ML20055A373
| ML20055A373 | |
| Person / Time | |
|---|---|
| Site: | Comanche Peak  |
| Issue date: | 03/26/1982 |
| From: | Austin T, Brittain P TEXAS UTILITIES CO. |
| To: | |
| Shared Package | |
| ML20055A370 | List: |
| References | |
| NUDOCS 8207160221 | |
| Download: ML20055A373 (43) | |
Text
{{#Wiki_filter:1 ' s
~
py , 'S ' s
' si . % V1. -
aff;i);.- 7 ,3 . '
"a )
...=;--
q; . -' 7
,r
, :.. ?g+tf.;u
}':
en
#<!- T: L .1 eJr A . . ' y ,- p; it : ml . . U py ;, ;
b i N:: it
. .. ; a a-
. ; i-. ;!)
L s. . ; u ;. ! s r; if. . - .# 3 r+ -
-2 t t Jr m .
?- Q 1': :@.
3 "g
*" -~
seis " p-j f" d{
, i*! -P- y
'h
(. '
. s ' . --
'". . . ay , . f
~ i m...
..- .t l'
. [. 1 p. .
4, ,y : , l E.g. "d 'i
-r.; ,
9:si r4-.;;
,[ s' ,
r c.
. . ; < ;' ' > .( w# J. .
i l
;gn[
((i$g? .. . ' s M AU.- A~- g.g:f%y y;;g. ' 9 _g, e , q.; v ;
., a .
? >
g
%5>' . . .--
s I e
,e , ...-l kfN ed n ..
g$$ J/.;.'d,* f ' 4 l ';'l&
*3"s .s a
.=
.."3',; s.'.
~
+
%a&&a ...
1 Higniiants s 1981 1980 Change Utility Plant * .... . . . . . $8,194,803,003 $7,438,877,000 10.2 % Construction Expenditures. S 792,268,000 $ 807,008,000 (1.8) E'ectric Energy Sales in Thousands of Kilowatt-hours. 58,372,177 58,499,267 (0.2) Peak Demand in Kilowatts . 12,970,000 12,970,000 - Operating Revenues. $2,738,377,000 $2,174,553,000 25.9 Fuel and Purchased Power . . $1,053,777,000 $ 737,589,000 42.9 Operating Expenses Excluding Fuel and Purchased Power.. S1,121,599,000 $ 947,112,000 18.4 Consolidated 4et Income. S 359,398,000 $ 297,844,000 20.7 Earnings per Share . S 3.51 $ 3.18 10.4 Dividends Declared per Shaie. S 1.88 $ 1.76 6.8 Book Value per Share * $23.01 $21.76 5.7
*End of year Contents 1982 Annual Meeting Management's Letter 2 The Annual Meeting of System Companies 4 Shareholders of the Company System Employees 5 yhay, M y 21,1982, r$ he Review of 1981 7 Gold Room of the Fairmont Service Area 7 Hotel, Ross and Akard Streets, Operations 7 Dallas, Texas. Shareholders Rates and Regulation re cordially invited to be pres-11 ent. Those unable to attend Planning and Building are urged to exercise their for the Future 12 right to vote by proxy. Notice Planning 12 of meeting and proxy state-Construction 12 ment and form of proxy will Fuel Supplies 15 be mailed shortly after April 2, the record date for the meet-Research and ing. Following the meeting, a Development 17 report of the proceedings will Financial Report 19 be prepared and distributed to Directors and Officers 40 all shareho:ders.
Texas Electric Service Texas Utilities Fuel Company owns a natural gas System Company provides service in 48 counties in north centrai pipeline system, acquires, and west Texas. This nigniy st res and eeiivers f ei gas COmnanies t' diversified area includes the and provides other fuel ser-cities of Fort Worth, Arlington, vices for the three electric Texas Utilities Company .is Grand Prairie, Midland, utilities. a holding company which Odessa, Wichita Falls and 72 Texas Utilities Generating owns virtually all of the com- other incorporated municipali- Company acts for the three mon stock of Dallas Power & ties. Fort Worth is a center of electric utilities in the opera-Light Company and all of the banking, business and in- tion of their jointly owned common stock of Texas dustry. The area served be- generating stations and fur-Electric Service Company and tween Fort Worth and Dallas nishes related services, in-Texas Power & Light is a comp'ex of commercial ciuding the ownership and Company. The Company pro-
, , development, warehousing and operation of lignite fuel pro-vides its subsidianes with light industry. In west Texas, duction facilities.
common stock capital and the company serves much of Texas Utilities Services Inc. short term funds required for the Permian Basin and other furnishes engineering, financial their construction programs. At oil and gas fields, a major and other services at cost to . year-end, the common stock petrochemical complex and the System companies. of the Company was owned refinery, and extensive farming Old Ocean Fuel Company, by some 82,700 registered and ranching areas. a subsidiary of Texas Electric shareholders. Texas Power & Light Service Company, owns and Dallas Power & Light Company serves customers in operates facilities for transport-Company serves Dallas, the 51 counties in north central ing and storing natural gas, nation's seventh largest city. and east Texas. Included are primarily for that company. The Company also serves . the cities of Brownwood, Chaco Energy Company, three adjo,ining communities in Denison, Irving, Killeen, Lufkin, chartered in New Mexico, was Dallas County-Cockrell Hill, Mesquite, Paris, Richardson, organized to own and operate Highland Park and University Sherman, Temple, Tyler, facilities for the acquisition, Park. This area is a banking, Waco and 255 other incor- production, sale and delivery insurance, commercial, cultur- porated municipalities. The of coal and other fuels. al, regional distribution and rich agricultural blacklands of Basic Resources Inc. is convention center. Maj,or in- central Texas, farming and primarily engaged in the de-dustries include electronics ranching sections north and velopment of energy re-and aerospace manufacturing. east of Dallas, part of the oil sources, related technology ihe national headquarters of and gas fields of east Texas, and services. more than 1,100 companies and the Dallas / Fort Worth are located in Dallas, as are Regional Airport-the nation's many regional headquarters. largest airport-are all in the f territory served. This area is also highly diversified with light and heavy manufacturing and substantial commercial activities.
~
f' j , v W; @llW N@ flu.,eg d 7lSQ L-
'f Wh;iMkdWD&i 5
.M t
.~
e.Q s 's d& la ODoorton!!ies are also Q/M asauaD:e for emDioyees to O yStem _ e me Der ena, are-1n n]d
%, Employees and develoDment tnrougn on-me,oo t,ai,,ng and 1nrougn
( I tinanciai assistance provided {, - The System companies for jot >related special. f J tirmly Deheve that thee con- techn; cal, cohege and 'y' tinued success cepends or graduate sturies
- Ag;j. , _ _ , their empioVeeS Increasingly important to
. .c%H Through then performance employees performance in g^ more than 15.000 caDable e' today's rapidiv changing en-g penencea employeer orovide oro ,aent is an understanding g"p rehable service to customers. of the companies' plans. ac-maintain a strong onv,er svn tivities and issues affecting the tem pioneer new tecnnoloGV electnc industry In recognition L. p ~ _ < . and innovate hteraliv hundrec- of this need the companies l f. of ways to aT1Drose oDeratiotM Drovide employee information IT1 and etticiency Drograms and pubhcations. _ The efforis of emp!uvee' and are increasing their use y have been reCoqntzed n many of v!deo CommunlCattons ways f rom me e ecmc ,n The pnotos in this report austrv's highest hono' the emonasize the roles of em-d Edison Awara. to a customet s 0;ovees in providing service
~ ]y sincere 'thank you for a joD and SDothght their spectal ex-
+ weH done Dertise. Derformance. Innova-Safety records a:so reflect tion and productivity
~
emDrovees skHis and ded!ca tion Dunna 1981. several
?5- work groups compieted a i muhori man-hours without a e;e -. .- disabhng injurv Early in 1982 f,~
.. the power deDartment at 'ne
- -:~' , ,
p MonticeHo station passea the Q ] ; -.. two-mthion-nlan hour mark. set-(p ( . ' a ~ ^A ling a new record tot a hGn:!e-
~~~.'*
i' fueled pldnt 4 -{ [6 E 37-Empiovees are afforded equal ODDortunity in ah phases of employment and DerSonne! activitres This objective s carried out inrough the companies continuing and effective affirmative act'on
% programs ibf u
h
' l$W{;L >
lg h! i , e ,,. . 6 ww h' =
*~
m
%-c. 1 f? ' 5 LRM % '
.. W i d a & N M 7 7
%- - - .- -- - . s; , ,. p , , . , j., J. . ,.* se . A * .h.,
E3 'k E - g A. s. a. a- , - - ' .- 7 +4 ' 8 e; y , ,4' 4 e s. .x
. g , .,, '.
{w:,j :4@~;' . ? , ., 1 . .-
. T .. ;
y'.y
~ '
N ' ;. g i); , . ; }" . . . , ,. ,
'. .** - -%.} !. ., ; y
.yl;.gl,::
~
& !., . A.W .'~ ~;- R,,, _ L . ' ,L ' .. f '?f=' -
[; @ p h j f.f [:?y [ y ,;f Q .-lihi& 'lO7 3. q L .. .^ y.a
* .)
.,~4.. .W.- '
Gu .,.-=: s.. *'. 4.,; w;: :.v:=. . , , y. .-
- c. e - * ..
+ <. % .. c e t. .
.g.
; y
%: 3,n q.g . . ? - -
' , fag - J. .
c w
. ; #.g .
- T. pp); . - }
f.'g ,.I$.S 3{('7.-, .y,, : ..' f -- n u ., ..
-- , 'y . . . ;p, f.. . ;; . .
. 3: ;- - .
. ( . e. y.. . >.
b ; - -
.y p , . .in . . . ,
r j -
.. +
. J g ,
7 jb a
- ,,,, W '. ,- ,y g .
9?_ [
- 4. % .N
.- .-) % < . .' .. ',
{ . wMD , W 7 AI
,' i % v
- R. ., -
y
'. 1.Q {
y 4; n?.? . <; p.d .x K .f.f.". .l.J;pf#i
.N f.
, _. +- -
. 7 98 -
f ' ~' . *q;. :
.y .-- = z,.- . .
3 _ & ? y. c. n l? _ G x ,. '; , ! j .
~~ '
A. l& ."
< j . .,4
':,. .. g* .S , i.' g ' j x.gh, q _
; 4,.4
% t 3
=
.r ( Q* , . - , i nny
.1: ffg . [ T}, ~y 3-' . -J . 3; , _ S, <)/, . ' fy e vy . *v,' *) T' .:q We .
. . s , gp ; e., ..
,4
,.., [^_, j. . -
*- c, ' - - ; . , . . .
_, .s. 7s y ,:',.., yl g:] , , ' ,.w m. j-i_' ,e
.t 4 '. ;
7-4--. . $ ., J c j.',..s.. 4
).
1..
, r. .
v ...' .=
;,....v-1
.'. ;, .;p.;. y . ,', .
q., u_
.' s r..= p . .
. ..y
'tf 'M' 3 -g . -
g q ' ,
.;,.,.h. ,.
.3 N; ,
. .>., '*:c , p h,
.--y,,,. 1-
. .9 .
3 ,
'i .
ff.3_ %,. v -Q:M, . 1 :
.*,7 I
(' %.1 -
;q f* -
. l? , ', , ..e.. V. 9p' i(;,"
g<- ,.< i- .. < . ,.n , p * ?;;4 .. , , .., ; .- ,
.- . e.
's*
- ..,- a,u,: ..? .,k (
N #
N, g }
,4J q .W j k' [a^'j g ..,,
c > %g . 4 .
- g.
A
- y_ :. ; ; .x y n.; . , -. ;,'.>. . .
. ._ y . 4 ,: :: - ..
a ; h <9 ..
;%.. ~ . ., ,." M .ff f ~
.g A . %7W ' , t" ,i , W'.:- .-;L 1}.!'k, ' '
. # . k 6 .b ' Vh.
lf eQW . . ;; [. M.f WA ; ? y, V
,w J
f gf l: 3 ' jh w y :5 ., .-
,r
, ,, - o . . ,,,y e M, . .';-
.. ;s ;.'__
[ , 4,.* s N
.u.*: - ) g.
s .
- _ , 4 y [,
>i-f q . ,.
h, ', - '.
-'. %~ ' . ~-f }$
\;f '9 ' d[] 1 g(
%,g. y 3: ; ,- f ;
q:.s, ;; f,.r. ' .p.i ,} ) g ; . . , js.'. 4, -
.a .4 1
g '. , . , -8 .,e, , .k , . ,.J. . . . ,g- .- , V g i
. f. _ , .
s.y[;.'~~, . . .9
.k 3 gb 44.x
'* .S .3..*.. I,$ 5 Ir w%r h, T,
<=
M.sjd'. y - t
.;(g M,,M@,7N2-'.'%k,;l,.',e.-le-D e.
A 'rw'.:' -N : ,
* ._c
- *. y: - -
h '.
,g' - gl%. *:
,4.y 3, pf ;N,, < -
.',,.y S
'(
gf.
-' s
., .,, ; ,;. .: , A .
4 .
?
. ,.[f
./. N e.:.
w.;-::.~
..s .v h5
.: ,. x:.y: .
, . , .- ;,I
- yay #;4gsygmy -
-v m .
; 3g y m, ;. . & : v . x y ;;a. : a, ;2 -; . .. .
s.
. ['
,.d y . . , _ .
$-h /' h: b..
k, ~ . ; s~ ,, . ..
}
..e
- v. w
l 7 I l million people, or about one- Petroleum industry activity third of the state's population. in Texas continued to increase Review The ,argest concentration of during 1981 at a somewhat the System's customes is in highs rate than in 1980. De Of1981 the state's most heavily pop- number of new wells drilled ulated area-the Dallas / Fort for oil and natural gas in the Service Area Worth Metroplex, with more state in 1981 was a combined While much of the nation than three million people. This total of 19,437, or an increase was subjected to depressed area accounts for about 60% of about 20%. economic conditions in 1981, of the System's revenues. In addition, agriculture's role the service area's well- in the area's economy con-diversified economy remained relatively strong. py p y m[ m m1 . tinued to grow. with overall in-come gains of about 10%
- ~ _>l (NPM, i y This area, located entirely in i j compared with 1980.
the State of Texas, stretches ! 1 , ph The Dallas / Fort Worth Re-some 600 miles from the west Ld ( 1. d gional Airport maintains a vital Texas oil fields to the piney k '
- D. I role in the area's economy woods of deep east Texas. On S (
s and is helping the Metroplex the north, it is bounded by the L uJ develop as an international Red River, which divides N ?aT j1 trade center. Texas and Oklahoma; and it }F % e~ 1 The diversity of the service extends almost 250 miles [ % 5 ! area, with its wide range of south into the center of the L JLLj commercial services, manufac-state. tunng, agnculture and natural Rich in energy resources, Although the area showed resources, indicates a future the service area produces some effects of the national of relative stability and eco-more than 15% of the na- recession during 1981, the nomic strength. tion's petroleum. The energy potential for cont,nued de , i situation and higher prices for velopment and expans, ion is Operations petroleum products are pro- reflected in favorable statistics The continuing economic viding added incentives for for the year. growth in the service area, discovery and increased According to a year-end na- combined with an increasing production of the state's tional study, Texas recorded conservation awareness by reserves. the second best business customers, is reflected in the Texas, long the nation's climate- placing extremely System's operating results. leading petroleum state, is well, by companson, in During 1981, the System's unemployment compensation also number one in the pro. three electric companies sup-duction of lignite coal. This benefits pa,id by employers; plied more than 58 billion standing is primarily the result estimates of population in- kilowatt-hours of electricity to of the System's program to creases over the next three some 1.6 million customers. develop this fuel. Other utilities years; and a high productivity These figures represent a and energy companies are level among Texas workers. slight decrease in energy now developing and using The Dallas / Fort Worth sales compared to 1980, and lignite. Much of this energy Metroplex population increased a continuing steady growth in activity is located in the ser. by nearly 100,000 residents in customers that has been vice area. 1981, or about 3%. New con- averaging more than 4% in addition to energy, food, struction continued to spiral annually. fiber and livestock production upward as the combined The 1981 System peak de-are still basic to the economy. dollar-value of building permits mand of 12,970,000 kilowatts, As the petroleum industry has for Dallas and Fort Worth the same as recorded in matured, business and in, reached the $3.76 billion level, 1980, was set on August 6. dustry have diversified to in, an all-time record for the The peak for both periods in-clude major insurance and fourth consecutive year. cludes electric service to banking interests, as well as . At year-end, unemployment Alcoa, which prior to 1981 aerospace, electronics and in the Metroplex was about was interruptible. At the time other manufacturing. 4%, just under the state level of the 1981 peak, System net The 87-county service area of 4.5% and well below the capability was 17,957,160 includes some four and a half national average of 8.3%. kilowatts.
W
. I , b I
- n ,.~19 , / .-
t
)f'
- .,; f
! . FM>
( .Q _ ,
~ts }' ,
**(< g.(.],lisdM
- s. .s
""f" ~ #*
'J .}
' yds] **
4 w3 ' E M., wih*.
. 1 ll.' '
j's_{L i gn, ) M * - . *
. p - +* g, e #
- y . ,
e: , . . . d L,
- e g.
j
.,.s ?g -
, ((dh =* l , as
- +; ; 2
- y ,
y'
- i 1
s 1 4-
$, /
^
- l. Nr , 1l g _ * *
, , - . yd**
( .me + ( - {; k ,p eo , i Mt -- 4 A.! s,- .
._v ,
,,9';: -
- gyt r@
E %: O g[l .
- 1
^
I
]') _ .
7tg - Jf G Qi . ..
.: ' Y[. , ,.
%s A. p , .'j
, <N .:
4., 33 . 3 W
. u,, f L '. -
Q $sh m tu q g
, , , J,lV -
8
?< J j.
;% te'" +jp$g s , . fdl .A JY ?h . . h $ - , , ,
}.m4 '"(
, l@
q7 .j . A "ti y 4. (( [ 4.k. - J L>
.; :q. d'le;'n 'I . ;7lf
)
gf) ? f4f g- 9'- O: : tl * (;, .. y ?:hN .W ' l
-u, ky . ,
N ,'
;a , -m M hy u h ,
su- ;s u . w;F,gwz ,s 1
. ';3.:pn;:;lk
'_lE .
f
9 The service area in 1981 r ~ f*i m.L _ 43r_TT.Z] did not experience the abnor-mally hot summer weather . w 1971 1981 - 10 Years of Lignite Operations ana accompanying air condi-tioning loads recorded during e System observed a milestone in , 1980, when peak demand in- 1981 with the completion of 10 years of creased by over 15%. lig, nite operations. The first lignite unit,
- jointly owned by the System s three elec-Texas Power's Sandow Unit tric utilities, was placed in service at Big A went into commercial opera- Brown in late 1971, tion in May 1981. A major During this decade, the efforts of
~
n .x &w.. portion of this new 545,000 System employees resulted in the addi- 7" ' ~ MV -- G kilowatt lignite fueled gener- tion of nine new lignite units, which * %;[."jf ating unit has been contracted to Alcoa as firm power, re. generated more than 175 billion kilowatt t hours of electricity; the mining of 144 yg h : J.Q', W' placing what previously had million tons of lignite; and the restoration '5 , , . , been interruptible service. I m te than 10,000 acres of mined land * . - to agricultural production. ('\y' h, s s ~k Alcoa furnishes the fuel for its Also during this period, the Generating -
' ' ke portion of the generation from
_ Company, which is now the fourth largest producer of coalin this unst. the nation, further developed and refined lignite technology and in 1981, a record 27,884,000 pioneered the use of equipment to protect the environment. tons of lignite were mined at the three lignite stations jointly u g y-w gg - g n owned by the System s util 73 ities. Approximately 53% of natural gas requirements. In- were personally informed electricity generated by the cluded was gas to replace about insulation, caulking, System was from lignite; while that previously delivered under weatherstripping and other natural gas, and a small contracts of the electric utility energy-efficient measures amount of oil used during gas companies that have expired through Texas Electric's curtailment, accounted for or have been assigned to the " Operation Tighten Up" 47% of the System's genera- Fuel Company. presentations Dallas Power's tion. The chart below shows Lignite generation continues and Texas Power's " Neighbor the growth in the use of to produce substantial savings to Neighbor" meetings and lignite since 1971: in fuel costs for customers of the speakers' bureaus of all the three utilities. The average three companies. KWH Generation by Type of Fuel gas Cost for the 12 months
' The three companies'
, ended December 1981 was energy specialists continue to 8o 4 m ]: $2.63 per million 8tu, and the work closely with residential, cost of lignite was about 83 commericial and industrial soE 4'Mhy
-l cents. The System's average builders to encourage the effi-fuel cost was $1.69 per million
{ "U i f cient utilization of electricity in a Btu for the period. The use of new construction. 20 [ lignite has resulted in fuel cost in 1981, Dallas Power ini-lower than those of most tiated a feasibility study to oh other utilities in the region. coordinate the energy re-71 72 73 74 75 76 77 78 79 80 81 The System continued its quirements of four downtown efforts to resolve the two suits high rise office buildings. This Natural gas for the System's filed in 1979 by the State of proposal, unique to the utility 19 gas fueled gererating Ma- Texas alleging violations of air industry, involves determining tions was provioed in 1981 by and water quality regulations and programming from a cen-four principal suppliers, in. at the Martin Lake station. tral location the most energy-cluding Texas Utilities Fuel Energy conservation pro- efficient methods of lighting, Company. The Fuel Compary grams of the System's three heating and cooling the supplied 72% of the System's utilities assist customers m buildings. contro.ng the amount of N < tricity they use. During 1E, nearly 100,000 customers
- - - ' ~
k y n y t . i, (. f I
.i -
s ;.
,1 ' '
$j"
W1 6
11 m ~.__~, -' _~ _'_. Z T2 ' .
~~J approval of payments to affiliates. -
(7 Load Management: Goal of New Programs The System electric utilities
,Uhe System's three electric utilities implemented new pro- operate entirely within the ^
grams in 1981 that help the customer to conserve onergy dur. State of Texas and are not ing periods of peak usage and the System to use its subject to the general jurisdic- ,,,, generating /acilities more e//iciently. tion of the Federal Energy These programs provide incentives to residential customers Regulatory Commission. Inter-who install energy-efficient equipment-air conditioners, heat connections are maintained
^
pumps or certain solar or heat recovery devices to supplement with the member systems of electric water heaters. the Electric Reliability Council - The energy-officient equipment will reduce customers, energy use and peak demand. This will enable the System to S C fgfg*Y O96', g g' te _ meet customers energy requirements with less expensive fuels and more efficient generating units, and m3y result in Texas. , postponing the construction of new units. ERCOT members include -
~ ' ^
two electric utility subsidiaries L . _ . Ti2ZO of Central and South West -
. Corporation, a holding com-Rates and Regulation proved, would increase oper- pany. CSW also has two elec-In an effort to keep pace ating revenues by about 15%.
. tric utility subsidiaries that are with inflation and to support Texas Power s prior increase members of the Southwest -
their continuing construction of 5.6% was apptoved in a, Power Pool. These companies programs, the three electric rate order issued in August operate in Oklahoma, Arkan- - utilities must make applica- 1981 and was placed in effect sas, Louisiana and a small tions for rate increases to the that same month. area in east Texas. Public Utility Commission of In April 1979, follow.ing a For the past six years, - Texas and the cities and comprehensive review of CSW has involved the System towns in their respective ser- System operations, the PUC in a number of actions and vice areas. issued an order generally con-
. regulatory proceedings relating Texas Electric's last rate cluding that certain trans . to interstate interconnections order, which was placed in ef- actions between the subsidiary between ERCOT and SWPP. ,
fect in October 1980, was for
~
companies were in, the public n June 1980, an agreement a 10.1 % increase in operating interest: and requinng that was signed by the System, '= pnor approval be obtained revenues. CSW and Houston Lighting & B Dallas Power applied for with respect to certain trans. Power to settle the long- i higher electric rates in actions. The order was appeal- standing litigation and pro- - September 1980, and received ed to a state district court. ceedings. Under terms of the an order from the PUC in in December 1981, the agreement, two direct current February 1981, authorizing an court issued an order remand- nterstate interconnections increase in operating revenues ing the matter to the Commis-would be made at no cost to of 11.4%. The new rates sion for further consideration. the System. These would not were placed in effect the The court concluded that pro-adversely affect the System's visions of the Texas Public following month. service reliability and would As the factors described Utility Regu!atory Act require not subject the System to the - above continue to impact on prior determination by regula- general jurisdiction of FERC. ' Texas Electric's and Dallas tory authorities of the reason- In October 1980, the Sys-Power's financial results, it will ableness of charges involved tem, CSW and HL&P filed an - be necessary for these com. in transactions among affiliates Offer of Settlement, based on i panies to file for additional which are to be recovered the June agreement, with rate rehef in 1982. through fuel adjustment FERC. In January 1982, FERC Texas Power, in February clauses. issued an order approving the 1982, made applications to the The System eyctric utilit.ies agreement. It is expected that Commission and to incorpo. have appealed this ruling and the litigation and various ad- 3 rated municipalities in its ser- filed a request with the PUC ministrative proceedings a vice area for higher electric and those municipalities reta.in-related to this dispute will be service rates. It is estimated ing original jurisdiction, seeking terminated in connection with that the proposed rates, if ap- authonzation of a new pro- " the settlement. cedure to provide for prior j
12 planning techniques. The The share of the plant own-System also began long range ed by the System's electric Planningand pians to furtner increase effi- utiiities is estimated at s2.8es ciencies in the operation of billion, or $1,454 per kilowatt. Budi dng or power generation and trans- The new estimate continues to gg Qgg mission facilities by centraliz-ing load dispatching. compare favorably with the cost of other nuclear units Plmdng mg scheduled for completion by i Meeting the future electric oth companies in the same The System's fuel conver- per service needs of System sion program has been customers begins with an The primary reasons for the substantially completed and, revised cost and schedule for ongoing long-range planning with the exception of the process. The System s early Comanche Peak nuclear units, Comanche Peak are design acquisition of alternate fuel changes and required modifi-no additional generation is cations. Due to the delay in supplies. Its fuel conversion scheduled for service until program and its search for completion of the units, the in-1988. The System now has crease in the cost of funds new energy sources are ex- the flexibility to adjust the amples of sucn long range used during construction is a schedule or future lignite units major factor in the higher planning. to meet changes in custom-The System continues to estimate ers' needs for electric energy. The total project is about look for new ways to improve The schedule for new generat-productivity and to better uti- 74% complete. Even though ing units at year end ,s i shown many changes have had to be lize its resources. Much higher on this page. construction , costs and the made, steady progress con-As a result of the annual tinues on the facility. A num-longer lead time required to review of the construction pro-complete new facilities have . ber of significant milestones gram, revisions were made in made it advantageous to re- have been achieved to date. the estimated cost and com- The switchyard has been en-duce the amount of new gen- pletion dates of the 2,300,000 eration needed in the future, ergized, water is flowing for kilowatt Comanche Peak the service water system, ma-Thus, emphasis has been nuclear plant. Expected com- jor concrete work is finished placed on developing pro . pletion dates are non 1984 for and both turbine generators grams to slow the growth in Unit 1 and 1985 for Unit 2. peak demand and on plans to The two units were previously are in place. Of the nearly reduce the System s reserve scheduled for 1982 and 1984, 300 systems for Unit 1 and capacity. facilities common to both respectively. The estimated A key element of long-range cost of the plant is now $3.44 60% have been turned planning is flexibility to adapt units' over t o the Generating billion, a change from the Company operations group for to frequent and sometimes un- prior estimate of $2.235 billion. expected changes-in fuel testing and start-up. supplies and costs; in the economy and money markets; 1 and in regulations and public Construction Schedule policy, which today affect all phases of construction and ' operations. Station - Unit Fuel ( as t These and other factors Cornanche Peak 1 Nuclear 1984 985.000* have placed an even higher Cornanche Peak 2 Nuclear 985,000* 1985 priority on financial planning. Twin Oak 1 Lignite 562,500* 1988 During 1981, organizational Forest Grove 1 Lignite 750.000 1989 changes were implemented to Twin Oak 2 Ugnite 562.500* 1990 improve these functions, which Martin Lake 4 Lignite 750,000 1990 included additional computer .ye, c,gan,.y to tne system modeling and other advanced
13
, ,y.~rm The Generating Company With the required approvals,
;8 entered into an agreement ownership in Comanche Peak with a private firm in 1981 to will be: Texas Electric, 35%%;
f M operate a 470-acre park on Squaw Creek Reservoir, built Texas Power,33%%; Dallas Power,18%%: Texas Municipal
,K >
~
to provide cooling water for the Coinanche Peak plant. In Power Agency,6.2%; Brazos Electric Power Cooperative, 'sJ December 1981, Squaw Creek Inc., 3.8%; and Tex-La, 2%%. Park was opened for public System construction esti-recreation. mates have been revised to
.. In January 1981, an agree- reflect the changes in Coman-ment was signed for the sale che Peak and in the Twin Oak of a 4%% ownership share in lignite fueled generating Units Considerable progress has Comanche Peak by Texas 1 and 2. The Twin Oak units, also been made in the oper- Power to Tex-La Electric previously planned for service ating license process. The Cooperative of Texas, Inc. This in 1986 and 1988, are now Nuclear Regulatory Commis- agreement was subject to schedu!ed for 1988 and 1990.
sion issued its Safety Evalua- necessary regulatory approvals System construction expen-tion Report in July 1981 and and to Tex La obtaining ade- ditures for 1981, and esti-the Final Environmental State- quate long-term financing. mates for 1982 through 1984 ment in September 1981. The However, Tex-La was un- are shown on this page. NRC's Advisory Committee on able to obtain the necessary Compared to prior esti-Reactor Safeguards completed financing for a 4%% share, mates, the new construction its review in November 1981 and in January 1982 re- figures represent a decrease and issued a favorable ad- quested a reduction in its of $58 million in expenditures visory letter to the Commis- share of Comanche Peak for 1981 and estimated in-sion later that month. to2X%. creases of $50 million for both The first public hearing on Texas Power has agreed to 1982 and 1983. the operating license was held this change, which is subject in December on specific to necessary approvals. issues and questions raised by intervenor groups and the . . NRC staff. The second round of hearings held by the NRC's Construction Expenditures Atomic Safety and Licensing Board is expected to be Estirnated scheduled in the spring of 1981 1982 1983 1984 1982. After the heanngs are completed, the ASLB will Mdlions of Dollars evaluate the findings from Electric property: these and other reviews and Production $389 $428 $365 $396 make a recommendation on Transmission 74 73 70 95 the granting of an operating license for each of the two Naf b b h units. Fuel facihties: In 1981, publication of a Gas 9 32 3 4 Ugnite 56 56 121 141 newsletter was begun for residents living in the two Total 698 787 789 883 counties in whicn the Comanche Peak plant site is *AFUDC 94 113 136 117 located. The newsletter is Total construction expenditures $792 $900 $925 $1.000 designed to provide residents with progress reports on plant Such expenditures do not include: construction, licensing and Nuclear fuel $- $ 28 $ 62 $ 63 operations and nuclear Non-utikty oroperty . 23 14 24 26 information.
- AMowance for funds used dunng construction
.h l: f ':.. .
^
r 1.1 X :L ' . 2 '.C3 % . ' -
.. ~ ;.: ;. L ,. .
~n.~.;.- . . . ; . s- -
+ n s. .e. .
. .. : w .+s ..
.y; . - - ..a , .- [? -- 49 .
. c. .
. w .1 o T ,. .g ..
?' }
_ l)
~
. W; ..
X.h. . L;'- - .
.) _ ...,......;. ' ' N.
l
. . f. [
g
.g .
kj JL .;s. l g J~ - ~ A -. Egg, 7 ' t .A" _. 3 h ? Q i.. Q *,.N . . .' ' the:Sefety ' " I ' 2 $ ,. <
.i l'~. .
1 - (N./ WWGWiratkl0JggnM- [ - [ .
, . s y((.l-)M %
3 - - s ye - - 3W;3 ~2. . i - - the develo bl' Ib . . aid.' .( - , Ii '
)
y- p1gg ql ll% qqgn p- y,'
'$b. . . fif ' A ..
; ' ' '~ . <A-h'ik
- i.C *%:, %:. _ (.?: . . - . ..
3 .' q;l J. systent which Wi i "">- -M. ~ . ' ' ' i.: O ,* /: u
- i N 1. f.;.'l i T :ir . uj'
~
t { : .- jgg.sbeignal gggggg ggl gly to infurther .. Nf 8- '+ -. '.i o .S ..q.w h'~ *for.* ;;
-J .
J -x s.- _ N N 1300IlI 2, U.
.;,] '['
. J. .
,a . : >
g gyg gg l33 '.I" '. 17 ,
. . L E ,1
( .
'Slocalmiin the con- ..
e
., t .
~'-a.. ^.
.~?:.../ Il e fI - . 2 trotDorn and wm tie g ggg, l-:4 _ > , ; / '-
93 y;.g'y -. y, _
- v . 1.
~,
b % em f i . . q, . [ .I ,, I. -
.y 48t e
% .g
,, ,,,,. .t _
s . 4,4 .
- m. ,
4*l ,.t
-ltQ +h .. --
- . .' . , %m
? .q q' ;
[_ i'""( 4'
.I jQ .W dlEty .
' . _, e ' ~ . ' . , . f , ,J f .
h , . ,,D e eaan 1 " ~
?. ( , **f*sm
_ jRENill0F l1151t SyS- , (. .t.e
.h. . W ggl 4n83133
. e "c . ,=, ' .- : . *- 6
. .- . e .
+ ' '
\- -j * * * - i' f[ - the tlW IM M pidenunce-0l$ ntlSl N. i * . : ' ! ** # .-
.f4'$
+
.- W llN n9'90 1lSt Sl> 1
^ ' ,' . h. ?.- '
.-It, _'. .: ': ' ;%br s
., - . ** k' ' ?e ?)+
,3 SOUOnCan .'; '. g. -
.g :
]
~ ~
$ .l _. .N l , . .
~ r
^
[ L.. ' ' ,, . . . ',j : , ' h )
^
.. - I'
.. ;.S " ; . '1it analyae plant'.'SW L 100 ' 1 a. / ' - -
f < -
;9 x . r .,, e J-4 - - 'D
.d 't' "t ' c - %. -
- y s ..
J 3)(j gy35. f f- 2.Q-(. , ;., . y 4.h T * ' ", ." *
.. l'! h
[ - l3g ggg.gf l . . c.- t.. s .. f '. jggggggy
-c ,
. y . . ~ ,
...'s .
. g , g , ,,. , .
. ,,, .g ,
h hSl M . . .'.; .!~' *
~q. ~~
i---4 TM.,,& v ,. . .. t8',.
),, ' ;.
h ' , . l. .
. t ~ . . , ,j
[j5' [e# . .
.; .] .\ 'y i- ' - .
_ 7 ;
- x' v u.;
, 't .
, Vr . , . =
=
.s rs . .
r-.
.,'.- -c s
ny . . ,
} S_ -. . . . ~-
J -.
~%,
t.,. .. y ,
- g L. , . - . : , . w -
.sq Q:. '
~ -
p . ,.. ' .A ; , ;,, 2 j-4
*A l @ .v- . #-a .{. g : gr. ,. .. -. y .. ... .gu. ._
'.g;kg r, -
. . . .. n, .y
. ? '; . }. , ' - % g
. .c a.c u. . ., = . . c.;; d. : f.g.s y
_ l- _ . . ,
. .J ,'y
- 3., rb.: ;: >
.R'
._ ,. . ,s- -l' .
* % 3 ?.
.e . _.
if' / :-
.a s r ;
. s ..s.
$ c
'T :-. . ~ . -
- 1. . % - r: ., * *' %'.-4 ., w.
+
. .. 3 n.
.c :, =
. fx . . g *p. ,, .
_.,,?- - * ,,;. , , -i -s p. g. . . x s' h f,. '.
~
(- -p, ,f ((; 5 L ;- '
.._ '?, - . . . j . ?. '.;^ 1 , $$, } fh '? .
d.1 ., ; - ( fy ;f , g(;e.s y,: .v > * ,- i. <.3; ; , ,.,
, s - )p. ,
.z,- , ' ;, ,
w
+ .-
.r gav ; , >
n e. .N.
~.g y_. .. gg . .a .*g,.,, .. ug_ ~pe_ ..
s _q 4; g --
.,..'s f l5
* ' ,1
%l . . h .r .
L .x
.a ;. . .. , ..,e, ;. mx~ .. m .x.,. n s u . .a .. :e s.n +. + . ,, . A
15 Fuel Supplies Texas lignite is now well- Tyr - -v " i.1_3 ~ The System companies estab!ished as a major long- .
,f f have historically maintained a term energy alternative, and j strong fuel position and have the acquisition of lignite rights ., y ongoing fuel acquisition and has become extremely com-f management programs to petitive. However, the System j assure continued reliable ser. has been acqu,nng lignite i ;
vice to customers. deposits for more than 30 l Although the System is reducing its dependence on years and owns, or has the nghts to, substantial supplies f f3 I natural gas, supplies of this obtained at very favorable 6(e fuel will be needed for many costs. Along with Alcoa, a ' I years, especially for periods of Joint participant in the con-high electrical demand. The struction of Twin Oak, the System will continue its gas System now has an estimated , fuel planning and operations to 880 million proven recoverable obtain maximum flexibility and tons of lignite. This supply is ' { ) to ensure the most effective dedicated to the existing use of this increasingly expen, plants and those under , ( construction. q ! sive fuel. 4 As natural gas contracts of The Generating Company , the utilities have expired, the announced plans in 1981 for a A~. ! Fuel Company has supplied new lignite mining facility, l which will supply fuel for the This on-site capacity should the gas necessary to replace allow ample time for the tht previously delivered under Martin Lake station. Construc. tion of the facility will begin in development of afternative ! those contracts. The percent 1983 and mining is expected storage technology or l of total gas requirements sup. , to begin in 1985, pending ac. reprocessing. plied by the Fuel Company quisition of permits. The new One of the System's non-has increased from 33% to utility subsidiaries, Chaco 72% in the last two years. mine is expected to produce The Fuel Company owns 3.5 mi!Iion tons of lignite Energy Company, head-annually. quartered ,n i Albuquerque, and operates a network of gas pipelines through which this The System is in a favor- New Mexico, signed agree-fuel is gathered and trans. able nuclear fuel position for ments in 1977 for more than I ported for use in the genera. Comanche Peak. Fuel for the 320 million tons of coal in the first 17 years of operation of northwestern part of the state. tion of electric energy by the In December 1981, Texas utilities. The Fuel Company each unit is under contract. and Old Ocean Fuel Company' The first fuel core for Unit 1 Utilities Company and Chaco a subsidiary of Texas Electric, has been fabricated and is be- filed suit against Santa Fe ! ing stored until needed. Industries, Inc., and two of its l own underground gas storage facilities with a combined The System also has long- subsidiaries and against usable capacity of approx. term contracts for related fuel Thercol Energy Co. and imately 28 billion cubic feet. processing services, except Peabody Coal Company, alleg-for the reprocessing of spent ing violations of federal and The utilities have oil storage state antitrust laws involving capacity, located at their gas. fuel, which must await action by the federal government. these agreements. fueled generating stations, The suit, which was filed in totaling about 6.8 million bar. Adequate storage for spent rels of oil. Approximately 4.7 fuel will be available on-site the United States District million barrels of oil were in for at least 17 years of opera- Court for the Northern Division tion, and this storage capacity of Texas in Dallas, seeks to inventory at year end. This oil is used primarily when natural can be increased. have certain agreements with gas supplies are interrupted or the defendants declared void ! and unenforceable, and also curtailed. ,l seeks damages and other relief. t i l I l
3; [Vi$7 3
.,~. . , Y .,
" " = .
-:n .. , O fy' ,
u 4 J y,' ' , , , , , v ft [4, ,, f
. Agg fy; 'M r ,
... ;; y ;y, y,;,
, , . +
, y- .
.,.c . e ;.~.,.,.-g S. * 'q, ; il..I
- - 3 ,... ; lla:
<[. ~ :-,' '. (
v?; , s
- Je ' - -
pg ,. . lkt
,"-(
, a rygjj c w:v 2
;- N' '
y '
- / -
)
. . . . - e.1
~ -
, JA
~
e
s
./
l p c.; ) ,v; et'^ '? ~ h
- 1 (>
1
. ,i -.
;( e
- _ n, g,
) '$
, , p.
w
, '.?.
< ['..I l- c 1*
O
, w -
~i t
j
,,s - /,
s _ 4'#",
' str4 e e
17 The suit alleges, among an experimental coal washing Brown station near Fairfield, other things, that certain of operation at the Big Brown Texas. These studies, under the defendants fixed the price station. The pilot plant, to be the direction of an indepen-of New Mexico coal sold to built by Dow Chemical, is dent committee of university - Chaco, that the defendants' scheduled to begin a five-year professors, have contributed to actions prevented Chaco from test period in June 1982. It improvements in the efficiency = freely competing in the pur- will be used to determine the of mining, land reclamation chase and sale of coal; that efficiency and economics of and other lignite operatior s. Santa Fe refused to make rail reducing impurities such as The Center marked its tenth transportation available on sand, clay, sulfur and other year of operation in 1981. reasonable economic terms materials to increase the heat The major industry research , and to disclose that it owned value of low-quality lignite. If efforts supported by the - additional coal near its main- successful, this process will System companies are those line trackage. The combined enable the burning of addi- of the Electric Power - effect of these actions has tional quantities of lignite Research Institute, which at made the commercial mining which could not otherwise be year-end had over 1,200 pro-of this coal uneconomical. used. jects underway. Increasing In response, the defendants The Generating Company emphasis is being given to re-have filed actions in the fed- will provide the lignite to the search on the efficient use of eral and state courts in New test facility and, in return, will electricity and load manage-Mexico denying these allega- be allowed to have proprietary ment techniques, as well as tions. In January 1982, the technical data generated by the development of new _ Company and Chaco also filed the plant's operation, it also energy technology and suit in the United States has the option to purchase sources. - District Court for the District the plant when Dow has com- EPRI began construction in - of New Mexico. pleted the program. 1981 on a $7 million electrical The utilities are funding a transmission line research Research and Development number of projects at univer- facility in Texas Electric's ser-The System continues sities that involve energy tech- vice territory. The facility, researching potential energy nology. Included are projects which is scheduled for opera-sources and developing new to improve the technology of tion in early 1982, ,s i bel,eved i technology to help serve cus. fluidized bed combustion to be the most advanced tomers more efficiently and boilers, a more efficient way transmission tower testing economically. to burn lignite, and improve- project in the world, and will - research methods of reducing The three utilities are ex. ments in the operation of ploring ways to harness and sulfur dioxide removal costs and improving reliability _ equipment. of electrical transmission lines better utilize energy from the sun. All three are supporting Investor-owned electric and towers. solar research, which includes utilities in Texas, including the A non-utility subsidiary of test metering of applications in System companies, have the Company, Basic homes and commercial build- P.ioneered fusion research Resources, Inc., is involved ,n i ings and installations using since 1957 through the Texas the development of energy- _ wind power, a form of solar Atom,ic Energy Research rela,ted technology. One of its energy Foundation. A new nuclear projects is the development of In 1981, Dallas Power and fusion machine, the Texas in situ gasification of deep j Texas Power announced that Experimental Tokamak (TEXT), lignite deposits. Testing to they will be monitoring the ap. has been built at the date indicates that a low Btu University of Texas at Austin gas can be produced at a plication of electric vehicles to the U.S. Post Office fleet in to continue this research. It pnce lower than the current _ their respective service areas. was formally dedicated in cost of unregulated gas. Bas,c i The Generating Company May 1981 ceremonies. Resources is discussing a - completed plans'in 1981 to Each of the three utilit,es i commercial-s,ze i in situ proj,ect assist in the development of provides support for the , with potential participants,. graduate-level studies carned Bas,c i Resources is also in-out at the Environmental volved in the exploration and Research Center at the Big development of oi! and gas.
, 4 J g' , .
4 7 _-> .3 s w #
. . +
~ " '
ep .y.
.-s g _
" ? -
.y .
V ' Y W
... * .- > ~
l
^
,.] .
s ., E
- . ' E ,
" [ ' _,.
' y y . , $ -
. ~ . .
1 ,
-2 .$ ,#
L
= . , ..
t g a
-- .*9 ,
c'
@ si \
~ '
. I
~
t -r , . .
; s y .
- g.
, . l' ' ,
p.'+ .
.. tl 4}'
.. t . -- -
~
t, y ~' - .
'y ' -
v
.. 'f -
375; '. M - n .' _~ '. .:;* . [ '. ,; .;
, :I2
? .,
y J. , yp j 2 ~ p. gp V , . . , , r.
;. "d
. a :
, . _ . sL ' "
A,
-7y
~ .
. h rg .:-.
_ g-
= . '
- , f' .x-my. v.
1, t.
]: .
c- ' 4 s
.j.
g 4 e
- r,
~
. ' .,3 Qw, ;
. v.4 c.
s-k y.* . . , .
. .- ' ? l.: . . ~ ..
="
je; .. '
'4-4
\ '
% 'h
, iy "is- - 4
. s '
g .s W :s 5. . 1 *
,. b
[-;.y . :. . 5' 4c'
. ! l *
- 9 .
4
- : ~$*,, 3 ~
r, '
~- - [
~ . l[
m j n- l' r-~ j <,l
't d' . , - '
u , ' C . - ggg.i ^~
^.,. u.
,- *r* _y' ..
~ 2' g n [4: , Q , , s
- .m
- i
; [f. < % . p. .
w ' f" fy>. 4
,, i y '
'n (t $
_r -
~9 ' ' N,
,. jfwk j"~
? -,
94 ._ h .
\
y _,,R
$ *, ,7(Vf
~
; 4 4 -
M 3 s_- .. 9 e J' _. ' ga ':g w b'
'T r
- ' 6
19 bnancialReport Contents Management's Discussion and Analysis of Financial Condition and Results of Operations 20 Statement of Consolidated Income 22 Statement of Consolidated Retained Earnings 22 Statement of Consolidated Source of Funds for Construction 23 Consolidated Balance Sheet 24 Notes to Financial Statements 26 Accountants' Opinion 32 Quarterly Market Price Ranges 33 Dividends Paid per Share of Common Stock 33 Financial Statistics 34 Operating Statistics 36 l Supplementary Information Concerning Effects of Changing Prices 38 i
20 TEXAS UTluTIES COMPANY AND SUBSIDIARIES Management's Discussion and Analysis of. Financial Condition and Results of Operations Liquidity and Capital Resources The primary capital requirements for 1981 and as estirnated for 1982 through 1984 are as follows: 1981 1982 L983 1984 Thousands of Dollars Construction expenditures (excluding AFUDC).. $698,000 $787,000 $789.000 $ 883.000 Nuclear fuel and non-utility property..... 23,000 42,000 86,000 89,000 Matunties of long-term debt and sinking fund requirements.. 21.000 28.000 40,000 65,000 Total _$742.000 5857,000 _$9J5.000 $10 J,000 For detail conceming major new construction wo:k now in progress or contemplated by the subsidiary companies and commitments with respect thereto, see Construction. The System generates funds from operations sufficient to meet operating needs, pay dividends on capital stock and finance a significant portion of capital requirements. These funds are derived from consolidated net income, depreciation, deferred taxes, and federal investment tax credits. Factors affecting the ability of the electric uti'ity subsidiaries to fund a portion of their capital requirements from operations include adequate rate relief and regulatory practices allowing a substantial portion of construction work in progress in rate base, adequate depreciation rates, normalization of federal income taxes, full current recovery of the cost of fuel used in the generation of electricity, and the opportunity to earn competitive rates of return required in the capital markets. For 1981, approximately 59% of the funds needed for construction was generated from operations. External funds of a permanent or long-term nature are obtained by the System through the sale of common stock by the Company, and the sales of preferred stocks and long-term debt by the subsidiary companies. The capitalization ratios of the System at December 31,1981, con-sisted of approximately 47% long-term debt,11% preferred stocks, and 42% common stock equity, and similiar ratios are expected to be maintained in the future. For information regarding bank lines of credit and short-term borrowings of the Company, see Note 2 to Financial < Statements. Financing to date in 1982 includes the sale to the public in March of 5,000,000 shares of the authorized but unissued common stock of the Company for $103,925,000. System companies expect to sell securities as needed, including (i) the anticipated sale by Texas Electric in April 1982 of $75,000,000 principal amount of first mortgage bonds, (ii) sales of additional shares of common stock of the Company pursuant to various plans described in Note 3 to Financial Statements, and (iii) sales of additional securities from time to time, in amounts and of types presently undetermined. Although the System companies cannot predict future regulatory prac-tices and are to some degree exposed to fluctuating economic and securities market conditions, no changes are expected in trends or commitments which might significantly alter their basic financial position or ability to finance capital requirements in the future (see Rates and Regulation and Note 7 to Financial Statements). See Financial Statistics for additional information.
21 Results of Operations Operating revenues have increased $563,824,000 for 1981 and $418,264,000 for 1980 primarily as a result of recovery of higher fuel costs on a current basis, increased rate levels and also for l 1980 as a result of increased energy sales (see Rates and Regulation and Operating Statistics). Energy consumption is affected by material variations in weather conditions and was particularly impacted by the relatively normal temperatures during the summer of 1981 compared to the unusually hot and dry summer of 1980, and by the relatively mild summer of 1979. Fuel and purchased power expense increased as a result of higher costs of fuel consumed (cents per million Btu): 169.2c for 1981,118.0c for 1980 and 102.0c for 1979; such expense also increased for 1980 as a result of increased generation (see Operating Statistics). Operation and maintenance expenses have increased as a result of the continuing inflationary pressures on the cost of labor, materials and services, and additional lignite-fueled generating units placed in ser-vice during 1981 and 1979; such expenses were also affected by the higher costs of operating and maintaining existing lignite-fueled generating units, including the additional costs of operating and maintaining the pollution control equipment required in connection therewith. Increases in taxes other than income resulted primarily from increases in revenue and property based taxes. Increases in allowance for funds used during construction are primarily attnbutable to in-creases in the AFUDC rate effective January 1981 and November 1979 accompanied by semi-annual compounding, and increases in the level of construction work in progress of the electric utility subsidiaries not allowed in rate base by regulatory authorities. Decreases in other income and deductions-net reflect decreased income from a large industrial customer (Alcoa) of one electric utility subsidiary for construction of generating facilities for 1981 and decreased interest income on temporary cash investments for 1980. ! The electric utilitysubsidiaries expect to pursue adequate and timely rate relief in the future to offset the effects of increases in the costs of providing electric service. The Company has prepared supplementary information concerning the effects of changing prices in compliance with the reporting requirements of Financial Accounting Standards Board Statement No. 33; such information is included on pages 38 and 39.
22 TEXAS UTILITIES COMPANY AND SUBSIDIARIES Statement of Consolidated Income 1981 1980 1979 Thousands of Dollars OPERATING REVENUES $2,738,377 $2.174,553 $1,756289 f OPERATING EXPENSi.S Fuel and purchased power 1,053,777 737,589 600,986 Operaton . 337,075 289.513 233,637 l Maintenance 194,064 156,818 130,037 Depreciaton 180,445 161,926 150,294 Federalincome taxes (Note 8) 236,247 194,589 134284 Taxes other than income 173,768 144266 127,155 Total operating expenses 2,175,376 1,684,701 1,376,393 OPERATING INCOME 563,001 489.852 379,896 OTHER INCOME A!!owance for equity funds used during construction 70,381 56,666 43,332 Other income and deductions-net . 5,568 21,342 25.312 Federalincome taxes 402 (8.345) (13,816) Total other income 76,351 69.663 54.828 TOTAL INCOME 639,352 559.515 434,724 INTEREST CHARGES Interest on mortgage bonds 157,238 143,877 130,381 Interest on other long-term debt 61,539 62,682 39,839 Other interest . 38,424 33,019 30252 Allowance for borrowed funds used during constructon (23,576) (21,505) (16,306) Totalinterest charges 233,625 218,073 184,166 PREFERRED STOCK DIVIDENDS OF SUBSIDIARIES . 46,329 43,598 39,407 CONSOLIDATED NET INCOME . $ 359,398 $ 297,844 $ 211,151 l Average shares of common stock outstanding (thousands) 102,292 93,719 86,319 - Earnings and dMdends per share of common stock: Earnings (on average shares outstanding) . $3,51 $3.18 $2.45 4 DMdends declared 1.88 1.76 1.64 Statement of Consolidated Retained Eamings 1981 1980 1979 Thousands of Dollars BALANCE AT BEGINNING OF YEAR . S 892,279 $ 758.962 $ 690,073 ADD--Consolidated net income . 359,398 297,844 211,151 Total . 1,251,677 1,056.806 001224 DEDUCT-Divdends declared on common stock (for amounts per share, see Statement of Consoldated income) . 192,306 164.527 142262 BALANCE AT END OF YEAR (Note 4) $1,059,371 $ 892279 $ 758.962 See accompanyng Notes to Financial Statements.
23 TEXAS UTILITIES COMPANY AND SUBSIDIARIES Statement of Consolidated Source of Funds for Construction 1981 1980 1979 i l l Thousands of Dollars FUNDS FROM OPERATIONS Consoldated net income $359,398 $297,844 $211,151 Depreciaton (including amounts charged to fuel) 206,323 181.835 167,103 Deferred federal income taxes-net 68,445 73.660 62,070 Federaiinvestment tax credits-net 62,361 73.552 89.056 A!iowance for funds used dunng constructon (93,957) (78.171) (59.638) Total furxt; from orcratons 602,570 548,720 469,742 Less-Divdends declarM r nmmon stock 192,306 164.527 142262_ Net funds fror ons 4102t>: 384.193 327.480 _ FUNDS FROM FINANCING S*s of secunties. First mortgage bonds 218,507 125.000 175.000 Other long term debt 3,677 58,879 199.538 Preferred stocks - 64285 29.591 Common stock 164252 126.731 137285 Retirement of long term debt (21207) (40,390) (27257) Increase (decrease) in notes payable-Bank loans (50,000) 50.000 - Commercial paper (20,910) (9,790) (45.655) Net funds from financing 294,319 374,715 468.502 OTHER SOURCES (USES) OF FUNDS Changes si working captat, excluding notes payable and long term debt due currently: Cash in banks and ternporary cash investments (56,644) 2.684 8,433 Accounts receivable ~ net (38,503) (13.636) (23.164) Inventores (56,402) (55.988) (31,603) Accounts payable 4,704 4.409 (1.578) Tawes accrued 46,652 67,323 (19.455) Advance payrnent on sae of utility plant (Note 7) 90,420 - - Other-net 31,661 6271 10,035 Net change 21,888 11,063 (57,332) Nonctility property-net (22,985) (7.122) (4.774) Nuclear fuel 4,271 (23,198) (12,192) Sab of utsty plant - - 99.871 Other-net (9,446) (10.814) (8277) Net other sources (uses) of funds (6272) (30.071) 17296 Total $698,311 $728.837 $813278 CONSTRUCTION EXPENDITURES UtSty plant $792,268 $807.008 $872,916 Ahvance for funds used dunng constructon (93,957) (78,171) (59.638) CONSTRUCTION EXPENDITURES (excluding allowance for funds used dunng construction) $698,311 $723.837 $813.278 See accompanyng Notes to Friancial S'a'ements.
24 TEXAS UTIUTIES COMPANY AND SUBSIDIARIES Consolidated Balance Sheet Decerrrer 31 1981 1980 Thousands of Dollars UTILITY PLNJT Electro plant in servce Producton $3,261,250 $2.892.655 Transmission 888,083 816.025 Distrbution 1,576,135 1,429.451 General 168,830 143.640 Total 5,894298 5.281,771 ' Construction work in progress 2,208,147 2,055.838 Nuclear fuel 83,264 87,535 Held for future use 9,094 13,733 Total utility plant 8,194,803 7,438.877 Less accumulated depreciaton 1,560,754 1,378.654 Utility plant, less accumulated depreciation 6,634,049 6.060.223 INVESTMENTS-at cost Nonotility property (Note 7) 82,029 59.044 Other investments (Note 1) 15,899 16.307 Totalinvestments 97,9_28 _ 75.351 CURRENT ASSETS Cash in banks (Note 2) 22,367 20.459 Special deposits 15,772 11,984 Temporary cash investments-at cost . 54,736 - Accounts receivable: Customers 148,755 119242 Other 33,156 22,955 Al!owance for uncollectele accounts (7,729) (6.518) ( Inventones-at average cost. Matenals and suppies 86252 65,787 Fuel stock 164,103 128,166 Other current assr ts . 27,249 27.808 Total current assets 544,661 389.883 DEFERRED DEBITS Unamorteed debt egense 10,795 9.308 Other 19225 18207 Total deferred debits . 30,020 27,515 Total $7,306,658 $6.552.972 See accornpanywy Notes to Fonancial Statements
25 1981 1980 Thousands of Dollars l Liabilities CAPITALIZATION Comrnon stock, Texas Utdit4es Company-uthout par value (Note 3)- Authonzed shares-150.000.000 Outstardng shares-1981,105236.301,1980. CA088.645 $1,362,493 $1,198.241 Petained earnings (Note 4) 1,059,371 892279 Tota! 2,421,864 2.000,520 Pre ferred stocks (Note 5) 600,109 600,109 Long term debt. less amounts due current'y (Note 6) 2,713,863 2.527,716 Total capitanzaton 5,735,836 5.218.345 CURRENT LIABILITIES Notes payaue (Note 2) Bank loans - 50,000 Commercat paper 145,000 165.910 Long term debt due current'y 27,880 17,380 Total (to t;e tehnanced) 172,880 233290 Accounts payable 166,866 162,162 Ducends dectared 61,035 53,845 Customers' depos ts 19,565 15,161 Tames accrued 156,599 109 947 Interest accrued 66,736 59.844 Other current Itabilities (Note 7) 133,923 27.098 Total current habiht es 777,604 661.347 RESERVE FOR INSURANCE AND CASUALTIES 7,158 5.013 ACCUMUI.ATED DEFERRED FEDERAL INCCME TAXES 374,231 305,718 UNAMORTlZED FEDERAL INVESTMENT TAX CREDITS 411,829 362.549 COMMITMENTS AND CONTINGENCIES (Note 7) Total $7,306,658 56.552.972 See accom;wyng Na'es to France? Statements
26
~. . . ; ..
TEXAS UTILmES COMPANY AND SUBSIDIARIES Notes to Financial Statements i
- 1. Significant Accounting Policies Consolidation-The consolidated financial statements include Texas Utilities Company and all of its subsidiaries; all significant intercompany items and transactions have been eliminated in consolidation.
Utility Plant-Utility plant is stated at original cost. The cost of property additions charged to utility plant includes labor and materials, applicable overhead and payroll-related costs and an allowance for funds used during construction. Allowance for Funds Used During Construction-Allowance for funds used during construction (AFUDC)is a cost accounting procedure whereby amounts based upon interest charges on borrowed funds and a return on other capital used to finance construction are charged to utility plant. The accrual of AFUDC is in accord with established accounting practices of the industry, but does not represent current cash income. Effective January 1,1981, the subsidiaries have capitalized AFUDC at a net of tax rate of 8%% compounded semi-annually of expenditures incurred, except for that portion of construction work in progress allowed in rate base by regulatory authorities. Beginning in November 1979, AFUDC was capitalized at a rate of 8%; prior thereto a rate of 7% had been used. These rates were determined on the basis of, but are less than, the cost of capital used to finance the construction programs. Effective January 1,1982, a rate of 9% was adopted. Depreciation-Depreciation is based upon an amortization of the original cost of decreciable properties on a straight-line basis over the estimated service lives of the properties. Depreciation as a percent of average depreciable property approximated 3.8% for 1981, and 3.7% for 1980 and 1979. Other Investments-The difference between the amount at which the investment in a subsidiary is carried by the Company and the underlying book equity of such subsidiary at { the respective dates of acquisition is included in other investments: $14.411,000 at December 31, 1981 and December 31,1980. FederalIncome Taxes-The Company and its subsidiary companies file a consolidated federal income tax return, and federal income taxes are allocated to all subsidiary companies based upon taxable income or loss. Deferred federal income taxes are generally provided for i differences between book and taxable income; such differences result primarily from the use of liberalized depreciation and accelerated cost recovery allowable under the Internal Revenue Code. Investment tax credits are being amortized to income over the estimated service lives of the properties. (See Note 8.) Reserve for insurance and Casualties-The electric utility subsidiaries, as allowea by regulatory authorities, maintain a reserve for major uninsured losses and claims. 5
27 f 7 ' - yspw gigy,p>yu.w wt m l l 2. Bank Balances and Short-Term Borrowings l At December 31,1981 and December 31,1980, the Company had lines of credit with com-mercial banks aggregat:ng $300,000,000. The lines of credit may be used for either backup lines for commercial paper or for bank loans at the prime commercial lending rate as it exists from time to t;me. At December 31,1981, the total amount of borrowings authorized by the Board of Directors of the Company from banks or other lenders was $500,000,000. No commitments with respect to the maintenance of compensating balances have been made by the Company to any banks from which it has lines of credit, such arrangements are de-pendent upon the regular operating balances maintained in accounts with said banks by the Company and its subsidianes.
- 3. Common Stock The Company issued and sold shares of its authorized but unissued common stock during the years 1981,1980 and 1979 as follows:
Automatic Dividend Employees' Thrift Plan Reinvestment and Common and Employee Pubhc offering __ _ stock Pughase Plan stock Ownership Plan Total Year shares Amount shares Amount shares Amount shares Amount 1M1 50n0000 5M100 000 2.358 142 $42,699 000 1,789.514 $35 453 000 9.147.656 1161252.000 1 '.K) 5 rYCmo 74 2T 000 1.928 479 31.715.000 1.175.0F9 20.766.000 8.103.547 126 731.000 19'3 S un0 (m 41 750 000 1.091.137 19 689 000 1228 072 22.846 000 7.319.209 137285.000 In March 1982, the Company issued and sold to the public an additional 5,000,000 shares of its authorized but unissued common stock for $103,925,000. At December 31, 1981, 5,988,568 shares of the authorized but unissued common stock of the Company were reserved for issuance and sale pursuant to the above plans. The Company has 50.000,000 authorized shares of serial preference stock having a par value of $25 a share, none of which has been issued.
- 4. Retained Eamings The articles of incorporation, the mortgages, as supplemented, and the debenture agreements of the subsidiaries contain provisions which, under certain conditions, restrict distributions on or acquis;tions of their common stocks. At December 31,1981, $57,670,000 of retained earnings of two subsidianes was thus restricted as a result of the provisions of such articles of incorporation.
Reta;ned earnings at such date also included $431,243,000, representing the Company's equity in undistnbuted earnings since acquisition included in transfers by subsidiaries from their retained earnings to stated value of common stock, making a total of retained earnings which was restncted of $488,913,000 at December 31, 1981. l
28 Notes to Financial Statements (continued) I
- 5. Preferred Stocks of Subsidiaries (cumulative, without par value, entitled upon liquidation to $100 a share)
Redemption Price Per Share (before adding Amount accumulated dividends) i December 31, Shares Eventual Outstanding 1981 1980 Current Minimum Thousands of Dollars Dallas Power & Light Company
$ 4 00 series 70.000 $ 7.049 $ 7.049 $103.56 $103.56 4 24 series 100.000 10.081 10.081 103.50 103.50 4 50 series 74.430 7.443 7,443 110.00 110.00 4 80 series 100.000 10.009 10.009 102.79 102.79 6 84 series 200.000 20.022 20.022 104.76 103.05 7.20 series 200.000 20.044 20.044 105.01 103.21 7.48 series 300.000 30.073 30.073 106.69 102.95 Texas Electric Service Company
$ 4.00 series 110.000 11.000 11.000 102.00 102.00 4.56 series 65.000 6.563 6.563 112.00 112.00 4.64 series 100.000 10,016 10.016 103.25 103.25 5.08 series 80.000 8.004 8.004 103.60 103.60 7.44 series 300.000 30.006 30,006 106.12 102.40 8.32 series 300.000 29.655 29.655 108.32* 101.00 8.44 series 300.000 30.046 30.046 107.40 103.18 8.92 series 200.000 20.076 20.076 105.83 103.60 9.36 series 300.000 29.625 29.625 107.02 102.34 10.12 series 350.000 34.615 34.615 110.12* 100.00 I
Texas Power & Light Company
$ 4.00 series 70,000 7.000 7.000 102.00 102.00 4.44 series 150.000 15.061 15.061 102.61 102.61 4.56 series 133.786 13.379 13.379 112.00 112.00 4.76 series 100.000 10.000 10.000 102.00 102.00 4 84 series 70.000 7.000 7.000 101.79 101.79 7.24 series 250.000 25.113 25,113 107.04 103.42 !
7 80 series 300.000 30.030 30,030 105.20 103.25 8.16 series 300.000 29.655 29.655 108.16* 102.04 8.20 series 300.000 30.108 30.108 107.39 103.29 C.68 series 300.000 29.550 29.550 106.26 101.92 8 84 series 300.000 29.591 29.591 108.17* 102.05 9 32 series 300.000 29.625 29.625 106.99 102.33 10.92 series 300.000 29.670 29.670 110.92* 102.73 Total 6.023.216 $600,109 $600.109
- Redemption may not be effected currently though certain refunding operations.
29 i i
- 6. Long-Term Debt of Subsidiaries (less amounts due currently)
December 31, i Maturity Groups interest Rate Groups 1981 1980 From To From To Thousands of Dollars 4 First mortgage bonds. 1982 1986 3y,% 7% % $ 161,000 $ 183,000 1987 1991 44 45 50.500 50.500 1992 1996 4% 5% . 142.000 142,000 - 1997 2001 51 9% . 304.000 304.000 2002 2006 7% 104 750.000 750.000 I 2007 2011 8i 17X 575.000 400.000 ! Pollution control seres: 4 2011 - 133 . 70.000 - Fur % on deposit with trustee (26.493) - Total 2,026.007 1.829.500 Pollution control revenue bonds: 2004 2009 5.70 71 160.000 160.000 Funds on deposit with trustee (9.071) (12.748) Total 150.929 147252
! Sinking fund debentures:
1985 1989 43 55 29.084 31.991 4 1993 1994 6% 7% . 35.159 36.079 1 Total 64243 68,070 Senior notes: 1996 1999 8.50 10 45 482,360 488.240 j Unamortized premium and discount . (9.676) (5.346) j Total long-terrn debt (less amounts due currentty) $2.713.863 $2,527,716 l Sinking fund and maturity requirements for the years 1982 through 1986 under long-term debt - instruments in effect at December 31,1981, were as follows: i Sinking Minimum Cash Year Fund (a) Maturity Requirement (a)(b) Thousands of Dollars 1982 $17.824 $22.000 $27,880 1983 18.354 34.000 40,000 1984 33.437 45,000 65.133 1985 46.521 44.507 78.187 1986 46,196 40.000 73,680 I (a) Excluding requirements satisfied prior to December 31, 1981: $2,060,000 for 1982,
$1,940,000 for 1983, $1,107,000 for 1984, $620,000 for 1985, and $620,000 for 1986.
l (b) Other requirements may be satisfied by certification of property additions at the rate of 167% of such requirements, except for thirteen issues at 100%,
; Utikty plant of the System companies is generally subject to the lien of the mortgages..
l i
30 Notes to Financial Statements (continued) l
- 7. Commitments and Contingencies For major new construction work now in progress or contemplated by the subsidiaries, and commitments with respect thereto, see Construction.
The three electric utility subsidiaries have entered into contracts with public agencies to pur-chase cooling water for use in the generation of electric energy and have agreed, in effect, to guarantee the principal, $166,270,000 at December 31,1981, and interest on bonds issued to f finance the reservoirs from which the water is supplied. The bonds mature at various dates through 2011 and have interest rates ranging from 5%% to 10%%. The electric utility subsidiaries are required to make periodic payments of such principal and interest for the years 1982 through 1986 as follows: $14,485,000 for 1982, $14,492.000 for 1983, $14,449,000 for 1984, $14,458,000 for 1985 and $14,407,000 for 1986. In addition, the electric utikty subsidiaries are obligated to pay certain costs of operating and maintaining the reservoirs. For 1981 total payments, including amounts capitalized, were $8,981,000. Amounts payable under the contracts may be reduced, under certain circumstances, due to the sale of water to nonaffiliate parties. In January 1981, Texas Power completed an agreement to sell a 4%% undivided interest in the Comanche Peak station, nuclear fuel and associated transmission facilities to Tex-La Electric Coopemtive of Texas, Inc. (Tex La), with such sale subject to regulatory approvals and Tex-La's abihty to complete the necessary long-term financing arrangements. Texas Power received approximately $90,000,000 from Tex-La in connection with this agreement which is included in Other Current Liabilities. Commencing in January 1981, Tex La has paid its pro rata share of the construction costs of the facilities. In January 1982, Tex La notified Texas Power that it has been unable to obtain long-term financing in an amount sufficient to support a 4%% participation and requested that consideration be given to reducing such participation to 24%. In February 1982, Texas Power concurred in the Tex La request by agreeing, subject to regulatory approvals and completion of the necessary long-term financing arrangerrants, to assume the ownership interest released by Tex La. including all future costs associated therewith, and to refund approximately 3
$65,000,000 (which includes interest) to Tex La in connection with such assumption. J Chaco Energy Comoany (Chaco), a wholly-owned subsidiary of the Company, entered into agreements in 1977 for the rights to over 320 million tons of surface mineable coal located in New Mexico. The agreements provide, subject to certain limitations, for advance royalty and/or distnbution payments, payable over a period of nearly 40 years, which are based upon annual j quantities ranging from a minimum of approximately 0.6 million tons in 1977 to a maximum of approximately 10.0 million tons in 1991. Such payments approximated $5.00 per ton in 1981 and are subject to escalation in the future due to inflation. In connection with the foregoing, the -
Company entered into a surety agreement pursuant to which it has undertaken to assure the perforr.,nce by Chaco with respect to a portion of the coal to be acquired. Non-utility property j at De.ernber 31, 1981 includes $31,175.000 for an undivided one-third interest in certain coal / leases ane $24.500,000 of minimum advance royalties paid by Chaco under the terms of these agreements. Reference is made to Fuel Supplies for information concerning pending lawsuits relating to the validity and enforceability of such agreements. The Company and its subsidiaries are involved in various legal and administrative proceedings ; which, in the opinion of the Company, are not expected to have a material effect upon the con-sohdated financial position or results of operations of the Cornpany.
4 i 31 l i i I J 8. Federal Incomo Taxes The details of federal income taxes are as follows: I 1981 1980 19[9 4 j Thousands of Dal,3rs ! Charged to operating e penses Current federal income taies .. $101.851 $ 51.310 $ (13.622) Deferred federal income taies-net. l D;fferences between deprecaton methods and lives . 63.831 56.185 49.138 j Certain capita!ited constructon costs 9.040 10.516 9269
- Other . (83G) 3.026 446 Total .. 72,035 69.727 58.853 lovestment tax crects-net. 62.361 73.552 89.053
); Tota: federal income taxes ch vged to operating expenses . 236.247 194.589 134.284 j Charged to other income . (402) 8.345 13.816 Total federal income taves . $235.845 $202.934 $148.100 Federat income taxes were less than the amount computed by applying the federal statutory rate to pre tax book income as follows: g _7__, 3 Thousands of Dollars l Federal income ta.nes at statutory rate of 46% . $295.123 $250.413 $183.383
- Reductons in federal income taxes resutting from
), A!!owance for funds used dunng construction.. 43220 35.959 27.434 { Depletion a!!awance . 14.662 8.033 6265 Amortization of investment tax cred:ts .. 10,348 8,925 7237 Other . (8.952) (5.438) (5.653)
- Total reductons . 59.278 47.479 35.283 l Total federal income taxes $235.845 $202.934 $148,100 Ef+ective tax rate.. 36 6 % 37.3 % 37 1 %
4 9. Retirement Plans ! The System companies have uniform retirement plans covering substantially all employees. The ! costs of the plans are determined by independent actuaries and are funded by the companies as accrued. The costs of the plans, including amounts capitalized, approximated $31,791,000 for j 1981, $26,520.000 for 1980 and $22,878,000 for 1979. As of the annual valuations in 1981 and 1980, accumulated benefits and net fund assets were as follows: 1981 1980 } 1housands of Dollars j Actuanal present value of accumulated benefits: J Vested . $ 221.229 $ 212.833
! Nonvested .. 26.215 24.405 Tota! . . $ 247.444 _$ 237_238 Net fund assets . $ 215.629 $ 185.565 An assumed rate of return of 5%% was used in determining the value of accumulated benefits.
I i I
~ l 32 Notes to Financial Statements (concluded) I
- 10. Supplementary Financial Information (Unaudited)
In the opinion of the Company, the following information includes all adjustments (constituting only normal recurring accruals) necessary to a fair statement of such amounts; quarterly results are not necessarily indicative of expectations for a full year's operations because of seasonal and other factors, including rate increases and variations in maintenance and other operating expense patterns: Consolidated Eamings Por Share Operating Revenues Net income of Common Stock Quarter Ended 1981 1980 1981 1980 1981 1980 Thousands of Dottats Thousands of Dollars March 31 $ 555.374 $ 426,190 $ 61,556 $ 37296 $0.64 $0.42 June 30.. 650.971 480.254 71,276 50.206 0.70 0.54 Smtember 30. 895.369 763.826 150.839 142.716 1.45 1.51 December 31. 636.663 504,283 75,727 67.626 0.72 0 71 Total . $2,738.377 $_2174.553 $359.398 $297p44 $3.51 $3.18 Accountants' Opinion DELoiTTE HAsKINS & SELLS CERTIFIED PUBUC ACCOUNTANTS To the Shareholders of Texas Utilities Company: i We have examined the consolidated balance sheet of Texas Utilities Company and subsidiaries as of December 31,1981 and 1980 and tne related consolidated statements of income, retained { earnings and source of funds for construction for each of the three 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 financial statements referred to above present fairly the financial position of the companies at December 31,1981 and 1980 and the results of their operations and the source of their funds for construction 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. DELOITTE HASKINS & SELLS Dallas, Texas March 26,1982
33 Constructkm Expenditures 1 ooo Quarterly Market Price Ranges soo A ' Price Range f Ouarter Ended 1981 1980
* /jm High Low Hgh Low soo March 31. $19 $16v. $18% $14';
2# jI June 30. 21 17% 19% 16% Septerrter 30. 21% 17% 18'; 16% l o l December 31. 22% 19% 19% 15% Dividends Paid Per Share of Common Stock 7p,,,,,, M Dividends Paid
!p g Quarter Ended 1981 1980 March 31. $0.44 $0.41 June 30.. 0.47 0.44 / bk September 30..
December 31. 0.47 0.47 0 44 0 44 y # g
$1.85 $1.73 s
The Company has declared common stock dividends payable in ,,,3,,,,,,,,,,,,,,,, cash in each year since its incorporation in 1945 and has continued its record of annual dividend increases, which commenced in 1948. At its February 1982 meeting, the Board of Directors again raised the Not Funds From Operations quarterly dividend-this time by four cents per share, from 47 cents to as a Percent of 51 cents. This regular quarterly dividend is payable April 1,1982, to Consm E-p rm shareholders of record on March 5. Dividends are paid in cash to shareholders who are not participating in the Automatic Dividend so / Reinvestment and Common Stock Purchase Plan; all dividends are reportable for federal income tax purposes as ordinary dividend in-
,, y 3k M
come. Reference is made to Note 4 to Financial Statements regard- l" __
/
ing limitations upon payment of dividends on common stock of certain o subsidiaries. ' The " Economic Recovery Tax Act of 1981" includes provisions which may benefit individual shareholders participating in a dividend
- reinvestment plan of certain public utilities.
The Company has been advised by its legal counsel that, under the Act, qualified individuals may elect to defer federal income taxes AFUDC as a Percent of'
~
on dividends reinvested under the Company's Automatic Dividend ' Consolidated Net income Reinvestment and Common Stock Purchase Plan in amounts up to so
$1,500 a year on joint returns or $750 a year on individual returns.
This provision of the Act applies to dividends paid and reinvested " from January 1,1982 through December 31,1985. .,, n i V% h 2'
,, /
1273T47576TT7879Go41
34 l . .. . . .. .. TE/AS UTILITIES COMPANY SYSTEM Financial Statistics 1981 1980 1979 TOTAL ASSETS era of year (thou ; ands) 57,306,658 $6.552.972 $5.821,933 UTILITY PLANT end of year (thousands) 58,194.803 $7.438.877 $6.631.618 Accumuta9d coprecation end of year 1,560,754 1.378.654 1.213.927 Constructon expendtures 0nclud.ng a:lowance for funds uvd durmy cons'ruction) 792.268 807.008 872.916 CAPITALIZATION end cf year (thousands) Long term d+tt 52,713,863 $2.527.716 $2.368.612 Preferred stocks 600,109 600,109 535.824 Common stock ecW and surpius reserve 2,421,864 2.090.520 1.830 472 Totat $5,735.836 $5.218.345 $4.734.908 CAPITAUZATION RATIOS end of year Long term debt 47.3 % 48 4 % 50.0 % Preferred stocks 10.5 11.5 11.3 Comnon stock equ@ and surptus reserve 42.2 40.1 38.7 Tota! 100.0 % 100.0 % In00% AVERAGE INTEREST COST ON LONG-TERM DEBT end of year 9.0% 8.3% 7.9 % AVERAGE DMDEND COST ON PREFERRED STOCKS end of year 7.7% 77% 74% CONSOLIDATED NET INCOME (thousands) $359.398 $297.844 $211.151 DMDENDS DECLARED ON COMMON STOCK (thousands) $192.306 $164.527 $142262 CCMMON STOCK DAfA* Sha'es outstanding-average 102292239 93.719.257 86.319.396 i Shares outstand.ng--end of year 105,236.301 96 088.645 87.985.098 Earnings per average share $3.51 $3.18 $2.45 D Vdends decla'ed per share $1.88 $1.76 $164 Book vale per share-end of year $23.01 $2176 $2080 Return on average common stock eaug 15.9 % 15 2 % 12.2 % l ALLCWANCE FOR FUNDS USED DURING CONSTRUCTION AS PERCENT OF CONSOLIDATED NET INCCME 26.1 % 26.2 % 282 % NET FUNDS FROM OPERATIONS AS PERCENT OF CONSTRUCTION EXPENDITURES (exclud:ng a:lowance for funds uced dunng construct,on) 58.8 % 52.7 % 40 3 %
- E"cu in Wy 1972. the 2&750 0C0 snams of outstagry; cornman stock of the Company we e et on a *,,o'orow tuss oto 53EC 003 shires w!nout capb':za!.on ct rem:rvo ea"bfXD [v' s%re ea nnos. o vo, cs a xs ncce save ave tve- aayssx3 retroactvey ,
35 1978 1977 1976 1975 1974 1973 1972 1971 $5.161.808 $4.563.806 $3.878.180 $3.245663 $2.768.435 $2.352.427 $2,121.565 $1.884.754 $5.862 090 $5.111.037 $4.398.695 $3.736.126 $3.177.008 $2.771.098 $2.462.669 $2.208.718 1.057.068 917.637 813.837 716.726 629.236 552.477 495.571 443.459 737.353 734 282 671,708 570.016 419.776 321.907 265.800 251.377 $2.038 654 $1.859.007 $1.627,403 $1,334.881 $1.140.023 $ 995.352 $ 951.542 $ 862.908 506233 476.578 446.923 417,373 358.123 297.969 267.896 212.777 1.624 298 1.432.830 1.266.0fE 1.024.491 982.349 856.164 731.704 682.962 $4.169.185 $3.768.465 $3.340,412 $2.776.745 $2.480.495 $2.149.485 $1.951.142 $1,758.647 48 9 % 49 3 % 48 7 % 48.1 % 4G O% 46 3 % 48.8 % 491 % 12.1 12.7 13 4 150 14.4 13 9 13 7 12.1 39 0 38 0 37 9 36 9 39 6 39 8 37.5 38 8 100 0 % 100 0 % 100 0 % 100 0 % 100 0 % 100.0 % 100.0 % 100.0 % 75% 7.3 % 7.2 % 69% 64% 57% 56% 5.3 % 7.3 % 72% 7.1 % 70% 66% 63% 62% 5.8 %
$200.738 $175.919 $147.920 $120.976 $123.107 $111.243 $104.137 $92.790
$119.945 $103.250 $ 85.800 $ 74.400 $ 63.880 $ 57.590 $ 53.500 $51.000 79.026.787 73.194.444 64 625.000 60.000.000 56.588.889 55.354.167 53.500.000 26.606.250 80.665.889 75.000.000 70.000.000 60.000.000 60.000.000 56.000.000 53.500.000 26.750.000
$2.54 $2 40 $229 $2.02 $2.18 $2.01 $1.95 $1.74
$1.52 $1.40 $1.32 $124 $1.12 $1.04 $100 $0.96
$2014 $1910 $18 09 $17.07 $16 30 $1509 $13 40 $12.45 131 ' b 13 0 % 12 9 % 12 1 % 13 5 % 14 2 % 15.1 % 14 9 %
26 9 % 33 3 % 33 7 8.-b 26.1 % 17.8 % 14 2 % 11.9 % 15.3 % 44 1 % 36 4 % 29 7 % 28.5 % 35 8 % 41.3 % 45.6 % 37.9 %
36 N sW/7.hs#1?75" V$?'l J5'? ' M T f 'f-? J' - M TE /AS UTILITIES COMPANY SYSTEM Operating Statistics 1981 1980 1979 ELECTRIC ENERGY GENERATED AND PURCHASED (megara~nours) Gereated-net staton ou'put 62,447,413 62.865.64? 58.051.429 Purch,ved and net intercnange 91,091 56188 75.695 Total generated and purchased 62,538,504 62.922.029 58,127.124 Company use. losses, ard unaccounted for 4 [66,327 _ _ 4.422,76] _ _ 4.001.684 Total eectnc energy sales 58,372.177 58499267 54.'25,440 _ _ :_-- -- - -== = FUEL MlX FOR ELECTRIC GENERATION (percent) Gas 46.4 % 490 % 48 6 % Oil 02 0.1 14 Lignite 53.4 50 9 50.0 Total 100.0 % 100 0 % 100 0 % ELECmlC ENERGY SALES (megawanhours) Resdential 18,676,240 19.844.409 17.394.402 Commercal 15,383,162 i4.693.104 13 264A36 Industnal 17,992,261 ~ 7581.265 172/5359 Government are monopal 1,692,106 1 791988 ISC3.726 Total general Dusiness 53,743,769 53.905.766 49.602,423 Other e!ectnc utat:es 4,628,408 4,593.501 4.521.017 Total eectnc energi sats 50,372,177 58.499267 54.125.440 OPERATING REVENUES (thousards) Resdentut $1,044,761 $ 877,555 $ 672,340 Commercal 778,008 590.921 488.170 industnal 659,678 482.919 419.224 Coemment and muncoal 83,077 68.396 54.565 Total general business 2,565,524 2.019.791 1.634299 Other ebctnc utities 161,998 123.188 105.306 Total from electnc energy sales 2,727,522 2.142.979 1.739f(6 > Other oporatng revenues 10,855 31.574 16.684 Total operatng revenues $2,738,377 $2174 553 $1,75629 ( ELECTRIC CUSTOMERS (end of year) / Resdental 1,421,273 1.356.651 ? 287,701 Commercal 177,269 171.495 164 291 Industnal 20,692 19.590 18.654 Government and muncpal 10,263 10.488 11.257 Total general Dusiness 1,629,497 1.558.224 1.481,903 Other e!ectnc utates 78 80 80 Total eectnc customers 1,629,575 1.558.304 1.481.983 Resdental classificaton includes indirect sa!es (apartments, etc ). d,velkng un;ts not included in number of customers 213,905 223.960 24G,164 Industnal cLiss.ficaton includes service to Alcoa-Sandow (interrupt ble pror to May 1981) Eectnc energy saes (mega,vatt hours) 2,848,997 2.918.794 3.076.399 Operating revenues (!nousands) $64,016 $48.813 $48.400
," 37
~
g o .. . . s 1978 1977 19 1975 1974 1973 1972 1971 _ 57,'n 077 53.156235 47,573.856 45h62,942 43.969,560 42,169231 40,151227 36.041,530 79.688 72.845 46.656 225.718 176.059 449.061 239.660 259278 ) 5 7,275.765 53229,080 47.620.512 46,088.660 44,145.619 42.618292 40,390.887 36.300,808
't 4.041,486 3.549.768 3290,124 3238.645 3.052.126 2.872.902 3.029,500 2.654.846 53234219 49.679.312 44.330.388 42.850.015 41,093.493- 39,745,390 37,361.387 33.645.962
..~._. _ .
580% 65 9 % 68.3 % 74.8 % 82.0 % 81.7 % 92.6 % 99.6 % 06 , 1.5 0.2 0.3 2.1 32 1.2 0.4 41.4 32.6 315 24.9 15.9 15.1 62 -
~
100 0 % 100 0 % 100 0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 17,943224 16.642,382 14.548.407 14,575.846 13.532,494 13,122,546 12,748,036 10.915.310 13,117202 12.347,755 11,338.371 11,026,4 % 10285297 10,130.629 9,471,615 8,307.851
, 16.469,636 15,678254 13.917.588 '12.962.019 13231,004 12,715,469 11.535,114 11267,589 1,728.056 1.565.518 1,425.U65' 1 333.765 1293.641 1226292 1227,335 1,111,712
# 49258,118 46233,009 41230,ud1 39398,125 38,342,436 37,194.936 34,982,100 31,602.462 3.976,161 3.445.403 3.100.357 2.951.890 2.751.057 2.550.454 2.379287 2,053.500 53234279 44,330.388 42.850.015 41,093,493 39.745.390 37,361,387 33,645.962 39E79.312 __ _ _ _ _ . _
' $ 640.611 $ 552,331 $ 442,204 $ 374.480 $ 308,735 $ 268.131 $ 253,473 $ 213,790 439.146 375.822 303,785 251,882 204.441 178,718 162274 138.054 373.456 310,811 238,426 182,491 149.526 125,144 109,026 99,039 49,623 40.331 32,390 25.337 20209 16.974 15.899 13,700 1,502336 1279295 1,016.805 834,190 682.911 588.967 540.672 464.583 87,592 69.975 53.052 39.764 27290 20,967 17,682 14,666 1.590,428 1,349270 1,069,857 873,954 710.801 609.934 558,554 479249
~
13.928 18.508 12,473 14.782 15.796 5.162 4.720 4,109
$1,604.356 $1.367.778 $1.082,330 $ 888.736 $ 726.597 $ 615,096 5 563274 $ 483,358 4 1.221,468 1,159.885 1,122.358 1,000.798 1,069.017 1.048.317 1.024.567 1,000,359 160,170 153,658 146,267 140.085 136241 134.895 132,392 128,004
~17,953 17216 16.688 16,405 16.077 15.773 15,463 15,197 11274 11,121 10,736 10,330 9,886 9.523 9,129 n t t t 2. 60 1,fdE51 1.342.033 296 454 1 1258.024 1.231,665 1208871 1,181.945 1,152,689 62 60 59 63 58 58 61 60 1,410.913 1,342.093 1296,513 1258,087 1231.723 1208.929 1,182,006 1,152,749
, s 243.886 '24a; 3 240,672 236,055 232.358 224.577 211.645 197,868 2,891,259 2 7t:6.027 1,822.488 2.038.618 2,431269 2.001.058 1.500,644 1,945,309
$41.672 $36878 $20.057 $18,704 $15,309 $10,037 $6,637 $8276
+ :
h i
1 I 38 TEXAS UTIUTIES COMPANY AND SUBSIDIARIES f Supplementary Information Concerning Effects of Changing Prices I Unaudited information furnished in compliance with the reporting requirements of Financial Accounting Standards Board Statement No. 33, Financial Reporting and Changing Prices (FASB 33), follows. The Statement indicates the need for experirNntation in providing information about the effects of changing prices. Such information is intended to help readers better under- { stand the impact of inflation on the Company. Because the information is presented on an experimental basis, it should be viewed with caution. Calculation of the information inherently involves the use of assumptions, approximations, and estimates and, therefore, the resulting measurements should be considered in that context and not as precise indications of the effects of inflation. The effects of changing prices are not recognized for income tax or rate-making pur-poses; therefore the supplementary information should not be interpreted as adjustments to earn-ings reported in the Financial Statements. Inforrr,ation conceming the effects of general inflation (constant dollar) was determined by converting historical cost amounts into dollars of equal purchasing power, as measured by the Consumer Price Index for A!I Urban Consumers. inforrreliori conceming changes in specific prices (current cost) represent such changes in } utility plant from the date costs were initially incurred to present, and differs from constant dollar information to the extent that the specific prices have increased at a rate different than the general rate of inflation. The current cost of utility plant was computed by indexing the existing historical cost of plant by the HandyWhitman Index of Public Utility Construction Costs for the South Central Region and other appropriate indices. Such current costs are not necessarily representative of the replacement cost of the Company's productive capacity that might be incurred in a future period. Depreciation on the constant dollar and current cost basis was determined by applying the System companies' straight-line depreciation rates used for financial accounting purposes to the appropriate indexed utility plant amount, and is the only incorr: statement item (including depreciation charged to fuel) that has been restated from the Financial Statements. In compliance with FASB 33, no adjustment has been made to federal income taxes. Under rate-making rules prescribed by the Public Utility Commission of Texas, only the original cost of utility plant is recoverable through revenues as depreciation. Therefore, the excess of the cost of plant stated in terms of constant dollais and current cost over the original cost is not g recoverable through rates as depreciation and is reflected as Reduction to Net Recoverable Cost ; of Utility Plant. The Company believes, based on past experiences, that System companies will J be allowed to recover the investment in utility plant when replacement of facilities actually occurs. During periods of inflation, the ho!ders of monetary assets suffer a loss of general purchasing power while holders of monetary liabilities experience a gain. The amount shown as Gain From Decline in Purchasing Power of Net Amounts Owed reflects the net of these two items and is , primarily attributable to the substantial amount of iong term debt which has been used to finance utility plant. Since depreciation on this utility plant is limited by regulation to the recovery of historical costs, a holding gain on debt is not allowed and recovery is limited to only the embedded cost of debt capital. To reflect the results of rate regulation, Gain From Decline in Purchasing Power of Net Amounts Owed is offset by the Reduction to Not Recoverable Cost of Utility Plant.
39 t f . . . . . . . .
- n Summary of Consolidated Net income Adjusted for Effects of Changing Prices Year Ended December 31,1981 Historical Cost Adjusted for Changing Prices .
Reported in General inflation specific Prices Financial statements (Constant Dollar) (Current Cost) (Thousands of Dollars) Amrage 1981 Dollars Operating revenues $2.738.377 $2.738,377 $2,738.377 Operating expenses (a) . 2.175.376 2.376.092 2,407,074 Operating income . 563.001 362285 331.30'3 Other income . 76.351 76.351 _ 76.351 Total income 639.352 438.636 407.654 Interest charges 233.625 233.625 233.625 Preferred stock dividerts of subsdiares 46,329 46.329 46,329 Consoldated net income $ 359.398 $ 158.682 $ 127.700 increase in specific pnces of utSty plant held during the year (b) $ 839,151 Reduction to net recoverable cost of utAty plant $ (342,082) (182,817) Effect of general inflaton on utihty plant (967,434) Effect of general inflation in excess of increase in specific prices of utthty plant after reducton to net recoverable cost (311,100) Gain from dechne in purchasing power of net amounts owed 304,126 304.126 Net change in purchasing power . $ (37.956) $ (6.974) i (a) Depreciaton, including amounts charged to fuel, was $206,323.000 for historcal cost, $407,039.000 for constant dollar and $438.021,000 for current cost. (b) At December 31,1981, utihty plant, net of accumulated depreciation, was $11,923.225.000 for current cost and
$6.634,049.000 for histoncal cost.
Comparison of Selected Financial Data Adjusted for Effects of Changing Prices 1981 1980 1979 1978 1977 Thousands of Average 1981 Dollars Operating revenues $2,738,377 $2.400,114 $2200.613 $2236,574 $2.052,797 Constant Dollar Information Consoldated net income . $158,682 $152.355 $110.352 Earnings per share of common stock . $1,55 $1.62 $128 Net assets at year end at net recoverable cost . $2,949,471 $2.856,799 $2,817,894 Current Cost Information Consvidated net irieome $127,700 $113,712 $56.188 { Earnings per share of Common stock . $125 $121 $0.65 Effect of general inflaton in excess of increase in specife pnces of utikty plant after reducton to net recoverable cost $(311,100) $(524.812) $(590.961) Net assets at year end at net recoverable cost . $2,949,471 $2.856,799 $2.817,894 General Information Gain from decline in purchasing powe of net amounts owed $304,126 $423.795 $457,547 { DrvderXis declared per share of common stock $138 $1.94 $2.05 $2.12 $2.11 Market pnce per share of common stock at year end $18.99 $19.64 $21.03 $25.33 $3221 Consumer pnce index-average 272.4 246.8 217.4 195.4 181.5
q 13'
. e Directors
- and Officers
[~D j A o1
, s J Directors T. L. AUSTIN, JR. '
Officers T. L. AUSTIN, JR. w) Dallas, Texas Chairman of the Board and { 4 Chairman of the Board Chief Executive and Chief Executive BURL B. HULSEY, JR. I the Company Vice Chairman of the Board PERRY G. BRITTAIN Dallas, Texas PERRY G. BRITTAIN President President of the Company W. H. HARRISON, JR. ES K O EY Executive Vice President 4h. 9 gal f rn a
} ;)
4 Retired Chairman of the Board, Wells Fargo & ERLE NYE Executive Vice President Company MICHAEL D. SPENCE W. M. GRlFFIN Executive Vice President S ecu e [ }Q T: u
, g c
g; of the Finance Committees nt, g,gcu i e Vce' Pre'sident R. E. FONVILLE E( of Hartford Fire Insurance Secretary and Assistant l{ Company and Subsidiaries Treasurer BURL B. HULSEY, JR. H.A. HORN k Fort Worth, Texas Treasurer and Assistant
~ ~
- Vice Chairman of the Board Secretary
'4 ,' of the Company S. S. SWIGER '
ABNER V. McCALL Controller hance of Baylor University
" 'N HAM s i tan Sec, fg,y $ J. C. PACE, JR.
Fort Worth, Texas x Chairman of the Board, z President and Director 1Il T - of Kimbell, Inc.
. db gdfh' :
CHARLES N. PROTHRO Wichita Falls, Texas
%g{; Owner, Perkins-Prothro
- m% .
D972pf~%3%~ Company and Chairman of the t 4 *. k Board of City National Bank,
- i Wichita Falls, Texas d WILLIAM H. SEAY Dallas, Texas
- ) Chairman and Chief Executive Officer of Southwestern Life
-3 Insurance Company l]
3
Directory TRANSFER AGENTS AND REGISTRARS Mercantile National Bank at Dallas Dallas, Texas Morgan Guaranty Trust Company of New York New York, New York DIVIDEND DISBURSING AGENT Morgan Guaranty Trust Company of New York 30 West Broadway New York, New York 10015 AGENTS FOR PARTICIPANTS AUTOMATIC DIVIDEND REINVESTMENT AND COMMON STOCK PURCHASE PLAN Morgan Guaranty Trust Company of New York Dividend Reinvestment Plans P O. Box 3506, Church Street Station New York, New York 10008 STOCK EXCHANGE LISTINGS New York Stock Exchange, Inc. New York, New Yoik Midwest Stock Exchange, Incorporated Chicago, ilknois The Pacific Stock Exchange Incorporated Los Angeles and San Francisco, Cahfornia Ticker Symbol TXU The Annual Report has been prepared for the purpose of providing shareholders with infor-mation concerning the Company and not in connection with any sale or purchase of. or any offer or sohcitation of an offer to buy or seII, any securities. Texas Utihties Company distributes a t.:mklet contatning detailed System financial a:a operating data which have been combiled for the convenience of financial analysts; a copy wi!! be furnished upon request. A copy of the Annual Report to the Securities and Exchange Commission, Form 10-K, will be furnished by the Company upon request. Requests for copies or other shareholder information should be directed to' Shareholder Relations Texas Util, ties Company 2001 Bryan Tower Dallas, Texas 7520t (214) 653 4646 1
f - T_- 5
?
a 1. T e '4 O r}}