ML20062G824
| ML20062G824 | |
| Person / Time | |
|---|---|
| Site: | New England Power |
| Issue date: | 01/31/1979 |
| From: | NEW ENGLAND POWER CO. |
| To: | |
| Shared Package | |
| ML20062G822 | List: |
| References | |
| NUDOCS 7902210095 | |
| Download: ML20062G824 (200) | |
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I Revision 3 NEP 1 6 2 January 1979 GENl:RAL 6 FINANCI AI, INFORMATION
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i REVISION 3 INSERTION INSTRUCTIONS I
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- These instructions provide the information necessary to properly update the docketed version of the NEP 1 & 2, G. F. 1. to Revision 3.
- VOI.UME 1 i
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< REMOVE INSERT l
, Tab 3 and Contents (llold) - For Vol. 2 ----
Table of Contents Page Table of Contents Page TAB General and Financial Information ,
Page 1 Page 1 i Schedule 3 Schedule 3 VOLUME 2
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Table of Contents Page Table of Contents Page
Tab 3 and Contents Tab 8 and Contents (llold) - For Vol. 4 ----
Tab 8 - S1 and Contents (llold) - For Vol. 4 ----
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Tab 9 - S1 and Contents (llold) - For Vol. 4 ----
Tab Requests and Responses, and Contents (llold) -
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Table of Contents Page Table of Contents Page
Tab 6 and Contents VOLUME 4 Tab Table of Contents
Table of Contents Page
Tab 8 and Contents
Tab 8 - S1 and Contents
Tab 9 and Contents
Tab 9 - S1 and Contents
Tab 10 and Contents
Tab Requests and Responses
Tab Revision 3 Responses When Revision 3 insertion instructions are completed - discard these in-structions.
79022100 6 l i
I NEP 1 E. 2 Revision 3 January, 1979 e General and Financial Information j
i Table of Contents
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- Tab 4 General and Financial All Applicants l Information
- 1. New England Power Company 1-S1 Supplemental Information
- 2. Bangor Ilydro-Electric Company i
j 2-S1 Supplemental Information 1
j 3. Canal Electric Company '
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3-S1 Supplemental Information l I
- 4. . Fitchburg Gas and Electric Light Company !
l 4-Si Supplemental Information
- 5. Montaup Electric Company 5-S1 Supplemental Information i
l 6. The Narragansett Electric Company l
6-S1 Supplemental Information l
- 7. Massachusetts Municipal Wholesale i Electric Company j t
7-S1 Supplemental Information '
- 8. Taunton Municipal Lighting Plant l
8-SI Supplemental Information
- 9. Vermont Electric Cooperative, Inc.
9-S1 Supplemental Information !
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- 10. Maine Public Service Company l 3 {
Requests and Responses Revision 3 Responses I 3 ,
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NEP t 6 2 Revision 3 January, 1979 N
I. GENERAL INFORMATION AS TO APPLICANTS A. Background New England Power Company Unita No. I and No. 2 ("NEP 1 & 2" or "the Units"), to which this Application relates, are to be constructed as part of the regional construction program for generation facilities for electric utilities participating in the New England Power Pool and for other New England electric utilities. Both of the Units will be owned by a group of participating New England Utilities listed below.
Each participant will have the same proportionate ownership interest in each of the Units.
The principal participant is New England Power Company
("NEP"), which currently owns 78.417 percent of each Unit.
A further discussion of ownership of the Units is set forth below. 23 All participants have executed or will execute a " Joint 1 Ownership Agreement, NEPCO Nuclear Units" which delegates to NEP the sole authority for determining the design, construction, operation and maintenance of the Units. Therefore, although each participant is an Applicant with respect to its proportionate interest in the Units, NEP will be serving as representative
[d)
N of all the other Applicants.
B. Description of Applicants The nine Applicants and their percentage of ownership are as ,
follows: '
Ownership Percentage (each unit)
New England Power Company 78.417%
Bangor Ilydro-Electric Company 4.350 Canal Electric Company 3 4.350 j Fitchburg Gas and Electric Light Company 1.130 Montaup Electric Company 4.350 The Narragansett Electric Company 0.260 Massachusetts Municipal Wholesale Electric Company 6.008 Taunton Municipal Lig;hting Plant 0.500 Vermont Electric Cooperative, Inc. 0.200 Maine Public Service Company 0.435 100.000%
3 The foregoing ownership percentages were determined as a result ofl expressions of interest received by NEP subsequent to its general f(s_s\ of fering of participation in the Units in 1975.
) NEP 1 & 2 Revision 3 l January, 1979 l l l
SCllEDULE 3 l
1 iUCLEAR ELECTRIC GENERATING UNITS l Applicant's l l Ownership Total Cost
- l l Share (Thousands of S)
New England Power Company 78.417 $ 1,770,650 !
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Bangor Hydro-Electric Company 4.350 98,225 i l Canal Electric Company 4.350 98,225 l l 1 i i Fitchburg Gas & Electric Light Company 1.130 25,515 ,
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Montaup Electric Company 4.350 98,225 l l !
The Narragansett Electric Company 0.260 5,870
- Massachusetts Municipal Wholesale l Electric Company 6.008 135,660 ;
Taunton Municipal Lighting Plant 0.500 11,290 Vermont Electric Cooperative, Inc. 0.200 4,515 l
\ .d Maine Public Service Company 0.435 9,825 ~l f
TOTAL 100.00% $ 2,238,000 3
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- Exclusive of allowance for funds used during construction.
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NEP 1 6 2 Revision 3 January, 1979 General and Financial Information Table of Contents i Tab l <
General and F1pancials All Applicants Inf orma t ion' -
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- 1. New England Power Company l ;i s
{ 1-S1 Supp1'emental Information l' . ,
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2., Bangor Ilydro-Electric Company 2-S!
Supplemental Information
- 3. Canal Electric Company 3-SI Supplementa! Information
- 4. Fitchburg Can and Electric Light Company 4-SI Supplemental Information l
- 5. Montaup Electric Company l
l 5-S1 Supplemental Information
- 6. The Narragansett Electric Company 6-Si Supplemental Information
- 7. Masnachusetts Municiial l Wholesale Alectric Company 7-S1 Supplemental Information
- 8. Tathton Municipal 1.ighting Plant 8-S1 Supplemental Information
- 9. Vermont Electric Cooperative, Inc.
9-S1 Supple.nental luformation
- 10. ., Maine public S,rvice Company l 3
itequests and Responses Revision 3 Responses .
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- NEP 1 & 2 .
Iy Revision 3 e a i
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i .g GeneralandFinancial[lntarmation ,
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, Table af Cont ents
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.d l General and Financial ; All Applicants ~
Information "i l l t
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- 1. New England Power Company /
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- Supplemental Information ,
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. 2. ,' Bangor liydro-Electric Company p i l 44 / # ,
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'h Supplement 51 Information '
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- 3. ,r Canal Electric Company "'
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3-S1 fSupplemental Information i li
- 4. Fitchburg Gas and Electric Light Company .j l
4-S1 , Supplemental Information I
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i 5. f f Montaup Electric' Company '
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j -Supplemental ~Infcrmation ,
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- 6. ? 4 IThe Narragansett Electric Company l 4
i 6-S1 Supplemental Information '
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- 7. Massachusetts Municipal Wholesaie' Electric Company 7-S1 Supplemental Information I
- 8. , Taunton Municipal Lighting Plant-~
8-S1 .
Supplemental Information
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Vermont Electric Cooperat've, Inc.
9-SI Supplemental Information s s
- 10. Maine Public Service Company ( ,
3 Requests and hosponses Reyision 3 hsponses I -
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"+s. I NEP l 6 2 Revision 3 !
4 January, 1979 O General and Fi_nanciol Information -
Table of Contents .
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, Tab General and Financial All Applicants Information
- 1. New England Power Company la . 1-S1 Supplemental Information i
- 2. Bangor Hydro-Electric Company
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2-S1 Supplemental Information [
- 3. Canal Electric Company l
3-S1 Supplemental Information
[ 4. Fitchsirg Gas and Electric Light Company 4-S1 Supplemental Information S. Montaup Electric Company !
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4 5-S1 Supplemental Information l;
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- 6. The Narragansett Electric Company l
6-S1 Supplemental Information
- 7. Massachusetts Municipal Wholesale i j Electric Company i'
7-S1 Supplemental Information f[
r 8. Taunton Municipal Lighting Plant I .S .
l/ 8-SI Supplemental Information
- 9. Vermont Electric Coopera tive, Inc.
9-S1 Supplemental Information
- 10. Maine Public Service Company l 3
Requests and Responses
- Revision 3 Responses 3
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Revision 3
.Ianuary 1979 ',
MAINE PUBLIC SERVICE COMPANY t
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t NEP 1 and 2 NEW ENGLAND POWER COMPANY l
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General and Financial Information furnished pursuant to Section 50.33 L
of the United States Nuclear Regulatory Commission's Rules and Regulations as part of License Application with Respect to the Particular Applicant Named Above i
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Revision 3 January 1979
. 1. ORGANIZATION AND CONTROL A. Name of Applicant Maine Public Service Company ('MPSCo.")
B. Address of Applicant 209 State Street Presque Isle, Maine 04769 C. Description of Business of Applicant Maine Public Service Company is engaged in the business of producing, generating, trans.nitting, delivering and furnishing electricity for lighting, heating, and other public purposes in the State of Maine as follows:
Its service area comprises 3600 square miles in Aroostook County f-and the northern part of Penobscot County in Northern Maine.
This area includes over 60 communities at retail and eight communities served by whole~ sale sales, with approximately 32,000 customers.
D. Corporate Control, Directors and Officers i '~%s MPSCo. is a corporation organized and existing under-the laws of 9
the State of Maine. Its exact corporate name is Maine Public i Service Company and its principal office is located at 209 State l Street, Presque Isle, Maine 04769. The names and addresses of MPSCo.'s directors and principal officers are as follows:
j OFFICERS s
l Name/ Title Residence Citizenship Ralph A. Brown, President 55 Barton Street and Chief Executive Officer Presque Isle, Maine 04769 U. S.
f G. Melvin Hovey, Vice President RFD 1, Box 228 Engineering and Operations Presque Isle, Maine 04769 U. S.
Frank E. Livingston, Secretary, 52 Dupont Drive
- Treasurer and Clerk Presque Isle, Maine 04769 U. S.
Paul R. Cariani 68 Pine Street Assistant Treasurer Presque Is1c, Maine 04769 U. S.
Clarence E. Cambridge 78 Pine Street i Assistant Secretary Presque Isle, Maine 04769 U. S.
C. Hazen Stetson 92 Barton Street
,j Chairman of the Board Presque Isle, Maine 04769 U. S.
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Revision 3 January 1979 DIRECTORS
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's s' Ralph A. Brown 55 Barton Street, Presque Isle, Me. 04769 U. S.
D. James Daigle St. John Rd., Fort Kent, Me. 04743 U. S.
Thomas S. Pinkham P. O. Box 168, Ashland, Me. 04732 U. S.
Irwin F. Porter 131 Barton St., Presque Isle, Me. 04769 U. S.
C. Ilazen Stetson 92 Barton Street, Presque Isle, Me. -04769 U. S.
Philip D. Ting 1cy 27 Weeks Ave., lloulton, Me. 04730 U. S.
MPSCo. is not controlled or dominated by an alien, a foreign corporation or a foreign government.
E. Regulatory Agencies and Publications Regulatory Agencies having jurisdiction over rates and services. Federal Energy Regulatory Commission 825 N. Capitol Street, N.E.
Washington, D. C. 20426 Maine Public Utilities Commission 242 State Street Augusta, Maine 04333 Trade and news publications considered appropriate to give reasonabic notice to municipalities, private utilities, public
/' 'N, bodies and cooperatives in the service area of FTSCo. -
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Bangor Daily News 491 Main Street Bangor, Maine 04401 II. FINANCIAL QUALIFICATIONS Financial information is provided in the following section. This informa-tion is similar to that provided by the other applicants in Revision 2 to this document.
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l Revision 3 MAINE PUBLIC SERVICE COMPANY January 1979 q 'INDEX FOR FINANCIAL INFORMATION CONCERNING NEP 1 AND 2 Paragraph Item Description 410.3 1-1 Sources of Funds for Construction Expenditures 1-2 Assumptions for Sources of Funds.
1- 3 . Terms of Nuclear Fuel Arrangement - Refer to Lead Owner-410.3 2-1 Percentage of Ownership in the Facility 410.3 3-1 Annual Report tb Stockholders (1976 and 1977) i 3-2 Sales Brochure - Most Recent Security Issue 3-3 Form 10-K (1977) 3-4 Preliminary Prospectus - Pending Security Issue - NONE 410.3 4-1 Officer's Certificate - Mortgage Bonds 4-2 Bondable Property Additions - Explanation 4-3 Indenture - Interest Coverage Requirements 4-4 Net Earnings and Interest Coverage - Most Recent 12 Months 4-5 Estimated Additional Amounts of Mortgage Bonds Availabic 410.3 5-1 By-Laws - Preferred Stock Coverage Requirements 5- 2 Estimated Additional Amount of Referred Stock Available 410.3 6-1 Restrictions on Short and Long Term Debt, Preferred Stock and Common Stock 410.3 7-1 Recent Rate Relief Action and Regulatory Environment 7-2 Rate Developments - Amount 7-3* Rate Order 7-4* Original Testimony and Exhibits
.7-5* Revised Final Financial Exhibits with Stipulations 410.3 8-1 Generating Units, Transmission and Distribution Facilities, Etc., During Construction of Nuclear Plant 410.3 9-1 Financial Statistics
- Because of their bulk, 2 copies of this material was provided separately to the NRC.
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- MAINE PUBLIC SERVICE COMPANY i
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l 410.3 1 - 1 Sources of Funds for Construction Expenditures i l
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MAINE PUBLIC SERVICE COMPANY SOURCE OF FUNDS FOR CONSTRUCTION ASSUMPTIONS 1978 1979 1980 1981 (a) Rate of Return on Equity 7. 13.90 11.21 13.24 13.02 The Company is presently limited by the PUC to a 13.257. return on equity (b) Preferred Stock Dividend )
Rate @ 9 1/47. )
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(c) Long-Term Debt Interest ) Based upon present knowledge Rate @ 9 1/47. ) these are the rates expected.
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Short-Term Debt Interest )
Rate @ 8% )
(d) Fbrket/ Book Ratios - Not Applicable No Common Stock Issues (c) Common Stock Dividend Assumes a $.08 increase in dividends per year.
Payment Ratio 7. 44.6 55.2 45.3 44.6 (f) Target Capital Structure 7.
Debt 48.9 54.6 55.8 56.5 Preferred Stock 5.8 4.7 4.2 3.7 Common Equity 45.3 40.7 40 39.8 (g) SEC Interest Coverages Before Taxes 4.48 3.57 3.77 3.60 (h) Annual Growth Rate Based upon Engineering Department forecast.
KW11 Sales = 67.
Price Per KWil $ .039 .041 .045 .046
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O 1982 1983 1984 1985 1986 1987 1988 J
12.98 13.25 12.73 13.25 11.70 13.25 13.25 43.2 40.6 40.6 37.1 40.6 33.8 31.8 58.3 59.4 59 58.6 59.6 61.4 62.7 3.2 2.8 2.6 2.3 2 1.8 1.5 38.5 37.8 38.4 39.1 38.4 36.8 35.8 3.25 3.20 3.16 3.29 2.93 2.88 2.95
.048 .051 .050 .053 .049 .054 .058
Ref. 410.3 2- 1 O
MAINE PUBLIC SERVICE COMPANY PERCENTAGE OWNERSHIP IN FACILITY Maine Public Service Company's ownership is .43487. of the electrical capacity and the energy output of the units.
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. I RALPH A. BROWN C. HAZEN STETSON
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7: President and Chairman of the Board
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[t Chief Executive Officer e #, ;. y THEODORE H. GRANT vt - 'j
_3 SAMUEL W. COLLINS Vice President
, Honorary Chairman Engineering and Operations of the Board CLARENCE E. CAMBRIDGE FRANK E. LIVINGSTON Assistant Secretary Treasurer, Secretary and Clerk RALPH A. BROWN C. HAZEN STETSON DONALD A. LINDSAY President and Chief Executive Chairman of the Board, HORACE M. CRANDALL Vice President-Subsidiary Officer, Maino Public Service Maine Public Service Company, Assistant Treasurer Company, Presque Isle, Maine. Presque Isle, Maine m,
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b reintents A President's Letter 1 i d g
yy" j Review of 1976 Operations 2 y ] Financial Statements and Notes 7-13 SAMUEL W. COLLINS D. JAMES DAIGLE Auditors' Opinion 13 Honorary Chairman President, of the Board, David D. Daigle & Sons, Analysis of F,ve-Year i
Maine Public Service Co.; Fort Kent, Maine.
Vice President, S. W. Collins Co. Summary of Operations 16 Inc., Lumber and Building Five-Year Summary of Materials, Caribou, Maine inside Operations Back Cover F"7 ~ 1 System Map Back Cover Y t' 1 e: g N'
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\ ) g. ANNUAL MEETING: Second Tuesday in May.
PRINCIPAL OFFICE: 209 State Sreet.
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j Ai Presque Isle, Maine 04769 Transfer Agent: Manufacturers Hanover Trust ROYAL H. FROST Company, New York.
THOMAS S. PINKHAM President, R. H. Frost General Manager, Stock Registrar: Common Stock -
Company, insurance, Pinkham Lumber Co., Morgan Guaranty Trust Company of New York Caribou, Maine; Ashland, Maine.
Chairman of the Board, Aroostook Trust Company, Caribou. Maine.
front correr:
pmg y 9-The front cover this year was created by a inserting an Aroostook County scene with-
] .. get . In the outline of the State of Maine of our y ,-
'Q co,mpany logo and was developed by our printer.
IRWIN F. PORTER PHILIP D. TINGLEY / N Executivo Vice President, Honorary Director, Northern Naticnal Bank, Houlton Trust Co.,
Presque Isle, Maine. Houlton, Maine.
O V fil*(8N [([(*llI # [(8I /(87* $3,088,000, based on test year figures, while fuel adjustment charges will be reduced by a similar to osse stocittrolsicrx tanti amount. Because of this, the rate realignment is not expected to increase overall costs to our einplo#PPN customers substantially. However, recapture of Maine Yankee Atomic Power capacity and ener-After a slow start during the early months of gy with its much lower fuel costs than our 1976, firm sales of electricity picked up in the previous power mix together with the increase last half of the year to produce a 7.5% increase in base rates is expected to improve the Com-over 1975. While our revenues on the surfac,e pany's earnings in 1977.
seem to reflect only a 1.4% gain, further analysis reveals that after eliminating the fuel and pur- The Company's appeal to an initial decision chased energy clause revenues from the totals, of the Federal Power Commission denying the the real gain in base revenues amounted to Company's right to approximately $456,000 in 8.6% . surcharge revenues, which had been collected from our wholesale customers during 1975 and Gross hydro product. ion in 1976 174,303,300 kilowatt-hours, which is , amounted early 1976, subject to refund, is still pending 128.4% of to with no final decision having been received from normal and 63.7% over 1975, for the best hydro the Commission, production year in the Company's history.
A wholesale-rate filing with the Federal Power Earnings per shara amounted to $2.40, an .in- Commission has been allowed to go into effect, crease of 40c over the restated 1975 earnings subject to refund, effective December 11,1976.
of $2.00. The 1975 earnings have been adjusted As of this date no hearings have been scheduled from $1.89 to $2.00 per share this year to reflect on this matter.
the adoption of the Financial Accounting Stand-ards Board's Statement relating to translation of High energy costs and the many problems our Subsidiary's financial statements into U.S. facing the industry in rate matters, together with dollars, the lack of a definitive national energy policy, have made very difficult the job of providing for Cash dividends paid in 1976 on the Common the future electrical energy requirements of our q Stock amounted to $1.32 per share and must be customers. However, despite these conditions u/ considered 100% taxable for Federal income tax 1976 has been a year of progress and I am purposes, optimistic that 1977 will show further improve-Construction of the 600,000-kilowatt Unit #4 ment.
of the W. F.Wyman Station is on schedule and it is you, our valued stockholders and employ-should be ready for commercial operation late ees, who have made this progress possible and in 1978. At the end of 1976 the Company for this I express to each of you our grateful had expended approximately 52,713,000 on its appreciation' 20,000-kilowatt portion of this unit, which is Sincerely' being constructed by Central Maine Power Company. ,
Central Maine Power Company announced in N NuW January that it has cancelled plans to build the RALPH. A. BROWN 1,150,000-kilowatt Sears Island Nuclear Plant at Searsport, Maine because conferences with the President U.S. Nuclear Regulatory Commission staff have now made it clear that the Commission probably Presque Isle, Maine March 15,1977 will not provide the approvals necessary for its construction. Plans for this second Maine nu-clear plant, in which the Company had an ex- s 4 pressed interest in 30,000 kilowatts of capacity, ^
will be deferred until the early 1990's at a new ?
site. Meanwhile, Central Maine Power Com- ,$'
pany's plans for a coal-fired plant at Sears Island with capacity of 400,000 to 600,000 kilo-watts for 1986 operation are in progress and the F Company is studying its capacity needs for L / ,~
possible participation in this unit. ,
- m. As reported previously, the Company received
) an order from the Maine Public Utilities Com-mission on November 1,1976 authorizing the rate restructuring and realignment which pro-vides an increase in base rates of approximately 1
I re>ria ar <>f 1976 <>prorastitores Revenue and Energy Sales Purchased power expenses were down from
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$6,884,091 to $5,768,339, due to low-priced Ach.ieving a new high .in 1976, consolidated energy available from The New Brunswick Elec-operating revenues of $17,166,458 were 1.4% tric Power Commission before November 1, and over those of a, year ago. Thi,s see,mingly small to low-unit-cost nuclear energy from Maine gain is deceptive, though, since it was com-posed of a robust 8.6% ( $1,019,160) growth in Yankee af ter that date.
l base revenues, partially offset by a rather sharp A flow-back of previously-deferred fuel ex- '
decline of $789,484 in fuel adjustment billings. penses amounted to $941,833, against the prior Revenue from base rates is expected to include year's deferral of $180,201, producing an addi-a reasonable return on the Company's invest- tional expense of $1,122,034 compared with I ment, whereas fuel adjustment revenues reflect 1975. Transmission expenses were up $165,581, !
only the pass-through of excess fuel and pur- partly due to the transmission costs associated I chased energy costs, with no element of profit. with the Maine Yankee energy delivered from Fuel adjustment billings were down because southern Maine, and partly due to a one-time fuel and purchased energy costs were consider- credit of $99,290 which reduced last year's costs ably lessened by the incidence of exceptionally to a lower-than-normal amount. Distribution ex-favorable hydro conditions and by the infusion penses were up a normal 6.2%. The Federal of nuclear energy into the Company's system Power Commission introduced a neu group of during the last two months of the year. Over accounts in 1976, called Customer Service and half of the growth in base revenues occurred in Information Expenses, to which are charged l November and December, due to the colder- numerous items formerly classified as Customer i than-normal winter weather and greater energy Accounts Expense or Sales Expenses. During needs cf customers, and because of changes the year, $82,524 was charged to this new group in retail and wholesale base rates, effective of accounts. Sales expenses declined from November 1 and December 11, respectively. $163,478 to $56,583, due partly to the discon-Energy sales of 482,098,000 kilowatt-hours tinuance of sales activities not now considered were 9.0% over those of 1975. All classifications necessary or , appropriate, and partly to a change showed increases, with Residential gaining in classification to the Customer Eervice and Information accounts. Customer accounts ex-6.0%, Commercial and Industrial-Small 7.4%,
and Commercial and Industrial-Large 10.0%. penses were $77,222 below the $468,128 of a Sales to Other Electric Utilities were up 11.4%, year aco, due pnncipally to an unusually high while those to Other Public Authorities ad. figure last year because of a speci write-off associated with customers,al bad debt Chapter XI vanced 18.4%. Representing 83.5% of Sales to Other Public Authorities, Loring Air Force Base bankruptcy proceedings. For a variety of rea-used 23.3% more energy than in the previous sons adm,n,strative ii and general expenses were year. Sales to other customers in that category $201,479 higher than in 1975, a large part of ;
held at about the same level as in 1975. which ($143,485) was an increase in regulatory I commission expenses arising from the three rate cases in progress during the year. An in-Operation and Maintenance Expenses crease of $46,763 in pension costs was incurred Whereas 1975 was noted for unusually low because of increased payroll and new govern-water levels the reverse was true in 1976, with ment regWadons u,nder the Employee Retire-excellent hydro conditions prevailing throughout ment income hg M hah consMaM most of the year, reaching 128.4% of normal for peration and maintenance expenses were the best year on record. A total of 174,303,000 $10,878,209, which was $644,855 less than the kilowatt-hours was generated in the hydro plants year before.
in 1976, compared with only 106,448,000 kilo- .
watt-hours in the year before. This reduced Taxes the need for steam-produced energy, which dropped from 53.339,000 kilowatt-hours to only State and Federal income taxes charged to 15,953,000 in 1976. Necessary purchases from operating expenses amounted to $1,449,166 in outside the Company's system went up only 1976, compared with $1,148,399 in the previous 2.9% (328,709.000 kilowatt-hours compared year, the increase arising from greater income with 319,334,000) though energy sales advanced subject to current and deferred taxes. Income 9.0% over the year before. taxes currently payable rose to $1,5,74,320, from
$780,049 in 1975, while the provisions for de-Thus, excellent hydro conditions are credited ferred income taxes were reduced from $236,389 with holding down production expenses, though in 1975 to a negative $263,410 in 1976. The there were other positive factors as well. Such negative figure came about from the reversal of production expenses declined 10.5% , from
$9,040,881 in 1975 to $8,089,407 in 1976. Steam fuel costs of $447,020 were less than a third of
$486,361 of previously deferred income taxes related to deferred fuel expenses, while new ac- h cruals for other types of deferred taxes totaled the $1,511,626 experienced in the previous year. $222,951. Investment tax credit adjustments 2
came to a net amount of $138,256 in 1976, up 1976. On November 1, the Company reclaimed A slightly from the $131,961 of the year before. its capacity in the Maine Yankee nuclear V)
Taxes other than income taxes rose a nominal unit, which (after normal early problems) has achieved a high level of steady, reliable, opera-4.5%, from $603,141 to $630,185. tion and a reputation as one of the finest nuclear plants in the entire country.
Construction Maine Electric Power Company,Inc. (MEPCO)
The Company and its Subsidiary expended owns and operates a 345-kv transmission line,
$2,398,511 on property additions, replacements about 180 miles long, which connects The New and improvements during the year. Of that total, Brunswick Electric Power system with the New approximately $1,530,000 was spent for the England Power Pool. Under agreements with Company's share of the construction costs of NBEPC, MEPCO is presently receiving Cana ~
William F. Wyman Unit #4 being built by Central dian-produced energy and reselling it to various Maine Power Company at Yarmouth, Maine. New England utilities. Beginning in June,1976 Distribution extensions, rebuilds and highway the Parent Company began purchasing its small relocations accounted for the expenditure of share of that Canadian capacity (3400 kilo-about $496,000. Approximately $194,000 was watts) and, in addition contracted for 6000 kilo-needed for meters, services, transformers and watts of an entitlement from the same source other customer-related facilities, while trans- that was assigned to it by another New England mission lines required $16,000. Street lighting, utility. The Parent Company owns 7.49% of the voltage conversions, substation improvements, outstanding Common Stock of Maine Electric general equipment and miscellaneous items ab- Power Company, Inc.
sorbed the remaining $163,000 of the construc-tion funds expended. Rate Proceedings The 1977 construction budgets of the Com- After the Maine Yankee nuclear plant went pany and its Subsidiary anticipate the expen- into service on December 28, 1972 the Parent diture of approximately $3,619,000, excluding Company, by reason of its ownership of Maine amounts onginally budgeted for the Sears Isla,nd Yankee stock, became subject to the jurisdiction nuclear plant, now cancelled by Central Maine of the Federal Power Commission and was re-Power Company. Of that total, $2,486,500 is ex- quired to file its wholesale rate with that Com-pected to ce used for the continumg construc- mission, which was done in 1973. The FPC ac-
- v; tion of the William F. Wyman Unit #4. Including allowances for funds used during construction cepted the rate for filing but required the Com-pany to submit a revised fuel cost adjustment the Company's share of the cost of the Wyman clause, which it did on March 5,1975. By its unit will be in excess of $6,000,000. order of May 5,~1975, the FPC permitted the new fuel cost adjustment clause to become effective, Affiliated Companies subject to refund, on May 11,1975, and ordered The Company owns 100% of the Common a hearing to be held to determine the legality Stock (except for directors' qualifying shares) of the proposed fuel clause. Tesumony and ex-of Maine and New Brunswick Electrical Power hibits were filed by both the Company and the Company, Limited, a Canadian corporation. The FPC staff and a hearing was held on January 8, Subsidiary owns the Tinker Station on the 1976, i,n Washington, D.C. before administrative law judge. The maj,a presiding or point at Aroostook River in New Brunswick. That sta_
tion has a hydro plant of 37,300 kilowatts of issue i,s the Company's t,welve-month surcharge capacity and a 1,000-kilowatt diesel unit. The provision which was designed to recoup the un-Canadian Company serves the small communi- recovered excess fuel costs outstanding at the ties of Andover, Perth, and Car!ingford in New date of the change from a twelve-month deter-Brunswick and the balance of its generated mination period to that of a s, ingle month. That energy is exported to the Parent Company in twelve-month surcharge was completely billed Maine' to customers as of May 10,1976 and has been fully collected by the Company. On September An 855,000-kilowatt nuclear plant is owned 30,1976 the Administrative Law Judge rendered and operated by the Maine Yankee Atomic an initial decision which, in addition to a very Power Company (Maine Yankee) at Wiscasset, minor point, found the surcharge not to be Maine. The Parent Company is the owner of 5% just and reasonable, but recommended that of the Common Stock of Maina Yankee, and be- the Commission resolve the surcharge issue cause of that ownership is entitled to purchase through a rule-making proceeding. The Com-5% of the nuclear plant's output. Prior to No- pany has appealed the initial decision in this vember 1,1976 the Company's entitlement in case, since it appears to be in direct contradic-Maine Yankee's capacity had been assigned to tion to a decision in a similar case with a similar
, Consolidated Edison Company of New York be- surcharge issue. If the FPC should ultimately J cause the Company's needed capacity was ful- rule against the Company on this point, and if d
filled under a contract with The New Brunswick that ruling should be subsequently sustained, Electric Power Commission (NBEPC). That $456,647 collected through the surcharge will contract with NBEPC expired on October 31, have to be refunded with interest at 9% per 3
annum. Excluding the undeterrr:ined amount of year. The Company expects to finance its 1977 interest, such a loss would reduce earnings per share of Common Stock by 330, after related income taxes.
construction program from short-term bank bor-rowings and internally-generated cash.
g General in anticipation of the Company reclaiming its The Parent Company engages in the produc-capacity in Maine Yankee on November 1,1976, at which time a large proportion of power costs tion, transmission, and distribution of electnc would shift from fuel-related expenses to fixed energy to retail and wholesale customers in charges of the Maine Yankee plant, the Com- Aroostook County and a small portion of Penob-pany instituted rate proceedings with the Maine scot County in northern Maine. Prior to Novem-I Public Utilities Commission in Aaril of 1976, re_ ber 1,1976, the Company also sold and serviced questing new retail rates to be 6fective Novem, majo,r electncal appliances, but on that date dis-ber 1,1976, and designed to recover the in, continued the sale of appliances since,the field creased capacity costs through the base rates, appeared to be adequately covered by indepen-The Company's application a.so requested a dent dealers. The Company plans to cease the rate improvement which would raise the Com. servicing of appliances also, effective March 1, pany's rate of return on its investment to a rea. 1977, as expenenced establishments will be well sonable level. After exhaustive proceedings, the able to serve customers in this area by that date.
Maine Commission recognized the need for a Municipalities, business, and landowners in timely rate realignment and ordered new, modi- Maine are being subjected to increasing uncer-fied, rates to become effective as of November tainties stemming from a 1972 suit brought by 1, 1976, though it did not approve the full the United States government on behalf of In-amount of revenue requested by the Company. dians, seeking return of 12.5 million acres of Based on the test year in this case, it does not Maine hnd to the Passamaquoddy and Penob- l appear that annual bills to customers will be scot tribes. Apparently, the indian claims are increased significantly, assuming that no drastic based on a 1790 law that prohibited land trans-fuel price intiation will take place in the near actions with tribes without the express approval future, since the higher level of the base rates of Congress. It is not presently known whether are expected to be offset by lower fuel adjust- the suit veill cloud the Company's title to any of ment billings. its land or land rights, which would make future With the principal rate question resolved, the mortgage financing more complex and difficult.
Company, on November 5, filed a new wholesale Along with the Subsidiary the Company con-rate with the Federal Power Commission for the tinues to avail itself of the advisory and other same reasons outlined previously. The FPC ac- services provided by Stone & Webster Manage-cepted the new rate for filing and allowed it to ment Consultants, Inc., subject to the direction go into effect on December 11,1976, subject to and control of the Board of Directors.
refund. One of the The Company's Common Stock is listed and sale customers has ,inte.vened Company's, in smaller whole-this case, but at this wnting, no hearings or conferences have traded on the American Stock Exchange. Only ,
b,een scheduled by the Federal Power Commis- Common stockholders are entitled to vote at the sion.
Annual Meeting, except in case of default (con-sidered extremely unlikely) under the provisions Employees of by-laws relating to the Preferred Stock of the Company. Each year the Annual Meeting is held The Parent Company had 179 employees at on the second Tuesday in May.
December 31, 1976 and there were 10 at the Subsidiary s Tinker Station, for a comb,ned i total For the two most recent years the market price and dividend data related to the Common of 189, compared with 185 and 12, respectively, Stock is tabulated below; at the end of the previous year. Payroll costs of the combined system were, $2,670,819 in 1976, Common Stock Statistics compared with $2,628,596 in 1975. The Parent Company and the International Brotherhood of Sales Price Dividends Electrical Workers settled on a one-year con- High Low Paid Per Share tract, effective October 1,1976, which called for 1975 -
an 8% increase in pay rates, some improve-ments i,n the life insurance port,on i of the group First Ouarter 12% - 9% 1/1/75 $0.32 insurance plan, and other minor frin0e changes. Second Quarter 14 - 12% 4/1/75 0.32 Commensurate adjustments in the non-union Third Quarter 14 % -13 7/1/75 0.33 pay scales were made, effective December 1, Fourth Ouarter 13 % -13 10/1/75 0.33 1976 -
Financing First Quarter 15 % -13 % 1/1/76 0.33 in 1976 the Company financed its operations and construction program with no further out-Second Quarter 14% - 13%
Third Quarter 15 % -13 %
4/1/76 0.33 7/1/76 0.33 h
side financing of any kind and it was unneces- Fourth Quarter 16 % -14 % 10/1/76 0.33 sary to issue ary debt obligations during the 4
~N e
/
ANNUAL RESIDENTIAL CONSUMPTION 7.0 7 1961- 1976 6.0 - _ ._.
6 pggMD e
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gg(h ) 4 pr 3.0 MM------ % mM 3 2.0 2 1.0 f THOUSAND CENTS PER K AT MS KILOWATTHOUR 19 61 1962 1965 1964 1965 1966 1967 1968 1969 1970 .9 71 1972 1973 1974 1975 1976 YE AR ENDING DECEMBER 3187 Maine Public Service Company. Residential Service Unit Revenue vs Average Annual Consumption per Customer.
1976 SOURCE OF REVENUE 1976 DIGTRIBUTION OF REVENUE Millions of Dollars (Total $17.2) and percent of total Millions of Dol lars (Total 517.2) and percent of total COMMERCIAL . FUEL AND
- $4.3 '. punCHASED POWER 25% . \
gy_g 42 %
INDUSTRIAL
$2.9 INTEREST ANO ~
17 %
- PREFERRED DIVIDENDS ~
STREET & A - 1u81 ' .STOCAHOLDERS ' $1.7 :.
$42% DIVIDEND 10 %
.p 5% ~
OPERATING WAGES RESIDENTIAL AND PEROVISITES
$6 6 38 %
h2 OTHER CPERAf fNG E RPf NSES 4*
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Bob Ashby demonstrates basics of electricity to the 4th and 5th grade students in an area school.
The company provides education programs for grades 3 through 12. Below are !atters of apprecia-tion received from students.
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O naine Puhiii service t'anipaniy um! N hsieliary 2
' N Year Ended December 31, 1976 1975 stilteill4* lit Oh' 4*UnsO$54$48tvi$ $nv0 nit" (Flestated-l Note 1) l
~
$17,166,458 $16,936,782 Operating Revenues Operating Expenses Operation: 6,884,091 Power Purchased 5,768,339 4,431,059 3,993,314 Other 645,659 Maintenance . . . . .... 678,811 Depreciation (Note 1) 1,331,670 1,286,843 Taxes:
630,185 603,141 Other Than income 118,154 State Income . ... . ... .... ..
204,509 U. S. and Canadian Federal Income (Note 3): 661,895 Current ..... .... .. .....
1,369,811 Deferred-Related to Deferred Fuel Expense . ... .
(486,361) 93,055 Other Deferred-Net (including Investment Tax Credits) 361,161 275,295 Total Operating Expenses 14,289,184 14,561,447 Operating income 2,877,274 2,375,335 Other Income (Deductions) 138,595 63,330 Allowance for Funds Used During Construction Return on Equity Investments (Note 1) .
348,365 348,593 Foreign Exchange (Losses) Gains (Note 1) (14,264) 62,953 Other-Net (72,652) (46,107)
Total 400,044 428,769 income Before Interest Charges 3,277,318 2,804,104 Interest Charges Long-Term Debt 1,223,743 Other l 1,478,277 16,165 58,820 Total 1,494,442 1,282,563 Net income ............. 1,782,876 1,521,541 Preferred StocF. Dividend Requirements 185,128 187,898 Net income Available For Common Stock $ 1,597,748 $ 1,333,643 Earnings Per Share of Common Stock (based on 665,734 shares outstanding in each year) $2.40 $2.00 stesteinent ol' vansoliciatesI : ettuineel earnings l
Balance at Beginning of Year-As previously reported .... S 7,218,500 $ 6,829,119 Adjustment to reflect adoption of Statement of Financial Accounting Standards No. 8 in translation of subsidiary financial statements (130,229) (202,380)
(Note 1)
As restated 7,088,271 6,626,739 Net income 1,782,876 1,521,541 Total 8,871,147 8,148,280 Dividends Declared Preferred Stock . ... . .... ..... . .. ......
185,128 187,898 Common Stock (per sharo: $1.34 in 1976 and $1.31 in 1975) 892,083 872,111
)
Total Dividends [ 1,077,211 ,
1,060,009 Balance at End of Year S 7,7S3,936 l $ 7,088,271
~
See Notes to Financial S:atements. ,
___I____________. _______ __
Maine Pulalie Service (?oningnain,v $
and Subsidiarv '
coussolielasteel .
assets i
December 31, 1976 1975 (Restated-Note 1)
Utility Plant (Note 1)
Electric Plant .... $47,093,787 $45,040,522 Less Accumulated Depreciation 15,153,779 14,222,936 Net Utility Plant 31,940,008 30,817,586 Investments Maine Yankee Atomic Power Company (Note 1) 3,339,443 3,339,822 Maine Electric Power Company, Inc. (Note 1) 113,097 118,820 Miscellaneous 28,504 28,246 Total 3,481,044 3,486,888 Current Assets Cash, including temporary cash investment of $500,000 in 1976 1,285,589 742,065 Deposits for interest, dividends and bond proceeds held in escrow 933,895 921,787 Accounts Receivable:
Customer (less allowance for uncollectible accounts-1976, $19,395; 1975, $21,483) 1,740,734 1,832,691 Other . . . ..... .. . ... . . .... . 196,362 162,260 Deferred Fuel and Purchased Ene:gy Costs (Note 2) 671,625 1,613,458 Materials, Fuel, and Supplies (at average cost) 830,960 911,899 Prepayments 47,977 56,904 Total 5,707,142 6,241,064 Deferred Debits Unamortized Debt Expense (being amortized over terms of related debt) 226,592 237,739 Miscellaneous 239,866 204,864 Total 466,458
$41,594,652 442,603
$40,988,141 h
See Notes to Financial Statements.
8
D ~ -
- ( '
lisance siseet '
lituloilities sinal carpittal December 31, 1976 1975
( Restated-Note 1)
Shareholders' Equity (Note 6)
Capital Stock (see Schedule of Caoitalization Data):
Common Stock ... ... S 4,660,138 $ 4,660,138 Cumulative Preferred Stock 2,249,000 2,309,000 Paid-in Capital 1,564,243 1,540,389 Retained Earnings 7,793,936 7,088,271 Total 16,267,317 15,597,798 I
I Long-Term Debt (less current maturities) (see Schedule of Capitalization Data) 20,484,429 20,897,160 Current Liabilities Long-Term Debt Due Within One Year 422,592 392,184 Accounts Payable .. . . .... .. ..... .... .. 1,123,533 1,308,670 Deferred Income Taxes Related to Deferred Fuel Costs (Note 2) 346,828 833,189 Dividends Declared 278,933 266,330 Customer Deposits 31,730 86,374 Taxes Accrued . 780,759 156,011 Interest Accrued 410,109 382,122 Total 3,394,4154 3,424,880 Deferred Credits income Taxes (Note 1) . 912,187 689,282 Investment Tax Credits (Note 1) . 439,970 301,714
, Miscellaneous 96,265 77,307 p Total 1,448,422 1,068,303
$41,594,652 $40,988,141 9
statencent of source of w - Q consolielutval fuurls for plant -; v utlelitions anal replacernents Year Ended December 31, 1976 1975 (Restated-Note 1)
Source of Funds Funds From Operations:
Net income . . ......... .. ... .... _. $ 1,782,876 $ 1,521,541 Charges (Credits) Not Affecting Working Capital:
Depreciation (Note 1) ... 1,331,670 1,286,843 Deferred Income Taxes-Net . .... 361,161 275,295 Allowance For Funds Used During Construction (Note 1) (138,595) (63,330)
Foreign Exchange Losses (Gains) (Note 1) 14,264 (62,953)
Other 76,964 153,030 Funds From Operations 3,428,340 3,110,426 I Less Dividends Declared 1,077,211 1,060,009 Funds Retained in the Business 2,351,129 2,050,417 Funds From (For) Financing-Net:
Issuance of Long-Term Debt . . . .. ... .
- 4,000,000 incrcase (Decrease) in Notes Payable to Banks - (650,000)
Retirement of 2%% Series Bonds . . . ..... .
(2,088,000)
Reduction of Long-Term Debt and Preferred Stock (418,469) (495,115)
Funds From (For) Financing-Net (418,469) 766,885 2,817,302 I Total Available Funds . 1,932,660 increase (Decrease) in Available Funds Change in Working Capital (see below) 473,118 (786,088)
Other-Net
.j (7,267) (17,479) f Funds Used For Plant Additions and Replacements $ 2,398,511 $ 2,013,735 (Decrease) Increase in Working Capital by Components (excluding long-term debt due within one year and notes payable to bank):
Cash . .. ..... $ 543,5 M $ 380,603 Deposits for interest, dividends and bond proceeds held in eserow . . . ... 12,108 60G,391 Accounts Receivable-Net ... .. .... .. (57,855) 239,604 Deferred Fuel and Purchased Energy Costs (Note 2) (941,833) 180,201 Materials, Fuel, and Supplies (80,939) (56,062)
Prepayments .. (8,927) (2,284)
Accounts Payable . . .... ... .. _ . .. .
185,137 (356,076)
Deferred Income Taxes Related to Deferred Fuel Costs (Note 2) 486,361 (93,055)
Taxes Accrued (624,748) (20,280)
R Interest Accrued and Other Current Liabilities-Net (Decrease) Increase in Working Capital 14,054
$ (473,118) $
(92,954) 786,088 g
See Notes to Financial Statements.
10
180$4*N $4 $50H181'5U5 S$U$4*1184*18$N
- 1. ACCOUNTING POLICIES, ETC. Investment Tax Credit The Parent defers in-vestment tax credits ($150,000 and $138,000 in Regulation The Parent is subject to the reg. 1976 and 1975, respectively) and amortizes the ulatory authority of the Maine Public Utilities credits over the estimated useful lives of the Commission (PUC) and, in respect to wholesale related utility plant.
rates, the Federal Power Commission (FPC).
The Company maintains its accounts in accord- Investments The Parent records its investments ance with the accounting requirements of the in the Common Stock of Maine Yankee Atomic PUC which, generally, conform with the ac- Power Company (5% ownership), a jointly-counting requirements of the FPC (see Note 7). owned nuclear electric power company, and the Common Stock of Maine Electric Power Com-Consolidation The accompanying consolidated pany (MEPCO) (7.49% ownership), a jointly-financial statements include the accounts of the owned electric transmission company, on the Parent and its wholly-owned Canadian subsidi- equity method. Dividends received in 1976 and ary, Maine and New Brunswick Electrical Power 1975 from Maine Yankee were $335,000 each Company, Limited. Intercompany items have year and from MEPCO S13,842 and $14,446, been eliminated in consolidation. respectively.
Translation in 1976 the Company changed its The Common Stock of the Subsidiary is method of accounting for the translation of the pledged as additional collateral for the first financial statements of its Canadian subsidiary mortgage and collateral trust bonds of the in accordance with Statement of Financial Ac- Parent.
counting Standards No. 8 (Accounting for the Translation of Foreign Currency Transactions and Foreign Currency Financial Statements).
Accordingly, the 1975 consolidated financial 2. DEFERRED FUEL AND PURCHASED statements have been restated to include an ENERGY COSTS g additional foreign exchange gain of $72,151
($.11 per common share) due primarily to the in order to achieve a better matching of costs translation of the subsidiary's long-term debt at and revenues, the Parent changed its method of the exchange rate in effect at December 31, accounting for recoverable fuel, and purchased 1975, rather than at the historic rate. Exchange energy costs in 1974 by deferring the recogni-gains and losses are reflected in consolidated tion of the recoverable portion of such costs as earnings. expense until the period in which the related revenues are billed under the operation of fuel Electric Plant Electric plant is stated at orig- and purchased energy adjustment clauses. By inal cost which, as to construction, includes all this accounting method, fuel and purchased en-direct labor and material, as well as related ergy costs of $671,625 and $1,613,458 and re-indirect construction costs including general lated income taxes of $346,828 and $833,189 engineering, supervision and similar overhead have been deferred at December 31,1976 and items, and an allowance for cost of funds used 1975, respectively.
during construction at 7.5% in 1975 and through October 31,1976 and at 9.71% thereafter. Main-tenance and repairs, including replacement of minor items of property, are charged to main- 3. FEDERAL INCOME TAXES tenance expenses as incurred.
The consolidated provisions for federal in-Depreciation Depreciation is provided on corre come taxes differ from amounts computed by posite bases using the straight-line method for applying the statutory rate to pre-tax income financial reporting purposes and the declining primarily due to the dividends received deduc-balance method for tax purposes. tion allowed for dividends received from jointly-By order of the Maine Public Utilities Commis-sion, the Parent records income tax reductions, wl%ch result from the use of liberalized depre-ciation, by the " normalization" method for all 4. NOTES PAYABLE TO BANKS AND property additions. Related deferred income SHORT-TERM CREDIT ARRANGEMENTS taxes recorded in 1976 and 1975 amounted to g $211,300 and $155,600, respectively. The Sub- The Parent has credit arrangements with two sidiary records income tax reductions by the banks. The first is a short-term arrangement
", flow-through" method for all property addi- with maximum borrowings determined by the tions. lender baced on the financial affairs of the Com-11
l panies. A compensating balance of 20% of out- par value over reacquisition cost of 1200 shares standing borrowing is required to be maintained. of the 4.75% Preferred Stock retired. 3 The second is an open credit arrangement of up to $650,000 with interest at the lender's prime The Preferred Stockholders are entitled to W rate without compensating balances. special vot,ing rights in respect to certain cor-porate action and are entitled to elect a majority During 1976 the Parent did not utilize these of the Board of Directors in the event of a de-credit arrangements. Detail of short-term notes fault in the payment of four quarterly dividends outstanding during 1975 are as follows: on the Preferred Stock.
Borrowings:
Average amount outstanding 7. RATE PROCEEDINGS during the year $ 525,000 After the Maine Yankee nuclear plant went Maximum amount outstanding at into service in 1972, the Parent became subject month-end during the year 1,050,000 to FPC jurisdiction, and at that time filed its wholesale rate schedule with the Commission Interest Rates: which became effective in 1973. In 1975 the Parent, in accordance with the initial require-Average during the year 8.045% ments of the FPC, filed a revised fuel cost adjustment clause. The Commission permitted At year end -
this revised clause to take effect in May 1975 subject to refund and ordered a hearing to be held to determine its lawfulness. In Sep; ember 1976, a judicial decision was reached, subject
- 5. PENSION PLAN to an FPC rulemaking proceeding, which found two provisions of the clause to be not just and The Parent and its Subsidiary have an insured reasonable. The Company has appealed this non-centributory pension plan (terminable at decision. If the FPC should rule against the any time) for the benefit of all employees, based Parent, applicable deferred fuel costs incurred on age and period of employment conditions. to the effectiv,e date of the revised clause Pension expense, which includes amortization of $456,647 will become unrec,overable and and of prior service costs over a period of twenty ($ in 197 years, was $181,500 in 1976 and $117,000 in amounts , collected $292,157 m 1975) ill plus have ,164,490 interest a 1975. The Companies policy is to fund pension to be refunded to customers.
cost accrued.
- 8. CONSTRUCTION PROGRAM
- 6. SHAREHOLDERS' EQUITY (See page three)
Under the most restrictive provisions of the Parent's long-term debt indentures, retained earnings available for the payment of cash divi-dends on Common Stock were $2,580,433 at December 31,1976.
The Preferred Stock is redeemable, with cer-tain restrictions, at the option of the Parent, or ,
in case of voluntary liquidation at $51.00 per '
share for the 4.75% Series and at $54.94 for the 9%% Series (both plus accumulated divi-dends). No shares were redeemed during 1976 or 1975.
l Purchase funds for both Series of Preferred Stock provide that the Company will annually offer to purchase on July 1 at prices not to exceed $50 per share and accrued dividends, 3% of the maximum number of shares issued prior to May 15 of such year, less any shares theretofore purchased and surrendered by the Company to the transfer agent as a purchase fund credit for such year. Any shares so pur-chased and surrendered are retired. In both 1976 and 1975, paid-in capital increased by ap-proximately $23,000 representing the excess of NOTES Continued on Page 13 12
o.'1 s -
- 9. QUARTERLY INFORMATION (unaudited) three quarters of 1976 and the four quarters of 1975 have been restated in accordance with the '. '
D Presented below are financial data showing translation of the subsidiary's financial stats- - _-
- results for each quarter in the two years ended ments (See Note 1) ,
2 December 31, 1976. The results for the first ,.~l
=
(Dollars in Thousands Except Per Share Amounts) / '
1976 By Quarter 1st 2nd 3rd 4th Operating Revenues $5,492 $4,200 $3,128 $4,346 Operating Expenses and Interest 5,048 3,964 3,015 3,756 ..
Other income-Net 16 62 121 201 Net income $ 460 $ 298 $ 234 $ 791 Earnings Per Common Share:
As Previously Reported $ .73 $ .43 $ .27 $ 1.12 ". . '
Adjustments for Restatement (.11 ) (.05) .01 -
As Restated $ .62 $ .38 $ .28 $ 1.12 1- ,
1975 By Quarter . ;
1st 2nd 3rd 4th .
Operating Revenues $4,657 $4,371 $3,199 $4,710 ;1 Operating Expenses and Interest 4,236 4,089 3,061 4,458 Other income-Net 113 153 75 88 l . , ,
5 '?#
Net income $ 534 $ 435 $ 213 $ 340
) ,
Earnings Per Common Share: ,
As Previously Reported $ .68 $ .47 $ .27 $ .47 .
Adjustments for Restatement .05 .11 (.02) (.03)
As Restated $ .73 $ .58 $ .25 $ .44
= = - :== = - - ==== . ,
- - . - - - - -- ~~ *
- . - - As described in Note 7 to the financial state-lilll[l[Ol*N OffilflOli ments, in 1976 and 1975, the Parent collected certair. revenues undcr the provisions of a re-
+ .
vised wholesale fuel cost adjustment clause.
Such revenues are subject to regulatory review .
MAINE PUBLIC SERVICE COMPANY: and approval, and may be subject to refund to .' / q the extent not ultimately allowed by the appro- -
s pr ate regulatory authority. .,
We have examined the consolidated balance '
- sheet of Maine Public Service Company and in our opinion, subject to the effect, if any, of its subsidiary, Maine and New Brunswick Elec- the outcome of the proceedings referred to in - -
trical Power Company. Limited, and the related the preceding paragraph, such financial state-schedule of capitalization data, as of Decem- ments and supplemental schedule present fair- . .
ber 31,1976 and 1975 and the related state- ly the financial position of the Companies at .
ments of consolidated income, consolidated re- December 31,1976 and 1975 and the results of
- tained earnings, and source of consolidated their operations and their source of funds for . j~, <
funds for plant additions and replacements for plant additions and replacements for the years '
the years then ended. Our examination was then ended, in conformity with generally ac- . ..; - .
made in accordance with generally accepted cepted accounting principles consistently ap- N.
auditing standards and, accordingly, included plied, after restatement for the change, with . , L /
such tests of the accounting records and such which we concur, in the method of accounting
) other auditing procedures as we considered for the translation of the financial statements of .
necessary in the circumstances. the Canadian subsidiary (Note 1).
- Boston, February 25,1977 HASKINS & SELLS :. ,
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! f Matine Public Service Connipstin,y m
- G niist N Imielistry f C schealute of < tupitali:aution eleuttu December 31,
$onif=tPI'1H 4$P$11: 1976 1975 (Restated-Maine Public Service Company:
First Mortgage and Collateral Trust Bonds:
3% Series due 1980-Interest Payable, March 1 and September 1 $ 750,000 $ 760,000 3.35% Series du s 1985-interest Payable, February 1 and August 1 1,600,000 1,620,000 5%% Series due 1990-Interest Payable, March 1 and Sept.1 1,680,000 1,700,000 4%% Series due 1995-Interest Payable, January 1 and July 1. . 2,225,000 2,250,000 7%% Series due 1998-interest Payable, May 1 and November 1 3,720,000 3,760,000 7.95% Series due 2003-Interest Payable, March 1 and Sept.1. 2,450,000 2,475,000 10%% Sedas due 1995-interest Payable, March 1 and Sept.1 4,000,000 4,000,000 Decentures:
5%, due 1987-interest Payable, May 1 and November 1 . 918,000 972,000 9%%, due 1995-Interest Payable, May 1 and November 1. . 1,350,000 1,375,000 Maine & New Brunswick Electrical Power Company, Limited:
First Mortgage Bonds-5%% Series due 1989-interest Payable, June 1 and December 1 2,214,021 2,377,344 Total Outstanding . .... ... ... ..... .... . 20,907,021 21,289,344 Less-Amount Due Within One Year included in balance sheet under Current Liabilities 422,592 392,184 Balance $20,484,429 $20,897,160 Current Maturities of Long-Term Debt for the Succeeding Five Years Are: (
1977-$422,592; 1978-$542,592; 1979-$542,592; 1980--$1,252,592; 1981-$532,592.
i erspittil stock:
Common Stock $7 Par Value-Autnorized, 1,000,000 Shares; issued and Outstanding, 665,734 Shares $ 4,660,138 $ 4,660,138 Cumulative Preferred Stock, $50 Par Value-Authorized, 70,000 Shares (issuable in series):
4.75% Series-Originally Issued 40,000 shares; Outstanding, 14,980 Shares in 1976 and 16,180 Shares in 1975 . . . . . . $ 749,000 $ 809,000 '
9%% Series-Originally issued and Outstanding,30,000 Shares 1,500,000 1,500,000 0
Total Preferred Stock $ 2,249,000 $ 2,309,000 14 l
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Consolidated operating revenues have in- was responsible for $121,536 of the $188,627 in-creased nearly 74% since 1972, from $9,874,325 crease in the net gain since 1972 from Other to $17,166,458 in 1976. A major portion of that income and Deductions. Also contributing to increase was derived from the pass-through of that gain was an expanded return on equity rapidly increasing fuel and purchased energy investments (mostly related to Maine Yankee costs through the fuel adjustment clauses. Atomic Power Company), which was $250,001 Amounting to only $461,889 in 1972, these rev- in 1972 but grew to $351,939 the next year and enues had mushroomed to $5,059,860 in 1975, has held at about that level ($348,365 in 1976) but have subsided to $4,270,376 in 1976 because since then, of lower fuel costs resulting from excellent hy-dro conditions and comparatively low-cost nu- Reflectin9 the issuance of $2 i clear energy coming into the Company's system First Mortgage and Collateralrust T'500'000 Bonds asof of 7.95%
beginning November 1,1976. Excluding fuel March 1,1973 and $4,000,000 of 10%% First adjustment revenues, those produced from base Mortgage and Collateral Trust Bonds on Octo-rates gained a less-spectacular $3,483,646, or ber 1,1975, interest on long-term debt has m-37%, during the period. A general rate increase creased $472,731 since 1972. Part of the latter was granted by the Maine Public Utilities Com- issue was used to refinance $2,088,000 of 27/8%,
mission in April of 1973, estimated at the time bonds which matured on the same date. interest to produce about a million dollars of additional on other indebtedness decreased from $131,142 3 revenue ~ to $16,165 during the period, fluctuating from year to year since 1972 with the volume of bank Effective November 1,1976 a realignment and loans outstanding. There were no bank loans a restructuring of retail rates were approved by outstanding at any time during 1976.
the Maine Public Utilities Commission which were designed to recogn,ze i the high capital Net income cf $1*782.876 in 1976 represents costs of nuclear energy in the base rates and, a gain of $652,669, or 57.7%, over that of 1972 at the same time, to improve the r es and a signifi. ant increase of $261,335 over that lagging rate of return on its investme .ie of 1975 as !' estated (See Note 1 to Financial same reasons a wholesale-rate reali9 mt was Statements). The reasons for the 1976 improve-ment are discussed in the review cf 1976 opera- )
. filed with the Federal Power Commission and it was allowed to go into effect by that agency on tions.
December 11,1979 subject to refund. The over- Preferred Stock dividend requirements in 1976 all level of revenues has not been affected to were lower than those of 1972 by $10,605, de-any great, degree by those rate changes, though creasing slightly year by year, as 1200 shares after their effective dates, a substantial shift
($60,000 par value) of 4%% Preferred Stock has occurred from fuel adjustment revenues, were retired annually through the Preferred with no element of profit, to base revenues that Stock Purcham Fund.
produce a reasonable level of return. As those rate changes occurred late in 1976 the overall Earnings per share of Common Stock were effect is not considered material for the purpose $1.40 in 1972, rose to $1.87 in 1973, and to $2.12 of this analysis. in 1974 (before the cumulative effect of a change in acccunting principle adopted that
, The Company adopted a change in account- year and $2.42 after inat change). In 1975 the ing principle in 1974 in which excess fuel ex-
, earnings sent:d back to $2.00 per Common penses incurred m one accounting period but share (as restated) but have recovered to $2.40 not, collected until a subsequent accounting per share in f 976.
penod are deferred on the balance sheet to the period in which the excess costs are billed to in the Summary of Consolidated Operations customers. income taxes related to these de. on the facing pace,1975 has been restated to ferred fuel expenses are a!so deferred to fu. reflect the change in the method of accounting ture accounting periods. The Company has con _ for the PanMation of the financial statements of tinued that method of accounting for unrecov_ the Canadan Subsidiary (See Note 1 to Finan-ered fuel costs and related taxes during 1975 cial Statements). The years 1972 through 1974 and 1976. were not restated, as tne effect of the change Operati1g income after taxes and other oper- Wsn ma n I in ose years.
ating expenses gained $821,796 from 1972 to 1976, with the most significant improvement (S501,893) occurring in 1976 for reasons which are detailed in the review of 1976 operations.
Greater allowances for funds used during con- w / I struction, arising from the Company's share of William F. Wyman Unit #4, under construction since 1974 by Central Maine Power Company,
' ((I l
N 16
sunsnuary of consolitluival operations '
i O Operating Revenues . . . $17,1RA58 1976 (Restated) 1975 1974 1973
$16,936,782 $13,068,684 $10,748,450 $9,874,325;
'1972 Operating Expenses Operation:
Power Purchased ... 5,768,339 6,884,091 4,428,456 2,136,724 1,617,823 Other . ... .. 4,431,059 3,993,314 2,419,991 2,864,445 3,190,082 Maintenance .. . 678,811 64a,659 511,753 558,307 453,598 Deprcciation . . . .. ... 1,331,670 1,286,843 1,259,472 1,221,649 1,174,409 Taxes Other Than income 6?3,185 603,141 592,887 585,676 575,543 State income . . . . 204,509 3 d6,154 64,250 76,088 43,233 U.S. and Canadian income . 1,369,811 661,895 596,251 822,794 656,940 U.S. and Canadian Deferred (125,200) 363,350 711,450 151,977 107,265 Total Operating Expenses 14,289,134 14,561,447 10,584,510 8,417,660 7,818,893 Operating income . . _ 2,877,274 2,375,335 2,484,174 2,330,790 2,055,432 Other income and Deductions Allowance for Funds Used ,,
During Construefion . 138,595 63,330 '
41,820 22,699 17,059 Return on Equity investments 348,365 348,593 352,701 351,939 250,001 Other-Net . ... (86,916) 16,846 (85,485) (84.182) (55,597)
Total 400,044 428,769 309,036 290,456 211,463 Income Before Interest Charges 3,277,318 2,804,104 2,793,210 2,621,246 2,266,895 Interest Charges Long-Term Debt . . 1,478,277 1,223,743 1,161,162 _ 1,140,641 1,005,546 Other 16,165 58,820 28,413 45,793 131,142 Total 1,494,44f 1,282,563 1,189,575 1,186,434 1,136,688 income Before Cumulative Effect of a Change in Accounting Principle . . . ....... ... 1,782,876 1,521,541 1,603,635 1,434,812 1,130,207 9 Cumulative Effect of a Change in Accounting Principle -
~
- 194,562. .
Net income ........ ... 1,782T876 1,521,541 1,798,197- ~ 1,434,812 1,130,207 Preferred Stock Dividend Requirements . 185,128 187,898 190,724 192,204 195,733 Balance for Common Stock $ 1,597,748 $ 1,333,643 ' S 1,607,473 $ 1,242,608 ' $ 934,474 Earnings Per Share of Common Stock income Before Cumulative Ef- -
fect of a Change in Account-ing Principle .. .... $2.40 $2.00 $2.12 $1.87 $1.40 Cumulative Effect of a Change in Accounting Principle - -
.29 - -
Net income $2.40 $2.00 - $2.41 $1.87 ' $1.40 Operating Revenues Residential . . ... .. $ 6,617,492 $ 6,498,277 $ 5,241,793 $ 4,306,306 $3,876,884 Comm. and Industrial-small 4,258,303 4,153,889 3,317,147 2,870,766 2,614,663 Comm. and Industrial-large 2,859,436 2,752,432 '1,874,967 . 1,434,155 1,364,035 Municipal Street Lighting 213,590 197,190 189,980 174,618 153,962 Area Lighting . . .... 161,924 147,531 140,239 128,587 113,472 Other Municipal and Other Public Authorities 926,200 889,789 744,038 538,689 490,793.
Other Electric Utilities 1,984,171 2,147,984 1,415,135 1,191,488 1,169,430 Other Operating Revenues 145,342 149,690 145,385 103,841 91,086 Total Operating Revenues $17,166,458 $16,936,782 $13,068,684 $10,748,450 $9,874,325 Sales (thousands of kilowatt-hours)
Residential . . . ... . 154,060 145,361 140,702 134,747 127,834 Comm. and Industrial-small.. 96,910 90,211 86,304 86,464 80,347 Comm. and Industrial-large 96,499 87,712 79,504 78,414 81,348 6 Municipal Street Lighting 2,889 2,804 2,706 2,744 2,707 F Area Lighting . . ....... 2,305 2,182 2,085 1,992 1,835 Other Municipal and Other Public Authorities 41,157 34,752 35,617- 39,754 35,820 Other Electric Utilities 88,278 79,239 78,472 77,203 76,918 Total Sales . 482,098 442,261 425,390 421,318 406.809
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- 1 w-LE.Z Ref. 410.) 3~- 2 O '
HAINE PUBLIC SERVICE COMPM;Y
$4,000,000 First Mortga;a and Collateral Trust Bonds, Series due I
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- - - - - - - -w-,c . -.- - - - - --mmwww, ry y .--, - - - .
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)... MAINE PUBLIC SERVICE COMPANY Summary of Certain Terms of Proposed Additional Issue of Bonds of New Series under the October 1, 1945 Mortgage, as supplemented .
- 1. Title First Mortgage'and Collateral Trust Bonds, 10 5/8% Series Due
- 2. Amount to be issued $4,000,000
- 3. Price Not less than.100%,of the principal amount thereof, plus accrued interest from September 1.
- 4. Closing Date About middle of September
- 5. Trustee Continental Illinois National Bank and Trust Company of Chicago A-(,) 6. Interest Rate and 10 5/8% from September 1, 1975, pay-Dates l
able semi-annually on September 1 and March 1 of each year.
- 7. Date of Bonds and Maturity Date: September 1, 1975 Maturity: September 1, 1995
- 8. Denomination Fully registered Bonds only in denominations of $1,000 or any multiple thereof.
- 9. Redemption Prices Bonds of this Series will be subject to redemption prior to maturity- as a whole at any time or in part from time l l to time, at the option of the Company, upon not less than 30 nor more than 90 days' notice given by mail at reg-
'ular redemption prices (exclusive of accrued interest) starting in the gg year beginning September 1, 1975 at-(_/ a price equal to the ~ purchase price plus a premium equal to the inter'est l
rate, such premium declining evenly to par in the final year provided, however, that no such redemption shall I
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- 9. Redemption Prices be made prior to September 1, 1985 (Continued) (except in connection with bona fide .
consolidation, merger or transfer or sale of all or substantially all of the properties subject to the lien of the Indenture), directly or indirectly as a part of, or in antici-pation of, any re funding operation in-volving the incurring of indebtedness by the company if such indebtedness has an effective interest cost to the Company of less than the annual in-terest rate on the Bonds of this Series.
Bonds of this Series may also be re-deembed for the sinking fund, the replacement fund provided for in the Original Indenture, and with trust monies representing the proceeds of property taken, purchased by or sold llk to municipal or governmental authori-ties or any nominee thereof, at a special redemption price (exclusive of accrued interest) which (if in excess of the principal amount) shall start with the purchase price and be reduced annually on a basis to afford bond-holders approximately (but in no event less than) the same yield as the pur-chase price until the last year when such Bonds can be redeemed at the principal amount.
- 10. Sinking Fund 3% cash pro rata sinking fund be-ginning at the end of the third year after closing to retire 48%
of the issue prior to maturity.
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- 11. Replacement Fund Tha Bends of this Series will be entitled to
/
the benefits :f the replacccent fund pro-
, vided for in Section 4.04 of tr.e Original Indenture.
- 12. Minimum Provision for So long as any Bonds of this Series re=ain Depreciation outstanding, the tcrd " mini =um provision for depreciation" specified in Section 1.1CG of the Original Indenture shall rc=ain effective.
- 13. Appropriation by So long as any Bonds of this Series remain Subsidiary Corporation outstanding, the covenants by the Co:pany con-for Depreciation tained in Section 4.05 of the Original Inden-ture co.vering the depreciation appropriation l
,- by the Subsidiary Corporation shall remain l
. effective. l l
- 14. Dividend Restrictions So long as any of the Bonds of this Series remain outstanding, the Ccepany vill not (a) declare or pay any dividend (other than div-idends payable in Co==on Stock of the Cc=pany) or make any other distribution on any shares of Co= mon Stock of the Company, or (b) pur-l ** -
. chase or otherwise retire for a censideration (other than in exchange for or from the pro-ceeds of other shares of Caoital Stock of the Company) any shares of Capital Stock of the
()
Company of any class, e.<ccot to tr.e extent
. required to cesply with any sine.ina or purchase fund established for any class or series of preferred stock of the Company, if the a;gre-f gate amount so distributed er e::renced ci:er January 3, 1975 woald exceed the a regate amount of the net incese or the Cc=pany avail-abic for dividends on Cu-_on Stock accu:alated after Deccaber 31, 1974, plus the sum of
$1,600,000.
- 15. Bases of Issuance The Bonds of this Series uill be istced against available additione (i.e. propcrty additions constituting " bondable public utility property" less the greater of " retirements' or " inicua provision for depreciation" to che entent the amount thereof has not theretofore been used
, as the basis of action or credit under the Indenture) on a 6C7, basis and a;ainst availaole bond retirements or against the deposit of cash.
. Terms used herein are used as defined in the Indenture.
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- 16. Modificction of the The Supplemcatal Indenture will contain pro-Indcature visions modifying the Indenture in a manner which would allow the Company to own bond-abic property in states other than those contiguous with Maine, and in Canada, other
. than those contiguous with :;ew Brunswict; to subject property jointly owned to the lien of the Ir. denture; and to allow the In-denture liens of other joint owners to be s permitted encumbrances under the Indenture.
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USE OF ??~CEEOS
, Proceeds from the sale of the $4,000,000 principal amount of First Mortgage Bonds will be used to pay $2,088,000 of maturing First Mortgage and Collateral Trust Bonds, 2-7/87. Series due October 1,1975, and to pay outstanding bank loans which amounted to $1,050,000 at April 30, 1975. The balance of the proceeds will be used to finance, in part, the Company's continuing construction program.
THE CO.9ANY A'.O B SIN SS The Company was originally incorporated as the Could Electric Company in April, 1917 by a special act of the Maine legislature. Its name was changed to Maine Public Service Company in August, 1929. Until 1947, when its capital stock was sold to the public, it tas a subsidiary of Consolidated Electric & Cas Company. Its principal officcu are located at 209 State Street, Presque Isle, Maine. Maine and New Brunswick Electrical Power Company, Limited, the Company's wholly-owned Canadian subsidiary, was incorporated in 1903 under the laws of the Province of New Brunswick, Canada. The properties of the Company and Subsidiary are operated as a single integrated system.
The Company is engaged in the generation, purchase and sale of electric energy. It serves an area about 120 miles 1cag and 30 miles wide in Aroostook and Penobscot Counties in northeastern Maine adjacent to -the Canadian border, with a population of approxicately 100,0G0. The Company serves 60 communities at retail, including Caribou, Presque Isle, Fort Fa'irfield, Madawaska, Fort Kent and Island Falls and the'co==unitics of Van Buren and Houlton at wholesale. The Company also wholesales to the Farm Hoce Area of the Eastern Maine Electric Cooperative.
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The subsidiary, Maine and New Brunswtek Electrical Power Company, Limited, is principally a hydro-electric generating company. lll It owns and operates the Tinker hydro plant at Aroostook Falls in New Brunswick, Canada and sells to the Company all available energy over and above that necessary to supply its Canadian load, which consists of the communities of Andover, Perth and Carlingford, New Brunswick.
During the twelve months ended April 30, 1975 sales to the Maine Company amounted to 103,655,000 kwh out o f 119,600,000 kwh of net generation at Tinker.
On April 30, 1975, Maine Public Service served 29,528 custacers of which 24,654 were residential. An interconnected system firo load peak of 89,900 kilowatts was established in January,1975. Under median water conditions in 1975 the generating capability of the Company and Subsidiary was 76,900 kilowatts. In addition the Company has a 69,000 volt interconnection with The New Brunswick Electric Power Co= mission at Beechwood, two 69,000 volt interconnections with the Co= mission at Madawaska, Maine, and a 138,000 volt interconnection with the Commission at the subsidiary's Tinker Plant substation. The total interconnection capability ot' these lines is 60,000 kilowates. In recent years the company has filled cut its requirements through purchasing blocks of firm contract capacity from The New Brunswick Electric Power Co= mission over the various interconnections, with 39,000 kilowatts from this source in April, 1975.
The Company owns 5*/. of the common stock of Maine Yankee Atomic Power Company which was formed to construct and operate an atomic power plant in Wiscasset, Maine. The Maine Yankee plant has been operating -
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V efficiently at various capacity levels since December 28, 1972, its commercial operation date. The Co=pany has contracted to sell its'5% -
entitlement in Maine Yankee power for the period starting with the commercial operation date of Maine Yankee through October 31, 1976 in order to take advantage of an offer by The New Brunswick Electric Power Co= mission for a firm power' contract from June 1,1972 to October 31, 1976 at attractive terms, af ter which the Company plans to reclaim that block of power for its cwn system requirements.
During the twelve months ended April 30, 1975, consol' idated operating revenues of the Compe.ny and Subsidiary were 397. residential, 41% commercial and industrial, 117. wholesale, and 97, other.
4 The Company actively participated in the formation of the
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Maine Electric Power Company, Inc. (:CPCO) which owns and operates a 345,000 volt transmission line f rom Wiscasset, Maine to a point on the Maine - New Brunswick international boundary near Orient, Maine. The line interconnects The New Brunswick Electric Power Co= mission and the Maritime Provinces with all of New England for econocical interchange of power between the two areas.
MEPC0 presently purchases large blocks of firm and peaking capacity from'New Brunswick for New England require-ments, with the Company presently receiving approximately 1,300 kilowatts as its share of that capacity. The line will also provide a vehicle for the transmission of Maine Yankee power through The New Brunswick Electric Power Commission systep to that of the company beginning in November, 1976.
Maine Electric Power Company is owned entirely by Maine ce=panies with i
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x- Maine Public Service Co=pany having 7.497. of the cocmon stock at a present cost of $121,952. The Company receives regular d'ividends on this invest =cnt.
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The Co=pany has contracted for part ownership in a new jointly-owned fossil-fueled steam unit being constructed by Central Maine Power Company at Yarmouth, Maine for completion in 1978. The Company will own approximately 20,000 kilowatts of the 600,000 kilowatt capacity of the new unit, which will be known as the William F. Wyman Unit #4.
TERRITORY The service area of the Company includes Aroostook County which is one of the most important potato growing sections in the United States. The Company serves a number of factories processing potato products, including frozen food plants, among which are A & P, Taterstate, American Kitchen Food Company, and it subsidiary, Potato Service, Inc.,
which owns and operates one of the world's largest frozen potato processing plants. A new $5,000,000 food processing plant is presently being con-structed at Washburn in the Company's service area by R. T. French Company.
In addition the area produces wood products, principally pulp wood for paper manufacturing. Plants dependent upon the area's timber include a large paper mill and other plywood and lu=ber plants. The Pinkham Lumber Co., a division of Great Northern Ziekoosa, is completing an $8,000,000 expansion of its modern sawmill facilities at Nashville.
A large plywood plant, two shoe factories, a cattle feed plant, a corrugated box factory, a prefabricated housing plant, and many smaller industries now operate at busy Skyway Industrial Park on the site of the former Presque Isle Air Force Base. This area was purchased by the city from the Federal Covernment in 1962 and has been developed as an industrial park by the Presque Isle Industrial Council. Loring Air Force Base of the Strategic O Air Command is al'so located in the Co=pany's service area. Though kring
t Ai'a Force Base generates much of its ovn electrical requirements it
()- purchases large amounts of off-peak energy from the Company.
I i CONSTRUCTION i In the twelve months ended April 30, 1975, capital expenditures I
I of the Company and its Subsidiary were $1,761,600. Of this amount
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$264,900 was for major transmission line improvements. Approximately 4
$495,000 was expended on distribution line extensions, rebuilds and
.i' voltage conversions. Expenditures for meters, services, transformers and other service improvements amounted to $189,400 while $277,100 was required for improvements to various substations. Street lighting and i
general plant and equipment accounted for $163,300. The Co=pany's share of expenditures on the new Wyman #4 Unit amounted to $371,900 during 1
the period.
1 lL It is anticipated that a total of $2,881,600 vill be expended I for construction by the Company and Subsidiary in the year 1975, including J
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$1,642,300 for the Cocpany's share of the continuing construction costs of I Wyman Unit #4.
REGULATION Maine Public Service Company is subject to the jurisdiction of i
the Maine Public Utilities Co= mission and, in respect to sales for resale,
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I to the jurisdiction of the Federal Power Commission. Other than as stated i
below the company is not presently involved in any rate proceedings.
- In 1973 the Company tendered for' filing its sales for resale
! rate to the Federal Power Commission as an initial rate schedule, having conceded FPC jurisdiction at the December 28, 1972 in-service date of the Maine Yankee unit. Except for the fuel cad purchased energy clause the n
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FPC accepted the initial rate for filing. A revision of the fuel and purchasad energy clause, designed to conform with Section 35.14, as ggg revised, of the Commission's regulations, was submitted by the Cocpany on H.rch 5,1975. By its order, dated May 5, 1975, the Commission has established procedures for submitting testimony and exhibits to support tFs new fuel clause and has set a hearing for October 7,1975. Pursuant to the same order the Company has started billing the new fuel adjustment clause as of May 11, 1975, subject to refund.
AUDITORS Haskins & Sells.
MANAGE E T Officers Ralph A. Brewn, President. Mr. Brown served as treasurer i
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with the Company starting in 1956. He also served as Secretary and Clerk and became Vice President - Finance on May 9, 1967. He was ciected President and Chief Executive Of ficer of the Co=pany on May 14, 1968.
T. H. Grant, Vice President. Mr. Grant came with Maine Public Service Company in December, 1944 and served as an engineer with various responsibilities in the Engineering Department, becoming Chief
. Engineer in 1956. He was elected Vice Presiden - Engineering and Operations on February 25, 1969.
Frank E. Livingston, Treasurer, Secretary and Clerk.
Mr. Livingston has been with the Co=pany since March, 1948, serving in various capacities. He was elected Treasurer on May 9, 1967, succeeding Mr. Brown in that position, and became Secretary and Clerk on May 14, 1968.
Clarence E. Carbridge. Assistant Secretary.
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I Horace M. Crandall, Assistant Treasurer.
(A . Donald A. Lindsay, Vice President - Subsidiary.
DIRECTORS Ralph A. Brown, Presque Isle, Maine President and Chief Executive Officer, Maine Public Service Co=pany Samuel W. Collins, Caribou, Maine Honorary Chair =an of the Board, Maine Public Service Company Vice President, S. W. Collins Co., Inc.
Honorary Chairman, Aroostook Trust Cocpany D. James Daigle, Fort Kent, Maine
. President David D. Daigle & Sons Royal H. Frost, Caribou, Maine President, R. H. Frost Company, Insurance Chairman of the Board, Aroos took Trust Co=pany i
Thomas S. Pinkham, Ashland, Maine i General Manager, Pinkham Lu=ber Co.
Irwin F. Porter, Presque Isle, Maice Executive Vice President Northern National Bank C. Haren Stetson, Presque Isle, Maine Chairman of the Board, Maine Public Service Company i -
. . Philip D. Tingicy, Houlton, Maine Q
\/ Chairman of the Board, Houlton Trust Company
. _ . - - _. _ _ _ _ , _ _ _ _ _ _ _ _ -. _ _ a
The Company has for many years ecployed Stone & Webster Management Consultants, Inc. of New York City in an advisory capacity.
Under the terms of the contract with Stone & Webster, Maine Public Service O
Company is furnished consulting, advisory and other services related to its business and operations.
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, t-CONSOLIDA"ED "AL.*2:0E Sii ET ITEMS (OOO's omitted)
April 30, 1975 Pro For._a Utility Plant 6 Other Investments Utility Plant $43,951 $43,951 Less: Accu:nulated Deprectation 13,641 13,641 Net Utility Plant 30,310 30,310 Other Property and Investments 3,602 3,602 Total 33,912 33,912 Deferred Charges 414 414 Current Assets $5,569 $6,431 Current Liabilities:
Long-term Debt Due Within One Year 2,480 392 Other 3,670 2,620 liet Current Assets (581) 3,419 33,745 37,745 Less: Deferred Income Taxes 600 600~
Nat Tangible Assets 33,145 37,145 Less: Other Liabilities 389 389 32,756 36,75o 1'
Lorg-Term Debt 16,983 20,983 NET WOR 111 $15,773 $15,773, O .
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SUMMARY
OF CONSOI.IDATED INCOME Year Ended December 31 (000's Omitted) 12 Mos. to 197.0 1971 1972 1973 1974 4/30/75 OPERATING REVENUES $_8,170 $9,025 $9,874 $10,748 $13,069 $14,957 Operating Expenses 3,206 4,348 4,308 5,081 -
6 , 8 '. 9 8,552 Haintenance 368 404 454 479 512 524 Depreciation 1,095 1,137 1,174 1,221 1,259 1,269 1 axes Other Than Incorac Taxes 530 541 576 585 593 594 Fe.leral and Canadian Income Taxes 731 663, 807 __1,051 3,372 d,474 l OPEltAl'ING INCOMC 2,240 1,932 2,055 2,331 2,484 2,544 l Return on Major Equity'. Investments 197 252 250 352 353 350 011t ER lt4CottE 134 55 58 79 73 73 cross I NCWtE 2,571 L239 2,36J 2,702 2,910 2,907 Int. rest on Long-Term Debt 982 1,024 1,006 1,141 1,161 1,152 Oth.r Interest Charges - Net 201 59 131 46 28 50 Miscellaneous Deductions 87 65 96 140 117 102 Income Before Cumulative Effect of a Change in Accounting Principle 1,301 1,091 1,130 1,435 1,604 1,663 Cumulative Effect of a Change in Account'ing Principle 194 NFl* INCOMC $g3,01 $1,091 $L 13] $_1,435, $ 1,798 $_1,663 Actual' Itit.r.c.t Charges - Times Earne'd B. fore Taxes 2.72x 2.62x 2.70x 3.09x 3.67x 3.61x An'tcr Taxes ,
2.10x 2.01x 1.99x 2.21x 2.51x 2.38x Pro Forma int.r.st Charges - Times Earned
- 3rlore Taxes 2.69x 4rt. r Taxes 1.78x J
- Ansuming an 17. coupon on the proposed ncy debt, ,
g such charge 111 be approximately $1,611,184 _
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- DEPRECIATIO!;
{; Depreciation is provided on composite bases using the straight-line method for financial reporting purposes and the declining-balance method for tax purposes.
By order of the Maine Public Utilities Commission, the Parent records income tax reductions, which result from the use. of liberalized depreciation and the Class Life System of depreciation, by the " flow-through" method for property additions prior to 1970 and by the " normal-ization" method for property additions af ter 1969. Related deferred income taxes recorded in 1974 and in the twelve-months ended April 30, 1975 amounted to S149,793 and S152,993, respectively. The Subsidiary follows the " flow-through" mcchod of accounting for income tax reductions resulting from liberalized depreciation. Applicable gg deferred taxes are included in Federal and Canadian Income Taxes in the V Summary of Consolidated Incoma.
INVESTMENT TAX CREDIT The Parent. defers investment tax credits ($44,483 in 1974 and
$84,483 in the twelve months ended April 30, 1975) and amortizes the credits over the estimated useful lives of the related utility plant.
These deferrals, net of amortization credits, are included in Federal and Canadian Income Taxes in the Summary of Consolidated Income.
i INCOME FRO 11 I::VESTYE::TS The Parent's inves tments in two joint venture projects are recorded en the equity basis. During the period of construction of the Maine Yankee nuclear plant the Company charged its invest =ent account l
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and credited income with its proportionate share of the allowance for funds used during construction as accrued on the books of Maine Yankee.
lll During the period of construction approximately $840,500 was credited to income and the annual amounts are included as " Return on Major Equity Investments" on the Succary of Consolidated Income.
The Parent has also credited incomo each year with its pro-portionate share of Maine Yankee earnings since .it began operations at the end of 1972. Such earnings amounting to $337,749 in 1974 and $335,247 in the twelve conths ended April 30, 1975 are also included in " Return on Major Equity Inves tments" on the Su= mary of Consolidated Inco:2.
Similar accounting has been followed for the Parent's investment in Maine Electric Power Company (MEPCO). During the period of construction of MEPCO's transmission line, completed in 1971, about $17,400 was recorded as a return on the investment. In 1974 and in the tucive conths ended April 30, 1975, $14,952 and $14,732, respectively, representina the Company's share of MEPC0 earnings are also included in " Return on Major Equity In-vestments" on the Su= nary of Consolidated income.
DEFERRED FUEL AND Pt3C1 LASED ENERGY COSTS Prior to 1974 the Parent recorded the cost of fuel used in the production of electric energy and the cost of purchased energy in the period of use, even though part of such costs were recouped in subsequent periods under the operation of the Parent's fuel and purchased energy clauses. In order to achieve a better matching of costs and revenues, the Parent changed its method of accounting for these recoverable costs l
l in 1974 by deferring the recognition of the recoverable portion of such -~
costa as expense until the period in which the related revsnues are billed. h O
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- As a result of this accounting changa fuel and purchased energy costs of j
/T $1,433,257 and related income taxes of $740,134 were deferred at December 31',
V 1974. Accordingly, net income for 1974 was increased by $693 123, of which
$498,561 related to 1974 and $194,562 was the cumulative effect of the .
accounting change for the period from January 1 to December 31, 1973. The effect of the accounting change in periods prior to January 1,1973 is not significant.
In the twelve conths ended April 30, 1975 deferred' fuel and purchased energy costs amounted to $1,210,792, and related deferred income taxes of $625,252 were recorded during that period.
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HAINE PUBLIC SERVICE COMPANY AND SUBSIDIARY CONSOLIDATED CAPITALI2ATION April 30, 1975 (000's Omitted)
Actual Pro Forma Amount Ratio A=ount Ratio LONG-TERM D:7.T (Including Portion Due Within One Year)
First Mortgage Bonds:
2-7/87. due 1975 $ 2,088 -
3% due 1950 770 $ 770 3.357. due 1985 1,620 1,620 5-1/2% due 1990 1,720 1,720 5-3/47. due 1995 2,275 2,275 7-1/87. due 1998 3,760 3,760 8 7.95% due 2003 2,475 2,475 due -
4,000 Total $14,708 41.7% $16,620 44.7%
Debentures:
5% duc 1987 972 972 jlh' 9-7/87. due 1995 1,375 1,375 Total $_2,347 6.77. $ 2,3;7 . 6 . 37.
Subsidia ry Debt (U.S. Equivalent) 5-3/4% 1st Mtg. due 1959 2,407 6 . 87 2.407 6.57 Total Debt $19,462 55.2% $21,374 57.5%
_ PREFERRED STOCK 4.757. ($50 par, 17,313 shs.) 867 867 9-7/87. ($50 par, 30,000 shs.) 1,500 1,500
$ 2,367 6.7% $ 2,367 6.4%
COMMON EQUITY Common Stock
($7 par, 665,734 shs.) 4,660 4,660 Paid-In Capital 1,518 1,518 Retained Earnings 7,228 7,228
-Total Common Equity $13,406 38.1% $13,406 3 6 . 17.
TOTAL CAPITALIZATION $35,235_ 100.07. $37,147 30g.
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SECURITIES AND EXCHANGE COMMISSION
/q Washington, D. C. 20549 h y FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) 0F w
THE SECURITIES EXCHANGE ACT OF 1934 I
For the fiscal year ended December 31, 1977 Commission file number 1-3429~
Maine Public Service Company (Exact name of registrant as specified in its charter)
Maine 01-011-3635 (State or other jurisdiction of (1.R.S. Employer incorporation or organization) Identification No.)
209 State Street, Presque Isle, Maine 04769 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 207-768-5811 Securities registered pursuant to Section 12(b) of the Act:
i Name of each exchange
[J Title of each class on which registered 1
Common S tock , $7.00 par value American Stock Exchange Securities registered pursuant to Section 12(g) of the Act:
None (Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No .
(APPLICABLE ONLY 10 CORPORATE ISSUERS:)
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report.
Commen Stock, $7.00 par value - 665,734 shares
PART I Item 1. Business g The Company engages in the production, transmission, and distribution of electric energy to retail and wholesale customers in all of Aroostook County and a small portion of Penobscot County in northern Maine. Geo-graphically, the service territory is approximately 120 miles long and 30 miles wide.
Prior to November 1, 1976 the Company also sold and serviced major electrical appliances. On that date the Company discontinued the sale of such appliances and on March 1, 1977 ceased to service such appliances, as well.
Except for consumers served at retail by the Company's wholesale customers the Company has exclusive franchise to provide electric energy in the Company's service area.
On December 31, 1977 the Company had 166 employees, of whom 64 were covered by provisions of a two-year contract with a local of the Inter-national Brotherhood of Electrical Workers, which is due to expire on September 30, 1979.
In 1977 consolidated operating revenues included sales for resale to six wholesale customers which produced 13.0% of such operating revenues, (m while sales to seventeen large commercial and industrial customers accounted
's , for 15.4% of total operating revenues. Total consolidated operating revenues were $17,998,660 of which 39.3% came from residential customers, 9 23.0% from small commercial and industrial,15.4% fran large commercial and industrial, 5.87. from public authorities, 13.0% from sales for resale and 3.5% from street and area lighting.
Item 2. Summary of Operations Information with respect to operations of the Company and its Sub-sidiary is contained on page 16 of the Company's 1977 Annual Report to Stockholders, which is incorporated herein by reference. Management's analysis of the five-year smamary of operations is on the page facing the su= mary in the report.
Item 3. Properties The Company owns and operates electric generating facilities consisting of: oil-fired steam units with a total capability of 23,000 kilowatts, diesel generation totaling 12,300 kilowatts, and hydro-electric facilities of 2,300 kilowatts. The Company's wholly-owned Canadian Subsidiary owns and operates a hydro-electric plant of 37,300 kilowatts and a small diesel unit with 1,000 kw capacity.
As of December 31, 1977 the Company and Subsidiary had approximately
,s 428 pole miles of transmission lines and the Company owned approximately (j 1,350 miles of distribution lines.
- 2-(O The Company is participating as a part-owner in the construction of a new 600,000 - kilowatt unit being built by Central Maine Power Company at its Wyman Station in Yarmouth, Maine. The Company's share of that unit will be approximately 20,000 kilowatts. The unit is scheduled for completion
, by the end of 1978.
Substantially all of the properties owned by the Company are subject to the lien of the Indenture of Mortgage and Deed of Trust, securing the Company's first mortgage and collateral trust bonds.
Item 4. Parents and Subsidiaries The Company owns 1007. of the Common Stock of Maine and New Brunswick Electrical Power Company, Limited, a Canadian corporation. The accompanying consolidated financial statements include the Subsidiary Company.
The Company owns 57. of the Common Stock of Maine Yankee Atomic Power Company (Maine Yankee)a nuclear generating company at Wiscasset, Maine. By virtue of its stock ownership the Company is entitled to purchase approximately
- 57. of the output of the Maine Yankee plant.
The Company also owns 7.497. of Maine Electric Power Company, Inc. (MEPCO) which owns a 345-kilovolt transmission line about 180 miles long, purchasing power from Canada for resale to New England utilities. The Company purchases e
p] a small amount of that power.
v The Company records its investments in the two joint-venture companies
, (Maine Yankee and MEPCO) on the equity method of accounting.
Item 5. Legal Proceedings In its Form 10-Q, commencing for the quarter ended September 30, 1977, acting on the advice of its general counsel, the Company discussed and dis-closed so-called " Indian land claims cases" pending in the United States District Court for the District of Maine, Northern Division. Reference is made to the statements contained in all 10-Q Reports since the quarter ended June 30, 1977. To summarize briefly, actions have been brought in the United States District Court for the District of Maine, Northern Division by the United States of America against the State of Maine, on behalf of the Passamaquoddy Tribe and Penobscot Nation of Indians for damages for alleged wrongs done to the tribe and the nation. These are docketed United States v.
Maine Civil Action No. 1966ND; and Civil Action No. 1969ND. The United States has until July 1, 1978, or such later date as may be allowed by the Court to decide whether to proceed with these claims. Whether or not the United States proceeds, it is possible that the complaints may be amended to assert claims with respect to the land itself, or to seek damages including damages from the present owners of the land, or both. The Indians (Passamaquoddy and Penobscot) and representatives of the President of the United States, have recently entered into a Joint Memorandum of Understanding, 7, dated February 6,1978, concerning settlement of certain of the claims of the
(" , Indians. Under the Memorandum, the White House representatives propose to submit to the Congress, legislation designed to extinguish certain Indian land claims in return for federal funds and federal services to be extended
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to the Indians in the future as well as agreed state fund payments and rights to acquire certain privately-owned lands. If such legislation is passed, as
, is presently proposed, and without change, all claims to the Company's electric properties would be extinguished. The Company cannot predict whether icgislation implementing the proposed settlement will be enacted.
t The Company will, of course, continue to assess the possible impact of this controversy upon it. The pending actions are at an early stage and involve complex historical and legal questions. The Company is presently unable to assess such claims as might be advanced by or on behalf of the Indians in the event such a settlement as has been proposed is not achieved, or to assess various defenses which might be asserted to such claims, or to determine the extent to which the Company or any of its properties might be involved. The Company, of course, intends to make every reasonable effort to oppose any claims that may be made by or on behalf of the Tribe and/or the Nation against the Company or its property which are contrary to titles which have been generally understood to be valid and have been bought and sold for substantial sums of money for almost two hundred years in the belief that such titles were not subject to Indian claims.
Counsel further advises that as of this writing, the Company is not a party to the above litigation nor has any of the property of the Company become the direct subject of the litigation.
/K/ T In May,1975 the Federal Power Commission (now Fedcral Energy Regulatory Commission) permitted a revised fuel adjustment clause, including a surcharge provision, to go into effect subject to refund and ordered a hearing to be 1 held to determine its lawfulness. The case was heard before a Presiding Administrative Law Judge who, on September 30, 1976, rendered an " Initial Decision Finding Two Provisions Of The. Proposed Fuel Adjustment Clause Not To Be Juat and Reasonable, But Recommending Rulemaking On One Of The Issues" and the Company appealed that Initial Decision to the Consission. On June 27, 1977 the FPC (FERC) issued an " Order Modifying Initial Decision and Rejecting Proposed Fuel Adjustment Clause." The Company filed an application for rehearing in the case which the Commission has rejected.
The Company has appealed the case to the First Circuit Court of Appeals.
If the FPC (FERC) ruling is sustained by the Court, applicable deferred fuel costs incurred to the effective date of the revised clause, $456,657 will have to be refunded to customers, plus interest at 9% per annum from the dates of collection to the date of refund.
The case has been briefed; it was argued orally to the Court on March 7,1978; and is presently pending decision by that Court.
Item 6. Increases and Decreases in Outstanding Securities and Indebtedness Title of Class Number of Shares 4.75% Preferred Stock, $50 par value Outstanding Shares, December 31, 1976 14,980
(" ~} Less: Shares reacquired various dates, vs' cancelled July 1, 1977 1,200 Outstanding Shares December 31, 1977 13.780
'v >' The above 1,200 shares were reacquired and cancelled pursuant to require-ments of Section 6-A of the Company's By-laws.
Decreases in outstanding long-term debt during the year resulted entirely from normal sinking fund operations.
Item 7. Changes in Securities and Changes in Security for Registered Securities None Item 8. Defaults upon Senior Securities None Item 9. Approximate Number of Equity Security Holders Title of Class Number of Record Holders at 12/31/77 Common Stock, $7 par value 3,616 4.75% Preferred Stock, $50 par value 154 9 7/8% Preferred Stock, $50 par value 3 Item 10. Submission of Matters to Vote of Security Holders The annual meeting was held on May 10, 1977. Proxies were solicited pursuant to Regulation 14 under the Act. There was no solicitation opposing 4 management's nominees, and the board of directors as previously reported to the Commission was re-elected in its entirety.
On November 18, 1977 the Company mailed a letter to bondholders requesting consent of its bondholders to two modifications of its Indenture of Mortgage and Deed of Trust, dated as of October 1,1945. The modifications were desired to (1) redefine the term " bondable additions" so that the Company may own property anywhere in the United States and Canada rather than being ihmited to "the State of Maine or in any state contiguous thereto, or in the Province of New Brunswick, Dominien of Canada, or any other Province of said Dominion contiguous thereto," and (2) to clarify certain provisions of the Original Indenture as to " permitted encumbrances." The modifications were included in the Sixth Supplemental Indenture, dated March 1,1973, and were effective without approval or consent of holders of bonds issued thereunder, or subsequently, but only when all of the bonds previously issued were retired or upon modifications made with the consent of the holders of such earlier bonds, pursuant to terms of the Original Indenture. Pursuant to the Original Indenture approval of the modifications was required from not less than 75%
of the principal amount of all bonds issued prior to March 1,1973, including not less than 60% in principal amount of each series of such bonds still outstanding. Out of seventeen, all affected bondholders have consented except one from whom there has been no response. A tabulation follows:
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Principal Amount Principal Amount Outstanding at Consenting to Principal Amount Series 11/18/77 Modifications Not Responding
- 37. Series due 1980 $ 740,000 $ 740,000 ;
3.357. Series due 1985 1,580,000 1.580,000 l 5 1/27. Series due 1990 1,660,000 1,660,000 l' 4 3/47. Series duc 1995 2,225,000 2,003,000 $222,000 3 7 1/87. Series due 1998 3,680,000 3,680,000 I
$M $Lifd.dD.Q $222.dQQ Item 11. Executive Of ficers of Registrant Office-Continuously Name Title Ralph A. Brown Am Held Since President and Chief Executive Officer 59 5/14/68
'Iheodore H. Grant Vice President - Engineering and Operations 65 2/26/69 I Frank E. Livingston Treasurer, Secretary, and Clerk 59 5/9/67~
Each executive office is a full-time position and has been the principal l
. occupation of each officer since first elected. All officers were elected to serve until the next annual election of officers and until their successors
- h shall have been duly chosen and qualified. The next annual election of officers l will be on May 9, 1978.
There are no family relationships between the executive officers.
i I Item 12. Indemnification of Directors and Officers 5
Section 11 of the Company's By-laws indemnifies each Director and Officer against all liabilities, costs and expenses reasonably incurred by him or in j his behalf in connection with any civil action suit or proceeding to which he
, may be a party by reason of his being or having been a Director or Officer of j the company, except in relation to matters as to which he shall be adjudged in
- such action, suit or proceeding to be liable for negligence or misconduct in
< the performance of his duties as such Director or Officer. Directors and 4 Officers liability insurance is carried by the Company.
Item 13. Financial Statements, Exhibits Filed, and Reports on Form 8-K.
l (a) 1. Financial Statements:
) The financial statements, including supporting schedules, are 4 listed in the Index to Financial Statements filed as part of this Annual Report.
I O
1
~_ ~ . - - _ - - - - - -- - _ , .
- . , . - - . - - . - . . - . . . . _ _ . . . . . - , . . , _ . . . m._. , - --
y 1
m 6-O 1 2. Exhibits:
g, ^ . 1 - 1977 Annual Report to Stockholders 2 - Audited Financial'5it$tements of Maine Yankee Atomic Power s
4 .. Company for the years ended December 31, 1977 and 1976.
< +
1 3 - Audited Financial, Staie rents of Maine Electric Power
' Company for the yea're ended December 31, 1977 and 1976.
(b) There were no actiotis or, events during the last quarter of 1977 which, in the opiniqu of management, required a report on Form 8-K.
- PART II
- Part II has' been omitted since the registrant files with the Commission within 120 days 'af ter the close of its fiscal year, a definitive proxy state-ment pursuant to regulation 14A, 'which involves the election of directors.
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
~
, MAINE PUBLIC SERVICE COMPANY (Registrant) e t
By /s/ F. E. Livingsten F. E. Livingston, Treasurer April 14, 1978 O
H AS KINS & SELLS
'" CERTIFIED PUBLIC ACCOUNTANTS 28 STATE STREET BOSTON, MASSACHUSETTS o2109
' REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Maine Public Service Company:
We have examined the consolidated balance sheets of Maine Public Service Company and its subsidiary, Maine and New Brunswick Electrical Power Company, Limited, and the related schedules of capitalization data, as of December 31, 1977 and 1976 and the related statements of consolidated income and retained earnings and of source of consolidated funds for plant additions and d) replacements for the years then ended, as contained in pages 7 through 14 in the Company's annual report to stockholders for the year 1977 These consolidated financial statements and related schedules and our opinion with respect thereto are incorporated by reference in this annual report on Form 10-K to the Securities and Exchange Commission for the year ended December 31, 1977 Our examinations also comprehended the supplemental consoli-dated schedules listed in the accompanying index. In our opinion, such supplemental consolidated schedules, when considered in rela-tion to the basic financial statements, present fairly in all material respects the information shown therein.
/la a VY2-HASKINS & SELLS February 24, 1978
MAINE PUBLIC SERVICE COMPANY AND SUBSIDIARY O INDEX TO FINANCIAL STATEMENTS The consolidated financial statements and related schedules for the years ended December 31, 1977 and 1976, together with the opinion of_Haskins &' Sells dated February 24, 1978, appearing on pages 7 through 14 of the accompanying 1977 annual report to stock-holders are incorporated by reference in this Form 10-K annual report as Exhibit 1. Also incorporated by reference are the audited finan-cial statements of Maine Yankee Atomic Power Company (Exhibit 2) and Maine Electric Power Company, Inc. (Exhibit 3) for the years ended December 31, 1977 and 1976. With the exception of the aforementioned a information, the 1977 annual report to stockholders is not deemed filed as part of this report. The following additional financial data should be read in conjunction with the consolidated financial statements in such 1977 annual report to stockholders:
Report of Independent Certified Public Accountants Relating to Supplemental Consolidated Schedules.
Schedules (Consolidated) for the Years Ended December 31, 1977 and 1976:
III - Investments in, Equity in Earnings of, and Dividends Received from Affiliates and Other Persons.
V - Property, Plant, and Equipment.
VI - Accumulated Depreciation and Amortization of Property, Plant, and Equipment.
XII - Valuation and Qualifying Accounts and Reserves.
XVI - Supplementary Income Statement Information.
Schedules other than those listed above are cmitted for the reason that they are not required or are not applicable, or the required information is shown in the financial statements or notes O thereto.
Columns omitted from schedules filed have been omitted
() because the information is not applicable.
. Individual financial statements of the Company are omitted because it is primarily an operating company and its wholly-owned subsidiary included in the consolidated financial statements being filed does not have minority equity interests and/or indebtedness to any person other than the parent in amounts which together exceed 5%
of the total consolidated assets at the date of the latest balance sheet filed excepting indebtedness incurred in the ordinary course of business which is not overdue and which matures within one year from the date of its creation, whether evidenced by securities or not.
Individual financial statements of 50% or less owned O persons accounted for by the equity method have been includcd as Exhibits 2 and 3.
i 4
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MAINE PUBLIC SERVICE Ci
. AND SUBSIDIARY 6 INVESTMENTS IN, EQUITY IN EARNINGS OF, FROM AFFILIATES AND OTHE:
FOR THE YEARS ENDED DECEMBER 31 COLUMN A COLUMN B C(
BALANCE AT BEGINNING OF PERIOD y NUMBER I NAME OF AFFILIATE OF
'AND DESCRIPTION OF INVESTMENT SHARES AMOUNT E)
YEAR ENDED DECEMBER 31, 1977:
Consolidated subsidiary - Maine and New Brunswick Electrical Power Company, Limited................................... 10,000 $3,034,756 $1 Joint venture companies:
Maine Yankee Atomic Power Company......... 25,000 3,339,443 :
/)
a Maine Electric Power Company, Inc......... 1,103 113,097 t .
T0TAL................................. $6.487.296 $7 YEAR ENDED DECEMBER 31, 1976:
Consolidated subsidiary - Maine and New Brunswick Electrical Power Company, .
Limited................................... 10,000 $3,045,237 $2 Joint venture companies:
Maine Yankee Atomic Power Company......... 25,000 3,339,822 3 Maine Electric Power Company, Inc......... 1,158 118,820 T0TAL........................... ..... $6.503.879 $6 (1) Investee's repurchase c
,-.\
i j
SCREDULE III i
i 9
MPANY AND DIVIDENDS RECEIVED '
PERSONS 4 1977 AND 1976 UMN C COLUMN D COLUMN E BALANCE AT END f
)ITIONS DEDUCTIONS OF PERIOD !
UITY DISTRIBUTION NUMBER I IN OF OF NINGS l
' EARNINGS OTHER SHARES AMOUNT ;
i i
14,013 $183,974 10,000 $3,284,795 l i
35,045 335,095 25,000 3,339,393 :
2,961 A 16,270 $5,500 (1) 1,048 104,288 l W
!2.019 $535.339 $5.500 $6.728.476 j i
19,091 $299,572 10,000 $3,034,756 '
4 2746 335,125 25,000 3,339,443 i 3,619 13,842 $5,500 (1) 1,103 113,097 7.456 $648.539 $5.500 $6.487.296 shares.
O
. +
- M n "LM MAINE PUBLIC SERVICE COMPA(
AND SUBSIDIARY O .
PROPERTY, PLANT, AND EQUIPMI FOR THE YEARS ENDED DECEMBER 31,191 COLUMN A COLUMN B COLUMN C COLUMN!
BALANCE AT BEGINNING ADDITIONS CLASSIFICATION OF PERIOD AT COST RETIREMS YEAR ENDED DECEMBER 31, 1977 - Utility plant in service:
Production............................... $13,748,112 $ 33 Transmission............................. 9,495,311 21,56 Distribution............................. 18,234,490 320,44 General.................................. 2,585,498 140,9!
Total............................ 44,063,411 483,21 '
Construction work in progress............ 2,753,441 $3,603,467 Tota 1....................... 46,816,852 3,603,467 483,27 Intangibles:
Organization........................... 30,536 Miscellaneous.......................... 438 Total....................... 30,974 7,)
, Property held for future use............. 245,961 Utility plant acquisition adjustments....
T0TAL.................. $47.093.787 $3.603.467 $483.21 YEAR ENDED DECEMBER 31, 1976 - Utility plant in service:
Production............................... $13,876,710 $145,71 Transmission............................. 9,424,377 7 ,83 Distribution............................. 17,782,533 326,2a General.................................. 2,557,317 49,15 Total............................ 43,640,937 528,9(
Construction work in progress............ 1,122,649 $2,582,372 {
Total....................... 44,763,586 2,582,372 528,9(
Intangibles:
Organization........................... 30,537 Miscellaneous.......................... 438 Total....................... 30,975 Property held for future use............. 245,961 T0TAL.................. $45.040.522 $2.582.372 $528.9(
(1) The undistributed cost of property acquired during 7~ was reclassified from utility plant in service 1 (j adjustments as of December 31, 1977
.w
SCHEBUhE V 9
AND 1976
~
COLUMN E COLUMN F
. RECLASSIFICATIONS AND ADJUSTMENTS.
TRANSFERS FROM CONSTRUCTION BALANCE WORK IN FOREIGN AT END L'S PROGRESS EXCHANGE OTHER OF PERIOD
$ 5,355 $(446) $13,752,669 16,961 (20) $ (83) 9,490,623 '
993,868 (2,438) 18,905,480 342,882 330 (201,176)(1) 2,586,601 1,359,066 (136) (203,697) 44,735,373 (1,559,463) 166 4,797,611 (200,397) 30 (203,697) 49,532,98E i (1) 30,535 200,397 200,835 .
200,397 (1) 231,370 !
245,961 .
201,176 (1) 201,176
$ 29 $ (2,521) $50,211.491 .
$ 17,020 $ 87 $13,748,112 '
9,495,311 78,445 312 779,081 (901) 18,234,490 77,692 (360) 2,585,498 952,238 (862) 44,063,411 (952,238) 658 2,753,441 (204) 46.816.82 (1) 30,536 438 (1) 30,974 245,961
$(205) $47,093,787 the period 1950 through 1962 utility plant acquisition e
~O MAINE PUBLIC SERVICE COMP AND SUBSIDIARY ACCUMULATED DEPRECIATION AND AMO OF PROPERTY, PLANT, AND EQU FOR THE YEARS ENDED DECEMBER 31, 1 COLUMN B COLUMN C COLUMN A BALANCE AT ADDITIONS BEGINNING CHARGED TO CO OF PERIOD AND EXPENSE DESCRIPTION YEAR ENDED DECEMBER 31, 1977 - Utility plant $15,153,779 $1,424,715 (
(Note a).................................... 47.877 (
$) YEAR ENDED DECEMBER 31, 1976 - Utility plant (Note a)....................................
$14,222,936 $1,331,670 (
82.418 (
NOTES:
(a) The accumulated depreciation on utility plant is not cla to classes of property shown in Schedule V.
(b) Depreciation of utility plant other than transportation (c) Depreciation of transportation equipment charged to cleo distriouted to various other accounts on the basis of O
SCHEDULE VI .
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(NY 7
I e 1TIZATION
[PMENT 777 AND 1976 COLUMN D COLUMN E COLUMN F OTHER CHANGES - ADD BALANCE 3TS REMOVAL COST, LESS AT END 3 RETIREMENTS SALVAGE OF PERIOD 3)
- ) $483,188 $90.385 $16.233,568 3) c) $528,643 $45.398 $15,153.779 h
i ssified in the riccounts according l '
equipment.
ring accounts and thereafter f operating hours.
e
'> .m O
MAINE PUBLIC SERVICE COM
' AND SUBSIDIARY VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, COLUMN A COLUMN B CHARGED TO BALANCE AT COSTS AND DESCRIPTION BEGINNING OF PERIOD EXPENSES RESERVE DEDUCTED FROM ASSET TO WHICH IT APPLIES - Allowance for doubtful accounts - year ended December 31:
1977.................... $19.395 $92.400 1976.................... $21.483 $36.994
- O I
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Ammm888 ' ~ SIO8
" SCHEDULE XII e
4Y 4
JD RESERVES 77 AND 1976
)LUMN C COLUMN D COLUMN E
)DITIONS DEDUCTIONS j RECOVERIES OF ACCOUNTS WRITTEN ,
LCCOUNTS PREVIOUSLY OFF AS BALANCE AT l WRITTEN OFF UNCOLLECTIBLE END OF PERIOD t i
$18.062 $54.842 , $75.015
$15.714 $54.796 $19. 3 95_ l g l . .
i 9
SCHEDULE XVI
/N
'U MAINE PUBLIC SERVICE COMPANY
, AND SUBSIDIARY
- SUPPLEMENTARY INCOME STATEMENT INFORMATION FOR THE YEARS ENDED DECEMBER 31, 1977 AND 1976 COLUMN A COLUMN B CHARGED TO COSTS AND EXPENSES, YEAR ENDED DECEMBER 31 ITEM 1977 1976 TAXES OTHER THAN INCOME TAXES:
$499,349 $489,057
~
Real estate and personal property.................
Social security................................... 137,341 135,476 0ther............................................. 86,413 101,285 Total................................ 723,103 725,818 Less charges to utility plant and other accounts.. 75,835 95,633 Remainder, shown in statements of consolidated I' ) ss income and retained earnings.................... $647.268 $630.185 b NOTE: Depreciation is disclosed in the statements of consolidated income and retained earnings and in Schedule VI, accumulated depreciation.
Maintenance is disclosed in the statements of
. consolidated income and retained earnings.
I Rents, adyertising, and research and develop-ment expenditures are not significant.
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w 60 years of service AN N :A1 lE?O~1T 377
director.s ?" "
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7/i [ RALPH A. BROWN C. HAZEN STETSON 1
'a J s President and Chairman of the Board t 2 f ! ' Chief Executive Officer 4 .
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s- , > THEODORE H. GRANT 1 "gj j ~[ ,'
_ [% j SAMUEL W. COLLINS Honorary Chairman Vice President Engineering and Operations
. of the Board s s
CLARENCE E. CAMBRIDGE p
( FRANK E. LIVINGSTON Assistant Secretary [
RALPH A. BROWN C. HAZEN STETSON DONALD A. LINDSAY President and Chief Executive Chairman of the Board. HORACE M. CRANDALL Vice President-Subsidiary Ii 4 Officer, Maine Public Service Maine Public Service Company, 1 Assistant Treasurer I Company, Presque Isle, Maine Presque Isle, Maine l 3
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contents g L
s - : s f - ,f President's Letter 1 E 7 y- Review of 1977 Operations 2 4
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.,a gif 3 Financial Statements and ,
Notes 7-14 b SAMUEL W. COLLINS D. JAMES DAIGLE Honorary Chairman President. Auditor's Opinion 13 I of the Board, David D. Daigle & Sons, l' ,
Maine Public Service Co.; Fort Kent. Maine il Five-Year Summary of Vice President, S.'.V. Collins Co.
Inc., Lumber and Building j
L Operations 16 i y
Materials, Canbou, Maine '
Analysis of Five-Year Inside .
j Summary of Operations Back Cover 7., -y,. _q
,. Eleven-Year Statistical inside Back g ( Summary Cover Fold w . , c w f $& b , Y
. /.A $ y -/ - Il
{* g. le %, /. ANNUAL MEETING: Second Tuesday in May.
N[y PRINCIPAL OFFICE: 209 State Street,
/ 2 ek' 6# 1 Presque Isle, Maine 04769 4 Af a .
Q Transfer Agent: Manufacturers Hanover Trust ROYAL H. FROST THOMAS S. PINKHAM 7 Company, New York President, R.H. Frost General Mariager, Stock Registrar: Common Stock- S sne " ' ' j
" 8 mpanyQ d, Mani facturers Hanover Trust Company, New York
, 9 s e Chairman of the Board, d .s Aroostook Trust Company, j J Caribou, Maine 7 , ,
.- . J j j Outdoor scenes at Round Pond on the r famous Allagash Wilderness Waterway in i , Northern Maine. ] -
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- r w d IRWIN F. PORTER Executive Vice President, PHILIP D. TINGLEY Honorary Director, O g 4 Northern National Bank, Houlton Trust Co., t P,esque Isle, Maine Houlton. Maine C L?'O N A " " T3":#" M -
NMCma%*"4TJ J
The Company has also requested a joint in-terest amounting to approximately 35.000 kilo-s watts in two nuclear units with an aggregate
) capacity of 2300 megawatts, which are being built by a group of New England utilities at Seabrook. New Hampshire Public Service Com-pany of New Hampshire is the leading participant The year 1977 marked the 60th anniversary of in the construction of these plants, which are the incorporation of your Company Onginally sc..eduled fc' cc mmercial operation in 1983 and chartered as Gould Electnc Company on April 7. 19s5 1917 its name was changed to Maine Public Serv ce Company by the stockholders on July
- he Company has signed a letter of intent to purchase 10.000 kilowatts of capacity in a second large nuclear complex planned by New England in 1918 Gould Elet tnc purchased utility plant Power Company for construction in Rhode assets ,n Maine that were owned by the Maine Island These two
- arge units. having an aggre-and New Brunswick $lectrical Power Company. gate capacity of 2300 megawatts. are scheduled Limited a Canadian corporation. now a Subsid- for completion in 1986 and 1988 iary of the Maine Company. f or $400.000 Today The Company has a case before the U S Cir-total assets of the Company and its Subsidiary cuit Court of Appeals for the First District which exceed $42 000 000 Revenues in 1977 reached arose f rom the denial by the Federal Power
$17 998.660 as compared with $110 552 ;n 1918.
its first f uh year of operation Commission (now Foderal Energy Regulatory Commission) of the Company s nght to retain While 1977 knowatt-hour sales increased 7 5% $456.000 m surcharge revenuos which had been to a total of 518.065 000. firm sales showed only cohected from the Company's wholesale cus-a 2 3% improvement over the previous year tomers. subject to refund. dunng 1975 ano 1976 Revenues on the other hand gained 4 8% in The Case was heard by the Court on March 7.
total reflecting a healthy 17 4 % jump after 1978 We believe the surcharge is equitable and eliminating fuel and purchased energy clause hope the case will be settled oromptly revenues f rom both years This improvement results mainly from the November t.1976 rate High energy Costs and other inflationary prob-
~
lems continue to f ace our industry. but it appears restructuring and realignment that at long last we may have a definitive national
)) Although hydro production did not quite energy policy in 1978 ~l he year 1977 has been one of progress and the outlook for 1978 appears reach last year's record high. It amounted to 168.677.170 kilowatt-hours. which is 124 3% of reasonably good. if inflationary forces can be normal In these days of high energy costs, kept under control and ample tax relief is granted particularly oil, I am happy to report that oniy to improve availability of the large amounts of 24% of our 1977 energy requirements were gen. investment capital needed by our industry in the erated from od. whde 30 3% came f rom hydro and future a solid 45 7% f rom nuclear To each of our valued stockholders and em-Earnings per share of common stock amounted ployees. I express our gratitude for your con-to $3 57 in 1977 versus $2 40 last year Whde we tinued interest and support.
are very pleased with this 48 8% gain m earnings. Sincerely I feel it should be pointed out that approximately 61C per share was denved from Allowance for j ,
Funds Used Dunng Construction while another (/pm, g 21C arose from the translation of our Canadian [ f / A.
Subsidiary's financial statements m accordance RALPH A BROWN with the Statement of Financial Accounting President Standards No 8 Neither of these items represent cash earnings even though they Contributed Presque isle. Mame March 15.1978 substantially to this year's results Cash dividends paid on the Common Stock in 1977 amounted to $143 per share and must be considered 100% taxable for Federal income tax J!
purposes p j <
Construction of the 600.000 kdowatt od-fired W' generating unit at the W F Wyman Station m 1 / 4 Yarmouth is on schedule and should be com- ?!(
pleted in late 1978 At the end of 1977 the Corm s pany. as a jont owner had spent $4.735 671 on l
) its 20 000 kilowatt portion of tnis unit bemg budt by Central Ma ne Power Company 1
TCU/ClO O[ l9 / / OperalMUS 24.3% above normal, and must be accorded some credit for the low level of production expenses experienced in 1977. Other factors contributing )
Revenues and Energy Sales to the fine performance are discussed in the Consolidated operating revenues reached
$17,098,660 in 1977, exceeding those of the
~
Though 1976 steam fuel costs of $447,020 were previous year by $832,202, or 4.8%. The fuel less than a third of 1975 costs, they were further adjustment component of the revenues was cut in half to $222,674 in 1977. Purchased power
$1,415,541 lower than a year ago, but revenues costs were up somewhat over 1976 ($6,227,121
~
derived from base rates grew a substantial against $5,768,339), but the energy purchased
$2,247,743 (17.4%). The non-f uel revenue growth included 252,829,000 kilowatt-hours of nuclear was achieved from a 7.5% gain in energy sales energy from Maine Yankee at a low unit cost, and from revisions in retail and wholesale base compared with only 52.978,000 kwh a year ago rates, which became effective on November 1 (November and December, only). Total produc-and December 11, 1976, respectively. Fuel ad- tion expenses for 1977 were $7,427,879, a level justment billings were reduced due to lower fuel $661,528, or 8.2%, below those of 1976. A charge-and purchased energy costs, reflecting the fact back of previously deferred fuel and purchased that increases and decreases in the cost of fuel energy expenses amounting to $125,930 oc-and purchased energy are mert.y passed curred in 1977, compared with a similar charge through to customers wi th no profit element of $941,833 in the year before, effectively reduc-included. Compared with the last two months of ing production operating expenses by $815,903.
1976, nuclear energy purchases from Maine )
Yankee Atomic Power Company (Maine Yankee) for the full year of 1977 (except for Maine Yankee Transmission expenses were up to $680,344 being down for refueling during two months in from $418,738, with the increase arising almost the spring), produced a sig.jficant reduction in entirely from wheeling Maine Yankee power into fuel costs and related fuel adjustment revenues. the Company's system from Wiscasset, Maine.
Distribution expenses rose $39,862 (5.6%) over At 518,065,000 kilowatt-hours, energy sales last year's $709.180, primarily due to additional exceeded one-half billion kilowatt-hours for the tree trimming requirements. In addition to infla- -
first time in the sixty-year history of the Com- tion, the conversion of customer accounting to pany, and increased 7.5% over those of 1976. All computer operation and a $54,000 addition to major classes of rates showed some gains, uncollectible accounts expense pushed cus- -
though the residential category recorded only a tomer accounts expenses to a level $125,628
.2% pickup, reflecting conservation efforts and (31.6%) above the year before. The cost of cus-moderate weather conditions, compared with tomer services and information went up $14,424, -
very severe winter weather in November and while sales expenses declined $32,419 for a net December of the previous year. Commercial and savings in the two groups of accounts amounting industrial-Small sales were up 2.2%, and Com- to $17,995. Administrative and general expenses mercial and Industrial-Large, 3.8%. Sales for rose $200,397 for a number of reasons, the most resale advanced 28,532,000 kilowatt-hours (a prominent of which were: an increase in outside whopping 32.3%) but the bulk of that increase services amounting to $35,844 (primarily com-was related to economy sales of energy to The puter system development); an increase of New Brunswick Electric Power Commission $76,016 in pension costs charged to operating (NBEPC), totaling 27,327,000 kwh against expenses; other employee benefits expenses, 2,924,000 kwh in the previous year. These un- which were up $63,295; and a $59,459 first-time usual sales are almost entirely accounted for by contribution in support of the Electric Power l the above-normal hydro production which re- Research Institute. Though regulatory matters leased Maine Yankee nuclear energy for sale are still not fully resolved, as discussed later in under the interchange agreement with NBEPC. this review, regulatory commission expenses Other sales for resale grew a more normal 4.1%, declined sharply to $42,018 against the prior from 71,640,000 to 74,560,000 kilowatt-hours. year's $170,927. Other accounts in the adminis-Sales to Other Public Authorities grew a modest trative and general expense group grew by 3.2%, with Loring Air Force Base accounting for amounts that appear to be consistent with gen-just about all of that gain-35,793,000 against eral inflation. Overall operation and maintenance 34,346,000 kwh. Combined street and area light- expenses for the year were $10,824,179, which ing energy sales were about the same as in 1976. was a decrease of $54,030 from 1976, about the same amount as the $52,965 reduction in overall Operation and Maintenance maintenance costs.
A total of 168,677,000 kilowatt-hours was gen- Federal and State income taxes charged to erated by the hydro plants in 1977, com- operating expenses grew from $1,449,166 to pared with the previous year's all-time high of $1,892,537 as a result of a greater amount of 174,303,000 kwh. Though not quite as favorable income being subject to current and deferred as last year, hydro production nevertheless was taxes. Current income taxes payable declined to 2
1
$1,435.442 f rom $1,574,320, while deferred in- 1,000 kilowatts. A portion of the plant's output is come taxes rose to $188,338 from a negative required to serve the small communities of D $263.410 in 1976 As a result of the Company developing an Employee Stock Ownership Plan Andover, Perth, and Carlingford in New Bruns-wick, with the remainder of its production being expected to quahfy under the Tax Reduction Act exported to the Parent Company in Maine.
of 1975 as a "TR ASOP." the investment tax credit for the current year was calculated at the 11% The Parent Company owns 5% of the Comrnon rate instead of the previous year's 10% rate. Stock of Maine Yankee Atomic Power Company However, the primary reason for the greatly in- (Maine Yankee), which owns and operates an creased investment tax credit was the quahfying 855,000 kilowatt nuclear generating plant at of a greater portion of the progress payments on Wiscasset, Maine. By virtue of its stock owr er-the Company's share of Wilham F Wyman Unit ship the Company is entitled to purchase ap-
- 4, under construction by Central Maine Power proximately 5% of the plant's generation. Prior to Company Such investment tax credit adjust- November 1,1976 the Company's entitlement in ments grew f rom $138.256 in 1976 to $268,757 in Maine Yankee energy was assigned to a New 1977 York utility. but since that date the Company has taken its full share of that power into its system.
Construction The Maine Yankee f acihty has achieved a reputa-tion as one of the finest nuclear plants in the Dunng 1977 the Company and its Subsidiary United States.
expended $ 3,270.214 on additions, replace- A 345-kilovolt transmission line, about 180 ments, and improvements to utihty property and miles in length between Wiscasset and Orient in 9quipment About $1.635,000 of that total was reouired for the Company,s share of the con- Maine, is owned and operated by Maine Electric struction costs of Wyman Unit #4. Rebuilds of Power Company, Inc. (MEPCO). The line con-nects the New Engtand Power Pool with the distnbution hnes. highway relocations, and ex- system of The New Brunswick Electric Power tensions totaled $598,000, while expenditures for meters, transformers, and other customer- Commission at the international bour.dary near related facihties amounted to $261,000. Approxi- Orient, Maine. MEPCO has agreements with The mately $347.000 was required for hardware and New Brunswick Electric Power Commission. by software costs of a new computer system. Volt- virtue of which it receives energy produced in age conversions and substation improvements Canada for resale to vanous New England utili-g took $54,000 and general equmment and miscel- ties The Parent Company, which owns 7.49% of P laneous items account for the balance of con- MEPCO's Common Stock, is purchasing its small struction expenditures (about $375,000)- share of that capacity, 3,400 kilowatts At year-end, the Company was receiving additional Construction costs for 1978 are presently esti_ energy from the 10,000 kilowatts of that capacity mated to exceed $12,000,000, with the bulk of the assigned to it for a short term by another New funds being budgeted for ownership participa_ England utility.
tion in major generating units planned or being built by other New England utilities The Com- Rate Proceedings pany hopes to fulfill its f uture capacity needs by jo:ning in the ownership of Public Service Com- Af ter the Maine Yankee nuclear plant went into pany of New Hampshire's two planned Seabrook service on Dacember 28,1972, the Parent Com-nuclear units and in two nuclear units planned pany, by reason ofits ownership of Maine Yankee for construction in Rhode Island by the New stock, became subject to the jurisdiction of the England Electric Power Company. Over Federal Power Commission (FPC) and was re-
$10.000.000 of the 1978 budget is allocated for qutred to file its wholesale rate with that Com-progress payments on those facihties, while mission, which was done in 1973. (On October 1 about $1,400,000 is budgeted for the Company's 1977 FPC functions were absorbed into the share of continuing construction costs of Federal Energy Regulatory Commission (FERC)
Wyman Unit #4, scheduled to go into service by and the FPC ceased to exist.) The FPC accepted the end of 1978 the rate for filing, but required the Company to submit a revised fuel cost adjustment clause, Affiliated Companies which it did on March 5,1975. By its order of May 5,1975, the FPC permitted the new fuel cost ad-Except for directors' quahfying shares, the justment clause to become effective on May 11 Company owns 100% of the Common Stock of 1975, subject to refund, and ordered a hearing to Maine and New Brunswick Electncal Power be held to determine the legality of the proposed Company, Limited. a Canadian corporation. The fuel clause Subsidiary operates the Tinker Station on the The major point at issue is the twelve-month Aroostook River near its confluence with the St. surcharge provision which was designed to re-John River a few miles on the New Brunswick coup unrecovered excess f uel costs outstanding g side of the iiiternational boundary The plant at the date of the change from a twelve-month consists of five hydroelectnc units totakng 37.300 determination penod to one of a single month kilowatts of capacity and a small diesel unit of That twelve-month surcharge was completely 3
billed to customers as of May 10,1976, and has pay increase is scheduled for October 1,1978, been fully collected by the Company. On Sep- along with a long-term disability plan, and an tember 30,1976, the Administrative law Judge in eleventh annual holiday. On December 1,1977 the case rendered an initial decision which found changes were made in nonunion pay scales com-the surcharge not to be just and reasonable, but mensurate witn those in the first year of the union recommended that the Commission resolve the contract.
surcharge issue through a formal rule-making proceeding. During 1977 the Company developed an Em- -
ployees' Stock Ownership Plan (ESOP) to take The Company appealed the Judge's initial de- advantage of the current tax law which allows 1%
cision to the Commission, but on June 27,1977 additional investment tax credit (11% instead of .
the Commission issued an order modifying the 10%) provided that an amount equal to the addi-initial decision by rejecting the Company's sur- tional credit is placed in trust to purchase the charge proposal and ordering the Company to Company's Common Stock for distribution to refund the surcharge within thirty days after the employees. The contribution to the trust may be Commission's approval of the revised tariff. The in cash or previously unissued Common Stock.
Company applied for rehearing on the surcharge The Company plans to follow the latter pro-issued and was turned down by another order cedure, which will increase the Company's com-dated August 25,1977. On October 5,1977, the mon equity position slightly. The ESOP has a Company petitioned the United States Court of provision that will make it noneffective if it does Appeals for the First District, asking for review of not receive timely approval by the Internal the Commission's decision on the surcharge Revenue Service.
Financing The FERC has refused to stay its refund order pending the Company's appeal to the Court, and No debt obligations, either long-term or short-the Company will very likely have to refund term, were issued during 1977. In 1978 the Com-the full amount of the surcharge it c.ollected pany expects to fmance its construction program
($456,647) plus interest at 9% from the dates of mainy through short-term bank borrowings and collection to the date of refund (perhaps in ex- internally generated cash. Some form of perma-cess of $100,000). The Company feels that it has nent financing may be required in late 1978 or a sound case and a reasonable chance of winning early 1979.
in Court, but the decision is not expected until mid-1978. General On November 5,1976, the Company filed a new Engaging in the production, transmission, and wholesale rate with the Federal Power Commis- distribution of electric energy, the Parent Com-sion, which accepted the new rate for filing and pany serves retail and wholesale customers in ,
allowed it to go into effect on December 11,1976, Aroostook County and a small portion of Penob-subject to refund. The wholesale customers all scot County in northern Maine. The Company intervened in the case and a settlement confer- ceased to service electrical appliances on March ence was held in Washington, D.C. on June 9, 1,1977, having discontinued the sale of such 1977 before an Administrative Law Judge. A set- appliances in 1976. Both markets are currently tlement agreement was reached which made the being well served by independent dealers and Company's proposed rate permanent and left the experienced service establishments.
revenue collected thereunder completely undis-turbed. The FERC issued an order on October 27, We repeat the reference made in the 1976 1977 approving the settlement agreement. Annual Report to the Indian land claims suit brought by the Federal government in 1972 on [
Employees behalf of the Passamaquoddy and Penobscot tribes. The su,ti seeks the return of 12.5 million At December 31,1977 the Parent Company's acres of Maine land to the Indians, with the claim prmanent labor force totaled 166 employees, apparently based upon a 1790 law prohibiting compared with 179 the year before, and there land transactions with tribes without the express were 11 full-time employees at the Subsidiary's approval of Congress. The issues are rather ob-Tinker Plant compared with 10 on the same date scure and it still is not known whether the suit will last year. The combined total of 177 is thus 12 cloud the Company's title to any of its land or less than at the end of 1976. Consolidated pay- land rights, though the claims presently do not roll costs were $2,697,770 in 1977, only 1% over appear to be directed toward any of the settled the $2,670,819 of the year before. The Parent area where the Company's facilities are located.
Company and the International Brotherhood of Though no decisive action has been taken at this Electrical Workers settled on a two-year contract, writing, representatives of the tribes and a" White which called for an 8% increase in base pay rates House Work Group" have issued a joint memo-
- on October 1,1977, plus a significant improve- randum of understanding, outlining proposed ment in pension benefits, additional vacation terms for an out-of-court settlement.
benefit, for employees, with 25 years of service, Subject to the approval and control of the and miscellaneous minor changes. A 7% base 4
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High Low Paid Per Share ';7 . -a The Company s Common Stock is listed and .
traded on the American Stock Exchange Com-mon stockholders are the only shareholders en- rs Quarter 15% - 13% 1/1/76 $0.33 h titled to vote at the Annual Meeting. except in the Second Quarter 14% - 13 % 4/1/76 0.33 ..
Case of default (considered extremely unlikely) Third Quarter 15% - 13 % 7/1/76 0.33 ^
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l I under the provisions of the by-laws relating to the Fourth Quarter 16% - 14% 10/1/76 0.33 r.
l Preferred Stock The Annual Meeting is held each 1977 - . .f. - a : q year on the second Tuesday in May First Quarter 17 -15% 1/1/77 0.35 :-1 3 Secand Quarter 17% - 16 4/1/77 0.35 , ' ". \' - -
Markot price and dnidend data related to the Third Quarter 19% - 17 7/1/77 0.35 .- .-
Common Stock is tabulated as follows for the two Fourth Quarter 19 - 18 10/1/77 0.38 ..<y ' .;
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6 M _ Maine Public Service Company _ D and Subsidiar)- w - ( '
/ x m statements of consolidated income Year Ended December 31, "
and retaineN CarningS 1977 1976 ' (Note 1) Operating Revenues . . . . .. . . . ... . $17,998,660 $17.166,458 l Operating Expenses - Operation: _ Power Purchased . . . .. . .. . .. .. 6,227,121 5,768,339 - Other . .. .. . .. .. . .. . . 3,971,212 4,431,059 - Maintenance . . . ... . .. .. . . 625,846 678,811
=
Depreciation (Note 1) . . . . . . .... .. 1,424,715 1,331,670 Taxes: -n 647,268 630,185 Other Than income. . . ... .. .. State income . . . ..... .... ....... .... . ... 203,958 204,509 : U.S. and Canadian Federal income (Note 3): - Current . . . . . . . . . ...... .......... .. .. . 1,231,484 1,369,811 - Deferred-Related to Deferred Fuel Expense . . (65,028) (486,361) 253,114 222,905 Other Deferred-Net. . .. Investment Tax Credits . . .. . ... . .. 268,757 138,256 = Total Operating Expcnses. . . . . . . 14,788,447 14,289,184 Operating income . . . 3,210,213 2,877,274 -- g Other income (Deductions) P Equity in income of Joint Ventures (Note 1) . . .... .... . 348,006 348,365 g Allowance for Equity Funds Used During Construction (Note 1) . 242,829 87,997 - Foreign Exchange Gains (Losses) . . . 139,509 (14,264) - Other-Net . . . .. . . . (70,569) (72,652) _ Total . ... . . 659,775 _ 349.446 _ income Before Interest Charges . . .. .. . . 3,869,988 3,226.720 Interest Charges - Long-Term Debt, etc. ..... ............ .... . . . 1,473,704 1,494,442 Less Allowance for Borrowed Funds Used During Construction (Note 1) . . . . . . . (160,872) (50,598) S Total . . .. . . 1,312,832 1,443.844 7 Net income ........ .. . . . . . ... 2,557,156 1,782,876 _ Preferred Stock Dividends . 182,257 185,128
]
Met income Available for Common Stock .. ..... ......... ...... 2,374,899 1,597,748 6 Common Stock Dividends (per share: $1.46 in 1977 and $1.34 in 1976) (971,974) (892,083) Retained Earnings, Balance at Beginning of Year. . ..... .. 7,793,936 7,088,271 Retained Earnings, Balance at End of Year. . .. . . . $ 9,196,861 $ 7,793.936 - Earnings Per Share of Common Stock (based on 665,734 shares 7 outstanding in each year) . . .. . . . .. . . $3.57 $2.40 -- See Notes to Financial Statements. sg D ed 2
~
Maine Public Service Company and subsidiarv G consolidated assels December 31, 1977 1976 Utility Plant (Note 1) Electric Plant. ...... . . . .. $50,211,491 $47,093,787 Less Accumulated Depreciation . . ... .. . 16,233,568 15,153,779 Net Utility Plant . . . .. . . 33,977,923 31,940,008 Investments in Associated Companies Maine Yankee Atomic Power Company (Note 1) . 3,339,393 3,339,443 Maine Electric Power Company, Inc. (Note 1) , 104,288 113,097 Total . .. 3,443,681 3,452,540 Net Utility Plant and investmentin Associated Companies 37,421,604 35,392,548 Current Assets Cash, including temporary cash investment of $500,000 in 1976... 456,897 1,285,589 Deposits for interest, dividends and bond proceeds held in escrow 352,561 933,895 Accounts Receivable: Customer (less allowance for uncollectible accounts-1977, $75,015; 1976, $19,395) . . . 1,714,013 1,740,734 Other . . . ... . .. ... .... . . 312,451 196,362 Deferred Fuel and Purchased Energy Costs (Note 1). . . . . . . . 545,695 671,625 Materials, Fuel, and 'dapplies (at average cost) 889,067 830,960 Prepayments . 73,811 47,977 Total . .. 4,344,495 5,707,142 Deferred Debits Unamortized Debt Expense (being amortized over terms of related debt) . 198,470 226.592 Miscellaneous . . 161,546 268,370 Total . . 360,016 494,962
$42,126,115 $41.594,652 See Notes to Financial Statements.
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- 3) -' '
liabilities and capital December 31, 1977 1976 Shareholders' Equity (Note 6) Capital Stock (see Schedules of Capitalization Data): Common Stock. ..... ...... ... .. ....... .. $ 4,660,138 $ 4.660,138 Cumulative Preferred Stock . . ...... .. .... .. . .. 2,189,000 2.249,000 Paid-in Capital . . . .. . .. . ... .. ..... ... . 1,580,078 1,564,243 Retained Earnings . . . . ... ... ... .. .. .. 9,196,861 7,793.936 Total . . . . ..... . .. .. . . . . . .. 17,626,077 16.267.317 Long-Term Debt (less current maturities) (see Schedules of Capitalization Data) . .. ... .... . . ... 19,802,632 20.484,429 Current Llabilities Long-Term Debt Due Within One Year. . ... . . 528,864 422.592 Accounts Payable . ..... ... ...... ................. ...... 1,213,001 1,123,533 Deferred income Taxes Related to Deferred Fuel Costs (Note 1) . 281,800 346.828 Dividends Declared . ... . .. .. ............... . 298,192 278,933 S Customer Deposits . . ... . . . .. . ..... ... 22,594 31,730 Taxes Accrued . . ... .. . .. . ....... . .... 43,826 780.759 Interest Accrued. . . ... ... . ... ... .. ... .. . 405,033 410.109 Total . . . . . . .. . . . . .. .. .. ... .. 2,793,310 3,394.484 Deferred Credits j Income Taxes (Note 1) ... .... ... .. .. . . ! 1,165,301 912.187 investment Tax Credits (Note 1) . .. . .. . ....... ! 682,803 439.970 Miscellaneous . . .. . .. . .. . . i 55,992 96,265 1 Total . . . . . ... . . .. . .. . j 1,904,096 1,448,422 l $42,126,115 $41,594.652 O ' i l i 9 l l
statements o J source of f J consolidated funds for plant 7, w / x Q additions and replacements . Year Ended December 31, 1977 1976 (Note 1) Source of Funds Funds From Operations: Net income . . . ......... ....... .... ... .. .. $ 2,557,156 $ 1,782,876 Charges (Credits) Not Affecting Working Capital: Depreciation (Note 1) . . . . . . .. . 1,424,715 1,331,670 Deferred Income Taxes-Net. . . . 253,114 222,905 Deferred Investment Tax Credits . . . ....... ..... . . 242,833 138,256 Allowance For Equity Funds Used During Construction (Note 1) (242,829) (87,997) Foreign Exchange Losses (Gains) (Note 1) (139,509) 14,264 Other . . . . . .. 105,807 76,964 Funds From Operations. . .. 4,201,287 3,478,938 h Preferred and Common Stock Dividends. .... ... . . (1,154,231) (1,077,211) Reduction of Long-Term Debt and Preferred Stock (net) (465,743) (418,469) . Net Funds Available 2,581,313 1,983,258 increase (Decrease)in Available Funds Change in Working Capital (see below) . 655,201 473,118 Other-Net . . . . . . 33,700 (7,267) Funds Used For Plant Additions and Replacements $ 3,270,214 $ 2.449,109 (Decrease) in Working Capital by Components (excluding long-term debt due within one year): Cash. .. .. . ....... .... ..... ..... ............. $ (828,692) $ 543,524 Deposits for interest, Dividends and Bond Proceeds Held in Escrow (581,334) 12,108 Accounts Receivable-Net . . . . . . .... . .. 89,368 (57,855) Deferred Fuel and Purchased Energy Costs . (125,930) (941,833) Materials. Fuel, and Supplies . ... . 58,107 (80,939) Prepayments . . . . . . . . 25,834 (8,927) Accounts Payable . ...... ... ...... .......... (89,468) 185,137 Deferred Income Taxes Related to Deferred Fuel Costs. .. 65,028 486,361 Taxes Accrued . . . . . . . . . .... .. ... ... 736,933 (624,748) Interest Accrued and Other Current Liabilities-Net (5,047) 14,054 (Decrease)in Working Capital . .. . $ (655,201) $ (473,118) See Notes to Financial Statements. O 10
v- .. f . the statements of source of consolidated funds IZO/CS /0 ((IldllC/U[ Sld/ClllFillS for plant additions and replacements. Financial
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- 1. ACCOUNTING POLICIES, ETC.
statements f or 1976 have been restated to comply with this presentation. Maintenance and repairs, including replacement of minor items of proper-
- 3. .
Regulations The Company is subject to the reg- ty, are charged to maintenance expenses as ulatory authority of the Maine Public Utilities incurred. The Company's properties, with minor
^
Commission (PUC) and,in respect to wholesale exceptions, are subject to a first mortgage lien. rates, the Federal Energy Regulatory Commis- . sion (FERC). The Company maintains its ac. Depreciation Depreciation is provided on com-counts in accordance with the accounting re- posite bases us,ing the straight-line method for 3 quirements of the PUCwhich, generally, conform financial reporting purposes and the declining . - - , with the accounting requirements of the FERC balance method for tax purposes. (see Note 7). By order of the Maine Public Utilities Commis- ' Consolidation The accompanying consolidated sion, the Company records income tax reduc- ... financial statements include the accounts of the tions, which result from the use of lioeralized . depreciation, by the " normalization" method for
~
Company and its wholly-owned Canadian sub. - .t sidiary, Maine and New Brunswick Electrical all property additions. Related deferred income . 4 Power Company, Limited. Intercompany items taxes recorded in 19I7 and 1976 amounted to " have been eliminated in consolidation. Exchange $208,000 and $211,300, respectively. The Sub- . . . ,' gains and losses are reflected in consolidated sidiary records income tax reductions by the r, earnings. " flow-through" method for all differences be- ~$l, - tween book and tax depreciation. N . '. Deferred Fuel and Purchased Energy Costs The - portions of fuel and purchased energy costs investment Tax Credit The Company defers in- , which are recoverable from customers under the vestment tax credits ($285,000 and $150,000 in . . operation of fuel and purchased energy acjust- 1977 and 1976, respectively) and amortizes the e vt<s ment clauses are deferred until the periods in credits over the estimated useful hves of the ' - - - which the related revenues are billed. related utility plant. Electric Plant Electric plant is stated at original Investments The Company records its invest- ' cost which, as to construction, includes all direct ments in the Common Stock of Maine Yankee labor and material, as well as related indirect Atomic Power Company (5% ownership), a joint- ,
. v 9 construction costs including general engineer-Ing, supervision and similar overhead items, and ly owned nuclear electn,c power company, and the Common Stock of Maine Electric Power Company (MEPCO) (7.49% ownership), a jointly Y . ..
EO' allowances for costs of funds used during con- owned electric transmission company, on the struction (AFUDC) at 7.5% from January 1 to equity method. Dividends received in 1977 and
- October 31,1976, at 9.71% from November 1 to December 31,1976 and at 9.75% during 1977. In 1976 from Maine Yankee were approximately
$335,000 each year and from MEPCO $16,270 M ,
accordance with an order issued by the FERC in and $13.842, respectively. 1977, AFUDC applicable to borrowed and equity funds are shown separately in the accompanying The Common Stock of the Subsidiary is f - statements of consolidated income and the pledged as additional collateral for the first ~ u AFUDC associated with equity funds have been mortgage and collateral trust bonds of the - excluded from funds provided from operationsin Company.
- 2. GEOGRAPHIC BUSINESS SEGMENTS *
- 1.,
^
The following table summarizes the companies' operations in the two countries in which they . 4 operate (000 omitted): Company Subsidiary Adjustments
- '(<. . A T.
and - United States Canada Eliminations Consolidated 'I--
^ ~
For the Year Ended December 31,1977: ' , Sales to Unaffiliated Customers $17,848 $ 151 $17,999 1,021 $(1,102) T. 1> ;' .. Intercompany Revenues 81 . Total $17,929 $1,172 $(1,102) $17,999 * ', ? , Operating Profit Before income Taxes S 4,466 $ 639 $ (3) $ 5,102 income Taxes 1,667 225 1,892 s 4 Operating income $ 2,799 $ 414 _$_ (3) $ 3,210 . .. d .h ' 3 Identifiable Assets at December 31,1977 $36.956 $5,170 $42,126 d
)
The identifiable assets, by company, are those assets used in each company's operations, exclud- [. ? ing intercompany receivables and investments.
- 'c--a 11
_f-
I
- 3. FEDERAL INCOME TAXES share for the 4.75% Series and at $54.94 for the 9%% Series (both plus accumulated dividends).
The consolidated provisions for federat income No shares were redeemed during 1977 or 1976. taxes differ f rom amounts computed by applying the statutory rate as follows: Purchase funds for both Series of Preferred 1977 1976 Stock provide that the Company will annually . offer to purchase on July 1, at prices not to Statutory Rate 48.0% 48.0% exceed $50 per share and accrued dividends, Tax Benefits of Lower Effective 3% of the maximum number of shares issued
- Tax Ra% Attributable to prior to May 15 of such year, less any shares Dividends Received (3.5) (4.7) theretofore purchased and surrendered by the Foreign Tax Credit (3.8) (4.6) Company to the transfer agent as a purchase I Allowance for Funds Used fund credit for such year. Any sharea so pur-During Construction (4.8) (2.2) chased and surrendered are retired. Paid-in Other 3.6 4.3 capital increased by approximately $16,000 and
$23,000 in 1977 and 1976, respectively, repre-Effective Rate 39.5% 40.8% senting the excess of par value over reacquisition cost of 1200 shares of the 4.75% Preferred Stock
- 4. NOTES PAYABLE TO BANKS AND SHORT-TERM CREDIT ARRANGEMENTS '
The Preferred Stockholders are entitled to special voting rights in respect to certain cor-The Company has credit arrangements with porate action and are entitled to elect a majority two banks. The first is a short-term arrange- of the Board of Directors in the event of a de-ment with maximum borrowings determined by fault in the payment of four quarterly dividends the lender based on the financial condition of t,he on the Preferred Stock. companies. The Company is expected to main-tain a compensating balance of 20% of outstand-ing borrowing. The second is an open credit 7. RATE PROCEEDINGS arrangement of up to $1,000,000 with interest at the lender's prime rate without compensating After the Maine Yankee nuclear plant went into balances. service in 1972, the Company became subject to Federal Power Commission (now F.E.R.C.) juris-During 1977 and 1976 the Company did not diction, and at that time filed its wholesale rate utilize these credit arrangements. schedule with the Commission which became effective in 1973. In 1975 the Company, in ac-cordance with the initial requirements of the FPC, -
- 5. PENSION PLAN filed a revised fuel cost adjustment clause. The The Company and its Subsidiary have an in- Commission permitted this revised clause to take sured non-contributory pension plan (terminable effect in May 1975 subject to refund and ordered at any time) for the benefit of all employees, a hearing to be held to determine its lawfulness.
based on age and period of employment condi- In September 1976, a judicial decision was tions. Pension expense, which includes amorti. reached, subject to an FPC ruiemaking proceed-zation of prior service costs over a period of ing, which found two provisions of the clause to twenty years, was $285,000 in 1977 and $181,500 be not jus' and reasonable. The Company ap-in 1976. The companies' policy is to fund pension pealed this decision, but in 1977 the FERC agreed cost accrued. The plan is currently being therewith. The Company has since further ap-amended, retroactive to January 1,1977, to pro- pealed this decision to the United States Court of vide increased benefits and to further defina Appeals for the First Circuit. If the Court should participating employee groups. The current rule against the Company, applicable deferred year's pension expense includes a provision in fuel costs incurred to the effective date of the re-anticipation of the increases in pension cost for vised clause of $456,647 will become unrecover-these amendments. able and amounts collected ($164,490 in 1976 and $292,157 in 1975) plus interest at 9% will have e un customers. Any such refund
- 6. SH AhEHOLDERS' EOUlTY would be recorded as a prior penod adjustment.
Under the most restrictive provisions of the Company's long-term debt indentures, retained earnings available for the payment of cash divi- 8. CONSTRUCTION PROGRAM dends on Common Stock were $4,113,587 at See the first paragraph of Construction Section December 31,1977. on page three. The Preferred Stock is redeemable, with cer-tain restrictions, at the option of the Company,or in case of voluntary liquidation at $51.00 per NOTES Continued on Page 13 12
- 9. EMPLOYEES' STOCK OWNERSHIP PLAN amount of cash to be used to purchase common stock) with a value, as defined, equal to 1% of the E During 1977 the Company enacted an em- Company's qualified investments in property for ployee stock ownership plan (subject to approval that year. The current year's contribution ac-by the Internal Revenue Service) to provide eligi- crued amounted to $25,924. Amounts so contrib-ble employees with the opportunity of becoming uted will be accumulated in individual member stockholders of the Company and, at the same accounts and will be available for distribution time, to achieve certain tax benefits for the Com- upon termination of employment after an appro-pany. All employees with one or more years of priate waiting period required by federal statute.
service are eligible to participate in the plan; Amounts in individual member accounts are each year the Company will contribute to the 100% vested at all times. plan shares of common stock (or an equivalent
- 10. QUARTERLY INFORMATION (unaudited)
Presented below are financial data showing results for each quarter in the two years ended Decem-ber 31,1977. (Dollars in Thousands Except Per Share Amounts) 1977 By Quarter 1st 2nd 3rd 4th Operating Revenues $4,919 $4,631 $4,058 $4,391 Operating Expenses and Interest 4,252 4,312 3,757 3,781 Other income-Net 190 115 135 220 Net income $ 857 $ 434 $ 436 $ 830 Earnings Per Common Share: $ 1.22 $ .58 $ .59 $ 1.18 1976 By Quarter 1st 2nd 3rd 4th Operating Revenues $5,492 $4,200 $3,128 $4,346 Operating Expenses and interest 5,048 3,964 3,015 3,756 Other Income-Net 16 62 121 201 Net income $ 460 $ 298 $ 234 $ 791 Earnings Per Common Share: $ .62 $ .38 $ .28 $ 1.12 As described in Note 7 to the financial state-ments, in 1976 and 1975, the Company collected (1/H((/07 S Of)llllOll certain revenues under the provisions of a re-vised wholesale fuel cost adjustment clause which contained provisions subsequently dis-MAINE PUBLIC SERVICE COMPANY: allowed by a federal regulatory authority. The Company has appealed this disallowance. Rev-We have examined the consolidated balance enues collected are subject to refund to the sheets of Maine Public Service Company and its extent not ultimately approved. subsidiary, Maine and New Brunswick Electrical Power Company, Limited, and the related sched- In our opinion, subject to the effect, if any, of ules of capitalization data, as of December 31, the outcome of the proceedings referred to in the 1977 and 1976, and the related statements of preceding paragraph, the financial statements consolidated income and retained earnings, and and supplemental schedules referred to above of source of consolidated funds for plant addi- present fairly the financial position of the com-tions and replacements for the years then ended. panies at December 31,1977 and 1976 and the Our examinations were made in accordance with results of their operations and their source of generally accepted auditing standards and, ac- funds for plant additions and replacements for cordingly, included such tests of the accounting the years then ended, in conformity with gener-records and such other auditing procedures as ally accepted accounting principles applied on a we considered necessary in the circumstances. consistent basis. Boston, February 24.1978 HASKINS & SELLS 13
Maine Public Service Company ami solniiliarv 3 _ ] g
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schedules of capitalization data l long-terHL NCl)t December 31, 1977 1976 Maine Public Service Company: First Mortgage and Collateral Trust Bonds: 3% Series due 1980-Interest Payable, March 1 and September 1 $ 740,000 $ 750,000 3.35% Series due 1985-interest Payable, February 1 and August 1 1,580,000 1,600,000 5%% Series due 1990-Interest Payable March 1 and Sept.1. . 1,660,000 1,680,000 ( 4%% Series due 1995-Interest Payable, January 1 and July 1.. 2,200,000 2,225,000 / 7%% Series due 1998-interest Payable. May 1 and November 1 3,680,000 3,720,000 7.95% Series due 2003-Interest Payable, March 1 and Sept.1.. 2,425,000 2,450,000 10%% Series due 1995-interest Payable, March 1 and Sept.1 4,000,000 4,000,000 Debentures: 5%, due 1987-Interest Payable, May 1 and November 1. . . . 864,000 918,000 9%%, due 1995-Interest Payable, May 1 and November 1 . 1,296,000 1,350,000 Maine & New Brunswick Electrical Power Company, Limited: . First Mortgage Bonds-5%% Series due 1989-Interest Payable, June 1 and December 1. . . . . . .. . 1,886,496 2,214,021 Total Outstanding . . . . . . . . . . . . . . . 20,331,496 20,907,021 Less-Amount Due Within One Year. 528,864 422,592 Long-Term Debt. ... . . .. . .
$19,802,632 $20,484,429 i
Current Maturities of Long-Term Debt for the Succeeding Five Years Are: 1978-$528,864; 1979-$528,864; 1980-$1,238,864; 1981-$518,864; 1982-$518,864. I capital stock: Common Stock $7 Par Value-Authorized, 1,000,000 Shares; issued and Outstanding, 665,734 Shares . . . .... . . . . $ 4,660,138 $ 4,660,138 Cumulative Preferred Stock, $50 Par Value-Authorized,70,000 Shares (issuable in series): 4,75% Series-Originally issued 40,000 shares: Outstanding, 13,780 Shares in 1977 and 14,980 Shares in 1976, . . . . . . . . . $ 689.000 $ 749,000
- 9%% Series-Originally issued and Outstanding,30,000 Shares 1,500,000 1,500,000 Total Preferred Stock . . . . . . . ... .. .. $ 2,189,000 $ 2,249,000 hj l
14
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l l; (Restated) 1976 1973 1977 l 1975 1974 Operating Revenues . .. $17,998,660 $17,166,458 $16,936,782 $13,068,684 $10,748,450 Operating Expenses Operation: Power Purchased. 6,227,121 5,768,339 6,884,091 4,428,456 2,136,724 Other. . . . .. . 3.971,212 4,431,059 3,993,314 2,419,991 2,864,445 Maintenance . 625,846 678,811 645,659 511,753 558,307 Depreciation 1,424,715 j 1,331,670 1,286,843 1,259,472 1,221,649 Taxes: 1 Other Than income. 647,268 630,185 603,141 592,887 585,676 State Income . . . . . . . . . . 203,958 204,509 118,154 64,250 76,088 U.S. & Canadian FederalIncome Current . .. . ... . . 1,231,484 i 1,369,811 661,895 596,251 822,794 Deferred ........... . 188,086 j (263,456) 236,389 669,876 105,494 . Investment Tax Credits . 268,757 ; 138,256 131,961 41,574 46,483 Total Operating Expenses 14,788,447 14,289,184 14,561,447 10,584,510 8,417,660 ; Operating income 3,210,213 2,877,274 2,375,335 2,484,174 2.330,790 Other income (Deductions) Return on Equity Investments . 348,006 ! 348,365 348,593 352,701 351,939 Allowance for Equity Funds l Used During Construction 242,829 { 87,997 21,449 20,807 4,350 Other-Net . . 68,940 l (86,916) 16,846 (85,485) (84,182) Total . 659,775 l 349,446 386,888 288,023 272.107 income Before Interest Charges . 3,869,988 ! 3,226,720 2,762,223 2,772,197 2,602,897 Interest Charges j Long-Term Debt, etc. ... 1,473,704 j 1,494,442 1,282,563 1,189,575 1,186,434 - Less Allowance for Borrowed ' Funds Used During Construction ~ (160,872) (50,598) (41,881) (21,013) (18,349) Total . 1,312,832 l 1,443,844 1,240,682 1,168,562 1,168,085 income Before Cumulative Effect . on a Change in Accounting l Prin ci ple . . . . . . . . . . . . . . . . . . . 2,557,156 ! 1,782,876 1,521,541 1,603,635 1,434,812 Cumulative Effect of a Change in ! Accounting Principle i 194,562 Net income ..... ...... . 2,557,156 1,782,876 1,521,541 1,798,197 1,434,812 Preferred Stock Dividends 182,257 ! 185,128 187.898 190,724 192,204 Net income Available for l Common Stock. $ 2,374,899 $ 1,597,748 $ 1,333,643 $ 1,607,473 $ 1,2/.2,608 Earnings Per Share of Common Stock l Income Before Cumulative Effect I of a Change in Accounting Principie . . . . ........ $3.57 $2.40 $2.00 $2.12 $1.87 Cumulative Effect of a Change in Accounting Principle . . .29 Net income . $3.57 $2.40 $2.00 $2.41 $1.87 f l e 16 t I
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,l Than 1967 increase Operating Revenues Amount Percent 1977 1976 1975 R esiden tial . . . . . . . . . . . . . . . . . . . . . . . . $ 4,277,965 9.7 $ 7,073,874 $ 6,617,492 $ 6,498,277 Commercial and Industrial-small . 2,215,959 7.9 4,148,247 4.258,303 4,153,889 Commercial and Industrial-large . 1,896,156 12.3 2,765,238 2,859,436 2,752,432 Municipal Street Lighting ... . . . . . 154,802 8.7 273,902 213,590 197,190 Area Lighting . . . . . . . . . . . . . . . . . . . 142,420 12.2 207,990 161,924 147,531 Other Municipal and Other Public Authorities . . . . . . . . . . . . . 744,538 13.2 1,045,997 926,200 889,789 Other Electric Utilities . . . . . . . . . . . 1,518,326 11.1 2,334,404 1,984,171 2,147,984 O,her Operating Revenues . . . . . . . . 108,973 14.0 149,008 145,342 149,690 Total Operating Revenues $11,059,139 10.0 $17,998,660 $17,166,453 $16,936,782 Number of Customers (average)
Residential . . . . . . . . . . . . . . . . . . . . . .
. 3,467 1.5 25,272 24,990 24,709 Commercial and Industrial-small . 51 .1 4,731 4,756 '4,778 7
Commercial and Industrial-large . 7 5.4 17 15 ' 14 Municipal Street Lighting ..... .. (1) 35 34 34 Area h ti n g . . . . . . . . . . . . . . . . . . . 854 6.5 1,824 1,825 1,763 Other unicipal and Other
/O Public Authorities .......... . (1) 8 8 8
! U Other Electric Utilities ...... ... 4,377 6 6l 6l Total Customers . . . . . . . . . 1.5 31,893 31,634 31,312 Net Generation, Purchases and Sales (thousands of kilowatt-hours) Net Generation: S tea m . . . . . . . . . . . . . . . . . . . . . . (104,043) (25.0) 6,193 14,791 50,748 f H y d ro . . . . . . . . . . . . . . . . . . . . . . . . . . 23,929 1.6 167,874 173,421 105,726 Diesel . . . . . . . ....... ...... .. (4,507) (175) (80) 78 Purchases: ' Nuclear Generated 252,829 252,829 52,978 Fossil Fuel Generated . .... .. 76,351 9.6 127,109 275,731 319,334 Total . . . . . ........ . . 244,559 6.0 553,830 516,841 475,886 ] Losses and Unaccounted for .. ... 7,147 2.3 34,536 33,462 32,313 l Company Use . . . . . . . . . . ...... . (384) (2.8) 1,229 1.281 1,312 Electricity Sold . . . . . . .. 237,796 6.3 518,065 482,098 442,261 Sales: Residential . . . . . . . . . . . . . . . . . . . . 66,437 5.8 154,420 154,060 145,361 / Comniercial and Industrial-small 43,155 5.9 98,999 96,910 90,211 Commercial and industrial-large 46,040 6.4 100,122 96,499 87,712 Municipal Street Lighting . . .. . 917 3.8 2,952 2.889 2,804 Area Lig h tin g . . . . . . . . . . . . . . . . 1,209 7.9 2,269 2,305 2,182 I Other Municipal and Other Public Authorities . . . . . . . . . . 19,695 6.4 42,493 41,157 34,752 Other Electric Utilities ... .... 60.343 7.5 116,810 88,278 79,239 Total Sales . . . . . . . . . . 237,796 6.3 518,065 482,098 442,261 j Average Use and Revenue Per ! Residential Customer l Kilowatt-hours . . . . . . . . . . . . . . . I 2,075 4.2 6.110 6,165 5,883 Revenue . ..... ............ $151.69 8.1 $279.91 $264.81 $.'62.99 Revenue per Kilowatt-hour . . . 1.40C 3.7 4.58C 4.30C 4.47C
l flHj! SIUllSilCS , l I - t l 1974 1973 1972 1971 1970 1969 1968 1967 1 5,241,793 $ 4,306,306 $3,876,884 $3,586,685 $3,238,097 $3,056,788 $2,910,518 $2,795,909 3,317,147 2,P70,766 ! 2,647,987 2,452,033 2,252,285 2,119,058 2,055,550 1,932,288 1,874,967 1,434,155 1,330,711 1,215,867 1,043,711 1,019,795 951,891 869,082 189,980 174,618 153,962 153,138 143,484 139,520 133,080 119,100 140,239 128,587 113,472 104,475 94,761 86,577 76,814 65,570 744,038 538,689 490,793 424,343 448,720 409,897 256,854 301,459 1,415.135 1,191,488 1,169,430 1,005,892 878,855 921,008 920,322 816,078 145,385 103,841 91,086 82,691 69,751 61 339 53,530_ 40,035 l $ 3,068,684 $10,748,450 i $9,874,325 $9,025,124 $8,169.664 $7,81'3,982 $7,358,559 $6,939,521 i ! l 24,421 { 23,805 l 23,238 22,654 22,423 , 22,131 21,993 21,805 4,710 4,691 ' 4,715 4,672 4,647 4,630 4,671 4,680 13 13 I 12 12 11 11 11 10 34 34 l 34 34 36 36 36 36 1,723 1,681 1,546 1,386 ! 1,306 1,209 1,099 970 8 6 8j 6 j 8. 7l 8 6 7 6 , 7 7 9 6 9 6 h 30,915 30,238 j' 29,560 I 28,772 28,436 l 28,031 27,825 27,516
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! i 32,385 i 33,263 i 55,617 84,437 14,346 46,813 101,803 110,236 140,362 ' 153,898 l 157,488 102,275 144,480 143,441 87,923 143,945 (209) 875 .
10,741 6,854 (472) 1,896 4,685 4,332 i 286,649 i 262,210 j 214,703 200,079 225,673 166,227 131,448 50,758 j 459,187 450,246 ; 438,554 393,645 384,027 ' 358,377 325,859 309,271 32,401 27,391 l 30,033 24,012 29,306 27,668 29,282 27,389 1,396 1,537 l 1,712 1,591 1,715 1,662 1,612 1,613 425,390 l 421,318 406,809 368,042 353,006 329,047 294,965 280,269 140,702 134,747 127,834 117,460 107,010 99,401 93,412 87,983 86,304 86,464 81,411 75,063 69,431 1 64,056 61,406 55,844 79,504 78,414 80.284 74,057 68,183 1 63,403 58,321 54,082 2,706 2,744 2,707 2,775 2,535 2,419 2,314 2,035 2,085 l 1,992 1,835 1,647 1,541 1,406 1,263 1,060 35,617 39,754 35,820 29,121 41,767 38,142 19,474 22,798 78,472 ; 77,203 76.918 67,919 62,539 60.220 58,775 56,467 425,390 l 421,318 406,809 368,042 353,006 329,047 294,965 280,269 9 5,762 i 5,660 5,501 5,185 4,772 4,491 4.247 4,035
$214.64 $180.90 $166.83 $158.32 $144.41 $138.12 $132.34 $128.22 3.73C 3.20C 3.03C 3.05C 3.03C 3.08C 3.12C 3.18C l l
2 from a mere $22.699 in 1973 to $403.701 in 1977. In accordance with a Federal Energy Regulatory _ Commission (formerly Federal Power Commis-sion) accounting order. AFUDC has been split UD on the income statement with the portion re-
) iated to the cost of debt being shown as an offset =
- to interest expense and the portion related to the cost of equity f unds being shown in Other in- " come, as before The FERC order also sets forth ' the formula for calculating the AFUDC rates and Since 1973 conschdated operatmg revenues allows semiannual compounding of AFUDC have grown about 67 % from $10.748.450 to which the Company has adopted along with a "
$ 17.998,660 in 1977 Some of the gain is related close-up of the lag period m applying the rates to to the pass-through of changes in fuel and pur- construction expenditures in the summary of chased energy costs via f uel adjustment clauses consolidated operations on the f acing page the m=
Revenues from that source were only $331.124 in years pnor to 1977 have been restated to allocate ] 1973. had ballooned to $5.059.860 by 1975. then receded to $4.270.376 in 1976. and in 1977 were AFUDC to Other Income and interest Charges down to $2.854.835 On the other hand, base-rate In addition to non-cash earnings represented revenues have gained 45 4% since 1973. from by AFUDC. a foreign exchange gain of $139.509 -
$ 10,417.334 to $ 15.143.825. resulting from was recorded in 1977. which arose from the growth, and also reflecting retail and wholesale translation of the financial statements of the '
base-rate changes which became effective Canadian Subsidiary m accordance with State-November 1 and December 11.1976. respective- ment of Financial Accounting Standaids No 8 ly The higher base rates were required in part. This cornpares with a loss of $14.264 from the - to cover the greater capacity costs ]f nuclear same source in 1976 power coming into the Company's system, whde the hwer energy costs of such power significant- Interest on long-term debt has advanced from _ ly reduced fuel adjustment revenues Thus 1977 $1.140.641 in 1973 to $1.444.001 in 1977. though income reflects a substantial shif t f rom f uel ad- it is somewhat lower than the peak of $1.478.277 - justment revenues. with no element of profit to reached in 1976 because of operation of the vari- _ ous sinking funds Long-term debt issued during base revenues that produce a reasonable level of return the five years were $2.500.000 of 7 95% First Mortgage and Collateral Trust Bonds. as of Iri 1973 the Parent Company adopted a change March 1 1973. and $4.000.000 of 10%% First - in accounting principle by which excess fuel Mortgage and Collateral Trust Bonds, on Oc-x expenses incurred in one accounting period but taber 1. 1975 Part of the proceeds from the _ ') not collected until a subsequent accounting latter issue was used to refinar ce $2.088.000 of period are deferred on the balance sheet to the 27% bonds which matu ca on the same date _ period in which the excess costs are billed to Interest on other indebteoness was $45.973 in " customers Also deferred to future accounting 1973 and was up to $58.820 ir 1975 and bacx to
~
periods are the income taxes related to the de- $29.703 in 1977 fluctuating with the level of ferred fuel expenses That method of accounting short-term bank loans There were no such bank has been in effect for each year subsequent to l cans outstanding in either 1976 or 1977 = 1974 Net income in 1977 reached $2 557.156. com- _- pared with $1434.812 in 1973. and was over tr.at A 't e r ta xes and other operating expenses ] operating income has gone up $879.423 in the of 1976 by $774.280 for reasons covered in the - review of 19 e < operations Net income for 1974 four years since 1973. or 3 7 7% The bulk of that growth has occurred in 1976 ($501939) and 1977 included an amount of $194.562. representing ($332 939) The changes in base rates referred the cumulative effect of a change in accounting principle related to the adoption in that year of to above increases in sales. and excellent water conditons in both rf those years are the major deferred fuel cost accounting elements of the income gains Also contributing Preferred Stock dnidend requirments hme to improved performance is the Company s been dechning Whtly each year smce 1973 success in limitmg payrnli costs in the f ace of because 1200 shares of 4 e Preferred Stock = significant mflation Consohdated payroh costs ,$60 000 par ,aWo) have been retired annually _ in 1977 were $2 69 7 770 only 12 4% above those -- thrmh the Prefer ed Stock Purchase Fund of 1973 in spite of regular improvements m pay M scales each year in the intervening penod From Earnings per share of Common Stock reached j 217 at the end of 1973 the total number of f ull- $3 57 in 1977 up from $2 40 m the previous year. 3 time employees dropped to 1 by December 11 $2 00 m 1975 $2 41 m 1974 (after the cumulative Y 19 7' Reductions. as per mitted by improvements effect of a change in accountmq principle) and - in operatmg omciency were achieved lar gely $187 :n 1973 - through attritmn A ten qea, statisticaf summary is provided on Arising primarily from the Company s share M the inside enver fold That summary mCorporates - continin na expenditures on Winiam F Wyman operatmq rmeniles and k+lowatt-hour sales bv lj nit ud Aildw dnCDs h if Flinds Used Durina C in t lasses wh.t h in previous years had been shown Structen i Af L JN) haw mcreased enssr mouCV "' t h e w m m y y Ti consolidated operations -
1 EKHIBIT 2 REPORT OF INDEPENDE!rf PUBLIC ACCOU!iTA!1TS To Maine Yankee Atomic Power Company: We have eraminad the balance sheet ami statement of capitalization of Maine Yankee Atomic Power Company (a Maine corporation) as of December 31, 1977 ami December 31,1976, and the related statements of inoame, changes in stockholders' investment and sources of funds for acquisition of nuclear fuel and construction of electric property for the years then ended, ami the related schedulas as, listed on the accougpanying inder. Our aw==1 nations were ande in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting recoz,1s and such other am11 ting procedures as we considered necessary in the ciretanstances. In our opinion, the accompagring financial statements present fairly the financial position of Maine Yankee Atomic Power Company as of December 31, 1977 ani December 31, 1976, ani the results o* its opera-tions ami its sources of funds for acquisition of nuclear fuel ami construction of electric property for the years then ended, ami the supporting schedules present fairly the information required to be set forth therein, all in conforinity with generally accepted accounting principles applied on a concistent basis. AR MUR AIDERSEE & CO. Boston, Massachusetts, February 6, 1978. ( _
t#' Maine Yankee Atcaic Power Compaq Folm 10-K - 1977 I MAINE YANKEE ATOMIC POWER COMPANY STNITMENT OF INCOME Year Emded December St. 1977 1976 1975 1974 1973 ELacrase Ormanse Esmrvas Se8,800A18 884,800,198 861,731,e04 863,543,106 850,664,547 - Orunanse Ensuses Fest (Notes 1 and kO) . 14,888,806 11,846,398 14,538,118 10,601,179 7,865,346 Oysrsden 4,894,068 4,M8,880 f,339,781 8,863,589 8,475,771 Wat======= (Note 1) 8,565,908 1,688,700 1,917,015 1,818,0e7 1,022,703 Depreenados (Notas 1 and 10) . 8,087,384 8,089,100 f,734,688 f,445,317 f,481,221 Tazes 1%Baral and State laasune (Note t) 9,064,068 8,878,010 8,191,8e8 4,264,510 0,331,753 1Asal Preparty 6,332,372 3,799,803 2,889J10 2,335,555 2,272,600 Tesal Opersdag Espenses 68,180,421 40,eos,H3 et eSt,cos 34,052,157 19,s79,394 Orenanze Isconsa 17,479,394 18,450Ja9 18,278,999 13,400,968 20,565,653 Oruna Iscous (Enssass) ! Allowenes for Other Funds Used-For Nealsar Feel (Note 1) . 1,047,358 1,134,064 844,608 1,006,214 224,391 Dartag Construstion (Note 1) 40,830 80,600 118,881 130,588 23,034 Other . (31,681) (14,965) (33,717) 845,843 603,829 Isaoisa Barons Isreser Cuaname 14,546,156 18,802,094 20,104,511 80,868,813 21,317,207 IsTemast Cuanssa lametern Debs 11,50s,404 11,815,418 13,537,1e6 12,964,86e 13,878,e05 Other 38,48s 781,3e8 est,0s1 se0,ese too,see ADowease for Borrowed Fands Used-For Nasisar Feel (Note 1) . . (874,000) (580,682) (378,858) (266,746) - Dartag Consernedom (Nose 1) (90,f20) (50,018) (192,587) (110,450) (38,597) 10,7e1,000 11,777,147 12,397J16 13,044,604 13,468,374 Nor 1scossa 7,784,015 7,884,967 7,807,306 7,80s,000 f,7ss,833 Dividsuds sa Preferred Steak . 1,083,148 1,125,000 1.132,000 1,122,000 1,066,500 Eaastuos ArrucaaLa to Coansos procs . 8 4,700,988 8 0,70s,967 8 4,888,306 8 0,703,000 4 8,70s,333 Saaans or Conusou trocs Oeterasasse 300,000 000,000 500,000 600,000 500,000 Eaaartsee Pm Jaans or Conusos trocs 8 13.608 8 13.40s 8 13J70 8 13.60s e 13.40s Dmpasse Damas Pun saaaa or Coasasom Stocs 8 13.404 8 13.605 8 13.340 8 13.600 8 13.600 The accompaging notes are an integral part of these financial statements. l t ,
Maine Yankee Atomic Power Company Form 10-K - 1977 SL4TNE YANKEE ATOMIC POWER COMPANY BAIANCE SHEET ASSETS Deenmaar 31, 1977 1976 EucTarc Paorsarr, at Original Cost (Notes 4 and 10) .(Sch. V.). . . 8236k720 8225,143,327 Less: Accumulated Depreciation (Notes 1 and 10) (Sch. VI) .. . 38,312,780 30,291,667 198,214,940 204,851,660 Construction Work in Progress 2,537,434 1,555,110 Net Electric Property - 200,752,374 206,406,770 Nectzas Fen, at Original Cost (Notes 1 and 10) (Sch. V) Nuclear Fuelin Beactor . 39,811,J40 26,453,903 Nuclear Fuel-Spent 33,203,029 21.065,058 Nuclear Fuel-Stock . 4.063,815 9,435,627 77,078,184 56,954,588 Le:,s: Accumulated Amortiarian (Sch.. VI). 59,113,618 44,250,932 17,964,566 12,703,656 Nuclear Fuelin Process 33,139,893 32,295,608 Not Nuolear Fuel . 51,104,459 44,999,264 Net Electric Property and Nuclear Fuel . 251,856,833 251,406,034 Cesaarr Assers Ceeh (Note 3) . 400,409 183,216 Aeoounts Beenivable . 6,011,781 5,183,523 + Materials and Supplies, at Average Cost . 2,713,862 2,240,844 Prepayments . 1,207,033 1,093,457 Total Current Assete . 10,342,085 8,701,040 Darumaso Caassas an Ormus AansTs 718,282 823,182 8262,917,200 8260,930,256 The accompanying notes are an integral part of these'fLnancial statementa,
- 11. -
Maine Yankee Atomic Power Cauqpany Form 10-K - 1977 t 1 l ) I MAINE YANKEE ATOMIC POWER COMPANY BALANG SHEET STOCHOLDERS' INVESTMENT AND LIABILITIES Deemember 31. g 1976 Carrrar.u.attow (See Separate Statement) Common Stock Investment . 8 66,769,105 4 66,681,744 Pnferred Stock 13,696,000 15,000,000 Long. Term Debt . 115,626,839 120,595,666 Notes Payable to MYA Fuel Company . 8,900,000 20,850,000 Total Capitalisation . 204,991,944 223,127,410 Ccammer Liaanaam Current Sinking Fund Requirements (Note 4) 2,500,000 3,127,000 Notes Payable to Banks (Note 3) - 200,000 Accounts Payable 12,272,470 1,811,174 ! Dividends Payable , , 1,967,365 280,5M Accrued Interest and Taxes . 2,147,651 2,227,719 Other Carnat Liabilities , 38,525 31,728 Total Current Liabilities . 18,926.011 7,678,121 Bassavus ero Dzrsasso Casorrs l 1 Accumulated Deferred Income Taxes and Unamortised Investment 'laz Cndits (Note 2) 38,068,546 29,200,798 ( Unamortised Omns on Reacquired Debt (Note 1) 930,699 923,927 i Total Bemerves and Deferred Credits . 38,999,245 ' 30,124.725 Couwruarre awo CowTrwoc<ctus (Note 8) 3262,917,200 8260,930.256 The accompanying r.otes are an integral part of these Anancial statements. l t 4 i
- . _ _ --- _ y - , _ . . _ . , . -
Maine Yankee Atomic Power Ccanpany Form 10-K - 1977 MAINE YANKEE ATOMIC POWER COMPANY l STATEMENT OF CAPITAUZATION l Dessenhor 31, 1977 1976 Comuow &socs INTIBtMsNT Comunan Stock, $100 Par Value, Authorised and Outstanding
~
500,000 Shares 8 50,000,000 $ 50,000,000 16,804,479 16,804,479 Other Paid in Capital - (315,799) (348,729) Capital Stock Espense 74,958 - Gain on Cancellation of Preferred Stock . Premiums on Capital Stock-Preferred 205,440 225,000 Betained Earnings 27 994 66,769,106 66,681,744 Paarumman Stoca-7.48% Ssarus (Note 6) 8100 Par Value, Authorised 170,000 Shares, Outstanding 13,696,000 15,000,000 136,960 Sharea in 1977 and 150,000 Sharea in 1976 LoNo-Tsau Dust (Note 4) First and General Mortgage Bonds 65,000,000 66,377,000 Series A-9.10% due May 1,2002 . 41,165,000 44,750,000 Series B-8%% due May 1,2002 12,154,000 12,818,000 Series C-7%% due May 1,2002 Less: Cumnt Sinking Fund Requinments (2,500,000) (3,127,000s Unamortised Debt Discount, Net of Fren. lum (192.161) (222.334) 115,626,839 120,595,666 ( Nors Paraat.: to MTA Fest, Courant (Note 5) 8,900,000 . 20,650,000 Total Capitalisation 8804,991,944 8223,127,410 The assompanying notes are an integral part of these flaancial statements. 16 - t
Maine Yankee Atanic Power Co::pany l Fom 10-K - 1977 I \ l MAINE YANKEE ATOMIC POWER COMPANY STATEMENT OF CHANGES IN STOCKHOLDERS' INVESTMEYr For the Five Years Ended December 31,1977 Preferred Sesek Ceanmen Sesek is.eeeement
? : as Other Paid W Sk-e Ameens Shme Per Vdee in Capital ra w Tesal maina.e Jaa. art t, af - s - soo,0co eso,0co,ooo su,f:4. sos : - sa fra, sos
, Add (Dednot)
Na : man. - - - - - f,fa,ssa 7,fes,an Cank Dind de Deaued on - Commet Stock -= = - - - (4,700,000) (6,700,000) Pntmed Suak . - - - - - (1,0N,soo) (1,066,300) Im.e Pref =ea steek . 1so,0oo ts.ooo coo - - ans.ooo - 2s,000 capant sink rzp== - - - -
<sto.sss) -
<s10.3ss)
Balmase December 31,197 M "T U 5 U 53 15 0 55 so, coo ooo N s. ass se,6el, fad Add (Dodest) Net Iaeone ... - - - - - f,sas,003 7,ess,cos cash Dinded. Dalared cemens siaek - - - - - (stooooo) (e,70o,0oo, Preferred Steek - - - - - -- (1,122,000) (1,121,000) Onytsal Steak Espanse - - - - 13 fM - 13,fu anlease Desember s1,1sfe T55'55E IU505315055 so, coo,ooo W s,s : 6 Add (Dedset) Net Inneme . . . . - - - - - f,8o7,3o5 7,sof,20s Omsk Dividende Dennared i en - Common Stoek . . - - - = = (6,000,000) (0,690,000) Pnterred seek . . . - - - - - (1,133,000) (1,122,000) i Capasal steek Erpense . - - - - 13,76s - 13.76s Balaase Deh 31, 1973 T3U55 "IU505515U55 so,ooo,ooo N saf '"803UIT
- g. Add (Dedest)
Nas Insame - - - - - f,ssa, set f,334,947 Cash Dtvidende Demanned on - Demmes geoek . , - - - -. -. (g,703,300) (6,702.3o0) Preferred geoek . . . - -. -- - - (1,128,000) (1,112,000) ( Onyttal steek Espesse . - - - - 13.fm - 13.766 annan.e "w si, iets 13 0 51r ! U 5 0 56 15 0 55 s0,000,000 TUili,751r m ~30TrJ Add (Dedeet) Not !aseme .. . - - - - .- 7,734,073 f,fs4,075 Cash Dtvidende De:Jared ee -. Commes Steet -. - = = -- (4,701,900) (4,foi,900) Preferred Steen - - -. == -. (1,088,142) (1,0s3,162) Esdam of Preferred
.. . . . . . . (13.0e0) (1,804o00) - -
f4,soo - ?4.aco Capsel steen Expen . -. - - - 1 Jits - 1s.s s salmas. Daember 31, 1977 lElitt 11Tur551r NN3 T!RnNW TTU51FJfi a af T3381m3 The accompanying notse are an integral part of these Anan. f at statements. g l
Maine Yankee Atcunic Power Company Form 10-K - 1977 MAINE YANEEE ATOMIC POWER COMPANY STATEMENT OF SOURCES OF FUNDS FOR ACQUISITION OF NUCIS.AR FUEL AND CONSTRUCTION OF ELECTRIC PROPERTY Year Ended Deseemier 31, 1977 1976 1975 1974 1973 Ferne Ptorn o laternal Soureea
. From Operatises FW 1asone 8 f,784,073 8 f,82. Mf 8 f,807, sos 8 f,sts,009 s 7,7s8,833 Amortisatson of Nerlear Feet . 14,ses,sse 13,ssa, 's 1s,0ts,fs: 11,390,s12 f,343,34e Feel Settisessa Credas - (1,364,6 4) (400,667) (709,833) -
, Dep m Ha= .... . ..... . . . . 8,08f,384 8,089,18
- f,734,488 f,486,317 f,431,221 Deferred Inassa Taase and lavessment Tas Credit Not . . . . . . .. 8,807,748 8,412,089 8,181,848 6,264,310 e,331,733 ADowance for Other Fands Used for Nealear Fuel and Dartas Coassrustion (1.097,17s) (1,les,750) (e58J39) (1.128,802) 1em WWWWW (147.923)
Staking Fund Requirements of 1,ong Term Delm 5,886,000 4,448,000 4,171,000 8,375,000 513,000 Fund '3equirumaase of Preferred
. .. . 1,304,000 - - - -
Div&,6. em Preferred stach . 1,083,143 1,125,000 1,132,000 1,123,000 1,066,300 Dtviesado en Commaa steek . 0,701,900 0,701,500 0,000,:0r 8,700,000 8,700,000 Other, Nes . (128.920) (1,207,500) (est,841) (4 2,096) 105.sas M M N "Tr33U3 M (!aarenasi Decrease la War ' Captsal, Esala-ave of Nesse Payable and Fuad Ba-gent =nera Cash and Baselvables (1,064,481) 1,519,181 964,388 38,379 (8,122,083) Other Carrent Amess . (806,804) (506,848) (618,761) (840,384) (804,365) Other Carrant rnh 12.074,800 (4J54,121) (0,178.042) e,144J34 (582270) M l "ITIIT"4D) "7535f351) M M) No A uahis from lateraan sonrose . 1EHI33r 1tr23rJI3 H3pI358 T'Ir3sa v'!!TH Essarnal sonnem lamune (Deerense) la Note Papnele to MYA Fusa n -r 7 . . . (u ama,aaa) so,aso,000 - - - 1aarenas (Deerenas) la Notes Payahis to Banke.. (300,000) (5,700,000) (8,100,000) 0,000,000 (30,330,000) l Preferret Steek * -
- - - 15,225,000 Sartse A Debateres . . . . . . . . . - 18,000,000) - - 15,000.000 i
Not AmGable from External Seereas. IH3K33I) .
"iU5H55) M m3 aca l
HEHI3TF #E G T3T3 ITUIT355 13TTER8 ITIITUH ( Ferne Unas com Acomamos or NUCLasa FCuL aND Comeracarior or EIJorarc PeorsaTT . Asquistansa of Noelear Feet 800,947,841 419,542,421 812,786,925 884.968,043 8 4,488,863 ADowanes for Other Fands Used for Nealear Feat ) Casserustlas of Elastria Property (1,047,338) RJ48,se6 (1,138,064) (844,604) (1,006,214) (224,891)
...... 8.027,844 8,083,319 f,360,713 4,337,382 ADowmass for Other Fands Caed Dartag Can-l serumeen (es.as0) (so.ees) (113.a81) (120.sasi (23.034)
NEIIT3K mre3 TUT ff833rs5T IIUIU35 (H35137I The accompanying notes are an integral part of theos fLnancial statements. l l , i L
.j* .
1 l Maine Yankee Atomic Power Cec:pany Form 10-K - 1977 MAINE YANKEE ATOMIC POWER COMPANY NOTES TO MNANCIAL STATDIENI3 1. Scuuant or Sroxmcaur Accoc2mna Pouctzs Tb Company generattag plant with an expected ultimate espacity ec r c of ap commenced commeretal operation on January 1,1973. egawatta. The plant New E The following own all of the Company's =nman stook: g and electrie utilities Spe===r/Parude MPI Central Maine Power Company - 38 % New England Power Company 20 The Connecticut Light and Power Company , 8 Bangor Hydro. Electric Company . 7 Maine Public Service Company . 5 Public Service Company of New Hampshire . 5 Cambridge Electric Light Company - 4 Montaup Electric Company . 4 The Hartford Electric Light Company . Western Maanachusetta Electrie Company . 3 Central Vermont Public Service Corporation . Totala. , _2 100 Contreets, each participant shall receive , its entitle e with the Power to pay its entitlement percentage of the Company's , cu total costa in l di put and is obligated regardless of the level of operation of the plant. ng a return on invested espital Regulation-1 story Commission (FEEC), formerly the , Feders! Powe uclear Begulatory C-%u (NRC) and the Public Utilities Commi=ian Ing, operations and other matters. as to account. of Depreciation and Iaintenance: to fully depreciate electrie plant on a straight.line basis oDepreciation is provide ver & period ending May 1,2002. Beesum of aaanamie and regulatory uncertainties, b Company dess not presently provide for ( nuclear plant de=nmi-ioning costa. The Company cannot now predict i Ins will be adopted or its eost, which could be signineant a ast using present wh l oo ecommission. a retirement unit, in which case the new unit is charged to e At the time depreciable to the accumulated provision for depreciation. properties are retired, the o . Amortuation of Nuclear Puel: disposition of that nuclear fuel. is amortised to fuel expenn ced based during the Amortisation. period to the estamated total eore capability with a corresponding e i Maine Yankee Atomic Power Ccanpeny Form 10-K - 1977 ( MAINE YANKEE ATOMIC POWER COMPANY NOTES TO FINANCIAL STATEMENTS-(Continued)
- 1. Semar or Smwxricax7 AccocwTneo Poucus - (Continued)
Prior to June 10,1977. the Company's estimated cost of disposition of nuclear fuel was based on estimates of the cost of nprocessmg,less salvage. Through May 1976, nuclear fuel salvage values and reprocessing costs were based on the estimated market values and costs of nprneens:ng at the time that the fuel was expected to be remnved from the nactor. From Jue 1,1976 through Jue 9,1977, nuclear fuel malnge values and reprocesang cos', wen based on the ar'== tad market values and reptvessatng costs at the time of reprocesstng This modideation for estimating the c ast of reprocessing, net of salvage, had no material efect on the cost of power because & inenases in each component wm apprnufmately of equal magnitude. As a result of federal energy proposals and other indications of a developing national policy with respect to the disposition of nuclear fuel, b Company changed its a=ri= ate of the cost of disposition of nuclear fuel. Oc neneing June 10,1977, the Company began providing for permanent storage rather than reprocessing of spent fuel. The Company's estimate of the cost of permanent storage, based on a study by the NRC, increased fuel expense in 1977 by approximately 82,188,000 based on levels af energy productie from June 10,1977 to the end of & year. However, this nvision had no efect on not income of & Company, since, in accordance with tha terms of the power con. tracts, those ewta wen billed to the participants. This estimate of cost is beasd on the most current f information available but is subject to a number of neertainties including the timing of available storage espacity, the extent of futun inaation, ngulatory requinments and & cost of future services, all of which may require periodic revisions in future nuclear fuel amortisation rates. N original cost of Nuclear Fuel-Spent has been fully amortized and an amont for the dia. position of spent fuel totalling 82,221,000 has been collected. These amounts am nported uder the esption " Accumulated Amortization" in the attached Haancial statements. Spent fuel has not been reenlued to ro6ect permanent storage because of the number of uncertainties ==~4arad with the sub-ject of disposition. Management will nvalue its spent fuel innatories when deanitin guidelines are established by the various ngulatory agencies. Costs of reenluation, if any, would not afect not income of the Company as such costs are neonrable under the terms of the power contracts nfernd to above.
- Anowenes for runds tud Durim constrsetson and Allowance for runds Und for Nucleor'
' ruel (AFC)r The Company records the net cost of borrowed funds and a reasonable return on other funda used to Anance construction sad nuclear fuel acquisition progsma. The amount of the allow.
anee ncorded is determined by ruultiplying the aversgo monthly dollar balance of Construenon Work In Progrees (CWIP) and Nuclear FuelIn Process and Stock (hTIPS) by a rate related to & cost of capital. The following table contains the weighted anrege rates used during the most neent fve year period: AFC AFC em CWIP en NFIPS 1977 7.87 % 6.96 % 8.07 7.21 1976 8.46 7.35 1975 ( 1974 1973 8.50 8.83 8.25 8.97 Efective January 1,1977 the FPC established a formula for ~2mputing AFC. This order requind separste recognition of the debt and equity components of AFC. Amouts recorded pnor to 6 efee. tin date have been restated to refect this separate recognition of cost components in the accompany-ing Anancial statements.
- Unamortised Geen or Lon on Reocquired Debt: Gains and losses on bonds reacquired to satisfy amking fund nquirements of Fint Mortgage Bonds han been defernd and an being amortized to income ont & r==aimng original terms of the applicable series as prescribed by the Uniferm System of Accouts of the FERC.
t
Maine Yankee Atcanic Power Company Tom 10-K - 1977 i
- MAINE YANKEE ATOMIC POWER COMPANY NorIT.S TO FINANCIAL STATE 31ESTS-(Continued) e
- 2. Iwoour Tax EzrsNas The components of Federal and state income taxes reflected in the statements of income are as follows: 1973 1977 1976 1975 1974 Current income taxes:
8 134,485 $ - 8 - 4 - 8 - Federal - State f5,310 165,330 - - Deferred income taxes and invest. ment tax endits: 8,049,923 7,741,382 7,335,028 5,653,763 5,662,135 Federal 1,002,321 1,150,206 887,647 669,618 State 1,273,861 Amortisation of investment taz - - eredita (456.036) (331.014) (293.388) (276.900) Total Federal and state in-come taxes $9,058.043 88.578.019 88.191.846 86.264.510 86.331,753 Investment tax endits an deferred and amortised over the life of the amets giving rise to such endita. At December 31, 1977, the Company had available approximately $7,862,000 of investment tax credits which may be used to reduce Federal income taxes which would obrwise be payable. Ava!Iable not operating lose and investment tax credit carryforwards have been utilised to 6 extent possible to ah*=t, current taxes payable in each penod. The Company provides defernd taxes for the tax eLets of timing diferences between pre-tax accountin6 income and taxable income. Prior to 1975 h Company did not provide fuur for the tax efect of timing difennees and begmnmg in 1976 is providing additional deferred taxes to recognize the tax efect of these difennees. These add!tional deferred taxes an roooverable under & terms of the pawer contracts desen' bed above. The table below reconciles the above provision for Federal income taxes to a provision calculated by multiplying income befon Federal income taxes by 6 statutory Federal income tas rate: ten 1s s is75 1974 1sn D I I A A reasra as.me las previenen 87,728,373 48J% 87,410,368 e4.0% 87,041,640 47.4 % 85,870,808 40.7 % $$.Ge2,133 e1.1% Insrenses (redeselsas) la tasse samalttag from: Deferred taans ase prended en eartata 80 mint difsveness - - -- -- -- - 1,09t,734 SJ 1,248,953 9J Mar (34tJ87) (1.8) (97, eld -(.8) 85,800 .8 (112,868) (1.0) (480,233) (1.4) rodsfal tassee 8m3P etssa at senessary rm as 97,644,973 e4.0% $7,312,961 es.0% 87,127,ees 4LO% Se,834, Set 44.0 % 9e.ees,848 e4.0% man men sums u- - mum
- 3. Norza Fa7asut to Baxus The Campany had lines of credit at year end 1977 and 1376 totaling $14,000,000. With respect to 813,000,000 of the line, the compensatmg balance requirement la 15% of average outstanding bor*
i Maine Yanitee Atomic Power Ccupeny Form 10-K - 1J77 MAINE YANKEE ATOMIC POWER COMPANY NO1TS TO MNANCIAL STATEMEN'13-(Continued)
- 3. Notza Paraatz to Bass-(Condnued) 1 rowings The compensadng balance requinment for the nmaining $1,000,000 is 10% of the line j or 20% of outstanding bonowings, whichever is greater. Certain information related to these lines is as follows-1 1977 1976 Totallines of endit at year end $14,000,000 s14,000,000
' Borrowings outstanding at and of year . - 200,000 Average daily outstanding borrowings for the year 552,000 9,050.000 Highest level of borrowings at ar.y time during the year . 3,600,000 18.800,000 Annual interest rate at year end . - 6.25 % Average sanual interest Iste for the year . 6.80 % 7.53 %
- 4. Finst Monroaar Bowee The annual sinking fund nquirements of the First Mortgage Bonds currently outstanding amount to 64,775,000 for each of 6 years 1978 through 1982. Bonds apurchased at December 31, 1977 amounted to $2,581,000, including $306.000 applicable to 1979 requirements.
Under the terms of the Indenture sacuring the First Mortgage Bonds, substantially all electric plant of the Corr.pany is subject to a Arst mortgage lien.
- 5. MTA Fun, Courar On August 26,1976, the Company entered into a Loan Agnement covering the issuance of up to $35,000,000 pri.icipal amount of promissory notes to MTA Fuel Company, a subsidiary of BSC Holdings, Inc. ESC is owned by a partnenhip composed of partners of Goldman, Sachs & Co.
Certain information nlated to this loan arrangement is as follows: 1977 1976* L A.i Notes outstandmg at end of year . . 8 8,900,000 820,850,000 Average daily outstanding borrowings for the period . 11,742,000 17,900,000 Highest level of borrowing at any time during the period . 23,550,000 24,000,000 Annualin'.orest rate at year and . .. . 6.92 % 5.43 % Efective average annual interest rste for the period . 7.76 % 7.38 %
'3epresents info mation for the period August 26 through December 31,1976 only.
The Loan Agreement provides that, in the absence of an Event of Default (as defined) or occur. nnee of a Terminating Event (as deaned), the arrangement will extend to May 1,2002, unless termi. nated by either party upon proper notice. The Company must provide 90 days written notice while j MTA Fuel Company must give at least thne years written notice which, in the absence of an Event of Default or a Terminating Event could not be presented before August 26,1978. In order for the i arrangement to extend beyond August 26, 1981, & PUC must extend its present approval of the arrangement.
- 6. Pusrsmaan Stocs The Company may ndeem,in whole or tr part, any of the 7.49% Series Prefernd Stock upcc not less than thirty nor mon than afty days' notice at $107.11 per shan on or befon December 31,1982, and at amounts doenasing to $100.00 thereafter; in each case plus accrued dividends.
Bessaning in 1978, 6,000 shans must be redeemed and aa=Had annually, at par, and at the eleedon of the Company an additional 6,000 shares may be redeemed and cancelled, at par, on each redempdon date. The opdonal provision is not eumulative. Durtag 1977,13,060 shares won npurehased. Of this amount 6,000 shares were cancelled to ful. 811 the 1978 sinking fund requirements. The remainbg shares will be used to fulAll future sirJung fand nquirements.
-n.
(
Maine Yankee Atomic Power Cce:pany Form 10-K - 1977 MAINE YANKEE ATOMIC POWER COMPANY T NOf!TS TO FLNANCIAL STATEMENTS-(Conslaved)
- 7. Rzrmnmer Incoaut Ptaw The Company has a noncontributory Reurement Income Plan which covere substantially all full.
time employees. The Company's policy is to fund current secred pension oosta. The plan oost approzunated $121,000 in 1977,886,000 in 1976, 872,000 in 1975, $55,000 in 1974, and 041,800 in 1973. Then is no unfunded actuaria! liability under terms of the Plan.
- 8. Consaarrasswis Ann Corrneempcus The Company anticipates nuclear fuel espetaltune of $37,812,000 for 1978 (exclusive of AFC) and $104,904.000 for the period 1979 through 1982 (exclusive of AFC).
The Company has contracted for the punhase of all of its uranium concentrate nquinments through 1982. The Company has conversion contracts through 1982 and has a contract with the Energy Be-
- seanh and Development Arhainwh for ane^===t services through 2002. Its fabricatie re.
quirements an covered through 1983, with a current contreet option for two additional years. It has no contractual arrangements for reprocesang or permanent storage of spent fuel. The Company { is orpanding its on.eite spent fuel storage facility at an ==='ad east of $1,612,000 to provide capacity to stan such fuel through 1982. The 1975 amendments to the Price Anderson Act changed the publie liability insurance require-ments for the nuclear industry. Since Angust 1,1977 each reactor licensee is required to carry $140 milhon of pq publie liability insurance, supplemented by a mandatory _ industry wide program of self insuranosw Lader the progmm,in the event of a nuclear incident at any operating reactor in the United States, each heensee could be assessed up to 85 million with a limit of two assessments per reactor owned per calendar year in tlw event of mon than one incident.
- 9. UNAITDIEsD Qtl ant 53LT FtNANCIAs, DATA Unaudited quarterly Snancial data pertainmg to the results of operations for 1977 and 1976 la shown below:
mah Jan. s.ei b.e D =her _1977 _1976 _1977 _1976 _1977 _1976 _1977 _1976 Revenues 814,707 815,432 $15,471 415,315 $18,296 814,449 817,186 813,664 Operating Income 4,322 4,822 4,325 4,639 4.442 4,466 4,390 4,523 Net Income . 1,966 1,966 1,947 1,956 1,939 1,956 1,942 1,957 Earnings per Share of Common Stock 3.35 3.35 3.35 3.35 3.35 3.35 3.35 3.35
- 10. UMatrome Bart.Acusmer Cost Iwrosasinox The replacement oost data described in this note has been compiled in response to ngulations promulgated by the Securines and Twhange C-i-iaa and repnsents, in the opinion of manage-ment, reasonable *== of nylacement oosts given the guidelines of the ngulations. However, in.
precisions exist and subjective judgments have been made in the esttmatmg process. Consequently, in the opinion of management this note is of limited usefulness in the evaluation of the impact of infia. tion on the Annad=1 position or results of operations of the Company. Furthermore, the disclosure of this replacement east data should not be construed as a plan to replace existing productive capacity, and the actual replacement of productive espacity, if any, may not take the form implied by the techniques used to develop the estimates. Finally, the replacement east data pneented in this note should not be interpreted as management's estimate of the current value of existing property, plant and equipment.
, N
Maine Yankee Atanic Power Carpany Form 10-K - 1977 ( MAINE YANKEE ATOMIC POWER CO31PANY 4 NOTES TO HNANCIAL STATEMENTS-(Continued)
- 10. Usanmn EzrucxxxxT Cost Ixrnau mon - (Continued)
The Company's operating costs and the recovery of its investment in ut!Iity property an signifi-cantly afected by inflation and the more stringent environmental regulations. Replacing ning utility property with equivalent productive capacity would require substantially greater dollan of empital investment than were requind to acquire the property originally and yet replacement cost is not considered in the rate making process, since only the historical cost of utility property may be ( included in the rate base upon which the Company is allowed to earn a fair rate of nturn. However, ! the cost of replacement property when exisung productive espacity is actually replaced will be in-cluded in the rate base and is neoverable under the contreet with customers. i The computed groes replacement east of the Company's Electric Property and Nucle nplacement data are presented east and below related depreciation and amortir.ation expense with comparative hisl i December 31,1977 December 31.1976 l Computed Actual Replacemens Competed Actuat Bissorical Replamment Hieserial Cast Cast Cost Cast (la P-da) (ta D - "t) Electric Papezty 8660,500 8236,528 8622,100 8235,143
- Ims: Accumulated Depreciation 107,100 38,313 80,300 30,292 Electric Property, Net $553,400 8198,215 854LS00 $204,851 Annual Depreciation Expense 8 22,500 8 8,087 8 21,200 8 8,029 Nuclear Fuel Nuclear Fuelin Beactor . 8 82,774 8 39,811 8 71,715 8 26,454 Leas: Accumulated Amortization . 46,389 20,666 47,927 19,538 Nuclear Fue!, Net .
8 36,385 8 19,145 8 23,788 8 6,916 Annual Noelear Fuel Expense . 3 29,942 8 14,863 8 28,648 8 11,686 Methodologies used in compiling the computed replacement cost data were as follows: Etacraic Paorzarr Land. at their Land original cost ofand land rights
$522,000. are included in the replacement cost data of Electric Generstwn:
The replacement cost of electrie generating plant was estimated on the basis of a engineering study of the current cost (per megawaa) of construction of a nuclear k Reserve for Depreciation The related accumulated depreciation based on the replacement cost was developed by applying the same percentage relationship that existed between accumulated depreciation on a historical cost basis to the current replacement cost o especity. , 1 Deprecists, Impen,e developed by apply.ng the depreciation rate to year.end nplacem of average historical ecst to year end historical ecst. I E
a Maine Yankee Atomic Power Ccapany Fom 10-K - 1977 (' MAINE YANKEE ATOMIC PO157.R COMPANY NOTES TO HNANQAL STATEMENIli-(Continued)
- 10. Uxerrun Ran.actuxx? Coer Lvroamarrow - (Continued)
Ntretaan FcxL Grom Nuclear Fuel: The nple ement cost was estimated using current market prices of uranium, conversion, enrichment and fabric .2on applied to the components of the in. reactor fuel as it existed - at the time of insertion into the nactor. Net Nuclear Fuel: The replacement cost was esumated naing the current market prices of uranium, conversion, enrichment and fabrication applied to the depleted content of the in. reactor fuel at each year end. Nuclear Fuel Expense: Amortisation expense was developed by dividing the estimated replace. ment value of the in.asactor fuel plus the related net disposal cosa by the estimated expected genera. tion of that con times the actual generation produced during the periods of service. D C . ( i
9 EX1tIBIT 3 (
. REPOR* W IIDEPENDENT PUBIJC ACCOUlfrANTS To Heine Electric Power Company, Inc.:
We have evenimd the balance sheet of Maine Electric Power Ccupacy, Inc. (a Maine corporation) as of December 31, 1977 and December 31, 1976, and the related statements of income, changes in stockholders' 1:riestment and scurces of funds for constntetion and replacement of electric property for the ytars then ended, and the related schedules as listed on the accompaging index. Our examinations were made in accordance with generally accepted auditirg 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 accompanying financial statements present fairly the financial position of Maine Electric Power Compaq, Inc. as of December 31, 1977 and December 31, 1976, and the results of its opera-tions and its sources of funds for construction and replacement of electric property for the years then ended, and the supporting schedules present fairly the infonnation required to be set forth therein, all in confonnity with generally accepted accounting principles applied on a consistent basis. k ARTHUR ANDERSEN & CO. Boston, Massachusetts Febntary 6, ISP18 l 4 , l
l Maine Electric Power Compazy, Inc. 17T7 i i s MAINE ELECTRIC POWER COMPANY, LNC. STATEMENT OF LNCOME Year Ended Deessaber 31. 1977 1976 1975 1974 1973 E&actwo Orename Ravanvan 872,787,901 888J43,9eo 818,24tJ46 824,308,s33 817,440,s40 Or===e Isrssass Pereheast Peeer (Note 1) N,988,252 32,133,008 13Jef,138 31.134,964 Other Opermsica 14/ 4 ,140 196,660 lal,977 IM,092 100,3f8 171J20 m*=m- (Note 1) 45,262 203,375 ?_02,731 35,034
-"-r (Note 1) 3tJ26 E4 F33,311 734,304 730,443 729,643 Tasse ?!9,386 Federst and State Insome *
(Note 3) 120,f00 213,770 212,304 360,819 Kaan! Preperry aad Other 268,385 233,654 354,437 844,879 244,814 266,646 Total Operating Expeasse f1,370,529 33,733,971 14,776,191 38,579.266 15,807443 Oraname Isaous 1,147,172 1,601,909 1,64a,1M 1,829,350 1,653,077 Orman Incous amo Deacettoma, Net 50,975 13,316 34,541 te,846 23,316 Incous Beroes IsTsaart Caaanse 1,434,347 1,431,343 1,502,756 1,684,263 1,676.393 IsTunast Cuanese tang. Term Debt 1,102,325 1,224,114 1,296,500 1,371,251 Other L439,763 73,0st 25,638 13,833 as,533 13,390 Tesal laterees Charges 1,265,387 1,260,553 1,818,132 1,486,739 1,463,153 Nar imooms a 172,900 8 181,79: 3 100,884 s 190,634 8 213,460 Wweatus Annaas Neussa or 8saass e,. Coumon Stoct Octstaunt:re 14,413 13,149 13.445 18,821 17,787 E4astmes Pun Saaas or Couuow Stocs 8 12.00 8 1100 3 1100 8 12.00 8 1100 Dmosuae DscLamas Paa 8sAas or Coumos Stoct - 4 12.00 8 12.00 4 11 00 4 1100 8 1100 g The accompanying notes are an integral part of these financial statements. l
Maine Electric Power Compacy, Inc. 1WI t 1 i MAINE ELECTRIC POWER COMPANY. LNC. BAIANCE SHEET Deessaar 31, ASSETS g,77 3,7. Es.scraic Paorsan, at Original Cost (Note 3) $18,616,626 s18,609,963 Lass: Accumulated Depreciation (Note 1) 5.010,921 4.275,710 13,605,706 14.334.253 Cunazxt Anasts Cash (Note 4) 301,506 1,600,885 Temporsry Investmenta, at Cost which Approximatee n!arket 1,725,000 - Accounts Receivable-Associated Companies 1,807,068 1,593,569 Other 4,278,520 3,659,847 Other Current Assetr 142.985 146,980 Total Current Aaseta . 8.255,099 7.201.281 Dm.anzo CecAncas 110.535 116,479 821.971.339 $21.652.013 CArrrAuzArtoN STOCEHOLDERS' INVEST 3IENT AND LIADILITIES Common Stock Investment Common Stock,8100 Par value, Authorized 20.000 Shares, Outstanding 13,984 in 1977 and 14,720 in 1976 s 1,308,400 $ 1,472,000 Capital Stock Expense - (3,456) Retained Earninse - 9 Total Common Stock Investment 1,39e,400 1,468.553 Series A 9%e5 Fint 3fortgage Bonds due in Annual inat.allments through August 1.1996-Less Current Sinking Fund Re. quirements (Note 3) 11.S80.000 12.540.000 Total Capitaluation 13.278.400 14.Me353 Cuassxt LzAmD.ED Current Sinking Fund Requirements (Note 3) 660,0u0 600,000 Notes Payable to Banks (Note 4) - 65,000 Accounts Payable 17,760 19,098 Dividenda Payable 41,998 44,160 Accrued Purchased Power 6,094,630 5,195.916 Accrued Interest and Tazes 487,312 539.649 Total Current Liabilities 7.301.700 6.463.e23 ( Rusaavns Axp Drnaaro Casorts . Accumniated Deferred Income Taxes and Unacionized Investment Tax Civdits (Note 2) 1,380.161 1,167,964 Unamortized Gain on Reacquired Debt (Note 1) 11.078 11.673 Total Reserves and referred Credits 1.391.239 1.179.637 Commrusms Axo Cowrixoaxcrsa (Note 5) 821.971.339 421.652.013 The secompanytna notee are an integral part of these Anancial statements. g -k-l l
Naine Electric Power Campany, Inc. 1 777 MAINE ELECTRIC POWER COMPANY. INC, STATEMENT OF CHANCES IN STOCAHOLDERS' INVESMYT Fee the Five Yeere Ended December 31,1977
- h- St.eb Investueemt sh D I.' " @ N T.e.: -
Balance December 31,1972 18,400 81,840,000 S(3,466) 8 55,200 81,891,744 Add (Deduet) Net Income - - - 213,440 213,440 Common Stock Dividende De-elated - - - (216,325) (216,325) Redemption of Common Stock (1.472) (147.200) - - (147,200) Balance December 31,1973 16,928 1,692,800 (3,456) 52,315 1,741,652 Add (Deduct) Net Income - - - 199,456 199,456 Common Stock Dividende De. elated - - - (202,452) (202.452) Redemption of Common Stock J716) (73.600) - - (73.600) Balance December 31,1!r74 16,192 1,619,200 (3,456) 49,319 1,665,063 Add (Deduct) Net Income - - - 190,624 190,624 Common Stock Dividende De. eland - - - (239,934) (239,934) Redemption of Common Stock (736) (73.600) - - (73.600) Balance December 31,1975 15,456 1,545,600 (3,466) 9 1,542,153 Add (Deduct) Net Income - - - 181,792 181,792 Common Stock Dividende De. elated - - - (181,792) (181,792) Redemption of Common Stock (736) (73.600) - - (73.600) Balance December 31,1976 14,720 1,472,000 (3,456) 1,468,553 9 Add (Deduct) ( Not Income - - - 172,960 172,960 Common Stock Divi &nde De- - eiered - - - (172,969) (172,969) Redemption of r'ommon Stock (736) (73,600) - (73,600) Capital Stock Expense - - 3.456 - 3.456 Balance December 31,1977 13.984 81.398,400 $ - 8 - $1.398.400 The accompanying notes are an integral part of these onancial statemente. l l 5-
Maise Electric Power Company, Inc. 1977 ( MAINE ELECTRIC POWER COMPANY. INC. STATEMENT OF SOURCES OF FUNDS FOR CONSTRUCTION AND REPLACEME!Yr OF ELECTRIC PROPERTY Yeer Ended December 31, 1977 1976 1975 1974 1973 Internal Sounes
- From Operations Net Income 8 172,960 8 181,792 8 190,624 8 199,456 8 213,440 Depreciation 735,211 734,804 730,443
' 729,663 729,326 Defernd Income Tazes and Investment Taz Credit, p Net 159.290 184,187 207,579 x
. 212,1971,048,567 1,120,368 _ 131.971 _1,060.357 1.113,306 1,150,345 Lees:
Sinking Fund Requinments of Long Term Debt . 600,000 720,000 660,000 660,000 660,000 Dividends on Common Stock 172,969 181,792 239,934 202,452 216,325 Bedemption of Common Stock 73,600 73,600 73,600 73,600 147,200 Other, Net (11,739) (13,532) (28,169) (7,081) (8.349) 285.538 86.7M 134,992 183.603 133.901 (Inenase) Decnase in Working Capital. Ezelusive of Notes Payable and Sinking Fund Requirements Ceah, Receivables and Tem-porary Investments (1,057,813) (4,982,279) 1,075,800 440,218 (1,220,413) Other Curnnt Assets 3,995 (43,832) (12,628) 18,736 (36,351) Other Current Liabilities 842.877 4.897,805 (1.110.701) (641.314) 1.143.803 (210.941) _ (128.306) (47.529) (182.360) (112.961) Not Available from In-tornal Sources 74.597 (41.599) 87,463 1.243 20.940 External Sources Incrosse (Decrease) in Notes Payable 65,000 ( Ftmos Usso Fon Cows 7 eenon ao 8 (65.000) 9.597 8 23.401 8 87.463 8 1.243 8 20.940 Ramennett or Exactste Peor-sBTT 9,597 8 23.401 8 87,463 8
$ 1.243 8 20.940 The accompanying notes an an intgral part of these Baancial statementa.
( _ -
Maine Electric Power Company, Inc. 1977 MALNE ELECTRIC POWER COMPANY, LNC. NOTES TO FINANCIAL STATDIENTS 1. Scunast or Stomrtcurr Accomrmre Pos.tcma The Company: The Company owns and operates a 345,000 volt tran== Man interconnection, completed in 1971, extending from Wiscasset, Maine to & CanaAian border at Orient, Maine, when it connects with a line of The New Brunswick Electric Power Co== Man (New Brunswick) u
- a 25. year Interconnection Agrument. Under a Participation Agnement which also terminates in 1996, all costs of the Company (including a return on invested capital), to the extent not met by transmission neenues, an paid by the participating uti!! ties (Participants), which include most of & larger companies in New England and a group of publicly owned systems. Under a Power Purchas. Agreement, New Brunswick is providing to the Participants over the interconnection up to 600,000 kilowatts of base load power for a ten. year period ending October 31,1986.
- The capital stock of the Company is owned by four Maine Participants, including 78.1% by Central Maine Power Company. The Company has been paying dividends on a quarterly basis equal to seenmalated earnings, and expects to continue this policy in the future.
Regulatios: The Company is subject to the ugulatory authority of the Feders! Energy Regn. 1 story Commission (for:nerly 6 Federal Power Commission) and the Public Utilities Com=ission of the State of Maine as to operations, accounting and other matten. Depreciation and #sintenance: Depreciation is provided using the straight.line method at rates designed to fully depreciate all properties over the period ending July 1,1996. Minor renewals and betterments an charged to mainteranee expense, unless & Item constitutes a rottrement unit, in which case & new unit is charged to electric plant. At the time depreciable pnporties an retind, the original cost, plus cost of remots!, less salvage, of such pnperty is charged to the accumulated pronsion for depreciation. Enemerrised Goess and Iossm Gains and losses on bonds re equired to satisfy sinking fund requirenaents are defernd and amortized over the naaming original term of the Series A Bonds. ( l -- _ _ - _ _ _ . - - _ - _ - . _- _
haine Electric Power Company, Inc. 1977 ( e MALNE ELECTRIC POWER COMPANY, LNC. NOTES TO HNANCIAL STATDIENTS -(Continued)
- 2. Lecout Taz Ezrcrs:
The components of Federal and state income tues raflected in the statements of income an as follows Yeare Ended December 31, 1977 1976 1975 1974' 1973 Current income taxes: Federal . . , s 8,030 s 70,543 8 44,934 s 56,240 s 37,202 State . 473 11,256 8,084 9,192 3,604 Defernd income tues: Federal . 183,141 112,592 131,273 159,717 186,416 State 28,719 17,655 20,047 24.508 20,440 Investment tu credits, net . 337 L724 7.970 (38) 723 Total Federal and State income taxes 2 .700 8213.770 S212.308 3249.619 3248.385 The Company provides defernd Feden! and state income tuas for the tax efects of Mg difennees between pre tax accounting income and income subject to tax. The deferred provision represents principally the tax efects arising from the use of accelented depnciation for income tax punoses which currently exceeds the amounts provided in thc accounts. Investment tu endits an defernd and amortized over the lives of the related properties. , The table below neanciles the above provision for Federal income tues to a provision calculated ! by multiplying income before Federal taxes by the statutory Feden! income tax rate: 1977 1976 _ 1975 1974 1973 Ameest % Aaseunt % Federal tassee tax
~
.~ annoont ~% Amesent ~
% Annemat%-
prwtaan 8191, Sos SLS% 8154,SSe So.6% 8234.177 69.1 % tt13J19 52.0 % 32:eJ41 su% Ditarmen la tas , arpense - q r.,. ' - and . I neerstassam ser beety use N parpose (as,6eo) (u) (21,ser) (s.s) (tws) (u) (21, sos) (s.o) - (n.soe> cs.s>
- Otaar s.ett uv tr.sts sJ - tt.sdur s.rto u f.aos 1.7 i
redsen2 inasms ta s=wnstem na assenery
'T ,
rame
- (
- e 0.%3174.sas es..- e .s.i.fs s.et es.os 3179304---.~sise.3N ea.0% nos stiolss es.0% ,
S. Fasr Moersar Bowen , ~ The annual sinking fund requirement for First Wortgage Bonds is $660,000. . Under the terms of the Indenture securing the Flat Mortgage Bonds substantially all electric property of the Company is subh3 to a irst mortgage lien. s-t
\ \
g 6
+
Maine Electric Power Conqpacy, Inc. 1977 i MAINE ELECTRIC POWER COMPANY INC. NOTES 70 FINANCIAL STATEMENTS-(Continued)
- 4. Coure m tmo Ba.a css The Company had lines of endit at year end 1977 totaling 38,600,000. With respect to $5,900,000 of the line,6 anrap compensating balance requincent is 15% of outstanding borrowisp. The average compensating balance nquinment for the r-Ining $2,500,000 is 10% of & line or 205, of outstanding borrowicp, whicheur is greater. ,
The Company had lines of credit at year end 1976 totaling $6,900,000. With nspect to $5,900,000 of the line, the aurage compensating balance requinment wu 15% of outstanding borrowinp. The averse compensating balance nquinment for the remaining $1,000,000 was 10% plus 10% of out. i standing bortvwings.
?
Certain information n1sted to these linee is as follows: left 1976 Total lines of endit at year end . 88,400,000 36,900,000 Borrowimp outstanding at year end - 65,000 Anrap daily outstanding borrowing fer the year 966,000 307,000 Highest level of borrowing at any time during the year 5,800,000 4,100,000 Accual intenet rate at year and - 6.25 % Anrep ar.nual interest rate for the year 7,01 % 6.53 %
- 5. Couvrrurcs as 'CoxTeracecas Actions han been brought in & Ur.ited States District Court for b District of Maine, Northern Division, by & United States of America against the State of Maine on behalf of the Passamaquoddy Tribe and Penobscot Nados of Indians for damages for wroup done to the Tribe and the Nation. The United States has until July 1,1978 or such later date as may be allowed by the Court to decide whether to proceed with these claims. Whether or not 6 United States proceeds, it is possible that the complaints may be amended to assert cla!ms with respect to tha land itself, or to seek damaps, including damspe f tm & present owners of the land, or both. At December 31, 1977, approximately 69% of the Company's electric properttee were located in the tern'.ory which may be involnd in the claims.
~
l ' The pending actions are at an early stap and involve complaz historical and legal questions. At least unn1 the United States has decided whether to proceed with the Indian claims and any amended (_ .amplaints han been examined, it is not possible to assees such claims as may be advanced by or on behalf of the Indians or vanous defenses which may be assened to such claims or to deter =ine the l extent to which the Company and its properties may be involved !.2 the actions. The Company will, of I ecurse, continue to assess the possible impact of the actions upon it. The Company intends to make enry reasonable afort to oppces any claims which may be made by or on behalf of the Tribe and Nation assinst the Company or its property which an contrary to titles which have been generally undentood to be valid and han been bought and sold for substantial sums of money for almost 200 years la the belief that such titles won not subject to Indian claima. l l 9
Eo 5 Ref. 410.3 4-1 h<. . 24
~
'I Re: Application No. 8 For x_/
) Authentication and Delivery of Bonds Earnings Certificate Sections 1.13, 5.03B, 5.05B and 5.06B MAINE PUBLIC SERVICE COMPANY Indenture of Mortgage and Deed of Trust
; dated as of October 1,1945, supplemented and modified Enrninns Certificate The undersigned, R. A. Brown, President, and F. E. Livingston.
Treas arer of Maine Public Service Company (hereinaf ter called the " Company"), said :?. E. Livingston being also an accountant as defined in the above men-tione1 Indenture of Mortgage and Deed of Trust (hereinafter called the
" Indenture"), do hereby certify as follows:
- 1. The net earnings of the Company availabic for interest, s
c omputed as shown in Exhibit A hereto annexed, for the peritd of 12 consecutive months ended August 31, 1975, were $3 685 014.
- 2. The nnnual interest charges on bonded indebtedness, as Cefined in Section 1.13 of the Indenture and computed as shoun in Exhibit A hereto annexed, are $ 1 168 296.
- 3. Such net earnings available for interest are at lenet twice such aggregate annual interest charges on bonded indebted-nesc.
- 4. Such net earnings available for interest have been com-puted as provided in Section 1.13 of the Indenture. .
Each of the undersigned does hereby further certify that: (a) he has read all of the covenants and conditions contained in Section 1.13 and in Paragraph B of Sections 5.03, 5.05 and 5.06 of the Indenture end the definitions contained in the Indenture relating thereto; (b) he is familiar with the affairs and property of the Company and has acquired knowledge through the performance of his respective duties as an officer of the Company as to matters relevant to the statements herein contained and has made or caused to be made an
-- examination of the records of the Company and ascertained from such examination that the statements contained in paragraphs 1 to 4, in- !lE clusive, of this certificate are true and correct; I
=
a li< -
---s .
(c) in his opinion he has made such examination or investigation as is necessary to enable him to express an informed opinien as to whether or not all covenants and conditions contained in said Section 1.13 and Paragraph B of Sections 5.03, 5.05 and 5.06 have b.nen complied with; and (d) in his opinion all such covenants and conditions have been y complied with. Dated: October 1, 1975
,q U President of MAINE PUBLIC SERVICE COMPAW Treasurer of MAINE PUBLIC SERVICE COMPANY and an Accountant
TT .
. -s. ,
a EXIIIBIT A
;* j4 11AINE PUBLIC SERVICE COMPANY INDEf7fURE OF MORTCACE AND DEED OF TRUST DATED AS OF OCTOBER 1, 1945, AS SUPPLEMENTED AND MODIFIE_D
_ COMPUTATION OF NET EARNINGS OF Ti!E COMPANY AVAILABLE FOR IITTEREST FOR TIIE Tt/ELVE M0!Tril PERIOD ENDING AUGUST 31, 1975 AND OF ANNUAL
/ IlifEREST CllARGES ON BONDED INDEBTEDNESS Net Earnings Available for Interest Gross Revenues:
Operating Revenues
$15 861 957 Dividends on pledged securities of Subsidiary (to an amount not exceeding net income of Subsidiary for the period):
Dividend Income U. S. $173 624 173 624 Net Income of Subsidiary for the Period ($206 986 Canadian) U.S. 197 115* Compensation from Subsidiary for maintenance or operation of Aroostook Storage Facilities 81 000 (~ Total Revenues Lj 16 116 581 Deductions: Operating Expenses Maintenance 10 521 576 512 363 Provision for Depreciation (not less than " minimum provision for depreciation" as defined in Section 1.10 (G) 1 144 436 Taxes (Other than income taxes) 594 136 Total Deductions 12 772 511 Operating Income Other Income - Net 3 344 070 Gross Income 348 377 Miscellaneous Income Charges 3 692 447 Net Earnings Available for Interest 7 433
$ 3 685 014
- Converted at current average monthly exchange rates Annual Interest Charges on Bonded Indebtedness Annual Principal Interest Amount Charges (a) All First Mortgage and Collateral Trust Bonds 3% Series due 1980 outs.tanding on the date of the Certificate annexed hereto $ 760 000 $ 22 800 (b) All First Mortgage and Collateral Trust Bonds' 3.357. Series due 1985 outstanding on the ,
date of the Certificate annexed hereto. 1 620 000 54 270
1 <** - ( Annual Principal Interest Amount Charges (c) All First Mortgage and Collateral Trust Bonds 5-1/2% Series due 1990 outstanding on the date of the Certificate annexed hereto. $1 700 000 $ 93 500 (d) All First Mortgage and Collateral Trust Bonds 4-3/4% Series due 1995 outstanding on the date of the Certificate annexed hereto. 2 275 000 108 063 (e) All First Mortgage and Collateral Trust Bonds - 7-1/8% Series due 1998 outstanding on the date of the Certificate annexed hereto. 3 760 000 267 900 (f) All First Mortgage and Collateral Trust Bonds 7.95% Series due 2003 outstanding on the date of the Certificate annexed hereto. 2 475 000 196 763 (g) All First Mortgage and Collateral Trust Bonds i 10 5/8% Series due concurrently applied for hereafter. 4 000 000 425 000
$1 168 29_6 1
I e
d i Ref. 410.3 4-2 4
- O i
MAINE PU11LIC SERVICC CollPANY i BONDABLE PROPERTY ADDITIONS - EXPIANATION 4 Under the Indenture of Mortgage and Deed of Trust, bonds may be issued 1 in an aggregate principal amount not exceeding 607. of the amount of avail-
, able property additions.
9 l.
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s I* - Ref. 410.3 4-3 q ( 's MAINE PUBLIC SERVICE COMPANY V INDENTURE - INTEREST COVERAGE REQUIREMENTS 38
' Szenon 1.13. The term " earnings certificate" shall mean an oflicers' certificate (which, unless one of the oDicers signing the same is an accountant, shall also be signed by an accountant), dated not more than 30 days prior to the date upon which application is made for the authentication and delivery of Bonds on the basis of such certificate and dated subsequent to the last previous date upon which any Bonds have been authenticated and delivered hereunder, setting forth in reasonable detail:
(1) The net earnings of the Company available for interest, computed as hereinafter provided, for a period of 12 consecutive calendar months within the 15 calendar months immediately pre.
;") ceding the calendar month in which the application for authentica.
tion and delivery of Bonds is made. (2) The annual " interest charges on bonded indebtedness", which term shall mean the aggregate annual interest charges on (a) all Bonds outstanding hereunder at the date of said cer-tificate; l (b) all Bonds whose authentication and delivery are applied for in such application or in any other pending appli-
' cation; and I
(c) all prior lien indebtedness; excluding, however, from such computation the annual interest charges on any Bond or prior lien indebtedness which is to be paid, redeemed or otherwise retired or provision for the retire-ment of which is to be made, so that the same will cease to be ontstanding as herein defined, prior to or concurrently with the authentication and delivery of the Bonds applied for. ee 9 b
4 i' C'\ V 39 (3) That such net earnings available for interest are at least twice the aggregate such annual interest charges on bonded indebtedness. , (4) That such net earnings available for interest have been l computed as provided in this Section. If the aggregate principal amount of Bonds being applied for plus the aggregate principal amount of Bonds authenticated and delivered I since the commencement of the then current calendar year (other than i Bonds with respect to which an earnings certificate is not required or l with respect to which an earnings certificato signed by an independent j public accountant has been previously furnished) is 10% or more of l( the aggregate principal amount of the Bonds at the time outstanding ;a hereunder, and if the 12 months' period in respect of which the net earn- j ings are being calculated is a period with respect to which an annual , L report is required to be filed by the Company pursuant to Section 11.03, ! . then such earnings certificate shall be signed by an independent public l O- eccountani. ie adaitien te beina siseed ae hereinebeve reentred. e l Net earnings available for interest shall be computed in accord- .j i ance with sound accounting practice (a) by deducting, from the sum of - (i) the total operating revenues of the Company for the period in , question from the trust estate and (ii) the dividends received by the Co,mpany and interest accrued on the pledged securities of the sub-sidiary corporation during such period (to an amount not exceeding the net income of the subsidiary corporation for the period in question applicable to the securities of the subsidiary corporation then pledged s hereunder) and (iii) any payments receivable from the subsidiary cor-poration for such period as compensation for the maintenance or opera-tion by the Company of any Aroostook storage facilities as defined in Subsection C of Section 1.10, an amount equal to the total operating expenses applicable to the trust estate for such period, including (a) all taxes other than income, excess profits and other taxes imposed on ; or measured by income or undistributed earnings or income, for the ,[
. T A
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E V 40 . determination of liability in respect of which interest charges are de-ductible; (b) rentals, insurance, current repairs and maintenance; and (c) provision for depreciation, obsolescence, and/or depletion of prop-
. erty from wldch such operating income and revenues were derived, which shall be in an amount not less than the minimum provision for depreciation as defined in Subsection G of Section 1.10, but excluding any charges on account of interest on indebtedness or on account of debt discount and expense; and (b) adding to the amount so d'e'termined net operating income and revenue from the operation _of property not included in the trust estate and net non-operating income (other than dividends and interest on pledged securities of the subsidiary corpora-tion and other payments receivable from the subsidiary corporation as aforesaid), to an amount not exceeding 15"/o of the total of net earn-ings available for interest, including such income so added. Profits or losses from the sale, abalidonment, amortization, retirement or other disposition of capital assets or any amortization or elimination of intaugibles or adjustment accounts shall not be taken into' account in determining net earnings available for interest. ,,
V In case any item of income or expense is not segregated on the books of the Company as between the operation of property which is and property which is not a part of the trust estate, the Company may allocate such expense or income in any reasonable manner. , If the Company shall have acquired, within or after the period for which net earnings available for interest is being determined, or will acquire in connection with the issuance of the Bonds being applied for, properties which within six months prior to s'uch acquisi-tion were used or operated in a business similai to that in which they are or are to be used or operated by the Company, then, in computing
- net earnings available for interest, the net earnings of such properties for the whole of such period shall be included as if such properties had been owned by the Company during the whole of such period; and if, 'within or after said period,# any substantial portion of th'e properties of the Company shall have been disposed of by the Com-pany, and if the amount of earnings of such properties is capable of being separately determined in accordance with sound accounting practice, then in computing net earnings available for interest, the net earnings of such properties shall be excluded.
i , f_ q (_)
Re f. 410.3 4-4
/'
xs MAINE PUBLIC SERVICE COMPANY INDENTURE OF MORTGAGE AND DEED OF TRUST DATED AS OF OCTOBER 1,1945, AS SUPPLEMENTED AND MODIFIED COMPUTATION OF NET EARNINGS OF THE COMPANY AVAILABLE FOR INTEREST FDR THE TWELVE MONTH PERIOD ENDING SEPTEMBER 30, 1978 AND OF ANNUAL INTEREST CHARGES ON BONDED INDEBTEDNESS Net Earnings Available for Interest Gross Revenues: Operating Revenues $18 163 007 Dividends on pledged securities of Subsidiary (to an amount not exceeding net income of Subsidiary for the period): Dividend Income U. S. $202 261 202 261 Net Income of Subsidiary for the Period ($249 158 Canadian) U. S. 230 271* Total Revenues 18 365 268 Deductions: 0 10 835 080 9.peratingExpenses nintenance 626 122 Provision for Depreciation (not less than " minimum provision for depreciation" as defined in Section 1.10 (G) 1 280 209 Taxes (Other than income taxes) 689 872 Total Deductions 13 431 283 Operating Income 4 933 985 Other Income: Allowances for Funds Used During Construction 546 463 Interest and Dividend Income 2 930 Equity in Earnings of Joint-Venture Companies 347 719 Other Income Deductions (Debit) (24 295) Other Interest Expense (Debit) (3 064) Net Other Income ** 869 753 Net Earnings Available for Interest $ 5 803 738
- Converted at current average monthly exchange rates
- Not to exceed 15% of Net Earnings Available for Interest Annual Interest Charges on Bonded Indebtedness Annual Principal Interest Amount Charges I ) All First Mortgage and Collateral Trust Bonds 3% Series due 1980 outstanding on the date of the Certificate annexed hereto. $ 730 000 $ 21 900 (b) All First Mortgage and Collateral Trust Bonds 3.35% Series due 1985 outstanding on the date of the Certificate annexed hereto. 1 560 000 52 260
. s
( , () - 2-Annual Principal Interest Amount Charges (c) All First Mortgage and Collateral Trust Bonds 5-1/2% Series due 1990 outstanding on the date of the Certificate annexed hereto. $1 640 000 $ 90 200 (d) All First Fbrtgage and Collateral Trust Bonds 4-3/4% Series due 1995 outstanding on the date of the Certificate annexed hereto. 2 200 000 104 500 (e) All First Mortgage and Collateral Trust Bonds 7-1/87. Series due 1998 outstanding on the date of the certificate annexed hereto. 3 640 000 259 350 (f) All First Mortgage and Collateral Trust Bonds 7.957. Series due 2003 outstanding on the date of the Certificate annexed hereto. 2 400 000 190 800 (g) All First Mortgage and Collateral Trust Bonds 10-5/8% Series due 1995 outstanding on the g3 date of the Certificate annexed hereto. 3 880 000 412 250 luj
$1 131 260 i
Re f. 410.3 4-5
._s 'wJ MAINE PUBLIC SERVICE COMPA?N ESTIMATED ADDITIONAL AMOUNTS OF MORTCAGE BONDS AVAIIABLE The estimated additional amount of first mortgage bonds which could be issued for the 12 month period ending September 30, 1978 is $17,000,000, assuming an interest rate of 10 1/47..
s., L) l l l l l l l l l l l l w l l 1 - 1 l l l
Ref. 410.3 5-1 MAINE PUBLIC SERVICE COMPANY l RE8'11tICTIONS ON 00 TE ION (A) So long as any Preferred Stock is outstanding, the Company shall not, without the consent (given in writing or by a vote in person or by proxy at a meeting called for the purpose) of the holders of at least two-thirds of the aggregate number of shares of Preferred Stock . then' outstanding, (i) Create or authorize any shares of, or increase the authorized amount of, any class of stock ranking as to dividends or assets prior to the Preferred Stock or any. obligation or security convertible into stock ranking as to dividends or assets prior to the Preferred Stock, or (ii) Amend, change or repeal any of the express terms of the Preferred Stock outstanding in any menner adversely affecting the holders thereof, except that, if such amendment, change or repeal adversely affects the holders of lesn than all of the series of the Preferred Stock at the time outstanding, the consent of the holders of two . thirds of the total number of outstanding shares of - the series so affected shall alone be required; or (iii) Issue shares of the Preferred Stock in excess of the forty thousand (h0,000) shares initially authorized or issue any Parity Stock unless (a) the consolidated net income available for dividends, as hereinaf ter defined, for any period of twelve (12) consecutive calendar months within the fif teen (15) calendar months immediately preceding the calendar month within which such additional shares of
' stock are to be issued, shall have been at least two and one-half (2-1/2) times the aggregate annual dividend requirements upon the entire amount of Preferred Stock and Parity Stock and any stocks of the Company of any class ranking as to dividends prior to the Preferred Stock to be outstanding af ter givir.g effect to the issuance of such additional shares, and (b) the consolidated income available for pay-ment of interest charges, as hereinaf ter defined, for any period of twelve (12) consecutive calendar months within the fifteen (15) calen-dar months immediately preceding the. month within which such additional shares are to be issued, shall have been at least one and one-half (1-1/2) times the sum of (1) the aggregate annual interest charges on, all indebtedness of the Company and the subsidiary corporation (ex-cluding inter-company items) to be outstanding af ter giving due effect to the issuance of such additional shares, and (2) the aggregate annual dividend requirement > (excluding inter-company items) upon the entire amount of Preferred Stock and Parity Stock and any stocks of the Com-pany of any class ranking as to dividends prior to the Preferred Stock and on all shares of preferred stock of the subsidisry corpora-tion to be outstanding after giving effect to the issuance of such ad-ditional shares, and (c) the accregate of the capital of the Company applicable to all stock ranking as to dividends and assets junior to .I the Preferred Stock, plus consolidated earned and capital surplus of the Company and the subsidiary corporation and plus premiums on capi-tal stock of the Company of any class, shall be not less than the ag-gr36 ate amount payable upon involuntary liquidation, dissolution or vinding up of the Company to the holders of Preferred Stock and Parity Stock to be outstanding af ter. giving effect to such issue, excluding all shares of Preferred Stock and Parity Stock to be retired in connection with such proposed issue. There shall be excluded from the foregoing ~
coagutations interest charges on all indebtedness and dividend require- ~
j senGo ca reLQI Ota1Go L9I UdsstI'sESGne onru tqs,Knsens<Annrwauusem
* - ~ ~ ~
w ith the icaue of cuch additional shares. The net carnings of any s _, } preperty acquired by the Co.upany or the subsidiary corptration during er af ter the period for which income is computed or which is to be acquired in connection with the issuance of any such additional shares,
, if capable of being separately determined or estimated, may be included on a pro forma basis in the fore 6oing computations; and if within or
<n>
~
af ter the period of computation any substantial portion of the properties'\ of the Company or the subsidiary corporation shall have been j [ disposed of, the not earnings of such properties, if capable of jj being separately determined or estimated, shall be excluded. l l l l l I l
.. . . - . . - . .- - -- . ~ . .. - -- . - . -. .. .-. .. -- . . . . _ , _ - _ - . ._
Re f. 410.3 5-2 O , i MAINE PUBLIC SERVICE COMPANY s ESTIMATED ADDITIONAL AMOUNTS OF PREFERRED STOCK AVAIIABLE The estimated additional amount of preferred, stock which could be issued for the 12 month period ending September 30, 1978 is $8,800,000 i assuming a dividend rate of 101/27.. .i 4 4 I !. O 1 I I O 6
-.e--- .-_>-wme, -n -- _ , _ , - - , . _ _ - - , - - - , , , , _ _ , _ . , , , , , , , . . . _ . . , , _ . _ , , . , - _ _ , , , _ , _ . . . . , , , , , , . _ _ _ , _ , , _ _ , , , , _ ,, . _ _ , ,.,, _,,__
Ref. 410.3 6-1 ( I v MAINE PUBLIC SERVICE COMPANY RESTRICTIONS ON SHORT/LONG TERM DEET PREFERRED AND COMMON STOCK Except for charter limitations authorizing capital stock, interest coverages and bondable additions limitations, there are no restrictions on issuance of securities. The Company has credit arrangements with two banks. The first is a short-tens arrangament with maximum borrowings determined by the lender based on the financial condition of the Company. The Company is expected to maintain a compensating balance of 207. of outstanding borrowing. The second is an open credit arrangement of up to $1,000,000 with interest at the lender's prime rate without compensating balance. I l
'%)
mA W
Ref. 410.3 7-1 q V MAINE PUBLIC SERVICE COMPANY RECENT RATE RELIEF ACTION The nature and reasons for the company's most recent rate relief action are outlined in the attached opening statement by the Company's Counsel, Roger A. Putnam, Esquire. The amount of this rate action is prescribed in the MPUC order and the revised financial Exhibit L-5, Schedule 1. Two copies of the financially related testimony and exhibits relating to the above rate relief case are attached and marked 410.3 7 4 and 7-5. Aspects of the Company's regulatory environment are as follows: In the Company's 1976 rate case the Maine Public Utilities Commission allowed Construction Work in Progress in rate base but required that the Allowance for Funds Used During Construction be credited to cost of service at an Laputed rate equal to the allowed rate of return. The rate base was
. at original cost. Deferred Federal Income Taxes and Investment Tax Credits were normalized but Deferred State Income Taxes were " flowed-through" for 3
k_s/ rate purposes. Pursuant to a state law at the time which had been recently enacted all fuel costs were pulled out of the base rates, to be included subsequently in the fuel cost adjustment calculations. (The State Legis-lature has recently enacted a new law which will require that all fuel costs will be included in base rates at the time of the next general rate adjustment, with subsequent increases or decreases to be included in the fuel adjustment) . l l I i
Ref. 410.3 7-2 p MAINE PUBLIC SERVICE COMPANY RATE DEVELOPMENTS Electric Granted
- Annual amount - test year basis (000's) ($1 443 838) decrease Percent increase (8.3%) decrease Effective date November 1, 1976 Rate of return on rate base authorized 9.71%
Rate of return on cmmnon equity authorized 13.25% Revenue Effect (000's) Amount received in year granted Impossible to determine Amount received in subsequent year Total revenue in 1977 was $460 367 over test year. However the 1977 revenue includes 57 028 MWH's of increased sales. Pending Pequests** Amount (000's) ) Percent increase ) Date filed ) None Date by which decision must be issued ) Rate of return on rate base requested ) Rate of return on common equity requested )
- Provide copy of latest rate order
** Provide copy of staff and company financial testimony and exhibits
Ref. 410.3 8-1 MAINE PUBLIC SERVICE COMPANY CONSTRUCTION FORECAST 1978 - 198_8 3 CASH REQUIREMENTS $ X 10 1978 1979 1980 1981 Nomal Expenditures Includes Blanket, Distribution and General Plant Items - Total S 1 365 $1 572 $1 180 S1 310 Major Fransmission t'p ra t e Line 6955 to 138 KV 155 842 Van Buren - St. Leonard 69 KV Tap 100 Woodstock - Mullon 69 KV Line 60 280 Fo r t Kent - Clair i 69 KV Tap Mepco 14 5 K V Tap tal Major Transmission 155 902 380 Major Generation Nuclear Seabrook Units dl & 2 Unit ul In Jervice July, 1983 l' nit #2 In Service July, 19 16.8 MW Each: Fotal 33.6 MW 1 387 6 182 4 132 3 014 NEP l' nit s #1 & 2 L' n i t #1 In Service December, 1986 l'n i t #2 In Service Dece 5 MW Each: Total 10 MW 312 189 396 866 Other Nuclear 15 MW Addition Each Year Starting in 1990 rhrough 1994 tal Nuclear 9 t)99 6 371 4 528 3 880 Fossil Wyman u4 In Service December, 1978 20 MW 951 120 Gas rurbines 25 MW in Service November, 1984 "arious 25 MW In Service November. 1987 tal Generation 10 650 6 491 4_ 528 3 880 ital const ruction Cash Requirements $12 170_ S8_ 9_11 $6 088 S5 190
O 1982 1983 1984 1985 1986 1987 1988
$1 500 $2 040 $ 2 120 $1 400 $ 1 490 $ 1 630 $ 1700 80 800 1 600 5 600 80 800 1 600 5 600 i
1 500 1 079 375 336 er 1988 1 372 1 644 1 834 1 296 929 351 101 1 260 3 035 5 086 9 397 12 558 15 040 2 872 3 983 5 244 6 718 10 326 12 909 15 141 600 2 400 3 250 735 2 940 3 981 3 472 6 383 8 494 7 453 13 266 16 890 15 141
$1_q52 $8 423 $10 614 $9_633 $16 356 $24 120 $16 841
Ref. 410.3 9-1 () MAINE PUBLIC SERVICE COMPANY FINANCIAL STATISTICS 12 Nonths Ended Calenda- Year September 30, 1978 1977 1976 (Dollars in Millions) Earnings available to Common Equity 2.584 2.375 1.598 Average Common Equity 15.692 14.793 13.784 Rate of Return on Average Common Equity 16.47% 16.05% 11.59% Ttmas Total Interest Earned Before FIT: Gross Income (incl. AFDC, + Current and Deferred FIT + Total Interest Charges & Amortization of Debt Discount and Expense 4.43 4.13 3.25 Timec Long-Term Interest Earned Before FIT: Groso Income (incl. AFDC) + Current and Deferred FIT + Long-Term Interest Charges
+ Amortization of Debt Discount and Expense 4.44 4.14 3.26 Bond Ratings (end of period) standard and Poor's A A A cody's - - -
Times Interest and Preferred Dividends Earned Af ter FIT: Gross Income (incl. AFDC) + Total Interest Charges + Amortization of Debt Discount and Expense + Preferred Dividends 2.71 2.54 -2.04 AFUDC .546 .404 .139 Net Income Af ter Preferred Dividends 2.584 2.375 1.598
% 21.13% 17.00% 8.67%
Market Price of Common 19 3/4 18 1/8 Book Value of Common 15 7/8
$24.71 $23.18 $21.25 Market-Book Ratio (end of period)* 79.9% 78.2% 74.7%
' Earnings Avail. for Common Less AFDC + Depreciation and Amortization, Deferred Tax e s, and Invest. Tax Credit Adjust.- Deferred 4.635 3.720 2.533 Common Dividends 1.052 .972 .892 Rctio 4.40 to 1 3.83 to 1 2.84 to 1 Short-Term Debt ! B:nk Loans None None None
-rommercial Paper None None None M3hitelization (Amount & Percent) Amt. % Amt. % Amt. %
Long-Term Debt 18.102 49 Preferred Stock 18.445 51 18.693 54 2.129 6 2.189 6 2.249 6 l Common Equity 16.479 45 15.437 43 14.149 40 CIf Subsidiary Company, Use Parent's Data {
Revision 3 NEP 1 6 2 January 1979 9 The material in this section is provided in response to NRC letter of 10/16/78. i l O . 1 l l t i ! , i 1 l I r f a 9 6 e
)
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f 9 NEP 1 & 2 Revision 3 January 1979 Question 1. The attached schedule entitled " Sources of Funds for System-wide Construc-tion Expenditures During Period of Construction of Subject Nuclear Plant," did not include the items of net income, preferred dividends, and common dividends. Also, the yearly capital structure should be completed as set forth on the bottom of the schedule. Additionally, this schedule should be completed for the parent companies of each applicant that is a subsidiary , company. Response 1. This questionwas subsequently revised by the NRC Staf f to require the requested information for the parent company of New England Power Company (New England Electric System). The non-proprietary version of the requested information is attached herewith for each applicant and New England Electric System. l, 4 l O i i l j i i , o \ i f G 4 i . I 1 k ,
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__ ~ - - . - - - . - . . - . - - - - - - . . . _ . _ - -. . . - - - . - _ _ _ . - _ - - . . ~ . ~ . . . i e i 9 9 9 I i I 4 1 ATTACWENT FOR ITN M 1 A pplic ant siv tviAND P%TR Co. Nuclear Plant: tit? I 6 2 ran rm-A s<wers M Ftw ra= cmstv"CTim n*Tirtsts Aw reITat sTwcT'?t pt?t% PEpl.^D 4 4 3NS TW"rT!aN M sa it JT WCt.fA4 '5 %I P P' ANT (" ! L;. I MS 'Y F_iA*S) I J CrWTCCTirW YEAR $ OF $111tCT VJCIJAt PCLR PLANT ) 167e 979 1940 1 +41 1992 ggs) 193 1945 g%g guy gg3 I ] EJTERNAI. FINANCING 55 las 165 5 5 70 $ - 5 20 $ 15 3 25 5 'O $ $ 5 155_ j common stoca 60 65 *o is M 23 20 15 29 li Preferred stock t4 210 210 2% ts0 IN - Long-term debt : 50 5) 45 70 ~ 15 )J (143 flut +> + sotes payable s. 7 t ()* 6 ) 11 ta* ! Contributions f rom parent-net - - - - - - Other f unds - Le N1 *15 6 --) 237 150 la i Total Esternal Foots 61 82 41 11)
!MTE9NAl.LT CE%TPATED CASit - '
teet Inc ome Less: preferred dividende , } comon dividends , in 2) 11 Je .7 52 - 16 15 17 Peta tned earntnas 25 32 se 54 vs 67 72 9 14 18 Deferred teses il 34 34 37 %
- 1;_
Investment tan credit-de ferred A 11 7 1) 19 , 29 31 3t_ 12 )+ 41 51 77 1)+ 13 Depreciation and Amortisation 29 Change in working capital (75 **? (5) v3 + (5i g e in (13 ( 73 ? .ls. e-- t i ny #42) '60; (825 ti/S) (1505 (1e2*
- 9 7)
Less: AF DC (161 8 2 )> 76 129 34 37 11 4 14 55 32_ 12, i?* Total Internal Funde 161 225 5 6* 5 LF 5 512 s 11 ) $ 279 5 I TOTAL FUNDS 5 9+ 5 119 $ 112 $ 5 l CNTT'?CTT'M ff?!NDIT"RTs* 199 407 $ '50 5 27R $ 212 5 105 !' 57 5 70 5 #2 $ 1% 5 189 $ 5 Nuclear power plants $ 44 39 20 10 46 W ), 3 )* .. Othe r 31 1
$ 15e 5 21 9 5 4*5 5 -4 5 6e $ 112 $ 269 5 1 31 j Total construction empenditores S 64 5 114_ 5 III 2)_ l'~1# 5 150 5 15$ 5 is 7 $ 2f 5 tw $ ..
l Sub jec t nuc! ear plant $ 4 $ 18 $ $ 7( 5 i l i OTuEt CAPITAL REf}'?IPEPTMTs 5 - - 25 - 10 33 5 - 12 I Redemption of Paturing Bonds _ 11 ) Acqotsition of Pref e rred Stock 1 1 1 t i 1 L~ 1 1 f or Sinistr.g Tunds - - Miscellaneous Regoirements ..F 5 5t? $ 11 1 5 ,'w e . 99 119 $ 122 5 647 5 22) 5 %= 5 S 5 T(7IAL CAPITRL REQUIRDtENTS . CAPITAt. STwt'CT. PE ($ 6 5) er $1.13' 59, Sg; 4F 91.917 4% 51.*)? ST 51.*2' 5* Lorg term debt $474 Sti $Jt_9 31*. 5 5A4 Sm 5 422 49' 5 71 ? &f 5 927 { 145 13 1 %4 t) 144 t) 227 12 71 12 no il 3.- in 373 12 1 1; Pref erred stock 111 12 111 i) 1 Coruson equity 3/. ) 37 173 16 JS 37 4's ).4 s%) M 729 )* *t? 3+, 1.116 M 1. 21a 60 g* M 1. ? )* }$ j TOTAL 5424 10M 51.021 10' *. 51.124 taw.
$ _1. 2% I to* St. s* 4/* 51. d 1 tw. 52.120 '* $2 ,741 im 5M $h2< h t i * '. $ 1. 25 5 la i'
I
) '
*Emslesive of AFDC ( Allowance for Funds used During Construction 1 i
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! e 0 - 0 l ATTACll>IENT FOR ITF21 NO. 1 APPLICANT RMMOR HYDRO t;UCLI AR PLANT: NEP 1 & 2 I i g i PRO FOR.'fA S00PCES OF FUNDS FOR SYSTDI-WIDE CONSTRUCTION EXPrNDITURES AND CAPITAT. STRUCTURE j DURING PERIOD OF CONSTHt'CIloN OF SUBJECT f.UCl. EAR POWER PLANT i (Millions of th3 11arg l t Conutruction Years of S y ect Nuclear Power Plant 1978 1979 1980 193l 1981 1983 1984 1935 1986 1987 1938 jl ext'ERNAL FINANC_ING Common stock $ 4.5 Preferrc<t stock
$ $ $ $ 2.7 $ 7.5 $ 7. 9 $ 9.5 $ 6.0 $ 1. 7 $
tong-term debt
.3 1.2 2.1 2.3 2.8 2.0 1.0 2.4 4.8 2.2 6. 7 6.0 10.8 12.7 15.7
! Notes payable 3.7 10.2 5.1 2.7 1.9 1.0 1.0 1.0 j Contribut. ions from 1.0 1.0 1.0 , J parent-net j Other fun <ls (describe) i Total Ext ernal Funds 10.6 4.8 4.1 INTERNALLY CENERATED CASil 7.0 10.9 21.1 23.9 29.0 19.2 8.8 2.7 ,
- Net income - !
Less: l Preferred dividends . I l Common dividends _ Retained earnings .3 (.5) 1.0 1.0 1.1 __ _ Deferred taxes 1.3 1.6 2.0 2.2 2.5 2.5 6 .8 .7 .6 .6 .5 6 Invest. Tax credit deferred .4 1.4 2.1 2.6 1.2 .5 .7 . 7 1.0 2.2 2.2 1.9 l 5 Depreciation and amort. 2.7 2.4 1.0 .7 2.2 3.0 3.1 1.3 3. 5 3.7 3.9 7.8 Change in working capital (2.9) (.6) 5.9 9.7 i Less: AFDC (1.3) (.5) (2.0) (1.4) .1 (.2) (. 2) (1.4) 5.0 (.9) (.5) J.7) (1.1) (1.5) (2.3) (4.6) (6.7) Total Internal Fun.js .5 2.4 3.4 1.8 2.5 ( 6. ,1 ) (4.8) (2.7) TOTAL FUNDS 3.3 3.6 1.8 5.1 7.2 17.8
$ 1.2 L
$11.1 $ 7. 5 $10.8 $ 13. 4 $24.6 $27.5 $30.H CONSTRUCT 10N EXPFNDI1URES:
$24.1 $16.0 $20.5 i Nuclear power plants $ 3.7 $ 1.9 $ 2. 3 $ 5.0 Other $ 8.2 $20.M $22.0 $25.1 $19.9 $11.6 $ 3.2 7.4 4.7 i 3.2 3.6 4.2 3.8 4.0 4.2 4.4 4.4 10.2 Total const. exp's. $11.1 $ 6.6 $ 5.5 Subject nuclear plant
$ 8.6 $12.4 $24.6 $26.0 $29.3 $24.3 $16.0 $13.4
$ 1.2 $ .6 $ 1. 3 $ 4.0 $ 7.6 $19.3 $19.7 $21.3 [
OTl!ER CAPITAL _REQUIRDfENTS
$11.6 $ 8.8 $ 2.7 Redempt ion of flaturing Bonds .6 2.0 2.2 i
Acquisition of Bonds for Sinking Funds 1.0 1. 5 1.5 7.1 tfiscellaneous Requirements TOTAL CAPITAL REQUIREffENTS $11.1 $ 7.2 $ 7. 5 $10.8 $13. '4 $2'. 6 $27.5 . $ 30.14 $24.3 $16.0 $20.5 CAPITAL STRUCTURE ($ & 2) ~~ ~ - ~ ~ ~ ' long-Term Del.t S 47% $ 502 $ 50% Preferrew! stock $ 552 $ 55% $ 50% $ 50% $ 51: $ 52 $ 50% $ 50% 11 11 11 10 10 11 11 11 11 Common equity 42 39 39 12 12 i li 35 39 39 38 I 37 18 38 TOTAT. 100 l 100 100 100 100 100
" 100 100 100 100 100 i
t I i i i
.s.,_ _ _-.-+--,--,,s. --c. ., m - - - y- --m- ---we--ve-- w---v- & --w----- - v- --1 ---c- -~g. m-m-..--y.w-. - -- . _ _ _ _
_, . . _ _ _ m. m - _ - _ . - - -. __ _ _. - _ . - _ _ _ _ . _ _ . , . - - . _ _ . _ . _ . _ _ - . - . . _ . _ _ . _ - - _ _ _ _ . . . . . . . _ . _ _ _ _ . _ . . . _ _ _ . _ _ . _ i e f k O 9 i m 1 i 1 1 CANA1. E11CTRIO COMPANY NTP Unit s - Nuclear Regulatyry Permst - Revis10{ Appltrattons
~
Sources of Funds For Systee-wide Construction Expen.iitures During Period of Construction of Subiect Muetear Parer Plant f l (Dollars an Mallions) ] Construction Years of Sub?ect Nuclear Penver Plant , 1979 1979 1980 1941 1992 ?993 1994 1995 19R6 1947 19pm t Esternal Financing 1 cosomm stock 3 $ $ $ $ $ $ $ $, 4 S $ { Preferred Stock ' i h ng-Tera Debt - 26 Notes hayable-Net 8 22 (gg) 4 (24)
. Contr&Lutaons From Parent-Net
- Other Funds
~
Total futernal Funds 8 22 4 6 _ (10) > Ir.tereally Generate 1 Cash !
~
j het income *
- 14ss:
Preferred Davidends Concon Dawsdends _ metatned sarnangs 1.1 11 1.0 1.0 1.0 1.2 1.4 1.6 1.9 J.0 2.2 Deferred Tames 1.2 1.1 .9 6 .4 .2 .1 f.2) 3.8 1.7 3,7 Investment ras Cre14t-net (.2) 6.2) (.2) s.2) (.2) (.2) (.2) (.2) 6.4 s.41 6.7 Depreciation and Aeortaastion 4.5 4.5 4.6 4.6 4.6 4.6 4.6 4.6 5.9 7,2 r. 6 (4.5) wortte.g Capital (5.23 (3.5) (.2) 4.2 17.2 11.5 1.3 1.1 (1.71 (J.2) Imss: ' ! ATUDC .1 2 .2 .5 1.1 2.4 4.4 6.4 8.1 4.6 4.8 Total Internal Funds 1.3 1.u 2.e 5.3 8.9 20.6 13.0 7 9.0 4.2 34.2 i Total Nnds 5 1.1 $ 1.8 $ 2.6 $ 5.1 $ e.9 $ 20.6 $ 21.0 $ 22.7 $ 13.0 $ 10.2 $ 42 f Const ruct a_onygdit ares (Excludang AFUDC) 1 Subject Nuclear Plant $ .2 $ .6 $ 1,3 $ 4.3 $ 7.6 $ 19.3 $ 19.7 $ 21.3 $ 11.6 $ 8.8 $ 2,7 Other Nuclear Power Plant s other Construction .1 .4 .5 .5 .5 .5 .5 .6 .6 .6 .7 l l Total Const ruction .5 1.0 1.8 4.5 e.1 19.e 20.2 21.9 12.2 p.4 3.4 other Capital Peraireawnts { pelerytton of maturing Bonds Acquisition of Bonds for 5tnking Fur.ds .8 8 .8 .8 .8 .8 8 .8 .6 .g ,e Mtscellareous Pequirenwnts i i Total Capital pequirements $ 1.1 $ 1.8 $ 2.6 $ 5.1 $ 8.9 $ 20.6 $ J1.0 3 22.J $ 13.0 ' 19.2 42 t I s l I ' Cayital structure Leno-Term Debt $ 50.9 4 )* $ 59.1 ist 3 49.3 474 $ 49.5 464 54?.7 454 $ 46.9 4 ;n $ 46.1 435 $ 45.3 423 $ 44.5 41% $ 69.7 Mt $ 68.9 494 J Preferred Stock ) Neu=2n Laust/ 51." 51 %4.8 . . _ %5.4 51 56.4 54 *7.6 55 5. 9. 0 '6 (3.4 57 62.0 %g 61.9 59 69.9 'A T2,3 51 f Total $1.4.6 134* $104.9 A* $105.1 10ct $ 10 5.1 100* $105.5 10;* sto$.9 are $106.5 loot $107.3 IWs $104.4 19C4 $139.6 1%t $141.o g or, g i i i f l l 1 e . t l 1 h
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1 l l l 6 9 9 i e $ ATTVR*'EN T FFR YTD4 No. T Applic ant : upFAr.Abf TT Et EFT %1C CD. Muclear Platst : N8'P 1 4
- 5'P'1 FoR*A SMScr s N Ft 'at F.* C.'*M Ty t. cI l' *. E' rt !!LSf 3 AW ' A
- f141. S T9t'CT'.*#T Ot'R T NC PF# f @ OF CM51St'rtinN (T St'4_2Ei'T %TCLfat PATR PLAvr
("71.L !JNs CF !w'LLAb ! CrNST*trT !% YEANs f* c'1tJECT Nt'C11Aa P%Ya PtANT l 1979 1979 M 1991 19*t 1991 b 1995 196e 1997 l +9 i EXTTPMAt. FINANC!NC 5.0 - - 1.0 $ 5
$ - 5 5 5 $
l Caumon Stock - - - - 5.0 - 5.0 - 4 Pref erred stock - 30 > 70.9 10 0 d tong-teru debt !
- 25.0 - -
lu.0 -
- - 1. 9 4.1 ')<> tb.II : . e" 3.0 e ,4 s (.4, ,8 Notes payable - -
Contributtons f rom parent-net - - - - Other f unds 7.e 8.0 19 6 9.6 nr. 6 Total tuternal Funds - - 29.9 93 2* 1 1).7 INTERMAf LY GENERATED CASM _ l Met inc ome tese: j pre ferred dividende _ j conunon dividends _ 8
.9 9 w 1,9 1.0 Retained earnings .9 .8 .8 .9 .1 i
1.6 1.7 .9 2.0 2.7 2S 2.7 2.6 3.0 3.) 3.$ i peferred taxes ~ 1.g 12 1.2 ..$ t,* 1.) l 6 1.s i_$ t.4 19 { Inve stment tan credit-deferred 12 9 L).5 12.5 13.2 16.1 1).. Depreciation and esortt eat tog 10.0 10.5 1 ,.C 11.9 12.) t ' 2) r .63 ( . 7) i.h t . 7., ( Bf 43 f.es it.oi Change in working capital 8,9 .* 4.5? ( .y f.57 2) f.2) ( t t . 4) s.)? t,.y j tess: AFDC (.6) f .&) f. 77 a_ 17 6 19.0 1= 3 Total Internal Funds 2 2._t. _ 16.1 t$,) 15 $ 1).+ te 4 10.5 , ;s.* 22.1 $ 16.1 $ e4 2 S '4 5 67.7 S_ *?.S 5 ! 2. 5 $ I? . ? 5 23 6 5 29 1 TOTAL Ft"fD5 $ CONS TWCTIM E T PEND t ?'.Sf 5 * .7 .4
- 3 .1 $ .2 5 & $ t.' S 1.2 $ 1.) S 5 5 Nuc lear power plants 24 1 l
15.1 18).1 14
- 2.
- 20 6 21.5 7. = 2 3. . Je 6 2d.4 cther .5 27.5 24 6
{ Total construc tion empenditures $ 16 $ 14 1 $ 20 0 $ 2+.5 $ N4 $ 2I~T ' 5 25.6
$ 2 $ $
5- -1 2* 5 1 $ ' s . $ 1
$ 1.1 $ t ) $ 7 3 .5 s 2 Suhject nuclese plant $ - $ amerw=r same OTuTR CAPITAMEIPDTNT9 2a ' 21,4 9.8 - - 9. 7 - -
Fedemption of Paturing Bonde 7 . f) - Acquiettion of Bonde for $1nking Funds - - - - - Miscellaneous pequiremente - a A =1 14 1 9 4 ? $ ' *
- 45 s 5 12 5 5 25.. 5 ' #. 5 5 *? ? 5 $
TOTAL CAPITAL P.IQt'IFIMENTS $ 22 i S CAPITAL STRt'CT"PE (1 % ") 5 )* W. 1816 5114 92* 54% $t24 51*, $ 134 53" Long term debt $ 94 51* $ 'S 51' $ 94 51*. $ 99 5t' 51 % Sila 5' $124 13 27 14 27 2? 14 27 l) 27 l) 12 l= )? 14 37 IS 37 1) Pref erred stee n 27 15 27 t* Cco uron equity 63 34 C- 14 e5 1) 44 n. ** 11 61 32_ 1) le - 2 15 32 91 5247 1 t ik r P2
$251 -lw.
12 100 TOT.A L $m 19 5__18s,,,7,,.
$.159-.--l'a $1** 1 %- *. S194e,,m.- lo- 5t97 1N* ?? ww,1,0<T 121; , 10-
. $m2 2_o __m *. 211.ImF m -
*Eac tuelve of AFTM; (Allowance for Funds used During Constructionn
,. -.. y
_-_...,._w.. .__, _ . . - _ _ , - . _ _ -_. -
- , _ . - _, . . _ , , _ , _ _ _ , - , . -,m-
1-29-79 . , s (N n - ATIACl! MENT; TEM NO.1 APPLICANT: MASSACHUSETTS Mt"1TCIPAL WHOLESALE ELECTRIC CO. NUCLEAR FLANT: NEP 1&2 . , r PRO PORMA SOURCES OF FUNDS FOR SYSTDf-VIDE CMSTRUCTION EXPC'Dili;RES AND CAPITAL STRUCWRE DURING PERIOD OF CONSTRUCTION OF SUBJECT NUCLEAR POWER PLANT (MILLIONS (,F DOLLARS) U CONSTRUCTION YEARS OF SUBJECT NUCLEAR POWER PLANT g 1988 as 1979 1980 1981 1982 1983 1984 19S5 1986 1987 EXTIRNAL TINANCINO
==on Stock $ $ $ $ $ $ $ $ $ $
a Preferred stock Long-term debt: 122.9 139.4 113.8 182.6 145.4 128.5 135.7 22.0 63.5 1 y I.otes Payable (54.3) Contributions f rom parent-net * (Other funds (describe) 113.8 182.6 145.4 128.5 135.7 22.0 63.5 Total External funds 68.6 139.4 INTEP.NALLY CE';ERATED CASH p.'e t incoce ' f Less: ( preferred dividends 1 4 cor=on dividends . Retained earnings j Deferred taxes 4 Invest. tax credit -deferred 2 Depreciation and azort.
.1 .1 .1 .2 2.0 2.8 7.9 8.5 12.5 3 Change in working capital 97.0 (6.4) 1.9 (32.7) 50.8 45.7 15.3 31.0 2.6 24.1 4 Less: AFDC Total Internal Funds 97.0 (6.3) 2.0 (32.6) 51.0 47.7 18.1 38.9 11.1 36.6 TOTAL FUNDS $165.6 * $133.1 $115.8 $150.0_ $ 196.4 $ 176.2 $ 153.8 $ -60.9 $ 74.6 $ 36.6 5 CONSTRUCTION FXPCiDITURES*
Nuclear power plants $ 75.6 $ 38.2 $ 57.5 $ 71.3 $ 88.9 $ 82.6 $ 68.9 $ 30.3 $ 26.2 $ 23.3 Other 71.7 47.8 34.2 22.9 28.1 20.6 13.4 6.3 Total const. exp's. $147.3 $ d6.0 $ 91.7 $ 94.2 $ 117.0 $ 103.2 $ 82.3 $ 36.6 $ 26.2 $ 23.3 Subject nuclear project $ .8 $ 1.8 $ 5 ,, 6 $ 10.4 $ 26.7 $ 77 $ $ 29.5 $ 16.1 $ 12.1 $ 3.7 OTHER CAPITAL REQUIREMCiTS Redu:ption of maturing bonds .1 .1 .1 .2 2.9 3.7 9.5 9.3 13.3 Acquisition of bonds for sinking funds 4-6 P.iscellancons requirements l 24.0 55.7 79.2 70.1 67.8 14.8 39.1 (detail) 18.3 47.0 165.6 133.1 115.8 150.0 196.4 176.2 153.8 60.9 74.6 36.6 l TOTAL CAPITAL REQUIREMENTS CAPITAL STRUCTURE ($ & %) Long-ters debt $533.8 $673.1 $786.8 $969.3 $1114.5 $1240.1. $1372.1 $1384.6 $1438.8 $1425.5' Preferred stock Co=non equity 533.8 673.1 786.8 969.3 1114.5 1240.1 1372.1 1384.6 1438.8 1425.5 TOTAL SEE NOTES ATTACHED L
~ . . . . _ - - . = - . .~
1-15-79 } NOTES MASSACllUSETTS MUNICIPAL Wil0LESALE ELECTRIC COMPANY (FD1WEC) PRO FORMA SOURCES OF FUNDS i MMWEC is a public corporation and political subdivision of the Commonwealth 4 of Massachusetts. It is a joint-action power agency engaged in power supply activities for approximately = thirty members which are Massachusetts municipal electric systems. Member systems.and others (Participants) contract with MMWEC with respect to
! the output of specific electric generating facilities. (Projects) to be financed by MMWEC. The contracts require each Participant in a Project to pay its share of MMWEC's costs related to the Project including debt service on bonds issued to acquire or construct the Project.
t i MMUEC is entirely financed through issuance of tax exempt debt obligations.
- Issues for each Project include amounts for construction expenditures, net interest
- costs during construction, working capital and certain required reserve funds j prescribed by its bond resolution. In general, such amounts are held by trustees and the use of such funds is restricted.
l After commercial operation, working capital requirements and reserve funds ! . are maintained at prescribed levels by the Participants in each of the Projects l who also pay all other costs associated with the Projects.
- 1. As a public corporation and political subdivision of the Commonwealth, FDMEC has no stockholders and external financing is entirely accomplished
- through issuance of tax exempt debt obligations. MMWEC operates on a
, , non-profit basis and has no net income or retained earnings. As a -
i . political subdivision, MMWEC is exempt frem State and Federal income
~ '
[ taxes. . .
- 2. lb Projects are placed into commercial operation, Participants are not billed for depreciation but are billed for maturing debt which is the equivalent to depreciation over the life of the Project. Amounts shown
} here are the estimated billings to Participants to satisfy debt maturities j on debt issued or estimated to be issued for each Project af ter the ! Project is placed into commercial operation.
- 3. Debt issues for each Project generally provide for construction costs for periods in excess of one year and are held by trustees. For the
~
) purposes of this schedule, increases or decreases in such funds are , j shown as changes in working capital. The balance of such funds on l hand at December 31, 1978 dmounted to approximately $231.7 million. . 4. Debt is issued on a Project basis and each issue includes an amount to pay the net interest cost (estimated interest expense less interest
- income) for a designated period of time. Proceeds to pay such interest
! costs are held by trustees. This net interest cost is capitalized as ( a part of the cost of a Project during the construction period and, to
- some extent, is the equivalent of AFUDC. For the purposes of this J
, ..,,,p.. . . + , --- -,,..-,~,,m-~-------,ex- - ~ - - - - - -_m..-n,-----. .n -e-, . - - , . , - . . - - - - - - - - - - - - - - - - -
. _s . s_. - . -
_2_ G schedule, the estimated net interest cost associated with each years' financing has been included in Miscellaneous Requirements under Other Capital Requirements and has not been included in either AFUDC or Construction Expenditures.
- 5. Includes amounts to pay certain early maturities on certain bond issues where such maturities are due prior to the presently scheduled commercial operation date of the Project for which the bonds were issued in cases where the scheduled commercial operation date has slipped since such bonds were issued. Such amounts are not material.
- 6. Amounts required by }DMEC's bond resolution, to be segregated to fund requirements of Debt Reserve Funds and Reserve,and Contingency Funds associated with each years' financing have been included in Miscellaneous Require::.ents under Other Capital Requirements.
I 3 h l-v) . D
~ .
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-_ - . - . . - _ _y, - . . , . _ . - . _ _ . - _ ,
I i 1 'pplican ( !aunton Municinal Linhtin" Plant j uclear Plant: Nou Ennland Power Company's Pla and 2 Sources of Funds for System-uide Construction Expenditures and Capital Structure During Period of Construction of Subject Uuclear Pouer Plant (Millions) 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 Construction Years of Subicct Uuclear Pouer Plant EXTERNAL FINA?!CII:C Con .on Stock Preferred Stock Nonc anticipated Long-term Debt Notes Pafable Total INTERNALLY GENERATED CASH Uct Income 679 852 1.296 1.465 1.615 1.741 1.992 2.134 2.296 2.458 1.907 Depreciation Cash Fund 1.127 1.507 1.522 1.544 1.567 1.589 1.619 1.649 1.679 1.709 1.739 Change in t.'orhin;: Capital 286 (.442) (.406) 215 .234 1.188 .880 727 (1.226) (1.715) (1.855) Total Funds 2.092 1.917 2.412 3.224 3.. 16 4.518 4.491 4.510 2.749 2.452 1.791 COUSTRUCTIO" EXP"."DI"m ",0 1:uclear Power Plants 1.227 1.037 1.512 2,054 2.221 3.298 2.996 2.985 1.339 1.007 .311 Other .500 500 .500 .750 .750 .750 1.000 1.000 1.000 1.000 1.000 Total Construction Expense 1.727 1.537 2.012 2.804 2.971 4.048 3.996 3.985 2.339 2.007 1.311 Subject I!ucicar Plant .018 070 .149 463 .868 2.221 2.267 2.452 1.339 1.007 .311 OTHER CAPITAL REnUIREMENTS Redemption of Maturin3 Bonds .365 .380 400 420 445 470 495 525 410 445 .480 Total Capital Expenditures 2.092 1.917 2.412 3.224 3.416 4.518 4.491 4.510 2.749 2.452 1.791 CAPITAL STRUCTURE Long Term Debt: 3.07. .700 .600 .500 .400 .300 200 .100 - - - - 3.17 .315 270 .225 180 .135 90 . 45 - - - - 7.97. 23.580 23.345 22.090 22.815 22.515 22.190 21.840 21.460 21.050 20.605 20.125
^
m, y) Applicant: V2rmont Electe d Cooperative, Inc., Nuclear Plant; NEP 1 and 2_ Sources of Funds for System-Wide Construction Expenditures During Period of Construction of the Subject Nuclear Power Plants (Millions of Dollars) 1978 1979 1980 198 1982 1983 1984 1995 1986 1987 1988 Security issues and Other Funds Long-Term Debt 3,077 2,499 2,759 3,730 4,343 1,656 1,885 1,860 1,630 1.573 1,400 Total 3,077 2,499 2,759 3,730 4,343 1,656 1,885 1,860 1,630 1,573 1,400 Internal Funds Net income .373 .431 .446 1.466 1.372 Depreciation and Amort. .867 .639 790 .772 917 1.049
.439 .466 .506 .602 .697 1.014 1.112 AFUDC 1.196 1.310 1.393 1.426
.167 .249 347 371 546 .183 .247 .191 .163 .136 .121 Total J 1.146 1.299 ,@ 2.615 2.064 1.098 2.183 2.745 2.446 m Total Funds 4.056 3.645 4.058 6.169 6.958 3.720 1.883 4.043 3.875 4.019 3. 9%
Construction Expenditures
- and Other Capital Requirements Nuclear Power Plants 2.739 2.174 2.468 3.473 3.986 1.264 1_482 Other 1.012' 960 .736 .637 .384 i 1.089 1.034 1.034 1.045 1.045 1.100 1.030 h10^ 1.000 1.000 Subtotal 3.751 3.263 3.502 4.507 5.031 2.309 2.582 2.060 1.736 1.637 1 384 Other Capital Require-ments:
Retirement of Debt .205 .222 .356 750 920 1.020 1.120 Miscellaneous Reserves .100 1.250 1.500 1.700 1.900
.160 .200 912 1.007 391 .1,81, J3, .639 .682 712 Total 4.056 3.645 4.058 6.169 6.958 3.720 3.883 4.043 3 4.019 g Subject Nuclear Plant .062 .028 .060 .185 347 .888 907 .981 536 .403 .125
- Exclusive of AFUDC Revised 1/79
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Revision 3 NEP 1 & 2 January 1979 [s)~ 4 Question 2.
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The underlying assumptions supporting the " Source of Funds Schedule" for Narra-gansett Electric Company base the projections on a 12% rate of return on common equity. The 1976 return on equity was 2.04% and the 1977 return was 4.42%. The basis for this increase in the anticipated rate of return on equity should be explained. Response 2. The low returns earned by the Narragansett Electric Company (Narragansett) on its common equity of 2.04% in 1976 and 4.42% in 1977 were due largely to regulatory lag in receiving and implementing both general rate increases and Purchased Power Cost , Adjustnent Provision increases as well as under recovery of fuel expense under the i Company's prior fuel clause. In October 1977, Narragansett Electric implemented a new fuel clause which elim-inates any under or over recovery of fuel expense. Also in 1978, two major deci-sions occurred which substantially increased Narragansett's return on equity and its ability to maintain a higher return on equity than prevailed in 1976 and 1977. These decisions support the' assumed 12% return on common equity used in Narragan~ sett's " Source of Funds Schedule." 1 In a rate decision effective April 1, 1978, the Rhode Island Public Utilities Commission (RIPUC) allowed Narragansett a general rate increase of $5,603,000 (s 3 which was 80% of the amount the Company requested. Included in the rate order ( ) was an attrition and tax adjustment of $935,000 to offset the effects of infla-tion and allow the Company an opportunity to earn a fair return. The equivalent return on common equity including the attrition and tax adjustment is 13%; with-out this adjustment it is 12.2%. In addition, in April 1978, the U. S. Supreme Court declined to hear an appeal by the RIPUC, which would have withheld from. Narragansett recovery of approximately [ $3.4 million in annual wholesale power costs. Narragansett was allowed to col-j lect these costs retroactive to February 3, 1978. This decision by the U. S. Supreme Court upholds an earlier landmark decision by i the Rhode Island Supreme Court, which decision had been stayed pending resolu-tion of the appeal. The State Court ruled earlier that the Rhode Island Public Utility Commission must treat as an actual operating expense of Narragansett any increase in purchased power cost caused by rate increases of its afilliated wholesale supplier, New England Power Company, which increases are allowed to go into effect by the Federal Energy Regulatory Commission, whether or not subj ec t to refund. v
l l i Revision 3 NEP 1 & 2 January 1979 Question 3. The Massachusetts Municipal Wholesale Electric Company did not submit the l " Sources of Funds Schedule for System-wide Construction Expenditures Dur.ing ! Period of Construction of Subject Nuclear Plant." This form should be com-j pleted even though the only source of funds may be through the issuance of l bonds, t i Response 3. I i i The requested information is provided in response to Question 1. ; e i i - i i G : i f l l 8 l
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1 1 ,t Revision 3
. NEP 1 6 2 January 1979 l t
Question 4. A copy of the loan commitment notice guaranteeing Vermont Electric Cooperative's loan by the Rural Electrification Adminstration is needed to support this appli- 1 cant's financial'lqualifications. . I Response 4.
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A copy of the loan commitment notice is enclosed herewith. r i, 1 i r , t 1 I l l t I l G ! l i r l { l l
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. { !.g,. g itJN)TED STATES DEPARTMENT OF AGRICULTURE k/ "m:.fi.
e T' be- RUR Al. ELECTRIFICATION ADMINISTR ATION / F./Mi P r WAeMiwoToN. D.C. 202SO
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m g p ^ B77 i ~ V 4..
/.3 6 Y v Mr. J. Douglas Webb, President
- Vermont Electric Cooperative, Inc. ..
School Street i!W Johnson, Vercent 05656
Dear Mr. Webb:
A loan in the amount of $15,816,000 has been approved for your organization from the Rural Electric and Telephone Revolving Fund at an interest rate of $ percent per annum, w.. 1.j:i:: The loan agreement and other documents will be forwarded in the !.:.!q g near future for execution. This loan is approved with the il
,j understanding that the loan agreement will be authorized and executed by your organization and returned to us by the date which will be cet forth in the letter transmitting the loan agreement.
Sincerely, - 9 dikii. p.
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i Revision 3 l NEP 1 & 2 Ja nua ry 1979 Question 5. The " Source of Funds Schedule" should also be completed by Vermont Electric Cooperative, Inc. This schedule shc,uld set forth the loan advances anticipated from the Rural Electrification Administration in addition to internally generated 1 funds. i ! Response 5. ! The requested information is provided in the response to Question 1. l l l l ( ude
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