ML20072G708

Annual Financial Rept 1982

ML20072G708
Person / Time
Site:	Comanche Peak
Issue date:	03/31/1983
From:	Campbell R TEXAS POWER & LIGHT CO.
To:
Shared Package
ML20072G635	List: ML20072G639 ML20072G666 ML20072G678 ML20072G694 ML20072G708 ML20072G713 TXX-3688, Forwards Annual Financial Repts 1982
References
NUDOCS 8306280603
Download: ML20072G708 (34)

Text

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"r lexas Power & Light is a unique company because of its dedi-cated people who have given of themselves to assure that our customers are served...Even though programs and priorities change, the Company's commitment to provide electric service does not."

k TexasPower&LightCompany 1982 Annual Report eMYoMs I

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SN20W NO. 4 Generating Station-Generating Station -

System Map Legend JointlyOwned byTexas Power & Light Jointly Owned by Texas Power & Light, This nrap of the Company's service and a large industrial customer Dallas Power & Light, Texas Electric area shows generating stations, major

<$> Lignite-fueled, Service, Texas Municipal Power transmission lines and towns in which Under Construction Agency, Brazos Electric Power Cooperative, Inc. and Tex-La a Division, District or Local Office Generating Stations -

Electric Cooperative of Texas, Inc.

is located Town kvith Company Office J intlyOwned byTexasPower& Light, @ Nuclear-fueled, Dallas Power & Light and Under Construction Generating Stations -

Texas Electric Service Areas Served by Dallas Power &

Owned byTexas Power & Light G l',gmte-fueled, Operating Light and Texas Electric Service D Gas-fueled, Operating D Ligmte-fueled, EEGas/ Oil-fueled. Operating Under Construction n

O Lignite-fueled, Operating Transmn_ss_on Lines 345 KV.

138 K V.

69 K V.

1982 Report to Stockholders Texas Power & Light Company Subsidiary of Texas Utilities Company 1982 At A Glance se,

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1982 1981l % Increase l Qperating Revenues *

$ 1,416,508

$ 1,183,659 l 19.71 Qperating Expenses *

$ 1,131,445 960,047 [

17.9j Fuel Cost per Million Btu 1.89 1.63 L 15.9I Construction Expenditures (Excluding Nuclear Fuel)*

410,424 352,110!

16.6 Electric Plant (End of Yea _r)*

$ 3,849,543 I $ 3,478,003}

10.7a Plant Investment per Customer 4,960 4,646 !

6.8 j Peak Demand _(Megawatts) 6,128 5,929 3.4 j Electric Energy Sales (Megawatt-hours) 28,231,471' 27,147,451; 4.0 j Number of Customers (End of Year) 776,184 748,569!

3.7 l Residential (Average):

Annual Kwh Usage _per Customer 12,411 11,922!

4.1 Cost to Customer per Kwh 6.16e i 5.41e l 13.9i

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'.- T The Company Contents Texas Power & Light Company was Management's Message to Stockholders,2 incorporated under the laws of the Operations State of Texas in 1912. The Company Corporate Planning,4 is an investor-owned electric utility Construction and Operations,4 engaged in the generation, purchase, Fuels, 8 transmission, distribution and sale of Load Management, 9 electricity wholly within the State of Operating and Financing Costs, 9 Texas. The Company, Dallas Power Financing System Expansion,10

& Light Company and Texas Electric Reorganization,11 Service Company, whose systems are Rates, Regulation and Litigation,12 interconnected, are subsidiaries of Service to Customers and Area Growth,13 Texas Utilities Company.

Public Affairs,15 The Company serves customers in Employees,16 432 communities in 51 counties of Research and Derclopment,17 l

North Central and East Texas. Eight Financial Statistics and Operating Statistics,18-19 of these communities have popula-Management's Discussion and Analysis of tions in excess of 50,(XX) and 34 have Financial Condition and Results of Operations,20 populations of 10,(X)0 to 50,(XX). The Financials territory served has an estimated Accountants' Opinion, 21 population of 2,458,(X)0 (at Decem-Balance Sheet, 22-23 ber 31,1982) and includes the agri-Statements ofincome and Retained Earnings, 24 cultural blacklands of Central Texas, Statement of Source of Funds for Construction, 25 the farming and ranching sections Notes to Financial Statements, 26 north and cast of Dallas, part of the Supplementary Information Concerning Effects of oil and gas fields of East Texas and Changing Prices,30-31 the Dallas /Ft. Worth Airport. The Officers, Directors. Executive Committee,32,33 area has a highly diversified base of light and heavy manufacturing and substantial commercial activities.

Cover: Excerpts from the Company's Corporate Plan.

I

onditions affecting the production and consumption of electric energy _

a have changed more rapidly and more unpredictably in the past decade than ever before.

Energy producers have been faced with the problems of rising costs of construc--

tion and capital, spiraling prices and sometimes uncertain supplies of fuels and the i

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cconomic and technological constraints of governmental regulation.

Texas Power & Light is combatting these problems with mtensified attention to a l

l formalized corporate planning process. Every facet of the Company's operation is' l

subjected to a penetrating evaluation, forecasts of future events and conditions are -

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continually updated and all employees are encouraged in a~ work ethic ofinnovative:

l thought and action.

In data and commentary throughout this re-port you will fhid many evidences that the.

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Company fulfilled its responsibilities to customers,.

l investors and ' employees during 1982'and s'us-tained a~ sound financial and functional character.

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' At year-end, the Company was serving 776,184 j

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customers, compared to 748,569 customers at 4.

the end of 1981. This represented an increase of:

1 3.7 per cent.

Electric energy sales rose from 27,147,451

'c megawatt-hours in 1981 to 28,231,471 megawatt-Q 1

'3 hours3.472222e-5 days <br />8.333333e-4 hours <br />4.960317e-6 weeks <br />1.1415e-6 months <br /> in 1982 an increase of 4.0 per cent. The

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I average annu,al usage by residential customers in' 1982 was 12,411 kilowatt-hours, 4.1 per cent greater than in 1981.

In August, the Company met a new customer peak demand of 6,128 megawatts.

This represented an increase of 3.4 per cent over the 1981 peak,5,929 megawatts.

The Company's operating revenues increased from $1,183,659,000 in 1981 to

$1,416,508,000 in 1982, a gain of 19.7 per cent; operating expenses increased from -

$960,0i7,000 to $1,131,445,000, an increase of 17.9 per cent. Net income for 1982-was $230,932,000, an increase of 2.6.7 per cent over the 1981 figure, $182,276,000.

Construction expenditures in 1982 were $410,424,000 (excluding nuclear fuel) and it is estimated that these expenditures will be approximately $363,000,000 in 1983,

$361,000,000 in 1984 and $524,000,000 in 1985.

In June 1982, the Public Utility Commission of Texas authorized an increase in revenues of approximately $72 million, or 5.8 per cent. The new rates became effective for all customers for energy consumed on or after July 1,1982.

Significant progress was made ~during the past year in accomplishingthe objec-tives of the Company's load management program, an undertaking imtiated in 1981.

The program involves a number of mutually beneficial actions by the Company and customers which will reduce the need to build new generating plants and other facilities.

2

Since 1980,~in meetings with more than 700fspokespersons for minority groups, retired persons,' business, industry, agriculture and ot ders, your president and other Company. officials have sought greater un'derstanding~of customer concerns about electric service'. Several new provisions for extraordinary customer needs have been developed from these meetings. One such 3rovision is a plan which allows persons

'65 years of age and older and who receive xnefits from Social Security and other l

pension plans to pay. electric bills on a designated date, regardless of when the bills o are received.

l J. E Skelton, Chairman of the Board, retired from the service of the Company on June 1,1982. Mr. Skelton's'45-year career began in 1937. Prior positions include

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' manager of field districts and the Central Division, Assistant Vice President, l

Financial Vice President and Executive Vice President. He was named President and Chief Executive in 1972 an~d. Chairman of the Board in 1977.

It is with deep regret that' we report the death'of Mr. John M.- Griffith, a member of the Company's Board of Directors since 1959. Mr..Griffith was Chairman of the

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Board of the City National Bank in Taylor, Texas at the time of his death on June

20g 1982. -

. Thomas G. Parker, Chairman of the~ Board of the First-Taylor National Bank in Taylor, Texas, was elected to'the Company's. Board of Directors during the Board's quarterly meeting in' November 1982. Mr. Parker is also a director of the Texas Indepe'ndent. Bank' of Dallas.

On February 23,1983,'special meetings of the-holders of preferred stock of Texas Power & Light, Dallas Power.& Light and Texas Electric Service companies were

-held in Dallas. The purpose of.the meetings was to vote on the proposed merger of

' the three companies, all subsidiaries of Texas Utilities Company, into a new single

electric utility subsidiary known as Texas Utilities Electric Company. The merger was approved by the required favorable vote of two-thirds of the outstanding shares

'of preferred stock of each company. The merger is scheduled to be completed by January 1,- 1984. I invite you to write to'me personally if you have any questions regarding the merger.

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S On behalf of the officers,' directors and.more than 5,500 employees of the i.

Company, I pledge our continuing dedication and efforts in the tasks ahead.

1 Respectfully submitted,.

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R.TK. Camp President and Chief Executive Dallas, Texas -

- March 31,1983-3

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!!) reCent s eilrs, the pilte <>t all le\\ Cls is tils til\\ Cd ill de\\ eliiping riew lignite and nucleair-tueled change in econoniic. technologi-and executing a corporate plan generating units. It is estimated cal. social and political conditions w hich serses needs of customers.

that construction expenditures allectiflg Icxiis Ihhter A.1.ight hiis iriterests til stockhtilders iind coil-(excitiding nucle;ir ttici) t<>r acceleritted rapidls. I he pioCCss CCrils ol Cillp!os eCs 19S3 l%4and19S3 Aillhe of anticipating f uture esents.

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establishine coals and implement-ing strategies w hich respond to Construction and ()perations lii ht lignite-tueled generatmg these conditions must he more Construction expenditures in units. ow ned iointly by I PM ininlediatt' ill the sliort-teriti innd 1982 were 5410.424 J HH) (excitiding Dallas Power A 1.ight ('ompans y

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In 1982. 'I pal 's generation by rate was 5.76 per cent. \\lthough either jointly own with I)P&l and type of fuel was approximately 61 this was short of the goal. it was II s or lointly own with Alcoa per cent lignite and 39 per cent an improvement from the previ-were in design or under con-natural gas. One of the Com-ous year. It is expected that the struction at three plant sites. 'lbtal pany's corporate objectives during torced outage rate will be turther capability of these four units will the year was to reduce the forced reduced through a continuation of be 3.;HH) megawatts, of which outage rate of gas-fueled generat-the concerted ef fort to improve I PAI. will ow n 1.519 megawatts.

ing units to 5.0 per cent and im-preventive maintenance aad the Construction of two 1.150.(HN)-

prove the unit availability factor acquisition of additional critical kilowatt nuclear-fueled generating to 80 per cent. The 80 per cent spare parts.

units at the Comanche Peak plant availability factor was attained At year-end, four lignitt-tuded was S1 per cent complete at the during 1982. The forced outage generating units which IP&l. will end of 1982. The plant will be gymgnmee-megmeserw;gggum:ggnprammmpJ,;3rymtgggmneme m

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jointly owned by ^\\lwn nlwI Generatine Units l'nder Conuructum or m Design TI s. Texas Municipal Power %, t apan,nn a keawans' Agency, Tex-La Electric Coopera-( oinpans AhnhM for tive of Texas, loc. (Tex-1 a) and Plant and I i tanon lud i mt %, lotal P;o th ipanon i.ii % nac ibi Brams Electric Power ( oopera-Comanche Peak l 1 1.15h 3S~ 19s4 I "' / somersell County 1 2 1.150 3 s-' 1955 I he table at ught shows loca- , hun ()ak I , y.u y h _, 1958 tion, type of f.uel, total capabih.t v. Itobertson Counts i NU ih3 1990 ~Ilsl. capability and the years in I orest Grose - I" ""' l '5" I"*" which the four lignite and two Henderson Counts nuclear-fueled generating units Wrnn l ake -- now under construction or in 1(osk Counts t ai ( ompans parnapanon in nei capabihn and umi or umis iomth ow ned with Danas Power and leus 7M Td M FTWOM MU@M3 I ledrh ( omanche Pt IT l12 ounotbs leus slunhipal Power.\\ cent s Mr.vos I lettrh w Pow e r ( oope r at n e. l' od levl.a i ledra ( ooperatne of leus Int 1. I orest (iros e 2a. Ntartm I ake No 4 ( omp.un par thipanon m net upabilin and unb of umts p mtlsowned of net upabihn and 'n' of unt with an addinonal *o mecawath hom w u h -\\luia lwin ()ak \\koai share of eac h umt.n.nl.ibh donne peak penods see bdow tm mtor manon uintermne a powbk t hance in ow nenhip iit Iw m ( Lik I and 2 t h) sub ca to approul ol unous reculaton acenacs incluJme the %hlear Recul.iton ( ommimon m i the em of ( omanche Peak b desien are scheduled to be placed mining equipment and lignite in service. reserves. All of the proposed As a result of the Company's transactions are contingent upon continuing review of its con-satisfactory settlement of litiga-struction program during 19S2. tion to w hich flalliburton is a / C the operating date for Martin s emMurnWartzr.msm':A i' 7 Lake Unit 4 was rescheduled fr :) from 1990 to 1991. There were no construction Expenditures' - O changes in the scheduled comple-

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m, tion dates of other lignite units or ~ in the estimated completed cost + or completion dates of the two N generating units at the Comanche Peak nuclear plant. In March 19S3. the Company [ and Texas Utilities Services Inc. _w a m (Tt'sI) entered into letters of in-Q,1 l il l,2 anl, A L ' + y tent with Alcoa and llalliburton Company (llalliburton) for the l'/am /m emnem per ( ~usnnner '"'d'" sale of an interest in the ~Iivin Oak plani owned 70 per cent by the l Company and 30 per cent by 1,,,, Alcoa. The letters include an op-tion by llalliburton to purchase a 75 per cent interest in ~Iivin Oak 1 by acquiring all of Alcoa's interest and a portion of the Company's ~' ~ interest with an option by the Company to repurchase all of flalliburton's interest in the unit after 10 years from completion 01 construction. In addition. the letters also provide for the Com-pany's purchase of Alcoa's interest in Twin ()ak 2 and It srs purchase of Alcoa's interest in related

parts, regulators approsals and 9 to I inancial Statements f or f ueled generating plants wer e certam other conditions, including additional information concerning approximatch 521.500.mo the e()nsumniatitin of definitise the transactnin. tw2 M rDACKD M.zi.a.smatAD aercements. Du rin e I,>S,.. S b i.,134.000 w as .Ueb In Nias 19S2 the ('ompany expended f or transmission. dis. completed the sale of a H per tribution and general improse-The total cost of all tuels used m cent interest in the ('omanche ments of the ('ompans 's ss stem to in generating the electrical needs Peak plant nuclear tuel and asso-ensure that reliable sersice con-of customers during 19S2 was ciated transmission tacilities to tinues f or all customers. 55ho.7S9.UUU. an increase of ~ Tex-l.a and assumed ow nership During 1982. the ('ompans 's 13.1 per cent oser l'uel costs for interest m the remainmg 2' o per expenditures for environment-19SI. The cost was Sl.S9 per cent released hs Tex-1.a. See Note related equipment at lignite-million Blu in 19S2. compared wee m m-- meum. m >m m m ; m'rm e & N :m ~

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to $1.63 in 1981. ' N C "'"*" "" as a result of the Company's Lignite coal is the primary fuel Load Management efforts to maximize the use of at generating plants on the TP&L The Company continued during lower-cost lignite-fueled genera-system. Two units in service at the 1982 a program of load manage-tion, increases in fuel costs were Big Brown plant, three units at ment which was begun in 1981. moderated; thus the Company's the Martin Lake plant, three units The purpose of the program is to customers paid considerably less ' at the Monticello plant and one improve the utilization of power per kilowatt hour than would unit at the Sandow plant use lig-generating facilities and to reduce have been the case if natural gas nite as fuel. the need to build new facilities by or oil had been used. Lignite reserves which are shifting customers' use of elec-At December 31,1982, the recoverable by surface mining are tricity, as much as possibic, away Company's embedded costs of located adjacent to lignite-fueled from periods of peak demand. long-term debt and preferred generating units in operation, Accomplishment of this purpose stock were 9.2 per cent and 8.0 under construction or in design. will minimize the cost of financing per cent, respectively. The up-At the end of 1982, TP&L, new construction, benefitting both ward trend in these costs, as DP&L and TES, along with Alcoa customers and stockholders. shown by the chart on page 11, owned in fee or had under lease Some of the measures which is expected to continue as the an estimated 900 million proven have been introduced to reduce Company's need for long-term recoverable tons of lignite. peak usage include customer use financing continues and capital Sandow Unit 4 is owned by TP&L of high-efficiency equipment, market interest and dividend rates and is fueled from lignite deposits solar and other renewable energy continue to remain higher than owned by Alcoa. sources; employment of load con-the Company's embedded costs. Fuel for TP&L's eight principal trol devices; and the availability of Pre-tax interest coverage (in-gas and gas / oil-fueled generating interruptible tariffs; off-peak cluding the Company's allocable plants is provided by three major (time of use) tariffs and co-suppliers. One of these suppliers generation tariffs. is Texas Utilities Fuel Company The overall load management Fuel Cost by Types (TUFCO), a subsidiary of Texas goal, and one of the Company's M e *a' u, Utilities Company. Approx-corporate plan objectives, is to l !/ w, imately 44 per cent of the Com-reduce the firm peak load by 465 l l / l/ 1, i pany's gas requirements during megawatts compared to that l I m, 1982 was supplied by TUFCO. which would otherwise have l m ] ty E Oil is stored at the gas and gas / occurred in 1985. Reference to I m, oil-fueled facilities for use only in progress being made in achieving IR M 5, 1 I I I l emergencies as is the case when the goal will be found in other certain gas supplies are curtailed. parts of this report. '%1 My LRmf *" "

• 2 l At the end of 1982, TP&L had 1.5

' million barrels of oil in inventory. " * " ~ i " " *#"d ( Commitments have been ob. Operating and Financing Costs G'neration by, T5pe of Fuel tained for anticipated uranium The increase in operation and lll lll lll l ll* ore concentrate requirements and maintenance expenses, other than T Ti! i fabrication services for the first 17 fuel, resulted from inflationary l ,'l i m years of operation of the two pressures on the cost of labor, ma-i i nuclear-fueled generating units at terials and services, and from the j the Comanche Peak plant which addition of a lignite-fueled gener- + 2" is now under construction. These ating unit, Sandow Unit 4, in May o i units will provide 774 megawatts 1981. Operation and maintenance ' L L M m y w2 y w w y ' net capability to the Company. expenses were also affected by the =" Uranium hexafluoride conversion higher costs of operating and services have been contracted for maintaining all existing lignite-through 1987 and uranium enrich-fueled generating units, including ment contracts, having a duration the additional costs of operating ! of approximately 30 years, have and maintaining the pollution been made with the Department control equipment required in of Energy. connection therewith. Ilowever, 9 l

share of interest on Texas Utilities tal at reasonable rates. The Com-mon equity comprised 43 per Generating Compan.s ( l t u1)) pany can best serve its customers cent,11 per cent and 46 per cent. and IiRo Senior Notes)- a if it is financially strong. and with respectisely. of total capitalization. major factor in determining the the net result being dependable ,y _ y cost of debt as well as the overall service at the lowest possible cost. costs of capital - was 3.5 times. The conservative capital struc_ Financing S,ystem Expansion Periodic rate increases will be ture of the Company is a result of The Company has specific fi-required in the future to proside its commitment to protect the nancial goals and objectives such an adequate return on common quality of its securities and ensure as achieving an adequate return equity. protect the quality of the the lowest cost of capital. At on common equity. limiting al-Company's securities and enable December 31. 1982. long-term louance for funds used during the Company to acquire new capi-debt, preferred stock and com-construction as a per cent of earn- -,- e mm 14_ h-l y if5 a e 8 g ,i p-> w' x p 7 a%' gf9 o ., 8 g-4 1- ~ ~~ MT ty yg J ? f VAh

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ings to common stock and main-its construction program from ture of the Texas Utilities taining desired levels of fixed internally generated funds. In Company System. The revision charge coverages. Excluding the addition to net income after divi-willinvolve the merging of the one-time effect of the Comanche dends, internally generated funds Company, DP&L and TES into Peak sale, the Company achieved were derived from depreciation Texas Utilities Electric Company, its financial objectives during and from deferred federal income a recently formed subsidiary of 1982. In addition, one of the taxes and investment tax credits. TU, with the merging companies Company's corporate plan objec-The balance of the 1982 constrec-thereafter becoming divisions of tives is to finance a minimum of tion program was funded from ex-the new E!cctric Company. A 50 per cent of its construction ex-ternal sources as outlined below. fourth division will be responsible penditures internally. In 1982, the In Alarch 1982, the Company for engineering, construction and Company financed 59 per cent of sold 2,500,000 shares of its com-operation of all System generating mon stock to TU for $75,000,000. facilities. In June 1982, the Company sold The Company believes that the $50,000,000 principal amount of revised structure should provide 15% per cent First hfortgage greater flexibility and achieve . Face-to-face meetings Bonds, due June 1,2012. In con-additional economics and efficien-with spokespersons nection with this sale of securities, cies which will benefit share-for our customers the major credit rating agencies holders, customers and employees broaden our understand. reaffirmed their confidence in the of the System companies. The 10-ing of them and their Company's securities by con-cal service identities of TP&L, tmumg the triple-A rating on the DP&L and TES will be preserved understanding of the Company's First h1ortgage Bonds. and the changes will not be read-Company. In December 1982, the Com-ily apparent to customers. pany, DP&L and TES sold Ken Farris $40,000,000 principal amount of ~ Semor Consumer Affairs 10 per cent First N1 rtg ge Bonds, Times Earned-TotalInterest Charges * " * " " * ' " " " ' ' ' ~ Pollution Control Series B, u Specialist the Company's share being 5.5 $18,650,000. The proceeds from so this sale are for the purpose of \\ j 4.5 funding construction of pollution N A i l control equipment at the lignite 3d 35 l-generatmg plants. y l Financing the 1983 construc-2, l tion program will require addi- "lGl,o,n,]? * " ' ' * *

• l tional funds from external l

sources. The Company expects to Embedded Cost of Long-Term Debt continue to obtain short-term and Preferred Stock y loans from TU for interim financ- / w ing and also expects to obtain / 8.5 additional permanent financing as -y 8" needed, including the sale to 7 gA j Texas Utilities in hlarch 1983 of ^h 2,000,000 shares of its authorized 7 [ but unissued common stock for ss

$64,000,000.

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• Reorganization In August 1982, the board of Directors of Texas Utilities di-rected management to proceed with the implementation of a revi-sion of the organizational struc-11

The proposed mercer has re-N N N N N N*N Prior eeneral rate levels were ceived the requisite titsorable sote Rates. Regulation and established. ettectise August ' of the hoklers of the outstanding Litigation 1981. by upward adjustments in shares of capital stock of the con-On Juac 23.19S2. the Compans electric service rates. The stituen' corporations. The merger received a final order trom the adjusted rates were designed to has also received the approval of Public Utility ('ommission of increase annual oper:tting reve-the Public Utility Commission of Texas (Pt r) which authorized an nues bs approximately 557 mil-Texas which f ound that it was in increase in revenues of approx-lion. or 5.6 per cent. the public interest. imately 572 million or 5.S per in April 1979. folkming a hear-The merger will become ettec-cent. The new rates became effec-ing with respect to certain trans-tise with commencement of busi-tive for all customers for energy actions among the Company and ness on January 1.1984. consumed on or after July 1.19S2. the other subsidiaries of IL the I 1 OO 03.$5rhl0'b4bl$.0.?S?WMWEYWWA&&5$$$$$M&OMOLWN&&E$NESll n a. m- ...g - g 4 .s 4 ,v s ..g [ ,. N:l ~ Y h .2. g y k... ; ...):. W ~

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PUC issued an order requiring will be scheduled for further Community Center of Stafford-that prior approval be obtained comments by the public at a Armstrong Addition of the City of with respect to certain future later date. The Company can-Scagoville, Texas, et al, filed suit transactions and required $1.2 not predict the result of the in the 53rd Judicial District Court million refund to the customers of PUC's review of fuel cost recovery of Travis County, Texas for review the Company. This order was or its effect, if any, upon the of the PUC order granting the appealed by the Company, DP&L, Company. Company its May 1980 rate in-TES and other parties to the pro-In December 1976, Tex-La crease. Each of the suits seeks a ccedings to the 53rd Judicial Dis-requested an investigation by reversal of the order and a refund trict Court of Travis County, the Federal Power Commission, of all payments made by the Texas, which entered judgement the predecessor of the Federal plaintiffs thereunder. in December 1981 remanding this Energy Regulatory Commission ~",""A matter to the PUC for further con- (FERC), to determine whether the Service to Customers and sideration. The Court did not Company engages in interstate Area Growth order further refunds or require commerce in connection with penalties to be levied but asked the transmission of energy gen-Increases during 1982 in the that these matters be considered erated by the Denison Dam number of customers served by further by the PUC on remand. power plant located near the Company and the population The Company appealed this judg-the Texas / Oklahoma border and of its 51-county service area were ement and filed for approval with whether such agency or the PUC notable. At year-end, TP&L had the PUC, and those municipalities had jurisdiction over the whole-776,184 customers and the service retaining original jurisdiction, a sale sales of the Company. In area had a population of new procedure to provide for January 1982, FERC approved 2,458,000. At the end of 1981, prior approval of payments to an offer of settlement in another there were 748,569 customers affiliates. On July 29,1982, all proceeding concerning a dispute """""CQ suits, appeals, and remands re-between Central and South lating to these rate proceedings West Corporation (CSW) and Total Customers

• • "d""""""*"""d'"

were resolved by the entry of a the Company, DP&L, TES, and non-appealable Agreed Final other members of the Electric j l l l l l l Order by the PUC which adopt-Reliability Council of Texas j l ^ ed a new procedure for prior (ERCOT). This settlement re-j i approval of certain payments solved the concerns of Tex-La to affiliates and granted no and certain intervenors in this j = further relief. proceeding. In June 1982, the s In February 1983, the PUC United States Supreme Court re-s,, adopted, on an emergency basis, solved the Texas / Oklahoma "'*"**2 amendments to its existing rules boundry dispute pertinent to for the purpose of " assuring this proceeding. Accordingly, in Cost of Living vs. Cost per KW/l ""^*" stricter scrutiny and prior ap-September 1982, upon a motion m l ia Qf proval of fuel costs" for electric by the Company and the FERC i m utility companies operating in the staff, supported by the State of " = " m uar -f so State of Texas. Since the adoption Texas as intervenor, FERC entered WEN YNI,- 2" of the rule amendments, the an order dismissing this proceed- __. s2C 7

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three Commissioners have ing. The entry of this order termi-f7-i no l resigned and appointments have nates the litigation and various '3 7--t been made by the Governor of administrative proceedings N

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Texas to fill the vacancies. In relating to the dispute between TLALl&' l March 1983, the newly constituted Texas Utilities (including its PUC held a hearing to consider electric utility subsidiaries - the permanent adoption of the DP&L, TES, and the Company) rule amendments. The PUC de-and CSW with regard to syn-ferred action on the rules and chronous interconnections. indicated that it would continue to In July 1980 Tex-La filed suit in study appropriate methods for the 126th Judicial District Court recovery of fuel costs. A hearing of Travis County, Texas and the 13

and an area population of tion included 15.560 single-family The average annual usage of 2,388,000. These figures rep-units.13.581 apartment units and electricity by residential cus-resent an increase of 3.7 percent 1.455 units in duplex projects. tomers rose from 11,922 kilowatt-in customers and 2.9 per cent Non-residential building autho-hours in 1981 to 12.411 kilowatt-in population. rization during the year totaled hours in 1982 an inc; ease of 4.1 Building activity in the Com-20.263.900 square feet, a decrease per cent. Total energy sales pany's service area during 1982 of 33.6 per cent from 1981. This amounted to 28.231.471 mega-was highlighted by a record downturn was not unexpected as a watt-hours in 1982. compared to 30,596 residential units which large volume of new space pre-27.147.451 megawatt-hours in were authorized. This exceeded viously authorized, much of which 1981, an increase of 4 per cent. the previous record set in 1978 by is still under construction now The "ExCEI I.' (" Excellence in 9.5 per cent. The 1982 authoriza-requires an absorption period Customer and Employee Load 4 _g', 8 t - (.*

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Leveling") program has the dual $1.898,000,000 in 1981, a decrease service. The purpose of these purpose of helping customers im-of 7.8 per cent. This decrease was meetings is to measure and evalu-prove the efficiency and economy attributable primarily to the over-ate customer concerns and, when of their use of electric energy and all state of the economy. feasible, to modify or initiate meeting the objectives of the Company policies and practices which will satisfy those concerns. Company's load management pro-Public Affairs gram. Customers are provided The Company's Electrical information about the advantages During the past decade, every Safety Program is an ongoing ac-of energy-efficient equipment segment of society has in-tivity to inform the general public through advertising messages and creasingly become concerned with about electrical hazards and how personal contacts. Cash incentives the supply, use and cost of all to avoid them. Specially trained are offered for the installation forms of energy. Texas Power & personnel present demonstra-i l of equipment which meets Light has responded to the con-tions, films and literature to l "ExCELL" standards. Qualifying cerns of its customers through a schools, civic clubs and other pub-equipment installed by residential number of expanded and new lic groups. Safe procedures when customers during 1982 included activities. working with or near electrical 17,207 central heating and cooling TP&L employees are the front apparatus is the subject of an arc-units and 5,533 room air con-line of the Company's contact and ing demonstration. ditioners and heat pumps. At the communication with its cus-To further young people's un-end of the year, residential and tomers. In this role, they must derstanding of energy production commercial load reduction was 30 have not only a high degree of and use, the Company makes per cent greater than the load knowledge and expertise in spe-available to schools more than 200 management goal established cialized fields, but also a famil-films and numerous study kits, in 1981. iarity with all facets of electric booklets and brochures. " Energy, The Company continued during service and the Company's opera-Economics, Environment," a 1982 its " Residential Conservation tions. These needs are being met demonstration program, was pre-Service Program" which was be-with programs of intensive em-sented to some 12,000 students in gun in 1981. On request, TP&L ployee training and education. 103 schools during 1982. An ad-personnel conduct a free energy Since 1980, Company president visory board of teachers from audit of customers' homes. Cus-R. K. Campbell and other offi-various grade levels provides the tomers are provided recommend-cials have met in 46 service area Company counsel on all educa-ations for improving the energy towns with more than 700 repre-tional materials and programs. effiriency of their homes, esti-sentatives of customer groups to TP&L continued during 1982 mated costs of those improve-hear candid views about electric long-standing cooperation with ments and the energy savings which would result. Industrial customers were sup-Residential Customer Usage and Cost plied information regarding effi-3,,,,,, A,,,,i xw,i A,,,,,, cm, p, xWil Average Annual Electric Bill cient use of electric energy and usage per cuswmer the potential for additional sav-i4so 7, 5875 ings through alternatives such as l off-peak usage, interruptible 9 i2no e< 575o l tariffs and co-generation. i Fifty-six industrial and office 5, ses l io,, facilities employing 25 or more persons selected locations in the g, TP&L service area during the year. l These facilities, when in full oper-3' E_ } 6"" 5" ation, will create more than g 3 13,000 new job opportunities. 2' 525" _ l W j The gross agricultural income a in 36 counties surveyed annually 1 ment Division was $1,750,000,000 l g l g [ljj- ~ [ by the Agri-Busines's Develop-i< ~ ~~ ~~~ si:5 23o R i_l in 1982, compared to 5" o xwn gy.57 e 67 n n c nn 57 e 67 n n c nn 57 e o7 n n c 15

youth organizations such as ul. Comanche Peak plant and 49 advertising and enclosures with Fil A and FFA to promote leader-tours of lignite-fueled generating service bills keep customers in-ship skills and personal develop-plants. N1 ore than 4.7(W) people formed about the supply. cost and ment of participants. were in the tour groups. ef ficient use of electric energy. In November. the Visitors In-Timely and factual response to un~ gwn vw w na a formation (. enter was opened at news media requests for inf.orma-the Comanche Peak nuclear plant tion is a dedication of I Pu ott _ Employees which is now under construction. cials and the media relations stall N1aintaining a competent and The f acility includes 15 displays The Company initiates news sto-highlv productive work force is and an audio-visual presentation. ries on matters of importance to essential to the supplying of de-During the year. Company per-its customers. pendable electric service. sonnel conducted 94 tours of the Newspaper, radio and television During 1982. more than 3.7M) E% .ess.amsu,m a c.am-1 i %"N c.g;g.; e MQMg n'e-m.neipre s f eb 1 a-x > m.M w_wAN5DQT"lM 5_ y' 't,'. f t.M*Wy@Qf ~

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TP&L employees participated in At the end of 1982, the Com-Results of research have influ-formal training programs de-pany had 5,564 full-time em-enced the formulation of building i signed to increase job knowledge ployees. This number includes 819 energy standards and load cal-and skills. Workshops at the full-time employees of Industrial culation methods in many areas of Company's training center at the Generating Co., a division of the nation. Trinidad generating plant were at-TP&L which operates TP&L's TP&L participates in the sup-tended by 1,979 employees and Sandow Unit 4 and certain other port of a number of funded re-1,362 participated in sessions con-generating and mining facilities search activities including work of ducted at other locations in the owned by A oa. the Electric Power Research In-service area. Workshops spon-As an Equa Opportunity Em-stitute. The Institute, now in its sored by manufacturers and sup-player, Texas Power & Light will twelfth year of operation, is en-pliers of equipment and materials continue to seek the most effec-gaged in major research of solar, were attended by 130 employees. tive utilization of all employees geothermal and nuelcar fusion en-More than 200 employees re-through its Affirmative Action ergy and is supported by more ceived Company assistance in in-Program. than 500 energy-related com-dividual, job-related courses of panics, governmental agencies ~ study. and cooperatives. The Texas Information conferences, a Research and Development Atomic Energy Research Founda-monthly magazine, weekly news The primary goals of the Com-tion (TAERF) is sponsored by summaries and special news bul-pany's technical research pro-TP&L and nine other Texas inves-letins keep employees informed grams are leveling the demand for tor-owned utilities. Through on developments and events con-electric power and minimizing TAERF, the companies support cerning the Company and the customers' energy costs. To fusion research at the University electric utility industry. achieve these goals, TP&L de-of Texas at Austin. The Company's Productivity velops and evaluates measures Consulting Team which was with potential for reducing on-organized in 1981 continued de-peak residential and commercial TP&L Revenue Dollar velopment and refinement of pro-use of electricity. Measures cur-Where It Came From jects designed to improve internal rently under investigation include I s un. communications and operating use of solar and other renewable l, '!, un procedures. During 1982, the energy sources, improvement of ~ i3n team established nine Ouality Cir-the thermal integrity of customer jg cles, groups of job-related em-buildings, operation of energy-i- ~ f recommend solutions to problem ment of service-limiting devices. Mgg,E [ ployees who identify, analyze and efficient equipment, and employ-1 ~B conditions. The efforts of these During 1982, the Company d emummM M E ,,o groups have already resulted in monitored 14 residential solar L Z l d n.,l,1 J ' *" *'

• 2 modified procedures and methods water heating systems. This study which have made possible signifi-provides information on water use now It was used

cant manpower efficiencies and patterns, solar contribution, elec-i som dollar savings.

trical usage and utility bill un I Education in on-the-job safety, savings. on first aid training and safety in-TP&L is designing a solar test spections of facilities, equipment facility for research to determme --l e and work habits are among con-the relative year-round suitability i 4 l. AW C#C [ M~ tinuing Company efforts to help of various active and passive assure the well-being of em-building designs. Inside tempera- +- o playees. Three times during 1982, tures, demand patterns and elec-W,k A o J,,,,,l M,L, 1 *"

• 2 employees worked more than one trical usage are being recorded in

@ = "l=Fj=n o n, million man-hours without a dis-two occupied passive solar homes. - o - a" * "* * "" * ""'" * * " ~ abling injury. More than 2,400 Data will be compared with the field employees received recogni-results of scale model research at tion and awards for completing the solar test facility. one or more years of wcrk with-The Company's study of air in-out a disabling injury. filtration is now in its sixth year. 17

l Year Ended December 31,- 1982 1981 1980 1979 -1978 = Total Assets end of year (thousands) - - $3,395,098 $3,135,156 $2,790.527 $2.416,820 $2,107,413 L Electric Plant end c' year (thousands) - ' $3,849,543 - $3,478,003 $3,140,209 $2,729,803 $2,376,985 Accumulated depreciation end of year-643,553 565,510 494,911 433,158 377,346 Construction expenditures'(including l allowance for funds used during construction)! 410,424 352,110' '409,806 356,603 295.180 Capitalization end of year (thousands) - r ' Long-term debt - $1,175,983 - $1,099,450 $1,015,522 $ 949,644 $ 820,113 Preferred stock 285,782 285,782 285,782 256,112 226,521 ~ Common stock equity - 1,242,572 1,071,618 '920,355 806,334 722,263 Total $2,704,337 $2,456,850 $2,221,659 $2,012.090 $1,768,897 ~ Aver:ge Interest Cost on Long-Term Debt end of year 9.2% 8.8% 8.0%

7.8%

7.6% l _ Aver:ge Dividend Cost on Preferred Stock ~ i end of year 8.0% 8.0% 8.0% 7.6% 7.4%' l I L Net Income (thousands)' $230,932 $ 182,276 $ 161,623 $ 128,642 $ 123,086l L Dividends Declared on Common Stock - 1- '(thousands) 112,221 93.756 75,864 65,194 59,040 4 .1 R-tio of Earnings to Fixed Charges 3.9 4.1 3.9 3.8 -4.1. Supplemental Ratio of Earnings to Fixed. Charges

• 3.5 3.5 3.3 3.3 3.8 CAllowance for Funds.Used During Construction as Per Cent of Earnings to

. Common Stock ~ 27.9 % 27.1 % 27.0 % 21.8 % 17.1 % Return on Average Common Stock Equity 18.0 % 16.0 % 16.2 % 14.3 % 15.2 % L Net Funds from Operations as Per Cent of Construction Expenditures (eniuding allowance for funds used during

construction) 58.9 %

48.1 % 44.0 % 46.4 % 51.0 % - The supplemental ratio of earnings to fixed charges includes the Company's allocable portion of interest on Senior Notes of affiliated companies which provide sersices to the Company.

18 ~

' 1 Year Ended December 31, - -1982 1981 1980! 1979 1978 Electric Energy Generated and Purchased (MWh) - Generated -net station output -29,5 %,025 28,754,607 '28,431,111 25,952,023 24,503,681 Purchased and net interchange '464,790 167,205 - 218,847 729,425 1,412,136 Total generated and purchased. 30,060,815 ~ 28,921,812 28,649,958 26,681,448 25,915,817 Company use, losses, and unaccounted for 1,829,344 1,774,361 2,182,539 '1,881,667 1,930,139 Total electric energy sales-28,231;471 27,147,451 26,467,419 24,799,781 23,985,678 Full Mix for Electric Generation ~ Gas 38.3 % 42.2 % 47.3 % 46.4 % ~ 53.0% - Oil 0.4 0.2 0.1 .0.5 0.2 Lignite. 61.3 57.6 52.6 53.1' 46.8 Total 100.0 % 100.0 % -100.0 % 100.0 % 100.0 % Electric Energy Sales (MWh)- ~ Residential '8,660,466 8,079,838 8,451,010 7,334,355 17,520,665 Commercial 5,730,040 5,281,545 4,975,135 4,451,990 4,338,257 Industrial 8,375,719 ,8,854,880 8,583,227 8,512,728 8,000,546 Government and municipal 953,835 923,882 943,792 845,800 880,988 Total general business - 23,720,060 23,140,145 22,953,164 21,144,873 20,740,456 Other electric utilities ~ 4,511,411 '4,007,306 3,514,255 3,654,908 3,245,222 - Total electric energy sales - 28,231,471 27,147,451 26,467,419 24,799,781 23,985,678 Operating Revenues (thousands) Residential- $ ' 527,802 . $ ~ 432,964 . $ ~ 380,564 $ 293,489 $ 285,748 Commercial 317,523 273,054 - 224,116 185,750 168,904 Industrial 330,649 303,463 238,898 211,085 184,091 Government and municipal 51,608 43,719 35,983 28,587 -26,902 Total general business 1,227,582 1,053,200 879,561 718,911 665,645 Other electric utilities ' 164,456 131,236 96,882 82,715 70,828 _Other operating revenues 1,392,038 1,184,436 976,443 801,626 736,473 . Total from electric energy sales - ' 24,470 (777) 15,712 7,991 '6,835 Total operating revenues $1,416,508 $1,183,659 $ 992,155 ' $ 809,617 $ 743,308 ' Electric Customers (end of year) Residential 673,754 ~ 650,942 623,077 595,631 563,378 Commercial 86,655 82,411 80,517 78,553 77,371 Industrial 7,784 7,409 6,990 6,599 6,257 7 Government and municipal 7,958 7,773 7,619 7,346 7,061 Total general business. 776,151 748,535 718,203 688,129 654,067 Other electric utilities 33 34 35 35 30 Total electric customers 776,184 --748,569 718,238 688,164 - 654,097 Residential classification includes indirect sales l (apartments, etc.); dwelling units not included in number of customers-37,309 40,065 42,523 43,560 47,656

Industrial classification includes service to Alcoa-Sandow (interruptible prior to May 1981):

Electric energy sales (MWh) 2,316,308 2,848,997 2,918,794 3,076,399 2,891,259 - Operating revenues (thousands) $68,035 $64,016 $48,813 $48,400 $41,572 19

External funds of a permanent or long-term nature are The primary capital requirements of the Company for obtained by the Company through the sale of common 1982 and as estimated for 1983 through 1985 are as stock to Texas Utilities, preferred stock and long-term follows: debt. The capitalization natios of the Company at De-l Thousands of Dollars cember 31,1982 consisted of approximately 43% long-l 1982 ~1983 1984 1985 term debt,11% preferred stock and 46% common stock construction equity. To provide for immediate cash requirements dur-expenditures ing periods between long-term financings, the Company obtains short-term loans from Texas Utilities, which had '5352,000 ? $304,000 $299,000 . 5458.000 Nuclear fuel-11,000 20,000 31,000 27,000 . lines of credit with commercial banks aggregatmg ' Maturities of - $300,000,000 at December 31,1982. The Company does long-term debt h and sinking fund.. not maintain separate credit arrangements with banks or other lenders. requirements 15,000 20,000 1,000 The Company expects to sell securities as needed, Total - 5378,000 $324.000 - $350.000 . $486.000 including the sale to Texas Utilities in March 1983 of -2,000,000 shares of its authorized but unissued common - - For detail concerning major new construction work now stock for $64,000,000. Although the Company cannot in progress or contemplated by the Company and com-predict future regulatory practices and is to some degree. L . mitments with respect thereto, see " Construction and : - exposed to fluctuating economic and securites market l . Operations " Reference is made to Note 9 to Financial ' conditions, it does not currently expect any changes in Statements for information regarding the sale of a 2%% trends or commitments which might significantly alter its - interest in the Comanche Peak nuclear station. basic financial position or ability to finance capital re-The Company generates funds from operations suffi ' quirements, including the proposed merger of the Com-cient to meet. operating needs, pay dividends on capital pany, Dal!as Power and Texas Electric into Electric stock and finance a significant portion of capital require-Company. The new organization resulting from the pro-3 ments. These funds are derived from net income, - posed merger should provide greater financing flexibility ~ depreciation, deferred taxes and investment. tax credits. and achieve additional economies and efficiencies. (See - ' Factors affecting the ability of the Company to fund a " Reorganization.") portion of its capital requirements from operations in-- See " Financial Statistics" for additional information. clude adequate rate relief and regulatory practices allow-A ing a substantial portion of construction work in progress in rate base, adequate depreciati_on rates, normalization. Operating revenues have increased $232,849,000 for of federal income taxes, current recovery of the cost of 1982 and $191,504,000 for 1981 primarily as a result of fuel used in the generation of electricity and the oppor-recovery of higher fuel costs on a current basis and } tunity to earn competitive rates of return required in the. increased energy sales and rate levels. Energy consump-capital markets _. For 1982, approximately 59% of the tion is affected by material variations in weather condi-funds needed for construction was generated from j operations.- ~tions and was particularly impacted by the unusually hot and dry summer of 1980 compared to the relatively nor-i mal temperatures during the summers of 1981 and 1982. (See " Rates, Regulation and Litigation" and " Operating L Statistics".) ( Fuel and purchased power expense increased primarily as a result of higher unit costs of fuel consumed and i h increased generation. (See " Rates, Regulation and Liti-P gation" and " Operating Statistics".) Operation and b maintenance expenses have increased as a result of infla-k tionary pressures on the cost of labor, materials and services and an additional lignite-fueled generating unit r = ' 20 -

s -

n

'l: - (placed in service during 1981; such expenses were also . Texas ~ Power & Light Company: c. > affected by the higher costs of operating and maintaining ; (& Light Company as of Decem

We have examined the balance sheet of Texas Power '

1 f cxistirig lignite-fueled generating units, including the ad-i 'ditional costs of operating and maintaining the pollution? the related statements of income,' retained earnings ~and? ' control; equipment required in connection therewith.'.

source of funds for' construction for each of the three.

~ ' increases in taxes other than income resulted primarily: 4 years in the period ' ended December 31,1982.;Our : ~ from ir. creases.in revenue;and property based taxes.

examinations'were made in. accordance with generally l Increases in allowance for funds used during con..

f accepted additing standards and,4accordingly, included 1 istruction are primarily attributable to increases in the such tests of the accounting records and such;other '. ~ ~ L AFUDC rate' effective January 1982 and January 1981 and auditing procedures as'we considered nece'ssary in thei Eincreases in the level of construction work in' progress of ' circumstances. ~ 3, ~ 'M the Company not allowed in rate base by regulatory. 7 In_ our opinion; the financial statements referred to c authorities, and also for 1982, to the' interest capitalized : 1 above present fairly the. financial position of the C6m-!- 1(net of tax) upon.the assumption of the 2K% interest'in' c pany at December 31,1982 and 1981 and the ~results of its f Comanche Peak release'd by. Tex-La Electric Cooperative operations and the source of its funds for construction'for - 'of Texas, Inc. (Tex-La). Other income and deductions - each of the.three years in the period ended December 31t f net and related federal income' taxes for 1982 reflect the - (1982, in conformityLwith~ generally accepted ' accounting { f net gain on the sale of the 2K% interest in Comanche t ^ prmciples applidd on a consistent basis. ~

• : Peak ' decreased incom'e frem temporary cash invest-' '

7 ments for 1982, and for 1982 and 1981 decreased income. DEL.OITTE HASKINS & SELLSI from Alcoa for construction of generating facilities ~ . placed in service in 1981.1 { -Dallas,= Texas - The increase in 'other interest charges for 1982 is. ' March 25,119831 > primarily attributable to the interest paid Tex-La;upon.

the assumption of the 2K% interest in Comanche Peak 1

rcleased by. Tex-La.

~ . Nct income for 1982 includes an increase of approx. ' imately $3,400,000 as a result of _the sale of the'2K% - - interest in Co;nanche Peak to Tex-La.'(See Note 9 to

Financial Statementi) '

iThe Company ~ expects to pursue adequate and timely - rate relief in the future to offset the effects'of increases in ' nthe costs of providing electric service. = The Company has prepared supplementary informa-r tion concerning the' effects of changing prices in com-upliance with the reporting requirements of Financial l Accounting Standards Board Statement No. 33; such

information is included beginning on page 30 following -

i

the Notes to Financial Statements.

s .s: +. 21 k

4 Thousands of Dollars - December 31, - 1982 1981 Eiectric Plant : In service: Production $1,295,014 $1,220,366 1 Transmission - 510,708 487,801--

Distribution 853,030 770,177

- General.- 88,242 78,370' Total 1 2,746,994 2,556,714 il i Construction work in' progress-1,057,748 885,512 . Nuclear fuel 42,228 33,281 Held for future use - 2,573 2,496

Total electric plant 3,849,543 3,478,003L

~

Less accumulated depreciation 643,553 565,510 Electric plant, less accumulated depreciation 3,205,990 2,912,493 Other Investments.

1,422 1,421-Current ' Assets Cash in banks > 5,383 6,036 Special. deposits 6,162 6,185 . Temporary cash investments - at cost - 54,736 ~ Accounts receivable:

Customers 72,245 59,890 Otheri 17,345 15,316 1-Allowance for uncollectible accounts (3,870)

(2,987)

- Inventories-lat average cost: Materials and supplies - 25,045 '21,544 . Fuel stock -- 26,632 . 22,927-1 Working funds ' 18,393 14,600

Other current assets --

14,341 16,733 Total current assets 181,676 214,980 Deferred Debits 6,010 6,262 Total $3,395,098 $3,135,156 - See accompanying Notes to Financial Statements. 22

Thousands of Dollars December 31, 1982 1981 Capitalization ~ $ 745,500 Common stock (Note 3). $ 820,500 Retained earnings (Note 4) 422,072 -326,118 Total 1,242,572

1,071,618

Prcferred stock (Note 3) 285,782 285,782 Long' term debt -less amounts due currently (Note 5) 1,175,983 1,099,450 Total capitalization

'2,704,337 2,456,850 ' Current Liabilities

Notes payable -Texas Utilities Company (parent) 28,500

- Long-term debt due currently 14,000 -Accounts payable: Affiliates 34,634 '36,012 Other - 40,889 46,561 - Dividends declared - 5,689 5,689 Customers' deposits 11,286 8,024 Taxes accrued 86,151 73,322 Interest accrued 34,383 33,467 - Other current liabilities (Note 9) 17,506 105,118 Total current liabilities 259,038 322,193 Reserve for Insurance and Casualties 2,093 2,149 Accumulated Deferred Federal Income Taxes 212,544 167,616 UnImortized Federal Investment Tax Credits 217,086 186,348 Commitments and Contingencies (Notes 2 and 6) Total- $3,395,098 $3,135,156 - See accompanying Notes to Financial Statements. b 23 .j u

Thousands of Dollars . Year Ended December 31, -1982 '1981 ~1980 Opercting Revenues $1,416,508 $1,183,659 $ 992,155 . Operating Expenses. c Fuel and purchased power 583,021 492,232 -411,737-7 Operation: .173,408 135,574 106,290 - Maintenance 105,915 91,761 69,7 % Depreciation - _ 88,424

80,499 69,881 Federal income taxes (Note 7) 110,597.

97,628 84,408

Taxes' other than income 70,080 62,353 J 49,818 Total operating expenses 1,131,445 960,047

-791,930 ' Opermting Income 285,063 223,612 200,225 Other Income '37,943 132,685 27,788 Allowance for equity funds used during construction ' . Other income and deductions-net '.13,723 10,602 19,403 Federal income taxes - (6,707) (4,926): (9,071) Total other income - 44,959 38,361- -38,120 Total Income 330,022 '261,973 ~238,345 Interest Charges Interest on mortgage bonds' 94,607-77,092 70,503 Interest on other long-term debt 8,766 8,822 8,889 Other interest -- 15,863 ._4,303 _ 7,287 Allowance for borrowed funds used during construction. (20,146) (10,520). - (9,957) Total interest charges - 99,090 79,697 '76,722 Net Income ' $ 230,932 $ 182,276 S' 161,623 Thousands of Dollars - _ Year Ended December 31, ~1982 1981 l 1980 Balance at.Beginning of Year $ 326,118 - $ '260,355 ~ $.196,334 Add.- Net income - 230,932 182,276 -161,623 Total 557,050 442,631 = 357,957' Deduct Dividends (cash) ' Preferred stock: $4-series ($ 4.00 per share per annum) 280 280 280 $ 4.44 series ($ 4.44 per share per annum) .666 666 -666 $ 4.56 series ($ 4.56 per share per annum) -610 _610 610 $ 4.76 series ($ 4.76 per share per annum) _ 339 339 339 476 476 '476 $ 4.84 series ($ 4.84 per share per annum) $ 7.24 series ($ 7.24 per share per annum) 1,810 1,810 1,810 -$ 7.80 series ($ 7.80 per share per annum). 2,340 2,340 2,340 l - $ '8.16 series ($ 8.16 per share per annum) 2,448 2,448 2,448 ' $ 8.20 series ($ 8.20 per share _ per annum) 2,460 2,460 2,460 - $ 8.68 series ($ 8.68 per share per annum) _2,604 2,604 2,604 $ 8.84 series ($ 8.84 per share per annum) 2,652 2,652 2,652 ~ $_9.32 series ($ 9.32 per share'per annum) 2,7 % 2,796 2,796

$10.92 series ($10.92 per share per annum) 3,276 3,276 2,257

- Common stock (per share: 1982, $2.86; 1981, $2.56; 1980, $2.24) 112,221 93,756 75,864 Total dividends 134,978 116,513 97,602 Balance at End of Year (Note 4) $ 422,072 4 $ 326.118 $ 260,355 - See accompanying Notes to Financial Statements. 24i

.s O Thousands of Dollars LYear Ended December 31, 1982~ 1981 1980 Funds from Operations 1 4 Net income - $230,932 $182,276 $161,623 - Depreciation... _44,928 25,767 - 33,552 _88,424 80,499 69,881 Dcferred federalincome taxes . net. ' Federal investment tax credits -- neti 36,136 19,907 34,062' Allowance for funds used during construction - 1(58,089) -(43,205) (37,745) Total funds from operations 1 342,331 .265,244 261,373 Less-Dividends declared:L Preferred stock - 22,757 22,757 121,73'8 Common stock 112,221 93,756 -75,864 Total dividends declared ~ 134,978 116,513 197,602- -Net funds from operations - 207,353 148,731 163,771 . Funds From Financing.- Salcs of securities: First mortgage bonds

74,039 96,745

- 50,000 Other long-term debt > 4,636 - 3,664 18,096 Preferred stock. 29,670 Common stock. 75,000 85 500 50,000 Retirement of long-term debt: (15,366) -(492) ((1,603) Increase (decrease) in notes payable to Texas Utilities Company (parent) 28,500 (70,000)

64,500 Net funds from financing 166,809-115,417

~ 210,663 Other Sources (Uses) of Funds : Changes in working capital,-excluding notes payable and long-term debt due currently: Cash in banks and tempora.ry cash investments 55,389 .(54,597) .1,559-Accounts' receivable'- net ' (13,501) (13,565)

(9,321)

Inventories c (7,206) (6,191)

(6,498)

Accounts payable (7,050) (8,285) 8,614 Taxes accrued 12,829 26,146 27,710-Advance payment on sale;of electric plant (Note 9) l -(90,420) 90,420 ~ Other - net ~ 5,608 8,911

(9,335)

Net change (44,351) _42,839 12,729: ~ Investment advances to affiliates 3,800

(1,800)

Nuclear fuel

^ (11,055) 1,571-3(11,023) E Sale of electric plant _ (Note 9) ' 36,220 Other - net (2,641) (3,453) (2,279) Net other sources (uses) of funds. (21,827) 44,757 - (2,373) Total: PC,~as i $308,905 $372,061 4 Construction Expenditures: - Electric plant : $410,424 $352,110 $409,806 Allowance for funds used during construction (58,089) (43,205) (37,745) i ' Construction Expenditures (excluding allowance for funds used during construction)~~ $352,335 $308,905 $372,061 See accompanying Notes to Financial Statements.

25; 0

'6 x ( Electric Plant --- Electric plant is stated at original cost. The Company is a subsidiary of Texas Utilities which iThe cost of property additions charged to' electric plant provides common stock capital and short-term financing ! includes labor and materials, applicable overhead and ~ to the Company. Dallas Power & Light Company (Dallas ? payroll-related costs and an allowance for funds used Power) and Texas Electric Service Company (Texas Elec- ~

during construction.

tric), whose respective systems are interconnected with w Allosmnce[For Funds Used During Construction - that of the Company, are also subsidiaries of Texas Util- ' Allowance for funds used during construction (AFUDC). ities. Texas Utilities has three other subsidiaries which iis a' cost accounting procedure whereby amounts based : ' perform specialized services, at cost, for the Texas Util-J upon interest charges on borrowed funds and a return on ities Company System (System), including the Company: other capital used.to finance' construction are charged to - Texas. Utilities Services Inc. furnishes engineering, finan-cial and other services; Texas Utilities Fuel Company c electric plant. The accrual of AFUDC is in accord with c c'stablished accounting practices of the industry, but does - (Fuel Company) owns a natural gas pipeline system, ! not represent curre.nt cash income. Effective January 1,' acquires, stores and delivers fuel gas and provides other ?1982; the Company has capitalized AFUDC at a net of tax fuel services for the generation of electric energy; and ~ Texas' Utilities Generating Company (Generating Com-

rate of 9% compounded semi-annually of expenditures incurred, exc'ept for that' portion of construction work in : 'pany) acts in operating the jointly-owned generating sta-

- - progress allowed in rate base by regulatory tions and furnishes related services, including the Lauthorities. Prior AFUDC rates effective in January 1981 . ownership and operation of fuel production facilities for land November 1979 were 8h% and 8%, respectively. the surface mining and recovery of lignite for use as fuel (These rates were determined on the basis of, but are at such stations. less than, the cost of capital use'd to finance the construc-- The Company, jointly with Dallas Power and Texas 1 Electric, has entered into agreements with Fuel Com-ition program.- = pany to procure certain fuels and related services and t Depreciation - Depreciation is based upon anf amor-: - f tization of the' original cost of depreciable properties on a. ;with Generating Company for the production oflignite L straight-line basis over the estimated service lives of the - fuel and the operation of electric generating stations; 1 properties. Depreciation as a percent 'of average depre-payments are at cost of the services received and are ._ ciable electric plant in service approximated 3.5% for ~ required by the agreements to be "at least equivalent in the aggregate to the annual charge to income on the 11982,'3.6% for 1981 and 3.5% for 1980.1 1 books" of Fuel Company and of Generating Company.

FederalIncome Tares -The Company is included in.

the con'solidated federal income tax return of Texas Util 1 The Company is, in effect, obligated for its share of the L ities. Company and its subsidiary companies, and federal - principal, $209,410,000 a_t December 31,1982 and interest t ncome taxes are allocated to all subsidiary companies on long-term. notes of Fuel Company and of Generating i s J based upon taxable income 'or loss. Deferred federal. Company.through the payments described above. Such ~ + (income 1 taxes are generally provided for differences be- . notes mature at various dates through 1999 and have itween book'and taxable income; such differences result interest rates ranging from 8.50% to 10.45%. fprimarily from the use.of liberalized depreciation and ~ In August 1982, the Board of Directors of Texas Util- > accelerated cost recovery allowable under the Internal. ities directed management to proceed with implementa- ~ ~

Revenue Code. Investment tax credits are being amor-tion of a revision of the organizational structure of the n tized to income over the ~ estimated service lives of the System. Such revision will involve the merging of the i properties. (See Note 7.).

Company, Dallas Power and Texas Electric into Texas Reserve For Insurance and Casualties -The Company, Utilities Electric Company (Electric Company), with the

as allowed by regulatory authorities, maintains a reserve merging companies thereafter becoming divisions of

? for major unin'sured losses and claims. Electric Company. The merger will become effective with the commencement of business on January 1,1984. For information concerning jointly-owned generating stations, see " Construction and Operations.' Y T 26 L ~ s ; t.. s

S .u.. Thousands of Dollars Redemption Price. Per Share (before :

Shares Outstanding Amount adding accumulated December 31, December 31.

dividends) I Eventual 1982 1981 1982 1981 Current Minimum p - Common stock - without par value; -- authorized 80,000.000 shares 39,850,000 37,350,000 $820,500 $745,500 Preferred stock - cumulative, without par. value; entitled upon liquidation to $100 a share; authorized 5,000,000 shares: $ 4' series'. 70,000 70,000 - $ 7,000 $ 7,000 $102.00 $102.00 $ 4.44 series i 150,000 150,000 15,061 15,061 102.61 102.61 .$ 4.56 series '133,786 133,786 13,379 13,379 112.00 112.00 $ 4.76 series: 100,000 -100,000 10,000 10,000 102.00 102.00 . $ 4.84 series. 70,000 70,000 7,000 7,000 - 101.79 101.79 $ 7.24 series 250,000 250,000 25,113 25,113 105.23 .103.42 $ 7.80 series 300,000 300,000 30,030 30,030 105.20 103.25 $ 8.16 series ' 300,000 300,000 29,655 29,655 106.12 102.04 $ 8.20 series' 300,000 '300,000 30,108 30,108 107.39. 103.29 .- $ ' 8.68 series 300,000 300,000 29,550 29,550 106.26 101.92 $ 8.84 series. 300,000 300,000 29,591 29,591 108.17* 102.05 $ 9.32 series ~ 300,000 300,000 29,625 29,625 106.99 102.33 = $10.92 series 300,000 300,000 29,670 29,670 110.92* 102.73

Total 2,873,786,

2,873,786 $285,782 $285,782 ' Redemption may not be effected currently through certain refunding operations.- ' : The Company issued and sold shares _of its authorized - common stock to Texas Utilities as follows: March 1982, The Company's articles of incorporation, the 2,500,000 shares for $75,000,000; March 1981,3,000,000 mortgage, as supplemented, and the debenture shares for $85,500,000'and February 1980,2,000,000 agreements contain provisions which, under certain shares for $50,000,000. conditions, restrict distributions on or acquisitions of its--. ' In May 1980, the Company issued and sold 300,000 common stock At December 31,1982, $32,239,000 of J l shares of its $10.92 authorized preferred stock for retained earnings was thus restricted as a result of the' - $29,670,000. provisions of the articles of incorporation. ..No_ shares of the Company's ' ommon~or preferred The articles of incorporation restriction provides in - c ! stock are held by or for acco_unt_of the Company, nor are 'effect that the Company shall not pay any common - any shares of such capital stocks reserved for officers and dividend which would reduce retained earnings to less'- employees or for options, warrants, conversions and than one and one-half times annual preferred dividend L other rights in connection therewith, requirements. The mortgage restriction is based. primarily on the replacement fund requirements of sne. mortgage. The restriction contained in the debenture-agreements is designed to maintain the aggregate. preferred and common stock equity at or above 33M% of : total capitalization. 27

Sinking fund and maturity requirements for the years Thousands of Dollars - 1983 through 1987 under long-term debt instruments in December 31, 1982 1981 effect at December 31,1982 were as follows: ' First mortgage bonds: Thousands of Dollars 3%% series due 1984 $ ~ 20,000 $ 20,000 4%% series due 1986 10,000 10,000 4%% ser{es due 1988 12,500 12,500 Sinking Maturity e ui ement Year Fund (a) (see above) (a) (b) 4%% senes due 1991 n2,000 12,000 l-4%% series due 1993 10,000 10,000 1983; $5,003 4%% series due 1995

14,000 14,000 1984 6,261

. 20,000 20,058 5 ' % series due 1996 ' 20,000 20,000 1985 _.6,899 696 5%% series due 1997 30,000 30,000 -1986 6,903 10,000 10,700 6%% series due 1998 25,000 25,000 1987 - 6,753 6.000 6,700 8%% series due 2000 30,000 30,000 '(a) Excluding amounts satisfied prior to December 31,1982: $900,000 for 1983, ' 8%% series due 2000 30,000 30,000 $842,000 for 1984, $208,000 for 1985 and $200,000 for 1986. 7%% series due 2001 30,000 ' 30,000 ~ 7%% series due 2002 40,000 - 40,000 '(b) Other requirements may be satisfied by certificadon of property additions . at the rate of 167% of such requirements. . 7%% series due 2003 .50,000

50,000 8%% series due 2004

.50,000 _50,000 The total amounts of sinking fund debentures autho-10%% series due 20G4 50,000 .50,000 - rized in the debenture agreements have been issued. The [j[j y .. Company's first mortgage bonds may be issued in addi-8 tional amounts, without limitation as to the maximum 8%% series due 2007 100,000 100,000 9%% series due 2009 100,000 100,000 thereof, but limited by property, earnings and other 11%% series due 2010 50,000 50,000 provisions of the mortgage. None.of the long-term debt l 17%% series due 2011 75,000 75,000 is pledged, held by or for account of the issuer, or held in 15%% series due 2012 50,000 its sinking or other special funds,' Substantially all of the $"$ 3c,';,"'[fue $11 ' ele'ctric plant is subject to the' lien of the mortgage. i 34,510 34,510 10 % Series B due 2012 18,650 Funds on deposit with trustec (7,376) (12,765) Total 1,054,284 - 980.245 For major new construction work now in progress or Pollution control revenue bonds: contemplated, and commitments with respect thereto, 7%% series due 2004 15,000 15,000

see " Construction and Operations."-

6%% series due 2006 32,385 - 32,385 The Company, Dallas Power and Texas Electric have 5.70% series due 2007 11,235 11,235 entered into contracts with public agencies to purchase 6 n 3j cooling water for use in~ the generation of electric energy g 3 Funds on deposit with trustee (2,141), (6,777). and have agreed, in effect, to guarantee the principal and Total %,369 91,733 interest on bonds issued to finance the reservoirs from ~ Sinking fund debentures: which the water is supplied.' At December 31,1982, the ~ 4%%, due 1987 6,000 6,666 Company is obligated for $91,900,000 principal amount 4%%, due 1989 10,1 % 10,526 of such bonds, which mature at various dates through 7%%, due 1994 15,658 16,028 2011 and have interest rates ranging from 5h% to 10%%. Total 31,854 33,220 The Company is required to make periodic payments Unamortized discour.t (6,524) (5,748). equal to such principal and interest for the years 1983 Total long-term debt through 1987 as follows: $8,128,000 for 1983, $8,103,000 (less amounts due currently) 51,175,983 $1.099,450 for 1984, $8,105,000 for' 1985, $8,076,000 for 1986 and $8,084,000 for 1987. In addition, the Company is obli-gated to pay certain variable costs of operating and main-taining the reservoirs. The Company's total payments, including amounts capitalized, for 1982 and 1981 were $9,038,000 and $3,041,000, respectively. Amounts pay-able under the contracts may be reduced under certain circumstances, due to the sale of water to nonaffiliate parties. In June 1982, the Company, Dallas Power and Texas Electric entered into an agreement, which is sub-ject to regulatory approval, with a municipality for it to assume all contract rights and obligations of the three companies in connection with the principal amount of certain bonds ($55,287,000 of which is the Company's 28-

share included above), related interest and' costs of oper-Federal income taxes were less than the amount com-ating and maintaining the reservoir; however, the Com ' . puted by applying the federal statutory rate to pre-tax _ pany, Dallas Power and Texas Electric would be _ book income as follows: contingently liable in th'e event of default by the - Thousands of Dollars municipality. -Year Ended December 31, 1982 1981 1980 The Company has entered into an agreement with Tex - Federal income taxes at La Electric Cooperative of Texas,-Inc. (Tex-La) whereby statutory rate of 4&c $160,189 $131,022 $117.347 the Company agreed to purchase an assignment of por-Reductions in federalincome tions of Tex-La's entitlement to capacity and energy from = taxes resulting from: Allowance for funds used the Comanche Peak station in declining amounts over . the first eight years of commercial operation of each ' Depbn "to an$ - generating unit. In connection with the ' agreement, the - -. Amortization ofinvestment tax Company is required to make annual payments to Tex-La. credits 5,421 4,574 3,698 comprising a pro-rata share of operating costs plus a . Other (172) (2,281) (675). capital charge on Tex-La's net investment applicable to : Total reductions 42,885 28,468 23,868 the portion of Tex-La's entitlement assigned. (See Total federalincome taxes $117,304 $102,554 $ 93,479 Note.9.) The Company is involved in various legal and ' admin-- EHectim tax rate 333 l 36 Mol 36M l istrative proceedings (see " Rates, Regulation and Litiga-tion") and while the Company cannot predict the final ' results, such proceedings, in the opinion of the Company, are not expected to have a material effect upon the. The Company has uniform retirement plans covering financial position or results of operations of the - substantially all employees. The costs of the plans are Company. determined by independent actuaries and are funded by the Company as accrued. The costs of the plans, includ-

ing amounts capitalized, approximated $12,355,000 for The details of federal income taxes are as follows:

1982, $10,455,000 for 1981 and $8,628,000 for 1980. As of -Thousands of Dollars. the latest annual valuations in 1982 and 1981, accumu- ~ Year Ended Dec mber 31, 1982 1981 1980 lated benefits and net fund assets were as follows: Thousands of Dollars Charged to operating expenses: Current federalincome taxes $ 38,742 $ 43,397. $ 18,510 1982 1981 Deferred federalincome taxes Actuarial present value of accumulated -- net plan benefits: Differences between Vested 5 94,953 $ 88,677 depreciation methods - 30,751 . 29,%2 26,706 Nonvested 7,515 8.699 and ives Total $102,468 $ 97.376 construction costs 4,797 4,711 5,30t Other 171 (349). (171): Total 35,719 34,324 - 31,836 l U** " ****** Investment tax credits - net 36,136 19,907 34,062 Total federal income taxes Assumed rates of return of 7% for 1982 and 5H% for charged to operating expenses - 110,597 97,628 84,408 1981 were used in determining the value of accumulated benefits;if the Sh% rate had been used for 1982, the Charged to other income: 7,355 present value of accumulated benefits would have been Current federalincome taxes (2,502) 13,482 Defert federal income taxes approximately $14,000,000 higher. ,209 (8,556)- '1,716 Total federalincome taxes charged to other income 6,707 4,926 9,071 I" J nuary 1981, the Company completed an agree-Total federalincome ment to sell a 4h% undivided interest m the Comanche taxes $117,304 $102,554 5 93,479 Peak station, nuclear fuel and associated transmission facilities to Tex-La, with such sale subject to regulatory approvals and Tex-La's ability to obtain long-term financ-ing arrangements. The Company received approximately $90,000,000 from Tex-La in connection with this agree-ment for that portion of the plant and related facilities 29

3 the 2K% ownership interest released by Tex-La. In May

completed through December 31,1980, which amount -

1982, following regulatory approvab and completion of was included in Other Current Liabilities. Commencing the long-term financing arrangements, the Company iin January 1981, Tex-La paid its pro-rata share of the completed the sale of the 2K% interest in the Comanche construction costs of the facilities. In January 1982, Tex-- Peak station, nuclear fuel and associated transmission

La notified the Company that it was unable to obtain facilities to Tex-La, assumed ownership interest of the

' long-tcrm financing in an amount sufficient to support a 2K% released by Tex-La and refunded approximately 4h% participation and requested that consideration be $66,000,000 for that portion of costs and interest ex- ' given to reducing such participation to 2%%. In Febru-pended by Tex-La in connection with such assumption. ary 1982, the Company concurred in the Tex-La request (See Management's Discussion and Analysis'of Financial -.by agreeing, subject to regulatory approvals ard comple-Condition and Results of Operations for additional - tion of the long-term financing arrangements, to assume information.) j 1 1 _Unaudikd information furnished in compliance with incurred in a future period. j .the reporting requirements of Financial Accounting Stan-Depreciation on the constant dollar and current cost dards Board Statement No. 33, Financial Reporting and basis was determined by applying the Company's 1 Changing Prices (FASB 33), follows. The Statement - straight-line depreciation rates us_ed for financial account-l indicates the need for experimentation in providing ing purposes to the appropriate indexed electric plant information about the effects of changing prices. Such amounts, and is the only income statement item that information is intended to help readers better understand has been restated from the Financial Statements. In com. - the impact of inflation on the Company. Because the pliance with FASB 33, no adjustment has been made to 'l cinformation is presented on an experimental basis, it federal income taxes. should be viewed with caution. Calculation of the infor-Under rate-making rules prescribed by the Public Util-mation inherently involves the use of assumptions, ap-ity Commission of Texas, only the original cost of electric

proximations, and estimates and, therefore, the resulting plant is recoverable through revenues as depreciation.

measurements should be considered in that context and Therefore, the excess of the cost of plant stated in terms not as precise indications of the effects of inflation. The of constant dollars and current cost over the original effects of changing prices are not recognized for income cost is not recoverable through rates as depreciation and

tax or rate-making purposes; therefore the supplemen-is reflected as Reduction to Net Recoverable Cost of j

tary information should not be interpreted as adjust-Electric Plantc The Company believes, based on past ~ ~ments to earnings reported in the Financial Statements. experiences, that it will be allowed to recover the invest-j "Information concerning the effects of general inflation ment in electric plant when replacement of facilities -(constant dollar) was determined by converting historical actually occurs. _ ._ cost amounts into dollars of equal purchasing power, as During periods of inflation, the holders of monetary Emeasured by the Consumer Price Index for All Urban assets suffer a loss of g'eneral purchasing power while - Consumers. holders of monetary liabilities experience a gain. The - Information concerning changes in specific prices amount shown as Gain From Decline in Purch_asing 1(current cost) represents such changes in electric plant Power of Net Amounts Owed reflects the net of these from the date costs were initially incurred to present, and two items and is primarily attributable to the substantial differs from constant dollar information to the extent amount of long-term, debt which has been used to finance that the specific prices have increased at a rate different electric plant. Since depreciation on this electric plant is ' than the general rate of inflation. The current cost of limited by regulations to the recovery of historical costs, J electric plant was computed by indexing the existing a holding gain on debt is not allowed and recovery is historical cost of plant by the Handy-Whitman Index of limited to only the embedded cost of debt capital. To Public Utility Construction Costs for the South Central reflect the results of rate regulation, Gain From Decline Region and other appropriate indices. Such current costs in Purchasing Power of Net Amounts Owed is offset by gre not necessarily representative of the replacement the Reduction to Net Recoverable Cost of Electric Plant. cost of the Company's productive capacity that might be ~ - 30.

m b 4 Average 198'2 Dollars Adjusted for Changing Prices : . Historical Cost Reported In General Inflatio'n L Specific Prices

Financial Statements

-- (Constant Dollar) -(Current Cost) l ; Operating revenues;.. - $1,416,508 $1,416,508

$1;416,508'

Operating expenses (a) 1,131,445 1,220,292 1,225,683

' 10perating income 285,063 196,216 190,825f 1 Other income ' -44,959 44,959 44,959 Total income 330,022 .241,175

235,784 l. Int

rest charges 99,090 99,090

< 99,090 - N:t income $~ 230,932 $ 142,085 - $ 1 136,694. JIncrease in specific prices of electric plant held ; during the year.(b)- . $ 270,474 4 Reduction to net recoverable cost of electric ~ plant : $ J (25,968) (85,313) : Effect of generalinflation on electric plant C -(205,738) ;

j Effect of general inflation in excess of increase in ;

spccific prices of electric plant after reduction to. net recoverable cost. (20,577) ; . Gain from decline in purchasing power of - net amounts owed 60,919 60,919 p: Net change in purchasing power'-- 34,951 40,342 ! (a) Includes depreciation amounts of $88,424,000 for historical cost, $177,271,000 for constant dollar, and $182,662,000 f (b) At December 31,1982 electric plant, net of accumulated depreciation, was $5,705,230,000 for current cost and $3,205,990,000 for - L-historical cost.-- ' ~ ~ Thousands of Average 1982 D' llars - o 1982 1981 1980-1979 1978 ~

i. Constant Dollar Information ~

$1,416,508 . $1,256,225 $1,162,204 $1,076,634 $1,099,746' Operating Revenues l ~ . Net income. $ 142,085 > $' 113,962 $ 116,365 $ 109,125 ' Net assets at year end at net recoverable cost = $1,511,105 $1,394,048 $1,349,436 $1,336,029 Current Cost Information S. 136,694 $ 104,996 $ 103,534 90,283 ' Net income ' Effect of general inflation in excess of .--increase in specific prices of electric plant l

.

after reduction to net recoverable' cost

$ - (20,577) $ (163,577). $ (251,077); $ (275,302)_ ' Net assets at year end at net recoverable cost - ' $1,511,105 $1,394,048 $1,349,436 $1,336,029 L Generd Information - . Gain from' decline in purchasing power.of . net amounts owed i ~ 60,919 $ 136,106 $ 182,389 $ 189,429 Consumer Price Index-average : 289.1 272.4 246.8 217.4 -195.4 L31i m + is-

l& W l + .w d I i ^^ / W \\\\ V t. /f ' l y i Thomas E. Blakey Joe M. Nelson Leon Loveless Gerson Berman Vice l' resident-Operations Vice President-Customer and Vice President-h>wer 17ce President-Engineering hohlic Service =m W. II. Goodenough Louis W. Howard E. Coy Stanphill Gary L. Price Vice President-Finance Vice President-Rates.Regidation Vice President-Administration Treasurer and Assistant and \\\\1wlesale Power Secretary 32

Directors Officers ' K. A. Anderson Palestine, Texas R. K. Campbell President and Chief Executive Owner. The "K" Way Equipment Company Gerson Berman Vice President E. L. Ashcroft, Jr. Sulphur Springs, Texas Thomas E. Blakey Vice President Daner, Ashcroft Motor. investment Company W.1L Goodenough Vice President T. L. Austin, Jr. Dallas, Texas Louis W. Howard Vice President Chairman of the Board and Chief Executive. Leon Loveless Vice President J e N1. Nelson Vice President Th ma .3i Nacogdoches, Texas Chairman of the Hoard. E. C. Stanphill Vice President Commercial National Bank Charles V. h1cCarter secretary and Assistant Treasurer Thomas E. Blakey Dallas, Texas Gary L. Price Treasurer and Assistant Secretary vice IWsident of the Company W. h1. hicDonough, Jr. Assistant Treasurer Frank A. Blankenbeckler, Jr. Waxahachie, Texas Chairman of the Board, Exectative Committee Ellis County savings Association K. A. Anderson R. K. Campbell Dallas, Texas R. K. Campbell IWsident and Chief Executive of the Company T. L. Austm. Jr. Ben H. Carpenter Ben H. Carpenter Dallas, Texas Thomas E. Blakey Charles E Hawn President and Chief Executive Officer. Southland Financial Corporation This report and the financial statements contained herein h1arvin Gibbs Paris, Texas are submitted for the general information of the stock-IWsident, Fry & Gibbs Funeral flome holders of Texas Power & Light Company. They are not Charles E Ilawn Athens, Texas presented in connection with any sale or offer to sell, or President. Hawn Lumber Company. Inc. any solicitation to buy, any securities. ' Thomas G. Purker Taylor, Texas Chairman of the Board. Transfer Agent (for Preferred Stocks) First Taylor National Bank hiercantile National Bank at Dallas R. L. Poland Lufkm., Texas Dallas, Texas President and Chief Executive Officer. LufAin Industries. Inc-Registrar (for Preferred Stocks) James A. Ratteree Dallas, Texas RepublicBank Dallas, N. A. Investment' Dallas, Texas R. E. Roberts Cleburne, Texas Chairman of the noard and Chief Executive Officer. Trustce {for h1ortgage Bonds) Rangaire Corporation B. Lynn Sanders, Jr. Corsicana, Texas RepublicBank Dallas, N. A. President, Corsicana Grain and Elevator Company. Inc. Dallas, Texas C. Truett Smith Wylie, Texas Trustee (for Debentures) Chairman of the Board. First statr Bank InterFirst Bank Dallas, N.A. John A. Warner Ts.ler, Texas IWsident and Chief Executive Officer, Dallas, Texas Trustee r mploy es' Ret rement Plan) J et rt Brownwood, Texas President and Manager, U &atherby Motor Company. Inc. Dallas, Texas General Offices 1511 Bryan Street Dallas, Texas 75201 (214) 748-5411 33}}