ML20069C265
| ML20069C265 | |
| Person / Time | |
|---|---|
| Site: | Vermont Yankee  |
| Issue date: | 12/31/1993 |
| From: | Tremblay L VERMONT YANKEE NUCLEAR POWER CORP. |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| BVY-94-58, NUDOCS 9406010059 | |
| Download: ML20069C265 (38) | |
Text
. . . . - . ~ - -- -
t Y VERMONT YANKEE- ,
NUCLEAR POWER CORPORATION
. Ferry Road, Brattleboro, VT 05301-7002
[
ENGINE N OFFICE 580 MAIN STREET
- BOLTON, MA 01740 (508) 779-6711 May 26,1994 BVY 94 - 58 United States Nuclear Regulatory Commission A'ITN: Document Control Desk Washington, DC 20555
References:
- a. License No. DPR-28 (Docket No. 50-271)
Subject:
Vermont Yankee Nuclear Power Corporation - 1993 Annual Financial Report In accordance with the provisions of 10CFR50.71(b), enclosed please find one (1) copy of Vermont Yankee Nuclear Power Corporation's annual financial report, including the certified financial statements, for 1993.
Should you have any questions regarding this report, please contact this office.
Sincerely, VER iONT YANKEE NUCLEAR POWER COP RATION
@@A e 4% i Leonard A. Tremblay, Jr., P.E. 1 l Senior Licensing Engineer i l
cc with enclosure:
USNRC Region I Administrator USNRC Resident Inspector- VYNPS USNRC Project Manager- VYNPS I
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Verntont Yankee Nuclear Power Corporation 1993 ANNUAL REPORT
5 i , ,
CONIENTS A Page Description of Business 2 President's Letter 3 4 Highlights 4 Common Stock Ownership 5 Management Review 6 ,
Financial Review 10 Statements of Income
& Retained Eamings 11 Balance Sheets Assets 12 Capitalization and Liabilities 13 Statements of Cash Flows 14 Notes to FinancialStatements 15 Independent Auditor'sReport 35 Board of Dimctors 36 Officeis 36 1993 ANNUAL REPORT VaatavrYAmrNuarsuPoatn Courounav FouwRoso BRAnunono, Vauto.vr 05301-7002
DESCRIP110X of business ennont Yankee Nuclear Power monthly,mgardless of the Plant's Corpomtioluvas incorporated under the operating level, or whether or not it is laws of Vem1ont on August 4,1966. The operating,an amount equal toits Coinpany was formed bya group of entitlement percentage of Vennont New England utilities for the purpose of Yankee's total fuel costs, operating constructing and operating a nuclear- expenses, decommissioning costs and powered generating plant (the " Plant"). an allowed mturn on equity. Also, underthe terms of theCapitalFunds The Plant commenced conunemial Agmements withits sponsors, the operation on November 30,1972,and, sponsors are committed to make funds excepting maintenance and mfueling available for changes or mplacements outages, has been in full operation since needed to maintain or restore operation that time. The Plant's license, originally of the Plant or to obtain ormaintain due to expimin December 2007,has licenses necessary for its operation. The been extended to March 2012. names of the sponsors and their respective entitlement pementages of Located in Vernon, Vermont, the facility capacityand outputamas follows:
has a gmss maximum dependable capacity of appmximately 535 Entitlement megawatts. The common stock of Spanstr Percentage Vennont Yankeeis owned by thirteen utilities,nine of which are th'e centrai vermont rudtic service Corporation 35.ovt sponsoring utilities that am entitled to creen Mountain PowerCoquration 2ao and obligated to pumhase the output of New Englana powerCorporation 20.o the Plant. Die Connecticut Light and Power Company 9.5
' Central Maine Power Company 4.0 Underthetermsof theCompany's Public service Company of New Hampshire 4.0 Power Contracts each sponsoris westem Massachusetts Electric Company 2.5 obligated to pay Vermont Yankee Montaup ElectricCompany 2.5
} Cambridge Electric Light Company _2.5 100.07c
)
1 i . i
? RESIDENT'S letter _ j fA wm-1993 marked Vermont Yankee's twenty-first year of a peration. Since going on line in 1972, we've generated over 7315illion kik) watt hours of electricity. In the last two decades, the national demand for electricity has gmwn more than 60 aercent and nuclear power has surpassed oil, natural gas and hydropower to accome the second largest source in the nation.
l The state of Vennont leads the nation with the hi thest pen entage of total electrical generation coming fmm nuclear d power, c k .59', ten percent mom than any other state. As Vennont's only nuclear power plant, we have an obligation to successfully and safelv manage all facets of nuclear technology in order to produce competitively-. priced electricity for Vennonters and other New Englanders.
This year, we successfully mfinanced our long-tenu mortgage debt at a rate thny percent lower than the existing rate, and extended ourloan period until 2009, a date more consistent with the current operating license of the plant. We also mceived approval fmm our Boan.1 of Directors to upgrade our low-pmssure turbines in 1995 - an impmvement which is expected to incmase our electrical output to 548 megawatts and ensum continued overall mliability of theplant.
Another component of Vermont Yankee's operation pmcess is the efficient and
, safe dis Texas,emiant
\psaland of Maine low-level radioactive to dispose of low-levelwaste. A proposed radioactive compact waste in Texas is between nearing completion. The com aact has been ratified by both Texas and Maine.
VemTont is expected to consic er a bill during early 1994 to authorize its participation.
Other achievements, financial as well as perfonnance, am highlighted in this Annual Report. Fmm the infonnation in the following pages,it's appamnt why, when measunxi against the standan.ls of excellence set by the mdustry, Vennont Yankee continues to be mcognized for our consistently high level of perfonnance. gi 2
J. Gary Weigand
e .
I 9 HIGHTIGHTS l 1993 1992 % Change Financial (dollamin millions):
Operating mvenues $180.1 $175.9 2.4 Net income 7.8 7.9 (1.3)
Totalassets 469.8 438.2 7.2 Average numberof shares of common stock outstanding (thousands) 392 392 0.0 PerShamof Common Stock:
Earnings peraveragecommon sham $19.86 $20.18 (1.6)
Dividends paid percommon sham 20.14 20.15 0.0 Book value per common sham (yearend) 138.01 138.29 (0.2)
Operating:
Kilowatt-hoursales(billions) 3.4 3.7 (8.1)
Cost per kilowatt-houm(cents) 5.34 4.71 13.4 Numberof employees (yearend) 338 338 0.0 l
4
COMMOX STOCK ownership Percentage Shares Owned Owned Central Vermont Public Service Corporation 31.3 % 122,653 New England PowerCompany 20.0 78,402 Green Mountain Power Corporation 17.9 70,088 Connecticut Light and Power Corporation 9.5 37,242 Central Maine PowerCompany 4.0 15,681 Public Service Company of New Hampshim 4.0 15,681 Burlington Electric Department 3.6 14,301 )
Montaup ElectricCornpany 2.5 9,801 Cambridge Electric Light Company 2.5 9,801 Westem Massachusetts Electric Company 2.5 9,800 Vennont Electric Cooperative,Inc. 1.0 4,213 Washington Electric Cooperative,Inc. 0.6 2,431 Lyndonville Electric Department 0.6 2,387 100.0 % 392,481 i.
I i
5
e e i I MAXAGEVIE NT review PlantPerfonnance PlantIntparmnents CaIucityFactor Since the plant commenced commercial operation in 1972, Vermont Yankee has Vermont Yankee continues to be a world made capital investments exceeding $207 class nuclear power plant. For the five_ l n ( n8m I lant P cost was $183 year period 1987-92, Vermont Yankee,s m@lnon).Theseinvestments mi have
. cNplant safety and mliability.We average capacity factor was 86.8%. Tlu,s is continue toinvestin plantimpmve-36% higher than the U.S. mdustry aver-ments. Significant expenditures over the age and 21% higher than theintema-last ten years indude mplacement of our tional average. Although 1993 U.S. and mcirculation pipe, main transfomier, intemational capacity factors are not yet several feedwater heaters, as well as available for comparison, Vermont Yan- improvement in plant safety systems and kee's capacity factor of 76.4% is expected fueldesign. During 1995,we plan to to continue our mcord of exceeding both mtrofit our two low-pmssum turbines.
U.S. and interna tional average capacity This pmject will mplace existing equip-factors. ment withimproved materials and Vimrer hur At ! . N Iv1TRNAWPAL Uxmn SrAR3 6
kihnhlI mummmmmmmmmmmmmmmmma
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design which willcontribute to in- its ability tolimit downtime during creased turbine efficiency and durability. refueling outages.The plant has an All of these improvements are consistent operating cycle of eighteen months and with our goal to be a safe, mliable source must be shut down at the end of an of electricity for the next 20 years and to operating cycle for mfueling, mainte-have the capability of operating an nance, and construction activities. Our additional 20 yearsif desired. refueling outages are appmximately in-Incl Radimctive Maste Disjesal U.s. Em'R vermont Yankeeis moving fonvani vEnuour mousrRy with an ultimate solution for its knv- YEAR NEC '"' ERA GE level radioactive waste disposal. While = 1988 86 =
we are able to dispose of our low-level = 1989 57 99 =
radioactive wastein Bamwell, South = 1990 45 86 =
Carolina, thmugh June 1994, the State of = 1991 84 =
Vennont is in the process of completing = 1992 45 - 97 =
an agmement to enterinto a compact = 1993 57 78 =
with Texas and Maine for disposal of ,
low-level radioactive waste in Texas.
The compact has been ratified by both i1 Texas and Maine. The Vermont Legisla- Indnstrial Accident Rate tum is expected to consider a bill early during 1994 which would authorize Over the past two years, Vennont Yankee Vemiant's participation in the compact. has devoted considerable attention to If approved by the State of Vennont, the raising the standants for industrial safety compact will be submitted to the U.S. in ourcompany.Our efforts havein-Congmss for ratification. cluded development of a compmhensive Outagelengths safety manual, extensive employee train- ""f ing, and an incentive awant system. We /
Vennont Yankee has significantly out- are particularly pmud of our zem lost-performed theindustry on averagein time accident rate achieved during 1993.
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MANAGEV1KNT review Plant Economics VERA10NT INDUSTRY YEAR YANKEE AVERAGE Vermont Yankee,despite having the = 1989 1.49 1.50 =
handicap of being a smallplant,has = 1990 1.94 1.47 =
operation and maintenance costs that = 1991 1.22, 1.48 =
compare favorably with the industry as = 1992 1.95 1.83 -
illustrated by the chart to the right- - 1993 2.36 N/A =
- 0) Excluding Fuel and Administrative and General Expenses
- Non-refueling year ** Not available VERA10NT INDUSTRY Fuel Eamonu.cS YEAR YANKEE AVERAGE
1989 0.76 0.76 Vermont Yankee's fuel costs continue t = 1990 0.67 0.72
bebelow thelndustry averageas
1991 0.61 0.68
Illustrated in this table:
1992 0.57 0.65
2 0 ) includes spent fuel disposal fees. = 1993 0.58 N/A* =
(2) Indudes DOE enrichment site cleanup fee. , ,
' Not available . .
YEAR VERA10NT YANKEE TotalCost ofPouer
= 1989 4.04 Vermont Yankee continues to be a low- = 1990 4.61 cost pnxiucer of electricity. The table to = 1991 3.69 the right illustrates Vermont Yankee's = 1992 4.70 cost per kilowatt hour of electricity = 1993 5.34 generated:
(u inclusive of all msts.
5-mu annact - 4.48 mmmm um run - 3.23, 8-(2) Sinm mnunercial operations began in 1972.
- Non-refueling year ,
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~
au w .
linjnct on flie Vennant Economy Dor t Aus sy Altittoxs In addition to providing to Vermont 5"
utilities 55% of the electricity we vr daom pmduce, Vemiant Yankee makes s,ffdm$-(
j substantial dimct contributions to the ,s3g7 hf Vennont economyin the fann of i employee wages, state and local taxes s.4 and fees, payments to Vennont vendom, " "* s20.8 and dividends to Vennont shamholdem. uM,m "'"""
The chart to the right shows the amount of thesepaymentsduring1993. . . fl. . y f.cor o ; *lmpact 7
Conununityinvolmnent Vennant Yankee makes corparate FundingforDeconnnissioning contributions to organizations or programs which benefit a significant Vemiont Yankee continues to fund the portionof thecommtmityand ultimate deconunissioning of our plant generally improve the quality of life in with the goal of restoring the plant site to the area.Thecompany is an annual its original condition once we have n.
benefactor to many health and human concluded operations. At the end of - - - - -
service agencies, supports a var iety of 1993, these ftmds and ex}xrted futum tax educational pmgrams, particularly benefits totalled $101 million out of a those focusing on math, science and current pmjected decommissioning cost the envimnment, participates in of $253 million. We expect to continue to pmgrams tointmduce adults and contribute to our decommissioning fund childmn to the perfomaing arts,and at a level necessary to achieve full sponsors kral sporting events, teams, funding at the end of our operating and youth activities. In addition to licensein 2012.
dimet donations by the company, many Vennont Yankee employees O
J contribute countless volunteer hous to organizations in the tri-state mgion.
e , e i MNAN~CIAL review h perating mvenues of the Company during 1993 plant shutdowns and other are billed and mceived fmm customers operating projects completed during the based on the terms of the PowerCon- year including station air compmssor tracts. Under those contracts, customers mplacements, fim barrier seal repairs, are severally requirai to pay the Com- and modifications to the turbine build-panyan amount equal to their respec- ing roof vents.
Live entitlement sham of the Company's total fuel costs, operating expenses with Decommissioning expenseincreased respect to the Plant, and a mturn on net $0.7 million, or 6.3%, in 1993 primarily as unitinvestment as defined in such a msult of the inflation factor included in power contracts. the Company's decommissioning rate schedule,as appmved by the Federal Operating mvenuesincmased in 1993 Eneigy Regulatory Commission.
fmm 1992 by $4.2 million, or 2.4%, pri- Depmciation expenseincmased $0.5 marily as a result of higher operating, million,or 3.4%,in 1993 due to an in-maintenance, depmciation and decom- cmase in depreciable assets. Two major missioning expenses, offset, in part, by additions, a new spent fuel pool cooling l
lower nuclear fuelexpense. system and new feedwater heaters, wem placed in servicein 1993.
Nuclear fuel expense decmased by $1.7 million,or 8.1%,in ICA3 fnam ICA2 as a In November,1993, the Company issued msult of an 8.1 % decrease in electrical $75.8 million of Series I 6.48% first mort-generation. Due to additional emergent gage bonds and applied the proceeds to work mquimd in 1993, the Plant was retim the mmaining Series D 10.125%,
shut down fora total of 81 days com- Series E 9.875%, Series F 9.375%, Series G pamd tojust 45 daysin 1992. 8.94% and Series H 8.25% first mortgage bonds. The Company estimates that this Other operating expenses incmased $1.0, first mortgagebond mfinancing will million, or 1.4%, and maintenance ex- msult in a net decrease in 1994 intemst l pense incmased $3.5 million, or 12.7%, in expense of $1.6 million and a total sav-10 1993 fmm 1992. Theseincmases am the result of costs associated with the main-tenance and mpairefforts completed ings (measumd over thelives of the mtired bonds) of $7.8 million.
STAIEMENTS C"fanemiuss Years ended December 31, 1993 1992 1991
(
)
(Dollars in thousands exapt per slure amounts) stating revenues $1@,145 $15319 $151222 C rating expn,es:
uclear fuel expense 19,526 21,240 24,864 Other operating expense 74,013 72,067 59,666 Maintenance 31,405 27,878 13,664 Depreciation 13,7(T7 13,253 11,800 Decommissioningexpense(Non 2) 11315 10,M9 8,065 Taxeson incume(son 10) 3,777 3,401 3,485 Property and other taxes _%961 _10227 10,294 Totaloperatingexpenses 16'4,7(M 1E6_15 131XE Operatingincome _1M41 16E _19 SE1 Otherincumeand (daluctions):
Netcamingsondecommissioningfund(Nons 2and 5) 5,653 5J95 4,423 Decommissioningexpense(Non 2) (5h53) (5395) (4,423)
Allowanw for equity hmds used during wastmetion 92 89 124 Intertst 1,550 2,(M6 1377 Taws on otherincome(son 10) (623) (736) (447)
Other, net _J232) __(1_49) (917) 787 1,180 137 incomebeforeinterest expense _12228 _17,4&l _2J]p21 Interest expense-Intenst on long-term debt 7,281 7,101 7,6f4 Interest on disposal costs of spent nuclear fuel (Non 8) 2,4TI 2.801 4312 ...
Allowann> for twrowed funds umi during construction (2V7) __(339) (465) .-
1 Totalintet expense _ ofdi 9Na lifal + = - =
Net income 7,794 7,921 8,490 Retained earnings at beginning of year _ _1,178 _ 1,166 1,982 8,972 9,087 10,472 Dividends decland 7,905 _ 2,90_9 9306 Retained earnings at end of year $ 1,067 5 1,178 5 1,166 Average number of shares outstanding in thousands 392 392 394 Net income per average share of common stock outstanding 5 19.86 5 20.18 5 21.56 DMdends per average shan of common stock outstanding 5 20.14 5 20.15 5 23.71
s o BAI ANCE sheets Assers December 31, 1993 1992 (Dollars in thousands)
Utility plant:
Electric plant, at cost (Norr 6) $374,736 $ 362,278 Less accumulated depreciation 198,389 185,263 176,347 177,015 Construction work in progress 597 6,408 Net electric plant _l 1 94_4 _lfL3A23 Nuclear fuel, at cost (NOTE 6):
Assemblies in reactor 69,063 74,025 Fuel in process - 5,236 Spent fuel _287,700 2592 199 356,763 338,460 Less accumulated amortization of burned nuclear fuel 317A39 3J02,362 39,724 36,098 Less accumulated amortization of final core nuclear fuel 7,220 _ _6 487 Net nuclear fuel 32,504 __29 6_11 Net utility plant 209,448 213J)34 Current assets:
Cash and temporary investments 2,349 1,922 Accounts receivable from sponsors 12,235 15,407 Other accounts receivable 4,522 2,715 Materials and supplies 17,081 16,862 Prepaid expenses 3,949 4,381 Total current assets _ 402 136 41287 1 Deferred charges:
Deferred decommissioning costs (NoTt 2) 34,379 34,389 Accumulated deferred income taxes (NOTE 10) 18,231 10,378 Deferred DOE enrichment site decontamination and decommissioning fee (NOTE 4) 18,627 18,143 Net unamortized loss on reacquired debt 2,942 -
Other deferred charges (NOTE 4) _ _ 3m 643 4,994 Total deferred charges 77,822 673)4 Long-term funds at amortized cost:
Decommissioning fund (NOTLs 2,5, and 7) 98,880 82,091 Disposal fee defeasance fund (NOTLs 5,7, and 8) _432 484 _33_EL2 Total long-term funds 142,364 115,983 12 5469,770 $438,208 l
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CAPITALIZATION AND LIABILITIES .
December 31, 1993 1992 I (Dollars in thousands)
Capitalization:
uity:
Common Common stock stock, eq$100 par value; authorized 400,100 shares; issued 400,014 shares of which 7,533 are held in Treasury '
$ 40,001 $ 40,001 Additional paid-in capital 14,227 14,227 Treasury stock (7,533 shares at cost) (1,131) (1,131)
Retained earnings _ LO67 12 178 Total common stock equity _54,.164 54,275 Long-term obligations, net (Nous 6 and 7) 79,636 _742 193 Total capitalization 133JLOO 12M68 Commitments and contingencies (No!Ls 2,14 and 15) k Disposal fee and accrued interest for spent nuclear fuel (Nous 7 and 8) 80& 88 78,239 Current liabilities:
Accrued liabilities 28,063 22,743 Accounts payable 2,117 2,591 Accrued interest 635 974 Accrued taxes _L206 1d7_2 Total current liabilities _32,021 2Z,780 Deferred credits:
Accrued decommissioning costs (Non 2) 134,614 117,601 Accumulated deferred income taxes 56,478 58,963 Net regulatory tax liability (Non 10) 8,351 -
Accumulated' deferred infestment tax credits 7,013 7,590 Net unamortized gain on reacquired debt -
1,732 Accrued DOE enrichment site decontamination and decommissioning fee (NOTE 4) 15,966 17,220 Other deferred credits 839 615 Total deferred credits 223 261 203 Z21
$469,770 $438,208 .
e L_____.____.___.__
SIAIEVIENTS of cash flows .
Years endcd December 31, 1993 1992 1991 (Dollarsin thousands)
Cash flows from operating actisities-Net income $ 72M $ 7,921 $ 8M]
Adjustments to nmncile net inmme to net cash provided by operating actisities:
Amortization of nuclear fuel 15,410 18,143 21,002 Depreciation 13~d7 13,253 11,&K) 11,115 10,M9 8,(b5 I
Demmmissioning quise Deferred tax expt - (973 (2,169) (801)
Amortization of deferred investment tax civdits (577) (M1) (740)
Nuclear fuel disposal fee intenst accrual 2,450 2,802 4,312 Interest and dividends on disposal fee defeasance fund 0,402) (1,3&5) (1,495)
Oncrease) dectmse in accounts receivable 1,365 688 (129)
Oncivase) decrease in prepaid expenses 432 0,159) 163 Oncrease) in materials and supphes inventory (219) (454) (1,531)
Increase (decrease)in acmunts payable and accmed liabilities 4,M6 (7,453) 5,495 Increase (decrease) in intertst and taxes payable W15) 306 (760)
Other _(L228) _(L4101 __(1,66,)
Totaladjustments 44 51; 31,170 43,716 Net cash pnnided by operating activities -]d,13t)9 39,091 52,2(ii Cash flows fmm investing activities:
Ekttric plant additions (7,229) 0 0,750) (6,596)
Nudear fueladditions (18,303) (4,707) 0 8,444)
Payments to decommissiodng fund 0 1,250) (10,612) (8,323)
Pavments to disposal fee defcasance fund __(8,1901 _ 15,1901 ._ 18,216)
Net cash used in invesCng activities _L44m972) _(3EL59) _L4117_9)
Cash flows from financing activitics.
Dividend payments (7,R)3) (7,000) (9,306)
Puithaseof treasurystock - - (1,131)
Issuance of Series H first mortgage bonds, net - - 10,374 Issuanm of Series I first mortgage bonds, net 75,125 - -
Retirement of first mortgageknds including redemption costs (74,629) (6,521) 0 3,178)
Pa (137,911) (107,763) (53,419)
Ik>yments oflong-term obligations 111,215 rrowing underlong-temi agnements _L3&410 53298 Net cash used in fincmcing activities _L6 910) _OA97_8] _(1232]
Net increase (decrease) in cash and temporary investments 427 (3,146) (2,235)
Cash and temporary investments at beginning of year 1,422 _5 0f6 7,303 Cash and temporary investments at end of year $ 2,349 $ 1,922 $ 5,068 14
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NOIES to financial statements c
1l Suw,lAla Or sicNirICANT
.L. A CCOuNTING POLICIES .
Ekrtric plant is tving depraiatai on the straight-line method at rates designed to fully depreciate all depre-a Regulations and Operations ciable proprties over the lesser of estimated useful lins or the Plant's remaining NRC license life, which Vennont Yankee Nuclear Power Corporation ("the extends to March 2012. Depmciation expense was Company") is subitt to regulations prescribed by the ajuivalent to overall effective rates of 3.74%,3.56% and Faleral Energy Regulatory Commission ("FERC"), and 3 /.3M for the years 1993,1992 and 1991, aspectively.
the Public Sen iw Ikurd of the State of Vemiont with resprt to accounting and other mattets. The Company Renewals and trttenuents constitu;ing mtirement units is also subject to regulation by the Nuclear Regulatory are chargal to ekttric pkmt. Minor renewals and Commission ("NRC") for nudear plant licensing and bettennents are charged to nuintenance expense.
safety, and by federal and state agencies for environ- When properties are retinti, the original cost, plus cost mental nutters such as air quality, water quality and of removal, kss salvage, is chargai to the accumulatal land use. provision for depreciation.
Prior to Novemtvr 1993, the Company was subject to c A7gg7[j;gtjgggfNyc/pg7pupf regulation by the Securities and Exchange Commission.
As a result of the debt mfinancing discussed in Nonm, The cost of nuclear fuel is amortizal to expense based the C ompmy is no longer subject to such regulation.
on the rate of bum-up of the indhidual assemblies comptising the total core. The Company also provides The L,ompany raugnizes revenue pursuant to the tenns for the costs of disposing of spent nuclear fuel at rates of the Power Contracts and Additional Power Contracts s (ifial by the Unitai States Department of Energy The Sponus, a group of nine New I;ngland utilities, are ' ~
(,g,,) under a entract for disposal trtween the severally obliga tai to pay the company eat h month Comptny and the DOE.
their entitlement perwntage of amounts ajual to the Company's total fuel costs and operating expenses of its
.Ihe Company amortizes to exp nse on a straight-line I lant, plus an allowai mturn on equity (12.25% since basis the estinuted aists of the final unspent nudear December 1,1989). Such contracts also obligate the fuel core, which is expectai to be in place at the Sponson, to nuke demmmissioning payments through expiration of the Plant's NRC operating limnse, in the end of the Plant s sernce life and the completion of confonnity with rates authorized by the FERC.
thedecommissioningof thePlant. AllSponsorsare -
committai to such payments mganikss of the Plant's operating level or whether the Plant is out of senim .
during the prial. a.
d Amortn. tionofMaterialsandSuppfw. s Under the tenus of the Capital Funds Agarments, the The Compmy amortizes to expense a formula amount Sponsors are committed, subject to obtc Sing necessary designed to fully amortize the cost of the material and regulatory authorizations, to make funds available to supplies inventory that is expectai to be on hand at the obtain or maintain licenses necessary to keep the Plant in expiration of the Plant's NRC operating license.
operation.
NOlhS to financial statements e inng-tenn Funds h Decommissioning The Company accounts for its investments in long-term The Company is accruing the estimated costs of decom-ftmds at amortized cost since it has both the intent and missioning its Plant over the Plant's remaining NRC ability to hold these investments for the foreseeable license life. Any amendments to these estinukd costs future. Amortized cost n pmsents the cost to purchase areaccounted for prospectively.
the investment, net of any unamortized pmmiums or discounts.
i Taxesonincome f AmortizationofGainandlosson Effective January 1,1993, the Company began account-Reacquired Debt ing for taxes on income under the liability method mquinxi by Statement of Financial Accounting Standard The difference between the amount paid upon reacquisi- }09. Sw Note 10 fora further discussion of this change tion of any debt security and the face value thereof, plus '" """li"8' any unamortizai premium, less any related unamor-Investment tax credits have been deferred and am being tized debt expense and maa]uisition costs, or less any unamortizni diacount, miated unamortized debt am itizai to income over thelives of the relatai assets.
expense and reacquisition custs applicable to the debt .
raieemal, retiral and canceled, is deferred by the J CashEgm.mlents Company and amortizal to exptmse on a straight-line basis over the remaining life of the applicable security For purposes of the Statements of Cash Flows, the issues. Company considers all highly liquid short-term invest-ments with an original maturity of tlure months or kss g AllourmceforFunds Used Dnring to be cash equivalents-Construction Allowance for funds used during constmetion
("Al;UDC")is the estinutal cost of ftuxis usal to fiinixt Certain infomution in the 1992 and 1991 financial the Company's construction work in progrtss and statements has been ndassified to conform with the 1993 nuclear fuel in proass which is not nxuvensi from the Sponsors through current revenues. The allowance is P"*'"I l' "-
not realizal in cash currently, but under the Power Contracts, the allowance will be recovered in cash over / EarningsperConnnon Sham the Plant's service life through higher revenues associ-ated with higher depreciation and amortization expense. Eamings per cummon slure have ban computed by AFUDC was capitalized at overall effective rates of dividing eamings available to common stock by the 16 5.92% 6.82'?c and 6.98% for 1993,1992 and 1991, nspec-tively, using the gross rate method.
weighted average number of shams outstanding dunng the year.
l l
l
1
~
j annual decommissioning fund colk ctions reflecting the p~, DecomussioxiNc historicaldirference betweenassumaiand actualrate ofinflation and the historical differences lerween assumai and actual rates of earnings on decommission-The Compmy awrues estinutai decomndssioning costs ing fund assets. Filings are requirai to be nude within for its nudear plant over its remaining NRC licensed life four years of the most nrent FERC approval of daum-bastd on studies by an independent engineering finn missioning cost estinutes and rates.
that assumes that decommissioinng will be accom-plishal by the prompt removal and dismantling Cash receinsi from Sponsors for plant decommissioning method. This meth(d requins that radioactive nuterials costs is depositai into the Vermont Yankee Decommis-be remoud from the plant site and that all buildings and sioning Trust in either the Qualifini Fund (i.e., amounts facilities be dist aantini immediately after shutdown. currently daluctible pursuant to the IRS regulations) or Studies estimate tlut approxinutely six years would lv the Nonqualified Fund (i.e., excess colk ctions pursuant rajuired to disnuntle the Plant at shutdown, remove to FERC authorization which are not cunvntly daluct-wastes and nstore the site. The Company lus imple. ible). Funds held by the Trust are invested in high-grade mented rates lusti on a settlement agnement with the U.S. govemment securities and municipal obligations.
FERC which allowai $100 million,in 1988 dollars, as the Intenst earnai by the Decomnussioning Trust assets is estinutai decommissioning adt. This allowed amount recordai in other income and deductions, with an equal is usai to compute the Compmy's liability and billings and offsetting amount reprewnting the current period to the Sputsors. Ilasai on an assumal inflation rate of decommissioning cost fundal by such eamings reflected
- 1 per annum and an expiration of the Plant's NRC as demmmissioning expense.
o}vrating liwnse in 2012, the estimated current cost of decommissioning is $253 million and, at the end of 2012, Dwomndssioning exgsw for 1991 indudal an adjust-is approxinutely $769 million. The pn sent value of the ment of appnaimately $2.1 million resulting from the pro rata pirtion of tiecommissioning costs nwnkd to Compu y's rate ntluction filing appronti by the FERC .
dateisSibmillion CM Dn9nber31,IW3,thebalanw on Ibbntary 28, lu91 as discussi in mnt 3. 7.
in the Decommis,ioning Tmst was $98.9 million.
liillings to Spn tsors for estinutal decommissioning msts commencal dunng 1983, at which time the @Q FERC Ram Cast Ma7Tras Company nronkti a deferred charge for the present value of decommissioning costs applicable to operations On April 27,1989, Vermont Yankee filed an application of the Plant for prior periods. Current perkd demmnus-with the NRC to extend the term of the operating sioning c sts not funded through billings to Sponsors or license from 2007 to 2012 so that the Plant may operate canungs decommissioning fund assets are also for 40 years after it ententi commercial service in 1972.
deferral. 'Ihese deferrai costs willlv amortuni to On December 17,1990, the NRC issual an amendment expense as they arv fundal over the remaining life of the to the operating liwnse extending its term to March 21, ,
NRC operating liwnse.
2012. The Compmy submitted a rate raiuction filing with the FERC to refktt in rates the adjustments to in 1944, the C,ompany must file a revisai estimate of chrommissioning, depreciation and amortization daummissioning costs and a revised schedule of future resulting from th'elicense extension The Company
NO1FS to financial statements proposed to nuke this rttiuction effective as of March 1, ff~ f OmenDtrrnarDCuancrs 1991, and, since the extension was issued in 1990, to y AND CREDUS reflect the necessary adjustment for the period January 1, 1990,through Febmary 28,1991. In October 1992, Congress passed the Energy Policy Act of 1992 which raluires, among other things, that certain On February 28,1991, the FERC approved the Com- utilities help pay for the deanup of the DOE's enrich-pany's rate reduction filing. The effects of this mling ment facilities over a 15-year period. The Company's I were accounted for pmspectively in fiscal 1991, pmduc- annual fee is estimated based on the historical share of l ing a net mvenue reduction of approximately $7.4 enrichment service provided by the DOE and is I million in 1991, which reflected the retroactive treatment indexed to inflation. These fees will not be adjusted for to January 1,1990. This ruling resulted in reduced future business as the DOE's future mst of sales will revenue requirements of approximately $3.5 million for indude a decontamination and decommissioning i both 1992 and 1993, and similar reductions are expected component.The Act stipulates that theannual fee shall in future years, be fully recoverable in rates in the same manner as other fuel costs.-
On March 26,1993, the FERC initiated a review of the return on common aluity component of the fonnula In 1993, the DOE billed, and the Company paid, the rates induded in the Company's Power Contracts. On firstof the15annualfees. Asof Dewmber31,1993,the October 22,1993, the FERC appmved a settlement Company has recognized a current accrued liability of whemby the Company retained its 12.25% authorized $2.6 million for the two fee payments expected to be rate of return on common equity and agmd to credit made in 19%, a deferred cmiit of $16.0 million for the monthly power billings by approximately $139,000 12 annual fee payments that are due subsequent to 1994 beginninginJune,1993. and a corresponding regulatory asset of $18.6 million which represents the total amount includable in future in 1M the Company will aihmit a rate filing to Ihe billingc to the purchasers under the Power Centracts.
FERC whidt willindude, among other things, a revised Wnile these amounts am reflected in these nnancial estinute of decommissioning costs and a revised statements, the Company is reviewing the DOE's schedule of future annual decommissioning fund calculation of the annual fee and believes that the collections. annual fee will ultimately be n'duced.
Appruxinutely $2.1 and $33 million of the $3.6 and $5.0 million in other defentd charges at December 31,1993 and 1992, respectively, relate to payments made to the Vermont Iow Level Radioactive Waste Authority
("VLLRWA"), an agency of the State of Vermont for the siting and construction of a low-level waste disposal facility.
18
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AM P Loxa-inw Fuxos A- The book value and estimated market value of long-term fund investment securities at December 31 is as follows:
1993 1992 Ekiok Market Ikxik Afarket value value value value (Dollars in thousands)
Decommissioning fund:
US. Treasury obligations $17,262 18,666 $22,000 $23,067 Municipal obligations 79,755 84,576 57,141 59,009 Accrued interest and money market funds 1M3 1R33 _2 9_50 _2 9_50 98,880 10M05 82LM 85026 Disposal fee defeasance fund:
Short-tenn investments 39,870 39,870 26,457 26,457 Corporate bonds and note 3,195 3,083 6,110 5,940 Accrtud interest and money market funds 419 419 _1225 1 325
_41484 4Ll72 33,892 _3E22 Totallong-temt fund investments $142,364 $148,477 $115,983 $118,748 1993 1992 At Daember 31,1993 and (Dollarsin thousands) 1992, gross unrealind gains Unrealind gains on US. Treasury obligations $ 1,431 $ 1,071 and ke,ses pertaining to the Unrealind kews on US. Treasury obligations $ 127) $ (4) long-term investment Unrealind gains on Municipal obligations $4A13 $ 1,893 securities were as follows: Unrealind kms on Municipal obligations $ (22) $ (27)
Unrealized k*,ses on corpm ate bonds and notes $ (112) $ (170)
Within one year $42,200 Two to fweyears 16,W Maturities of short-term obligations, Ninds and notes Five toseven years 19,670 (face amount) at December 31,1993, ar> as follows Overseven years 57 Nil (dollars in thousands): $136,707
XO1FS to financial statements NOTE ($ Loxc-mmOnuannons A summary oflong-term obligations at Dtwmber 31, 1993 and 1992,is as follows:
1993 1992 (Dollars in thousands)
First mortgage bonds:
Series B - 8.50% due 1998 $ - $1,307 Series C-7.70% due 1998 - 1,612 Series D- 10.125% due 2007 - 23,147 Series E- 9.875% due 2(XTI - 5,703 Series F- 9.375% due 2007 -
5,704 Series G -8.W% due 1995 -
25,000 SeriesIi-8.25% due 19% -
8,388 Series I- 6.48% due 2009 75,N5 -
Total first mortgagelunds Z5,N5 Zl)fM Eurodollar Agrwment Commercial Paper 3,791 3,292 Unamortized premium on debt -
40 Totallong-temmbligations $79,636 $74,193 The first mongage bonds are issued under, have the Series E, Series F, Series G and Series 1 I first mortgage temts and provisions set forth in, and are secunti by an lunds, including call pnmiums totalling $3.7 million Indenture of Mortgage dated as of October 1,1970, based on the early redemption of the bonds. Cash between the Company and the Trustee, as modified sinking fund requirements for the Series I first mortgage and supplemented by 13 supplementalindentures. All bonds are $5.4 million annually beginning November lunds are secured by a first lien on utility plant, 1999.
exclusive of nudear fuel, and a pledge of tht Power Contracts and the Additional Power Contracts (except The Company lus a $75.0 million Etuniollar Cretiit for fuel payments) and the Capital Funds Agreements Agreement that expires on Dowmber 31,1995, subject to with Sponsors. three optiona1 one-year extensions. The Company issued commercial piper under this agntment with On July 1,1993, the Cornpany retinti the outstanding weighted average interest rates of 3.22% for 1993 and I Serim B and Series C first mortgage tvnds. In Novem- 3.95% for 1992. Payment of the commercial paper is 20 ber 1993, the Company issued $75.8 million of Series I supportai by the Eurodollar Credit Agreement, which first modgage bonds statai to mature on November 1, is secunti by a second mortgage on the Compmy's 2009. The Companyapplial the procatis of thelund generating facility.
issuance principally to retire the remaining Series D, l
l l
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W DISCLoSuRts Anotrr mc FAtu
/ VALuE OF FINMCIAL INSTRUMENIS The carrying amounts for cash and temprary innst- estimatal basal on the quoted nurket prices for the ments, trade receivables, accounts receivable from same or similar issue, or on the cununt rates offenti to spinsors, accounts payable and accrual liabilities the Compmy for debt of the same renuining maturities.
approxin ute their fair values because of the short nuturi'y of these instruments. The fair values of long- The estinukt! fair value of the Company's financial tenn funds are estinuted baxtl on quotal nurket prices instruments as of [Atember 31 are sumnurized as for these or similar investments. The fair values of each follows(dollais in thousands):
of theCom[uny'slong-temidebtinstrumentsare 1993 1992 Carrying Estimatai Carrying Estinuh i Amount Fair Value Amount Fair Value Decommissioning fund $48,880 $105,105 $82,091 $85,026 Disposal fee defeasance fund 43,484 43,372 33,892 33,722 longenn debt 79,636 77,361 74,193 78,235 Disposal feeand accruniinterest 80,6S8 80/ M 78,239 78,239 Fair value estimates are made at a sprific point in time, senices when a facility for spent nuclear fuel and other luxtl on relevant market infornution and infomution high-level radioactive waste is available, which is about the financial instrument. These estimates are ra]uinti by cuntut statute to be prior to Jantury 31,1998.
subjective in tuture and involve unwrtainties and matters of significant judgment and therefore cannot le The DOE contract obligates the Company to pay a one-determinal with pntision. Clunges in assumptions time fee of apprminutely $393 million for disposal costs could significantly affect the estinutes. for all spent fuel disclurgal through April 7,1983.
Although such amount lus been colktted in rates from Disi>osat Frc ron Si>rvr the Spmsors, the Company bas ektted to defer payment C@)NuCmin Furt of the fee to the DOE as pennithil by the DOE contract.
The fee must be paid no later than the first delivery of spent nudear fuel to the DOE. Interest accrues on the The Company has a contract with the Unital States tmpaid obligation basai on the thirtwn-week Treasury Depurtment of Energy (" DOE") for the pernunent Bill rate and is compounded quarterly. Through 1993, disposal of spent nudear fuel. Under the tenns of this the Company deposiksi approtimately $37.5 in an contract, in exclunge for the ont time fee discussed irreuable trust to be usal exclusively for defeasing this triow and a quarterly fee of 1 mil per kwh of elwtricity obligation at some future date, providal the DOE generatal and sold, the DOE agrtes to provide disposal complies with the terms of the aforementional contract.
XO1ES to financial statements On December 31,1991, the DOE issual an amendal final EMS ONINCoM rule modifying the Standard Contract for Disposal of Spent Nuclear Fuel and/or High-level Radioactive Waste. In February,1992, the Financial Accounting Standards The amendal final rule confonns with a March 17,1989, ikuni issual Statement of Financial Accounting nding of the US Court of Appeals for the District of Standards No.109, " Accounting for income Taxes",
Columbia that the 1 mil per kilowatt hour fee in the which as]uinti the Compmy to clunge from the Standard Contract should be basal on net ekttridty defentti method to the liabihty metini of accounting for generated and sold. The impact of the amendment on the income taxes on January 1,1993. The liability method Company was to raluce the lusis for the fw by 6% on an accuunts for defenai ina >me taxes by applying enacted ongoing basis and to establish a rativable from the DOE statutory rates in effect at the Lulan sheet date to for previous overbillings and accmai intertst. The differences between the book basis and the tax basis of Company lus recogniial in its rates the full impact of the assets and liabilities (" temporary differences").
amendal final nde to the Stimdani Contract.
This new stdement rtsluires remgnition of deferred tax The DOE is refunding the overpayments, induding liabilities for (a) income tax benefits asmciatal with interest, to utilities over a four-year period ending in 1995 timing differences previously }ussed on to customers via cralits against quarterly payments. Interest is based and (b) the aluity component of allowance for funds on the 9Aiay Treasury Bill Auction Bond Equivalent and usal during construction, and of a deferred tax asset for will continue to accrue on amounts nnuining to be the tax effect of the accumulatai deferred investment tax cntlital. At December 31,1993 and 1992, respectively, credits. It also reuuires the adjustment of deferral tax approxinutely $0.9 and $1.6 million in principal and liabilities or assets for an enactai change in tax laws or interest is reflated in other accounts rtreivable. rates,amongothertn s.
Aldmugh adoption of this new statement has not and is NOTE % Snonr-mBonnoms not expected to have a nutenahmpact on the Com-panys cash flow, nsults of operations or financial The Company had lines of credit from various banks position because of the effect of rate regulation, the totalling $6.3 million at December 31,1993 and 1W2. The Company was requirai to recognize an adjustment to nuximum amount of short-temi bonuwings outstand- accumulatal deferred income taxes and a cornsponding ing at any month +nd during 1993,1992 and 1991 was regtdatory asset or liability to customers (in amounts appnwinutely $0.2 million, St6 million and $0.4 million, atual to the requirai deferral income tax adjtstment) to nspectively. The average daily amount oi short-tenn reflect the future revenues or ntluction in revenues that bornmings outstanding was approxinutely $0.3 million will be requinti when the temporary differences tum for 1993, and $0.1 million for 1992 and 1991 with around and are nuwend or settled in rates. In addition, weightai average intenst rates of 5.75% in 1993,6.12 % this new statement requirai a reclassification of certain in 1992 and 8.19% in 1991. There were no amounts deferral income tax liabilities to liabihties to customers in 2
outstanding under these lines of cntiit as of Demmber order to refktt the Company's obligation to flow luck 31,1993 and 1992.
deferral income taxes providai at rates higher than the current 35% faieral tax rate. The Company has applksi the provisions of this new statement without restating prior year financialstatements.
k l E .-
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W C4Ga The components of income tax expense for the years .
endal December 31,1993,1992 and 1W 1, are as follows:
1993 1992 1991 (Dollars in thousands)
Taxeson operatingincome: {-
Current federalincome tax $ 4,236 $ 4,926 $ 4,003 Deferrai faieralincome tax (1,039) (1,MO) (1,285)
Current stateincome tax 1,097 1,285 1,024 Defentd stateincome tax 80 (329) 483 Innstment tax cntiit adjustment _f7D _MJ1) _GO)
_3R _._3JO_1 _3d@
Taxes on ofherincome:
Curn nt faieralinaime tax 4% 598 353 Current stateincome tax 127 158 W
_ 623 756 447 Totalincome taxes S 4,400 $ 4,157 5 3,932 A rtwnaliation of the Company's effective income tax rates with the faieral statutory rate is as follows-1993 1992 1991 i Faieral statutory rate 35.0% 34.0% 340%
State income taxes, net of fakra) income tax benefit 6.9 6.1 6.1 Innstment cralit (4.7) (5.3) (6.0)
Book depreciation in excess of tax basis 2.0 1.9 1.7 AFUDC u]uity 0h 0.9 0.9 _
Flowback of excess defentd taxes (3.6) 0.1) (6.7)
Other gL1) 10j) 1.7 36.1 % 34.4 % 31.7% ,
o .
XOIES to financial statements The items comprising defer; d inmme tax expense an' as follows:
1993 1992 1991 (Dollarsin thousands)
Decommissioning expense not curnmtly deductible $(351) $(1(M) $ 14 Tax depreciation over (under) financial statement depreciation (978) (6W) 955 Tax fuel amortization over (under) firuncial statement amortization (255) (637) (1,389)
Tax kr,s on reacquisition of debt over (under) financialstatement expense 1,887 187 178 Pension experte not currently deductible (167) (192) (562)
Pmtemployment benefits deduction aver (under) firuncial statement expense 67 (141) -
Amortization of nuterials and supplies not cunently deductible (335) (343) (239)
Iow-level waste deduction over (under) financial statement expense (596) 139 825 Flowback of excess defernd taus (442) (376) (828)
Other 191 _{23] 243
$(979) $ (2,169) $ (801)
I 1
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u%t@en The tax effects of temporary differenws tlut gnv rise to defernti tax liabilitie 4 at Darmber 31,1993, and Jantury significant portions of the deferral tax assets and 1,1993, are presented below:
December 31,1993 January 1,1993 (Dollars in thousands)
Deferred tax assets:
Acuimulatal amortization of fiaal nudear core $ 2,914 $ 2,559 Nudeardecommissioningliability 2,810 2,291 Regulatory liabiliis 5,856 670 Nl Accumulataideferraiinnstment cralit 2,830 2,9S4 Accumulated amortization of nuterials and supplies 2,281 L851 Other _2271 _4M1 Total gross deferrai tax aswts 19,462 21,069 IAss valuation allowanx _1 13] _1,142 Net deferrai tax assets 18231 19M27 !
Deferral tax liabilities: .
Plant and ajuipment (51,258) (51,399)
Other _(5220) Es5_74)
Total gross defernxi tax liabilities @R8) M 973)
Net defernxi tax liability $(38,247) 5(37,046)
The valuation allowance is the result of a provision in Vermont tax law which limits refunds nsulting from can) backs of net operating k>sses.
- A SUPPLBmVTAL
.hJ.L CAsnFLowIxronnarios The following infonnation suppk nx nts the cash tiow infornution pa nadai in the Stattments of Cish Ilow (Dollarsin tlnisands) 1993 1992 1991 CashJ uidduringtheyearfor Intenst(net of amount opitalizai) $ 7,632 5 7,062 5 7,990 hxun,e taxts S 7,0A) 5 6.192 $ 4,793 .
XOlliS to financial statements NOTE i_i:2 PENSION PLANS
{
The Comp <my has two noncontributory pension plans on age, yeas of service and the level of compensation covering substantially all of its regular employees. The during the final years of employment. The aggregate Compuny's funding policy is to fund the net periodic fundai status of the Company's pension plans as of pension expense accmed each year. Benefits are based December 31,1993 and 1992, is as follows:
g December 31, 1993 1992 (Dollaisin thousands)
Vestai benefits $ 8,882 $ 6,5 k8 Nonvested benefits 1,338 918 Acutmulatai benefit obligation 10,220 7,466 Additional benefits mlatai to futun compensation levels _8S0 _7228 Projected benefit obligation 18,760 15,194 Fair value of plan assets, nwestal pHmanly in equities and bonds 16,M3 13) _9 1 Projected benefit obligation in excess of plan assets S 2,417 $ 1,403 The incnnse in the projectal benefit obligation from
$152 million in 1992 to $18.8 million in 1993 is the nsult of additional senice accruals, interest costs and changed plan assumptions Certain changes in the items shown above am not nxugnizai as they occur, but are amortizal systemati-cally over subsequent periods. Unnupized amounts still to be amortized and the amount that is includai in thebalance sheet appear on page27.
E_.
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uwtchra ~
December 31, 1993 1992 (Dollarsin thousands)
Unrecognizai net transition obligation $ M6 $ 1,057 Unnuynizai net gain (4,086) (4,939)
Pension liability induded in balance shwt 4,866 4,610 Unrm>gnized priorservim costs 641 675 Pnveted trnefit obligation in exwss of plan assets 5 2,417 $ 1,403 The following are pension plan assumptions as of Decemtvr 31,1993 and 1992:
December 31, 1993 1992 Dismunt rate 7.0% S.0'1 Compensation Kale 53% 65%-
Expectai tvtum on assets 83% 85'l-Net pension expense for the thne years ending Denmlvr 31,1993,includal the following components:
1993 1992 1991 (Dollars in thousands)
Senicecost-benefits camal $ 1,141 $1,20 m1/147 interest cost on pntctai tenefit obligation 1,288 1,305 1,1D4 Actual (retum) k*,s on plan aswts (1,792) (867) (2,124)
Net amortization and deferral 631 78 1,452 Net pension expense $ 1,268 $ 1.791 $ 1,579
XO1ES to financial statements regulations, the Company has amendal its pension NON(/M@ POSTRETIREMENTBENEFITS OTiiER TiidNPENSIONS plans and tstablislui ayurate VEBA tmsts for nun-agement and union employees.
The Company adoptal Statement of Financial Account. In December 1992, the FERC issual its policy statemtut ing Standards No.106, " Employers' Accounting for settmg forth how utilities can nuwer in rates the Postretirtuient Benefits Other Tlun Pensions" (SFAS increased costs associatai with theimplementation of 106), on January 1,1992. This statement ra]uires SFAS 106. The p>licy statement specifies thnv condi-companies to use accmal accounting for postretimment tions that must be met before FERC will mnsider benefits otlwr tlun pensions. IYior to 1992, the Compmy companies' ekttion of the actmal methai: (a) the acemed and mllected a portion of potretirement Compmy must agree to nuke cash deposits to an benefits costs through dtuimmissioning billings while inuvocable extenul tmst fund, at least quarterly, in the remaining cost was expensai when benefits were amounts that am propirtional and, on an annual lusis, paid. The incremental cost, alxwe the amount colkctai atual to the annual test period allowance for postretire-through decommissioning billings, appnninutely $2.4 ment lenefits other tlun yutsions; (b) the Com}uny million, is now accmal and since January 1992, has twn must agree to nuximize the use of income tax daluc-included in the Compmy's monthly power billings to tions for contributions to funds of this natum; and (c) in Sponsors. The Compmy is funding this liability by order to rtuwer the transition obligation, the Company placing monies in separate trusts. In order to nuximize must file a general rata change within three years of the daluctiUe contributions pennittai under IRS adoption of SFAS 106.
The following table presents the pbn's funded status rtroncikd with amounts remgnized in the Company's bahnm sheets as of December 31,1993, and Demmber 31,1992 (dolbn;in thousands):
Aaumulatai postreti ement benefit obligation: 1993 1992 Retirtis $ 1,078 S 1,277 Fully eligible active pbn participants 921 1,332 Other active participmts _8R1 9EC, Total accumulated pdtretirement benefit obligation 10,070 12,514 Fair value of plan assets,investal primarilyin short-tenn i <estments _ 2,457 1M95 Acrumulated postmtiren ent benefit obligation in exass of pbn assets 5 7,613 $10,949 Unrecognizal net transition obligation S 7,933 $10,314 Unnu>gnized net gain (1,980) (126)
Accrued postretirement benefit cost collectai through dammmissioning billings and includal in accmal liabilities 1,660 761 Accumulated postretirement benefit obligation in exctss of plan assets $ 7,613 510,949
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MLW The net periodic postretirement benefit cost for 1943 and -
1992 indudes the following components (dollars in LEASE COMUTTAffXIS thousands): 7-The Company leases ajuipment and systents under 1993 1992 noncancelable operating leases. Charges against hicome for rentals under tlxse leases were approximately $3.7 Smicecost $ 735 S 958 million, $2.6 million and $3.7 million in 1993,1992 and Interest cost 652 941 1991, respectively. Minimum futum rentals as of Net amortization December 31,1993,are as follows:
and deferral 350 543 Fiscalyearsendal Asmual rentals (Dollars in thousands) potretinment 19 % $ 3,283 l benefit cost $ 1,737 $ 2,442 19 % 2,878 1997 2,798 1998 and after 5,053 For measurement purpo,es, a 15% annual rate of increase in the per capita cost of covend benefits (i.e.,
health care udt trend rate) was assumai for 1993; the rate was assumal to decrease gradually to 6% by the year 2001 and renuin at that level thereafter. The health The Compmy has entend into an agnement with cam cost trtud rate assumption has a signifiant effeet on Ceneral Electric Capital Cory> ration to lease turbine the amounts reported. For example, increasing the ampants being mnstmctal by Cmeral Ekttric Cor-assumed health care awt trend rates by one percentage pration valuai at approximately $24 million including point in each year would increase the accumulatai installation costs. Under the lease agreement, the postretinment benefit obligation as of Dewmber 31, Company will nuke 120 monthly payments of $N2,358 1993, by $22 million and the aggmgateof the senice and each commencing on the later of(1) April 15,1995, or intertst mst components of net periaiic postretirement (2) the commissioning date of the a]uipment. The lease benefit adt for the year endai December 31,1993, by will also indude the sale and leaseback of a $2 million
$03 million. The weighted-average discount rate usal turbine rotor fort;ing prisiously ownal by the Com-in detennining the acciunulated postmtirement benefit pmy. The lease will be classified as an operating lease obligation was 7% at Darmber 31,1993. for acmunting purposes.
The change in the accumulated postwtinment benefit The construction contract ragms progress payments obligation from $12.5 million in 1992 to $10.0 million in to be paid by Vennont Yankee prior to installation of 1W3 is the nsult of adjustments nude to reflect a lower the a]uipment. Just prior to delivery of the aluipment, actual malical cost increase dwing 1993 than projected. the lessor will reimburse Vermont Yankee for thew .
The niiuction in the unnmgnizai net transition payments and will continue to nuke the nmaining obligation from $103 million in 1992 to $7.9 million in payments until the commencement date of the lease.
1W3 is prinurity the result of elimination of Malimre During the time period subsa[uent to aluipment Part B coverage. delivery before the ajuipment is commissioned, the
NOIES to financial statements Compmy will pay interim nnt to the kssor hisal on the if the aimpact is successful and pnuuis on schalule, amount of outstanding progress payments. The final Vermont Yankm would irgin wnding its waste to a documentation of the lease is currently tving negotiatal, Texas facility during 1W7. Under the prupati and if a final agreement cannot tv reachai, the Com- comp ct, Vemtont would pay the State of Texas $25 pany would be itspntsible for substantial termination million ($12.5 million when the US. Congnss ratifies payments. the compact and $12.5 million when the facility opensk in addition, Vennont must pay $2.5 million
($1.25 million when Congress ratifies the cumpact and NOE Qg- COMMITMENTS AND cOuriucrucits
$1.25 million when tle facility is liwnsed) for cummu~
nitya,1,tancepmjectsinnua,pethCeunty,Texa, whem the facility is to tv kicatai. Vermont would alsopayone-thirdof theTexaslow-IrvelRadkuc-(I [17W-/CUCI WaSlc tive Waste Disposal Compact Commission's expenses until tl e facility opens. The disposal fws for genera-In February 1993, the Vemmnt Public Serviw Ikurd tors in Vermont and Maine wouki then tv set at a issual an ortier whiclun]uires the Company to pay its level tlut is the same for gerxrators in Texas. Tl e slure of expenses incurral by the Vennont low Ixvel Company anticipates recovering the costs of the Radioactive Waste Authority ("VLLRWA") for the mmpuct from sponsors.
period April IW3 through June 19'4, cunuuly cappd at $15 million. In addition,in accordance with Vemiont Act 2%, the order establish d a fund for the long-tenn b NuclearFuel care of any eventual Vennont low-level waste disposal facility. Iltsui on this order, the Company must nuke ~
11r Compuny hts appnninutely $1(t mi' lion of annual payments of approxinutely $0.8 million into the "nsluirtments luati" puniuse mntracts for nuckur long-term care fund. Payments nude to the VLLRWA, fuel ixuls to nxtt substantiallyall of its power not pertaining dirtictly to the siting and cortstruction of a pnduction nsjuinmxuts thmugh 2m2. Under thw low-level waste disposal facility, am tring expensai amtrats, any disruption of oprating activity wouki cuntmtly. alkiw the Compmy to canwl or pstpme deliveries untiladually natkti.
In parallel with siting a knv-level radioactive waste facility in Vermont there lus been a thatwtate effort C Insurance Irtween Vermont, Maine, and Texas to form a cumpact to site such a facility in Texas. The Texas Irgislature has appmvai, and C wernor Ann Richards of Texas has The Prim Andermn Act,as anuxhti, cuntntly limits piblic signai into law, a bill tlut would form such a compact. liability fmm a single inckknt at a nuckur p nny plant to F4 On Nonmhr 2,1W3, Maine voters ratifial the cumpxt billion. Any danuges tryond $9.4 billion are irxienmitid Early d uring its 19'4 session, the Vennont lxgislature is mxiiran agrtunent with the NRC, but subjwt to Congrtt+
schalukti to vote to approve entry into the compact. sional apptwat The first $30 mdliam(6 hdity antrage is Folknving approval by the Vennont lxgislature, the the nuximum puvi kti by private insuranw. The Sea m-compact will rajuireapproval of the US. Congass. day Finuxial Prukttion pnyram is a ntadiutive
insuranm plan prosiding additional coverage up to 59.2 program referencal above prmides awerage in exass billion per incident by awssing retrospective premiums of the Master Worker policy.
of $793 million against each of the 116 reactor units that are currently subject to the Program in the Unitai States, hisurance has been purchasai from Nudear Ekrtric limital to a maximum aussment of $10 million per Insurance Limitai (NEIL II) to cover the costs of prop-incident per nuclear unit in any one year. The maximum erty danuge, decontamination or prematun decommis-awssment is to be adjustal at least every five years to sioning resulting from a nuclear incident. All companies refkvt inHationarv dunges. insured with NEIL Il are subjttt to retnuctive assess-ments if ksxs exatti the accumulated funds available The above insurance covers alhvorkers employal at to NEIL II. The ntwimum potential assessment against nudear facilities prior to January 1,1988, for tulily injury the Company with respect to ksses arising during the
, claims. The Company has purdused a Master Worker current policy year is $18 million at the time of a first kss insurance policy with limits of $200 million with one and $123 million at the time of a subsequent kss. The automatic reinstatement of policy limits to cover workers Company's liability for the retndpective premium employed on or after January 1,1988. Vermont Yankee's adjustment for any policy year ceaxs six years after the estimatal contingent liability for a wtndpective pre- end of that policy year unkss prior denund haslven mium on the Master Workers policy as of December made.
1993 is $3.1 million. The Secondary Financial Protection
" We have an obligation to successfully andsafely manage allfacets ofnucleartechnology in order to produce competitively-priced electricity for Vennonters and other New Englanders."
31
XOIES to financia. statements ScnwULEI: MARKETABLE SEcuumEs - OmER INVESTMEMS N
(Dollarsin Thousands)
Name ofIssuerand Title Number of Cost of Market Value Amount at Which of Eachissue Shr.xs or Each issue of Eachissue Each Portfolio Units - at 12/31/93 ofEquity Principal Security Issues Amounts of and Each Other Iknis and SecurityIssue13 Notes Carried on the 13alanceShmt Dmommissioning fund:
US. Treasury obligations $ 16,252 $ 17,262 $ 18,666 $ 17,262 Municipalobligations 78,035 79,755 M,576 79,Ta5 Money market funds and accrtalintenst 11h3 _11!i3 If63 ilE33_
$ 96,170 $ 98,880 5105,103 $ 98,fk80 Disposal feedefeasanw fund:
Short-terminvestments $ 40,200 $ 39,870 $ 39,870 $ 39,870 Corporatebonds and notes 3,200 3,195 3,083 3,195 Money market funds and accmed intertst 419 414 419 419
$ 43,819 $ 43,4M $ 43,372 $ 43,4M
' Cost includes accrued intemst and amoitization of premiums and dieunts.
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Scumuu: V: Puotun', Piswr Axo Equmurxr Years Ended December 31, 1993 1992 1991 (Lbilars in Thousands)
Electric Plant:
j Land and land rights $ 1,397 $ 1,127 $ 984 Stmetuns and improvements 61,887 61,868 61,515 Reactor,turbogenerator and acctssory uluipment 3tM388 292,%1 285,808 Transmission ajuipment 5,948 5/& 6,141 Other 1,116 1,116 1,116 Construction work in prognss 597 _ .6,408 _4jl88 375,333 368,686 359,752 Nuclear Fuel:
Assembliesin reactor 69,063 74J)25 83,213 Fuelin pnnss -
5,236 637 Fuelin stock - - 22,863 Spent fuel 287JR) _259fN 227pg]
13663 3M4H] 3 132 53 Total $732,W6 $707,146 $693,505 Neither total additions of $25,361 J100, $15,167/X10 or $25/X12fXX) nor total retirements of Sill,( KX),
$1,526,(XX), or 50 for the years endai December 31,1993,1 W2 and 1991, nspectively, euwded 107c of the utility plant tulance at the end of the year.
XO1ES to financial statements ScuEDULE VI- AccustuuntD DEPREChmON, del % DON AND AA101017ADON Or PROPElur,Pbs7 AND EqumMENT Years Ended December 31,1993,1992 and 1991 tDollais in Thousands)
Additions Other Iblance Charged to Charges Balanw Beginning Costs and and AtEnd of Year Expenses Retirements (Daiuct) of Year Accumulated depndition of ekttric plant:(A) 1993 $185,263 $13,707 $(411) $(170)(B) $198,389 1992 173,827 13,253 (1,526) (291)(B) 185,263 1991 162/165 11,8(X) -
( 38)(B) 173,827 Accumulatal amortization of nuclear fuel:
1993 308,848 19,526 - (4,115)(C) 324,T.59 1992 291,013 21,240 -
(3,405)(C) 308348 1991 270,011 24,861 - (3,862)(C) 291,(113 Total amimulatal depreciation and amortization 1993 4'41,111 33,231 (411) (4,286) 522/>18 1992 464S10 11,493 (1,526) (3/66) 494,111 1991 432,076 36/61 -
(3,900) 4MS10 (A) Ekrtric plant is being depreciated on the straight-line method at rates designal to fully depreciate all depreciable properties by 2012. (See Noit 1 to the financial statements).
(B) Represents net salvage and mmoval costs.
(C) Represents disp mi custs of spent nudear fuel.
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- NDEltNDENT auditors' re, ort ,
The Stockholders and ikurd of Dirwtors Wrmont Yankee Nuclear Power Corporation:
We have audital the aaumpmying balance sheet of Vermont Yankee Nudear Power Corporation as of Iltemtvr 31,1W3, and the relatai statements of income and retainal camings and cash flows for the year then endal. These financial statements are the responsibility of the Compmy's nunage-ment. Our responsibility is to express an opinion on these financial statements lusal on our audit.
The financial statements of Vennont Yankee Nudear Power Corporation as of Ilwmtvr 31,1W2 and 1W1, were audited by other auditors whose rep >rt, datal February 5,1W3, expressed an untlualifiai opinion on those statements and indudai an additional paragraph dimussing the Com-pmy's 1W2 dunge in accounting for pwtretirement benefits other tiun pensions.
We conductai our audit in acmrdance with generally aatytai auditing standards. Thwe standanis ntjuire llut we plan and perfonn the audit to obtain reasonable assuranw about whether the financial statements are free of material misstatement. An audit includes examining, on a test lusis, j evidence supporting the amounts and dischwures in the financial statements. An audit also indudes -
p assessing the accuunting pnnciples used and Q;nificimt estinutes nude by nunagement, as well as evaluating the overall firuncial statement prtsentation. We believe that our audit provides a reasonablelusis for our opinion.
In our opinion, the financial statements refermd to above pasent fairly, in all nuterial nspects, the financial position of Wrmont Yankee Nuclear Power Com ration as of December 31,1W3,and the results of its operations and cash flows for the year then enual, in mnformity with generally ac-ceptai accounting principks.
As discusati in vnt 10 of the accompmying financial statements, effective January 1, IW3, the Company adopted the provisions of Statement of Fuuncial Accounting Standards No.109,"Ac-munting for Income Taws."
Our audit was made for the pmpose of fonning an opinion on the basic financial statements taken as whole. The supplementary schaluks are presented for purposes of additional analysis and are not a requiral put of the tusic financial statements. This infornution has been subjectai to the auditing procaiuns applied in our audit of the tusic financial statements and,in our opinion,is fairly staksi, in all material nspats, in relation to the tusic financial statements taken as a whole.
_. % pow ~ .
ikdron, Massachuwtts January 27,1W4
Of Cirectors l'REDERIC E. GREENMAN, Vice Ibident and General DON ALD G. PARDUS, Cluirnun and Chief Exautive Counwl, New Englusi Ibwer Compuny, Westborough, Officer, Eastern Utilities Associates,lloston, Massachusetts Nttwchttwtts 5 GERALD C POULIN, Vice President, Engineering, Central R. EDWARD liANSON, Viw Ibiikut, Pnsluction Opera- Maine Ibwer Comptny, Augusta, Maine **
tions, Central Maine Power Company, Augusta, Maine
- STEPlIEN E. SCACE, Vice Ibident, Nuclear Operations JOSEPII IIARRINGTON. Viw Ibident, New England Senices, Northeast Utibties, I lartford, Connecticut
- Power Compmy, Viw Ibident and Dinxtor of Research and Development, New England Ibwer Servix Compmy, A. N ORMAN TERRERL Senior Vice Ibident and Chief Westhirough, Massachusetts ** Openting Officer, Green Mountain Ibwer Corporation, DOUGLAS G. IIYDE, Ibident and Chief Exautive Offiwr, Grten Mountain Power Corporation, South Burlington, Tl IOM AS C WEllU, Chairman, Vennont Yankee Nudear Wymont Power Corporatiort Brattleboro, Wymont, Ibident and Chief Ewcutive Officer, Central Wnnont Ibblic Seniw JOIIN B. KEANE, Vice Ibident and Trmsurer, Northeast Corporation, Rutland, Wnnont Utilities,ilartford,Connaticut J. G ARY WEIGAND, Ibident and Chief Ewcutive Offiwr, E RAY KET SER, J R., Esq., Keywr, Crowks, Meub, layden, Vermont Yankee Nudcar Power Corporation, i3rattleboro, Kulig and Sullivan, P.C, Chainnan Centraf Vennont Ibblie Vemiont Seniw Corporation, Rutland, %nnont RUSSELL D. WRIGIIT, Ibident and Chiet Operating JOIIN W. NEWSIIAM, Vim Pcesident, New Engtuxi Ekttric Offiwr, Commonwealth Elatric Company, Wai cham, Systent Westborough, Massachuwtts
- Massachusetts JOIIN E OPEKA, Executive Via Ibident, Northeast Utilities ROHERT I L YOUNG, Executive Viw Ibide'it and Chief Seniw Company, I lartford, Connaticut ** Operating Of fiwr, Central Wrmont Ibblic Ser ,ict Corpora-tion, Rutland, Wymont
- Dectal February 2,194 ** Resigned Febmary 2,194 OFMCE LS TllOMAS C WEUU, Chairman J. G ARY WEIGAND, Ibident and Chief Exautive Offiwr DON ALD A. REID, Vice lbident, Operations JOlIN P.O'CONNOR, Secretary J AM ES P. PL:LLETIER, Viw Ibident, Engineering TIIOM AS W. HENNLT,JIL, Manager of Financial Planning, Assistant Treasurer LIRUCE W.WIGGLTT, Viw Ibident, Finanw and Treasuny J01IN A.RITSIIER,Esq, AssistantSecretary (This report is not to be considered an offer to sell or buy or solicitation of an offer to sell or buy any security)
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Vermont Yankee Nuclear Power Corporation 1993 ANNUAL REPORT
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!, JONIENTS eg.g 1
uam. -
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, Description of Business 2 I Pmsident's 1.ctter 3 2
l Highlights 4 1
- i. Common Stock Ownership 5 Management Review 6 10 Financial Review l Statements of Income
& Retained Earnings 11 j
l Balance Sheets
! Assets 12 l Capitalization and Liabilities 13 l Statements of Cash Flows 14 Notes to FinancialStatements 15
! Independent Auditor'sReport 35 i Boand of Dimetom 36 Offices 36 i 1993 ANNUAL REPORT i VassoxrhurNuassa PomaConionr11ox FauwRoAD BnArsunono,Vossoxr 05301-7002 l
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DESCIUF110Lf ausiness kemnontYankeeNudearPower monthly,mgardlessof thePlant's Corporation was incorporated under the operating level, or whether or not it is
{
laws of Vermont on August 4,1966. The operatmg,an amount equal toits Companywas formed bya groupof entitlement pertentage of Vermont ,
New England utilities for the purpose of Yankee's total fuel costs, operating constructing and operating a nuclear- expenses,decomnussiomng costs and powered generating plant (the " Plant"). an allowed mturn on equity. Also, underthe termsof theCapitalFunds ThePlant commenced commercial Agmements withits sponsois,the operation on November 30,1972,and, sponsors amcommitted to make funds excepting maintenance and refueling available for changes or replacements outages, has been in full operation since needed to maintain or restore operation that time. The Plant's license, originally of thePlant or to obtain ormaintain due to expimin December 2007,has licenses necessary for its operation. The been extended to March 2012. names of thesponsors and their mspective entitlement percentages of located in Vemon, Vermont, the facility capacityand output amas follows:
has a gmssmaximum dependable capacity of approximately535 Entitlement megawatts. The common stock of Sponsor Percentage VermontYankeeis owned by thirteen utilities,nine of which am the CentralvennontPublicseniceCorporation 33.0%
sponsoring utilities that am entitled to creen Mountain PowerCorporation 20.0 and obligated to pmthase the output of New England PowerCorporation 20.0 the Plant.
The Connecticut Light and Power Company 9.5 CentralMainePowerCompany 4.0 Under the terms of the Company's Public senice Company of New Hampshire 4.0 PowerContractseadisponsoris Western Massachusetts Bectric Company 2.5 obligared to pay VermontYankee Montaup BectricCompany 2.5 Cambridge ElectricLight Company 2.5 2 100.0 %
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. ? RESIDENT'S etter _ fa.h s w.
2 1993 marked Vennont Yankee's twenty-first year of o peration. Since going on !
line in 1972, we've generared over 73 billion kilowatt hours of electricity. In the last two decades, the national demand for electricity has gmwn mom than 60
~xment and nudear power has surpassed oil, natural gas and hydmpower to xcome the second largest source in the nation.
The state of Vermont leads the nation with the highest pementage of total electncal generation coming fmm nudear power, / 9.5%, ten pement mom than alw other state. As Vermont's only nudear power plant, we have an obligation to successfully and safely manage all facets of nudear technology in order to pmduce competitively-pnced electricity for Vermonters and other New Englanders.
This year, we successfully mfinanced our long-term mortgage debt at a rate i thndpercent lower than the existing rate, and extended our loan period until 4 7009, a date mom consistent with the curmnt operating license of the plant. We also received appmval fmm our Board of Dimctom to upgrade our low-
- pmssum turbines m 1995 - an impmvement which is expected to incmase i our electrical output to 548 megawatts and ensum continued overall reliability of theplant.
Another component of Vennont Yankee's operation process is the efficient and 4
safe dis Texas, \psal of low-level radioactive waste. A pmposed compact be
Vermont is expected to consic er a bill during early 1994 to authorize its participatmn. l Other achievements, financial as well as performance, am highlighted in this Armual Report. Fmm the information in the following pages, it's ap,pamnt why, when measumd against the standards of excellence set by the mdustry,f Vermont Yankee continues to be mcognized for our cons'stently high level o performance.
J. Gary Weigand 1
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HIGHTIGHTS j
1 i 1993 1992 % Change :
! Financial (dollasin millions):
4 Operating mvenues $180.1 $175.9 2.4 Netincome 7.8 7.9 (1.3)
Totalassets 469.8 438.2 7.2
- Averagenumberofshares j of common stock
! outstanding (thousands) 392 392 0.0 i
! PerShamofCommonStock:
{ Earnings peraveragecommonsham $19.86 $20.18 (1.6) j Dividends paid percommon sham 20.14 20.15 0.0 4
Bookvaluepercommonsham (yearend) 138.01 138.29 (02) i i Operating: .
j Kilowatt-hoursales(billions) 3.4 3.7 (8.1)
{ Cost perkilowatt-hours (cents) 5.M 4.71 13.4 i Numberof employees (yearend) 338 338 0.0 i
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! COMMON STOCK ownersai, i I
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j Percentage Shares Owned Owned 4
' Central Vermont Public Service Corporation 3L3% 122,653
) 20.0 78,402
- New England PowerCompany Gmen MountainPowerCorporation 17.9 70,088 l 9.5 37,242 l Connecticut Light and Power Corporation CentralMainePowerCompany 4.0 15,681
! 1 Public Service Company of New Hampshire 4.0 15,681 j
3.6 14,301 i Burlington Electric Department Montaup ElectricCompany 2.5 9,801 Cambridge ElectricLightCompany 2.5 9,801 l
- WestemMmchusetts ElectricCompany 2.5 9,800 Vermont ElectricCooperative,Inc. 1.0 4,213 l 2,431
- Washington Electric Cooperative, Inc. 0.6 Lyndonville Electric Department 0.6 2,387 l
100.0 % 392,481 l
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- MNAGEW.NT review .
l PlantImpnivements l PlantPerfonnance
! Since the plant commenced commeitial CgucityFactor operation in 1972, Vermont Yankee has Vermont Yankee continues to be a world made capital investments exceeding $207 class nudear power plant. For the five_
milhon(originalplant cost was$183 million). These investments have en-j year period 1987-92, Vermont Yankee's hanced plant safety and mliability. We average capacity factor was 86.8%. Thts is continue toinvestin plantimpmve- ,
36% higher than the U.S. industry aver-ments. Significant expenditums over the !
1 ageand 21% higher than theintema-last ten years include mplacement of our
- tional average. Although 1993 U.S. and reciinilation pipe, main transformer, l
{ international capacity factois are not yet several feedwater heaters, as well as l l available for comparison, Vermont Yan- impmvement in plant safety systems and l l kee's capacity factor of 76.4% is expected fueldesign.During 1995,we plan to j to continue our mcord of exceeding both mtmfit our twolow-pmssum turbines.
i U.S. and international average capacity This pmject will mplace existing equip-l factors. ment withimpmved materialsand .
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noo. .
VImmt YANUI ' Au. UNmn Smu i 90-.
80 --
l6 i4 lHMIIIII nummmmmmmmmmmmmmmmma 4
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" aw, design whid1will contribute toin- itsability tolimit downtimeduring creased turbine efficiency and durability. refueling outages.The plant has an All of these impruvements are consistent operating cyde of eighteen months and l
4 with our goal to be a safe, mliable source must beshut down at theend of an j of electricity for the next 20 years and to operating cyde for refueling, mainte-
- have the capability of operating an nance, and construction activities. Our !
- additional 20 yearsif desired. refueling outagesam appmximately Inw-inci Radioactive Waste Disposal
' U.s BWR 1 Vermont Yankeeis moving forward vEnuo,vr mo'usiny YEAR YANKEE AVERAGE i with an ultimate solution for its low-level radioactive waste dispel. While = 1988 86 =
1 we am able to dispose of ourlow-level = 1989 57 99 =
- radioactive waste in Barnwell, South = 1990 45 86 =
. Camlina, thmugh June 1994, the State of = 1991 84 =
- Vermont is in the pmcess of completing = 1992 45 97 =
4 an agreement to enterinta a compact =1993 57 78 =
i withTexas and Maine fordisposalof ' ' '
. low-level mdioactive waste in Texas.
Thecompact hasbeen ratified byboth
. Texas and Maine. The Vermont Legisla- Industrial Accident Rate tum is expected to consider a bill early
) during 1994 whidiwould authorize Over the past two years, Vermont Yankee
- Vermont's participation in the compact. has devoted considerable attention to i If approved by the State of Vermont, the raising the standanis for industrial safety compact willbe submitted to the U.S. in our company.Our efforts havein-l Congmss for ratification. duded development of a compmhensive safety rnanual, extensive employee train-Ontagelengths ing,and anincentwe award system.We Vermont Yankee has significantly out- am particularly pmud of ourzemlost-performed theindustry on averagein time accident rate adiieved during 1993.
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i l MANAGEV1ENT review i Plant EconorniCS VERhfoNT INDUSTRY
\ YEAR YANKEE AVERAGE Vermont Yankee,despite having the - 1989 1.49 1.50 -
handicap of beinga smallplant,has = 1990 1.94 1.47 =
operation and maintenance costs that = 1991 1.22, 1.48 =
compare favorably with the industry as = 1992 1.95 1.83 =
illustrated by the chart to the right: = 1993 2.36 N/A =
- 0) Exduding Fuel and Administrative and Geneml NcWS ,
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- Non-refueling year "Not avallable i
i vERasoxT inousTRY l FuelEconorniCS YEAR YANKEE AVERAGE i = 1989 0.76 0.76 j Vermont Yankee's fuel costs continue to
1990 0.67 0.72
bebelow theindustryaverageas l = 1991 0.61' 0.68 =
illustratedin this table:
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1992 0.57 0.65
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l 0)Indudes spent fueldisposal fees. =1993 0.58 N/A __
i (2) lndudes DOE enrichment site deanup fee. ,, , l
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1 YEAR VERhfoNT YANKEE l 2 TotalCost ofPower i
- 1989 4.04 i Vermont Yankee continues to bealow- = 1990 4.61 cost producer of electricity.The table to
= 1991 3.69*-
j the right illustrates Vermont Yankee's = 1992 4.70 j cost per kilowatt hour of electricity = 1993 5.34 1 generated: .
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! 0)lnclusiveof allcosts.
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(2) Since commercial operations began in 1972.
cuuuurimostonom - 123
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l hnpact on the Vennont Economy _
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Dos t Ans as Afstsloss
! In addition to providing to Vermont S
i utilities 55% of theelectricitywe su?/r,x v!"dao,,
i pmduce,VermontYankee makes M l substantial dimet contributions to the 8?M_
Vermont economyin the form of .
s.4 i employee wages, state and local taxes '
"'id-d' s20.8 l and fees, payments to Vermont vendors, """
and dividends to Vermont shamholders. va"l.m The chart to the right shows the amount of thesepaymentsduring1993.
ConununityInvoltanent VermontYankee makes corporate Fundingfor Deconunissioning contributions to organizations or pmgrams which benefit a significant VermontYankeecontinues to fund the portionof thecommunityand ultimate decommissioning of our plant generally impmve the quality of life in with the goal of mstoring the plant site to the area.The companyis an annual its originalconditiononcewehave benefactor to many health and human concluded operations. At theend of service agencies, supports a variety of 1993, these funds and expected futum tax educationalpmgrams,particularly benefits totalled $101 million out of a those focusing on math, science and currentprojected decommissioningcost the environment,participatesin of $253 million. We expect to continue to pmgrams tointmduceadults and contribute to our decommissioning fund childmn to the performing arts,and at alevelnecessary toachieve full sponsors local sporting events, teams, fundingat the end of ouroperating and youth activities. In addition to licensein 2012.
direct donationsby thecompany, O J
many Vermont Yankeeemployees contribute countless volunteer houts to organizations in the tri-state mgion.
review h perating revenues of theCompanyduring 1993 plant shutdowns and other am bi!!ed and mceived fmm customers opemting pmjects completed during the based on the terms of the Power Con- yearinduding station aircompmssor tracts. Under thosecontracts,customem mplacements, fire barrier seal mpairs, am severally mquinxi to pay theCom- and modifications to the turbine build-pany an amount equal to their mspec- ing mof vents.
tive entitlement sham of the Company's total fuel costs, operating expenses with Decommissioning expenseinatased mspect to the Plant,and a mturn on net $0.7 million, or 63%, in 1993 primarily as unitinvestment as defined in such a result of theinflation factorincluded in powercontracts. the Company's decommissioning rate schedule,asappmved by the Federal Operating revenuesincmasedin1993 Energy Regulatory Commission.
fmm 1992 by $4.2 million, or 2.4%, pri- Depreciation expenseincmased $0.5 marily as a msult of higher opemting, million,or 3.4%,in 1993 due to an in-maintenance, depreciation and decom- crease in depmciable assets. Two major missioning expenses, offset, in part, by additions, a new spent fuel pool cooling lower nudear fuel expense. system and new feedwaterheates,wem .
Nuclear fuel expense decmased by $1.7 million, or 8.1%,in 1993 fmm 1992 as a In November,1993, the Company issued result of an 8.1% decmase in electrical $75.8 million of Series I 6.48% fist mort-generation. Due to additional emergent gage bonds and applied the proceeds to work required in 1993, the Plant was mtim the remaining Series D 10.125%,
shut down for a totalof 81 days com- Series E 9.875%, Series F 9375%, Series G pared tojust 45 daysin 1992. 8.94% and Series H 8.25% fist mortgage bonds. The Company estimates that this Other operating expenses incmased $1.0, fist mortgagebond mfinancing will million, or 1.4%, and maintenance ex- msultin a net decmasein1994intemst pense increased $3.5 million, or 12.7%, in expense of $1.6 million and a total sav-10 1993 fmm 1992. Theseincmases am the msult of costs associated with the main-tenance and mpairefforts completed ings (measumd over thelives of t' mtimd bonds)of $7.8million.
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e STAIEMENTS Dam eemuys Years ended December 31, 1993 1992 1991 (Dallars in thousands except pr share amounts)
$180,145 5175,919 5151,722 ating revenues ttngexpenses:
19,526 21,240 24,861
. uclearfuelexpense 74,013 72,% 7 59,666 Other operating expense Maintenance 31,405 27,878 13/61 13,707 13,253 11,800 Deprttiation 8,(b5 Decommtssioning expense (Non: 2) 11,315 10/>19 Taxes onincome(NOR 10) 3,777 3,401 3,485 Propertyand other taxes _ _9M(31_ __102 !7 _10E Total operating expenses 163,704 M3 _13]AM 16A41 16304 19,884 Operating income Otherincomeand (deductions):
Neteamingsondecommissioningfund(NUTES 2and 5) 5/63 5,395 4A23 Decommissioningexpense(NOn 2) (5,653) (5,395) (4A23)
Allowance for eqtuty Iunds used during constmction 92 89 124 Intenst 1,550 2,016 1,377 Taxes on otherincome(Nan:10) (623) (756) (447)
Other, net __(232) _J99) (91 7tsf 1,1R) /
Incomebeforeinterest expense E 228 17AF4 _20El Intenst expense:
Interest onlong-term debt 7,281 7,101 7/61 Intenst on disposal costs of spent nuclear fuel (NOTE 8) 2A50 2,801 4312 Allowance forbormwed funds used during constmction _ 129_7) J339) (465) 11,531 Totalinterest expense 9A34 9863 Net income 7,7W 7,921 8A90 Retaintd camings at beginning of year _ 7 __g 8]
Dividendsdedartd 7,905 7,909 9306 Retained eamingsatend of year $ 1067 5 1,178 5 1,166 Average number of shan's outstanding in thousands 392 392 3H Net income per average share of common stock outstanding $ 19.86 $ 20.18 5 21.56 l
Dividends per average share of common stock outstanding $ 20.14 5 20.15 $ 23.71 I
BALANCE saeets .
A SSETS December 31, 1993 1992 (Dollars in thousands)
Utility plant:
Electric plant, at cost (NOTE 6) 5374,736 $ 362,278 Less accumulated depreciation _198a 389 3 176,3D _M5,26_5 177,01 Construction work in progress 597 _ _ 6 408 Net electric plant 176,944 183A M Nuclear fuel, at cost (NOTE 6):
Assemblies in reactor 69,063 74,025 Fuel in process - 5,236 Spent fuel _283 700 251199 136,763 338,460 Less accumulated amortization of burned nuclear fuel 317,039 302M2 39,724 36,098 Less accumulated amortization of final core nuclear fuel 7,220 6,487 Net nuclear fuel 32,504 _29 6_11 Net utility plant ?09,448 213.034 Current assets:
Cash and temporary investments 2,349 1,922 Accounts receivable from sponsors 12,235 15,407 Other accounts receivable 4,522 2,715 Materials and supplies 17,081 16,862 Prepaid expenses 3,949 41 3J1 Total current assets 40,136 41,28Z Deferred charges:
Deferred decommissioning costs (NOTE 2) 34,379 34,389 Accumulated deferred income taxes (NOTE 10) 18,231 10,378 Deferred DOE enrichment site decontamination and decommissioning fee (NOTE 4) 18,627 18,143 Net unamortized loss on reacquired debt 2,942 -
Other deferred charges (NOTE 4) 3,643 4,994 Total deferred charges 77.822 67.904 Long-term funds at amortized cost:
Decommissioning fund (notes 2,5, and 7) 98,880 82,091 Disposal fee defeasance fund (notes 5,7, and 8) 43.484 33,892 Total long-term funds 142,364 _115,983 12
$469,770 $438,208
~
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~ ~ ~ ~ '~ '~ ~ ~ ~ ~
I CA PITA LIZATION AND LIABILITIES December 31, 1993 1992 (Dollars in thousands)
Capitalization:
Common stock equity:
Common stock, $100 par value; authorized 400,100 s' ares; issued 400,014 shares of which 7,533 are held in Trtasury $ 40,001 $ 40,001 14,227 14,227 Additional paid-in capital (1,131)
Treasure ctock (7,533 shares at cost) (1,131)
__1067 1,178 Retaine .' v: aings Total common stock equity 54,164 _f4 22_73 ;
I Long-term obligations, net (notes 6 and 7) 79,636 74,193 Total capitalization 133,800 128,468 Commitments and contingencies (NOTES 2,14 and 15)
Disposal fee and accrued interest for spent nuclear fuel (notes 7 and 8) 80B8 18m239
- Current liabilities:
I Accrued liabilities 28,063 22,743 Accounts payal,b 2,117 2,591 2 Accrued interest 635 974
. Accrued taxes 1,206 1,472 Total current liabilities _32.021 27.780
, Deferred credits:
Accrued decommissioning costs (NOTE 2) 134,614 117,601 Accumulated deferred income taxes 56,478 58,963 Net regulatory tax liability (NOTE 10) 8,351 -
1 Accumulated deferred investment tax credits 7,013 7,590 Net unamortized gain on reacquired debt - 1,732 Accrued DOE enrichment site decontamination and decommissioning fee (NOTE 4) 15,966 17,220 Other deferred credits 839 615 Total deferred credits 223,261 203,721 5469,770 5438,208
>,~e- , m - - _ - - .
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i l SIAIEMENTS of casa flows .
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l Years ended December 31, 1993 1992 1991 ,
(Dollarsin thousmds) i l' Cash flows from operating actisities-Net income S 7,794 5 7,921 S 8A90 i Adjustments to nxuncile net income to net cash pmvided j byoperating actisities:
( Amortization of nudear fuel 15A10 18,143 21,002 Depirciation 13,707 13,253 11,800 Decommissioning expense 11315 10,649 8,065 Deferred tax expense (979) (2,169) (801)
Amortization of deferred investment tax credits (577) (641) U40)
Nuclear fuel disposal fee interrst accmal 2A50 2,802 4,312 Interest and dividends on disposal fee defcasance fund 0,402) 0,385) 0A95)
Unatase) decream in accounts receivable 1,365 688 029)
Oncrease)decreasein prepaid e 432 0,159) 163 Oncease)in materials and su esinventory (219) (454) 0,531)
Incease(decrease)in actuun pavable and accmedliabilities 4,846 U,453) 5A95 Increase (decrease) in interrst and' taxes payable (fd15) 306 760)
Other _ 11_,228) J1310) __EM)
Totaladjustments _44315 _311N ,_4321g Net cash provided by operating activities 52309 39,091 _j!2,2M Cash flows from investing activities:
Electric plant additions U,229) 0 0,750) (6,596)
Nudear fuel additions 0 8,303) (4,707) O8A44)
Payments to decommissioning fund 0 1,250) 0 0,612) (8,323) -
Payments to disposai fee defeasance fund (8,190) _E19_0j _18J16)
Net cash esed in investing activities (44,972) (31139_] (41579)
Cash flows fmm financing actisities:
Dividend payments U,905) U,909) (9,306)
Purchaseof tirasurvstock - - 0,131)
Issuance of Series H first mortgage bonds, net - - 10,374 Issuance of Series 1 first mortgage bonds, net 75,125 - -
Retirement of first mortgage bonds induding redemption costs (74,629) (6,521) 0 3,178)
Pavments oflony;-term obhgations 0 37,911) 0 07,763) (53A19)
Boirowing uncier long-tenn agreements 138A10 111,215 . 53,748 Net cash used in finanang activities (6,910) (10 p m m '62)
Net inavase (decrease) in cash and temporary investments 427 (3,146) (2,235)
Cash and temporary investmen:s at beginning of year 1,922 5,068 7303 Cash and temporary investments at end of year 5 2,349 $ 1,922 $ 5,068 14
NORS to financia. statements D Subih1ARY OF SIGNIFICANT b Dt1neciaticnandM1intenance
.],k, ACCOUNTING POLICIES Electric plant is being depraiated on the straight-line method at rates designed to fully depmciate all d(pre-a Regulations and Operations ciable properties over the lesser of estimated usefullives or the Plant's mmaining NRC license life, which Vermont Yankee Nudear Power Corporation ("the extends to Ma ch 2012. Depreciation expense was Company") is subject to regulations prescribed by the equivalent to overall effective rates of 3.74%,3.56% and Federal Energy Regulatory Commission ("FERC"), and 323% for the years 1993,1992 and 1991, respectively.
the Public Servim Board of the State of Vermont with respxt to accountmg and other matters. The Company Renewals and bettennents constituting retirement units is also subject to regulation by the Nudear Regulatory are charged to ekcric plant. Minor renewals and Commission ("NRC") for nudear plant licensing and bettennents are charged to maintenanw expense, safety, and by federal and state agencies for environ- When pmperties am mtimd, the original cost, plus cost mental matters sudt as air quality, water quality and of tunoval,less salvage,is charged to the accumulated land use. provision fordepreciation.
Prior to November 1%3, the Company was subject to l
c AmortizationofNuclearFuel regulation by the Securities and Exchange Commission.
As a result of the debt refinancing discussed in NOTE 6, lhe Cost of nudear fuel is amortized to expense based the Company is no longer subject to such regulation. on the rate of bum up of the indh idual assemblies comprising the total core. The Company also provides The Company rtrognizes revenue pursuant to the terms for the costs of disposing of spent nudear fuel at rates l of the Power Contracts and Additional Power Contracts. sNfid by the United States Department of Energy The Sponsors, a group of nine New England utilities, am (" DOE") under a contract for disposal between the severally obligated to pay the Company each month Company and the DOE.
their entitlement percentage of amounts equal to the Company's total fuel costs and operating expenses ofits The Company amortizes to expense on a straight-line Plant, plus an allowed retum on equity (1225% since hasis the estimated costs of the final tmspent nuclear l Darmber 1,1989). Such contracts also obligate the fuel com, which is expected to be in place at the Sponsors to make decommissioning payments through expiration of the Plant's NRC operating license,in the end of the Plant's service life and the cumpletion of conformity with rates authorizM by the FERC.
l thedecommissionmgof thePlant. AllSponsoisare committed to such payments regardless of the Plant's operating level or whether the Plant is out of service . .
during the period _
d Amortization ofMaten. alsand Supplies Under the terms of the Capital Funds Agreements, the The Company amortizes to expense a formula amount daigned to fully amortize the cost of the material and l Sponsors are (nmmitted, subject to obtaining necessaiy regulatory authorizations, to make funds available to supplies inventory that is expected to be on hand at the I
obtain or maintain licenses necessary to keep the Plant in expiration of the Plant's NRC operating license.
l l operation.
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XO1FS to financial statements e Long-tennFunds h Decoinnlissioning The Company accounts for its investments in long-temi The Company is acenung the cstimated costs of decom-funds at amortized cost since it has both the intent and missioning its Plant over the Plant's remanung NRC :
ability to hold these investments for the fonseeable license life. Any amendments to these estimated costs future. Amodind cost repnsents the cust to purchase areaccounted for prospectively.
the investment, net of any unamortized pn.miums or discounts. g Tjyxc5onJnCDnlC Effective January 1,1993, the Company began account-f ArnortizationofGainandlosson ing for taxes on income under the liability method Reacquired Debt required by Statement of Financial Accounting Standan!
The diffemnce between the amount paid upon reacquisi_ 309. See Note 10 for a further discussion of this change tion of any debt security and the face value thervof, plus * ^CC ""ti"8' any unamortized premium,less any related unamor-Imtstment tax credits have been deferred and are being tized debt expense and reacquisition costs, or less any unamortized discount, related unamortized debt m rtized toincomeoverthelivesof themiated assets.
expense and reacquisition costs applicable to the debt .
redeemed, retinxl and canceled,is defemxi by the J CashEquimlents Company and amortizect to expense on a straight-line htsis over the mmaining life of the applicable security For purposes of the Statements of Cash Flow s, the issues. Company considers all highly liquid short-term invest-ments with an original maturity of tlute months or less g AllouunceforFunds Used Dunng tobecash esuivalents.
Construction c
Allowance for funds used during construction
("AIUDC")is the estmated cost of funds usect to finance Certain information in the 1992 and 1991 financial the Company's construction work in procress and stAnnts has been nrW to confonn with the 1993 j nudear fuelin process which is not recoveied fmm the ,
Sponsors through current nxenuca. The allowance is Pmsentation. ;
not realized in cash currently, but under the Power !
Contracts, the allowance will be nxuverni in cash over / ForningsperCorninon Share l the PLmt's service life through higher mvenues assod-ated with higher depreciation and amortization expense. Eammgs per common share have been computed by AFUDC was capitalind at overall effective rates of dividing earnings available to crnnmon stock by the i 16 5.927c,6.827c and 6.987c for 1993,1992 and 1991, respec.
tively,using thegnws rate method.
weighted average number of sharts outstanding dudng the year.
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1 annual decommissioning fund culkrtions reflecting the f DEcomussioNNG historical differences between assumed and actual rates of intlation and the historical differences between assumed and actual rates of eamings on decommission-Le Company accrues estimated decommissioning costs ing fund assets. Filings are required to be made within for its nudear plant over its remaining NRC licensed life four years of the most recent FERC approval of decom-bawd on studies by an independent engineering finn missioning cost estinutes and rates.
tlut assumes that decommissioning will be accom-Cash nxtived from Sponsors for plant decommissioning pli3hed by the prompt removal and dismantling method. This method requires that radioactive materials costs is deposited into the Vennont Yankee Decommis-be removed fmm the plant site and that all buildings and sioning Trust in either the Qualified Fund 0.e., amotmts facilities be dismantled immaliately after shutdown currently deductible pursuant to the IRS regulations) or Studies estimate that approximately six years would be the Nonqualified Fund (i.e., excess colketions pursuant to FERC authorization which are not currently deduct-l required to dismantle the Plant at shutdown, remove wastes and nstore the site. The Company has imple- ible). Funds held by the Trust are invested in lugh-grade mental rates based on a settlement agreement with the US. govemment securities and municipal obligations.
FERC which allowed $190 million,in 1988 dollars, as the Interest camed by the Decommissioning Tmst assets is estimated decommissioning cost. This allowed amount recorded in other income and deductions, with an equal is used to cornpute the Company's liability and billings and offsetting amount representing the current period to the Sponsors. Based on an assumed inflation rate of decommissioning cost funded by such eamings rdkcted U4 per annum and an expiration of the Plant's NRC as decommissioning expense.
operating license in 2012, the estunated cununt cost of decommissioning is $253 million and, at the end of 2012, Dtmmmissioning expense for 1991 induded an adjust-is appmximately $769 million. The pnsent value of the ment of appmximately $2.1 million resulting from the pro rata portion of decommissioning asts recorded to Company's rate reduction fihng approved by the FERC date is $1316 million. On December 31,1W3, the bahnce on February 28,1991 as discussed in Ncnt 3.
in the Decommissioning Trust was $98.9 million.
Billings to Sponsors for estimated decommissioning h
l costs commenced during 1983, at which time the d FERC RATE CASE MarrEns
- Company recorded a deferred charge for the present value of decommissioning costs applicable to operations On April 27,1989, Vermont Yankee filed an application l of the Plant for prior periods. Current period decomnus- with the NRC to extend the term of the operating sioning costs not funded through billings to Sponsos or i;g,nse from 2007 to 2012 so that the Plant may operate ,
earnings on decommissioning fund assets are also fo@ veas after it entered commercial service in 1972.
deferred. These deferred costs will be amortized t On December 17,1990, the NRC issued an amendment expense as they are funded over the remaininglife of the to the operating license extending its term to March 21, NRCopemtinglicense. 2012. The Company submitted a rate reduction filing with the FERC to n flect in rates the adjustments to in 1994, the Company must file a revised estimate of dwommissioning, depreciation and amortization dwommissioning costs and a revised schedule of future resulting from thelicense extension. The Company
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XO1FS to financia. statements -
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I pmposM to make this reduction effective as of March 1, gG Omen DEmwn CHARGES 1991, and, since the extension was issued in 1990, to E AND CREDUS reflect the necessary adjustment for the period Jantury 1, l 1990,through Febmary 28,1991. In October 1992, Congress passed the Energy Policy Act of 1992 which requires, among other things, that certain On February 28,1991, the FERC approved the Com- utilities help pay for the deanup of the DOE's ennch-l pany's rate reduction filing. The effects of this miing ment facilities over a 15-year period. The Company's were accounted for prospectively in fiscal 1991, produc- annual fee is estimated based on the historical share of ing a net mvenue reduction of appmximately $7.4 enrichment service pmvided by the DOE and is million in 1991, which reflected the retroactive treatment indexed to inflation. These fees will not be adjusted for toJanuary 1,1990. This mling resulted in mduced future business as the DOE's future cost of sales will mvenue requirements of appmximately $3.5 million for . indude a decontammation and dwommissioning both 1992 and 1993, and similar reductions are expected component. The Act stipulates that the annual fee shall in future years. be fully recoverable in rates in the same manner as other fuelcosts.
On March 26,1993, the FERC initiated a resiew of the retum on common equity component of the fonnula In 1993, the DOE billed, and the Company paid, the rates induded in the Company's Power Contracts. On first of the15annualfees. Asof Dember31,1993,the October 22,1993, the FERC approved a settlement - Company has recogruzed a current accrued liability of l whemby the Company retained its 12.25% authorizect $2.6 million for the two fee payments expected to be rate of mturn on common equity and agreed to credit made in 19%, a defemxi crectit of $16.0 million for the monthly power billings by approximately $139,000 12 annual fee payments that are due subsequent to 1994 .
beginnmginJune,1993. and a curresponding regulatory asset of $18.6 million which represents the total amount indudable in future in 19W, the Company will submit a rate filing to the billings to the purchasers under the Power Contracts.
FERC which will indude, among other things, a nnised While these amounts are reflected in these financial estimate of decommissioning custs and a revised statements, the Company is reviewing the DOE's schedule of futum annual decommissioning fund calculation of the annual fee and believes that the collections. annual fee will ultimately be reduceci.
App odretdy $2.1 and $33 milhon of the $3.6 and $5.0 million in other deferred charges at Daember 31,1993 and 1992, respectively, relate to payments made to the Vermont Low level Radia.ctive Waste Authority
("VLLRWA"), an agency of the State of Vermont for the siting and constmetion of a low-level waste disposal facility.
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' AOaw l P Loxc-TERAIFuxos j th The book value and estimated market value of long-term i fwid investment secunties at Dtwmber 31 is as follows t
1993 1992 i
) Lkok Market Ikok Market 5 value value value value I (Dollanin thousands) e i Decommissioning fund:
$17,262 18,666 $22,000 S?3,067 j US.Tmasury obligations 79,755 84,576 57,141 59,009 Municipalobligations 1N33 1263 2,950 2.950 j Accrued interest and money market funds 4 98,880 KE1(5 82,091 81026 i
Disposal fee defeasance fund:
39,870 39,870 26,457 26,457 i Short-tenninvestments 3,195 3,083 6,110 5,940
- Corporatebondsand notes Accued intemst and money market funds 419 419 1325 _1.2 25 43,484 43372 33M92 33},Z?2_
1
$142,3M $148,477 $115,983 $118,748 Totallong-term fund investments i
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1993 1992 At December 31,1993 and (Dollars in thousands) l Unrealizai gains on US. Treasury obligations $1,431 5 1,071 1992, gross unrealizal gains l
- and losses pertaining to the Unrealized losses on US. Treasury obligations $ (27) 5 (4)
$ 4,M3 $ 1,895 j long-term investment Unrealizai gains on Municipal obligations securities wem as follows: Unrealized losses on Municipal obligations 5 (22) $ (27) i 5 (170)
Unrealized losses on corporate bonds and notes $ (112) l i
Within one year $42,200 l
w to6veyeas 16,M
! Maturities of short-term obligations, bonds and notes e to em yeas WO l (face amount) at Decemixr 31,1993, are as follows
"" 7'^"
! (dollarsin thousands): $136,707 l
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NOTE 0 LONG-TERu OsuGADONS I A summary of long-term obligations at December 31, 1993 and 1992,is as follows:
1993 1992 (Dollarsin thousands)
First mortgage bonds-Series B- 8.50% due 1998 S -
$1,307 Series C-7.707c due 1998 - 1,612 Series D-10.1257c due 2007 -
23,147 Series E- 9.8757e due2007 -
5,703 Series F- 93757c due2007 - 5,701 Series G-8.94% due 1995 -
25,000 Series H -8.25% due1996 -
8,388 SeriesI-6.48% due2009 75,M5 -
Total first mortgagebonds 75M5 70f41 Eurodollar Agrwment Commercial Paper 3,791 3,292 Unamortized prunium on debt -
40 Totallong-term obligations S79,636 574,193 The fi.st mortgage bonds are issued under, have the Series E, Series F, Series G and Series H first mortgage temas and provisions set forth in, and are secunxi by an bonds, including call premiums totalling 53.7 million Indenture of Mortgage dated as of October 1,1970, based on the early redemption of the bonds. Cash between the Company and the Trustee, as modified sinking fund requirements for the Sovies I first mortgage and supplementedby13supplementalindentures. All bonds are $5.4 million annually bepnning November bonds are secured by a first lien on utility pLmt, 1999.
exdusive of nuclear fuel, and a pledge of the Power Contracts and the Additiorul Power Contracts (except The Company has a $75.0 million Eurodollar Credit for fuel payments)and the Capital Funds Agreements Agreement that expims on Dtember 31,1995, subject to with Sponsors. three optional one-year extensions. The Company issued commercial paper under this agreenent with On July 1,1993, the Company retired the outstanding weighted average inten st rates of 322% for 1993 and Series B and Series C first mortgage bonds. In Novem- 3.95% for1992. Payment of thecommercialpaperis ber 1993, the Company issued $75.8 million of Series I supported by the Eurodollar Credit Agreement, which first mortgage bonds stated to mature on November 1, is secured by a second mortgage on the Comp,my's 20% TheCompanyapplied theproceedsof thebond gencrating facility, issuance principally to retire the remauung Series D, w 6 6 6 6 6 . 6m 6 sh- - guemusto - **
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= DISCLOSURES ABOUT ME FAIR
! VALUE OF FINANCIAL INSTRUMENIS The carrying amounts for cash and temporary invest-estinuted bawd on the quoted market prices for the same or similar issues, or on the current mtes offered to ments, trade receivables, accounts rtwivable from sponairs, accounts payable and accrued liabilities the Company for debt of the same remaining matmities.
approximate their fair values because of the short The estimated fair value of the Company's financial maturity of these instmments. The fair values of long-term funds are estimated based on quoted market prices instruments as of December 31 am summarized as for these or similar investments. The fair values of each follows (dollars in thousands):
of theCompany'slong-tenndebtinstrumentsare 1993 1992 Carrying Estimated Canying Estimated Amount Fair Value Amount FairValue
$48,880 $105,105 $82,(N1 $85,026 Decommissioning fund 43,484 43,372 33,892 33,722 Disposal fee defeasance fund 79,636 77,361 74,193 78,235 Long-tenn debt 80,688 78,239 78,239 Disposal fee and accrued interest 80/28 1
l Fair value estimates are made at a specific point in time, services when a facility for spent nudear fuel and other based on relevant market infonnation and information high-level radioactive waste is available, which is about the financialinstnnnent. These estimates are rtt]uirul by cunent statute to be prior to January 31,1998.
subjective in nature and involve uncertainties and nutters of significant judgment and therefom cannot be The DOE contract obligates the Company to pay a one-l detennined with pnxision. Changes in assumptions time fee of approximately $393 million for disposal cats could significantly affect the estimates. forallspent fueldischarged thmugh April 7,1983.
l l Although such amount has bean collected in rates from the Sponsors, the Company has elected to defer payment D@NUCLEAR DISPOsAtFEE FUEL FOR SPENT of the fee to the DOE as permitted by the DOE contract.
The fee must be paid no later than the first delivery of spent nudear fuel to the DOE. Interest accrues on the The Company has a contract with the United States unpaid obligation based on the thirteen-wwkTreasury l Department of Energy (" DOE") for the permanent Bill rate and is compounded quarterly. Through 1993, l l
disposal of spent nudear fuel. Under the tenns of this the Company deposited approximately $37.5 in an contract, in exchange for the one-time fee discussed irrevocable tmst to be used exdusively for defeasing this below and a quarterly fee of 1 mil per kwh of electricity obligation at some future date, provided the DOE generated and sold, the DOE agrees to pruvide disposal complies with the terms of the aforementioned contract.
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f XORS to financia. statements 4
. On Demnber 31,1991, the DOE issued an amended finaj TAXES ONINCOME rule modifying the Standard Contract for Disposal of Spent Nuclear Fuel and/or High-level Radioactive Waste. In Febmary,1992, the Financial Accounting Standards The amendeci final rule conforms with a March 17,1989, Board issued Statement of Fmandal Accotmting 2
ruling of the U.S. Court of Appeals for the District of Standards No.109, "Acmunting for income Taxes",
Columbia that the 1 mil per kilowatt hour fee in the which required the Company to change from the Standard Contract should be basal on net electricity deferred method to the liability method of aontnting for generated and sold. heimpact of the amendment on the incume taxes on January 1,1993. The liability methcd Company was to reduce the basis for the fee by 6% on an accounts for defernd income taxes by applying enacted ongoing basis and to establish a receivable from the DOE statutory rates in effect at the balance sheet date to for previous overbillings and actmed intenst. The differences betwmn the book basis and the tax basis of Company has reagnized in its rates the fullimpact of the assets and liabilities (" temporary differenas").
amended final ntle to the Standard Contmet.
This new statement requires nrognition of defernd tax The DOE is refunding the overpayments,induding liabilities for (a) income tax benefits associated with -
intemst, to utilities over a four-year period ending in 1995 timing differences previously passed on to customers via credits against quarterly payments. Interest is based and (b) the quity component of allowance for funds on the 90-day Treasury Bill Auction Bond Equivalent and used during constmetion, and of a defernd tax asset for will continue to accrue on amounts remaining to be the tax effect of theaccumulated defenrd investment tax endited. At December 31,1993 and 1992, nspectively, cndits. It also requires the adjustment of defenrd tax approximately $0.9 and $1.6 million in principal and liabilities or assets for an enacted change in tax laws or interest is refintcd in other accounts receivable. rates,among other things. -
NOTE 6 snour-reausonnow1Nos """s" "" e" " "' * "~ sc"cc~c"" " c ""' '8 3 not expected to have a material unpact on the Com-pany's cash flow, results of operations or financial The Company had lines of credit from various banks position because of the effect of rate nyulation, the totalling $63 million at December 31,1993 and 1992. 'The Company was requind to recogruze an adjustment to maximum amount of short-tenn borrowings outstand- accumulated deferred income taxes and a corresponding ing at any month-end during 1993,1992 and 1991 was wgulatory asset or liabili_ty to customers (in amounts approximately 502 million, $0.6 million and $0.4 million, equal to the requirvd defernxl income tax adjustment) to respectively. The average daily amount of short-tenn reflect the future revenues or reduction in revenues that bonuwings outstanding was approximately $03 million will be required when the temporary differences tum for 1993, and $0.1 million for 1992 and 1991 with amund and are recovered or settkd in rates. In addition, weighted average interest rates of 5.75% in 1993,6.12 % this new statement required a reclassification of certain in 1992 and 8.19% in 1991. There were no amounts deferred income tax liabilities to liabilities to customers in 22 outstanding under these hnes of credit as of December 31,1993and 1992.
onier to reflect the Company's obligation to flow back deferred income taxes provided at rates higher than the current 35% federal tax rate. The Company has appikd the pmvisions of this new statement witimut restating prioryearfinancialstatements.
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1 l 'Ihe components of income tax expense for the years f ended December 31,1993,1992 and 1991, are as follows 1
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l 1993 1992 1991 3 (Dollars in thousands) i Taxes on operatingincome-
$4236 $4926 $ 4,003 i Cummt federalincome tax j Deferred federalincome tax (1,059) (1,840) (1,285)
Current stateincome tax 1,097 1,285 1,024 i
j Defernxi stateincome tax 80 (329) 483 j Investment tax credit adjustment (577) (641) (740) 3,777 3A01 3,485 l
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j Taxes on otherincome:
- Current federalincome tax 4% 598 353 Current stateincome tax 127 158 94 l
i 623 756 447 l
Totalincome taxes $ 4,400 5 4,157 5 3,932 l
3 4
A nxunciliation of the Company's effective income tax rates with the federal statutory rate is as follows l l
1993 1992 1991 l
Federalstatutory rate 35.0% 34.0% M.07c 1 l
i State income taxes, net of federal income tax benefit 6.9 6.1 6.1
! Imestment credit (4.7) (53) (6.0)
Book depreciation in excess of tax basis 2.0 1.9 1.7 AFUDCequity 0.6 0.9 0.9 j Flowback of excess deferred taxes (3.6) (3.1) (6.7) j Other 1011) .10J] 12
! 36.1 % 34.4 % 31.7 %
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i XOlFS to financial statements i
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j The items comprising defened income tax expense am as follows:
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j 1993 1992 1991 f 'Dollarsin thousands)
] Decommtssioning expense not currently deductible S(351) $(101) $ 14 j Tax depreciation over (under) financial statement j depnaciation (978) (679) 955
, Tax fuel amortization over (under) financial l statement amortization (253) (637) (1,389) 1 Tax loss on reacquisition of debt over (under)
- financialstatement expense 1,887 187 178
, Pension expense not cunently deductible (167) (192) (562)
- Postemployment benefits deduction over (under)
- financialstatement expense 6/ (141) -
! Amortization of materials and supplies not cuntntly deductible (335) (M3) (239) jl low-level waste deduction over (under) financial i statement expense (596) 139 825
) Flowback of excess defermd taxes (442) (376) (828) 4 Other 191 _Q33 245 -
- $(979) $ (2,169) 5(801) i i
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The tax effects of temporary differences that give rise to deferred tax liabilities at Dtwmber 31,1993, and January l
significant portions of the deferred tax assets and 1,1993, are presented below-December 31,1993 Januaryl,1993 j (Dollarsin thousands) 3
! Defemd tax assets:
$ 2,914 $ 2,559 Accumulated amortization of final nudear cure 2,201 I Nudear dixommasioningliability 2,810 5,856 6,793 Regulatoryliabilities 2,830 2,984 Accumulated defentd investment credit l 1,851 Accumulated amortization of materials arid supplies 2,281 Other _2_27_1 4,591 f 19,462- 21,[b9 Total gross deferred tax assets i Lass valuation allowance 1 231 1142 19,927 l Net defened tax assets 18211 i
Deferrcd taxliabilities-(51,258) (51,399)
Plant and equipment J2.20j (5,574)
Other (56,973)
Totalgrossdefentd taxliabilities (%478)
Net deferred tax liability $(38,247) $(37,046)
The valuation allowance is the nsult of a provision in Vennont tax law which limits refunds nsulting from carrybacks of net operating knses.
d SuurirMENTAL b&r1) CAsu FLOWINFOTWADON The following information supplements the cash fknv infomiation provided in the Statements of Cash Flows 1993 1992 1971 (Dollarsin thousanris)
Cashpaid duringtheyturfcr.
$ 7,632 $ 7,062 5 7,990 Intenst(netof arnountcapitalized)
$ 6,192 $ 4,793 l Incometaxes S 7,070
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NOTE $5) PENSION PLANS The Company has two noncontributory pension plans on age, years of service and the level of compensation covering substantially all of its regular employees. The during the final years of employment. The aggngate Company's funding policy is to fund the net pericxiic funded status of the Company's pension plans as of pension expense accrued each year. Benefits are based December 31,1993 and 1992, is as follows:
December 31, 1993 1992 (Dollarsin thousands)
Vested benefits $ 8,882 $ 6,548 Nonvested benefits 1338 918 Accumulated benefit obligation 10,220 7,466 Additional benefits related to future compensation levels 8540 7728 Pmjected benefit obligation 18,760 15,194 Fair value of plan assets, invested pnmarily in equities and bonds 16343 13391 Projected benefit obligation in excess of plan assets $ 2,417 $ 1,403
'Ihe increase in the projected benefit obligation from
$152 million in 1992 to $18.8 million in 1993 is the result of additional service accruals, interest costs and dianged plan assumptions.
Certain changes in the items shown above are not recognized as they occur, but are amertizeci systemati-cally over subsequent periods. Unrecogruzed amounts still to be amortized and the amount that is induded in the balance sheet appearon page 27.
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1993 1992 t
(Dollarsin thousands) i
$ 996 $ 1,057 Unremgnized net transition obligation l
4 Unrecognized net gain (4,086) (4,939) 4,866 4,610 Pension liability induded in bahnw sheet
(>11 675 Unrecognized prior wrvice costs l Projected benefit obligation in excess of
$ 2,417 5 1,403 plan assets j
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( The following are pension plan assumptions as of Dewmber 31,1993 and 1992:
December 31, )
1993 1992
)
Dismunt rate 7.0% 8.0%
j f Compensation scale 55% 65%
j Expected retum on assets 85% 85 % l 1
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Net pension expense for the three years ending December 31,1993,induded the following components:
1993 1992 1991 (Dollarsin thousands)
$1,141 $ 1,275 $ 1,147 Servicecost -benefits camed L288 1,305 1,101 Intenst cost on pmjxted benefit obligation (1,792) (867) (2,124)
Actual (retum)kr,s on plan assets Net amoitization and deferral 631 78 1.452 l
! $1,791 $ 1,579 j Net pension expense $ 1,268 1
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XO1ES to financia. statements l regubtions, the Company has amended its pension 4
NOE.']r@ POSTRETIREMENTBENEriTS M OTnERTuaNPENSIONS plans and etablished x7 urate VEBA trusts for man-agement and union employees. !
- The Company adoptW Statement of Financial Account- In December 1992, the FERC isst ed its policy statement ing Standards No.106, " Employers' Accounting for setting forth how utilities can recover in rates the Postretimment Benefits Other Than Pensions" (SFAS increased costs associated with the implementation of 106), on January 1,1992. This statement requins SFAS 106. The policy statement specifies thrte condi-companies to use accrual accounting for postretirement tions that must be met befom IIRC will consider benefits other than pensiorts. Prior to 1992, the Company companies' election of the aantal method: (a) the accrued and collected a portion of postretirement Company must agree to make cash deposits to an
, benefits costs through decommissioning billings while in evomble external trust fund, at least quarterly, in the nmaining cust was expensed when benefits wem amounts that am prop 3rtional and, on an annual basis, paid. The incremental cost, above the amotmt collected equal to the annual test period allowance for pmtretire-through decommissioning billings, approximately $2.4 ment benefits other than pensions; (b) the Company million, is now accmed and sinceJanuary 1992, has been must agme to maximize the use of income tax deduc-induded in the Company's monthly power billings to tions for contributions to funds of this natum; and (c) in Sponsors. The Company is funding this liability by order to recover the transition obligation, the Compmy i pbcing monies in separate trusts. In order to maximize must file a general rate change within tlute years of the deductible contributions pennitted under IRS adoption of SFAS 106.
The following table presents the plan's funded status reconcikd with amounts recognized in the Company's tulance
- sheets as of December 31,1993, and December 31,1992 (dollars in thousands)
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4 Accumulated postretimment benefit obligation: 1993 1992 Retines 5 1,078 $ 1,277 4
Fully eligible active pbn participants 921 1,332
- Other active paiticipants 8.0 71 9.933 Total accumulated postretirement benefit obligation 10,070 12,514 Fair value of plan assets, invested primarily in short-term investments __457 2 1.595 Accumulated postrvtirement benefit obligation in excess of plan assets 5 7,613 $10,949 Unrecognized net transition obligation S 7,933 $10,314 Unrecognized net gain (1,980) (126)
) Accrued postretirement benefit cost collected through decommissioning i billings and includai in accued liabilities 1.660 761 l Accumulated postretinment benefit obligation in excess of plan assets 5 7,613 510,949 1
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The net periodic postretirement benefit awt for 1993 and g 1992 includes the following components (dollars in d}q4 ,- LEASE CommEVIS j
thousands):
The Company leases equipment and systems under 1993 1992 noncancelable operating leases. Charges against irxume for rentals under these leases were appmximately $3.7 Service cost $ 735 $ 958 million, $2.6 million and 53.7 million in 1993,1992 and Intenst cost 652 941 1991, respectively. Minimum futum rentals as of Net amortization Demmber31,1993,are as follows:
and deferral 350 543 Fiscalyearsended Annual rentals Net periodic (Dollars in thousands) postretirement M $ 3,283 benefit cost $1,737 5 2,442 1995 3,060
]
1996 2,878 1997 2,798 1998 and after 5,053 For measurement purposes, a 15'7c annual rate of increase in the per capita cost of covered lxmefits (i.e.,
health care cost trend rate) was assumcd for 1993; the rate was assumed to decrease gradually to 6'7c by the year 2001 and remain at that level thereafter. The health ne Company has entemd into an agreement with care cost tnmd rate assumption has a significant effect on General Electric Capital Corporation to lease turbine the amounts reported. For example, incmasing the arnpments being cinqncttd by Coneral Electic Cor-assumed health care cost trend rates by one pertentage paratim valued at approximately $29 million induding point in each year would incmase the acrumulated installation costs. Under the lease agreement, the postmtinnnent benefit obligation as of December 31, Company will make 120 monthly payments of $342,358 1093, by $2.2 million and the aggmgate of the service and each commencing on the later of (1) Apnl 15,1995, or interest cost components of net periodic postretinment (2) the conunissioning date of the equipment. The leaw benefit cost for the year ended December 31,1993,by will also include the sale and leaseback of a $2 million
$03 million. The weighted-average discount nte used turbine rotor forging previously owned by the Com-in detenmning the accumulated postretimment tx2Jit pany. He lease will be classified as an operating lease obligation was 77c at December 31,1993. for accounting purposes.
The change in the accumulated postretirement benefit The construction contract nyuires progress payments obligation from $125 million in 1992 to $10.0 million in to be paid by Vennont Yankee prior to installation of 1993 is the result of adjustments made to mflect a lower the equipment. Just prior to dehvay of the equipment, actual malical cost increase during 1993 than projected. the lessor will reimburse Verrnont Yankw for these The mduction in the unrecognized net transition payments and will continue to make the remaining obligation fmm $103 million in 1992 to $7.9 million in payments until the commencement date of the lease.
1993 is pnmarily the result of elimination of Medicare During the time period subsequent to equipment Part B awerage. delivery befom the equipment is commissioned, the
XOlFS to financia statements .
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Company will py interim nmt to the lesmr based on the If the compact is successful and proauls on schedule, I amount of outstanding progitss payments. The final Vennont Yankm would begin sending its waste to a documentation of the lease is cunendy being ntpotiatal, Texas facility dtuing 1997. Under the pmposed and if a final agreement cannot be read ed, the Com- compact, VemTont would pay the State of Texas $25 l
pany would be nsponsible for substantial tennirution million ($125 million when the US Congitss ratifies i payments. the compact and $12.5 million when the facility opens). In addition, Vermont must pay $25 million c._. ($125 million when Congress ratises the compact and COMMITMENTS AND
$1.25 million when the facility is licensed) for commu- I NOTE E* 7"" couriucEuc1Es nity assi tance pmjects in Hud peth County, Texas, I
where the facility is to be located. Vermont would also pay one-third of the Texas low-level Radioac-G I.0&lC0Cl WGSic tive Waste Disposal Compact Commission's expenses until the facility opens. The disposal fws for genera- ,
in Febmary 1W3, the Vermont Public Service Board tors in Vermont and Maine would then be set at a j issued an order which nyuins the Company to pay its level that is the same for generators in Texas. The 1 sham of expenses incuntd by the Vennont Low level Company anticipates rectwering the costs of the Radioactive Waste Authority ("VLLRWA") for the compact from sponsors. ;
period April 1993 through June 1994, cunently capped I at $45 million. In addition,in accordance with Vermont Act 296, the order established a fund for the long-term b NucimrFuCl care of any eventual Vermont low-level waste disposal facility. Based on this order, the Company must make The Company has appnmnutdy $165 million of .
annual payments of approximately 50.8 million into the "nquutments htsed" purchase contracts for nudear i
long-term care fund. Payments made to the VLLRWA, fuel needs to meet substantially all of its power not pertaining dinrtly to the siting and construction of a pmductionstquinmentsthrough21m Undertlec j low-level waste disposal facility, are being expemed contmcts, any dismption of operating acthity would j currently. alkw the Company to canal orpatpone ddiveries untilactuallyneeded.
In parallel with siting a low-level radioactive waste facility in Vermont, there has bmn a three-state effort C IHSurnNCC betwmn Vennont, Maine, and Texas to form a compact to site such a facility in Texas. lhe Texas legislature has approved,and Govemor Ann Richards of Texas has The Pria'Andenen M as amended, cununtly limits public signed into law, a bill that would fonn such a compact. liability from a single inddent at a nuckur powtr plant to $9A On November 2,1993, Maine voters mtified the compact. billion. Anydanugesbtymd$9Abillionarvindemnifkd Early during its 1994 session, the Vemiant irgislature is under an agreement with the NRC, but sulict to Congres-schedukd to vote to approve entry into the compact. sional appruval. The first $200 milhon ofliability coverage is Following approval by the Vermont Legislature, the the maximum panided by private insurance. The Somn-compact will nyuire approval of the US. Congrtss. dary Finandal Protection pngram is a rttrospective
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j insurance plan pmviding additional coverage up to $9.2 program referenced above provides coverage in excess billion per incident by assessing retrospective premiunts of theMasterWorkerpolicy.
1 of $793 million against each of the 116 reactor units that
! are cturently subject to the Program in the United States, hasurance has been purchased from Nudear Electric limited to a maximum assessment of $10 million per Insurance Limited (NEIL ID to cover the costs of prop-erty damage, decontamination or premattur decommis-1 incident per nudear unit in any one year. The maximum assessment is to be adjusted at least every five years to sioning resulting fmm a nudcar incident. All companies 7
reflectinflationary changes. insurtd with NEIL Il are subject to retnuctive assess-
) ments if ksses exctsd the accumulated funds available The above insurance covers all workers employed at to NEIL IL The maximum potential assessment against l
nudear facilitie prior toJanuary 1,1988, for bodily injury the Company with respect to losses arising during the
- daims.The Company has purchased a Master Worker cununt policy year is $5.8 million at the time of a first kws insuran policy with limits of $200 million with one and $123 million at the time of a subxx]uent loss. The automatic reinstatement of policy limits to cover workers Company's liability for the retrospective premium l adjustment for any policy year ceases six years after the J
employed on or after January 1,1988. Vennont Yankee's f estimated contingent liability for a retrospective pre- end of that policy year unless prior demand has lwn mium on the Master Workers policy as of December made.
l 1993 is $3.1 million. The Swondary Financial Protection 1
j "Wehave an obiigation j to successfully andsafely manage allfacets ofnucleartechnology in order to produce competitively-priced electricity
- for Vennonters and other New Englanders."
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a NO1FS to financia. statements SCHEDULEI: MARKETABLE SEcuRmEs - ODIER INVESIMENTS (Dollarsin Thousands)
Name ofIssuerand Title Numberof Cost of Market Value Amount at Which of Each Issue Shares or Each issue of EachIssue Each Portfolio Units-
- at12/31/93 ofEquity IMncipal Secuntyissues Amounts of andEach Other Bondsand SmurityIssueIs Notes Carried on the BalanceSheet Decommissioning fund:
US. Treasury obligations $ 16,252- $ 17,262 $18/46 $ 17,262 Municipalobligations 78,055 79,755 84 5/6 79,755 Money market funds and accued interest 1M3 1M3 1E3 1NG ,
$ %,170 $ 98,880 $105,105 $ 98,880 l Disposal feedefeasance fund:
Short-termimestments $40,200 $ 39,870 $39,870 $39,870 Corporate bonds and notes 3,200 3,195 3,083 3,193 Moneymarket fundsand i
accued interest 419 419 419 419
$ 43,819 $ 43,484 $ 43,372 $ 43,4&1
- Cost includes accrued interest and amortizaticm of premiums and discounts.
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l aw-L SCHEDULE V: PROPEXTY, Puwr ANo Equuuuxr i
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Years Ended December 31, 1993 1992 1991 l
(DollarsinThousands) l I
Ekrtric Plant:
Umd andland rights $ 1,397 $ 1,127 $ 984
! 61,515 Structuns and improvements 61,887 61,8f6 l
j Reactor, turbogeneratorand 3GI,388 292,561 285,808 i acussory equipment i Transmission u]uipment 5,948 5/ib 6,141 1,11 6 1,116 1,116 i Other 597 6A08 4,188
! Constniction workin pmgress 375,333 368,686 359,752
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j Nudcar Fuel:
l 83,213 1 Assembliesin reactor 69,0fG 74,025 Fuelin pnnss - 5,236 637 ,
! 22,863 j Fuelin stock - -
j 287,700 259,199 227140 Spent fuel 356,763 EJ@ 333,753 1
Total $732,096 $707,146 $693,505 i
Neither total additions of $25,361,000, $15,167,000 or $25,002,000 nor total retirements of $411100, I
$1,526,000, or $0 for the years ended Dtusnber 31,1993,1992 and 1991, nspectively, exceeded 10% .
of the utility plant balance at the end of the year.
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- SCHEDULE VI- ACCuumAn:D DEPRECIADON, DEFLETION AND t AMorm7ADON OF PROPERTY, PLANT AND EqwNIENT l
. Years Ended December 31,1993,1992 and 1991 j (Dollars in Thousands) ,
j Additions Other j Balance Charged to Charges Balance Beginning Costs and and AtEnd of Year Expenses Retirements (Deduct) ofYear Accumulated l depreciation i of electric plant:(A) j 1993 $185263 $13,707 $(411) $198,389
$(170)(B) j 1992 173,827 13253 (1,526) (291)(B) 155,263 j 1991 162,065 11,800 -
( 38)(B) 173,827 Actumulated l amortization i of nuclear fuel:
} 1993 308,848 19,526 -
(4,115)(C) 324,259
! 1992 291,013 21240 -
(3,405)(C) 308A18 .
l 1991 270,011 24,861 -
(3,862)(C) 291,013 i
j Total accumulated j depreciation and amortization )
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- 1993 494,111 33,2M (411) (4,286) 522,M8 ,
! 1992 4MS10 M,493 (1,526) (3,696) 494,111
) 1991 432,076 36, 6 1 -
(3,900) 4M,840 1 -
(A) Electric plant is being depreciated on the straight-line method at rates designed to fully depreciate all depnriable properties by 2012. (See NOH l to the financial Statements).
l (B) Repnwnts net salvage and removal cmts.
i (C) Represents disposal costs of spent nudear fuel.
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~___T___~'_____~_~____________________._________.____________________________________________.___
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[NDtltNDENT auditors' report i
f The Stockholders and Ikurd of Dinrtois l Vermont Yankee Nudear Power Corporatiort We have audited the accompanying balance sheet of Vermont Yankee Nudear Power Corporation as of December 31,1993, and the related statements ofincume and retained camings and cash flows i for the year then ended. These finandal statements am the nsponsibility of the Company's manage-ment. Our responsibility is to express an opinion on these financial statements based on our audit.
i The financial statements of Vermont Yankee Nudear Power Corporation as of December 31,1992 i
and 1991, were audited by other auditors whose report, dated Febmary 5,1993, expresscd an unquahfied opinion on those statements and induded an additional paragraph discussing the Can-pany's 1992 dunge in accounting for postretin'rnent benefits other than pensions.
We conducted our audit in accordance with generally accepted auditing standards. Timse standards requim that we plan and perform the audit to obtain reasonable assurance about whdher the financial statements are fnv of nuterial misstatement. An audit indudes examining, on a test basis, esidence supporting the amounts and disdosures in the financial statements. An audit also indudes assessing the aucunting principles used and significant estimates made by management, as well as evaluating the overall financial statement pnsentation. We believe that our audit pmsides a reasonable basis for ouropinion.
In our opinion, the finandal statements referred to above present fairly,in all material nspects, the financial position of Vennont Yankee Nudear Power Corporation as of December 31,1W3, and the results of its operations and cash flows for the year then ended,in conformity with generally ac-cepted accounting principles.
As discussed in NOrE 10 of the accompanying financial statements, eff(rtive January 1,1993, the Company adopted the provisions of Statement of Fuuncial Acrounting Standards No.109,"Ac-counting forIncomeTaxes."
Our audit was made for the purpose of forming an opinion on the basic financial statements taken as whole. The supplementary schedules are presented for purposes of additional amlysis and are not a required part of the basic financial statements. This information has been subjected to the auditing procedurts applied in our audit of the basic financial statements and, in our opinion, is fairly stated, in all material nspects, in relation to the basic financial statements taken as a whole.
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Boston, Massachusetts January 27,1994
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I MN of c irectors .
1 FREDERIC E. GREENMAN, Vice Ibident and Genend DONALD G. PARDUS, Chauman and Chief Exmutive Counsel, New England Power Compmy, Westborough, Officer, Eastem Utilities Assodates, Ikiston, M,tssachusetts Massachusetts GERALD C POULIN, Vim Ibident, Engiruring, Central R. EDWARD ilANSON, Vice lbident. Pn xiuction Opera- Maine Power Compmy, Augusta, Maine" tions, Central Maine Power Compmy, Augusta, Maine
- STEPHEN E. SCACE, Vice lbident, Nudear Operations JOSEPH liARRINGTON, Vim President, New England Services, Northeast Utilities, Hartford, Connaticut
- Power Compmy, Viw Ibident and Director of Researth and Development, New England Power Service Compmy, A. NORMAN TT.RRERI, Senior Viw Ibident and Chief Westborough, Massachusetts " ting Offimr, Green Mountain Power Onporation, th Burlington, Vemiont DOUGLAS G. IIYDE,Ibident and Chief Executive Officer, Green Mountain Power Corporation, South Burlington, 1110 MAS C WEBB, Chaumm, Vermont Yankw Nuclear Vennont Power Corporation, Brattlebom, Vermont, Ibident and Chief Executive Officer, Central Vemiant Public Service JOHN B. KEANE, Vice Ibident and Treasuns, Northeast Corporation,Rutland,Vennont Utilities, Hartford, Connecticut J. G ARY WEIGAND, Ibident and Chief Executive Offimr, E RAY KEYSER, JR., Esq., Keyser, Cmwley, Meub, layden, Vermont Yankee Nudear Power Corporation, Brattleboro, Kulig and Sullivan, P.C, Chairman, Centraf Vermont Public Vennont Servi Corporation,Rutland,Vennont RUSSELL D. WRIGliT, President and Chief Opcating JOIIN W. NEWSHAM, Vim Ibident, New England Electric Officer, Commonwealth Elatric Compmy, Wareham, '
System, Westborough, Massachusetts
- Massachusetts JOHN E OPEKA, Executive Vice Ibident, Northeast Utilities ROBERT H. YOUNG, Executive Vice President and Chief Senice Company, Hartford, Connecticut " Operating Officer, Central Vermont Public Service Corpora-tion,Rutland, Vermont
- Elected Rbruary 2,1994 " Resigned February 2,1994 OFMCIMS 1 THOMAS C WEBB, Chairman i
J. GARY WEIG AND,Ibident and Chief Ex&utive Offictv i DONALD A.REID,ViceIbident, Operations JOHN P.O'CONNOR,Stuetary J AMES P. PELLETIER, Vim Ibident, Engineenng TlIOMAS W. BENNET,JR., Manager of Financial Planning, AssistantTreasunr BRUCE W.WIGGETT,ViceIbident, Financeand Treasurer JOHN A.RfTSHER,Esq.. AssistantSemtuy (This report is not to be considered an offer to sell or buy or solicitation of an offer to sell or buy any security) l l
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