ML20071H056
| ML20071H056 | |
| Person / Time | |
|---|---|
| Site: | Farley  |
| Issue date: | 03/04/1983 |
| From: | Farley J ALABAMA POWER CO. |
| To: | |
| Shared Package | |
| ML20071H053 | List: |
| References | |
| NUDOCS 8305240484 | |
| Download: ML20071H056 (40) | |
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CONTENTS Comparative Highlights . . .. 1 Management's Discussion and Analysis To the Stockholders . . .. . ..2 of Results of Operations and Management Changes . . .. . 3 Financial Condition . . ... ...... 22 Rates . . . . . . . .. .3 Auditors' Report .. . ........23 Financial Review . . .... .. .3 Balance Sheets . . ... .. .. . 24 Electric Sales . .. . .. . .. .. .4 Statements of Capitalization ..... . 25 Planning .. ... .. . ......4 Statements of Income . .. .. 26 Generating Resources . . . ..6 Statements of Earnings Retained Construction . . . . . .. .. .. . . 8 in the Business . . .. .. . ...... 26 Industrial Development . .. .. . 10 Statements of Other Paid-In Capital . . 26 Ice Storm . . . .. ..... .. 10 Statements of Sources of Funds for Employees . ... . . . ... . 12 Gross Property Additions . . .. 27 Research and Development . . . . 14 Notes to Financial Statements . . . . . . . . 28 Customer Relations . .. .. . . . . . . 16 Officers . . .. .......... . . . 35 Report of Management . ..... .. 19 Directors . . . ..... . . . . . . . . 36 Selected Financial Data . . . . .. 20 System Map . . . . . Inside Back Cover COVER A transmission tower at dusk provides a AlabamaPowerCompanyisoneof the beautiful web of iron and steel. Alabama operating companies of The Southern Power has 9,122 miles of transmission lines Company. Others are Georgia Power that must be maintained if our customers are Company, Gulf Power Company (serving to have reliable electric service. northwest Florida), and Mississippi Power Company (serving southeast Mississippi). System affiliates also include Southern Company Services, Inc., which performs specialized services at cost for system companies upon request, Southern Electric International, Inc., a consulting firm, and Southern Electric Generating Company, which is owned in equal shares by Alabama Power and Georgia Power companies. A copy of Form 10-K as filed with the Securities and Exchange Commission will be available to stockholders upon written ! request to Richard Bowron, secretary. A copy of the company's Financialand Statistical Review is also available on request. Alabama Power A Alabama Power Company /600 North 18th Street / Post Office llox 2641/Ilirmingham, AL 35291/ Telephone 205/250-1000
1 EZ:=.TJC=2rrc r,rr:Zr.=Z7=;zmTcr.rarT. rar2.lzz2rr:2%rI5zzi COMPARATIVE HIGHLIGHTS 1982 1981 (Dollars in Thousands) Electric Energy Sales (Millions of kwh): Residential . 9,153 9,229 All Other Retail , 19,311 20,369 Wholesale . 5,475 4,171 Total 33,939 33,769 l Average Annual Use per Residential Customer (kwh) . 10,466 10,621 Customers Served Directly at End of Year . 1,001,832 996,200 Operating Revenues: Residential Sales . $ 578.291 $ 518,730 All Other Retail Sales 979,836 917,062 Wholesale Sales 189,345 145,740 Total from Sales cf Energy . 1,747,472 1,581,532 Other Revenues 16,673 12,490 Total $1,764,145 $1,594,022 Operating Expenses: Fuel $ 540,878 $ 504,930 Purchased and Interchanged Power (Net) . 17,042 144,916 Other 825,269 655,461 Total $1,383,189 $1,305,307 Income before Interest Charges . $ 409,527 $ 335,642 Interest Charges (Before credit of $51,796,000 in 1982 and $46,849,000 in 1981 for allowance for debt funds used during construction and related income tax effect) 262,408 246,611 Dividends on Preferred Stock 36,658 36,071 Net income after Dividends on Preferred Stock 162,257 99,809 Total Gross Utility Plant at End of Year $6,050,508 $5,609,959 Gross Additions to Utility Plant During Year 459,437 437,587 Construction Work in Progress at End of Year , 748,762 583,036 DISTRIBUTION OF REVENUE DOLLAR * (PERCEST) 1982 TN#33n' Di\ IDLNLB LTAk
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2 m , w - x_ emm m m - - - - n ,. e x , e--- m 1 Many customers Workersbeganin June 1982, and face energy related in early September a strike was emergencies during the called by the union. In October,
, winter without financial the company and the union assistance. In an effort to agreed on a new two-year ; ease the financialburden contract and ended the 45-day l of energy costs for those work stoppage.The ratified most affected by the contract contains significant depressed economy, the productivity and efficiency company started Project improvement items.
SHARE with a one-time Alabama Power employees seed money contribu- have always worked to provide tion of $50,000. our customers with dependable, g Customers were also offered the opportunity economical electric service. But special note should be made
, of pledging $1 a month regarding the outstanding through their electric efforts during theice storm bills to create the Project which blanketed central Ala-SHARE fund. Based on a bama in January 1982. More - / three-month solicitation than 250,000 customers lost by Alabama Power, electric service, and our more than 75,000 employees, with the assistance customers pledged to of severalother utilities and support the program, providing contractors, worked around the i
TDTHE PProximately $1 million clock to restore electricityin a l STOCKHOLDERS f annually to Project SHARE.The matter of a few days. p or the first time in American Red Cross is admin- The programs which we r 4 severalyears,weareable istering the energy assistance have planned and executed are 1 to reportayearof major program throughits area offices indicativeof thededicated achievements. in Alabama Power's service area. employees who work for Ala-The most significant Both units of the nuclear plant bama Power and the Southern improvement came from the continued their excellent electric system.Their dedication implementation by the Alabama performance records during to the goals of the enterprise l Public Service Commission of a 1982, operating 79% of the year. continues to helpimprove the new rate stabilization proce- During a refueling outage for responsiveness of our organiza-dure. Instead of large, delayed Unit 2, Alabama Power tion and the quality oflife i rateincreases, this concept completed the refueling and throughout our service area. allows for small periodic rate maintenance in 41 days, a Our greatest challengeis to adjustments based on the com- new record. These efforts have sustain these achievementsin 1 pany's current rate of return on helped save customers millions the economic climate we face common equity. This is impor- of dollars in fuel costs. today. tant in recognition of the state's In March 1983, the company depressed economy and high unemployment.The adoption of beganconstructionof anew headquarters building in down-M h. this innovative approach, town Birmingham.The project Josepn M. Farley following a favorable decision had been deferred for more than President by the Supreme Court of Ala- ten years for financial reasons bama, disposed of both the 1981 despite the urgent need to March 4,1983 and 1982 retail rate cases. consolidate operations and staff. Negotiations to establish a new contract with the Interna-tional Brotherhood of Electrical
3 m - = - w - =a - e. m -- a MANAGEMENT 4
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' e .C. V .N.) j CHANGES j
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. Jg F"" N he company's Board of Ljh ;@kgE J vel E. f[
Directors made several f .g g ._, y 7.. q. . .7.; - d.
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'C ]L Randy Hardigree and Clyde lj :- ;'j -
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H. Wood were elected vice gVS- 4 3 - .T. y ' .FM ' - s. .s., presidents, and Whit Armstrong d.?jd. ?w./ ;d. (. U ' .G. . s ' ?. /. and Robert H. Radcliff, Jr., were i :. .e + s t# . J i. ~': a W P ': ' ;" - ' elected to the company's board P.M.[..? Mi N . . ,.fp U. ; [ y [ "1.,hi
* .T d - B 4.v 7 "W' j of directors. Mr. Hardigree, : .7 -
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formerly general manager- m[ l ,, ; .j'[; 4 " .h , 0 j f , [7 corporate planning, continues '(f . . ':(.Y f.: T ( n '. . his responsibilities for corporate . ~ J .y. .. . . .- 3 Q j .o .. -f ':
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planning,and Mr. Wood,formerly j O ;A - , g .- y~e ' c . o g ,;; .g ' assistant vice president, 2 W .
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My[k,cdi.n 91: ?.76 5 M . g /. [ h . company's Southern Division. Mr. Armstrong is president Ass ning new management Electod to the company's board of posmons in W um 9de wood dimetors in 1982 wem Robert 11. and chief executive officer of (left), d,us, i ion uce pmsident.and Radcliff. .Ir.,(left), Mobile, and Whit The Citizens Bank of Enterpn.se, nandv IIardigme, vice pmsident
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Armstnmg, Enterprise. Alabama,and Mr. Radcliffis for corporate planning. . j chairman of the board and lion annual rate increase which eligible for small periodic chief executive officer, Radcliff Alabama Power had been increases aslong as the rate of return on end-of-period (as collecting subject to refund was i
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made permanent by the com- opposed to average) common ; I mission, and the company was equity does not exceed 13.5 RATES percent. No increases will be awarded an additional $120 7 n November 12,1982,the million in revenues effective approvedif thereturnisbetween ; December 1,1982. On Dbruary 13.5 and 15 percent. If it exceeds l f(V Commixion(APSC)fAlabamaPublicService adopted a new retail ratemaking 1,1983, the first periodic Rate RSE increase of 2 percent was 15 percent, the company would be required to reduce rates. j approach for Alabama Power effective. Revenues totaling Severalintervenors have
- known as Rate Stabilization and $198 million which had been appealed the APSC order. ,
Equalization (RSE)and billedin 1982 subject to refund On December 30,1982, the Certificated New Plant (CNP). were made permanent by orders Federal Energy Regulatory Com-l This concept allows for small of.the APSC and the Court. Future mission approved a settlement periodic rate adjustments based adjustments will be based on the agreement between Alabama on the company's rate of return company's rate of return on end- Power and its wholesale custom- I on common equity and provides of-period common equity and ers providing for an increasein for rate adjustments which the placing in service of addi- wholesale revenues of $6,050,000 l recognize the placingin service tionalcertificated generating annually effective May 1,1982. j of new generating facilities. facilities. Harris Dam will be the The adoption of this first generating plant to be given FINANCIAL REVIEW innovative approach, following recognition under Rate CNP T et income for 1982, after i a favorable decision by the after it is placedin commercial \" dividends on preferred Supreme Court of Alabama, operation in early 1983. a 5 stock, was $162.3 million, disposed of both the 1981and the Under the rate stabilization an increase of $62.5 million over 1982 retail rate cases. A $186- mil- approach, the company will be 1981. This increase resulted
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primarily from revenue derived
'+ 2 fromincreased ratesbilledunder :
the orderof February 12,1982 by 'L* the Supreme Court of Alabama. As a result ofimproved earnings
' 1y{ .p 9 in 1982, the company's return Wq on average common equity increased to 12.62 percent for Q^q the year ended December 31, ~{4 ..,,
4 1982 from 8.17 percent for the t I l year ended December 31,1981. $; . ,; j" - Additionally, at year's end, the g 7 f'7 coverage ratios under the .. s company's mortgage indenture P - I :jg 3 and corporate charter were 2.83 *1' ^ and 1.60, respectively, substan- g tiallyimproving the companys & m .se financing flexibility. The mini-mum coverage ratios under the adding its one-millionth mortgage mdenture and cor-PLANNING ' customer to the company's porate charter for theissuance electric system. Despite that yn a business as complex of additionalfirstmortgage milestone, the company's resi. p asanelectric utility,it bonds and preferred stock are dentialkilowatt-hour sales Aisnecessarytohave along-2.0 and 1.5, respectively. decreased 0.8 percent frorr.1981 range strategic plan that During 1982, the company's due to a sluggish economyin the establishes general goals and financing needs were met pri- state and energy conservation specific objectives for each facet marily byinternally generated efforts. While sales to commer, of theoperation.Throughan funds and capitalcontributions cialcustomers increased 2.3 per. integrated planning process, from The Southern Company. cent when compared with 1981, departments and divisions Internal funds supplied 87.3 industrial sales decreased by 8.1 develop detailed operational l percent of the company's percent as a result of Alabama's plans which establish specific requirements, thereby reducing depressed economy. goals and objectivesin support the need for outside financing. Wholesale and other energy of thelong-range corporate Three major security-rating sales increased 30.4 percent strategic plan. agencies upgraded the ratings of over 1981 due primarily to Alabama Power's forecast Alabama Power's first mortgage increased energy sales to projects peak kilowatt demand ] bonds and preferred stocks as a neighboring utilities. overthe next 10 years toincrease result ofincreased earnings and Residentialcustomers at an average of about 2 percent I adoption of the new ratemaking accounted for 27 percent of the annually, while electric terri-approach. company's total electric sales in torialsales are expected to 1982, commercial customers increase about 2.2 percent dur-ELECTRIC SALES 16.8 percent and industrial ing the next decade. Revised customers 39.7 percent. each year, the company's fore-r7motalsales of electricity Wholesale and other energy casts employ an econometn,c 0 were 33.9 billion kilowatt-
.$. hoursin 1982,ascom- sales accounted for the remain. model based on the relationship ing 16.5 percent. between various national and pared with 33.8 billion kilowatt-hours in 1981. Demand for electricity on During the year, the company Alabama Power's system reached a significant milestone, reached its 1982 peak on July 1. , g gg g,,
27 at 6.3 million kilowatts, down no , y.o,%., m o a og, 8.1 percent from the 1981 peak. we w wrm.
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6 m- & n .m ga m m m m-m m : mc - sw ,a regionaleconomic factors and second unit set a nationalrecord totalrainfallfor allof 1981, energy usage. among comparable nuclear enabling the company to gen-During 1982, Alabama Power units by achieving 90 percent eratelower cost hydropower agreed to sellelectricity from the availability duringits first year whicit resulted in substantial Miller Electric Generating Plant of operation. lt surpassed the savingsin fuelcosts that were in north Jefferson County over previous availability record reflected in reduced energy an approximate 10-year period held byits twin unit, Plant Farley charges to our customers. to Gulf States Utilitiesin Unit 1. Fossil-fueled unitson Alabama Beaumont, Texas, the Jackson- The company's 13 hydro- Power's system continued their ville (Florida) Electric Authority, electric plants generated 13.2 excellent performancein 1982 and Florida Power & Light percentof thetotalelectricity and supplied 59.2 percent of the Company in Miami. produced during the year com-The purchasing utilities will pared to 7.8 percent in 1981. Alabama Pimer completed rernet. pay allcosts associated with the Rainfallduring the first four ing or Unit l or tiie Farley Nuclear electricity supplied over the monthsof theyearsurpassed the Plant in 11 days, a new wcon d. term of the agreements.These agreements will result in the TUTAL TERRIlDRIAL ENERGY SALES creation of approximately 1,900 jobsii. Alabamaandinfusethe state's economy with more than
$3 bii..an. >
In 1995, when the sales agreements expire, the entire - 25 0 [ plant willbe available to serve e a the needs of Alabama Power . E j customers. ; g, GENERATING ! RESOURCES E r 1hecompanycontinuedto is72 is73 is74 is73 is76 1977 1978 is79 isso issi i382 rely on a generation mix
- . ofcoal, nuclear,andhydro-electric power forits power MONTHLY PEAK DEMAND production in 1982. Generation from the Farley Nuclear Electric my Generating Plant near Dothan supplied 27.6 percent of the on company's generation in 1982, {
as compared to 16.6 percent in am 1981. The increase over the previous yearis duein large part to the placingin service of Unit 2
- in July 1981. An evaluation published by the Institute of ..
Nuclear Power Operationsin March 1982 found the plant "in w excellent materialcondition and operatedin a safe manner by m
#8# #[8#[ 8[8 well-qualified personnel."
The plant's performance was i9so ~ ~ ~ i9si - 19s2 underscored in July when the
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l 8 0::2 = ::r r = = = = m t: n r = = r = = = = = ~ ~ h a n c C = 2 total energy production.The y company purchased 11.3 million tons of coalin 1982,99.8 percent K%~ l supplied by Alabama mines. At year's end, the company had 3.5 million tons on hand, a 120-day supply based on anticipated requirements. The installed generating capacityof thecompany,includ-ing 50 percent of the capacity of four units and a small combus-tion turbine of Southern Electric Generating Company at Gaston Electric Generating Plant, and 60 percent of the capacity of the Greene County Plant, totaled 8,493,675 kilowatts at year's end. A1.dmma Iwer's newest hytmelectric generating olant,lorris Da:n, is scheduled to begin conunercial operation in early 1983. CONSTRUCTION Undertermsof agreements Miller units w.lli be availab!e to which begin in 1984, three serve the needs of Alabama lA onstruction was completedin 1982 on virtuallyutilitiesin Texas and Florida will Power customers.
%/ Harris Dam on the Talla- purchase electricity from the During 1982, the company poosa Riverin Randolph and plant, thereby allowing the com- spent approximately $459 Clay counties. Commercial pany to continue construction million for construction of operation of this 135,000- on the remaining three units transmission and distribution kilowatt unit is scheduled for without further delays. When lines, substations, generating, early 1983. the contract expires, all Plant and other facilities.
Redevelopment of Mitchell Dam,includingconstructionof a new powerhouse,is approxi. PERCENT OF TOTAL KWH GENERATION mately 44 percent complete. 100 % 100 % 100 % 100 % 100 % 100 %
% hen the project is completed, ; ,- ..
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j r' three new units will have replaced the three units built in the 1920s, with a net increase of 97,500 kilowatts of capacity. The dam was originally builtin , 1923 on the Coosa River near Verbena. Construction continued to move forward on Plant Miller near Birmingham. At year's end, Unit 2 was about 43 percent complete and is scheduled for commercialoperation in 1985; Units 3 and 4 were approxi- 1977 1978 1979 1980 1981 1982 mately 3 percent complete with C O HYDRO GAS AND OIL projected commercialoperation niiluTIE NUCLEAR M COAL in 1989 and 1991, respectively.
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INDUSTRIAL y DEVELOPMENT M-p . . . .m r~"-~t he extc nt of Alabama's /T 2' depressed economic situ- , ation was most evident in # the addition and expansion of e
- industries in the s; ate during .,
1982. Fewer industrial firms than any year since 1975 announced >
's *w<
m, ne.n - plans to locate or expand facil-ities in the state. Several large " industries announced record 9 y.s. , layoffs or closings affecting more m than 275,100 workers. _. NM%d N Unemployment reached 15.9 percent in December, t he second highest in the nation. Despite the economy,415 industrial firms announced I plans to locate er expand facil-ities in Alabama Power's service area, creating 1,812 jobs and an estimated annual payroll of #h r J. !" ~ 4 ',, * \ f. . ' . . approximately $57.8 million. c.>
~
A gy. . _- x When these additions and ;o a ~
,.. ,r . * . ...f expansion ; are in full operation, '5" V f.odi.
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g n. El . totalinves, ment for new and '
.s t ,r,* 4".- ~~.' .*.~ ..
m g expanded industries announced b #
, ,, (.* ~, {y] g ?.g , f in 198_' will be $80 i milhon. '
ICE STORM J: 1
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y 7 or the third time in
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[yh;}' . ~4JN~ " ? U -? d, * ,1.y l4.~ ?:; M F four years, nature had a . s k 1-A tremendous impact on
$p ' 1- (% .j ,
1 / l ; % [. y ( W v , c; .j... Alabama Power's electric 4 4,. l...,y - l , ) . 6 [' e - system. a winter storm on n. c. ' s - ..e. s . . .O i- . .i .% ~ y 'L.*
. s. . . i 42:.; e ii:
january 12-13,1982 dealt a s.
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blow to the system as snow. sleet M. .o .hM:[Y$Mh'? . D.': ., D . .. .f~%+.4 n
- f and subfreezing temperatures paralyzed much of Alabama.
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As ice-laden tree limbs p1; , 4'? +
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snapped and short-circuited power lines,27.0.000 Alabama Power customers were without electric service. More than 3.000 Alabama Power operating personnel worked around the clock for days, facing the most grueling repair task since
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l 1 l 12 c.=:::L::L.:= n===:= :: :===w==. = :::=::::=:=:=:: Hurricane Frederic devastated hT 195" , . . g "'
.( s '.g. *eg 3q.; q . s g, the Gulf Coast in 1979. An 7. p' '. ,
g 'y . , g 6( ,v .l.p#,,- .g. additional 800 personnel from Qe y g~ ( ' ' ,;. . - other utilities andindependent .. ' '4 a h '. ? ... ? 2: ' gt
~d contractors assisted in the 14 #ddN Ag ~ a ' ' ' ' L restoration efforts. ,
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service was restored within .( % , . s. d(, ' '
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Q [; Record low temperatures % ; hovered around zerojust prior to the storm, prompting customer
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sN_ ' .; demand for electricity just short <
". ' '.; =% ~ e of the company's all-time winter
~~
peak deraand on February 12, Ibr s~n aan in Jannan. Atah.nna P~er emphnees brmed suhrnwing 1981. tenip. , atun s to emne chx trh,en h e to inon than novoo cusionn n u ho lost pow d.a ing an ice stoi sn. EMPLOYEES GROSS PLANT ADDITsONS r jnhecompanyemployed g 9,663 peopleasof Decem-ber 31,1982 compared to ~ [ 9,661 employees a year earlier. -
*' g More than one-third,3,900 . l. l s employees, are represented by the International Brotherhood
(
'l l ll - ll *- ' .
-3""
I y of ElectricalWorkers.Negotia- 1 .-
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s tions to establish a new contract -! . 2mi began in June 1982.On October f 14, the company and the union '
- ino agreed on a new two-year con- l
!_ l II lL JlI I ' l .-l tract and ended the 45-day strike I el i 3 . o against the company.
During the strike, nonunion employees, including mana-AVERAGE RESIDENTIAL USAGE PER CUSTOMER gerial personnel, eng,meers, 9' accountants and office workers, replaced union workers throughout the system. .my The ratified contract contains significant productivity and effi- ; ciency improvement items. The - 90 contract also calls for improved j life insurance, sick leave and 2 medical benefits, and a 7.5 per- ~"j centincrease in wages during the first year of the agreement, 7u and an additional 6.5 percent wageincreasein thesecond year. m2 na m4 ms na m7 na na n,., nxi us2
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w Projects far beyond the financial RESEARCH AND capability of any one utility. DEVELOPMENT Within the Southern electric roviding for customers' system, Alabama Power also
. energy needsat thelowest participates in research elforts " '
a possible cost with minimal in numerous areasincluding f,).'[l.ll"n'[i h',$';',',1',';",fy['l,'llll[,"l, environmentalimpact is a major solvent refined coal, acid rain, inaintaineti no, nial electric sen ice challenge facing Alabama Power and solar technology. for our customers. today.To help meet this challenge, the company has pooledits research dollars with RESIDENTIAL ELECTRIC BILIS FOR SELECTED U.S. CITIES more than 600 other electric FOR MONTHLY USE OF 1,000 KILOWKIT. HOURS utilities across the country to RATES IN EFFECT DECEMBER 1,1982 support the work of the Electric Power Research Institute (EPRI). E us. During 1982, Alabama , Power contributed more than N ,,
$5.4 million to EPRl's research and development efforts. Almost half of that contribution went to "" s generation research toimprove 3 existing fossil-fired and nuclear so. 5 power generation systems and to develop advanced generating 3, equipment and technologies.
Other projectsincluded research toimprove the understanding of
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environmentaland health f pQ//(p effects of electricity generation # # # and transmission. improving the performanceof transmission and distribution systems, and DISTRIBUTION OF REVENUE DOLLAR * (19731982) major effortsin solar, geothermal, nAnsiscs Avan.Asu: and nuclear fusion energy. 1000 moimoimo200oimoimoimoimo mo ggs Overall, about 1,400 active _.-ggcTrisa) research projects are currently J under EPRI's management, exuunnisnicx representing a funding authori- ,
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zation in excess of $1.6 billion ,jn 38:2j ji7jlt,,yj Q f % Egg,gm over five years. [n4 s.q 3g.p [,,rr h3 j - . $ 9.s] ;874.. y , , , s78; i ; s.2 AuowrlZATioN Through EPRI, Alabama :4 Power maximizesits return on !8A ! every research and develop- lN#EMI""*
- ment dollar, avoiding costly duplication of research and allowing for extensive research agg, Po%ER 1973 1974 1975 1976 1977 1978 1979 1m) 1981 1982
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16 e n _ na w== w ,m= - wm = m - ,- m a CUSTOMER RELATIONS suggestions to the Customer Alabama Power customers and Relations Steermg Cgmmittee. employees. As a result of a three-M heabilityof Alabama A training program was month solicitation, approxi-Power to serveits cus- developed for allemployees mately 75,000 customers and
-~ tomers effectivelyis with direct customer contact. By employees pledged financial influenced,in large part, by the the end of the year, more than support to SHARE, thus creating levelof public understanding 1,300 employees had partici- an annualfund of approximately customers have of the company. pated in the training program. $1 million. No administrative Nationwide, public utilities One of the most positive pro- expenses are being withheld by are recognizing that customer grams to evolve during 1982 was either the Red Cross or Alabama concerns must beidentified and Project SHARE, an emergency Power.
addressed in a straightforward energy assistance program. Through Project SHARE and timely manner. Our first SHARE means " Service to Help more than one thousand fam-responsibilityis to produce Alabamians with Relief on ilies have received emergency electricity-efficiently and Energy"and will be admin- assistance during the 1982-1983 economically. But a critical istered by Red Cross chaptersin heating season. responsibilityis the ability of an Alabama Power's service area. It electric utility to communicate is designed to help families and effectively with its customers. It individuals who face energy-was with the understanding that related crises without financial realcommunication includes assistance. Project SHARE speakingas wellaslistening that began with a one-time seed Alabama Power embarked in money contribution of $50,000 1982 on an aggressive customer from Alabama Power. relations program. Additional funding for the The rationale behind this was [y','),'$'j"','.';,',"[gMI[d it" program is being provided added uie one.miniont h customer not complex. What really sus- through voluntary $1 per to the system. Mrs. nisian Perkins tains the huge flow of electricity month contributions from of Gadsden. is another kind of energy-human energy, generated by more than 9,600 employees. Alabama Power already enjoys e % 4;) ,f. ;;7.f .f.Q r,j;;.f '1A a good reputation for providing service to its customers. p . f ; . f 1. .- ? y Q.( g-
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20 C - - aserms - e viy w rmeu m m w r.m m e m a rm e m w m m 2.mr d SELECTED FINANCIAL DATA (DollarsIn Thousands) 1982 1981 1980 1979 Condensed Statements of Income: Operating Revenues . . . . . . . . . . . . .
$1,764,145 $1,594,022 $1,421,997 $1,163,623 Operating Expenses:
Operation and maintenance .. . . . . 940,262 978,075 816,243 700,647 Depreciation and amortization . . . . 169,753 147,581 127,840 123,075 S Taxes other than income taxes ... ,. 96,936 86,878 74,488 74,592 Federal and state income taxes . . .. 176,238 92,773 114,427 58,759 Total Operating Expenses . . . . 1,383,189 1,305,307 1,132,998 957,073 Operating income . . . . . . . . 380,956 288,715 288,999 206,550 Other income, Net .. . . . . 28,571 46,927 42,715 40,775 Income Before Interest Charges . . .. . . 409,527 335,642 331,714 247,325 Net Interest Charges . . . . . . . .. . . . 210,612 199,762 170,997 158,666 Dividends on Preferred Stock .. .. . . 36,658 36,071 31,013 31,219 Net income After Dividends on Preferred Stock . $ 162,257 $ 99.809 $ 129,704 5 57,440 Cash Dividends on Common Stock . . . . . . . $ 130,700 $ 120,800 $ 115,300 $ 54,000 Return on Average Common Equity (Percent) . 12.62 8.17 11.61 5.82 Total Assets . . . . . . . . . . . $4,683,358 $4,449,126 $4,244,932 $3,995,816 Gmss Property Additions . . $ 459,437 $ 437,587 $ 411,813 $ 459,533 Capitalization: Common stock equity . . . $1,340,890 $1,231,061 $1,211,417 $1,022,533 Preferred stock . . . . . . ... ... . . 374,400 374,400 334,400 334,400 Preferred stock subject to mandatory redemption 42,234 43,789 47,500 50,000 Long-term debt . . . . 2,370,050 2,394,674 2,159,793 1,883,684 Total Capitalization .. . $4,127,574 $4 043,924 $3,753,110 $3,290,617 Kilowatthour Sales (In Thousands): Residential . . . . . .. . 9,153,173 9,229,255 9,510,609 8,679,417 Commercial . . . . . . ... . 5,715,630 5,586,990 5,514,844 5,207,513 Industrial . . . . . 13,460,193 14,651,012 14,499,375 14,629,581 Sales for resale . . . 2,408,904 2,402,331 2,510 M7 2,461,078 Other. .. . . 134,811 131,117 12),582 126.729 TotalTerritorial Sales .. . . 30,872,711 32,000,705 32,170,757 31,104,318 Non-territorial sales . . . . .. . . 3,066,423 1,768.650 1,346,912 6,286 Total Kilowatthour Sales . . . 33,939,134 33,769,355 33,517,669 31,110,604 Operating Revenues: Residential . . . . . . $ 578,291 $ 518,730 $ 489,031 $ 385,224 Commercial . . . 371,581 325,388 233,576 242,626 Industrial . . . . . . . 600,219 584,030 507,784 442,221 Sales for resale . . .. . 99,014 89,727 77,627 76,056 Other. . ... . . 8,036 7,644 6,706 6,335 Total Territorial Revenues . . . . . 1,657,141 1,525,519 1,374,724 1,152,462 Non-territorial revenue: .. . . 90,331 56,013 37,304 1,222 Total Revenues from Sales of Electricity . 1,747,472 1,581,532 1,412,028 1,153,684 Other revenues . .. . . 16.673 12,490 9,969 9,939 Total Operating Fevenues . . $1,764.1G $1,594,022 $1,421,997 $1,163,623 Customers (End of Year) . ... . 1,001,832 996,200 986,082 976,200 Employees (End of Year) . . . ... 9,663 9,661 9,573 9,038
~
Average Revenues Per Kilowatthour Total Sales (Cents) . . . . . . . . . . . . . . . . 5.15 4.68 4.21 3.71 Average Cost of Fuel Per Net Kilowatthour Generated (including SEGCO)(Cents) 1.80 1.84 1.61 1.56 Certain prior year amounts have been reclassified to conform with current year presentation.
21
,. 7 .. ;; ._a. . . - n ,. x y a y ; a , n , w: . ; . r ;
1978 1977 1976 1975 1974 1973 1972 l
$1,014,443 $ 968,693 $ 699,667 $ 631,250 $ 489,455 $ 396,841 $ 325,700 655,384 594,880 461,504 362,041 300,718 185,372 167,471 109,315 69,938 57,692 51,394 45,523 40,605 37,253 63,737 47,887 45,584 38,147 34,370 30,241 24,950 25,080 89,161 36,577 58,3d? 26,426 44,076 20,327 853,516 801,866 601,357 509,924 407,037 300,294 250,001 160,927 166,827 98,310 121,326 82,418 96,547 75,699 44,892 57,436 95,552 75,012 55,383 33,780 16,682 205,819 221,263 193,862 196,338 137,801 130,327 92,381 131,697 83,101 115,053 101,609 72,843 55,472 42,709 31.219 23,886 22,385 16,947 15,964 9,766 9,027 $ 42,903 $ 117,276 $ 56,424 $ 77,782 $ 48,994 $ 65,089 $ 40,645 $ 108,800 $ 94,900 $ 60,000 $ 60,000 $ 46,800 $ 45,800 $ 35,500 4.46 12.82 7,18 11.60 8.61 13.89 10.12 $3,717,638 $3,341,428 $2,886,941 $?,520,299 $2,142,355 $1,742,852 $1,408,641 $ 483,430 $ 540,076 $ 443,951 $ 447,966 $ 428,874 $ 383,114 $ 257,338 $ 952,648 $ 971,626 $ 858,300 $ 713,197 $ 628,415 $ 511,109 $ 426,809 334,400 334,400 235,400 235,400 235,400 200,400 150,400 50,000 50,000 50,000 - - - -
1,851,394 1,652,013 1,294,731 1,200,277 1,015,948 897,333 730,045
$3,188,442 $3,008,039 $2.438,431 $2,148,874 $1,879,763 $1,608,842 $1,307,254 9,088,856 8,804,755 8,135,215 7,743,609 7,321,419 7,344,878 6,656,760 5,282,746 5,121,461 4,793,698 4,611,863 4,306,750 4,194,288 3,797,751 13,799,043 12,845,489 11,872,717 10,742,325 10,992,118 10,867,180 10,278,181 2,479,439 2,346,603 2,134,011 2,020,406 1,954,525 2,330,717 1,922,452 125,177 120,556 117.377 111,313 104,989 97,097 93,493 30,775,261 29,238,864 27,053,018 25,229,516 24,679,801 24,834,160 22,748,637 342,302 615,423 544,327 420,868 552,995 - 104,303 31,117,563 29,854,287 27,597,345 25,650,384 25,232,796 24,834,160 22,852,940 $ 351,644 $ 339,393 $ 248,306 $ 230,161 $ 178,949 $ 152,689 $ 126,355 213,059 208,864 152,076 140,568 109,044 92,121 74,758 357,691 338,007 238,282 208,068 165,540 127,415 104,427 67,539 56,872 42,308 38,229 21,362 17,434 11,784 6,004 5.663 4,310 4,051 3,814 3,503 3.269 995,937 948,799 685,282 621,077 479,609 393,162 320,593 10,534 12,496 7,817 5,253 5,031 - 1,981 r 1,006,471 961,295 693,099 626,330 484,640 393,162 322,574 7,972 7,398 6,568 4,920 4,815 3,679 3.126
{
$1,014,443 $ 968.693 $ 699,667 $ 631,250 $ 489,455 $ 396,841 $ 325,700 961,440 938,576 921,208 898,658 882,706 863,272 835,017 9,695 8,813 8,164 7,870 7,948 7,693 6,947 3.23 3.22 2.51 2.44 1.92 1.58 1.41 1.22 1.20 1.06 1.08 0.79 0.43 0.41
22 _ m __ m my m . mm m m MANAGEMENT S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations The company's financial performance improved significantly increases in depreciation and amortization each year are due in 1982 compared to 1981 and 1980. Net income after dividends principally to the continued g owth in depreciable plant in on preferred stock was $162,257,000 in 1982, $99,809,000 in 1981 service. The composite straight-line depreciation rate was 3.4 and %29,701.000 in 1980. Return on average common equity for percent in 1980,3.3 percent in 1981 and 3.6 percent in 1982. 1982 was 12.6 percent compared to 8.2 percent in 1981 and 11.6 Fluctuations in income taxes resulted f rom changes in income percent in 1980. before income tain. Federal and state income tax provisions increases in operating revenues in each period are attributable are detailed in Note 5 to the financial statements. principally to a combination of rate increases, recovery of The allowance for funds used during construction represents increased fuel and purchased power costs through fuel and the cost of capital charged to utility plant under construction. energy adjustment provisions contained in rate schedules and This allowance represents t he estimated debt and equity costs of comparatively small increases in total energy sales. Kilowatt hour capital funds which are necessary to finance the construction sales in 1980 increased 7.7 percent over 1979, compared to a 0.8 of new facilities. A portion of current cash flow results from the percent increase in 1981 over 1980 and a 0.5 percent increase in allowance of a return on and recovery through depreciation of 1982 over 1981. The increase in kilowatthour sales in 1980 was previously capitalized amounts. The allowance for funds used due to an extended heat wave and the implementation of during construction, net of income taxes, as a percent of net contracts for sales to nonaffiliated utilities, whereas increases in income after dividends on preferred stock was 57.1 percent in 1981 and 1982 kilowatthour sales were due primarily to sales to 1980,64.2 percent in 1981 and 29.3 percent in 1982. nonalfiliated utilities. The company's portion of these sales The results of operations discussed above are not necessarily amounted to 3.1 billion kilowatthours with associated revenues indicative of future earnings. it is expected that higher operating of $90 million in 1982, representing increases over 1981 of 73.4 costs and carrying charges on increased investment in plant,if percent and 61.3 percent, respectively. Territorial sales not of fset by proportionate increases in operating revenues decreased in 1981 and 1982, compared to 1980, due to a (either by periodic rate increases or increases in energy sales), combination of moderate weather, conservation efforts by will adversely affect future earnings. Increases in future sales will customers and a sluggish economy. The additional revenues be affected by the volume of energy sales to nonaffiliated utilities, resulting from rate increases and the recovery of increased fuel the extent of energy conservation pacticed by customers, the and energy costs have steadily increased the average revenue elasticity of demand, weather and the rate of economic growth per kilowatthour from 4.21< in 1980, to 4.68e in 1981 and to 5.15< in the corcpany's service area. See Note 14 to the linancial in 1982. statements for supplementary information concerning the The rise in operation expenses occurring each year since 1979 approximate effects of inflation. resulted primarily from escalations in the cost of fuel and other operation expenses, partially offset by reductions in purchased Financial Condition power costs in 1980 and 1982. Purchased power expense The company's continuing construction program to build decreased substantially ,n i 1982 due to a s,gmficant i increase in ' an energy supply network with a sufficient margin of reserve nuclear and hydro power generation.This increase in generation capacity to ensure an adequate, economical power supply, allowed the company to avoid energy purchases at higher costs required the expenditure of $1.3 billion during the three years from neighboring utilities. The increase in nuclear generation is 1980 through 1982. As shown on the Statements of Sources of due to Plant Farley Unit 2 being in service the entire year and Funds for Gross Property Additions, the primary sources of funds increased hydro generation is attributable to a high level of l for construction expenditures are internal sources, sales of rainfall. in 1981 purchased power increased over 1980 due to Unit long-term debt and capital contributions from The Southern 1 of the Farley Nuclear Plant bmng out of service for approxi-mately seven months and a reduced level of hydro power Th company's capitalization ratios have remained approxi-generation as a result of abnormally low rainfall. Fuel cost per mately the same in recent years, but the composite interest rate kilowatthour generated, including SEGCO, was 1.61< in 1980, on long-term debt has increased from 8.6 percent at December 1.84* in 1981 and 1.80< in 1982.The decrease m the fuel cost per 31,1979 to 9.9 percent at December 31,1982. As f urther evidence kilowatthour generated in 1982 as compared to 1981 is mdicative of the increasing cost of capital, the company's annualinterest of a favorable generation mix (more nuclear and hydr requirement on long-term debt has increased 45.3 percent generation). Increases in other operation and maintenance since 1979' expenses are largely due to escalating costs of labor, material and services.
23 l y - . - 7 -. .. .
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f At December 31,1982, the company had $25,212,000 of cash in connection with maturities of first mortgage bonds, and temporary cash investments and $311,619,000 of unused pollution control bonds and preferred stock subject to mandatory credit arrangements with banks to meet its short-term cash redemption. needs. (See Note 4 to the financial statements.) At the end of 1982, it is anticipated that the funds required will be derived from the company had no short-term bank loans outstanding. sources in form and quantity similar to those used in the past. The company's construction expenditures are estimated However, in order to issue additional long-term debt and l to total $1.8 billion for the three years 1983 through 1985.The preferred stock, the company must comply wit h certain earnings construction program is subject to periodic review and revision coverage requirements contained in its mortgage indenture and and construction costs incurred and commercial operation dates corporate charter. On the basis of the requirements contained in may vary from estimates because of several factors including, the company's mortgage indenture and corporate charter, the new estimates of increased costs, revised load estimates and the bondandpreferredstockcoveragesof thecompanyatDecember cost of capital. (See Note 3 to the finamial statements.)ln addition 31,1982 were 2.83 and 1.60 respectively. (See Note 3 to the to the funds required for the construction program, approxi- financial statements.) raately $52,673,000 will be required through the end of 1985 i l AUDITORS' REPORT To the Board of Directors of Alabama Power Company: We have examined the balance sheets and statements of capitalization of ALABAMA POWER COMPANY (an Alabama corporation and a wholly owned subsidiary of The Southern Company) as of December 31,1982 and 1981, and the related statements of income, earnings retained in the business, other paid-in capital and sources of funds for gross property additions for each of the three years in the period ended December 31,1982. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the financial statements referred to above present fairly the financial position of Alabama Power Company as of December 31,1982 and 1981, and the results of its operations and the source of funds for gross property additions for the periods stated, in conformity with generally accepted accounting principles applied on a consistent basis. f Arthur Andersen & Co. r ( Birmingham, Alabama, February 11,1983.
24
- . . c n m w " ne . .w .w m.ym1.eemweww m m msnmecemwo mo:.
BALANCE SHEE'IS at December 31,1982 and 1981 1982 1981 Assets (In Thousands) UTILITY PLANT (Notes I and 3): Plant in service, at original cost . . . . . . . . . . $4,979,976 $4,771,723 Less-Accumulated provision for depreciation . . . . . . . . . 1,218.727 1,063,897 3,761,249 3,707,826 Nuclear fuel, at amortized cost . . . . 143,767 143,541 Construction wo3 k in progress . . . .. . 748,762 583,036 4,653,778 4,434,403 Less-Property-related accumulated deferred income taxes (Note 1) . . . 491,264 431,364 OTHER PROPERTY AND INVESTMENTS: Southern Electric Generating Company (Note 9) . . . . 16,400 16,400 Nonutility property, net . .. . .. . .. . 2,437 2,564 Miscellaneous . . . . . 1,194 1,104 CURRENT ASSETS: Cash (Note 4) . . . . . . .. ... . . .. 11,203 4,400 Temporary cash investments, at cost . . . 14,009 19,551 Receivables-Customer accounts receivable . . . . . . . . . . . , , . 101,059 94,515 Other accounts and notes receivable . 12,262 10,632 Intercompany accounts . .. .... . . . . . .. 36,791 10,605 Accumulated provision for uncollectible accounts . . (558) (572) Refundable federal income tax (Note 5) . . . 22,173 25,000 Fossil fuel stock, at average cost . . . . . . 210,349 166,857 Materials and supplies, at average cost . . . . .. 26,154 24,087 Prepayments . . .. . . 27,900 28,952 DEFERRED CHARGES: Cost of cancelled plant, being amortized (Note 1) . . . . .
- 5,473 Debt expense, being amortized . . . . . . . 6,948 7,343 Miscellaneous . . . 32.523 29,176 39,471 41,992 Capitalization and Liabilities CAPITALIZATION (See accompanying statements):
Common stock equity . . . .. $1,340,890 $1,231,061 Preferred stock . . . . ... ... . ........ 374.400 374,400 Preferred stock subject to mandatory redemption (Note 8) 42,234 M,789 Long-term debt . . 2,370.050 2,394,674 CURRENT LIABILITIES: 1 Long-term debt due within one year (Note 7) . . . . . . 59,821 52,687 Accounts payable-Intercompany accounts . . 43,405 33,367 l Other... . 101,458 90,520 Customer deposits . . . . . 23,996 22,362 Taxes accrued-Federal and state income (Note 5) . . . 27,483 30,499 Other. .... . . .. . 8,731 10.236 Interest accrued . 65,241 65,382 Miscellaneous . . . . 40,537 16.220 DEFERRED CREDITS, E'IE.: Accumulated deferred investment tax credits . . 170,709 67,407 Miscellaneous . . 14.403 16,522 185,112 _ 83,929 ) COMMITMENTS AND CONTINGENT MATTERS (Notes 2,3,9 and 11)
$4,683,358 $4,449,126 l
Certain prior year amounts have been reclassified to conform with current year presentation. I The accompanying notes are an integral part of these statements.
25
. . . . . .. ~ . . . .. .. . .. . . , . .
STATEMENTS OF CAPITAI.IZATION at December 31,1982 and 1981 Percent of Amount Total 1982 1981 1982 1981 (in Thousands) COMMON STOCK EQUITY: Common stock, par value $40 per share, authorized 6,000,000 shares, outstanding 5,608,955 shares . ... .. . . $ 224,358 $ 224,358
- Other paid-in capital . . . . . . . . . . . . . 986,145 908,145 Premium on preferred stock (Note 8) . . . . . . . ... . 1,807 1,535 Earnings ret 3ined in the business (Note 10) . . .... 128,580 97,023 Total . .. .. .. . . . . . 1,340,890 1,231,061 32.5 % 30.4 %
CUMULATIVE PREFFRRED STDCK (Note 3):
$1 par value, authorized 27,500,000 shares-
$25 stated value-1,600,000 shares outstanding-15.68% . . 40,000 40,000
$100 par value, authorized 3,850,000 shares-Series 4.20% to 4.52% , . . . .. ... .. . . . 41,400 41,400 4.60% to 4.92% . . . . 29,000 29,000 5.96% to 8.04% . .. .. . .. .. .. . 32,000 32,000 8.16% to 9.44% . . . ... 232,000 232,000 Total (annual dividend requirement-$31,991,000) . . .. ... 374,400 374,400 9.1 9.3 Subject to mandatory redemption (Note 8):
11.00% (annual dividend requirement-54,646,000) . .. 42,234 43,789 1.0 1.1 IJONG-TERM DEBT (Note 3): First mortgage bonds-Maturity Interest Rates April 1,1982 3%% .. .
- 12,000 May 1,1983 4%% .. I1,939 11,939 March 1,1984 3%% . . 17,000 17,000 June 1,1985 3%% 15,000 15,000 March 1,1986 3%% . . . 13,725 13,725 May 1,1987 4%% . 14,500 14,500 October 1,1987 8%% . . . . . . . . . 75,000 75,000 1988 through 1992 3%% to 18%% . .. . 277,317 277,317 1993 through 1997 4%% to 6%% . 128,581 128,581 1998 through 2002 7% to 9% . . . . . 378,424 378,424 2003 through 2007 8%% to 10%% . . 685,000 685,000 2008 through 2011 9%% to 17%% . . . .. . 525,000 525,000 Total first mortgage bonds . . 2,141,486 2,153,486 Other long-term debt (Note 6) . . . .. . 304,916 311,060 Unamortized debt premium (discount), net . . (16,531) (17,185) f Total long-term debt (annual interest requirement-i $243,453,000) 2,429,871 2,447,361 Less amount due within one year (Note 7) . . 59,821 52,687 l Long-term debt, excluding amount due within one year 2,370,050 2,394,674 57.4 59.2 TOTAL CAPITALIZATION . . .. . . $4.127,574 $4,043,924 100.0 % 100.0 %
The accompanying notes are an integral part of these statements.
26 ra . - a._ m n ., r a:a m m mm; - - _-w~ . , - - - , s STATEMENE OF INCOME for the Years Ended December 31,1982,1981 and 1980 1982 1981 1980 (In Thousands)
$1,764,145 $1,594,022 $1,421,997 OPERATING REVENUES OPERATING EXPENSES:
Operation-540,878 504,930 439,488 Fuel . ... ... ... Purchased and interchanged power, net , 17,042 144,916 124,163 232,952 192,502 153,552 Other 149,390 135,727 99,040 Maintenance . . . Depreciation and amortization 169,753 147,581 127,840 Taxes other than income taxes .... 96,936 86,878 74,488 Federal and state income taxes (Note 5) , 176,238 92,773 114,427 Total operating expenses 1,383,189 1,305,307 1,132,998 380,956 288,715 288,999 OPERATING INCOME . OTHER INCOME-Allowance for equity funds used during construction (Note 1) . 20,352 39,471 32,189 Income from subsidiary (Note 9) 2,412 2,531 2,466 Other, net . 5,807 4,925 8,060 income before interest charges 409,527 335,642 331,714 INTEREST CHARGES: Interest on long-term debt ... 250,806 239,858 184,557 Amortization of debt discount, premium and expense, net . 936 871 593 Other interest charges . . .... .... ... 10,666 5,882 65,68a Allowance for debt funds used during construction (Note 1) (51,796) (46,849) (79,839) Net interest charges 210,612 199,762 170,997 NET INCOM E . . . . . . . . . . . . . . . . . . . . 198,915 135,880 160,717 36,658 36,071 31,013 DIVIDENDS ON PREFERRED STOCK NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK . $ 162,257 $ 99,809 $ 129,704 STATEMENE OF EARNINGS RETAINED IN THE BUSINESS for the Years Ended December 31,1982,1981 and 1980 1982 1981 1980 (In Thousands) Balance, beginning of period $ 97,023 $ 119,973 $ 105,569 Add (deduct): Net income after dividends on preferred stock 162,257 99,809 129,704 Cash dividends paid on common stock (130,700) (120,800) (115,300) Preferred stock issuance expense - (1,959) - Balance, end of period (Note 10) . $ 128,580 $ 97,023 $ 119,973 STATEMENE OF OTHER PAID IN CAPITAL for the Years Ended December 31,1982,1981 and 1980 1982 1981 1980 (In Thousands) Balance, beginning of period $ 908,145 $ 866,145 $ 692,145 Cash contribution to capital by parent company 78,000 42,000 174,000 Balance, end of period $ 986,145 $ 908,145 $ 866,145 The accompanying notes are an integral part of these statements.
27 e m-, -
._ - 2, > r , _ ,= _ _ _ < 4 m m q_-*m STATEMENTS OF SOURCES OF FUNDS FOR GROSS PROPERTY ADDITIONS l for the Years Ended December 31,1982,1981 and 1980 1982 1981 1980 (in Thousands)
Net income . . .. ... $198,915 $135,880 $160,717 Add (deduct) principal noncash items-Depreciation and amortization . 238,664 198,977 161,262 Deferred income taxes, net .. , 66,474 82,723 105,299 Deferred investment tax credits . . 118,200 29,400 10,700 Allowance for equity funds used during construction . (20,352) (39,471) (32,189) 601,901 407,509 405,789 l Dividends on common stock 130,700 120,800 115,300 Dividends on preferred stock 36,658 36,071 31,013 Decrease (increase) in net current assets, excluding long-term debt due within one year and notes payable to banks-Cash and temporary cash investments . (1,261) (1,505) (13,398) Receivables . . . .. (34,374) (7,974) (3,944) Refundable federalincome taxes 2,827 (5,000) (16,846) Fossil fuel stock . . (43,492) (5,264) (37,841) Materials and supplies . (2,067) (2,353) (821) Accounts payable 20,976 (35,307) 316 Interest accrued (141) 11,321 4,968 Taxes accrued . (4,521) 10,200 11,164 Other, net 27,003 1,035 (14,380) (35,050) (34,847) (70,782) Other, net (includes allowance for equity funds used during construction) 1,643 (1,986) 5,017 Totalinternal sources . 401,136 213,805 193,711 External Sources-First mortgage bonds - 275,000 250,000 Bonds retired (12,000) (15,000) - Preferred stock ..... ...
- 40,000 -
Preferred stock reacquired (Note 8) (1,555) (3,711) (2,500) Capital contribution by parent company 78,000 42,000 174,000 Pollution control obligations, net . ......... ..... 3,240 1,713 8,803 Increase (decrease)in capitalized leases and other long-term debt (9,384) (19,719) 43,776 increase (decrease) in notes payable to banks - (96,501) (255,977) Total external sources 58.301 223,782 218,102 Gross Property Additions (includes net allowance for funds used during construction in the amount of $47,549,000 in 1982, $64,070,000 in 1981 and $74,110,000 in 1980) $459.437 $437,587 $411,813 Certain prior year amounts have been reclassified to conform with current year presentation. ( The accompanying notes are an integral part of these statements.
a 28 ~ =cmww : x :. w m~mw~~mmmnaw m NOTESTO FINANCIALSTATEMENTS
- 1.
SUMMARY
OFSIGNIFICANT ACCOUNTING Utility Plant-POLICIES: Utility plant is stated at original cost. Such cost includes General- applicable administrative and general costs, payroll-related The company is a wholly owned subsidiary of The Southern costs such as pensions, taxes and ot her benefits and the estimated Company (SOUTliERN) which is the parent company of four cost of funds used during construction. The cost of maintenance, operating companies, a system service company, and Southern repairs and replacements of minor items of property is charged Electric International, Inc (SEI). The operating companies pro- to maintenance expense accounts. The cost of replacements of vide electric utility service in four southeastern states. Contracts property (exclusive of minor items of property)is charged to the among the companies, covering interconnection arrangements, utility plant accounts. interchange of electric power and joint ownership of generating Allowance for Funds Used During Construction-facilities, are regulated by the Federal Energy Regulatory This allowance represents the estimated debt and equity costs Commission (FERC) or the Securities and Exchange Commission of capital funds which are necessary to finance the construction (SEC). The system service company provides, at cost, technical of new facilities.The composite rate used to determine the and other specialized services, upon request, to SOUTif ERN amount of allowance, net of the income tax effect of capitalized and to each of the operating companies. SEl, which was formed debt cost, was 8.4% in 1982,8.1% in 1o81, and 8.3% in 1980.The in January 1982, markets to utilities and industrial concerns the company accounts for the income tax effect of capitalized debt technical expertise of the Southern electric system in planning cost as a charge to income tax expense associated with opera-and operating electric power facilities. tions with a corresponding credit to allowance for debt funds SOUTHERN is registered as a holding company under the used during construction. Public Utility Holding Company Act of 1935 (Holding Company Depreciation and Amortization-Act), and it and its subsidiaries are subject to the regulatory Depreciation of the original cost ol depreciable utility plant provisions of the Holdir.;' Company Act.The company is also in service is provided using composite straight-line rates which regulated by the FERC and the Alabama Public Service Commis- approximated 3.6% in 1982,3.5% in 1981, and 3.4% in 1980, and sion (APSC) and follows generally accepted accounting prin- includes a factor to provide for the expected cost of decommis-ciples and complies with the accounting poli:ies and practices sioning nuclear facilities. This cost, based on decommissioning prescribed by the respective commissions. promptly after the unit is taken out of service, is estimated at Revenues- approximately $37,000,000 per unit at Plant Farley.This esti-Revenues are included in income as billed monthly to mate will be adjusted periodically considering changing price customers on a cycle billing basis. levels and technology. When property subject to depreciation is Fuel Costs- retired or otherwise disposed of in the normal course of business, Fuel costs are expensed as fuel is consumed. The company's its cost, together with its cost of removal,less salvage, is charged rates include fuel and net purchased energy adjustment clauses to the accumulated provision for depreciation. under which fuel and net purchased eaergy costs are charged The construction of a proposed nuclear generating plant was or credited to customers on a current basis. The cost of nuclear cancelled in 1977. Obligations related to equipment design and fuel, including the estimated cost of permanent storage of spent engineering and termination of contracts applicable to this plant fuel,is amortized to fuel expense based on the quantity of heat amounted to approximately $34,000,000.The company received produced for generation of electric energy. Such amortization regulatory approval to amortize and recover these costs as an was $61,947,000 in 1982, $42,369,000 in 1981 and $27,505.000 operating expense, ratably over a five-year period. Such amorti-in 1980. zation is included in depreciation and amortization and Final disposition of spent nuclear fuel may require future amounted to $5,568,000 in 1982, $6,958,000 in 1981 and adjustments to fuel expense. Pending ultimate disposition, the $7,071,000 in 1980. At the end of 1982, such costs have been fully company has sulficient installed storage capacity at Plant Farley amortized. for storage of spent fuelinto 1994 and 2012 for Plant Farley Unit Pension Costs-Nos. I and 2, respectively. The company has applied to the The company has a trusteed and noncontributory pension ; Nuclear Regulatory Commission (NRC) for a license to install plan which covers substantially all regular employees. The / higher capacity storage racks at Plant Farley Unit No.1, which policy of the company is to fund each year's accrued pension will provide sufficient storage of spent fuel into 2010. On cost for the plan which amounted to $28,165,000 in 1982, January 7,1983, the President of the United States signed the $25,592,000 in 1981, and $14,849,000 in 1980.Of these amounts, Nuclear Waste Policy Act of 1982 (Act) relating to the storage of $18,961,000 in 1982, $16,829,000 in 1981, and $9,466,000 in 1980 spent nuclear fuel by the federal government. The company is were charged to operating expenses, and the balance was presently reviewing this legislation and does not expect the Act charged to construction and other accounts. Amendments to have any material impact on its financial statements. to the plan in 1981 liberalized retirement benefits, including increased terminal pay formulas and expanded benefits to employees.The eifects of these amendments were a net increase
29 e m m uw v m: u , m - of $78,865,000 in the accrued liability with respect to past The first such adjustment was a 2% revenue increase effective scrvice under the plan and an increase in the 1981 contribution February 1,1983.The rates also provide for adjustments to recog-of $9,836,000. Accumulated pension benefit information as of nize the placing of new generr. tin;; facildies in service. As part of the valuation dates (January 1 of each year) follows: the proceedings the company agreed not to file for any general retail rate increase prior to January 1,1985. Appeals by certain 1982 1981 intervenors from the APSC order are pending in the Court. Actuarial present value of Approximately $198 million in revenues which had been billed (In Thousands) accumulated plan in 1982 subject to refund were made permanent by orders of the benefits- APSC and the Court. Vested . $175,751 $152,780 On December 30,1982, the FERC approved a settlement Nonvested . . 3,291 3,220 agreement between the company and its wholesale customers providing for an increase in wholesale revenues of approxi-Total. .. $179.042 $156.000 mately $6,050,000 annually, effective May 1,1982.The company Weighted average rates will refund approximately $1,906,000 in revenues and has of return assumed in accrued for this refund at December 31,1982. determining actuarial present value of accumulated plan 3. CONSTRUCTION PLAN, FINANCING AND benefits . . 8% 8% FUELCOMMITMEN'13: Net assets available
"*"*'I*"
9*"- The company s estimated gross property additions, as of for benefits '
$218,717 $191'055 October 1982 amounted to $589,136,000 in 1983, $679,529,000 in 19S4 and $518,108,000 in 1985.These estimates include The actuarial present value of accumulated plan benefits was allowance for funds used during construction. The construction determined on the basis of accrued benefits as of January I of program is subject to periodic review and revision, and actual the respective years, whereas, the plan is funded based on the construction costs incurred and commercial operation dates premise that the plan will continue in existence, which requires may vary from estimates because of several factors including that future events be considered. The unfunded prior service cost new estimates of increased costs, revised Icad estimates and the under the plan and supplemental contractsamounted to approx- cost of capital.
imately $83,938,000 at December 31,1982 and is being amor- Hnancing-tized over a period of approximately 15 years. The ability of the company to carry out its construction plan Income Taxes- depends on the amount of funds generated internally and the The company provides deferred income taxes for all significant funds it can raise by external financing. The company's primary income tax timing differences as permitted by the appropriate sources of external financing are sales of first mortgage bonds regulatory agencies. Investment tax credits utilized are deferred and prefer red stock to the public, receipt of additional paid-in and amortized over the average lives of the related property. capital from SOUTHERN, sale of pollution-control revenue Provisions for property-related deferred income taxes reflect bonds by public authorities and leasing of nuclear mataial. consumptionof partof thevalueof theplantandequipmentto Paid-in capital is planned to be provided, to the extent which they relate. Consequently, the related accumulated possible, by SOUTHERN from the sale of additional common deferred income taxes is a valuation reserve deducted from the stock in amounts and at times not yet determined. plant investment in the Balance Sheets. Other deferred income In order to issue additional first mortgage bonds and preferred f stock, the company must comply with certain earnings coverage taxes are included in taxes accrued. The company is included in the consolidated lederal income tax return of SOUTHERN requirements contained in us mortgage indenture and corporate charter. The most restrictive of these provisions require, for the d (See Note 5). issuance of additional first mortgage bonds, that before-income-j tax earnings, as defined, cover pro forma annual interest charges
- 2. RATEMA'ITERS:
In response to the reversal and remand by the Supreme Court of Alabama (Court)of a 1981 rate decision and as a result of negotiations, the APSC on November 12,1982 issued a consoli-dated order in the company's 1981 and 1982 retail rate cases, granting an annual revenue increase of approximately $306 mil-lion and adopting rates which provide for periodic adjustments based upon the company's earned return on common equity.
30
- x. -
u- . n ; ; :. ; / . . p ru.y : 4 ._,ae a: : xw on outstanding first mortgage bonds at least twice; and for company does not consider any of its cash balances to be issuance of additional preferred stock, that gross income restricted as of any specific date. Including compensating available for interest cover pro forma annual interest charges balances, the company has maintained operating account and preferred stock dividends at least one and one-half times. balances in banks averaging approximately 57,591,000 in These coverages, for first mortgage bonds and preferred 1982 and $6,441,000 in 1981. stock for the year ended December 31,1982, were 2.83 and 1.60, respectively. Fuel Commitments- 5. INCOMETAXES: To supply a portion of the fuel requirements of its generating A detail of the total federal and state income tax provisions is plants, the company has entered !nto various long-term commit- set forth below: ments for the procurement of fossi1 and nuclear fuels. In most
, 1982 1981 1980 cases, such contracts conta,n i provision for price escalations, minimum production leve's and other financial commitments. (In Thousands) la addition, contracts with certain coal contractors require Federal-reimbursement or purdase, at net book value, of the invest- Currently (refundable) . $(20,546) $(21,257) $ (4,678) ments m mmes or equipment upon termmation of the contract. Deferred . 89,028 86,637 110,871 Deferredin prior
- 4. NOTESPAYABLE'IOBANKS:
years (cye )... (26,550 @,M3) 00,% Deferred mvestment At December 31,1982, the company had lines of credit tax credits . . 118.200 29,400 10,700 with banks totaling approximately $311,619,000 of which 85,687 106,802 160,128
$200,000,000 represents commitments obtained under a re-volving credit agreement with a group of ten banks outside its State-service area, terminating September 30,1983. The agreement Currently payable . 12,141 1,946 3,151 contains provisions, which among other things,(a) limit the Deferred ... 5,745 5,814 5,205 amount of certain types of additionalindebtedness which the Deferredin prior company may incur,(b) require that a substantial portion of the years (credit) . . .. (1,776) (674) (731) proceeds from sales of properties or securities, with certain 16.110 7,086 7,625 exceptier.s, be applied to repayment of the notes, and (c) require Total applicable to the payment of a commitment fee. operations 176,238 92,773 114,427 Arrangements with respect to the $111,619,000 remaining Income taxes applicable lines of credit expire at various times dunng 1983 and in certa.in to other income . 2,839 3.518 (1,273) cases provide for average annual compensating balances.
Because the arrangen:et ts are based on an average balance, the Totalincome taxes . . . $179,077 $ 96.291 $113,154 The company received a federal income tax refund of
$15,197,000 for the year ended December 31,1981, and has accrued a refund of federalincome taxes of $21,000,000 at December 31,1982. The company also received a refund of
$7,995,000 for the year ended December 31,1978, and has recorded a refund of federalincome taxes of $1,173,000 for i' the year ended December 31,1977.These refunds are due to the company's utilization of investment tax credits in SOUTHElWs consolidated tax return and settlement of Internal Revenue Service audits for the years 1978 and 1977.
The provision for deferred income taxes results pm.narily from the company's tax deduction of accelerated methods of depreciation and other write-offs of property costs, as provided for by the income tax laws, being significantly greater than the took depreciation of such costs. Income taxes deferred in prior years are credited to income when book depreciation of those property costs exceeds the related tax deductions.
31
.,... ; .c ; .; .a e . w 7 gn ; y ,. ; g a y;y y _ .,, g . m ; y ~
The total provision for federalincome tax as a percent of 6. GINER LONG TERM DEBT: income before federal income tax was less than the statutory Details of other long-term debt are as follows:
%deral income tax rate for the following reasons: December 31, 1982 1981 1980 1982 1981 Elfective federalincome tax (In Thousands) rate as reported . . .. 45.0% 39.6% 39.6% Obligationsincurred in connection Reductionsin tax expense with the sale of tax exempt resulting from statutory pollution-control revenue bonds exclusions from taxable by public authorities-income- December 1,1982,7.70% $ -
S 500 Equitycomponentof the December 1,1983,7.85% 500 500 albwance for funds used December 1,1984,8 % .. . 3,500 3,500 duringconstruction . . 2.6 8.1 5.6 December 1,1995 and 2004 Other. . 1.0 1.3 2.3 (due serially),9% to 9%% . . . .. 18,700 18,700 Effective federalincome tax 2003-2010,6% to 9%% . . 175,950 175,950 ratebeforeeffectof timing Less funds on deposit with differences . .. . 48.6 49.0 47.5 trustee . . . . . 19,561 23.301 Timing differences not 179.089 175,849 normalized for accounting Capitalized lease obligations and ratemaking purposes-
, and otherlong-term debt-Nuclear fuel . . . 100,597 108,519 ia on s and ates . . (2.6) (3.0) (1.8) 12,674 15,028 Vehicles . . ..
Other. . .. 0.3 Office buildings . 10,314 10,440 Statutory federalincome tax Equipment and other . . . 2,242 1,224 rate .. 46.0% 46.0% 46.0% 135,211 125.827
$304,916 $311.060 The amortization of deferred investment tax credits is applied as a credit to reduce depreciation in the Statements of Income Pollution-control obligations represent installment purchases and amounted to $2,226,000 in 1982, $1,699,000 in 1981 and of pollution-control facilities financed by funds derived from
$1,687,000 in 1980. At December 31,1982, investment tax sales by public authorities of revenue bonds. The company is credits totaling approximately $191,000,000, expiring at various required to make annual payments sufficient for the authorities times during 1996 and 1997, have not been utilized and are to meet principal and interest requirements of such bonds. With available to reduce federal income taxes payable in future years. respect to $32,500,000 of such pollution-control obligations, the company has authenticated and delivered to the trustees a like principal amount of first mortgage bonds as security for its obli-gations under the installment purchase agreements. No principal or interest on thesa first mortgage bonds is payable unless and until a default occurs on the installment purchase agreements.
The company has capitalized leased nuclear material and recorded the related lease obligations. One arrangement pro-vides for the payment of interest monthly,in advance, based on the cummercial paper rate, as defined, plus 1.5% (10.75% at December 31,1982). The other arrangement provides for the payment of interest at varying times dependent on options selected by the company from types of loans available under the arrangement. The interest rate applicable to this arrange-ment at December 31,1982 averaged 9.94%. Principal payments are required under both arrangements based on the cost of fuel burned. The company has also capitalized certain vehicle, office building, equipment and other leases. Monthly principal pay-ments plus interest are required, and at December 31,1982, the interest rate was 11.25% for vehicles and 9.5% br office buildings. The net book value of capitalized leases included in utility plant in service was $117,531,000 and $134,208,000 at December 31,1982 and 1981, respectively.
32 tm2.a_ m ==:nnrr7C urar= = = = r.rrrrrrr.r = =r n a The estimated aggregate annual maturities of the company's operating ex,>enses, taxes and debt service, including a return capitalized lease obligations and other long-term debt through on investment, whether or not SEGCO has any capacity and 1987 are as follows; $47,382,000 in 1983, $39,437,000 in 1984, energy available. The company's share of such amounts totaled
$25,791,000 in 1985, $2,519,000 in 1986 and $306,000 in 1987. $73,290,000 in 1982, $76,576,000 in 1981 and $68,882,000 in 1980 and is included in " Purchased and interchanged power, net"in the Statements of Income.
- 7. LONG-TERM DEI)T DUE WITillN In addition, the company has guaranteed unconditionally the ONE YEAR: obligation of SEGCO under an installment sale agreement for The annual first mortgage bond sinking fund requirement due the purchase of certain pollution-control facilities at SEGCO's on June 1 is one percent of the aggregate amount of bonds.other generating units, pursuant to which $26,000,000 principal than refunding bonds, authenticated prior to January 1 of each amount of po!!ution-control revenue bonds have been issued.
year. This requirement, amounting to $24,063,000 in 1983 and GEORGIA has agreed to reimburse the company for the pro rata
$23,824,000 in 1982, may be satisfied by the deposit of cash or portion of such obligation corresponding to its then propor-reacquired ixmds or by the delivery of bonds specifically authen- tionate ownership of stock of SEGCO if the company is called ticated for such purpose against unfunded property additions. upon to make such payment under its guaranty.
The 1982 sinking fund requirement was satisfied by the At Dcamber 31,1982, the capitalization of SEGCO consisted delivery of bonds specifically authenticated for such purpose. of $32,800,000 of equity and $48,843,000 of long-term debt on First mortgage bonds maturing in 1983 and 1982 amount to which the annual interest requirement is $3,880,000. Through
$ 11,939,000 r.nd $ 12,000,000, respectively. Other long-term debt December 31,1982, SEGCO has paid dividends equal to its maturing in 1983 and 1982 amount to $47,882,000 and net income.
$40,687,000, respectively. The company and one of its affiliates, Mississippi Power Company, own as tenants in common in the proportions of 60%
and 40%, respectively, a 500,000 kilowatt steam-electric
- 8. PREFERREDSTOCKSUBJECTTO generating plant in Greene County, Alabama. The plant was MANDATORY REDEMI'rION: placed in service in 1965 and the company's investment at The 11% preferred stock is subject to a cumulative sinking December 31,1982 amounted to $55,182,000. The company's fund requiring the company to redeem or purchase annually share of expenses is included in the corresponding operating 25,000 shares ($2,500,000) of the stock. The company has the expense accounts in the Statements of income.
option to double the number of shares redeemed in any one year beginning January 1,1986. The stock is redeemable for sinking fund purposes at $100 per share plus accrued dividends to the 10. DIVIDEND RESTRICTIONS: date of redemption. The company reacquired 15,550 shares in The company's charter contains provisions which prohibit 1982,37,110 shares during 1981 and 25,000 shares during 1980. the payment of cash dividends on common stock (except Ihose The shares reacquired during 1982, together with shares paid concurrently with the receipt of a cash capital contribution reacquired in prior years, were used to satisfy the 1983 sinking in like amount)in cases where retained earnings are not at fund requirement and the remaining 2,660 shares will be used to least equal to two times annual dividends on the outstanding satisfy future years' requirements. The gains on reacquisition, preferred stock. At December 31,1982, this restriction amounted
$272,000 in 1982, $594,000 in 1981 and $480,000 in 1980, to $73,274,000. In addition, various series of the cempany's out-are included with premium on preferred stock as shown in the standing first mortgage bonds are entitled to the benefits of Statements of Capitalization. covenants restricting the payment of cash dividends on common stock. However, under the terms of such covenants, the entire
^* "" "^'"'"E""""" " "*""**^"'*"* *
- 9. INVESTMENTINJOINTLYOWNED 1982 is available for the payment of cash dividends on common g
The company and one of its affiliates, Georgia Power Company (GEORGIA), own equally all of t he outstanding capital stock of Southern Electric Generating Company (SEGCO), which 11. NUCLEARINSURANCE: owns electric generating units with a total rated capacity of Under the Price-Anderson Act (Act), the company maintains 1,019,680 ki:awatts, together with associated transmission agreements of indemnity with the NRC which, together with facilities. The capacity of these umts is sold equally to the private insurance, cover third-party liability arising from any company and GEORGIA under a contract expiring in 1994 which, nuclear incident occuring at the company's nuclear power plant. m subdance, requires payments sulficient to provide for the The Act limits public liability claims that could arise from a single nuclear incident to $560,000,000. Each reactor at the company's nuclear plant is insured against this liability to a maximum of
$160,000,000 by private insurance (the maxirr;im amount presently available)and the remainder is provided by indemnity agreements with the NRC. In the event of a nuclear incident involving any commercial nuclear facility in the country, a company could be assessed up to $5,000,000 per incident for each licensed reactor operated by it, but not more than
33 wm m m u - mp #mmam r=nyrmm
$10,000.000 to be paid in a calendar year. On the basis of its 14. SUPPLEMENTARYINFORMATION ownership of two reactors in service, the company could be CONCERNINGTilE EFFECIS OF assessed a maximum of $10.000,000 for any such incident, but CilANGING PRICES (UNAUDITED):
not more than $20,000,000 to be paid in any one year. The following supplementary information concerning the The company is a member of Nuclear Mutual l.imited, a effects of changing prices is presented in accordance with the mutual insurer established to provide insurance coverage general concepts set forth in Financial Accounting Standards against property damage to members' nuclear generating Board Statement No. 33, as modified to reflect the economic facilities. The company is subject to a retrospective premium elfects imposed on the company by regulatory authorities. It l adjustment in the event that losses exceed accumulated funds. should be viewed as an estimate of the approximate effects of The present maximum assessment for the company is limited inflation, rather than a precise measure. to approximately $50,000,000 per policy year. Constant dollar amounts represent historical costs stated in Also, the company is a member of Nuclear Electric Insurance terms of dollars of equal purchasing power, as measured by the Limited, a mutual insurer which provides insurance to cover Consumer Price Index for all Urban Consumers. Current cost separately, (a) the extra costs which would be incurred in amounts reflect changes in specific prices of plant from the date obtaining replacement power during a prolonged accidental the plant was acquired to the present. They differ from constant outage at a member's nuclear plant and (b) contamination and dollar amounts to the extent that specific prices have increased property damage to nuclear generating facilities in excess of more or less rapidly than the general rate of inflation. The
$500,000.000. The company is insured against increased costs of current cost of plant was determined by indexing each major replacement power in the amount of up to $2,500,000 per unit class of plant using the Handy-Whitman index of Public Utility Inr week (starting 26 weeks after t he outage) for one year and up Construction Costs. Current cost does not necessarily represent to $1,250,000 per unit per week for the second year. Under each the replacement cost of existing productive capacity because policy, the company is subject to retroactive assessments if losses the utility plant is not expected to be replaced precisely in kind.
exceed t he accumulated funds available to the insurer under that The accumulated provision for depreciation for current cost policy.The present maximum assessments for the company was developed by applying, for each major class of plant, the would be approximately $15.200,000 under the replacement same percentage relationship that existed between gross plant power policy and $9,400,000 under the property damage policy and accumulated provision for depreciation, on a historical per policy year in each case. basis, to the adjusted plant data. Depreciation expense for both methods was determined by applying the current depreciation rates to the respective indexed plant amounts reduced by the
- 12. ASSETSSUBJECTTOLIEN: amortization of investment tax credits which were first adjusted The company's mortgage, as amended and supplemented, to average 1982 dollar amounts by year of addition.
securing the first mortgage bonds issued by the company, increases in the costs of electric generating fuel are recov-constitutes a direct first lien on substantially all of the company's erable in revenues through operation of fuel cost recovery fixed property and franchises. mechanisms. Such increases ef fectively are receivables or payables from customers. Therefore, such increases are not included in income but instead are treated as monetary assets or
- 13. QUARTERLYFINANCIALDATA liabilities. Income tax expense was not adjusted because only (UNAUDITED): historical costs are deductible for income tax purposes.
Summarized quarterly financial data for 1982 and 1981 are as Under the ratemaking prescribed by the regulatory com-
,) fo!!ows: missions to which the company is subject, only the historical
[ cost of plant is recoverable in revenues as depreciation, and Net co plant in rate base is limited to original cost. Therefore, the cost of
' d ds plant stated in terms of constant dollars or current cost that Operating Operating on Preferred varies from the historical cost of plant is not presently reflected Revenues Income Stock n rates charged to customers. The amount of this variance (In Thousands) in the current year is reflected as an adjustment to net j982 recoverable cost.
Mrst $431,578 $ 96,996 $40,644 Holding assets such as receivables, prepayments and Second 403,733 84,576 26.214 inventory results in a loss of purchasing power during periods of Third 506,882 11i M 61.265 inflation because the amount of cash received in the future for Fourth 418.952 84,48f 31,134 these items will purchase less. Conversely, holding monetary liabilities, primarily long-term debt, results in a gain because the 1981 payment in the future will be made with nominal dollars having First $395,128 $ 73,'08 $33.686 yss purchasing power.The company has a net gain due to the significant amounts of long-term debt outstanding. While the use Second 365,919 55,783 14,671 f debt financing reduced the effect of the loss to the common Third 457,932 96,713 46,984 5,368 stockholder, earnings were rmt adequate to offset the erosion in Fourth 375.013 63.111, the purchasing power of its mvestment.
34 a , ._ c m cm - u , - m, , En . n_. _ _r w- , - . e- _ STATEMENT OF INCOME ADJUSTED FOR CHANGING PRICES for the Year Ended December 31,1982 Constant Current Dollar Cost (InThousandsof Average 1982 Dollars) income applicable to common stockholder, as reported $162.257 $162,257 Dosion of common stockholder's equity because of changing prices: Cost in excess of the original cost of productive facilities not recoverable in rates as depreciation-Reportable as an additional provision for depreciation 163,941 191,140 Reportable as an adjustment to net recoverable cost 6,156 (15,579) 170,097 175,561 Excess of the specific price changes ($365,567)in the current year over increases in the general level of prices ($3SO,103)* - (5,464) Offsetting elfect of debt financing , (119,756) (119,756) Net erosian of common stockholder's equity . 50,341 50,341 Income applica' ole to common stockholder, as adjusted" (including the effect et debt financing) $111,916 $111,916
*At December 31,1982, current cost of property, plant and equipment, net of accumulated depreciation, was $9.4 billion, and historical cost or net cost recoverable through depreciation was $4.5 billion. " Adjusted income applicable to the common stockholder would be a loss of $1.7 million on a constant dollar basis and a loss of $28.9 million on a current cost basis if only the amount reportable as an additional provision for depreciation were deducted from the reported amount of suchincome.
FIVE. YEAR COMPARISON OF SELECTED SUPPLEMENTARY FINANCIAL DATA ADJUSTED FOR EFFECTS OF CHANGING PRICES 1982 1981 1980 1979 1978 Operating Revenues: (In Thousands) Historical cost $1,761,145 $1,594,022 $1,421,997 $1,163,623 $1,014,443 As adjusted
- 1,764,145 1,689,663 1,663,736 1,547,619 1,501,376 Income (loss) applicable to common stockholder:
Historical cost . . . .._
$ 162,257 $ 99,809 $ 129,704 $ 57,440 As adjusted for the net erosion of common stockholder's equity
- 111,916 2,445 11,314 (80,295)
Common stockholder's investment / (net assets), at year-end: Historical cost . $1,340,890 $1,231,061 $1,211,417 $1,022,533 $ 952,648 \ As adjusted * ... 1,327,481 1,267,993 1,356,787 1,288,392 1,352,760 Amount of increase in general level of..... prices over (less than) increase in specific price changes * $ (5,464) $ 40,728 $ 127,860 $ 344,325 , Effect of debt financing * $ 119,756 $ 243,729 5 357,325 $ 423,679 Return on average common equity: i Historical . . . . . . ... 12.62 % 8.17 % 11.61 % 5.82 % As adjusted for the net erosion of common stockholder's equity
- 8.62 % 0.19 % 0.86% (6.08)%
Cash dividends declared: Historical cost . $ 130,700 $ 120,800 $ 115,300 $ 54,000 $ 108,800 As adjusted * ... 130,700 128,048 134,901 71,820 161,024 Average consumer price index . 289.1 272.4 246.8 217.4 195.4
- Adjusted amounts represent average 1982 dollars.
___- _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _________________ =________ -
35
~.~ _ = ~ _ -m = + wa GENERAL OFFICERS DIVISION OFFICERS Joseph M. Farley, President W.D. Bolton, Vice President, Anniston Elmer B. Harris, Executive Vice President John B. Byars, Jr., Vice President, Eufaula Jesse S. Vogtle, Executive Vice President Hugh P. Foreman, Vice President, Montgomery 1 William O. Whitt, Executive Vice President William L. McDonough, Vice President, Mobile Kenneth L Allums, Senior Vice President A. C. Rogers, Jr.. Vice President, Tuscaloosa Fred L. Clayton, Jr., Senior Vice President H. H. Turner, Jr., Vice President, Birmingham l H. Allen Franklin, Senior Vice President Clyde H. Wood, Vice Piesident, Montgomery 2 John D. Jones. Senior Vice President Bob Andrews, Vice President, Human Resources TRANSFER AGENTS S. H. Booker, Vice President, Marketing Alabama Power Company Travis J. Bowden, Vice President, Finance 600 North 18th Street and Treasurer Birmingham, Alabama 35291 Stephen E. Bradley, Vice President, Public Information Chemical Bank 55 Water Street Rayford E Davis, Vice President, Power Delivery New York, New York 10041 R.S. Hardigree, Vice President, Corporate Planning (For the 8.72% Preferred Stock)
R. E. Huffman, Vice President, Electric System Continental Stock Transfer & Trust Company Planning and Operations 72 Reade Street R. P. Mcdonald, Vice President, Nuclear Generation New York, New York 10007 (All series except 8.72% Preferred Stock) Jackson W. Minor, Vice President and Comptroller G. Thornton Nelson, Vice President, Industrial REGISTRARS Development Ollie D. Smith, Vice President, Corporate Real Estate The First National Bank of Birmingham Birmingham, Alabama 35288 Robert R. Todd, Vice President, Construction Citibank, N.A. Alvin W. Vogtle, Jr., Vice President New York, New York 10015 J.T. Young, Vice President, Fossil / Hydro Generation Chemical Bank Richard A. Bowron, Secretary New York, New York 10041 Charlton B. McArthur, Assistant Vice President, (for the 8.72% Preferred Stock) Industrial Development Continental Stock Transfer & Trust Company Charles M. Deason, Assistant Comptroller 72 Reade Street New York, New York 10007 Ernest E. Glass, Jr., Assistant Comptroller (For the 15.68% Preferred Stock) Dale W. Oliver, Assistant Comptroller Robert C. Ford, Assistant Secretary and Assistant Treasurer E. Ray Perry, Assistant Secretary and All executive officers are full-time employees of the AssistanGeasum company with the exception of Mr. Alvin W. Vogtle, Jr., Dorothy L. Essig, Assistant Secretary The Southern Company; and Mr. Robert C. Ford and John H. Snyder, Assistant Secretary Mr. E. Ray Perry, Southern Company Services, Inc. William B. Hutchins, III, Assistant Treasurer W. L Sanders, Jr., Assistant Treasurer Retired October 1,1982 William L. Smith, Assistant Treasurer 2 Effective October 1,1982
36 raramammr---.~m mem m. - - =am . cm - ~ wga William J. Rushton,111, Birmingham (1970)t NRE N RS Chairman and CEO Joseph M. Farley, Birmingham (1965)t Protective Corporation President Sales and Service of Life and Health Insurance Frank M. Moody,Tuscaloosa(1956) John W. Woods, Birmingham (1973)t Chairman of the Board Chairman of the Board AmSouth Bancorporation The First National Bank of Tuskaloosa Commercial Banking Multibank Holding Company D.H. Morris,111, Enterprise (1956)i Ernest E Ladd,Jr., Mobile (1974)2 President Chairman Emeritus FabricsAmerica Division Merchants National Bank of Mobile Commercial Banking Bama Mill Allied Products Corporation EmilHess, Birmingham (1975)t Manufacturer and Finisher of Textile Products Chairmanof theBoard Parisian,Inc. T.Massey Bedsole, Mobile (1963)* Partner Apparel Hand, Arendall, Bedsole, Greaves & Johnston Fred Morgan Clark, Eufaula(1977)*
- Attorneys Senior Vice President and Director Howard Murfee,Prattville(1963) United Federal Savings and Loan Association Financial Service of Savings and Loan Association Chairman of the Board McQueen Smith Farms,Inc. John C.Webb,IV, Demopolis(1977)*
D,i versified Farmers and Ginners President James C. Inzer,Jr.,Gadsden(1965) Webb Lumber Company,Inc. Partner Wholesale Lumber Inzer, Suttle, Swann & Stivender, P.A- Jesse S. Vogtle, Birmingham (1979) Attorneys ExecutiveVice President Alvin W.Vogtle,Jr., Atlanta (1968) Wlliam O.Whitt, Birmingham (1979)t President Executive Vice President The Southern Company Electric Utility Holding Company Elmer B. Harris, Birmingham (1980) Executive Vice President Crawford T. Johnson,111, Birmingham (1969)t President Whit Armstrong, Enterprise (1982) Coca-Cola Botlling Company United Inc. President Bottlers of Soft Drinks The Citizens Bank Enterprise G. Thornton Nelson, Birmingham (1969)t Vice President Robert H. Radcliff, Jr., Mobile (1982)* Clidman of the Board Frank A. Plummer, Montgomery (1969) Radcliff MarineServices,Inc. Chairmanof theBoard First Alabama Bancshares,Inc. Multibank Holding Company i Retired April 23,1982
- Audit Committee member S. Eason Balch, Birmingham (1970) *
- Audit Committee alternate member ch Bingham, Baker, Hawthorne, Williams & Ward Attorneys Years in parentheses indicate date of election.
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