ML20081F167

Ohio Edison Annual Rept 1990

ML20081F167
Person / Time
Site:	Beaver Valley
Issue date:	12/31/1990
From:	Rogers J OHIO EDISON CO.
To:
Shared Package
ML20081F108	List: ML20081F103 ML20081F111 ML20081F157 ML20081F163 ML20081F167 ML20081F172
References
NUDOCS 9106070088
Download: ML20081F167 (40)

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.,. 7 Sanduik)

{ [ ], ' - ,, 8 Spr6ng6cid j * '

9 Warren p.- .

%4 ,1 . - . .,

k0i [ ,, h, f

• p ',7 .f.4 10 bunptown w L A Neh' Castle, [VntnpIsanhL The CDinfallie\ filoside tlciirrt' \ctsit t to Innic than elv std!! ion twfantcn t< tlhin 9,lUd MlHarc nli!n of t chiral and isorthantesis Oltia al'd Hnfeln Penn\lhunia.

l Contents 2 President's Monage

4 brinP mew

.14 Iinandal N ucw 36 Stotkiwilder Information 37 Direct m And Managenent

', . FINANCI AL HIGHLIGHTS b>r the bri i n,ini tw raiber ti 1990 Piw ( h i.e pii ..um = u .y n i a... ......u,,io Kilimatt flour $alo 31,109.5 l l .h 7 8.2 -

1.8%

Operatmg Resenues $ 2.2 2 5.5 52.1500 + 1.1%

Operating i synics and ' lases 1.715.2 1.611.1 + 63't , i Operating income 510.3 541.7 -

6.1 %

Capitalized I inant ing Costi 9N 9 i ;0. 4 - 14.2 %

Interest and Other Charges 129.5 351 5 -

6.1%

Net income 2NI.7 161.0 - 2 2.0%

1 atninp on Common $ tot L 254.0 112.9 - 2 3.7%

1 art.ing per Comnmn Share 51.67 52.18 - 21.4%

1)isidends per Cornnmn Share $ l.7 ) $ 1.96 - 11.7%

1)nidendi on Capital $ toc k $ 291.6 5127.0 - 10.8%

Capital I spenditures:

Const rm tion of I a< ilities $215.6 5211.1 Nuc lear i url 16.6 F8.0 Capital I caso N.N 5.9

'lotal $ 2 71.0 $ 2 58.0 + 5.0%

Internally Generated Cash $ 165.5 5 82.6 +100.4%

i sternal Iinanting:

New Iinancing $ l . I 2 3.7 *907.9 Retlempt6ons and Repayments 1.O N 7. ~19 7.9 Net I sternal Iinancing _

$ 16.6 5(90.0) _.

Return on Aserage Common i quity 9.9% i10%

Earnings Dividends Return on AveraDe per Share per Share Common Equity av,v u wev uv,vp 24I 1 ill: 1% I ' N. 14 (4 t 97 gg n N N oo

\ \

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l es av se as so se et se es so se et as es so l 1

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PilESIDE NT'S IWESS AG E . , l l

l I

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%oe than a dn adt ofsolut and aggrcune i0orti that impunni !

'.l " I l }w flot mant c w as under tnined in operating per fortnant e and two by an aihene duiuon of the enham ed both stot khol ler and I

Publn lltihito l'orniniulon ol ( ustoiner s alue, $1nt e I'lbo, t hese I

! ohio that led to a drop m earmngs, ef forts miImled.

1

, f rom $2.18 pet note of (ominon e Can(chng four jomtly owned ;

stot L in 1989 to $ 1.67 per share. nu(leat gent rating uruts;

[ In August, the Comnuuron a %ntng the Company f roin a j .g substannally ( ut the Companyi net buyer of bull power to a not l

~ s rMluDted b21.YIHillnt!) late seller k8) Int reasifig gl neratIng T. int rease, wha h was needed to unit asailalohty to an aserage of l y ,m ow,unis o,ouatea wnh s oe m nt.

lte.nt r \ alley 2. ~l hk genetating a llas mg estahinhed ounches l

! umt began serung out t uitoniers in as a reliable bull power suppher.

., sem nd.ast ,n u,ca sonstaeo.a im ,caso m eib

I rom Nowintu i 1987 through system power sales, including one i the hnt eight months of 1990, we agreement that produtn an cerage

. . - deterred more than $200 milhon of $150 nulhon in inenue annually l annuany of the unn s npensn through ihe par 200%

, a  ;

j under a Comnuuion-approwd e Completing a $510 million 4

l al(ilullting Ircat nlenl . I llis ensIIonIDenka ( oln laIh e fr(l{Ialn '

auounting approat h pnnnled us ahead of 36 hedule and under  ;

l I with a n. cans of reduong " rate budget;  !

i l shotl" to out i ustorners In it Nedullfig our ut,rk hir(c by I delaymg in(lusion of these iosis in nearly 1.100, saung the equisalent

. n.cir bdk our e rnings for that of about $50 mdhon annually; k permd redetted thow deferred a Nestru(luring our !argest npensn. coal sales agreernent, whkh l

llowner, the Commiuioni redutes fuel unis by $175 million *

Aug ot det hion (ut our requnted owr the 13-year contras t; and rate iniicaw by 576 nulhon, te- e Negotiating innmatne sale [

i l

plas ing the enore than $200 milhon and leauha< k agreements her two

. In annual deletrah unh a rate nut it ar units, raismg $ 1.1 bilhon i

mt reaw of bl I2 millnbit hn ause that was used to fund systeln of the shortsit, we had no prospn t impnnements and to ruire nearly '

of carnings i.emg sutthlent to $700 nuthon of high ont seu.iitics. ,

l l support the $1.96 dnidend on 'Ihoe actions better prepared i

t omnmn sto(k. I ben tore. our us to deal wah the atherse l Board of threoors niabbshed a regulatory treatment that has l

new lewl of $ 1.;0 per share. on 1.euime all too c ommon for l an annual basn. (ompanies uimpleting nuc lear

'I he Commnuon's dn nion unus. As a inuit, the $ ire of our ownhadowed yean of innmaine diudend re luulon was le<s than  !

2 I

e .

that taken by many other$ w nh Sale, to other utihties war t ommun6ts sout o: i su llent reha-AU(lear tomtruellon plogrann. dow n 8.9 pert ent, at t ounung for bdit%, trasonable lateA and enough 1.wn so, we base been pursuing nmst of the i N per(ent du hne in base load genciatmg e apauts to the posubihty of haung the Com- total iilowatthour ules I un $o. meet iin u nuty need, well mio minioni de(blon owflurned. Altet oli ny stern sales prodot ed nearly the 19'Hh the Comminion denied our injucit $22ci mil lion in rewnue. Our uneuments and an om-

' for rehearing, we bled an appeal Solid Operating flesults phshmenti m emironmental

! with the Ohio suprerne Court. We in adihuon to g<md ules we proin tom mer the yean gne m cApett a ruhng by cally 1991 at hiewd holid tesulth in many key anoths e competithe edge: We ate Regardlen of the appeal's npeuting areau well postooned to meet the enm-outs ome, the Cornpany's finata lal e Aggreuhe matteting during sinn standants requised by the new ,

performam e in the years ahead w di the year will pn dm e more than - Clean Air % t. At least -42 peuent benefit fram out intemilled ellotts 900 milhon kilowatt houn of new of our generating i apauty won't to reduc e comtruenon, operaung bmincoannualh need major addmom of sulfut.

and interest ontt These indude; e impimed eHieienty at our dioude umt rol equipment.

tutting at leau $100 milhon mer power plants Lept the awrage <mt We are aheady time to the next four yea 6 f rom our $ysicm of produong a kilowatthour al rnecilng the PM sulfur dioude imprmem.nu budget and housing eleurit 6ty belon that of 1989. emmion standani under the lawi other di partmental budgeti; e Awrage fuel onts were the fint phaw, w hn h targen only at hining luither redut tium in the lowest of Ohioi eintric umipanies 9 of our 29 osal fited unin for (mt of tap 6 al and in the stic of our -for ihe eighth year running. additional sulfur dioude reduc- ,

work force atul suspending the e iinpheycen bettered 1990 oont We.are ahn uudying a range

- incenthe t ompemat6on program ulety and anendam e goah. of oimpham e strategin aimed at for senior management, e lor the sisth year m a nns meeting the unther and more Continued Growth mote than nine of ten oniomen <htlitult second phase redut uom in Retail Sales nurwyed gaw u4 pmitne marks for that adi begm in the year 2000 Our arcai economic pr.iorm4 the salue they plate on our wnic c. Without doubt, we fa< e a ant e, coupled unh our aggrenne Positioned For The 1990s number of t hallengo in the 1990s

marketing, led to (ontinued gnmth llow we snect t hallenges hLe -but we haw plar ed many td/.H

' in retad ules in 1990. 'lotal retad. Im reased c ompetition and ewr. m duttng the pau duade, loduurial and mmmen tal Lilowatt- rhing emironmental aandanh w di i remain t onfident in ihe hour uka wt new marks, as our help shape our nuu_est soundnen of our Company. In the senit e area outperformed the Competition wdl t untinue to - talents of our employen, and 6n

national comomy. t ome trom both trathtional energs our pnnpn ti lor impnning the f or the year, retail uln were supplien and thme who wouhl me_ ulue of your imntment in Ohio up by nearly 127 milhon Lilowatt. tas and regulatory loopholn to lure i dann.

i hours mmpared with 1989 roults. - our i miomert

Commen tal and industnal llowcwr, we haw been in this ( -

4

sales increased 2.2 and 0.8 penent, businen her moic than 60 3 can.

T " b t __, "'( $

1 topeethcly Reelential uln and we offer umurpaned adgan a

~

were off 12 pera nt, as nuhl taget highly >Ldled employen lmtm l. Rogen, Ir.

' weather redut ed heating and . with a thorough knowledge of aur l'"'" k "'

air <onditioning uw. market; a wide range of energy and um h 1, pm l l

l 3 j

YE AR IN REVIEW . ,

Rato Decision liet ause of the PilCO's athe rse h>wera Earninun decision, we (ouhl not expn t our I arnity on common stock in carnings to support the $ 1.96 1990 fell to 51.67 per share from ann.ial dn t<8end on common sto(L.

52.18 in 1989. The drop in earnings Consequently, ihe Itoani of tellected the etIcci of an August 16 Directors in August set a new dethion by the Public lltikties lesel of $130 per share, on an Commission of Ohio (PilCO), w hk h annual basb.

cut our requested iate increase by We appealed the dechion to the

$76 million, to $142 million. Ohio Supreme Court in December.

We had IIIed for a $218.million The Court h expected to reach a int rease to reuncr costs ao ociated det bion by early 1992, with our share of licaser Valley 2. Retail Sales a nuclear generating unit that has Reach Record Lavols been sening (untomers sin (e With 9eady business growth November 1987, and an expandmg customer base, l~ rom bt c date of commercial our senice area outpcifntmed the n s.it operation, ihe Company deferred national economy during the year.

k'[,',"l n

$'i,7'"'x"m,"r'w more han $200 million of the Despite rn ession in ihe national n,w am ce economy, our retall kilowatt hour g,s annual expenses undct an m na g ,px accounting treatment apprmed by sales reac hed a reconilesel. Retail m 2 is x the PilCO.1:arnings for 1987 sales in 1990 hit 2 3.9 billion

,N ss N through the nrst eight months of kilowatt. hours, up nearly 1990 reflected those accounting 127 million kilowatt hours deferrah. Howeser, the 5142 million compared wlih 1989.

granted by the PllCO in August Strong exports of manufactured

'y\ N

,3

\ fel! far short of what we had been prodects and high demand for deferring. The PLICO's decision aho speclahy steel and pipe helped reduced the amount of deferred push industrial sales to a record m

licaser Valley 2 costs that could be 9.9 billion kilowatt-hours, an reuncred. As a resuh, the Company 0.8 penent increase oser 1989 took a $17.6-milhon, or a 12 cent results. Sales to commercial cuo per share, w rite oft against fourth tomers, our fastest growing market

e. et es e. so se at as se so quarter earnings. segment, increased 2.2 percent, l

4

- .. . .- . .. - - . ~ . - - . . -

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i at lhe 11u1111:r1 id l414mrut s set sod l grns by 1,212. Rnniennat saln , -

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were ott 1.2 penent as a inuit e i e-

'U of UnMastmaldy Huld urather, ,

r , ,

I w hk h redut ed heating ami air- 7 y, q 3

\ j m i k ( tilHilt hsfilf)f Use. " '- ( ,

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~-f l -r ,

f j l

'lotal Ldon att hour ,alo =

g- , < O{, f ,

x

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l t t 4 j

4

,. i i derhntd 1.8 pen ent, priinarily  ; ,

lk { ...\ j'M i the inuh of an 8.4 pen ent drop $ g k l in sairs to other unhun. $tdl, r ' 'k -- -] 1 g- 7

*' , re ,

j.- 3 oll sperm 6ain totaled nearly d.

k. - .

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t , i U9 5228 milhon in entnue. . M' , ,

.. , g- 1 Peak Lmul llecord Set

<* } y4.]

2I

{ , y l

Cntomca set a new peak ,p ) +

, {

• dernand lor the fif th tonsn uine k , y. .,

...p V[ J -'4 ,

x- *j 3 car. On Augmt 27,ilemand for 5

.N ,f p' w, , ,

I clntrkity trat hed a rn otd ,

/ ' . ga. c 4 g yid J[

j' 5,204 megawatts and c limhni to

(( [. h; j h/' i.( D ~

. N} s.g

' J)%

5.394 megawatts the nnt day. . V -

f  !

l Since 1985, our sptem peak

[ ...e.; ,4u '

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il j g / gPO,4$g.ygg.Q c

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demand has increased 12 peu ent, ""'-)  ;& -

MN if- Q,j, .; ,[ l i or 1,110 megawatts. . 4 t

~ .y local Econorny Spurs .

s OU$5fless E stparirdoti /

Major imntments in new ,

Inliflologin by Steel and autofno-the industrin, t oupled with our ,

nonomk dnelopment programs, .

8 p, , ., ,4-,-

>timulated cln Int saln growth p

• k e dinorig OlfMpallin trOrsting to tldng fulh opf,rs is un imptose produ(thity and t ost. */b '/"' ""' '" I"'# 1' ungwa an+1 onainsaan ellh irnty h lihh/Kobe $tcel, u hk h ou, ,,4po ,n,lo yf

"""""i"i""'""-

rnently < ompleted a $J0-mdhon I

- -- -~- - _ ~ . _ - . - . - - -

l l . .

Sales to ptop.s t at its u andru pipe tnill in in our senis e otra sint o IW1. With itx entne rates to orn of espanilitig Other Utilities l' <

l e statti, ll'l l estet is building a this dnt istty, the lin al ot otuiln) is businturs that inert t titeria

$ 4 5.5 niillion plaht th the M ton tu rn hs tiet able to tolt late su ligs tclatt1] to llu tt ased Linploy nicht

\ atul clet tilt sales. In 19'H),

alta to inanulattute a!utilinuni tri the flaflorial t t oliorny.

i j tratatnluloh parts l'or the autto We att notkIng hatd to 28 t ofnpatilm took alltahtag'e of l tuotit e indust ry. .\nd, hhaton $tu ' protnote this kin 4l of busilieu those f atr% ( tt atilig tnote than

<>ut latgest indust flal ( Usta nttier th glon th in out Wiin C alta. II) I.4DO jol6 and adthng $k8 intlhon Pennsy h attia, is platillitig a latpr proindstig a tange ol tt onottilt iti tien t IC(tilt t ri t hur.

(apital iniptv\rinttit ptseglani that desolopnicht ard etief g; t ohsultttig Sint e these rates note intro-y itu ludr> a nen (outiliuoun ( aster. M rsit r% u r are helpitig (olith)U- dut ed ih 19hl, ! $4 (onipatut n

, We air ahn helichting ltorn the tiltics atttat I potential busilieurs hJsr bot 10llted, in\Csting inole

,N enirigtht e ol Alnaller, di)CthlOrd ahd Otit outage esistitig busitiOun thah $718 f ttilliot) it) non lat ihtles '

nianulat tilreti.181 lat t, ahout 300 to espatal operations t hat plewrsed ot' ( trated approsi-of thern base intated of expanded We onet spnlal, hse yrat inately 9,700 jobs. Cornhined,

)

a 80 87 8e to 90 e

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+ ~,

Cruc lYM. vurJhv9 tar iturnthe rates to rwn or (-, ;. '

~

o ry%stuhng budt. curs '* 4, 4-hel;wJ s trant er preserse OL i A' ' ~U l 3 _'

upprodnua p u,wps in our srn h c arra, n Mic h I -_ k alkng ul.out $ tb unilhon in annualtin ers sornur, 6

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thew huunt urs int it awil ilu o .I ""'""d""#""'"'

,,o o. .no .. n. ,gi to h .

ein tt u itg uw in alv ent 7 H > inilhon n,;gga,,ojg,y, furl Ldonatt-houis pnulm int in aih """""d'"""""d'-

<n, *v,In.g sler I ur ovig

$4h imllion in annual tt3t nur. , j ..o.n nai s u n h Three @ otigent 'on""h" "",', P "" ' N ""

Ivo.nu vino.

Marketino Strategy (lut matirong Mrciegy targtis ihree t ry atrav un traung oil peak sales, retaining estomg sales. and intrmloting now energu lliueng new lwmer plante Aggienne mailenng i flott s Inune hmblen an atti.u taily < noiniages home huiblen to in 1940.or espn ted to ponlut c pin ni pat Lage of energerila irni nwiall high priloimain i braung.

nunc than 40n nulhon Ldowati. apphantes lo i;uahh, huihh n i onlmg anel hghung nunn, aint houn of new hounru annually tung inn i sinti ionurut tion i neig.ct ita icni apphatu n Ihe We were un i rului m wt uting siamlank for energy t ita itin y aml Umd ( ran i enitit ation auurn new s.dn in our target mailrts natall total rIn tra or .uhl on heat new home nu ncn ol the heu encip customers InaInt;, olbpcak cln o h sa!rt \\ r pumpMurnw b m joi ihrH mone) g,,ygg athled neatly 1,ono s tn it u alh \\c are aho wn:Lmg tlosch Denuind Sido Energy heated hoion, inore than 4,00n w nh buiblen to mtn ulut e gro. Management y resulential uaier heating umts thennal w.tems to the inidenital %c t ununur to a nt out age \

,\

ar.d 10 peu rot of ihr spat e- mattei Geothermal, the mou enogy t flit it nry through our many N heating mailet m new uinunen tal energy.rtfit ient system asailabic demand ude management piogiann g (on tr u( tion. In the high'y today, uws giouini temperaturn that promoir use dunng peno.h (ompetunc unluunal pmuw for heanng and on hng I hne of lower i uunmer demanil tot heating market, we athled inoic nucms art hemg natalled as a cln tra ny lh inha mg pral than 162 nulhon k dowatt houn et pih,t pn.in i m a dnelopnu ni of cmand. we make heuer uw ot new bounew 20 new homn m the Akion aira nur power plann aint delas the We intnuha ed a program to in 1941, we w di he sponsonng neni to buihl new oon Int rea e our share of the new home a nanonally irt ogniml. rnidennal We are aho deugnmg new spat e- and wairi heanng ma:Let. energy managena ut ptogram t alled eneigs management progiaans to Working w nh the Wluripuol G u d (rnrt i ndoned hs the roan h ihr i hangmg needs of our l

('orporatit m. we now oller wlet ted 1)cp uiment of 1 in'tgt thh juogr am ( uuoiners u ith the hot t nt ig) so af se as so 7

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Isot,on, s .a ehr

> p Infonn.uk,n w urns , _

Of yrothern t rnn e s;wd A uhe r.1ovang onforn a. e,.

sk.n from 4300 Jasa a.

ea,ws on . usnnnrr , . .O

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= ..  %,b ut ipunf t pont e plitut j .m e

..p tork.n. ond stoer.

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& f/7 5///j i in hoologin asallable. Ihese with other senit et Ihk marks surpaa saln to tnalential u+

progrann help customers use the sisth tonsnuthe year that tomen by 19'G.

elettricity more etliciently, customers gase our seni(e salue We expect industrial salo to prmidmg the best salue ponible tha high rating graw an astrage of 1. I pen ent from our ein trie ' .t c. Steady Growth Predicted annually, with strong gionth High Marks For For Electric Sales m the increasingly unportant Customer Service Our 20 year inergy lorn ast plastin industry.

lkinering high quahn sen a e antiopates that growth m our Rnidenual salo should increase b mercasmgly important as son n e areaN n ononw should by an aserage of 1.1 penent iompentton intenutin for our proth.t e an as erage annual inuease annually .\1ost of that grov +5 wlli

( ustomen' businen. In a 1990 of 1.8 pen eni in retad cln trit sales tome Irom spaie and water-suncy oliustomer atutudn, better .\lso, commen tal saln shouhl htating sales and f rom an than nine of ten (ustomt n gase be our lastni growing market int trasing customer base ot' about us poutne raungs for our rnpon- segment, teiln ung our sen n e ,000 annually.

snenen to (ustomer ingmnn and area's expu ted economit npan- Continued i:mphasis senie inter niptions for the sion and inucasn in popu lanon, On Controlling Costs (ourten and helpf ulnns of our mt ome and employ ment. We pro- We (onunue io nphire w ays i mployi n, and for the s alue ict i a 1.1 pen ent annual int reee to redut e operaung. tinanung and cln t niity reprnenn t.ompared in t ommen tal uln. w hit h iould const rut tion i osa.

8

. e

$ticatnhoing out operattoin he stot L on th< open mat kt t. I bcs plant opo atmg (osa in ah>ut Total F uel Cost per Million Eltu prtulut ed signilis ant sas mgv Wnh wdl he aulgn d .o at(ounn as $ 1 1 nulhori annualls about 1,100 fewet employt t s at employees earn shares under torno f ossil4 uel Costs Still N

yeat ctuiihan we had in 1982, ne of the saungs plan Ohio's Lowest are delncong highquahty cln tru Power Plant lor the ughth(onwt utne war. N sen u e to 70.000 inore i uuoinert Per f ormance improves ( shio I dron had ihe louru .nerage 'N \

The stall tedu(tiorn icprewnt the ()ot pone' plarn perloinial knul luel ious of any of t )hini rejuhatent of about $ 50 nulkon in well m 1990. holabihty of our ein tra (ornpames ( >ur ont of afillual s.n ing( (oahl1ted unin was 80.4 l4 f(efit - (tial was a}uml } I pen crit belon

'I hew ellotts to socamhne our 2.1 peu eniage poinn alune out the state awiage, operanoin are iontinuing in target for the year Our goal n We also took sicps dunng the lehruary 1991, we n (hn eil the to push umt asadakhiy up to year to hohl dow n tutore i oali osts notk hin e at the three unit, unal- 85 peu ent by the inut 1990s, well lor example, af ter an anahsn of ihni litut e Manslichi Plant by abow ti c current nulustry awrage, numng opriatioin aml usal ma:Let 216, s.hu h shoubt uhtmately low er ~lo he@ us at luew ihat goal, (omhtsom. we ended out operation plant operatmp espernes by we haw imtiaini wural plant of a high4ull_r uial nunc near the ,, ,, ,, ,, ,

approstmately 58 milhon annually modomfation pro s n. lor W 11. Sammh Plant in September,

~1 he sier of the plant's wo:L example, we are inntalhng a in athhtton, we w(uial forer has been dn te ning for uimputetierd control room for wwral long-term agrectnenn sneral yeart A new organteational three umis at the it I . Iturger through our subsahary. Ol $ 1 ocl.

sinu ture, w hkh rephxes indnidual Plani. set hn iompicoon by Int orporated. that will saw us unit supeniston and 4,tatling with mid 1492, the projec will redm e nearly $41 milhon through the year a plant wide orgamration, made further redm tiom poulble.

ESOP Reduces Savings Plan Coits f

'I he ('ompany started an I mployee blot k (lu nenhip Plan (I $0P)in 1990 to reduce the unt R['

O 2

~" !

t

"""'""'"""'d"'h" ugu en itu rnne produo of fun hng its matc hing umtribu- N #iiir,s base lu lpd m tions to the exhung i mphnee -

"d"""'""P'"'"""~

unwan.r ratin; lau ivar.

Sagings Plan. I ate in the ) car, the nr u nrJ To.ooo nmrc

""""""' " uh nnu ti I $OP began pun haslng about

. e, s oo pu , nncle,m i 1.5 million shares of (ominun k j than or had in 1941.

Gi

_ 7, {i l 4

-9

-n. ,

j

"@ nn mg .

[

- wh ' *1

. e Employee f(HH) and ponule us an aumed signlII( antly leduted partit ulate, lorm of plot eurd mio thumh4I/cd Productivity supply of natuial utatuutu. sulf ur dioside ai.d tuttogen uside f uel pellett Energy Recovery enusuont f low the ll.h. I curonmental N Projects Offer Prornlso We t ould burn about ihrt e l'nnn oon Ag.:ncy (t PA) tegulates I ast May. we bu ame the firsi nulhon w aste tires thric annualh. the dnpo al of ash f rom burmng

\ (luint (ompany in ( >ho to icit. iconermg the energy niunalent solnl muniupal aaste aill hase a

• N of 17(UMMI banch of od. Wah maior itupa(t on u hether or not burn w aste tien at a oial-tired plant.

, \ we to ahead with thb e nergy l hn energyreuntry proju t may approsah inon the ( 2hm and ll.$

\

help us lower tuel tosts and plani i noronmental Proin non Agern in, reonery proin t. We expn t i PA emiolons, wlole reduting enuron- tull-s( alc (ombustion ot u aste tirn regulanons later thn ycar.

mental problenn auialated with (ould begm in 1941. lo at hine Financing Strategies dntarded enn in the o mmunitin greater f uel sasings. we are studung Cut Costs Of Capital

!! the teaubilny ol burning uaste i manong at thity in 1940 we sene.

()unng the tour-day tot at our t6en at other toal-lived planit uintinued to h.cus on redm ing Another energyreuncry higher unt debt and preferred

~

'loronto Plant in loronto. Ohio.

tires replaced up to 20 percent of pmlu t we're looking at n burning and pn k ten (c sto(L.1)unng the

• • ** ** " ' the (oal normally buined in one treated mutuopal suhd uaste unh year, we redeemed, n ured or of the plant's boilers Not only thd (oal. I cluse derned f uel, mainly retinanced about 5 M milhon, the tire blirn base flo alberse ettu! paper, would be deinered to coal- lowering (osis by nearl) b9 nullion

~

on plant pertormante, it aho tired powei plants m a shreddal annually.

, - - t y uhy w7, e ..

• ..** gl ' -

)

4 .

f  :

8 t pl

.)7

'  ?

s lutsher irnprmwnu nts to 3 -g.

t our hans.htsa. ,ncter.

7.-ju ')g"'^g ,

. d  %

, Y ? "L ,. - ,

readin,q onnputen help Y' ~ '

'<>> YO (

u iru vrase prmlu.thity kh y.

ulf ly ?

. A. A- ~

?:g%rh jjf(jhkf,.e w g h, uns ,cau,, onts #:, 'W s ere,w,ne,q,

,_t i m.

~

5 f tMr.tMNI annual 6. e

$ og '

.~

b a ,.. w ,

i s 1 I l

, , E a

. . + .:

, ;f. "

g  :

y

!r i

r l l l i:

l Construction fludget l[

1 Focuses On System i ,0 i,

'~

l t Q /:-

l Improvements }, - g j

k. <

our nnancial proo, man (c nai  ;

I bef a llt 1 orn a de( nion to ( ut

! $100 nothon fium the mt(in l t l enintru(tion budget ont t the next lour ) cars. By n ahng hat k some

. p,.(,s mm,, o, d,or-g 1 others. our Inc. sear const rut uon l I k e Ik kI ( k . ll ll ),

i  !

l that amount, sorne $27; nulhon is

, huttgeted for 1991, l l

With genet.iting ( apat ity

., additiom t ompleted, f utuse im .

k k

$W N -

4

, - ~ r

improsernenn al our poner plants, { , s y A4 l addnional installadon i.I emiron. I,,

i inental (olltrols and upgrJdes ol

.w m 1 out transtniuion and dntribution j j., i a g, ,

l

' niiworks. In 1990, we spent pc 4

4~

• q - I 5215.6 inithon on sysiem irnpn n ement s.

ll

) Employees Meet

! Perf ormtmco Objectivos I lor the ) car, etnployc( s t i

cheet el lei (II'nlan( e l' Ilet tiles I in the areas of saten, attendarac '

and salue of senice. We set seco ne o , gen ior these ana ouec ,,,,,_,,,,,,,,a,,,,,,,,,

other objetines: catnings per 5"0 ""Hioa danud'Is "a ut,c o,.crari..n an.1 unain.

l share of(ommon stock, operating , ,,,,,,, ,. ,,h a+ iri'nincei'ai  !

i effet tneness and sales growth. "'"'*""d""'""""ti i can ironinental requirr-l.mployees are aho finding nwnn, 6ui h as sniosuroren,q

-air, quasu, at our  !

. l'ourr ,ilann. ,

I i

i l u

, 4 9 4 dI IkIINia ski LIk *I H P\ }( e t illlk !il t hlif 4 ffdif l% l(8 fif ffflof t'

. ,.ng, .flion o and e inn m m mm dir qmn -

P'ul*' de";V' "I

• h ' t "I rqu pmna emtal latiom \

m[ ltelt "" Hu ol" of t he nt " la" m lude t thio Ishwn\ A 6g armvalIna rm baign

• v gg

' k # '

t tempanion for un in.

g.>

en bred gentiaung umts are taigeted

,o ,o,n,uJm.n .a -

e / I"I ChdW"" 'UI* Ih'ns u nder t he Arnt baertermitdo.

1. law h subtit dli1\lde 811Hulitn standard. We base J1Hillt twit st 4' , seah to suhmit out lintial 4

i omphant e plan.

~" I -

Ihe law allows unhun to meet the new requonnents by beta r wap to do their jobs 'l brough Successf ul Environinental uung a ma:Let-basul, ennuson the i mployee $uggotion Program, Protection Strategies allow ant e traihng splein. 't his 121 suggntions were adopted m We are better pouoonni ihan inethod pernuts unknn to trade IW), w ha h houbt ptodute enore

. many other ein ene unnpamn m ( mimon allow aiu n among the than 512h000 m first year sauagt the \lidunt to meet the tandants umts on the n *ptemt Ihne Sime its inu puun in 1481, the of the new Clean Air At t, m part allow atu n i an also be bought or iinployee $uggesuon Progr.un has bn auw ohiur past inu sonenn in sold on the open ma:Ln.

on -Term Debt aanp,ca nmm ,h,n uOo suggn. enomnmemai p,otm oon. m,aanm nadmg. assum,ng a tions, w hic h haw resulte I m tuote $nu e 197;, weie spent more market dnclops, u dt be impoliant

\ than $ 1.; imlhon in annual saungt than 52 billion on enumnmental in dneloping strategin to incet

\ \ Extending The Life proin tion, and ucNe ( ut the the costher and tougher snond-

~

Of Wood Poles awrage iate ot sulf ur dioude phase embslon stanitards u heduled We e\ pet t a saungs of about ennuions at our uial-tired plants m the year 2000. All ot our < oal-N by about one hall. We are now titt d uints will be ai$ t ted, and 510 nullion f rom a maintenant e pmgram designed to extend the ble spemhng nearly 590 milhon eat h we must file our uimphant e plan ut our wood dainbuiton potet year to operate and mamtam tor these standanis by 14%

About %0.000 poln will be enuronmental equiptm nt. Our leadenhip in the dnclop-impn ted. treated or remtoned I qually important, about inent ut (Iran-t nal in hnologin dunng a ten year ep le. I his 12 peu ent of our genciatmg (CCI) shouhl be helpf ul in meeting juogram should delas by some ten ( apaaty is nuc lear, oil, or the suond phase standa,ds. LUI yean pole replat emenn that ont u rubbet-equipped, coal fired rescan h is aimed at imthng more sa e4 a so ao about $ 1,000 ea< h. generanon ihat uon't require unt etinine uap to protn t the 12

l l . .

j 4

4 l

1 I.

etnironment aint to t onlinue tnifig w a4t dhpi nal t'spt fiv' t hf ough sti an s s po t iniridal tet mi r g pn ,t en Annual j Pool local j lo ally anulaldr mal ihr fonc f u st hng l hese bi produt ts ( ould that toalts lugleiluahts pypsuin Il CCI proin n ur parin ipate in be usi d as substuoirs for apin ul- or go into tull produt tion. ui i ouhl s

j tt ptt'%t fit a tislal t oinfullfntni b\ a!! t ulal Illite, a s }d[hn.M t ond t ut (b 8n ploilUt e about $OO,00ll lof a f el l

\

l tlH afitt it ; e d at al h $.9 N) tulllu pf t. Inatrilah. and tot f rt lain.ilnif) e d t t enunt it talpf ailt py pstl'n anliu,ilh Mr are aho n.duating u as s to sitip tunnes. We an po'Tunig thew i nd let)(le t he in pf tidut is of (l'I. l 4 bt ('olut-ltif1p M f uIdler kludpr tillit i ptidnbilip tt a hntdispita tai exaniplc. ur ate tinpotnoting a into yypsuni h another of out hs lp us at hu ir out opelatHip anil 4

$.4 4tnllhon It+t att h propt t tent hng t flottv \t out lkut e tinitonnu htal goak w hde inet fine (lesignt d to liini wao to totitu r Mateht hl Plant, u r'it' pat tit ipating ( uslonirt ni t ds lot t let tin ih i

' - ' :.,_ [ '. Rf yt { f _ } "' ':

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=

'h +j Q , . j gg W l h;>+ Q w? }j$ }? C:,.. _

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. t ,r ".fqpd., J.

r )1. A. . > $ .-

e-co-go -. ,p.,,."..o. , m? x .".-

4 , ,

.he, .M1 < ^ M ^r-$g- 4. . i .n$.e

.,,3'. -

J "k.'

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%pphewnf al trnst-

,.. a sfour u m l

> p.ki u n 6 prnre onisn shouldniend thsir hje i by unynses or nevrr and a

-' ' gaw alvus I f 0 anithon

a. * . .

in pok trplas vnwnts, i

l 13

~,-m_w---w-wn,-m-m ,w,,en-. w w v,,w e m e -~.wm~~a, -w w ws , ,e-,.e,-<,e,-e,.p w w-er = ~

FINANCI AL REVitW '

MANAGEMENT'S DISCllSS10N AND somm of the ihangn in operating enenon durmg ANALYSIS OF HESULTS OF OPERATIONS 1940 and !"89:

AND FIN ANCI AL, CONDlil0N no no.

-==

lIls pusllhsful flesultti of Operations g, ,g ,,

Itmo was a year of Han>Hion for the (,ompany, wah huma 6 mn Wh 5 niti f uDue cartimps inels being intrit ved due to die g, gg,gg g gg,gg, g g y t, gg )

insuuklent rate rehef authorved by the Pubht litthun pu,,a ,odrunwn un 86 '. 7 Comnuuinn of ( shm (PilCO) in August 14'Hl. Ihh h y 7 ty 4,;3 reflet tod by the 2 3% ledutlion in 1990 carNogs pe( g,lo n, n 6,lmh a ushism 9Hi @ ')

share of uimnum sto< L wmparnl u Hh 1989, the on,o (nt 13

~

Company's return on aserage totumon equity dropped s,g u c 5," g l L.1 to 9#4 m 1990 f rom i 1.0% catned in 1989 ~Ihe -

Company requnted a rate tin rease of appuiuntahl) hales to tetail(untomers inercased shghtly by 0%

5218,tHM),000 but the PUCO granted only 6W of the m prm, with saln to wmmett tal and indmtrial Companp request, or 5142 tHNI,000 of athhtional t uuomoi mneaung by 2,2% and OA, rnpeonely.

annual tornue. Athhoonally, the PtlCO rnio(ed ibe 1)npac an int reasing i miomer base, residential sales amount of deferted licaser Valley tinit 2 unts that dromed by 1.2% primardy as a rnuh of unseasonably wuhl he rumoed from the Compann untonuvs- mild weatho. 'lotal Lilowatt hout Salo were thm n 1.8%

As a inuit the Company w rote idt approumately in 1990 prunanly as a rnuh of an 8 9% drop in saics

$27,000,000 ol protou31) deferred mts, whh h to other utihtles wmpared with 1989 teduted 1990 m t 1.nwmc by apprmimately ~1 he inocase in f url npense in 1990 w as prinopally

$ 17,600 000 (5.12 per d. ate of wmmon stml) the rnuk of a rnene made by Penn Power due to the As a rnuit of the inadequate rate rehet gianted b) umertam reunerabihty of wits thtough its energs wst the PtlCO, the Company's boaid of threums determined tate. Ihk rnene reduted net inonne by approumately that it would not be prudent to t ontinue to pay quartal) 59,994.000(5.07 per share of common inn L), l uel tor, aun slot k dnidends at the SM9 per shafe Incl- Opense dn tmed in 1989 primanly due to teduted Aiumhngly, the third quarter dnidend uas redou d to luel prk n and deocased fuel menumpoon, mmpared 5.17 5 At this inel, the Company's wmmon stot L with 1988. lhe Compamn' wmnotment to pun hase a dnidends on an annuaheed basis are 5150 per share poroon of Clocland lin tric illuminating Company's as wmpared in the pinloos inel of 51.96 per share. Pen) Unit 1 opaeuy, wha h began in Nmember 1987

't he mmpathon of carnings in 1989 with 1988 was and ended to May 1989, was primardy rnponuble for affeued by the w rite offin 1988 of nmlear t omtrouton the deocasn in pun based and inten hanged power ontt ulos b tedut ed 1988 net inwmc by approumately npeme in 1990 and 1989

$ 128,000,000 (5.84 per share of wmmon stm LL In haal otf er opera 00n and maintenance npemes addnion, the Company's inwme las pnnhion in 1989 were d<m n in 1990 as a rnuit of an in reased Inel of uas reduced by approumately 5 49,000,000 (5.12 per npemn 6n 1989 due to ficawr Valley Plant onts billed share of wmmon om L) due to the amortization of to the compamn in 1989 attributable to prior years, t ettain deferred im ome tasn and imntment tas occhts, and fewer nuclear refuehng outagn in 1990 than in as authorved by the I(100. Thne amounts were full) 1989. Inomes in other operatton and maintenance amortired by the end of 1989 and also aneued the opemn in 1989 mmpared with 1988 were due prin.

wmpathon of l'NO net inu>me w uh 1989 upally to onts incurred durmg the 1989 triuolmg

~lhe 1990 inerme in operating rnenues rnuhed outages at the Companin' nuclear generatlng units-primardy from the rate inume dnumed alune. 'lhe there were no refuehng outagn in 1988, inume in operating rnenues m 1989, w hen wmpared Con urrent wuh implementing new elettric ratn, with 1988, was prinopally the rnuh of rate inumn the Companin stoppnl deferring npenso auributable granted the Compay and Penn Power (Companin)in to Perry Unit i in the hrst half of 1988, and defetrah the Bri,t half of 1988,'t he following summarvn the for Hmer Valley tinit 2 ended in August 1990. As a rnolt, deferred nudear unit imernt and delerted nudear una operating emts were dimn in 1990. In adthoon,1940 deferred npenso were reduced by the 527,000,000 w tite oH of deferred Be.ner Valley Unit 2 unts donibed alune.

14 a

Gener4 ann incre.ned m 19'Hi pornardy due to Cemipamo nimh! in.t npn i a toan r6al aiherw i Hn i imicaml propetty tan aml higher grou runpte laws to nrt nu ome as a et suh of adopong $1 As No 106 fetulling bOnt bIgher et lad f ewflut% lla ornt' tases were lllone t'lIn t$ are miste f ully dest Id*Cd til %,te I to the up in 1990 mer 19M'8 as a inuh of the pintously Cornohdated I mant ial heatetnenn mentioned anunio/atmn of deterred nuonw tasn and  ?

. Capital Honources and Liquidity inwument in unha lau yeat. I he i manud Au oununy' lluung the last loe 3 eats, the ( ompa:Un spent approv stamlaoh linard (I Ash) has inued Matenwnt of I inam i4 i im.nely 52JHHtJHHUHN)in ionnet. tion wah thest An ounting standardi(4 A9 M, 96. "Au ountmg for

, t onstiounm programt We during dos penal, the Itu ome lun?, whn h tlw Companin enust adopt in -

(.ompamn deoerned thnt longleten debt outuamhng 1992, .Ibe ! AMt h t unenil3 t onudering cuendmg dw in approshnatdy $ 10ljnHUHHI lhe (,ompamn haw tequired adoptum date to 1991. As dm uuniin No*e i talen adiantage of opimrtumon in optionally tulcem

• to the C.onmildated I matuial 5tatettu nt A thh i hange h lughs mt dibe donng ihn penod, whk h helped to i not nIin ted to how a matenal eHet t on net itu ome. redm e the ont of de bt outstainhng from 10.9% at the Miu ellaneout inuime has du reased ufu e 19xN as nd d 1985 m % W 4 du mid W 19%

a inuk of dn kmng tetoporary ush uneument leuk 11 ne hmo cunup ui 19'm redy imm ne .

~lhe dn traw in 1, trent on loeg term debt duong 1990 mgg ,g gg, add nH udi pimWed Nim opnmon nuhed inan the nu reduction in long rerm de be outstandmg and the enulong hmer emhnhled debt un hylhn g n yg,whosmpmW un 1989 brawr YaHey unHNna 2 muiduNimGespn wud ont.Sulnequent to 1)nernber ll 1989, she Cotopam" ononnen m Auguu, a ugmhum minodi osmponem dn rened their nei longlerm dibr outuamhng b) d en nn W 1989 md 19M Nd rn d Hows VMlg appnatmatdy 5112,000/HHh uinuuingof approsimaidy g,g y q,nm 4 h bq gl.n cd w nh a h n ad 5146AHkUNH)of debt redempnoin whh h had a weighted M hm 9my woum Min mmus m k ( n-awrage intereu rate of 10.7%, partially othet by the heu d h Penn Pen's mouA nu im inm udn in tuuam e of appnnnnatdy 52 NJH10,On0 of odihuonal hmmt phm % pa debt baiing a welgbled awrage Intetnt tale ol kb5 j g, ( q g gg ggg g gg g g Athhoonally,01.5 l ud redm ed in longarem dda out' < A ed h mpoun uncumenn ed $122JHHUHH1 W standink by opinuuniately $ 14,000JH10 during 1990 dmawm ma Nde a IMmW ll,199n N Olh I ucts embedded unt of debt deocawd shghti) knum 199 L du' Cotnpq en ened $ 17;JH10,Ono dunng 19% The Im rene in other internt npenw I" noin Mid pmpow 0u4 We Note %e to the 1990 was poncipally due o highn shott term bot'"""T Conwhdated Iinam tal htaiemenn); appnaimateh lewh in 1990 pending teplacunent unh pennanent U 49300.000 W sWmenn uddaMnm M bA 0 " * "' '" C- dauified as long ter m debt on the Consohdated llalam e Ihe ciertth utthty induury b subjeu he inflationar) MicH m Odeu du logianm pnoon W dw Wu's preuurch Himlat to thow npetictu nl by all other ggg g yg 3 ,I bd Onah-(y %9/HMJHM d induuriet lo the utent that the ColupalHn incur g, gy , 4 jg gg g g, ,g l addnional onta or in che benefits resuhing f rom the wW h wn muale ha rdom m du Compn AW dw l diccts of in0ation,it u anth tpated umt ihow clinis udi Comp.my nd Penn Pen bd 528,000JHO W unuwd j ulumately be teHn ted in the Companin' elet trk ratet amgy,gy gg gy g yn;da ad $;0j00.000 W 1he I AMI inued Sl As No.106, "I mployen' mdale bd 6 dnin didi m9 eb 6nmW on a An ounting ha Postretirement Benetin Other t han - dmruerm ben at the bank's diu retion,01 $ Capital Penuun," in 1)ccouber 1990. The new uandant, w hk h bd 9 mund $20JHM 000 6mnW dmmnm nunt be adoptol no later than 1991, will iequuc the knodmg c 94 k a D E nan R 19na Companin to < hange the method of auuunting for %c Wmpmn* oinunn Don pmgum ad 94 pouemphnment bendits, inuktng in a subuantial Icwe requiremenu her the period 1991 1995 aretur-in(tene in the annual n;wnw < harged to inoime lor ndy nomad m be gmhu@ H SOROuaund 6m h benentt 'lhe Compamn npni to wel reguhuory '

approial to dder the increawd annual npenw rnuhing l fnim the new standatd for future odhition from (uitomen. Anunung mt h trqueos are grantnb the 1fi i a,

MANAGEMENT'S DISCUSSION continued - .

(culudmg nutlear tudh of whah appimimately l he company ntabbshed an i mployee stot L

$27 sr,tnuMxn) ap[ hen to l<ril. ihe Companin base Ow nership Plan 'Irust (I $0P) in 1990 wlm h w dl fund a&hoonal(ash requirernents of apprmimately the Company's rnatt hing (oninhution to its existing S t.226JKHMHt0 for the 1991 199; period to meci 401(L) saiings plan. 'I he company espn ts to lend the maturitin of, and sinking f und requirements for, long- 150P $200dKK).0tK) to enable the ISOP to putt base term debt and preh trod and pu ferem e stotL; of that cpproumatdy l1,MHMMMI sharea of the Companyi i amount apprmtmately 527MJMMMxio apphes to Pril common atml on the open market through the end I pnilmhng 5 42,448JHH) of pa ferred stot L ami long- of 1991. ~ e dnldends paid on the itm L anguired by l term debt optionally redeemed in January PP)l) the i NOP will be med to wrw e the debt and, under  ;

imntruents for adehtional nudear fuel during the prnent tax law s, will be dulut oble by the Company l 1991 1995 perimt are ntimated to be appnnimately for inc ome tas purposo.

5166,000JXH), of a hk h apprmtmately 511JMMMHK) Penn hmer will be implementing the final applies to 1991. Dunng the same penods, the inucase of its four year phase in plan in May 1991, ,

Companies' nudear f uel imotments are npu ted Cash inenues for the tolkm eng tuche months u di to be reduied by apprmtmately 5 !!7JHMMHHi and inucase by apprmimately $ 11JHHMKM); himever,

$N6JMH),0(H), rnpnthely, as the nudear fuel b there will be no material clin t to net income sm(c tonsumed. Also, the Companin have operating lease Penn hmer rnogniecd rnenue under the phase-m i somnntments of apprmtmately 5605,000,000 hir the plan as if the full rnenue ind had been plated into Pril.Pr#5 peond.of whk h apprmtmately $12 )juMUNN) elint in 1988. In May 1990 Penn hmer began rum.

tdatn to 1991.1 he Companlei rn mer the (mt> of cring amounts prniously recognued as au rued nudcar fuel (onsumed and operating leasn through rnenun. Linder the phase in plan, amounts deferred their electric ratn. in prior years for future (olin non are n heduled to be

$ ales by the Company of first mortgage bonds t ollected by May 1992, at uhk h time Penn hmeri against propert) ad&tions and of preferred stm L clutrk rates u di be deercased by apprmimately require that appik able carnings (merage ents be met. 544,0tHMxH) on an annual basa, absent other With rnpnt to the hsuame of first mortgage bonds rntulatory action.

under the Companyi first mortgage indenture. the lhe Clean Air Act Amendmenti of 1990 prnent asailainhty of property a&btions (euludmg Perry (hallengo and opportunitin to the Companies that are linit 2) h more rntikthe than the carnmgs tot at being analyicd,lhe Act requito signifi< ant reductions the prewn time and would hmit the amount of first ut sulfur smide and mides of nitrogen from the mangage bondi usuable agalmt property a&httons to Companies' toal-lhed generaung unitt Compilame

$ 3 7 7,000.000. Ihe Company b ninently able to bsue ontions indude, but are not hmited to, instalhng

$ e,161,000AMK) principal amount of first mortgage eldioonal pollution comrol equipment, burning ins bonds agairat previously reared bonds without the r olluting fud, purthasing eminkm alkm anen from need to meet the abme rntrk tions. Itawd upon earn. athers, and retiring facthties. lhe Companin base not ings for 1940 and after ghing effeti to the special set determined the ultimate (mt of complian(c.

purpose trmt dmuwed abme, the Company would be As dhcuned in Note 7 to t he Comohdati d I inanciai ;

permitted, under the earnings tmerage int contained Statements, the Companin have imnted neatly in its (harter, to iuue at least 57 57,000,000 of 5 800,000,000 in Perry linit 2, a nudcar generating preferred ut L at an anumed duidend rate of 9.5% 11 unti w hme c omt na tion w anuspended in 19M. Optiom .

the Company were to inue first mongage bondi or under (omideration indude, but are not necessarily other debt at or prior to the time it inued preferred rntrkted to, roumption of comtruction, umtinued stock, the amount of the preferred stml whkh would suspension or termination. If ronstru(tion were to be louable would be reduced, resume during the 1991 1995 period, the Companin' t apital npenditurn would be higher than the amount distimed abmc for that period. If termination were to ouur and rate recovery from PllCO Jurisdictional customers were to be denied, the Company would base to w nte oli as mm h as $210,000,000 after inc ome taxn.

16

SE(E'CTEb TINANCI AL DATA (ne u..ea ompam 1990 lob 9 Pm loh 7 Iw.

- ~ - - .m:a.a _ -m=wu=r=x m as,uraas (lstllv w dwig 4 4 4 gn) goe t duelt Mtu r p fu sl Opreanng kni nun $ 2.2 2 53 2 4 $ 2,14 4.469 51,1423 72 51.7 7 9.M6 R 7 41.9m Operat mg int ome 510,279 *> 41.! A9 496.' r y, ly !,46s 592,18,7 2 N I,fi76 Ne t im ome 161.026 J i b.R_

412,9/o 110 A28 l atning. on Common sua l 2 5 4,04 N 112.912 1 % l70 D.4.t d 7 ( W. A 2 r, I arningi jn t \ hate of ( ommoti Ntm L (hami on ur6phird ast rope ound.t t of whato outstatnhng iluong the year) 1.(i7 2.1 k i 22 2 40 2 47 Dn 6&nik !)n lateil pet Shart of Common Sem i 1,73 1.< o . I 96 1.96 I 92 Iotal Aucti at Dni mhtt iI 7.N I 1,(.21 7.72 2. A96 7 MU21 7,007,0 $ 7,926, I i 1 Preferred and l'trirn nte sins k Subi n t to Mandaiori Realempoon (> 2,N 2 2 69. % 2 96.ho2 145.1;l 160.794 J

- - -Iongirtm ikbt 1,10 5.21 N 1,07 l 7oh 1.208, % i ), i 12.M ;N lj.61.h61

- - mum - --.- -.- -- m m.m- .aa.a m m l l

1 C@MMON STOCK DATA l hr Corupani s Commun Stos L n Intnl on the Nos brL atul Wlant Stoi L I u hango and n er.uini on other n gnerre.f i u hangn l'es< c Range of Comnmn him i 1990 19 s9

, . - _ _ -.m - . _ _

m f irst Qu.irter iligh t ow 217; N 19 1,N ;o-7/h t h4 /k herond Quarter liigh-l ow 20 1/I IN.1/N f l .1/-l 19-7/M l

'T hird Quarts r l ogh t ow 21 1/4 15 7/N 11 21 1/8 lourth Quarter lhph'luw 17 7,N 15 7/N 24 20 1/4 Yearh lhgh tow 257N 15 7/N 24 thT

.._, - ,.mm- m-.-_'h l'fl4 Ut eff' b4%Cd Lee !*f 8Flt f ebhdted %<. bsf n.NI h t'I ,fi.fM 4dl lOf brW bek M.4 i s. nar.gr i ompoine 'traniai noen CLASSIFICATION OF HOLDERS OF COMMON STOCK AS OF DECEMBER 31,1990 liol.k n of krioni shain i n kl Nutubt t  % Numbu  %

laulniduah 152,960 M S,9 K 61,792,811 4 l,H ]

I idut iarin 22.210 12 4h 7.192.279 4.71 Nominen 124 0 07 79,20;, l t,0 51.92 Irnurame Compamts & Other Corporations 1,207 0.68 1,i10,921 0 87 All Oihet s I,400 0 79 1,0 4 h,2 4 2 0.69

'Iotal 17 7,90 l 140 00 152,569,417 IOO t K)

~ - _ ,_ -,n _ _,. .- .. -. . - . , ,

bh W IdnUah II. It0l. Ibt'fr HPit' $ 7I bh it Ch on l k .kIOf.4 N NMUt I)Maftrib dNidendt id 494 llt.f th4!Y MOff f Hd o" tbf t omlUM 3 (ommon ut the t ompanft t ommon h L Mo. L dontig I m9 an ' the hr.i t.u. quaoro ut tr4.p.aorrh <ho tenih of 17 k pcv shart wrir paid the tai tao ip.aorn of two intoonanon fvgmtmp setamed ranunp e ,ulable ha i..ntnent of t oh ihuilen,h a por n in Notr 82a 17

.~ ._ - . - . . , - . ..- -. , , - . , . -

CONSOLIDATED STATEMENTS OF INCOME i n,o. nw ,n u> mpan, ,

b r ihr h ao I n&d Iku mb< r 11 1990 WW im

==:,-

(lh N,i tina,0l A t'4,4 pl },rl tha' A f q, gap h,,)

Operating Restnues $ 2,2 2 5,5 2 4 $ 2,154.9m $1142.572 Operating i spenses and lasru ope ration-l url 461,366 428.221 452,515 l'utt hawd and interc hanged power, not i3,170 67,216 114,822 Oiher operation espenses 494,575 524,507 471.617 10:41 opuailon 971.11l 1,024.946 1,058,994 Maintenant e 207,970 189.616 149,851 l'rounion for dcpreuatwin and amortiution 224,250 212,624 221,981 General tanen 212,212 190.104 188,021 Ikh tred nmlear unit u. sis, not (Note 1) (66,070) (147.280) 1147,610) inc ome tasco 165.572 141,280 172,115

'loial operat!ng espenses and tasci 1,715,245 1,611,110 1.645,576 Operating inc ome 510,279 543,659 496,996 Other intome and Dedut tionu Allowante for equny fundi used durmg (onstruttion 1,2 IN 2.511 1.397 Iballowed nuticar (omtruction (mts (Note 2) - - (201,260):

Income tas tenefit f rom daallowed nuticar (omtruuton toiti - -

71.615 Mm ellaneous. not 7,201 28.201 18,160 income tases (5,212) (4,776) (10,914) loial other inwmc and dedut tions 3.207 20,938 (97,022)-

lotal inc ome 5 l 1,4 N 6 564,597 199.974 Net Interest and Other Charges:

Interent on long term dcht 29),993 132.021 118,706 Deferred nu(Icar utui interest (Noic 1) (7N,514) (124,087) (134.171)

Allowame for terrowed f unds used during (onstru(tlon and < apitalind intercit (19,196) (23,448) (21,819)'

other interrit esponse 25,545 8,810 7,405 Subsidiary's preferred atm L dnidend requirements 9,9 N 2 10,671 10,967 Net interest and other (hargen 211,810 201.571 181,086 Net income 2 H l .676 161,026 118,888 Preferred and Preference Ato(L Dhidend itcquirements 2 7,62 N 28.094 12,718 l'arnings on Common Stoc k $ 2 54,04 N $ 332,932 $ 186,170 Wrighted Ascrage Number of Shares of Common Sto(L Outstanding 152,569 152.531 152,441 Earnings per share of Common $to(L (based on weighted aserage number of shares outstandmg during the 3rar) $ 1,67 $118 $ 1,22 3-- -4321Ei ab Disidends Declared per share of Common stoc k $ 1,7 3 $ 1.96 $ 1.96 t he atu mpanpng Nars to Conwhdaad i manual Siarementi ate an imrgral part of these catements 18

CO'NSOll' DATED DALANCE SHEETS o s,i n..., aim p ,

N 16, o nibo li 199u im

.,_,,,,,,w_-.--______ = _

_kkki Ik (lh llb ! utehi titility I'lanti in se rut e, at origmal u.st $ 7.511,4 7 2 57.1 % 171 less- % tymulated prouuan for deprn ianon 2,1N9,N16 1.970.12; 5,14 l,7 lb 5,17k M 16 Construt tion work m progow-1 intra plant (Note 7) 426,219 515.447 Nut irar i ut I l 79,2 6 4 168,144 704,4 N l 701,691 6,049,219 6 0N I,717 Other l'toperty and insestenents l 2 5,016 41 {,01 Current Assetu Ceh and t ash equhait nii 2 4. I 4 H I19.610 Ret en able -

Customers (Iru au umulated pros hions of 5 5.210#Mi and

51. ll2JH Hi, ropa inely, for unt ollet table an ount9 19 N,5 91 194.619 t Hher 21,544 21,k 12 Currently in t nabir au rued a usiorot r resenus 6 (Noir .) 14,774 10564 Wirriali and supphes, at aser.,gr ont-l url 66,N 2 2 40.670

()t he r N6,0N 4 75.594 Prepay monts _ Mf fy l l 6'yN67 ._

514,7/4 5 %,il 7 Deferord Chargru Drienol nut Itar unit t om (Noir 1) NO I .2 79 642.221 linamorived sair and h awbat L t osts 95,970 4N,51; Property taes 99,454 hM,142 Unamortved lou on traopmni dibt 71,257 70,427 An iurd a untomer restuurs (Noir il I N,610 44,990 Other 66,012 84,744 1.15 2,5 N 2 1,014,241

$ 7,N 41,6 21 $ 7,7 2 2,b96 Cwlistit A1HW Aw ltuutifies Capitalisation (Nor (^ons<,lidated Staternents of Capitahra*uin)

Common siot Lhohh rs' equay 52,445,I59 52,;M,406 Preirrred stml-Not subi ni to mandatory redempnon l i 2,115 112,115 Subi ni to mandatory redemption 16,00t. 20JH M)

• Preferente stod subnt to ruandatory trdempoon N,100 9,' O)

Preterrrd stm L of coniuhdaint subshhan-Not suhnt to mandatory redernpuori 41,905 41,905 Subint to mandatory redemption 3 N,7 2 2 54,662 Iong term debt I,105,2 4 N 1,071,796 6,067,469 6,081,504 Current I.labiliticu Currently p,oable pirferred and perlerrm e sim k and k,ng term debt 2 7N,191 282,20%

$hort term borrowings (Note 6) I71,511 I I H,000

.% ounts pay able 144,415 147,464 Au rued taws 111,641 94,274

.b rued interrst 79,0N6 M2 M2 Other 69,791 91,701 N 4 N,6H I b l 6,400 Deltrred Certlits:

.%umulaird deterred un omt tars 5 2 5,9 ) H 444,018

,% umulated ch ierrni imesiment in t redo. 2 60,N 41 2M,719 Property tnes 99,454 68,142 Other 2 9,2 Ik 21,894 9I4,471 522.992

'"j_E" * "' '2I" * "'' ^_'d 'IE*'N'spotts 4 and h _ _ _

$ 7,N 41,6 21 17,722 M96

:e -1 -m=,m. m- - - m m=:- .._,__, - _m====

i kW A4 4 ufhg6Afl% )fy buf f'6 (O ( .aDvidOl,,f f d l (tidN jdl \f dt, melif.6 A,t' 30 Mleg'l 4l p.,f t .4 l),Cg(' bd !A'h C gIwt t g 19

CONSU IDATED STATEMENTS OF CAP 11AllZ ATION i di a-iE u,3 i

%t la er 11 1990 _

IWi 0""*""*

Coturnon % tot kholders' l quityt Comtmen sto( L,59 pot s ahir, authiiti/nl I 7 $jH Hij H NI dairt 6 -

$ 1,171,12 5 51,171.125 152,46% 417 shares outstandmg 711,0*81 711,09I (Ithi t paid m a apital 4 4 9,N I O 4 49jikh Ri tamni t af ninp (Notr ;a)

Unabi att d emphnir stoi k oa nershipplan (omnyon stog - 62 7.418) dianyNoie 46) ]I_,0,N 5 7) -

2.5 4 %,I 's9 2364,906

'1o1,415 ommon sh.t I hablers' equa s N umbi t of %4n . ~

( kpoot,al Rt ilt mpic n 1% e ^

( tutit an+1mr- W rptr 14 80 l** l% r %ve (In thousan ly)

Pttitt ttd Sto(L (Notr 5t )

('umulatn t , 5 I00 par s alut -

Authott/cd 6JH Hi tH Hi shart s Not $ubF e ' to hian latory Knleruption 152,;10 152,410 $10161 $ 16.804 19,251 15.2%I l 'H A 176,2 ku 176.250 luk OO l'Ullk 17,62 N 17ji28 4Ms 11,656 116,;60 l 16,;60 10150 14,114 l 1,6 56 4 t% 14,410 144,100 14 4,lt H) lui.lk 14,917 14,410 4 t b% 16,170 161,7t H) 161,700 10106 17,481 16,170 7.2 #% lijKK) 150.000 i;OJHHi 102K4 15.994 15,000 7.16 %

4 %OJ H M) 4 %OJ H H) 101 10 46,4 M % 45,000 4 %j H K)

M 20%

400jHH) 4t Hij H N) 104.12 41,728 40,000 40JH M) 8 64%

4 %OJ H N) 4 50j HlO 104.56 47,052 4%,000 4%jM)O 4 12 %

'lotal not subjet t to 2.6)1.1$O 2,623, ISO $ 2 7 2,6 3 b 2b2,3 3 $ 2b2,13b inatulator) r edt inpt hin Subpsi to \tandatory Kt detuption (Note 5dt 521,200 20,000 2OjkK) 11.50% 2OO,OiH) 2tHijHH) S l O6 (Hi krdempoon wIthin one war (4,000) -

~lotal suhi i t i to 2OOJ H H) 2OO J H Hi $21,2(H) 16,000 2034)O (nandator) trdt hipilon Cumulatisr. $25 par salue-Authorved 8JKK)JkW) sharts Not Sub tt to hiandatory Rnirmption:

\rties ll-lO O',N t unent 2JKHijHND 23h0jHHI $ 2 5.7 5 $ 51,%(HI $O,000 503H30 dntdt nd rate Preferente Sto(k (Note 5tl Cumulathe, no pat salue-

\uthottled 8JHIOjkW) shares Sub}rtt to $1andatory Redemption (Notr %d).

9JHH) 10.k00 $ 1,040 00 5 % 160 9,000 10.800 1025%

kedempOon within onry ar _ (900) ('H Kl)

'lotal hub lrt t to $9,160 N,100 9,9(M) mandatory todeluption 9.OtHI l0 MtHI Preiterett Stot L of consolidated huhtidiary (Note 50).

Cumulathe, $ l(h) par salue-Authortird 1,2tKUH KI sharts Not Subi ett to Niandaiory hedimphon:

40jKul 40jklO 5101.11 $ 4,12 5 4,000 4,000 424% 4,10$

4.25% 41,049 41,049 IO;(H) 4,110 4,105 60jk Mi 102.9 M 6,179 6,000 bjK)O 4.64% 60JN M) 60,(K K) 60j M H) 102 56 6,154 6,000 6JKK) 7.6f% 5,800

%8 000 SbJKKI 101.27  %,990 $,NOO k(Kr%

8 4b% 50JKM1 bOJMK) 103.08 8,246 N,000 kJKK) 104.;8 M,166 N,000 k jM)O 9.16% h0.000 h0j uki k ,

41%O49 419.049 541,170 41,905 41,9M to mandatory redernpuon Sub;crt to hiandatory Redemphon (Note 5dr b.2 4% $$jHK) (,0fMH) $ 104.12 b 5,7 2 7 $,$O0 (' J KXI 100JH K) i00,000 106.K 5 lO.65 $ 10,000 1 OJH K) l O. 'M%

27,616 15,616 102.75 2.815 2.762 1,562 l i j kl%

11,50 % 1 %OJIOO 1;O.000 10; 11 1;,766 13,000 1 %j)OO 101.29  % 246 9,000 12jKIO 1130% ' H ).OOO 12OJHH1 90j k lO 109.10 9.819 9,000 lOjkK) lllHr% l t M)J M kl 6,040 6,720 1500% 60.8( H i 67,200 111.46 6,h94 Redrmphon wuhin one star _

_ __Ji k,6 2 0) (1.620)

'lotal subject to

71,4 t h 612.816 561.010 3 N,7 2 2 59,662 mandatory redtmption

CONSOLID'ATED STATEMENTS OF CAPITAllZATION (continued) m a a n e on.p.,n, au tietend,rr il 1990 #we

===========mw.ce -mmema- : '

'b'"""""

long Irrm th bt (No:e M litat enortgagt hondt oh6o I do,on Company -

10 24% weighird netage intriest rate, due l'890 l'NS $ 176,267 5 174,767 9.41% weighted au rage interrst iare, due l'*%20tHa 194,961 19h,40 i N (H.% wtoghted au rage intrrt st t Atr, ilur 2001-](N N l 4 6, ) 4 ) 146fl l )

9 0% urighted nerage mte int raie, duc 2t w Hr 2OlO 274,110 2% 397 10 0% weighted aserage intert st rain dur 2016 2014 275,000 2 7 U H .O 1,066,N N I 1,086.170 l'entmisania l'oner Cornpang -

916% weighted astrage init rnt ratt, duc 1990-l'N; 59,9 I N 05,116 4.18% weighird astrage intertwt tate, due 199tr 2tM Hi 121,4 l l 72,741 <

M.21% weighird au rage interest rate, dur 2001 JOM 4 0,9 5 N 42,006 9 2 AN weighted asetage internt rate, due 2(MHr2OlO 44 N70 44370 9 74% wt'!ghteil sut t ag0 tidt'rt%t talO, flur 2011 201; 4,N 70 4.M 70 9.7 4% wrigkdt Ll ast roge liitt'rt%t ralP, ilur 2tille-2til9 3,929 I/12' O 275,976 211,712 lotal fust tuor gage lionds 1,14 2,N 59 1,119,402 het ured no'n anti ohhgauunt i >h6o I <hson Company 8 bh% wrightr'l asetage internt iate, duc 1990 1995 IN 2,740 $ 19,2 7 's 7 47% weighird au rage ints rest rate, dur 19%20tHe 27,809 44,015 7 61% weighted astrage mit rnt rate, due 2001201R 62,2 N 2 67,157 6 6k% weighted astrage intt rnt raie, due 2(NHr2OIO 21,600 64,1;O 9 72% weighted astrage internt rate, dur 20112015 2 i ),NOO 21 1,M K) 7,1 IN wngbird aserage mit rnt eate, dur 2016 2020 73,729 -

7.77'*., weighted astrage interni rait, due 2021-2t624 I N N,000 I;h tNHi 971,956 1,OM.,617 h nn9 hanla hmer Compan)-

10.16% wrighted ascrage inte rnt rate, due 1990 1995 61,860 62,114 7.69% weighted astrage internt rate, due 19%2(MN) 10,591 10300 10 04% weighted astrage internt rate, duc 2001 2004 16,7 l N 16,7 i M 7.24% weighted werage mternt rate, due 2(MHr2OIO 9,460 9.460 9.74% wrighted astrage internt rair, duc 2011 2015 12,1 $4 12,150 M.lON wt ighted au rage inicint rate, due 2016 2020 11,500 10,100 166,279 161,111 01 S I uri- M.3ON wrighted aserage internt rate 291,2 i i 125, bib Ioial sn used noin and obhganoni 1,429,446 1371,000

!!nur tred noter uluo I thson Company 830% weighird astrage internt rate, dur 1990-1995 175,000 l %O,000 6.h4% wrighted asolagt* Intrrrst rate, duc 201 I 2015 i00,000 1SO,OtMe b.6l% wt'aghtt'd ,horagr iritt'rr%l raie, dur 20] 8 I I ),100 1Il,1(M) blal unsreured noin 1H N,100 411,100 Capual lease ohhgations (Note 4) 61,196 57,1 %

Notn pasahic refinant ed with long it rm drht 14 H,40N -

Not unamortved diu ount on debt ( 10,1N N) (11,671)

Iting term debt dur wwhm oneytlar (254,675) (277,688) biat iong ierm dchi 3,i O s,2 4 H i,07 i,796 btal Capitalintion 56,067,469 56,0s1304 inuusnnzateaware - > -

._~m -- .c . -e - -

k k%t' .it s tilFftt'illip bidt1 b3 k EllM:4h!JIrf! h ubtf u Lik hl.ut-f'tChl, af t- an (HfCf A! l,4fl 4 ph f fit',e' 6f 4(t ItW Dli 21

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS ohuh hmnran,ay Ior the leais i ndej th-temt.cr il 1990 -1989 1988 (In ilmuundq Balant e at begmning of par $ 4 59,688 $4 25,670 $ 519,111 Net insome 211,676  % 1,026 218,8M8 74 I . lts 786.6 % 757,999 Ceh dnidena on prtiened and preferente stal 27,609 28,040 11,% 2 Coh dntdends on common steL 261,945 298,96M 298,793 Premimn on reden ; ion of pret' e rred and - - 1,5 h 8 291,554  !!7,008 112,129 Italance at end of scar (Note Sa) $ 4 49,N 10 $ 4 59,688 $ 42 5,670 CONSOLIDATED STATEMENTS OF CAPITAL. STOCK AND OTHER PAID-IN CAPITAL Preferred and Preferente Stock Not Sublect to .

Subl ect to Common Stutk Wndatory Redempuun Mandatory Redemption -

Other 1.Inaltos aied Par or Par or humtwr Par raid-in ISOP Number Staa ' Numlwr Stated of Shares \alue Capital Common Simk of 5 hares Value of Sharen Value (th,itue in thouu. a 4 Italance, lanuary 1,1988 152,39i,537 $ 1.171,578 $ % L616 $- 7,042,199 1404,240 1,597,818 $ 156,784 Capital SimL 1xpense il1)

Comernium and Redempilom-

$ l .80 Series 110,176 99I 6li (118,112) (2,089)

$95.00 Series (l 800) (I,800)

$ 102.50 Series (l .MfM)) (l, MIN))

8.24% Serlea p,(MN)) (500) 10.48% Series (602) (220Jk M)) - '2 2,(M M))

10.76% Series 442l) (240,(M10) (24,000) L lllHP%Serns (4,000) (400) 14.(MN Series (7,500) (2JX N)JN M)) (5 0,0(10) 15.(XN Series ( I) (6.400) - (640) llalance. lhremher 11,1988 152,507,913 1,172,571 7 32,7 '1 - i.042,3% 154,240 980,726 101,555 Comersies,s and

- Redemptions-

$1.80 $eries - 61,524 554 167 (88;110) (1,113)

$95.00 Series (1,800) #1,800)

$ 10230 Series (1,800) (1,800) 8.24% Serien (5JhM)) - (500) i IiM)N Series (4,000) ' (400)-

1i30% Series (6) (10AMMi) ().000) 15.00% Series (2) (6.400) (640) bal$ne,!)ecember II,1989 152,56't,417 1.171,125 711.091 - 5,042 199 354 .'40 84! bib 94,082 ISOP Purchase Tra nactiom (l0,8 U)

Redempnom-

$ 102,50 Series (1,800) (' MOO)

H.2 /% Se rics (5,000) (5(M3) -

11.tNP% Series . (8,(N H)) (800)".

1 I,50% $ctles (6) (lOJMM)) ( 3,000) -

11.00% Serie. (4) ' (LEU'M)) (l .000)-

15.00% %r'; (i (6.400) tb40) lialance, Des ernF .r 11, 19'80 152,569,417 $ 1.17 5,12 5 5751,081 $(10,8 57) 5,042,199 $ 3 54,240 782,416 $ 86.142 The unmpanymg Notei to runwhdaird Imantis statemenn are an mtegral part of these statements 22 l L- . m., . - - - - _ _ _ _ _ _ _ _ _ _ _ _______________.S.____ . _ . _ _ _ _ ,

CO$SOLtdATED STATEMENTS OF CASH FLOWS ohm i a,mn umni, f or the bn i nded llecernher il 1990 1989 1988 on suunaq Cash flom from Operating kthities:

Net incorne $ 2 N 1,676 $ 161,026 5 218,h88 Adjustments to reconule net in(ome to net (ash from operating atinities:

Depre(latkm and amorttiatkm 10 3.N 77 271,129 106,919 Deferred income taset net NO,900 111,612 72,744 Irnestment tas (redits, net (4,N7N) (2M 5 9) (2.822)

Au rued rnenue, net (4,675) ( 38,1;O) (66,161)

Allowan(c lor equity fundi used durmg construt uon (1,2 3 N) (2,51 1) (1,197) l)eferred f uel t osts, net 26.375 (l2,450) (28,666)

Write-off of dnallowed plant rats - -

201,260 Delerred nuclear umt onts, net (14 4,5 N 4) (271,367) (281.781)

Ret eiubles ( 3,2 4 N) (i1,476) (9,702)

Materials and supphes (26,64 !) 172 10,790 r% counts payable 603 8,866 (7,904)

Other __

( 36,N 74) 665 28,121 Net (ash prouded frorn operating actattles 465,293 409,185 418,287 Cash I' lows from I~inancing Acihities:

New Onancing-long-term debt 919,667 791,911 182.476 Short term lorrowings, r*ct 204,039 1 14,t H M) 4.000 Redemptions and Repayments-Preferred ami preferen(c sto(L 7.740 8,542 111,'i71 L ong-term debt 1,079,397 989,174 416,H9 Ihodend Payments-Common stot L 272.255 298,422 101,04i Preferred and preferenc e stock 2 7,5 Nb 28,202 15,186 Net tash used for Onantlng atinities 2 ti l,2 7 2 .816.607 678,275 Ccsh I' lows from insesting Atthities:

Property ,,ddations 2 56,2 i N 221,771 192,246 Purt hasc of imestments 6,651 6,611 4,807 Sale of imestments (l,I 4 2) (17,795) (296,471)

Imestment m employee simk onnership plan 40,000 -- -

- Other 5,776 6,2} 2 (6,255)

Net cash used for (prouded from)imestmg artis.nes 307,501 1 % 84 (105,671)

Net decrease in cash and tash equisalents 105,482 204.263 114,1I5 Cash and cash equisalents at twginning of year i29,830 114,09) 468,408 Cash and cash equisalents at end of sear $ 24,3 4 N $ 129.810 $ 114,091

=

' Supplemental Cash I' lows Information:

Cash Paid During the Year-Interest (net of amounts capitaheed) $ 290,155 $ 110,574 5 299.707 Income taxes N 7,95 3 15,011 52,950 l'he acompanymg Noen to Comoh,lateil I man,ul hinemenn are an mergral part ot' thew uarementt I

23 )

i l

CONSOLIDATED STATEMENTS OF TAXES ohllamnbmpns f or the h an i nded bei c,nber il 1990 1989 N88 I

~

m e= ' n w. _2 ,

on ih. oun:19 l General Tases:

Real and p rsonal property $ 97,366 5 85,5'l 5 90.611 Staic gross ret cipts 91,226 82,598 77,226 l Social security and unemployment 14.126 14,179 11.577 l Othet 7,494 7,804 6,589 l l

'lotal general tae- $ 212,212 5190.104 5188.021 Prmision for inneme 7ases:

Currently payable-l ederal $ N 8.102 5 46,765 $ 19,141 State 6,4 NO 1.208 589 94,782 47,973 19,732 Iklerred, net bee below)-

lederal 79,5 l N 12),851 67,486 i1 1,3N2 7,761 4,758 l 80,900 131,612 72.744 i i imestment to credits, net of amortleation (4.N 7 N) (28,529) (2,822)

Total prosision for income taes $ 170,N04 5151,0;6 $ 109.654 hour0.00757 days <br />0.182 hours <br />0.00108 weeks <br />2.48847e-4 months <br /> (es of Deferred Tas IApense:

I uen of en oser imL depreciatlon, net $ 60,915 5 68.155 $ 60,249 Allowance for torrowed lunds used during construction and capitahzed interest 3,912 8.405 7,155 Deferred fuel costs, net (7.740) 6,869 10.514 Amortization of deferred interest on leased nudear fuel (5,017) (10 113) (12,109)

Pension costs N,N 21 3,220 1,779 Property tnes (26,7 3 l } (632) (6,7 b) l Ikferred nuclear unit costs 4 4,N05 80,111 85,981 Plant cost disallowance - -

(73,615)

Ditlerence between tax and lu2L resenue. net (3,104) 13,721 5,882 l Ikferred lon on reacquired debt, et 1,914 1,649 9,299 i Alternathe minimum tax credit utilized (deferred) N,090 (15,973) (14.336)

Other, net (4,965) (6,204) (1,322) '

Net deferred in expense $ NO,900 $ 131,612 5 72,744 I;cconciliation of f ederal income Tas 13 pense at Statutory Rate to Total Prmision for income Tases:

Ikok income before provision for income taxes $ 4 5 2,4 N0 $ 512,082 5128,542 ,

federalincome tas expense at statutory rate $ 151.84 3 $ 174,108 5111,704 Increases (reductions)in taes resulting from-1:xcess of luik mer tax deprectation 2 4,7N ) 27,665 13,143)

Amortization ofimestment tu credits (I I,14 2) (41,826) (13,140)'

Rapid amortization of deferred incon.e twes -

(15,360) -

I ffect of reduced federal income ta rate - -

(5,656)

Other, net 3,320 8,469 3,601 lotal prm bion for income tues $ 170,N04 5151,036 $ 109.654 :

't he at 6umpan;tng Nacs i,i Con-Antare d Fina'nial Maten *-a are an inte gr.d part of thew ><arements.

24

NOTES TO* CONSOLIDATED FINANCI AL STATEMENTS

1. Summary of Significant expect that ddleren e to aho be reunerable f rom Accounthg Policies: t heir ( ustomen.

. 'lhe (onsohdated finandal starments intlude Ohio Common Onnership of Generating f acilities-I dnon Company (Company) and in w holl) ow ned 1 he Companies and od er Central Area Pimt r Coorde subudiaren, Pennsyhania Power Company (Penn Power), nation Group (CAPCO) t ampanies ou n, as tenants in 01 S Capital, intorporated (OI 5 Capnal) and 015 I ucl, mmmon, sarious power generating laihtles. I at h tJ Incorporated (OIS I t cl) AH sigmfk ant interrompany the mmpamn k ohhgated to pay a share of the wn-transactions have been clinunated. t he Company and struction onts of any jointly ou ned f at ihty m the same Penn Power (Compames) folkm the auounung pohues proportion as its ow nenhip internt. The Companin' and prattkes prescrdwd by the Pubhc linhties portions of operatmg expenws awiated with pointly Comminion of()hio (PllCO), the Pennsyhanta Pubik ou ned fa(ihties are induded in the (orrespondmg Unhty Comminion (PPllC) and the lederal I nergs operatmg npenws on the Consohdated statements of Regulatory Commbslon (Ii RC). Inwme (we Note 3 w nh respect to the delertal of Perry Revenues-The Companies' retail customers are . Ilmt I and licawr Valley limt 2 costs). The amounts metered on a cycle basis. Resenue h recognierd for re0c(ted on the Con ohdated lialant e $heet under unhty electcic senkt based on meten read through the end plant at December 11,1990, indude the folkm mg; of the month. uunn s . unna.uta c.mu u. n..n Receivahlo In>m customers include saln to tesi. utar. on runi mu o.n u  %,6 m i omram ,

dential, commercial and industriai customers located """' '"5""" "4""'"" "'"'"*" b"""' t2 in the Co npanin' wn ke area and sal . to w holesale d a ' h"u'a'^ >

customers.1 here b no material (oncentration of reicio "R samnu, #7 5 267.b00 5 64,100 $ 23:00 bx Mh, ahin at Decembcr 31,1990, with respect to any llruce

, p_rticular wgment of the Companies' customers, M.inme!d I uct Costs-The Companin reuner fuel-related *l, #2 cosa not othernne induded in haw rates f rom retail ""d " 72*""" 2 N "" 2 " '" '""*"

customers through separate energs rates. Any owr or lic.ner Llle)

,1 and n2 i,814 Soo 194200 7,' m 4 7. l i am undet collection resuhing from the operation of thew pun ,i ,na rates are induded as adjustmena to subsequent energs ci.n.mor

. rates. Anonhngly, the (ompanies defer the <hdert nce Idd"" k"'9 7"" 17 2 """ ** R2^

between actual fuchrdated costs incurred and the P" " " 2 ~ ~

K """ C" amouna currently recmered f rom their customers. 1"'dl 5 A2 762"" 5 ""M '" 5437 " '

titility Plant and Depreciation-Utik:y plam oi i aan nm iur sa m pn,, n, osa s ha, no, wi sc,n .o,gn,y im redects the originc.l cost of construction (,ee Note 23, a v4 nudar unn includmM Payndl and related cmt5 such as taxes,i,ensions ""'"d"w""'"""""""""""""""""#""""'"**""

nee e43 and other fringe benena, adminhtrathe and general cows and allowance for funds uwd during wnstruction Nuclear Foel-Nue: ear fud n rewrded at onginal cmt, w hkh indudes material, enrkhment, fahntation ggigct The Companies generath pnnide for depreciation and interest wsts incurred priot to reactor load.1 he

- on a straight-hne hash at sarious mes mer the ntimated Coinpamn amonue the cost d nuckar fud hwed on hies of property incinded in plant in sen k e. The annual the rate d comumpoon, The Companin' eleuric ratn compoute straight hne rates for electr.c plant were indude arnounts for the future disposal of spent nuclear L2% in 1990 and 1989 and I,1% in 1988 The fud hawd upon the fonnula uwd to cornpun pannenn Compan' reconb depreciation expenw apphcable to to the UniaW Maua De,urtment of Energy.

Perry linit I on a unia of production hash as AHowance for Funds tised During Construoion-authorized in the PUCO. Al UDC reprnenn financing costs capitalized to The Cornpanies are currendy recognizing estimated consuuc00n wod in pnigre3s (CWIP) during the future decommissming cosn apphcable to their ow oer- wncuoion penu e bormwed funa ponyn rednu

' ship and leasehold interests in nudear gen (rating unin capuaheed mternt paymenn, and the rquity luna

as a component of depreciation expense. The Companici portion represents the nuncash capitaheation of imputed

share of the future ohhgation to decommnsion thew equu) wn Alu sann auonhng um dangn in units in current do!!ars n approximately $214,000.000, the Inel of CWIP and in the (mt of capital. The

. based on estimates used in the Companies' latest rate WmPosne AFUDC ratn texdudmg nudcar turl intertst)

' tilings. \ mounts recmcred from customers are imnted in external decomnnssic.uing trust funds. If the actual

costs of demmmnsioning the units exceed the ar-cumulated amounts recmcred from customers, which base Lien invested in 'he innt funds, the Companies 25

l NOTES continued 1

w re 9.6%, i 1.1% and I l .3% in 1990,1989 and 1988, through to the Companies' curomers and an assumed j respecthcly. Capitahration rates for interest on nudcar deferred ias habihty applicable to the equity component ;

fuel were 8.4%,9.9% and 8.8% in 1990,1989 and of AlllDC, for whith no income tax timing difference 1988, respecthely. exists under the prior inwme tax accounting standard.

Incame Taxex-Details of the total punision for Since the Companies apect that the additional deferred income taxes are show n on the Consohdated Statements tax liabihues will be collected from their customers oflaxes. The deferred income taxes sult from timing when the taxes i.ewmc payabic, an asset will be remg i differences in the recognkion of n 4 and expenws nized when the Companies adopt SI AS Nu 96 for for tax and acwunting purpmes. <ision for that pnibable future resenue. The Companies are not income taws in 19F9 InduJed ami moion of approxi- required to adopt 51 As Nu 96 until 1992. Ilowewr, )

mately $49,(KK),0m) of deferred inc ome taxes and if the Companies had adopted the standard as of imestment tax credits (11C) as authonzed by the PllCO. Det ember 11,1990, total av,ets would base increased All other ITC w hich was dcierred when utihred h being by apprmimately 51 HK),000,0m) with no material effect amortized mer the estimated hfe of the related property. to net inwme. ,

lur income tax purposes, the Capanies claim Retirement Benefits-The Companies' trusteed, !

hberaheed depreciation and, consistent uith the rate nonwntributory dellned benefit pension plans mver treatment, generally proside deferred inwme taxes. The almost all full. time employees. tipon retirement,  ;

Companies expect that deferred taws which hase net employees ret ene a monthly pension bawd on length heen provided will be collected from their customers of senice and wmpensation. The Companies use the when the taws bewme payable, based upon the projected unit (redit method for fundmg purposes and estabinhed rate making practicca of the PLICO, the were not required to make pension contributions during :

PPllC and the I LRC, As of December 11,1990, the the three years ended December 11,1990.

cumulathe net income tax uming differenc es fin w hi(h The following wts forth the funded status of the deferred inwme taws haw not been provided were plam and amounts recognued on the Consohdated approximately $500,000,000,Ihe Companies base Balance Sheets; approximately $42,200,000 of alternathe minimum tax y ,,, g y ,, p, credits available to offset future federal ir.come taxes

~

payable; such credits may be carried forward indelimich. '

~ Proceeds from the sales of certain tax benefits in Yn'((,"((",'j,'j"" "'

accordance with prmnions of the Economic Recown wed benenn 5356,97; 5119,987 Tax Act of 1981 are being amortized owr the hfe of Nonsested benchu 914 1.119 the related property. Proceeds attributable to 1IC wer humulated benent obhganon 51;7,s89 5141,106 recorded as additional deferred ilC: the ren aining amounts were recorded as reductions to utihty plant Nan aucu at fair salue M89A n 56 DA60 Actuarial presem salue of I" ^"N #' 419,234

- proietted benent ohhgat on 415.264 The financial Accounting Standards Board (fASB) hsued Statement of financial Acmunting Standards M",'"]"*]'Q' on I s0,213 222,196 TAS) Na 96, " Accounting for income laxes," v hich, unrn ognued net g,un 04,1011 (i 10,1 in) among other things, requires a change in the method unrecognued pnor senit e cost I kJ 28 19A s6 used by enterprhes to account for deferred income unrecogmnd net transmon awet (81.554) iM9A99) taxes. Linder this standard, deferred income tax habihues set pension anet 5 s2A86 5 22.017 must be recognized at the statutory income tax rates in effect w hen the liabihties are expected to be paid. The The assets of the plans consist primarily of common standard also requires recognition of a deferred tax saicks, United States gowrnment bonds and corporate hability foi tax benefits that have presiously been ikiwed bonds. Net pension costs li>r the three years ended December 31,1990, were computed as follows:

rm em em

((n thouumly hen k e t mt -benrht s earned during the period 5i1,125 5 15,981 5 15,519 Interest on pnyected benent obhgation 16.049 15,967 13,916 Return on plan .usets 20,777 (111,059) (78,079)

Net deferral (amort teanon) (I t'OAo0) S t ,5 42 22,017 Net penuon cut 5(10A49) 5 (9.567) 5 16.607) 26

. . t

't he anunu d darount rate used m determining the 2. Distillowance of Nuctoar actuarial present salue of the projet ted benefit ohhgation Construction Costs:

was 9% in eat h year, ilu anumed rate ofinurase m ()n Man h 7,1989, the PilCO appnned a Supulation future unnprmation icwh used to measure tha ohhga- and Reuimna ndanon enteerd nuo between the Company tion v as 5% in 1990 and 1989. and 7% in 198k. I he and the I L100 Stall in umnn tion u uh the imesogatuem auumed exprued long term sates of return on plan ut Perry timt I aml 8caset Valley llmi 2 ionutu< tion aucts were ! IN in 1990 and 10% m 1989 and ! 'SF i mit in the sopulation and Reuimmendation. the

~lhe Companies pon nie a nummum amount i i Company agreed to permanently bubear serLing reuntry nont uninhutory hic immans e to retin d employen in of $217JMHUNHi of Perry thut I umuruttu n unb aikhtion to optional contributory itnuran( c, llcalth ( are and $ 17,tMHl.000 of Ikaser Val!cy linit 2 a.mtru< tion benelin, w hk h inc.lude t ertain employee deduuibles and unts as ihey n late to fla Companyi PllC() jurndu tionai

< oluymenn, are aho asadable to retuul employers, t uuomers b a rnuh, the ( ompany w nite oil the thur dependenn and, under (crtam t irrunntam n, their applaable amounts whk h, af ter gnmg citru to the sun hon. 't he Compames pay imurant e prennunn to resene cuabhshed by the Company in 1987 lor potentiat unct a portion ot' thew benrhu in t a ru of wt lumn; dnalbmant e of Perry linit 1 e on uurnon onts,iedot ed all amounts up to the bmits are paid by the Con.panin. 1968 net Int ome by $ 127,M5.000 484 per shair of lapemn ano( 6ated u nh brahh < are and I,te insuram e i omnum mim Ll. Linder the terna of the stipulanon and benehtn for retirees are t harged to in< ome during Reuimmendatmn, prmnu n was made for ternuncaion the appbrable payment ir4inds and amounted to of all remammg loun triated to c onstrouion of Perry

$7.2 55juni, $ 5/%0tM) and $5.102MH) m 1990, lion I and !!cawr %lley linit 2 and the prudente of 1989 and 19M8, rnpertnely the Compamiimnement m su< h uma for rate

~Ihe I ASil rn ently hsued SI Ah Nu 106,"I mployr s* malmg lmrpmet Atrounting for Postroturment Benelin Other 'ihim

3. Recovery of Nucle,ar Unit Costo:

Pvmiom," whah moddles the current ac c cIacd methml

.I he Pll(.O authorterd the (.ompany to deler nontuel to be med by roterprho m at: ount for other gunt-operation and maintenanir onts relating to Perry employment benetin. Linder the new Mandard, the linn i from its m4cnn e date for rate making purpmn Compamn w dl be rnlutred to troogniec the expn trd until lebruan .,,1988, when Pern oper-9ng onts cow of pnnuhng pmiemploymem bencl,us to emphnees .' .-

urre rn ognved in the (-,ompany,s cicurk r.,'n it aho and their benef k iann and uncred dependenn f tom auhmued the C ompany to deler nonluel operate md the time employen are hired until they beuime chgdde

, maintenan(c expemes, deprn tatmn expeme, pmpan to rn ene those beneh,ts. I he ComIunies ex!in t to aooIit -

tasm and internt expeme anoriated with Brawr Wiley the new wandard pnnpeonely in 199 L Based on Umt 2, imm u, s commerual operaion date until rurrent plan demographas it h numaird that annual Augmt .31,1990, w hen these unts w etc aho recognited pmtemployment bench,t expemn ud. l increase bs .

m the (,ompam,s cleurk ratet .Ihe Company aho approximately $71,000,000. 'Ibe C.o, -panin npert to '

began to udln t Pern llrut I and Brawr 5,alin linit 2 wel regulatort appnnal to deler the im reawd annual '

• delerred unh in runneuton uuh the August 1990 expeme rnuhing i.non the new standard for futurc f rate order. T he i,UCU has aho authortred the (,a mpam rolin hon rom < miomen. Anunung sut h requnn are -

to drfer internt npeme on an umulated Beawr %lley granted, the (,ompames would not npn t a material . .

linit 3 deterred uno (ru tudmg preuomly deterred

athene ellet t to net im ome as a rnuh of.adoIonb- mterest) whk h were not miluded in rate base in the SI AS Nu 106.

Augun 1990 rate onler, untd ihe carher of lanuary 1, huI>Id emental Cash f lows information- All 199 8. or the date tenain m the (,ompam,s nnt rate raw.

temporary (ash 'mntmenn pun hawd w uh an initial -

As pan of the Augmt 1990 PllCO rate order, the merunty of three numths or less are reponed as e ash -

Pil(,O rnhn ed the amount of deferred Brawr \, alley equivalents on the t.omohdated Balant e Shern. 'I he lina ., una whk h a uhl be reuncred f rom the l Companics record temporary t ash imestments at unt, . .

C.ompany s tuuomen. I.he Pill.O denied a rehcanng l

whkh aI>Iirosimain iheir marLei salue, Noncash -

on thk inue in number 1990; an onhngly, the (.ompany Onanung and imnting at tiutics im luded rapital leaws of $H,7hS,000, $2M,111,000 and S l1,170,000 torthe w rote oil appnnimarrly $ 27,000,000 of prniomh '

deterred < mt% whn h redut ed net income by approd I

yean 1990,1989 and 19X8, rnpertnely Nomash malcly $ 17,h00,000 ($.12 per share of Common him k) hwesting artniten aho nu luded allowant e for equdy '

tunds med dunng (omtruction. t )! S I url rommen ial papo tramautons uhkh are retln red as long-term debt on the Conminlated Balanu $hrets (we Note 5e) but h,nc inlual maturity pecimb of three months or leu, are reported net within finam ing aunities under i long term drht.

27 s

, w__- , ~ -, - - - - - - - - - - - - -- - - - - - .

1 1

NOT ES continued .

during the fourth <piarter of 1990. The Company has term or the renewal term (if elected) for a purc hase appealed the PLICO decision to the Ohio Supreme Court. price equal to the fair mar! et value of the f acibiles.

The PPllC ordered Penn Power to defer operation Consi ient with the regulatory treatment, the and maintenance costs (net of energy sasings f rom rental pay ments for (api,al and operating lec.ses are Perry linit I), depret lation expense, property taxes and c harged to operating expenses on the Conschdated intere.st expense awociated with Perry tinit 1, irom its Statements of Income. Such costs reflected on the commercial operation date until May 4,1"88, w ben Consohdated Statements of income for the three years Perry operating costs were recognized in Penn hmer's ended December 31,1990, are summarieed as followc electric rates. The rate increase is designed to produce , , y approximately $67,100,000 of additional annual (in the uutui.)

operaung resenues and is being phased in mer seseral Operatmg leases 5110.128 5 t 10/878 5111.111 yearn all amounts deferred durmg the phase in period , g will be fully retmered by the end of the fourth year. opn i ie,ses 7,s i g i 2,oi s 39,3s7 linder this phase in plan, Penn Power's rates were initiall,, Interesi un opnal ti ases 7,93 9.eno 17.040 increased to produte approximately $24,000,000 in ~l oial renial pay ments SiaU77 5152,tM2 5188,210 ,

addnional cash resenues; the second year increase of approximately $28,000,000 was implemented in 1989 The future minimum lease pay ments as of The dillerence between resenues actually billed and December 11,1990, are:

revenues that would have been billed absent the phase-in plan were recognierd as additional accrued resenue ims i ,,,,

for f1nancial reporting purposes. Penn Power began ,,,,so,,, )

recosering the resenues previously deferred in May 1990, iyy; $ i7,i gs 3 i 2 3,o49 when rates were increased approximately $28,000,000 pn2 33,433 i2ngii on an annual basis. Such resenues and associated interest 1993 y,302 i20,337 accrued for future collectLn in connection with this ps4 i 1, t s s 120,091 plan amounted to approximately $53,384.000 as of 1995 12.192 119,909 Dnember 31,1990. Accrued customer resenues iean thereaner 138,s18 2,s19,266 retelvable within twelve months base been reclassitled Total mn . mum lease pay ments 5211,060 51124,461 on the 1989 Consolidated Balance Sheet to conform to i xecumry costs 52.916 the 1990 presentation. M mmnnum lease pasmenis h8,124

4. Esases: Interest portion 96,728 1he Companies lease a portion of their nuclear present salue of nei generating facilities, certain transmission facilities, mmimum icase payments 61,196 computer equipment, olllce space and other property 1.ess current poruon 6,11s and equipment under cancelable and noncancelable Noncurreni portion 5 ss,261 leases.

In 1987 the Company sold a portion ofit$ 5, Capitalization:

ownership interest in Perry linit I and Beave Valle) (a)lletained Earnings-llnder the Company's tinit 2 and simultaneously entered into eperatin8 indenture, the Company's consolidated retained leases on the portions sold for basic lease terms o;' earnings unrestricted for payment of cash disidends on approximately 29 years. During the term of the leases the Company's common stock were 5 377,76 3,000 at the Company conttaues to be responsible, to the extent December 11,1990.

of its combined ownership and leasehold interest, for (b) Employee Stock Ownership Plan-The costs associated w th the units including construction Company established an Employee Stock Ownership expend tures, operation and maintenance expenses, Plan Trust (ESOP)in October 1990 which will fund the insurance nuclear fuel, property eaxes and decomnus- Compan 's matching contribution to its existing 401(k) sioning. The leases provide for adjustments to the basic sasings p'lan. The ESOP has the abilits to horrow funds rental payments for ponible future changes in the to acquire shares of the Company's common stock which federal tax code. The Company has the right, at the end will be allocated to employees beginning in June 1991, of the respecthe basic lease terms, to renew the lease $ The dividends paid on the stock acquired by the ESOP for up to two years. The Company also has the right to will be used to service the debt and, under present tax purchase the facilities at the expiration of the basic lease lam w 11 be deductible by the Company for income tax purposes. The Company expects to ultimately lend the LSOP $200,000,000 to enable the ESOP to purchase approximately 11,500,000 shares of the Company's common stock on the open market, As of December 31, 28 l

, 4 1990, the t. SOP had borrowed $40,000,000 from the against unfunded property addinons or againsi presi-Company, of w hit b $ 10.8'J,00() was used to pun base oudy retired bonds. llus method r an result in minor 627.400 sharea of the Companfs common uotk. inc reases in the amount of the annual sinkmg fund (c) Pwferred and Preference Sim L-Penn Pond requirements. Penn Power expects to satisfy its re-

-l 3% and I % series of preferred stock hase restrictons quirements in 1991 by certifying unfunded property presenting early redemption through new issuantes of additions at 166-2H% of the required amount.

set urities ha,ing interest or dindend rates less than the Smking fund requirements for (ertain series of first 4tdend rates of the series being reder ned. All other mortgage bonds and maturing long-term debt (excluding cierred and preferente uk may be redeemed in (apital leases) for the next fne years are:

whole, or in part, with at least 30 days but not more

'than 60 days notice. 'I he optional redemption prices pg, a r,pyg3 shown on the Conschdated Statements of Capitalization pp,2  ;;p 5gpg, will det hne to esentual mlnimums per share according prn m4pnpo to the Charter provisions that estabbsh eac? mies. Noa loo.9 m Ao (d) Preferred and Preference Stock Sui jcct to pn5 210 ;o un)

Mandatory Redemption- Annual sinking fund Amounts show n above for 1991 include prmisions fi>r the Companies' preferred and preference stock are as lialkms: $2Lo# 0m) of Ant mongage londs opoonayy redeemed in January 1991. The weighted aserage senn  % om n' P""'"" interest rates shown on the Consolidated Statements

. Ohio i den- of Capitahation relate to long-term debt outstandmg Prefs tred Sna k 13.50 % aoJWM) JuneI 1991 W- b ll,1990.

Pnlerence Saxk Io25% o00 July 1 (i)

Penn Power- De Companies gabons to repay certain Preferred Snick 8.24% SJXM Des emtwr 1 (i) pollution control resenue bonds are secured by sescral

!!JNyb 4jMT) January 1 (i) 3eries of Orst mortgage honds and, in home cases, by IUn% 3,200 July 15 (i) subordina;e liens on the related pollution control i1.50 % e590 ~ July 15 (i) facilities. A portion of the unsecured notes outstanding i HHrb 5AU Juh I (t) are entitled to the benent of irresocable bank leners to. sos 100#)0 April i 2040 W dit of $ 282.412,000. Ti> the extent that drawings go neorements or this senes have begun. are made under those letters of credit to pay principal Preferred and preference shares are retired at $100 of, or interest on, the pollution control menue and $ LOOO per share, respectisely, plus accrued dni, tends, the Company is entitled to a credit on the dendt The sinking fund requirements for the next tise notes. The Company pays an annual fee of 4/10% to sean are: t/2% of the amounts of the teners of credit to the issuing banks and is obligated to reimburse the banks

-pm for any drawings thereu, der.

$2 L;20Am pri2 8,12ono .Re C,ompany is party w . currency exchange l pg3 gyg, agreement to reduce potential risks arising from I

pn4 8,120sm exchange rate fluctuations for pay ments ofimerest and pe9; 8.120p n principal on its Suiss I ranc Note, SFr. 81,000,000 principal mount ($44,000 000)due May 199 3. Under Amounts shown abme for 1991 include the current y exchange agreement, the Company and j$15,400,m>0 of preferred stock optionai'y redeemed the counterparty exchange dollars for Sw o ancs to jn January 1991. meet all obligations under the note. In th - mt of c)1.ongTerm Debt-The mortgages and their nonperformance by the counterparty, the Company is L

tupp _ (lements, which secure all of the Companies' relieved fromfirst its obhgation of payment pursuant to the l mortgage bonds, sene as direct first mortgage hens on agreement and would h- m afy interest and pubstantially all pegerty and franchises, other than principal payments by purchasing Swiss francs at the specificalls except(d pnperty. ow ned by the Companies. spot rate in ettect at that time.

Base's on the amou it of bonds authenticated by the Nuclear fuel purchases are Ananced through the (Trustees through December 11,1990, the Companies' issuance of 015 I uel commercial paper and loans, both

' annual s 4tne and imprmement fond requirements of which are st.pported 82y a $450,000,000 long-term for all bo ids rued under the mortgages amount to bank credit agreement which expires March 31,1993.

j 31,1 !!,000. The Company expects to deposit funds Acconhngly, the comme cial paper and loans are

k. i991 which wi'l be withdrawn upon the surrender for cancellation cia hke principal amount of bonds.

Which are spec'tically authenticated for such purposes 29

[

NOTES continued i

redected as long-term debt on the Consohdated The CAPCO (umpanies are continuing to reuew )

llalance Sheett Of S I uel must pay a facdity fee of the status of Perry linit 2. Currently, no ugmutant 1 1/M% on the totallint of credit and a commitment work k oeing performed on the tinu and the Companies .

fee of 1/20% on any unused amount. do not capitahre AlllDC. Until resiew of the status of in January 1991, the Company soll us right to Perry Unit 2 has been completed, enere will be no recche a portion of the monthly resenation (harges deOned whedule for its completion; the construction payable under certain wholesale p<mer sale arrange. estimates for the 1991 1995 period do not include any ,

ments, to a spe(lal purpme trust. Sale prm eeds to the amounts apphcable to Perry tinit 2 if comtruction of Company of $175,000,000 were borrowed by the the tinit were to be resumed. Pmsible ahernathes being trust from institutional imestors who wdi be repaid reslewed wkh respect to tinit 2 indude indennite by the trust in equa;inonthly installments through suspension of (onstruction on the Unit, resumption of June 1996, as payments for the tramferred resenation work on ib- Unit and termination of the Unit. In c harges are received, Repayment of the trust's acconlan(e with the CAP' 0 arrangt nents, none of borrowings are guaranteed by the Company. The pro- these alternatives may be implemented without the (eeds re(ehed by the Company were used to redeem approval of each of the CAPCO companies.

a hke amount of short term debt; accordingly, apprm, Duquesne Light Company's (Duquesne) claimed imately $148,508,000 of short-term debt has twen "de facto" abandonment, for rate making purposes, of dassi6ed as long term debt on the December 11,1990 its 13.74% interest in Perry Unit 2 was accepted by the Consolidated 11alance Sheet to redect the long. term PPtlC in a 1987 rate order and Duquesne was allowed portion of the trust's notes (see Note 6). recmcry ofits imestment in Perry tinit 2 mer a ten-

-vear period. Duquesne has advised the PPUC that it

6. Short-Term Borrowings and Bank Lines g will not agree to the resumption of cor struction of.

Perry tinit 2. Duquesne's decision was independently Short. term borrowings outstanding at December 31, .

ma e and does nu represent a deciskm on the pan of 1990, include $ 100,039,000 of 01 S Capital debt u hich the Companies to abandon linit 2 for rate making or is secured by cu3tomer accounts receivable. OLS t,apital .

am other purposes. Iloweser, any future decision on van borrow up to $ 120,000,000 under a recchables -

the status of Perry tinit 2 will hase to take into account .

Anancing agreement at rates based on certain bank .

Duque ne,s position and ways w. d l haw to be found to commercial paper. OES C.apital is requ. ired to pay a . .

accommodate this position d. . construction on the Unit fee of 4/25% on the amount of the entire Onance I'*"**'

limit and 7/20% on the amount of borrowings out-As of December ll,19 so, the C,ompany and Penn standing. The receivables Onancing agreement expires Nmember 27,1991, Power had invested approximately $142,000.000 and 555,600,000, respectheh, apphcable to Perry Unit 2, The Companies base lines of credit with domesu. c -

Delay in the cmnpletion of the Unit can be expected to .

banks that provide for borrowings of up to $ 135,000,000 increaw us total cmt amounts u hich are not presently -

($107,000,000 of which was utilized at December 31, determinable, if a decision were made to terminate 1990) under various inttrest rate optior.s. Short term borrowings may be made under these lines of credit

'*"#"'"* #'# '""""b #"Y"# '"

Unn wou be reangned, w here appmpdate, m Unu L on the Companies' unsecured notes. E assure the

"""#'' '#""# don charges payaW m connacmn availability of these lines, the Companies are required and other costs of. termination could be incurred.

to pay commitment fees that vary from 1/8% to I/2%

Pending comptedon of We CAM redew, the Wupany Of these total hnes, $70,000,000 expire in May 1991,

$5,000,000 in December 1991 and the remainder in is unable to predia whether the construction on linit 2 wiH condnm , : m innued, on whar basis such May 1993. OES Fuel also had $90.000,000 of short-term borrowings at December lig 1990, under the '"" d "" # U"" ' ' P * "

If constructh.o of Perry Unit 2 is terminated, the credit facility descr. i bed abme (see Note ,.e).

C.ompany would seek to recowr l's imestment but

7. Commitments, Guarantees cannot now predict whether its investment in Unit 2 and Contlyencies: applicable to its PtlCO jurisdictional customers will be Construction Program-The Companies' current recmerable. If no means of recmery of the costs of budget forecasts reilect expenditures of approxim,uely Unit 2, in the case of termination, were asailable to the

$ 1,500,000,00() I pmperty additions and impnnements Company from its PUCO lurisdictional customers and from 1991-1995, of which approximately $275,000,000 no other basis for reemery could be found or anticipated, is apphcable to 1991. the Company would be required to write off the portion of its imestment apphcable to its PUCO jurisdictional customers. As of December 31,1990, the Company estimates that the maximum amount of such a write-off would be approximately $210,000,000, net of income 30

saa dject.The Company does not presently cnt'icipate construction forecast under "Comtruction Program"

that a wtite oti of even thh ra,,grutu Jr. if required, for 1991 through 1995. Additional amounts may be would of itsell .f fect its ability to pay (ommon ma L n quired due to the Clean Air Act Amendments dividends at curre nt lewis, and studies indk are th it the discuned below, magnitude of any suc b write off t ould be much smaller. On Nmen,ber 1 L 1990, the President of the linited if, despite its best current iniotmation, a much larger States ogned the Clean Air Act Amendments of 1990 write off were required, dependmg upon the timing (At), The Ac t nquires signtHeant reductions of sulfur involved, suth a write-off could temporardy affect the dioxide (50,) and ost.len of nitrogen from the Company's abihty to pay common st<x L disidends at Companies' coal-fired generating un.ts by 1995 an.1 (urrent leiels. liased on Section 520 ofihe Penns)hania additional erniuion reductium by 2000 tompliam e i Pubhc linhty Code, Penn Power lalieses it could , optiom include, but are not hmited to,irmatling recowr its imesiment in Perry linit 2 with resped to additional pollution cont rol equipment, burning less its PPllC jurhdictional customers.

If a dechion were made to terminate R 2, Perrytwilluting lint [g fuel, pun hasmg embsten allowantes from others, and retiring facilities The Companies are cons < bdated net income would be reduced at that time required to submit compliance plans to the i miron-by the ihtference between the cmt of Perry linit 2 and mental Protection Agency (i PA) indic ating how their the present salue of resenue to be collected fmm retail facilities will comply within 27 months of enactment.

jurbdictional customers applicable to the linit; The These compliance plan must be comhtent with iI RC has revhed its policy with respect to recowring regulattom that the I:PA is to promulgate within the costs of terminated construction projects. As a 18 months, in addition, the I:PA h required to perform result,if Perry linit 2 were terminated, the Companies studies, the Drst of which is due with,a three yean, would be required to write off one half of their respective of the potential hazards to public health anticipated to investments apphcable to their i1-RC lurhdictional . occur as a resuh of the emhslon by electric utilities of customers if and to the extent that the Il F.C resbed certain potentially hazardous air pollutanti. The I.PA pohey h~ applicable. Under such circumstances, the is to submit the results of these studies to Congress remaining costs, plus a return on the unamortteed together with recommendations for further control imestments, would be recovered from their il RC requirements. The Companies are evaluating the Act Jurhdictional customers.- and the various comphance options available and have Guarantees-The Companies, together with the not yet diiermined the ultimate cmt of compliance.

other CAPCO companies, have seseral guarantees of Violnion of SO, regulations can result in signincant certain debt and lease obhgations in connection with a civil and/oi o nminal penalties as well as injuncthe relief, coal supply contract for the liru<c Mansncid Plant. As including shutdown of the ger. rating unit involved.

of December 31,1990, the Companies' shares of the - The I PA has an interim enforcement policy for the 50, r uarantees were $ l 41.600,000. The price under the j regulations in Ohio which allows for comphance with soal supply contract, which includes certain minimum the regulations based on a 30 day aseraging period, payments, has been determined to be suf1lcient to satisfy The i PA has informed another Ohio electric utility of she debt and lease oh:Igations. The Companies' total changes in the interim enforcement pohey including a payments under the (oal supply comract amounted to reshion of the method of calculating emissions. While

$ 114,077,000, $ 105,154,(XX) and $ 100,037,(XX) during the Company does not agree with the i PA's position in 1990,' 1989 and 1988, respecthely. lInder the co the matter, the Company expects to et ly with all tupply contract, the Companies' future minhoum legal requirements, lhe Company um . predict w hat payments are: - action the ILPA may take in the futun with respect to the interim enforcement puhey. In ad& tion, the EPA IW1 = 525.558.Ono has hsued Notices of Violation (NOV) regarding $O, tw2 24,u a,ooo emissiom at the Company's Sammis, Niles and Gorge tw3 21,74 uou Plants The f PA and the Compny have reached IW4 22394,t M H; agreement on Administrathe Orders resolving the NOV's W95 -- 21,454,000 at the Sammk and Niles Plants.These Orders require

- han thereafler  %,198.000 demonstration of compliance through the use of certain emissions tests and do not require monetary penalties.

i ndronmental Matters-Various federal, state Negotiations on the resolution of the NOV related to nd local authortties regult,te the Companies with regard the Gorge Plant are continuing.

o air and water quahty and cther environmental matters.

he Companies ha$e estimated additional capital xpenditures for emironmental compliance of

, pproximately $207,000,000, w hich h included in the 31 i .- - - - . . , . , ,, -_ - , - _ , . -, . - - - ,. - ,,

e  ;

4 NOTES continued l

In April 1988, sescral states, the Pnnince of Ontario, sites m Pennsyhania. The Companies have submitted and sescral emironmental groups petitioned the LPA to detailed comments on the proposed regulations object ,

ing to and proposing changes to (ertain provisions. I conduct a rulemaking under section I15 of the Clean

~

Air At. Section i15 is that portion of the Clean Air Iinal regulanons are expected to be hsued by mid 1991,

&t whkh addresses pollution across international The Companies are unable to predict the requirements 1 boundanes. The p titioners claim that the i PA has of the final regulations and the cost of compliance, already determinea that sources in midwestern states With respect to the emironmental matters contribute to air pollu ton which they allege is desuibed above, the Companies expet t that any result- l endangering public health and welfate in Canada. T he ing adshtional capital costs w hk h may be required, as l 1 PA is iwing asked to officially mnfirm this determina- well as any required increase in operating costs, would i tion. The ! PA has Informed the petitioners th't it does ultimately be re(osered from their customers, j not presently base suificient information to act on the 8. Summary of Quarterly Financial Data petitions. The Companics are unable to predict the IUnauditedh outwmc of this proceedmg.

.the following summarties (ertain consolidated operating . '

During the past sescral years, the U.S. Court of.

results by quarter for 1990 and 1989.

Appeals for the District of Columbia reversed sescral significant portions of the IPA's regulations on the w  != k inembo Iw ener mv wmba mud n. erm u pro m. nem n. pro r methods used by the LPA to determine the amount of j stac k height credit for establishing indisidual source C" """"d'"

• P' P'"h'"' """""i e latest i PA U PC""M """ nues 5H9fdd 5521947 5571814 $570,101 j emission limits for sop Portions <

l regulations were resersed and remai do by the Court U]*""E, ,"#b418w 197 uoma emj in January 1988 as a result of appeals by the Companies 140,671 125.457 126.651 117,498 Operanng income and others. After the EPA promulgates new regulation' ohr N ome and in c9nformity with the final Court decision in this Deducuani 1,515 IJ47 6) 60) matter, Ohio and Pennsylsania must then resiew their Net imerest and emission limits to ensure conformance with the new Oth . , Charges  ;

(Note 3) 45,510 41,914 57Jdo 84.686 :

EPA regulations. Such review could result in more  !

N"' 3 "'"nie 5 964,56 5 8wo 5 68,92 5 Ig62

, stringent embsion h; nits for some exhting plants and increased capital costs and operating expenses. The l arnings on comrean sun k 5 89,m 5 7ti,346 5 62Jn) 5 25.817 Companies are currently unable to predict the outcome of these proceedings. We@ W wrge in June 1987, the ! PA announced regulations Number of shares or common sim k emering small particulate matter emisdons from ut;lity 152.569 15L%9 15L%9 i S2,569 outstandmg boilers. Although the C,ompanies hase power plants in one of the two counties in Ohio where EPA computer I:arnings per share of common sunk 5.59 5.50 5.41 5.17 modeling predicts that excessive small particulate emissions will be thund, the Companies are unable to predict the uhimate eHect of these tegulations. At ars h lune he<<mber t w ember Three Emh Imkd H,Uw) in. U)H 10.19H 11. tw9 On f ebruary 24,1990, the Pennsylvania 0"'h""*'""P'P'"""'"""")

Department of I nvironmental Resources hsued pio- -i Oper30ng Reu nun m o m Hi2 m s m 970 5 m posed regulation; deahng with the storage, treatment, Operanng Lxpenses transportation and disposal of residual waste such as and h 401.011 -181871 40L898 421510 >

coal ash and scrubber sludge. The proposed regulations Operanng income 141,677 129J12 147,072' 121,198 -

impose substantial additional requirements relating to Oher Income and permitting, ground water monitoring leachate collection Deducoons_ 6,19 5 1,%) u,54 6,926 systems, closure, liability insurance and operatirq Net interest and

" h" Chd'ges 51,247 51/100 52.688 48.610 matters. These requirements could resuh in tot dosing Net income 5 98.825 5 82,669 5 98,018 5 81,494 of or substantially increased operating costs at existing F armng , on Comman Snxk 5 91,624 5 75,620 5 91,083 5 74fios

%ghted % rage Number of Shares of Cu;nmon Sunk Outuandmg 151509 152,509 D ,.m 152,569

.-n e ..

Larmngs per Shore of Common snick 5fo 5.0 53 0 5.49

=. --x 32

REPD;T OfINDEPENDENT PUBLIC ACCOUNTANTS to the Stod holders and Board of Direuors in our opmion, the Unam ial statements irlerred of Ohio I thmn Company: to abuse present f anly, in all matenal respn it the hnain tal posnion ,1 ()hio lihmn Company atul We base audited the au ompanying , onmbdated balam e wbsuhann as of bn ember 11,199n and 19.% and sheets and (onalatated statements of(apitalvanon of the rnuhs of then operainem and their (ash ihms Ohio lihmn Company (an (1hio ( orporation) and for eat h of the three years m the penod ended subskhann as of December 11,1990 and 1989, and Deu mber 11, 1990, in (onionnuy wnh generally the related (onsolniated uatements of inu,me. retamed au epted acu>unung prou iplet earnings. capnal stm L and other paid-in rapnal, ( ash Ihe natus of Perry linit 2 is < urrently being flows and taxn fbr ca(h of the three years m the penod reuewed by the CAPCO uimpaniet As dnruned m ended Dn ember 11, IWu, Ihew Unandal statements Note 7 to the conmbdated finanual staiementt poudde are the respomibihty of the Company's management- ahu natnes being uinsidered im lude indefimte Our rnpomibihty b to exprns an opmion on thew so pemion, rnumption of uott and ternunation of finanual statements I awd on our audas. the timt. liet auw the Compames are unable to predui We ,onducted our audus m auordano, u nh the touhs of the reuen, they (annot now preda t generally au cpted au<htmg standards 't hose Mandanh d uinstruu:on of Perry tinn 2 suit be terminated require that we plan ami perform the audit to obtain and, d ternunated, to w hat ntent the ('ompanin' reamnable anutance about whrcho the Unan tal imniments u di be reunerable.

statements arr f ree of material nuntatement. An audit includn exanunmg. on a tes; bash, nident e sup-porting the amounts and diwimurn in the fmandal stateme,its. An auda alm includes aswsung the R I q . Y hil& i W)-

f accounting prinopin uwd and signih, rani ntimates (J made by management, as well as evaluating the owrall Arthur Anderwn A Co.

finandal statement prewnianon. We b(heve that our New York, N1 ambtc prmide a teamnable basis for our opouon. lebruary 5,1991 MANAGEMENT REPORT The conmhdated financial statements were prepared and the obin nuty of finanual reporting; inquiry mio by the management of Ohio I dnon Company, w ho take the number, nient, adequacy and sahdny of regular vnponsibihty for their integnty and objet thity. The and sptrial audits rond,u ted by independ.nt pubhc 2: ate,uents were prepared in (onfornuty with generally at countants and the mternal authtoru the terom-aucpted au ounting prindpin and are o nsatent with mendation to the lioant of Dirn tors of independent nther finandal informanon appeating chewhere in thn auountants in t ondm t the nonnal annual auda wport. Arthur Andersen & Cu, independent pubhr and speual purpow audus as may be required, and scrountants, hase inued a report on the CompanyN reporting to the lloard of t hreuors the Committee's

}lnancial statements in w hich they comment on the hndmgs and any rn ommendanon for thangn in recmerabihty of the Companies' Perry tinit 2 imntment. s(ope, methods or pna edurn of the audning The Company's internal auditors, w ho ce rnpon- tunctions The Amht Committee held thne mernngs ible to the Autht Commuter of the Board of Directon, dunng 1990.

view the results and performante of operating uruts nhin the Company for adequacy, ellectnenen and habilny of auounting and repornng systems as well O #

s managenal and operating controit -ffW i l* &

1he Audit Commuter uimists of lour nonem. ae8 11.1. W gner

,loyee dircunr3 whme duties indu le: consideration of Senior Vice Presulent Comptroller he adequacy of the internal umtrols of the Company Chief I manual Olhcrr 33

CONSOLIDATED FINANCIAL STATISTICS E t eM.,, n3 ,

1990 twa 19 % 1937 1986 1%; 19Mi (t h, slim Irn thatuw.h.h. t u t gif [irt sh.tts tur mill .)

General Iinan(ial informatiosi operatmg knenues 52,225,524 52,134.969 52.142,572 51,779,5;6 51,741,900 $ 1,7 ;4.7 49 51,0so,869 5 510,279 5 ;41.M9 5 496,996 5 197.468 5 192,1;7 5 1Mi.1;4 5 169.181-Operatmg in< one l arnings on Common stm k 5 2 5 4,04 N 5 112,912 5 186,170 5 164,6;7 5 M9,8 2 ; 5 118.073 5 101,401.

51 C Katio of I arnings to i tud Charges 1,97 2.01 1.M 2.10 2.19 2.26 2 00 Net llahty Plant at 56,049,219 56,0hl,717 $ 6,04 8.014 $6,116.099 57,219,741 56.644,7;0 $ 1,41;.267 De(ember 11 C apital l. xpen<htures 5 270,993 5 2 %,041 5 221,;81 5 70;,242 5 776,198 5 826,994 5 51;,020' Capitahtanon 4: 1:ecember 11:

52,545,159 52,;6; 406 52,510,975 52,6;1,12; 52.;41,712 52,214.1;6 51.067,;24-Common stoc kholders' l quity heferred and Preferenc e Snx L Not Subject to 154,240 1;4.240 1;4,240 404,240 4;;,;67 467,940 106.90; Mandatory Redemption l' referred and Preference Stot L Subject to 6 2,N 2 2 69,562 96,802 149,1;I 160.794 176.694 156,4501 Mandatory Redemption 3.105,2 4 N 1,071,796 1,208,;51 1, l l2.h ;8 1.661h61 1,464,;49 1,85%184 longterm Debt

'lical Capitalization 56,067,469 56,081,504 56.190,570 30,531.774 56,821,914 56.141,119 $ 1,190.261 Capitah/ anon Ratios at Decemtwr 11:

4I,9% 42.2% 40.9% 40.6% 17. IN 1;.2% 11.55 Common Sun kholders' I quity Preferred and Preierente Stmk Not Subl e t to Mandatory kriempnon 5,9 5.d 5.7 6.2 6.7 7.4 9.1 Preierred and Preference Stoc k Subi nt to Mandatory Redempoon 1.0 1.; i.6 2.2 2.1 2.5 4.6 1.onglerm Debt 51,2 ;0.5 51.8 51.0  ; l. , 54.6 54.8 Ltal Capitahzanon 100.0 % 100. 100.0% 100 0% 100.0% 100.0% 100 &

Cost of Preferred and Preference Sunk Outstandmg at December 11 8.59% 8 72 % b.71 N 9.18% 9.66% 10 00N 8.18' Co_t of Iong:lerm Debt Outstandmg 9.2H % 9.67% ' O.2 6% l 0.22N 10.29% 10 88 % 10 71; at themier 11 Common Stock Data

$ t ,67 52.18 51 22 52.40 12.47 52,4; $ 1,52 Larnmgs per Aserige Common Share Return on herage Common Iquity 9,9% 1l#N 7RN I L8N I 4.9% 15.2% 9.7 Dwidends Paid per Share $ 1,7 3 51.96 51.46 51.96 $ 1.42 51.88 51.76 Common Stock Dnidend Payout I atto 104% 90N 161% 82% 78% 77% 116 Common Sto(L Disidend held at December 31 N.N% 8.1% 10.4% 9. 7% 9.8% 11.5% 14.M Pncellarnings Ratio at Decemler 11 10,3 10.9 15.5 84 7.9 6.7 7.8 Shares of Common Stock Outstanding at December ll (000) s52,569 I;2,569 1;2,508 1;2,198 14%81; 117,089 68,526 Ilook Value per Common Share at December ll 516,6N $ 16.82 516.60 517.40 $ l 6.97 516.10 51533 Market Price per Common Share at December 11 $ 17.12 5 521.75 518.87; $ 20.12; 519.;0 516.175 511.875 Ratio of Market Prite to 1(ook Value per Share at Dnember 11 103% 141% 114% i16N 11;% 100'N 70 34

CONS 01.lDATED OPERATIIJG STATISTICS m i a~n comp.w3 1990 p+9 1%h em7 19 M . 198; 1980 Resenue I rom Ilet tric Sales (ilmusands):

Renderaial 5 76N,2 2 6 5 749.14; 5 728,410 5 622,148 5 61;,262 5 600,481 5 198,812 Commen ial 586,947 5;8.924 511.825 454.706 449,;40 411,445 268,788 Indust nal 5 N0,6 2 4  % 4,0 17 917,16; 452,;64 449,142 476,2;7 110,717 Other 16,71 N 19,769 6;,;21 64,454 64,14 ; 64,708 50,420 subtot al 1,972,515 1,901,67; l h64,921 1,;49,072 1,;78,589 1,; 7 4.k91 1,048,7;7 Sales to litilines 227,670 228,1 % 254.052 1 % 611 i17,994 159,262 12.181 Ltal $ 2.200,2 0 5 52.129,M 10 52,118,471 51,7 % ,70; 51,716,;81 51,714,151 51,061,118 benue I rom Ilectric hates (Ivr(ent):

Rewlen0al 14,9 % li2% 144% lt4% 15.8% 14.6 % 17.6 %

Commen tal 26,7 26 2 2L2 2; 9 26.2 2LO 25.1 Indminal 26.4 26 0 2 ;. ) 25 8 2h2 27,5 31.2 Other 1,7 1.4 LI 4.0 L8 17 47 Subtot al 89,7 89.1 88.0 9,l .1 9 '.O 90.8 98.8 Salen to llohttes 10.1 10.7 12.0 89 .0 9.2 1,2 Ltal 10(Urb 100 { 10(Hrs 10tHr% 100 0% 100 0% l(xt0%

C5ilonatt ilour Sales (Millions):

Rentden0al 7,527 7,619 7,628 7,299 7,046 6,791 6,601 Commen.tal 6,170 6.2 14 6,060  ;,782 5,;60 5.266 4,812 Industrial 9,N 7 2 9,795 9,872 9,067 8,ill 8,7;l 8.909 Other 36N 157 1,159 1,110 1,192 1,149 1,170 Suhtotal 24,117 24,t N)5 24,7!9 21,458 22,111 21,9;7 21,892 Sales to llnIntes 7,171 7,871 10,466 6,252  ;,8 15 6,929 502 total 11,110 11,878 15.68; 29.710 28,166 28 m 22,194 fustomers Resklennal Sersed at Detember 11 9 2 H,0 26 919,91; 911,158 902,466 888,107 867,447 894.164 Commeraal 101,297 102,0;5 100,808 99.122 97,383 96,048 88,50; industnal 1,012 2,8 16 2,624 2,452 2,2 19 2,021 1,059 Other 1,061 881 918 881 802 892 704 Ltal 1,015,416 1,025,709 1,015,508 1,005,121 994,588 987,068 957,715 4crage Annual Reudential kWh thage 8,159 8,116 8,42i 8.140 7,924 7,682 7,870 herage Reudential Prke j per LWh 10,21c 9 69< 9.40e 4 ile 8.7 )( 8.64c 5.86c pmt of t'uel per ;1,Ilion Btu $ 1,2 7 51.26 51.10 51.12 51,40 $ 1,47 51.51 Generating Capability at I A cemler 11.

Coal 77.9% 77.4% 77 9 % 77.9% 811% 89.1% 86.1%

. Oil 2,7 2.7 2.7 2.7 3 .0 LO h4 l Nuclear 19,4 19.4 19.4 19.4 7.9 7,9 7,5 l Leal 100.0% 10(Ur% 100.0% 100.t r% 100.0% 10(Ur% 100 0%

hurces of Ilet tric Generation:

l Coal 1

77,1% 82.1% 77.0% 87 4% 91.0% 89.1% 98.7%

l Oli - - - - - -

0.6 l Nuc lear 22.7 17,9 21.0 12.6 9.0 10.7 0.7 Ltal 100.0% 100 0N 1004rw 10(Ur% lotur% 10tur% 100.0%

vak loaddleganam 5,194 5,152 5.027 4.579 4.241 4,084 4,210 humber of imployees at 6,792 6,943 ,,180 7,266 7,181 7,496 7,5c >

P thumber 11 1

i 35

STOCKHOLDER INFORM ATIOM I

Dividend Reinvestment Stockholder Assistance And Stock Purchase Plan lor assktanca or information, please u nte to The Company's Diudend Reimestment and Sto(L 90.Lholder Senkes, Ohio idnon Company,76 South Purthase Plan pnnides an opportunity for registered \tain Street, iron, Ohio 44108, or call one of the stockhoiders to acquire shares of Ohio i dnon .olkming toll-free telept' le numbers.

Common Stock. Participants may imest all or some so C .np an addre3s o n identification number:

their dnidends or make optional cash payment

• of up , g.7 36- 3 401 to $40,000 annually. At the end of 1990, abou; lo transi stock or report lost t ertificate:

61,500 stockholden were participating in the y;r ,

Stock Divi tends for dnidend reimestment plan auistance:

fur federal income tax purposes, all Jn-ldends i. goo.7161401 paid by the Company in 1990 are taxable income to f or dnidend check inquiries and other information:

stot tholders.

1 800-716-3404 Stock Listing And Trading lhe toll-free numbers are salio in the United Ohio 1dnon Common Stock is listed on the New States, Canada. Puerto Ri< o and the Virgin Islands.

Erk and Midwest Stock I:xchanges under the "OlC" 11usiness hours are 8:00 a.m. to 4:30 p.m., f astern trading symbok Newspaprs usually use "Ohiold" in time, Monday through I riday. Stottholden who hase their stock listings. penonal computers and modems can call our Bulletin Form 10-K Annual Report iloard senice weekdays between 5:00 p.m. and form 10-K, the Annual Report to the Securities 7:30 a.m., and on weekends, at (216) 184 7917. This ard i xchange Commiwion, will be sent uithout senice features dally stock prices and financial data.

charge upon written request to Gregory F. Iallame, Audio Financial Reports Secretary, Ohio [ dison Company, 76 South Main stod Siders with impaired vhion can obtain free Street, Akron, Ohio 44 308. Jhms ,f the Company's annual report and Annual Meeting Of Stockholders interim reports by contacting Stockholder Senices.

We invhe stockholders to attend the 1991 Annual Multiple Annuai Reports Meeting of Sto(Lholders on Thursday, Apnl 25, at %u mas be recening more than one copy of the 10:00 a.m. in the Company's General Office in Akron' annual report if you hase more than one stock auount Ohio. Registered stockholders not attending can vote or sou are both a stockholder and an Ohio Idison on the items of business by tillmg out and returning e or Wu if you want to maintain separate the proxy card that is mailed about 10 days before the 3mck accounts but eliminate multiple copies, please meeting. Stockholders whose shares are held in the write to Stockholder Senices and request that we stop name of a broker can attend the meeting if a letter niathng an annual report to a particular account. Be from the broker is presented indicating ownership of sure to prmide the euct registration of the stock Ohio Edison stock on March 7,1991, cccount for which you want the anrual report mailing Transfer Agent And Registrar stopped. Dividends and proxy material will continue to Ohio Edhon Company be sent for each account. If you want to combine your Transfer Agent and Registrar accounts, please write or call Stockholder Senices.

76 South Main Street Management Developments Akron, Ohiu 44 308 in August 1990, Ohio Edison's Board of Directors elected Assistant Comptroller Slaney L Wagner comp-troller, succeedmg Comptroller William A. Daniels, who retired January 1,1991, after more than 42 years of dntinguished service.

36

k!bani bf Direr toru Of ficer s Division Mana9ms Doncld C. lilasius 61 William it, Miller. 6M Justin 1, Itogers, J r. Itobert I . Kcminger Prealent of Whne Conwhdated Perudent of Nanonal Preudent uron Ib mon Induu rten. Inv., rico land, Ohio Manutaituring & Drugn Corp, (home and commcnial appio Albany. Lenun ky p lothmg) Douglas R 1st happat Gag R Mair i anc et outdoor and induurt d Memtwr, Compensanon I * " ""' C \ '" I"' "d""' E"I'"*""

produc t s, buthhng c omponent s) Comminee.

Member, f inant e ( omminer, Ilaird 19M g, g,mr ilug 31 k ilm L C M bbt V P dem I ake i oc Dn mon Normnatme( on smurr.

Ucited 19kl }"h" NCI*on,68 16 W W%M 1 red M, h m krored, formetly Chainnan of kmor Vm Pnmdem Mam' kid Dnnm II, Pcter flurg, +4 the hoard and Cluef I scrutne heruor Vitr Pseudent of Ottu er of Omnmen tal Shearing. Anthony J. Alesander I red K. % hite Ohio I daun Mendwe, Inc, now Commen tal imenu h Va e Prrudent Marion Dn mon Iinant e Comnunce. Corp, kungst<m n. Ohio (en and (;rnetal Counwl Iletted 1989 gmcered metal com)mnent4 Mark 1 Clark Member. Comjw nanon John A. Gill Spongtkid I mmon Itobert H. Carlson,64 Commince, vice p,cuden.

Rented, formerly c onsultant and liet ted 1982 I arl L Carey President and Chwl i xerutisc Anthony N. Gorant Ntark Damon Olherr of tinnrrsal Rundle Charles W. Itainger, 57 Vice Pn.adent Corporanon, New Caule, houdem of Sanduds f oundn & Id"d"I l' IICII Prnnsyl ania (plumbmg listun s) Mat hme Company, $'andudyf Itarry M, Miller Warren I biuon Mendiet, Auda Comminee. Ohio (cent rif ugal s.auings).

Ykr Brudent t ierted 1987 Member, Compensation

( ommmte D nid L k g  % epm ben Dan It Carmkhael,46 lict ted 1987

. ' " h ""J""'

Chairman of the Ibard, I. talknu-hest lent and Chief I met utne just,m 1. Itogers Jr.,61 g

OHit er of t he shrily Insuran r Panident of Ohio Idnon and Company, Shelby Ohio Chauman of the 16ard oflis - Kenneth j, Verbic (dneruned insuran(c) nuhskhary, Penn9hama Ptmer- 1reasurer llected 19'80 Chairman, linam e Comnunce; Memtwr, Nonunanng Committee. liarse) I.. Magnrt Dr, I.urille G. Ibrd,6') Iletted 19/0 Compt roller Pnnost of Ashland linisenits Ashland, Ohiu Chairman, ' George M Smart. 4 i Nang C. lirink Nominanng Commutec; Pre ident and Chief I xecuose Aniuant secretary Member, I mant e Comnutter. Offit er of Central st un Can Ilet ted 1979 Co , Mauillon. Ohio (rigid U 'C

• I"r0 I' 48'"' k II c ontamers) Member, Iman(r ^"'"d"' I "' d'""4 Itobert I Ioughhead 61 Commiure.

Redred, formerly Chainnan of l % gird 1988 U""*'dI'I"h'r the Ibard, Preullent and Chief ^ "'" ^ "" ( ""' P' J"EC '

I scrutise Othorr of Wemon Douglas W. Iwhappat,6i Stect Corporation, Weir,on. West i xet utise Vis e Predient of Virgmia (ueel produt n). Chair. Ohio I duon.

man. Compensanon C ommmec; Iletted 1980 Memler. Amht ( ommurce.

Iletted 1980 I: rank C. Watson,66 City Manager for the City Glenn 11. Meadows 61 of CantieH Ohm Chairman, Retned, fortnerly Prnident and Auth: Committee; Memtwr.

Chief I set utne Utlk er of Nononating Conumucc.

McNe d (Ohio) Corporanon, Iletted 1974 Ak ron, Ohio (manutat t u red E "' C ' " E " *"

• products) Member. Amht Commu ter, Compensanon l' red 11. 7ut k Commiure.

Iletted 1981 g r , m ,# , m a ,e 37

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