ML20072K282
| ML20072K282 | |
| Person / Time | |
|---|---|
| Site: | Grand Gulf  |
| Issue date: | 06/30/1983 |
| From: | MISSISSIPPI POWER & LIGHT CO. |
| To: | |
| Shared Package | |
| ML20072K276 | List: |
| References | |
| NUDOCS 8307060113 | |
| Download: ML20072K282 (27) | |
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ff E EN N v v
. is more thanjust a slogan to employees of Mississippi Power & Light Company
%e feel this is our responsibility . . to be "always there
- even i:. the worst weather i situations, and to supply electric er frgy when and where it is needed to nearly 313.000 customers in our 6.600-square-mile service area.
Over our 59-year span, our electrioty powered the development of Western i l Mississippa industrial might. Today that industnal base, together with growing I service and commeraal business segments, promises economic vitality for our area for many years to cor. e. Similarly, our residential customers have depended on us to light, heat and cool their homes . . to cook their food. , to wash and dry their clothes
. to provide reliable electnoty for a better living standard.
Because we are investor-owned, we are obligated toyou, our stockholders and
; bondholders, whose investment makes our mission possible. You are entitled to a fair J
return on your investments. Mt stove to meet that obligation. It is our belief thatyou 1 are one of the keys to being "always there." CONTENTS 1 The MP&L Dollar 2 President's Letter 4 Year in Review 9 Energy Experts 11 Report to Management 11 Auditors' Opinion 12 Balance Sheets 14 Statements of Income 14 Statements of Retained Earnings 15 Changes in Financial Position 16 Notes to Financial Statements 23 Record of Progress 20 Firunaal Condition and Results of Operations BC Board of Directors and Officers i THE MP&L DOLLAR / ]' WHERE IT COMES FROM A TEN-YEAR COMPARISON l i 1982 1972 , ril sfDE NrtM N - _.-- 33! RE SIDE NTLM I cOYMFRCIAL /44 223 CoMMERCt% ( (NDu57Rtv lis -- 204 iNDusTRtAt
- 3" gov & MUN GOV & MtJN 44 -
( oIHER Uilllfif s 164 211 OTHER UTIUTIEs j & Misc & MISC THE MP&L DOLLAR / WHERE IT GOES 1982 1972 FUE L & PP 6St - 18: FUEL & PP 184 TVEs
- 104 PAYROt t ryg 5 g4 _ - loc DEPVECLATION PAiROLL M - M MANTENANCE Df FTf CLAf roN y - 124 oTHER l NtaNTENANcE u 44 - - 97 DMDENDs j OTHER M- -
--- 74 RE NVEsTED EANN:NGs
, DMLANDS 74 1
PRESIDENTS LETTER
'- Dear Stockholders-
- Because of slower economic growth, higher interest rates and nsing costs of operation, the Company's earnings declined from the leve! of ;
i . the preceding year Yet there were some favorable developments during
- p. .;, .g 1982.
Some of these developments which warrant optimism as we look 4..w , y , , ' g. 4 ' A ahead are as follows
- There are ind; cations that the oppressive inflationary spiral of the
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,4l; [* I]p * .r . ,. f" hg last severalyears is moderating Oil pnces have temporanly stabilized.
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- Progress was made toward getting a portion of the needed rate
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- We were able to temporanly decrease our total operating costs.
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- Grand Gulf Nuclear Stabon received its low power operating i ,w .y - ci. 4 ,J . s [ license from the Nuclear Regulatory Commission loaded fuel, and achieved its first sustained cntical nuclear reaction. It is antrapated to f* .
.Y i, p.;; : j z -f'5 z. .] .. begin commeraal operation late in 1983.
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- Independence Steam Electnc Station. a coal plant in Arkansas.
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; was neanng completion in December MP&L has a 25 percent interest
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* - in this plant The first unit began commercial operation in January.1983.
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- A comprehensrve thirteen-part program called CONCERN was k,,;5 . -J.f(n 9* . - ' ?'(
1 launched it includes a broad customer assistance package ranging
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from providing finanaal assistance for the purchase of weathenzation
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.. t ;,.. , matenals to making arrangements for a speaal payment schedule for
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F. s m af.'l ,^ S i Some of these significant events warrant further discussion.
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,r . .. - I mentioned that the Company made progress in the area of rate relief
, [J ';- in 1982. In January 1983. the Mississippi Public Service Ccmmission
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3 }( " 4 , ,kj%*. d 'b . [=' - l 79., We feel wejustified the full amount of what we requested. but
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have chosen to accept the Commission order. Several factors led to MP& L's deosion to accept the order:
- Realization cf the costly and time consuming process of court appeals;
- Recognition of economic times which have placed many MP&L customers into finanaal hardships that higher rates at this time may prolong.
- Cooperation with Mississippi Governor William Winter and the Legislature's efforts to bnng reason into the emotionalissue of utility rates and reform.
Our ability to meet our obligations to customers and shareholders depends largely on regulatory treatment that recognizes the speaal difficulties an inflationary economy imposes upon utility operations. While it is understandably difficult for regulators today to withstand the pressures which seek to keep utility rates low at any cost, the cost of succumbing to those pressures is exceedingly high - lower investment ratings. and greater finanong costs and the curtailment of construction and operating prcxyams all of which lead ultimately to infenor service and higher rates for consumers. In October. due to potential financial problems and uncertainties in , the regulatory and legislative areas. Moody's investors Service lowered , its ratings on the secunties of the Company First mortgage bonds were down rated from A-3 to Baa-2. preferred stock from Baa-2 to Baa-3; and 4* unsecured Pollution Control Bonds from Baa-1 to Baa-3. The change in ratings will increase future finanang costs of the Company and make finanang more difhcuit under tight money market conditions. 2
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h wr wnxUb y S b e.Me ~ The reduction in oil pnces has encouraged some to reflect on the possibility that the oi lsupply cnsis has passed or at least become j permanently tolerable. Me do not feel this is the case. The stability or J instability of the world's oil supply is a function of international affairs
> over which our nation has very little control. The choice to use oil as a diplomatic weapon is an always present possibility The uncertainty of oil's long-range supply and the volatility nf its price remain our customers' single biggest burden. %t have continued, therefore, to proceed in our plan of fuel diversification. The acquisition of a part of the Independence Plant and our contract to purchase power from the Grand Gulf Nuclear Station will begin to implement our plan to replace oil and natural gas with the use of coal and nuclear energy Once we get more base load capaaty that uses coal and uran:Um.
the results will be dramatic. %e will have approached a plateau of more stable and predictable fuel pnces and as a result, a leveling out of electoc rates. Electnc rates should then nse only as the consumer price index does, or to put it another way, they should track inflation. While we are in a transitional penod dunng the next severalyears, there will be continuing nsks ahead in the area of public perception. One thing is for sure - our customers will be using more, not less. 6ect "ity in the years ahead. And even though electnoty may be costly, as will be all forms of energy it will be much more expensive not to have electncty to run the tools and machines of business, farms and industry which Mississippi people must use if they are to havejobs in the future. Providing electric service is our paramount duty %t must carry out this duty within the increasingly complex arena of federal and state regulation, high interest rates, involved financial procedures, growth projections, and tough energy decisions. Shifting from oil and gas to coal and nuclear is not easy it is not cheap but it will provide long range savings for our customers. Me have the knowhow %t have the raw materials we need here within the United 5tates What we need from you, our stockholders, is your active support. This will enable our team of over 2200 employees to continue to prowie you with a reasonable return on your investments and our customers with reliable electnc service at the lowest costs. You see, we feel these are two of the responsibilities of being "Always There". Sincerely 1 Donald C Lutken s 3 l
YEAR IN REVIEW ENERGY SALES Total energy sales for the year amounted to 9.84 billion kilowatt hours, a decrease of 460 million kilowatt hours or a 4.5 percent decrea;e when compared to 1981. Almost half of the decrease was due to the scheduled transfer of contracts for delivenes to electnc power assoaations which are being served by their associated organization. w South Mississippi Electnc Power Assocation (SMEPA). The remainder of L the decrease was split between sales to ultimate customers (those
- -3 served directly by MP& L) and wholesale sales to other utilities.
Soies to ulw note cus.un.ers arnounted to 7.3 billion kilowatt-hours, a decrease of 2.0 percent below the previous year due pnmanly to a drop in industnal sales resulting from a combination of a general slowdown in the economy moderate temperatures and conservation. This year the average residential customer used 11.037 kilowatt-hours. a slight decrease of only 41 kilowatt-hours, as compared to 11.078 for the year before. One encouraging indicator was in the commeraal area where customer usage was up by 2.6 percent. The re-cession impacted industnal customer usage more severely. causing it to go down 8 4 percent. The Company's total customer base rose in 1982, bnnging the number of customers served in December to 312.717, an increase of 1.729 over the previous year Customers by classification were. residential. 268.556; commeraal. 38.651. industnal. 3.194; government and muntapal. 2.309. muniapalities. 5. and other public utilities. 2. The year's peak was 1.765.000 kilowatts and was reached in August. In 1981, the peak was 1.912.000. and in 1980 the peak was 2.078.000. It was higher these two years because of weather conditions and because the e , Company served 12 cooperatives and mun:apalities whose loads are s' now being served by SMEPA. MP& L now serves five munrapalities - Leland. Itta Bena. Kosausko. Durant and Canton - and has dropped all of the cooperative load. OPERATING REVENUES
- Ia6 .a . a Lagging kilowatt-hout sales to industnal customers was a contnbuting operts point out that nuclear factor for operating revenues being down. 5526.483.000 as compared plant operators are a vital part with 5531.843.000 in 1981-of the overailplant safety systems. such as these operators A distnbution of the Company's 1982 revenue dollars was as at Grand Gulf Nuclear station. follows' These two electncians at the Amount % of Delta steam Eiectnc station in in Thousands Revenue Oeve and are frequently able to repair an eqmpment -
malfunction as soon as a Purchased Power 93.621 17.78 P' DI'* d"5'5 Total fuel and Purchased Power 340.737 64 72 Tases 41.805 7.94 Pavtoil 32.591 6.19 Deprecatron 24.255 4 61 0:ner income. Expenses and Deductions 27.202 5 I7 Cost of Capital Cost of Debt 24.773 4.70 Net income 35 120 6 67* j Total Revenue s526.483 100 00
- I 35 & paid as prefmed dvdends. s 32 h paid as common dividends EXPENSES MP& L actions are controlled by the knowledge that there are two ways to improve profitabMy by taking in more money and/or by spending 4
l less. MPSL has ernphasized belt tightening measures designed to eliminate or defer all expenses except those which could have long-term impact on reliabihty and availabikty of service. Operating expenses were less than last year due ponapally to defernng certain maintenance expenditures. Expenses were 5480.603.000 as compared with 5483.479.000 in 1981, showing a decrease of $2.876.000. . Dunng the year. the Company improved cash flow and reduced
- expenses by delaying power plant maintenance, postponing , ,-
construc tion and reduang tree tamming and nghts-of-way clearing 4 Ti.e wurn tone was reduced oy a freeze on hinng. and most overtime was suspended While these measures temporanly improved operating expenses they are expected to adversely impact service reliability if continuation is necessary MP&L has deferred expenses riot only in the maintenance and manpower areas The Company has a long-standing policy to operate more effiaently Other areas include developing a scentific approach to improve power plant availability and effiaency expanding use of cornputer forecasts to make long range plans, instituting new and more - or effiaent bid procedures, and following recommendations by ; consultants to streamline management and operating divisions. FINANCING g MP&L secured approximately $10 milhon through the pnvate placement > D of 100.000 shares of its 5100 par value preferred stock in March, at a $q dividend rate of 14 /5 percei er. In May MP&L raised approximately 530 milhon by the safe, at pa *~ competitive biddrag. of a hke pnnapal amount of its First Mortgage Sond.14 I/8 percent senes. due June 1.1990. ' The preferred stock and the bond sales were necessary in order - . f to help finance the Company's continuing construction program x and for other corporate purposes it is necessary for an electnc utshty to [ . p budd faahties on a coritinuing basis to meet electnc service r eeds . I' % of custornen MPKL partiopated in the sale of $30 milhon in pollution control N, . I' I, I , ohhgations issued by Independence County Arkansas to finance fachties at the Independence Steam Electnc Station This safe was g [' inade in tw o parts the first 515 mdhon in July at interest rates ranging ' - from I i to Il-l/2 percent dunng the first three to five years aft er issuance, and the second. SIS mdhon in December at interest rates " rarvpng ftom 9-3/4 to 10 percent dunng the first three and a half to four Average Residential [0['[P'nm" w$h fitting and welding. such as this ( and a half ycars after issuance Power Consumption mechanic at Gerald Andrus l KWH/MONm 1945-1981 Steam Electnc Station in RATE INCREASE icon G"V'"' MP&L filed a 594 mdhon rate increase with the Mississippi Pubkc g Ron Wilisams supervises the Service Commission (MPSC) in July to cover the increased cost of faahties to cut use of oil and gas as boiler fuels, finance construction '
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9[. "un eno1 P' u tne nuclear plant staff p projects and recover inacases in costs due to inflation. ; ; This fihng proposed to provide 594 milhon additional revenue over 600 the revenue level allowed by the MPSC in MP&L's 1980 rate case, The g -{ anard of the MPSC in the 1980 fihng was approumately $20 mdkon less - - 4gg than the amount requested by the Company The commission deasion , in that matter was affirmed. after appeal to the Chancery Court, and at N- ) _ L
, year erx1 was on appeal to the State Supreme Court. 200
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( 0 The increase proposed in 1982 was $74 mdhon above the 1980 gQ [ fded rates ahich customers were currently paying sut1 ject to refund by the Company The Company elected not to place the rew rate increase 4s N) ss 60 os 70 75 80 87 into effect under bond before tne MPSC rendered its deosion. t 5
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also made available to university staff members doing research on ~
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energy conservation to help them make genenc recommendations to vanous types of customers. Energy Consulting for Local Governments is a second new program developed in 1982 to help oty and county governments face the problem of rapidly nsing expenses and limited funding With the help of the Mississippi Energy Extension Center and the Mississippi Department of Energy and Transportation MP&L is offenng a program to help local governments manage the total energy ,. operating cost of their larger bu Idings. yi f FNCM '
.: w CONCERN
, ^
y MP& L introduced a new concept in customer assistance called
" CONCERN *. The 13 programs included emphasize MP&L and the __-
community working together, extending he!p to the less fortunate. . Each of these energy related programs is designed to help MP&L customers. Some programs are designed to help all customers, while some are limited to those in extreme need like the elderly and very disadvantaged poor. Energy Concern is a program to help customers with senous finanaal needs deal with their electnc bills. The program is administered by The Salvation Army Funds are available to elderly or disabled
-i customers who find themselves in an energy-related cnsis. A 550.000 '"
donation initiated the Energy Concern fund. MP&L employees and L a customers have been making tax deductible contnbutions to the fund. Anv partiopating soaal service agency in \Wstern Mississippi can recommend a needy ir d.Mdual for assistance. , Helping Hands is a program that provides insulation and other _ weathenzation matenals. For this program, MP& L has agreed to donate 5100.000 seed money to be used by others to purchase insulation, caulking and other weathenzation matenals. Volunteers from $ y community organizations, trained by MP&L representatives, are I donating their time and effort to work on houses their groups se:ect. ,'my with MP&Cs partiapation kmited to not more than 5200 per house for the purchase of matenal W . (' t t The other eleven programs in CONCERN deal basically with -Q i \jb f I speaal payment arrangements and consulting services to make homes and buildings more energy ethcient. a k.NM Cynthia Kittrell, a chemist at MP&cs Average Average Cost Average Cost chemical and ermronmentallab, Residential Power Cost of Long Term Debt of Preferred Stock cents / W4 1940 1982 PE RCE NT PE RCENT "x $ ha#"d n m"a ave on tn environment 7 II ll Nita Thames, a senior secretary, is 10 10 I helping co rdinate a plant tour for a 3 group of high school students. s E l EE 8 a 8 I E a EE 7 _-mumEEE 7 E l m ll 6 s _EEEEEEEEE mEEEEEEEEBR 6 s sEREIEEEEE E II 4 IEEEEEEEEEE 4 EEEEEEEEEE T-
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E 5 5 5 5 5 5 5 E 5. s 2 2 IIIIIIIIBE ll i EEEEEEEEERI i EEEEEEEEEE 30 40 $0 60 70 80 62 72 73 74 75 76 77 78 79 80 81 82 72 73 74 75 76 77 78 79 80 81 82 I 7
N NO
, INDUSTRIAL DEVELOPMENT Since all expenses cannot be reduced without adversely impacting service, an important strategy of MP& L is to help improve its customers' ability to pay by attracting more and better payingjobs through an t aggressive economic development effort.
At MP&t's invitation, a number of companies visited the state
~
r dunng the year to become better acquainted with the industnal advantages offered in Western Mississippi. Although the state and natio . were expenenang a severe economic recession, a total of
$166.485.000 was invested for new and expanded industnes .n the MP& L service area, creating 3,386 newjobs.
COMMUNICATIONS The Company marntains an aggressive communications program consistent with its philosophy that a well informed public ss in the best interest of the Company To help develop a grass-roots understanding of the Company, its operations and corporate community. MP&l's communications N program encompasses governmental. internal and external audiences.
~
Dunng the year, two significant communications events took place
,. which included a senes of "Always There* Family Banquets, meetings
$ > for employees and their spouses where past, present, and future issues of MP&L were discussed; and the *MP&L Family Day." an event in May for employees, stockholders and fnends of the Company o hear
~^
__ y . political candidates' opinions on energy-related topics.
~
AZ, udMI;.- A well informed employee is more productive, and a major new step in the MP&L employee information effort dunng 1982 was the formation of the employee bnefing leader program. The key factor in this program is that the employees are bnefed and their questions answered by their peers on subjects that range from rate re!:ef information to new customer assistance programs. CONSTRUCTION Expenditures for construction dunng the year were $100,847,000, with
$71,123.000 of this amount for construction of tne Independence Steam
, j *t 3 Electnc Station.
k L -- Some of the major projects dunng the year included the workingin ail types of weatner completion of: the McAdams 500 KV/230 KV EHV Substation and the cond tions is part of the responsciety Power Plant Fuel Cost Attala 230 KV/IIS KV Substation with the connecting 230 KV Line to McAdams; conversion of the Tillatoba to Batesville 115 KV Line to 230 custome pNa deser t h$e tncir crettnc service aiways there - CENis / MittiON btu 19so-1982 KV; the Natchez to South Natchez 115 KV Line; the double arcuit i15 KV 300 l Line from the Attala Substation to the Kosausko-Carthage 115 KV Line; Operators at Grand Gulf Nuclear station are trained on a umulator. a the Franklin to South Brookhaven 115 KV Line; the Pickens 230 KV/II5 wphistwated training tool that is an Ky $ybstation; the Ruleville 115 KV Substation and the rebuilding of the cuc t replica of the controi room that is Durant i15 KV Substation-the brain' of a nuclear plant.
;gg
%brk on the McAdams to Pickens 230 KV Line is 20 percent complete and is scheduled to be completed in 1983. A site for the Rankin County 230 KV Substation was purchased and right-of-way on 60 percent of the Franklin to Boga! usa. Louisiana 500 KV Line has been secured. ,
gg The first unit of the Independence SES in Arkansas was neanng completion with the unit going into commercial operation in mid-Janu ry.1983. The sec nd unit is still n schedule for commercial y E E E ! operation in 1985. 50 60 70 80 82 8
( - - . _ - GRAND GULF in June. MP& L and Middle South Energy. Inc. (MSE) received a low - T g power operating license fu Unit No. I of the Grand Gulf Nuclear [ UUTq [l *' Station (GGNS) from the Nuclear Regulatory Commission. This license permitted fuel loading at the nuclear plant and operation of the plant at I -l Y.$, low power levels. not exceeding five percent. Also in June. MSE fded for approval with the Federal Energy h,,,# Regulatory Commission (FERC) a unit system power sa'es agreement " - with MP&L Louisiana Power & light Company and New Orleans PERL sTIEFEL BURTON LEVENsON Public Service Inc. covenng electnc power sales from the nuclear plant. Experts Analyze Grand Gulf Fuelloading was completed by the insertion of the last of the Four energy experts came to Mississippi dunng the year to meet w!!h the 800 bundles into the reactor on August 6. govemor. buuness readers. the news media and the regislature to explain On August 12. Middle South Utilities. Inc. and MPS L officals met vanous aspects of the Grand Gutt Nuclear Staten. at the invitanon of the with the Advisory Committee on reactor safety in Washington. D. C., to (cu pany discuss Grand Gulf management staffing. hydrogen control and other D' LP*'S M 5""' r vue president of the Natonal Economic Research
^" " "*"#' "'#"' # " " "**
issues The Committee stated theY would recommend to the Nuclear cost or the avadable a:ternanves. tnat being either a continued use of on Regulatory Commission that Grand Gulf receive a full power are gaso,acoalarternanye i operating license. 'it was our esnmate that both units of Grand Gulf would save On August 18. the Grand Gulf reactor achieved its first sustained consumers about a bdhon Jollars in companson with an od or gas critical nuclear reaction. anenanve it would save $s00 maison compared with a coal alternative. In October. M5E announced that the scheduled commeraal Gr nd GuWnit No I alone, d viewed in isolaton hmss wh(h are about equai to these alternatives, about the same as od and gas and operation date for Unit No. I of GGNS. which had been February 1983. about the same as a coal Bred alternative Dr Peri stated had been changed to the last quarter of 1983. The major reason cited Dr Pert bases his forecasts on the conservative esDmates that od prges for the changed date was a deosion to perform certain additional work a di nse about one percent above the general rate of inflation items on the unit prior to power generation in order to improve John stiefel. pren1ent of St efel Assocrates incorporated. descuned the availability and to reduce the time length 07 outages when the plant is shut down to load fuel dunng the first years of its operation-
'*"((""""' " g Grand Gulf was proper ibe' se that MP&L has been prudent as related MSE owns 90 percent of the Grand Gulf Nuclear Station, and to the major deasons and ontrois auooated witn Grand Guif. he said 10 percent is owned by South Mississippi Electnc Power Assoaation. Douglas Burton. vice pre dent of the Pace Company assessed how Currently the Muniapal Energy Agency of Mississippiis also MP&l's fuel diveruf(ation program and costs a illimpact new industnal considenng the purchase of an interest in the plant.
From the 90 percent ownership interest of MSE. electnc power d]P"l}" ,, , ny g
,ep,esent to percent of the cm. iong term electnc power avaabairy and generated by the first unit will be allocated to three operating re9atetery is a must This consideraton is no longer taken for granted on companies in the Middle South System, with Louisiana Power & Light the Gutf coast severar utilitres we already looking at reserve margins of taking 38 57 percent. MP& L taking 3163 percent and New Orleans leu than 5 p"ce"t in the late IWs Public Service takin9 29 80 percent. ~ ' """" '"5 #'* *('"' U "9 ""d '""*'""9' '"*Y d " '
accelerat:ng or recreasing out of proporDon to other competing utdities The projected cost of MSE s 90 percent portion of the Grand Gulf on the Gulf Coat - Nuclear Station is 52 55 billion for Unit No. I based on the present Maron Levenson, an esecunve engineer and assistant to the president schedule. of acchrei Pow er Corp . says despite seemingy high reserve capaaty Billings to the companies will be at cost, including a FERC "at o"* 'dt 'eahty shows that extra capaaty actually available in approved return on invested capital. The rates as approved will not be "*"9" " #"d' " ""* ' # d" 5 G""" **" ""d S h"""'"9 He said new electncas plants are needed on a national basis. reflected on customers' bills until Grand Gulf Unit No. I begins In Misusuppi. for many reasons if you are going to sustain economic commercal operation ymin. you want your electnorv system to be stable. You must have Atyear end Grand Gulf Unit No. I was essentially complete. A full enough excen capaaty you have to disprace on and gas as it becomes power operating license is expected to be granted in the second unavadable for emnomic reasons and to marntain secunty-quatter of 1983 with commeraal operation in the last quarter of the * *"5 "# year A limited amount of work continues on Unit No. 2 to protect the large investment already made in the unit. Full construction has been cuttailed since late 1979 because of a cash flow restaction until Umt No 1 is operational. Unit No 2 at year-end was approximately 30 percent complete. 9 1
r Ek MC
' ~
INDEPENDENCE N' ,- Construction was 98 percent complete at year end on the first unit of { ' independence Steam Electnc Station. a coal burning generating station i , ,
- ~1 in Newark. Arkansas of which MP&L owns a 25 percent interest.
f ! independence Unit I underwent tests in the latter part of the year in l 3 preparation for commeraal operation in January 1983. It passed its y
, ; j
'~ ~
maximum dependable capability tests at a rating of 836 megawatts
.v q.. Q j f Construct:on advanced on independence Unit 11 from being *p(Ny3 M!
Ag
" bkM N& h i l T 21 percent temp!cte at the beginning of the year to be!ng 35 percent 7
compfete at year end Unit ilis estimated to produce 815 megawatts (net). It is scheduled for completion in 1985. Independence will be the first coal-fired generating unit in the
.#- MP&L system and will become part of the base for all electnoty c reaching MP& L customers. It will use low-sulfur coal and will be 1- capable of burning i10 train car loads of coal per day MP&L owns 25 percent of both units of the plant. Arkansas Power
; & Light Co , a sister company that owns 315 percent of the plant. will operate the faality The remainder of the plant is owned by an electnc cooperative and several muniopalities located within Arkansas.
In testimony in Octcber on the $94 million rate hike proposal. MP&L officals testified that the Independence faality will result in projected savings for utility customers in the range of $320 million through 1990. The3e savings are estimated to begin when the plant is in its third year of operation MANAGEMENTCHANGES Sewral management changes occurred dunng the year in January 1983, a major reorganization was announced These key management changes include the following
) Stewart Frame. vice president of the personnel and administrative services department, became vice president of t personnel and administratiort Now reporting directly to Frame is George M Ledfow director of a new department, administrative services which will include management systems. purchasing. Contract 4 administration. and internal auditing Internal Auditing reports to independenc e Unit No. I began comrnercial operation in January,1983 lediow for administratrve purposes and deectly to MP&L President Dona!d Lutken and the board of directors for audit report purposes r Ocry19 rta tNIa r neb Gra utf Nucirar station in July when the first fuel bund!c was iowered into Unit No. I Alex McKeigney Vice president of informational services, retired in December. The department was placed under the direction of Donald E. Meiners, vice president. customer services.
MP&L Generation MP&L Projected Generation et ec t NT rut t souRct Now reporting drrectly to Meiners is James L Moore. director of n n i Nr r ut t souuct El m E mi E3as Bolt EcoAt ENuctt An informational services department. Clark Colvin, director of the area
'~~
w => Q~~~R development and consumer relations department, and Johnny Ervin, director of the marketing department.
- . - - The departments of public affairs and environmental matters N N and area a' fairs will be combined into one department when W Donald Colmer. vice president. reaches normal retirement age in -- : I-P- - - -
Apnl.1983 John D. Holland. vice president will then have responsibility for the combined departments meanwhile Colmer and Holfand will l) , ;
--.-i.-d .-<) .-
l- l Work together toward an early combination of the two departments. Dr. Alex McKeigney Jr., director of strategic planning at Middle g l I ( ; South Services. New Or!eans, was transferred to MP&L as director of j __j_ _.h~_[i . h j 5 jg jo j 4 ;" , strategic planning l ,
, Ted Cloninger became Grand Gulf Nuclear Station Unit No 2 project manager a n 241s 76 n 7819 m si 81 m 9 ss 86 81 M 89 90 9191 10 ;
MISSISSlPPI POWER G UGHT COMPANY 1982 FINANCIAL REVIEW / REPORT OF MANAGEMENT The management of the company has prepared and is The board of directc,rs pursues its responsibility for responsible for the financial statements and related reported financial information through its audit committee, financal information included in this annual report. The composed of outside directors. The audit committee meets finanaal statements are based on generally accepted penodically with management, the internal auditors, and accounting pnnoples. consistently applied. Financial the independent public accountants to discuss auditing. information incluoed elsewhere in this report is consistent internal control, and financial reporting matters. The with the financial statements. Independent public accountants and the internal auditors To meet its responsibilities with respect to financial have free access to the audit committee at any time. j information. management maintains and enforces a system fhe independent public accountants provide an of internal accounting controls which is designed to objective assessment of the degree to which management i provide reasonable assurance. on a cost effective basis, as meets its responsibility for fairness of finanaal reporting to the integnty objectrvity and reliability of the financial They regularly evaluate the system of internal accounting records and as to the protection of assets. This system control and perform such tests and other procedures they includes communication through written polices and deem necessary to reach and express an opinion on the procedures, and an organizational structure that provides fairness of the financial statements for appropnate division of responsibility and the training of Management believes that these pclicies and proce-personnel. This systern is also tested by a comprehensive dures provide reasonable assurance that our operations
; iriternal audit program. are carned out with a high standard of business conduct.
AUDITORS' OPINION Mississippi Power & Light Company:
%t= have examined the balance sheets of Messissippi Power in our opinion, subject to the effects, if any on the
& Light Company as of December 31.1982 and 1981 and finanaal statements of the ultimate resolution of the matter the related statements of income, retained earnings, and discussed in the preceding paragraph, the above-changes in finanaal position foi each of the three year > in mentioned finanaal statements present fairly the financial the penod ended December 31.1982. Our examinations position of the Company at December 31.1982 and 1981 were made in accordanc- with generally accepted auditing and the results of its operations and the changes in its standards and, accordinefj included such tests of the financial position for each of the threeyears in the period accounting records and such other auditing procedures as ended December 31.1982, in conformity with generally we considered necessary in the arcumstances. accepted accounting pnnoples applied on a consistent As discussed in the first paragraph of Note 2 to the basis.
finanaal statements. the Mississippi 5upreme Court affirmed in part and rwersed in part the opinion of the Chancery Court on the 1980 rate incease and remanded
].E'8" d the case to the Mississippi Public Service Commission. The ultimate impact of this deosion cannot presently be February 11.1983 determined and no provtsson for any additional liability that (March 9.1983 as to the first may result has been made in the finanaal statements. In paragraph of Note 2 to the our report dated February 12.1982. our opinion on the 1981 finanaal statements) and 1980 finanaal statements was unqualified. however, in New Orleans. Louisiana vev of the matter referred to above, our present opinion on the 1981 and 1980 financal statements as expressed therein, is different from that expressed in our previous report.
l 11
MISSISSIPPI POWER O LIGHT COMPANY BALANCE SHEETS DECEMBER 31,1982 and 1981 l ( ASSETS 1982 1931 in Thousands UTIUTY Pl. ANT: Electuc plant .5 828,570 $ 784.663 Construction work in progress (Note 6) 174,744 135.605 Electnc plant acquisition adjustments 1,861 2.043 Total .1,005,175 922,311 Less accumulated depreciation 282,315 260.343 Utility plant-net 722,860 661.968 OTHER PROPERTY AND INVESTMENTS: Investment in associated company at equity (Note 6) 20,533 18.884 Other 818 844 < Total 21,351 19.728 CURRENT ASSETS: j Cash (Note 7) 3,774 28 Special deposits . 81 855 Accounts receivable: Customer and other-less allowance for doubtful accounts of $154.000 25,131 25.836 Associated companies . 164 100 Matenals and supplies-at average cost: Fuel 3,277 4.907 Other 8,496 10.068 Other . 7,079 3.521 Total 48,002 45.315 DEFERRED DE8ITS: Unamortized debt expense . 1,483 983 Other . . 592 483 Total . 2,075 1.466 TOTAL .
.5 794,288 $ 728.477 i see Notes to Frianaal statements.
l i l 5 t 12
=
LIA81UTIES 1982 1981 in Thousands CAPITAUZATION: Common stock no par value (stated value 93 per share) authorized 15.000.000 shares; outstanding 4,540.000 shares . .5 104,420 5 104.420 Retained earnings (Note 8) 80,783 81,596 The common shareholder's equity . 185,203 186.016 Preferred stock, without sinking fund (Note 4) 38,077 38.077 Preferred stock. with sinking fund (Note 4) 30,000 20,000 Long-term debt gNote 5) 288,835 284.349 Total 542,115 i 528.442 CURRENT LIA81UTIES: Currently maturing long-term debt 12,454 427 L Notes payable (Note 7) - 3,000 Accounts payable: Associated companies 8,565 15.815 Customers (Note 2) 49,067 29,513 Other 16,378 13.248 Customer deposits 11,549 10,551 Taxes accrued 30,235 23,020 Intemst act rued 12,904 10.205 DMdends declared 7,703 6.587 Other 9,289 2.128 Total 158,144 114.494 DEFERRED CREDITS: Accumulated deferred income taxes (Note 3) 38,575 42.446 Accumulated deferred investment tax credits (Note 3) 40,108 28.916 Other 6,759 7.068 Total 85,442 78.430 RESERVES 8,587 7. I i 1 COMMITMENTS AND CONTINGENCIES (Notes 2 and 6) TOTAL .5 794,288 5 728.477 i j l l 13
MISSISSIPPI POWER G l.lGHT COMPANY STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31,1982,1981 and 1980 i 1982 1981 1980 l i In Thousands
$ 526,483 5 531.843 5 532.988 OPERATING REVENUES (Note 2)
OPERATING EXPENSES: Operation: Fuel 247,116 238.836 267.685 Power purchased 93,621 105.183 85.782 52,855 49.617 43,207 Other 20,951 24.248 26.021 Maintenance Depreciation 24,255 23.359 22.672 Taxes other than income taxes 20,768 20.053 18.012 21,037 22.183 18.606 i Income taxes (Note 3) Total 480,603 483.479 481.985 OPERATING INCOME 45,880 48.364 51.003 , OTHER INCOME AND DEDUCTIONS: 8,609 2.429 923 Allowance for equity funds used dunng construction Miscellaneous-net 2,842 7.316 3.600 2,562 (775) (1.431) Income taxes (Note 3) Total 14,013 8.970 3.092 INTEREST CHARGES: Interest on long-term debt 24,959 20.650 19.454 Other interest-net 5,573 2.821 1.131 Allowance for borrowed funds used during construction 15,759) (2.168) (444) Total 24,773 21.303 20.141
$ 35,120 5 36.031 5 33,954 NET INCOME (Note 2)
STATEMENTS OF RETAINED EARNINGS FOR THE YEARS ENDED DECEMBER 31,1982,1981 and 1980 RETAINED EARNINGS, JANUARY I $ 81,596 5 74.979 5 65.383 ADD--Net income 35,120_ 36.031 33.954 Total 116,716 111.010 99.337 DEDUCE Dividends-cash: Preferred stock 7,099 3.640 2.384 28,834 25.774 21,974 Common stock Total 35,933 29.414 24.358 RETAINED EARNINGS, DECEM8ER 31 (Note 8) $ 80,783 S 81.596 5 74.979 See Notes to Finar.cial Statements. I4
MISSISSIPPI POWER G LIGHT COMPANY ) STATEMENTS OF CHANGES IN FINANCIAL POSITION FOR THE YEARS ENDED DECEMBER 31,1982,1981 and 1980 l 1982 1981 1980 l In Thousands f FUNDS PROVIDED BY: f Operations: [ Net incorne $ 35,120 5 36.031 5 33.954 ) Depreciation 24,255 23.359 22.672 Deferred income taxes and investment tax credit adjustments---net 8,127 1.875 957 Allowance for funds used during construction 114,368) (4.597) (1.367) Total funds provided from operations 53,134 56.668 56.216 Other: Allowance for funds used during construction 14,368 4.597 1.367 Decrease in working capital
- 31,936 28.206 32.783
( lovestment in associated company - - 340 Miscellaneous--net - 9.630 4.601 Total funds provided from operations and other 99,438 99.101 95.307 Financing transactions: Preferred stock 10,000 20.000 - First mortgage bonds 30,000 - - Other long-term debt 17,212 23.052 - Book value of utility plant sold 14,705 - - Short-term securities-net - 36.000 - l Total funds provided from financing 71,917 79.052 - ) Total funds provided . $ 171,355 5 178,153 $ 95307 FUNDS APPLIED TO: l Utility plant additions: Construction expenditures (includes allowance for funds used during construction) $ 100,847 5 146.095 5 31.020 Other: Dividends declared on common stock 28,834 25.774 21.974 Dividends declared on preferred stock . 7,099 3.640 2,384 investment in associated company 1,649 2.240 - Miscellaneous-net 446 - - Total funds applied to other 38,028 31.654 24.358 Financing transactions: Retirement of first mortgage bonds - - 7,500 Retirement of other long-term debt 29,480 404 429 Short-term securities--net 3,000 - 32.000 Total funds applied to financing . 32,480 404 39.929 Total funds applied . $ 171,355 5 178.153 5 95.307
*Rtyking capital excludes shott-term secunties and current matunties of lontyterm debt. the 1982 net decrease is due pnmanly to arxreases in accounts payable, taxes accrued. and other current liabilities. the 1981 net decrease is due pnmanly to increases in accounts payable and dxteases in accounts receivable the 1980 net decrease is due pnmanly to increases in accounts payable and taxes accrued See Notes to financial Statements.
15
1 NOTES TO FINANCIAL STATEMENTS in ene same manne as construct on iabor and matenal costs As non-can items twe credits to the income statement have no
- 1. Summaryof Significant Accounting Policies enect on currert cxn camings After the property is placed in 5" "# " ' "
A. SYSTEM OF ACCOUNTS from customers th'cv;h deprecation provisions included in rates = The arx ounts of the Company are maintaned :n 4 cordant e I cham >ed for utmtj sm f e The ef'ective composite AFDC rates with the system c,f au ounts pres (nbed by the Feral Energy wer,8 /0 % 8 30K and 7 30% for 1982.1991. and 1980. Pego!#or / Commnsion respectrvely B. REVENUES The Company cont;nues to capitahze allowanc e for funds The Company records revenues as talled to its customers on a used dunng c onuruction ori prorcts dunng periods of cy(le b@ng baus h> venue is not accrued for energy dehvemd interrupted construct.on when such interruption is temporary i but not twed at it.e end of the fiscal penod The rates of tt'e and the continuson can bejustified as being reasonable unde-Company tralude fuel adju'.tment (lauses under whKh fuel the orcumstances c osts above or br low the tme levels allowed in the vanous f ate H. RESERVES sc heduies are permitted to be billed or required to be crn! ed to it is the pohcy of the Company to provide reserves for c mtony.rs uninsured propertj nsks and for claims for injuries and damages C. UTILITY PLANT AND DEPRECIATION through charges to operating expense on an accrual basis Utary plant is stated at onginal cost The costs of add:tions to Accruais for these reserves have been allowed for rate-making uhic plant include ( ontrac ted work, direr t labor and matenals. ourpo',es ( anocaNe overhe.nis and an allowance for the compo9te (Ost of fore owd dunny construction. The tosts of units of property 2. Rate Matters retired are removed from utihty plant. and such costs plus On May 28.19PO. me Company filed with the Mississippi s removal c osti leu salvage, are charged to accumulated PuMc Seme Comm%on NP5Q for an annualincrease in its depreoation Maintenance and repairs of property and retail electnc rates or approximately 568.800.000 The new rates replac ement and renewal of items determined to be less than were put into effect for service on or after Juty 1.1980. subject to units of property are c harged to operating expenses refund On November 24.1980. the MPSC rendered its decision Substantially all of the utikty plant is subject to the hen of the allowing the Company 548.300.000 in additional annual Company's f rst mortcpge bond indenture revenues. The Company. the Mississippi Attorney Generafs Depreciation is cornputed on the straight hne basis at rates Offg e and the Misussippi Legal Services Coalition appealed the bmed on the estimated servme kves of the various classes of MPSCi order to the Chancery Court of Hinds County Mississippi. property Depreciation provided in 1982.1981. and 1980 On October 30.1981 the Chancery Court entered a Final Decree amounted to approximately 3 2% on average depreciable affirming the November 24.1980 decision of the MPSC. The property Company the Missisyppi Legal Services Coaktion, the Mississippi D. JOINTLY OWNED GENERATING STATION Attor ney Genera! and the City of Jac kson appea'ed the decision of T he Companyjuntfy owns a generating station whKh is the Chancery Cour t to the Mississippi 5upreme Court. On February currently under construction The Company records investments li 198i the rates put -ito effect. subject to refund. by MP&L on in this station only to the extent of its ownershrp percentage. July i.1980. wcre superseded by new electnc retail rates, whKh were approved by the Mr$C on January 21.1983. From July I. E. PENSION PLAN 1980 until February 15.19ti3. MP&L conected the full amount of the The Company has a pension plan covenng substantially all of rate increase whah it put into effect on July 1.1980. but included its empInyecs The pohcy of the Company is to fund pension only that portion approved by the MPSC and by the Chance /yly n . costs as accrued Cour t in its ear nings. On March 9.1983, the Mississippi Supreme Court afhrmed in part and reversed in part the opinion of the F. INCOME TAXE5 Chancery Court and remanded the case to the MPSC for The Company pns its parent in fihng a corisohdated Federal in(ome ran retuh income taxes are allocated to the Company in appropnate proceedtngs not inconsistent with the Court s opinion. for the year ended December 31.1982, the rates which were put proportion to its cMitnbution to the conschdated tax liabikty Deferred income taxes are provided for differences between into eff ect. subject to refund. on July 1.1980. produced additional book and taxable income to the extent permitted by the revenues of 566.100.000 Of this total. 546.600.000 theamount Mich would have been biHed under the rates approved by the regulatory txkhes for rate-making purposes. Investment tax credits allocated to the Company are deferred and amortiled MPSC. was recceded as revenue and the remainder was recorded as a habihty At the end of 1982. the Company had a liabihty of fused upon the average useful hfe of the related property 549.000.000 recorded for possible refunds. beginning with the year allowed in the conschdated tax return On December 4.1981 the Company fJed with the Federal G. ALLOWANCE FOR FUNDS USED DURING Energy Regulatory Commission (FERCl for an increase in certain CONSTRUCTION of its wholesale and transmission service electnc rates of in acwrdance with the regulatory system of accounts. the approximately 54.763.000 On February 2.1982, the FERC Company capitahres, as an appropnate cost of utshty plant, an accepted for fikng the proposed rates and suspended the a:lowance for funds used dunng construction (AFDC) Under this apphcation of the rates for five months. The Company unhty industry practme. construction work in progress on the requested in this fihng that it be allowed to place in effect a full balance sheet is charged and the income statement is credited recovery fuel adjustment Clause which would involve the use of for the approximate net composite interest cost of borrowed projected sales and energy costs fa the month, adjusted for any funds and for a reasormic + turn on the equity funds used for over- or under-recovenes due to diffeTnces between tne actuai construction This procedure is intended to remove from the and estimated costs of energy and sales levels for the second income statement the effect of the cost of finanang the pnor month. On July 3.1982, the Company put into effect construct on programs and results in treating the AFDC charges wholesale and transmission service electnc rates, subject to 16
refund. whc h had t,cen nm]otiated and agreed to t,y te e a penod not to exceM sa months f'om the da'e of feng On Company South Mdsiwppi E rec tn( Power Assocot:on (SMEPA). Jano.n 21.198 3. tN N'PSC issued m Order 7 anting the and the Monopal Energy Agerxy of M6siwppi(ME AVI The;e (cmpany an anruai .ncrease in its retail electnc rates of rates ref txt an aenvalincrease in cef tain of the Comp.iny s $4 7.534 059 above tne &,el app'osed by the MPSC in Novemoer, whuesAe and tran*.mswon service ele (tnc rates cf 1980 Tbs enmase en annua! 'evenues is approximately 50 67 cf appimirnately $2 500.000 rJ the 54 /63.000 requested On the 593 949 000 reweued by the Company As of February i1 Novemt.er S.1982 the Con pany SMEPA and MEAM fced a 1983. no appeai from me MPSC Order has Deen tasen Sett>rnent Agreement with the f EPC agremog to the rax thar To meet the upg and oper nng c osts associated wIth
/ ere put into e'fec t on Jury 1 1982. and to all other ruuo raised M,dme South Energ, loc 's investmert in Grand Gu:f Unit No I in the proc redings On January 24.1981 the FERC approved the (See Note No 6 ~Comm tments and Financing"). the Company Sett!emer>t Agreement wdl fde requ"sts for rate increases vath the MPSC and the FERC.
On My10.1982. the Company fded an apphcation Mh the These increases wm be partiady offset to the d/ference between I Mf 5C for an er u rease in its eiet inc rates to its real custorners the relatively low cost of ruclear fuel and the higr er cost of fuel designed to p'nduce annua!y approximately 591949 000 in od and natural gas now used in generation e=pected to be inc re.e.ed rn enues above the kvel approved in Novernt er.19sd d4 aced by Grand Gif Un.t No 1 The amount of such offsetis hy the MF.C. f he new rates w ere propo'.ed to tA e of'ect dependent on the future poce of fuel od and natural gas September 1.198/ tsor were *,uspended by the MPSC Under present law the Mf5C rnay suspend the (peration of said 'ates for
- 3. Income Thxes irrome ta evpense convsts of the following-1982 1981 1980 in Thousands Federd $ 8,429 518 546 516.828 state 1,919 2.537 2.252 Total 10,348 21.083 19.080 Deferred - Net Revenue subytt to refund (10,978) (9 224) (4.989)
Unbmed revenue 750 (1,617) 1407) Iibe<a'ited deprecianon 7,575 4.240 4.827 Other (412) (579) (572) Total l3,065) 15.970) (2.351) investment tax credit adjustmentwNet 11,192 7.845 3.308 Recorded inc orne tm expense $ 18,475 522.958 520.037 Charged to operations $21,037 522.183 518.606 Charged lcred,ted) to other income (2,562) 775 1.431 Recorded incorne tax expense 18,475 22.958 20.037 inc ome taxes apphed agarnst the debt component of AFDC 2,931 806 409 Tota income taxes $ 21,406 523.764 $20.446 [ Total irx ome taxes difter frorn the amounts (nmr.uted by appfying the statutory Federal income tax rate to income before taxes. The reasons for the l differen( es are as follows l 1982 1981 1980 in Thousands
% of % of % of Pre-Tax Pre-Tax Pre-Ta Amour.t income Amount income Amount income Computed ar statutory rate $24,654 46.0 $27.135 46 0 524.836 46 0 frxreases l reductions)in ta resulting from.
Mowance for funds used duang construction (5,426) (10.1) (1.520) f2.61 1629) Il 2) Tax saungs due to fding consondated retum (1,300) (2.4) (2.399) 14 1) 14.792) (8 9) Other - net 547 1.0 (2581 l4l 622 12 Rewrded income tm expense . 18,475 34.5 22.958 38 9 20.037 37.1 j' locome taes apphed against the debt component of AFDC 2,931 3.4 806 .8 409 .5 Totalincome taes . $21,406 37.9 523.764 39.7 520.446 376 1 Unused investment ta credits at December 31.1982, amounted to 55.003.0% of which 52.295.000 may be carned forward through 1992. and $2.708 000 thrnugh 1993 17 l
- 4. Preferred Stock 5. Long-Term Debt Prderrr d stock at Decemter 31.1982. arvf 1981 consisted of the Lcng-term deot at December 31.1982 and 1981 consisted of the fonoury fonoung Current 1982 1981 first Mortgage Bonds
- In Thousands Shees Shares Ou%tandm Can Pnce 3-5/8% 5er:es due 1983 .5 - 5 12.000 Aumon/ed 1982 -19P[ Per Sh.ve 15,000 15.000 4-1/8% 5erms due 1988 Wahout sirikirvj 4 5/8 ( Senes due 1995 20,000 20.000
"" 5-1/8% 5enes due 1996 25,000 25.000 4 36% 5enes 60 000 59,920 59,920 5 10386 6-3'/8% Senes due 1996 10,000 10.000 4 56% Senes 44.476 43,888 43.888 107.00 9 5/8% Senes due 197, 20,000 20.000 4 9/A Senes 100 000 100,000 100.000 102 88 9-1/4% Senes due 2000 17,500 17.500 916% 5eries 75.000 75,000 75.000 106 35 7-3/4% 5enes due 2002 15,000 15.000 100 000 100,000 100.000 106 53 7-3/4% 5enes due 2003 30,000 30.000 7 44% 5enes 8-1/4% Senes due 2003 20,000 20.000 Total 379.476 378.808 378.808 25,000 25.000 9-7/8% Senes due 2004 25,000 25.000 Wrth sinbrv; 10-7/8% 5enes due 2005 15-1/8% 5enes due 1990 30,000 -
fund' 17 00% 5enes 200.000 200,000 200.000 117 00 252,500 234.500 M 75% Senes 100.000 100,000 - 114 75 Total 300 000 300,000 200 000 8%. due senan y 'hrough 1993 5,536 5.890 Unissued 1.325.000 Pollution Control Bonds-7-I/2% due 2004 9,400 9.400 Total 2.004.476 8,575 8.575 8-I/2% due 2004 6-1/2% to 8-1/2% due 1983 to 1995 1,800 1,900 Without sinkirv) fund in Thousands 537,881 9-3/4% to I l-1/2% due 20I2 to 2014 30,000 - Stated at 5100 a share 537.881 196 196 Less: Amount held by Trustee ** (18,788) - Premium Total 538,077 538.077 Other - 23.052 Unamortized Premium on Debt 970 1.032 Witn sinking fund
$30,000 520.000 Unamortized Discount on Debt (1,158) -
Stated at 5100 a share - Total .5288,835 5284.349
*Beginnirv; September 1.1986. the 17% senes is required to be redeemed by a sinkirx; fund at the rate of 10.000 shares each year The *5 inking fund requirements, which may be met by certification of Cornpany will have a non-cumulative optiori on September I in each property additions at the rate of 167% of such requirements, amount year, commencirv) with the year 1986. to re em up to an additional to 52.448.000 annuany for the years 1983 through 1987, respectively 10000 shares The 14 75% senes is required to be redeemed by a ** Interest expense on funds held by the Trustee was charged sinang furx1 at the rate of 33.333 shares per year on March 1.1990- against the interest income earned by the *unds invested.
1991 arx11992. Dunng the first quarter of 1983, the Company sold 100.000 shares of $100 per share preferred stock.
- 6. Commitments and Financing refinanced as part of the amended January 4.1978 agreement.
in connection with certain of SFI's borrowing arrangements. SFI's The Company % 1983 construttron program contemplates parent companies. including the Company have covenanted and expenditures of approximately 570 milhon, including approximately agreed. severally in accordance with their respective shares of 531 milbon for the Companyi interest in the Independence Plant. ownership of SFit common stock, that they will take any and all actions Construction expenditures for 1984 and 1985 are estimated to be necessary to keep SFI in a sound financial condition and to place SFI in 570 milhon and 561 melkon, respectively a position to discharge and to cause SFi to discharge its obligations The Company has a 19% interest in System Fuels. Inc. (SFil. a under these arrangements. At December ai. i982. tne totat ioan , jointly-owned sutsidiary of the four operating subsidianes of Middle commitment under these arrangements amounted to 5295.000.000 of South Utihties. Inc. (MSUL SFl operates on a non-profit basis for the which $198.210.000 was outstanding at that date. Also SFI's parent purpose of plannirx; and implementing programs for the procurement companies, including the Company have made similar covenants and of fuel supphes for aN of the operating companies;its costs are primanfy agreements in connection with long-term leases by SFI of oil storage recovered through charges for fuel dehvered and services rendered and handkng fachtles and coal hopper cars. At December 31,1982. the The parent companies of SFl have made loans to 5Fl to finarce its aggregate discounted value of these lease arrangements was fuel supply business under a loan agreement dated January 4.1978. as
$74700M amended January 1.1983. which provides for SFl to borrow up to SFI has entered into a contract with ajoint venture for a supply of coal $220.300.000 from its parent companies through December 31.1983.
from a mine in Wyoming. v.hich is expected to provide 150 to j As of December 31.1982. the Company had loaned $14.760.000 to SFt 210 mWion tons over a penod of 26 to 42 years; the coal supphed is pursuant to this loan aiyeement and the Company 1 share of the i expected to be used at the Independerve Steam Electnc Station. SFl's unused loan commitment is $19.515.000 Notes under this agreement parent companies, including the Company. each acting in accordance mature December 31,2008. In addition the Company had loaned SFI with respective shares of ownership of SFI's common stock.jc>ned
- 55. 769,500 under previous loan agrcements. Notes mature in 10 and 25 in, ratified, confirmed and adopted the contract and the obligations of years from date of borrowing under the provisions of the previous foan SFl thereunder atyeements. Matunties in 1983 of 53.429.500 are expected to be 18
Thr cor:trar t prtudes for SFl to mane orect investments tn the mme hnes cf cred t w .t" hank s outside the M:da!e south System serv <e
, fur p!r rand equrpment in order to brnt the amour? to be paid by SFl ama Compenu m LtLncm lapproxtmate'y 5 + cf the comm:tment to tf +pr;t ver:ture as a corq,anent of the pnce of coal Througri N2 arnount) or equua ent fees are required by certan of the lends:g 5fl h.n so ir reWd appromwely 54 8 moon and 4: Decemter 3t tant s Dunng Feuary.1983. the consondated lmes of cred:t were 1982. Sfl antiop ited that its total add!!onal inWstment over me hfe of incre,tsed to 5200 rvion Tre Cort,pany has arrangements wit *1 a i %e cormr.t wou:d be awommately $100 mdbon includ.nq 544 8 commeroal paw rwer for tre sa e of its commeroal paper and. in rnar,n emn.atml for 198 3 Any fund, invested under the cont act w di addJion, part>og.ates mth certain other companres of the Midfe t + obta:r.ed t,y SH either through t orroungs or other arrarvnents South Svstem in a Spem money pool arrangement whereby those
- t*i it, p. vent companies. ,rxludrng the Company or trvoup other companres with M 'able funds make shortderm loans to other rTothorh of finanong c ompanies in the System haeng short-term bonowng requirements the Coropany together eth the other Wue Sou n System The Company may borrow from these sou ces subrct on!y to its operanry cornpanies. is otAgated ander agreements [MSE manimum author. zed revel of short-term borrow ngs The Company Ayerments) vath Mdre South Energy Int (M5E). in ac cordame with has recer.ed auinor zat:on from the Securit;es and Exchange Med percentajes speo5ed therein. to mAe payments or Commission unde < the Pubhc Utilcy Holdng Company Act of 1935 to sutturdin,ced advan(es adequate to cowr a!! of the 9peuty have outstanding at any one t.me short term borrowings aggregating e3penses and cc ta:n of the capital (osts of MSE The Company's stmed not more than the Msser of 563 m@on or 10 6 of the Company's percentage responsrtaty under the MSE Agreements is 313 A capaahzation At the end of 1982 and 1981 the aggregate amounts of throwp 1982, 52 7 tulhon had been erpended by MSE on the two unused hnes of cred t mth Mississippibanks was 522 6 mdhon and
, uruts of the Grand Gulf Plant the first unit of wheh 6 scheduled for $20 6 mobon. respectuely The operating companies had ava:lable at (ommercul opcatton in the fourth quarter c t 1983 Urder certxn the end of 1982 and 1981 556 mdhon and 5190 8 mdhon. respectively orcumstarx es. the Company may be required under the M5E under the consolidated knes of cred:t I Agrr ements to make its share of advance power purchase payments of The shott term borrowings and appkcable interest rates l
512 5 mdhon per month commenong January 2.1984. if the first und of { determined by d.viding appucabfe interest erpense by the average the G and Gulf Plant has not been placed in commeraal operation by amount borrow edt for the Company w ere as follows Der ember 31.1983 1982 1981 1980 Pfectr,e November.1981. the System operating companies entered in Thousands into a reallocanon agreernent alfocatiry the capaaty and energy $36,500 Maumum borrowng 5 6.000 510.000 madat>!c to M5E from Unit Nos I and 2 of Grand Gu'f as focows the Year end borrow 1ng - 5 3.000 - Company 3163 L and 4 3 9/A toursrana Power & Light Company Average borrowings (LPSt j 38 S D, and 26 23 h and New Orleans Pubhc service.Inc Commeroal pape- 5 9,045 5 562 5 1.993 {NOP5fl. 29 80 h and 29 do E respectivety This allocataan was Assooated companes 5 100 - - consistent with a poor allocatron of capaaty and energy for the Units Average interest rate made amono iP&l MP&L and NOPS pursuant to a memorandum of l dunng the penod understandry e=ccuted by the system opeutirx; companies on Jufy Commercal paper ) 14.99 % 15 5 % 12.0 % 1 21.1980 Under the reallocation agreement. the Company LP&L and Assocated companies 10.86 % - - NOPSL in proportion to such allocatrons. have acyeed to assume and j Average interest rate at l hold AP&L harm:ess from all of the responsibihties and obhgations of end of penod that company with respect to the MSE Agreements and. in Commeraal paper - 12.9 % - consideration thereof. AP&L has rehnquished its nghts !n the Grand Gulf Plant The electnc power supply facktres of the Company are The indenture provistons relat;ng to the Company's long-term debt interconnated with the faokties of Mississ:ppi Power Company. a pwde for restnctions on the payment of cash dmdends on common neighbonng utdity which is part of the Southern Company System lo stock As of December 31.1982. 540.136.000 of retained earnings May 1980. the Company entered into a long term agreement which were free from such restnctions. pwded for tne Company to purchase 200 megawatts of capacy from 50uthern Company Scruces. Inc (SCSI) when available dunng the
- 9. Transactions with Affiliates The Company buys from and sells electnoty to the other operating penod Jufy 1.1980 through Dece mber 31.1986 The energy cost.which subsidianes of Midd* South Utthrees. Inc . its pa ent, under rate includes a capaety charge. is based upon a formula which adjusts for schedules fded with the Federal Energy Regulatory Commission. In hourly incremental cost of SCSI coal-steam generation If the add tion. the Company purchases fuel from 5FI and receives technical energy 6 to be supphed from higher cost sources. the Company may. at and advrsory services from Middle South Services. Inc.
f its option refuse the purchase and a credit adjustment to the capaary Operating revenues include revenues from sales to afhisates charge wdl be made amounting to 593.521.000 :n 1982. 589.393.000 in 1981, and Ihe Federahncome tax returns for the years 1971 through 1976 have 5132.417.000 in 1980 Operating expenses include charges from been examined by the Internal Revenue Service (IRS) and adjustments hAe been proposed T he pnoopal issue n w hether customer deposits aMhates for fuel cost. purchased power. and technical and advisory services totMhng 5103.651.000 in 1982. 5145.607.000 in 1981. and are includable in taxable income. Formal witten protests have been S R991000 m 198a fded and c onferences are being held with an Appeals O"scer of the IRS. l Any finalliabihty for taxes resofting from settlement w ith the IRS would 10. Pension Plan not have a matenal effect on net income since income taxes on The companies of the Midd:e South System have vannus pension customer deposits w ould be normakled Most of the other issues have plans c venng substantia ly all of their employees. These plans are been setted and adequate provisions have been recorded drnatered by a iustee who is responsible for pension payments to retirees Vanous investment managers have responsibility for t 7. Lines of Credit and Related Borrowings management of the plans' assets. In addtion. an independent actuary At December 31.1982, the Company had 522 6 milhon in lines of performs the necessary actuanal valuations for the indMdual credt wth M^sisuppi banks ano pa tropated with the other Middle company :.'lans South Setem operating companies in $100 mdhon of consohdated Effective January 1.1982, the Company modif.ed the method of 19
amornzery poor sarvic e costs by chary m] from a f4ed amortitanon 11. Quarterly Results(Unaudited) penul of ten years to varfrv; amortizanon penod; not to e=ceM tNrN Unaudded operanng resuas by quarters fonow bn thousands! ye,n f he e artt of tha change on 1982 pension emente was not signacant Total pertnan e< pense of the Compag 'or 1982.1981 and Quarter Ended 1980 was $4 269.000. 54.58 / 000 and S 154 3.000. re* pecnvelf Wrc h June September December [ The companson of the actuanal present va:ues of ac umutavd ( plan terrfits and plan net assets for the Company s defined tenef t Opmanng Pfan 6 presented below This compan ,on was determ:ner! .n a(cordant e wch the provisions of Staterrent of Finanaal Account 1ry revenues $ 112,256 5128,946 5168.031 $117,250 Standeds No 36 whKh requaes the use of ( ertain anumpnons Operanng
'nc ome 10,168 6,990 16,552 12,170 whK h are different from those used by our actuary in detemin.ng an Net income 7,426 4,346 13,356 9,992 appropnar" level of fund.ry for the Company Janupy I. 1981 1982 1981 Operanng revenues $120.265 5131.689 5166,230 5113.659 Actusi.il present vafue of On ThwW) Operatirg anurnulated plan benehts uncome 12.348 4.896 20.150 10.970 Net income 8.61l 1.584 16.659 9.177 Vested 528,173 524.161 Nnnvested 3,409 1 719 The business of the Company is subject to seasonal fiuctuations with Tota! $31,582 527.880 peak penods occumng dunng the summer months Accord:rvfy unings in ormeon or any mmh pen shw d not N Net assets avaiLible for benefits $40,908 535.031 considered as a bags for est;manng the results of operaDons for The assoned rate of return used in determining the actuanal a full year present value of accumulated plan benefits was 9%
- 12. Effect ofinflation on Operations (Unaudited)
The following supplementary information about tne effect of chancyng pnces on the Company is provided in accordance with the recprements of Statement of Finanaal Accounnng Standards No. 3 3. *Finanaal Reporting and Changing Pnces". It should be viewed as an estimate of the effect of changing pnces, rather than as a prease measure. Statement of Income from Operanons and Other Finanaal Data Adjusted for Effects of Charxyng Pnces for the Year Ended December 31.1982 (In Thousands) Adjusted For As Reported in Adjusted For Changes in The Finanaal Generalinflation Speafic Prices Statements (Constant Dollars) _ (Current Costs) Revenues' 5526.483 5526.483 5526.483 Operanng expenses (excluding depreaatron)' 456.348 456.348 456.348 } Depreaanon 24.255_ 53.564 60.283 Tutal operating expenses . 480.603 509.912 516.63I Operating income 45.880 16.571 9.852 Other income' .. 14.013 14.013 14.013 Interest and other charges' 24.773 24.773 24.773 loc ome from operations (excluding reduchon to net recoverable costi 5 35.120 $ 5.811 5 (908l Increase in speafic pnces (current costs l of property plant. and equipment held dunng the year S 80.125 Inacase (reduction) to net recoverable cost . S 6 676 (11.696) Ef'ect of increase in general pnce level . (55.034) E xcess of increase in general pnc e level over increase in speafic pnces after reduchon to net recoverable cost 13.395 Gain from decline in purchasing pow?r of net amounts owed 18 884 18.884 Net S 25.560 S 32.279
' Assumed to be in " average for the year" dollars and thus are not restated #i ncluding the increase to net recoverable cost. income from operahons on a constant dollar basis would have been $12.487 for 1982. 'At December 31.1982. current cost of property. plant. and equipment. net of accumulated deprecation. was $1,539.718. while histoncal(ost or net cost recoverab!e through depreaation was $722.860.
20
Five-Year Companson of Se!ected Supp!ementary Finanoa Data Acusted for Effects of Chanrpng Pnces Un Thousands of Ave age 1982 Douars) l l 1 1982 1991 1980 1979 1978 OPEPAliNG REVENUES 5526,483 5564 449 5624.339 W80.493 5592.220 Historical cost Information adjusted for general inflation incorne from operanons (excluding adjustment to net recoverable costl . 5 5.811 S I 1.137 5 12.270 5 5.529 Net assets at year end at net recoverable cost . $ 183,113 5 t 91.038 S200.720 5213.535 Current cost information lacome (fou) from operanons (excludn] reduction to net recove atele cost) 5 (908) S 4.770 5 9.222 5 0.480) Excess of inc rease in general pnce level over increase in speofic pnces after reduction to net recoverable cost 5(13,395) S i 7.558 i 41.836 5 53.2 f 6 Net anets at year-end at net recoverable cost $183,113 S191.038 5200.720 5213.535 Generallnformation Gain from decline in purchasrng power of net amounts owed 5 18,884 5 37.013 S 50.192 5 58.848 Average consumer poce index 289.I 2724 246 8 217.4 195.4 Note The statement requires that histonCai cost informaDon adjusted for general inflacon and current cost informa00n be provided for 1979 and subscquent years Comparable informahon is not read:ly available for 1978 and thus is not prouded Corntant dollar amounts represent hrstoncal costs adjusted for As prescnbed in Statement of Financal Accounang Standards the effects of generalinflation The effects are determined t,y No 33. income taxes were not adjusted (onverting these costs into dollars of equal purchasing power The regu!atory comm:ssions to which the Company is subject using the Consumer Pnce Index for all Urban Consumers (CPI-U). a!iow only the histoncal cost of plant to be recovered in revenues Current cost amounts r..f!ect the changes in speofic pnces of as deprecanon Therefore. the excess cost of plant stated in terms property plant and nqurpn ent from the year of acquisition to the of constant dollars or current cost over the histoncal cost of plant is present. The current costs of property plant and equipment whrch not presently recoverable in rates This excess is reflected as a represent the esDmated costs of replaarg exisung plant assets, are reduc! on to net recoverable cost While the rate-making process determined by applying the Handy-Whitman index of Public gwes no recognition to the current cost of replaang oroperty plant UtMy Construction Costs (HW1) to the cost of the surviving plant and equipment the Company belteves. based on past by year of acquisition. Land and certain other plant assets which expenences, that it wm be allowed to earn on the increased cost of are not included in the H41 were converted using the CPI-U. The its net investment when replacement of faoliDes actually occurs. dSerence betw een currennost amounts and constant dollar To property reflect the economics of rate regulation in the amounts results frore geofic pnces of property plant and Statement of income from Operapons presented above. the equipment (as measured by the HW1)(nanging at a rate different reduction of net property plant and equrpment to net recoverable than the rate of general inflanon las measured by the CPI-U). cost is offset by the gain from the dechne in purchasing power of T he current yeari deprecaDon expense on the constant dollar net amounts owed. Dunng a penod of inflation. holders of and cunent cost balances of property plant and equipment were monetary assets suffer a icss of general purchasing power while determined by applyn] the Company's deprecianon rates to the holders of monetary liabilites expenence a gain. The gain from the indexed amounts. decline in purchasing power of net amounts owed is pnmanly Fuelinventones. oil and gas reserves. the cost of fuel used in attnbutable to the substantial amount of debt which has been generatton and gas purchased for resale have not been restated used to finance property plant and equipment. Since the from their histoncal cost in nominal dollars. Regulation limits the deprecacon on this plant is hmited to the recovery of histoncal rec overy of fuct and purchased gas costs through the opera 00n of costs. the Company does not have the opportunity to realize a adjustmen% lauses or adjustments in basic rate schedules to holding gain on debt and is limited to recovery only of the actuJI costs. For th:5 reason fuel inventones and oil and gas embedded Cost of debt Capital. reserves are effectrvely monetary assets
\
l I l
MISSISSIPPI POWER G UGHT COMPANY RECORD OF PROGRESS 1972-1982 1982 1981 1980 SELECTED FINANCIAL DATA (000's OMITTED) ELECTRIC OPERATING REVENUES: Pestderinal 5 183,045 5 !78.051 5 153.397 Commercal 128.099 12!.905 100.471 Indtr.tnai . 110,696 116.180 94.834 Government & muruopal 20,459 21.120 16.601 Cooperatives & munpopahties 9.559 16.975 34 377 Total from enerry saks (M:ss area! 451,858 454.231 399.680 Sates to other putAc utikt;es 94,56_3 93237 139.076 Total from enagy sales 546,421 547.468 538.756 M6ce!!.incous revenues (12,80113 (15.920F 16.877)2 Deferred fuel adjustment revenues' (7.137) 295 1.109 Tot il electnc operatirv3 rwenues 5 526,483 $ 531.843 5 532.988 NET INCOME $ 35,120 5 36.031 5 33.954 TOTAL ELECTRIC UTluTY PLANT: Produccon 5 356,298 5 355.771 S 355.084 I Transmission 210,926 179.778 171.810 D6 tnt ution 235,114 225.152 212.035 General & other 22,293 20.646 18.641 } Total utility plant tompleted 824,631 781.347 757.570 Plant held for future use 3,939 3.316 3.316 Construction work in pranyess 174,744 135.605 I7.702 Eks.tnc plant acqursition ad;ustments 1,861 2.043 2 224 Total utrhty plant 51,005,175 5 922.3 l l 5 780.812 TOTAL ASSETS 5 794,288 5 728.477 5 649.101 LONG-TERM DEBT . .... . .. ... 5 288,835 5 284.349 5 262.860 PREFERRED STOCK, WITH SINKING FUND . $ 30,000 5 20.000 - OTHER DATA ELECTRIC ENERGY SALES (MKWH): Residennal 2,953,836 2.943.959 3.069.404 Commeraal 1,988,978 1.938.341 1.918.334 Industnal 2,011,579 2.196.968 2.217.846 Government & muniopal 362,072 387.503 385.133 Cooperatnies & muniopahnes 210,368 418.447 986.063 Toial energy sales (Miss a'ea) 7,526,833 7.885.218 8.576.780 Sales to other pubhc unhtres 2,314,418 2.419.177 4.343.224 Total electnc energ/ safes 9,841,251 10.304.395 12.920.004 ELECTRIC CUSTOMERS (END OF PERIOD): Residential 268,556 266.975 263.850 Commeraal 38,651 38.427 38.115 Indust'ui 3,194 3.351 3.276 Government & munropal 2,309 2.221 2.132 Cooperatives & muniopahnes 5 12 39 Tota 1 customers lMiss. area) 312,715 310.986 307.412 Other pubhc utshties 2 2 2 Total euxtnc customers . 312,717 310.988 307.414 SYSTEM INPUT (MKWH): Messissippi area 8,254,866 8.464.044 9.407.985 Other 3,988,921 4.080.059 7.033.874 Total system enput . 12,243,787 12.544.103 16.441.859 PEAK LOAD lMISS. AREA]-KW . 1,765,000 1.912.000 2.078.000 LOAD FACTOR (MISS. AREA l-PER CENT . 53 51 52 NET PLANT CAPA81UTY-KW 2,763,000 2.763.000 2.763.000 CIRCUIT MG.ES OF ELECTRIC LINES 19,262 19.120 18.855
'See item B to Note 1-Summary of sign.ficant accountnj pokoes.
2 includes adjustment for revenues bs!!cd subject to refund of $19.554.000 in 1982. $19.153.0ut, in 1981 and 510.360.000 in 1980. See Note 2 to Finanaal Statements. i 22
19/9 19/8 19// 1976 1975 1974 1973 1971 5 1/0 /46 5 110./05 5 106.520 5 91849 5 78296 5 6/.690 5 47.473 5 38.096 83561 73.54 / 69114 60 855 47484 43559 31 194 25.'/0 : 83491 70.306 6/.948 58 645 42.863 41 743 16851 22.399 11433 11.804 11.158 9 899 7.022 6163 3.975 3.193 39423 M 591 14 073 25.6/1 21.399 13 362 9 915 9.884 g 340.155 302.948 288.813 246 870 191064 172.517 !!9.509 99 273 9L34/ 93701 /7.142 57298 41064 10.484 6 684 15 223 413502 396 649 3(4 545 304.168 236.148 183.001 126.193 I I 4.496 45/4 3.18/ l.441 1.113 8 38 5 74 44 9 3 74 11.5461 440 (2 (AO) 3.495 3.071 (5.134) - - 5 4365/4 5 400 2/6 5 365 346 5 308 /76 5 24'05/ 5 178.441 5 126 642 S I I4.870 5 22 581 5 28 845 5 25.027 5 25.745 5 10803 5 20.454 5 17.346 5 18.!01 5 352 6'>8 5 351.(A6 5 349.195 5 338.118 5 299.583 5 292.491 5 176.217 5 166.537 149 887 146 21/ I32 966 118.137 I i8.450 109.960 91.535 9 f.068 ! 201.361 190.820 180.035 171.955 166.590 158.256 148,492 130.191 > l / l/8 16 254 16.154 15.72/ 15.366 14.763 14.355 13 598
//1034 i04.94/ 678.350 643.937 599.989 575.470 430.599 401.394 31/0 32/0 3.2/0 3.270 4.070 1.219 1.144 1.146 15.913 10.820 15.660 18.061 35.772 16.688 121.908 50.070 2406 2.588 1 769 2.951 3. I I 3 3.193 3067 -
5 /52614 5 /21675 5 700.049 5 678 219 5 642.944 5 596.670 5 556.718 5 452.610 5 607.643 5 60 t811 5 594.985 5 584.012 5 559.009 5 516.437 5 473.943 5 373.752 5 263.3R0 5 271.374 5 279.073 5 2/8.029 5 286 060 5 258.082 5 229 498 5 169.998 2./8/.4 31 2.856.746 2.727.718 2.491.067 2.440.460 2.268.954 2.356.073 2.032.670 1.852.46/ 1./81.881 1.647.919 1.537.I69 1.457.505 1.356.173 1.380 035 1.213.432 2.285120 2.18/.020 2.071 093 1.935.573 1.751.042 1.793.055 1.787.741 1.677.137 369.441 171 811 344.634 326.275 302.319 271.233 262.645 238.624 1270 581 1.280.949 1 217.041 1.064 636 990.309 938.205 988 351 1.089.349 8'AS.0 W 8.478 397 8.008,406 7.354.720 6.941.635 6.627 620 6.774.845 6.251.212 3(31.898 4 454 425 3.580.571 2.624 001 1 638.144 487.097 312.454 1.269.927 11.2/6.93/ 12 831.872 I I .588.977 9.978.721 8.579.779 7.114.717 7.087.299 7.521.139 160 41l 255.I74 149 889 245.384 24 f.739 237.085 229.76i 206.222 37.919 37.405 35.922 34 718 33.801 33.4 74 33.109 30.629 3130 3245 3 301 3.247 3.247 3.267 3.213 3.168
/ 087 1.049 1.965 f.920 1.8/9 1.789 1.731 1.618 64 66 67 67 66 63 61 74 10 U21 297.939 291.144 285.336 280.732 275 678 267.875 241,711 2 2 2 2 i I l 2 303 723 197941 291.146 s95.338 280.733 275.679 267.876 241.713 9 309 449 9 299.653 8.739.930 7.995.181 7.583.9/l 7 249.896 7.378.216 6.906.300 t /.177490 8 105.780 7.422.162 6 275 856 5.369 242 4.353.673 4.160.152 5.081.123 16.48/139 1/405.433 16.162.092 14 271.040 12.953.213 I l.603.569 11.538.368 11.987.423 1.913.000 1.899.000 1.784 000 1.733.000 1.642.000 1.640.000 1.565.000 1.476.000 56 56 56 53 52 51 54 53 2.763.000 2.763.000 2 763.000 2.751 000 2.752.000 2.752.000 2.002.000 2.002.000 h 18.504 18.3.44 18.109 17.859 17.713 17.461 17.146 14.279 l
23 E __ .- -
MISSISSIPPI POWER & LIGHT COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- l. FINANCIAL CONDITION lli. RESULTS OF OPERATIONS The trunaal c or con of it m Company detmormed rn 1982 un net Pesu ts for me p 1982 produced a decease in net income of 3 A irv ome der re.rm; tn Sh mann. . bHow the pror year Tne rate when compared to tre pr:or 3 ear and a decrease in operaung income echef f.ed for in My 1982 her Nr? / to the f aunoai Sta9 et4 of W 5evers d .ese factors have had an ef'ect on operaong resu:ts w.n r x>t put into th t dunnq 1982 an.1 only by reder aj gm ng on r the past thme ,ea's Total KWH sates to utnWe customers have arut rrorenanc e e< pen.es throwjh an austenr,r amj esperv.e de erra!
t been fady sta for the yea <s 1982.1981. and 1980 showing a 2 0% decrease. a i 6 e d" crease and a 4 R increase. respectrve!y Cookng pro;'am w.is the Comparr/ abic to k eep net inc ome from f. Ang conader.ibly be!cw tne arnou it ret orded for the poor sea' degree dan 'n 1980 were 118 6 of normal. causing residentiaf sales to Apynorn tu+y 54/ 5 moon of the rate rehef fJed for in IN was put tr conW,Mn above normal and 10% abose the pnor year in 1981 into eff"ct beg:nr ung F et,ruary 15.1983 in .ic cordance e ne n d"r and 1982 resider tal sies returned to a more norma! !evel in 1982 a of the M:sv.sippi Putu Service Commission N"! int ome for the years dec rease in industna! actray msutted in an 8 4 % decrease in industna! IW lW and 1980 w.n 5 35 m@on. 5 36 mmion and 5 34 maort sales compared to the pnor two y ears Sates to wholesa!e customers deceased 58 A in 19F1 and 50 6 in 1982 as a result of the Company reptweN The Company's pre t.ix earnnp coverage ra90 of band a cere .! regarements a as 3 46 in 1982. after including a new rehnquish:ng the *oads of the elecinc power assooatons as they were 5 m nulann suur. (ompsed in 4 64 in 1981 and 419 in 1980 The c hanging to gene' anon from their own plant, with the Company onfy ( overaje r.on < if in! crest durges and preferred stou dMderx1 eceury revenue from the transmission service fumished With the reqarernents was 1 M in 198L after including a new 510 mmion issue acquismon of the independence plant in 1981. both the adowance for of 14. U L prefened stod compared to 101 in 1981 atW 2 34 in 198C funds used dunng construct:on (AFDC) and interest expense began to kn< e the Company wou d be leg /ly preduded from issu:ng inuease AFDC as a percent of net income in 1982.1981 and 1980 was aMt:nnal bonih f ather trun for refunding purposes) should the 4141 R and 4 h respectrsery It is espected that AFDC wdl decrease reuted cwera. ;e rano t e less than 2 0 and from issuing add.tional in 1983 bnth in arnount and as a percent of net income because or peferrn! < tu< k shouhl the related coverage ratio be less than i 5. the complenon and p;aang into commeraal opeiron in January ma:nrenam e of sansfactory earrmys and coverage rat.os n essenDal 1983 of Independence Unit One. Cost control measures of the to enalde the Company to sell add,Donal amounts of senior ecunties Company's austeNy program and the deLy of some maintenance on satmfactory terms to meet future capital requirements work enabled the Company to reduce operaDon and ma ntenance expenses in 1982 Fuel and purchased power costs cononue to be the
- 11. LIQUIDITY AND CAPITAL RESOURCES Company's major costs. equa:hng approumately two thirds of its ,
TN Company's constru< tion and plant acquisitions program for 1981 revenues from customers Fuel adjustment clauses in the Company s re'.utted in expend:!ures of approximately 5101 muhon. includ:ng retail and whoicsa!e rates provide recovery on a current basis of gpmomately 511 mdhon related to the Companis 25% interest in anDopated fuel and purchased energy costs, with subsequent the Independerxe Steam Electnc Stanon and the coat handhn9 adlustment for actual results. High fuel costs. such as the Company egwpment Approurneciy %0 milhon or 49 L of these funds were has expenenced over the past several years. have produced supphed from internal cash generation and from the sale of a portion distortions in the Company s fuel expenses and related revenues of the(cal handhng equipment at the independence plant to the Howeser these factors tend to be offsettry) and have had a other co owners of Independence The remainder of the funds neghgible ef'ect on net income. The effect of inflauon is felt more in supphed a ere trom external sources including $10 milkon from the the area of wages, interest rates. matenals and suppkes and other sac of prefened sicA 530 mdhon from the sale of fast mortgage gnods and sereces which the Company acquaes from outside t,onds and sii mcon frnm podution control eqwpment finanon9 supphers Such pnce pressures are expectec to cononue to exist but T he Company rrude use of short term bonowing in 1982 mainly in the are expected to be at a more moderate rate of increase than has been fast two quarters. w c the maumum amount of 536.5 milhon bem9 e=penenced in 1981 and pnor ycars The effects of inflacon on utdeed of the amount authonzed by the Secunbes and Exchange eperating expenses and the expected additional investment in l Commission Ithe fester of SM mahon or 10% of capitakzacon) faakties will cause the Company to seek rate relief from the { ihe c onstruction programs for the years 1983.1984 and 1985 are Mnsissippi Pubhc Service Commission on a regular basis. projected to he 570 mdhon. 570 mdhon and $61 mdhon. respecovely IV EFFECT OF INFLATION Ihe Company presently expects to secure new permanent finanong of approumately 5/6 mdhonin 1983 through the issuance and sale of Despite the reduced level of inflation dunng 1982. Its impact on the fast mortgage bonds. preferred stock and common stock, and Company's operaton in recent years has been significant (see Note 12 through podunon control rever,uc bond finanong The Company also to the Finanaal Statements) expetts ta use shcyt term borrowing on an intenm basis. In 1984 and 1985 the Comparty expects tc secure permanent finanong of V
SUMMARY
approunutely 599 mdhon and $38 mahon, respectively Based on 1982 The abihty of the Company to secure adequate and Umely rate rehef ce nam coverages and an assumed interest rate and preferred to cover its porton of the fixed costs of the Grand Gulf Nuclear Station omJend rate of 12 L the Company could issue approumately and the Independence Steam Electnc Station (see Notes 2 and 6 to S136 mdkon of fast mor!qage bonds or approumately $33 mdhon of the Fmancal Statements) and other increased costs wiU have a matenal ef'ect on the abihty of the Company to remain finanaally prefened stoc k viable in the future. and thus be able to provide the generaung capaoty and other resources necessary to serve the present and future energy requaements of its customers 24
BOARD OF DIRECTORS AND OFFICERS BOARD OF DIRECTORS: G. Lawrence Adams, Partner. Adams. Forman. Truly Ward. Smith and Bramlette, Natchez Frrnk R. Day, Charrrrun of the Board and Chief Executwe Othcer. Fust National Bank and First Capitau Corporation.10 son Norman B. Gillis, Jr., Attorney-at-law. Mc Comb Dr. J. H. Johnston, Jr., Physgian. Jac kson Robert E. Kennington,11, Chairman of the Board and Chief Execunve Othcer. Grenada Bankiry Sgtem. Grenada Firyd W Lewis, Chairman rf the Board and President Middle Soum Utilities. Inc., New Orleans Dornld C. Lutken, Presidera and Cruef Executrve Offger. M6s6sippi Power & Lght Company Jackson John R Maloney, Chairrnan of the Board and Chief Executwe Ofhcer. Deposit Guaranty Nationa! Bank. Jackson Richard D. McRae, President. McRae5. Inc . Jackson LsRoy R Percy. Planter. Greenville Dr. W lter Washington, President Alcorn State Unwersity Lorrnan Robert M. [ Bob) Williams, Jr., Partoer. Reeves-Williams Builders. Southaven Frrnk 5. York, Jr., VKe President and Secretary Mississippi Power & Light Company Jackson OFFICERS: DIVISION MANAGERS: Doruld C. Lut ken, President and Chief Executwe Officer David I. Bridgers, western. Mcksburg Nortis L Stampley, Senior Mce President. Nuclear John R. Craf t, North Central. Greenville Aint McKelgney, Mce President, informational ServKes John E. Sherrod, Central. Jackson , Frank 5. York, Jr., Mce President Chief Finanaal Officer and Secretary Graham H. Tempel, Southern. Brookhaven J. 5tswart Frame, M(e President. Personnel and Administratwe Servxes T. Ray Tomlinson, Northern. Senatobia W Donald Colmer, Mce President. Public Affairs and Environmental Matters Thomas A. Dallas, Mce Preudent and Chief Enryneer PLANT MANAGERS: Donald E. Meiners, Mce President Customer Servges Malcolm Allred, Baxter \Mison. Mcksburg John D. Holland,Mce President. Area Affairs Richard Denman, Natchez. Natchez . JImes R McGaughy, Assistant VKe Presic.'ent. Nuclear Production A. T. Johnson, Rex Brown. Jackson ! JimIs R. Martin, Treasurer and Assistant Secretary Kenneth McCoy. Grand Gulf Nuclear. Port Gibson Allan H. Mapp, Assistant Treasurer and Assistant Secretary Alan Sebren, Gerald Andrus. Greenville Rex Shannon, Delta. Cleveland THE COMPANY SYSTEM MAP i MISSISSIPPI POWER & UGHT COMPANY is a regulated electnc utility ofwratiry in 45 counties of %tstern M6sisuppi. The Company is one of the pnrxipal operatiry subsidianes of Middle South Utilities. Inc and its system is interconnected with and operated as a part of the Middle South Utilities System. which supplies the ekttnc energy requirements of more than 1.5 million customers in a 92.000-square-mile area of Arkansas. Louisiana. M6sissippi and Missoun . THE COMPANY 31982 ANNUAL REPORT TO THE SECURITIES . . AND EXCHANGE COMMISSION ON FORM 10 K (INCLUDING A FINANCIAL 5TATEMENTS AND FINANCIAL STATEMENT SCHEDULE 5J 15 AVAILABLE TO ANY STOCKHOLDER UPON l REQUEST WITHOUT CHARGE Persons interested in obtaining a s 1 (opy should wnte to Frank 5 York. Jr. Vice President and Secretary , l at the address below; j MISSISSIPPI POWER & UGHT COMPANY P O Box 1640 J.ukson. M6sissippi 39205 8 :::.-- (601) % 9-2311 $~ -
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REGISTRAR (for preferred stock): Deposit Guaranty Natiorul Bank 1(kson. M6sissippi ' TRANSFER AGENT (for preferred stock) First National Dank of Jackson Ikhon. M6sissrppi
MI551551PPI POWER & UGHT COMPANY BULK RATE POST OFFICE BOX 1640 U. S. POSTAGE < JACKSON. MISSISSIPPI 39205 Pg PERMIT NO. 24
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