an investigation.

159 above 1980. Electric operating revenue rose Also, on February 1,1981 to $2.0 billion, an incrense of $235 million or this subsidiary was permitted to implement an 13% over 1980. This increase reflects higher base Energy Cost Rate which collects from customers rates, the recovery of higher fuel costs through any additional cost of fuel above the amount adjustment clauses and $46 million of revenue previously allowed in the electric base rates from the sale of Salem Unit No. 2 output and prior to that date.

capacity. Gas revenue amounted to $356 million, umerick investigation. In Oc-an increase of 23% over 1980, and steam revenue tober 1980, the PUC inwituted an investigation reached $75 milhon.

into various aspects of the Limerick Generating

%ta! operating expenses Station, including its necessity, economic justifi-amounted to $2.1 billion, an increase of $253 cation, and the reasons for increases in projcet million, or 144, over 1980. The maior factors costs and for delays in the anticipated completion contributing to this inaase were higher fuel date. During the proceedings, w hich ran from costs and increased operating and maintenance March to November 1981,39 days of hearings 4

f Maior Financinge Millions of Dollars 4 s1 Cammor Stock-5,000,000 shares S 59 s

4 ei Mvtgage Bonds-Private Placement 73.5 15',' % Series due 19%

$52.5 million 15% Series due 19%

$21.0 million set Pollution Control Bonds (tax exempt) 100 Average Yield,12.6%

7.81 Mortgage Bonds 125 17%% Series due 2011 set Mortgage Bonds 125 18%% Series due 2009 esi Common Stock-7,800,000 shares 96 Dividend Reinvestment and Employee Stock Purchase Plans-3,074,526 e, hares 40 meal

$618.5 tesi notait note increases Millions of Dollars Application Annual Date Approved Revenue Electric-Penneytvenia 7/29/80 4/25/81

$197,6 Pennoyevenia /29/81 Pending 344.0 Marytend 8/18/81 Pending 3,.6 Gas 9/28/81 Pending 38.7 steem 9/28/81 1/15/82 3.4 wcre hehl and the record contained almost 4,WO ted by the liconomic Recovery Tas Act of 1981 pages of testimony. The Company presented 17 and it allowed the Company to receive cash pro-witnesses u hile the inter ening pases presented ceeds now which w ould otherwise have been de-20 witnewes.

ferred to the future.

T he economics of I.imerick as Ratings on the Company's presented by the Company show ed that complet-mortgage bonds, preferred stocks, debentures ing 1.imerick would pnwide customers with sav-and pollution control notes were lowered during ings ranging from about $200 million to almost the y car due to inadequate camings and cash 51 billion per y ear w hen compared to the alterna-tlow in the face of the need to raise large amounts tises of building a series of sma!I coal plants to of capital for our construction program. This ae-replace 1.imerick or cancelling 1.imerick uithout tion has the effect of increasing the cost of bor-replacement. The Administratise 1.aw Judge's rowing new funds and reducing the potential for Recommended Decision is espected soon.

marketing the Company's securities.

Financing Highlights Dur-Our 1982 financing program

ng 1981, the Company successfully raise 1 will require the sale of approsimately 5670 mil-f more than 5618 million, a record amount of new lion of new debt and equity securities. A satis-capital, to meet the needs of our construction factory conclusion to the present electric rate program and refundings.

case is essential to assure adequate access to in addition, to the major the capital markets.

financings shown abose, arrangements were Construction Program. lis-completed in April for a $100 million, two-year poditures for new plant and equipment in 1981 resolsing 1.ine of Credit through a group of amounted to 5794 million. listimated construe-1 uropean banks. In November, the Company tion outlays are $881 million for 1982 aad $3.1 finalized arrangements to finance its ponion of billion for the entire 1982-85 period. A pprosi-the Salem Generating hution nuclear fuel mately 60% of these construction funds are ear-through a lease with an independent fuel com-marked for completion of the two nuclear units at pany in an amount up to 5125 million. in De-1.imerick and tlue gas clean.up systems at the cember, the Company received $54 million by liddystone and Cromby coal-fired units.

selling, for I ederal income tas purposes only, the las depreciation and insestment tas credit as-sociated with its share of the Salem Generating Station Unit No. 2. This transaction was permit-5

Elsctric Opsrations coal Strike. On N1 arch 28.

Eddystone and Cromby Generating Stations.

1981, the Cmted N1ine %rkers began a nation.

Eddy stone Cnn No I now operates w ith particu-wide strike which lasted 10 weeks. Howeser.

late scrubbers to mamtain the stack enussion scrsice to PE customers was not attected because for particulate and sisible emissmns within the of adequate coal insentories w hich were increased Federal and state standards The full program in anticipation of the strike, the as ailability of the of implementation of SO: remos al sy stems at Company 's nuclear piants and the purchase of Eddy stone and Cromby Stations is expected to energy from other utilities.

remose 90', of all SO: and particulate ennssions New Transmission Line Ener.

discharged at these sites. The Company. through gized. A 17.4 nule. 500 kV line between PEco's saluable expenise gained in recent year 3 has be-new Elroy Substation in N1ontgomery County come a leader in the use of the magnesium oxide and Pennsylsama Power & Light's Hosensack regeneratise air pollution control technology.

Substation w as energized on N1 arch 22.1981 The scrubbing sy stem installa-af ter nearly tise years of regulatory delays and tions are proceeding on schedule and are ex-extensne litigation The connection w as de-pected to be in full compliance with all Federal signed to reinforce our transmission system and and state air quahty regulations by December to at hiese economics of operation 1982 tor Eddy stone and early 1983 for Cromby.

The total cost of the project.

The projected final cost for the ensironmental mcludn.g Eboy Substation. w as 517.2 million systems. including scrubbers and an upgraded but the proiect will result in annual sasings to waste u ater treatment facility at Eddy stone Sta-Philadelphia Electrit of 54 million in reduced tion and scrubbers and a new waste water treat-sy steni losses and lowervost generation.

ment facility at Cromby Station. is approxi-Eddystone and Cromby m tely 5300 million.

Stations-Environmental Projects. Construction The operation of the scrubbing continues en the Due gas scrubbing systems sy stem produces magnesium sulfite in order to bemg installed for the coal-fired boilers at the con' ert nugnesium sulfite mto its usab!e co.n.

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duce sulf uric acid. These facilities are espected i

-. j., g to cost approumately_575 million.

Power Purchases from Allegheny Power System and Central Hudson. The A-l. [Q.

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Company was a pioneer in deseloping intercon-94 nections wiih other sy stems to proside hich-L V

quality sersice at the lowest possible cost. Ncser

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has this effort been more beneficial m reducing

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A decade ago, the Company cont ol equipment at Eddy-conserted fise ot'its major generating plants from stone, i coal-fired station, coal to low-Mphur oil to meet air quality regu-progressed in 1981.

lations. I he maior escalation in the price of oil in

he past ses eral years has dictated that PE should ponent compounds the Company is constructing now avoid operating these high-cost plants r

two magnesium oude regeneration f acilities w heneser a lower-cost alternatise source of which will be located at the Albed Chemical power was asailable.

Company Sulfuric Acid Plant m Claymont.

Beginning in February 1981.

[

Delaware and at the Esses Chemical Company PE has purchased coal-fired electncity f rom sy s-l Suituric Acid Plant in Clifton. New Jersey Ihe tems in West Virginia. Ohio. Indiana and Illinois.

regeneration f acilities will consert magnesium The sasings produced by these porchases sultite to magnesium oude and sulfur dioxide.

amounted to 596 million in 1981.

Ihe magnesium oude will then be reuseJ in the An additional 53 million was f

scrubbmg sy tems of the Compcn> 's generatmp sas ed by continuing the arrangements made in l

lacihties Ihe sulfur <hoside will be used to pro-1980 to purchase low er-cow. oil-fired power dur-my sammer peak load hours from Central Hud-Et [,.

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Construction Engineers installation at Umerick Station Jonathan Moffitt (center) and with manufacturer represent-Joseph Brozonis (right) dis-ative Charles Bruck (left).

cuss low pressure turbine beense was made in \\1 arch.1981 1 ollowine a prehminary.esiew. the NRC accepted the apph-cation f or docketing in July,19xl Nuclear Activities Nuclear Training Umerick Training center. I'he 1.imerick 'Irainmg Center Limerick Construction. ('on-began l'ormal nuclear trainine on January 5.

struction continues al a rapid pace at 1.linerick 1981. uith a croup of licensed operators f rom (iencratme Station In 1951. the Company spent Peach Ilottom reteising requahtication traimng 542 4 nillhon al l lilielh k brmpmg the total ex m the sunulator. (Ne of the sunulator makes penditures throuch 1)ecember l,19X1 on the it possible f or operators to be tramed in a i

projet t to 52 (I bilhon lotal t onstrut tion cost hott peroxi ot' tnne without disrupting norinal upon conipletion in 19h7 is estim.iled at about plant operdtlons 54 2 bilhon l' nit No I was 68', coinplete and l'he center i training person-l'mt No 2 was IO'i complete as of !)ecember nel also instructed a group of olYrator tramees ll.19S! Commercial sersice dates f or the two l'or the I ruerick plant, selected t' rom the Com-units.tre 19S5.ind 19M7 Ilichhehts durine 1981 include completion of the l' nit No I cooling tower N

structure, estas ation of the lip acre spray pond.

( g g]f3, V"e and t ompletion of the Admimstration lluilding q*-

laet tion of the l' nit No I turbine-generator

, I nears completion ( her 70.tM)0 feet of small pyw and ou r 1.thW) INN) feet ot cable were installed g

l' '

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I in 19S1 Prewure testing of pipmg sy stems com-F ig b2 menced in preparation for stait up testing in 1981 l'he worktorce teached 1.950 l'mt No 2 nulestones mclude settirig the generator stator and install.ition of the 70.(NM) condenser tubes An interestisip 'de light in July, a derailed flat car from occurred durmg the year w hen eu as ation 'or the an 89-c9r freight train severed two legs of a 66kV transmis-spia) pond untosered rocks bearmp dmosaur sion tower in Philadelphia.

tracks estimated to be oser 2tM) nuthon years old sixteen Tvansmission and Apphcation to the Nuclear Distribution men completed l

Regulaton Comnuwinn (NRCi t'or an operatine the repairs within two days l

without any customer service l

Interruptions.

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pan) 's 1;lectrh Prinluttion I)epartment 'I he the Peach llottom reactors until at least 1993 tramees underwent an IS-week course m f unda I hn uramum nunina senture n another of PIES mentals and theory as the beginnmg of tr.unmg ettorts to obtain an awured and dm rse supply w hich w di t < mately lead to certit'ication.is of uramum for our nuclear plants beenwd ip : M rs Pooled Inventory Management in addition. s arious engineer Service. In January.19S1. Philadelphu l.lectric onentat on tourses. laboratory courses and Company and sesen other utihties mitiated a other shon non operator courses hase been costaharmg program for stockmg spare common conducted throughout the year In Septeniber.

nuclear components for smular nuclear plants a series of college lesel es ening tourses, ton-ow ned by tlus group of utihtiet the program.

dutled by l)rese! l'nisersity. w ere started at called Pooled ins entors Nianagement Sers ice the traimng center i PINIS L p w ides s aluable protection to our cus-Peach Bottom.1)urmg 19S1 tomers against lengthy outages at Peach Hottom Peach Hottom l'mt No 3 underwent a scheduled caused by the unanulabihty of a nuclear compo-outage for reluchng and completion of a number nent at a traction of what it would cost the Com-of maior NRL mandated modit kations In order pany to stack thn equ;pment independently.

to incre.ne the lesel of safety and improse the abably of equipnwLt and personnel to respond propeily to plan malturh tions. sigmlic.mt thanges w ert.n.ide to the teactor prewure sup-prewoin sy stem the rea tor s wel teedw ater v

a mlet no// lex the emergent s control rod insenion M sle n t ;thd spet ll'h %ilet)-lclated piping and in-g

.t r u me nt a tion Ihes mi thth ations to the f acihty i

were the result of the I \\11 esperience as well as iin poing Pl and N R(' conc erns l he out ilt these modit'ica-t hiin on l 'Mll Ni I aiHounted l') nhire than $35 x

millhinIPl: share s l 5 inillion i tow ird iniprii.cJ

'r n L A lcal %itet).ilR! w ere i.timpleted in ses t n nionths \\1uch iil thn w ork h.n etre idy been t ilin[leled iln Peat h Hiittiim l nit No 2 l's en with the extended outace of Peat h Hottom l' nit No 3.11 n e sti niated th.it the siet luel was ings to Pl li, custom-cis f rom the operation of Pe.h h Hoitom w as i s er

'slS5 millhin in 19SI Salem Unit No. 2 in Service. I N a

2-sciond umt of the Salem. New Jersey nutlee Peach Bottom Station engineer generating st.ition was placed m tommercul op-inspects the reactor pressure eration on ()t tober i T Pl ou ns 42 59 percent of suppression system during modifications at Unit No. 3. The the lointly ow ned. l.1IS :negaw att station w hich system provides cooling water n i perated by Pubbt Sersice 1:lectric and (i.n for emergency shut-down.

('ompany of New Jersey w hh h ou ns a smular s\\

percentage of the plant I)ehnars a Power A

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('ompans e.h h ow n 7 41 percent

'.y Lee Mine Construction. l)ur-A, N.'. M gf* F -

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1'14 ing 19SI. construt tun started on the I.ee \\1me i

l'ramum Protect located m Neo Niewico. N) g$e*ym.

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nules wesi of \\lbuquerque. under an agreement G

ks];

w hh h Pl entered mto with kerr \\h Gee Nuclear o e;;

Corporation durmg 19S0 l hn n a iomt s enture 1 T.

.,y oper.lflon in w hh h Kerr \\1c(ice n 'he construc

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W' tor and w di operate the nune I he ur..niuin uill be shared equally between Ken \\1cGee Unit No. 2 at Salem was placed in service during 1981 by and the Peach llottom ou ners PSE&G. PE owns 42.59% of the lhe nune shaf t now under station.

tonstrut tion n 14 feet m dumeter and w di extend mio the e. nth to a depth of 1.66s feet I he first uramum ' rom thn nune w di be pruhh ed m 19S5 and. at f ull production. the nune w ill h.ne a Nio ton pei Jay capacity l'ramum from ihn nunc will supply a portion of the requirements for 11

1 i

Ges Opercticns Peak Gas Sendouts. During the The Company has increased its winter supply 1980-81 heating season, total gas sendout surpas-from underground storage by contracting for 1

sed the previous recorded peak day total on five an additional 3% of normal winter natural gas j

days. Prior to Christmas Day,1980, the recoro supplies for the 1981-82 heating season. The next j

daily sendout had been 441 million cubic feet, phase of this storage expansion project is ex-I which occured on January 17,1977. Total send-pected to provide a further increase of 2% for the l

out for December 25,1980 established a peak of 1982-83 winter heating season.

444 million cubic feet, when the average temper-TWo New Gate Stations for ature was 4'E Continued cold weather produced Natural Gas Distribution.The increase in new gas a series of records in early 1981 and the final peak sales experienced by the Company over the past daily total amounted to 486 million cubic feet on two years has been greater than in any similar Monday, January 12 when the average tempera-period in the Company's history. The sharp in-ture was 7#E crease in new load required the construction of On January 17,1982, a new two additional supply points to feed the Com-daily sendout record of 529 million cubic feet of pany's natural gas distribution system. The sup-l natural gas was established as the temperature ply poiats, known as gate stations, are h> cations averaged minus 2'E where the Company purchases gas from two Record Gas Sales. Gas sales natural gas transmission companies.

increased 6% in 1981 to a record 73 billion cubic When placed in service I

feet. This amount surpassed the previous party during the winter of 1981-82, one of the new sales record of 70 billion cubic feet set in 1972.

gate stations, hicated in Chester County, will re-Gas Supplies increased for inforce the gas distnbution system in the Paoli-i 1982 and 1983. Natural gas availability fram Dow ningtown-West Chester areas. The second l

the Company's interstate pipeline suppliers con-station, k>cated in Bucks County, will pro-tinued to improve in 1981 and is expected to vide similar reinforcement to the Morrisville-remain at the current level through 1982.

Levittown-Bristol areas. With the addition of the new stations, which have a total expected cost mz {

of $1.8 million, the Company's natural gas dis-tribution system will have a total of thirteen i

supply points feeding a network of 4,475 miles j

of mains. These mains cover an area of 1,475 l

square miles serving 293,000 customers.

Operation of the thirteen sup-ply points is directed from the Gas System Con-

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trol Center in King of Prussia where distribution h

system pressures and sendout requirements

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through a computerized network of supervisory

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control equipment.

During 1981, gas operations I

l continued to expand as new gas connections were completed. In order to supply this new load,88 miles of new main were installed at.

h.

cost of $15 milhon.

9 William Fulmer (conter),

Assistant Supervisor-Mains and Services, and Street.

Mechanics Joseph Gambino (left) and Steven Allen (right) inspect the gauge on a hy-draulic pump used to com-press a coupling in making a final connection for a six-inch, j

plastic gas main extension for j

service to a new business area.

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conservation measures. A customer observes Mark gelieration and ahernate energy sources Thn Thompson, Home Energy group a msobed with the appheations of solar energy. w md energy and cogeneration f acilities Customer Activities For oser three years the Com-

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pany has had a pohey concermng the purchase of Cogeneration and Alternate electnc energy f rom pnsate generating facilities Energy Sources. Alternalise methods of generat-and will cononue to estend c'ery. >operanon to mg electnen) are gammg wider attention through those customers who desire to operate their pn-the media and gosemment programs aimed at sate f acihties. A process for the implementation consersing non renewable energy resources of the Federal rules and regulations goserning the in Apnl.1981 the Company manner m which we contract uith a pnsate gen-estabbshed an Alternatne F.ncrgy Section to eration customer is now being prepared b: Penn-l wordmate the increasing insobemt..ts of co w h ania. w hile Maryland has its rules in effect 14

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f Home Energy Audits. In con-stalled in 9.800 additional units, of which I,600 fermance with the Residential Conservation were new constmetion while 8,200 converted Service (RCS) Program of the National Energy from oil.

f Conservation Policy Act, Philadelphia Electric While gas prices are expected l

Company began offering residential energy to rise further with complete deregulation, at year audits to its customers last summer. The charge end the cost of gas was equivalent to 74' per for this service is $15 per residence, gallon af oil.

All residential customers were In the new construction mar-advised of the availability of audits by bill en-ket,69% chose electric heat w hile 169 chose gaa l

closures. By the end of the year 11,400 custom-for a total penetration in 1981 of 85% for PEco i

ers had applied for audits of their homes, and energy.

1,400 audits had been completed.

Area Development. In spite of The Company trained a team the high imerest rues ar.d the nation's depressed I

of ten Customers Senice employees in the skills economy, the Jowntown Philadelphia construc-

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required to inspect homes and iden:ify places tion boom, w hich started in the last decade, con-I where adding weatherization imprevements-tinued durmg 1981. The construction of office insulation, sealing, caulking, glazing--or im-buildings and new hotels is apparent throughout proving the efficiency and operation of the heat-the city.

l ing system can save energy and money for the A 40-story 0 ' ice building 0

customer. At the conclusion of each audit, the joins three other ofUce buildings in sarious i

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customer receives a print-out from a portable stages of construction on Philadelphia's Market

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computer terminal. 'Ihis informs the customer of Street. Another 30-story office building is under the approximate cost and savings of each con-construction at Logan Circle on the Parkway. In servation step that can be taken in his home.

tiie suburbs, along the Turnpike and Expressway, Residential Space Heatina.

there is also growth in ofHee constmetion.

l During 1981.19,700 additional residential The growth of the hotel indus-units chose PECo supplied electricity and try indicates the confidence investors have in gas for space heating as oil prices inc reased Philadelphia's future. Construction is underway l

to $1.25/ gallon.

on a 25-story,450-room Hershey Philadelphia L

Electric space heating Hotel on Broad Street. An 8-story,375-room, was selected for 9.900 units,7,000 of which luxury hotel to be operated by Four Seasons is were new and 2,900 were conversions from under construction on the Parkway at Logan Cir-other heating systems, mostly oil-fired. Of cle. A 33-story luxury hotel and condominium

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these units,5,500 or 56% chose heat pumps, has been topped out on Rittenhouse Square, and j

an efficient sou.cc for year-round comfort. At a 350-room Best Western Hotel is underway in year end there were 94,200 electrically heated City Line's Golden Mile area. Since 1975, almost homes on our lines.

400 new restaurants have opened.

Gas space heating was in-The new office buildings,

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hotels, restaurants, other commercial develop-PECo Residential ment and cultural activities have stimulated resi.

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dential development in downtown Philadelphia.

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wes conannon During the past year, ten ships f

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.u ross from independence r enov.ited Hourse Building H.Cl P uk in center city m

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Management's Discussion and Analysis Financial Ssction Contants of Financial Condition and Results of Operations 21 N1anagementi l)iscussion and General. l'he res enue Analysis of Financial grow th of retent scars has been accompanied Condition and Results of by substantial mcreases in operating costs and

()perations carry my charges on mcreased msestment m plant 23 Consohdated Statements of and equipnient \\ny f uture increases in such income mosts and charges may be espected to attett 24 Consohdated Balance Sheets f uture net income and earnings per aserage 26 Consohdated Statenients of conunon share ad.crsely unless periodic iate l

Retained Eammys iehet is obtained to o" set them See Note 14 of 26 Consohdated Statements of Notes to Hnancial Statements for the estnnated

( %nges m I mancial ettects of mtlation in ad htion. the capital Position caiT} ing Cnarges JwiCiated with the cons'ructi<in 27 Notes to Hnaqcial Statements of the 1.imerick stat'on and other proiects w loch 35 Accountants' Repon are capitah/co e octuung mcome with an 36 1 inancial Statistics allow ance for iunds used durmg consicuction 38

()perating Statistics i AFUIC) and recosered through t'utu:e depreclation now repiesents a niapir podion of net income and wlll continue lo increase until the first I.imerick unit goes mto serslCe uniess prior to that iirne. some of the carrying < harges are recosered in res enue Sluggish economic conditions in the Company \\ sersice area also are hasing an ads erse eff ect on operating resultv Although the return on aserage conunon equity has increased shghtly during the past three years, the return on ins esiment is still substantially below w hat the Pennsy is ania Pubhc l'tihty Commission (PUO allowed as a f air rate of return m the Company \\

last rate order Ettectne April 25.1981. the Company put mio et'tect a rate increase l'or electric operations amounting to 5188 nulhon

()n January 15.1982. the Company put mto ettect a rate merease for steam operations amounting to % T 4 nulhon. ()n July 29.1981. the Company filed a request with the PUC for an additional 5144 nulhon in electric res enue Hearings base been completed with bnetinc.

oral argument and decision to follow The PLC has suspended the rate increase under agreement with the Company to May 21.19S2 when a final order is espected ()n September 28.1981. the Company filed with the PUC tor an additional 53S.7 nulhon m eas res enue. I he PCC has suspended the rate merease until June 27.1982.

O ama Hearings on the gas increase began in January.

1982. The toial 's3S3 nullion of requested increases m resenue is designed to unprose the Company i carmngs and cash flow to enable the

)

Company to attract the capitai necessary to l

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tmance its construction program. Fhe Company has no assurance that all or ans ponion of the GM requested mcreases will be granted.

Q Ihe Company estimates that j

56 percent of the si W per snare dn idend paid to conmon shareholders in 19SI represents a return l

til capital w hi h is niit taxable as disidend l

income foi i edeia mcome tax purposes 4

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21 i

Electric Operating Revenue.

Taxes, Other than income.

Increases in 1981 and 1980 reHect both higher Taxes, other than income, have increased due to base rates and the recovery of higher fuel increases in revenue, w hich is subject to a gross costs through fuel or energy adjustment clause receipts tax, and due to higher capital stock, billings. In addition, the increase in 1981 over realty and social security taxes.

1980 reflects the sale of the energy and capacity AHowance for Funds Used equivalent of Salem Unit No. 2 to Jersey During Construction.The increases in AFUDC Central Power and Light Company during the for the last two years resulted from a higher second half of 1981. Kilowatt-hour sales of cost of capital for construction and increases electricity to retail customers declined slightly in construction work in progress.

throughout the period.

Interest Charges. Interest oss operating Revenue, charges on long-and short-term debt increased increases in 1981 and 1980 primarily reflect in the last two years because of higher costs of the recovery of higher fuel costs. Mcf sales of money and additional debt outstanding. The ratio gas increased 5.5 percent in 1981 over 1980 and of earnings to mortgage interest, which is a 8.9 percent in 1980 over 1979, due to increased measure of the Company's ability to issue house heating and small commercial customers, additional long-term debt, has remained only Fuel and Energy 6nterchange slightly above 2.0 times, which is the minimum Expense. Fuel and interchange expense increased required for the issuance of new mortgage debt.

8.9 percent in 1981 over 1980 and 64.8 per-Capital Expenditures and cent in 1980 over 1979 as a result of higher Changes in Financial Position. The Company prices for all fuels.

is carrying on a construction program which is Other Operation and estimated to require expenditures of $881 million Maintenance Expenses. Other operation in 1982 and $2.3 billion from 1983 to 1985. Of and maintenance expenses have increased in these expenditures, approximately $1.9 billion the last two years due to inflation and to relates to the construction of the Company's two, growth in utility plant.

1055-mw nuclear generating units at Limerick, Depreciation. Increases which are scheduled for commercial oper-in depreciation in the last two years result ation in 1985 and 1987. The final costs of these from additions to plant in service. The increase units are currently estimated to be $4.2 billion.

of 6.09 in 1981 over 1980 is due primarily Successful completion of this program is to Salem Unit No. 2 being placed in dependent on the Company's ability to obtain commercial operation.

external financing, primarily through sales of Taxes on income. Taxes on new debt and equity securities which are subject operating income increased in 1981 and 1980 as to market conditions and cenain earnings tests.

the result of higher income. Income tax credits, The program also is subject to the licensing net, included in other income, have increased requirements of the Nuclear Regulatory in the last two years as a result of the Commission, financing approvals by the PUC highcr Allowance for Borrowed Funds Ustd and changes due to litigation. The Company During Construction.

cannot predict the outcome of such regulatory Ratio of Earnings to Return on Average have been or will be met and that the economic Mortgage Interest Common Equity n=c-omme desirability of the program has been demonstrated and that the program wil! be

. _. yd successfully completed.

i Placing the Limerick units into

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$1.0 billion per year as compared with obtaining

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Philadelphia Electric Company and Subsidiary Companies Consolidated Stat m:nt3 of Innma For the Year Ended December 31 1981 1980 1979 Operating Revenues (Thousands of Dollars)

Electric S2,002,063

$1,766,956

$1,311,891 Gas 356,431 290,743 221,135 Steam 74,931 65,695 45,479 Total operating nevenues 2,433,425 2,123,394 1,578,505 Operating Expenns Fuel and Energy Interchange 1,187,635 1,090,497 661,724 0.her Operation Expense 360,840 279,587 247,152 Maintenance 156,878 136,963 117,491 Depreciation 130,283 122,947 120,608 Taxes on Income 129,484 93,673 79,055 Taxes, Other than Income 145,312 133,761 106,676 Total Operating Expenses 2,110,432 1,857,428 1,332,706 operating income 322,993 265,966 245,799 Other income Allowance for Other Funds Used During Construction 65,013 50,483 46,008 Income Tax Credits, net 63,164 49,025 33,884 Other, net 2,457 3,425 1,710 1

Total Other Income 130,634 102,933 81,602 inc?me Before Interest Charges 453,627 368,899 327.401 Interest Charges Long-Term Debt 266,691 224,970 192.990 Shon-Term Debt 33,155 13,865 7,315 Allowance for Borrowed Funds Used During Construction (123,784)

(97,067)

(67,375)

Net interest Charges 176,062 141,768 132,930 Net income 277,565 227,131 194,471 Preferred Stock Dividends 53,804 52,181 44,773 Earnings Applicable to Common Stock S 223,761 S 174,950

$ 149,698 Average Shares of Common Stock Outstanding (Thousande 99,557 87,302 80,529 Earnings Per Average Common Share (Dollars)

$2.25

$2.00

$1.86 Dividends Per Common Share (Dollars)

$1.30

$1.80 St.80 t

See notes to financial statements.

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4 23

___O

Philadelphia Electne Company and Subsidiary Companies Consolidated Balanco Sheets I

December 31 ASSETS 1981 1980 Utility Plant, at original cost (Thousands of Dollars)

In Service Electric

$4,163,088 S3,708,715 Gas 371,239 332,599 Steam 54,152 53,955 Common, used in all services 118,701 118,387 4,707,180 4,213,656 less: Accumulated Depreciation 1,330,611 1,235,715 Net Utility Plant in Senice 3,376,569 2,977,941 Construction Work in Progress 2,337,517 2,202,100 5,714,086 5,180,041 Nonutility Property and Other Investments 77,780 58,697 Current Assets Cash and Temporary Cash investments 30,678 6,678 Accounts Receivable Customers 277,292 262,447 Other 65,131' 37,910

.\\taterials and Supplies, at average cost Fuct (coal, oil and gas) 83,612 82,216 Operating and Construction 48,581 38,870 Deferred Fuel Expense (31,299) 11,048 Prepayments 6,819 6,180 480,814 445,349 Deterred Debits 31,515 18,462 Total S6,304,195 SS,702,549 See notes to financia! statements.

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TIchn:lcgy Cleaning Up PCB's. 'l he Com-gosernment regulation. PCirs were manuf ac-pany is field-testing a umque process designed tured on a large scale between 1929 and 1977 and to detosit'y and destroy the suspected cancer-were used in numerous products, mcludme adhe-causing chenucals know n as polychlorinated snes. mks. lubricants. paints and plast!cs In the biphenals t PCirst The ( ompany n cooperatmp utihty industry. PCirs were used as an msula.-

with the Franklin Institute Re. earth 1. abs t HRI.)

ing fluid m capacitors and transtorn.ers.

in this demonst.ation program. w hich insolses The procew has been ettec-a process deseloped by HRI. chemists. l his tne m laboratory trials and has the approsal process reduces PCirs to harmless table sah.

of the Ens tronmental Protection Agency i EPA).

thereby chminatmg the hazards associated with the city of Philadelphia and the Pennsylsania handling and transporting this material.

1)epanment of Ensironmental Resources. Once Presiously, the Company the field trials are prosen succewtui. the Com-shipped transformer oils long distances to in-pany will seek the EPCs permiwion to con-cinerators or landfills This is now prevented by tinue batch procewing. This project is another c '..

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.tfij tenance Division, checka the PCB processing.

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_ tg was completed in August 1981.

intermediate points.

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Ctmmunirti na example of how modern technology is being Community Outreach Program.

applied effectively. _

The Corporate Communications Depanment is sectric veMcles. Philadelphia carrying out a community outreach program, de-Electric Company was selected by the Depan-signed to bring the personal touch to meeting ment of Energy to panicipate in the Electric and customers' needs. The key to the program is let-Ilybrid Vehicle Demanstration Program. The ting people know that PE is really thousands of goal of the program is to advance electric vehicle individuals trained and willing to help our cus-technology and market potential.

tomers. The program also serves the Company Under the cost-sharing agree-by opening a dialogue with many customers, ment between Philadelphia Electric and the De-giving the Company a better insight into cus-panment of Energy, Philadelphia Electric pur-tomer thinking.

chased 6 vans and trucks and 14 passenger cars Among the best ways to for use in its transportation lleet. Each electric achieve this give-and-take communication with vehicle will replace a petroleum-fueled vehicle.

the public was to get groups of customers with During the three-year pro-similar broad interests together with Company gram, the Company will collect data on perform-people to talk over mutual concerns. Eight cus-ance, reliability and safety, vehicle maintenance tomer councils were formed by the suburban di-and public awareness. Periodic reports to the vision managers and by the Philadelphia district Department of Energy will record the Company's mar. agers. The councils meet regularly on mat-experience for use in a national data base, ters of topical and timely interest. Members of Acoustic Stress Monitoring.

these councils live in the same geographic area Acoustic Emission Testing techniques, which and reflect broadly the opinions of their varied were initially developed by the Company to in-communities. A Clergy Councilis made up of 40 spect buried gas pipe lines, have been recently members of the Philadelphia clergy who have applied to other Company structures, The most arranged for PE representatives to speak at recent successful application of acoustic emis-church meetings and after church services, sion by PE engineers is the development of a primarily on energy conservation. A Social Ser-system to continuously monitor the stress of fiber-vices Council is composed of over 50 members glas booms on aerial lift trucks. This system representing public and private social service measures the energy waves produced by the fiber-agencies. An Hispanic Council is composed of glas material indicating any deterioration of 41 members w ho represent business, social agen-the material well before failure, assuring the cies, civic and community groups and organ-integrity and safety of the boom.

izations in the growing Hispanic community. An In a ltesearch and Testing pro-Energy Education Advisory Council (EEAC) gram now underway, Acoustic Emission Testing was established in 1976 to broaden the base of techniques are being used to determine the in-public understanding on energy. The EEAC, tegrity of fiberglas ladders. An examination composed of teachers, administrators, cur-rig and associated instrumentation have been riculum and environmental specialists, has de-developed to test and qualify all Company veloped extensive curricula materials on energy fiberglas ladders.

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December 31 LIA88UTIES 1981 1980 Capitalization (Thousands of Dollars)

Common Shareholders' Equity Common Stak

$1,572,388 S1,377,463 Other Paid-in Capital 3,888 2,581 3

Retained Earnings 387,251 353,570 p

1,963,527 1,733,614 Preferred Stock Series Without N1andatory Redemption Requirements 372,472 372,472 Series With N1andatory Redemption Requirements 266,929 274,330 Long-Term Debt 2,745,723 2,371,933 5,348,651 4,752,349 Current Liabilities Short-Term Debt Bank Loans 54,225 5,900 Commercial Paper 46,690 Current Alaturities of Long-Term Debt 36,062 130,789 Accounts Payable 165,485 164,637 Taxes Accrued 68,421 72,121 Deferred Income Taxes-Fuel (17,052) 5,717 Interest Accrued 82,294 64,943 Disidends Declared 23,380 22,969 Other 18,130 17,372 e

k 430,945 531,138 Deferred Credits Accumulated Defened Income Taxes 273,528 224,953 Accumulated Deferred investment Tax Credits 204,061 163,422 Other 47,010 30,687 524,599 419,062 TgrJ

$6,304,195

$5,702,549 e.

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Philadelphia Electric Company and Subsidiary Companies Ccn:clidatzd Stctamanis cf Rotained Earnings For the Year Ended December 31 1981 1980 1979 (Thousands of Dollars) sanance, January 1 S 353,570

$338,154 S333,649 Net income 277,565 227,131 194,471 G31,135 565,285 528,120 Cash Dividends Declared Preferred Stock (at speciGed annual rates) 53,762 52,973 44,760 Common Stock ($1.90 per share in 1981 and

$1.80 per share in 1980 and 1979) 189,476 157,423 144,984 Espenses of Capital,W.ckIssues 646 1,319 222 s

243,884 211,715 189.966 Balance, December 31 S 387,251

$353,570 5338,154

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Consolidated Statements of Changes in Financial Position Sources of Funds Net income S 277,565 S227,131 S194,471 Charges (Credits) Not Atfect'ng Funds Depreciation, Amortiration and spent ruel Costs 144,031 130,354 123,066 Deferred Income Taxes, net 2,011 (12,121) 44,854 Investment Tas Cn'de, net of Amortization 25,049 28,135 (3,019)

Allowance for Other Funds Used During Construction (65,013)

(50,483)

(46,008)

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Total from operations 383,643 323,016 313.364 Sales of Securities long-Term Debt 423,500 275,000 200,000 Preferred Stock 72,000 i

Common Stock 194,925 137,816 99,988 Increase (Decteue)in Short-Term Debt 1,635 (32,597) 68,968 Sale of Salera Station Noclear Fuel 100,166

=

Sale of Tas llenefits 53,743

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Total from Financmus 773,969 452,219 368,956 i

Tot:.8 sourevs

$1,157,612 S775.235

$682.320

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Uses of Funds Additions to Utility Plant 787,075 579,802 421,615 Allowance for Other Fun.ds Used DLr;ng Construction (65,013)

(50,483)

(46,008)

Dividends on Preferred and Common Stock 243,238 210,396 189,744 Increase (Decrease)in Deferred Fuel Expenw (42,347)

(72,464) 79,285 Retirement of long/rerm Debt 137,470 140,671 56,169 Increase (Decrease)in Other Items of Working Capital 62,144 (36,286)

(28,114)

Other, nct 35,045 3,599 9,629 Total use.

S1,157,612 S775,235

$682.320 i

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Notes to Financial Statement]

1. Significant Generet. All utility subsidiary companies of Philadelphia Electric Company are wholly-owned Accounting and are included in the consolidated financial statements. Non-utihty subsidiaries are included in insestments and Policies:

accounttd for by the equity method. The t.ccounts are maintained in accordance with the uniform systems of accounts prescribed by the regulatory authorities having jurisdiction.

Revenues. Revenues are recorded in the accrunts upon billing to the customer. Rate increases are billed from dates authorized or permitted to become etTective by the regulatory authorities.

Fuel Expenses. For financial reponing purposes, the Company defers the under or oser collection of fuel espense which is recoverable under energy adjustment clauses until it is subsequently billed. For income tas purposes, fuel expense is considered an expense w hen incurred.

l The Company leases nuclear fuel for use in its r.uclear generating stations. Nuclear fuel costs are I

charged to fuel expense on the basis of the number of units of thermal energy prmfuced as they relate to the estimated total thermal units to be produced oser the life of the fuel. Commencing in May,1981. the estimated dispo al costs of spent fuel are being charged to operations as permitted for rate making purposes. Such amounts, net of elated deferred income taxes, are deposited in an escrow account for funding of future costs. The Company belic es that any additional costs, which may be significant, would be recoverable through adjustments of rates charged to its customers.

Depreciation. For financial reporting purposes, depreciation is a rovided over the estimated service lives of the plant on a straight line basis, Commencing in May,1980, the estimated decommissioning costs of portions of the nuclear plants are being charged to operations as permitted for rate making purposes. Such amounts, net of deferred income taxes, are deposited in an escrow account for funding of future costs. The Company belieses that any additional costs, w hich may be significant, would be recoverable through adjustments of rates charged to its customers. The annual depreciation provisions, exprewed as a percent of aserage depreciable utility plant in service, were approximately 3.019 for 1981,3.06% for 1980 and 3.119 for 1979.

Income Taxes. Deferred income taxes are provided for differences between book and taxable income to the extent permitted for rate making purposes. Investment tax credits, other than credits resulting from contributions to the Tax Reduction Act Stock Ow nership Plan for employees w hich do not affect income, are deferred and amortized by credits to income over the estimated usefullife of the related utility plant.

Attowance for Funds Used During Construction (AFUDC). AFUDC is a non-cash item which is defined in the uniform systems of accounts as "the net cost for the period of construction of borrowed funds used for construction purposes and a reasonable rate on other funds when so used." AFUDC is recorded as a charge to Construction Work in Progress, and the equivalent credits are to " Interest Charges" for the pre-tas cost of borrrowed funds and to "Other income" for the remainder as the allowance for equity funds. The rate used for capitahiing AFUDC, w hich averaged 8.659 in 1981,7.859 in 1980, and 7.454 in 1979, is computed under a method prescribed by the regulatory authorities. The rate is a " net after-tas rate" and the current income tax reductions applicable to the interest charges capitalized, 563.875,000 in 1981, 550,083,0(X) in 1980 and $34,754,000 in 1979, are recorded in "Other income." AFUDC is not included in taxable income and the depreciation of capitalized AFUDC is not a tas-deductible expense.

Retirement Plan.The Company has a non-contributory trusteed retirement plan applicable to all regular employ ees. Pension costs include nsmal cost for the year and amortization of unfunded prior service costs, oser ten to Iw enty-year penods (see Note 10). Approximately 79% of such costs w cre charged to operating expense and the remainder, associated with construction labor, to the cost of new utility plant.

Gas Exploration and Development Costs. The Company has insested in several joint ventures for esploring atyl drilling for gas. These costs are capitalized under the full cost method and charged to operations commensurate with the use of gas produced by these ventures. Non. utility property and other investments at December 31,19M1, and 1980, include unamortired capitalized costs of $46,294,000 and 532.224.000, respectively.

f n

2. Common Stock:

At December 31,198 I and 1980. Common Stock, without par value consisted of IM),(XX),(XX) shares authorized and 108,507,097 shares and 92,632,571 shares, respectively, outstanding. At Decerr,xr 31 1981, there were 4,787,024 shares reserved for issuance under stock purchase plans.

Number of Shares Amounts Common Stock iwued:

1981 1980 1979 1981 1980 1979 (Thousands of Dollars)

Public Sales 12,800,000 7,000,000 4,000,000

$154,786

$101,360

$63,460 Disidend Reinvestment and Stock Purchase Plan 2,667,081 2,399,418 1,740,991 34,809 31,593 26,389 Employee Stock Purchase Plan 407,445 349,937 279,315 5,330 4,863 4:416 Tas Reduction Act Stock Ownership Plan 350,225 5,723 Ltals 15,874,526 9,749,355 6,370,531

$194,925

$137,816

$99.988

3. Preferred Stock,

$100 par, cumulative, at December 31,1981 and 1980 Number of Shares Amount Current Refunding Redemption Restricted Authorized Outstanding i

Price sa>

Prior to ibi 1981 1980 1981 1980 (Thousands of Dollars)

Series (without mandatery rede,aption requirements):

9.509

$106.50 750,000 750,000 750,000

$ 75,000

$ 75,000 8.759 107.00 650,000 650,000 650,000 65,000 65,000 7.859 105.00 500,000 500,000 500,000 50,000 50,000 7.809 105.50 750,000 750,000 750,000 75,000 75,000 7.75'fr 103.00 200,000 200,000 200,000 20,000 20,000 4.639 104.00 150,000 150,000 150,000 15,000 15,000 4.49 112.50 274,720 274,720 274,720 27,472 27,472 4.39 102.00 150,000 150,000 150,000 15,000 15,000 3.11 9 106.00 300,000 300,000 300,000 30,000 30,000 3,724,720 3,724,720 3,724,720 372,472 372,472 Series (with mandatory redemption requirements)

G) and id):

15.25'1(Sold 1980) 115.25 5-1-90 500,000 500,000 500,000 50,000 50,000 10G-(Sold 1980) 104.44 5-1-85 220,000 220,000 220,000 22,000 22,000 9.524 106.25 5-1-86 500,000 453,920 490,210 45,392 49,021 8.759 108.75 5-1-88 500,000 500,000 500,000 50,000 50,000 7.3259 104.98 750,000 660,000 690,000 66,000 69,000 74 104.00 400,000 335,370 343,090 33,537 34,309 2,870,000 2,669,290 2,743,300 266,929 274,330

{

Unclassified 3,405,280 Total Preferred Stock 10,000,000 6,394,010 6,468,020

$639,401

$646.802 a Rcdeemable, at the option of the Company, at the indicated dollar amounts per share, plus accrued dividends.

Prior to the date specified, none of the shares of each series indicated may be redeemed through refunding at an interest cost or dividend

- rate which is less than the dividend rate of such series.

a Redemption requirements (par value)in the period 1982-1986 are as fellows: 1982-$3,000,000; 1983-$5,129,000; 1984-$5,800,000; 1985-$5,800,(XM); and 19S6-$12,700,(XX).

r3 'lhe escess of the aggregate par value of reacquired shares,74,010 shares in 1981,45,210 shares in 1980 and 40,490 shares in 1979, cver the aggregate purchase price is reflected in Other Paid-In Capital: $1,307,000 in 1981, $378,0(X)in 1980 and $235,000 in 1979.

38

4. Long Term Debt, at December 31,1981 and 1980:
Philadelphia Electric Company 1981 1980 Series Due (Thousands of Dollmss)
First Refunding N1ongage lionds sai 2%%
1981 30,000 3%%
1982 35,000 35,000 3%%
1983 20,000 20,000 3%%
1985 50,000 50,000 4%%
1986 50,000 50,000 3%%5%
1987 1989 130,000 130,000 4W%15%%
1992-1996 455,256 383,007
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6%%11%%
1997-2001 559,988 565,089 8%%12%%
2002-2006 500,000 500,000 6%-18%%
2007-2011 448,500 198,500 Ltal First and Refanding N1ortgage Ilonds 2,248,744 1,961,596 Notes Payable-Banks ibi 1984-1987 225,000 225,000 Pollution Control Notes 5.5 % 13 %
1982-2011 130,205 31,250 100,000 Debentures 12%%
1981 Debentures 4.85%
1986 22,710 22,710 Debentures 14%%
1990 50,000 50,000 Debentures 14%%
2005 100,000 100,000 Unamonized Debt Discount and Premium Net (14,162)
(7,190)
Total Philadelphia Electric Company 2,762,497 2,483,366 Philadelphia Electric Power Company-a subsidiary:
Sinking Fund Debentures 4%%
1995 19,356 19,429 Unamortired Debt Discount (60)
(73)
Ltal Long-Erm Debt 2,781,785 2,502,722 Current Maturities included in Current Umbilities ici (36,062)
(130,789)
Long-Term Debt included in Capitalization
$2,745,723
$2,371.933 sai Utility plant is subject to the lien of the Company's mortgage.
ibi At interest rates ranging from prime rate to i12%% of prime rate.
ic long-term debt maturities in the period of 1982-1986 are as follows: 1982-536,062,(XK): 1983 - 529.207.000:
1984-585,300,0tu: 1985-5160,300,000, and 1986-580,300,000.
The Company has an agreement with a group of banks for a $400 million revolving credit and term loan. The agreement prosides a revolving credit availability through Niay 31,1985 and repayment during the period June I,1985 to Ntay 31,1987. There is a commitment fee of %9 on the $400 million during the credit availability period and thereafter %4 on outs:anding balances. The interest rate during the credit availability period is 105% of either the prime rate of a major bank or 1% above the rate on 90-day certificates of deposit, w hichever is higher, and 107% of such higher rate during the repayment period.
5. short Term Debt:
1981 1980 (Thousands of Dollars)
Aserage Short-Term Borrowings
$146,273
$54,716 Average Interest Rates, Computed on Daily Basis 17.80 %
15.07%
N1asimum Short-Term Borrowings Outstanding
$266,512
$161,143 Aserage Interest Rates on Short-Term Borrowings at December 31:
Bank Loans 16.37 %
20.53%
Commercial Paper 15.11 %
included in Bank loans as of December 31,1981 is $50,000,000 at an interest rate of 16.5%,
under a $100,000.000 Two-Year Euro Dollar revolving credit facility, effective April 6,1981. Such credit facility prosides for a commitment fee of 3/8G on the unused amount of the credit facility.
As of December 31,1981 the Company had borrowed 54,225,000 under informal lines of credit with domestic banks aggregating $239,175,00tl The Company generally does not hase formal compensating balance arrangements with these banks.
i-u_
s. Jointly-owned The Company's ownership interests in jointly-owned utility plant, at December 31,1981 were as follows:
Electric Transmission Utiuty Plant:
Production Plants Plant Peach llottom Salem Keystone Conemaugh Operator Philadelphia Public Service Penn9 vania Pennsylvania Wrious 1
Electric Electric and E!cetric Electric Companies Company Gas Company Company Company Participating Interest 42.49%
42.59%
?0.99%
20.72 %
21% to 43%
Company's share of; tThousands of Dollars)
Plant in Scrsice S387,761 S798,805 S47,01S S57,163 569,141 Accumulated Depreciation 73,520 56,528 19,894 16,388 7,275 Construction Work in Progress 12,064 18,588 1,068 761 The Company's participating interests are financed with Company funds and, when placed in service, all operations are accounted for as if such participating interests were w holly-owned facilities.
7. Taxes on income:
1981 1980 1979 (Thousands of Dollars) included in operating expenses-Current Federal S 75,558 S 55,416 S 29,844 Current State 26,866 22,243 7,376 102,424 77,659 37,220 Deferred Federal 6,007 (4,653) 41,058 Deferred State (3,996)
(7,468) 3,796 2,011 (12,121) 44,854 Investment tas credits, net of amonization-Federal 25,049 28,135 (3.019)
Ltal Federal 106,614 79,898 67,883 Total State 22,870 14,775 11,172
$129,484 S 93,673 S 79.055 included in other income:
Current Federal (50,299)
(39,132)
(27,021)
Current State (12,865)
(9,893)
(6,863)
S(63.164)
S(49,025)
S(33.884)
Total income tas provisions:
Federal 56,315 39,766 40,862 State 10,005 4,882 4,309 S 66.320 S 44,648 S 45,171 Investment tas credits reduced Federal income taxes currently payable by $29,817,000 in 1981, $32,428,0(X) in 1980 and $605,000 in 1979. Approximately $53,000,(KX) of additional investment tas credits available in 1981 have not been realized due to limitations based on tasable income. These credits may be used to reduce Federal income taxes in future years through 1996. Investment tax credits consist of(a) the basic credits allowable of 104 plus (b) a credit of 1 %% resulting from the Tas Reduction Act Stock Ownership Plan for employees
($6,200,000 in 19P 1. none realized in 1980 and 1979). The additional credits w hich are passed on to the employees of the Company in the form of Philadelphia Electric Company Common Stock have no effect on net income.
In December,1981, the Company sold the tax benefits attributable to its ownership interest in the Salem Station Unit No. 2. This transaction was structured under the safe harbor lease provisions of the Economic Recovery Ta Act of 1981. The proceeds from the sale, $53,743,000, have been credited to Deferred income Taxes
($24,759,000), Deferred investment Tax Credits ($21,863.000) and other Deferred Credits ($7,121,000) and will be amonized by credits to income over the estimated useful life of the plant.
lleginning May 1.1981, the normalization ofincome taxes associated with capitalized pension costs and payroll and realty tases was adopted f r both accounting and rate making purposes.
80 L
I Prmisions for deferred income tases consist of the following tas effects ofliming differences between tas and book income:
1981 1980 1979 (Thousands of Dollars)
Depreciation and amortization S 25,452 S 25,655
$ 26,981 Recoupment resenue (18,462)
Deferred fuel espense (21,804)
(37,369) 40,899 Other (1,637)
(407)
(4,564)
$ 2,011
$(12,121)
$ 44,854 The total income tas provisions ditTer from amounts computed by applying the Federal statutory tas rate to income and adjusted income before income tases for the following reasons:
Net income
$277,565
$ 227,131 S 194,471 1htal income tas provisions 66,320 44,648 45,171 Income before income taxes 343,885 271,779 239,642 Deduct-allowance for funds used during construction (non. taxable) 188,797 147,550 113,383 Adjusted income before tases
$155,088
$ 124,229
$ 126,259 income tases on above at Federal statutory rate of 469 71,340 57,145 58,079 increase (decrease) due to:
Escess of us depreciation over book depreciation not normalized (551)
(1,338)
(2,987)
State income tas, net of j
Federal income tas benefits 5,436 2,636 2,327 Tases and pension costs capitalized but expensed for tas purpmes (3,226)
(7,028)
(6,382)
Amortitation of investment tas credits presiously deferred (4,769)
(4,293)
(3,624)
Other, net (1,910)
(2,474)
(2,242)
T.tal income tas provisions S 66,320
$ 44,648
$ 45,171 Prosision for income tases as a percent of:
Income before income tases 19.3%
16.4%
18.8 %
Adjusted income before income tases 42.8%
35.9%
35.8 %
8. Taxes, Other than Ciross receipts
$100,912 S 90,487
$ 67,385 income:
Capital stock 19,600 19,046 17,000 Realty 9,555 9,398 8,f)19 Other, principally social security 15,245 14,830 13,442 Total
$145,312
$133,761
$106,676 e, t. eases:
Certain leases, including the nuclear fuel contracts for Peach Ilottom and Salem, meet the criteria l
of a capital lease as defined by Financial Accounting Standards, but are accounted for as operating leases in accordance with the rate making process. If these leases were capitalized they would not have a material etTect on 3
assets, liabilities or related expenses.
The minimum rental commitments under all noncancelable agreements aggregated $378,514,000 at December 31,1981. The annual rental commitments are estimated to be $83,020.000 for 1982; $89,459,000 for e
1983; $89,995,(XX) for 1984; $46,034,tXX) for 1985; and 59,155.000 for 1986.
^
Rental pay ments charged to operating expenses were as follows:
1981 1980 1979 (Thousands of Dollars)
Nuclear Fuel
$26,709
$21,177
$21,747 Other 24,782 21,235 19,912 Tbtal
$51,491 S42,412 S41,659 The Company's proportionate share of the contractual liabilities to purchase nuclear fuel under
)
lease agreements for the Peach Hottom Station and Salem Station as of December 31.1981 was $199,045,(XX).
Independent fuel companies have been authorized to acquire and ou n up to a maximum of $425,000.0(X)of nuclear fuel at any one time and have contracted to sell the energy therefrom to the Company.
31
10. Retirement Plan lietirement plan costs, which are funded as accrued, aggregated $31,7m),CM) in 1981, costs:
$28,575,(MN)in 1980, and $25,713,(XX)in 1979. Plan data as of the dates of the most recent actuarial reports is as follows:
January 1 1981 1980 Actuarial present value of accumulated plan benefits tbased on 6.59 (Thousands of Dollars) awumed rate of retuno:
Vested
$3'5 786 S295,999 c
Nons ested JLS,317 35,453
$365,103
$331,452 Net assets available for benefits
$332,027
$277,223
11. Segment Electric Gas Steam Total I
(Thousands of Dollars) 1981 Operating revenues
$2,002,063 S356,431 S74,931
$2,433,425 Operating espenses, excluding depreciation 1,586,506 322,008 71,635 1,980,149 Depreciation 117,270 11,294 1,719 130,283 Total operating expenses 1,703,776 333,302 73,354 2,110,432 Operating income
$ 298,287
$ 23,129 S 1,577 S 320,J33 Utility plant additions S 746,535 S 40,432 S
108
$ 787,075 December 31:
Alkicable assets Net utility plant (*)
5,372,240 314,652 27,194 5,714,086 N1aterials and Supplies 101,956 29,986 251 132,193
$5,474,196
$344,638
$27,445 5,846,279 Nonalhicable assets 457,916 Totat assets
$6,304,195 1980 Operating revenues S1,766,956
$290,743
$65,695 S2,123,394 l
Operating expenses, excluding depreciation 1,414,038 258,063 62,380 1,734,481 Depreciation 111,106 10,169 1,672 122,947 Ltal operatmp expenses 1,525,144 268,232 64,052 1,857,428 Operating income S 241,812 S 22,511 S 1,643 S 265,966 Utility plant additions S 540,628 5 38,833 S 341 S 579,802 December 31:
Alh> cable assets:
Net utility plant (*)
4,867,879 283,414 28,748 5,180,041 N1aterials and Supplies 102,193 18,582 311 121,086 S4,970.072
$301,996 S29.059 5,301,127 Non lhicable awets 401,422 Total assets
$5,702,549 1979 Operating resenues
$1,311,891 S221,135 S45,479 S1,578,505 Operating expenses, excluding depreciation 975,414 194,416 42,268 1,212,098 Depreciation 109,990 8,944 1,674 120,608 Total operating expenses 1,085,404 203,360 43,942 1,332,706 i
Operating income S 226,487 S 17,775 S 1,537
$ 245,799 Utility plant additions S 401,674 S 19,490
$ 451 S 421,615 December 31:
Alkicable assets:
l Net utility plant (*)
4,449,522 261,719 30,141 4,741,382 Staterials and Supplies 91,685 18,017 299 110,001 l
$4,541,207 S279,736 S30,440 4,851,383 i
Nonalkrable assets 389,877 Total assets
$5,241,260
(-sincludes construction work in progress and allocated common utility property.
l I
l
12.Comndements and The Company has incurred substantial commitments in connection with its construction program.
E ~ W3'*:
Construction expenditures are estimated to be $881,000.000 for 1982 and $2,267,mX),000 for 1983-1985. These estimates are resiewed and revised periodically to renect changes in economic conditions, revised load forecasts and other appropriate factors. The nuclear plant facilities under construction require numerous permits and licenses,w hich the Company cannot be assured will be issued at completion of the facilities.
The Price-Anderson Act places a " Limit of Liability" of $560,000,000 on each licensed nuclear facility for public liability claims that could arise from a nuclear incident involving any licensed facility in the nation.
The Company and its co-owners of the Peach Bottom and Salem Stations have insured for this exposure by purchasing private insurance in the maximum available amount of $160,000,000 and the remainder is provided by indemnity agreements with the Nuclear Regulatory Commission. In the event of a nuclear incident invohing any licensed reactor in the United States, the Company could be assessed up to $8,500,000 per incident with a maximum amount of $17,000,(XX)in any onc > car.
The Company is insured for damage to its nuclear plant facilities at Peach Bottom and Salem.
3 This insurance provides coverage for losses up to $450,000,000 and an additional $247,000,000 for losses in excess of $500,000,00(L Under the terms of the various insurance agreements the Company could be assessed up to $28,000,(X)0 for losses incurred at any of the plants insured by the insurance companics. The Company is a self-insurer, to the extent of its ownership interests, for any property loss in excess of the insurance coverage.
The Company, along with other nuclear facility operators, formed an industry mutual insurance company to provide replacement power cost insurance coverage up to a maximum of $179,400,000 for a single unit loss over a two-year period in the event of a major outage a' a nuclear station. The premium for this coverage is subject to an assessment for adverse loss experience, and the coverage currently applies to Peach Bottom Units 2 and 3, and Salem Units I and 2. The Company's maximum share of any assessment is $13,805,000.
Actions have been filed in the U.S. District Court against the Company with respect to alleged discrimination in its employment or promotion practices. Counsel is of the opinion that the ultimate outcome of these actions would not have a material adverse effect on the financial position of the Company.
13. Quarterfy Data The data shown below includes all adjustments (consisting of normal recurring accruals) w hich the (Unaudited):
Company considers necessary for a fair presentation of such amounts.
Earnings Average Shares Earnings Per Quaner Operating Applicable to Outstanding Average Share Ended Revenues Net income Common Stock (Thousands)
(Dollars)
(Thousands of Dollars) 1981 1980 1981 1980 1981 1980 1981 1980 1981 1980 March 31
$647,927 $564,353
$69,904 $53,605 $56,382 $42,125 92,706 82,944 S.61 S.51 June 30 543,612 455,326 58,475 43,891 45,017 30,308 98,383 83,649
.46
.36 September 30 620,697 567.810 79,198 78,920 65,763 65,052 99,227 90,557
.66
.72 December 31 621,189 535,905 69,988 51,015 56,599 37,465 107,749 91,970
.53
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14. suppsementary The following sun aentary information is supplied to show the estimated effects ofinnation Information to because the Company is required to do so, according to the Statement of Financial Accounting Standards No. 33.
{ **j The methods required to des clop this information are approximate and complex, and may not necessarily reflect the of Inkhn for the true effects ofinflation on the Company. Under existing regulatory law, the Company is permitted to recover actual WarEnded "Perating and capital costs incurred to serve customers and a reasonable return on investment, and the Company Decomtwe 31, believes it will be allowed to recover cost increases caused by innation as such increases are actually incurred.
1981 (Unaudited):
Effect of Inflation on Reported Income. Ir, adjusting the Consolidated Statements of Income, as shown below, only depreciation expense is required to be adjusted for the etrect of innation. The " constant dollar" and " current cost" depreciation expenses were determined by applying the Company's depreciation rates to restated 1981 average depreciable plant in service. Fuel inventories have not been restated from their original cost because the operation of fuel adjustment clauses pennits the automatic recovery of fuel costs.
If the Company had to replace its entire utility plant at this time, the costs to do so would greatly exceed the original costs incurred w hen the facilities were built because of the cumulative etTect of innation. These plant replacement costs, net of accumulated depreciation, are estimated at $10,225,000,000 as restated for " constant dollars" and $10,851,000,000 as restated for " current costs." Under the " constant dollar" method, the Company is required to restate the original costs in terms of dollars of equal purchasing power, as measured by the Consumer Price Index for all Urban Consumers. The " current cost" method uses Handy-Whitman Indices of Public Utility Construction Costs, Results from the two methods difTer because construction costs have increased more rapidly than consumer prices in general. Ilowever, during 1981,1980 and 1979, general inHation increased more rapidly than specific prices. Under the " current cost" method, the effect ($856,000,000) of general in0ation in 1981 on net utility plant exceeded the increase ($670,000,000) in specific prices by $186,000,000 and by $205,000,000 and
$85,000,000, for 1980 and 1979 expressed in average 1981 dollars. In the Company's opinion, the " current cost" method is more appropriate for estimati 3 the effect of in0ation on utility plant.
l Conso.idated Statements of Incomo Adjusted for inflation for the War Ended December 31,1981 (Thousands of Dollars)
As Adjusted For Constant Current Dollars Costs (Average (Average As Reported 1981 Dollars) 1981 Dollars)
Operating Revenues
$2,433,425
$2,433,425
$2,433,425 Depreciation 130,283 293,000 331,000 Other Operating Expenses 1,980,149 1,980,149 1,980,149 Operating income 322,993 160,276 122,276 Other Income 130,634 130,634 130,634 Income Before Interest Charges and Preferred Stock Dividends 453,627 290,910 252,910 Interest Charges and Preferred Stock Dividends 229,866 229.866 229.866 Eamings Applicable to Common Stock' S 223,761 S 61,044
$ 23,044 Earnings Per Average Sharca
$2.25
$0.61 S0.23
Earnings applicable to Common Stock for 1980 and 1979, restated in average 1981 dollars, amounted to $54.887 and
$46,633,respectively, for Constant Dollars and losses of $2,313 and $8,368, respectively, for Current Costs.
~ Earnings per average share for 1980 and 1979, based on the restated earnings were 50.63 and $0.58, respectively, for Constant Dollars and losses of $0.03 and $0.10, respectively, for Current Costs.
34
Effects of inflation on Shareholders' Equity.The efTect of inflation on the Company's actual original cost of net utility plant amounted to $456,000.000 for 1981, ($626,000.000 for 1980, and $699,000,000 for 1979 expressed in average 1981 dollars). These intlationary effects were not recovered because rates are based on depreciation of original cost plant. If the Company were required to charge these amounts against income in 1981,1980 and 1979, earnings applicable to common stock would have become losses of $232,239,000, and
$433,455,000, and $511,628,000, respectively. The effect of in0ation (8.9% for 1981,12.4% for 1980 and 13.39 for 1979) on the value of the Company's debt and preferred stock approximated $308,000,000 for 1981,
$426,000,000 for 1980, and $480,000.000 for 1979 (1980 and 1979 expressed in average 1981 dollars) and would partially offset the effect of inflation on utility plant.
If the Company had earned at the rate of inflation (8.9%) on its con' mon shareholders' equity in 1981, earnings would have been approximately $165,000,000 compared with reported earnings of $223,761,000.
Thus, reported earnings applicable to common stock in 1981 were about $60,000,000 abi.ve the Icvel necessary to g
offset the impact of inflation on shareholders' equity.
Adjustment of Selected Five Year Financiallnformation. In order to reflect the impact of general inflation on selected financial information for each of the years 1977 through 1981, the following table shows actual data compared with data adjusted to 1981 dollars.
Five Year Summary of Selected FinancialInformation Showing Adjustments to Reflect inflation 1981 1980 1979 1978 1977 Development of Consumer Price Index Adjustment Factors Average During Year 272.4 246.8 217.4 195.4 181.5 Year End 281.5 258.4 229.9 202.9 186.1 Consumer Price Index N1ultiplier A = Average (272.4 +Index) 1.00 1.10 1.25 1.39 1.50 B = Year End (281.5 +1ndex) 1.00 1.09 1.22 1.39 1.51 Actualand Adjusted Dividends Per Common Share Financiallnformation Actual Paid
$1.90 S1.80
$1.80
$1.80
$1.76 Adjusted (Actual x A)
S1.90
$1.98 S2.25 S2.50
$2.64 Alarket Price Per Common Share Actual year End
$13.63 S12.50
$13.75
$15.50
$19.63 Adjusted (Actual x B)
S13.63
$13.63 S16.78 S21.55
$29.64 Operating Revenues (thousands of dollars)
Actual S2,433,425 S2,123,394 $1,578,505 S1,456,758 $1,394,762 Adjusted (Actual x A)
S2,433,425 S2,335,733 S1,973,131 $2,024,894 S2,092,143 Common Shareholders' Equity (thousands of dollars)
Actual Year End
$1,963,527 S1,733,614 S1,580,004 $1,475,276 $1,437,202 Adjusted (Actual x B)
S1,963,527 S1,889.639 S1,927,605 S2,050.634 S2,170,175 Accountants' Report To the Shareholders and Board of Directors Philadelphia Electric Company We have examined the consolidated balance sheets of Philadelphia Electric Company and Subsidiary Companies as of December 31,1981 and 1980, and the related consolidated statements of income, retained earnings, and changes in financial position for each of the thre; years in the period ended December 31, 1981. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the consolidated financial statements referred to above present fairly the financial position of Philadelphia Electric Company and Subsidiary Companies as of December 31,1981 and 1980, and the resuh> of their operations and the changes in their 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.
]
1900 Three Girard Plaza Philadelphia, Pennsylvania M,A
__ b February 2,1982 M
35
Financial Stati: tic 3 Summary of Earnings (N!illions of Dollars) 1981 1980 1979 1978 1977 1976 1971 Operatmg Revenues (for details see pages 23 and 32)
$2,433.4 S2,123.4 S1.578.5 $1,456.8 S t.394.8 S1,224.1 S608.1 f
Operating Expenses Fuel and Energy Interchange 1,187.6 1,090.5 661.7 573.9 575.3 480.7 189.8 Labor 256.8 232.1 209.3 195.0 179.2 161.9 108.8 Other Ntaterials. Supplies and Services 260.9 184.5 155.4 135.0 121.4 88.9 45.2 Leal Operation and N1aintenance 1,705.3 1,507.1 1,026.4 903.9 875.9 731.5 343.8 Depreciation 130.3 122.9 120.6 116.5 107.8 98.0 55.9 Tnes 274.8 227.4 185.7 194.7 188.9 183.2 80.8 f
Total Operating Expenses 2,110.4 1.857.4 1.332.7 1,215.1 1,172.6 1.012.7 480.5 Operating income 323.0 266.0 245.8 241.7 222.2 211.4 127.6 Other income Allowance for Other Funds thed During Construction 65.0 50.5 46.0 37.6 36.2 30.1 14.4 income Tn Credits, net 63.2 49.0 33.9 26.3 25.3 24.2 (1.7)
Other, net 2.5 3.4 1.7 4.6 3.5 2.6 3.2 income Before Interest Charges 453.7 368.9 327.4 310.2 287.2 268.3 143.5 Interest Charges Long-Term Debt 266.7 225.0 193.0 176.3 161.0 147.6 60.9 Short-Term Debt 33.2 13.9 7.3 2.5 2.6 3.6 6.3 Allowance for llorrowed Funds Used During Construction (123.8)
(97.1)
(67.4)
(53.4)
(49.8)
(47.5)
(17.3)
Not interest Charges 176.1 141.8 132.9 125.4 113.8 103.7 49.9 Not income 277.6 227.1 194.5 184.8 173.4 164.6 93.6 Preferred Stock Dividends 53.8 52.2 44.8 43.5 40.7 39.0 15.3 Earnings Applicable to Common Stock 223.8 174.9 149.7 141.3 132.7 125.6 78.3 Dividends on Common Stock 189.5 157.4 145.0 135.7 124.9 107.7 60.7 l
Earnings Retained S
34.3 S 17.5 S 4.7 S 5.6 S 7.8 $
17.9
$ 17.6 l
Earnings per Average Share l
(Dollars) 2.25 S 2.00 S 1.86 S 1.87 $
1.87 5 1.91 S 2.10 Dividends per Common Share (Dollars) 1.90 S 1.80 $
1.80 $
1.80 S 1.76 S 1.64
$ 1.64 Common Stock Equity (Per Share)
$ 18.10 S 18.72 S 19.06 $ 19.28 S 19.26 $ 19.13
$19.54 Averige Shares of Common Stock Outstanding (Millions) 99.6 87.3 80.5 75.4 70.8 65.6 37.3 See page 21 for Managements Discussion and Analysis of Financial Condition and Results of Operations.
t i
Operation and Maintenance l
Comparison of Electric Expenses (Less Fuel Costs Per Million BTU Fuel and Interchange) om unun omms
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Summary of Financial Condition 1981 1980 1979 1978 1977 1976 1971 December 31 (N1illions of Dollars)
Assets Utility Plant, at original cost S7,044.7 56,415.7 $5,885.5 $5,502.5 $5,121.1 S4,747.2 S2,851.0 I
Less: Accumulated Depreciation 1,330.6 1,235.7 1,144.1 1,053.3 955.3 860.3 585.7 Net Utility Plant 5,714.1 5,180.0 4,741.4 4,449.2 4,165.8 3,886.9 2,265.3 Nonutility Property and Other Investments 77.8 58.7 47.4 30.0 27.4 13.2 6.0 Current Assets Cash and Temporary Cash Investments 30.7 6.7 10.6 38.6 30.8 23.8 25.2 Accounts Receivable 342.4 300.3 230.9 223.5 184.0 168.0 63.0 N1aterials and Supplies 132.2 121.1 110.0 93.3 102.3 88.3 34.2 Deferred Fuel Expense (31.3) 11.0 83.5 4.2 23.0 19.9 Other 6.8 6.2 4.6 4.3 3.8 2.6 2.0 Ikferred Debits 31.5 18.5 12.9 7.5 10.9 14.7 6.6 Total
$6,304.2
$5,702.5 $5.241.3 S4.850.6 $4,548.0 S4,217.4 S2.402.3 Lhbilities Common Stock
$1,572.4 S1,377.4 S1,239.6 S1,139.7 S1,106.7 S1,002.8 S 528.2 Othn Paid-In Capital 3.9 2.6 2.2 2.0 1.8 1.7 1.2 Retained Earnings 387.2 353.6 338.2 333.6 528.7 321.2 254.7 Common Shareholders' Equity 1,963.5 1,733.6 1,580.0 1,475.3 1,437.2 1,325.7 784.1 Preferred Stock:
Series Without N1andatory Redemption Requirements 372.S 372.5 372.5 372.5 372.5 372.5 222.5 Series With N1andatory Redemption Requirements 266.9 274.3 206.8 210.9 161.7 162.6 40.0 long-Term Debt 2,745.7 2,371.9 2.241.9 2,173.2 2.078.3 1,936.4 1,161.8 Total Capitalization 5,348.6 4,752.3 4,401.2 4,231.9 4,049.7 3,797.2 2,208.4 Current I.iabilities Short-Term Debt 54.2 52.6 85.2 16.2 14 9 7.2 49.3 Current N1aturities of long. Term Debt 36.1 130.8 127.8 52.9 28.7 36.9 17.1 Accounts Payable and Dividends Declared 188.9 187.6 133.5 120.3 92.4 83.9 40.7 Taxes Accrued and Deferred 51.4 77.8 65.1 44.5 36.7 30.7 22.3 Interest Accrued 82.3 64.9 58.1 51.0 48.6 43.2 17.5 Other 18.1 17.4 13.9 7.9 4.1 4.6 15.2 Deferred Credits 524.6 419.1 356.5 325.9 272.9 213.7 31.8 Totai
$6,304.2 SS.702.5 SS.241.3 S4,850.6 $4,548.0 S4.217.4 S2,402.3 capital Investment aem ag S t, 40--
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Operating Stati:ti3a El.ECTRIC 1981 1980 1979 1978 1977 1976 1971 OPERATIONS Output (millions of kilowatt-hours)
Steam 9,931 11,234 11,279 13,160 11,468 13,385 19,849
[,
Nuclear 7,464 7,333 7,104 7,769 4,596 4,937 206 II draulic 1,397 1,240 2,155 1,700 1,997 2,065 1,738 3
Pumped Storage Output 1,101 1,050 1,270 1,109 1,223 1,062 1,639 Pumped Storage Input (1,624)
(1,526)
(1,847)
(1,606)
(1,761)
(1,506)
(2,302)
Purchase and Net Interchange 11,173 9,973 9,180 6,651 9,759 7,666 2,889 Internal Combustion 283 442 454 704 847 792 940 Other 528 716 36 86 Total Electric Output 30,253 29,746 29,595 29,487 28,845 28,437 25,045 Sales (millions of kilowatt-hours)
Residential 8,014 9,341 7,968 7,875 8,110 7,585 6,649 q
Small Commercial and InJustrial 3,115 3,065 2,928 2,888 2,825 2,755 2,428 Large Commercial and Industrial 14,916 15,056 15,428 15,302 14,912 14,662 13,296 All Other 2,223 1,159 1,277 1,329 1,350 1,271 1,085 Total Enoctric Sales 28,268 27,621 27,601 27,394 27,197 26,273 23,458 Number of Customers, December 31 Residential 1,200,238 1,190,312 1,173,514 1,158,853 1,148,171 1,137,544 1,079,585 Small Commercial and Industrial 117,016 116,808 115,724 115,945 115,883 115,422 119,203 Large Commercial and Industrial 5,790 5,820 5,798 5,780 5,772 5,747 5,517 All Other 746 736 1,919 2,413 2,381 2,345 2,130 Total Electric Customers 1,323,790 1,313,676 1,296,955 1,282,991 1,272,207 1,261,058 1,206,435 Operating Revenues (millions of dollars)
Residential S 643.7 $ 607.8 S 461.0 S 430.8 S 427.6 S 373.2 S 198.3 Small Commercial and Industrial 285.9 249.8 189.0 176.5 168.4 149.3 78.6 i
Large Commercial l
and Industrial 917.1 813.9 587.4 544.0 513.4 442.9 198.2 All Other 155.4 95.4 74.5 73.1 68.3 59.4 31.6 Total Electric Revenues
$2,002.1 $1,766.9 $1,311.9 S1,224.4 S1,177.7 S1,024.8 $ 506.7 i
Operating Expenses (millions of dollars)
Operating expenses i
excluding depreciation
$1,586.5 S1,414.0 $ 975.4 S 896.3 $ 881.2 $ 750.2 S 344.2 l
Depreciation 117.3 111.1 110.0 106.3 97.9 88.0 50.4 Total Operating Expenses
$1,703.8 S1,525.1 $1,085.4 $1,002.6 S 979.1 S 838.2 S 394.6 Electric Operating income (millions of dollars)
$ 298.3 $ 241.8 $ 226.5 S 221.8 $ 198.6 $ 186.6 $ 112.1
(
Net Electric Utility Plant (millions of dollars)
$5,372.2 $4,867.9 $4,449.5 S4,167.1 $3,883.9 S3,604.5 S2,017.9 Average Use per Residential Customer (kilowatt-hours)
Without Electric Ileating 6,022 6,411 6,227 6,290 6,584 6,298 5.968 i
With Electric Heating 18,054 19,482 20,760 21,884 23,593 22,154 24,837
'Ibtal 6,699 7,058 6,829 6,833 7,097 6,710 6,187 Electric Peak Load, Demand (thous. kw) 5,731 6,095 5,641 5,667 5,888 5,346 5,313 Net Electric Generating l
Capacity-Year End Summer rating (thous, kw) 8,006 7,698 7,727 7,727 8,198 7,742 6,366 Cost of Fuel per Million Htu
$2.10
$1.90 S1.55 S1.29 S1.40
$1.24
$0.59 Btu per Net Kilowatt-hour Generated 10,930 10,787 10,810 10,773 10,882 10,529 10,782 3e
CAS OPERATIONS 1981 1980 1979 1978 1977 1976 1971 Sales (millions of cubic feet)
Residential 2,446 2,461 2,327 2,316 2,394 2,342 2,441 4,
llouse IIcating 24,675 23,671 23,593 24,974 26,335 24,540 25,165 Commercial and Industrial 45,670 42,890 37,452 32,784 31,017 33,390 40,624 All Other 127 92 93 94 86 89 102 Total Gas sales 72,918 69,114 63,465 60,168 59,832 60,361 68,332 Number of Customers, December 31 Residential 78,426 81,346 85,315 87,715 88,775 89,459 95,478 Ilouse Ileating 193,038 182,246 168,905 163,469 162,978 162,993 154,902 Commercial and Industrial 21,578 20,197 19.065 19,207 19,422 19,669 19,778 f
Total Gas Customers 293,042 283,789 273,285 270,391 271,175 272.121 270,158 Operating Revenues (millions of dollars)
Residential S 15.4 S 14.0
$ 10.7
$ 9.9 S 9.6 S 8.7
$ 6.2 flouse IIcating 128.5 108.5 91.2 86.6 84.1 73.3 45.8 Commercial and Industrial 209.7 166.7 118.4 92.2 80.4 76.1 34.8 All Other 0.5 0.3 0.2 0.2 0.2 0.2 0.1 Subtotal
$354.1 S289.5 S220.5 S188.9 S174.3
$158.3 S 86.9 Other Revenues 2.3 1.2 0.6 0.6 0.5 0.6 0.4 Total Gas Revenues
$356.4
$290.7
$221.1 S189.5
$174.8 S158.9 S 87.3 Operating Expenses (millions of dollars)
Operating expenses excluding depreciation
$322.0
$258.0
$194.4 S163.0
$145.7 S128.1 S 67.1 Depreciation 11.3 10.2 8.9 8.6 8.2 8.4 4.5 Total Operating Expenses
$333.3 S268.2 S203.3 S171.6
$153.9 S136.5 S 71.6 GLs Operating income (millions of dollars)
$ 23.1 S 22.5 S 17.8
$ 17.9
$ 20.9
$ 22.4 S 15.7 N;t G;s Utility Plant (millions of dollars)
S314.7 S283.4
$261.7 S250.5 S248.1 S247.5 S220.2 STEAM OPERATIONS Sales (millions of pounds) 5,484 6,044 6,581 7,336 7,165 7,735 8,223 Number of Customers, December 31 593 618 638 660 670 679 733 Operating Revenues tmillions of dollars)
S 74.9
$ 65.8 5 45.5 S 42.9 S 42.3 S 40.4 S 14.1 Operating Expenses (millions of dollars)
Operating expenses escluding depreciation S 71.6 S 62.4 S 42.3 S 39.3 S 38.0
$ 36.5 S 13.3 Depreciation 1.7 1.7 1.7 1.6 1.6 1.5 1.0 Total Operating Expenses S 73.3 S 64.1 S 44.0 S 40.9 S 39.6 S 38.0 S 14.3 sixm Operating income (millions of dollars)
$ 1.6 S
1.7 S 1.5 S 2.0 S 2.7 5 2.4 S (0.2)
Not Steam Utility Plant (millions of dollars)
$ 27.2 S 28.7 S 30.2 S 31.6 S 33.8 S 34.9 S 27.2 39
Sharchold:r Infcrmati:n Stock Exshange Listings. Atost PECo Securities are listed on the New York Stock Exchange and '
the Philadelphia Stock Exchange. Philadelphia Electric Power Company Debentures are listed on the Philadelphia Stock Exchange.
1 Dividends.The Company has paid dividends on its common stock continually since 1902.
8 The Board of Directors normally considers common stock dividends for payment in N1 arch, June, September and December.
The Company estimates that 569 of the $1.90 per share dividend paid to common shareholders in 1981 represents a return of capital which is not taxable as dividend income for Federal income tax purposes.
Dividend Reinvestment and Stocis Purchase Plan. Shareholders may use their dividends to purchase additional shares of common stock through the Company's Dividend Reinvestment and Stock Purchase Plan. Philadelphia Electric pays all brokerage and service fees.
All common and preferred shareholders have the opportunity to invest additional funds in common stock of the Company, whether or not they have their dividends reinsested-also with all fees borne by the Company.
The Plan has been amended to enable eligible individual participants in the Plan to elect to defer Federal income tax on up to $1,500 of reinvested dividends per year as provided by the Economic Recovery Tax Act of 1981.
Nearly 224 of the common shareholders are participants. In 1981, they invested more than $34 million through the Plan, including cash payments. Informa' tion concerning this Plan may be obtained from N1. W.
Rimerman, Treasurer, Philadelphia Electric Company,2301 Ntarket Street, P.O. Box 8699, Philadelphia, PA 19101.
Comments welcomed.The Company always is pleased to answer c,aestions and provide infor-mation. Please address your comments to N1rs. L. S. Binder, Secretary, Philadelphia Electric Company,2301 N1arket Street, P.O. Box 8699, Philadelphia, PA 19101.
Inquiries relating to shareholder accounting records, stock transfer and change of address should be directed to Philadelphia Electric Company,2301 N!arket Street, P.O. Box 8699, Philadelphia, PA l')l01, Attn:
Stock Transfer Section. (215) 841-5795 AnnualMeeting.The Annual N!eeting of the Shareholders of the Company will be held on April 14.1982, at 10:30 A.N1. at the Franklin Plaza Hotel,17th & Race Streets Philadelphia, PA.
Common stock shareholders of record at the close of business on N1 arch 5.1982 are entitled to vote at this meeting.
Notice of the meeting, proxy statement, and proxy will be mailed under separate cover. Prompt return of the proxies will be appreciated.
Form 10-K. Form 10-K. the annual report filed with the Securities and Exchange Commission,is available to shareholders upon written request to Philadelphia Electric Company,2301 N1arket Street, P.O. Box 8699. Philadelphia, PA 19101, Attn: Financial Division.
Shareholders.The Company has 266,613 shareholders of record of common stock, a 20%
increase in 5 years.
Transfer Agents and Registrars.
PillLADELPHI A ELECTRIC CON 1PANY-Preferred and Common St6cks Registrars:
Girard Bank. One Girard Plaza. Philadelphia, PA 19101 N1 organ Guaranty Trust Co. of NY,30 West Broadway, New York, NY 10015 Transfer Agents: Philadelphia Electric Company,2301 N!arket Street, Philadelphia, PA 19101 N1 organ Guaranty Trust Co. of NY,30 West Broadway, New York, NY 10015 PillLADELPHIA ELECTRIC CON 1PANY-First and Refunding N1ortgage Bonds Trustee:
The Fidelity Bank, Broad and Walnut Streets, Philadelphia, PA 19109 New York Agent: N1 organ Guaranty Trust Co. of NY,23 Wall Street, New York, NY 10015 PillLADELPHIA ELECTRIC COMPANY-Debentures PHILADELPHIA ELECTRIC POWER CONIPANY (A Subsidiary)-Debentures Trustee:
The Philadelphia National Bank, Broad and Chestnut Streets, Philadelphia, PA 19101 New York Agent:Irving Trust Company One Wall Street New York, NY 10015 General Office. 2301 N1arket Street P.O. Box 8699, Philadelphia, PA 19101.(215) 841-4000 NYSE-Composite Common Stock Prices, Earnings and Dividends by Quarters (Per Share) 1981 1980 Fourth Third Second First Fourth Third Second First Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter High Price
$14%
$14%
$13%
$14
$13%
$15%
S15%
$14%
1.ow Price
$12%
$12%
$11%
$11%
$11%
$12%
$12%
$11%
Earnings 53' 66*
46' 61' 41' 72' 36' 51' Disidends 50' 50' 45' 45' 45' 45' 45' 45' y
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PNiedelphia Elecedc Company BULK RATE 2301 Market Street U.S. POSTAGE PAID PO Box 8699 Philadelphia PA Phdadelphia PA 19101 Permit No. 378 l
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ML20050C039

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