ML20076E690
| ML20076E690 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 07/27/1983 |
| From: | Thurlow E CENTRAL MAINE POWER CO. |
| To: | |
| Shared Package | |
| ML20076E650 | List: |
| References | |
| NUDOCS 8308240635 | |
| Download: ML20076E690 (36) | |
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- Highlights 1982 1981 % Change Electric Operating Revenues $401.3 million $361.7 million 10.9 Kilowatt-hour Sales (Territorial) 6.6 billion 6.2 billion 5.9 Net Income $ 41.0 million S 33.6 million 22.0 Earnings per Common Shore $ 2.02 S 1.81 11.6 Dividends Declared per Shore $ 1.82 S 1.74 4.6 Dividends Poid per Shore $ 1.80 S 1.29 39.5 Return on Equity 12.4% 10.5% 18.1 Common Shores (weighted overage) 16.6 million 14.5 million 14.5 Book Value per Shore (year end) $ 16.20 S 16.16 .2 Total Assets $933.6 million S849.4 million 9.9 Eamings per common share Your Company n s,.,,
s2.02 CMP's 2,000 employees provide electric service to opproximately 400,000 customers in on 11.000-square mile crea in southern and centrol Moine. The Company currently hos a varied generation mix consisting of hydroelectric.
Il"*'s nuclear-fueled and oil-fueled generating stations. In addition, CMP balances its can generation with power purchases from outside the state os well as from l
independent cogenerators and small power producers in Moine Our customers have relied on CMP's dependoble I service for more than 80 years and are currently sersed by a system strengthened by on interconnection with Conodo
'78 '79 '80 '81 '82 j and membership in the New England Power Pool.
Dividends declared Table of Contents per common share 2 se s2 President's Letter sm M l Operating Results 4 pu 20 sue Bolonce Sheet Statement of Earnings 22 Statement of Capitalization 23 l Statement of Changes in Common 24 Stock Investment Statement of Sources of Funds 25 Notes 26
- Eleven-Year Statistical Review 34 Management Analysis 36 37 '78 '79 '80 '81 '82 Service Map l
l
- 1 Capitalization ratios
] ] [ R 75 > ;.y 1 -. ,.'
m LW a d. t. c a e l 50 > ' i / O !
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25 > --
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bout the cover-Our 1962 annual 0> -
'%s -. - ~ report theme highlights the unique
'78 '79 '80 '81 '82 Maine environment in which CMP operates. Featured in the i i
a ro,oi o.o. :1 me.,,.o s,oca pages that follow are CMP shareholders who typify the best I
- a co-moa stoca of traditional and modern Maine.
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Quarter Ended March 31 June 30 Sept. 30 Dec.31 (Dollars in Thousands Except Per Shore Amounts) 1982 Electric Operating Revenues $105,238 $81,582 $91,444 $123,072 Operating income 17,103 14,132 13,040 14,008 Net !ncome 11,937 9,726 9,433 9,859 Earnings Per Common Shore .62 .48 .45 .47 1981 Electric Operating Revenues $95.575 $94.085 $86.760 $85.250 Operating income 15.699 12.074 13.246 14.080 Net income 9.835 6.790 7.317 9,703 ,
Earnings Per Common Shore .57 .35 .39 .50 1980
$101,165 E!ectric Operating Revenues $68.292 $71.995 $93.813 Operating income 12.905 9.942 10.114 14.370 Net income 7.807 3.951 5.184 9.485 l Earnings Per Common Shore .55 23 .29 .58 i Earnings per snare are computed using the weighted average common shares outstand.ng dur:ng the opphcaele quar +er i
l
, 2 President's Letter '
l l
2 r4 I
nf To our Shoreholders- ,_
February 9,1983 The year 1982 was one PJ' common stock dividend, of steady advances in boosting the annual rote many areas of opero- y from $1.80 to $1.88 per tion despite o severely a shore. This increase is
\ consistent with our long-depressed economy and .
continued high interest standing objective of rates. Earnings per share providing moderate but increased from $1.81 ta steady growth of divi-S2.02, on 11.6 percent dends to our sharehold-increase over 1981 and ers.
o 21 percent increase over 1980. Earnings Rate Relief growth is still well below Granted desired levels, however, - ..
and the Company faces '
In January,1982, the several financial and g Maine Public Utilities regulatory hurdles before Commission granted the we con achieve the Company $10.2 million earnings performance in temporary rate relief that our shareholders have o right to expect, and later ordered a permanent $32 million in-crease in onNol revenues on March 27. Al-At the some time, we have begun to see strong wm . apM@NMd economic signals that give us cause for real op-timism. As inflation slows and interest rates stabi- [ehe receM. N new memes NW eon ings to recover from the erosion of the previous lize , the financial strain which has plagued our tw ye rs. More realistic rate relief is still essential industry for so long should begin to ease. As a to establish a firm pattern of earnings growth, capital intensive company, that's good news however, and we have returned to the Commis-sion with a request for a $53 million revenue in-Two important financial issues challenging crease to be implemente1 in late 1983.
your management in the near-term will be the A major priority of your monogement in 1983 is reasonable recovery through rates of the Com-to convince the Maine Commission that inade-pony's $14.6 million investment in the concelled quote rate relief con only result in lost investor Pilgrim Il nuclear plant in Mossochusetts (CMP had a 2 85 percent ownersh,p interest) and the i deteriaate d seh leW to increased costs to the consumer. We will op-additional financial burden resulting from the delay and revised cost estimates of the Seabrook eM io &i@e Wi@lw el&tts nuclear units in New Hampshire and the Millstone es d N eme d w MWlh We Wil also seek to further protect your investment by lli nuclear unit in Connecticut. CMP has on holding capital spending to reasonoble levels ownership interest of opproximately six percent ;g, and 2.5 percent, respectively, in these facilities.
Dividend increased Two Cents Holding Company Plans Deferred in the fourth quarter, the Board of Directors in early 1983, the Company announced its voted a two-cent per share increase in the plans to temporarily defer efforts to form a hold-l
_ _ _ _ _ _ - _ . - _ _ _ _ _ _ _ - . __ _ _ _ _ _ _ _ _ _ _ _ _ - . _____/
3 ing company colled Maine Industries, Inc. This controlled growth has many desirable attributes, decision was made offer it became apparent the artificial manipulation of the free market that the regulatory climate for obtaining op- through non-economic pricing policies is fraught proval was not favorable at this time. with danger and totolly foreign to the free enter-prise system. Such a policy could weaken the
- '*C"i "ti"'Y industry and cost a shadow on the Maine's Economy On The Upswing ability of the industry to maintain the level of reli-Moine economists anticipate on economic able electric service required to serve on expand-turnaround in 1983 as inflation slows and fuel ing economy.
prices stabilize. Management expects that opti- The restoration of the utility industry's financial mam to be reflected in industrici growth, more health is absolutely essential to the continuance housing starts, higher employment and lower of t reli@ilig AtM@ in mese tim we energy costs-oll positive signs for the state of cannot expect the public to be fully sympathetic Maine and your Company.
to me fimial e d w imW e hM During 1982, the Company moved closer to its strive for on intelligent understanding of those goal of cutting oil consumption in half by the late problems by both the public and the regulators.
1990's with advances in hydroelectric redevel-We feel that this goal is attainable and we will opment, coal conversion studies and power ex-continue to vigorously bring our message to the change negotiations with Conodo. Also in 1982, the Moine Yankee nuclear power plant cele-ublic and raise customer awareness of the issues focing their electric company. We intend broted its 10th anniversary of sofe, clean and economical power production. And, once again, to o eselM im h W mMe and federal-to shape legislation that will en-Maine voters soundly rejected efforts to close honce our obility to provide reliable service for Maino Yankee in the second such referendum ,g,.nem oM o fair rets b w he-issue b two years.
holders. Monogement is also redoubling its efforts Looking ahead, management expects a con- to initiate o more informal and open dialogue tinued leveling of customer demand for electric- with our regulators outside the adversary envi-ity as conservation and improved end-use ronment of formal proceedings. We must gain efficiencies hold growth levels to about two per- the full confidence of those who regulate us if we cent annually over the next decade. This re- are to expect more responsive regulation.
duced demand should help relieve the need t On a personal note, I have recently notified the raise large amounts of capital-o significant cost Board of Directors of my intention to retire at oge of business not always fully recognized by the , 60 on or about the date of the onnual meeting in regulators This slowing of demand, combined May 1984. Plans are already under way for on with stabilizing oil prices, led to the Company's orderly transition of presidential responsibilities decision in 1982 to defer until the mid-1990's its and you con rest assured that Centrol Moine plans to construct a major coal-fueled facility on Power Company will continue to grow and crs Island rosper under new leadership just as it hos under six presidents over its 83 year history.
What's Ahead On behalf of the Board of Directors and man-Today, the generation of electricity is one of agement, I'd like to thank you for your confi-America's most basic and important industries- dence and support and assure you that we will and still one of the most token for granted. In the continue to work to justify your investment in CMP.
Inflationary era of the 1970's. the cost of all goods
. edy, and services skyrocketed. yet few commodities received more public price resistance than elec- g tricity. As a result, public and political pressures ,.
W, -
have fostered a growing reluctance on the part of the regulators to permit electric companies to E W. Thurlow recover their full cost of doing business. A'though President and Chief Executive Officer
40 Operating Results Where each CMP dollar come from
,.m
.+ _ ,
Residential 32?
ii ,
Other 30
- fj ;[{ Lighting and Electric Utilities 2c j[,, /
- i}' General Service 53c y
g, & "
Where each CMP dollar went
~
j , Fuel ac l
., Earnings-Common Stock 6:
,, ~s,
/ Electric oP8ratin9 i interest and
, pCA : Preferred Dividends 12:
ggygnygg 4 7 %~
(in millions of dollars)
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Taxes 7c $400 >
L ; 3: [ Depreciation M 1,,,# # Operoflons 2ic 300 >
Operating revenues for 1982 were S401.3 million, an 200 >
increase of 11 percent over 1981 while operating expenses were $347 mi!Iion, up 11.8 percent.
Increased revenues reflect some soles growth but primarily 100 >
show the effect of new rates opproved in early 1982.
Fuel expense represented the largest single cost category and required 46 percent of all revenues collected from o>
'78 '7 '80 '81 '82 customers in 1982. Revenues ossociated with fuel, however, do not offect not earnings since they represent a non-profit dollar-for-dollar recovery of cost through the fuel-used-for-generation chorge.
The Company's earned return on cc:nmon equity was 12.4 percent for 1982. Earnings available for common -. .
shareholders were $33.6 million or the equivalent of $2.02 per y shore, up 21 cents over 1981. i The primary factor positively affecting earnings in 1982 was aine increased revenues resulting from the $10.2 million temporary fLD lobster-rate increase granted in January,1982, and from o men have farmed the sea along the permanent $32 million rate increase in March.1982. The state's rocky coast for generations.
increased revenues were offset somewhat by higher Today, these hardworking Indi-expenses including increased purchased power capacity vidualists produce more than .
costs and higher operation and maintenance expense. three quarters of the nation's total l For a detailed discussion of 1982 operating results and lobster harvest.
the Company's financial condition, please refer to j
" Management Analysis" on page 36. <
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Sales Up Nearly 6 Percent Total territorial kilowatt-hour sales in 1982 were 6.6 billion, on increase of 5.9 percent over 1981. Residential sales grew 4.9 percent reflecting (1) the addition of 12,000 new residen-tiol customers including 7,000 ocquired with the purchase of Carrobassett Light and Power Company and the acquisition of the Maine service territory of Public Service Company of New Hampshire and (2) a small increase in the overage kilowatt-hour usage per residential customer.
Commerclol kilowatt-hour solos in 1982 were up 31 percent and industrial sales increased 9.4 percent, reflecting expansions at two large pulp and paper mills.
Future Growth Steady But Moderate Looking chead, the Company currently projects that onnual kilowatt-hour sales and peak load will increase by about 2.0 percent and 1.8 percent, respectively, for 1982-92.
Maine economists are optimistic about the state's economic growth over the next ten years. They project that growth in pcpulation and income will keep pace with notional rates while overall energy cost growth in Maine will decline, o positive sign for Moine business.
During 1982, the state sow 17 new industries and 50 Kilowatt hours expansions, on investment of $42 million creating nearly 2500 gold new jobs. (ramtoriat sores in bilkons) .;.q w .a e Conservation incentive Offered n, 7 n ["*[,!
p3 4 t .
In late 1982, the Maine Public Utilities Commission 5 > L j ,. J [ N I i [ j opproved a $5 million conservation loan program whi':h } [N I j f .l [ ; '
offers low-interest and no-interest loans to eligible customers installing electricity-soving home improvements. #
- lL J'! " " l *l kJ i ' [- l" The loans range from $250 to $2.000 for single-family homes and are offered to utility customers who own their homes and 3>
use electricity for space or water heating. In homes with electric space heating the money con be used for storm windows, storm docrs. insulation and other devices designed 2>
to reduce consumption of electricity. 3 Electric water heating customers con use the funds to ,,
purchase water heater insulation, heat pump water heaters or solar water heaters. Also in late 1982 the Company proposed a rebate program to promote the installation of 0> --
insulation " jackets for electric water heaters. '78 '79 '80 '81 '82 Another energy conservation incentive recently n .ew c n..
implemented by the Company, home energy audits, has c c n.e D*,co-drawn a positive response from thousands of residential '"U*m n om,
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w l 1982 1981 customers throughout the system. By year end 1982, the WM WM Company's certified energy auditors had performed more (Meons) (Meons) than 4.600 comprehensive home audits and more than 9,400 Pu!p and Paper 1,574 1.372 customers had requested information on conducting their Metal Trades 252 248 own energy audits.
Chemicals 142 147 An audit program for small commercial customers is Textiles 114 138 expected to be implemented in 1983.
Food Processing 88 94
'"$[ofuing y yo, ,gg ReSearch Efforts Continue Boots and Shoes 89 91 Shipbuilding The Company spent approximately $1 million in energy 97 52 research and development during 1982. CMP's owr. R&D efforts were supplemented by its membership in the Electric Power Research Institute, the national research arm of the i
electric utility industry which, among hundreds of other issues, is studying energy conservation techniques, the effects of acid rain. nuclear waste storage and energy alternative technologies. The Company itself conducted research in 1982 in the areas of load management, solar hot water heating, cool gasification, district heating and fuels from biomass.
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Revenues Kilowott-hour Sales
( $ Meons) (Meons)
More (less) % More (less) %
1982 Thon 1981 Change 1982 Thon 1981 Change Residential $168.8 S11 8 7.5% 2,453 114 4.9%
l l Commercial 101.3 5.2 54 1,521 46 3.1 Industrial 114.7 6.3 5.8 2,490 213 9.4 Electric Utilities 3.3 (.3) (8.3) 77 (6) (7.2)
Lighting 6.7 .5 8.1 46 (2) (4.2)
Total Terntorial Sales 394.8 23.5 6.3 6,587 365 5.9 Non-Territorial 2.6 (3.8) 75 (51)
Total Energy Sales 397.4 19.7 S.2 6,662 314 4.9%
l Other Revenues 3.9 19.9 Total Operating Revenues $401.3 $39.6 10 9%
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80 Rotas -
$32 Million increase Approved On March 27,1982, the Maine Public Utilities Commission (MPUC) granted the Company a $32 million increase in annual revenues.
Earlier in the year the Commission had voted unanimously to approve o $10.2 million interim increase-the first time in recent history the MPUC has approved interim relief in any J cmount. j The full increase approved provided for an overall rate of j return of 12.34 percent (up from the 10.78 percent allowed ;
under prior rates) and a return on common equity of 15.4 percent (increased from 13.75 percent). 1 Denied were Construction Work in Progress (CWIP) funds although the Commission did allow the Company to recoup over a five-year period S14 million of the costs incurred for the cancelled Montague (Mass.) and Sears Island (Maine) ,
nuclear projects. Pending further investigation, the MPUC l deferred its decision on recovery of the Company's $14.6 l million investment in the Pilgrim II (Mass.) nuclear plant concelled in 1981.
The Company failed to earn its allowed rate of return in 1982 primarily because the March 27 MPUC rate decision did not adequately recognize the economic consequences to the Company of fixed rates which do not realistically reflect nor fully onticipate the increasing costs of doing business throughout the year.
New Rates Filed Despite partial relief in its 1982 rate decision, rising costs forced the Company to file o $53 million revenue increase request in March 1983, some 21 months after its prior filing.
The Company will seek on overall rate of return of p opproximately 12.5 to 13 percent and on allowed return on d equity of 16 to 17 percent. In addition, we will seek recovery, ..
over o ten-year period, of the Company's $14.6 million investment in the concelled Pilgrim Il plant.
Fuel Clause Reduced $43 Million (9 moii business is the backbone of Moine's economy. Owned and operated in Decreasing oil prices and excellent hydroelectric conditions during early 1982 allowed the Company to the Yonkee tradition by independent reduce its fuel-for-generation rates by $43 4 million in April. As and self-rellant men and women, ;
a result of this significant decrease in fuel costs, customer bills small businesses represent 98 j were reduced by 3.4 percent-even taking into account the percent of the stote's employers.
March 27 general rate increase. (Fuel revenues do not affect l net earnings since they represent a dollar-for-dollar recovery '
of cost through the fuel-used-for-generation charge.)
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'o inergy Supply-Oil Backout Plans Continue During 1982,39 percent of the electricity produced for CMP's customers come from oil-fueled generating plants. 31 percent was produced by the four New England nuclear plants in which CMP has partial ownership and 21 percent come from hydroelectric plants. The remaining 9 percent was produced by other sources including energy purchased from wood-burning cogenerators (primarily Maine paper mills) j ond also from generating plants in New Brunswick, Canodo. 1 which included cool-fueled units.
The Company hos successfully reduced its dependence on costly foreign oil for electrical generation by more than 23 percent since 1980. Oil use will be further reduced when three New England nuclear units, now under construction.
are completed in the late 1980's.
Meanwhile, CMP will supplement its oil backout efforts by optimizing energy conservation opportunities and developing viable non-oil generating sources such as hydro, cool and Conodian purchases. This corporate objective was reinforced at the 1982 Annual Meeting when shareholders opproved a shareholder proposal to " pursue a general policy favoring renewable energy, conservation and decentralization."
An important Hydro Year The Company made several significant advances in the redevelopment of hydroelectric facilities in 1982. Fuel sources On March 15, the 13.200 kilowatt Unit I of the Brunswick- %100 > g Topsham Hydroelectric Redevelopment Project begon commercial operation on schedule. Two additional Brunswick j;qm r; ; j i
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units scheduled for early 1983 completion will oad 7.000 75>(j-jE.; {Li,(g7j j
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kilowatts of copocity to the site for a total of 20.200 kilowatts. E4 ; 1( .1 ' ' i.
eight times the capacity of the former Brunswick-Topshom 50 > !.$
generating facility originally constructed in 1909. "'
On April 1. two new generating units at the Showmut Hydroelectric Project also began ccmmercial operation on 25 >
schedule, odding 4.400 kilowatts of capacity to the CMP system. By 1985, a third redevelopment of Hiram Hydr
- 0> " -
l Station will produce on additional 8.500 kilowatts. The three '
78 '79 '80 '81 '82 redevelopment projects combined will save the burning of .
more than 260.000 barrels of costly foreign oil a year. g,, m, Several other hydroelectric redevelopments are also under study.
/ 11 i
l Sears Island Deferred l l
Reduced customer demand combined with stabilizing oil prices led the Company in May to defer from 1989 to 1995 its l plans to construct a 568.000 KW cool-fueled generating plant
" S* 'S IS' "d-Maine Yankee Celebrates The Company is also carefully reviewing the feasibility of First Decade converting three oil-fueled units (total 108.000 KW) to coal at ts Mason Generating Station. As a result of lower oil prices The Maine Yankee nuclear e g el ys, mapW Ms recem me power plant celebrated its 10th completion date for this conversion to early 1986.
year of commercial operation on December 28,1982. CMP is the major owner of the 846.600 KW plant with a 38 percent share.
Canadian Link Progresses The holder of two world records The New England Power Pool (NEPOOL). in which CMP for energy production, Moine participates signed a tentative agreement with Hydro-I Yankee produced more than 47 Quebec in 1982 to progress plans for a transmission tie billion kilowatt-hours during its between the two regions. Once the 690,000 kilowatt line is first decade, saving the burning completed in 1986. NEPOOL utilities plan to purchase about of 78 million borrels of oil. Today, three billion kilowatt-hours of surplus Conodian hydroelectric the state's only nuclear plant power each year through 1998, helping to reduce oil continues to produce electricity depenaence and enhance the reliability of the region's at a fraction of the cost of oil or power supply.
cool-fueled plants and produces Also in early 1983, the Company agreed to purchase thelowest cost nuclear-generated 100,000 to 150,000 kilowatts of economical firm power from electricity in New England. the New Brunswick Electric Power Commission through 1991.
The New Brunswick purchase is expected to offer substantial savings to CMP customers in lower fuel costs as well as hold down the Company's long-term capital costs. The ogreement must be approved by the National Energy Board Assets of Canada and the Moino Public Utilities Commission.
(In millions Of d0110r5) s,00 , Seabrook, Millstone ill Work Continues 800 >
The Company expects to receive 167.710 kilowatts of new nuclear capacity in the late 1980's when three additional 700 > NewEngland plantsarecompleted.TheSeabrookIandil nuclear units (2.300.000 KW) in New Hampshire ore now 600 >
II schedu!ed for completion in late 1984 and 1987, respectively, and the Millstone ill plant (1.150.000 KW) in Connecticut is set for 1986 commercial service. CMP's ownership in these plants is opproximately six percent and 2.5 percent, respectively.
l 0> I '78 '79 '80 '81 E
'82 All three units have experienced considerable regulatcy delays and financial concerns forcing the plants' lead participants to substantially increase their cost estimates during 1982. For more information on these projects and the Company's financial commitment see Note 3 of Notes to Financial Statements on page 27.
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13 Capital Spending Tops
$114 million Oy ne of the notion's leading shipbuilders for Capitol requirements during 1982 totalled $114.8 million.
Of this total, opproximately $82.9 million was required for generating station additions. S29 4 million for transmission, more than two centuries, Moine has distr bution and other general plant facilities and $2.5 million crafted scores of stalwort seagoing to meet sinking fund requirements. vassels from Iron-rlbbed battleships New capital raised during 1982 come primarily from short-to defenders of the America's Cup. term financings and the so!e of $11.9 million in common shares through the Company's Dividend Reinvestment and Common Stock Purchase Plan. Capital Requirements Set construction During 1983, the Company anticipates total construction expenditures requirements of approximately $137.3 million including (in meons of dollars) o lowance for funds used during construction (AFC) of $30.3 million. The Company's current forecast of construction 75 > expenditures totals $527.0 million for 1984-87, including AFC. Further discussion of commitments and contingencies
. related to the major generating projects is available in Note lI 50 > 3 of Notes to the Financial Statements on page 27.
The Company plans to raise approximately $131 million 25 > during 1983 in order to finance these construction requirements, refund a portion of outstanding short-term aebt. meet sinking fund requirements and retire $8.6 million of maturing long-term bonds. Depending on market conditions, 0>
'78 '79 '80 '81 '82 the Company plans to sell bonds and preferred stock in the first half of the year and common stock late in 1983.
Long Term Financial Goals l Our Company's number one commitment to shareholders . in the 1980's is to earn a fo;r return on their investment and maintain its value, thereby sustaining investor loyotty and the ability to attract new capital on reasonable terms. j I In keeping with our long-term financial commitment we will work to control capital spending, strengthen our capital structure, achieve and maintain on improved ratio of earnings to fixed charges and earn a high quality return on common equity which will enable the Company to sell l cornmon stock at or above book value. l As o regulated public utility we are aware that our long-term financial objectives con only be realistically achievable when regulators. legislators and consumers olike recognizc that their interests are also served by a financially healthy electric utility
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15 i Reinvestment Plan Popular ) Enrollment doubled in the Company's Dividend 1 Reinvestment and Common Stock Purchase Plan during 1982 with more than 17.000 participants investing a total of
$11.9 million.
Contributing to the success of the Plan in 1982 was the introduction of two new Plan features-a five percent price discount on stock purchased with reinvested common I d:vidends and a customer stock purchase option. V Discount, Customer Option All Plan porticipants are eligible for the discount which oday, in Maine's diverse allows shareholders to use reinvested common dividends to economy, agriculture purchase newly-issued common stock of five percent below prospers alongside the newer high market prices. The customer option also allows any CMP l technology industries of the future. customer residing in Maine to enroll in the Plon and purchase shores directly from the Company without paying brokerage commissions or service charges. Following announcement of the customer feature, more y, i g, m
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than 20.000 customers made inquiries about the Plan with
- nearly 2.000 becoming shareholders and purchasing more than 145.000 shores.
(Common and Preferred Shoreholder More than 32 percent of our 52.666 common shareholders Distribution) now participate in the Plan. reinvesting dividends on 24 As of December 31.1982 percent of the 17,132.324 shores outstanding shareholders Shores uo,ne 18.561 5.547,323 Tax Benefit Saved Lost summer, thousands of shareholders across the Country contoCted their Congressional delegations and urged them At ont 3 6 Centro! 6.191 1,521,875 to reject the threatened repeal of the federal tax deferrols on Western 5,808 1,573,406 reinvested dividends of up to $750 per year on individual Foreign 104 15,343 returns and $1500 on joint returns. Thanks to these efforts. 56,408 18,053,487 Congress voted in September to retain this votuable tax Toto!s benefit. Withholding On Dividends The Tax Equity and Fiscal Responsibility Act of 1982. recently signed into low, requires 10 percent withholding from all interest and dividend payments (with certain exceptions), beginning July 1,1983 Among the exceptions to the required withholding are dividends reinvested by individuals under reinvestment plans of certain public utilities (including CMP). and dividends paid to individuals or joint owners who qualify for and have filed exemption certificates. Further information t including on exemption certificate will be sent by the ! Company to shareholders in early 1983. For more Information about the Dividend Reinvestment and Common Stock Purchase Plan, please contact Shareholder Services, Central Maine Power Company, Edison Drive, Augusta, Maine 04336.
46 o Rogulatisn Two PUC Commissioners Named Moine's Governor Joseph E. Brennon oppointed two new members to the Public Utmties Commission in 1982. Named were former U.S. Nuclear Regulatory Commissioner Peter A Bradford whom the Governor also named as Chairman of the three-member PUC and Cheryl Harrington, former head of the Moine Attorney General's Consumer Fraud and Anti-trust Division. Mr. Bradford formerly served as a member and chairman of the
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Moine PUC from 1971 to 1977. h_oh!! a PUC Investigation b4 %f quaintYankee in October,1982 the Moine Public Utilities Commission V% /' giftshops abound commenced an investigation as a result of false testimony given in communities throughout the in a PUC proceeding by Robert F. Scott, formerly a Senior Vice state, miniature museums of President and Director of the Company. The investigation was "downeast" history, its culture, arts continuing on the date of this annual report. The Board of Directors and croffs. of the Company has created on Ad Hoc Legal Coordinating Committee consisting of directors who are not officers of the Company with the responsibility of investigating the matter and octing on behalf of the Company. The Committee is advised by independent counsel. On February 14,1983 the PUC Staff issued its preliminary report to the PUC and recommended, among other things, that the PUC consider issuing a finding of contempt against the Company and Robert F. Scott and a finding that E.W. Thurlow and Thomas C. Webb " intentionally disregarded facts tending to show that a senior officer of the Company had provided false testimony to the Commission and failed to act in accordance with the standards of leadership and integrity expected of high level utility management." The Board of Directors considers portions of the Stoff report to be inaccurate and unfair and on March 2,1983 filed with the PUC o detailed statement specifying those aspects of the report to which it takes exception. The Board also stated that (1) the Board had oppointed a Regulatory Relations Policy Committee consisting of three outside Directors to review with management significant positions the Company will take in regulatory proceedings and to monitor such proceedings. (2) E.W. Thurlow has urged the Board to take steps to enable him to accelerate the date of his long standing plans to take early retirement of age 62 and expressed a strong desire that this be accomplished no later than the May. 1984 annual meeting if at all possible, and (3) Robert F. Scott was discharged as on employee of the Company effective March 1, 1983. The Board also expressed its desire to meet with the Chairman of the Commission to discuss future relations between the Company and the Commission. The Board of Directors remains confident in the Company's obility to reestablish on effective working relationship with the regulatory agencies with which the Company deals and in the Company's ability to continue to provide its customers with safe. economic ond reliable power j
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i w0 Menagomont , Officers Board of Directors 1 l Elwin W. Thurlow,59
- George H. Ellis,63 )
President and Chief Executive Officer Boston. Massachusetts , Chairman of the Board of the < Charles E. Monty,55 Company l Senior Vice President, President and Chief Executive four-Engineering and Production Officer season i Home Savings Bank vacationland, the Pine Tree State o re e s M Mors ch n Vic edn Priscilla A. Clark,60 Portland. Maine o unique opportunity to share in Finance Vice President and Treasurer a quality lifestyle and a match-Norman J. Temple,61 Casco Bay College less natural environment. Vice President Legislative and Public Affairs Galen L Cole,57 Bangor, Maine j Matthew Hunter,48 President I Vice President Coles Express (Trucking) Charles E. Monty,55 Administrative Services Augusta. Maine
'E. James Dufour,48 Senior Vice President John 8. Randona,54 Skowhegan. Maine Vice President Vice President and Treasu er *Cartton D. Reed, Jr.,52 Nuclear Operations William Phitbrick Company Woolwich, Maine (General Insurance and Real Partner Ralph L Bean,60 Estate) Reed and Reed (Construction)
Vice President Engineering Leon A.Gorman,48 *Elwin W. Thurlow,59 Yarmouth Maine Augusta. Maine Donald F. Molly,51 President President and Chief Executive Vice President L L Bean, Inc. (Sporting Goods) Officer Power Supply Planning and Research John J. Russell,55 James H. Titcomb,65 Robert S. Howe,43 Portiond, Maine Sanford. Maine Comptroller Senior Vice President and Partner Treasurer Titcomb. Fenderson & Richard A.Crabtree 36 Knight. Attorneys Hannaford Bros Co. (Food Treasurer Distr bution) *Merrters of the Executive Cornmittee Seward B. Brewster,55 Secretary and Clerk Management Changes HHam M. Rnn,46 On June 17, George H. Ellis was named Chairman of the Company's Board Assistant Secretary and Assistant Clerk of Directors Mr. Ellis succeeded E. Clifford Lodd who retired at 70, the normal Carol W. Oliva,35 '*"'***"I 9* I ' *** 8' Assistant Treasurer Mr. Ellis. a native of Orono, Maine, is a former president of the Federal Reserve Bank of Boston and is currently president and chief executive officer of ggg g the Home Savings Bank of Boston. Mr. Ladd. chairman of the board and former president of W. C. Ladd & Sons (general insurance), Rockland, first became a director of CMP in 1966 John H. Kennedy,59 and was elected Chairman of the Board in 1980. Southern Division. Portland On May 20. Dona!d F. Kelly was named Vice President, Power Supply ; Patrick S. Lydon,40 Planning and Research. ' Central Division, Augusto Mr. Kelly is responsible for coordinating the Company's bulk power arrangements within the New England Power Pool and for planning the Joseph R. Moran,41 generation and transmission needs of the system. He is also respons,bte for the Northern Division. Waterville Company's load forecasting and energy transactions. Ibra L Ripley,61 in December Robert F Scott resigned as Senior Vice President and Western Division. Lewiston Company director.
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200 Finsn aiol Statemonts EZUME5Hf5MO Balance Sheet (Dollars in Thousands) Assets December 31. 1982 1981 Electric Property, at Origina! Cost (Notes 7. 8 and 9) $778,530 $717.419 Less: Accumulated Depreciation (Note 1) 233,568 213.786 544,962 503.633 Construction Work in Progress (Note 3) Jointly-Owned Projects 204,836 151.766 Company Projects 15,756 36.635 220,592 188.401 765,554 692.034 Investments in Associated Componies. at Equity (Note 7) 40,142 40.068 Net Electric Property and Investments in Associated Companies _ 805.696 732.102 Current Assets Cash (Note 5) 2,256 5.169 Temporary Cash Investments 7,000 150 Accounts Receivable. Less Allowances for Uncollectible Accounts of $587 in 1982 and $600 in 1981 Service-Billed 34,351 33.208
-Unbilled (Note 1) 11,529 16,982 Other 7,564 8.269 Inventories, at Average Cost Fuel Oil 18,243 20.492 Materials and Supplies 11,184 10.996 Prepayments and Other Current Assets 2,969 2.458 Total Current Assets 95,096 97,724 Deferred Charges and Other Assets, Net (Note 3) 32,801 19.558
$933,593 $849.384 The accompanying notes are on integral part of these financial statements
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_ -,w-mm,-mnn L: a u; . = + _m ,ppwgyy;~yy,- awawban ma 21 Bolonce Sheet (Dollars in Thousands) Stockholders' investment and Llobilities December 31, 1982 1981 Cipitalization (See Separate Statement) Common Stock Investment 3277,501 S262.353 Preferred Stock 35,571 35.571 Redeemoble Preferred Stock (Note 8) 54,785 56,545 Long-Term Debt (Note 8). 344,593 353.861 Total Capitalization 712,450 708.330 Current Llobilities interim Financing (See Separate Statement)(Note 5) 74,030 23.500 Other Current Liabilities Sinking Fund Requirements 1,829 1.822 Accounts Payable 37,194 23.228 Dividends Payable 9,866 9.159 Accrued Interest 7,681 7.695 Accrued Income Taxes 2,226 152 Other _ 5,656 4.710 64,452 46.766 Total Current Liabilities 138,482 70.266 Commitments and Contingencies (Notes 3. 4 and 7) Reserves and Deferred Credits Accumulated Deferred Income Taxes (Note 2) 43,663 37.606 Unamortized Investment Tax Credits (Note 2) 37,342 31.378 Other 1,656 1.804 Total Reserves and Deferred Credits 82,661 70,788
$933,593 S849.384 The occompanying notes are on integral port of these financial statements
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i Statement of Eamings (Dollars in Thousands Except Per Shore Amounts) Year Ended December 31, 1982 1981 1980 Electric Operating Revenues (Notes 1 and 4) $401,336 S361,670 S335.265 Operating Expenses Fuel Used for Company Generation 70,695 88,082 65,860 Purchased Power (Note 7) Energy 115,605 85,918 100,507 J Other 40,889 33,433 30,759 Other Operation 52,202 45,427 39,934 Maintenance 18,916 14,667 13,984 Depreciation (Note 1) 24,516 22,770 21,362 Taxes Federal and State Income (Note 2) 13,067 9,323 9,078 Local Property and Other 11,116 10.659 9,741 347,006 310.279 291.225 Equityin Earnings of Associated Companies (Note 7) 3,953 3,708 3,291 Operating income 58,283 55,099 47,331 Other income (Expense) Allowance for Other Funds Used During Construction (Note 1) 12,608 9,700 1,771 Other, Net (718) (262) 571 Income Before Interest Charges 70,173 64,537 49,673 Interest Charges Long-Term Debt (Note 8) 36,957 27,768 23.657 Other 2,453 11.328 8.733 Allowance for Borrowed Funds Used During Construction (Note 1) (10,192) (8.204) (9,144) 29,218 30.892 23.246 Net income 40,955 33,645 26,427 Dividends on Preferred Stock 7,392 7.450 5,780 Earnings Applicable to Common Stock $ 33,563 S 26,195 S 20.647 i Weighted Average Number of Shores of Common Stock Outstanding 16,630,925 14.458,788 12.357,075 Earnings Per Shore of Common Stock $ 2.02 S 1.81 S 1.67 Dividends Declared Per Shore of Common Stock $ 1.82 S 1.74 S 1.66
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The OCCompanying DCtes are on integrol port of these financial Statements
m m-c.mm s u.a -em m u m ,eg n a m &g uy p % q g 7 , - O wwwa Statement of Capitalization and Interim Financing DeCemt:er 3t 1982 1981 (Dollars in Thousands) Amount % Amount % Capitolization (Note 8) Common Stock Investment: Common Stock. Por Voiue SS Per Shore-Authorized-20.000.000 Shores Outstanding-17.132.324 Shares in 1982 and 16.234.626 Shores in 1981 $ 85.662 S 81.173 Other Poid-in Capital 112.052 104.495 _Retoimd Earnings _ 79,787 76.685 277,501 35.3% . . 262.353 3_58%
. - . -Cumulative Preferred Stocic- - . . . . - - .
Por Votue $25 Per Shore-Authorized-2.000,000 Shores Outstanding-None - Por Votue $100 Per Shore-Noncalloble. Voting. 6%- Authorized and Outstanding-5.713 Shores 571 571 Dividend Senes. Collable-Authorized-1.300.000 Shores Current Current Redemption Rote Outstanding Shores Price 3 50% 220.000 S101 00 22.000 22.000 4 60 30.000 101.00 3.000 3.000 4 75 50.000 101 00 5.000 5.000 5 25 50.000 102 00 5,000 5.000 Preferred Stock 35,571 4.5 35.571 49 8 40 236.250 in 1982 106 30 23.625 25.000 250.000 in 1981
$1125 79.200 in 1982 108.44 7,920 8.305 83.050 in 1981 11.75% 250.000 111.75 25,000 25.000 56,545 58.305 ...__ _ Jpss; Current sinkjng fund requirements _ _ __
___ __ 1,760_ _ _ _ 1_.760 Redeemoble Preferred Stock 54,785 7.0 _ 56.545 7. 7 Long Term Debt-Series Interest Rote Matunty First and General Mortgage Bonds-U 3%% March 1.1983 8.530 8.580 V 3% April 1.1985 10,297 10.362 W 4% May 1.1987 15.660 15.739 X 5% November 1.1990 5.283 5.330 Y 7S May 1.1999 27.837 28.032 Z 9 30 August 1.1995 32,720 32.920 AA 7.70 July 1.1997 23.682 23.753 BB 10 65 August 15,1984 20.000 20.000 General and Refunding Mortgage Bonds-A 9% May 1. 2006 35.000 35.000 B 9% October 1. 2003 25.000 25.000 C 104 October 15.1999 40.000 40.000 D 16% May 1.1991 45.000 45.000 ____.____E.,__. _ __._ _.__ _ ._15% _._ __ December 1.1991 45.000 __45.000_ _ __ _ _ _ _334.716 334.009 _ Unamortized Premiums _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ __ _62 _ _ _ _ _ _ _ _ _ __ 75 _334,0 71_ _ _ _ _ 334.7_91 _ . _ _Other_ _ _ . _ _ _ _ _ _ _ _ Lease Obligation 11 5% 2021 (in installments) 7.871 7.882 Installment Notes-Pollution Control Facilities 64 2002-2003 11,250 11.250 19,121 19.132 Less Sinking fund requirements and current motunties 8.599 62 344.593 43.8 353 861 484 l TotaliCopital'Izotio_r{[~ ~] 712.450 90.6 708.330 96 8
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Interim Financing, Amounts to be Refinanced (Note 5)- Commercial Paper 65.500 23.500 Current Maturities of Long-Term Debt _ _ . _ _ _ _ _ 8.530 _ .- 74.030 9.4 _23.500 32 Totot Capitalization and Interim Financir g $786.480 100.0% $73183') 100 0% The occompanying notes are on integrol port of these financial statements.
nm - -- n n p pg!gGdB%Ehud 24 [1., ,gg u m m _, mm Amggfynnympm Statement of Changes in Common Stock Investment For the Three Years Ended December 31,1982 (Dollars in Thousands) Other Amount at Poid-in Retained Shares Por Value Capital Earnings Total Bolonce-December 31,1979 12.074.234 $60.371 S 77.445 $76.206 S214.022 Add (Deduct) Net income 26.427 26.427 Cash dividends-Common Stock (20.926) (20.926) Preferred Stock (5,780) (5.780) Sales of Common Stock 1.878.168 9.391 12.981 22.372 Capital stock expense (404) (404) Bolonce-December 31.1980 13.952.402 69.762 90.022 75.927 235.711 Add (Deduct) Net income 33.645 33.645 l Cash dividends-Common Stock (25.437) (25.437) Preferred Stock (7.450) (7.450) Sales of Common Stock 2.282.224 11.411 14.499 25.910 Capital stock expense (26) (26) Bolonce-December 31.1981 16.234.626 81.173 104.495 76.685 262.353 Add (Deduct) Net income 40.955 40.955 Cosh dividends-Common Stock (30.461) (30.461) Preferred Stock (7.392) (7.392) Sales of Common Stock 897.698 4.489 7.433 11.922 Capital stock expense 124 124 Bolonce-December 31.1982 17,132,324 $85,662 $112,052 $79,787 $277,501 The accompanying notes are on integral part of these financial statements Price Range and Dividends of Voting Stock 1982 1981 Market Price Dividends Market Price Dividends High Low Declared High Low Declared Common Stock Traded N.Y.S.E. 1st Quarter $13b $12 $ .45 $12h S11?s S.43 2nd Quarter 135s 12% .45 13 11 % .43 3rd Quarter 147s 12' e .45 125i 11b .43 4th Quarter iTs 135s .47 13% 113e .45 6% Preferred Traded O.T.C. I ist Quarter * *
$1.50 S1.50 2nd Quarter 1.50 1.50 3rd Quarter
- 1.50 1.50 4th Quarter *
- 1.50 1.50
*There have been no quotations since June 1974.
y w w aaw wa m ay,w w, wynw n a a.wa gyygygggg n m.w w w wl3 % d ,g Statement of Sources of Funds for Construction and Acquisitions (Dollars in Thousands) Year Ended December 31. 1982 1981 1980 Funds Provided Internal Sources From operations Net income $ 40,955 S 33.645 S 26.427 Depreciation 24,516 22,770 21,362 Deferred income taxes and investment tax credit, net 11,245 10,318 11,375 Allowance for other funds used during construction (12,608) (9.700) (1,771) 64,108 57.033 57,393 Less: Sinking fund requirements of long-term debt and Preferred Stock 2,478 678 1.578 Dividends declared 37,853 32.887 26.706 Other, net (1,613) 1.928 (1.538) 38,718 35.493 26.746 (Increase) decrease in working capital, exclusive of interim financing and sinking fund requirements Cash, temporary cash .nvestments and receivables 1,078 24.640 (23,065) Other current assets 1,550 (43) (5,331) Other current liabilities 17,679 (9,816) 15,370 20,307 14,781 (13.026) 45,697 36.321 17.621 . __ _ - _Internal SourNet _ _ -
- -- _ce_s. _ _ . . -- -. - _ - .
External Sources Common Stock 11,922 25,910 22,372 Preferred Stock - - 25.000 Long-term debt - 90.000 16,500 Revolving credit agreement - (9.000) 9,000 Increase (decrease) in short-term borrowings 42,000 (42.698) 5,606 Long-term debt refunded - (5.933) - Changes in investments 57 57 58 External Sources. Net 53,979 58,336 78.536
$ 99,676 S 94.657 S 96.157 Funds Used for Construction and Acquisitions Jointly-owned projects $ 66,745 $ 52,343 S 53,473 Company projects 45,539 48.858 44.455 Property acquisitions from other utilities -
3.156 - Allowance for other funds used during construction (12,608) (9.700) (1.771)
$ 99,676 S 94.657 S 96.157 The accompanying notes are on integro! port of these financial statements
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, 333 h, 33g: 33 to Financial Statements i . Summary of Significant Accounting Policies Regulation: The Company's rates, operations, accounting and certain other practices cre subject to the regulatory authority of the Public Utilities Commission of the State of Maine (PUC) and the Federal Energy Regulatory Commission (FERC).
Depreciation: Depreciation of electric property is provided using the straight-line method. The effective composite rates were 3.27%,3J2% and 3.31% for the years 1982,1981 and 1980, respectively. At the time depreciable property is disposed of, the original cost of the property, plus cost of removal less salvage, is charged to accumulated depreciation. Electric Operating Revenues: Electric operating revenues include amounts billed to customers, estimated unbilled sales and unbilled fuel costs at the end of each reporting period. The Company's approved tariffs permit dollar for dollar recovery of the cost of fuel used in Company generating facilities, the energy component of purchased power and on ollowed cost of capital ossociated with the financing of unbilled fuel costs. Allowance for Funds Used During Construction (AFC): The Company capitalizes as on element of the cost of construction on allowance for funds (including common equity funds) employed during periods of construction. The debt component of AFC is reflected as a reduction of interest expense while the equity component is recorded as other income. While AFC does not provide funds currently, present ratemaking practices allow the Company to recover these amounts in revenue over the useful life of the property. Further, the unrecovered cost of electric property placed in service, including AFC, is on element of rate base on which the Company is permitted to earn a return. The amount of AFC recorded in 1982 was determined by multiplying the overage monthly dollar balonce of construction work in progress (CWIP) by a rote reflecting the overall weighted cost of capitol including short-term borrowing balances and the cost of equity allowed in the PUC's most recent rate decision. The overage AFC rates produced by the Company's monthly computations were 11.96%,11.26% and 12.44% for 1982,1981 and 1980, respectively.
- 2. Income Taxes The components of Federol ond state income taxes reflected in the Statement of Earnings are as follows:
Year Ended December 31, 1982 1981 1980 (Dollars in Thousands) Federal: Current $ 235 S(1,093) $(2.696) Deferred 5,746 8,934 6 765 Investment tax credit, net 5,965 734 4,295 11,946 8,575 8.364 State: Current 1,587 98 399 Deferred (466) 650 315 1,121 748 714 Totcl Federal and state income taxes $13,067 S 9.323 S 9.078
y v,m--nn y- w- r, - c y., mnm - ~ r- m y w m g' i. s 4., - ;q: ;; ; L u.:s c a ss 27 k%: Mwa.Jw ~ di - :w d a w,ub ~~ .wm . . v. , ;,wu , , % .% ' - Ou The ratemoking practices followed by the PUC permit the Company to recover Federal and state income taxes payable currently and to recover deferred taxes only when the tax low, in effect, requires such treatment or when PUC opproval is granted on specific timing differences. Current tax low requires the Company to defer Federal income taxes crising from the use of accelerated tax depreciation of property added subsequent to 1969. The income tax effect of other timing differences related to property is flowed through for rotemoking and accounting purposes. The following table reconciles the statutory Federal income tax rate to o rate determined by dividing the total Federal income tax expense by income before that expense. 1982 1981 1980 Amount % Amount % Amount % (Dollars lii Thousands) Statutory Federalincome tax rate $24,335 46.0% S19.421 460% $16.004 46 0% Permanent reductions in tax expense resulting from statutory exclusions from taxable income Dividend received deduction related to earnings of associated companies (1,546) (2.9) (1.450) (3 4) (1.287) (3.7) Allowance for other funds used during construction (5,800) (11.0) (4.462) (10.6) (814) (2.3) Other (742) (1.4) (594) (1.4) (956) (2.8) 16,247 30.7 12.915 30.6 12.947 37.2 Effect of timing differences for which deferred taxes are not recorded (flow through) Deduction of removal costs (933) (1.8) (1.243) (30) (851) (2.5) Allowance for borrowed funds used during construction (4,688) (8.8) (3.774) (9 0) (4.207) (12.1) Depreciation of replacement property added from 1970 to 1980 (356) (.7) (393) (.9) (425) (1.2) Depreciation differences flowed through in prior years 1,790 3.4 1.421 34 1.395 40 Other ~ (114) (.2) (351) (.8) (495) (1.4) Calculated rate $11,946 22.6% S 8.575 20 3% S 8.364 24 0% Investment tax credits utilized to reduce Federal income taxes currently payable are deferred and amortized over the lives of the related assets. At December 31,1982. the Company had approximately
$15,600.000 of additional investment tax credits available to reduce future Federal income taxes otherwise payable.
- 3. commi,m.ne. and conting.nci..
Construction Program: The Company's load forecosts and construction plans for additional generation and purchases of power ore under continuing review and revision. Estimated construction expenditures relating to the jointly-owned units are based upon the lotest information furnished by the utility responsible fcr the construction of the unit. The Company's forecostad construction expenditures amount to $107.000.000 for 1983 and $401,300.000 for 1984 through 1987, exclusive of AFC but including estimates for nuclear fuel costs where applicoble. These expenditures include $225.600.000 for major generating facilities. $81.000,000 for other generating facilities $27,500.000 for transmission. S114.700.000 for distribution and $59,500.000 for other capital projects.
O &Qdtg; The Company's shore of Generoflon Focilities Expenditures Estimated AFC EsHmated Expanures Net Through (Excluding AFC) Estimated Percent Capability December 31. Total Unit in-service Date ownership MW 1982 1983-1987 Project (Dollors in Thousands) Brunswick-Topshom Re-development 2 & 3 1983 100.00 7 S 8,528 S 700 S 9,000 Mason Cool Conversion 1986 100.00 108 1,525 67,200 68,000 Hiram Hydro Redevelop-ment 1985 100.00 8.5 538 12,800 13.000 Seabrook i & 2 (Public Service Co. of NH) 1984 & 1987 6.04 139 155.835 112,600 236,000 Millstone 3 (North-east Utilities. CT) 1986 2.50 29 46.268 32.300 65.000 Nuclear Unit Concelled: On September 24,1981, Boston Edison Company, the lead participant of Pilgrim II, announced the concellation of that nuclear generating project. Although subject to some uncertainties, such as the resolution of a number of anticipated claims from vendors and questions of salvage, the Company's net investment in this project, based on Boston Edison Company's estimate of occumulated expenditures and concellation costs net of salvage vo!ues, would be approximately
$14,600,000 including A C of $4,900,000.
In its 1981 rate filing, the Company requested recovery of its investment in Pilgrim II. The PUC deferred its decision on this motter until completion of its investigation of the justness and reasonableness of the costs incurred. The Company believes that these costs were incurred for the benefit of the customer and, accordingly, should be recovered. The PUC has not yet scheduled any hearings on its investigation. See Note 4 Rotemoking Matters. In its 1980 and 1981 rate orders, the PUC disallowed recovery of AFC on two prior cancelled nuclear projects. Therefore, no assurance con be given that the Company will be permitted to recover costs in connection with Pi! grim II. If any amounts are determined not to be recoverable they would be charged, net of related income taxes, against earnings in the period such determination is made. Seabroolc The construction of the two nuclear generating units at Seabrook, New Hampshire, in which the Company is a port owner, has experienced lengthy delays and increased construction cost estimates resulting from regulatory and licensing procedures and other factors. In November 1982. Public Service Company of New Hampshire (PSNH) revised the cons 9uction schedule and estimated on in-service date of December 1984 for Unit i and July 1987 for Unit 2, ten and fourteen months later than the prior respective estimated in-service dates. PSNH also increased the estimated cost of the Seabrook units upon completion by approximately 43 percent over an April 1981 estimate. The Company owns approximately 6.04 percent of the Seabrook units and estimates that the Company's total cost, including S125,600,000 of estimated AFC, will be $361,300.000. In view of the increase in the estimated cost of the Seabrook units, PSNH has retained on independent consultant to review the revised cost estimates and completion dotes. In order to reduce the financial commitments resulting from the increased estimate of construction cost, the owners of the Seabrook units have agreed to reduce the level of construction on Unit 2 during 1983 and continue to review i other alternotives which could further offect the cost of construction and completion date of Unit 2. l Sears Island Cool-Fired Plant: In May 1982, the Company announced plans to defer the completion date of the 568 MW Sears Island cool-fired plant from 1989 to 1995. The PUC subsequently agreed to the dismissal of the Company's application for a certificate of public convenience and necessity for the plant on the condition that, without good cause shown, the Company would not be permitted to renew its opplication until offer July 1,1985. The Company stopped recording AFC on this project
m --mm.,-me-, mmmggsp@ldWLkW.&g$M2Am1 qgg ;m77m E L w .wna <-.a s.-;www -w.-n.adbibEL during December 1982 and the investment bolonce was transferred to deferred charges and other assets on the accompanying balance sheet. The Company's investment in'this project net of land at December 31,1982 was approximately $13,426.000 including AFC of $6.365.000. The Company will continue to review the proposed schedule for this plant in light of its capacity requirements, availability of other power sources and other factors.
- 4. Ratemaking Matters in March 1983 the Company is filing with the PUC on opplication for a rote increase which is designed to increase revenues by approximately $53.000.000. The Company will osk the Commission to increase the allowed overall rate of return from 12.34 percent to 12.5 to 13 percent and o!so that the return on common equity be increased to 16 to 17 percent from the currently approved 15.4 percent. The Company will seek the recovery, over a ten year period, of the Company's $14.600.000 investment in the Pilgrim II (Massachusetts) nuclear plant cancelled in 1981.
- 5. int. rim nnancing The Company uses short-term borrowings under lines of credit with commercial banks and for construction and other corporate purposes. Existing commercial lines of credit paper to provide at December initial 31,1982 financing $70.950.000 with $5,000.000 requiring from 2% to 5% of th totalled line in compensating balonces. Annual fees of 3/8 to 1/2 of 1% of the line ore required on $64.500.000.
Other credit arrangements amounting to $1.450.000 do not require fees or compensating cash balonces. The Company's Articles of Incorporation limit Unsecured Borrowings that may be outstanding to 20% of Capitalization, os defined (S142.239,000 as of December 31,1982). Unsecured Borrowings, os defined, amounted to $76,750.000 as of December 31,1982.
- b. Pension Plans The Company has two non-contributory defined benefit pension plans which cover substantially all of its employees. The Company's policy is to fund pension costs accrued on on annual basis. Annual pension expense, including amortization of prior service costs over 30 years, amounted to S3.840.000.
S3.412,000 and $2 562.000 for 1982,1981 and 1980 respectively. The relationship of occumu!ated benefits and assets of the plans is shown below. January 1, 1982 1981 Actuariol present value of occumulated benefits Vested $39,891,000 $35,490.000 Nonvested _ 2,926,000 _ _ _ _ 2.287.000
$42,817,000 $37,777.000 Not assets available for benefits $45,010,000 S40.692.000 T1e increases in pension expense and actuarial value of benefits in 1981 reflect changes in the retirement assumptions and defined benefit provisions. The weighted overage assumed rate of return used for both periods in determining the actuarial present value of occumulated plan benefits was 6.25%.
- 7. capacity Arrangements Power Agreements: The Company owns directly or indirectly a portion of the generating capacity and energy production of certain generating and transmission facilities operated by associated util;ty companies and is obligated to pay its proportionate share of the generating costs which include depreciation, o return on invested capital and the estimated cost of decommissioning the nuclear plants at tho end of their service lives.
M N N ~F 30 fe aw&Muww&R%dawhh$LG.d-[Ad%MU #i %L.s3N#9 1 l Pertinent data related to these power agreements os of December 31,1982 are os follows: Moine Vermont Connecticut Yonkee Yonkee Yankee Yankee Atomic MEPCo.
% of Ownership 38%~ 4% 6% 9.5% 78.1% 1 Contract Expiration Date 2002 2002 1998 1991 1985 Current Energy Capacity (MW) 847 528 582 176 133 i Company's Shore of Copacity(MW) 317 19 35 17 4 Estimated Annual Current Costs (1982 Costs in Thousands) S41.290 S3,786 S7.117 $4,949 S 918 Company's Shore of Long-Term Debt and Redeemable Preferred Stock (Thousands) S57,708 $3,693 $4,824 S1,625 S7,020 Estimated costs of nuclear plant decommissioning are being collected through rotes by Moine Yonkee, Connecticut Yonkee and Yonkee Atomic. Vermont Yonkee has recently completed a ;
decommissioning study and has filed rates with the FERC reflecting the estimated expense. J Maine Yankee estimates the cost of decommissioning, ossuming immediate dismantlement and 1 removal, to be $57,600,000 (in 1980 dollars) and is collecting $1.826,100 annually through its rates. ) Under the terms of its power agreements, the Company pays its ownership share of decommissioning expense as a cost of purchased power. The four Yankee companies recognize the relotive uncertainty of the future cost of decommissioning, the changing technology of decommissioning and the possibility of new requirements of the low and, therefore, recognize the need to constantly monitor and adjust decommissioning costs, if necessary, through supplemental rate filings. Condensed financial information of Maine Yankee Atomic Power Company is as follows: 1982 1981 1980 (Dollars in Thousands) Earnings: Operating Revenues $110,000 $102,650 $84,245 Operating income 18,621 19,632 18.034 Net income 7,293 7,562 7,508 Earnings Applicable to Common Stock 6,477 6,698 6,574 Company's Equity Shore of Net Earnings 2,461 2,545 2.498 Investment-Net Electric Property and Nuclear Fuel $324,431 $306.200 $304,514 Current Assets 21,373 17,719 14,394 Deferred Charges and Other Assets 8,987 4,509 3,001 Less: Redeemoble Preferred Stock 10,796 11,295 11,980 Long-Term Debt 139,575 129.862 134,823 Current Liabilities 23,718 21,741 25,285 Reserves and Deferred Credits 113,891 98,696 83,010
'~ ~
Net Assets $ 66,811 S 66.834 S 66,811 Company's Equity in Net Assets $ 25,388 $ 25.397 S 25.388 Also, the Company has a nearly 60% ownership interest in the jointly-owned, but Company operated, 619 megawatt oil-fired W. F. Wyman Unit No. 4. The Company's shore of the operating cost of this Unit is included in the appropriate expense categories in the Statement of Earnings. The Company's plant in service and related occumulated depreciation attributable to the Unit are os follows: December 31, _ 1982 1981 (Dollars in Thousands) Plant in Service $113,588 S113,922 Accumulated Depreciation $ 14,119 $ 11.417
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- b. Capitalization Long Term Debt- Under the terms of the Indenture securing the First and General Mortgage Bonds, substantially oil of the Company's electric utility property is subject to a first mortgage lien. Bonds issued under the General and Refunding Mortgage Indenture ore subject to the prior lien of the First and General Mortgage Indenture until the First Moitgage Bonds have been retired.
All or any part of each outstanding series of First and General Mortgage Bonds and General and Refunding Mortgage Bonds may be redeemed by the Company at any time at established redemption prices plus accrued interest to the daie of redemption, except that the Series A and D Bonds are subject to certain refunding limitations until May 1,1986, the Series B Bonds until October 1, 1988, the Series C Bonds until Octcber 15,1989 and the Series E Bonds until December 1,1986. The annual sinking fund requirements for First and General Mortgage Bonds (1% of maximum principal amount of series outstanding) may be met by payment in cash or repurchased bonds or, up to one-half of their amounts, by the certification of odditional property. The Series A. D and E General and Refunding Mortgage Bonds have no sinking fund. The Series B General and Refunding Mortgage Bonds have a five percent mondatory cash sinking fund commencing in 1984 and a non-cumulative optional five percent cash sinking fund, limited to one-third of the aggregate principal amount of Series B Bonds issued. The Series C General and Refunding Mortgage Bonds have o six and one-quarter percent mandatory cash sinking fund commencing in 1984, and a non-cumulative optional cash sinking fund, not to exceed the amount of the mandatory cash sinking fund and limited to thirty-one and one-quarter percent of the aggregate principal amount of Series C Bonds issued. The Company intends to meet one-half ($630,000) of the 1983 sinking fund requirements by the certification of additional property. Sinking fund requirements and maturing debt issues (net of
$728,000 purchased in advance) for the five years ending December 31,1987 cre as follows:
Year Sinking Fund Maturing Debt Total (Dollars in Thousands) 1983 $ 699 S 8,530 S 9,229 1984 4,891 20,000 24,891 1985 4,904 10,140 15.044 1986 4,907 - 4,907 1987 4,729 15.041 19,770 Redeemable Preferred Stocks: Sinking fund provisions of the S11.25,8.40% and 11.75% Series Preferred Stock require the Company to redeem all shares of por plus on amount equal to dividends accrued to the redemption date on the basis of 3,850 shares annually for the $11.25 Series,13,750 shores annually for the 8.40% Series and 10,000 shores annually beginning in 1986 for the 11.75% Series. The Company also has the non-cumulative right to redeem up to 13,750 odditiorut shores of the 8.40% Series annually and up to 10,000 shares of the 11.75% Series annually beginning in 1986 at the same price. The annual sinking fund requirements for the five years ending December 31,1987 are os follows: 1983 through 1985-$1,760,000; 1986 through 1987- $2,760,000. RetoIned Eamings- Under terms of the indentures securing the Company's Mortgage Bonds and the Company's Articles of Incorporation, no dividend may be paid on the common stock of the Company if such dividend would reduce retained earnings below S29,604,000. At December 31,1982,
$50,183,000 of retained earnings was not so restricted.
- 9. suppi.meniary informoeion to oisclose the Effects of Changing Prices (Unaudited)
The following information, supplied in accordance with the requirements of the Statement of Financial Accounting Standards No. 33, is intended to be viewed as an estimate of the opproximate effect of inflation rather than as a precise measure. Constant dollar omounts represent historical costs stated in terms of dollars of equal purchasing power, as measured by the Consumer Price index for All Urban Consumers (CPI-U). Current cost amounts of electric generation and transmission plant ore estimated based on engineering studies of the current cost of constructing the present mix of generation and transmission facilities. The current cost of remaining plant is determined primarily by indexing surviving plant by the Handy-Whitman Index of Public Utility Construction Costs. Current cost differs from constant dollar amounts to the extent that specific prices have increased more or less rapidly than the general rate of inflation. Depreciation is determined by applying the Company's composite depreciation rote to the indexed depreclable plant amounts. Accumulated depreciation is also adjusted for retirements and removal costs, net of salvage.
wwwgwwww-~ - v .~ ,~ -~ g w yymym au.2ea i s: a. w w a m n u m , w _aa u w l$20$ A sL C R O h!!E & Lil Fuel inventories are treated as monetary assets since regulation limits the recovery of fuel under the fuel odjustment clause to actual costs. Historical income tax expense is not adjusted since only historical costs are deductible for income tax purposes. Under present rotemaking practices only the depreciation of historical cost of utility property is recoverable through revenues. Since the Company may recover all, and only, the remaining net historical cost of plant through rates, on adjustment to net recoverable cost is reflected as on element of erosion of common stock investment due to changing prices. The adjustment is positive or negative depending on the amount of the current year's inflation effect and the amount of the additional depreciation resulting from cumulative inflation effects. While the ratemoking process gives no recognition to the current cost of replacing plant, the Company believes it will be allowed to earn a return on the increased cost of its net investment when replacement actually occurs. , During a period of inflation, holders of monetary assets suffer a loss of general purchasing power while holders of monetary liabilities experience o gain. The gain from the decline in purchasing power of net amounts owed is primarily attributable to the substantial amount of debt which has been used to finance plant. Because of regulation the Company does not have the opportunity to realize a holding gain on debt and is limited to recovery only of the embedded cost of debt capital Statement of Eamings Adjusted for Changing Prices for the Year Ended December 31,1982 (in Thousands of Average 1982 Dollars) Constant Dollar Current Cost Earnings Applicable to Common Stock, As Reported $33,563 $33,563 Erosion of Common Stock investment Because of Changing Prices Cost in excess of the original cost of productive facilities not recoverable in rates os depreciation
- Reported as an additional provision for depreciation 32,700 42,100
_ __ Reported as an adjustment to net recoverable cost (3,800)_ 8,800 28,900 _50,900 Excess of increase in the current year in the specific level of prices over general price changes _ _ ___- __(22,000)_ Toto! cmount not specifically recoverable in rates 28,900 28,900 Offsetting effect of debt and preferred _ stock financing _ . _ __ _ _ _ _ _ _(18,700)__ _(18,700) Net erosion of Common Stock Investment 10,200 10,200 Earnings Applicable to Common Stock, As Adjusted $23,363 $23,363
'At December 31,1982, constant dollar and current cost of property, plant and equipment, net of occumulated depreciation, was S1,080,300 and $1,250,100 respectively, while historical cost or net cost recoverable through depreciation was $544,962.
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^
Five Year Comparison of Selected Supplementary Financlol Data Adjusted For Effects of Changing Prices (In Millions of Average 1982 Dollars. Except Per Shore Amounts) Year Ended December 31, 1982 1981 1980 1979 1978 Operating Revenues Historical, os reported $401.3 $361.7 S335.3 $271.8 S208 2 Adjusted for generalinflation $401.3 $383.9 $392.8 $3614 $308 0 Historical Cost Information Ac}usted for General inflation Earnings (loss) applicabl3 to Common Stock Hi torical S 33 6 S 27.8 S 24 2 S 33 3 Adjusted for additional depreciation S ,8 $ (4 4) S (46) S 5.9 Earnings (loss) per share applicable to Common Stock Historical S 2 02 $ 1.92 S 1.46 S 2.79 Adjusted for additional depreciation S 05 S ( 31) S (37) S 49 Current Cost Information loss applicable to Common Stock adjusted for additional depreciation S (85) S(14 1) S(16 6) $ (76) Loss per shore opplicable to Common Stock adjusted for additional depreciation S (.51) S (.98) S(1 34) S (.64) Increase in general price level over (under) increase in specific prices, after reduction to net recoverable cost S(11.7) $ 214 S 44 9 $ 53.9 Generalinformation Goin from decline in purchasing power of net amounts owed S 18.7 $ 40 8 $ 54 8 S 60 0 Net assets at year end at recoverable cost Historical, as reported $277.5 $262.4 $235 7 S214 0 Adjusted for generalinflation $274 4 $269.5 $263.7 S269.1 Dividends declared per shore Historical, as reported S 1.82 S 1.74 S 1 66 $ 1.55 S 1.46 Adjusted for general inflation S 1.82 S 1.85 $ 1.94 S 2 06 $ 2.16 Market price per shore at year end Historical. as reported $17.00 $12.375 S12.25 $1300 $14 875 Adjusted for generalinflation $16 81 S 12.71 S13.71 S16.35 S 21.19 Average consumer price index 289.1 272 4 246 8 2174 195 4 Report of Independent Public Accountants T3 the Board of Directors of Centrol Malne Power Company-We have examined the balance sheet and statement of capitalization and interim financing of CENTRAL MAINE POWER COMPANY (a Maine corporation) as of December 31,1982 and 1081. and the statements of earnings. Changes in common stock investment and sources of funds for construction cod acquisitions for each of the three years in the period ended December 31,1982. Our examinations were made in accordance with generally accepted auditing standards ond occording!y included such tests of the accounting records and such other auditing procedures os we considered necessary in the circumstances. As discussed more fuliy in Note 3. the utility responsible for the construction of the Pilgrim .. nuclear generating project in which the Company hos an ownership interest has concelled that project. Recovery by the Company of its not investment and future commitments, which is estimated to be approximately $14.600.000 (including allowance for funds used during construction of opproximately $4.900.000)is dependent upon regulatory approval It is not possible to estimate what portion, if any. of this investment may not be recovered. In our opinion, subject to the recovery of the Company's investment in the concelled project discussed in the preceding paragraph, the accompanying financial statements present fairly the financial position of CENTRAL MAINE POWER COMPANY as of December 31.1982 and 1981. and the results of its operations and its sources of funds for construction and ocquisitions for each of the three years in the period ended December 31,1982 in conformity with generally accepted accounting principles applied on o consistent basis ARTHUR ANDERSEN & CO Boston, Mossochusetts. February 9.1983
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-- n m 1972-82 1982 1981 1980 1979 Totot Revenues (Dollars in Thousands)
Residential $168,785 $157.042 $137.229 $108.550 Commercial and Industrial 215.988 204 495 172.178 124.033 Electnc Utdities 3.356 3.570 3.212 2.390 Lighting 6.688 6.174 5.694 5.059 Totof Terntonal Revenues $394.817 S371.281 $318.313 $240.032 Totot Operating Revenues $401,336 S361.670 S335 265 $271.764 Mowo*t hour Soir s (Thousands) Residential 2.453,310 2.338.745 2.335.368 2.352.509 Commercial 1,520.504 1.475.506 1.475 416 1.517.264 Industnol 2,489,833 2.276.977 2.094 000 1.952.664 Electr,c Utilities 76.611 82 735 83.102 78.836 Lighting 46,326 47.638 49.735 50.507 Total Teintonot Sotes 6.586,584 6.221.601 6.038.521 5.951.780 Annual Percentage Change-Terntono! Sales 5.9% 30% 15% 18% Ncinc Customers ( Average) Residentici 356,838 345.089 340 351 335 474 Commerc.cl and Industnot 41.042 39.969 39.538 39.430 E;ectnc Utmt>es 3 4 4 5 Lighting 304 391 302 300 Total Terntonal Customers 398,277 385 453 380.285 375 299 Annual Percentage Change- Toto! Customers 3.3% 14% 13% 13% Gesidential Sotes Averages ~ Annua! Kilowatt hours Used 6,875 6.777 6.862 7.012 Revenue per Kilowatt-hour 6.880 6.71c 5 8ec 4 61c AnnualBal $ 473 S 455 $ 403 S 324 Pevenue Per petail Kdowatt hour 6.010 5 99c 5 29c 405c Net income (Thousands) $ 40,955 $ 33 645 S 26427 S 29.643 Ca pitaleation (Thousands) Short-term Debt $ 65.500 $ 23.500 S 66.198 $ o0.592 Long term Debt 353,123 353.861 279.152 254 699 Redeemoble Preferred Stock 54,785 56.545 58.305 33 690 Preferred Stock 35,571 35.571 35.571 35.571 Common Shoreholders' Fquity 277,501 262.353 235.711 214 02? Total $786,480 S731.830 $674 937 $598.574 Commc.1 Stock Octo Earnings Applicable to Common Stocx (Thousanos) $ 33.563 S 26.195 S 20 647 S 25.044 Earnings Per Average Shore of Common Stock $ 2.02 S 181 S 167 S 2.10 Dividends Declared Per Shore $ 1.82 S 1 74 $ 166 S 155 Payout Ratio 89% 96%(b) 99% 74 % Poce/ Earnings Ratio 8X 7X 7X 6X Shores Outstanding - Average 16,630,925 14 458.788 12.357.075 11.899A35 Number of Common Shoreholders 52,666 51.947 50.015 48. 15
% Earned on Average Common Equity 12.4% 10 5% 92% 12 0%
Dividend Cash Coverage potio 1.6X 16X(b) 20X 2 oX Yield 12.4% 141%(b) 12 9% 10 9% Book Vo!ue Per Shore $16.20 S16 16 S1689 S17 73 Market Price High $174 S13 7 S14'. Sto Low 12 i t 'a 10's 12% At Year End 17 12 % 12'4 13 GeneroHon Ma (% of kWH Generated) Hydro 21% 21% 15% 20 % fcssil and Other 48 44 55 47 Nuclear 31 35 30 33 Total 100% 100% 100% @% M4sce!ioneous Average Annuot Interest Rote on Bonds 10.49% 10 48% 8 38% 8 23% Ratio of Earnings to F; rod Chorge. 2.3 X 21X 21x 28x Average Annuot Dvdend Rote on Preferred Stock 7.88% 7A0% 7 91% 6 55 % Net System Capabihty at Time of Peck-MN 1,465 1.490 1.523 1.526 System Peak Demand-MN 1.259 1 207 1.193 1.207 Reserve Margin at Time of Peak 16% 23% 28% 26% System Load Factor 64% 63% 63% 61% Total Average Fuel Cost /kWH 2.610 2 Soc 2 52c 1 Soc Fuel Cost as a % of Operot.ng Revenues 46% 47% 49% 37% Number of Empiovees-Year End 2.082 2 018 2.008 2.000 Net UtSty Plant (Thousands) $765.554 S6 2.034 $625.706 $552.384 Total Assets (Thousands) $933,593 S840 384 S795.041 $694 837 Construct,on Expend,tures (Thousands) $112.284 S10' 201 S 97.928 S 60.068 Internally Generated Funds os o % of Construct:on Requ!rements (includes AFC) 54 % 46% 21 % 32% Effective Income Tau Rote 24.2% 21 7% 25 6% 36 3% (a) Totai of Commercial and Industnol (b) Based on dedends dectored
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_ __4,543 4,398 3371 3,622 _ _ 3,322 .._3,173 2.842 _
$190.762 $180.000 $149A19 $142.075 $120.048 $ 97408 $ 90 250
$208.176 $188.309 $155.005 $146.399 S131.893 $102.516 S 93.904 2.319 602 2.213.823 2.143.942 1.915.633 1.819,947 1.700.278 1.593A23 1A65.070 1 A28.187 1.383.290 1.290.000 1.240.219 1.249.862 2.560.639(o) 1.932.070 1.805.954 1.558.731 1 A 78.744 1.514.699 1 A20.577 76.768 75.180 79.149 79.251 78.666 75.845 68.945 50.573, 49,358 48,322 45 803_ 43S36_ 42.360 40J32 5.844.083 5.572.502 5.213A34 4809431 4.697467 4 488.922 4 263 139 49% 69% 84% 2.4% 46% 53% 10 9%
330.655 323.562 316487 306.569 299493 291409 282.204 39.285 38.914 38.358 37A04 36.865 36.190 34.996 4 4 4 5 5 5 5 390 392 387 375 3 70 369 .343_ 370.334 362.872 355236 344.353 336.733 327.973 317.548
- 2.1% 21% 32% 2.3% 2. 7% 33% 31%
7.015 ' 6.842 6.774 6.249 6.077 5.835 5.646 383c 3.76c i 3 34e 3.51c 2.99c 2.69c 266c S 269- . S 258 S 226 $ 220 S 181 S 157 $ 150 328c 2 3 24c . 2.88c 297c 2.57c 219c 213c
, - S 29.611' 'S 21.001 S 16.94C $ 14.671 S 11.624 S 13 269 $ 12.899 S 41.391 S 31.073 S 15A00 S 14.000 S 35.700 S 11.900 $ 5.500 l' / 236.391 225.228 _228.576 199.065- 168.630 10,615 164.284 165.147
= 34.075 34A60 9.845 10230 - -
35.571 35.571 35.571 35.571 35.571 35.571 35.571 203.600 167,954 139,387 . 122,355 _ 11L1_82 110.220_ 107,130_
$551 'J28 s . $404.?86 S428.770 $381.221 $361.698 $321.975 $313.348 i
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S 24.969 $ 18.275 $ 14.310 .- S 17 058 $ 10.108 $ 11.827 $ 11A57 2 2.19 $ 1.87 S 1.75 S 1.70 S 148 $ 1.73 S 1.68 I
;S .?A6 $ 141 S 1.35% ' ' S 1.34 S 1.34 S 1.28 S 121h
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67% 75% 77% 79% n 9X 9X 8X 7X 9X 11X $ "- (0 s 11.375A32 9.743.304 8.163.930., .7.082.622 6.825.636 6.825.636 6.825.636 4- 49.621 ' -15.613 41.497
- 38.989 36.840 36.724 36.807 i - '
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9.3% , . &6%- 8.9% 10 4% 9.7% 7.6% 6.7% S17.25 Sio67 $1644 S1626 $16 29 S16.15 $15.70 i S16% S17% Sio% $1$ $17?: $187s $19'a
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'^ '1.348 : 1.268 1.119 1.142 1.074 906 l 31.173 - 1.124 s 1.039 1M5 003 868 846
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' 'L 6513.170 . S459.695 $397.W5 5342.661 $307.597 $287.076 $276.604
+ "$$34m1 ' $559AB7 - $48342v S.125.072 $397.734 S350.937 S340.037
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.j - S' 84.713 ' ~ $ 65.333 ^ $ 49.743 S 32A19 S 21.730 S 16.719 i m
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- OMEnz cmont AnC1 sisEMU TER of Operating Results and Financial Condition Operating Results Electric Operating Revenues increaseo $26.4 million in 1981 and $39.7 million in 1982. Rate decis;ons in late 1980 and March 1982 together with territorial sales growth of 3 0% in 1981 and 5.9% in 1982 impacted growth in base revenues.
Fuel revenue increases totalled $10.7 million and $6.8 mill;on in the two periods. Since fuel revenues represent a dollar for dollar recovery of the cost of fuel. increases or decreases do not offect nst earnings. A $32 million rote decision granted in late March of 1982 and a $16 2 million increase in late 1980 raised base revenues. Revenues also reflect increased commercial and industrial kilowatt-hour sales of 5.1% in 1981 and 6.9% in 1982. The 1981 increase resutted from growth in the pulp and paper industry while the 1982 increase reflects the expansions at two pu!p and paper mills. Conservation impacted the rate of growth in the residential soles class during 1981 with an increase in kilowatt-hour sales of only 0.1% despite the addition of customers. Residential sales for 1982 increased 4.9% due to on increose in the number of customers opproximately half of which represent the acquisitions of the Maine service territory of Public Service Company of New Hampshire and Carrobossett Light and Power Company and a small increase in the overage kilowatt-hour usage per residential customer. Purchased Power Other (copocity) reflects larger operating expenditures in both periods of the four Yankee nuclear powl plants in which Centro! Maine Power Company is a joint equity owner. The year 1982 also includes the revised rotemaking treatment of certain purchasso power interchange credits which are now applied against purchased power fuel costs rather than capacity costs. Higher operation exoense includes increases in wages and costs of rnatenals while greater expenditures occurred in steam, hydro and distribution maintenance dunng 1982. a portion of which had been deferred frern 'ne prior year. !nterest charges reflect greater overage short-term borrowings in 1981 and the shift from shod-term bonowings to long-terra debt used primarily to finance construction programs. Larger Allowance for Funds Used During Construction (AFC)in 1981 and 1982 resulted from the Company's growing inestment in construct:en work in progress (CWIP). principally its shore in jointly-owned nuclear projects The overage costs of funds us;ng the overall weighted cost of cop;+al including ; , ort-term borrowings were 11.26% in 1981 and 11.96% in 1982. During the two yccrs. the Company issued app;oWmotely 3.2 mi: lion shares of common stock. The amount of earnings applicable to common stock increar.ed in both 1931 ond 1982. Financial Condition During 1982, Funds from Operoflons (principolly net income, depreciation and deferred taxes) amounted to $64.1 million. Of these funds $38.7 mhtion were used primarily to proude for sinking fund and dividend requirements. Working j capital (exclusive ct short-brrn borrowings and the current portion of long-term debt) decreased $20.3 million largely due to an increase in accounts payable resultir>g from increcsed purchased power during the month of December 1982 ottributable to the Moine Yankee refuehng. The resulting net funds from internal sources were S45.7 million Funds used for construction amounted to $99.7 million (net of $12.6 million of allowance for equity funds used during construction). The Company funded the remaining $54.0 million through the sale of common stock and increo ed short-term borrowings. Eomings per share of common stock in 1981 were $187. Although earnings in 1982 increased to S2.02 per share of common stock, the Company continues to earn less than its allowed rate of return. In March 1983, the Company filed with the PUC for additional rote relief of $53 mit!!on. The PUC mW under Maino law, render a decision in late 1983. It is difficult for the Company to predict the financial react on earnings per share and capital requirements of factors such as inflation, additional environmental and regu!atory requ;tements. and the pohtical involvement in utility regulation. The Company's number one commitment to its storeholders in the 1980's is to earn a fair return on their investment and maintain its value, thereby sustaining investor ht alty and the abihty to attract new capitol on , reasonable terms. Due to current retail rate making practices which focus on histoncol cost, the disallowance of a cash return on CWIP t . and flow through of tax deferrals that otherwise would provide cash flow. the Company is faced with making substantial investments in projects requiring long construction periods with large amounts of non-cash earnings The l Company v<ill continue to request improvements in its cash return in rate filings. Construction expenditures for 1983. exclusive of AFC, are estimated at $107 million and $401.3 million for 1984-1987. The Compcny must also generate additional funds to meet preferred stock and mortgage bond sinking fund requirements and det1 matunties. The Company plans to raise approximatelv S131 million through financings planned for 1983 The remoang planned expenditures, plus working capital requirements. will be financed by internal sources and short-term borrow'ogs.
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