ML20077K861
| ML20077K861 | |
| Person / Time | |
|---|---|
| Site: | Mcguire, Catawba, McGuire, 05000000 |
| Issue date: | 06/15/1983 |
| From: | NORTH CAROLINA MUNICIPAL POWER AGENCIES |
| To: | |
| Shared Package | |
| ML20076J176 | List: |
| References | |
| NUDOCS 8306200356 | |
| Download: ML20077K861 (20) | |
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Con:en:s 1982/ YEAR IN REVIEW /1 DUKE POWER COMPANY AND THE CATAWBAPROJECT/2 A BRIEF HISTORY /4 AGENCYl PARTICIPANI'S/6 i ENGINEERING 1982/8 FINANCE AND ACCOUNTING 1982/10 FINANCIALSTATEMENTS/12 AUDITOR'SOPINION/19 BOARD OF COMMISSIONERS, ALTERNATES /20 EMPLOYEES. CONSULTANTS.
TRUSTEES, PAYING AGENIS/
Inside BackCover NCMPA/1 NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 1 3117 Poplamood Coud, Suite 300 P.O. Box 95162 Raleigh. Nodh Carolina 27625 (919) 876-9170
- .982 ear in 2eview his 1982 annual report of NCMPA 1 provides a detailed analy T year. sis of the Agency's opera It also seeks to place our activities in a proper perspective by offering appropriate background material and a full explanation of significant events l and actions.
The NCMPA 1 Board of Commissioners and staff are grati-fled that years of planning and negotiation will result in the i Agency becoming fully operational in 1983. This milestone l will be achieved under re-negotiated contracts that will result in still-greater savings for our padicipants !
While we take pride in the achievements of our Commis-
- sioners professional staff and consultants. we are mindful that we perform our duties at the pleasure and direction of the municipalities that comprise the Agency. Without the suppod of i forward-looking citizens in 19 communities. NCMPA 1 would l not exist, and we would not have the opportunity to provide I a low-cost source of electric power for 277.676 citizens in Piedmont Nodh Carolina. l We would take this oppodunity, then. to express our
- appreciation to these citizens, and pledge to them our continued best effods to be wodhy of their tmst.
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v George W. Clay. Jr Ralph W. show Chahman General Board of Commissioners Manager J; <
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Jule :?ower Company anc. :he Cct:awoa :?rolec:
ince 1904. Duke Power Company has provided the Piedmont areas of Nodh and South Carolina with a N 'j S safe, reliable and During these 79 yeam, the utihty has produced a track record unmatched in the utihty industry in the
- M design, constmction and operation of its coal-fired and kp #
) nuclear-fueled plants.
' ,3 j Consequently, Duke's 1.3 million customers have 1
- '.. 'me..4.. ,egb, K' traditionally enjoyed some of the lowest electric rates on the 3 n['
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'[~ 6 Eastem Seaboard.
I , 7 For the future, Duke has dedicated itself to continue to
" serve our customets with reliability, serve our communities with citizenship, and provide our investors with a fair, competitive reward for the use of their money."
Catawba Nuclear Station Duke is building Catawba Nuclear Station on the shores of Lake Wylie, about 25 miles south of the utility's corporate offices.
The lake, created in 1904 to drive the turbines of the company's first hydroelectric plant, is home to more than 2,500 families along its 325-mile shoreline.
When Catawba begins commercial operation, the plant will have the capability of generating 2.29 million kilowatts of electricity. The two-unit nuclear-fueled generating facihty will provide electric power to NCMPA l's 19 project participants.
These participants, municipal electric utihties in North Carolina's Piedmont, have acquired a 75 pement undivided owneIship interest in Unit 2 at Catawba, and 37.5 pement owneIship interest in the station's support facilities. Under contract, Duke serves as engineer-contractor and will serve as station operator for the Agency.
NCMPA 1 periodically issues bonds to pay Duke for the Agency's portion of estimated costs of acquisition and construction, with approval of the North Carolina Local Govemment Commission.
This is a result of Duke's offer to sell podions of Catawba to a group of wholesale customers in 1975. NCMPA 1 entered into the joint agreement when it was concluded that substantial, long-term savings in electric power costs would accrue to Agenci padicipants through direct ownership in Catawba.
The Joint Agreement As a non-profit municipal corporation, the Agency is able to issue tax-exempt electric revenue bonds at interest rates l below capital costs of an investor-owned utihty. As an operating
- 2 power-supply utility, NCMPA 1 will provide power to its
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NCMPA 1 POWER SUPPLY PROGRAM '
(December 31,1982) ~
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Unit / Proposed % Construction ., ,%
Operation Date Capacity (MW) Complete ;' q i r nit 6 87
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g I t 6 85 !!45 91% 'l Exchange Unit 'I i McGuire Unit t 12.81 1180 100%
Exchange Unit ,;.> '
l i uccuire l i t it<-
1e fijf i Unit 2 3 84 1180 98% '>
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.I Exchange Unit participating municipalities at rates designed to recover only actual operating. maintenance and debt-sennce expenses.
The Agency will not need to recover stockholders' dividends or ;
income taxes '
A customary "take or pay" contract has been executed !
I with NCMPA 1 by each participating city, which has agreed to pay its share of Catawba's annual operating costs. including debt service on bonds. whether or not Catawba is completed.
Also, each padicipant has signed a supplemental power sales agreement with NCMPA 1. Under this agreement, the l Agency will purchase from Duke all additional power needed i beyond that provided by ownership of generation, and in excess of federal power allotments some cities obtain from the i Southeastem Power Administration (SEPA). l l 1
MCGuire Reliability Exchange
- The NCMPA 1 Board of Commissioners voted December ;
- 16. 1982. to initiate the McGuire Reliability Exchange. The 1 agreement. a special provision of the Agency': contracts with l l Duke, will be inggered July 1.1983. !
On that date. NCMPA 1 will replace Duke as all- i requirements power supplier for the Agency's padicipants l i Project power will be provided from the two-unit McGuire ! !
Nuclear Station where Unit 1 began commercial operation l '
on December 1.1981.
l McGuire. Catawba's " sister" station. is under construction '
by Duke near Charlotte Unit 2 at McGuire is expected to be fully !
operational no later than early 1984 l
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A 3rief Eis':ory n Januaq 13,1976, NCMPA 1 was ;hadered as a municipal corporation. Of the 23 municipal electric 0 utilities that are p customers of Duke Power Company, 20 are members of the Agency.
And all but one Agency member, the City of Concord, are padicipants in NCMPA l's joint-ownership arrangement with Duke. The participants own a 75 percent share of Unit 2 at Catawba Nuclear Station.
None of the Agency's member municipalities owns or operates any independent electric generating facihty.
Highlights in the histoy of NCMPA 1 include:
- On May 1,1975, the Nodh Carohna General Assembly enacted the Joint Municipal Electric Power and Energy Act.
This enabled municipahties owning electric systems to create joint agencies with authority to construct, operate, maintain and i finance electric generating and transmission facihties.
- In October 1975. Duke made a proposal to all its municipal wholesale customes in Nodh and South Carolina (including NCMPA 1 members) for the sale of a portion of Catawba.
- In 1977, an amendment to 111e North Carolina Constitution, ratified by the state's voters, enabled a municipal power agency to podicipate as a joint owner in generation or transmission projects with pnvate utilities or mral electric co-operatives.
- On February 27. 1978, the Agency's Board of Commissiones approved the Catawba Project and authorized the execution of joint-ownership contracts with Duke.This came l
after 2H years of negotiations between NCMPA 1 and Duke.
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- By July 1978, the goveming bodies of 19 Agency I
members had approved all contracts required for the joint project.
- In October 1978. NCMPA 1 (and two other municipal power agencies in the state) contracted to acquire a full range of management services at cost from ElectriCities of Nodh Carolina. The use of a combined staff eliminates the duplication
_ and expense of separate staffs for each agency.
"
- On November 16,1978, NCMPA 1 sold a $400 million electric revenue bond issue at a net interest cost of 6.812 percent. It was the second largest issue of its kind ever offered
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by a public utihty, and the largest single issue ever sold by the
. ,, North Carolina Local Govemment Commission. l
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- On November 29,1978, the Agency and Duke closed on
, the Agency's purchase of 75 percent of Unit 2 at Catawba.
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- In May 1979, NCMPA 1 went to market, selling anissue of l
.. - - $150 million at a net interest cost of 7.338 percent.
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- In July 1979 Duke revised its constmction schedule at Catawba. This slipped the commercial operation date for Unit 1 from July 1981 to July 1983, and for Unit 2, from Januaq 1983 to ;
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Januaq 1985. i
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- In April 1980, NCMPA 1 sold a third issue. S100 million in '
i 4 . .__ Me . _ bonds at a net interest cost of 10.507 percent.
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o In June 1980, the NCMPA 1 Board of Commissioners -
~.. r " ~ ~ n- ~r ' *3 approved a revolving credit agreement with a group of four w' banks. By year end, the Agency had borrowed the S75 million ,,
at its disposal under that agreement. .
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q o In June 1980. Duke slipped the commercial operation D- 'e 4 9 ,_ j g 75 d date for Unit I at Catawba from July 1983 to March 1984. Unit 2 was slipped from January 1985 to September 1985. 2
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- In Apnl 1981. NCMPA 1 sold a S125 million issue of bonds f- .
_. y ' 2 ,, ac at a net interest cost of 10.731 percent.
o In September 1981. NCMPA 1 sold a $200 million issue of t.[
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bonds and $100 million of bond anticipation notes. The long- .
term bonds were sold at a net interest cost of 14.45 percent. The interest on the bond anticipation notes was 12.17 percent.
- In May 1982. Duke slipped the commemial operation dates for Catawba Units I and 2 to June 1985 and June 1987. I respectively.
l
- On November 12. 1982, the Board voted to amend '
Agency contracts with Duke to increase the amount of capacity and energy sold back to Duke from the project when Catawba begins commercial operation. This will be beneficial to Agency participants through lower overall delivery costs of power and energy. These amendments also delayed the Agency's option to trigger the McGuire Reliability Exchange by six months. until July 1.1983.
- In December 1982. NCMPA 1 sold a S200 million issue of bonds at a net interest cost of 10.99 percent.
- On December 16, 1982, the NCMPA 1 Board of Commissioners voted to initiate the McGuire Reliability Exchange. a special provision in the Agency's contracts with Duke. NCMPA 1 would replace Duke as all-requirements power supplier to the participants on Januar/ 1.1983.
Other Agencies Formed in 1976. two additional municipal power agencies were formed.
On December 30.1981. North Carolina Eastem Municipal Power Agency (NCEMPA) began delivenng power to 11 of its 32 padicipating municipalities. These 11 northeastem Nodh Carolina municipalities formerly purchased all their power from Virginia Electric and Power Company.
These cities were also charter members of North Carolina Municipal Power Agency Number 2 (NCMPA 2). In early 1980.
these cities joined NCEMPA in anticipa';on of completion of NCEMPA's negotiations for the joint ownership of generating facilities owned by Carolina Power & Light Ccmpany (CP&L).
In June 1982. the six-year-old NCMPA 2 was dissolved by its Board of Commissioners.
NCEMPA has negotiated to purchase ownership interests in seven generating units in operation or under constniction by CP&L. a Raleigh-based pnvate utility serving some 757.000 electric customers in the Carolinas.
The remaining 21 participants of NCEMPA began receiving Agency power on Apnl 22. 1982. at the time of NCEMPA's first closing on ownership interests purchased from CP&L 5
Agency :: :?ar:icipan:s CMPA l's 19 member cities provide electric power K %.
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to 277,676 residents in 14 counties, along 2,289 miles of 1N distribution lines in a 565-square-mile crea of the North Carolina Piedmont. In 1982, these cities c
! provided 2.6 million megawatt hours of power, and
, generated revenues of almost $119.4 million.
The Agency's participants are clustered in the state's Piedmont section, a 40-county region ranging from the foothills of the Blue Ridge Mountains east to Raleigh, the state capital.
This area, comprising 45 percent of the state, has been and is Nodh Carolina's leader in growth, population and wealth.
The Piedmont is home to 3.5 million of the state's six million residents. Ecrmarks of the region are an agreeable climate, progressive govemment, and stable work force in its thnving economic base of industry and agriculture.
Each participant owns and operates an electric system for the distribution of electric power, but none operates any electric generating facility. Collectively, these cities represent more than 13 centuries of experience in providing electric service.
Individually, the cities have served their customers from 43 (Pineville) to 93 (Statesville) years.
l Albemarle @ @@ q 2 Bostic 3 Chenyville b (
4 Concord
- h 5 Comelius @ @ @m 6 Drexel VJ g 7 Gastoni CATAWBA 8 GmniteFalls 9 HighPoint 10 Huntersville 11 Inndis 12 Lexington 13 Lincolnton 14 Maiden 15 Monroe 16 Morganton 17 Newton 18 Pineville 19 Shelby 20 Statesville 6 i=n"%=; "
Management of the individual electric systems falls to the goveming bodies of each member municipahty, except in Lexington, where a Utilities Commission has that responsibihty.
The Agency's business matters are govemed by a Board of Commissioners that consists of one representative from each participating city.
A full range of professional management services is provided at cost to NCMPA 1, under contrcct with ElectriCities of North Carolina. ElectriCities' management services staff conducts the daily business of NCMPA 1, and of NCEMPA. The combined staff is economical, in that it eliminates the need for each Agency to hire employees.
Once the principal supphers of electric power in the state, womneon .
the individual municipal systems thnved before rural electric co-operatives and investor-owned utilities came into existence.
Later, cities'small generation statiors became less profitable to =m operate, and municipal systems began to purchase power at , yon,,
wholesale from private power companies that could operute larger, more economical generating plants.
The member cities of NCMPA 1 are an example of the emergence of municipal electric utilities as a significant pcItner in ownership of electrical generating facilities. By renewing municipal ownership of these facilities NCMPA 1 is today restoring the cities' historic role in North Carohna's mom, electric power-supplycommunity.
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Engineering /1982 m m i
erifying that provisions of contractual agreements y - between NCMPA 1 and Duke Power Company are being executed in the best interests of the Agency
"? and its participants, reviewing construction costs at Catawba Nuclear Station for propriety and accuracy of charges to the Agency, and designing all-requirements rates, are the main concems of the Engineering Division.
The 15-member Engineering Division includes an N engineering director, managers of construction and operation, '
power supply and technical support services; administrators of
-- interconnect services, engineering systems, and safety and j trairung services; cost engineers, power delivery engineer, rate l
I and forecast analysts, site representatives and engineering technicians.
During 1982, the management staff and engineering team continued to monitor all aspects of Duke's activities at Catawba
_
- through on-site inspection, and by attending formal buyer
_ *. y meetings at the utility's corporate headquarters in Charlotte. As '
provided for in the Agency's joint-ownership contracts with
- l Duke, the buyer meetings were established as a means for co- 1 e.m=%, % - owners of the Catawba facility to obtain a timely review of if a" project scheduling, construction status, and budget and financial matters. Day-to-day monitoring of the Catawba .
Project is the responsibility of one of the division's professional l engineers who is an on-site representative.
McGuire Reliability Exchange On December 16, 1982, the NCMPA 1 Board of g Commissioners voted to initiate the McGuire Reliability 8 L2.E w a ~a - '
Exchange. The decision meant that the Agency would replace j
Duke as all-requirements power supplier for NCMPA 1 participants on July 1.1983.
The Exchange is a special provision under contractual ,
agreements between the Agency and Duke which govems their joint ownership of the Catawba project. It enables the Agency to provide power to participants from McGuire o Nuclear Station. Catawba's sister station.
Since 1978 when NCMPA 1 first acquired its 75 percent "!
ownership interest in Unit 2 at Catawba. Duke has sold or EL -
1 arranged to sell all but a 25 percent interest in the two-unit e plant The Saluda River and Electric Cooperative in South Carolina and North Carolina Electric Membership Corpora- .
tion collectively own a 75 percent interest in Unit 1 at Catawba '
The Piedmont Municipal Power Agency, a group of 10 South wiluamG wemhoff Ccrolina municipalities, is arranging to buy the remaining 25 Director. rngineerrng percent of Unit 2 at Catawba the unit in which NCMPA 1 has its owneNhip.
During 1982, the Agency completed a major re ,
examination of its ownership agreements with Duke. This was in '
an effort to clarify and define certain contractual obligations and relationships of the co-owners one toanother.The Agency then negotiated contractual changes with Duke whereby NCMPA 1 would increase the amount of capacity and energy .
sold back to Duke from the pIcject after commercial operation j of Catawba begins. The results of these changes which the Board of Commissioners adopted November 12,1982, will be beneficial to the Agency's participants through lower overall delivery costs o! power and energy.
In consideration to Duke for the changes, the Agency agreed to delay initiation of the McGuire Reliability Exchange by six months for Catawba's Unit 1. from January 1.1983, to July 1.1983, and agreed to delay exercising its option to trigger the I
Exchange for Catawba's Unit 2, from January 1.1984. to January 1,1986.
When NCMPA 1 becomes the power supplier for its !
participating municipalities on July 1,1983, the Engineering l Division will be actively engaged in meeting participants' (
requirements for technical services, includag demand and '
energy forecasting. rate design, and assistance in determining project expenditure and revenue projections.
Catawba Construction Status At year end. Duke estimated constmction of the total Catawba Station to be 75 percent complete (as compared to 72 percent in 1981 ). Construction ot Catawba Unit I was 92 percent complete (88 percent in 1980) and Catawba Unit 2 was 47 percent complete (30 percent in 1980).
The current construction schedule estimates a cornmercial cparation date of June 1985 forCatawba Unit I and June 1987 I forCatawba Unit 2. !
9
rinance and Accoun:ing 1982 ESTIMATED FUNDING REQUIREMENTS s of January 1,1982. NCMPA 1 had outstanding: $975
($1.97 billion) million in bonds, $100 million in bond anticipation N notes, and $75 million in revolving credit notes. During the year, the Agency continued the financing of its ownership interest in Catawba Nuclear Station throughtheissuanceof additionalbonds.
On December 16. the North Carolina Local Govemment Commission sold $200 million of Series 1982 Bonds on behalf of NCMPA 1. The net interest cost was 10.99 percent.
This series of bonds was rated A by Moody's Investors Selvice, and Standard & Poor's Corporation, the independent rating agencies. The bonds were issued in denominations of
$5,000. With this sale, the Agency's total amount of debt outstanding grew to Sl.175 billion in bonds and S175 million in notes.
The 1982 sale provided funds sufficient to meet estimated cash flow requirements for construction costs into the first quarter of 1984, and interest requirements on bonds
~ outstanding to January 1,1984. Under these same cost flow 2"1 ygg= *** I projections, NCMPA 1 would not have to issue more debt until
"* late 1983. However, the Agency may choose to enter the 5,%',L",*]i,'i .l
""7/,o,e,r.,an,mm (sirs miuton) market prior to that time if conditions are favorable.
With authorization from the NCMPA 1 Board of Commissioners, the staff continued to explore altemative l'j8gguiyo5 ' methods of debt issuance which could provide the Agencywith flexibility in today's market. One method which shows promise istheuseof tax-exemptcommercialpaper.
Meanwhile, in May 1982. Duke Power Company revised its construction schedule at Catawba. The utility announced a 3, m ,,, 3,,,,,
(sam miumn) delay of 15 months for Unit 1, and a delay of 21 months for Unit 2.
This slipped the commercial operation dates for Units 1 and 2 to June 1985 and June 1987, respectively.
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During the preparation ior issuance of debt in December, it
($285 *"" ")
- S g g ,1,n2 was estimated that the total principal amount of bonds required to finance the NCMPA 1 project was Sl.97 billion.This 5""' represents a S38 millionincrease overthe Agency's 1981 project
' 'Mguion
- estimate of $1.59 billion. The $1.97 billion figure is based on the current construction schedule for Catawba, and the current
- ' regulatory and economic environment. The estimated total
- NUtuTo amount of bonds required to finance the project is subject to revision if there are economic changes affecting finance costs, T and 11 dates for commercial operation of the Catawba units are revised again.
'NUnuYon kl" By year end. NCMPA 1 had completed 60 percent of the estimated S1.97 billion financing program through the issuance of long-term bonds, and spent $969 million for construction.
10 nuclear fuel. financing and administrative costs.
AgencyFinancings The finance and accounting staff has the essential task of planning. controlling and repoding the financial activities of NCMPA 1 and NCEMPA. The finance staff's primary responsibility on behalf of NCMPA 1 is acquiring and managing the funds needed to finance the Agency's share of
! construction and initial fueling costs at Catawba.
In accomplishing this task, the financial staff works closely with the North Carolina Local Govemment Commission (a a
division of the Depadment of the State Treasurer) and with the Agency's financing team of consultants, undenvriters and other 3 staff. This assures the investing community of proper disclosure
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of pertinent information on a timely basis, through official Jan sT Bobo statements and periodic status reports. ,
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Systems Development ,
The evolutionary role of both Agencies as power suppliers has required the design of flexible, integrated systemswhichwill enable the Agencies to meet their contractual regulatory, planning and control responsibilities.
During 1982, steady progress was made in the development of operating systems for each Agency through the use of common software. Specifically, the Financial Reporting and Control system was considered operational as of December 31, 1982. This system is designed to accumulate and maintain detailed accounting information required by the staff for analysis and control of financial activities of NCMPA 1, and of NCEMPA The Annual Planning and Budgeting system is expected to be operational byJune 1983. This system is designed to prepare an annual budget and aid in the setting of all-requirements rates and charges for approval by each Agency's Board of Commissioners. A key aspect of the system is its ability to measure the performance of the Agencies' operations under changing operating events and revised budget assumptions.
These two programs. and the Power Demand and Operating Statistics system which went into effect at the end of 1981, will continue to be enhanced and refined in coming years. The Power Demand and Operating Statistics system was designed to aid in verifying the power suppliers' billings for the monthly energy and demand costs. and to collect, maintain and report monthlyload statistics.
Additional programs, systems and reports will be identified and developed as needed. Project Estimate ADMINISTRATIVE COSTS (Th0USCDdS Of DOUGIS)
CONSTRUCTI N COSTS Estimate 12-31-82 nNANCE COSTS Construction Costs 991,725 S623.985 Nuclear Fuel Costs 127.831 '35.276 ACTUAI, Finance Costs 841.203 305.374 L
Administrative Costs 9.241 4.810
$1,970,000 $969,445 NUCLEAR rUEL COSTS (6%)
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3 dance Shee:s E m cTRic m constructionworkin mf"*"""!a81 ($000's) Progress,at cost (Notes 1 and 2) S 796.362 S 638.192 SPECIAL FUNDS (Notes 1, 3,4,5 and 6): ConstructionFund: Constmction account 113,330 112,019 Constmctioninterest account 131,109 141.471 Construction revolving account 101 94 Noteinterest account 27.913 32,801 Bond Fund: Interest account 44,712 40,886 Reserve account 142.550 110.500 Reserve and ContingencyFund: ReseIve and contingencyaccount 12.003 Operating Fund: Workingcapitalaccount 5.761 5,021 RevolvingCredit Fund: Revolving credit account 81.558 79,072 559.037 521,864 DEFERRED DEBTISSUANCE COSTS (Note 1) 48.543 35,841 SI.403.942 SI 195,897 LIABILITIES CAPITALIZATION (Notes 4. 5 and 6): Revenue bonds S1,175.000 S 975.000 Revolving credit notes payable 75,000 75.000 Bondanticipation notes payable 100.000 100,000 1.350.000 1,150.000 OTHER LIABILITIES: Accounts payable 746 428 Accruedinterest on bonds 46.433 40,791 Accmedinterest on
?
revolving credit notes 1,013 1,803 Accmedinterest on bond anticipation j notes 5,750 2.875 53.942 45.897 COMMITMENTS AND CONTINGENCIES (Notes 2,7 and 8) Si.403.942 Si.195.897 12 se.nores to rrnancrar statements. 1
S:ct:emen:s O:: Caangesin . .
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($000's) Years Ended , December 31, 1982 1981 SOURCE OF FUNDS: Proceedsiromsale of revenue bonds $200.000 $325.000 ProceedsIrom sale of bond anticipation notes 100.000 Increasein other liabilities 8.045 18.547
$208.045 S443.547 APPLICATION OF FUNDS:
Additions to electricutility plant-constmctionwork in progress $158,170 S121,687 Additions to specialfunds 37,173 299.166 Additions to net deferred debtissuance costs 12.702 22.694 S208.045 S443.547 See notes to financialstatements. L 13 1
S:ct:emen:s of Caanges in Asse~:s of Specia:. :?uncs (sooos) Years ended December 31,1982 and 1981 CONSTRUCTION FUND BO{ co== " """.'t' " Account "O4" Account Ja Account gg, Cashand Investments. December 31.1980(1) $ 30.759 S 25.277 S 96 S S 26.501 4 < Bond proceeds (2) 85.058 174.710 Note proceeds (3) 66.705 31.625 Investment income 8.690 9.700 12 1,176 162 Disbwsements (87.172) (42) (50.254) Transfers 7.979 (68.225) 28 64.477 Cash cr dInvestments. December 31.1981 (1) 112.019 141.471 94 32.801 40.886 Bond proceeds (4) 98.435 67.959 Investment income 10.697 18.396 8 4.413 225 Disbursements (108.042) (1) (8.625) (85.431) Trans!ers 221 (96.717) (676) 89.032 Cash andInvestments. December 31.1982(1) S 113.330 S 131.109 S 101 S 27.913 S 44.712
)
14
f. REVENUE m IUND OPERATING CONTINGENCY IUND D IUND FUND Revenue I'" Working Ac t Revolving ! U i S 59.414 S 45.424 S
$5.009
$75.642 S 222.698 9.106 l 305.192 839 l 98.330 (12) 11.648 (3.444) 12 41.342 (8.218)
(827) (145.698) 110.500 l 21.372 5.021 14,536 79.072 l 2 521,864 i 3 l l 740 187.766 l (3.858) 10.607 l (2) 59.627 12.000 (8.121) i l (210.220) S1423 _ S 0 S12.003 l _ S5.761 l S81.558 i i l _ S550.037 i j
- 1. Cash and investments at December 31,1980,1981 and 1982 include accmed interest of $3.724, S7,514 and S6.332, respectively.
- 2. Net of underwnters fee ot S9,166 and discount on bonds of $11,583 plus accmed interest of $941.
- 3. of$160.
Net cf underwnters fee of $1.830 plus accmed interest 4.ofNet ofplus
$8,978 underwnters accmed interest offee $1.734. of S4.990 and discount on bonds Seenotes tounancialstatements.
.15
Nd:es ~:o . _,InCInClCL 8~,:G:eme11:s
. r North O~.Irolina Municipal Power Agency Number 1 NOTESTO FINANCIAL STATEMENTS Years ended Decernber 31,1982 and 1981
- 1. GENERAL MATTERS AND
SUMMARY
OF SIG POLICIES: GeneralMatters North Carolina Municipal Power Agency Number 1 (Agency
- 13. 1976.
was organized on January Municipal Electric Power and Energy Act, adopted by the General Assembly of North Carchno on May 1,1975. The Act
- enables municipahties owning electric sy fmance electric generation and transmission fac1htles.
The Agency currently has as memben 20 North Carchna municipahties which are wholesale customers of Duke Power Company (Duke) The Agency's principalac tac 1hties. The Agency and Duke have entered into the following agreements. as amended: The Purchase. Construction and Ownership Agreement provid among other things for the Agency to purchase a 75% undiv ownership interest in Unit 2 of the Catawba Nuclear Station a 37.5% undtvided ownership interest in certain support faciht the Proiect. This facihty is presently under construction by Du The acquisition is being tmonced by the iss
< (Resolution) of the Board of Commissioners of the Agency.
The Interconnection Agreement provides for the interconnectio between Duke's electnc power system and the Agency's above mentioned undivided ownership interest in the Catawba Nucle Station and for the exchange of power betweenUnit I andUn the Catawba and Duke's Nuclear McGuire NuclearStation Stationand The between Agreementthe alsoCa provides for the purchase and sale of ene participants. The Operating and Fuel Agreement provides for Duke to ope maintain and fuel the facihty, make rene decommissioning of the facihty at the end of its useful hfe The Agency has entered into a Project Power Sales Agree and a Supplemental Power Sales Agreement with each et members (participants) who have elected to participate in t Project. These Agreements provide for each participant to purchase its total share of Project Output and its All Re
, Bulk Power Supply, as defined. from the Agency. The Agen
! required to provide all electnc power and energy require each participant at the respective dehv sennce costs of the Project.
Basis of Accounting The accounts of the Agency are maintained in accordance the Unitorm System of Accounts of the Fe accounung pnnciples I 16;
Electric Utility Plant - Construction Work in Progress l All direct and indirect expenditures, including interest expense l net of amounts eamed on invested funds not otherwise classified. are considered to be costs associated with the development and l construction of the Project. These costs will be capitalized as construction work in progress until such time as the plant becomes operational Depreciation expense will be recognized on the facility when operations commence Investment Securities Investment secunties are stated at amortized cost as market declines are not recorded by the Agency unless a permanent loss is anticipated. Deferred Debt Issuance Costs Costs of the issuance of revenue bonds. revolving credit notes and bond anticipation notes, are deferred and amortized over the lives of the related debt instruments.
- 2. CONSTRUCTION PROGRAM The Agency has substantial commitments in connection with the construction of the Catawba facility. The Agency's cost of construction including nuclear fuel. is presently estimated at approximately S1.151.269.000. These costs, together with provisions for required working capital funds. and operating and de bt service costs dunng the construction period, will require the use of the proceeds from the issuance of up to an estimated S2.005.000.000 of Electric Revenue Bonds Any future delays in construction could further increase the cost of such facihties and this could require the issuance of additional revenue bonds.
In accordance with provisions of the Purchase. Construction and Ownership Agreement, as amended. between the Agency and Duke (Note 1). the Agency makes progress payments to Duke upon receipt of monthly billings The components of the construction work in progress costs are as follows (S000's): December 31 1982 1981 Electric Plant $761.086 $616.163 Nuclear Fuel Deposits 35.276 22.029 S796.362 $638.19_2
- 3. INVESTMENTSECURITIES Investment secunties include secunties of the U S. Government and governmental agencies and secunties purchased under agreements to resell (secunties of the US. Govemment and governmental agencies serve as collateral under such agreements).
- 4. REVENUE BONDS l The Agency has been authonzed to issue Catawba Electnc Revenue Bonds (Bonds) in accordance with the terms. conditions and limitations of the Resolution. The total amounts to be issued are to be su!!!cient to pay the costs of acquisition and construction of the Project. as defined. and/or for other purposes set forth in the Resolution. On November 29 1982. the Local Government Commission of Nolth Carolina approved the issuance of such bonds up to a maximum pnncipal amount of St.970.000.000.
additional Local Government Commission approval must be obtained for the issuance of bonds in excess of this amount. As of December 31.1982. the Agency had issued S1.175.000.000 of the total authonzed amount. These outstand 111g Revenue Bonds consist of the following: 7
SERIES 1978 Interest on Bonds is psyable semi-annually on January I and July 1. 5.20%to 645% matunng annually from The Bonds are subject to redemption prior to matunty at the option of U* Y' U 6 r atu g in 2003 with annual the respective pnncipal amounts: sinlang fund requirements beginning 2001 25.870.000 Series 1978 January 1.1989 6.70% matunng in 2008 with annual Series 1979 January 1.1990 smlang fund requirements Series 1980 January 1,1991 beginning 2004 5d935.000 6875% maturing in 2020 with Senes 1981 Janua41.1991 Series 1981 A January 1.1991 annualsinlang fund requirements beginning 2000 240.290.000 Series 1982 January 1.1993 400.000.000 These bonds are special obligations of the Agency, payable solely from and secured solely by the Revenues. as defined generated SERIES 1979 from the operation of the Project subject to the pnor payment from 5.75% to 6 90% matunng annually Revenues of Operating Expenses as defined as well as other moneys and secunties included in funds specifically established for 7.1 m 004 with annual sinking fund requirements that purpose by the Resolution. begmning 2001 12.005.000 The Resolution requires the Agency to deposit into special funds all 7.375% maturingin 2020 with annual proceeds of Electnc Revenue Bonds issued and all Revenues as sinking fund requirements defined generated as a result of the Power Sales Agreements
.mg 005 M 8 E 00 mentioned above. The utilization of the contents of the individual 150,000.000 funds is specifically defined in the Resolution.
SERIES 1980 5. REVOLVING CREDIT AGREEMENT 9.10% to 990% matunng annually from 1986 to 1995 16.855.000 On July 17.1980. the Agency and a group of four banks entered into 1025% matunng in 2000with annual a revolv1ng credit agreement (Agreement) which allows the sinlang fund requirements Agency to borrow up to S75.000.000 until July 17 1983. Borrowings beginning 1996 16.145.000 under the Agreement bear interest (with a ceiling of 12%) at 65% of 10504 matunng in 2010 with annual the prime rate as established by the banks from time to time. Interest sinlang fund requirements is payable on the last business day of July. October. January and beg nning 2001 67.000.000 April. commencing July 1980. 100.000.000 The Agency boITowed $18.750.000 on July 17. 1980 and the SERIES 1981 remaining $56.250.000 on December 17.1980. evidenced by notes 940% to 1050% matunng annually maturing July 17. 1983. These proceeds were deposited in the from 1991 to 1998 11.125.000 "Revolvmg Credit Fund" in accordance with the Agreement, to be 10.75% matunngin 200l withannual used for payment of costs of acquisition and construction of the sinking fund requirements project as defined. These moneys may be invested by the Agency beginning 1999 9.875.000 until expended' 8 5% matunng in 2017 with annual sinking fund requirements The notes are payable from proceeds of subsequentlyissued Bonds beginning 2011 25.000.000 and are additionally secured by a lien on Revenues, junior in right of 11125% maturingin 2020 with annual payment to the Bonds (Note 4). The Agreement requires the si fund equirements repayment of all outstanding notes from the proceeds of any Bondi 7 .000.000 issued within six months prior to matunty of the notes. 125.000.000
- 6. BOND ANTICIPATION NOTES unngin 2001 withannual Bond Anticipation Notes in the aggregate principal amount of 75%
sinking fund requirements
$100.000.000 dated October 1.1981. beanng an interest rate of beginningin 1997 17.500.000 11.50% per annum, will mature July 1.1984. Interest w111 be paycble 11% matunngin 2015 with annual semi <mnually on January I and July 1. commencing Januas 1.
sinking fund requirements 1982. beginningin 2012 25.000.000 14 75% maturingin 2020 with annual The notes are payable from proceeds of subsequently issued Sonds sinking fund requirements and are additionally secured by a lien on Revenues on a ponry with beginnhgin 2002 157.500.000 the Revolving Credit Notes, junior in right of payment to ther Bonds 200.000.000 (Note 4). SERIES 1982 11% matunngin 2003 withannual The Agency has a contractual agreement with ElectnCities of North ) sinlong fund requirements Carolina whereby ElectnCities provides general management begmning in 1991 14.700.000 services to the Agency. Such services include. among cther things. 7.5% matunngin 2018 with annual accounting seIvices. review of billings from Duke, cssistance in smking fund requirements connection with the issuance of revenue bonds. preparation of constmction and operating budgets. specific rate mat'ers, any other f I1 atu g 2020 with annual sinlang fund requirements services requested and the necessary facilities required for the begmning in 2004 160.300.000 Agency to conduct its normal business. According to '.he agreement. 200.000.000 charges for these services are at the actual costs to Electr1 Cities.
$1.175.000.000 The terms of the agreement specify automatic cor. tract renewal for successive three-year periods unless terminated b/ one year's notice by either party pnor to the end of the contract term. The present agreement extends through December 31.1984 18 i
i
- 8. CONnNGENCIES Duke has apphed to the Nuclear Regulatory Commission (NRC) for an operating hcense for the Catawba Nuclear Statiort The license is expected to be received pnor to the end of the constmction penod.
However, there is no assurance that the NRC will issue such license and the facihty cannot be placed into service without it. The Pnce-Anderson Act limits the public habihty for a nuclear generating unit to S560.000.000. which amount is to be covered by pnvate insurance and agreements of indemnity with the Nuclear Regulctory Commission. Such pnvate insurance and agreements of Indemnity are comed by Duke on behalf of all coowners of the Catawba Nuclear Statiort The terms of this coverage require the owners of alllicensed facihties to provide up to S5.000.000 per year per unit in the event of any nuclear incident involving any licensed fac1hty in the nation with a maximum of S10.000.000 peryear per unit owned in the event of more than one incident. If any such payments are required after the Catawba Nuclear Station has received its operating license. the Agency would be liable for 75% of those payments applicable to Unit *2. Property damage insurance coverage presently availchle for the entire Catawba Nuclear Station has a maximum benefit hmited to S450.000.000 Such available coverage has been obtained. Auci:or's Opinion February 14,1983 Board of Commissioners North CarolinaMunicipalPower AgencyNumber 1 Raleigh. North Carolina We have examined the balance sheets of North Carolina Municipal Power Agency Number 1 as of December 31,1982 and 1981, and the related statemen ts of changesin financialposition and changes in assets of specialfunds for the years then ended Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accoun ting records and such other auditing procedures as we considered necessaryin the circumstances in our opinion, the financial statements referred to above presen t fairly the financial position of North Carolina Municipal Power AgencyNumber 1 at December 31,1982 and 1981. and the changes in its financialposition and the changes in its assets ofspecial funds for the years then ended in conformity with generally accepted accounting principles applied on a consistent basis
/r d m&G Touche Ross & Co.
Certified Public Accountants 19
I K:erncr:e 30 arc o:: Commissioners Commissioners Clyde E. Bagwell Morris Baker
- David E. Lowe Utility Director, Statesville Manager, Drexel Administrator, Lincolnton P.E. Bazemore
- George W. Clay, Jr. Judy Mendenhall Councilman. Monroe Mayor, Shelby Council Member High Point Belvin B. Beck, Jr.
- Molly M. Darwin " Jack F. Neel Manager, Lexington Council Member, Morganton Manager, Albemarle Cyrus L. Brooks W.C. Deadmon *Earle E. Riddle Manager, High Point Director of Public Utilities Utilities Commission Chairman Jack R. Clark Landis Lexington Commissioner, Granite Falls James L Dorton Marion Sparrow Alderman, Concord Commissioner, Huntersville Wayne Dellinger Mayor, Newton William M. Edwards David R. Walker Richard L French Council Member, Cherryville Manager, Maiden Manager, Huntersville H. Max Gunter R Duke Whisenant Mayor, Bostic Manager, Newton Kenneth Harris Mayor, Drexel *J.E. Hinkel *E. Graham Wilson Pauline T. Helms Manager, Monroe Utility Director, Gastonia Council Member Albemarle A.W. Huffman, Jr. Margaret S. Wingate Gary D. Hicks Mayor, Granite Falls Council Member Pineville Manager. Gastonia " Executive Committee Eric L. Jones (Cornelius and Statesville seats vacant at year end.)
Alderman, Landis Andrew W. Kistler, II Mayor, Morganton 7 -: r. y p v m y - . , ,. . . ....- . . . ~ . John E. McGinnis F.c :'.ha,' ~ y;. ;., .J. .
.. [1.t
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Councilman, Bostic ; p. .
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Alderman, Lincolnton -
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.MT T. .b' Charles R yondell . i Y.E I; c.-
Councilman, Pineville :~ [ E
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(Cornelius and Concord seats vacant l .. ' c ..) . L ' , g .7 2 - lf,Y
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<' i-% y-(From Front Row, left): uinkel, Darwin, Clay (chairman), Lowe (secretary-treasurer); Baker (1983 altamate) Riddle (vice chairman), Wingate:
Bagwell (alternate), Ransom. Edwards; Walker, Gunter Whisenant. 20 uuuman
.sm::ioyees Consu:::an:s, r"1 n 1982, the combined staff of ElectriCities of North .. Ills:ees I Carolina continued to expand to m rapidly evolving and complex power-supply programs of NCMPA 1 and NCEMPA With the full operation of NCEMPA--and the approach-Nodh Carolina Counsel Spmill Lane Carlton McCotter & Jolly Rocky Mount. Nodh Carolina ing operution of NCMPA 1-as all-requirements powersuppliers, Washington Counsel staff additions have been requiredinalldisciplines.Thestaff grew Spiegel & McDiarrnid from 35 employees in early 1982, to 39 at year end. Washington. D.C.
I Last year, the focus of hiring was on personnel with special Engmeenng Consultant technical training, and experience in areas including power R.W. Beck and Associates Orlmd . Flonda supply forecasting, power plant design /constniction manage-ment, power delivery coordination, and accounting. Support C,oDa ms n personnel will be added in all areas. as needed- New York. New York Bond Fund Trustee Warren B. Allen William S. Jones.Jr. Chemical Bank Rate Analyst Manager-Management NewYoric NewYork Linda L Anderson Information Services Clerk / Typist Paul A. Jordan Construction Fund Tnistee Elaine M. Bagley Site Representative Wachovia Bank and Trust Company. NA Supervisor-Administrative -Roxboro/ Mayo Winston-Salem. Nonh Carohna Services Frederick R. Kisner Sandra L. Barnes Power Delivey Engineer Secretcy Fred M. Mills. Jr. Barbara J. Beckham Director-Government Affairs Accounting Technician Mary A. Proctor Katherine S. Benson Accounting & Compensation Secretary Technician James T. Bobo Kenneth M. Raber Director-Finance & Manager-Technical Administration Support Services . Hope C. Brown James W. Sally g;g' Coordinator E*E*!= GeneralManager i Paying Agen~s Arthur J. Burke.Jr. Steve R. Shelten Chemical Bank Manager-Administrative Administrator New York. New York
-Interconnect Services Support Services Dennis M. Cameron Mark D.Sherman Continental Illinois National Bank Site Representative-Catawba Specialist-Budgets and Trust Company of Chicago
& Studies Chicago. Illinois Thomas A. Collins Manager-Accounting & Michaelle S. Simpson Wachovia Bank and Trust Company. N A Budgets Programmer Winston-Salem. Nodh Carolina alm. Conyers Lois B. Smith Manager-Treasury Programmer Analyst Services Lois M. Smith Irene S. Fellows Administrative Services General Accountant Assistant p Diane I. Gallant Daniel M. Stone Receptionist Administrator
- g eemg stems MichaelJ. Gaona Investment Specialist William F. Watson Manager-Power Supply John R. Gaster. II Cost Engineer Clarence C. Wells ngmeemg echnicia David B. Holloway Administrator-Safety & William G.Wemhoff Training Services Director-Engineenng Arthur L. Hubert Karen S. Wood Manager-Construction Supervisor-Accounting
& Operations Sandra J. Young Danny B. Jones Accounting Technician Project Accountant
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Duke Powcr Company Statement of Purpose Contents Our purpose at Duke Power, working i Highlights together in a creative environment, is to 2 Letter to Shareholders serve our customers with reliability, 4 Year in Review serve our mmmunities with citizenship, 11 Electricity: An Essential Resource end pmvide our investors with a fair, Industrial Development, Iobs, competitive reward for the use of their Emnomic Growth money. To this end, we: Health, Education, o will conduct our business with self- Environmental Quality
*
- Comfort, Convenience, o will provide our customers with low- Recreation cost, reliable electric service at fair, 18 Electricity: Will There Be non-discriminatory pri s; Enough?
o will reward our investors with a fair, 19 Financial Statements and competitive return; Other Financial Data 43 Board of Directors o will strive as stewards to enhance in-vestor assets and remain financially 44 Officers sound; o will provide an equitable, safe and stimulating work environment, pledg. Notice of ing equal opportunity to all for per- Annual Meeting sonal gmwth and offering rewards commensurate with performance; The 1983 meeting of holders of Duke Power Company common stock will be o will be innovative, anticipatory, pro. held at 10 a.m. Friday, April 29,1983, ductive, and cost efficient in all our in the O.J. Miller Auditorium of the activities; Electric Center, 526 South Church o will help each other achieve company Street, Charlotte, N.C. goals established for individuals and for groups of employees; o will engage selectively in other About the Cover business activities that will comple-The skyline of Charlotte, N.C. shines ment our success as an electric utility; against the night with light and energy
- will communicate forthrightly and lift supplied by Duke Power. The largest the level of understanding in city in Duke's 20,000-square-mile ser-ourselves and others; vice territory is repmsentative of the rapid economic growth that has trans-o will honor and protect environmental formed the Piedmont Camlinas into one quality and human welfare in the area of the most vibrant, progressive regions we serve; m e namn. Beys essemal mle o will demonstrate good citizenship in in the past, present and future develoo-all of our public actions; ment of the area is highlighted in the feature section of this year's annual o and will seek excellence in all that we report, beginning on page 11.
do. L _ _ _ _ _ _ _ . _ _ _ _ _ _ _
l Highlights DUKE POWER COMPANY Percent Increase 1982 1981 (Decrease) Kilowatt-hour sales. 51,380,037,000 53,547,929,000 (4.0) Electric revenues . $2,244,480,000 $ 1,908,4S4,000 17.6 l Earnings for common stock before extraordinary item $ 287,713,000 $ 278,356,000 3.4 Extraordinary item . $ 48,304.000 - - Earnings for common stock . $ 336,017,000 $ 278,356,000 20.7 Common stock data Average shares outstanding. 93,679,000 87,313,000 7.3 Earnings per share before extraordinary item . $ 3.07 $ 3.19 (3.8) Extraordinary item . $ 0.52 - - Earnings per share . $ 3.59 $ 3.19 12.5 Dividends per share . $ 2.24 $ 2.08 7.7 Book value per share (year-end) $24.89 $23.83 4.4 Return on average common equity 13.9%* 13.7 % 1.5 Plant construction costs . S 736,060,000 $ 804,371,000 (8.5) Total electric plant, net $6,385,691,000 $S,998,307,000 6.S Peak load (Kw) Summer . 10,097,000 10,602,000 (4.8) Winter 11,145,000 10,530,000 S.8
- Excluding extraordinary item - gain on retirement of bonds, and excluding provision for loss on pending sale of certain coal mining assets.
Earnings Per Share Retum on Average C Earnings Per Share Common Equity O Allowed Return B Dmdends Per Share gy39 (N.C. Junatctxm at Year fix0 16.5C*4 Cindx:ated Annual Dmdend Ra e 5 Actual Return I * [15.s0%- 1119 I3 08 14.10 % k 13.99o4 13.6 ?4 . t l ' 5Y' F W 19 3 1979 19H] 1981 1982 19N 1979 1900 1981 1982
% extmnednary anun-gran on n.crement 'Subeequently remed b 1522%.
dbondr . SaS2. t ludng -vim on emment 1
ghi $ NJ
$j E
a
;u TO Our duction and employment '
*3 contributed to a 4 percent Ri I Shareholders: decline in overall kilowatt- N hour sales.
982 was a year of raod. The public's frustration
.. est fmancial progress with economic conditions was reflected in the l for Duke Power.
political process in North o Earnings per share rose Carolina. Legislation was to $3.59 from the $3.19 enacted that hampers the reported in 1981. This in- f ull and timely recovery of cludes an extraordinary fuel exoenses, as well as gain of 52 cents from the financing costs for projects exchange of new common under construction. I stock for outstanding bonds I and a provision for loss of Despite the continuma im-32 cents on the pending p ct of inflation and disposal of certain coal d uble-digit interest rates, mining assets. the North Carchna Utilities Commission disallowed
- Total earnings increased about two-thirds of a re-to $336 million from the quested rate increase,
$278.4 mi!! ion earned in while lowering the Dmpas W. Bmi Whm S. Lee 1981. authorized rate of return structure and enhance the dition of several new pro-n common equity. value of our securities. grams. This effort, which
- Return on common equi. ^'-'
~ In recognition of reduced has been cited as among
~
ty, excluding the effects of Financial irn~ forecasts for future growth, the most aggressive in the the extraordinary item and the provision for loss, im- prOVernents were regulatory and economic nation, is designed to uncertainties, and dif. reduce growth in winter proved slightly to 13.9 per- Clouded by eCO_ peak demand by more cent from 13.7 percent a ficulties in attracting the nom 1C, politiCd year ago. necessary capital, we than 6 million kilowatts abandoned plans for the through 1997, eliminating
- The quarterly cash divi. and. regulatory three-unit Perkins Nuclear the need to build six ma-dend on common stock difficulties' -- Station and Units 2 and 3 jor, new generating units.
was raised to 57 cents per -- --- share from its previous To protect the interests of of the Cherokee Nuclear To enable the Company to level of 55 cents, increas- our shareholders while Station. The status of fully recover its operating ing the indicated annual continuing to provide ade. Cherokee Unit I remains costs and increase current dividend to $2.28. quate, economical service unchanged. Cancellation earnings, we are continu-to our 1.3 million of these units will minimize ing to seek adequate rates These improvements' customers, management the need for additional in our regulatory jurisdic-however, were clouded in stock offerings below book tions. In South Carolina, acted to offset these many respects by econom- developments by restrain. value and lessen exposure our request for a 17.56 ic, political and regulatory ing capital expenditures to volati le capital markets. percent rate increase is difficulties, raising re- and operating expenses; We will seek to recover pending a final decision. A newed uncertainties about embarking on new pro. through rates costs associ- portion of this request was the future availability of grams to achieve a higher ated with these units. placed into effect on an in-adequate electricity sup~ level of understanding To further reduce capital terim basis in September, plies in the Piedmont among legislators, the requirements, we con- subject to refund. In as. news media and the pub- tinued to expano our com- February 1983, we filed for The impact of the adverse lic; and taking steps to prehensive Load Manage- a 7.68 percent retail rate economy on industrial pro- strengthen our capital ment Program with the ad- increase in North Carolina. 2 l
Even with these increases, with small groups of legis- every $4 they raise to help lighted in this year's an-our rates remain well lators, newspaper editors the needy pay their nual report, electricity is , below the national average and opinion leaders to heating bills. The Com- essential to growth, pros-I and among the lowest on communicate our corpo- pany has committed up to perity and the quality of i the Eastern Seaboard. rate goals and financial $100,000 for this purpose. life in the Piedmont Caro-needs more effectively. To minimize the level of We made overall progress hnas. future rate increases, we In early 1983, we began in 1982 in strengthening As we work to resolve this I took additional steps in offering our customers the our financial structure and dilemma, we are seeking to 1982 to control our operat- opportunity to purchase flexibility. Through an in- balance fairly the interests ing expenses. These in- Duke Power stock directly novative exchange of com- of both our customers and cluded a freeze on the hir- from the Company. This mon stock for low-interest, investors by providing ing of new employees and program is designed to outstanding mortgage high-quality, low-cost elec-intrcduction of a program help us raise needed bonds, for example, we tric service while striving l encouraging our employ- capital,as well as provide strengthened our equity simultaneously for higher ees to step forward with our customers with a new base without further earnings and greater finan-suggestions for reducing perspective and under- diluting the financial in- cial stability. Your board of costs. standing of our financial terests of existing directors has set forth these We also expanded the situation. shareholders. objectives in a Statement of Corporate Goals Program Purpose, which appears on We also continued to ex. this past year to include Electricity is piorethe potentiaiforin. the inside front cover of improved profitability as an creasing unregulated earn. this report. Supported by objective. The program in essential to ings and expanding our the energies and talents of cludes specific perform- growth, prosperity fin,nci,13,se 37 cffering , our dedicated employees, ance targets in such areas and the quality Of variety of design, engi- ** *r* "fid*ntin ur as generating efficiency, neering and management ability to meet these goals. load management, safety life in the Pied _ consulting services to other We thank you for your and reliability of service. InOnt Carolinas. companies and utilities. support and encourage Our 20,000 employees We plan to market aggres- your interest and participa-again met the challenge, Two new community ac-sively the expertise we tion in helping to build a achieving eight of the nine tion programs were devel have acquired in design- secure and promising incentive goals established oped and introduced in ing, building and operat- future for Duke Power and under this program, which 1982 to demonstrate our ing our own power plants. the people we are in will be expanded further in concern for our customers business to serve. 1983. in theseuncertaineconom- Although we have made ic times. Through our 96 great strides in restraining Our efforts to minimize fuel local offices,we recruited long-term growth in de-costs through increased
. and trained volunteers mand, greater supplies of %
generating efficiency again from churches, civic electricity will be needed wem cKed h BecMc organizations and thecom- by the mid-1990s. In the William S. Lee Light andPbwer maga-munity, as well as many current economic, political Chairman of the Board and
; zine,whichawarded us top Chief Executive Officer Duke employees, to wea- and regulatory environ.
honors in its most recent therize the homes of more ments, however, we face survey for the most efficient than 1,700 low-income severe limitations in contin-fossil-fired generating system in the nation - the families, using materials uing to provide this provided by theCompany. necessary service without g eighth consecutive year we We also established a jeopardizing our financial Douglas W. Booth have earned this distinc- Community Challenge integrity and the interests President and tion. Heating Fund, through of our shareholders. This Chief Operating Officer To improve political and which we are contributing places us in a dilemma for regulatory climates, we in- $1 to designated communi- which there are no easy or iliated a series of meetings ty assistance agencies f instant solutions. As high- February 18,1983 3
*""" by 1 wer kilowatt-hour Year in Review nmmcial nesults %=tC=h 88i88-m .
aw,a cess 4 arnmgs per share rose oco u sa w Return on common equity ato $3.59 in 1982 from , increased slightly from the $3.19 reported in 1981. = 13.7 percent in 1981 to Earnings for common stock _._ totaled $336 million, up 13.9 percent, excluding
, m the effects of the extraor-from $278.4 million in dinary item and the provi-1981.
sion for loss. Earnings per share for Earnings coverage of fixed 1982 include an extraor-charges rose to 2.98 times dinary gain of S2 cents at year-end, but remained from the exchange of new ma in in - im below the Company's goal common stock for out-f 3.5 times. The Company standing bonds and a pro. the land it leases from East generated approximately vision for loss of 32 cents ver Land Company. Both 46 percent of its capital re-on the pending disposalof Eastover companies are certam. coal mining assets. quirements internally. The
^
wholly-owned subsidiaries long-range objective is to The extraordinary gain to- of Duke Power. The Com- achieve a 50 percent level l Cash dm. .dend On taled $48.3 million and pany determined to sell of internal cash generation. COrnrnOn stock resulted from the January these properties after the . 1982 exchange of 3.7 The board of directors most recent rate order from was increased to million shares of new com- the North Carolina Utihties raised the quarterly cash dividend on common stock,. S7 Cents per mon stock for $119.9 Commission prohibited full to 57 cents per share from Share' millionprincipalamount of recovery of the cost of SS cents per share, effec-outstanding bonds. Eastover coal. tive with the dividend paid ' The 1982 Revenue Dolktr g-Jaj,11. is,, in September 1982. This Where It Came From.. Too . re increased the Company's 2" f S"". I i I I I ' I " I ndicated to $2.28 from annual dividen its previous level of $2.20. Sales and Customers Sales of electricity clined in 1982 due to i I , unfavorable economic con ditions and mild weather. l Sales totaled 51.4 billion l [ , t j ,l , lm ; , l kilowatt-hours, down 4 perH I l f'48' cent from 1981. I Hose It Was M"
- Sales to the textile indust c- sw-n 8* showed a substantial <
decline, dropping 8.8 per-The provision for loss was Earnings for the year were cent, largely as a result of
$30 million, net of income favorably affected by rate adverse economic condi-taxes. It was recorded in increases in late 1981 and tions that reduced produc-anticipation of the disposi- the fourth quarter of 1982. tion levels. Sales to non-tion of the assets of East- The impact of these rate in- textile industrial customers over Mining Company and creases was partially offset fell 4.1 percent.
4
I sales am-a rwm nor had it received the cm.tructim cc.t= =-- M ""d""'"1 Status of Construction O General Servre Prograrn necessary federal construc essee,rs sesto
. 5828.3 sa04.4 cinaa n.L Teet. tion permits. Approximate-y nIndsnaWNeTenie ,he Company's board ly $8.9 million was in- "' 1'"
U " *"d
- 59 "
s3 s
, . . of directors canceled curred for preliminary plans for the Perkins
. N .7'Y Mt h' engineering and licensing. T *- 7 :1.CD3 4 3 Nuclear Station and for The Company is recover-7""" b g'M;;
- i '.y Units 2 and 3 of the ing through rates the por-
.h @T@% (.i4616 W:.'.h.
y (' i i : P Cherokee Nuclear Station. tion of these costs allocated
- ,' These decisions were to its North Carolina %gM W p .'e6 N.#.
i
' [I-b :.b.f N ;gd N .f239 E
l ; ;.; f based on reduced growth jurisdiction. It is seeking
. projections, uncertain similar recovery in its hQ ' @
., y, economic and regulatory South Carolina retail and M ti Nj : f..'.[W~% 1
- i 1. . ' {.~.] 1 [ climates, and difficulties in its wholesale jurisdictions. * * * *
- q~ 'Q,4 . ' .y/
g '..f:1t ~se .3 ..ge
%.; y ~ attracting capital on ac- Plans for Cherokee Units 2 mitments been made on
.. ceptable terms.
and 3 were canceled in Unit 3. At the time of The proposed three-unit November 1982. Work on cancellation, the Company Sales to general service Perkins plant was canceled Unit 2 was suspended in had incurred costs of ap-l and commercial customers in February 1982. The February 1981. Construc- proximately $70 million. incmased 3.7 percent over Company had never initi- tion had not begun, nor Additional costs will be in-1981. ated work on the project, had any equipment com- curred as the Company negotiates the termination Sales to residential custom- - '
> of contracts related to Unit ers declined 1.1 percent, ,; o/ ;.. qq
'? 2. The Company will seek
, reflecting mild weather .
approvalin each cf its M and increased conservation - regulatory jurisdictions to efforts. . * *
- recover costs incurred for Wholesale and other these units.
i energy sales decreased 4 _ g 11.3 percent. cc c ,, .. Catawba Unit 1 is Of the Company's total h, h.[ 17 ..i . .: , . - m about 92 percent
; '. g ,.e sales in 1982, residential a
4c : 3 .> 7 - g,; 5.. ' 78
'Wed .% ..Complete : and is customers percent, generalaccounted service fMfor Sw.%I 27 : .7"*Niinni.g N. . -A y ; -
Scheduled for and commercial customers 19 percent, non-textile m- ; .;. Jl M[ y $ $: Commercial Oper-
,, 'g .g ation in 1985.
dustrial customers 20 per- m .. y. - {f 7 ' ., 'qE gJr.) ,3 c. .,
. . .gj-cent and textile customers -
18 percent. Wholesale and 1 -c 4
/
- Work on Cherokee Unit 1
-.jo J 1. 3 yi ~6a is continuing at the limited otner energy sales account , p 7 . .j
-,=- i pace authorized by the
' ed for the remaining 16 3, ;4 y.q , ', .v, p.(.:. - f board in February 1981. percent. , ,
.,f.; ; 34 ' A .
c.f ,. l Continued growth in the N . While needed to the unit will be Piedmont Carolinas p #=TM.?.! 7$ig...J.3 i.0"W 4'80 TW ,
~ f Yjmeet customer f demand by resulted in a 1.2 percent C 9[~ ~ C _
increase in the Company's y g -s g ;C_ h i.1 L. F; M .:'Y.g.Nfk : i completion has not be A - . 1990s, a schedule for its customer base in 1982. As %'gC.5;.yh.c v- . ph $WVj. established because of of December 31,1982, the ~ ~ '~ With rnore than 7,700 engineering and construction personnel, financial constraints. As of Company served 1.3 mil- Duke Power is the only investor-owned electric utility in the December 31,1982, $538 lion Customers. nation that designs and builds its own generating facilities. million had been invested 5 l
l in this unit. permits for this facility 1982 changing procedures case proceedings. In addi-have been obtained, con- for the recovery of fuel ex- tion, fuel costs will be Construction timetables for struction will continue only penses and modifying the reviewed again within one the two-unit Catawba Nu. clear Station, m which the to the extent the Company treatment of construction year of the resolution of a l work in progress (CWIP) general rate case. Previ- ( Company has a 25 percent s able to raise sufficient capital on reasonable for rate-making purposes. c. ly, the North Catchna interest, were revised in terms. No timetable has Utdities Commission 1982 to reflect more ac. curately the current status been established for com- Unfavorable (NCUC) allowed three I fuel-cost adjustments an- ) of the project. Catawba plet20n of the project. g g nu lly based on the Com- I Unit 1 now is scheduled for Costs for plant construction N' orth Carollrla pany's fuel costs over a i completion in 1985, with and investment m addi- prior f ur-month period. Catawba Unit 2 scheduled tional nuclear fuel totaled may hamper the for operation in 1987. The $736 million in 1982, com- full and timely Legislators also modified two units previously had the statute permitting cur-been scheduled for com-pared 1981. with $804 mil! ion m recovery of fue rent recovery of carrying l pletion in 1984 and 1985, COSTS costs for construction proj- ' respectively. As of Decem- , ects. The law previously ber 31,1982, Catawba Legislation Under the new law, the required the inclusion in Unit 1 was approximately "he North Carolina fuel-cost component of rates of carrying costs re-92 percent complete. .. General Assembly Duke's retail rates will be quested by the Company l Catawba Unit 2 was about enacted legislation m June established in geneml rete and incurred after July 1, 47 percent complete. - y- : When placed into com- l o JM
*s a .$J : k,9~i
, 4A-&~
,. N 3p.4. >c f ~gx5., .-W .. d.:.w.. .: . p .. .>c
. r. w .
mercial operation, the .eep g (.. g t
/.g f 3%p :J<. h.. {p3l 4{ [. .5 f V+ y w@2
-' %g - gg. U %g. " 4 c l
Catawba plant will have .= n g . ..' :f the capability of gener- J m. . " Q . p x .
.> L >
,q. :7., -
. ~ 4sf~v ating 2,290,000 kilowatts of
' , ' .=~ ' '.
.=, ,A,7 :p t.y 4/ 1e, -F o 8 , a:',j1 i,
. . ss . - .
?1eCtricity.
,',',, c w D'J3 tr
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k . ',. .' E X N
- O, li. " r - U.: ,
f..'.' Construction work on Unit V .?- !u.a f; & - 2 of the McGuire Nuclear +di.R ~ f - ' IN W ., . l 1 Station is virtually com- 3 v.W M.A.'. J .= Y , 'c*
. - [f f 2 f'.
*'i 1 ~M - :..?. . .N 1 -:
l plete. Initial testing was c . h.\,~s"f[' . :[#2 ' , . ' p. : < 4 iA yF'. - [: begun in 1982, and fuel ? Y-4.k C . ' .
# @ a... D ', , r ';-- T,7..-.1 . ,- < .D .'~t...
loading and further testmg y :.- - ... ~ . N.. . 7 . u. 3 . . -.- s .. L0 :M
- 1
.G . Q.., . 33. . -.e%.M"y 3 f f n.:. -. :.; j :.r . J j. .f f . ; . ~ .. i . ~~g are scheduled for the 3 ?r^P. .
p gC,%,.- ( ~. f' . }. . , . g s M, - . .; . j . .$yt .q I spring of 1983. Commer-cial operation is planned m - z wy . e .- ... t . ' - - _.a -
' v i. -
for no !ater than early ( [. ,.(g(. hunk [,, [.%ca.OTT C M' 1984. f 3.p } y{. j {t. .f c. j . _g %. In anticipation of projected id - M7*gg hc ' ; . ji ' A '
-l < _4 .N f ; Sjg3 M . [. [y ];Q(
~:
demand in the early 1990s, [',' , the Company is continuing 9 .- . 4 y ,; s .- site preparation work for -: b .. - .a $- -
-hl' f, $gr.-' .r,,4g'
~
., . M g 7. : 7fp the Bad Creek Hydroelec- y 3 *f '
tric Station, a four-unit, @ ~ :: y q ;J .g . i., f' g 1 -mdhon-kilowatt, pumped y 4 . . 4yyl[j$.g 1 ' ,
'M
~!
storage facihty to be locat- c .
.1
+ -
M ~ ed above Lake locassee m ( / $ 1 [. MP']~ . . A ..;.ph.(( ....]
- South Carohna. While re- _1 r.- Cornpany s -mbarkmq cn nu rrmra ns x adm a ! b r .m, m u ne.rsunmna A as quired state and federal % am 3%
6
l 1979. Under the revised 2 - H.: =- - e { ~ i- M.. ji - ' - - statute, the NCUC may in- ; Y Y ?- Il~ - i . Y.cl o .' . _ ~ ' A N..[. ! .Y - "# MM. . .O clude these costs m rates at M .; - u ^ , . sr ~ 9 . ;
. . . ..f E .d;M,
@-M ~. .
its discretion, after con- r -.a . p
.T.>,.
sidering the public interest .} 1 J,^ ; @. G(.;. {,< y
.' - ~ ' ' . .. }
' and the Company's finan- . y 7. c. s ? o e4 ', C ;s ._, I cial stability. l 7 7.Q.s[ %[T
'r 2 . p ." ,
_3,,, , v: - ;.
, t;
.w. y.,
3c
. [(~ . gg%k k ,ji
, e . 7.-
u
- ;. =- ^
i The ultimate impact of this yJ i.C ? 7. , c;
~
.m,9 -
f ' hl . . l revision will depend on .f ^;. .,; '
'.m.., ( ( ; . );- '/ J { ~4 3,~~< . 7 . .M3 ,W- ...: .y 1, . ] , [5 ..g
.g how it is applied by the .
, . ;'; . L. < =.
1 NCUC. In the Company's ~.,1a 4 .I.' . .< n. " C - - ,J: : , . .-
..gp -
n . < . .~ most recent rate case, the . p.a..,MS : 1 - ;j- .-
' 1 . ,-
MCUC allowed in rates the '
' - ' E",
carrying costs on $276 WhW y ' f.M . " k. li-j k{.h l M). y [(V g . - / .?$ *M C million of CWIP, repre- r * ; "- , - senting almost 90 percent " ' '
,w M o.13 i f..f " $., ,,
of the amount requested by at. - u g :p e J V [M the Company. . ' @ p 'Q4 C ~ ~3w [t - . .[e. ] j = .
;, ~ _y }u. _
p Y.1
~
Rata Increases t - ates to all customers y n .. ' f ' .- Duke Power attorneys presented the Company's case for higher electnc rates m all rate
.. were increased in junsdictions m 1982. The Company will contmue to pursue adequate rates frorn regu'atory !
1982 to help offset in- bodies m the future. creased costs brought retail rate increase. If imate the rate of return ap- Earnings Coverage of about primarily by inflation granted in its entirety, this proved for North CarolinaaM Chaps GENtM and the high cost of increase would generate retail industrial customers. ea
.m. .% .m
" Y-
$99.5 million in additional The higher rates, effective _ _ _ _ _ _
A 4.38 percent rate in- revenues annually, based as of November 1982, are ! ! crease, designed to gener- on a requested 17.5 per- subject to refund and final ' ' ate $61.7 million in addi- cent rate of return on com- approval by the Federal ~ C ' tional revenues annually, mon equity. The Company Energy Regulatory Com- .,.: was approved by the placed a portion of this re- mission. -
- DiL 5 S-NCUC in November 1982. quest, an 11.5 percent in- ? ~7 The approved rates were crease, into effect in Sep-based on a 15.5 percent tember 1982, subiect to re- Financing
[ " i [(.- ., allowed return on common fund. A final ruling from r
, j.
( f{' . . . ; equity, which subsequently the PSC on the full request
,he Company issued ( [ ~ '
l I 3.7 million shares of was revised to 15.22 per- is expected in March 1983. 4 new common stock in Jan- ~ ~,' .. m
- cent. The Company had - - - ---
uary 1982 in exchange for
- sought a $197 million in- Rates to all cuS- $119.9 mii11on of outstand-crease in its North Carolina the dilutive effect of selling tOrnerS Were ir1_ ing first mortgage bonds.
j retail rates, including a mw c mm n stock below An extraordinary gain of 17.5 percent allowed CreaseCl to help $48.3 million was recog- book value. return on common equity. OIISet higher costs. nized from the retirement External financing in 1982 l The Public Service Com- - of the bonds, which were included the sales of $100 mission of South Carolina The Company and its trading at discounts from million of nine-year bonds (PSC) currently is con- wholesale customers settled face value. The transaction at 151/8 percent; $40 sidering the Company's re- on a $26 million rate in- strengthened the Compa- milhon of Preferred Stock quest for a 17.56 percent crease designed to approx- ny's equity base without A ($25 par) with a 15.4 7
(PMPA), representing a tric facilities contributed 3 group of 10 South Carolina percent.
/ '
cities and towns. The Com-F M pany had anticipated final- Modifications to 4 izing the sale in 1982, but k4 x McGuire Unit 1
-A ~ %' y J gg a legal challenge has de-layed the sale indefinitely. should be com-f- 4
.s A
g4$m%@ Under the agreement pleted in early with
; p} VA -
$$ PMPA, the Company 1983.
#,=** e#- W
% dd {#g#g%
m
~
[# j ("
+
i W would sell the int Catawba at a price based primarily on the Unit 1 of the McGuire Nuclear Station operated at i s *a Company's investment at reduced levels because of I'~ the time of closing. In ad- problems with the manu-N 4 3 dition, PMPA would make facturer's design of its
/8f f~ / monthly progress payments team s generators. Despite f1 # d to finance the continued this, the unit operated
\ , j$j/ construction of its portion reliably, generating more Duke raised $423 million in domestic and foreign markets in of Catawba Unit 2, than 4 billion kilowatt-1982. scheduled for completion hours of electricity, in 1987. representing 29 percent of percent dividend rate; and tablished for this sale.
$125 million of 30-year A group of North Carolina total nuclear generation.
The Company also raised municipalities purchased The Company is working bonds at 141/2 percent. In $77 milli n fr m the is- with the manufacturer of addition, the Company the other 75 percent of suance of 3.5 million the unit's steam generators borrowed the proceeds of Catawba Unit 2 in 1978. shares of new common The sale of 75 percent of n modifications to allow
$60 million of seven-year notes issued by a sub- stock through the Dividend Catawba Unit 1 to a group full-power operation. These Reinvestment and Stock of the Company's North modifications, which are sidiary to foreign investors. Purchase Plan, the Stock expected to be made at no Carolina and South The Company has filed a charge to the Company, Purchase-Savings Program Carolina rural electric registration statement with the Securities and Ex-im Employees, and the cooperative customers was are scheduled to be com-pleted m early 1983. ;
l change Commission for the Employees, Stock Owner- finalized in early 1981. ship Plan. Duke will retain ownership Units 2 and 3 of the l l prospective sale of up to two million shares of addi- As of December 31,1982, of the remaining 25 per- Oconee Nuclear Station tional Preferred Stock A. the Company's capital cent of Catawba Unit 1 and were out of service for ex-No timetable has been es- structure consisted of 47 operate the facility on tended periods in 1982 for percent long-term debt,12 behalf of the joint owners. CNution h d KWH) capital structur.um a - m e- w percent preferred and s emi oc=*r preference stocks, and 41 Generation and sw Capacity "# ' s* " su "' ss.s 7 * ***""is " l " percent common equity. These ratios are consistent P' oal and nuclear a with the Company's cur- plants provided the l rent objectives. bulk of the Company's o generation in 1982. Sale of Assets Coal-fired generation n he Company plans to decreased slightly from
.. eell 25 percent of Unit 1981, providing 70 percent 2 of the Catawba Nuclear of total generation. Nuclear /
Station to the Piedmont plants supplied 27 percent Municipal Power Agency of total output. Hydroelec- ; 8
Duke customers millions of
. - dollars on their electric
- f. ? ' bills. If the Company's generating system heat rate 9 -
had been equal to the me-
' 4~ dian of the companies in M4 * * ' the EL&P survey, Duke
) .p.. - , ,
- n. a ; j. . Qgn ..m73%
.4
. ' f. ; <$ ' g-.,' e..% ,.44,,.
[g . N)o . , . customers would have l7 i faced more than $90
.d5
; *'. . . - f. . ; # La%. 3.%' ? million in additional fuel l .' .M
+
f -. .) l ~,( l g ((J. [" [ ff. . costs in 1981. v w.a 4 . . s - . ,1', ,. 3 P ' " ~ . ! ~ - r -- - 1 Based on information com-( f y -j { ,.? g;.f.>f;.f 7 . A}i ,,] y 6,4.,4, _ y , . ; .I . V .
.W piled by the Nuclear
.(
%3 $. . [ f [ 7, ~ ~ . ' .'-- %[.[lJ- - i ., L Regulatory Commission,
. {f e , j.[;. ~ . . ( . 1 . ' ' . ' ; - i ,;. <
l r. fm .- , . . -
~ . , ..-
- ..c. : , ,. 71.7 ' .
the Company's Oconee 7 - o : [. ?.=.C
~
-c m,. "; -
Nuclear Station was the
.j . 4 . ,
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7 g
? .] 7{ }{ '{ 3. ' ;. l; . ; . , ,, ] } y{.j y ; 3 _ q , }, .
water reactor nuclear plant McGuire Nuclear Station Unit I generated approximately 4 billi n I lowatt-hours of electricity n b nahon in M in 1982, mpmsenting 29 percent of total nuclear generation. required 10-year inspec- In addition to winning the Peak Demand tion procedures and refuel .Efficiency top awards for both overall new system peak was ing. Bolts securing thermal 4 or the second consecu- and fossil-system efficien- set January 11,1982 . shields in both units also .. tive year, the Compa- cy, Duke plants swept the when customer demand ! wem replaced. Similar ny's combined coal and first six places in the reached 11,145,000 kilo-
' work was completed on nuclear generating system survey's unit-by-unit effi- watts, S.8 percent above Oconee Unit 1 in 1981. led the nationin overall ef- ciency rankings for fossil the previous winter peak of Despite these planned ficiencyin 1981, according units. Unit 4 of the Com- 10,530,000 kilowatts set outages, Oconee gener- to a survey conducted by pany's MarshallSteamSta- January 12, 1981. Summer , ated almost 11 billion Electric Light andPower tion was the most efficient peak demand reached kilowatt-hours of electricity (EL&P) magazine. single generating unit of 10,097,000 kilowatts on in 1982 and achieved a 47 the 2,100 units evaluated July 28,1982, 4.8 percent percent capacity factor. EL&P also cited the Com- in the survey.
below the record summer As of December 31,1982, a n sy t s e mo t f- A Duke plant has EaNt$u* gun $1. the Company s installed net generating capacity ficient
- the eighth in the United States led the nationIninJune 1982, the Company consecutive totaled 13,234,000 kilowatts, consisting of year the Company has efficiency 14 of reduced its projection for earned that honor. long-term growth in peak 7,423,000 kilowatts of coal- the past ] 6 years. demand to 2.8 percent an-fired units, 3,760,000 The EL&P survey was nually from 3.8 percent.
based on comparative heat The Marshall station was ' kilowatts of nuclear units, recognized in another in-1,452,000 kilowatts of rates of the nation's 100 l hydroelectric facilities and largest electric utilities in dustry survey as the most Load Management S99,000 kilowatts of com- 1981, the latest year for efficient coal-fired gener- r- i he Company's load bustion turbine units. The which industry statistics ating plant in the nation in
.. management program Company subsequently are available. (Heat rate is 1981. A Duke plant has led again met established goals upgraded certain of its a measure of the amount the nation in efficiency 14 in 1982, achieving an ad-coal-fired units, increasing of energy required to pro- f the last 16 years. ditional reduction of total capability to duce a kilowatt-hour of This unparalleled efficien- 291,000 kilowatts in sum-13,411,000 kilowatts. electricity.) cy record has helped save mer peak demand and 9
I Cumulative Ioad Management Goals & Accxxnplishments g~:g P O .'i-,.. l (WWer) 9 ' l CGoal E A<v-M=ad .
}/ ,
. _] ; .
~~
p
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4 ..n
+
* -l \ +
30f0
']{
w ;- ; 4'
}
I 2urr [ - h e' 1000
~*
3 ...s .
- g. ; A ' $ :
,s,'.
.?
78 79 8C 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 % 97 p y N ^
..t.
" . A '-
340,000 kilowatts in winter deferral of federal income h kg gL peak demand. taxes on dividends rein- % 7 A yy Qpy vested in qualified plans.
~ - -
As of December 31,1982, h , the Company had Them were 38,090 share- p l g97 " ., achieved an accumulated holders enrolled in the -
"J
[L . a.Ik -
~
reduction of 1.1 million plan as of December 31, ,
.~ -
kilowatts in summer peak 1982, compared with [ Z " demand and 1.4 million 23,065 participants on De- p -
,1 l
kilowatts in winter peak de- cember 31,1981. % '
'?.J7 .
mand through load NN
~
l Under the new federal law. - a - management applicable through 1985, Duke employees achieved eight of nine targets in the Company's f 2 Ms % ram, including impmved customer The long-range goal of the plan participants who file ljy e g ty program is to eliminate 5.2 joint returns are eligible to million kilowatts in summer defer income taxes on up $O*M Employee Incentive peak demand and 6.6 mil- to $1,500 of dividends rein- === Progrmn lion kilowatts in winter peak vested in additional stock. " C 7% M r7 he Company,s 20,000 demand through 1997. A $750 limit applies to "D=dend Fem-ment and , Stock Pun base Plan .. employees achieved shareholders fih.ng mdi-a tmpiovee. stock o.ner,s1,
""" eight of nine ormance Dividend Reinvestment vidual returns. If the addi- m ,
r ,he number of partici- tional stock purchased s the 1982 Corporate Goals through the plan is held for l .. pants in the Company's at least one year and no sia, Program. Dividend Reinvestment other shares of stock are Goals were achieved in l l and Stock Purchase Plan sold during the period, the vehicle and employee safe-incmased 65 percent in reinvested dividends will ty, service reliability, load
,o ,, ,, , ,,
1982, largely as a result of be taxed as long-term management, generating legislation allowing the capital gain when the More than $67 million has efficiency, design and con-shares are sold. been invested through the struction and affirmative Investment in new 73, c,m,,,, ,1,, m,31 gien s;nce its inception in e ctio n. s m gioye es eiso m et Common stock 1973, incluaing $22 million the Company,s target of i fled the plan in 1982 to in 1982. improving profitability. through the Divi- allow participation by the owners of preferred and Inquiries concerning the Achievement of these goals dend Reinvest- preference stock and to plan should be directed to will be rewarded with an ment and Stock allow participants to the Investor Relations additional Company con-Purchase Plan reinvest dividends on only Department, Duke Power tribution to the Steck Pur-a portion of the shares they Company, P.O. Box 33189, chase-Savings Program for doubled m. 1982. hold. Charlotte, N.C.28242. Employees. 10
' &yg;&::~.. q ~r. - pl.&&&l4..g%. , ; .. ~'
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*9y SWl_ lYY:l?&. L.l l l l^ I.
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L W; hatWthdalueif.eldctrisity.?..Hos.do w6ftis'to bdwshin at 2:30imMhenfit's.lS'decirees outside?.WWudeer - . i . we'messdrie ns ccidri Lof turningEiglit 15tkdaEwith a flick of a'switelWadleventrig#of entertainnlent?f.E i. G? .$ m.STheise afe'adrde.lof.tluitradM W5pspidlat$1thsf fif } 'l ~ }'WJ c. :. . { [4}}
~
perschal li@es? Bdt ths caritributions of this esseritial resourts extend D
~
'. "?w .
i:1 L home: It h61ps 15ssphahufsStpring planth prcdui:indMoipleMorking%gges4s$.6 f .i - M ing, studebts learnirid arxl the~wheelstof governmeritl turningM : ~. . i.:. ..i t LC H.#
.J .' . '. f.
[ [
~ '
In'thipressrkerMt'isilifficdlt to imaglikIlfe without' 6i - electricity. c[ ' f heartbeat'of 4 For 79 veds,(Dhie' Pow pidcMhes',
*er[hss provided ihn thsPiedmbnt; circulatoI/spstem.of Carolinas: 1 . . .. 'I@? bbr.
r reliable and'edorioddOnl[ supply l$f blectridity.iAhd dMer~the' years,sMM . - . ;- W M
~
built an urimstchMdhedoed ofLeffi i}ithe dbsign ... [' power plants, serving its43fmillion endnmars*with:am( ong .the lowest rates .~. on$gr . j. .J~- ~ f Eastern % herd.htlie Words"of' ore NorthTCar611ha riswshsherM" Duke Power.Com ". : ~ ll f
~~
L. ." M .D.D.M !. . O T .: : - . . ' D .! . pany does.what it does high liettefthan'anyb6dy$gQ.@sTiisflation Mildrea t In recent eafs?howeiver, inte st' rate - requirements have dombined to indlease'dramattuallylthe"cosEof danplyiniithisjeheari-
; tial resource.' As a resultithe'Cdmpany fschs'the plosdecijf hning-to .O !, much capital as it has"in its ehtire historyTilinply tolineefpEjestedjiowtkin'dbmand 0. : . % z
[ g$$ J.hN Ty.9 {0Q ' .}. [. . through thethis' end of thisioenturR M@5 sigfiifichniimplicationsfor the C ., L Meeting financial challenge.h . 0 121,000 shareholders. After all, every nsw" investment;dollarfsised[thiodghf, '. : 1 .7 ' L the sale of anal nnmmnn stock below book'value wouki dilu - .. existing sharebnidam And raising large amounts of debt capital 1. ~,te'thefe.g
.A, . : . ...~
. at high11nterestgj ...
could ondermine the Company's financial intsgrity. In the fqce' of persisting V61atils Ci> 1. c
, amnnmic conditions, Duke wouki be far strenger financially if constibetickWere'ces-#v .c f' r talled or stopped completely. ;WWW 4Qsf 3 A To do so, however, would jeopardize the feline of the (( Pi$d F s
, , and its four millinn residents. A continued supply of electricity is essential forkF.C.'T :.i n Oly
."mfnrt.
industrial growth, jobs, ecoonmic progress, I.MfjQ:.W health care, edum The following pages offer an overview of the contributions 6f' electricity (to;the y.a Piadrrinnt Carolirjas and the efforts Duke tam $1ng to ensure continued progress:and13. ... .
~ p. yjg.Q.Q:;
prosperity for its endnmes and shareholders alike.
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Part I: Industrial depended on textile manu-facturers for almost two- 5
-e s
Development, 131rds of 11s industnai saies. Jobs, Economic since then, however, almost 12,000 industrial - oO firms have invested nearly M '
$31 billion in new and ex- .
panded manufacturing _ lmost 40 percent of the Aelectricity Duke Power facilities in the Carohnas. produced in 1982 went to Much of this new mvest- % ment has been concen- 7 jp - drive the wheels of indus-try in the Piedmont trated in Duke s senice h \ area. As a result, the Com-Carolinas. These 19 bilhon g_ , kilowatt-hours helped keep pan /s Musmal saks gQ market has become more g nearly 2 million workers on the job, enabling them to diverse. Electne sales to n n-textile manufacturers g -. - earn an estimated $30 have almost doubled over billion in wages to feed, the last 12 years and today , clothe and shelter their exceed those to the textile families. industry. Almost half of this energy Among Duke's 6,50C non-supply went to power the 4 textile industrial customers spinning, weaving and fin- are an increasing numoer ! je ishing machinery of the Company's 1,300 textile of research facihties and - T high-technology manufac-customers. Even in a year turers that have been at- w when adverse economic tracted to the Piedmont - conditions forced cutbacks area. At the noted in production levels, sales Research Triangle Park to the area's textile manu- near Durham, N.C. Duke f acturers still exceeded 9 supphes electncity to sup-bilhon kilowatt-hours, ort research laboratones T helping support the em- o erated by General Elec-
- n -
ployment of more than quarter of a million people. inc, Monsanto, Burroughs % - - W%%*< -
~
"2 Wellcome and others. The m Already the most modern Company also serves a in the world, the Carchnas growing number of cus- -N -
textile industry is investing tomers in the Univers1 y milhons of dollars in more Research Park near Char-sophisticated, more effi- lotte and the Ravenel cient equipment to in- Research Center at Clem-cmase productivity and son. __~Y 4 help assure future growth Elsewhere, this supply of MtW'ipMMP in the f ace of foreign com-electncity contnbutes to '" s - petition. Conventional the production of tele-shuttle looms are being g replaced with high-speed, fo Noh - air-jet looms with two t Telecom, surgical in-four times the production struments for Squibb and capacity. New spinnmg electronic banking equip-techniques promise t ment for IBM. In addition, streamhne the entire gggg manufactunng process. basM manufacturers and As recently as 1970, Duke distnbutors of such vaned 12
4 , x;
.._ , .h. , ..
v . t. - , , s .: . , . +. 4 , p .
-j
- m. , i. v. c f. r7 - g .
- p. ' products as chemicals, ball Duke is working aggres-
.; . '. *' ' J
, ( [. ~ f l. s 1. i beannys, heavy machm- sively with both new and 4 d' t j. .y. .j,. ( .i ~ , 3 y 8 ' $ ery, alummum, telephone existing manufacturers and Yy.
j . .g3., . .
?*-% :- : j cable plastics and phar- industnes to maximize the
- 9. ,. %g t '...
e- .c ,./ . i maceuticals now are energy efficiency of their f.*.{.7., f ? ,gp [ , , 5. located in the Company's facilities and thereby limit g., : .d. . - yf ; - .-
~
a service area. growth in peak demand.
,i g , ;;. .
. . . . '. .. d.;y ;c 4
- qp M,
; , i ! With guidance from Duke's
's w ,j f .
e Electncity-f ueled economic
.. $s s .n .., e c- load management experts, - :. c* . , . v. ; . -
p development has created
-. c ,4 g .
.e
. for example, one of the 4 - * ...'- more than 500,000 new 4
D: - /
.s . . .- 1
. v,
_i g *.
.. jobs in the Carchnas since Company,s largest in-W dusmal customers -
.. .- .4. - . , ,
. -s s, o '< , 1970. This economic
.o .,. .
; y .1 y l1 #. growth has contributed Bowater Carchna Corpora-
- M directly to the expansion of tion -- reduced demand at
,._.4
.. + ' .- . . s.
. 7
. , . . ' Mer.Ame... -
4 -- - its Catawba, S.C. plant by
. .. . s -
- s. - service and related m-
- - c, . . more than 20,000 kilowatts.
. c ..
. y ,-
.4.
dustnes: hotels, restau-
- a. .. ~. :Jr.....
tX., <...: m As a result, Bowater will rants, banks, retail sales
. s .s . - .o. v. -x save an estimated $1.3
,0 -w w Je ..- ...e
,. u. . .,c 5 , -w _
and homebuilding, to 3' . g-y -.va E
" ' . t. g* .
name a few. This, in turn, milhon on its annual elec-
. . 3. r r.'-u.
t cw .
- g. ,. ..
,w-gdmg+.c .
eM.. c.s e < a
. c .-
- .. s .
- a. a.<- My.#a. . - has added sigmficantly to tne bill. This effort recently y . ..- . .
. ~. .. .m... .
- m- ,
.c x v-P.. y;, ~...the revenue base of local was cited as the most
%) .g .- - ; g, y m.y. . 7 .,. .. . $- A- % governments, helping to outstandmg example of in-
- 1. g.g.y _.t_p. . .e .. 4,
' a.pg. . e,, - w. finance improvements m dustnal conservation 4m &,- w. c - .ea ;f - r *c j 'e
- 3. :'-%g,.
- sp4. :,: 3.3c- highways, urban redevel- retrofit in the Southeast in
. .g ...
pp.A .- ..4. : opment, schools and other 1982. Through load man-y 4 .c-, Q.x . . .. Q.3= w .
. wM. sy. o- +we: -y7 .
pubhc services. Accordmg agement, Duke is seeking d.I.4 to U.S. Chamber of Com- to reduce projected growth f ,..3mp . "h
- s. . v.
23 - m .-
- ,4,; ky+ ' J.4c . J.k... ..s [.~ merce ratios, every new in mdustrial summer peak
- 3
-. - f N .g h %. Q ip ,, 2 .. r. .
~
.. D .%,.2 v , manufactunng plant that demand by nearly 1.2
..:,.. e .cmq > ..
- 7 . ,.-
c
, . c*. %*e.m,:a$, F .
creates 1,000 new jobs million kilowatts by 1997.
- v. > ~- .. .
... n ~ s generates an additional Continued mdustrial
$!!i .7d[;WQ .,:y J. 'y c-<-' FW,;hf
- L .,
? g .- J kp 680 jobs m the local development and diver-A. , . . 4 :: [;
..g l:. e. .
c'6'; ,. 4 : . [ %.'L'*i129 > f economy. sification will be absolutely l l
,y . ..% ;4 . M .. .; 1, s 1 '
essential to provide ex-
.g, . -3, -g+,. .
.. ,:.g . Y. a. . m .?
O j .3 .
& ". - ., m t+g.g.. . ce? , 4 .,. To accommodate this ex-E ,-
panding economy, Du,xe panded Job opportumties
,. .+s. : tc . ;o_. ' ' . ~ . . - . .c -
. , .6
_f : not orn,y for the 425,000 g . ..:..'.-,- .
. ,. . . s -
...;4
,-.r * . c ' g.*.e. - has mvested about 55
, . g.4 .u ? 't.. .-
- g. ,,,'- Carohnians who were out
.' bilhon m new generatmg s
- x.
- 3 3
3
. .4 ..
of work in 198z, but also
- ;acihties smce 1970, w,ntle .
4.a e . , ,.:,; j ,( .- - .II W J.W.A." Y addmq 8 rm! bon kilowatts rmH ns of young pa'
^a, 1 71 at aa,ditional capacity. To ple who w1H enter the job e
.c s
,.. a a ai W m, . s.9, -
- y t
- e. v r... .3 .. -
- 5. -
i
'...c. , c,4.,. M., y . - meet fu:ure demand, the market in the future. But
~.-.'
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,, . p. -
this economic growth can. wem . . <
~ 4 - .. h Company is investmg m
.. is .
. A . .I . .
%s ., 7.> not be amured due to s- a- new power plants that wibi g ', Wk .- . .y . .#4-Qe.
ilk ..
@e .. +
provide rnare than 3 uncertainty over the y , . e, s
- k. .,. . , . , .,
. ,,, - . ,, # , /,>)h,. y t availa.cihty of adequate w -
$& milhen kilowatts of new
-'? 1g i ~ f ,
i - i
/ =
4 ...
% , - ; capacey by 198,z . , e!ectncity beyond the V *-
*. # (d ' $ . y. . , 4 , ~ Seekmg to mmimize the 1990s. Without this supply, I
{ the Pmdmont Carohnas ' ek *': ' ,, .c-( W.
.s .
p.
' ' LI amount cf capital requir&1 face the prospect of l
. ',t/ f to meet tuturo growth economic stagnation.
n '
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1 amme-d etice fera
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- Burroui.s ,A,-ce:..
[e - . %,i. ' .,[ .[ v j, c-+, w N[ ' '- ?['$ 8# inq surgCai ns+ umer. s e Squ:bb',s Edward WM & Com
- 9. .
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4 1,., g% . gy ' par?. tr.m J t Greer 'M new hyr h,m . v m: rm . l c ,., 1. g Y .
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+rcnrs Q t sr m ; e !. P. O mr ~ 42 j k ~ .g , , " %.'ai r.g. ' ' - ' . ' baO i C r 1 rV Du N" f_ h , _3"j . ..
. [j.g. %-:q % g gf(f3' n :. Q;%
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F<1rt II: Health' 9" " "t~s U" " "" " " " ' tia! role in rnedical r" Education, search m10 cencer Environmental >vne"enston c"H tr""s-plants, blood diseases and d lty arthntis. And at mme than 80 other colleg"s ami es m universities in tb
] .emarkable
. electronicsadvans and wm- Carchnas electncity is puter technology in recent contnbming to the devel years heve propeH ed our opment of r.m tect society into an exciting nological advancec that new age in health care. promise tc. surnass tF cse of ,
educatier. and communica- the past 20 ymrs. At Clem- ~7 tioris. The common denom- son University, for exam-ma'or ir this technological ple, the new Center for revolumn har been elec. Automated Manufactunng tr> city. By providing a Technology is investigating dependable, affordable the relationship between supply to the hc pitals. humans and machines, universities, scl wols and and will serve as a meguet government agerces of its tc dr+w high-technology service terntory, Duke mdusi in to the Piedmont. Power has enhanced the E'ectnc-rowered technolo-
! vm of millw e' P:ed- gy is being incorporated mont Carolinions. Increasmcdy into seconcia y Today, this < 'oply of elec- and elementary schools to tnnty is he't og ophthal- prepare today's ycuth for mologists a, Uuke Universi tomorrcw s world. More ty Medical Center treat than 700 North Carohna glaucoma patients with oubhc schools now are gp lawrs and dermatologists equipped with classroom at North Carohna microcomputers. At the Nord Carohna School of d
Memonal Hospital heal )
.. O, burn victims with skin Science and Math, for in- -
stance, students are offered -
- graf ts. At many major hospitals, the Company is an advanced computer powering computeriz&l curnculum suppoded by a .
pg . axial tomography (C AT) network of 37 rmcrocom- .
,L . . , . . .
-i.r -'. ' 7 scanners and ultrasound puters and termmals. ..>
units to enable radio!ogists Highly sophisticated elec- h ;k /
~
to locate and treat cancer- tronic networks dependent
~
W.
- I C ' ~; ' ' -
. 4.b M
i ous tumors by disp!aying ebm me M m - 4 ' Y- A 7";' : '.- crese sections of the brain many cities to cccrdmate and caer organs on video- the dehvery of esse: tal N. j- ' ' . N' WA ..f-I*
^*
screens. This vital eneray source also is keeping services. Cor putenzed dtFpo Ching sfstems, for <J-(SD. ;'Q 7h ~"[Y ~ y [, ,. 1.~ ' f
'E - * '
emergency rooms and in-
~
mple keer track ot ~ . M- 's E,..
-(
.ensive care units function- pc hre and hre umts, .+ , [ %* ye 4<-
'-. -m -
- s,
,o .
4 -
\ ~ '
. g at hospitals throughot t Ms ?
d4 - -- "
;h ' -
y* 7 the Pmdmunt.
~
with the ciosest av$dable
i i'"
At North Carohna, Wake mstance Most rcimor h ,t .g . [h [., f 1 Forest and Duke univer- cities in the hed.n:nt are ..
#. .. , 3- .
*,.m . . ..
t mties, the e'.ectncef Duke . sing computers to coor- i.'.) -f-' ' ^ ;{My f .' . 4
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u; in. y - .. x < rO y
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- 1. .e d m at" sin e . ;h z g m : .th" 1920s iong twtore l trathc syna.,s. a, nd mr
- rat state and federal environ 2 . ..
e.
- g. '%f , .
;. he contro!.ers are usmo mental arnaes ex:swd.
C'7
. 3,
- u ,%. corr.puters and vidn Taiay. more than 170 en
- ,- - w.,- . '
9 . screens to sateiy cwr +" onmental speciahsts are gq. m- ei 4., mccmm, and ouum "mployal by Duke to
.g(
< pf f. .. . .
...,i flights.
rrmmtor and safeguard the
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.y ..j.l , ' -' 4 mr. wamr and other
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.s
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- v.
- F.7 Dux, e Power has mcor ,
- namrai resources sur
. . . , ';. .- - - . . -' parated much of tt. - , , .., -
- r ,
roundmg its generatmg _g' i. sophisticawd technology
. A .y
- . ,4 m L,-
f ac1htles. Last year. they ' - ' - '. 4. . into its own cperations to o+
'/- _
.'s... .- w - 3 assis*ed state scient'sts In
-w '-
f, > ., ,. ,J 1rnprove pr(x3uct:Vlty, ser s 4 * *
. . . . ' , g's. -
tH relocdting more than 4,000 vice, safety and efhciercy.
- + , N9F .. *g ', .
endangered Oconee Bell
..u
.c y 4,
.O. l' -
- At the Company s gener
~ Au,1dWM. sse.
~ . .
. a ,
e#> e pi . ..' ,.- ,
,..p .
atmq staticns. for examp,e. wildf!cwers from the ruihng his of South C,archna to 1 s. .-- .
- xmputers monitcr
.v-.,...<g -
- v. 4 w.6 .
.z..
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teroeratures. pressures the k1r+h Carahna c c.
. e ,.. . 4 - - 4 and heat ratos, ne! ping Botamcm Gardens. ..f ,
- y. .- . 4 .; ,. .
7 t. .g. , - , . l; - Duke's fossi! bred system To m:mm ze the environ
.$..p; J l'? j ; - j#s , . . f. . l.' .
. - }.J.: ' lead the nation m efhcien- mental impact of produc-
., , i e, e M.7 ..
- D.
. i.l Q<. , . cy for eight conseceve mg more than 55 bQon y .gy s y s g . .- years. Duke engme-rs use Kilowatt-hours of "e, ctncity
_ y.c
=
j -
,, 3 f .4 .r. compu*er assisted graphics annually. *he amfuny 1,' .
g, _4 ' if ' A, to design new ger.eratmg uses low-sulf ur coal and j [ ,' j : D
- 1
f, , faclittles and thereby has equipped its piants M . Obg[ j.M' - '3 mintrr.1ze costs and max- with (?!ectrostatic 3 _ kM v.i., p,' k, I k [b I~/.
.k
.. N -' .'- .
Imize efhclency. Ali of the p ecipitators to reduce g ". .- Ccmpany's nuclear plant emissions. And by relying coeratcrs are trmned on on nucl"ar plants for more
,g1 ~, . .u,@.b. . .
. 7 f (k,F'J'.,'N w t
- i. -
i y h'r'./ , t , -( ;T, - elaborate simulators, ex- than a fourth of ths elec-7-('r@pg.y (, .c-g: 7f:- g . ,. posing them to actual con incity. Duke has provided
. , . , ;n
,sj trol room procedures and the Pledmont with the b f b cleanes+ and safest source A,h,.j-; n & .'. .y .q
.* .wsA ,s a ,..
{ conditions.
?W: of large-smle power
, f. - u
- 4. : c.JP.giNThese advanced tools also
; t.
3
.# m
,c' w , are helpng Duke contmue avanable today.
U.J.." :- ; *- e ' - m ' J. 4 . O < 3. . ,.,f..97 . jp e its comrmtrnent to preserv By supplying the eneray to
, q .s y3 - t .M -
n. (
- A
./l, . g Acw:d, tegnty of the Carolmas.
j@ mg the environmental advance m- the quabiy of health care, educatler. and
. .. s,, _- _ ; A The C mpany's new Phys- ommumcations and by ,
., fV 4. * . . y mmimizmg the environ-s
.s<,_,. -; . . .. y ?:gq4p V the .
icalshores Sciences cf Lake Norman Complex mentai onimpact of produc-
?" '
for example, is equipped mg this elec+ncity. Duke is . g.
.. ~ : ,
- / +t' . ? with state-of the-art contnbutmg to an im-
.- .'c a [. f '?; - chermstry, biology, radio- proved quality of !1fe for all l , - p ..i . l k w ; .' chemistry and chromatog *he people of the Carchnas.
* ' g , {[. . .
[< 4 (. /' ~ .
*I . .. raphy laboratones.
Ih ff:j f ' 3-y Duke brst estabbshed an
" environmental depar* ment (f . g - - ? @ ..
- $ $. L *
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&-? : ,
nd air conditionmq on a s Part [II . Comfort, hot summer afternoon. .in- g1 . Convenience, s1enteneous news end Recreation home entertainment. .com-puters and microwavo ,. ovens to save ture in the gg-2' > home. . power tools to n wenty years ago, Duke build with. .secunty hghts
.. Powers 658,000 to protect against prowlers.
s W* > p's *
^ '
q residential customers used For the benefits of elec-
- an average of about 5,900 tncity, the average Duke $
kilowatt-hours of electncity Power residential customer - in their homes each year.
- cven with mdividual con ays only about $2 a day '.4 about the same as the servation efforts, everage consumption for today s 1.1 pnce of a meal at a f ast-food restent milhon residential custom-ers has more than doubled, To help reduce the need '
nsing to about 12.100 for higher rates, Duke has 2 4 i .
# 'y ' '
kilowatt-hours annually. created one of the most in-
;j hl* O ,,
novative and comprehen- - This greater rehance on o, # m.- ggg;g .., electncity to run the home management programs in r . 3% has provided the people of the nation. By buildmg u e e- ' the Piedmont with a more upgrading their homes to ..
'!9 L
- p convenient and comfort ~ Duke's recommended in- y ~
able hfestyle. It also has sulanon standards. for ex- 9 helped create more per % sonal freedom and flexibih ample. residential custom-
~
ers automatically quahfy ty for the pursuit of in- for the Company's lowes+ & dividual goals and ambi- available rate. Today, r tions. nearly 80 percent of the While inflation has pushed new homes in Duxe s ser 3 up the cost of all goods vice terntory are being ?
^
and services including built to Energy Eff cient electncity, Duke Power Structure standards. And residential customers paid under a recently mtro-only about 5.4 cents duced program, the Com-substantially less than the pany is offering to pay a national average for pchton of the interest rate each at the 14 bilhon on bank loans obtamed by kilowatt-hours thoy used m homeowners to upgrade 1982. Duke's average reso thw houses to its recom-dential customer still pays mencied standards. about the same percentage To movide a ready supply of the average manuf actur $ # ' "
- deh'*mWM bma __
mg wage for elec+nc ser YJ e day 365 days a year, Duke - e-vice as m 1955. M *- S operates two nuc-lear , o g The mvisible nature of power comp: exes. etah 9 ' Duke's product maKes it coal burning plar.ts and & ('
*~
's *:. f .. _ _ .~ :
' ' ~
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HQ easy to take ter granted the hydroeiectric stahans. And s ..
- ' . .."~ s.
day-to day amemnes it nach c! the land sur .TE-~d'nh provides: a hot shower : , md.nq these gerrranng . N I' [ ..A
'A Ed " . I " .b^ ?~ "; N. ' ' / ,) ' I.' k ~? ( .: '.
- strammq cup of ccttee and tacities has been deve! V.' ' S^7 1 , f 7. "(J; % .g .
L'- warm kitchen Jn a Co!d .p%i mL, recreah( na) e.. , , -,'
' . .- . [i , -
^
mi tea * - wintet wrruna armis!<v "+ , ;b! ; .
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_ 9, . ,.y"*- ,) . }gg " .a F ,_ y[ \ 1, 4,, m... s c,-.. . - ., p,J ,. D-w . 4.- ( n y w... g g. . e. + , Lake Norman. near Char- powenng the Jocassee and
" , ' , U. >;.[ al,( ::p; [, , j %. "'
.# ,I .} ' lotte, for example, was Keowee hydroelectric
. . , 4* , -
4 .- designed and built by plants, the lakes provide
, , %. Q ; Duke engmeers to power coohng water to Duke's k
;,. . w,.g g.-u_qy 3., -. Mj .' 'i .
.i <
- -- t
? ,7 the Cowans Ford Oconee Nuclear Station.
Hydroelectnc Station and Smce begmnmg operation l .u 1 r c, 4' _
" i . g. * ,
~~
. * ~ provides coohng water to in 1973, Oconee has saved 7y. ,
.....,, both the Marshall Steam Duke customers more than
...-j. y.f .. . [M J, J f ( '. J j
.n. 4 ' ' .' - Station and the new $500 milhon, compared j
. , .~7O? :. e- _ ;
- Ly. y.. fC McGuire Nuclear Station. with the cost of producing
- fsJ$1 x r As North Carohna's largest the same amount of energy
- - 4. y. 1(. . ; .[. .,.; [, *. ; ~ '.' , ;.j 3 f;. '
body of fresh water, Lake at the Company's most effi-
. . . Norman offers more than cient, comparable coal
, y .,: ;.$_,g( u .
.q_ g ;% - Q -r-l5 , .3,r. " 9
. .:;, ,c,_- '.j 32,000 s ~- .
acres of open water bred plant.
.e'j.' # .;
t for boating, saihng and
~
l c 4 .- . , ' _ Duke completed work this
-e . ...5 .y
....,e e ; -
-e : ;.
% -.g.e water skung, and nurtures past year on a 43-mile seg- l
- s. .
some 40 species of hsh. Its m ment of the Foothias Trail, 520-mile shorehne is home a hiking path whicuu wmds
. to more than 6,000 year-
"# . more than 80 miles from round residents and at-4' x-
,4
< ,~ ..
tracts an estimated 3 Table Rock State Park to 5-Oconee State Park. The
.. .e. - >
.' e 5
... J - -
milhon summer visitors trail was designed m har-
.. c -..9.- :. .g*
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- eaCTlyear.
'&~ . ,Q ,, e4 .' l s . . N My . . M' iniga . .
mony with the natural W"[ 6%..' _./ '"fh
.e.1.,/(. '
.. ~ Less than 25 miles south of beauty of the surrounding
~
M.; $[f.f - @ %(.$
. % .- ,s.
; ,Y its corporate headquarters, area, which encompasses
',{% % ay yi[(d{v 9&h/ ;; + -.-? o&s '. . f (w ..'M Duke is buildmg the two. more than 60,000 acres of o y ,..A&, u.,,ea .,g-t v. 3 t -- ...
- 3. .
.. .n- unit Catawba Nuclear Sta- timberland and wildhfe t.
, e,-W:
, y.- .%p. 3 -
. : t
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tion on the shores of Lake preserves, and includes
"- [ y q- + .w; g . .. g,A .
_ga .. ., _.f'r *-i Wyhe. Created in 1904 to Whitewater Falls - the
,n .,-y s. . - .ge
' m:7 -Q ;'1,~ . ; l
+ , , .7 .
% .Q . dnve the turbines of the hiahest cascade in the
, . . . .., , n
. ; * < & g. < .m , ~ . Compary's hrst hydroelec- eastern Uruted States. The 79%.} ,, 6 ' ^: ,
,- A ~ 'E ( y. , . 4.;76 tric plant, Lake Wyhe pro- trail features camp sites
.- u ., ,Q. . ., %,
, b, t M ,k. ., j [ak vides home sites to more s i and lake access arees, as o .n.. .j ; 3 ,
- c. S w( t i; than 2 500 famihes along well as a two-mile hikmq t . . . .N . .. l 4 .D' 1, its 325-mile shorehne and section specially designed p* f.R g .,- { "j.1, ] j jx 4 ,;Q i p%., y,y[gL. y, offers nearby residents for the handicapped.
e %#,1
,y, . , :.. '3y c. * - - ... 7, < y , ., uc2- v +. - . ' % more than 12,000 acres ot
< a,
.,.?.
.- -
- c'. .w.- '
2-e .y - p-. -- s-U --..N ..- recreational opportunities. In providing these re-sources while producmg a g - g In developing its award- rehable and reasonably IE ' 5 wmning Keowee-Toxaway pnced supply of electncity. N 4? Energy Complex m the Duke has contnbuted im-w* ..' s
; ,.. early 1970s Duke created measurably to the comfort,
%_!. .aw >
p ; ' .- X. .;i~l'* . .. J k L Lake Jocassee and Lake convernence and recrea- I g., i r .-W - c,e -
- p e-7 F '~ WP Kmwee near Clemson. tional opportunities of the l
'-5 Q, L
Together, they provide people of the Piedmont. 7 .; 26,000 acres of open water
,. pe . .gb
.t
"'W -
*4*d for recreation and supply nf).. N t, ,
j 4, g . more than 3 milhon l
.i AG6p q)
)* F w.y -
of - kilowatts of generatmg capacity. In additicn to g.t - ' ' _M ,.Q g- / , .7-... -j i y . y.;
- 4.; .
g., . , - , . . q'. . .., ]. ' g ' . k. g'" , _ J. w.-~~CN
'." .: * (f -analysr 2
?.Frcm' '.[ . 'et* r r e rner + + ~ - e ~n Du ke L w -norm mk.r ; : n Feb i Tr E sE a . i 1.ake irrn w n4 . ,. . c " s]. J3 n v.a pg;.# A ex-3 , .
sec ~ skei tw r Q * - G o - <*~m
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b Electricity: Will There Be Enough? r, r he continued progress of the Piedmont Carolinas and its four million people is :
. . tied inextricably to assurances of an adequate supply of electricity. But Duke Power's ability to provide power needed for the future is uncertain. -
Despite plans to invest billions of dollars in new facilities, and one of the most ambitious load management programs in the nation, projections show that demand for _ electricity will exceed available supplies in the late 1990s. While plans exist for projects that would add 2.3 million kilowatts of new -
; capacity, a lack of adequate financing on reasonable terms has prevented a firm schedule for their completion. Even with adequate financial resources, it now takes 10 ;
to 13 years to design and build a new power plant. Unless regulatory, legislative and financial obstacles are overcome soon, the Company will be unable to supply the electricity that will be needed in the future.
! Duke must offer potential investors a competitive return if new capital is to be attracted. Yet over the last decade, Duke investors have earned less than compen-i satory returns, as rates have failed to fully reflect the cost of service. As a result, the Company's common stock continues to be traded at a discount to its book value.
To reverse this trend, the Company is seeking more realistic electric rates and more competitive rates of return to enhance the value of its securities. Yet, regulatory { commissions and governmental bodies have been slow to recognize the long-term consequences of failing to compensate investors adequately, opting instead for the expediency of responding to the short-term preferences of consumers and voters. 2 Frequently, the paramount issue of an adequate supply of electricity is overlooked in
- l debates over near-term issues. A reliable supply of electricity is taken for granted
[; simply because it has been there for so long. And most assume it always will be. In looking at future prospects, there really is no question as to whether greater
- j amounts of electricity will be required. Within the limits of its financial resources, i Duke Power is committed to meeting the challenges that lie ahead. This can be
; accomplished, however, only to the extent that providing the needed energy benefits both customers and investors. Duke Power is working actively to make that a reality.
E R m P a W ^ 1
%2-Q'y 'fC. ,
- A y p., ,
n' ~ ~ e,., x' ~~ , :; c 2 a R u uiu numin,
Financial Statements and Other Financial Data 20 Service Area Map 21 Responsibility for Financial Statements j 21 Auditors' Opinion 22 Financial Statements Statements of Income Statements of Source of Funds for Plant Construction Costs Balance Sheets Statements of Capitalization and Retained Earnings 27 Notes to Financial Statements 34 Management's Discussion and Analysis of Financial Condition and Results of Operations 36 Iong-Term Financing and Sale of Assets 37 Selected Financial Data 42 Subsidiaries i I i 19
About Your Company Duke Power Company is an investor-owned electric utility wholesale customers, primarily municipal electric systems and serving approximately 1.3 million customers in North rural electric cooperative systems. Carolina and South Carolina. The Company's service area During the 12 months ended December 31,1982, Duke's encompasses about 20,000 square miles through the Piedmont electric revenues were $2.2 billion, of which approximately 70 sections of the two states. Retail customers are served locally percent was derived from sales in North Carolina and 30 per-through 96 district and branch offices. cent from sales in South Carolina. In addition to selling electricity directly to its own retail customers, the Company sells bulk electricity to 55 major Duke Power Service Area VIRGINIA TENNESSEE NORTH CAROLINA NORTH CAROLINA
- DISTRICT OFFICE A STEAM STATION 9 HYDROELECTRIC STATION O HYDROELECTRIC STATION UNDER CONSTRUCTION N NUCLEAR STATION' O NUCLEAR STATION UNDER CONSTRUCTION NI.~,.$$1.nre
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SOUTH CAROLINA GEORGIA 20
Responsibility for Financial Statements The financial statements of Duke Power Company were their assigned functions. The Company's accounting controls prepsred by management which is responsible for their in- are continually reviewed for effectiveness and are augmented tegrity and objectivity. The statements have been prepared in by written policies, standards and procedures, and a strong conformity with generally accepted accounting principles ap- pmgram of internal audit. propriate in the circumstances to reflect in all material resp 3 cts the substance of events and transactions that should The Board of Directors pursues its oversight role for the be included. The other information in the annual report is financial statements through the audit committee, composed consistent with the financial statements. In preparing the solely of directors who are not officers or employees of the financial statements, management makes informed Company. The audit committee meets with management and judgements and estimates of the expected effects of events internal auditors periodically to review the work of each and and transactions that are currently being repoded. to monitor the discharge by each of their responsibilities. The audit committee also meets periodically with the Company's The Company's system of mternal accounting control is independent auditors, Deloitte Haskins & Sells, who have designed to provide reasonable assurance that assets are free access to the audit committee or the Board of Directors, safeguarded and transactions are executed in accordance without management present, to discuss internal accounting with management's authorization and recorded properly to control, auditing and financial reporting matters. permit the preparation of financial statements in accordance with generally accepted accounting principles. The Com-pany's accounting controls provide reasonable assurance that - errors or irregularities that could be material to the financial statements are prevented or would be detected by employees Norman P. Morrow l within a timely period in the normal course of performing Controller j Additors' inion Duke Power Company: We have examined the balance sheets and the statements of In our opinion, subject to the effects on the financial , capitalization of Duke Power Company as of December 31, statements of such adjustments, if any, as might have been l 1982 and 1981 and the related statements of income, retained required had the outcome of the uncertainty referred to in I earnings and source of funds for plant construction costs for the preceding paragraph been known, the financial ' each of the three years in the period ended December 31, statements referred to above present fairly the financial post. IS32. Our examinations were made in accordance with tion of the Company at December 31,1982 and 1981 and the generally accepted auditing standards and, accordingly, in. results of its operations and the source of its funds for plant l cluded such tests of the accounting records and such other construction costs for each of the three years in the period l auditing procedures as we considered necessary in the cir- ended December 31,1982, in conformity with generally ac-cumstances. cepted accounting principles applied on a consistent basis. As discussed in Note 12, the Company has canceled plans for construction of two nuclear generating units and is re-questing permission in each of its regulatory jurisdictions to recover all costs related to such units. The final outcome of this matter cannet presently be determined. In our report N Mb i dcted February IS,1982, our opinion on the 1981 and 1980 Deloitte Haskins & Sells financial statements referred to above was unqualified; Certified Public Accountants however, in view of the uncertainty referred to above, our present opinion on such financial statements, as expressed Charlotte, Nodh Carolina herein, is different from that expressed in our previous February 18,1983 report. 21
Statements of Income DUKE POWER COMPANY Year Ended December 31 (cs/lors m e.comds) 1982 1981 1980 Ellowatt. Hour Sales (thousands) . .. . .. . .. . 51,380,037 S3,S47,929 S2,311,276 Electric Revenues (Notes 1 and 2) . . . . . . . . . . 82.244,480 $1,908,454 $1,682,822 Electric F=rm Operation Fuel used in electric generation (Note 1) . . .. . . 781,406 790,967 680,693 Net interchange and purchased power (credit) . ... . (10.685) 25,068 (12,908) Wages, benefits and materials. . . . . . ... . . ... 329,954 264,488 211,014 Maintenance of plant facilities. . . . .. . . 177.766 131,670 114,597 Depreciation and amortization (Note 1) . . . .. . 186,000 142,899 131,441 General taxes. . . . ...... ... . .. . . . ... 158.289 139,140 124,422 Income taxes (Notes l and 8) . . . ... . . .. . .. . 231,902 137,872 153,463 Total electric expenses. . . ... .... .. . . 1.854,712 1,632,104 1,402,722 Electricoperatingincome . . . ... .. . . . 389,768 276,350 280,100 Other income (Notes 1,8 and 11) Allowance for equity funds used during construction . . . . 146,214 1S9,285 150,846 Earnings of subsidiaries, net . .. . ... .... . .. . . 7,039 14,662 3,418 Provision for loss on disposal of essets . . . . .... . . .. . (30,000) - - Other, net (deduction). .. ...... . . .. .. .. . . . . 12.548 28,791 (3,299) Income taxes-other, net (deduction) . .. . (11,687) (9,442) (982) Income taxes-credit. .. . . ... ... . .. . 50,934 60,747 S8,382 Total otherincome . .. .... . .. . . 175,048 254,043 208,365 Income before interest deductions. . . . . .. . . 564,816 S30,393 488,46S Interest Deductions Interest on long-term debt . . . . . 254,643 245,070 220,271 Other interest . . .. . . . . 12,802 11,694 17,287 Allowance for borrowed funds used during construction (credit)(Note 1). . .. . .. . . (52.506) (62,622) (60,184) Totalinterest deductions . . . . . 214,939 194,142 177,374 Income before extraordinary item . . . 349,877 336,251 311,091 Extraord6y Item (Note 3) . . . . 48,304 - - Net tacome .. .. . 398,181 336,251 311,091 Dividends on preferred and preference stocks . 62.164 57,895 58,612 Earnings for Common Stock . S 336,017 $ 278,356 $ 2S2,479 ( Common Stock Data Average shares outstanding (thousands) 93.679 87,313 81,985 Earnings before extraordinary item $3.07 $3.19 $3.08 Extraordinary item. 0.52 - - Earnings per share. . $3.59 $3.19 $3.08 Dividends per share. . $2.24 $2.08 $1.95 See Notes to Financial Statements. 22
Statements of Source of Funds for Plant Construction Costs DUKE POWER COMPANY Year Ended December 31 (dc>11an m tinwsands) 1982 1981 1980 Funds from Operations Income before non-fund extraordinary item . $349,877 $336,2S1 $311,091 Non-fund items Depreciation and amortization (includes nuclear fuel amortization) . . . 268,651 224,675 210,600 Deferred income taxes and investment tax credit, net of amortization . . . . .. 159,515 109,572 68,198 Equity component of the allowance for funds used during construction . (146,214) (l59,285) (150,846) Other, net . . . . . . 25,171 (13,146) 2,989 Funds from operations . 857,000 498,067 442,032 Dividends paid. . . . . . . . (272.115) (239,598) (217,618) Funds retainedin the business. . . 384,885 258,469 224,414 Funds from Financing and Sale of Assets-Net Proceeds First mortgage bonds. . . 221.521 - 271,150 Common stock (Note 3) .. . . . 199,134 35,954 105,829 Term notes . . . . . . 79,721 - 10,000 Preferred stock. . . . . 38,296 - 49,323 Nuclear fuel trusts . . . 33,052 42,248 30,664 Sale of an interest in the Catawba Nuclear Station (Note 11) - 520,562 - Increase (decrease) in notes payable for construction . (114,140) (25,650) 85,000 Funds irom financing and sale of assets. . . 457,584 S73,114 SS1,966 Total available funds 842,469 831,583 776,380 Increase in Working Capital Requirement . (58,068) (92,946) (31,000) Retirements of Long. Term Debt and Preferred Stock (Note 3) . (194,555) (93,551) (43,211) Plant Construction Expenditures . . 589,846 645,086 702,169 Equity component of the allowance for funds used during construction . 146,214 159,285 150,846 Plant Construction Costs . . $736,060 $804,371 $853,015 Summary of Plant Construction Costs Production . $405,329 $504,292 $S90,420 Transmission 40,599 36,233 51,300 Distribution 113,881 112,073 92,990 General 23,895 22,557 25,000 Subtotal 583,704 675,155 759,710 Nuclear fuel . . 152,356 129,216 93,305 Plant Construction Costs . $736,060 $804,371 $853,015 See Notes to Financial Statements. 23
Balance Sheets DUKE POWER COMPANY Assets December 31 (dollars in thousands) 1982 1981 Electric Plant (at original cost-Notes 1,7,12 and 13) Electric plant in service . . . . . .
$5,940,941 $5,662,674 Less accumulated depreciation and amortization 2,106.427 1,842,831 Electric plant in service, net . . . .
3,834.514 3,819,843 Construction work in progress . . . . . . . . 2,551.177 2,178,464 Total electric plant, net . . . 6,385.691 5,998,307 Other Property and Investments Other property-at cost (less accumulated depreciatiot: 1982. $7,384; 1981 - $6,781) . . .. 28,675 26,444 Investments in and advances to subsidiaries (Note 1) . . 75.430 S4,981 Other investments-at cost or less (Note 11) . . 24.900 22.592 Total other property and investments . . 129,005 104,017 Current Assets 4,053 4,526 Cash (Note 10) . .. .. . . Receivables (less allowance for losses: 1982 - $3,983; 1981 - $3,998) . . ... . 162.671 189,036 Materials and supplies-at av<arage cost Coal . . . . . 179.987 126,581 Other . . . . . . . . . 98,815 93,457 Prepayments . . . . 8,841 6,172 Total current assets .. . 454.367 419,772 Deferred Debits Debt expense, being amortized over terms of related debt 4,961 3,113 Canceled construction projects (Note 12) . . . . . 77,794 - Other . .. . . .. . . 5,962 S,835 Total deferred debits . . . . 88,717 8,948 Total Assets. . .. .. .
$7.057,780 $6,531,044 See Notes to Financial Statements.
24
Capitalization and Liabilities December 31
<dattan in thousands) 1982 1981 Capitalization (see Statements of Capitahzation)
Common stock equity .
$2,388,592 $2,108,935 Preferred and preference stocks without sinking fund requirements . 424,035 388,610 Preferred stocks with sinking fund requirements 304,026 308,674 Long-term debt 2.712.372 2,545,694 Total capitalization. 5,829.025 5,351,913 Current Liabilities Accounts payable 87,664 87,290 Interest accrued . 85,453 71,61S Taxes accrued . 61.037 59,958 Other . 25,360 26,872 Total . 259,514 245,735 Notes payable for construction-pending permanent financing (Note 10) 57,210 171,350 Current matunties of long-term debt and preferred stock . 60,851 79,646 Total current liabilities. 377.575 496,731 Accumulated Deferred Income Taxes (Notes 1 and 8) . 486,834 419,958 Deferred Credits Investment tax credit (Notes 1 and 8) 349,327 249,208 Other. 15,019 13,234 Total deferred credits. 301,346 262,442 Commitments and Contingencies (Notes 12 and 13)
Total Capitalization and Llobilities . $7.057,780 $6,531,044 See Notes to Financial Statements. 2S
Statements of Capitalization and Retained Earnings DUKE POWER COMPANY CapitallEGtIOn December 31 1982 1981 (abl/aa in thousands) Common Stock Equity (Notes 3 and 4) Common stock, no par, 150,000,000 shares authorized: 95,948,783 and 88,482,596 shares outstanding for 1982 and 1981, respectively . $1.734,611 $1,579,093 Retained earnings . . .. .. . .. . 653,981 ___ S29,842 Total common stock equity . . . 2,388.592 2,108,935 Preferred and Preference Stocks Without Sinking Fund Requirements (Note 5) Preferred stock. . 415,000 375,000 Pre!erence stock . . 9,035 13,610 Total preferred and preference stocks without sinking fund requirements .. . 424,035 388,610 Preferred Stocks With Sinking Fund Requirements (Note 6) . 304,026 308,674 Long-Term Debt (Note 7) First and refunding mortgage bonds. . . . 2,474,598 2,376,250 Promissory note due subsidiary,16 1/2%-due 1989 . 58,725 - Term note, floating rate--due 1987. . 21.000 - Term note,9.02S%-due 1985 . . . . 6,000 8,500 Pollution control obligations,75% of prime rate-due 1983 . 2,500 2,500 Sinking fund debentures, 4 7/8%-due 1982 . . .
- 25,000 Capitalized leases . . . . . .
96,738 101,579 Nuclear fuel trusts . . . . 125,000 125,000 Unamortized debt discount and premium, net . . (15.338) (15,489) Current maturities of long-term debt . . . . . (56,851) (77,646) Totallong-term debt . 2,712,372 2,545,694 TotalCapitalization . S5,829.025 $5,3S1,913 Retained Earnings Year Ended December 31 (cbl/on in thousands) 1982 1981 1980 Balance--Beginning of year $529,842 $433,24S $343,225 Add-Net income . 398,181 336,251 311,091 Total . 928,023 769,496 654,316 Deduct Dividends Common stock . 210,206 181,703 159,240 Preferred and preference stocks . . 62.164 57,895 S8,612 Capital stock expense 1,672 S6 3,219
)
Total deductions . 274,042 239,654 221,071 Balance-End of year . $653.981 $529,842 $433,245 See Notes to Financial Statements. 26
Notes to Financial Statements DUKE POWER COMPANY
- 1. Summary of Significant Accounting Policies A. Additions to Electric Plant D. Subsidiaries ,
The Company capitalizes all construction-related direct labor The Company accounts for investments in its subsidiaries, all and materials, as well as indirect construction costs, including of which are wholly-owned, using the equity method. (See general engineering, taxes and the cost of money (allowance " Subsidiaries" on page 42.) Retained earnings include for funds used during construction). The cost of renewals and $47,709,738 of undistributed earnings of subsidiaries at betterments of units of property is capitalized; the cost of December 31,1982. Dividends received from subsidiaries repairs and replacements representing less than a unit of were $1,600,000 in 1982, $981,302 in 1981 and $1,675,000 in property is charged to electric expenses. The original cost of 1980. property retired, together with removal costs less salvage The Company intends to dispose of the assets of Eastover Min-value, is charged to accumulated depreciation. ing Company and the related land leased from Eastover Land Company. In anticipation of this disposition, a provision for B. Allowance for Funds Used During Construction (ADC) loss of $30 million was recorded in 1982 (after the effect of ADC is an accounting procedure whereby the net composite income tax benefits of approximately $28 million). intemst and equity costs of capital funds used to finance con-struction are capitalized in the same manner as construction E. Income Taxes labor and material costs. ADC, a non-cash, non-operating The Company and its subsidiaries file a consolidated federal item, is recognized as a cost of Electric Plant with offsetting income tax return. Income taxes are allocated to each com-cmdits to "Other Income and Intemst Deductions. Under pany based on its taxable income or loss. established regulatory rate practices, a utility is permitted to ccpitalize ADC with respect to construction work in progmss Income taxes are allocated to electric operating expense and (CWIP) not included in rate base, but is not permitted to do to non-electric operations under "Other Income." The "In-so with respect to CWIP included in rate base. After con- come taxes-credit" classified under "Other Income" results struction is completed, a utility is permitted to include a fair from tax deductions of interest costs relating to investments in return on, and the recovery of, these capital costs through non-utility properties, mainly CWIP not included in rate base. their inclusion in rate base and in the provision for deprecia- Deferred income taxes are provided for timing differences be-tion. CWIP included in the Company's North Carolina rate tween book and tax income, principally resulting from accel-base and excluded for purposes of capitalizing ADC was $276 erated tax depreciation, capitalized taxes and employee million and $145 million at December 31,1982 and 1981, benefits, and nuclear fuel disposal costs. Investment tax credit respectively, is deferred and amortized over the useful lives of the related ADC, which is compounded semiannually, was calculated on properties. aversge embedded rates (net of applicable income taxes) of 9.38 percent, 8.67 percent and 8.10 percent for 1982,1981 F. Fuel Cost Adjustment Procedures and 1980, respectively. The Company has procedures in all three of its regulatory jurisdictions to adjust rates for fluctuations in fuel costs. In the C. Depreciation and Amortization South Carolina retail jurisdiction, fuel costs are reviewed Provisions for depreciation are recorded using the straight- semiannually with provisions for changing such costs in base line method. The year-end composite weighted average rates. This jurisdiction allows the Company to reflect in depreciation rates were 3.47 percent for 1982,3.44 percent revenues the difference between actual fuel _ costs incurred for 1981 and 3.33 percent for 1980. All coal-fired generating and fuel costs recovemd through base rates. In the North units are depreciated at the rate of 3.57 percent. Nuclear Carolina retail jurisdiction, fuel costs in base rates am i units are dep eciated at a 4.00 percent rate, which includes reviewed during general rate case proceedings. Also, an an allowance for decommissioning costs. annual fuel hearing is required to review such costs in base rates. Procedures for the wholesale jurisdiction provide for Under the Nuclear Waste Policy Act of 1982, all electric m nthly fuel cost adjustments, j utilities with nuclear facilities will be required to make payments to fund development and implementation of nuclear waste repositories. Provisions for amortization of nuclear fuel include estimates for disposal costs. Such provisions, which are included in " Fuel used in electric generation," are recorded using the unit-of-production method. 27
2, Rate Matters General rate increases since January 1,1980 are as follows (dollars in thousands): Percent Annualized Approximate Revenue Recorde_d Juri-diction and Date Implemented Increase on 1982 Sales 1982 1981 1980 N.C. Retail October 3,1980. 6.03 $ 66,100 $ 66,100 $ 66,700 $14,800 December 1,1981. 14.99 165,000 165,000 13,400 - November 1,1982 . 4.38 65,300 7,000 - - S.C. Retail December 1,1981. . 13.00 S5,000 55,000 21,600 - September 15,1982. . . I1.50' S2,700 11,300 - - Wholesale October 3,1980. . . 6.71 13,500 13,500 13,700 3,300 January 23,1981 . . 2.10 4,500 4,500 4,100 - December 1,1981. . I1.86 29,400 29,400 2,700 - November 2,1982 . . .. 10.16* 23,800 2,900 - - Total . . .. . $475,300 $354,700 $122,200 $18,100
- Subject to refund with interest.
3, Extraordinary Item On Januan 7,1982, the Company issued 3,727,544 shares The transaction resulted in a non-taxable gain of $48,304,000, of common stock with a market value of $73,489,000 in ex- or $.52 per share, on the retirement of the bonds. The North change for portions of several series of outstanding first and Carolina Utilities Commission approved the classification of refunding mortgage bonds with a face value of $119,902,000. the transaction as an extraordinary item. 4, Common Stock and Retained Earnings Common Stock In 1982,1981 and 1980, the Company received $199,134,000,
$35,954,000 and $108,361,000 from the issuance cf 7,274,724 shares, 1,884,944 shares and 6,278,820 shares of common stock, respectively. (See Note 3.)
At December 31,1982, certain shares of common stock were reserved for issuance as follows: c Shares Stock Purchase-Savings Program for Employees 3,629,642 Conversion of Preference Stock . 390,164 Dividend Reinvestment and Stock Purchase Plan . . 2,490,580 ) Employees' Stock OwnershipPlan 1,998,738 Total .. . . . 8,509,124 Retained Earnings None of the Company's retained earnings as of December 31, 1982 were mstricted with respect to the declaration or pay-ment of dividends. 28 l
5 Preferred and PcNference Stocks Without Sinking Fund Requirements At December 31,1982 and 1981,10,000,000 shares of pre- Preferred and preference stocks without sinking fund re-f:rred stock ($100 par vah:e) and 10,000,000 shares of pre- quirements at December 31,1982 and 1981 were as follows ferred stock A ($25 par value) were authorized and issuable (dollars in thousands): with or without sinking fund requirements. In addition, Year Shares 1,500,000 shares of preference stock ($100 par value) were Rate / Series Issued Outstanding 1982 1981 authorized at December 31,1982 and 1981. 4.50% C 1964 350,000 $ 35,000 $ 35,000 The outstanding Preference Stock, 6 3/4 percent Convertible 5.72 % D 1966 350,000 35,000 35,000 Series AA, is convertible into shares of common stock at the 6.72 % E 1968 350,000 35,000 35,000 cdjusted conversion price of $23.89 per share, with each 8.70 % F 1970 600,000 60,000 60,000 share of preference stock valued at $100 par for such pur- 8.20 % G 1971 600,000 60,000 60,000 pose. The conversion prica is subject to certain adjustments 7.80 % H 1972 600,000 60,000 60,000 designed to protect the conversion privilege against dilution. 8.28 % K 1977 500,000 S0,000 S0,000 In 1982,1981 and 1980,45,759 sharu,72,477 shares and 8.84 % M 1978 400,000 40,000 40,000 127,476 shares were converted into 191,463 shares, 303,236 15.40 % A 1982 1,600,000 40,000 - shares and S26,6S7 shares of common stock, mspectively. 6 3/4%, AA Convertible 1969 90,350 9,035 - 136,109 - 13,610 Total . . . $424,035 $388,610 6, Preferred Stocks With Sin 1 ring Fund Requirements At December 31,1982 and 1981,10,000,000 shares of pre- The annual sinking fund requirements through 1987, net of f:rred stock ($100 par value) and 10,000,000 shares of pre- amounts reacquired, are $4,000,000 in 1983, $7,300,050 in ferred stock A ($2S par value) were authorized and issuable 1984, $7,900,000 in 1985, $9,525,000 in 1986 and $9,525,000 with or without sinking fund requirements. in 1987, with some additional redemptions permitted at the Preferred stocks with sinking fund requirements at December Company's option. 31,1982 and 1981 were as follows (dollars in thousands): The call provisions for the outstanding preferred and Year Shares preference stocks specify various redemption prices not Rate / Series Issued Outstanding 1982 1981 exceeding 115 percent of par values plus accumulated
* **E " #
7.3S % I 1973 600,000 $ 60,000 $ 60,000 8.20 % I 1977 480,000 48,000 - 500,000 - 50,000 8.375%L 1978 500,000 50,000 S0,000 8.84% N 1979 500,000 50,000 50,000 11.00 % O 1980 S00,000 S0,000 50,000 10.76% A 1975 2,220,000 55,500 - 2,280,000 - 57,000 ) Iess: Preferred shares reacquired for current and future sinking fund requirements-at cost ( Shares Reacquired 10.76% A 83,998 (1,826) - 119,998 - (2,660) 8.84% N 32,500 (2,419) (2,430) 11.00 % O 13,750 (1,229) (1,236) loss: Current sinking fund requirements 8.20 % I (2,000) (2,000) 8.375%L (2,000) - Total. 5304,026 $308,674 29
- 7. Long-Term Debt First and refunding mortgage bonds outstanding at December 31,1982 and 1981 wem as follows (see Note 3) (dollars in thousands):
Year Year Series Due 1982 1981 Series Due. 1982 1981 (conhnued) 3 S/8% 1986 $ 30,000 $ 30,000 7 3/8%B 2001 $ 38,050 $ 40,000 14 3/8 % 1987 50,000 50,000 73/4% 2002 78,100 100,000 12 % 1990 75,000 75,000 7 3/8%B 2002 67,900 75,000 15 1/8 % 1991 100,000 - 73/4% 2003 94,872 100,000 41/2% 1992 50,000 S0,000 81/8%B 2003 98,050 100,000 41/4%B 1992 50,000 50,000 93/4% 2004 95,623 100,000 11 % 1994 84,500 91,250 91/2% 2005 92,800 100,000 41/2% 1995 40,000 40,000 83/8% 2006 96,850 100,000 S 3/8% 1997 72,600 75,000 81/8% 2007 119,500 125,000 63/8% 1998 68,500 75,000 93/8% 2008 120,610 125,000 7% 1999 56,075 75,000 10 1/8 % 2009 145,0S0 150,000 8%B 1999 64,739 75,000 10 7/8%B 2009 148,000 150,000 81/2% 2C60 69,244 75,000 14 7/8 % 2010 100,000 100,000 8 S/8%B 2000 95,635 100,000 131/8%B 2010 S0,000 50,000 71/2% 2001 97,900 100,000 14 1/2 % 2012 125,000 - Total. . .. $2.474,598 $2,376,250 Substantially all electric plant was rnortgaged at December 31,1982. Th3 annual maturities of long-term debt (including sinking Included in the annual maturities are amounts relating to fund requirements and capitalized lease principal payments) $125,000,000 in outstanding obligations under two nuclear thmugh 1987 are $56,851,000 in 1983, $49,S89,000 in 1984, fuel trusts. Such maturities are based on estimated nuclear $45,734,000 in 198S, $51,160,000 in 1986 and $81,727,000 in fuel consumption. The Company intends to transfer title of ad-1987. ditional nuclear fuel to the trusts as fuel is consumed. V h 30
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8, hmma Tax Expense Income tax expense consisted of the following (dollan in thousands): 1982 1981 1980 Electric Expenses Current income taxes Federal . . . . . ... .... . ........ . .... . . . ..... $ S8,118 $ 30,244 (a) $ 69,134 State. .......... ... .. . ............ .. . ..... ..... 21,694 11,183 16,121 79,812 41,427 85,255 Deferred taxes, net Excess tax over book depmciation . . . . . . . . . .. . . .. ......... . 46,985 49,353 25,114 Capitalized taxes, employee benefits, etc. . .... . .... ... . 9,431 16,672 17,680 Revenues refundable . . . . . . . . . . . . ... .. ....... .. .. 6,456 (8,281) - Repair allowance and cost of remova! . . . . . . . . . . . . . . . . . . . . . . . . . . . (144) (38) S,872 Nuclearfueldisposalcosts . . ... . ..... . ..... (12,893) (12,336) (12,263) 49,835 45,370 36,403 , 1 investment tax credit Defermd . . . . . . . . . . . . . . . . . . . . . . . . . .. ... . ..... 109,S96 S6,146 36,854 Amonization of deferments (credit) . . . . . . . . .................... . (7,341) (S,071) (5,049) 102,255 S1,075 31,80S Totalelectric expenses . . . . . . ... ..... . ... .. . .. .. 231,902 137,872 153,463 ) Other Income Incometaxes-other net (deduction) . . . . . ... . ..... ... 11,687 S1,592 (b) 982 Income taxes-credit . .. . .. . ... ........ .... .... (50,934) (60,747) (58,382) Totalotherincome . . . . . . .. .. ... ........ . ... ... (39,247) (9,lSS) (57,400) Totalincome taxexpense . . . . . . .. ....... ... ..... .. . $192,65S $128,717 $ 96,063 (a) Reflects substantial investment tax cmdit utilization related to the tax gain on sale of assets in February 1981. (b) Includes $42,150,000 resulting from the sale of assets in February 1981 and nominal amounts thereafter. (See Note 11.) Such income taxes, which are included in "Other, net (deduction)" on the Statements of Income, reflect a taxable gain in excess of book gain resulting principally from the tmatment of ADC. Total current income taxes were $33,128,000, $24,002,000 and $30,037,000 of which state income taxes were $15,687,000,
$11,086,000 and $10,753,000 for 1982,1981 and 1980, respectively.
Total deferred income taxes wem $S7,272,000, $53,641,000 and $34,221,000 of which deferred state income taxes were
$7,430,000, $7,899,000 and $3,896,000 for 1982,1981 and 1980, respectively.
Income taxes differ from amounts computed by applying the statutory tax rate to pmtax income as follows (dollars in thousands):
?
1982 1981 1980 Income taxes on pretax income at the statutory federal rate of 46% . . . $263,365* $213,885 $187,291 Increase (reduction) in tax resulting from: Allowance for all funds used during construction (ADC) . . (91,411) (102,077) (97,074) Amortization of electric investment tax credit deferrals . (7,341) (S,071) (5,049) State income taxes, net of federalincome tax benefit . 12,132 13,595 9,044 Increase in tax expense primarily because of excess of tax gain over book profiton saleof assets . . . . 12.468 - Otheritems, net . . . . . . . . . . . 15,910 (4,083) 1,851 Total income tax expense (see above) . . . . $192,655 $128,717 $ 96,063
*Pretax income excludes the provision for loss on disposition of assets of subsidiaries, recorded net of applicable income taxes.
(See Note 1.) 31
9 Retirement Plan The Company and two of its subsidiaries have a non- A comparison of accumulated plan benefits and plan net contributory, defined benefit retirement plan covering sub- assets at December 31,1981, the date of the latest actuarial stantially all their employees. The Company's policy is to fund report, and December 31,1980 is as follows (dollars in pension costs accrued. Total pension exnense amounted to thousands): $32,000,000 in 1982, $31,896,000 in 1981 and $26,782,000 in 1981 1980 1980. Effective Septerr.ter 1,1980, the plan was amended to Actuarialpresent valueof accumulated provide for certain plan changes including increased benefits for active and retired employees. In 1981, the actuarial cost plan benefits Vested. $229,783 $202,851 method and certain actuarial assumptions were changed. The . . Non-Vested. 71,742 60,332 effect of these changes did not significantly increase the Com. . pany's pension cost. Total . .
$301,525 $263,183 Net assets available for benefits . $263,241 $244,008 The weighted average assumed rate of mturn used in deter-mining the actuarial present value of accumulated plan benefits was 9.0 percent in 1981 and 8.3 percent in 1980.
- 10. Short-Term Borrowings As of December 31,1982, the Company had lines of credit of $1,658,500. Bank loans, normally for 90 days or less, are with 72 commercial banks. These lines, plus the sale of com- either at the lending bank's commercial prime interest rate or mercial paper, were used to finance current cash require- market rate. Certain of the Company's bank line arrange-ments. The lines of credit were on either a fee basis and/or a ments may require additional balances related to usage.
compensating balance basis, with total balance requirements A summary of short-term borrowings and credit arrangements is as follows (dollars in thousands): 1982 1981 1980 Amount outstanding at year-end-average rates of 10.38%,11.69% and 17.74%, respectively . .
$ 57,210 $171,350 $197,000 Maximum amount outstanding during the year . $189,950 $250,398 $197,000 Average amount outstanding during the year . . $ 74,148 $ 38,829 $ 84,466 Weighted average interest rate for the year-computed on a daily basis . . 12.38 % 15.39 % 12.91 %
Lines of credit at year-end . . $385,400 $305,400 $280,400
- 11. Other Income j In February 1981, the Company sold a 75 percent interest in mence. The Company has discounted the notes and recorded Unit 1 of the Catawba Nuclear Station (Catawba) and a 37.5 the present value ($15.7 million and $13.8 million at Decem-percent interest in the station's support facilities to groups of ber 31,1982 and 1981, respectively) under "Other invest- t North Carolina and South Carolina rural electric cooperative ments." The implicit interest on the notes is accrued monthly.
customers. At closing, $521 million and two notes totaling $76 At December 31,1982 and 1981, " Construction work in prog-million were received. The notes are non-interest bearing ress" included $S16,951,000 and $401,502.000, respectively, until 10 years after the first Catawba unit begins commercial representing the Company's investment in its remaining in-operation, after which, interest and principal payments com- terest in Catawba. 32
- 12. C-led Construction Projects The Beerd of Directors, at its February 23,1982 meeting, December 31,1982, the remaining unamortized balance was (pproved the withdrawal of the Company's application for a $8,630,000.
construction permit for the proposed Perkins Nuclear Station. The Board of Directors, on November 2,1982, announced the The Company has been permitted to recover the cost of cancellation of Units 2 and 3 of the Cherokee Nuclear Station. Perkins allocated to its North Carchna retail jurisdiction over Costs incurred related to Units 2 and 3 totaled $69,164,000 as e fiva-year period beginning November 1,1982. It is seeking of Decernber 31,1982. Significant costs relating to the cancel-similar recovery from the wholesale and South Carolina retail lation will be incurred; however, the amount of such costs jurisdictions. Accordingly, the entire $8,927,000 cost of 2nnot be determined pending negotiations with suppliers. Perkins, excluding land, has been classified as a defened The Company is requesting permission in each of its regula-debit and is being amortized to electric operations. As ' tory jurisdictions to recover all costs related to these units. 13, Conunitments and Contingencies A. Construction Pseu m- reactors in the event of more than one incident. At December The Company is engaged in a construction program for 31,1982, the Company had four licensed reactors. which substantial commitments have been made. Projected Property damage coverage for certain of the Company's construction and nuclear fuel costs are $1.93 billion and $581 nuclear facilities is provided through membership in Nuclear million, respectively, for the years 1983 through 1985. The Mutual Limited (NML). If NML's losses were to exceed its program is subject to periodic review and revision, and actual reserves, the Company could be liable, on a pro rata basis, construction costs incurred may vary from such estimates. for additional assessments of up to $86 million, representing This is due to various factors including changing levels of 14 times the Company's current annual premium to NML. inflation, revised load estimates, the cost and availability of capital, and the outcome of licensing and environmental The Company is a member of Nuclear Electric Insurance matters. Limited (NEIL), which provides insurance for the inemased c st of generation and/or purchased power resulting from the On February 24,1981, the Board of Directors, because of the a idental outage of a nuclear unit. If losses were to exceed uncertainty of the availability of funds on reasonable terms, the accumulated funds available to NEIL, the Company would indefinitely delayed completion of Unit 1 of the Cherokee be liable for a retrospective premium adjustment currently Nuclear Station. This status remains unchanged. As of estimated to be $31 million, which is up to S times the regular December 31,1982, $538 million had been spent on this unit. annual premium. B. Nuclear Insurance The Company purchases from NEIL, through its Excess Prop-The Company's public liability for claims resulting from any erty Insurance Program, $400 million of property damage in-nuclear incident is limited to $560 million under provisions of surance. This is in addition to the $500 million of coverage the Price-Anderson Act, which provides for nuclear liability provided by the Company's underlying property damage insurance up to that amount. A portion of this insurance is policies issued through NML. If losses were to exceed the provided through Nuclear Regulatory Commission regulations accumulated funds available to NEIL for the Excess Property pursuant to which the Company could be assessed up to $S Insurance Program, the Company would be liable for a million for each of its licensed reactors in the event there is a retrospective premium adjustment of up to 7.5 times the nuclear incident involving any licensed facility in the nation, regular annual premium. The maximum potential liability per with a maximum of $10 million a year for each of its licensed incident currently is estimated to be $17 million. 33
Management's Discussion and Analysis of Financial Condition and Results of Operations DUKE POWER COMPANY Capital Needs construction permit for the proposed The Company initially funds the excess Perkins Nuclear Station was withdrawn. with short-term bank borrcwings and Since January 1,1978, additions to (See Note 12 in Notes to Financial conanercial paper. While the Company property of $4.0 billion (includmq Statements.) Completion of Unit 1 of the prefers to limit short-term debt to about nuclear fuel) and retirements of $800 Cherokee Nuclear Station was indefi- $150 million, it presently has bank lines milhon have resulted in a net increase in gross plant of $3.2 billion. Retire. nitely delayed in 1981. As of December of credit of $385 million. Short-term ments were unusually large because of 31,1982, $538 million had been spent debt was $57 million as of December sales of portions of the Catawba Nuclear on this unit. Projected construction 31,1982. The Company's policy is to Station in 1978 and 1981. During 1982 msts include nominal amounts for the refund short-term debt at least once additions to property of $736 million (in. Bad Creek Hydroelectric Station. As of each year, and such refundings have cludmg nuclear fuel) and retirements of December 31,1982, $22 million had occurred in each of the past five years. $82 million resulted in a net increase in been spent on this pumped storage To supplement the internal generation gross plant of $654 million. Plant con. facility, although construction comple- of funds, the Ccmpany obtained an ad-struction costs were lower in 1982 than tion has not been definitely scheduled. ditional $781 million from the 1978 and in previous years because of the com- Expenditures for construction of major 1981 sales of the Catawba Nuclear Sta-pletion in late 1981 of Unit 1 of the generating facilities and for nuclear fuel tion. Funds from the Catawba sale McGuire Nuclear Station, prior sales of constituted approximately 80 percent of eliminated the need for external financ-portions of the Catawba Nuclear Sta- the Company's capital requirements ing in 1981. Additional funds were ob-tion, and recent curtailments in the con- during the past five years. Additional tained in the other years by issuing $1.2 struction pmgram. funds were required for transmission billion in long-term debt (principally and distribution facilities, the refunding first and refunding mortgage bonds), Projected construction and nuclear fuel $225 million in preferred stock, and f matunng secunties and sinking costs are $2.5 billion for the years 1983 funds, and increased working capital. $600 million in common stock, in-thmugh 1985, excluding costs related to luding the non-cash exchange for the portions of the Catawba Nuclear bonds in Jamary B82. (See Note 3 in DecW Renrenues A a o Stction which have been sold. Con- Notes to Financial Statements.) To in-skuction plans reflect a decline in the D""g u -n -m+ n l crease financing flexibility and to projected growth rate of peak load. This m %, ac, i facilitate financing in the European decline is due in part to the Company s o p "s-unac ,54 market, Duke Power Overseas Finance comprehensive load management pm- Q t' l N.V., a subsidiary in the Netherlands gram and energy conservation. The t- ! Antilles, was established. In April 1982,
,i load management pmgram is designed the net proceeds of a sale of $60 million to limit future construction costs without principal amount of notes were bor-restricting the continued economic rowed from this subsidiary.
development of the service area by en-ccuraging consumers to reduce The Company's long range objective is demands on the system. to generate at least 50 percent of its capital requiremen+s from internal The construction pmgram includes sources. From 1978 through 1982, funds plans for three nuclear units to begin from operations provided approximately
". " " ^
operation within the next five years. 33 percent of the Company's capital re-Commercial operation of Unit 2 of the quirements. In 1982, however, funds McGuire Nuclear Station is scheduled Liquidity and Resources generated internally increased to 46 for early 1984. Total estimated costs, in- The Company's long-term financial plan percent, mainly as a result of the inclu-cluding nuclear fuel, for both units of has three key goals: to improve the sion of McGuire Unit I and additional ( the McGuire Station are $2.2 billion, percentage of internal cash generation, construction work in progress (CWIP) including $2.0 billion spent as of to raise fixed charges coverage, and to in rate base. December 31,1982. The Company's strengthen capital structure. Achieving During the past five years, the North j portion of the total estimated construc-these goals should assist in attaining im- Carolina Utilities Commission (NCUC) tion and nuclear fuel costs for both units pmved ratings on the Company's secu-of the Catawba Nuclear Station is $1.0 has granted rate increases allowing ap-rities. The Company also seeks to sell billion, including $517 million spent as pr ximately 60 percent of the requested common stock at or above book value. additional revenues. During 1982 of December 31,1982. During the past five years, the market legislation was enacted which could price of common stock has averaged 85 During the past two years, several have a negative effect on the per ent of M valm Company's ability to generate funds in-planned generating units have been delayed or canceled. In 1982 Units 2 The construction program currently re- ternally. This legislation revised the and 3 of the Cherokee Nuclear Station quires expenditures greater than cash statutes under which the NCUC adjusts were canceled and the application for a generated internally from operations. base rates to reflect fuel costs and under 34
which the MCUC includes CWIP in rate Exchange Commission (SEC) method, is conditions, a decline in ths av: rage base. In the Company's first rate order 3.5 timea. During the past five years, kilowatt-hour usage per residential subsequent to this legislation, the actual coverage has not changed customer, and a decrease in industrial NCUC allowed only 31 percent of the significantly because higher earnings sales as a result of the current economic requested additional revenues to be im- have been offset by increasing embed- environment. plemented effective November 1,1982; ded costs of debt. For the year 1982, however, the amount of CWIP included this coverage was 2.98 times, but it is Opemting Expenses in rate base was increased from $14S expected to improve as increased inter- Incmases in total electric expenses have million to $276 million, which was nal cash generation reduces extemal fi- substantially offset the increase in almost 90 percent of the amount re- nancing requirements. revenues during the 1978-1982 period. quested. The most significant increase was in During the past five years, rate in- The Company continually analyzes and non-fuel operating and maintenance ex-implements alternative methods to meet pense, which rose at an annual rate of creases allowing approximately 60 per- its long-term financial goals. These cent of the requested additional 21 percent. Key factors were the com-methods have included cost reductions mencement of commercial operation for revenues have been granted by The by means of a more stringent budgeting McGuire Unit 1 on December 1,1981, Public Service Commission of South Carolina. A January 1982 rate order system and the adoption of an employee increased requirements by the Nuclear incentive plan for mducing costs. Regulatorf Commission, and inflation. allowed 55 percent of the requested ad- Unregulated business opportunities are (See " Selected Financial Data - Effects ditional revenues. On February 15, 1932, a request was filed for an addi- being explored to enhance earnings. In of Changing Prices.") Fuel and pur-addition, flexibility has been built into chased power expenses increased at an tional increase in retail rates. An 11.S long-term construction plans to mini- annual rate of 8 percent over the five-percent inemase, repmsenting a portion mize financings under unfavorable con- year period. In 1982, however, these of this request, was implemented sub- ditions. ject to mfund effective September 15, expenses declined primarily because of 1982. A rate order is anticipated in reduced generation as a result of de-March 1983. Results of Opemtions cmased kdowatt-hour sales. The Company and tts wholesale Net income and Dividends ofyg, customers generally settle on rate in. From 1978 through 1982, eamings per From 1978 through 1981, allowance for creases based on the most recent share increased at an annual rate of 8 funds used during construction (ADC), NCUC rate order as it pertains to North percent from $2.61 to $3.59. Eamings included in both other income and in-Carolina retailindustrial customers. A per share for 1982 includes a provision terest deductions, increased as a result rate increase was implemented in for loss of $.32 per share on the pend- of higher construction work in pmomss November 1982, subject to mfund and ing disposal of certain coal mining and higher embedded costs of funds. In final approval by the Federal Energy assets and an extraordinary gain of $.52 1982, however, ADC decreased Regulatory Commission. per share from the debt / equity ex- because McGuire Unit 1 began com-change. (See Notes 1 and 3 in Notes t mercial operation on December 1, To recover increasing costs and to m, - Financial Statements.) Although the 1981, and additional construction work clude additional CWIP m rate base, a eamed return on common equity flue- in progress was included in rate base. request for a 7.68 percent retail rate in- tuated during the past five years, the Interest income for 1981 was $20 crease in Nodh Carohna was filed in average earned return was consistently million, which was unusually high February 1983. Additional requests for below the average return granted by because of the investment of proceeds increased rates are planned in the the NCUC. During 1982 the Company's from the Catawba sale. Earnings of sub-South Carolina and wholesale Jurisdic- eamed return was 13.9 percent, ex-tions. sidiaries amounted to $7 million in cluding the extraordinary item and the 1982. Since 1978 intemst deductions pmvisi n f r 1 ss n the disposal of and dividends on preferred and The Company seeks to maintain a capital structure containing no more ssets. Dividends per sham inemased at pmfemnce stocks have increased at an-
*""" ' r nt from $1.74 nual rates of 12 percent and 7 percent, than 47 percent debt and 40 to 42 per- *[3g78 t 2 2 in 1 8
- cent common equity in order to im_ respectively. These increases are at-pmve financial strength. To improve tributable to higher financing rates and
""*""88 , capital structure while avoiding the the issuance of additional securities.
dilution of shamholders' existing equity Revenues increased at an annual rate of and to increase coverage ratios, 13 percent over the 1978-1982 period In anticipation of the disposition of the 3,727,544 shares of common stock were because of increases in rates and assets of Eastover Mining Company and issued in exchange for portions of kilowatt-hour sales. The rate increases the related land it leases from Eastover several series of first and refunding were necessitated by the effects of infla- Land Company, a provision for loss of mortgage bonds in January 1982. (See tion, the inclusion of construction work $30 million was recorded in 1982 (after Note 3 in Notes to Financial State. in progress and McGuire Unit 1 in rate the effect of income tax benefits of ap-ments.) As of December 31,1982, the base, and the increased cost of capital. proximately $28 million). Both Eastover capital structure was 47 percent long. Kilowatt hour sales increased an companies are wholly-owned sub-term debt,12 percent preferred stock, average of 1 percent annually. This in- sidiaries. The Company determined to and 41 percent common equity. cmase is principally attnbutable to a sell these properties after the most re-higher number of customers. Sales in cent rate order from the NCUC pro-The Company's goal for fixed charges 1982, however, were 4 percent lower hibited full recovery of the cost of ceal 9 coverage, using the Secuntiee and than in 1981 because of milder weather from these mines. 35
Long-Term Financing and Sale of Assets DUKE POWER CO!4PANY To meet its capital requirements, the Company has financed extensively with long-term debt and equity securities and hrs raised additional capital through other types of financing plus the sale of certain assets (dollars in thousands). 1982 1981 1980 Price Per Net Net Net Share Proceeds Proceeds Proceeds pg Common stock Public sales (4,000,000 shares: August 26) . . .. .. . .. . $17.375 $ 66,968 Stock Purchase-Savings Program for Employees * (1,624,436 shares) . . ... . . . ... . .. 21.79 $ 35,390 (1,236,180 shares) .. . . ... . . . . 18.88 $ 23,344 17.03 18,815 (1,104,54S shares) . . . .. .. . . .. ... . . Dividend Reinvestment and Stock Purchase Plan * (1,019,484 shares) . .. .. ... .. . . .. 21.62 22.042 (534,151 shares) . . . . . ... .. .... . 19.49 10,412 16.67 9,201 (SS2,000 shares) . . . . .... .. ... Employees' Stock Ownership Plan * (903,260 shares) . . .... . .. . . . 22.04 19,909 (ll4,613 shares) ... . .. .. . 19.18 2,198 17,43 10,845 (622,27S shares) ... . .. .. Bond / Stock Exchange (3,727,S44 shares) . . . .. 19.715 121,793 193,134 35,954 105,829 Totalcommon stock .. . .. . . Preferred stock, $100 par 1S.40% Series A,1982(1,600,000 shares: March 2) . . 38,296 11% Series O (S00,000 shares: February l4) . . . . 49,323 Total pmferred stock . . . . . . . .. . 38,296 49,323 Long-term debt First mortgage bonds IS 1/8% Series due 1991(March 2) . .... .. 98.680 14 1/2% Series due 2012 (September 16) . . 122,841 98,410 14 7/8% Seriesdue2010(March 19) . . .. .... 49,533 14 3/8% Series due 1987 (March 19) . . . . . . . 12% Series due 1990(August 26) . . . ... 73,8S7 131/8% Series B due 2010(August 26) . . . . ... 49,350 Totalfirst mortgagebonde . . . .. ... .. 221.521 271,1S0 Other financing 33.052 42,248 30,664 Nuclear fueltrusts. .. . . . . ... Promissory note due subsidiary-due 1989 . . 58,725 20,996 Term note-due 1987 . . .. . . .. 10,000 Term note-due 1985 . . . . ... 112.773 42,248 40,664 i Totalotherfinancing . . . . . . Totallong-term debt . . . .. . . 334.294 42,248 311 3 14 Totalfinancing .. .. .. . 571,724 78,202 466,966 Sale of Assets S20,S62 Sale of an intemst in the Catawba Nuclear Station . Totallong-termfinancingandsaleof assets . . $571,724 $598,764 $466,966
- Average price per share See Notes to FinancialStatements.
36
Selected Financial Data DUKE POWER COMPANY 1982 1981 1980 1979 1978 Condensed Statements ol lacome (thousands) Electric revenues . . . $2.244,480 $1,908,454 $1,682,822 $1,492,5S7 $1,396,720 Electric expenses . 1,854.712 1,632,104 1,402,722 1,238,680 1,159,719 Electricoperatingincome , 389,768 276,350 280,100 253,877 237,001 Otherincome . . 175,048 254,043 208,36S 168,612 131,899 Income before interest deductions . 564,816 530,393 488,465 422,489 368,900 Interest deductions . 214,939 194,142 177,374 147,729 138,299 Incomebeforeextraordinaqitem . . 349,877 336,251 311,091 274,760 230,601 ( Extraordinary ttem . 48,304 - - - - Net income . . 398,181 336,251 311,091 274,760 230,601 Dividends on preferred and preference stocks 62,164 S7,895 58,612 52,562 46,632 Earnmgs forcommonstock $ 336,017 $ 278,356 $ 252,479 $ 222,198 $ 183,969 Common Stock Data Sharesof common stock-year-end(thousands) 95,949 88,483 86,294 79,489 72,132
-average (thousands) 93,679 87,313 81,985 77,168 70,367 Per share of common stock Earnings before extraordinary item . $3.07 $3.19 $3.08 $2.88 $2.61 Extraordinary item . 0.52 - - - -
Earnings . $3.59 $3.19 $3.08 $2.88 $2.61 Dividends . $2.24 $2.08 $1.9S $1.83 $1.74 Book value-year-end . $24.89 $23.83 $22.82 $22.12 $21.31 Market price-high-low $24-20% $22W-IS7/s $19W-14W $205/ -16W $22-181/.
-year-end $23% $205/s $18W $17% $19%
Balance Sheet Data (thousands) Total assets . $7,057,780 $6,S31,044 $6,328,174 $5,615,372 $4,984,621 Long-term debt $2.712.372 $2,S45,694 $2,594,008 $2,300,488 $1,974,209 Preferred stocks with sinking fund requirements $ 304,026 $ 308,674 $ 316,S59 $ 268,500 $ 220,000 Electric and Other Statistics .. Kilowatt-hour sales (millions) Residential . 13,711 13,861 13,765 12,832 12,959 Generalservice . 10,087 9,731 9,395 8,778 8,920 Industrial 19.345 20,667 20.060 20,260 19,523 Wholesale andotherenergy sales . 8,237 9,289 9,091 8,453 8,537 Total kilowatt-hour sales . 51,380 S3,548 S2,311 50,323 49,939 Number of customers-year-end Residential . 1.139.248 1,125,371 1,105,035 1,078,419 1,049,543 Other 183,061 181,331 179,370 175,258 172,626 Totalcustomers 1,322.309 _12 306,702 1,284,40S 1,253,677 1,222,169 Residential customer data AverageannualKWH use . 12.065 12,392 12,560 12,013 12,469 Average revenuebilled per KWH . 5.41C 4. Sic 4.lle 3.90c 3.62c Number of employees-year-end Operating andmaintenance 12,539 12,134 11,463 10,758 9,895 ( Engineering and construction . 7,735 7,943 8,149 9,372 7,839 Source of energy (millions of KWH) , Generated-Coal 38,927 42,513 40,984 37,404 34,598
-Nuclear . 15,009 14,229 14,213 14,228 15,905
-Hydro . 1,569 843 1,820 2,809 1,941
-Oilandgas . 7 146 203 163 484 Netinterchange and purchased power (301) 494 (472) (S12) 1,016 System average heat rate . 9,666 9,633 9,675 9,742 9,769 Systemload factor 56.8 % 61.9 % 61.6 % 62.3 % 62.9 %
See Notes to Financial Statements. 37
Selected Financial Data DUKE POWER COMPANY Q -terly Data A summary of quarterly financial gata for 1982 and 1981 is as follows (dollars in thousands except per share data): Electric Electric Net Earnings Revenues Operating Income Income Per Share 1982 by Quarter Fourth. . . . . .. . .......... $540,925 $105,358 $ 71,127 $0.58 Third . , . . . . . . . . . . . .. .. .. S78,902 97,144 97,702 0.87 Second.... .... .... .... .... S31,204 86,069 83,027 0.72 First . ........ . .... . .... . S93,449 101,197 146,32S 1.42 1981 by Quarter Fou rth . . . . . . . . . . . . . . . . . . . . .. $484,782 $ 64,388 $ 79,626 $0.74 Third . . . . . . . . . . . . . . . . . ..... 499,216 64,188 83,740 0.79 Second... ... .... .... .. 426,200 70,397 80,111 0.76 First ....... ... ....... .... 498,256 77,377 92,774 0.90 Net income and earnings per share for the first quarter of 1982 include an extraordinary item of $48,304,000, or $0.52 per share. Net income and earnings per share for the fourth quarter of 1982 include a provision for loss on disposal of assets of
$30,000,000, or 50.32 per share. Generally, quarterly earnings fluctuate with seasonal weather conditions, timing of rate in-creases (including fuel cost adjustment procedures) and maintenance of electric generating units, especially nuclear-furled units.
See Notes to FinancialStatements. Stock Mehet Information At December 31,1982 and 1981, the Company had approximately 121,218 and 123,900 holders of record of common stock, respectively. During 1982 approximately 47,462,800 shares of common stock were traded, compared to 30,610,000 during tha previous year. The Company's common stock is traded on the New York Stock Exchange. Dividends Stock Price Rance Per Share High low 1982 by Quarter Fourth. . . ... ....... .. ...... $0.57 $23 W $205/. Third . . . . . . . . . . . . . . . . . . . . . .
. 0.57 235/s 20 W Second.. .... ........ ... . .. 0.55 24 208/a First ... ..... .... .. .. . .... 0.55 23 W 20 %
1981 by Quarter Fcuith . . . . . . . . . . . . . . . . .. $0.55 $22 W $19 % Third. . . ...... . . . . .. 0.51 21 W 18 % Second. ..... ... . . .. . 0.S1 20 W 17 W 9 First . ....... . ... ... . . 0.S1 19 W IS % ?
)
l 38
Selected Financial Data DUKE POWER COMPANY Effects of Changing Prices In recent years, the impact of general inflation and changes Effects of Hate Regulation in specific prices has caused distortions in traditional account- Under the Company's present ratemaking procedures, only inq measurements of income and capital. Although the rate of the historical cost of plant in service is recoverable in rates as inflation in 1982 substantially decreased, the replacement of depmciation. Themfore, the excess of the cc t of plant stated existing plant capacity occurs at a significantly higher cost in terms of constant dollars or current costs over the historical than recovered through historical cost depreciation due to the cost of plant, resulting from inflation in the current year, is high levels of inflation in previous years. In response to this not presently recoverable in rates as depreciation, and is problem, the Financial Accounting Standards Board (FASB) reflected as a reduction to net recoverable cost. issued Statement No. 33 requiring disclosure of the effects of The reduction is offset by the Company having signJicant inflation on a company's operations and fmancial psition. amounts of long-term debt outstanding, as well as other net Because the accompanying supplementary information in- monetary liabilities, which will be paid back in dollars of less volves various assumptions and approximations, it should be purchasing power. Thus, the gain from decline in purchasing viewed as an estimate of the effects of inflation, rather than a power of net amounts owed in the accompanying schedules precise measurement. resMs from inflation's effect on obligations to pay cash at a future date. Constant Dollar Accounting Constant dollar accounting reflects the overall decline in the Other purchasing power of the dollar by restating historical costs in Income statement items other than depmciation have not been terms of dollars of equal purchasing power. adjusted. The Company's operation and maintenance ex-penses almady include the average effects of changing prices Constant dollar amounts for electric plant in service were ng Se m and, hMom, no abstmeds have h determined by indexing surviving historical costs of plant with made to them. the Consumer Price Index for all Urban Consumers (CPI-U). Historical depreciation rates were applied to the restated No adjustments to income tax expense have been made in amounts of plant thereby trending the provision for deprecia- computing the impact of inflation since only historical costs tion to reflect the impact of general inflation, are deductible for income tax purposes. Current Cost Accounting Current cost accounting reflects changes in specific prices of the property used in the Company's operations from the date the property was acquired to the present. This method differs from constant dollar accounting to the extent that costs of specific utility property have increased more or less rapidly than the rate of general inflation. The current cost amounts of plant in service represent the estimated cost for replacing ex-isting plant facilities and were determined by indexing surviv-ing plant costs by internally generated indices or the Handy-Whitman Index of Public Utility Construction Costs. Since plant facihties are not expected to be replaced precisely in kind, " current cost" does not necessarily repmsent the replacement cost of existing productive capacity. Current cost depreciation is computed by applying the same rates used in the historical cost and constant dollar statements to the cur-rent cost plant amounts. 39
Suppl:m::ntary Statement of Earnings for Common Stock Adjusted for Changing Prices DUKE POWER COMPANY Yeur Ended December 31,1982 Constant Current (cb#ars in thousands) Historical $ Dollar Cost Electric revenues . . . . . . . .. . ... ... . . .. . .. . $2,244,480 $2,244,480 $2.244,480 Operating expenses. ..... .... . . .. . .... .. 1.100.675 1,100,675 1,100,67S Maintenance of plant facilities . . . . . . . . . . . .. 177,766 177,7FC 177,766 Depreciation .. .. ..... . . . .. . . 166 08C 392,536 410,277 Taxes..... . ... .. . ... .. .. .. . .. . 390,19_1 390,191 390,191_ Total operating expenses . . . .... . ...... 1,854,712 2,061,168 2,078,903 Operatingincome .. . .. . . .. ...... ... . 389,768 183,312 165,S71 Other income . . . . ..... .. . . . .. .. . . . . . 175,048 175,048 175,048 Income before interest . . . . .. . . .. .. . . .. S64,816 3S8,360 340,619 Interest expense. . . . . . . . . . ... ... . . ... . .. .. 214,939 214,939 214,939 Income before extraordinary item . . . . ..... . . .... 349,877 143,421 125,680 Extraordinary item. . . ...... .... .. . . .. ...... ...... 48,304 48,304 48,304 Net income . ........ ...... ... . .. ..... 398,181 191,725 173,984 Dividends on preferred and preference stocks . . ...... ... .... 62,164 62,164 62,164 Earnings for common stock . . . . ...... . . . .. . . $ 336,017, $ 129,561* $ 111,820 Increase in specific prices (current cost) of utility plant held during the year" . . . . . . . . . ... ..... .. $ 287,288 Reduction to net recoverable cost . . .... .... ... ...... .... $ (9,078) Effect of inerease in general price level . . . . . . . . . . . . ... . (386,771) Excess of increase in general price level over increase in specific prices . . . . . . . . . . .. ... .. .. ........ .. .. (99,483) Gain from decline in purchasing power of net amounts owed . . . . . 146,148 146,148 Net . . ..... .. .. . .. . ... . . .. .... ............... $ _ 137,070_ $ 46,665
- If the reduction to net recoverable cost of $9,078.000 wem reflected, and no recognition wem given to the $146,148,000 purchasing power gain, earnings for common stock on a constant dollar basis would have been $120,483,000.
" At December 31,1982, current cost of electric plant, net of accumulated depre.-iation, was $10,419,359,000.
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Five Year Comparison of Selected Supplementary Financial Data Adjusted for the Effects of Changing Prices DUKE POWER COMPANY (m thousands of overnge 19't? dallars. exwptper share hgures) 1902 1981 1980 1979 1978 Electric revenues In historicaldollars . . 32.244,480 $1,908,454 $1,682,822 $1.492,557 $1,396,720 Inconstantdollars. . . .. 2,244,480 2,025,4S5 1,971,247 1,984,812 2,066,488 Income from continuing operations In historicaldollars . 349,877 336,251 311,091 274,760 In constant dollars. . . . 143,421 17S,087 197,199 216,211 In currenicost . 125,680 153,604 177,474 188,889 Earnings per share before extraordinary item In historicaldollars . 3.07 3.19 3.08 2.88 In constant dollars. 0.86 1.31 1.57 1.90 In current cost. . 0.67 1.0S 1.33 1.54 Common stock dividends per share In historicaldollars . 2.24 2.08 1.95 1.83 1.74 In constant dollars. , 2.24 2.21 2.28 2.43 2.57 Market price per common share at year-end In historicaldollars . 23.25 20.62S 18.12S 17.25 19.37S In constant dollars. 22.99 21.18 20.28 21.69 27.61 Net assets at year-end In historicaldollars . 2,388,592 2,108,93S 1,969,140 1,758,016 In constant dollars. 2,361,635 2,165,872 2,203,090 2,210,711 In current cost. 2,361,635 2,165,872 2,203,090 2,210,711 Purchasing power gain on net monetary items . 146,148 346,958 482,925 514,678 Decrease in the current cost of electric plant in service, net of inflation, after reduction to net recoverable cost . . 99,483 280,634 S24,346 584,586 Average ConsumerPriceIndex . 289.1 272.4 246.8 217.4 195.4 41
Subsidiaries DUKE POWER COMPANY Subsidiary Investments December al (+.% in thousands) 1982 1981 Propeny and investments-at cost Real estoto, recreational and land development . .. . . S 33.391 $ 32,057 Coal mining . . .. .. . 56.545 89,4S7 Net current assets, principally investments, receivables and inventories . 46.820 7,104 Total acets . . 136.756 128,618 Coal product!an commitments . (24,868) (37,272) Deferred income taxes. . . .. . (36.458) (36,365) Totalliabilities . . . (61.326) (73,637) Im estments in and advances to subsidiaries . .~ . $ 75.430 $ 54,981 Crescent Land & Timber Corp. Crescent has instituted new progran.s to In 1982 Crescent harvested 32 million Formed in 1969, this subsidiary search for other natural resources which board feet of timber and 62,000 cords of manages approximstely 270,000 acres may exist on its properties, including pulpwood. Approximately 2 million new of "non-utility'* property consisting oil, gas and various minerals. Addi- trees are being planted each year. primanly of timber lands surrounding tional programs are under way to deter- Since Duke Power initiated its reforesta-Duke Power's hydroelectric facilities, mine the bes: use for properties, which tion activities in 1939, some 57 million but also including recreational, indus_ may lead to expanded industrial, com- seedlings have been planted on 81,000 trial cnd ccmmen-fal sites. mercial and residential development. acres.
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Duke Power Overseas Finance N.V. side the United States. In 1982 Duke the subsidiary loaned Duke Power the This subsidiary was formed in Curacao, Power made a capital contribution to net proceeds of a sale in the Eurodo!!ar Netherlands Antilles to provide Duke the subsidiary, which has been invested market of $60 million principal amount Power with financial resources from out- in short-tern securities. In April 1982, of notes. The Eastover Companies percent of the system's total annual re- Land Company. In anticipation of this Eastover Mining Company and Eastover quirements. The completion of the pro- disposition, a provision for loss of $30 14nd Company were founded in the cessing plant modernization program in million was recorded in 1982 (after the early 1970s to help ensure Duke Power late 1980 allowed Eastover to ship a eisect of income tax benefits of approx-an adequate supply of quality coal for consistent quality prtduct to Duke ima'ely $28 million). The Company its fossil-fueled generating stations. Pcwer during 1982. determined to sell these properties after the most recent rate order from the In 1982 Eastover Mining Company The Company intends to dispose of the North Carolina Utilities Commission chipped 2.7 milfion tons of coal to Duke assets of Eastover Mining Company and W M1 db d Power plants, repmsenting about 17 the related land leased from Eastover d b hse h Mill-Power Supply Company Respondag to the nee bment inq function. The capabilities of the Duke Power's oldest active subsidian, which reduces on-ru y er
- mand, system also provide M:ll-Power's Mill-Power Supply, was organized in in January 19F; 9 Pe forrned the management with a better means of 1910 to supply the necessary equipment Applied Ene: ry . A apertment to eva!aating the possibilities for future to textile mills and other industries then market evena ving g .onent. expansion.
converting to electricity. From its main Another major eevelopment this year Mill-Power Supply also acts as purchas-location in Charlotte, N.C. and its new was the installation of a fully-intecra+ea, ing agent for Duke Power. In this role, warehouse facilities in Greensboro, data based business computer system. the purchasing division contracted for N.C., Mill-Power Sales Division con. This development enhances the rnore than $1 billion worth of supplies, tinues to perform as one of the largest operating efficiency of Mill-Power, equipment, f ael and services required - electrical distributors in the Southeast. especially the decentrahzed warehoua- by Deln Power in 1982. Western Fuel, Inc. imately $12 million, includmg capital The additional cost required to resolve costs, in connection with the venture. In such problems, coupled with a declin- l This subsidiary was formed in Jun'e 1978 August 1981, the loirt venture began ing u.uruum market, led to a curt.sil-ta participate in a uranium exploration commercial production. As a result of ment of operations. In September 1982, and mining venture with Ogle Petr ~ certain geological problems in the min- operations were suspended, and leum Inc. of Califorrua. ing process, the cost per pound of ura- Western Fuel currently does not antici-Western Fue! has expended approx- nium produced exceeded expectations. pate any further uranium production. c <
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Left to nght: Davis, Henson. Mickel. Owen, Furman Sloan. Watkms Fraley. Hicks. Gngg Booth, Albanese Thies. Self, Edwards, Herbert, Lee, Johnson. Overcash. Not pictured: Gnfhtn. William S. Lee 4 E
- Alester G. Furman III
- James V. Johnson e Maceo A. Sloan
- l Chmnnan and Chairman of the Board Vce Chairman and Execunve Vice President and l Chief Exe unve Othcer Furman Reahy Co. Inc. Director of Pubhc Atimrs Ct.;ef Operating Officer Dake Power Company Steve C. Griffith, Jr. g Coca Cola Betthna Cc. North Carolina Mutui. L;te Naomi G. Albanese e Senior Vice Presiden, Consohdated Insurance Company Dean Ementus School md General Counse; Buck Mickel 4 Austin C. Thies E of Home Economics Duke Power Company Chmrman of the Board Exeutive Vice Presiden*
Universty < North Carohna William H. Grigg E
- Dan:el Internanoni. Power Operations at Greensboro Exemnve Vice President t rp rarn Duke Power Company Douglas W. Booth E
- Finance and Adm:rus ration EO* 'md mmmi William L. Watkins e President and Duke Power Corr.pany n stmctionJ Par +ner :n *he law Erm of Chief Operat:na Othcer Paul H. Henson
- Reece A. Overcash, Jr.
- Watkms. Vand:ver, Kirven Duke Power Company Cha.rman and Chmrman of the Board and Gab!e & Gray Cq Thomas H. Davis e Thiet Execunve Otheer Chief Execunve Othcer l Chairman at + e Board United Teiecomrnunicanons. Associates Corporanon ot dnd IredSu rer [nc. Nonn Amenca p1edmont iq .;anor,r i o, ': nance consumer lending. e Member of AA Geor9e R. Herbert e commewim, iending and m L,ornmattee Robert C. Edwards
- Prer Hent rance) 4 x Mernner of Comper.sanon Chmrmm of the Board Research Tnang,e Inste ce ,
Textt;e Han Corporano < d;verszned msearch for cer Warren H. Owen E Execunve v ice Preside-
, , rgm{t] --
John L. Fraley e 4 P*'ons and qnvernment "' Cornrr ""ee
',# nc,g'e Engmeenng and Construenon Vim thairman and '
Duke P,wer Company
- Member of h, nance Chirt Executive Othcer John D. Hicks E Comrmttee Caroima Freiaht Carners Senior V:ce President James C. Self
- Corporanon Pubhc Ahmrs President Duke Power Company br""nWoo(1 M *S Inc Trustee The Duke Endowment 43
Officers DUKE POWER COMPANY W111t== S. Lee Robert L. Dick William R. Stimart Subsidiaries Chairman of the Board and Vice President Vice President Chief Executive Officer Construction Regulatory Affairs R ard C. Ranson Douglas W. Booth George W. Ferguson, Jr. George E. Stubbins Crescent Land & Timber Corp. President and Vice President and Vice President Chief Operating Officer Deputy General Counsel Information Systems W Robertson. Jr. William H. Grigg M. Thomas Hatley, Jr. Hal B. Tucker Mill-Power Supply Company Executive Vice President Vice President Vice President and Western Fuel, Inc. Finance and Administration Rates Nuclear Production Robert M. Moore Warren H. Owen E. N. Hedgepeth. Jr. Fred E. West, Jr. President Executive Vice President Vice President Vice President Eastover Land Company Engineering and Construction Distribution Charlotte Division Norman Yarborough Austin C. Thies Samuel T. Lattimore James W. White Chairman of the Board and Executive V. ice President Vice President Vice President Chief Executive Officer Power Ooerations Financo Administration General Servi s Eastover Mining Company Henry L. Cranford John F. Lomax Lewis F. Camp, Jr. Senior Vice President Vice President Secretary and Division Operations Western Division Associate General Counsel Donald H. Denton, Jr. Joe S. Major, Jr. Norman P. Morrow Sanior Vice President Vice President Controller Marketing and Rates Personnel Richard J. Osborne Steve C. Griffith. Jr. Joseph G. Mann Treasurer Sznior Vice President Vice President C. Joe Sherrill and General Counsel Northern Division Assistant Vice President John D. Hicks Paul H. Mann, Jr. Transmission-Substation Division Sanior Vice President Vice President Carolyn R. Duncan Public Affairs Operation Assistant Secretary Frank A. Jenkina Paul G. Martin John C. Goodman, Jr. Sanier Vice President Vice President Assistant Secretary Transmission and Distribution Eastern Division Charles A. Markel Thomas C. Berry Dwight B. Moore Assistant Treasurer Vice President Vice President Southem Division Central Division W Bm Shannon William O. Parker, Jr. nT Ralph W. Bastian Vica President Vice President Eugene C. Sites Production Support Fossil Production Assistant Controller Richard R. Pierce H. D. Whitley J. Kenneth Clark Assistant Controller Vica President Assistant to the President Corporate Communications E. Bruce Shuler Linwood C. Dail Vice President Vice President Transmission Design Engineering
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Management Changes OtherInformation Tha following management changes Transfer Agents and were made in 1982: Registrars for Common Stock William S. Lee was elected Chairman Morgan Guaranty Trust Company of th3 Board and Chief ExecutiveOfficer; of New York Douglas W. Booth was elected Presi. 30 West Broadway dent and Chief Operating Officer; New York, NY 1001S William H. Grigg was elected Execu. North Carolina National Bank tive Vice President-Finance and P.O. Box 120 Charlotte, NC 282SS Administration: Warren H. Owen was elected Executive Transfer Agent and Registrar for Vice President-Engineering and Con- Preferred and Preference Stocks struction: Morgan Guaranty Trust Company i Austin C. Thies was elected Executive of New York Vice President-Power Operations: 30 West Broadway New York, NY 10015 Henry L. Cranford was elected Senior Vice President-Division Operations; Stock Exchange Listing Donald H. Denton, Jr. was elected Duke Power Company common stock is Senior Vice President-Marketing and listed and traded on The New York Rates: Stock Exchange. The trading symbol Steve C, Griffith, Jr. was elected Senior for the stock is DUK. Vice President and General Counsel: General Offices Frank A. Jenkins was elected Senior 422 South Church Street Vics President-Transmission and P.O. Box 33189 Distribution.' Charlotte, NC 28242 Ralph W. Bostlan, formerly Manager- (704/373-4011) Steam Results and Fuel Management, was elected Vice President-Production SEC Form 10-K and Support; Statistical Supplement George W. Ferguson, Jr. was elected Upon written request, the Company Vice President and Deputy General will provide, without charge, a copy of Counscl; its 1982 annual report on Form 10-K as filed with the Securities and Exchange E N, Hedgepeth, Jr. was elected Vice C~nmi.=sion. Also available without President-Distribution: charge is a Statistical Supplement to Samuel T. Lattimore was elected Vice the 1982 Annual Report to Share-President-Finance Administration; holders. Requests for such documents Paul G, Martin, formerly Assistant Divi- should be directed to Sue H. Cannon, sion Manager, was elected Vice Investor Relations Department, Duke President-Eastern Division: Power Company, P.O. Box 33189, William O. Parker, Jr. was elected Vice Charlotte, NC 28242. President-Fossil Production; , Richard R. Pierce was elected Assistant l to the President; E, Bruce Shuler was elected Vice President-Transmission: George E. Stubbins, formerly Manager-Ioad Analysis, was elected i Vice President-Information Systems: Hal B. Tucker, formerly Manager-Nuclear Production, was elected Vice President-Nuclear Production;
- Norman P. Morrow was elected Controller; Norman Yarborough was elected Chairman of the Board and Chief Exec-utive Officer of Eastover Mining Company.
(Effective January 1,1983, E. D. Slone succeeded Norman Yarborough as Chairman of the Board and Chief Exec- , utive Officer of Eastover Mining Company.)}}