ML20073D783
| ML20073D783 | |
| Person / Time | |
|---|---|
| Site: | Perry  |
| Issue date: | 12/31/1990 |
| From: | TOLEDO EDISON CO. |
| To: | |
| Shared Package | |
| ML20073D774 | List: |
| References | |
| NUDOCS 9104290222 | |
| Download: ML20073D783 (27) | |
Text
T:F.:E "201:IJO 3D:: SON COK?ANY 1990 ANNUAL J.Fl_.1J_3OJR'J-l Subsidiary of Centerior Energy Corporation
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CONTENTS.
1 About 'Ibledo Edison -
1 Directors 1 Officers
.2 Report ofIndependent Public Accountants 3 Summary of Significant Accounting Policies 5.\\lanagement's Financial Analysis, Financial Statements and Notes 22 Financialand Statistical Review 24 Investor Information
l ABOUTTOLEDO EDISON DIREC'lDRS The Company, a wholly owned subsidiary Robert J. Farling, President and Chief of Centerior Energy Corporation, provides Operating Officer of Centerior Energy electric service to about 760,000 people in Corporation and Centerior Service Company.
a 2,500 square mile area of northwestern Ohio, including the City of'Ibledo. The Richard A. Aliller, Chairman and Chief Company also provides electric energy at Executive Officer of Centerior Energy wholesale to 13 municipally owned Corporation and Centerior Service Company.
distribution systems and one rural electric cooperative distribution system in its service 1,yman C. Phillips, Chairman and Chief area. The Company's 2,500 employees serve Executive Officer of the Company, President about 2b4,000 customers.
and Chief Executive Officer of The Cleveland Electric illuminating Company EXECUTIVE OFFICES and Executive Vice President of Centerior The 'Ibledo Edison Company Energy Corporation.
300 hladison Avenue Donald Il. Saunders, President of the Tbledo,01143652 0001 (419)249 5000 Company and Vice President of Centerior Service Company.
OFFICERS Chainnan and Chief Executive Officer.
. Lyman C. Phillips President
. Donald Il. Saunders Vice President & Chief Vinancial Officer
. Edgar Il. Alangans Vice President
. Fred 1, l.ange, f r.
Controller.,
. Paul G. Busby Treasurer
. Gary AI. flawkinson Secretary
. E. l. yle Pepin l
1
ARTHUR REPORT OF lNDEPENDENT PuauC ACCOUNTANTS ANDERSEN To the Share Owners of The Toledo Edison Company:
We have aud;ted the accompanying balance sheet and in our opinion, the financial statements referred to statement of cumulative preferred and preference above present fairly, in all matenal respects, the stock of The Toledo Edison Company (a wholly owned financial position of The Toledo Edison Company as of subsidiary of Centenor Energy Corporation) as of December 31,1990 and 1989, and the results of its December 31,1990 and 1989, and the related operations and its cash flows for each of the three statements of income, retained earnings and cash years in the period ended December 31,1990, in flows for each of the three years in the penod ended conformity with generally accepted accounting December 31,1990. These financial statements are principles.
the responsibility of the Company's management. Our As discussed further in the Summary of Significant responsibility is to express an opinion on these Accounting Policies and Notes 7 and 12, a change financial statements based on our audits.
was made in the methods of accounting for income We conducted our audits in accordance with taxes and unbilled revenues in 1988, retroactive to generally accepted auditing standards. Those January 1,1988.
Standards require that we plan and perform the audit to As discussed further in Note 3(c), the future of obtain reasonable assurance about whether the Perry Unit 2 is undecided Construction has been financial statements are free of matenal misstatement suspended since July 1985 Vanous options are being An audit includes examining, on a test basis, evidence considered, including resuming construction or supporting the amounts and disclosures in the financial canceling the unit Management can give no statements. An audit also includes assessing the assurance when, if ever, Perry Unit 2 will go in service accounting pnnciples used and significant estimates or whether the Company's investment in that unit and made by management, as well as evaluating the overall a retum thereon will ultimately be recovered-financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Cleveland, Ohio February 12,1991 Arthur Andersen & Co 2
l l
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES l
GENERAL factor This matches fuel expenses with fuet-related revenues i'
The Toledo Edison Company (Company) is an electnc utility and a wholly owned subsidiary of Centerior PRE PHASE IN DEFERRALS OF OPERATING Energy Corporation (Centenor Energy) The Company EXPENSES AND CARRYlNG CHARGES follows the Unifonn System of Accounts prescribed by the Federal Energy Regulatory Commission (FERC)
The PUCO authonzed the Company to record, as and adopted by The P"bhc Utihties Commission of Oho expenses (includ:ng lease deferred charges. operating'nd taxes) and interest (PUCO).
payments, depreciation a The Company is a member of the Central Area carrying charges ' r Beaver Valley Power Station Unit Power Coordination Group (CAPCO). Other members 2 (Beaver Valley Unit 2) from its commerciaNn-include The Cleveland Electnc illuminating Company service date in November 1987 through December (Cleveland Electoc), Duquesne Light Company 1988 Af ter the PUCO determined that Perry Nuclear (Duquesne), Ohio Edison Company and Pennsylvania Power Plant Unit 1 (Perry Unit 1) was considered Power Company. The members have constructed and "used and useful" in May 1987 for regulatory operale generation and transmission facilitics for the purposes the PUCO authonzed the Company to deter use of the CAPCO companies Cleveland Electric is operating expenses (including depreciation and also a wholly owned subsidiary of Centerior Energy taxes) for Perry Unit 1 from June 1987 through December 1987, when these costs began to be RELATED PARTY TRANSACTIONS recovered in rates The PUCO also authonzed the d f tra! f interest and equity carrying charges.
Operating revenues. operat'ng expenses and interest exclusive of those associated with operating expenses, charges include those amounts for transactions with for Perry Unit 1 from June 1987 through December affikated companies in the ordinary course of business 1987 and the deferral of only interest carrying charges operations from January 1988 through December 1988 The The Company's transactions with Cleveland Electnc amounts deferred for Perry Unit 1 pursuant to these are pomanly for firm power, interchange power.
PUCO accounting orders were included in property, transmission hne rentals and jointly owned power plant plant and equipment through the commercial in service operations and construction See Notes 1 and 2 d te in November 1987 Subsequent tc that date, Centenor Service Company (Service Company).
amwn s d fen fr ny nd 1 w m mcorded as the third wholly owned subsidiary of Centenor Ener0Y.
deferred charges Amortization of these Beaver Valley provides, at cost. management, fmancial, Unit 2 and Perry Unit I deferrals (called pre-phase in administrahve, engineering, legal and other services to deferrals) began in January 1989 in accordance with the Company and othar affikated companies The the January 1989 PUCO rate order discussed in Note Service ^ompany billed the Company $49,000,000.
6 The amortizations will continue over the hves of the
$40 000.000 and $43,000.000 in 1990.1989 and mlated property.
1988, respectively, for such services PHASE IN DEFERRALS OF OPERATING REVENUES EXPENSES AND CARRYING CHARGES Customers are billed on a monthly cycle basis for their energy consumption based on rate schedules or As dism%ed in Note 6, the January 1989 PUCO rate contracts authonzed by the PUCO or on ordinances order for the Company included an apprnved rate with individual municipahties Effective January 1, phase in plan for the Company's investnients and 1988, the Company changed its method of accounting leasehold interests in Perry Unit 1 and EIcaver Va!!ey to accrue the estimated amount of unbilled revenues Unit 2. On January 1,1989, the Company began (as defined in Note 12) at the end of each m inW.
recording the deferrals of operating expenses and A fuel factor is added to the base rates for electr.-
interest and equity carrying charges on deferred rate.
service This factor is designed to recover f om based investment persuant to the phase in plan customers the costs of fuel and most purchased These deferrals (called phase in deferrals) will be power. It is reviewed semiannually in a heanng before recosered by December 31.1998 the PUCO DEPRECIATION AND AMORTIZATION FUEL EXPENSE The cost of property, plant and equipment. except for The cost of fossil fuelis charged to fuel expense based the nuclear generating units. is depreciated over their on inventory usage. The cost of nuclear fuel. including estimated useful hves on a straight kne basis The an interest component. is charged to fuel expense annual straight hne depreciation provision expressed based on the rate of consumption Estimated future as a percent of average depreciable ut hty plant in nuclear fuel disposal costs are being recovered through service was 3 3% in 1990 and 3 6% in 1989 and 1988 the base rates The 1990 rate dochned because of a change in The Company defers the differences between depreciation rates attnbutable to longer estimated actual fuel costs and estimated fuel costs currently hves for nonnuclear property The PUCO approved this being recovered from customers through the fuel change in depreciation ates effective January 1.1990 3
which reduced depreciation expense for 1990 by DEFERRED GAIM AND LOSS FROM
$3,930,000 and increased earnings $2,500,000.
SALES OF UTILITY PLAMI' Depreciation expense for the nuclear Unit.iis based on the units of production method In 1990, the The Company entered into sale and leaseback Nuclear Regulatory Commission (NRC) approved a transactions in 1987 for the coal fired Bruce Mansfidd six year extension of the operating license for the Generating Plant (Mansfield Plant) and Beaver Valley Davis Besse Nuclear Power Station (Davis Besse).
Unit 2 as discussed in Note 2. These transactions The PUCO approved a change in the units of' resulted in a net gain for the sale of Mansfield Plant producten depreciation rate for Davis Besse effective and a not loss for the sale of Beaver Valley Unit 2, both January 1,1990 which recognized the life extension of which were deferred The Company is amortizing This change reduced depreciation expense for 1990 by the apphcable deferred gain and loss over the terms of
$3,830,000 and increased earnings $2,500,000 leases under sale and leaseback agreements The Etiective July 1988, the Company began the amortizations along with the lease expense amounts external funding of future decommissioning costs for its are recorded as other operation and maintenance operating nuclear units pursuant to a PUCO order.
expense.
Cash contributions are made to the funds on a straight line basis over the remaining licensing period for each unit. Amounts currently in rates are based on INTEREST CH ARGES past estimates of decommissioning costs for the Company of $59.000.000 in 1986 dollars for Davis-Debt interest reported in the income Statement does Besse and $28.000,000 in 1987 dollars each for Perry not include interest on nuclear fuel obkgations Interest Unit 1 and Beaver Valley Unit 2. Actual on nuclear fuel obligations for fuel under construction decommissioning costs are expected to exceed these is capitalized See Note 5 estimates it is expected that increases in the cost Losses and gains reahzed upon the reacquisition or estimates will be recoverable in rates resulting from redemption of long term debt are deferred, consistent future rate proceedings. The current level of expense with the regulatory rate treatment. Such losses and being funded and recovered from customers over the gains are either amortized over the remainder of the remaining hcensing periods of the units is original hfe of the debt issue retired or amortized over approximately $4,000.000 annually The present the hfe of the new debt issue when the proceeds of a funding requirements for Beaver Valley Unit 2 also new issue are used for the dubt redemption. The satisfy a similar commitment made as part of the sale amortizations are included in debt interest expense, and leaseback transaction discussed in Note 2 PROPERTY, PLANT AND EQUIPMENT FEDERAL INCOME TAXES The financial statements reflect the habihty method of Property, plant and equipment are stated at original accounting for income taxes as a result of adopting a cost less any amounts ordered by the PUCO to be new standard for accounting for income taxes in 1988.
written off. Included in the cost of construction are The habikty method requires that the Company's items such as related payroll taxes, pensions, fringe deferred tax habikties be adjusted for subsequent tax benefits, management and general overheads and rate coa %es and that the Company record deferred allowance for funds used during construction taxes for all temporary differences between the book
( AFUDC). AFUDC represents the estimated and tax bases of assets and habilities A portion of composite debt and equity cost of funds used to these temporary differences relate to timing finance construction. This noncash allowance is differences that the PUCO used to reduce prior years' credited to income, except for certain AFUDC for Perry tax expense for ratomaking purposes whereby no Nuclear Power Plant Unit 2 (Perry Unit 2). See Note deferred taxes were recoided. Since the PUCO 3(c). The gross AFUDC rate was 11.17 % 11.45%
practice permits recovery of such taxes from and 11.62% in 1990,1989 and 1988. respectively.
customers when they become payable, the not amount Maintenance and repairs are charged to expense as due from customers has been recorded as a regulatory incurred Certain maintenance and repair expenses for asset in deferred charges Perry Unit 1 and Beaver Valley Unit 2 are being For certain property, the Company received deferred pursuant to the PUCO accounting orders investment tax credits which have been accounted for discussed above The cost of replacing plant and as deferred credits, The amortization of these eqwpment is charged to the utikty plant accounts. The investment tax credits is reported as a redu; tion of cost of property rehred plus removal costs, af ter depreciation expense under the liabihty method. See deducting any salvage value, is charged to the Note 7.
accumulated provision for depreciation.
4
MANAGEMENT'S FINANCIAL ANALYSIS
$23.000,000 in 1991, and more or less in subsequent years, depending on the performance of the units RESULTS OF OPERATIONS Inabihty to obtain approva: of the second request Overview would reduce camings by as much as $15,000.000 in The January 1989 PUCO rate order which provided for 1991, and even more in subsequent years three rate increases for the Company, as discusGed in The Company has agreed to use its best efforts, Note 6, was designed to enable us to begin such as these two requests for accounting orders, to recovenng in rates the ust of, and earn a fair return avoid rate increases in the years immediately following on, our allowed investment in Beaver Valley Unit 2 and 1991. Eventually, rate increases will be necessary to Perry Unit 1 The rate order improved revenues and recognce the cost of our new cap.talinvestment and cash flow in 1989 and 1990 over 1988 levels.
the effect of inflation Revenues and cash flow in 1991 are expected to Annual sales growth is expected to average about exceed the 1938 levels However, as discussed more 2% for ihe next sevaral years, contingent on future fully in the fourth and fif th paragraphs of Note G. the economic events Recognizing the limitations imposed phase in plan was not designed to improve camings by these sales projections and competitive constraints, g
significantly because gains in revenues from the we will utilize our best efforts to minimize future rate higher rates and assumed sales growth are inillally increases through maximmng our cost reduction and offset by a corresponding reduction in the deferral of quahty of service ciforts and explonng other innovative nuclear plant operating expenses and carrying charges options We will concentrate our efforts on retaining and are subsequently offset by the amortization of customers and adding new ones through innovative such cost deferrals and carrying charges marketing and service initiatives Despite the positive effect the new rates have on 1990 vs.1989 revenues and cash flow and the relatively neutral E
impact they have on camings, we f ace a number of Factors contnbuting to the slight increase in 1990 other factors which will exert a negative influence on operating revenues are as follows camings in 1991 and beyond These include intlation.
g,g,,
g,,,n c,n g e,,,ng,,v,nuc, the current economic recession and competitive a se nates a d usceluneous.
$T6 900 000 forces The latter, coupled with a desire to encourage sales volume and ux (29 400 000) economic growth. has prompted the Company in SJes for Resae.
(7 200 00_0) recent years to enter into contracts having reduced 5 J0000 rates with certain large customers Competitive forces have also prompted the Company to offer a rate The major factor accounting for the increase in reduction package to residential and small commercial operating revenues was related to the January 1969 customers as discussed in the eighth and ninth rate order The PUCO approved annual rate increases paragraphs of Note 6. Two other factors are having a for the Company of 9% effective in February 1989 and negative influence on camings. First, the Company is 7% effective in February 1990 T,e associated currently recortling depreciation on nuclear units at a revenue increase in 1990 was partially offset by hiciher level thhn that which is reflected in rates reduced revenues resulting from a 4 9% decrease in b5cause of the good performance of the units over the total kilowatt hour sales Industnal sales decreased
!ast several ytars. Second, with respect to facilities 3 3% because of the recession beginning in 1990 Residential and commercial sales decreased 3 3% and placed b service atter February 1988 and not included 0.4% respectively, as seasonal ternperatures weie in rate base, the Company is currently required to more moderate in companson to the poor year s record interest charges and depreciation as current temperatures, resulting in reduced cJstomer heating expenses even though such items are not yet reflected and coohng related demand Other sales actMty decreased 14.6% pnmarily as a result of the e are taking several steps to counter the adverse Company s municipal utikty customars satisfying a effects of the factors discussed above We are greater portion of their power needs from other implementing the management audit sources recommendations discussed in the sixth paragraph of Operating expenses decreased 1.4% in 1990-Note 6 which are expected to reduce operating Depreciation and amortization expense decreased
~
expenses by about $44,000,000 annually. We have pomarily because of lower depreciation rates used in already shared 50% of the expected savings with 1990 for nonnuclear property and Davis Besse customers by reducing the 1991 rate increase granted attnbutable to longer estimated hves and because of under the 1989 rate order. However, continuing cost longer nuclear generating unit refueling and reduction efforts will be necessary to help offset the maintenance outages in 1990 than in 1989. Federal effect of inflation Also, the Company is seeking income taxes decreased pomanly because of a PUCO approval to accrue nuclear plant depreciation at decrease in prelax operating income These decreases a level which is more closely abgned with the amount in operating expenses were partially offset by an currently being recovered in rates by switching to the increase in taxes, other than federal income taxes, straight kne method The Company also will seek resulting from higher property and gross receipts approval to accrue post in-service interest carrying taxes, and by lower nuclear operating expense charges and defer depreciation charges for facihties deferrals for Perry Unit 1 and Beaver Valley Unit 2 that are in service but not yet recognized in rates pursuant to the January 1989 PUCO rate order.
Inabikty to obtain approval of the first accounhng Credits for carrying charges recorded in request would reduce earnings by as much as nonoperating income decreased in 1990 because a 5
greater share of out investments and leasehold 2 7% as a result of continuing growth from new office interests in Perry Unit 1 and Beaver Va! ley Unit 2 were buildings and retail outlets The comparatively recovered in rates Other income and deductions, net, moderate summer weather in 1989 lowered sales decreased pnmanly because of less interest income because of reduced air conditioning usage Residential in 1990, sales decreased 2 Sk industnal sales decreased These decreases were partially offset by an 1 1% as modest growth in industnat sales actreity in increase in federal income tax credits related to 1989 was offset entirely by the impact of the loss of a nonoperating income resulting from a decrease in large industnat customer to a municipal power system pretax nonoperating income and federal income tax in Clyde, Ohio, which began operating in Apnl 1989.
adjustmenis of $18.810.000 associated with previously That customer eccounted for 1.1% of the Company's deferred investment tax credits relating to the 1986 total electnc sales in 1988 wnte off of nuclear plant Interest expense decreased Operating expenses increased 18.9% in 1989 in 1990 because of refinancings by the Company and Lower deferrals of nuclear operating expense for Perry a lower levei of debt outstanding Unit 1 ana Beaver Valley Unit 2 resulted in a
$65.000.000 increase in expense Fuel and purchased 1989 vs.1988 p wer xp nse increased largely because of the Factors contnbuhn9 to the 31.7% increase in 1989 matching of expense with higher fuel cost recovery operating revenues are as follows revenues discussed in the preceding paragraph Change in opmating nevenues
( Decrease)
Improved nuclear unit availability enabled the Company saies 01 Capam to Cineiand &ctnc.
t 72 000 000 to sell power to other utilities other than Cleveland Base nates and M,scelianeous.
63 000 000 Electnc The excess of revenues over cost is treated as Nst o$Enua
$000 a reduction in purchaled power expense which saies voiume and Ma.
(2 000 000) cushioned the increase in fuel and purchased power
$ 99 000 000 expense for the year. Depreciation expense increased.
~
reflective of the increased generation from the A pomary factor fcr the increase in operating Company's nuclear units since they depreciation is revenues was a net increase in 1989 in the total sales recorded based on units of production.
to Cleveland Electnc of a portion of the Company's Nonoperating income credits for AFUDC and leased capacity entitlements in Beaver Valley Unit 2 carrying charges decreased in 1989 as a result of and the Mansfield Plant The sales from Beaver Valley investment in rate base pursuant to the rate placing' Interest expense and preferred dividend Unit 2 commenced in November 1988 as discussed in order.
Note 2 The sales from the Mansfield Plant were only requirements decreased in 1989 because of for a three-month penod in 1988 The anuary 1989 retirements and refinancings by the Company rate order for the Company was pomanly responsible for two major factors impacting the increase in EFFECT OF INFLATION revenues The PUCO granted the Company a 9% rate increase effective in February 1989 The increase in Although the rate of inflation has cased in recent years, revenues attnbutable to deferred construction work in we are still affected by even modest infiation since the progress (CWIP) revenues in 1989 resulted from the regulatory process introduces a time lag dunng which reduction in the amount of deferred credits for the increaied costs of our labor, materials and services are mirror CWIP refund obligations to customers Fuel cost not reflected in rates and fully recovered Moreover, recovery revenues increased in 1989 because of a regulation allows only the tecnvery of histoncal costs significant nse in the fuel cost recovery factors of plant assets through depreciation even though the compared to 1988. The lower 1988 factors recogneed costs to replace these assets would substantially a greater amount of refunds to customers ordered by exceed their histoncal costs in an inflationary economy.
the PUCO for certain rep!acement fuel and purchased Changes in fuel costs do not affect our results of power costs collected from customers dunng a 1985-operations since those costs are deferred until 1986 Davis-Besse outage. Total Iqiowmtt-hour sales reflected in the fuel cost recovery factor included in increased 2 4% in 1989 Commercial sales increased customers' bills RETAINED EARNINGS THE TOLEDO EDtSON COMPANY For the years ended December 31, 1990 1989_
1988 (tnousan1s v dollars)
Balance at Beginning of Year
$ 99,965
$ 89.614
$ 297,221 Additions Net income (loss).
81,424 92.678 (115.452)
Deductions Dividends declared Common stock.
(73,283)
(63.285)
(61.711)
Preferred stock...
(25,145)
(19.036)
(26.269)
Other, pnmanly preferred stock redemption expenses.
(5)
_j6 )
(4.175)
Net increase (Decrease)
J17,009) 10 351 (207,607)
Balance at End of Year.
$ 8_2j5_6
$ 99,965
. - - -. -$_8_9114_
The accompanying notes and summary of significant accounting policies are an integral part of this statement.
6
INCOME STATEMENT mE 10d00 EDISON COMPANY For thejears ended December 31.
1990 1989 1988 (thousands of dollars)
Operating Revenues (1)
$_827 086
$826.803
$ 627,997 2
Operating Expenses Fuel and purchased power.
138,222 133.400 116.161 Other operation and maintenance 373,374 372,530 358,823 Depreciation and amortization 75,986 87,639 75.093 Taxes, other than federalincome taxes 79,320 72.123 80,138 Phase in deferred operating expenses (16,980)
(22.535)
Pre-phase in deferred operating expenses.
3,681 4.044 (83,813)
Federal income taxes.
_21,041 37.285 29.242 674,644 684,486 575,644 Operating income.
152,442 142,317 52.353 Nonoperating income (Loss)
Allowance for equity funds used dunng construction.
3,352 8,568 5,452 Other income and deductions,001.
6,149 20,361 30,233 (276,955)
Wnte off of nuclear costs.
Phasc in carrying charges.
43,487 82,308 129,632 he phcse in carrying charges,
Federal tecome taxes - credit (expense) 8,664 (21.563) 86,244 61,652 89,674 (25,394)
Income Bek,re Interest Charget, 214,094 231,991 26,959 Interest Charges Debt interest 135,344 144,792 150,523 Allowance for borrowed funds used donng construction.
(2,674)
(5.479)
_ (1,833) 132,670 139.313 148.690 income (Loss) Before Cumulative Effect of an Accounting Change.
81,424 92,678 (121.731)
Cumulative Effect on Prior Years (to December 31,1987) of an Accounting Change for Unbilled Revenues (Net of income Taxes of $4,177,000) 6,279 Not income (Loss) 81,424 92,678 (115/52)
Preferred Dividend Requirements,
25,159 25.390 26,983 Earnings (Loss) Available for Common Stock.
$J6J65
$ 67.288
$_(142,435 )
(1) includes revenues from capacity sales la Cleveland Electnc of $102,773,000, $104.127,000 and $31,774,000 in 1990.1989 and 1988, respectively The accompanying notes and summary of significant accounting policies are an integral part of this statement.
7
MANAGEMENT's FINANCIAL ANALYSIS CAPITAL RESOURCES AND LIQUIDITY economical, we may also redeem additional securities oing program of under optional redemption provisions See Notes We continue to need cash for an ong'fying existing constructing new facihties and modi 10(c) and (d) for information concerning hmitations facihties to meet anticipated demand for electric on the issuance of preferred and preference stock and debt.
service, to comply with governmental regulations and to improve the environment. Cash is also needed for Our capital requirements willincrease ef ter 1997 by about $30,000,000 to $35,000.000 as a result of the mandatory retirement of secunties Over the three.
year period of 1988 1990, these construction and Clean Air Act of 1990 (Clean Air Act) We believe that mandatory retirement needs totaled approximately no further significant capital expenditures will be
$435,000,000 In addition, we exercised various required to comply with the new law See Note 3(b).
We expect to be able to raise cash as needed. The options to redeem and purchase approximately
$275.000,000 of our secunties.
availabikty of capital to meet our external financing During the 19881990 period, the Company issued needs, however, depends upon such factors as
$174,100,000 of first mortgage bonds and obtained a financial market conditions and our credit ratings.
$15,000,000 term bank loan The Company utikzed Current secunties ratings for the Company are as foHows:
its short term borrowing arrangements (explained in standard Mon ly's Note 11) which resulted in the Company having
& Poor s investors
$23,200,000 of commercial paper and $16,000,000 in comoraion service notes payable to affikates outstanding at December First mortgage bonds BBB-Baa3 31,1990. Proceeds from these financings were used unsecured notes.
BB+
Bat to pay our construction program costs to repay Preferred stock.
Be+
ba2 portions of short term debt incurred to finance the construction program, to retire, redeem and purchase A wnte off of the Company's investment in Perry outstanding secunties, and for general corporate Unit 2, as discussed in Note 3(c), depending upon the purposes magnitude and timing of such a wnto off, could reduce The Company was granted rate increases effective retained eamings sufficiently to impair the Company's in 1989,1990 and 1991 pursuant to the January 1989 abihty to declare dividends, but would not affect cash PUCO rate order. See Note 6 for a discussion of the flow.
rate order which provides for specific levels of rate The Tax Reform Act of 1986 (1986 Tax Act) increases through 1991. Although the rate order provided for a 34% income tax rate in 1988 and required us to write off certain assets in 1988 which thereafter, the repeal of the investment tax credit, lowered our earnings base, our current cash flow was scheduled reductions in investment tax credit not impaired. Internally generated cash increased in carryforwards, less favorable depreciation rates, a new 1989 and 1990 from the 1988 level as a result of the alternative minimum tax ( AMT) and other items.
rate increases.
These changes had no s:gnificant cash flow impact in Estimated cash requirements for 1991 1993 are 1988 because we had a not operating loss for tax
$235.000,000 for our construction program and purposes. The changes resulted in decreased tax
$297,000,000 for the mandatory redemption ^f debt payments and an increase in cash flow dunng 1989
- and prefctred stock We expect to finance externally because the tax savings resulting from available tax about 75% of our 1991 construction and mandatory deductions were utikzed on the consohdated tax etum redemption requirements of approximately in determining the AMT. In 1990, the changes resulted
$ 177,000,000. We expect to finance externally about in increased tax payments and a reduction in cash 60% to 70% of our 1992 and 1993 requirements. If flow because we were subject to the AMT 5
CASH FLOWS M TORDO EDISON COMPANY For the years ended D_ecember 31, 1990 1989 1988 (mousands of coitars)
Cash Flows from Operating Activities (1)
$ l15 452)
]
Net income (Loss),
$ 81,424
$ 92.678 j
Adjustments to Reconcile Net income (Loss) to Cash from Operating Activities:
Depreciation and amortization 75,986 87,639 75,093 Deferred federal income taxes.
30,642 79,199 (62,598)
Investment tax credits, net (17,063) 1,237 6.920 276,955 Write off of nuclear costs, Deferred and unbilled revenues.
(22,658)
(42,624) 14,642 Deferred fuel (433) 16,259 (20,693)
Carrying charges capitalized, (43,487)
(82,308)
(129,632)
Leased nuclear fuel amortization 37,122 46,408 32,285 Deferred operating expenses, net (13,299)
(18,491)
(83,813)
Allowance for equity funds used during construction.
(3,352)
(8,568)
(5,452)
Amortization of reserve for Davis Besso refund obkgations to (12,655)
(20,777) customers..
Pension settlement gain.
(6,449)
(6,279)
Cumulative effect of an accounting change,
Changes in amounts due from customers and others, net.
(9,433)
(4,406) 13,472 Changes in inventories.
(0,521) 1,890 904 Changes in accounts payable 17,464 8,896 19,472 Changes in working capital affecting operations, 1,528 (30,713) 11,766 Other noncash items 5,503
_, 5.896 9.358 Total Adjustments.
45,550 47,659 131,623 Net Cash from Operating Activities.
126,974 140.337 16,171 Cash Flows from Financing Activities (2)
Bank loans, commercial paper and other short term debt 23,200 Notes payable to affuates,
16,000 (68,000)
Debt issues:
First mortgage bonds,
67,300 56,100 50,700 15,000 Term bank loan,
Matunties, redemptions and sinking funds,
(183,477)
(65,006)
(222,166)
Nuclear fuellease and trust obkgations (42,947)
(39,015)
(32,285)
Dividends paid.
(98,427)
(88,743)
(89,054)
Premiums, discounts and expenses
_ (1,845)
(925) 1.489 Net Cash from Financing Activities J205,196)
(137,589)
(359,316)
Cash Flows from Investing Activities (2)
Cash applied to construction (80,667)
(65,296)
(113,174)
Interest capitalized as allowance for borrowed funds used during construction,
(2,674)
(5.479)
(1,833)
Loans to affiliates 114,000 (114,000) 109,976 Cash withdrawn from sale and leaseback trust.
Other cash received (apphed)
(4,022) 831 3,947 Net Cash from Investing Activities.
_ 26,637 (183.944)
(1.084)
Net Change in Cash and Temporary Cash Investments..
(51,585)
(18 t,196)
(344.229)
Cash and Temporary Cash Investments at Beginning of Year.
73,692 254,888 599,117 Cash and Temporary Cash Investments at End of Year 5 22,107
$_7_3 69_2
$ 254,888 (1) laterest paid was $138,000,000, $141,000,000 and $150,000.000 in 1990,1989 and 1988, respectively.
Income taxes paid were $2,272,000 in 1990 No income taxes were paid in 1989 and 1988-(2) Increases in nuclear fuel and nuclear fuel lease and trust obhgations in the Balance Sheet resulting from the noncash capitakzations under nuclear fuel agreements are excluded from this statement.
The accompanying notes and summary of significant accounting pohcies are an integral part of this statement.
9
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t BALANCE SHEET December 31, 1990 1989 (thousands of dollars)
ASSETS PROPERTY, PLANT AND EQUIPMENT Utility plant in service.....
$2,607,010
- $2,532.291 Less: accumulated depreciation and amortization-646,193 567,197 1,960,817 ~
1.965,094 Construction work in progress 93,154-84,586 Perry Unit 2.........,,,,
343,685 345.754 2,397,656 2.395,434 Nuclear fuel, net of amortization..,,.,
221,848 235.193 Other prcperty, less accumulated depreciation...............
2,02_4 2,125 2,621,528 2.632,752 CURRENT ASSETS Cash and temporary cash investments,........,,,,....
22,107 73,692 Amounts due from customers and others, not,.....
63,233 53,800 Accounts receivable from affiliates 29,999 35.114 114.000 Notes receivable from affiliates...............
Unbilled revenues..........,
20,166 23,525
-Materials and supplies, at average cost.......,,,....,..
32,666 26,841 Fossil fuel inventory, at average cost..
15,578 14.882
. Taxes applicable to succeeding years 63,375 61,967 j
- Other...
2,473 4.815 249,597 408.636 DEFERRED CHARGES Amounts due from customers for future federal income taxes.
494,454 519,469 Unamortized loss from Beaver Valley Unit 2 sale.,
119,623 122.911 Unamortized loss on reacquired debt,,.
27,404 28,528
-Carrying charges and operating expenses, pre phase.in 255,020 257,709 Carrying charges and operating expenses, phase in......
165,310-104,843 Other..
68,582 63.998 1,130,393 1,097,458
$4 001518
$4.138.846 -
Total Assets.
1 The accompanying notes and summary of significant accounting policies are an integral part of this statement.
10
- -, _. ~ -
. - ~
THE 101.EDO EDISON COMPANY December 31, 1990 1989 (thousands of dollars).
CAPITALIZATION AND LIABILITIES CAPITALIZATION Common shares. $5 par value: 60.000.000 authorized; 39,134.000 outstanding in 1990 and 1989......
$ 195,687
$ 195,687 Premium on capital stock,.
481,082 481.082 Other paid in capital......,,
121,059 121,059
' Retained earnings..
82,956 99.965 Common stock equity.
880,784 897.793 Preferred stock:
With mandatory redemption provisions,
66,328 68.990 Without mandatory redemption provisions.
210,000 210.000 Long. term' debt..
1,097,326 1.197,277 2,254,438 2.374,060 OTHER NONCURRENT LIABILITIES Refund obligations to customers..
23.780 Other primarity nuclear fuellease obligations,
228,844-252.460 228,844 276,240 CURRENT LIABILITIES
' Current portion of long. term debt and preferred stock 116,150 114,870 Current portion of lease obligations....
50,389 44.480 Notes payable to banks and others.....,,
23,200 Accounts payable,,.
125,802-108.338 Accounts and notes payable to affiliates.....,,,,,..
31,626 8,311 Accrued taxes..
96,973 94,990 Accrued interest.
31,665 39,075
- Accrued payroli and vacations..
6,597 6,885
. Current portion of refund obligations to customers 23,888-26.125 Other.,.
4,628 10,749 510,918 453.823 DEFERRED CREDITS Unamortized investment tax _ credits 83,377 103,349 Accumulated deferred federal income-taxes...,
571,233 565,266 Reserve for Perry Unit 2 allowance for _ funds used during construction.,,,
88,295 88,295 Unamortized gain from Bruce Mansfield Plant sale.
236,835 247,305 Other,.
27,578 30,508 1,007,318 1.034,723 Total Capitalization and Liabilities
$4,001,518
$4.138,846 11
STATEMENT OF CUMULATIVE PREFERRED -
THE TOLEDO EDISON COMPANY.
' AND PREFERENCE STOCK-1990 Shares Current December 31 Outstanding Call Pnce 1990 1989 (thousands of donars) -
j
$100 par-value, 3,000,000 preferred shares authorized; $25 par value, 12.000,000 preferred shares authorized; and $25 par value, 5.000,000 preference shares authorized, none outstanding Preferred, subject to mandatory redemption:
- $100 par $11.00 -
-34.825
$101.00
$ 3,483
$. 4,480 9.375 150.100 103.95 15,010 16,675 25 par 2.81,..
2,000,000 26.87 50,000 50.000 68,493 71.155 Less: Current maturities 2,165 2,165 Total Preferred Stock, with Mandatory Redemption Provisions
$, 66,328
$ 68,990 Preferred, not subject to mandatory' redemption:
$100 par $ 4.25 160,000 104 625
$ 16,000
$ 16.000 4,56...
50,000 101.00 5,000
'5.000 4.25, 100,000 102.00 10,000 10,000 8.32.
100,000 102.46 10,000 10.000 7.76....,,..,,,,
150.000 102 437 15,000 15,000 7.80,.,.
150,000 101.65 15,000 15,000 10.00 190,000 101.00 19,000 19,000-I i
L 25 par.
2.21.
1.000.000 25.90 25,000 25,000 l.
2.365 _
1,400,000 28.45 -
35,000 35,000 i
Series A Adjustable..
1,200,000 25.75 30,000 30,000 i
Series B Adjustable..
1,200,000 30,000 30,000-
. Total Preferred Stock, without Mandatory Redemption Provisions
$210,000 p10,000 '
l~
The accompanying notes and summary of significant accounting pokcies are an integral part of this statement.
t 12
NOTES TO THE FINANCIAL STATEMENTS (1) PROPERTY OWNED WITH OTHER UTILITIES AND INVESTORS The Company owns, as a tenant in common with other utikties and those investors who are ownet participants in various sale and leaseback transactions (Lessors), certain generating units as listed below. Each owner owns an undivided chare in the entire unit, Each owner has the right to a percentage of the generating capability of each unit equa! to its ownership share. Each utihty owner is obhgated to pay for only its respective share of the construction and operating costs. Each Lessor has leased its capacity rights to a utility which is obligated to pay for such lessor's share of the construction and operating costs The Company's share of the operating expense of these generating units is included in the Income Statement, Property, plant and equipment at December 31,1990 includes the following facilities owned by the Company as a tenant in common with other utilities and Lessors:
Owner-In ~
Owner-sh4p Plant Construction Service ship Mega.
Power in Work Accumulated Generating Unit Date Share watts Source Service in Progress Depreciation (thousands of dollars) in Serv cc Dans besse.....
1977 48 62*.
428 Nuclear
$ 628.744
$ 32.273
$119.102 Perry Unit 1 and Common Facilites.
1987 19 61 238 Nuclear 917.939 5.057 102.296 Beaver Valiey Unit 2 and Common Facilites (Note 2).,
1987 1 b5 13 Nuclear 181,798 3.590 18.892 Constnetion Suspended (Note 3(c))-
Perry Unit 2.
Uncertain 19 91 240 Nuclear 343 685
$1.728 481
$384.605 g29J (2) UTILITY PLANT SALE AND LEASEBACK TRANSACTIONS As a result of sale and leaseback transactions Beaver Valley Unit 2 lease was $72,276.000 in both completed in 1987, the Company and Cleveland 1990 and 1989 and $71,810,000 in 1988. Of the 1988 Electric are co lessees of 18.26% (150 megawatts) of rental expense amount for Beaver Valley Unit 2, a Beaver Valley Unit 2 and 6.5% (51 megawatts),
portion ($58,254,000) was recorded in a deferred 45.9% (358 megawatts) and 44.38% (355 charge account pursuant to PUCO accounting orders.
megawatts) of Units 1,2 and 3 of the Mansfield Plant, This deferred amcunt is being amortized to expense respectively, all for terms of about 29W years, over the hfe of the lease beginning in 1989, As co lessee with Cleveland Electric, the Company The Company and Cleveland Electnc are is also obhgated for Cleveland Electnc's lease responsible under these leases for paying all taxes, payments. If Cleveland Electric is unable to make its insurance premiums, operation and maintenance costs payments under the Mansfield Plant leases, the and all other similar costs for their interests in the units Company would be obhgated to make such payments.
sold and leased back. The Company and Cleveland No payments have been made on behalf of Cleveland Electric may incur additionat costs in connection with Electnc to date.
capitalimprovements to the units. The Company and Future minimum lease payments under these Cleveland Electoc have options to buy the interests operating leases at December 31, 1990 are back at the end of the leases for the f air market value at summanzed as 'ollows:
that time or to renew the leases Additiona! lease For provisions provide other purchase options along with Year Co ny c
(and possible repurchase of the leasehold interests)
(thousands of deilars)
$0 noncomphance with several knancial covenants
$ 1 1993[
111 000 63 000 affecting the Company, Cleveland Electric and 1994 111.000 63.000 Centerior Energy contained in an agreement relating to 1995.
111.000 63,000 a letter of credit issued in connection with the sale and Later Years,
2,592 000 1,579.000 leaseback of Beaver Valley Unit 2, as amended in Total Futu.e Minimum 1989. See Note 10(d).
Lease Pafments.
$3142 000
$ 1.894.000 The Company is selkng 150 megawatts of its Beaver Valley Unit 2 leased capacity entitlement to Semiannuallease payments conform with the payment Cleveland Electnc. This sale commenced in November schedule for each lease.
1988 and we anticipate that it will continue at least Rental expense is accrued on a ctraight-kne basis until 1998 Revenues recorded for this transaction over the terms of the leases The amount; reconJed by were $102,773,000. $104,127,000 and $18,533.000 the Company as rental expense for the Mansfie!d in 1990,1989 and 1988, respectively. The future Plant leases were $44.556,000 in both 1990 and 1989 minimum lease payments associated with Beaver and $43.095,000 in 1988. Rental expense for the Valley Unit 2 aggregate $1,936.000.000.
13
(3) CONSTRUCTION AND CONTINGENCIES (Superfund) estabhshed programs addressing the cleanup of hazardous waste disposal sites, emergency (a) CONSTRUCTION PROGRAM preparedness and other issues. The Company is The estimated cost of the Company's construction aware of its potentialinvolvement in the cleanup of two program for the 1991 1993 period is $252,000,000, hazardous waste sites. We beheve that the ultimate including AFUDC of $17,000,000 and excluding outccme of these matters will not have a material nuclear fuel.
adverse effect on the Company's fnanc al condition or r suits of operations.
(b) CLEAN AIR LEGISLATION The Clean Air Act will require, amcng other things-(4) NUCLEAR OPERATIONS AND reductions in the emission of sulfur dioxide and CONTINGENCIES nitrogen oxides by the Company's fossil fueled electric generating units. Centenor Energy's prehminary (a) OPERATING NUs f!AR UNITS analysis indicates that compliance with the Clean Air Act by the Company is expected to result in somewhat The Company's interests in nuclear units may be higher fuel and operation and maintenance expenses.
impacted by activities or events beyond the Furthermore, comphance will require additional Company's control. Operating nuclear generating units aggregate capital expenditures in the range of have expenenced unplanned outages or extensions of
$30,000,000 to $35,000,000 af ter 1997 to meet the scheduled outages because of equipment problems nitrogen oxide emission limitation and for sulfur dioxide or new regulatory requirements A major accident at a and nitrogen oxide emission monitors. We beheve that nuclear facility anywhere in the world could cause the reduction of sulfur dioxide emissions will not require NRC to kmit or p ohibit the operation, construction or installation of scrubtos. A more specific comphance keensing of any nuclear unit. If one of the Company's cost estimate will become available when Centerior nuclear units is taken out of service for an extended Energy's comphance strategy for the Company and penod of time for any reason, including an accident at Cleveland Electric is further developed. We believe that such unit or any other nuclear f acihty, we cannot Ohio law would permit the recovery of comphance predict whether regulatory authonties would impose costs from customers in rates. Any rate increase is unfavorable rate treatment such as taking the expected to be minimal.
Company's affected unit out of rate base. An extended outage of one of the Company's nuclear units coupled (c) PERRY UNIT 2 with unfavorable rate treatment could have a material Perry Unit 2, including its share of the common adverse effect on the Company's financial position and facihties, is over 50% complete. Construction of Perry results of operations.
Unit 2 was suspended in 1985 by the CAPCO (b) NUCLEAR INSURANCE companies pending future consideration of various options, including resumption of full construction with a The Pnce Anderson Act limits the liabikty of the owners revised estimated cost and completion date or of a nuclear power plant to the amount provided by cancellation. No option may be implemented without private insurance and an industry assessment plan In the approval of each of the CAPCO companies.
the event of a nuclear incident at any unit in the Duquesne, a 13.74% owner of Perry Unit 2, has United States resulting in losses in excess of the level advised the Pennsylvania Pubhc Ulikty Commission of private insurance (currently $200,000,000), the that it will not agree to resumption of construction of Company's maximum potential assessmont under that Perry Unit 2. The NRC construction permit for Perry plan (assuming the other CAPCO companies were to Unit 2 expires in November 1991. Cleveland Electric, contribute their proportionate share of any the company responsible for the construction of Perry assessment) would be $58,503,000 (plus any inflation Unit 2, plans to apply for an extension of the adjustment) per incident, but is hmited to $8,844,000 construction permit prior to the expiration date. Under per year for each nuclear incident.
NRC regulations, this action will cause the The CAPCO companies have insurance coverage construction permit to remain in effect while the for damage to property at Davis Besse, Perry and appkcation is pending.
Beaver Valley (including leased fuel and clean-up If Perry Unit 2 were to be canceled, then the costs). Coverage amounted to $2,325,000,000 for Company's net investment in Perry Unit 2 (less any tax each site as of January t,1991. Damage to property saving) would have to be wntlen off. We estimate that could exceed the insurance coverage by a substantial such a write off, based on the Company's investment amount If it does, the Company's share of such in this unit as of December 31,1990, would have been excess amount could have a matenal adverse effect on about $173,000,000, af ter taxes. See Notes 10(b),
the Company's financial condition and results of (c) and (d) for a discussion of other potential operations.
consequences of such a wnte off.
The Company also has insurance coverage for the Beginning in July 1985, Perry Unit 2 AFUDC was incremental cost of any replacement power purchased credited to a deferred income account until January 1, (over the costs which would have been incurred had 1988, when the practice was discontinued the units been operating) af ter the occurrence of certain types of accidents at the Company's nuclear (d) SUPERFUND SITES units The amounts of the coverage are 100% of the The Comprehensive Environmental Response, estimated incremental cost per week during the 52-Compensation and Liabikty Act of 1980 as amended week period starting 21 weeks af ter an accident,67%
H
of such estimate per week for the next 52 weeks and giving eNect to the rate reaction proposals discussed 33% of such estimate pot week for the next 52 weeks below.
The cost and duration of replacement power could The January 1989 rate order provided for the substantially exceed the insurarce coverage.
permanent exclusion from rate base of a portion of the Company's investment in Perry Unit 1 The exclusion resulted in a write off by the Company of (6) NUCLEAR FUEL
$242.000,000 ($100.000,000 af ter tax) in 1988 3
The Company has inventones for nuclear fuel which Since the order effectn,ely eliminated the possibility of should provide an adequate sur ply into the mid-1990s the Company recovering its remaining investment in Substantial additional nuclear 'oel mum be obtained to four nucicar construction projects canceled in 1980 supply fuel for the remaining useful lives of Davis-and recovenng certain deferred expenses for Davis-Besse, Perry Unit 1 and Beaver Valley Unit 2 More Besse, additionai write offs totaling $35.000,000 nuclear fuel would be required if Perry Unit 2 were
($21000,000 af ter tax) were recorded by the completed Company in 1988, bringing the total wnto oH of nuclear in 1989, existing nuclear fuel financing costs as a consequence of the order to $277,000,000 arrangements for the Company and Cleveland Electric
($161,000,000 af ter tax).
were refinanc(1 through leases from a special.
The phase in plan under the January 1989 ratu j
purpose corporation. Th; fotal amount of financing order was designed to that the three rate increases, currently available undur these lease arrangements is coupled with then projected sales growth, would
$609.000,000 ($309 Om '00 from intermediate term provide revenues sufficient to recover all operating e
notes and $300,m J am bank credit expenses and provide a fair rate of return on the arranguments), althou 9 ' :,,cing in an amount up to Company's allowed investment la Perry Unit 1 and
$900,000.000 is pern nsd The intermediate-term Beaver Valley Unit 2 for ten years beginning January 1, notes maiore in the penod 1993 1997 Beginning in 1989. In the early years of the plan, the revenues were 1991, the bank credit arrangements are cancelable on exp ted tc be less than that required to recover two yeart notice by the lenders As of December 31, opeia.ing expenses and provide a fair return on 19s0, $233.000,000 of nuclear fuel was financed for investment. Tnerefore, the amounts of operating the Compant The Company and Cleveland Electnc expenses and retum on investment not currertly severally lease thSir respectiu portions of the nuclear recovered are deferred and capitalaed as deferred fuct and are obligated to pay for the fuel as it is charges Since the unrecovered investment will decline consumed in a reactor. The lease rates are based on over the penod of the phase in ptan because of various intermediate term note rates, bank rates and depreciation and federal income tax benefits that commercial papct rates.
result from the use of accelerated tax depreciation, the The amounts financed for the Company include amount of revenues required to provide a fair return nuclear fuel in the Davis Besse, Perry Unit I and also declines Beginning in the sixth year, the revenue Beaver Valley Unit 2 reactors with remaining lease levels authorized pursuant to the phase in plan were payments of $62,000,000, $18,000,000 ano designed to be sufficient to recover that penod's
$26,000,000, respectively, as of December 31,1990 operating expenses, a fait return on the unrecovered The Company's nuclear fuel amounts financed and investment, and amortization of deferred cperating capitalized also included interest charges incurred by expenses and carrying charges recorded dunng the the lessors amounting to $14,000,000 in 1990, earlier years of the plan. All phase in deferrals af ter
$19,000,000 in 1989 and $18,000,000 in 1988 The December 31,1988 relating to these two units will be estimated future lease amortization payments based recovered by December 31,1998 Pursuant to such on projected consumption are $49,000,000 in both phase in plan, the Company deferred the following:
1991 and 1992, $50,000,000 in 1993, $48,000,000 in 3990 i989 _
1994 and $43,000,000 in 1995. As these payments gwu %,y ate made, the amount of credit available to the lessor Deterred One atag hpenses.
$16 9R3
$22 335 becomes available ic finance additonal nuclear fuel,
~ - -
Can avs assuming the lessor's intermediate term notes and
$21,361
$30 617 bank credit arrangemerds continue to be outstanding E quit y 22 126 51.691 (6) REGULATORY MATTERS On January 31,1989, the PUCO issued an order which Undc' the Muary 1989 rate order, the amount of provided for three annual rate increases for the deferred operating w,oonses and carrying charges Company of approximately 9% 7% and 6% cHective scheduled to be recorded in 1991 through 1993 total w th bitis rendered on and atter February 1,1989,1990
$24,000,000, $33,000,000 and $15,000,000, and 1991 respectively. The 6% increase effective respectively The phase in plan was des %ned so that February i,1991 has been reduced to 2.74% as fluctuatans in sales should not affect the level of discussed below.
eamings The order accomplishes this by allowing the The annualized revenue increases in 1989 and Company to seek PUCO approval to adjust cost 1990 associated with the rate order were $50,700,000 deferrals if actual revenues are higher or lower than and $4(300,000, respectively. In 1991, the estimated amounts projected in the order. The order also provides annurlized revenue increase resulting from the order, for the adjustment of deferrals to reflect 50% of the net as adjusted, would have been $18,600,000 before af ter tax savings in 1989 and 1990 identified by the 15
management audit and approved by the PUCO as reduction in resident:al rates of 3% on March 1,1991 discusc.e 'in the followinq paragraphs No change was and a further residential rate toniction of 1% on mt.de ' 90 cost deferrals for 1989. The Company September 1,1991 Commmtie. accepting the l
- redo, its deferral of carrying charges by package must agree to keep
. vmpany as their sole
$13.933,000 in 1990 and will request PUCO approval suppher of electncity for a penod of fue years The of the adjustment package also permits the Company to adjust rates in in connection with the Company s 1989 order and a those communities on February 1,1994 and February simdar order for Cleveland Electnc, the Company, 1.1995 it inflation exceeds specified levels or under Clevelanet Electnc and the Seivice Company have emergency conditions All chgtbie communities in the undergone a management audit to assure that Company's service area. except the City of Toledo, operation and maintenance capense savings are have accepted the rate reduction package maximized The audit was conducted under the The Company plans to request PUCO approval to direction of an Audit Advisory Panel ( Audit Panel) reduce rates to the same tevels for the same Customer composed of representatives of Centenor Erargy, the categones in the City of Toledo and the rest of its Ohio Office of Consumers' Counsel and the industnal service area if all areas now served by the Compar.y Energy Consumers in Apol 1990 the Audit Panel receive the benefits of inc iower eaies. annuahzed announced that it had identified potential annual revenues w'll be reduced by about $17,000.000 The savings in operating cepenses in the amount of revenue reductions will not adversely affect the phase-
$98,160,000 from Centenor Energy's 1989 budget in plan as the decrease in revenues will be mitigated level The amount of potential savings attributable to by the cost reductions discussed above the Con.pany is 45% ($44,172.000) The Company The Company has enterad into an agreement with expects to begin reakzing most of the savings other members of the Audit Panel in which the identified by the audit by the end of 1991 Company has agreed to use its best efforts to avoid Fifty percent of the savings identified by the Audit rate increases in the years immediately following 1991 Panel were used to reduce the 6% rate increase The 1989 order also sets nuclear performance scheduled to go into effect on February 1.1991. As standards through 1998 Beginning in 1991, the discussed previously, the Company's ratos increased Company could be required to refund incremental 2 74% under this provision as approved by the PUCO replacement power costs if the standards are not mal in January 1991.
We do not beheve ary refund will be required for the in a move to become more competitive in notthwest Company for 1991 Fossil fueled power plant CRio, the Company has proposed a rate reduction performance inay not be raised as an issue in any rate package to all incorporated communities in its service proceeding before February 1994 as long as the area which are served ciclusively by the Company on Company and Cleveland Electnc achieve a system-a retail basis The package calls for the ohmination of wide avadabihty factor of at least 65% annually This the 2 74% rate increase effective February 1,1991 for standard was exceeded in 1989 and 1990 all residential and small commercial customers a (7) FEDERAL INCOME TAX Federalincome tax. computed by multiplying income before taxes by the statutory rates,is reconciled to the amount af federalincome tax recorded on the books as follows-For the yeart, ended Decomter 31.
1990 1989 1968 _
(thousands of dallars)
Dook Income (Loss) Before f ederal income ir.u.
gj3 By
$ 1515_26
$]168 27])
Tai on book income (Los.s) at Statutory hate
$ 31892 5 51 519
$ ( E7 214 )
Increase (Decrease) in Ian Acco! crated deprec;ahon.
(853) 5.993 529 trwestment tan creG1s on d'sallowed nuclear plant.
(18 810)
Organaahon costs.
2 274 Taxes, otner than federal income tases.
(2 c47 )
(107) 4 292 Other items.
2795 1443 (2 706)
Total f ederal income Tax [sponse (Credit).
$ 12_377 QB{B
$ (52 825) 16
Federalincome tax expense is recorded in the income Statement as follows r of tr+ vears ended DMember 31 1930 tim 9 1988 (thausands '>f dalla's)
Operating E apenses Cunent Tan provison.
1 17 045 5(11.458) 1 (3.132)
Changes in Accumulated Detened I ederal locome las
/stcelerated dep>eciaton and amorteaton 1580 8 764 1.723 Attemative minimum tar credit =
(5 480) 21291 Saie and leaseback transu hons and amortanton.
5.121 455 14.763 Property tax expense.
(4 011)
(6 058)
Defei,cd CMP revenues.
9 393 11.726 (4 331)
Detened f uel costs.
(4 021)
(1229) 419B System development costs.
248 207 3 639 Daws Dest.e replacemant ponov.
5 055 8375 Federat income tan retum adjustments (272)
Reacqueed detit costs
('32)
(378) 4.646 Defened uperahng expenses.
996
( t 208) 4 039 Net operating ioss carryforward.
(2 645)
Other items,..
(460) 2.398 (4223) investrnent Ian Credits.
I 162 1 722 6 920 lotal Charged to Operating E apenses.
21.041 37 285 20 242 Nonoperating income Current f ax Prouson...
(18 242)
(10 129)
Changes in Accumuiated Deferred Fede'aiincome Tat 2 709 Caes Desse replacement power.
wnte oli of nuclear costs (10.157)
(97277)
AFUDC and canying thwges.
t6 B35 32 930 46 543 Net operating ioss carrytorward (36 831)
Other items.
2 900 (1 238)
(1.388)
Total [upense (Credit) 1o Nonoperating ecome (8 664) 21 563 (86 244) federallacomo las included in Cumulative Lrtent of an Accounhng Change for Unbiiled nevenues.
4 177 Total f ederal locome Tai l upense (Credit).
$_12,37 7
$_58 848 1(52 825)
The Company joins in the fihng of a conschdated federalincome tax return with its affihated companies The method of tax allocation approximates a separate return result for each company.
In 1988, a change was made in accounting for income taxes from the deferred ta the habihty method. This change did not impact net income as the additional deferred taxes recorded were off set by a regulatory asset on the Balance Sheet Federal income tax expense adjustments in 1990, associated with previously deferred investment tax credits relating to the 1988 write ott of nuclear plant investment, decreased the net tax provision related to nonoperating income by $18.810.000.
The favorable resolution of an issue concerning the appropnate year to recognize a property tax deduction resulted in an adjustment which reduced federal income tax expense in 1990 by $3,911,000 ($2.168,000 in the fourth quarter).
For tax purposes, net operating loss (NOL) carryiorwards of approximately $28,101.000, $21,426.000 and
$187,019,000 were generated in 1990,1989 and 1988, respectively. The NOL carryforwards are available to reduce future taxable income and will expire in 2003 through 2005 The 34% tax effect of the NOLs generated in 1990
($9.554.000) and 1989 ($7,285,000) is included in the above tabic as a reduction to deferred federalincome tax rotating to accelerated depreciation and amortization The 34% tax effect of the NOL generated in 1988
($f 3.586 000) is included in the above table as reductions to deferred federal income tax relating to accelerated depreciatbn and amortization ($24,210,000) and to deferred federal income tax charged to operating expenses
($2,545,000) and to nonoperating income ($36,831.000). Future utihzation of these tax NOL carryforwa.Js would result in recording the related deferred taxes Approximately $20.161,000 cf unused general business tax credits are available to reduce futuie tax obhgations.
The unused credits expire in varying amounts in 2001 through 2005 Utikzation of these unused credits is hmited by provisions of the 19% Tax Act and the % vel of future taxable income to which such credits may be apphed.
The 1986 Tax Act provides for an AMT credit to be used to reduce the regular tax to the AMT level should the regular tax exceed the AMT An AMT credit of $5,480,000 was gercrated in 1990 An AMT credit offset for the consohdated tax return of 121,291,000 was generated in 1989 17
(8) RETIREMENT INCOME PLAN AND OTHER The settlement (discount) rate assumption wa POSTRETIREMENT BENEFITS 8 5% for December 31,1990 and 8% for Decemne.
1989 The long term rate of annual compensation We sponsor a noncontributing pension plan which increase assumption was 5% for both December 31.
covers all employeo groups. The amount of retirement 1990 and December 31,1989 The long term rate of benehts generally depends upon the length of service retum on plan assets assumption was 8% in 1990 and Under certain circumstances, benefits can begin as 1989 early as age 55 The plan also provides certain death.
Plan assets cons >st pomanly of investments in medical and disability benefits. The Company's common stock. bonds. guaranteed investment funding policy is to comply with the Employee contracts. cash equivalent secunties and real estate Retirement income Secunty Act of 1974 guidelines The cost of postretirement medical benefits During 1990, the Company offered its second amounted to $2.400.000 in 1990, $2.100.000 in 1989 Voluntary Early Retirement Opportunity Program and $1.600,000 in 1988 Consistent with current (VEROP). Operating expenses for 1990 included ratemaking practices these costs are recorded when
$7,000.000 of pension plan accruals to cover paid enhanced VEROP benehts plus an additional in December 1990, a new accounting standard for
$8,000,000 of pension costs for VEROP benefits being postretirement benefits other than pensions was paid to retirnes from corporate funds The $8.000,000 issued This standard requires employers to accrue is not incluued in the pension data reported be!c7 the expected cost of such benefits dunt'g the Operating expenses for 1990 also included a cred:t of employees' years of service The standard also
$5,000,000 resulting from a settlement of pension requires the recording of a cumulahve transition obligations through lump sum payments to a obligation adjustment which can be recognized substantial number of VEROP retirees Net pension and immediately, subject to certain limitahons, or amortized VEROP costs for 1988 through 1990 were compnsed over the longer of 20 years or the average remaining of the following components service penod of active emplopes espected to receive benefits. The Company is required to adopt the now 1990 1989 1988 standard no later than 1993 Although we have not (mahons of dolia s) completed an analysis to determine the effect of Pension Costs adophng the new standard, we do not expect adoption Service cost for benefits emned dunng the penod S 5
$ 4
$ 4 to have a niaterial adverse effect on the Company's interest cost on p mected benefit financial condition or results of operations because of obhgation 11 to 9
expected future regulatory treatment Any liabilities Actual return on plan assets.
(2)
(17)
(16) recorded pursuant to the standard may be essential ly Net amortaation and deferral.
Jt t )
4 5
offset by regulatory assets to reflect anticipated futuio Net pension costs.
3 1
revenues associated W:th recovery through rates VEnOP cost.
7 2
Sothemont gain.
(5)
Under a long-term coal purchase arrangement, the Nel costs.
$ 2 1
Company has guaranteed the loan and lease obligations of a mining company, This arrangement The following table presents a reconciliation of the also requires payments to the mining company for any funded status of the plan at December 31,1990 and actual out of pocket idle mine expenses (as advance 1989.
payments for coal) when the mines are idle for December 31 reasons beyond the controi of the mining company At December 31, 1990, the poncipal amount of the 1990 1939 (makons of donars) mining company's loan and lease obhgat ons Actuanal present value nr tmnefit guaranteed by the Company was $24,000.000.
obbgahons Vested benefits.
$101
$ 92 Nonvested benefit 3 6
7 Accumuiated tenefit obhgahon.
107 99
[tfect of future compensabon levels.
22 33 Total protected bencht obhgaton 129 132 Plan assets at fair rnadet vaiue.
y 174 Surpius of plan assets c<cr protected teneht obhgahon 22 42 Unrecognaed net gain due to vanance tetween assumptions and orpenence (20)
(35)
Unrecognaed pnor service cost 5
5 Transiton asset at Janua'y 1,1987 teng amortaed over 19 yea's.
(23)
(23)
Net accrued pension cost included in
'ther defened credits on the Balance Sheet.
$ QC)
$L1 t )
lh
1 (10) CAPITAllIATION rates, with the dividend rates for these issues averaging 9 06% and 9 84% respectively, in 1990 (a) CAPITAL STOCK TRANSACTIONS Under its articles of incorporation the Company Preferred stock shwes retired dunng the three years mn t issue p ne st unless mtain canmgs ended December 31,1990 are as fo! lows coverage requirements are met Based on camings for i993 1989 3988 the 12 months ended December 31,1990, the onmanas of shares)
Company could issue at December 31, 1990 cumulatw Preierred stock approximately $7.500.000 of additional preferred stock satyo i to Mandatory at an assumed dwidend rate of 11% tf Perry Unit 2 nedernebon
$100 par $1i 00.
(10)
(5)
(5) had been canceled and written off as of December 31.
_ _17) 1990, the Company would not have been permitted to 9 375.
(17)
(17)
(
_22 )
issue any additional preferred stock See Note 3(c)
_22)
_ 2..7.)
(
(
Total.
(
will depend on earnings for any 12 consecutive St c io a 1ai r months of the 15 months preceding the date of Pedempton
$25 par $3 47 -
(1 200) issuance, the interest on all long term debt outstanding and the dividends on all preferred stock issues Totai.
() 200)
=
outstanding There are no restoctions on the Company's ability Changes in premium on capital stock are to issue preference stock summanzed as follows:
With respect to dividend and liquidation nghts, the
'989
'*8 Company's preferred stock a pnor to its preference (thousands of dollars) stock and Common stock, and its preference stock is Balance at Begintung of Year
$481082 $481082 $482,770 prior to its common stock Premium Net of Emenso -
Preferred Stcc.
( ),688 )
Beance at End of Yet pB1082 $4810g $461082 BORROWING ARRANGEMENTS L ng term debt. less current me' unties, was as follows:
(b) EOUlTY DISTRIBUTION RESTRICTIONS Aciuai At December 31, 1990, retained eamings were g, em,,, 3 iriteIsUf$e
$82.956,000 Substantially all of the retained eamings y,,, o, v aiunty 1990 19e9 were available for the declaration of dividends on the gg Company's preferred and common shares All of the First mortgage bonds Company's common shares are held by Centenor 1991 15 00 % $
70.000 Energy. A write.ott of the Company's investment in 1995.
10 125 36.800 Perry Unit 2, depending upon the magnitude and 1995.
11 25 60.000 60,000 timing of such a write ott, could reduce retained eamings sufficiently to impair the Company's ability to 1996-2000.
8 69 166.378 166 378 declare dividends, See Note 3(c).
2001 2005, 7 79 61,725 61.725 Any financing by the Company of any of its 2006 2010.
9 64 101,900 101.900 nonutility affiliates requires PUCO authorization unless 2016 2020.
8 00 07.300 the financing is made in connection with transactions 2021 2023.
7 93 147.800 147.800 in the ordinary course of the Company's public utility 605.103 644 603 business operations in which one company acts on Term bank loans due behalf of another 1992 1996, 8 83 13 500 Notes due 1992 1997 10 64 219.4SJ 261,715 (c) CUMULATIVE PREFERRED AND PREFERENCE STOCK Decentures due 1997 11 25 125 000 125.000 Pollution control notes Amounts to be paid for preferred stock which must be redeemed dunng the next five years are $2,000,000 in due 1992-2015.
11 03 136000 106 480 both 1991 and 1992 and $12,000.000 in each year Omer - not (2 307)
(521) 1993 through 1995 Total Long.Torm The annual mandatory redemption provisions are as Debt
_$1,097.326 $1 197.277 follows-Snares Pnce To Be Beginning Per Long term debt matures dunng the next five yte)
Redeemed in Share 33 follows. $114.000,000 in 1991 $121,000.000 in Np$r $1100.,
1992. $46,000.000 in 1993. $21,000.000 in 1994 and 5.000 1979
$100 9 375.
16 650 1985 100
$86,000,000 in 1995 25 par 2 B1.
400.000 1993 25 aMW The annualized cumulative preferred dividend lien on substantially all property owned and franchises
- reauirement as of December 31,1990 is $25.000,000 held by the Company Excluded from the lien, among The preferred dividend rates on the Compan/s other things, are cash, secunties, accounts receivable, Senes A and B fluctuate based on prevailing interest fuel, supplies and automotive equipment 1
1 10
Additional brst mortgage bonds rnay be asued by (11) SHORT TERM BORROWING the Company under its mortgage on the basis of ARRANGEMENTS bondable property additions. cash or substitution for refundable first mortgage bonds The issuance of The Company had $75 550,000 of bank knes of credit additional first mortgage bonds by the Conpany on the arrangements at Decemtar 31.1990 There were no basis of property additions is limited by two provisions borrowings under these bank credit arrangements at of its mortgage One relates to the amount of December 31,1990 bondable property available and the other to earnings Short term borrowing capacity authonted by the PUCO is $150.000 000 The Company and Cleveland coverage of interest on the bonds Under the more Electnc have been authonted by tne PUCO to bonow restnctive of these provisions (cunently, the caming's from each other on a short term basis coverage test), the Company would have been permitted to issue approumately $177,000.000 of Most borrowing arrangements under the short-term bonds based upon available bondable property at bank knes of credit require a fee of 0 25% per year to December 31.1990 The Company also would have be paid on any unused portion of the kncs of credit been permitted to issue approumately $50.000,000 of For those banks without fee requirements, the average bonds based upon refundable bonds at December 31, daily cash balance in the bank accounts satished 1990 If Perry Unit 2 had been canceled and wntten informal compensahng balance arrangements off as of December 31,1990, the amount of bonds At December 31, 1990 the Company had which could have been issued by the Company would
$23 200.000 of commercial paper outstanding The commercial paper was backed by at least an equal not have changed amount of unused bank knes of credit Certain unsecured loan agreements of the Company contain covenants relating to capitah:ation ratios, earnings coverage rabos and hmitations on (12) CHANGE IN ACCOUNTING FOR UNBILLED secumd financing other than through hrst mortgage REVENUES bonds or certain other transactions An agreement relating to a letter of credit issued in connection with Prior to 1988, revenues were recorded in the the sale and leaseback of Beaver Valley Unit 2 (as accounting penod dunng which meters were read amended in 1989) contains several financia1 covenants Ut hty service rendered af ter monthly meter reading aficcting the Company, Cleveland Electnc and dates through the end of a calendar month (unbilled Centenor Energy. Among these are covenants relating revenues) became a part of operating revenues in the to earnings coverage ratios and capitaktation ratios following month in Januaiy 1988, the Company The Company, Cleveland Electoc and Centenor adopted a change in accounting for revenues in order to accrue the estimated amount of unbilled revenues Energy are in comphance with these covenant provisions. We beheve the Company. Cleveland at the end of each month Electnc and Centenor Energy will continue to meet The adoption of tnis accounting method increased these covenants in the evcnt of a write otf of the 1988 not income $218 000 (net of $112.000 of Company's and Cleveland Electric's investments in income taxes) before the cumulative effect on penods Perry Unit 2, barnng unforeseen circumstances poor to January 1,1988 The cumulative effect of the change on the penods poor to January 1,1988 was
$6.279 000 (net of $4,177.000 of income taxes) and was included in 1988 net income 20
(13) OUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a tabulation of the unaudited quarterly tesults of operations for the two years ended Decembei 31, 1990 ao.gim i rwo 1M131.
Em 30,
_h!1_3fL
_ Ml_
(ihOuf>n4d5 Of daltw 3 )
1990 Operating Revenues.
$203.641
$204 295
$ 223 201
$195.749 Operating income 38 771 28 298 39,472 45.901 Net income.
21.004 26.971 19.420 13.429 Earnings Available for Common Stock 15.357 20.660 13,109 7.139 1909 Operating Revenues.
$201,144
$203.436
$219,762
$202.461 Operating income 32.041 37,140 40.532 32.595 Net income.
24 280 30.284 34,501 3.613 Eamings (Loss) Available for Common Stock 17,857 23.882 28 176 (2,627)
Earnings for the quarter ended June 30.1990 were increased as a result of federal income tax capense adjustments associated with deferred investment tax credits relating to the 1988 wnle off of nuclear plant investment See Hole 7. The adjustments increased quarterly earnngs by $17.907,000 Eainings for the quarter ended December 31,1990 were decreased as a result of year end adjustments A
$13,933,000 reduction in phase in carrying charges (see Note 6) was partially off set by adjustments of $7.760.000 to reduce depreciation expense for the year (see Summary of Significant Accounting Policies) and $2,108.000 to reduce federalincome tax expense (see Note 7) The total of these adjustments decreased quarterly earnings by
$2.000.000
l FmANCIAL AND STATISTICAL REVIEW Operating Revenues (thousands of dollars) 9eam ime T otal 10 tat HtMhg Opergyg T e&f flekt.'lM ililI (DNfDerciM in td%tniM DIbef hWI8tl MJMe % die k IK tIlf
& had$
h T i efhlet 1990.
8223 920
$174 640
$235 678 579 636 5713 673
$113 613
$827 086 5-8827 066 1989 215 932 163 991 226 6S3 99 451 700 054 120 749 626 803 826 803 1988.
200 916 142 096 199 521 34 961 576 094 49 933 627 997 627 997
- 1987, 200 877 142 385 219 09B 27 046 593 000 15 031 605 037 605 037 1986.
189 292 133 841 214 274 23 8Br.
561 293 11 189 572 482 572 482 1980.
t 26 085 B0 B36 137 860 28 458 373 239 21 647 394 bE6 0 982 40t 868 Operating Expenses (thousands of dollars;
- oibe, t oci &
0;+raton Dep enation lasen Pree in &
F eder ai Totai PurchowJ OPw' Than Pte INaa in inc ome OWrebog Y ear Powet idMdWWK e ANWilld!nn i ll Dtder'c j Ne' lates l ygintet 1990.
$138 222
$373 374 876 986
$79 320
$ (13.299) 821,041
$674 644 1989.
133 400 372 530 87 639 72 123 (18 491) 37 285 684 486
- 1988, 116 161 358 823 75 093 80 138 183 813) 29 242 575 644 1987.
t 40176 223 307 65 503 59 658 (39 797) 22 747 471 594 1986.
158 703 167 310 37 832 51 398 41 150 456 462 1980.
155 771 85 161 26 000 31 202 23 376 321 512 Income (Loss) (thousands of dollars) r ederar Other 6nc ertie leg,orne seu ome &
T aies-Detare operat.ng Ar VOC -
Dwa'ms canong c ea>t interest vec i,um, toudy Nei
- Cnry, at Pen m
- cngs, 1990
$162 442 8 3 362 8 6 149
$ 43 487 8 8 664
$214 094 1989 142 317 8 568 20 361 82 308 (21 563) 231 991 1988.
52 353 5 452 (246 722)(a) 129 632 86 244 26 959
- 1987, 133 443 122 138 (16 904) 14 989 42 726 296 392 1986 116 020 129 578 (1 627) 52 029 296 000
- 1980, 80 356 28 443 879 13 218 122 896 Income (Loss) (thousands of dollars) income (testI ttefore
[cnings Comutative Com6 laime
< toss >
[Hect ni an E Nect of an Net Pretenmi Avanatde Debt Al (KC-Accounting Accounting irnvne 5 tac k ta Common Ter inteerst Debt Change Change (Loss)
Divdends Sixb 1990.
$136 344 8 (2 674)
$ 81 424
$~
$ 81,424
$26169
$ 66 265 1989-144 792 (5 479) 92 678 92 678 25 390 67 288 1988.
150 523 (tB33)
(121 731) 6 279(b)
(115 452) 26 983 (142 435)
- 1987, 185 493 (54 272) 165 171 165 171 42 749 122 422 1986.
174 397 (55 314) 176 917 176 917 45 243 131 674 1990.
70 866 (1514B) 67 178 67 178 18 021 49 157 (a) Includes write off of nucicar costs in the amount of $276 955 000 in 1988 (b) In 1988 a change in the metN>d of accounung for untM revenues was adapted 22
THE 1OLEDO ED; SON COWANY Electric Sales (millions of KWH)
Electric Customers (year end)
Residential Usage avecaue Aveceae Ave aae hee neve%e F ttutt'ial KWH Ief I'ef itf T eaf
$4ewlennt Co%merc ie UntAthd W1h w f.ipe Oi$er TMe Pewie%a. Comot'hg
& OtW lota!
Cast #wt D. W H Custof%f 1990 1 950 1 614 3 617 932 496 8 609 253 966 25 822 4 655 284 342 7 692 11.488 $882.99 1989.
2017 1 622 3 740 1 175 495 9 049 053 234 25 803 4 434 283 471 7 989 10 71 h55 29 1988.
2 068 1 579 3 780 93B 474 8 839 251 590 25 526 4 102 2B 1218 8 264 9 72 802 87 1987.
1977 1532 J589 344 464 7 900 249 344 25 110 4 085 278 593 7 969 10 10 B09 66 1986.
I941 1 495 3 482 242 449 7 609 247 256 24 655 4 004 275 915 7 681 9 75 768 43 1980 1971 1 282 3 165 560 410 7 3BB 240 142 23 532 3 818 207 402 8232 6 40 526 66 Load (MW & '.)
Energy (millions of KWH)
Fuel Oreatue Net i N nency-capacey Comte, Cenerated Po'emed F *: Cost piu F e, etin+
Peak Capacit y Load ine ol itM Load Magn f acts
__.i nW Nonear T ot at F%et f etat PN k WH D.WH 1990 1752 1 516 13.5%
63.0%
5 636 4 219 9 754 (499) 9 255 1,504 10 220 1989.
1 894 1 526 19 4 65 2 5 206 5 552 10 758 (1 175) 9 583 1 42 10 293 1988 -
1057(c) 1 614 (52 7) 62 8 5 820 3 325 9 145 385 9 530 1 59 10 174 1987.
1 698 1 484 12 6 64 9 0916 3 218 9 134 (647) 8 487 1 45 10 196 1986 1740(c) 1 423 18 2 64 8 6 462 12 6 474 1 689 8 163 1 82 9 B60 1980 1 700 1310 25 6 68 3 5 529 1031 6 560 1 352 7 912 1 65 10 245 Investment (thousands of dollars) constex ton Wain in tois Utmir Acc umula ted homess Naclear howly Ubbty hani in Deggettahan &
Net
& l'erty F uct and hant and Mant t otal Year SN vice Annvictphon hant Umt {
Other
[ mjonient Ad14 ens Assets 1990.
$2 607 010
$646193
$1960 817
$ 436 839
$223 872
$2 621528 8 86 693 54 001 618 1989 2 532 291 567 197 1 965 094 430 340 237 318 2 632 752 77 357 4 138 846 1988.
? 438 927 487 546 1 951 381 459 104 262 514 2 672 999 132 083 4 134 672 1987.
2 600 $11 419 149 2 181 362 374 274 267 009 2 822 705 380 974 4 277 587 1986 1 442 812 415 745 1 027 067 2 109 945 269 022 3 466 034 463 163 3 813 889 1980.
I 197 774 22'1629 977 145 520 239 27 424(d) 1 524 808 235 911 1 701 443 Capitalization (thousands of dollars & %)
heierced sico win Pieter,ed stock utnout Mdndatory Redemption Mandatory FiedempSan Year Common $ toc 6 [ciudy Prwsons h oosions Long Term De+t t otal 1990.
S 880 784 39%
5 66 328 3%
$210 000 9%
$1097 326 49%
$2 254 438 1989.
897 793 38 68 990 3
210 000 9
1 197 277 50 2 374 060 1988.
887 442 36 71 155 3
210 000 9
1 291 444 52 2 460 041 1987.
1 096 737 39 73 340 3
240 000 8
1 400 292 50 2 810 369 1986.
1 074 663 36 148 797 5
260 000 9
1 480 947 50 2 964 407
- 1980, 478 993 34 66 500 5
150 000 11 714 406 50 1 409 899 (c) Capaaty data rehects estended generahng unit outages kw renovahan and improvements (d) Restated br c5 cts of cap tauaton of nuclear fuelicase and hnancing arrangements pursuant to Statement of hnancial Accounhng Standards 71 3
INVES'lOlt INFOllM ArlON SilAllE OWNEllINFOltNINI'lON DIVIDEND REINVESTNIENT AND S' LOCK INQUIRIES PURCllASE PLAN ANDINI IYIDUAl, Questions regarding the Company or stock RETIRENIENT ACCOUNT (IRA) accounts shouki be directed to Sh'are Owner Sen ices at Centerior Energy Corporation at Centerior Energy Corporation has a imidend the address and telephone numbers indicated Reinvestment and Stock Purtbase Plan u hich below for the Stock Transfer Agent, prosides 'loledo Edison share owners of rnord and other investors a comenient Please have your account number ready means of purchasing shares of Lenterior w hen calling.
common stock by investing a part or all of N "" '
" " ' " " " * * " "E S' LOCK TRANSFER AGENT cash mvestments. In addition, individuals may Centerior Energy Corporation establish an Individual Retirement Account Share Owner Services (IRA) which invests in Centerior conunon P.O. Ilox 94661 stock through the Plan. Infonnation relating Cleveland, Oli 44101 4661 to the Plan and the IRA may be obtained in Cleveland area 642 6900 or 447 2400 from Centerior Share Owner Services.
Outside Cleveland area 1 800 433 7794 INDEPENDENT ACCOUNTANTS Stock transfers may be presented at PNC Trust Company of New York Arthur Andersen & Co.
40 Broad Street, Fifth Floor 1717 East Ninth Street New York, NY 10004 Cles eland, Oli 44114 S'IOCK REGISTRAR FORN1 10.K Ameritrust Company National Association The Company wiH furnish to share owners, Corporate Trust Division without charge, a copy of its most recent P.O. Box 6477 annual report to the Securities and Exchange Cleveland,01144101 Commission (Form 10.K) and, upon payment of a reasonable fee, a copy of each exhibit to Form 10.K. Requests should be directed to EXCil ANGE LISTINGS the Secretary of Centerior Energy Prc/ctrcd-$2) par value 8.84 % S2.363and Corporation at the address of the Stock
>2.81 series, Adjustable S,eries A and Transfer Agent' Adjustable Series ll-New York Stock Exchange Preferred-$RX) par value-4 % % S.32%
7.769h and 109b series-Ainerican Stock Exchange IlOND AND DEBENTUllE INFORMNrlON BONDTRUSTEE AND PAYING AGENT DEllENTURE TRUSTEE AND PAYING AGENT The Chase Manhattan Bank, N.A.
National City llank Corporate Trust Administration Division 1900 East Ninth Street 1 New York Plaza,14th Floor Cleveland, Ohio 44114 New York, NY 10018 (216)575 2528 (212)676 5550
'4
Tile 'lOLEDO EDISON COMPANY sutx RAu MK) Ntadison As enue * 'lidedo, Ohio 4%;;
V $ POSTAGE PAID CLtVELAND CHIO PERMlf NO 400
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