ML20050E258

Forwards Annual Financial Rept 1981, Fourth Quarter Review, & 1982 Internal Cash Flow Projection

ML20050E258
Person / Time
Site:	Davis Besse
Issue date:	04/08/1982
From:	Maugans E CLEVELAND ELECTRIC ILLUMINATING CO.
To:	Saltzman J Office of Nuclear Reactor Regulation
Shared Package
ML20050E259	List: ML20050E258 ML20050E261
References
NUDOCS 8204130160
Download: ML20050E258 (6)

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s THE CLEVELAND ELECTRIC ILLUMIN ATING C051PANY P o. box 5000 e CLEVELAND, oHlo 44101 e TELEPHONE (216) 622-9800 e ILLUMINATING BLDG e

55 PUBLIC SoUARE Serving The Best Location in the Nation Edgar H. Maugans ViCE PRE SIDENT-FINANCE April 8, 1982 t-Cb 9

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.o Mr. Jerome Saltzman, Chief N

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Antitrust & Indemnity Group

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II' Nuclear Reactor Regulation Nuclear Regulatory Ccc: mission

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t Washington, D.C.

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Re: Docket No. 50-3%

Dear Mr. Saltzman:

Retrospective Premium Guarantee The Cleveland Electric Illuminating Company hereby provides the documents described below and enclosed herewith as evidence of its guarantee of its share ($5,138,000) of the retrospective premium which may be levied against the Davis-Besse Unit No.1 reactor licensees during calendar year 1982.

1.

The Cleveland Electric Illuminating Company 1981 Annual Report which includes certified financial statements for the calendar year 1981.

2.

The Cleveland Electric Illuminating Company 1981 Fourth Quarter Quarterly Review which includes financial state-ments for the quarter ending Decemb-11, 1981 (the 1982 First Quarter Quarterly Review ir aci ;> et available).

3 An Estimate of Cash Positior es lA e of Funds actual 1981 and projected 1982.

Accordingly, The Cleveland Electric Illuminating Company believes that a cash flow can be generated which would be more than adequate should it be required to pay any retrospective premium in the amount of $5,138,000.

Sincerely,

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/Viody E. H. Maugartsj Vice President-Finance

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RJU:j1 Enclosures cc: Donald G. Nicholson Vice President, Finance Toledo Edison C.npany BBASB8MiJ888%

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1982 Internal Cash Flow Projection for Davis-Besse Unit No. 1 Nuclear Power Station (Dollars in Thousands) 1981 1982 Actual Projeeted Retained Earning s (1)...................... $ 22,422

$ Adjustments Depreciation and Amortization...........

85,325 87,538 Deferred Income Taxes and Investment Tax Credits...........................

43,931 45,870 Allowance for Funds Used During Construction..........................

(83,000)

(107,000)

Total Adjustments.........................

46,2 %

26,409 Internal Cash Flow........................ $ 68,678

$ 26,409 Average Quarterly Cash Flow............... $ 17,170

$ 6,602 Percentage ownership in Unit.............. Davis-Besse Unit No. 1 = 51 38%

Maximum Total Contingent Liability........ $ 5,138

$ 5,138 (1)

" Retained Earnings" means net income after income taxes and dividends paid. The Company does not publish its projections of these amounts.

Accordingly, net income after taxes and dividends paid used in the 1982 projected data, although contrary to the Company's expectations, has been assumed to be zero. The figures shown for the 1982 projection year are those non-cash items necessary to establish that its maximum total contingent liability can be satisfied from internal cash flow.

EEHIlflqAllgg I, Edgar H. Mangans, Vice President-Finance of The Cleveland Electric Illuminating Company, hereby certify that the foregoing Estimate of Cash Position and Source of Funds for calendar year 1982 is derived from accurate data and reasonable assumptions and is a reasonable estimate.

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Dear Share Ownet luLowATTwoUR SALES OfVIDEND REINVESTMENT TAX As our construction prolects move closer to CURRENT. FUTURE RNANCINGS EMdiens of kwhrs)

SAVINGS REMINDER complehon, we wit see an easmg of our f5eed Hart of the money reouired to fund our new Late last year we maded you a brochure wNch for new capital wmch should reflect favorably hve-year construction budget is expected to descnbed tan sawmgs avadable to participants on our fmancmq costs and ultimately on earmngs come from retamed earmngs and depreciation in our Share Owner Dividend Remvestment and At the end of 1981, our construction program accrumas The tetance en have to come from Eermngs for common stock m the fourth g

E Stock Purchase Plan IDRP) The savmgs began for Perry Units et and #2 was very close to ifwestors through sales of secunt>es To that ouarter lof&ted $29 3 mishon or 58 cerits per seus's restil tras ir am

• 'th the new year (1982) as a result of changes scheduce and on budget. Perry Un f #1. scheduled end, we sold 4.000.000 common shares to the shara, on OD*ratmg revenues of $248 2 mdhon SM8'TB MmE flIOl0 feNg en federal encome tan provisions enacted as for service m May 1984. was 81 percent com-public 6n January 1482 which raesed $60 8 mdlen fu seis it 3 e it a a part of the Econome Recovery Tan Act of 1981 piete Perry Unit #2 was 40 percent complete and brought our numtwir of outstandmg shares Compared with earnmgs of $24 2 mdhon, or 52 FIESIDINTML 1m8 - 20 4.376 - 20 Smce the enading of the brochure, more than at year-end and is planned for servce m 1988 to about $5.000.000 A though we sold common cents per share, on oceratmg revenues of $230 0, milhon m tzst year's fourth quarter For the yea CCW RCIAL

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.7 2.500 of your fellow share owners have jomed We own 31 percent of each of these units stock last September. we felt we should seit more endsid December 31. 1961,earrwngs for common INDUSTRIAL.

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- 42 8290 2.7 the 18.500 share owners previously in the DRP The second umt of the Beaver VaHey Nuclear shares agam as a necessary first step m help-stock rcac hed $120 8 mdhon. or $2 52 per share.

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-12 2 m - 38 Their taxes on evidend mcome startmg with Power Stahon, being built by Duquesne Light ang us acNeve our long lerm innancial otyctwes on opef atsrig revenues of $10 bilhon corppared SAL ES TO th's payment win be deferred and reduced to Company. and in which we have a 25 percent One of our obtectives for 1982 is to reduce w'th Strnengs of $97 7 m:lhon, or $2 26 per UlfrMATE Capstal garn rates as long as certam holdmg mterest, was 48 percent complete at year end aWrage short-term debt from 1981 eevels so that shers, on revenues of $893 6 mdhon m 1980.

CUSTOMERS 3.975

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pened rewrements are met TNs urut is scheduled for service m 1986 we can mamtam our high commercaal paper Ths was the first time m our history that annual SAL ES TO UTIL.

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-435 275 -743 We menten this as a reminder mat you too ratmg and have more financmg fleurtwkty Another opersteg revenues topped one bdhon dottars TOTAL

( 052 - 60 t 7.500 - 36 can sha acNne segnihcant tax savengs in 1982 1

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ob echve is to mcrease the common equity rate t

The higher earnengs and revenues renect rate on future evidend payments made tNs year To oH from the 1981 level and over the tong term reacn incrseses granted m 1980 and 1981 The impact get full detads on DRP participation, call Share On January 25,1982, the U S Supreme Court a 40 t of rits mcreases more than ottset higher operat-24TH CONSECUTIVE ANNUAL DtVfDEND Owner Services on the toll frce telephone num-refused. on procedural grounds, to hear w ogy,c,o 42 percent equety rate Meetmg these

,,,,,n help us to improve the quahty at eng sspenses and mf erest charges and the effect INCREASE DECLARED bers lested on the last page of this Quarterly appeat of an ONo Supteme Court ruhng revers-our cre@t so that funds may be raesed at reason-of a greetir number of outstaneng shares.

On January 5.1982, your Board of Directors Review or wnte the Company We wdl send you 6ng a July 1980 Pubic Utihties Commission of aide cost pr lowstthour sales to uitsmate customers increased the quarterly @vidend to 54 cents per informahon required for you to enroll before the Ohm order pemittmo the Company to recover s

Dunng Die first quarter. we espact to raise declined ici the fourth Quaf ter after having shown common share from 52 cents a share ettectwo nent evidend payment through rates as an operahng expense the costs an adet anal $75-$100 mdion through the putAc strength m the second and tNrd Quarters of wem ttus payment TNs dwidend action feathrms of four genwahng units which were terminated sale of first mortgage bonds in the second or 1981 The dechne was due maerify to a sharp the Boarris mtent to faerly compensate our m-CONSTRUCTION PROGRAM UPDATE m January 1980 T he Company is pursuing alter-tNrd ouarter. we may raise funds through the downturn m mdustnal sales The deepenmg vestors to maintain your Company as an attrac-Whde thnete d gr owm m demand fu electrety nate legal means of appealmg this matter sale d tadezempt poHuhon conpol bonds iswd recessean curtaded operations of both our steel twe, corppetitive investment TNs is the 24th has emmished m recent years, growth wdl con-The PUCO in October 19P? ordered the by the ONo Air Quahty Development Authonty Gnd auto custorners Ressdential sales felt mod-consecufwe annual dwidend increase and the tinue Demand fm electncety in our servsce area Company to escontinue amorfszation of the costs Late an 1982 we espect to imitate another er;tely m the fourth quarter reflectmg mdder 8tst year of urunterruptedcash@vidend payments is espected to grow at a rate of 2 to 3 percent arid to reduce rates accordngly This order, which common stock offermg. Sometime durmg the werther when Compared with the fourth quarter We estimate that 49 percent of common stock yendy in 20 years we win have to incmase w has been appeared to the ONo Supreme Court, year we may essue preferred stock or ad@tional of 1980 Commercial sales dechoed shghtly due

@vidends 95 riot tarable as ordmary @vedend pesent gensahng capacity by two-ttwrds That reduced annualrevenue by $6 7 mdhon,or 0 5%

hrst mortgage bonds if attractive pnvate place-to the econome weakness as well as the mdder mcome for Federal income tas purposes and new capacity does not mclude the eventual need but had no effect on carrungs. The PUCO also ment opportunities anse weather Sales to other utsties contmued to show should be treated on 1981 tan returns as a non-tm molacement d a pudon d w existmg capa-ordered the Company not to wnte ott the un-e marked decrease relateve to 1980 because of taxable capital estribution None of the evidends esty, some of wNch es over 50 years old amortized amount, statmg it would review the CASH RA# SED FROM e sales agreement that was not renewed m 1981.

On preferred and preference shares as a return Our new hve-year construction budget is set entire matter m the Company 3 pen @ng electrC TAX BENEFIT TRANSFERS of capital at $18 bdhon, essentiany the same as last year's rate case on whch an order es expected soon.

The Economic Recovery Tax Actof1981 changed Last month we maded to you a form (IRS twe-year budget of St 7 benen. The $100 minen The unammt zed amount, as of December 31, eauspment leasmg rules to permit the transfer 109MW) which shows the tan status of dwidends detterence hes m an anticspated hegher cost of 1981, was $30 2 mdhon net of taxes, equal to of Federal encome tax benet ts related to plac-you recewed m 1981 Ybu should use the hgures funds used during construction. The maior por-about 63 cents per common share. Included m 6ng equipment 6n service in November and m6cated on the forrel in Computmg your 1981 TOM of the budget wdl fund our share of three thes amount are payments to a maior conteactor December 1981, we completed two of these tan tan obligations However, the percentage used nuclear power generating unets with the balance for its costs on the termmated units. The cork benefit transfers for a total of $25 4 mdhon. This by the Company to arnve at these figures is sub-to be spent ma nly on the upgradmg and eunan-tractor has presented claims for substant alcosts helped reduce somewhat the burden of our en-pct to fmal determmation by the Internal Revenue sion of transmession and estnbution facshties.

in add tion to those already paid We bebeve our ternal hnancmg program. We are plannmg addi-Service at a later date in adsten, expeiwsitures for pollution control potential 16abdity, if any, is segnsticantly less than tional transfers of thic type in 1982 facehties wdl approximate $58 mdhon.

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