ML20082U209
| ML20082U209 | |
| Person / Time | |
|---|---|
| Site: | Beaver Valley, Davis Besse, 05000000 |
| Issue date: | 12/31/1982 |
| From: | Johnson W, Williamson J TOLEDO EDISON CO. |
| To: | |
| Shared Package | |
| ML20082U079 | List: |
| References | |
| NUDOCS 8312160271 | |
| Download: ML20082U209 (17) | |
Text
{{#Wiki_filter:. PW; , l Q w i 5 t , 4.< . - : ~t ' ' gg j;3 6 g} g p . . 9 .- a- s4 AW:-e a..; -s.t. .. _ ..e.g p. w : &. e Mgg%
.; . e . - . ;. , .
v.w.q $.,g; g.ps&..;l,g.3Qf. 1 .e J. q.h r. :~c. n e . Mwy
.cu -r M.}n.e@a$w., a
,; 6 . c
.g gngQ
, 3 - ( . 2. a . u M ;- . . - &m e m. n
~
t ,e +k' .%
, ~
R.. w..s.- e . a x;gd%. . Q,.p.g,,4 ,. n +m,,4,. A,,4y%.,- ... %.%g@;y_:p, .
;n n. .
w J p' ..:*g.- U v .#W.::m,. u s v - :ay g.~ s ,
~d ~4 C- ]w ;
ff 7 :.;fg.'
. p ,'
dg :
'hh k :
[ .f[i .
}
a e The yToleddlh. 9 1-. P-
. g fq&a q.
n/ @dy .ny-pS..W
. gyp l go :v..w:
3:31.3:gr'. n s7 M .? W ,,4 w .> m. fp
' 1M y-
/Y .m T:;u -
. . . ..p.b "
% @y[:
W : .p '6. 4 A . 9 ? .4.. j' i - 4 Ws i , ^. *
.. PMYf$1 F ' O.+@
$:yf;;,;3 ':%.h i.l'n.N E '.M'+;M %IhlD.7 A 4ilis [i.' 3.' 1 Yh. W 73 . N;i 6Y.N'_
m1
-d
./
i.. Q ,;%.%s :: .;%W ?l0.%.
' : ' * % :Q:.[._<._._,;3
- h: . y v.; ,
- .,.y.
%[) 9 f.[%
q, .,.; 7. j.f. .y;%
^ .4 _s fy -* ,y#l.%Q.f,4 n. g:f,V _ -. Q.l J.. , : ; _ . , ;g
', L N ., . ' . , 3.
t (( : ~ >. n .. . . _ . s_ . /f
* ~
. . Y. y ;. ' .. ._,* ; p . 4 ' ;: ;}-y e
~ . . a. ;' .., y ' ' ' ' .'. .. ,, :
** \; ; :q 'g . .::(. f. ' .. [ , a ' '. u' . ,. **.
. x .w f:r >.
x~
; ..eM;
,,o . w:. . - - . ~ . :
.r y. .)g nem{
d*.H.,,n. . ...n 'w .:< .
..y . . . :
. ; . . n . v. i s v v. . . ~ ~ , . . . . ,
i . . . .. .. ..g. .
. . . . w.u w s o. . . - 4. . . v. . .
a 9 c,. -
'N', i 9).uc.g6.sp
.0 c. : u . ..y:..: ;.; .. .. ' f,.-l:;:.l ',; .:,. Y..:..:.
~-
. . vA. '.-; ,..R:.jk:.M:l . ;$.. 6 .'. ~: .
%.ON '. '- L- ' .;% -pb:q::.f:-... ...<2: V. .: c?.J; z
Y.. . . .' 5:: ..; f.h.ls -
$<_~:..L.4
..n.
e, n.t:2 m f;- !: , 4 . *g+ h,. y-, - s, ./ q am. n : . . . .. . : . : q. .. . . '- : . .. y; : p .. . . = . . . L.
, - .. .. e.n .
- g__ .; (. , .'.u..ay,- 4:
n-y ,' .
~
$"w J e :,.".. :O - H1 .nc'c.'.'-...'.~.-
a .' e 4 q: -/+ r...' .'
. '. ' ' . .g . d 1 ll Y
%Q' ?.K3 W.N.w' ,= .. ; . : - . . .: ,: " .m#
; - ' .%,:; ' : . .* . f.':.
i' e . 3 ._ - i ~ 5' : c ., . . k .- mm w%
..7y I.
s WM v:g.pgW. ? y.@N j. . : ~ f A; . . , . ' -;; v. .'.. . .
-' ."' . ' . . ', ... ..? ~
t
. - T . ~. % % .
ye
; : ~ . .
J : v:,.. M 7,.'.c.: n .a'. q. : ..: Ly;;:;. :: - .
.: . .J* .y.
.Mff.ff:l,f .Q < [-I'? O % . . y ; . ' 'j ' '[ L.;_ _, v.,Y* .: _ . . ly nb:.-
;. R
'u Y; l, A. ( ? ;: ' l ? . .. _
l.) M H:V " .. . : ,@
.:JA3 r
~.- . - )_,.--l.. - '. - - ::;
_ .'.L'.
; .? ?
;Q . :f; ;. ':
*'5) .' 4-l. ,, - 6.&--
.. Am .
' [m,WM; ;6 p(f.yg>&;Q 'L ..; '
9' - - ,% y, m o
......"J.<. .
-....*~f;: : '~~
k'~'~~~ '
'^
w' t_ t # g ~tw&>'. . ' , 2. <.. :.-. : ..::+. x,e ; U. W
- . ~ .. :
'o-l { ::; ;: . * ,.;.y.;- W"L ,..'.' T- ~; .;ll. J.l . * ' ' . .-j,. .yQ^y, 4 , .
2; wm" R 4;; WMQ.x)O-Xy:v.n'? - 16.'.h.n;;. 'v. f.; .;x 1_ l [ ..V4 . . ' ' ~ ' , - '.: '. *,0. " 4
..4 "
.,:.v..
n,~.< n. , . wa 2. 4. .*
.- : . -? u - .
- V+;:;:;
~
A:L . .c.e
$ p v. - .s ~ .
nM2 ,:'.y;%. y; q -
= %*
. - ; Q . .:.. ; r. ..%,.
f:4
- ... . m.4. ;; . :
. 7 . . , . . .. .
. . 7g.mc :.m:.\L w;. '~ -.; ?.:.- .:: .. .- ' .t-b :: , . . . . ' . .? . :% .. '.;:
< - w;
- t a n/ Wp.: .. rw: g_:Q.N; .....u..>
' L.C.
e - W'
. Q. . . .- i .1: '; c - :
.; : : : !:t ,; - .~a. . . , .
'* k. g:kh. e. ? Y ? ? ',? O N,! *'. '. ? :t.: . .:' Q. , '" . # . g'l . l. : ~.> .-{. l"l' -~ '. .??...,.J.-
w c .
- M.. .x Gs, :f.x.Y y . . ... ~:- : - .- .' -..'.
^
5 Y.Y$ 1
..- [ 3.L .
s
.* ,&n Q..:n-Q.y .-. g k;:v ' ..'.. ' '.[.;. .:. . .: . .& . d.
Q L'% ,&fgY?y. %;." ' Ll $ .. ,-
.r. m. ..~!
8 -
.: .- J. ,:
' : - 1 m'- -
Dy.
..vp Y: b_:: N ] ' w: ,.W J % .h n . .. ; : . ' * ' ; :. . :_ . .. r g; s . . . . ' . j b &. .,Q):.
- )9 cygg ; ;;;; ,.y; .-.^
.. . s.; _ _ g ;( p . . ' ;. _ g ;.1, .v...- ;.. - .f; : ;n - . _; .: g a+:.
4yz .W:p. m..m. .n<(. y?)7 . b J c.;.. ..-
- ..:y....-- i L.. n
. -r: a g ~. -
- .s . ~
v . -. ., .
.. y,;- .. .. .: .. -
er .r.u;. . , .... _ .;.. . ;
- :.,...'. -.: . ~...~ ?
- n, +
?
,u \ : <
... 5 ; . . .-- n . , . . . - ,.
.u mk w , .': :r - -:> .. v. .. . .:'s .: .. i.-' ..~ v .-
7 -n l ? , i ; O Q;JQ y . g~.... m w s . . . ,
.a.. .a :.'.~.
'. ...L :. . ,: n w9
. : .L :fm, -. . D :/ d ' y ?.d b. , ':
s ..t ,* ?' - A.A&.m.#.M[\; U. M :., l%. ;c ..vw
- . .?. > ' " .6 ,,
- N: ' LV
~'
cy3 <
= > k ,. "' :.t=
-A '.s - : . ~. .L . . ;/
I: v '.
- 7
- h. :'- - - : . . ?*, . :o
.M , i
.. ~ . . . >
L
,2 :: . 4. aQ;.7x%. -~, ' vY.'.:c; _ . v. .
W.,
.. . , ..: s.
...;.:.. M ; , , , :.g...~,v.. .. . . ; . . :. :7. s4: K n .. .e.-. .g ; &'. .;.'r a, : ,;
. , ',: y. ; . 5, e .: ,
.r.. .~..a ' -
. .. -1 : ' .: .
~q , N ,h.;y&Y.,aw :&+ .m :: eq. . .Q i.)lO.' M ?' . lw' A . *4 i . . .:. j .
n, ,. 4 .
. , .-' ' i .* ;s .l. , .
*-. i-
.A : 5!l Q
,e...i- j . _ . . J. . kg . _ j_<-: ;*~ A_ .. . : ., l ?. : ..{-
; . ,: 7 .. . ' . ' , ' , ~
- A :f. ;, , . .
y
- (& s, y .- W _z.
.'yj; r~ ' ; ;_a-i . A
. w .- .
- .' ; ' g 4 ::-:p%pfy& q %y. t-J* c.; :. :'Y $&., &y ,. y n'.' . % 3;,. .!
- ;v. : ~ . . ~: ~
, %. -A . : v 3;. : : _ r. . 7 .M.. - .
r
'.v
.. - - t .- -
j: R. u . o_-:; . d' .n . - ;% b .: - .? l YM '! j 9 & ;T.' , ' ., a ,_ : ; . . . ' ? ', ' * /V
'< 7.. % - ' : p'.l y-f&&]kfl'Yl;j- ,': . & cI*lW-:.
-}
^
m, . . . - fA ? N fn_ ^x~. .n' 'D . ^ ';- - _?-l . L '., '. \ .J? - ,' ';W) -. ' Y0..b. - s
. kg.w .fg. . ~_ .A., -VH4.+ . " (.?
~,e., a .: .: .. .
.. we c4..
.i ;. =.
- y. .
.- ... :c. ~. . . . .. r, ..~
./-.:~ , . s r;? ? :> ; M .. , . . .t.~ W.3; . ..
~ : ;.'.-_ ' . T . ,e z. . .~;... ;
,.. 7 .
. - qg ;n?. A. . . : ~ ,, . .
'.,...;.'. . . . . . , . .~ :
.oq.
, ,. ' . . . . - m ..:- '- '. . .-' 4 gf ,. y.g; -
;,..',,. e n
$ h.
.- ; . wg. 3, .9 . ; ,..1 < . . " - .....; ....,n.1
,,=.:.,,,
,ap. .<.,-
..........,.t t ,.
;%&s.g.?L A.v;
;- L.:. d.. .z -.
..% y : - . . . ; .. '.' . y- 3 ..:.;;.:. * ,.: : ; ': ...- J- '. .v >;..... 9.i. '. ..a-*: , - ;. a ?: -
~
- a .. n v. + ... -
- . . <: - ' - e:.s s. .;..
.% m c
.8
- -h, 4,.::g@rww : .g:,~; <. .. .y':q,}~' . ( ;' ^t ;j,,
.v /;..: j' .,?.-*~ .!. .-
- - '- ^
- ,'. ,.. .'. . [.,4 . ~ ' . . l
- [.";& :
_ ,- Q,c.wg $ a y. W$ Ef ~
- s . : %-
Y ' _, .".L. * * -l ~ ! ' l:- .. 'h ?
.hj'.' f,'. .lyN'W . . . . . u[yh
- s. -?- t.N ; ,:.l .. .., .. . . :. ; ; : : ;'. ..'b..
r
-ep;; . :- . .. .. . , , . ,.
-':% , ?: :%:. :. . .,r c +. T. ;- c ; g
- _....-<:._y.._._._.y; y _. . . . .
. .: : ., 2 :. . . .: .. z ..:
..'t_
..'..-..M y +3, . . : n :;,:
. y. ._, * , . . . . . . _,....
. 4 3 .. ;
,. ;;; ? . . - y.3 >.
s
.e ,p.y. p./ .6.e.
.p.
. . . v
. . . : .. ; .e
.. . .. _y . . ' n, .. .
. .. .f ' - . *1*.,
. . ' ' ~ ~ ~ ^ . . ..
q !: .: 1 . 5 V '.,. . ' : p&n&p,* :. s.; - . + .. : . w . z. . . ' .i :, - .-
- *- . ' . l
^..a- ..-'.:~~~- ,'.4'. f t , .s : e * - -
.h. : .' .s, .: .^ $: - .?
- .: + .
y:' J' p @w.m . Y&; ;; ...:
k
= - F _F: ' . ' f :' . - ' .. . . . S ' .W v . ' ? ;. .. ;
m .: ' ; ; m x' : ' - - '
^
g'^&;f
~
g i., h l <:Gfl W : Q 1 .k c:% *:? <A.. % f <~. - + .;:f : fl :W . .
~ C ' ' .- t . - : ". . -' -: i?
* .. ' ?% "'::/ V . %: 5 ' -m f .';1 ..TV-J "'M&
~
$ M&W $Y: . 2 ".= N :. ' ' :. , ., $ .* . ? ?l. f: . * [. ? ':~ . .: J ,? -
~ f& . ' -$ :
J. fv wn
- h. f6.;,'
.. lr:.f i C h I ~ j .[ ;;.f.;, Q. l... ,, ' - :.T l ; k ..-_. .' - - L ( ~ * ..'. '. ; [ \-- . 0% l
.n :-',f j :-
- f. h
, ;A w a. . .,g;. i .m.,._..._.. my .. .:s -: .!. g. ^fi .- ::-. : . p.. : ;'. . s. :-- '
- ?. . .
v .. .; ,. .. .. ._ . . , p.c. ?: A^Q,; O .y. t . .p #.: ./...c o p A p. r ., .;- .- . .
- 7. ... e .** . ." .-
',i....,4
t . : . a 4
-% .~ m V ,.. -
- %;. a N '
w A..., s 1%
. .- . .k, .
v'e, . ,
. . A. +-
xpv3 p, '
.c
~ ~ -
. ~-- -
.. ? . ,
.h
- Y -
Sl g y. *W l ': .* r,
,s ; ' * .., ,, ._
- ? . .
s n.? '-j;r ! a. . ,- c ._ . _; . .:v. , .'4 ..
. . p . . s '. t - _ : . . < . "
, y
. ; . Y ,
. 9:.c. , z. . .
, :. y - ..q . . ;.
- J . , ;u., - ~ +
.1. .
s- s, ..
.._ ', h a, w , ,; Nb
. ~ . .
[s u. . n . . . .. .?." .
.. g:~w . m. . .
- i. . ', .. .
}? . . l
. .~
Dividends Declared per Common sh a Highlights 1982 1981 Change 2 40 r Hba hm Earnings Per Common Share Before Extraordinary Gain in 1981 $3.18 $2.77 + 41c After Extraordinary Gain in 1981 3.18 3.27 - Oc
, , , Dividends Declared Per Common Share 2.38 2.30 + 8c (current quarterly rate is 01c - equivalent to $2.44 per year)
OperatingResults(millions) 1 IllIl Operating Revenues $482 $442 + 9% am - Operating Expenses 373 339 + 10% Operating Income 109 103 + 6% FinancialPosition(millions) Assets $2122 $1868 + 14% nn, uno ems uma Capitalization 1 768 1 561 + 13% h','.I,$"$ n conimon Stock Price Range and Dividends Paid Per Share of Conimon Stock , u*c 1982 1981 l Mrst Seconti Third naurth Mrst Smind Third Pburth l tuim mre Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter i 2 - 1 Price Range i j a) - - - Iligh 17 % 18 % 19 % 21 % 17 % 18 % 16 % 17 % l n, _ _ - Low 15 % 16 % 16 % 18 % 15 % 15 % 15 % 15
'" '~ ~ ~~
Dividends Paid * .59 .59 .59 .59 .55 .57 .57 .57 17 - - -
*The dividend paid in January,1983 was inemased to $.61 per share.
. nn The C enroon Stock is listed on the New York Stock Exchange. These price quotations are 13 fmm The Wall Street Journal. The number of common stock shareholders as of December 31 IST 2ND 3RD 4 Tit 1982 and 1981 were 86.710 and 85.083 respecthely.
l l 1
v 'c,. . suppliers were six percent above those of the fourth
, Si quarter in 1981. Recent sales figures from the major i U.S. car manufacturers seem to indicate that national j 4 demand is, once again, on the rise. A continuation of 7
this trend would certainly have a positive effect on
~
electricity sales. W ' ' Although there was a three percent decrease in 1982 total kilowatt-hour sales, the annual rate of percent- 1 age change in sales has slowed its descent and leveled ) off, indicating that we may have reached a turning point in the taidst of the current two-year old reces- l sion. We see this as a sign that the recession is bot-toming out and that our regional economy is ready John H Williamson Wendell A. Johns (m for recovery. Chairman and l' resident and Chief Executive Of neer Cruer Operahng Omeer Our entire country s level of electricity consumption declined somewhat in 1982 fmm the previous year's level- the first time this has happened since World l To Our Shareowners War H. It is no coincidence that many economists have termed this one of the worst national recession- j ary periods of the past 40 years. But as economic 1982 was a year of interesting and significant devel- activity increases during the recovery, so too will the I opments for both the electric utility industry and demand for electricity. We are now well prepared to ) Toledo Edison. It is our pleasure, once again, to provide the electric power northwest Ohio's economy report them to you, our shareowners. will need in the pending recovery period. Our 1982 earnings per common share increased to A greatly expanded nuclear insurance program,
$3.18. This compares with earnings in 1981, before which reduces financiat risk from nuclear operations an extraordinary gain, of $2.77. Earnings per share is now in place. The Federal Price-Anderson Act has in 1981, with the extraordinary gain, had been $3.27. limited the amount of public liability for a nuclear reactor accident to $560 million. Utility companies Dividends were increased again in 1982 and it was have been providing $160 mihion of that coverage our Olst consecutive year of dividend payments. through private insurance companies. Additional Quarterly dividends were increased in December, private coverage of $5 million for each licensed 1982 by two cents per share to ol cents per share. The nuclear reactor is being provided by each reactor new rate is equivalent to $2.44 per share on an operator licensee. Government insurance, for which annualized basis. It also continues our record of the companies paid premiums, made up any differ-regular dividend increases to recognize our share- ence necessary, although it was never called upon ,
owners' ongoing reinvestment in their company. to do so. With the licensing of the country's 80th j nuclear reactor, the inuustry now pmvides all of the A price increase was approved by the Public insurance coverage and the government's role as an Utilities Conunission of Ohio (PUCO)in June,1982. It insurer for the nuclearindustry has been phased out. is expected to add $34 million annually in revennes. Also, through private insurance and an industry- , This, along with the operation of fuel adjustment cooperative arrangement, property damage insur- ' clauses and strong efforts to hold down costs, were ance covering nuclear plants has been increased to , the major reasons why we were able to achieve our $983 million for each nuclear site. This represents a l earnings increase. major impmvement fmm four short years ago, when only $300 million of such coverage was available. liesidential electricity sales, while relatively flat from , their 1981 level, were affected by very moderate tem- Also, through a similar industry-cooperative l peratures this past summer and this winter. Com- arrangement, companies operating nuclear plants , mercial sales showed a slight increase of two percent are now insured against the possible increased costs ! over the year before, for buying replacement power during periods of l extensive plant shutdowns. After an initial six. I Kilswatt-hour sales to motor vehicle suppliers month waiting period, insurance will cover up to in:rsased even though sales to other industrial chts- $2.5 million per week for the first year of an outage, ] sifications were down overall. Oil refining, primary The following year there is coverage up to $1.25 mil-metals and glassmaking activities still lagged. Kilo- lion per week. watt-hour sales to those in the automotive group increased by four percent in 1982 cver 1981. That rate An $80 million price lucrease request was filed in of increase is even more accelerated if one looks at the November,1982, with the Commission. This would be fourth quarter of 1982, when sales to motor vehicle used to offset higher operation, maintenance and 1
financing costs, as well as the carrying costs of addi- ducing product instead of a costly waste disposal tional facilities being added to our system. Any problem. approved increase would probably take effect during the third quarter of 1983, allowing for the usual nine. Reduced inflation has been good news for the util-month waiting period after the time of filing. ity industry. A tempering of inflation rates means interest rates and financialcosts arelower. Also, con-Sound financial planning is essential to placing us struction programs get some relief from mounting in a position to meet the challenges of the future. costs. And that, in turn, reduces the risk element on Your company's financial officers will continue utility stocks. exploring, in 1983, new approaches for strengthen-ing our financial base. The administration and the Federal Reserve Board have succeeded in reducing the inflation rate. Inter-During 1982, we sold 800,000 shares of preferred est rates have dropped accordingly. It has taken an stock ($25 par value) and 2.2 million shares of com- impressive amount of determination and discipline to mon stock, in addition to sales from our Dividend get the U.S. economy down off the inflationary spir-Reinvestment and Stock Purchase Plan. And there al of recent years. For the Federal Reserve,it has not were sales of 10-year and 30-year first mortgage been easy keeping a tight rein on the money supply bonds, $60 million worth of each. The proceeds from while critics call for an artificial stimulus for the these sales were used to finance our construction economy. For the White IIouse, it has taken courage pregram, initially financed by short-term debt. to resist political pressure for a quick economic fix. We continue to maintain a desirable mix of coal and The market price of our common stock increased to nuclear generating sources. This has enabled us to $21 per share at year end from $16.50 at the begin-meet our customers' needs this year in an efficient, ning of the year. This is not only good news for our economic manner. Coal-fueled generation provided shareowners, but will also help us in the financing of about 77 percent of our 1982 customer requirements. Our ongoing construction programs. Our highly-efficient Bay Shore Station remains the leader in this department, providing about four bil- It is our opinion that these positive notes can be car-lion kilowatt-hours-over half of the company's total ried over into other segments of the economy. While generation. And, while being extremely productive, we await the predicted modest recovery later in 1983, the station, in the moct recent survey of the Edison the people at 'Ibledo Edison will continue to work dili-Electric Institute, was the seventh most efficient gently to keep your company positioned to serve our coal-fired station of the hundreds in the country. customers well. Our employees will continue their belt-tightening and efficient service. And all of us Our Davis-Besse Nuclear Power Station operated at Toledo Edison will continue to search for ways to better serve our shareowners, customers and well in 1982. Except for the scheduled refueling, employees. inspection and repair period the unit produced power every day of the year. In the last quarter, Cordially, ' Davis Besse operated at a very high capacity factor of . 91 percent. Our customers and shareowners will con-tinue to benefit frum this low fuel-cost generating [* [ capacity throughout 1983. Coal and nuclear fuel together will do much in the John P. Williamson coming decades to relieve the nation's dependence on Chairman and Chief Executive Officer unreliable foreign oil. We believe that with the advan-tages of our balanced energy mix - currently 72 per-cent coal and 24 percent nuclear, we are in a sound position to sustain our service area requirements at present levels and help it grow in the future. Our major investments in environmental modifi. Wendell A. Johnson cations are now completed. Within the last few President and Chief Operating Officer years we have invested $326 million in new and upgraded environmental improvements. Prutection of the environment continues to be an important part of our commitment to northwest Ohio. In 1982 we invested $4 million for treating and handling fly-ash resulting from coal combustion. We are developing additional sales of this fly-ash to contractors for road-building, building construction and other uses. 2 Our strategy is to turn this item into an income-pro-
f i incmased nnancing wats associated with our con-
- Financial Analysis struction pmgram. The PUCO will probably rule on this matter in the sumnwr of this year.
'Ibtal kilowatt-hour sales declined during the pust three years, mainly because of lower sales to indus-trial custmners. This, in turn, has been the direct result of reduced industrial activity thmughout the servico area. In 1982, sales to certain municipalities, which resell electricity to their own customers, also declined. Several of our municipalities are now pur-chasing some of their seasonal power needs from other sources.
Fuel expenso decreased by 2 percent in 1982. The overall sales dmp resulted in lower generation requirements. There woro also three major power plant outages during the year. Wo continued to defer coal costs, in excess of mar'ket prices, fmm Quarto Mining Comptny (Quarto). Ilowever, in ,1uly,1982, the PUCO authorized us to begin recovering part of these deferred costa (see Noto 0). The cost of operating and maintaining our plants and equipment increased in 1982 due to the effect of innation on labor and material costs and the outage of a major unit for refueling and repairs. In March, the Davis-llesso Nuclear Ibwor Station was taken off lino for its second scheduled refueling and nudate-tumco outago. The outago schedulo included inspec-tion and testing of various components, n>utino nmjor Results of Operations nmintmanco and government required changes. The outage was extended longer than planned in order to Earrings per common share for 1982 were $3.18, repair some cracked turbino blades and replace two an increase of 41c over comparablo 1981 earnings auxiliary feedwater supply rings. Tho unit returned to before that year's extraordinary gain. Comparative service in September. A significant amount of tho
, 1981 earnings, after the extraordinary gain, were auxiliary equipment replacement costs were capital- $3.27 per share. Tho extraordinary gnin in 1981 ized as additional plant investment. The remaining resulted fmm an exchange of common stock for first maintenanco, inspection and testing costs woro major mortgago bonds (sco Note a), factors of the operation and maintenanco expenso increaso in 1982.
Our total operating revenues have increased in each of the last three years, as shown on the Itesults Depreciation and amortization expenso showed very of Operations statement. The 1982 increano was little chango fmm 1981. Iower unit of production primarily due to higher rato and fuel recovery depreciation for Davis 13 esse offset, for the most revenues, part, the increases in depreciable plant nasets and the amortization of the four cancelled generating W) received our August 1981 price increase pmject costs. As part of the Juno,1982 rate caso request fromTho Public Utilities Commission of decision, the PUCO allowed us to continuo amortiz-Ohio (PUCO) in June,1982. The increase, for retail ing our sharo of the costs of the four nuclear gener-electric custorners, was atx>ut 70 percent of the ating units cancelled by the Central Area Power amount requested and yielded $34 million in addi- ~ Coordination Group (CAPCO)(sco Noto 7). tional annual revenues. Stato and local taxes increased due to higher state The Federal Energy llegulatory Commission (FEllC) exciso taxes on increased revenues, and higher pmp-in Miy,1982, authorized us to increano rates charged erty taxes resulting from increases in plant assets, to wholesalo municipal customers. The increaso ~ An increaso in federal incomo taxes resulted fmm pitxtuced additional revenues of $3 million on an - higher taxablo earnings. annual basis. Other incomo and deductions (not) for 1982. decreased We filed a price increase request, in November, ~ from 1981. In 1981, other incomo and deductions (not) 1982, with the PUCO for $80 million in electric retail . included a non recurringinsurance settlement of $3.0 rates. This addittomd revenuo la needed to help meet million, and a non-recurring reversal of $3.0 million higher operation and maintenance costs, as well as of Pennsylvania gmas recolpts tax. 3
Other significant items affecting earnings per share continuing construction of three CAPCO generating were increased payments for interest and preferred units, of which we own a 20 percent share. They are stock dividends, and more common shares outstand- Perry No.1 Beaver Valley No. 2 and Perry No. 2 ing. Thmugh the allowance for funds used during units. External financing for construction in 1982 construction (AFUDC), we capitalized a substantial was $169 million. We used this, along with $42 mil-amount of these financing costs, including a return lion of funds raised internally, to fund the 1982 con-on equity funds used. AFUDC has increased during struction program and retire $40 million of first each of the last three years due to higher construc- mortgage bonds that matured during the year. In tion-work-in-pmgress amounts and increases in the addition, we also used short-term borrowings to l AFUDC rate. meet interim cash needs for capital projects. Unused bank lines of credit at December 31,1982 were $95 Note 10 explains the effects of inflation on our million. operations. We estimate spending approximately $277 million for construction in 1983, mainly on the three units Liquidity and Capital Resources discussed above. Net pmceeds from long-term debt, preferred and common stock issues and our Share-
'Ibtal assets and total liabilities rose in 1982 fmm the owner Dividend Reinvestment and Stock Purchase previous year. This was mainly due to expenditures Plan will provide about $160 million in external for our continuing construction pmgram, along financing. In addition, we will need $7 million to pay with related external financing. for long-term note maturities and preferred stock sinking fund requirements in 1983.
We will continue to modify, as we have done in the past, our construction program for changing For federal income tax purposes, we estimate that economic conditions.1992 construction expendi- 66.7 percent of the 1982 common stock dividends tures were $247 million. Most of this was due to the will be considered a return of capital. Tb the Shareowners and Board of Directors of The Toledo Edison Company We have examined the balance sheets and statements As discussed further in Note 3, the PUCO has ordered of capitalization of The 'Ibledo Edison Company (an that the extraordinary gain on an exchange of com-Ohio corporation) as of December 31,1982 and 1981, mon stock for bonds recognized in 1981 be reversed and the related statements of results of operations, and amortized over twenty years. The Company has earnings reinvested and source of funds invested in appealed this decision and cannot predict the out-plant and facilities for each of the three years in the come of this matter. period ended December 31,1982. Our examinations were made in accordance with generally accepted In our opinion, subject to the effects on the financial auditing standards and, accordingly, included such statements of such adjustments, if any, as might have tests of the accounting records and such other been required had the outcome of the uncertainties auditing pmcedures as we considered necessary in discussed in the preceding two paragraphs been the circumstances. known, the financial statements referred to above pre-sent fairly the financial position of The 'Ibledo Edison As discussed further in Note 7, the Company has Company as of December 31,1982 and 1981, and the incurred costs related to four cancelled generating results of its operations and the source of funds units. In its latest case before the PUCO the Company invested in plant and facilities for each of the three is being permitted rate recovery of these costs as a years in the period ended December 31,1982, all in component of the rate of return on common equity. conformity with generally accepted accounting prin-This case has been appealed by both the Company ciples applied on a consistent basis. and the Ohio Consumers' Counsel. How the appeal Arthur Andersen &, Co. or changes in future PUCO cases will affect the l Company's reco try of these costs from its customers 'Ibledo, Ohio, 4 is uncertain at tuis time. January 28,1983. l
( Results of Operations vor nie wars ended Decemt>er al. Thousands of DollarN 1982 1981 1980 Operating Revenues Electric 473 105 434 853 304 880 Gas and steam heating 8 530 7 431 0 082
'Ibtal operating revenues 481 725 442 284 401 808, Operating Expenses Fuel 120 484 123 074 110 423 Purclutsed and net interchanged power 7 174 (032) 45 348 Operation 75 834 03 070 55 842 Maintenanco 38 830 31 008 20 310 Depreciation and amortization 43 838 43 427 20 002 State and local taxes 41 200 30 000 31 202 Federal incomo taxes 45 214 40 842 23 370
'lbtal operating expenses 372 643 330 204 321 512 Operating Income From Sales to Customers 100 082 102 000 80 350 Other Income Allowance for equity funds used during construction 48 700 32 408 28 443 Incomo tax reductions applicable to borrowed funds used during construction and other 18 037 0 010 13 218 Other income and deductions - not 1 017 8 852 870
'!btal other incomo 08 000 50 000 42 540 Income Before Interest Charges 177 742 153 050 122 800 IIterest Charges long-term debt and other borrowings 04 713 80 310 70 800 Allowance for lx>rruwed funds used during construction (22 505) (15 401) (15 148)
Interest charges - not 72 208 70 810 55 718 Income Before Extraordinary Item 105 534 83 137 07 178 Extraordinary gain from exchange of common stock for bonds - 10 807 - Net Income 105 534 03 044 07 178 Preferred stock dividends accrued 20 221 23 542 18 021 EARNINOS ON COMMON STOCK 70 313 70 402 40 157 EARNINOS PER COMMON SHARE (average shares (in thousands) outstantling - 24,017 in 1982,21,507 in 1981 anti 10,220 in 1980) Before extraordinary gain $3.18 $2.77 - $2.50 Extraordinary gain in 1981 -
.50 -
After extraortlinary, gain _
$3.18 $3.27 $2.50 The notes on pigns O thruugh 14 ato an integrn! part of this statement, 5
s F
- Balance Sheet necem3er 31, I Thousands of Dollars 1982 1981
[ ASSETS - Property, Plant And Equipment Plant in service, at original cost 1 306 677 1 261 174
- Less accumulated provision for depreciation 285 453 252 310 1 021 224 1 008 864 L Construction work in progresc 878 535 656 999 Nuclear fuel in service, at amortized cost 18 390 10 951
[ F 1 918 149 1 676 814 i Current Assets E Cash 1631 2 590 , Temporary cash investments, at cost 8 2 541 g Accounts receivable - net 44 550 49 737 g Fuel for use in power plants, at average cost 36 818 31 077 Materials and supplies, at average cost 10 680 10 178 [ 14 330 6948
- Prepaid taxes Special deposits and other 9 126 7 997 L 117 143 111 068 p
G Other Assets
? Property taxes - subsequent years 20 947 19 521 Deferred charges - cancelled generating projects 42 902 43 048 Quarto coal costs 11 618 9 412 Miscellaneous 11 109 8 507 86 576 80 488 TOTAL ASSETS 2 121 868 1 868 370 LIABILITIES Capitalization Common stock equity 617 127 550 176 Cumulative preferred stock 170 000 150 000 Cumulative preferred stock with mandatory redemption 95 027 95 500 Long-term debt 886 168 764 831 1 768 322 1 560 507 Nuclear Fuel Trust 34 780 -
Current Liabilities Short-term notes payable 43 000 22 500 Long-term debt and preferred stock due within one year 13 184 44 588 Accounts payable 31 354 35 406 Accrued taxes 46 231 45 518 Accrued interest 20 556 17 031 Dividends declared 22 798 19 794 Advanced fuel cost recovery 2 225 4 118 Accrued expenses and other 5 754 15 338 185 102 204 293 Accumulated Provisions And Other Deferred federalincome taxes Accelerated depreciation and amortization 66 488 54 823 Cancelled generating projects 16 714 16 247 Property taxes and other 11 800 10 552 Investment tax credits 30 963 17 570 Deferred credits and other 7 699 4 378 133 664 103 570 0 TOTAL LIABILITIES 2 121 868 1 868 370 The notes on pages 9 thivugh 14 are an integral part of this statement.
Capitalization necem3er 31, Thousands of Dollars 1982 1981 Common Stock Equity Common Stock, $5 par value, authorized 30,000,000 shares, l (Issued and outstanding shares (in thousands)- 26,223 in 1982 and 23,4491n 1981) 131 116 117 243 Premium on capital stock 325 540 290 713 Earnings reinvested 160 471 142 220 l 'Ibtal Common Stock Equity 617 127 550 176 f Cumdative Preferred Stock Shares Outstanding Current (Thousands) Redemption Series 1982 1981 Price Not subject to mandatory redemption
$100 par 4 % - 4.56% 310 310 $101 - $105 31 000 31 000 8.32-10% 500 590 105- 107 59 000 59 000
$25 par
$4.28 800 -
$ 32 20 000 -
8.84 % 1000 1000 27 25 000 25 000
$2.365 1 400 1 400 29 35 000 35 000 170 000 150 000 Subject to mandatory redemption
$100 par 11% 70 75 $111 7 027 7 500 9%% 250 250 107 25 000 25 000 13%% 130 130 112 13 000 13 000 12.65% 200 200 113 20 000 20 000 14.80% 300 300 115 30 000 30 000 95 027 95 500
'Ibtal Cumulative Preferred Stock 265 027 245 500 Long-Term Debt First Mortgage Bonds, excluding current maturities Maturity Interest Rate 1984 3%% 14 000 14 000 1985 9.35% 50 000 50 000
( 1986 3%% 15 000 15 000 1988 4% 15 000 15 000 1990 -1992 14 - 16 % % 195 000 135 000 1997 -2000 6%- 10% 66 378 66 378 2002 -2006 7 % - 9.65% 111 725 111 725 2008 -2012 9%- 15% 186 900 126 900 Discount in process of amortization (544) (419) 653 459 533 584
- Other long 'Ibrm Debt, excluding current maturities l
Notes,8.75%, due 1984 - 1997 103 400 110 000 Term bank loan, average interest rate 15.16%, due 1987 - 1989 50 000 50 000 Pollution control notes,5.71 - 7%%, due 1984 - 2009 37 500 37 500 Pollution control loan agreement, 10 - 10.055%, due 1990 - 2010 31 500 31 500 Nuclear FuelIrase 10 309 2 247
'Ibtal Long Term Debt 886 168 764 831 TOTAL CAPITALIZATION 1 768 322 1 560 507 The notes on pages 9 through 14 are an integral part of the this statement. 7 )
- c. _ _ _ _ _ _ _ _ . _ _ . _ _ _ _ _ _ _ _
Earnings Reinvested vor The Years ended December 31 Thousands of Dollars 1982 1981 1980 , Balance, Beginning Of Year 142 220 122 743 117 306 i Add - Net Income 105 534 93 944 67 178 Deduct - Preferred stock dividends declared 26 766 24 222 18 720 , Common stock dividends declared 60 517 50 245 43 021 Earnings Reinvested During The Year 18 251 19 477 5 437 BALANCE, END OF YEAR 100 471 142 220 122 743 Source of Funds Invested in Plant and Facilities For The Years Ended December 31, Thousands of Dollars 1982 1981 1980 Provided Fram Internal Operations Earnings reinvested during the year 18 251 19 477 5 437 Principal non-cash items: Depreciation and amortization 43 838 43 427 26 002 Amortization of nuclear fuel 5 932 6 694 2 578 Deferred fuel cost recovery (1 893) 4 118 - Deferred Quarto coal costs (2 206) (9 412) - Deferred federal income taxes - net 13 380 13 295 29 056 Investment tax credits - net 13 394 9 466 (12 697) Allowance for equity funds used during construction (48 706) (32 408) (28 443) Gain from exchange of common stock for bonds in 1981 - (10 807) -
'Ibtal provided fmm internal operations 41990 43 760 21 933 Provided From Financing Activities Sale of Securities:
Common stock 48 700 51 706 41 001 Preferred stock 20 000 30 000 33 000 First mortgage bonds (principal amount) 120 000 70 000 65 650 Pollution control notes - net - 1 399 33 417 Com'ersion of short-term debt to a term bank loan - 50 000 - Net change in short-term borrowings 20 500 (66 500) 65 500 Net change in temporary cash investments 2 533 4 482 (7 023) Redemption of long-term debt and preferred stock (43 032) (18 637) (41 179).
'Ibtal provided from financing activities 168 701 122 450 190 366 Other Allowance for equity funds used during construction 48 706 32 498 28 443 Net change in current assets and liabilities, and other accounts (12 528) 141 (5 915)
'Ibtal other 36 178 32 639 22 528
'Ibtal Sources Of Construction Funds 246 869 198 849 234 827 Capitalised Nuclear Fuel Lease 12 616; -
8 398 Capitalised Nuclear Fuel Trust 34 780 - - INVESTED IN PLANT AND FACILITIES 294 265 198 849 243 225 The notes on pages 9 through 14 are an integral part of these statements. 8
/ l Summary of Significant Accounting Policies l l General they occur. We classify the tax benefit of the interest The company maintains its accounting records in cost added to plant (bormwed funds used during con-accordance with the Uniform System of Accounts as struction)in Other Income. prescribed by The Federal Energy Regulatory Commis. For certain property, we received investment tax cion (FERC). This system has also been adopted by The credits which are deferred and are added to income Public Utilities Commission of Ohio (PUCO). ovar the life of that pmperty. Unrealized investment tax credits from 1977 to 1982 total $40 million. We Property, Plant and Equipment will record them as we use them in future years. Th3 company states property, plant and equipment at original cost. This includes such items as payroll taxes, Revenues pen: ions, assorted fringe benefits, management and Customers are billed on a monthly cycle basis, based general expenses and allowance for funds used during on rates authorized by the PUCO which are applied to con truction (AFUDC). AFUDC represents the esti. their electricity consumption. The larger industrial and mated composite interest and equity costs of capital wholesale cu stomers are billed on a month-end meter-funds used to finance construction to the extent that reading basis. Euch costs have been transferred to pmperty, plant and equipm:nt from the statement of Results of Operations. Fuel Th3 company's AFUDC rates, net-of-tax, were 9 % percent Estimated fuel costs are authorized to be collected forJ nuary-May,1982,10% percent forJune-December, over a subsequent six-month time period through a fuel 1982,8 % percent for January-March,1981,8% percent for recovery rate. The fuel recovery rate is based on actual April-December,1981 and 8 % pement for 1980. The AFUDC and partially projected costs and generation. The PUCO calculation is based on the FERC formula. Beginning in reviews and approves the pmjected rate and historical 1981, the FERC granted the company authorization to performance. We are deferring the silfference between compute the AFUDC rate on a monthly basis. actual and estimated fuel charges until they are applied to the customer's bill. This enables the company to bet-Depreciation and Maintenance ter match fuel expenses with fuel adjusted revenues. The company provides for the apmciation of the The company charges the cost of nuclear fuel to original cost of properties, except for the Davis-Besse fuel expense based on the rate of consumption. In addi-Nuclear Station, over thcu estbaated useful lives on a tion, the company includes in fuel expense the estimated ctraight-line basis. The provisions for depreciation nuclear fuel disposal costs which are recovered from averaged 3.5 percent in 1982,3 4 percent in 1981 and its customers. 3.3 pement in 1980. Depreciation expense on the Davis-Besse Nuclear Station is based on the unit-of-pmduction Retirement Income Plan mithod. This includes a provision for our share of the The company's retirement income plan covers all total estimated decommissioning costs of $53 million. employee gmups. Employees are not required to con-Maintenance expense includes repairs of pmperty, tribute. We fund each year's cost and amortize unfunded including renewal of minor items. Costs of replacements past service costs over a 30-year period. Pension cost cnd those renewal items which are units of property are is based on estimated salary levels and service years of charged to the utility plant accounts. For retired pmp- employees at their retirement. 'Ibtal pension costs were: c rty, wn take its cost plus removal cost, net of salvage, and $4.5 million in 1982; $3.7 million in 1981; and $4.5 charge it to accumulated pmvision for depreciation. million in 1980. We amortize experience gains and losses over 15 years. Taxes The actuarial present value of total vested and non-The company provides deferred federal income taxes as vested plan benefits is based on salary levels and years required on the differences between straight line of employees' service as of January 1 for each year. depreciation and accelerated tax depreciation amounts These were: $39.1 million and $5.6 million in 1982; and for pmperty additions since December 31,1973. Other . $34.5 million and $1.1 million in 1981.The weighted aver-depreciation timing differences are considered in rates age assumed rate of return used in determining these in the year that they affect taxes payable. We believe values was 8 percent for both 1982 and 1981. Market that such taxes are recoverable in future revenues value of net assets available for benef;ts amounted to based on PUCO and Ohio Supreme Court decisions. . $57.6 million as of January 1,1982 and $54.5 million as W] deduct for tax purposes all interest costs as of January 1,1981, 9
N Notes to Financial Etatements December 31,1982 (1) Federal Income Taxes Supplementary information regarding federal income taxes is set forth in the following tables: (thousands of dollars) (thousands of dollars) For The Years Ended December 31. 1982 1981 1980 For The Years Ended December a t , 1982 1981 1980 FEDERAL INCOh!E TAX EXPENSE FEDERAL INCOh!E TAX EXPENSE WAS COMPUTED AS 10LIDWS: DETAl1E ARE AS IVLIDWS: hx at statutory rates on Currently Payable (Refundable) 1930 7477 (6 049) pre-tax income 60 633 57 578 35 574 Investment tax credits - Increases (reductions) Deferred 14334 10119 (12901) A lo a e o funds used Prior year adjustment (2857) 233 (205) during construction (32521) (22 075) (20 052) Extraordinary gain from Deferred taxes - exchange of common stock Accelerated depreciation (net) 11806 12377 11 269 for bonds - (4 971) - Cancelled generating projects 468 (1 118) 17365 Accelerated depreciation Quarto coal costa 1015 4 329 - methods and other Other provisions 521 (1 538) 475 depreciation differences 428 2 375 (3 875) Miscellaneous (2263) (1 681) (1489) 'Ibtal Federal
'Ibtal federal income tax Income hx Expense 26 277 31226 10158 expense 26 277 31 226 1015A hx included as credit in Other Income 18937 9616 132io Federal Income hxes Included in Operating Expenses 45 214 40 842 23 376 (2) Capitalization b. Cumulative Preferred Stock
- a. Capital Stock Transactions We are authorized to issue 2,000,000 shares of $100 par For The Years Ended and 6.000,000 shares of $25 par Cumulative Preferred Decemter 31. 1982 1981 1980 Stock under our amended articles of incorporation. The annual dividend requirement on Cumulative Preferred CAPITAL S'IUCK SIIARES Stock outstanding at December 31,1982 is $27.2 million SOLD:(RETIRED): for an average dividend rate of 10.26%,
* * " c. Cumulative Preferred Stock With Mandatory Public !iales 2 200 000 2053707 2000 000 Redemption Exchange of common We held 4,730 shares at December 31,1982 and 5,000 stock for bonds -
946 293 - shares at December 31,1981 of the 11% series as treasury Shareowner Dividend stock. The sinking fund requirements for the various series k re Ilan 574 680 300 201 236 361 of Cumulative Preferred Stock are: Cumulative Preferred Stock Series Minimum Yearly Shares Effective Date Public Sales
$4 28 Series, $25 par 800 000 - - 11 % 5 000 *79 9%% 16650 1985 Cumulative Preferred Stock with Mandatory thlemption Public Sales 14.80 % 12000 1987 14 80% Series, $100 par -
300 000 - 1245% Series, $100 par - - 200 000 The shares of the above series may be purchased at the sinking fund redemption price of $100 per share plus Private Placement accrued and unpaid dividends. Future sinking fund 13%% Series, $100 par - - 130 000 redemption requirements are: $500,000 in 1983 and in 1984; $2,165,000 in 1985; $3,831,000 in 1986 and i% ties. $100 par (5000) (5000) (5000) $5,031,000 in 1987. (thousands of dollars) d. Long-Term Debt PREMIUM ON CAPITAL S'IDCK: The annual interest requirement on long-term debt out-Dalance, Beginning of Year 290713 255 508 225688 Premium, Net of Expense - standing at December 31,1982 is $94.1 million for an Common Stock 33783 35569 30218 average interest rate of 10.66% This includes amortiza-Preferred Stock i044 (364) (398) tion of debt discount and expense but excludes interest 290713 255 508 on the nuclear fuel lease (as well as the Nuclear Fuel Balance. End of Year 325 540 10 'IYust).
/ Sinking fund redemption requirements and scheduled The first mortgage bond indenture provides for a maturities for long-term debt excluding nuclear fuel required annual payment after certain credits, as defined, leases through 1987 are as follows: to the Trustees as a Maintenance and Replacement Fund. We have been satisfying these requirements by pledging more pmperty additions which might otherwise be made Sinking Itnd the basis for the issuance of additional bonds. Itedemption Scheduled The mortgage securing first mortgage bonds issued by Itequirements Maturities us constitute a direct first mortgage lien on substan-(thousands of dollars) tially all property and franchises owned by us. This does 1983 2 990 6 600 not include expressly excepted property, such as cash 1984 3 600 20700 and securities, accounts receivable, fuel, supplies and 1985 3 600 56700 automotive equipment. 1986 3 450 21700 1987 3 450 23 367 (1) Exchange of Common Stock for Bonds As part of the June,1982 rate case decision, the PUCO ordered us to reverse the extraordinary gain and amortize In November,1981, we exchanged 940,293 shares of com- it over 20 years. We opposed this unfair decision when mon stock for $25.0 million of outstanding first mortgage we appeared before the PUCO for a rehearing in Septem-bonds owned by a bmkerage firm. The stock's exchange ber,1982. In addition, the company filed a Notice of value was $10.025 per share. From this exchange, we Appeal to the Ohio Supreme Court on this decision. If realized a non-taxable extraordinary gain of $10.8 million, these appeals are unsuccessful, we will be required to Thiz is the difference between the stock's value and the reverse the extraordinary gain. We cannot predict the principal amount of the bonds plus accrued interest. outcome of these appeals. (4) Pow r Pooling We own 4 percent of the common stock of Ohio Valley CAPCO is currently building three generating units. Electric Corporation (OVEC). Through a long-term con. The first of these should begin operating in 1984. Our tract. OVEC supplies power to the Department of Energy ownership share will total an investment currently (DOE). The proceeds fmm the sales of power should be estimated at $1.7 billion. cuffici:nt for OVEC to earn a return on its common We provide our own financing for this investment. ctock after meeting all of its costs. We are entitled to " Operating Expenses" in Results of Operations includes receive, but must pay for,4 percent of any power not our share of direct expenses for operation of three contracted for by IX)E. CAPCO units presently in service. Wa h;ve entered into a power-pooling arrangement, in The following represents our ownership in each of the th3 interest of reliability and economy, with four other CAPCO units at December 31,1982: utilities (known as CAPCO). This involves substantial commitments for generation and transmission facilities. Actual or Scheduled Ownership Ownership Plant Accumulated Construction Generating Unit Completion Share Megawatts Puel In-Service Depreciation Work in Pmgress (thousands of dollars)
. Ihvis-Besse No. I 1977 48.62 % 42e Nuclear 412400 -38700 28 800 Mansfield No. 2 1977 17.30 % 135 Coal 68 300 9 700 i700 Manarield No. 3 1980 19.91 % 159 Coat 127600 10500 900 lbrry No.1 1984 19.91 % 240 Nuclear - -
267500 Beaver Valley No. 2 1986 19.91 % 166 Nuclear 12200*- - 283 400
' Nrry No. 2 1988 19.91 % 240 Nuclear - -
240 000
- Common facilities with Unit No.1 11-t i
N (5) Short-Term Borrowing Arrangements ment fees for about two-thirds of the credit lines. The rest We have $95.1 million in unused credit lines at December are based on informal compensating balance arrange-31,1982 with various banks. This includes a $20 million ments whereby banks will expect us to maintain average Eurodollar revolving line of credit. This should help our deposits equal to 5 to 20 percent of the line of credit, future entry into the European long-term capital market depending on the borrowed amount. The deposits pmvide and give us access to short-term credit. We pay commit- operating balances for us and are not legally restricted. ! 1 (6) Quarto Coal Arrangement
- a. Coal Supply Contracts b, Coal Cost Deferral The CAPCO companies have made long-term arrange. At present, Quarto coal is more expensive than the other ments wi a Quarto Mining Company (Quarto) to supply coal currently available. Prior to Jaly 30,1982, the PUCO coal to the Mansfield units. The CAPCO companies each had ordered us not to charge our customers anore than have agreed to guarantee their respective shares of market prices. We deferred the difference between Quarto's debt and lease commitments incurred to develop market price and actual cost. On July 30,1982, the PUCO and equip the mines. As of December 31,1982, our 6.89 authorized us to recover further Quarto coal costs, plus percent share of the guarantees was $28 million. Our part of the prior cost deferrals under a revised market share of these commitments, incurred af ter 1982, will price formula. As of December 31,1982, we have deferred increase in steps to 12.4 percent in 1986. $11.6 million which has not been recovered through our Our coal supply contract with Quarto expires Decem- fuel clause.
ber 31,1999. Under its terms, the pricing pmvisions The Consumers' Counsel of Ohio has appealed this reflect Quarto's costs to operate the mines, including the July,1982 decision as being unfair to consumers. If the costs of mine construction. Our total purchases under appeal is denied and the current decision continues, we these contracts amounted to $12.4 million in 1982, $15.5 should be able to recover the costs of Quarto coal, includ-million in 1981, and $15.1 million in 1980. ing the deferred costs. We cannot predict the outcome of Under these arrangements, we expect our minimum this mattet. yearly payments to decline fmm $6.7 million in 1982 to
$5.0 million in 1987.
(7) Cancelled Generating Projects In January,1980 the company, along with the other The June,1982 PUCO decision has been appealed to the CAPCO companies. cancelled the construction of four Ohio Supreme Court by both the company and the Ohio nuclear generating units. All cancellation costs related Consumers' Counsel. to these units have now been paid. In a January,1983 PUCO order for another CAPCO In April,1981, the PUCO appmved rate recovery of company, such a cost recovery component in the rate of these costs as an operating expense. Since April,1981, return was not specifically identified. If the company, in the company has been amortizing these costs to oper- future rate cases, cannot recover these costs through a ating expenses over a ter. year period. In the company's specified component in rate of return or through other latest rate caso decided in June,1982, the PUCO disal- means, it would be necessary to immediately reduce net lowed recovery of these costs as an operating expense, income for the remaining unrecovered costs. The unre-based upon a 1981 Ohio Supreme Court decision, but covered cancellation costs at December 31,19821s $26.2 allowed continued amortization along with an additional million after iederal income taxes. risk factor as a specific component in the rate of return. The company is unable to predict the outcome of this matter. (8) Nuclear Fuel Financings CAPCO has lease arrangements for nuclear fuel to be of December 31,1982, we have an obligation of $34.8 mil-loaded in its five nuclear units. We capitalized our share lion to the Trust. This includes $.5 million in capitalized of the Davis-11 esse Unit No. I fuel lease relating to the interest expense incurred during 1982. The 1982 interest portion k)aded into the reactor in June,1982. This is expense was calculated at an average rate of 10.7 percent. In ammlance with provisions of a June,1982 PUCO Our share of these leases, including the Trust agree-rate order. ment, is $178 million. We expect our nuclear fuel leasing In November,1982 CAPCO created the Central Area arrangements to be adequate thmugh 1983. Additional Energy Trust (the Trust). The Trust will oversee the nuclear fuel financing arrangements are currently being financing of the pmeurement, conversion and enrich- negotiated. Estimated payments based on burn-up,includ-ment stages of nuclear fuel for the CAPCO units. Each ing interest are: $9 3 million in 1983; $26.1 million in company's role in the 'IYust is independent of its owner- 1984; $29.4 million in 1985; $41.2 million in 1986; and ship share of any CAPCO unit. Also, each company's $48 million in 1987. rights and requirements in connection with the Trust are separate and distinct fmm the other companies. As 12
f (9) Interina Finanstal Reporting (Unaudited) W2 feel the following quarterly results reflect all adjust- , ments (which are of a normal recurring nature) to ensure ' a fair ctatement of results for such periods: Earnings Per Common (thousands of dollars) Share ! Income , Before Earnings Before after i Three Months Operating Operating Extraordinary On Common Extraordinary Extraordinary Ended Revenues Income Gain Stock Gain Gain l
) 1987 March at ' 124 420 28 241 25 650 -19 683 $.84 $ .84 June 33 111 673 26307 24 078 17387 .72 .72 -
i September 30 126786 31 379 32108 25359 .98 .98 Dncember 31 118847 23155 23 698 16 883 45 45 + 1981
, M:rch 31 108 232 25110 18 082 ~ 12435 $ 42 6 42 June 30 105407 27169 20 887 14898 .70 .70 September 30 118 651 28790 24 660 18726 .86 .86 December 31 109994 21913 19507 24343 40 1.08 )
i (30) The EfM of Changing h (Unaudited) substantial amounts of debt used to finance property,
; The following supplementary information is based on a plant and equipment. This gain is shown in the table -
4 1979 pronouncement by the Financial Accounting Stand- pmsented on page 14 under the caption " Gain from the'
' enis Board. It pmsents financial information showing decline in purchasing power of net amounts owed".
I the effects of general inflation (Constant Dollar Account- The comparative Constant Dollar and Current Cost - ' ing) and changes in prices of specino assets, namely pmp- - values of all items on the income statement, except depre-arty, plant and equipment (Current Cost Accounting). clation, represent the amounts recorded in the historical-Con: tant dollar amounts represent historical dollars cost income statement. These amounts generally ctated in terms of dollars of equal purchasing power, as occurred ratably throughout the year. We have not measured by the Co..;.mr.c Frice Index for All Urban restated fossil fuel inventories and the cost of fuel used
' Conrumirs. Current cost amounts renect the changes in generation from their historical cost bacia. Regula-i in specific prices of plant from the date the plant was . tions limit how we recover fuel and purchased power acquired to the pmsent. They also differ from constant and gas costs. The only options are through the opera-
' dollar emounts to the extent that specino prices have ~ tion of aquatment clauses or adjustments in besic rate increased mom or less than the general rate of innation. ' schedules to actual costs. For this reason, fuel supplies . The current cost of plant estimates the probable cost of. am in effect monetary assets. No federal income tax ben-replacing existing plant assets and was determined by ents for any inflation aquatment are reflected. Current ; indexing the surviving plant by the Handy-Whitman tax law does not allow for the etusion of capital that
-Index of Public Utility Constructica Costs. exista during periods of inflation. We have calculated Beciuse our rates are regulated, we cannot recover . provisions, for the current year, for the depreciation on -
' thmugh revenues any mom than the original cost of the Constant Dollar and Curant Cost amounts of paup-plant assets. This is in spite of the fact that in times of - er ty, plant and equipment. We ngured this by applying.
high innation, the cost to replace such assets upon their ' the ratio of the pmvision for depreciation over the aver-retirement will substantially exceed the original cost. age pmporty, plant and equipment on the Historical Thus, in 1982, the added cost, due to inflation, of replac- : Cost basis, to the indemed plant valuss. The Financial Data A4usted for Changing Prices table: . Ing upon the company's which the company'splantrates assetsare is not reflected based. This amount,in the
. costy , presents selected operating and Anancial data for the therefore, is an economic loss to the company. This loss - past five years based on historical cost. This data is also is shown in the Heounts of Operations A4usted for a4usted for inflation as measured by the Consumer .
- Changing Prices statement, under the caption " Inflation . - Price Index for all Urban Consumers. Earnings on com-t 'efibet during 1982 on capital investment",- ; mon stock and earnings per share on a constant dollar .
' During a period of innation, holders of monetary basis and on a curmnt cost basis are shown as if only the .
assets cuffer a loss of general purchasing power. Hold-. amount reportable as an additional puuvision for depmci-i crs of monetary liabilities experience a gain. The latter's ation were u0 ducted fium the mported amount of such . gain is especially important for the company due to the . ' income. We revised the 1981 data to Inflect actual indices.
-13 ;
/
g 3. .
- . .. :_ _ - u - A
mascirs or oranATroNs ARIUSTED FOR CHANoING rRICES Millions of Average 1982 Dollars Constant Curmnt Dollar Cost-Pbr the War Ended December 31,1982 Accounting Accounting Earnings on Common Stock From Continuing Operations 79 79 l Effects of Innation on Common Stock Equity: Inf1& lion effect during 1982 on capital investment: Increase in specific prices to current costa - 258 Effect of change in general price level - (151) 11 eduction to net recoverable cost (54) (156) Additional pivvision for depreciation (26) (31) (80) (80) Gain from decline in purchasing power of net amounts owed (primarily debt) 54 54 (26) (26) Earnings on Common Stock From Continuing Operations Adjusted for Changing Prices 53 53 FI'fANCIAL DATA ADJUSTED FOR CHANGING PRICES Pbr The Years Ended December 31. 1982 1981 1980 1979 1978 Consumer Price Index (annual average) 2893 272.4 246.8 217.4 195 4 Operating Hevenues (millions) llistorical cost basis $482 $442 $402 $365 $340 Hestated to average 1982 dollars 482 470 471 486 503 Davidends Declared per Common Share Ifistorical cost basis $238 $230 $220 $220 $2.14 Hestated to average 1982 dollars 238 2.44 2.58 2.93 3.17 Consumer Price Index (year end) 294.4 281.5 258.4 229.6 202.9 Market Price per Common Sham (year end) Illstorical cost basis $21.00 $16.50 $15.88 $1750 $2143 Hestated to year end 1982 dollars 21.00 1726 1809 22.44 3138 i Earnings on Common Stock (millions) IIistorical cost basis $79 $60* $49 $45 Constant dollar accounting 53 34 36 29 Curwnt cost accounting 48 28 32 23 Earnings per Cornmon Share lustorical cost basis $3.18 $2.77* $2.56 $2.65
' Constant dollar accounting 2.14 1.59 1.89 1.70 Current cost accounting 1.93 130 146 139 Common Stock Equity (millions)
Illstorical cost basis $617 $550 $479 $433 Current / Constant accounting 591 - 506 426 381 Increase in G-neral Price level Over (Under) Inerease in Specific Prices (mhlions) ($107) $5 $84 $77-Gain P%m Decline in Purchasing Power of Net Amounts Owed (millions) $54 $93 $1.11 $102 Property, Plant and Equipment Net of Accumulated Depreciation (Includes Non. Utility Plant)(millions) IIistorical cost basis $1919 $1678 = ' $1525 $1310 Curmnt cost accounting 3 645 3177 2804 2390 Net Hecoverable Cost of Net Assets (Curmat/ Constant accounting)(millions) . $606- $534- $457 '$408
'Befom Extraonlinary Gain 14 q
I
'j
y Financial Review Thousands of Dollars 1982 1981 1980 1979 1978 1972 Operating Revenues Residential 153 662 138 781 126 085 113 404 106 512 37 055 Commercial 101 789 90 863 80 836 72 354 67 563 24 698
- Industrial 158 930 151 539 137 860 128 931 120 570 38 013 Other 58 814 53 670 50 105 43 958 39 438 16 001 Electric-total 473 195 434 853 394 886 358 707 334 083 115 767 Gas and steam heating 8 530 7 431 6 982 6 414 5 973 2 815
'Ibtal 481 725 442 284 401 868 365 121 340 056 118 582
% Increase from prior year 9% 10% 10% 7% 23% 14%
Operating Expenses Fuel 120 484 123 074 110 423 93 295 82 039 23 721 Purchased and net interchanged power 7 174 (632) 45 348 53 574 55 850 13 959 Opcration 75 834 63 976 55 842 44 691 38 883 20 097 Maintenance 38 839 31 908 29 310 21 137 19 604 6 799 Depreciation and amortization 43 838 43 427 26 002 29 117 26 532 11 778 State and local taxes 41 260 36 699 31 202 29 760 24 320 10 513 Fedcral income taxes 45 214 40 842 23 376 25 139 27 397 8 209 7btal 372 643 330 294 321 512 296 713 274 625 95 076
% of'Ibtal Revenues 77% 77% 80% 81% 81% 80%
Income Operating Income 109 082 102 990 80 356 68 408 65 431 23 506 Allowance for equity funds used during construction
- 48 706 32 498 28 443 23 512 17 470 4 458 Income tax reductions-construction borrowed funds and other 18 937 9616 13 218 8 251 6484 1004 Other income and deductions-net 1 017 8 852 879 1 017 720 90 Income before interest charges 177 742 153 956 122 896 101 188 90 105 29 058 Interest charges (94 713) (86 310) (70 866) (52 584) (42 746) (9 972)
Allowance for bormwed funds used during construction
- 22 505 15 491 15 148 9 991 7 000 -
Income before extraordinary gain 105 534 83 137 67 178 55 595 54 449 19 086 Extraordinary gain - 10 807 - - - Net income 105 534 93 944 67 178 58 595 54 449 .19 086 Pref;rred stock dividends 26 221 23 542- 18 021 13 894 13 020 2 650 Earnings on common stock 79 313 70 402 49 157' 44 701 41 429 16 436 Contanon Stock Dividends Declared per Share 2.38 2.30 2.20 2.20 2.14 1.86 Earnings per Share Before extraordinary gain 3.18 2.77 2.56 2.65 2.78 2.91 Extraordhiary gain -
.50 - -' - -
After extraordinary gain 3.18 3.27 2.56 2.65 2.78 2.91 Return on Average Equity Before extraordinary gain 13.3% 11.6% 10.5% 10.7% ~ 11.3% - 14.5% After extraordinary gain 13.3% - 13.5% 10.5% 10.7% 11.3% 14.5% Market Price Range per Share Illgh 21.12 - 18.38 20.75 23.38 25.50 31.75
- inw 15,75 15.00 15.00 17.38 20.63 26.25 Year End 21.00 16.50 15.88 17.50 - 21.63 30.25
. Book Value per Share 23.5G 23.46- 23.77 24.15 - 24.29 20.44 Average Shares Outstanding (thousands) . 24 917 21 507 19 226 '16 848 14 900 5 649
' il a lirt2, allowanw for funds used during construction was reported in total in other income. ' 15 V _ _ , - -
Statistical Review 1982 1981 1980 1970 1978 1972 Sales (millions of kilowatt-hours) Residential 1 911 1 919 1 971 1 934 1 914 1 460 Commercial 1 325 1 204 1 282 1 256 1 231 997 Industrial 2 873 3 080 3 165 3 559 3 617 3 079 l Municipals and other 809 858 970 960 923 885
% tal 6 918 7 151 7 388 7 709 7 685 6 421 l
% Inerease (Decrease) from prior year (3)% (3)% (4)% -% 3% 9%
Electric Customers (year end) Residential 241 492 241 663 240 142 238 353 234 450 213 546 Osmmercial 23 405 23 573 23 532 23 636 23 334 21 269 Industrial and other 3 815 3 844 3 818 3 695 3 551 4 217 Tbbl 268 802 269 080 267 492 265 684 261 335 230 032 Residential Usage Annual kilowatt-hours per customer 7 906 7 966 8 232 8 166 8 244 6 916 Average price per kilowatt-hour (cents) 8.04 7.23 6.40 5.87 5.57 2.54 Annual revenue per customer (dollars) 636 576 527 479 459 176 Load (mcgawatts) Net capability-at time of peak 1 790 1 773 1 760 1 825 1 813 1 273 Itakload 1 355 1 315 1 310 1 395 1 386 1 096 Reserve factor at peak 32% 35% 34% 31% 31% 16% Load factor 62% 66% 68% 67% 67% 68% Energy (millions of kilowatt-hours) Generated-net 6875 7 491 6 560 6 884 6 674 5 036 Purchased and net interchanged power 510 157 1352 1 348 1 566 1837
%tal 7 385 7 648 7 912 8 232 8 240 6 873 Fuel Fuel cost per kilowatt-hour (cents) 1.80 1.68 1.65 1.33 1.20 .47 Efficiency-BTU per kilowatt-hour 10 220 10 274 10 246 10 202 10 283 10 030
%tal Assets (thousands of dollars) 2 121 868 1 868 370 1 701 443 1 467 512 1 255 947 422 511 Property, Plant and Equipment (thousands of dollars)
Plant in service 1 306 677 1 261 174 1 208 001 979 809 950 873 387 874 Accumulated provisions for depreciation 285 453 252 310 220 629 201 895 176 450 100 305 Annua! Construction Expenditures (thousands of dollars) 246 860 198 849 234 827 239 010 169 888_ 75 278 Capitalisation (thousands of dollars) Common stock equity 617 127 550 176 478993 432 554 382 084 117 745 Cumulative pmferred stock 265 027 245 500 216 500 184 000 159 500 56 000 Long-term debt 886 168 764 831 714 406 611 137 560 644 183 969
%tal 1 768 322 1 560 507 1 409 899 1 227 691 1 102 228 357 714-Number of Employees (year end) 2458 2 335 2 331 2 200 2 188 1 912 13
C
- Board of Directors Executive Officers l
Richard P. Anderson (O) John P.Williamson Executive Offices Partner and General Manager, Chairman and 300 Madison Avenue l The Andersons Chief Executive Officer bledo, Ohio 43652 Samuel O. Carson (Ex N)* Wendell A. Johnson Phone (419) 259-5000 Chairman IWident and Chief Dividend Disbursing and Wiedo Wust Co. and Operating Officer Reinvestment Agent Toledo Wustcorp. Inc. Richard P.Crouse The bledo Wust Company Richard P. Crouse Vke President, Nuclear bledo, Ohio 43003 Vice 1%: dent, Nuclear John R. Dyer Stock Transfer Agents Robert IL Davies (C)*(O) Vice President. Public itelations The %kdo Wust Company Senior Vice lYesident, Frank W. Keith %Ied . Ohio 4m Owens-Lllinois, Inc. Morgan Guaranty Wust Vke President. Administration Elwood L Elberson (C) "P""# Da id A N 1 New York, N.Y.10015 Chairman, Iwsident and Vim Pres d n , Chief Executive Administrative Servkes Stock Registrars Dimer Bell Foods. Inc. Ohio Citizens Bank na d a Mcholson Wiedo, Ohio 43003 Stanley W. Oustafson (C) Ps n Fmanm thsident. Dima Corporation Morgan Guaranty Wust IJman C. Phillips Company of New York Wendell A. Johnson (E) Vice President. Corporate New York, N.Y. 20015 f kNNgNr "I^""I"8 ""d U"""I P**"* Mortgage Trustee Imell E. Roe The Chase Manhattan Bank, N.A. Marvin S. Kobacker(Ex N) Vice President Energy Supply New York, N.Y 10081 Kotacker Stores. Inc. and David K. Zaski Auditors Private Investor Vice ITesident Customer Servims Arthur Andersen & Co. Isabel E Martin (A) Stratman Cooke 300 Madison Avenue Consultant, Secretary %kx10. Ohio 43604 hk<io Ann United Way Donald II. Saunders General Counsel Donald O. Nicholson Tavasurer Ihd M. Smart Vim 1%sident. Finance Paul O. Busby Fuller & Ilenry Contmiler 300 Madison Avenue II:nry A. Page.Jr. ( A) 4 Director of Development. ' The MedW CoHegn of Ohio Exchange Listings at hledo The AnnualMeeting Common Lyman C. Phillips The Annual Mmting of The %ledo Edison New York Stock Exchange Vue President, Corturate Company will tw held at to a.m. (E.D.T) on hlidwest Stock Exchange Planning and Development April 26.1983 in the Company's headquar- Unlisted Wading Privileges Willard L Webb,III(A)*[E) ters. Edison Plaza,300 Madison Avenue, Boston Stock Exchange Chairman and Chief 'lotedo. Ohio. Formal notice of the mceting Cincinnati Stock Exchange Executive Officer, will tm sent to shanowners with the pmxy Philadelphia, Baltimore and Ohlo Citizens Dank statement. Washington Stock Exchange John P. Williamson (E)* Pmferred-$25 par value-8.84%, Chairman and Chief $2.365. $4.28 series Exocutive Officer Th4 report. Includmg the financial state- New York Stock Exchange ments, is submitted for the general informa-Robert O. Wingerter (NXO)* tion of Toledo Edison Company's share. Preferred-$100 par value-4 %% Chairman. Executive Committre. owners. It la not intended to be used in 8.32%. 7.70% and 10% series Libt:ay-Owens-Ford Company connection with any sale or purchase of any . American Stock Exchange Necurities. Bonds Kiy to Directors' Committees 7%% -Due 200J, 9%% -Due 2008 A copy of Form 10-K as nled with the Securi. (A) Audit Committe ties and Exchange Commission will le avail- 8%' -Due 2003 R05%De 2006 (C) Compensation Committm able to shanowners upon written miuest to - W -Due 2000, 11 % -Due 2009 the Company's Vke IWsident Finance. 9.3S% -Due 1985, (E) Executive Committee New York Stock Exchange (N) Nominating Cbmmittre (O) Operations Committm c) Committe Chai-m^" About Toledo Edison The bledo Edison Company is a public utthty whose primary activities am the genera-Directors Emeriti tion, transmission.dist ribution and sale of electric energy in hledo and northwestern Floyd M. Canter Ohio. Servicing appmximately 2.500 square mike with an estimated population of . 750XX)o, the Company also pmvides relatively small amounts of natural gas and steam William S. Carlson heating servims. %1edo Edison is owned by over 100.000 shareholders in all 50 states
. Virgil A, Gladieux and in many countries thmughout the world.
u .- . _ -
M R_y es 4 Y l h* W S 9_ 24 9 9 s m
& G_ . A, A ,,
k,fM M ,_ \ r 1 = F t e
. . g e ,
FF ' - utf05pGE EUISON ** i . s am j' eDe0N.IR.At,n.
== o Pom e Na 2300 10W30 OED43082 l>
ll 6 i'- ..
. , .s-5 * --
e a *
=
b O m h a s Y O 4 g
. 6 e
D$# o b
'l L.;*
1 I
,t i,I <
t q p 0' 9 eL
.s z s'e s0e I,
e o 9 e
*1
-. '. - 8 . .. ? .% -s ., - < ,
, e .
- . , " [ _ .-
" - ' ' I 4 'a-
', ., '.,A, ,
8
, . '{ + . . .
1 h OHIOEDISON AnnualReport l l l l A
-{
}.
e I .. iir
, ,\
~
l , l ' l I I l l BGBSBBBBBBBS g i i l l
\
T.x y'jg y, a c, yy Q-
.4 c- . pw .- .*
. ~ e. = . y y--m
~ .u , .
. ~ - - . . <- .* , . . ~ . -
J, ;.,_..,. . . . . . . . a. '2...... _ g.. .g-. . ' *- q- _' - .[_,_
- e. -
-_~.- e s.
' . , . ._.]- *;,_...-;_
l- _, s. ,- '
- v. ._ _..,.. ,- ..
- e -% . -f ...;q
'" ^
?Q .'. ' ; f ' l ** , . , . - p ,., . .,
' , . .( . _ : . , . . .[' y.d-; '& "fk.. ? -gj4.
..- . 5_. '. ' .' _'l'. _-,~,,'- ,' _- -. -
=
W ,..
,..,i' _ ..-
7 - , ..:.,. & :.0 . h.. C.u _.&.~,;*._,4.,.,.,' . '
- s. e
".a- - , .'
~ {:p :q'; ' : ; -
.q. '. .:. , - - * -
},;.g,f j ' , , , . '- !~ ,
' . J' ;"j .. f.
- C . i'l ; . g: " ,
g ug .. .- '. ' '
, , L ... ye J_a. .: . .: m.~.. . 's: .; .- .nn -. -
' * ' '"' ' * ~
- ff(+- . l. _ _* 4}- *:k.. :__-. .
*:__l :,. Q [- .
-J, J. iy 4 6q] :;-:. ' . g ' . ;;._.,._...,.g.
.. .- -. , _, )- - ,.- q...
. . - .s. . .^' '.
.4
.^
g.y .;p c '.L '; c',
". g : '; . ., -
, _ . _;;y . . p ,, - . , ' ? h.. 4 ' q.
J
'. - \ _' .
- ~ .:. -
_ _- r Rep yl"_' ~ ; , .,n :gs ' . ' ' ' _ ' .'- 1 > *(:q >'.'.,:- . QM!%: 1 '.:' 3. ; .. .
..,"7 ,,
]., '_/
$h ; r I* N .. E. '[ . ' ... .) 'LM n' 4,.
4' # S'- .. *
. ' . '"WQ _. *:
.<g
* - ' '~ ' ' ' ' ~' ' -' . . . -- .
i i.;f ' 74- : .' . ' - -
. ~ .& . ' - -
- ~
)FQ+f .. s iw$ V.. . .=.'.-. ,..',*.,Y .., - l- lT.- -,.},--l:-' ^' ' '
.'- I . '*.. 5 '
.N ? .. o kA,:.._h..$)y., .
- e
- < , . .' <-..y :
i - e .' . a.. a.. u 1.- -.: . l- ( . .,..' 1:. & '
+ ' . ); . .. ... *.
x-s . sp - - - s t. j@M.p:y. Kyk TQ
'.U
""1 - ' . . . *: '- 6- * ' '
'"_.'..(
.- . r ., .
Y, . '-N ' '
...=j, ' ' '
_ ;l: __, _. i Y.# : ., ' ,'__;.','...,3.'..,. er . - . - - -
i- -- - "
?. - -
- . g.,_;.,f; . % . - :.
. . . ~ . -
r > * ? s. V - - w p<->,._.~.;,v. m. -;*,. r - , . - , . - ll'I'...- -. ''. .- . f.l.. vr-4 . . o s.- Y
?- ' .-
M[* ' * 'I WS '..?-h. -
- l l.
lb
, ~. -- - ' %%?p>:~.% - ' < - -
k.. ..' ; '. . .-
... .._ . a .. . .. %%%g .- - - -
%% .q c_, : ::n . ' . . , . ' $ * . ~ - - % j. f. :. % . L:.
. , 4, ,
i n. . . . .. . - - ,. -
. 3, .. , ,,
.', ( , ,.
\. .
o g;. * . . . 4 - . . - d
, g .. . .- .
.. o.. - - -
#N. . ,
,' %.=':
, . I
.v. :': . , - s- .
3.q'p' .,.
- - =
pg= .' ,_ : - . ,; - . . . - . e . . - ~ 4 ,:. ; '., .o _._;".- 4 e f. 3 ;.sh.4Q. - ~;e _ . ' _ ._' 9.O:Y l.
- g. .:q., a. k . .. I.. . , .
b'- .' * - s '. . Q='; - ; '. ., ,. u - A v '. . It .
. ['. Q. k
?' .. . . ,; _ ? $r ns 9* . : ?..
.d. >-*. >.-
t A. - - - - f
*gg% e.*3's. -
- m
.e. , ..~ * ' .
r, h:f f' ,: \'_,__..-' l- - - Q'-l4. u ..:6
.'.. ..V:
.~ .......r. ,. .
~
0 ' 8 4W . >' . . - . ' re. - ." . . . , 4 A:s. I)..- .
- e f.. . . -
%e g.;..',,'-.,=-
W/p .- .
],.,,. -
. o- ,
9 . 4 - , , ,
..6 #
'.~+
'a .
1
%.e . .
., . t; v S,$..
i; .
.j ,: . _ .- - . -
- m. . .
e . . -
.['.,., .' g .'
O'+ ' e -
- _ .__ . , [
.gfg.[ .
4 y-;f .
* ^
3-* . - .. ., , .. - -
- f. 'g - ' .. -
e e
.ggm . -
e
* = f ,
EM. . W, , rm..,: ..pm~, n ; ~. ..w i s'n
~
am -
~
Y n?V ?!
' % v'
~& T' d"
n" n.$.;M
.pa' , w? :( - * . hx ^ Q ,_~.T e a ~
.j'LQ_.) c
*R f. v % " 4.vm q s Qsp p ~l?.r:'
;;e v,.*y
^ .
W b _Y
%www OMo E6 eon S sum:ysenne: MMlm,&M: e e;,&. .
'p, '
@ M : p % y f M , ns;m&,- f y g %l y i: V; Q R *?'.J..~'v.
- $1he CNo Edson System is the17th largest' investor ?
Woimedehbctricisystsmiin:theLUnitedStates,ibasedon: f u andconsists of Ohio Edison l h. cotalIdowatt hour sales;OVned mheHar9,
& g (bmpanyandyswh0Ey
% Power Company. Chio Edson, headquartered in Akron, ~
{ Ohio, provides electric ^ service 80 about 840,000 .
-w~ g ~
W[ customers: y Penn Power,[in NeWv CentMRennsylvania, Iln mserves about 125,000 customers lThe System's' service
" [ & area covers approximstely 9,000;igUe_re miids andin; k hJckxtes several of the most' highly industrialized cities b
1 h(Pennsylvania]Chio and.agricultursHfproductive[regiolis Edison fias a;second wholly owned - in (!Ksubsidiar9,{0hiol lAntHies'(West Indle's) Edison"Fihance'NK corporatiori which was' Tid 1981 td:ekpand the Compa'nyVcapital mstket access Q 1 i
%foJoreign - ym invesfors.W;S mn- g W@29x;';,& ,
.Q ,: v,.gyW;f,w &,O *yf.,f; y
~; - -nf;w; n..
Q G.;> , f g- p
<a. c . yg c , , ?
f a. .; @.
. ( O g 'l .
s l i'{. Q %,n g._ w m . - , l. s f. 3'i yfj % L'}.
*'M.
- w "hg 4y
, h %
4*- I
.y L t % '* 'e
' J'D'.QF. v;;~ R ,~* e - ,d > $4 _"?'/> n' '*~.
. W' mW.
L- 4' t'h' !'}2 C. : $L. .M
- i v '. v *?,p yw % ya " . '% ,:'6 s.
+
c- f
.k.s'..a,,.,"',. .~
v.
- p. n .,M.,N -
* %~ r r:co.w. u g/y e.-
r ;. , , .
~ . L
.'t > - mA[i : = 'sma ;.,,.; ; 'h.:q.. . g . ,% g,b, -) ~..p<g , i p<' ,i ,.,u A9 4,u ~Lm,s..,
' ,, , s )i
. x.,,,w
't h , u ,
. , .n
- O Y. p, *U,;3 'Y [ ,> >. f
- WS ?, m& [ n ,_, .t',.f.?,:R.lQ..y ..3 .
- r x . ,
,x,
- a. m ,a . : y - m a - nv
. - ;n r > : .
9w , ,,,j',-
~ >; - qa .. ,' n L_., W ,o y- r n %.e v( s v?. %[,
%. .; G.,,o..: . ,h
.r, < ,
u w,
. % . , $,7 f, Q>. ' , 4n . ,gye-R o'b u[.
s. fMN M7 N T (',1, [ ,. I'i .
-' 3. .} ,5 [' > j-
. yt- tc<+4M r.w.w ,<
e .%xs , A , N W
- y:p . mp/ g . u.% m >< W .
? - ; y. ~-- u ,, ,
a-
- i. s .o.
. . < > , s,
, w 4,, g ,o.. g v s x
[ 7 . n e ,.- * ,' i g , x Q ,j. ._ b ' h A . {l Q
/-Nf wx m.
, s o,
.m. a - .
- f. yn 2. ynm,n, ...s , ; ya,, .
s
-y g - ~, , > a... ..w
~ ~ .a, .,s. m,' ss.w l'.,9 w u, - r .. > ;
y , ~ yg~g;., ,r. ., n ,
; ep , ~-
, y ,
s_u . .v q _. p . , yfa , , ,
. y-( f- 't j~ o O "N>I .: 7 n ' ' ' 3' .xy o Vp;O @,f:m $;g y -M [ & ', M , Qgg M Rg (993 r .
_s service Ane 7 m L M, d;f <ww 4 - , x _ma . WA. 4,.. ~ i e'.'
') l lMW Y $?SN:T f *f g - $ . ! sj-Q "I,Ni h ._ , '
, . s.,,;,p , ,, _ " ,.. X_Y _D. Y h,. , _g_. ,
Ae.
^
g*' ; ."*. b g
.7/a y g 'N"' y' # gP m, _\ 9 .,,,g ,e i y9 y,,.f N f 3 e
- f4P ~* y#
y' Q 4. yV jrlmpL e'n,. &e"'h'W
-I M'AvOU , ,.?f ' [%r L , ,,
*'7 7
,g.f4[
, f y* 1,'l.m _.
e, y c J y ";n?[' g/r,. M 4
^
4GL s\ -Q' ~, s ,~ h .. _ (qf %$ T ^ ?N 1Q'.j ;;,. p f.f
,2pa
~ w m e f y'la~.w.Q am 4[j
~
n 3,r. W'.y ?
- . , ' /,
'e .i. -41 ; 4
,.;y-9, 'cs, ,
< c ,
$:s "y'1I. , - , p. !
W
- O ,a . * -
- n. w :
* ' c c9 %, ,v- is , . .
, :n s -
,,t h .
.. ;(pd. .I s q .
+..
^ .' ',,
on AA s=- - '[ ; .^ {
'f* q ,. -
- y' . .. . h.
0 D.m h1 ,
#An. 9'
~
=
N* O [, v4w(.,,# y b k' f $ w m vp W~ <Wl .
';kh ??m r
9 r. f,gl4) ~ 1 .&e & *
$. f , .
. ~+ T.e
',A ..,4 .e
- h. - 1 4
F s. s , c
* ,,13 4r : . Q 7, ' n '.-
5. h h;h1 n .m 8. >j ' -h j'=,'# g , 1 7.( -n d% . s mw, - ~ . I.n. 4E, h .' [ ,. m -q%[q
~.
.m .a. w w, , ,
y f:/ ~ . < u
;s ..< b - M.e, me G
}f1ps Q Q%$.kW ,oe ys. , 7~,I w 4 - w yj' u.:,
^t .?
yy gh - s,
'Nn +.:,, c ;A itm.n aw;
-, M' m, ' 4 n.. c n
-A h .
k ~ c, i
- k Y.-? :
s hb[Y$., f.. p. U$$ 6
}l, _e. f
.;.-8
&Q S..-(%~ m m..-. ,A 4 o ote iy# -
- r. j
_ _e: ' 't ',.; m> v
%v>
- , ; ,,f, r.
~a . sp , , ;
p, f,,, ,. - 7, l wein,n M' # $4.g qhy. m- im "g--
-. 4 ,,,
. . - - S i
i g4
- - - f. - ag gy_ _ ss. y g; j ,n, r. ,
. , gep;wpy-w*sny;u. ~ y y -, , - -
.y
. - - - - . ,I , , o a
* - %e w+ s J
I.1 d, . x.: I 9, . &> :.: ,, ' 4 w.c n w"s a . ; a . ..i .
; de,n?.,. e g-pj. w ~ N y~g *- X. b'd.i,m.. - - " 'n - ? ;y - .w e - .4
,+ , .
~ g,y: c ..
Wn d lS h9899CiniN09090099988 .lf^ - . F + ,
- s. . /-
W . : ,. ,- . . : _' ,n.- ;.e
- 1
. ra - ; w ,
~ '
- 1982 1981 Change
[ /( f For the Years Ended Decerrter 31. l 6, f~ . 4 -' '.;%- . ma,- l t % r ,
' ' yn mNons, except per share amounts)
-2.6%
n e,.94. a 7 f- _ ' Kikmett Hour Sales:' ' ' ' y% .f 24,025.5 24,6622
- j f
~
$1settA _ $1,279.6 + 11.7 %
i
.f L;f "f
, ' Operating Rowenues * ;, C'^6 3 Fuel Expense . A x ,
433.7;- 3413.7 +4.6%
$M' l 3.Operatin0 incomeigs),c,f ' '
iSSSAj i;,29 9 ~; .a , ,
~ 252.4 +6.8%
- Allowance for Funds Used : s .
k".;fa ,n. V During Construction, Not.- ~ ^lO; / N.H. 390.3. . ~ 127.8
+ 25.4 %
+ -
" .? + interest and Other Charges ?y . , ~ s,;L - 310.4 y :267.5 + 16.0%
%p;. % incxame Before Extraordnary items, , [195A' '183.0 +6.9%
?; ~ JC '. :.215.7T,? 197.1 +9.5%
- - W Lv' o L 2 Netincome -
I W{ m
~ Eaminos on Common StocE his1A' - ; ':163.9 s,', + 10.7 %
l (11 iEamingsPerCommonShare: .. M . - 3
- 10.0%
e f Belore Extraordnery itemsMc.w > $1 AS ;,Q $2.10 8 g'I'MEarnings on Common Stockj c. s;s.18 ,-; _ 2.30 >
-7.4%
m . . .; rf h ( DMdends Per Common Share
- L $1.78 ; . $1.76 -
Dmdends on CapitalSeocC 8185.8 ? . $159.2 + 16.7% hwl t
", construction Expendturesi #$ , , .
M G m* s 9., V . Construction of Facilities ~;
'1 948.9 549.1 Qy .. . - W..m Nuclear Fuel 4 "
- o /134.3/ 18.9 e, '
p < , .. M otal i Nst Finarc' wig ActMties L % W 4 . e83.5
.e _
e , ; $774.2 : $568.0 . + 36.3%
'385.6. + 77.3 %
iQ:. l x. --- 9 13.5% :14.6% Ms.:4 M , Retum on Average Ocmmon Equity 9F < . gy" ,'*Fhe guerleefF deedsed esse Jacsoseed to M samt per ehers Tf.N en se enneel heais) eNect/re I
.' ' n
. unflh the Ale #et31,1983,ev,idead. , e . , m.
- e :
kg(, ' sf p- ,. < n s --',-.
%>_ r r.n w' %w.y
^~ '
%.~~
- zy,
+ '
y@ V is ~ goggrge ' ' ]MW7; l ' +
\.;$ef198249Cessee h N . . [ psessenessiashes, an -
m o, g,
- aw - - -
g 3a ? a~ mm, 1 :g , ,s% yc n. , e
,,,..).] N * -- W ,
L
~
# a o N . 5'e.,, . _ e
. h;s s r, -
.e.. ,. - .
'# 6- b % P
.).pw y
m ..m _
,WM s .
W p..'* ; ,'m' N 3 i %l,., a-f . . s ,, , , , D[ $ q1 . '$ h('4 , ?, h N [321
.M .i.Q Q ,T" ' s h. , - ,.,
fm (.. p9. s- ? . u x :f y:.c & h ...e%f, y L,,J
-? ,s.,.rl. ' ;.
D W3 f.f " O g; ,
.s Q; ;% 7 -y% ,/ N,/r &
5 M *,iwi _
..q,. g 2 g *, y~t m,, ,Ar. <e - - >,
U y,3'e ,e {- O '. y ,.y -p ,.' ggh ~ 4 q ; 's
+-
1.- 3y - T .] *. g..' l.$.U . A ,'.l4 .$ ~p.; T n.
$y %~ 4 : ml9lL
/ e W: 1es ; _
PN sq d *.~4'X . W . ,yDO t) &, :,, 4.u. a'TrAW r =
,.-V, yf y , py .Jg.;Q, , y, y+g ]
- < u e
-yc s 3 TA K ,f y y3q 7 w .m s nJuN %,
.h;:Ag[mm. 6% ?MDN_MjM. m p%, m ;%7.;*Y d > b % [O i
~ -
." .s
. m lec
.s
.gJA 7nP.~p.M...h5. -Me
- v. s t, . p?? k, m. y\ h *;yO,.,ycWf 1
7 L,IwL, J M. .
~,a:Q
. f, '
$. .% w 4f ; sf98 l .. o4 V. -
.. g 2e5- Aeo n ese, 'W>t i ' .4 ,
m %, , g~%@
" s . g, c ., 0pe c* Wi e r; @t't s.y, .y- - . ,Ise a .* ,'
psmae U -9 4--W. A g' 4g Q'*?
- i 7 L n v s u c'>,.^W*9 .c
.Mh
- 4.r A rw ' O M r ? ,:, -- .[ , ', ; G _ *. %
,] s'*s g, y,* *p~ '." ..~ \.4 '
r v, .; , , 4j; u*. s: .- .wx t, p>w r~- g q -, .,e T8 N M ./ [,h, ' ,. 2 ( *:> e* Ca
' 'f c L,fL f'> !. W'it-..t #
gg er Ew{p?.&w. r n'{s M.W C DL. vW-
%9 .G r #. .
- p @. 9 v.jd s
fV s* % i ~~ and " n
~y$ Q Q ;sC ..Q.M b, 3 G,% a?. k 3y 6, , d.&yp n =~J, c W%..c g:wi.Q*
,- ,- V $ e W.j.. rq g
,R32
< at
+ w. ..+%;.+
* - - - h,au nc.g h q. ;; f g g *i s
* ; - 6 e)' k ,
--U 'O %.I y, , .(* Y 6y a 3 r, -
%4 .t l(IM'_ ..Q; I ..,('c. --) .,sv , . ' . 3Qf hM
~~
gag, l.C t. n . .+ I :q Shi[ :k,[k n
' a*O s N :
s>
.wk:. w( . s dm>. Cs: ny; t.w ..
W ,,mt 9.s ny n g%. .
*r
~nf. 3' $y" :s o s ..e ,' %+
5-y
- e *%,. +$ L ,s s -
. 3 f
,w--
e . g
&, o x hQb
~
f - hw&.awngh ma . [Q pl Q N.$ Q % , , qqg4; _ g.g , gwa_
k i s m .
.h .!k T;
f" g l I@ *
;c ; , 9 o y jj lh;W
, l 1 s
! i b '
aALast. .__. ,,. m L.J___...AA,eaA-+__a,J. ....,smsaA-.m .- ._. ._- a'- a m -_ _ ___ _. +4- M.- _ a .._ aA_... _,_m-m_- l n he year 1982 will be remembered as a difficult one for Ohio Edison, its stock-holders and customers. I t For the Comoany, it meant taking advamage of every opportunity that '. ,t3 would help offset the effects of a l == continuing business slump that gripped h- the entire nation. With the economy i g shnnking our customers' demand for
'g electricity, for example, we increased l 0 our efforts to sell available generating g capacity to other utilities. Despite intense competition from many com- l panies faced with the same need to sell '
power, our efforts met with consider- l able success. Kilowatt-hour sales to , other utilities were up 36.3 percent f over 1981. f
\
While these record sales of bulk power ; added $101.7 million to total revenues, l' ! they didn't make up for a 6.9 percent i
~
decrease in kilowatt-hour sales to our j < own customers. This drop in sales, -l combined with an increase in the num- t k ber of shares of common stock during
. the year, were the pnncipal reasons common stock earnings were down 17 cents from 1981, to $2.13 per share. ;
s ! We did, however, receive favorable ( treatment on several rate issues, which , I carned with them an improvement in ! our financial outlook. The Public Utilities , Commission of Ohio (PUCO)in July provided us with a means to begin re-covering $71 million in fuel expenses l s which had previously been deferred. In '
- our most recent rate case, the 13.02 percent rate of reten granted by the Commission was designed to permit
- amortization of $54 million in after tax costs for four nuclear units canceled
, in 1980. In a related development, the , Pennsylvania Public Utility Commission l ruled that our subsidiary, Pennsylvania Power, will be able to recover its $10 3 million after-tax share of the costs of
! JuerIn n nogers, Jr.
those units through rates over a ten-1 President year penod
; The Ohio Commission also approved i our accounting treatment of an equity-l for-debt exchange that took place in May when we acquired several series of our discounted first mortgage bonds
{ in exchange for 2.7 million shares of common stock. This exchange is partic-j utarly significant because it added an l i.
- l 2
' extraordinary gain of 24 cents per share,
- We witnessed some major changes in sharp drop in inflation arid the steady or $20.2 million, to 1982 eamings; and utility regulation in 1982. The most signif- decline in interest rates to more reason-it eliminated $53.4 million in long-term icant was a new Ohio law that changes able levels. For a capital intensive in-debt, thereby reducing future interest the process of selecting PUCO com- dustry like ours, these current trends charges and strengthening our capital missioners and establishes specific will help us hold down operating and structure. qualifications for commissioners. Also, a financing costs and will ultimately new law in Pennsylvania prevents utili- benefit our stockholders and customers.
The Companies also were granted new ties such as Penn Power from including rates during the year that thould add plant construction cocts in rates until With respect to long-term economic about $135 million to annual revenues. a project is complete. The result will growth, we are encouraged oy the 65 However, tNs amount is 27.3 percent be higher and sharper customer rate new or expanding commercial and less than the $185.8 million we needed increases when a plant is placed into industrial projects underway in our to meet our increasing costs and provide service. We cannot yet fully assess how service area that will eventually result a fair retum on stockholder investment. these and other changes will affect our in more jobs and sales of electricity, future eamings, but we will adjust our Industry continues to benefit from the As you may recall, the PUCO late in strategies to deal with these changes. area's many important assets, includ-1981 ordered an independent manage- ing skilied labor, geographic location, ment study of Ohio Edison. On January Fortunately, we won't have to deal with transportation and others-not least of 11,1982, the Commission-appointed the politics of elected PUCO commis- which is a reliable supply of reasonably consultants undertook a five-month sioners because Ohio voters overwhelm- priced electricity. review of the Company's management ingly defeated such a proposal on the and operations. In their final report to ballot last fall. We are deeply indebted Like our service area, we, too, have the the PUCO, the consultants found the to our many Ohio stockholders and assets that can help assure our success Company to be a "well-managed utility employees who helped defeat this and growth. We have a solid manage-enterprise." They noted that while the proposal, which would have eventually ment team, an efficient operation and Company " confronts an unusually com- resulted in higher costs to consurrers. much-appreciated stockholder support. plex array of strategic challenges. These strengths, combined with the con-management has recognized the dimen-
- Completing our plant and environmental tinuing dedication of employees, will not sions of these challenges and has construction program will require us to only enable us to continue provid:ng cus-developed appropriate strategic ap- raise about $1.4 billion over the next six tomers with high-quality electric service, proaches to them." The consultants years. Acquiring these funds will be a but also to protect and improve your in-also offered some recommendations very demanding task, especially in the vestment in the Company.
they felt could further strengthen opera- current economic and regulatory climate tions. These have either already been -but it is achievable. We will continue implemented or are undergoing further to develop the necessary methods to study to determine whether they are finance these projects as economically p* [ practical and cost-effective. as possible. We are proud of our achievements and
- Even though our urrent environmental Justin T. Rogers, Jr.
confident in our proven ability to con- program will be completed in 1984, at President tinue moving the Company forward. As a total cost of more than $511 million, March 1,1983 we look ahead, we see four areas that new federal legislation already being could have important effects on our considered could cost coal-buming utili-Company's future and will require our ties billions of dollars more to comply concentrated attention: changes in utility with so cal!ed " acid rain" standards. We mgulation; financing to complete con- must in good conscience oppose any struction projects; new and more costly " quick-fix" legislation directed at cor-environmental regulations; and the recting an environmental phenomenon general economy of our service area. about which too little is known. Sufficient research must be conducted to identify the true causes of acidic precipitation and the most cost-effective remedies. Again, we gratefully acknowledge the support we've received from our stock-holders and employees in bringing our concerns about this matter to the at-tention of lawmakers in Washington.
- The national economy will continue to impede our financial performance in 1983, but we do see some early signs that the economy is headed toward improvement. Two of the most impor-tant signs, especially for us, are the s-
l 01 isnt Rzlisbility Rctnzins Nigh be maintained and available in the l
- Power plant reliability is important to us future when they are needed.
a l because our customers and stock- ' Ib holders benefit from the most efficient Record Year in Bulk Power Sales t use of our facilities. For the third The combination of high plant perform-l k consecutive year, an average of more ance and aggressive sales efforts re-O than 70 percent of our fossii-fired sutted in more bulk sales of power in
%,, generating capacity was available to 1982 than ever before. In a highly O produce electricity. This relatively high competitive market for electric power, j g equivale. tilaaility was possible System sales to other utilities were 3.4 t) becauset , major availability improve- million megawatt-hours,36.3 percent l *$8) ment progcam begun in 1978, plus more than in 1981. The highest month-thorough and timely maintenance. Iong record was 575,832 megawatt-1 hours in August, when sales more than l'
{ With high plant availability and low cus- doubled from the same month in 1981. ! j tomer demsad, we took extra measures Representing 14 percent of our total i l to improve the cost-ef'ectiveness of kilowatt-hour sales, these bulk sales ! j operations. For examp!e, by extending contributed $101.7 million to our l some of our normal maintenance out- revenue and helped offset reduced r l ages, we were able to reduce costly sales to our own customers. !
- i overtime work. And even though our .
maintenance activities were intensified Beaver Falley Unit Performs Well l to further assure the reliability of equip- From July through December, the t j ment for years to come, maintenance Beaver Valley Power Station's 810-j costs were held to below the authorized megawatt nuclear unit 1 achieved ' j operating buogets. In addition, five 86.8 percent operating availability. As a j generating units at the Mad River and result, it reduced our need for more ;
- West Lorain power plants were taken expensive coal-fired generation during
- out of service in December 1982 and that period by approximately 12 percent.
l January 1983 because of reduced Prior to those six months, the unit ( electric sales. However, the units will underwent a scheduled refueling during i which various systems were modified to i j further improve its performance. j j r 7 Additional safety requirements were s
- h. t .g
( [ also fulfilled as specified by the Nuclear l i - ' Regulatory Commission (NRC) for all l i nuclear plants. The Companies own { A EIIWC w',
/
52.5 percent of this unit, operated by the Duquesne Light Company of i j .
. Pittsburgh, Pennsylvania.
i i < I / } Quarto Fuel Cost Recovery i .
'M in July, The Public Utilities Commission
" l of Ohio (PUCO) resolved a major issue i
, concerning Ohio Edison's recovery of
~
the cost of contract coal delivered to l the Bruce Mansfield Plant from the
,. Quarto Mining Company. Previously, we
/j**
were permitted to recover through the fuel component of our rates only a portion of the coat's cost. The unrecovered costs were deferred and, as of July 31,1982, had accumulated to A W/th the help of micro- apOroximately $71 million. After computers, meter readers comprehensive studies, we concluded are improving the war that the best method of reducing the oete and ocessed, O i saying both time and Plant was to work with the coal com-mone. . Use of these elec. pony to improve production efficiency fronic Porta Processors and to purchase more lower cost will e come system-wide in w a r coal from other sources. The PUCO i agreed with our approach and provided us with a method that should help re-cover the Quarto coal costs and the t i l r
wp- , , w J.y ';
. , n ..[ >-
l
,;v.<*-* *- ,h hw+ m. .
s,,
,[.
4 .g
> -c ,
. m . -
$, . # .p+. ,, j%
~'
- U '
4 , ,
)+#, q$#
A
+
^
; ;s en, ., . ,,
'y
. 1,* - * 'y v j
' Y g
,.s . .
W % w . 4
, ~ , . .
y-.j
. , >--j e- f *+n . .y ;. ' -s, f, , ~+
4
-'- r j . f . ,.
-.%s., ;
W.t. (
~
If .-b' ,_F' _ha g.l ik f ;
'Q -s s ,.
f - b,
. 4
[
+
'.1,, ?. Q ; .
, n.' Wh ,
,P 2'5,' ,.
N, t.. 4,.
-4f ~ ,
- 4 $.-g
. ' A
- \ '.s -g ,
-g"I ' ({ ,
h,'-
.] . ;> . % '
, . .: e r -
a z. y , r T. g
- y. '
ej e .- ,
./
- a. ,.%_ , .
t . q ' r e a. Q, - 4{ s 2-< . s H.
. n. .
4 Y e g er, - O&+ 1.%% .P-. 4 ; i,u 4.' .
- w s..
, R;
.- p-1
-s{r. '3 4:-,
1 s \q i &
,3
',k u.
-- v +-n.
}
r , p' k) f
.'s- 3 >
I ,
, ' 2' L %
4 P- i ,t i 4
. 4, - ,
's. ) .
4 3 g- ^ , .
" i. ,
..((; n, : i
. t.
- r
'. -F
- . . 3
- rm
- J --
0' > l4.* '( ,a*,oItt < t8! *.. .s_R '- 'g ~
, ' 's ; q -
s s- ' r 3, s , ,, j,.,, , Ehr[ , .\ = .- I
- E
> ?
. , , ., e ,,
/ f;.,f' ' .,skiY .
&'- hf-'
, . . . . . ~ ,,,,, ~
. w ~ w . m . ,, , }s-s;
. .. .g.?, y. .
. 's ,$j..ej2'. ,* .
g .g .f-.g. 9. +: :. -n_g~gr : . 9 > .' s- . w.. -;rt. ,.. .e . +, . . v a-
? . .,, . . ,[. t . , ,gg, .+ -
w,+ ,e, .. t., ,, , un a, y ._ w., ., -
,, 3g , . . . ,3 v is.;.y s o, , .s hr i'a M '.a'
-- r!. .'. . r..
/,.
1,f
. W... -,
n .
, ,- - . < - .. - - 7.s.?tc - . g M,. ., . , . i.n, .s.
. . . .1*w p _
p- g , .
* * * *
- a , s_ .
A s-
'y
' L
, , , r,- , $$.' r
+,
t<ss? V., f, e,s.s...
* .,&. . .,;9g' -
*.- .' 1 .:
..'- t
' 'y Gu<m*
1
', *'. 9
.c
, 7 *'. , . ,..
e p r -- - .' . , , , _ ' . . s.e _, h ; # %D s * - q,, _ w-,.
. k i 9 # *. ~ ,e-+'
C' - . , , f ,,Q
- D '.
..y 2{If %,, f , **. . 'f..' 7"<(/
7L.A,V t--
. 4 -. h. .-.-z--
ggget % 4-
.u .'&.
-r .
?.'j
-. . .*;, V, ,::,,.
. . i: . " ~-
s...
.- ,..w -
.~ s s 3 .s , .
5
i l deferred coal costs, depending on future market prices of coal As a result of the PUCO decision, the Company reduced the deferred coal costs to $63 million by December 31,1982. Coct Effective Environinental Ccntrol l We have the responubility of producing , g~ i reasonably paced electricity in an envi- 'e ronmentally acceptable manner, and we .. seek the most cost-effective ways of doing so. For example, while we added Wf** , 3 l 4 large dust collection facilities at a num-ber of generating units, we were also I able to comply with current air quality , regulations at some units without adding major new equipment. By improving the combustion efficiency of these units, modernizing system controls and using cleaner burning coal, we were able to - avoid the need to install nearly $150 ' ; 1 million in air qualiti control equipment. Environntental Research l
, in anticipation of ever-changing regula-tions. the Companies spent $2.9 million f in 1982 for air and water quality re-search For example, to promote deeper investigation of the so called " acid rain" theory, several major research projects -
are being conducted or supported by I the Companies. These studies include A An employee check s ) monitoring of rainfall and attempts to equipment me are "acio track the sources of acidic rainfall. ""*"""98" " Studies on the localimpact of emissions f,f,' **n#
,d ifdepojs aIe underway, sucn as a project begun ,,om ,he si,. sampies in 1982 at the Sammis Plant that incor- a. e anatried regularly potates data f rom sound waves, weather to determine changes in balloons. a network of monitonng * * '#" Y #* "#8 ' 8 '"'* "- !
stations and aircraft to follow the flow > To create a reservoir of emissions from the Plant's chimneys. where studge from the i These and other efforts are directed at sruce Manssierd s tant's finding a way to comply with emission (','"*j,1F ,contro1
, , ,,,,,s ys-regulations and yet fuel power plants deposited, rh. targest Witn iess expensive. high-suitur coal ear,h. and ,oca .,,,,
from local malkets. embankment dam in the eastern U.S. was built about seven Kilswatt Hour Sales In Cillione CResidential R Industrial Q Commercial W other l 1882 b
- u. ..
u, 8l 10l f8l 20l 25l e
' ' ,y ' ' e
_b .Q
' ' w 'A' g d
~*
.y -:., , . ~ . * , - .
. . _ .1 -
w
'9+ . ,
CY,'h,' . .. q. ' ' ' ' .. j
'=
. ~,
.O
'.w.
c 1 .. g t s
,y..'#. m. . .'- .
" '
- N-
*Y. g .t.
TW{**"V'"W***t5"*,**7 '9' E*TS?'* ?v +vr-- fp; 2""*MBi; 8
-1;-( -
- ' - '< i.,* .e
,b .
,7 .;, ',',g' Cr, -w ~+ < .
,, n ~
% 'y ,. .# 6 ,'_
~ 's '
.I ,_
e ; ', , N-
- 9. L _, -
5 g' - , .j - i y
] at
* ""p,,".,,4 , . ' ; I,, _,'. .#
]. [ _ _
;j 4 A i.'. Q ' .
2
.i. k-
.M'
^
e
., A Lgeborator y wor k ers
, 'h . tes t samg>/c m of t oal f rom our gene r r ta ng pl.en t % to
'*' L acc ur ately de ter ononc
< oa s q nn. slo t y Mo v a n y th 's work f r uen the pisn t s to ,e
?,h O M.ij?%t' Q?vli E
'" . ( cn tt ,els t ed labor an tor y l $fl*Q.fW"' - --
n,, s c o , , o s e s ,,n s u n
.&, pr oved the < on mtenc y . s3 , 4 . p ,a?ell s o f an,ely % r s a nd t r % ulls w
[ b 7
g cw C t;o Cranted its $10 million after tax share of costs of l
.E Unlike most industries, the prices we the units through electric rates. The !
charge are subject to regulatory ap- recovery will take place over a ten-year { g proval. We must, therefore, continually period beginning with the effective date o assess our needs and request new of Penn Power's next rate increase.
% rates as necessary to meet the
%. increasing costs we face in producing PUCO Structure Revised 4 ine eiectncity customers need. ounng A new Ohio law which affects several i
g the year, the Companies were granted aspects of state utility regulation was g $135 milhon in rate increases, either on enacted during the summer and be-a permanent basis or an intenm basis, came effective January '1,1983. The
,(c by federal and state regulatory commis- PUCO commissioners will now be
,g sions. Ohio Edison has also filed for an appointed by the Govemor from a list of g increase which should become effective candidates nominated by a 12-member 4 in the early fall of 1983 and, if granted council representing consumers, regu-A in the full amount requested, would add lated utikties, senior citizens, business, g $171.3 mi'l ion to annual revenues. labor and other groups. The law also
*. expands the Commission from three to M in our most recent rate case, the PUCO five members; prohibits the use of a 3 granted a 13 02 percent rate of retum, fully projected test year for rate-making g
h which included an allowance intended to provide Ohio Edison with a basis for purposes; and imposes time limits, in certain circumstances, on filing rate amortizing the expenses associated with increase requests. four nuclear units that were terminated in January 1980. (See Note 2 to the Diverse Sources of Caplial Consolidated Financial Statements ) The While raising the necessary funds for Company's after tax share of those ex- construction, we have been very suc-penses was approximately $54 milhon. cessful in diversifying sources of funding l Also, in January 1983, the Pennsylvania and thus lowering overall financing Pubhc Utikty Commission said that costs. The July sale of Eurobonds to Penn Power will be permitted to recover foreign investors through our Ohio Edison Finance N.V. subsidiary tc.pped l an alternative capital market when domestic market conditions were less favorable. Also, when two issues of pollution control revenue bonds were
$ fg.pff,t - -" JP Y).i 1,J..O f M.. '
. , % gg sold in April and September, arrange-
,L 'z a .y fn c ? Md? W.. ' ' -
v: '.' k V ments were made to secure each issue
.s. . . .- - s -. . .
. .g a with a bank letter of credit. In doing so, 7 . -, , .:
To Standard and Poor's Corporation gave
- y. . ,
4W
.} g4 p y + ' .- ,
a ,
'4..C -
$ d those issues its highest rating (AAA), en-tY ,j abkng us to save milhons of dollars in
_ . . , i .& .' ' ; . . f .. . ~'. . Syg .
, . , P ' .. , ' c .*- f >' N ,c.: % ir.terest charges over the life of those
. .a.; r,. m -
.1 .h secunties. And at the end of 1981 and
- 4. . .g
' ' ~
- m. -
.- " ' } f , .. . . f ' .. . .- ." 1 4 .
in 1982, arrangements were made to reduce the financing costs of nuclear
'A ..
fuel through the formation of two special corporations, unrelated to the Com-
- .y _ .
~ -
.]'
~
panies. These corporations will finance a l portion of the Companies' riuclear fuel requirements and lease the fuel to us. In addttion to the pubhc sale of 10 il ha we e chan o
$53.4 milhon principal amount of out-standing Ohio Edison first mortgage bonds. The exchange resulted in an extraordinary gain of $20 2 milhon in 1982 earnings, and more importantly, improved our capital structure ratios
..aev, u
s t W% - _ _
. ~ -
ms .x _.. . . - =
- O
a ' . <]A Ith er y w rlh more g"' ,. ..
j' .
.."~
ihan 20 melloon feet of w [.
. c ompu ter tape r e t.s o n s
- w. ' .:." $'t' : ,. ,,,
T. -
, u , , v m , . . . . a , , . , < > ,, v , a e ,
. n r ar m.< t o o n. o ra n n m u r ms. s %. .
, '. s.f_<N ? s n ct s t .h t i s to r .s l <1s t es y , . _,,#
i-o
',,,,Ih'"',.*C"",~*
', d'; , . ' , ' **"..".<"m',"'..','..'..,'.".',""
9s :. sh,a c . ;.- ', .. . _. .s,s .
- -t ' o v e r . n ,<,n r n ,1: tur ther automate g . . .. . . , . . .
r f'
. Y '.' l , ,
billinq and shor ten the G ~.
* <h.f %. '
s 7" ,g:
~
balomi or o< es s . a tso, C u s tomer s A C( oun tam;
',f l a' t s.
s, -* ', emn,,, vees wa,ha. y
', *> a s s e r , q u s c A e r /e( < es s jN f,ip }:. . '.
W; to o r. f or ma tson neec*ed 2
'7 n n een s w er e nu orsq uer oes.
'g..
;; t ,
l'-
~- -
L*, . ,. I m,_ I '_ s
- 41. < , +
m 4 i, -
~
rf g Pt P an {l: ' l_ Fr N y' 41
. ,(
n@M$yes -
; .Q & ~
g u.
' %_ ^ >,. } ,,, c . W p
g C , . y k %
=_
M
. in, j !N t o r au+ . 4 i. ommon oor . ' t *f ]i p Nj I jt *t f :i' U ) ( *!If f lif l, lit *() Tiaha'6' ri',4... -
n i gm. .o' . on in, e ,1+ t ,f Cilling Process improves Cash Flow m o. o m r e t r, m. - i n , " t ,. .. i n i r f n i, je . Si! J u i ( ( js g t . [ p,n r ; [;rt y , -
< m i ,. . ' e ,i s,iih iMt y r v i ,i ,t , ,im j w !! s + > < r( p o ,i'! r u ; # 9 [ p ar i ,e i (Jra f+1 ef1
(;r < x ;' . i r ' r $ n ). p e y ! hi+ . [ n o w , j t a t ,ast o n ) o w p u; .i n i, '. , ,p u j o cia,r i ; tr a. t n o
' ' ' if f i in t j, s y , i' l' )MI ) h) f( H ; r t ],, f , ( )y t e ., , o n ] , ,f 1 ' 48. ' T'a,f*i .i;1hr q iriipe r)s+ v)
.I f th M Nt , , , + ,01 e ' ,'H f h i e t n )
%#i'NNi Ir ( ). u e fitt no f r e i ( < p f q >, p g te;piS,( e u .h . i v. t i, se s ,y,n q p uj po n, eu, ,f pigmer d tg 1 'J F I heqe
'u), .1- lr c ) i < s t F Y a o( o1 ( t r ,$ d i se o',
i o
" (w '.ot,, ,, , a n ; , t d i, ;txN) We
, ,*s's , t )< l ' u U h r ,, i s o j- ift ftit -
J ' 4H ( f, ' i - ,. , ,sh 5 n.. e u}! .i c
'-U p**E Q;
t'. <. , i ,f [ :, i , ' le ir ' 'rp' ,s -2 l g{ -~q' I ' , Q___
", n., ;f 4
; , [
q[!n[A%.a.-
"N f ,* ? ; ' -
g%. 4 -
.s a . , J V.
.f L 9 r' ' '
u' ^r w -
!< , , g,< ccri, " ), o e ' 1 - . -:* ?
- ] . . - -g^' < i ~'N c
e,, t< e
~: m h t .4 ; t io <, 'i, ,rr r, 1, i , ( , , _
s, s ., t- 4,. ;73
,erl o e e ' s', .i .' r. e.[d- tw h3 3 ., s = N 2 II .;
'1
.%s i; t , .o.e, i a n i; n a A Kne en%)
E. - , -;c,<
@. .-r
- l. _"
r,
. u .. . .. p p o . !. .s , , e
- v. + .
, r. 4, W; un e .
o , 3, . ,, ,q e, . , ,, , v, p p ; m .. t- <q+ . i % 3,cu m eno y.
, o +w. < , , m j. , , ) ora N E t , , , M, n ou , n .m s
' , 3p ,, y _
i, a 1 io n ,*, r te, m u . 5, 4 Q, g ts ,o m; .o g m , , ,no , '~ p '
- m. om .. , u i u v, . :
"~
, s ,
' ' i 1, ' r i j.1 e
' M4 .E
+o
jg ;T r -
r
^
Capitalization at Year End & f.)r-sf,-}
~
g ,,
,u .u -
scommon rame, an ong.r.rm o.or r w 1 x N w(a 4 h0 g apr rerres a L j W} , er.r.,.nce st ca % m ; g *A q
,, E 4 MN I ge, . - - - e .
Q ~
~~
see -
~
iv
,;b A ,
a
,x .
. ~- > ,
e
.A
,7, ,
~
~'
, ,t A l [ r ere W,
, . y- 43
.<,,,k
.w Jf > %, ; , \ n so% l 40%l e0%l so%l s00%l i a J % >
, $,f
_:69 %, / .
% .,Ng~ 4
%: n .. .. . ' #' < *
-'M,4y m;
, h. k .. y-
,a m > wa almf +
; 7,!; ld l ~ ~.
Ae b? - U' f }e .. n r p.n 4
;;teys W W.>' gKj,;,,;. ;a @. , , f' : P A, sn M:;:7~et e'm* y- v a g.g%9 @3 p(sQ + + , l ,%f, y :Q %.);;y' j1 p jQ(
+
y a w ;, . y + -t
, y , ,iwwc
.a.y n
,te,.
s s, f - l._ , . q ; 3: ,>:)nllf ,Q
, , , u,- ., .. ' : ~ vft.:
.y, Lv_' l' y.
.t., ' l'ps+ {t *
- n
.sa i t,y.
> W < t t- th, > , *~ s s s'l f- iy o ( j f,&, #
(& cj l lk
- y ^ f? ?* ~}{~ ^l+ f ,:y& e-o r,1 + ,a x.ove ., s . n u V
' ? ? U . ir ' s C lM(:'WQh V }V ' V,%
f q.l '} j f & Q & ['l: n' G :y l wwl0l%-af,Qgllg&dh
,,, ~ .u ,.w.,,
. .., , , ,c ~ . .
io..v P,,ot ., s. heduled ,0 M.[ _;?> N
- m
% D Q %i
';pj/p q&pG.__-l$Jf h
^ -
n w'& f?if:
~ p y o[s
,um
.iw vo l-Q r M.} y$l M Ld m(3 LYlll@ ~m..J%l{%r y.KJ 3 3 <f f*WMWm & af
. . &r #;;mggyg, _4.. y%.g#w iv umt: m s u wea im y; .
.c~ < vg3 ,
7; y over.r.oo o soso r p y,y ); c ; '
;f j;
. Q ir.
,o wwm sh ems f A m , whgamm n; a r,+a Q .n
~4~s y w uw u xnm ~ mw +s m &an 's '
n e; sa 4..v,,. g ; u. x - - - .~-
- q;-
1:nt Ccnstrucil:n Prcgresses doubled in 1982 from the previous year. E Three nuclear generating units are Although Duquesne Light Company is 1g
' being built and financed by the building the unit for CAPCO, Ohio h companies it' the Central Area Power Edison is helping to keep costs and g Coordination Group (CAPCO): Ohio Edison, Penn Power, The Cleveland construction schedules on target by providing personnel to assist in project Electnc illuminating Company (CEI), management, engineering, construction y Duquesne Light Company and The and licensing. The Company will own y Toledo Edison Company. 41.88 percent (349 megawatts)of the 3 unit, which is scheduled for commercial D For unit 1 of the Perry Nuclear Plant, operation in 1986.
under construction for the CAPCO h Group by CEl,1982 was a particularly Alternative Generation Studied o O good year in licensing progress. Early in The three generating units under i the year, an NRC licensing study found construction should provide needed i that the unit poses no adverse effects capacity with adequate reserve margins , ** on the environment. In July, the NRC's through the 1990s. But because of long , k Advisory Committee on Reactor Safe. guards recommended that the 1,205-lead times to build new power plants, the Companies condnue to investigate, 40 i megawatt unit be licensed to operate at in addition to conventional technologies, ;
, full capacity. At the end of the year, the alternative technologies for potential I unit was 89.1 percent complete and generation beyond the 1990s. ' on schedule for operation in 1984. The I reactor of the 1,205-megawatt unit 2 Regarding alternative technologies, Ohio l was fully enclosed dunng the summer Edison studied the potential for three I when its dome was placed. Scheduled small hydroelectric plants at existing l i
l for operation in 1988, the unit was 47.5 locks and dams along the Ohio River percent complete by December 31. through permits granted in 1980 by the Ohio Edison and Penn Power will own Federal Energy Regulatory Commission 35 24 percent, or 850 megawatts, of (FERC). Our study showed that the plai. s total generation from both units. would not be economically attractive to , i us and the Company relinquished those l l Unit 2 of the Beaver Valley Power permits in 1982. I Station was 58.1 percent complete at j the end of the year. The 833-megawatt l unit's rate of construction progress l l I t.. I' 4
.D
' 'o W '
- w. .
i .~ .. l ge r + q s e p ~,
\ L
_ l
.t_
AThe unique $440 construction to com. mitilon W. H. Sammis ply with esisting regu. Plant Air Quality Con. lations. This project trol Project, most of is scheduled for com. which spans a four. pletion in 1984. lane highway, is our last remaining environ. mental faclisty under ff
}**'
~
- ' ' 3;
's
- w} .
;9 O- .
I M
- v. -
4 .
' N, e
l n-9 't l~ _ _.
- 4. Y 'u
% 1 ' l1:,c,; ,
gymper , ;_;
. ,; , . ww g ; g -;s - A A t the Sca ver Valley A Several Ohio Edoson Power Statoon trore-e -
employees are worh ong _ p ,~ ygy '
._,r- _ ' - ef ,' cf. ,_ '
grouncil. wher e the unot closely weth 0eaver
, Y',S -., -L __' ka . : :' 1 nuclear generator Valley's buolder and
", {
* $. , * ' _'i ,
. has been operatong operator, Duquesne
.'~' Y
,*.','_.,..s1, n t. .~1 sonce 19 76, unut 2 os Light Company, to g_ .kh ' '. ' y b . <'k._ f
~
, l T '4 '
. 58.1 percent complete help ensure timet,
';y. . l }{;',-
_,? p?': '4{ * ' ' and scheduled ;or oper- completoon of unot 2
, ?_* .
*.s .<-4
.. % : , . . . .f.
atoon on 1986. The cual constructron. We wall s, '1,l *
, g.' _._ ., 5. . 2l -g f ar ed Bruc e Mans forld ow n 41.8 8 per cen* o f
'M '
. s. i, -
Plant as on the bat h . the unot's 8 3 3-mega-
, . , ' ; ,' ' h
", - M+; :' ground watt capacity.
y.? ,, ';;..,,, , ,j :%.
** - _ g. . ..-
' %-?
-r'- ,f7 f.
,, . j . ,; < ;. ;
, y . ..
_ . :s. y.;q. . . 12
~
We are participating in a $155 milhon Scurcos of Ocasrctirn _ l unanative prolect at Ilhros Power s s cost s muc# ear s on Wood Rwer Station to determine the & frambihty of converting high tulfur coa! .,,,,
-' ' ~ \ - ~4 '
' uv ' as that found in ()hio to a clean E-t ur' r K; gawous fuel (3Onsttur.flon is o
. .- 7 . .m
-- ,;- 7 a-s' -c, fase
//ei anr jerv ay Mth festing and demon _
str it& to !M' Completed by mid 19&1 ep . -
') ' 3. . - .$ . ire.4. .e.,cf5 G-' i '- '
1984 l' <ir jdsteor1 /se are rnonitoring and w - . ,
' '
- 9: . _x es .
evan,anna <iew ter hookne'. resulting fees _ to 3m n,e ,ew,er n a,,d deve!opment - 20%li 40%l 60%l 80%I f00%l ef f t vt . r if ()H !Pr s 'W h jding the [ let tr y I I I i a wer Reseau h ht tu'.- i 1_ Air Quality Control Program Nasrs Completion i I h af f g,r r,>n{ is ' ' ['jigg(,n g.r ,qirgr ipyin}g j ( ( bf e,trid t!nn p ,r ap1 t( > rppla( e +'u diif rla _ di v ,1 ( ()hf 4 f f !r ', I!I , t ')()f 6 > (.fi6c pent 2 7.te rt t P, f r ir t ' u r iq ( !ed n ill r ' tdf ldil f (}', i t 'i 1(16'y ' ? K )Vir iq f( yj, g r (j ( ()r ' q dt q 6( >f > f ite ' es 6 n trost,ita prec ipitators that ( z.J .
'+ 'r 'V s e ' [ i.1' t( t ;l,ltt i'. (iN , t st < ) f rorT) p( yjp r #
[ d, t r ;t e .r 7 iii. if yr n ;g r1(j ()r i( > r 1pw ( hip tr .g g
/, # r 6 ' t (ir T 1['4 +tt y j [ 4 stWe pr 1 ,Juh K@ is T IIOn9 d dew frien5- A .ga! M,pr r P e. ai the R f Hur(a - """*" ""'"d""d to f ur * *ter s t r en g then f i lf ;f ' /si t t e ' r . F id h i b ". [ >l. int % I t ( n ,($ '
mer f r an santh ston and - e ?'t r 'tyt' [if( qt y I rT hir y gg,.rne,rit wp pq ;it! ass'r thuf #on networ k , 7
!*#" ,1? 14 r e ,;! h( ,r ! t ,nt h r [ n g j(;e t [ >y guy w erem are care +
s
' t it 'i[ oe !:r y ; t r ie ar r1 ( )r1 ( >r , d it >, ir j ( if s( l't y ) fuHy sec ured to support
, ' + " ' '[ W e M1 l'y M 't > () ca ( nVir(int'1t nt 1' .
a far ge pole Nearty
=
2 9,000 m ule, at Irnes ihr ei ti( tr i Ac p .n( y { { f %) vg , < '( ) now cover our Systm m c., ,0 id < r ,< tiv pe sr t a " _
=
i 1 , , .r ui m ;, w n o m enta r' i i )I ' fi j( ,d JI i$' .. .I ' itII ) et r i . i ' . c 0 f h : q. y i s t wr, t( > d< tie # _ eFw + + , . nise pe,- met I at n u _ l't r Pf'. .l t .< j' jf44
- gs t
- I t '
igi, en] < i F 4H. f t o t h- < ,p uj d e < g4)ce.s , .r q ', s t nq > ,
on ini,,e n ,
' iqi .rc ir ya ', t .t . p y j, g r () , (Jruf 1 =>
,1 ( ' r ', t s t ' s (i[ o i t die .' s t a e i ( j' uts 'i * * -
+ u;n v. , # ,
..w pertatu pr e, ,p
~
~; % _-
me t s . m < i >n m ut son a,, r oh p
;*"i c o 't ( or n[ be q,' t g [ h u , >mt ie 'r 21 ~
~
in' .p n 1 g o; q, y : ( ( >r n[ ue N ir ! at,91
,,,j't < { h a e >< r ipe o 1' 4HJ m-Continuing System 9_
Improvements _ N. emu',eer proi.9 t .ve u'u terway --
'c i net,tui the rehahihty o' ('ur se .vre "-
h>t , ' t( >r nt u, I t le ( ))if"h p'g ' i'l il [
,en!a ,n v'em l 'ispatt h,nq t entm
. I e 't [ J!t *( } b 1 l (1( 4t 'r,{Ilori Ir1 Apr il l'IN $ -
u m , > . pe(1 te he remponst' of generating p,ints to n Nomer denland for e ec
t( ~ h trk) frllpr Os t) Iht' CVt'! .td ((WrilTl!)q i "
ef t,( sent v < 9 Our transiniss.on network Ir' . )d( li f l()r 1 l r 4 f3 Mb($r (li !riU NIDISSlon Umjects neve ( ornpieted or in progress
.t+ NH ' to stus e thti growing e4ectnc l(\h!5 of StiVtit cli irKb 2Stf!i)I CllSIorflef % --'
in O'Ho arkj PerinSylVanlit dnd TO i_ Nt'tlq!Ilen (XJr Ir.lnSf DISNion SYS!t'rD 13 ~-- 1 l i g . . , , -
E y eveloping Future Sales ()tw > [ dison ;tnd Penn Powen pr o s de G>mpanyandacw "' ' avstanc e py gtim that are @ - ) espe ( h t% y g . i C extensive tr<prono and suppr e t to he.p to ' vip c uston er , fm o ; O uinua or -
% nm
( ()r nr Y i 3f );t Ms no rT)( U $ a ( ()f T1[ H 8titi v e r
' 4 *d K < 1 f [ N C l j lIle' IN"C ploQrdNS "
- ude ,, hi;dget pa y' men' pLin tmrd O ,ittrar Ong v idi j J 'a. rp o A to T r o ot ,qn c u Q M ir lu'er f u d i puXf af 71 /sor b sn()ps d't > '41'ty ' lot.Ii(,abijn ,ind the pl4DhC fiortM' h uw) fen "acAna r ommumbes noo to f ' + 'qy AwJanc e Progam < HE AP) The _
per ,,j. jo r v a < c .st r e to Tx.,4to a: me Comparne' <tko coobnued 'heF Rem _ are,i and 'O or" r " Jaqe es t anq indus.
< D "!'a (. 005P' v abon Se' d e p'ogr ams 9 t r e , to 'em,i n ar >d e s pand 'hea O(w"a ".c h ,t'e .1vadanie to a" msidenha au 2
h ' u yn , W' me t x x)s'ir1g 'he s tam y ( d ,1 "ab'ig tostrn ne's At 'ne c i stomer <
$ e ort r a;o A 'h i (po/sth is aNo ,1 soi g, , m est an ent"qv + Jd!'or insp"c ts 'he [
Q -f idd^ona' e er tr ( -
>a e. 'ome rPCommends c onse'vabon mea g co- and estima'es energy savings .
WiH1 e w lshr iq t ,r r in ier t y t ar u j indust'ia g < ustomer s /se oromote p orgy oth We n,ive many commuucahons pro C r 'onc. y through mrge cos' efier h se . j -c jams 'o meet the informahon needs of .
@ of e,orfra.ity We reac r ed more than our , ,tomer s F rom spot 'a message <
@ > W N ) :arrje , n t ome r rjt s!nq 'ne ye.l' N uded+n Don'hly Dihs to adV%or'-
n> roi 3ah t 'i. "qv Te,e nwor w (;onfer ei n e- pane hide up of consu r ner represen ] toUN n ,to gyng other TNng', how -a' ses !nese prog an js contobute. to
- g a s ier o ntnagement o' tt ea n a >y ( ar <
,ty ? t /e ejer 'r ity for q,tc pe t t r ' ( 4, ind r m tr, ,ujote theu oyeran..nergy e et " ( use and to tree undesaindmq h '
- % c os' le g l< 1' hon at c oad man,tgem+" ' r
? 'y and energy issur
% g m xran of fer , Jome' , the op5nn to
- 4 mir a ( por ' or t nf 'nei r c r p mumphor1 'n [],J,nq'ne yea' Speakers (hv o,tu -
m a e et r e u imu a' of t peg hoi g s wh u. " ren1e and Custorner Service <
=
0 , t . ' .r : .t:n w s ics a t witter t ;hn/e p;wer empgy bi se p'e' Pn'.thons to
@ pu r it', Se u e '4 program heq,in in ' W , ' < '( :- e Aurrent e-
. ..uded -
_ 3 +/' ni e pey 0"m, tr v1 ha<. het >n * 'sa: e ( i Senior t i'5 a ')OoF > _- _ r
- 9 h g ed t w 't h niega /satt' 'J t'id bu' riers Aqri top (s to,m ri , ,nad k i n "r en' r J ou' and 1( i da e t ind energy management hon . .da
[
= 's r and.ve i'nenlat'on aDplvf dd v 9 M Customer Assistance and "'9v ettoent eowpmen' e.ec t r ( _
Information Programs 'de ~"vv on m e'tM D'O'"' hon a' e ? H November /se sent iin revden' a '4" Un"'qV W IIed 6"Jeh d _ in.f(>n mes a Drn( m go < >utoning var ious Favorable Customer ' Attitudes Maintained Favorable attitudes among customers , y about their eleCt nc sprVICP reSu ?, C a l better operahnC enV;ronment for the
=
Compan'es -l a December survey of W ONo Ed' son Customers 80 perch"? of 'ne 'espOndentS Considered eleCtnCitV average to,aDove average in value and l N percen' ind'Cated that werv'Ce was = sa';stac tory l
@ A sanety of :nformahon programs neip
!{ . reinforce those athtudes but the least -
expensive is through advertising in loCa'
~ -
media The Companies present Cam 4 jb . e i~ '
'f y .
m.
~
% . 4 For the past 12 year s, Ohoo Edsson has :ompon
\,[ ' W " 4 sor ed a locolly tele v os erf Quri pr og rain tha t pro-v>10 te s ac ademic ac h*e v e rnent amony bryh school s tudents on the Com pan y s ser voce area.
It is r epr e sentertr v e at nur man y youth educa t ranni and ener g y ev ar e-ness actre etoe s. 14
- s
4 ps,gge,pany, m 4
.3 ..
. t ' , ?E '~ % -f* '. . . , Company spon sor ed
..;. L .- ' %,.. l1 __.. (,
.1 + ( nn , u m,, pg,,,0,y
' '. , , . , . ll. . y '_ ' , ' ~ - ~
. f, .' $_
- g , '. _ Panel disc uss ho w c , ','. : % . . ,' ** .' '
, 1, .* T '- .. n;or d sn ey c us tomer s ' i Valle y Mould m our
' 'N
. l6 tan t>e help ed w r th Youngstow n Dow nsson
%. s.:';~.. , .._
- -.'i' . ',+y <'.,e' W% ~ , ',. -
tu!! pa y
- n e n t p r oble m s. opened its new metal
.% , ~ "
{* x."?";. Y..f' n. 5, _ Ther e ar e c ur r en tly mettony shop vith three
' . . **':* ,. _. ' . )' '; .
~ . . - 'y...l s e , en r eg ron.O pan et s elec tr rc f arnaces which
_,... - . . . ,1 ' y l .: . th r ou.p hou t t he 6 y s tem ar e enc ry y ettacrent Tl
,L M' ,k b '. ' ..,. a 'h 'f,. . ' ti. -,,t.~ 'h eat n me, tony abou t and en s ironmentatty
. , ,__ .p
.p , - -
-; . a. e ,, , , , , , , , , , , , , , c g,, n _ a y gu ;, up,, , q,,,
,g ' . .jf :. ; th e f ur nat es .should
..'s' _- _ y Q% .s;k Liff_ ka add a t>ou t $4. 5 methon ht ?y($%
,' Q .: ,f to our annual electric
*?r
. b,. s r-- , .ff;;.agg.gn salen.
g.
*4'
?
- .g j'..! 1
' ^$f k{
+7
%. ,1,_
k. 4
'm
t5
p,vq , e nu.r' er n,o ,u,,va ionrunq
^~ *~
f r .vq, >}.sw ur + orar is ur v , <y.ar t
' or k' % 7 v b / /1s .,1 6?m[nrrgoo othjf ? J neyp ej fr; y < ; />rjo e ; y,f r ,n ,e < r J.p .no
. st, + on tr *, .ev:uj fn v nae : - Employee Training and Safety Programs i ' r o v.t pu; o, t r ror s ; < 3( >( g g t / bee , t, q i
~ "~ ~
r ' 't > ' ,' n) f r t ' . ve n' n) t<t- s'+0 ,tet* r po r '. va : p ' , < J tr v ( a ,e p. in g ,p. , ,, sr u } r v j s t [ a tys .6 r je a , M .;[ g r u .r t ? p r ( -> j' et h ' ' P. r v :( g 6 't t, p 1.P J j 6.r t q ,R g 4 - , , au- e,
' *
- t, ' f W si t ', T V ,t!,, 'H A 1 t i i, ti [ He-g .. i e n ! " e a h j ' nr or Mo. t stuy < e " .[ p n > ' ,
' o P ' t- * * 'ft) [ 8 ' 1 *+ . { >. p f u i i.. : r, . .......n1.,_ _ __ _
;[ ,e a tr' , e ar t1p y t t , , g r y } < c tie r t q u g o f { ,' j f* , :
{' 'f .".; h i( p .+ 4 ) r r q ;' < > , . 9 9., ,@ > 1 }' N. ,
,g , piir
. . ,p,..,
se'^ .
.g .
* ,. .. .s
\ :,._ %
,.i
- \, ', ._
, t i; ,e , <g'i
, u; < e * :tg >r pan $ .' ,.
A
; t..,
' >.
- n.-gx .,.,; ', ,p gr u ;
h g,/5
+ , .. . . , on o,a..o n a mor, W% Ed % r ao i ,tr je > j .( c . i'. , i f;t a n e (y pe, ( nrt g( m q .
pt j gg,a imme aan amm g
. , r 4- ', # . e ;' w x mo- voa i ,
. . . + g. - ; *
, ,e i,s., *( u ) ' > if ttintentr y t, f r,te ur u; a( j( jit y n y :
9 15 3 ' ) lc.' g
- q-MQ '- _ s.
_~:
.. c 4
NM.'. s%z
- _,s. - , j+ . '
?
i.
. F ; ;. ' + 'e n h - .i e n ) ng rt t i, - 4' i , iww? '
U i d re " ,trt' ' it i e }+ .( j P) MM. 6 MM M e .. h u r :, M
..n on j p .., , of nv p, qrr
' e < ji ;
- v j ' s ( nique du pt tg q u() l' M s
. s <> , 1,c,, es owenicu n g Aip; cag y, t
e -{ uer e r Li.,,e e. p[ { { ; ,;t or
't
- f. i 3r v t' bp+, l'+ a Vj ti 3. c ' i n w phj l( p r u (
o v e L pr( n f n t, ,et A,i ajo r ' t ' r op r s
' 6 ( n' u lt d w + H e- t, t[ >l Jus)!): st je 'l r :e " + s;.' " '> ,,6- 196 [ o < g e 9 j,;' t . f < p < j[q ur) 5 ,
r, - p 3, j ,
.. t ld e y ,4A,t'+44" . (U r x p.tol' . 'k la ]Miq
' ), > ' e s t ) . aw,
.j'is tr u; ( (h,r<ec , !.'t> yhdy -
O' u' n , n tr< pr m.} y q t f g ' .f , w t
'+ ;w.) ' r>eg,.its ; >, i q , W - g. y w.., ,
y .o n s , :r i :n. ,, e - , . , e'
~.
f F. %. y . qw
& yti '
g: _ s
~ 'k i ,y t .,4k s ;- A W A w=s- y n,p-; .g w %t:
~-l-
,'.,h' %,
,y'
^
%.y
?l_
4:
' ,, l g4 ' y
> f o rci n,# fi o n.ed Har w r's te r C arnpsn y re< 1.n tly con sotodated ots U S trut h inanufacturmq opera trans at a nwre modern . ,
and ef fic reve t plarst on Spr onu treid, Oho n. Tho r as siembly p!sn t t en our
~
largest endus tr oat cus. .
.E tomer on the $prenqtreld D: vs ss son .
t6
i Financial Review 1 1 l ra m wess
.,n . < . , - ~ . . , - .:. . , . . . . .. .. . . . . . - .
Page I mana,ement oolecueeson .,e l mana,ement neport se 8electedFinanctalData 20 Consolidated financial 3tatemente 21 Notes to Consolidated FinancialStatemente k7 Auditors
- Report 37 Coneelldened Financial Statistico 38 Consolidated Operating Statistico 39
.J
nfanagernent'3 Discussion and Analysis of Results of Operations and Financial Condition
.. . ,. . . . .. g. . ~ #~ - , ~ . . , - _ . ~~,_-__m._~._m .~ m._
Results of Operaflons The scheduled outage of Beaver Valley Unit No.1 during the Results of operations in 1982 continued to improve from the first half of 1982 for refueling and certam modifications was paor year with the Company experiencing increases of 6 9%, responsible for sopronmateY two fifths of the increase in 1982 9.5% and 10.7% in income before extraordinary items, net maintenance expenses. However, in 1981, submntially all of income and camings on common stock, respectrvely. the decrease in maintenance expense was attnbutable to Hmvever, due to the increased number of shares of common that unit. stock outstanding dunng the year, eamings per share fell by 10 0% and 7.4% before and after extraordinary items, Interest costs continued to nse in 1982, although at a much respectrvely. The Company achieved a rate of retum on slower pace than in recent years. The Companies issued average common equity in 1982 of 13.5% compared to 1981's $320,500,000 pnncipal amount of new long-term debt in 198?, 14 6%. ExcMng the effect of extraordinary gains in both which have interest rates ranging from 8'/,% to 17% %, while years and the settlement of a claimed Pennsylvania tax liabihty $59,237,000 pnncipal amount of first mortgage bonds with rates in 1981, the rate of return on average common equity would of 3% % to 9% % were retired. In addition, long-term obliga-have been 12.3% and 12.9% in 1982 and 1981, respectrvely, tions rose by approximately $209.200,000 at an average cost compared to 9.7% for 1980. of 14 3% in 1982, compared with 18.5% in 1981 (see below and Note 5 of Notes to Consolidated Financial Statements). In Rate increases received by the Companies in 1982, amounting contrast to the nsing long-term borrowings, average short term to $135,000,000 on an annual basis, accounted for approxi- debt outstanding during the year decreased from approximately mately 90% of the increase in operating revenues for the year, $133,100,000 in 1981 to $45,400,000 in 1982, the average cost increased fuel-related revenues and short term power sales of that debt showed a significant decline from 18.0% to 14.9%. to other utilities contributed the remainder of the increase. Adversely affecting 1982 revenues was a decline of approxi- Information with respect to the estimated effects of inflation mately 18% in kilowatt-hour sales to industrial customers, upon the Companies is given in Note 10 of Notes to reflecting the depressed economic conditions in the Companies' Consolidated Financial Statements. service temtories. In 1981, as in 1982, increased rates were the major factor in the increase in operating revenues, account- Caplial Resources and LIguldify ing for approximately twoth'rds of the total increase. The Over the last five years, the cost of the Companies' remainder was due pomarily to increased sales of short-term construction programs was approximately $2.700,000,000, of power to other utilities. which $1,600,000,000 was raised through permanent financing (net of debt and preferred stock redemptions), in addition to Th3 cffect of deferral accounting, which matches fuel expense $656,700,000 financed through the incurrence of long-term with the amount recovered in revenues, was the prime factor in obligations. Approximately $2,700.000,000 is currently budgeted tha reported fuel expense increase for 1982. Substantially off. to be spent from 1983 through 1987; the issuance of additional setting this increase were decreased quantities of fuel con- secunties will be necessary to fund a significant portion of this sumed and decreased coal prices. The increase in fuel expense new construction, including additional amounts of common for 1981 was primarily due to greater quantities of fuel con- stock. During this five-year period, the Companies will have sumed, but also was affected by fuel price increases. In that additional cash outflows of approximately $A57,600,000 for year, the effect of the Companies' deferral accounting served debt maturities and preferred and preference stock sinking to rcduce total fuel costs. fund requirements. s Power purchases which were made in order to sell short-term power to other utilities accounted for a substantial portion of the increases in purchased and interchanged power, net, in 1982 and 1981, increased purchases of low-cost power resulting from the Companies' contractual obligations to Ohio Valley Electnc Corporation were also responsib!e for the 1982 incr:ase. Combining short-term sales to other utilities (which ara reported in operating revenues as described above) with net purchased and interchanged power, resulted in net power deliveries of approximately $49,100,000 and $44,600,000 in 1982 and 1981, respectively. f~
Consolidated Financial Information _ - - ~ . . . , . . , , . . ~ . g - m , s. ~. - .
. m .m -
.s-The Company continued to strengthen its common equity base Manegement Report in 1982. Dunng the second quarter of 1982, the Company ex- The consolidated financial statements were prepared by the caanged 2,650.600 shares of its common stock for $53,432,000 management of Ohio Edison Company, who takes responsibility pnncipal amount of its outstanding first mortgage bonds which for their integnty and objecP t/ The statements were prepared were subsequently retired. This exchange played a significant in conformity with generalli accepted accounting principles role toward increasing the common equity ratio to 37.2% at and are consistent with other financial information appearing the end of 1982 frorn 35.7% at the end of 1981. elsewhere in this report. Arthur Andersen & Co., independent public accountants, have expressed an opinion on the Com-The Companies had $61,500,000 of temporary cash invest. pany's financial statements, as shcwn on page 37.
ments at the end of 1982, primarily due to the sale of 4.000,000 shares of common stock in December 1982. This financing was The Company's internal auditors, who are responsible to the planned for early 1983, but was accelerated due to existing Audit Committee of the Board of Directors, review the results favorable market conditions. Proceeds from that common stock and performance of operating units within the Company for sale wi!I be used to fund a portion of the Company's 1983 adequacy, effectrveness and reliability of accounting and report-construction program- ing systems, as well as managerial and operating controls. The Companies continued to pursue non-traditional forms of The Audit Committee consists of four non-employee odectors financing during 1982. The Company tapped alternatrie capital whose duties include: consideration of the adequacy of the markets by issuing debt through its foreign subsidiary, Ohio internal controls of the Company and the objectivity of financial Edison Finance N V. In addition, the Companies began reporting, inquiry into the number, extent, adequacy and validity participating in arrangements with the other CAPCO companies of regular and special audits conducted by independent public to finance the acquisition of nuclear fuel through the Central accountants and the internal auditors; the recommendation of Area Energy Trust. (See Note 5 of Notes to Consolidated independent accountants to conduct the normal annual audit Financial Statements for a more complete description of this and special purpose audits as may be required, and reporting arrangement.) The Company also received $10,480,000 from to the Board of Directors the Committee's findings and any the sale of tax benefits associated with property placed in recommendation for changes in scope, methods, or procedures service during 1982, in accordance with a provision of the of the auditing functions. The Audit Committee held three Economic Recovey Tax Act of 1981. The Tax Equity and Fiscal meetings during 1982. Responsibility Act of 1982 now denies utilities from taking ao' vantage of this mechanism for accelerated capital recovery. [
,/ .
In July 1982, The Public Utilities Commission of Ohio modified - - M # % '! the method for recovenng the costs of Ouarto coal, as discus- g 4 ,, { ,,,,, sed in Note 1 of Notes to Consolidated Financial Statements.- rnecutive Wee President Comptroller Dunng the last five months of 1982, the Company's balance of Chiet rineneter otticer deferred Quarto coal costs was reduced by approximately
$7.300,000, indicating recovery of a greater portion of these costs from its customers.
The Company has a rate case pending with The Public Utilities Commission of Ohio which, if granted in full, would produce additional annual revenues of approximately $171,300,000. A decision is expected in this case during the second half of 1983. l l 19
SelectedFinancialData orno eason
, n, . a. . s n,, u . w. ~ . + -: ~ - .~w
- m. -~. m . . .-.,--.w,m, .
.-nn,.--.~.~,.--
1982 1981 1980 1979 1978 Un rnot, sands. except per share amounts) Og rar.rq Revenues 31,429,626 $1.279 649 11.080.869 $ 994.58b 5 862.956 Orcrating income 269,640 252.381 169.383 163.744 123.945 incomo Before Extraordelary items 195,571 183.020 135.150 134.807 86.030 N* t incone 215,729 197.062 135.150 134.807 86.030 I arnese, on Common Stock 181,496 163.892 101.403 105.120 61.259 Earnsigs per Share of Common Stock (tw,ed on weghted average narrtwr of snares outstanding dunng the year) Before Extraordinary items 1.89 2 10 1 52 1 80 1.19 Earness on Common Stock 2.13 2 30 1 52 1 80 1.19 Divderxi; DWlarr'd per Share of Common Stock 1.76 1 76 1.76 1.76 1 76 Tot.d AM.ets at Decenter 31 5,247,138 4.460.274 3.979.965 3.446.454 3,010.914 Preterred and Preference Stock Sutect to Mandatory Rempton 152,500 151.141 156,450 150.850 98.000 Long Term Dett 2,005,436 1.759,771 1.594.384 1.410.782 1,343.195 Cor.structon Energy Trust and Nuclear Fuel Oolgations 656,655 447.484 265.000 - - Common Stock Data The Company's Common Stock is risted on the New York and Md. vest Stock E nchanges and is traded on other regis'ered excnanges amungrarsma'..- w -. ~ m c w % ,. ~ %.m.__,m.,- - .. ~ _ - m .- ~ , - - _ - , _ ... + + mmma Prica Range of Common Stock 1982 1981 hrst Ouarter Hgritow 1 3-118 11 318 13 11-3!4 Second Ouarter Hoh Low 14 118 12 318 131/2 11 7/8 Third Ournter hgh Low 1 4-318 12-1l4 12 7/8 11 Fourth Ouarter HonLow 15 118 13 114 13 11 Yeany High Low 1 5-118 11 378 13 11 Pnces are as quoted on the New York Stock Exchange Composite Transactons CI:ssification of Holders of Common Etock as of December 31,1982 Holders of Record Shares Held Number % Number % frdvduah 172.878 88.7 48.279.403 50 2 f dicunes 17.924 92 3.987.788 42 Urokers 70 - 727.927 08 Nominees 765 04 40.387.291 42.0 Banks & FinancolInstitutions 39 - 69.252 0.1 insurance Commmes & Other Corporations 1.558 0.8 1.648.846 1.7 Chantabkt Rehgous & EducatonalInstitutons 547 .03 375.138 0.4 Pensons. Proht Shanna & Other investment Trusts 1.006 06 606.199 06 Total 194.877 100 0 96.081.844 100 0 As of Janumy 31,1983, there were 195.443 holders of 96.259,665 Quarterly ctvdends of 44c per share were paid on the Comparhs shares of the Company's Common Stock. Common Stock dunng 1982 and 1981. Informaton regarding retained earnings availabte for payment of cash divdends is geven in Note 4b. 20
Ctatements cf Consolid:tedincome omo edison
- w. v. . . , . ; , .. w , + ~ w~ , .,_.n,,-~.~,-_n .,.-,.,-.g.- ..~.,.c.,, ;.
For the Years Ended Decemtier 31 1982 1981 1980 3 pn thousands. except per share arnounts! Operating Revenues $1,429,626 $1.279.649 $1.080.869 Operating Expenses and Tames: Oreration-Cost of fuet 432,749 413.698 364.894 Purcha9.d ard niterchancyd power. net 52,607 29.321 26.089 Other operaim emnes 221,129 195.075 170.351 Total oporation 706,485 638.094 561.334 Ma,ntenance 139,615 124.213 127.935 Provi9an for deprecation 103,206 95.830 85.455 Amort;/ation of terminated constructon project costs (Note 2) 1,866 3,995 - Cenera! taxes 114,569 84.316 85,143 incomo taxes 94,245 80.820 51.619 Total operating eerwes ard taxes 1,159,986 1.027.268 911.496 Operating income 269,640 252.381 169.383 Other income and Deductions: Aro.vance for equity furds used dtning constructon 84,210 60.421 57J15 Mvellanu;us net 16,871 17.021 2.104 income fares-credit 59,166 53.360 37.017 Total otner income and deductions 160,247 130.802 - 96.836 Tetri income , 429,887 383.183 -266.219 N:t Interest and Other Charges: Interest on long term debt 211,765 166.378 147.290 Interest on long term obbgat ons 80,092. 69.183 5.057 Mo.vance for borrowed funds used dunng corrstruction, net of defened income ta>es (76,088) (67.381) (48.814) Oiher interest eerri.e 12,449 26.378 22.304 Gi;bsdary's preferrtd stock divderd requirements 6,098 5.605 5.232 Not interest and other charges 234,316 200.163 131.069 income Before Extraordinary items 195,571 183.020 135.150-Extrcordinary Items (Note 8): Gain on reacquisition of f ttst mortgage bona net of related income taxes - 14.042 - Gian on euchang" of common stock for first mortgage bonds 20,158 - - N;t income 215,729 197.062 135.150 = Prel:rred and Preference Stock Dividend Requirements 34,233 33.170 33.747 Earnings on Common Stock $ 181,496 C 163.892 $ 101.403 W;i;;hted Average Number of Shares of Common Ctock Outstanding 85,241 71.180 66.683 E:rnings Per Share of Common Stock (based ca weghted average s nunter of shams outstar4ng dunng the year). [More extraord: nary items (after preferred and preterence stock dwKlend requirements) 51.89 - $2.10 $1.52 - UtraoiJawy items .24 .20 - Earnings on common stock $2.13 $2.30 $1.52 Dividends Declared Per Share of Common Stock S1.76 - $1.76 $1.76
.1
.1
. The accompanying Notes to Consohdated Financial Statements are an integral part of these statements. -
21-
ConsolidatedBalanca Sheet 3 on,o es, son At December 31 1982 1981 Assets (In Thousands) Utility Plant: In 1,ervice, at orgnal cost $3,417,669 $3.160.271 Less-Accomo!ated provison for depreciaton 953,541 871.740 2,464,128 2.288.531 Constructon work in progress 1,344,161 1,112.810 Constructon work in progress-energy trust (Note 5) 558,149 Gt.412 Nucmar fuel in orocess (Note 5) 156,295 32.004 4,522,733 3.867.757 Other Property and Investments 69,626 43.338 Current Assets: Cash 2,812 11.746 Temporary c'tsh investments at cost. which appronmates market value 61,500 4.300 Ikcevables-Customers (kss accumulated provison of $1.614.000 and I
$ 1863.000. respectively, for uncol>ctible accounts) 116,054 105.037 l O!her 24,855 26.809 Malvoals and supphes, at average cost- '
Fuel 92,684 84.'V3 Other 44,466 40.602 ! Prepayments and other 35,966 18.962 l 378,337- 291.959 Def:rred Charges: I De' erred Ouarto coal costs (Note 7) 71,346 63.363 De' erred energy costs - 2.318 Property taxes 50,527 41.450 Unamortired costs of terminated constructon projects (Note 2) 103,835 96.489 Other 50,734 53.600 276,442 257.220 55.247,138 $4.460.274 Capitalisation and Liabilities C:pitalization (See Statements of Consohdated Capitahzaton). Common stockhoklers' ecpty $1,488,371 $1.229.044 Preterred stock-Not subject to mandatory redempton 262,335 262.335 Sublect to mandatory redempton 64,000 68.000 Preference stock-Not subject to mandatory redempton 50,000 - Subject to mandatory redempton 55,165 56.843 Preferred stock of consohdated subsxtary-Not subject to mandatory r@mption 41,905 41.905 Subi eci to mandatory redemption 33,395 26.298 Long term debt 2,005,436 1.759.771 4,000,607 3.444,196 Lon>T:rm Obligations (Note 5): Constructon energy trust 500,000 432,500 Nuclear fuel 156,655 14.984 656,655 447.484 Current Liabilities: Current matunties of long term debt and preferred stock 22,383 7.581 Notes payable to banks (Note 6) - 74.400 Accounts payable 133,776 142.718 Accrued taxes 51,115 47.074 ' Accrued interest 57,736 39.982 Other 26,390 25.468 291,400 337.223 Def:rred Credits: i Accumulated deferred income tames 152,890- 124.279 Accumu!ated deterred investment tax credits 53,727 40.646 Property taxes 50,527 41.450 ' Energy costs recovered in advance 14,418 4 144 other 26,914 20.852 , 298,476 231.371 Commitments, Guarantees and Contingencies (Notes 2,3 and 7) 55,247,138 $4.460.274 The accompan,.nq Notes to Conschdated Financial Statements are an integral part of these batance sheets 22 l l
l l l Statements of Consolidated Capitalization onaeson i
. - - . . . . - . . . .- =. .
.. -- ~ .. . .. .. . . .
(In Thousands) l
- e...e. t k .i4e,. a..n,, l I
Comrnon stock.19 car vane author /ed !25 0'10 000 shares -
% 061844 and 78 675 703 shares outtand<ng revectively (Note 4e $ 864,737 $ 708.081 0+er pan)in capaa; 423,195 349 772 Rees,rei carn nas 4 Note Ab) 200,439 171.191 To'al comrnon stockhocers evty 1,488,371 1.229 044 Optonal Redempton Pnce Namber of Snares Outstand <ng Agg,,g,7, 1982 1981 Per Share fin Thcusands)
Priferred Stock (Note de): Cumutat'v* $100 par varue- Auften/ed 6 000 000 shares Not Sub;ect to Mandatory Reden pton 3 GW - 7 24 % 073.350 0 350 $103 38108 00 $102.034 97,335 97.335 716% -820% 800.000 800.t/K) $106 52-107 40 85.612 80,000 80.000 19 64 * , ~ 912 % 850.000 850.00.1 $106 4810912 91.696 85,000 85.000 totar not sutect to mandatory redempt.on 2 623 350 26233% $279 342 262,335 262.335 Setstect to Mandatof y Redawaton (Note 4d; 10 48 % - 10 76 % 659 630 692 760 $107 8611187 5 72.430 85,963 ' 69.276 Redempton wonin one year l1,94 3) (1.276) TotM mniect to marwlatory fedrmoton 64,000 68.000 L'riference Stock (Note 4c): Co m uutive. to paf va'oe- Authonted4 000.000 shares Not SubidI to Mandatory Redempton
$ 192 Senes 2 000 000 -
$3142 $ 62.840 50,000 -
hornt<! to Plindatory Redempton (Note 4e)
$M 00 ~ $102 50Sprics 21 000 27.000 $1.095 00-1.102 50 $ 29.700 27,000 27 000
$1 A0 Senes 1 862,181 1 973.100 $16 03 29.841 28,165 29.843 tetM sub,ect to manda'oey redemption 1 889.181 2 000.100 . $ 59 541 55,165 56.843 Pr:forted Stock of Consolidated Subsidiary (Note 4c):
Cumutahve $100 par value- Autbonzed 950 000 shares Not Subest to Mandatoey bJantpton 4 24 %-9 f fA 419 049 419 049 $102 98107 32 $ 44 238 41,905 41.905 Sub;ct I to Mandatory Redampt.on iNote 401 . 8 24 % - 15 00 % 338.951 267 984 . $108 24-115 00 $ 37.6% 33,895 - 26.798 Redempton w:tnin one year (500) (500) total subs *cl to mandatory redemption 33,395 26.298 Lons Term Debt (Note 4f): F erst mortJage bonds One Edmon Company-- 9 63% weightm1 average intevesi ratt!, due 1983 1987 113,791 113.791 13 37 % wegnted average interest rate. due 1988-19'T2 258,816 208,250 10 4m weighted average interesi rate. due t9931997 77,715 78.250 8 8/ % weiQhted average enterest rate. due 19 4 2002 157,198 191,701 . 10 203, weghted average interer.! rate, due 2003 2010 4e5,918 - 507.678 1,121,238 1.099 670 Pennsvtvana Power Company-10 n8% weghted avevage interest rate due 1983 2008 239,000 214 805 total first mortgage bonds 1.340,238 1.314 475 Gecuicd notes and obingatons Of"o Edson Company-8 03% wenhted average interest rate. due 1983 2010 230,914 230.914 Ohio fctson hnance N V - t 7 38 *. weigeted average interest rate. due 1987 1988 150,000 75.000 Pennsylvan,a Power Company-8 83% weghted aveeage infetest rate due 1983 2007. SS.106 ' 53 606 ' Amount held by Trustee (5,327) -- S2,779 53 606 Totaf secured notes and obagatons 443,993 -359.520 - Unsecured notes of Ohio Eais.in Company.10 42% weighted average interest rate due 1984 2012 - 302,000 176.000 Amount held by Trustee (69,028) 175 686) tota' unwcured note of Ohio Edmon Company 232,974 100.314 - Net unamontiren.1 dscount on debt (11,549) (8133) long ter'n debt (tus within one year (19,920) (5.805) Total long term debt 2,005,436 f.759.7 71 Total Capitalisatten (Nele 7) $4,000,807 $3.444.196 The accornpanying Notes to Consohdated Fenancial Statements are an antegral part of these statements. 23
Statements of Consolidated Retained Earning 3 on o ed, son
- - - - - - ~ ~ ~ - - - --___.n,.~._ - -. ~ .
For the Years Ended December 31 1982 1981 1980 (In Thousands) Batano at teynning of perod $171,191 $133.592 $150.552 Ns t income 215,729 197.062 135.150 386,920 330.654 285.702 Deduct Preferred ard preference stock divderds 34,488 33.160 33.724 Common stock divdends 151,289 126.030 118.137 Cap tal stock issuance e, pense 704 273 249 186,481 159.463 152.110 Balance at end of penod (Note 4b) S200,439 $171.191 $133.592
;-,.~.-.-m._ . :- m,n Ctatements of Consolidated Capital Clock and Other Paid In Capital n,- . ann - .-- - - n~. m.-n.-- -u_ ~ - - - ~ ~ ~ ~ ~ .- .- - -
Preferred and Preference Stock Not Subject to Subject to Conwnon Stock Mandatory Redempton Mandatory Redempton Number Par Other Pad Number Par or Number Par or of Shares Value in Captal of Shares Stated Va.ue of Shares Stated Value (Dollars in Thousands) Balance. January 1.1980 59 622.369 $536602 $282.956 3.069.049 $306.905 2.987.000 $153.250 Se of Common Stock 6.500.000 58.500 25 805 - - - - Divend Reinvestment Plan 2.403.803 21.634 7.979 - - - - S.Ce of 10 50% Seres of Prefer red Stoc k - - - - - 100.000 10.000 Preferred Stock Sinking Furd Redemptions-10 48% Senes - - 260 - - (20.000) (2.000) 10 76% Senes - - 175 - - (20.000) (2.000) 1100% Soom - - 21 - - (8.000) (800) Baunce. Denember 31.1980 68.526.172 616.736 317.196 3.069.049 306.005 3.039.000 158.450 Sale of cmmon Stock 7 000.000 63.000 21.875 - - - - Div&nd . einvestment Plan 3.122.631 28.103 7.751 - - - - Cc..verson of $180 Preference Stock 26.900 242 147 - - (26.900) (407) Preferred Stock Sinking Fund Redemptons-1048% Seres - - 585 - - (27.240) (2,724) 10.76% Senes - - 361 - - (20.000) (2.000) 110Me Senes - - 53 - - (4.016) (402) Other Preferred Stock Redemptons-3 90% Senes - - 271 0,790) (379) - -- 4 40% Senes - - 251 (3.720) (372) -- - 4 44% Seres - - 09G '13.440) (1.344) - - 4 56% Senes - - 386 U 700) (570) - - Baunce, Decemtwr 31,1981 78.675.703 708.081 349.772 3.042.399 304.240 2.960.844 152.917 S.de of Common Stock 10.000.000 90.000 42.000 - - - - Divdend Reinvestment Plaq 4.644.622 41.802 17.647 - - - - Exchange of Common Stock for First Mortgage Bonds 2.650.600 23.855 9.463 - - - - Conversion of $180 Preference Stock 110.919 999 610 - - (110.919) (1.678) S.de of $3 92 Senes of Preterence Stock - - 2.940 2.000.000 50.000 - - Sale of 15% Senes of Preferred Stock - - - - - 80.000 8.000' Preferred Stock Sinking Furd Redemptons-8 24% Senes - - - - - (5.000) (500) 1048% Seres - - 284 - - (13.130) (1,313) 10.76% Seres 435 - - (20.000) (2.000) _ 1100% Seres - - 44 .- - (4.033) (403) l Balance, December 31.1982 96.081.844 $864.737 $423.195 5.042.399 $354.240 2.887.762 $155.023 l The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 24
Ctatements of consolidated sources c1 orno ed, son Fund 3 for Property Additions
% ~,m w . % ._ e. _ . _ , -m._-._.m-.-m_._,_____
For the Years Ended December 31 1982 1981 1980 (in Thousands) Interruly generated funds-incorre twfore extraordinary items $195,571 $183.020 $135.150 Pnncoal nontash items-Depreciation and amortrzation-Charged to provison for deprecoton 103,206 95.830 85.455 ChargM to other accounts 1,953 1.318 1.282 Amortizaton of terminated constructon project costs 1,866 3.995 - Deferred incorne tams, net 91,832 99.179 83.536 lovestment tax credits, net 7,312 (772) (27.201) Alcwance for equity funds used dunng constructon (84,210) (60,421) (57.715) _ Deferred fuel and energy costs. net 4,609 (49.393) (9.114) 322,139 272.756 211.393 Less-Dividerxt; on common stock 151,289 126.030 118.137 Drvidends on preferred and preference stock 34,488 33.160 33.724 Net funds from operatons 136,362 113.566 59.532 income from extraordinary items 20,158 14.042 - Non-cash items-Gun on reacquisiten of first mortgage bonds - (26.276) - Giin on exchange of common stock for first mortgage bonds (20,158) - - 136,362 101.332 59.532 Financing activities-Common stock 224,767 100.729 113.918 Preferred stock 8,000 - 10.000 Preference stock 52,940 - - Fust mortgage bonds 105,000 95.000 322.000 Secured notes. net 84,173 94.920 50.000 Unnecured k>ng-term notes. net 106,660 24.314 - Construction energy trust and nuclear fuel obkgations 209,171 182.484 265.000 Retirement of long-term debt and preferred stock (43,295) (202.336) (95.800) increase ((1ecrease)in notes payable to banks (74,400) 32.918 (150.517) Sale of ta benefits 10,480 37.531 - 683,496 385.560 514.601 Not change in current awets and current liabikties excluding notes payable to banks and current matuntres of long term debt and pieferred stock-Temporary cash investments (57,200) (4.300) - Heceivables (9,063) 2.715 (29.171) Matenals and supphes (12,045) 3.149 (33.843) Accounts payable (8,942) 39,193 1.474 Accrued tams 4,041 (12.085) (1.186) Accrued interest 17,754 285 10.722 Miscelianeous, net (7,148) 112 1.601 (72,603) 29.069 (50 403) Other net-Constmdam twuh held in escrow. including accrued interest 711 39.847 (20.938) AW.inco for mudy funds used dunng constructen 84,210 60.421 57,715 he O! utihty property 13,568 - - Deterred income taxes on a!iowance for borrowed funds used dunng constructon (67,127) (59,530) (38.690) Miscellaneous. net (4,384) 11.345 (6.797) 26,978 52.083 (8.710) Property Additions $774,233 $568.044 $515.020 the accompanpng Notes to Consohdated Financial Statements are an integrai part of these statements. as
Statensents of Consolidated txes onro edison For the Years Etxied December 31 1982 1981 1980 (In Thousands) General Tames: State gross recepts (i) S 56,808 $ 34.144 $ 38,753 Real and personal property 45,028 39.193 37.183 Social security and unemployment 8,990 8,010 6.408 Misce!!aneous 3,743 2.969 2.799 Total general taxes $114,569 $ 84,316 $ 85.143 Prowlsion for Income Tames: Currently payable-Federal S 324 $ 80 $ (3.043) State 2,532 678 -- Foreign 206 59 - 3,062 817 (3.043) Deferred, net (see below)~ Federal 88,666 96218 81.105 State 3,166 2.961 2.431 91,832 99.179 83.536 lovestment tax credits, net of amorfilaton (6) 7,312 (772) (27.201) Total provison for income taxes $102,206 $ 99.224 5 53.292 income Statement Classification of Provision for income Taxes: Operatng expenses S 94,245 $ 80.820 $ 51.619 Other income (59,166) (53.360) (37.017) Allowance for borrowed funds used dunng constructon 67,127 59,530 38.600 Extraordinary items - 12.234 - Total provison for income taxes $102,206 $ 99224 $ 53.292 Sources of Deferred Tax Expense: Allowance for borrowed funds used during constructon, which is credited to plant S 67,127 $ 59.530 $ 38.690 Deferred fuct and energy costs, net 7,000 12.308 4.210 Excess of tax over book depreciaton, net 17,387 13.669 9.334 Cost of terminated constructon protects. net 384 5.197 33.181 Property taxes apphcable to subsequent penods, net 4,177- 1,233 F Deferred interest on leased nuclear fuel, net (2,840) 9.567: - Other, net (1,403) (2.325) (2.354) Total deferred tax expense. net S 91,832 $ 99.179 $ 83.536 Reconciliation of Federal income Tax Expense at Ctatutory Rate to Total Provision for income Tames: Book income before provison fot income taxes $317,935 $296286 ' $188.442 Federal income tax expense at statutory rate S146,250 $136.292 - $ 86.683 Increaces (reductions) in taxes resulting from: Allowance for equity funds used during constructon, which does not constitute taxable income (38,737) (27.794) (26.549)
. Difference tmtween tax and book dcpaciaton 4,026 (2.422) (5.874)
Gain on exchange of common stock for first mortgage bonds, whch does not constitute tax 2!e income - (9,273) - " Other, net . (60) - (6.852) (968) Total provison for income taxes $102,206 - $ 99221 - $ 53292 -
- 0) Amount for 1981 includes a cre&t of $14.352.000 resulting from & (u) Amount for 1980 retrects the resersalof prevrously recorded December 1981 settlement applicable to Ponnsylvania Escise Tax on . snvestment tax credits and related amortization due tc the carryback Gross Receipts accrued in prct years . of tax net openting loces-The accompanying Notes to Consohdated Financial Statements are an integral part of these statements.
26
Notes 13 ConeolMated Mnencial-Steeornents On July 30,1982, the PUCO, following the Comoany's regular f Samsmery of SepadNeant Acceemeing Po#cles semiannual fuel heanng, modified its prior order with respect to recovery of the costs of coal purchased from Quarto Mining Company (Quarto). Taking account of the fact that Quarto coal - The consolidated financial statements include Ohio Edison is burned exclusively at the Bruce Maasfield Plant, but does not Cunpany (Company) and its wholly owned subsidtaries, constitute the sole source of coal for that plant, the PUCO's Pennsylvania Power Company (Penn Power) and Ohio Edison order permits the Company to reduce the deferred cost of Finance N V (Finance). All signficant intercompany transactions Quarto coal by recovering such costs over time as an have been eliminated The Company and Penn Power (Com- additional cost of fuel for purposes of its EFC to the extent that panies) follow the accounting pohcies and practices prescribed the overall cost of coal at the Bruce Mansfield Plant is less . by The Public Utilities Commission of Ohio (PUCO), the than 115% of the generally prevailing market price of Pennsylvania Pubhc Utility Commission (PPUC) and the Federal comparable coal. In calculating the cost of coal at the Bruce Energy Regulatory Commission (FERC). Mansfield Plant, the PUCO ordered the Company not to include but to defer (unless the costs proposed to be deferred are Revenues found to be unreasonable) the cost of Ouarto coal to the extent The Companies' residential and commercial customers are it exceeds 125% of the generally prevaihng market price of metered on a cycle basis. Revenue is recognized for electnc comparable coal. The Jufy 30,1982 PUCO order has been service based on meters read through the end of the month. appealed by the Ohio Office of Consumers' Counsel. Although management cannot predict the outcome of this appeal, it , i The Companies collected $11,987,000 and $8,905.000 dunng believes the PUCO order is both lawful and reasonable and 1982 and 1981, respectively, in revenues attnbutable to whole- therefore beheves the order should be allowed to stand. sale rate increases which are subject to possible refund. The effect on retained earnings has been an increase of Penn Power recovers fuel and energy costs from its customers
$11.082.000. of which $6.327,000 ($.07 per share of common through an annual "levelized" energy cost rate (ECR). The ECR.
stock) is applicable to 1982 and $4,755,000 ($.07 per share of which includes adjustment for any over or under collection common stock)is apphcable to 1981. Management beheves from customers, is recalculated each year. Accordingly, Penn that any refunds which may be required in these cases would Power defers the difference between actual energy costs and not have a material effect on the Company's consohdated the amounts currently recovered from its customers. results of operations. In January 1981, the PPUC ordered that Penn Power not in-De/ erred fuel And Energy Costs dude the cost of Quarto coal in its ECR at more than generally - The Companies record the cost of fuel when n is consumed, prevaihng market pnces penaing completion of a PPUC investi-except as discussed below. gabon to determine the reasonableness of the costs of Quarto coal Accordingly, Penn Power defers the Ouarto coal costs in The Company recovers fuel related costs from its retail cus- excess of generally prevaihng market prices. tomers through an electnc fuel component (EFC), in accord-ance with a PUCO order. The EFC is an estimated fixed rate Reference is made to Note 7 for a further discussion of the per kilowatt hour included on customer bills for a six month Quarto project. , penod and is based upon fuel-related costs for the preceding six month penod. Any over or under collection resulting from Utihty Plant and Depreciation the operation of the EFC is included as an adjustment to the Utikty plant reflects the original cost of construction; including new EFC rate in a subsequent siemonth penod. Accordingly, payroll and related costs such as taxes, pensions and other the Company defers the d;fference between actual fuel-related f unge benefits, administrative and general costs and allowance costs incurred and the amounts currently recovered from for funds used dunng construction (see AFUDC). its customers The Companies provide for depreciation on a straight-line basis. at vanous rates over the estimated lives of property included in plant in service. The effective composite rate for electr'c i plant was 3.3% in 1982,1981 and 1980. The Company's deprecia-tion rates include props,ons for the estimated decommissioning - costs for its only nuclear generating unit in service. Penn Power provides for the cost of decommissioning radioactive - components only, in accordance with a PPUC rate order
.Er
Notes (Continued) Common Ownership of Generating facihties Income Taxes The Companies and other Central Area Power Coordination Details of the total provision for income taxes are shown on Grcup (CAPCO) companies own, as tenants in common. the Statements of Consohdated Taxes. Deterred tax expense vanous power generahng facihties. Each of the compan es is results from timing d:fferences in the recognition of revenues obbgated to pay a share of the construction Costs of any jointly and expenses for tax and accounting purposes. Own**d fac:hty in the same proportion as its ownership interest The Compantes' portions of operating expenses associat<d The Companies allocate the income tax credit resulting from with these jointly owned facahties are included in the interest expense related pnmanly to utihty plant under con-correspondng opnating eipenses on the Statements of struction. to income taxes-cred:t included under other income Conschdated Income The amounts reflected on the and deductions on the Statements of Consohdated income. Conschdated Balance SMet under utikty piant at Decemtwr 31 1982 include the following For income tax purposes, the Companies claim liberalized de-preciation and, consistent with the rate treatment, generally foFow "normahzation" accounting. The Companies expect that m,, r- Z T 5.7 C.] deferred taxes which are not provided will be collected from c ..< w u~ < ,v.~ c, mu u- - m eu their customers when the taxes become payable, based upon ere e N the estabhshed rate making practices of the PUCO. the PPUC w n s , >..i 5 w os4 5a4e 5 ca n u no " and the FERC. we w +o n ,s ana e , m en w9m ic ts so ta . n.s. ~, v# ., n wwo om mw, w n- ,, vs. . ,m.~ q - _ mor u as . The Company received $10.480.000 in 1982 and $37.531.000 i -, . , n .a ,c u w4 wm in 1981 resulting from the sales of tax benefits apphcabic to w si ao en Set si m m property placed in service dunng those years in acCordance a n %nn ,,wi.,%.se m oom,evm 2 with provisions of the Economic Recovery Tax Act of 1981. Of the total, $5.823 000 and $12.675.000. respectively. were re-A!! t.uclear fuel in process relates to the CAPCO units but is not corded as add.tional deterred investment tax cred ts on the segie'pted among them Company's Consokdated Balance Sheet and are being amor-tized over the hfe of the related property. The remaining Nuclear /oel $4.657.000 and $24.856.000, respectively, were recorded as The Companies charge the cost of nuclear fuel to fuel expense reductions to utikty plant in service and serve to reduce the based on the rate of consumption The Companies also include total provision for depreciation over the life of the property. in fuel espense the estimated spent nuclear fuel disposal costs which are being recovered from customers The storage of The Companies defer investment tax credits utikzed and spent nuclear fuel is necessary unbl the manner of its d<sposal amortize these credits to income over the estimated hfe of
!s determined. which is currently under study by the the related property. At December 31.1982. approximately Department of Energy $98.000.000 of unused investment tax credits were available to offset future Federat income taxes payable. These credits Altosance for Funds Used Dunng Construchon (AFUDC) expire at the end of the following years:
AFUDC, a non-cash item charged to utsty plant under con-struction dunng the construction penod. represents the net cost 1991 $11,000.000 of bonowed funds and equity funds used for construction 1992 16.000.000 purposes AFUDC vanes according to changes in the level of 1993 9.000.000 utihty plant under construction and in the cost of capital The 1994 7.000.000 Companies c ompute AFUDC ulikling a net of tax rate, which is 1995 33.000.000 consistent with the rate treatment. AFUDC related to assets 1996 5.000.000 financed only through the incurrence of long-term obhgations 1997 17.000.000 (see Note 5) is based on actual interest accrued on the obhga $98.000.000 tions donng the penod The rates used by the Company for all other construction projects were 10 32%. 9 84 % and 10.14 % dunng 1982.1981 and 1980 respectively. Penn Power used Pensions rates of 9 25%. 8 50% and 8 00% dunng 1982,1981 and The Companies' trusteed, noncontnbutory pension plans cover 1980, respectively, apphcab!e to such projects. almost all full-time employees. Upon retirement. employees receive a monthly cension based on length of service and compensation Pension costs for 1982,1981 and 1980 were s 28
M j A $15.448 000. $15.311.000 and $14.931.000, respectively. Of '"r m 27 22 C Z221 " rrr ~ ~m j those amounts. $10.350.000. $9.237.000 and $9.259.000. 2 Terminafed Construcfion Profects rewctively, were charged to oeerating expenses The l ba:ances were charged pnmarny to construction Such costs j include the amt rtization of unfunded past service costs on an in January 1980. the Companies and all other CAPCO g actuanal basis over 30 years. The Companies fund penson companies terminated plans to construct the following g I costs accrued A companson of accumulated plan benefits four nuclear generating units-Davis-Besse No. 2 and j and pian net assets from the two latest actuanal reports is No. 3. and Ene No.1 and No. 2. Costs, including settle- : as totlows. ment of all asserted claims resulting from termination. unrecovered by the Company and Penn Power as of 4o December 31,1982 apphcable to these units amounted to d uno w im m1 approximately $87.751.000 and $16.084.000. respectively. Aumm omsent va!u- of { g acumo w opunhe* M. The PUCO had authorized recovery of the applicable 3 - v"wd $ 1'2 7.0 ' 4 000 5144 527.000 portion of the Company's then known share of the con.
'#"d " * ' " ' ' # 0"O struction costs f rom its PUCO junsdictional customers J 5 ten 876 000 515s 994 000 over a ten-year penod beginning in February 1981. On f Nr aun weg in, tenrus SN4 6nuou 52 n m 000 July 15.1981, however, the Supreme Court of Ohio ruled 3 Assom. o ram of ro'um to< actuanai in a case involving another Ohio utility, also a co owner 4 pr. wn1 v.eur of .uuward of the terminated units, that under existing statutes the oun her an, 8% ao PUCO had exceeded its authonty in alowing these costs l as service-related costs in that company's rate case. 3 even though the decisions to construct and terminate .
Thc above total actuanal present value of accumulated plan were both, when made, prudent and reasonable. Subse-benefits reflects pension benefits apphcable to ehgtble quent appeals to the U.S. Supreme Court by that company ' employees based upon present salary levels and past years of have been denied because of the lack of a properly pre- ,i service accumulated through the valuation date This is the sented Federal question. The utility has taken further ' generally accepted reporting procedure currently set forth by action before the Ohio Supreme Court which may still have the Financial Accounting Standards Board The Companies' a bearing on the matter As a result of the July 1981 Ohio , annual contnbutions to the plans, however, consider estimated Supreme Court decision, the PUCO disallowed the Com-ultimate satary increases due to inflation and other factors and pany's recovery, as service related costs, of the costs of : p the estimated total service expected to be accumu!ated by the terminated units. effective August 1.1981. Accordingly, emptovees This is a widely recognized funding technique and the Company discontinued amortization of such costs on is consistent with the recommendation of the Companies' that date. l l actuary in addition. the actuary recommenMd. and the ; Companies utikzed, discount rates of 7% and 6% dunng the On November 3.1982, the PUCO decided in the Com- E twelve months ended June 30.1982 and 1981, respectively. for pany's then pending rate case to allow a rate of return funding purposes. Dif ferences between funding bases and above that which it otherwise would have allowed were it i reporting requirements can have a significant effect on the not for the July 1981 Ohio Supreme Court decision. Based i compansons above on that order, the Company has resumed amortization of 3 the costs of the terminated units applicable to PUCO juris- 4 dictionai customers over a ten-year period. Consumers' ! Counsel has appeated a similar decision in another util- mi ity's rate case lo the Ohio Supreme Court. Whether the y November 3,1982 PUCO order will ultimately be appealed 6 and sustained cannot be determined at this time. _ 4m 3 k 4 M M d
+
29 _ . _ . -J
Notes (Continued) l l In January 1983. the other Ohio unhty referred to above emannirem--=~mme-m~nm:::n received a rate order in a suusequent rate case whici; the 4 Capitalization utthty has concluded does not provide a sufficient basis under generally accepted accounting pnnciples for its continued amortization of the costs of the terminated (a) Common Stock units Were the Company to receive a similar order and Through the Dividend Reinvestment and Stock Purchase Plan, reach a similar conclusion in connection with the PUCO holders of common. preferred and preference stock and most order in its current 0; some succeeding rate case, and no of the Companies' full-time emphyees can acquire additiond other basis for amortization could be found or anticipated, new shares of the Company's common stock by automatically the Company would be required to wnte off that portion of reinvesting all or a portion of their dividends and by making the then unrecovered costs applicable to its PUCO juns- optional cash payments Purchases made with reinvested dictional customers Such costs at December 31.1982 common stock dividends are made at a pnce equal to 95% appro;nmated $83.559.000 ($53.613.000 net of income of the average of the high and low market pnces on the invest-tax effect) ment dates, and purchases made with optional cash payments are made at a pnce equal to 97% of such average. The pur-The Companies are currently seeking approval from the chase of common stock made with reinvested cash dividends FERC to recover these costs from FERC lunsdictional on preferred and preference stock are made at a pnce equal customers to the extent they are allocable to those cus. to 100% of the average market pnce. At December 31.1982. tomers The Companies are currently collecting interim the Company had 3.031.794 shares reserved for issuance rates f rom FERC lunsdictional customers which are under this plan and 1.862.181 shares of common stock re-intended to provide for such recovery and, accordingly, served for possible conversion of the $1.80 Preference Stock those costs apphcable to FERC junsdictional customers are being amortized over ten years The Companies (b) Retained Eamings beheve that the construction costs were prudently incurred Under the Company's indenture, the Coinpany's consohdated and have no reason to beheve that the FERC will not act retained earnings unrestocted for payment of cash dividends f avorably upon their requests. The PPUC has indicated on tne Company's common stock were $128.392.000 at that it will allow Penn Power to begin recovenng its share Decamber 31.1982. Under Penn Power's Charter. $30.089.000 of the costs allocable to PPUC junsdictional cuslomers of retained earnings at December 31,1982 were unrestncted over t ten year period beginning with the effective date for payment of cash drudends to the Company. of its ned change in base rates (c) Pretened and Preference Stock The Company has 4,000.000 authonzed and unissued shares mem:rmusamm: mumm -' of cumulative $25 par value Class A Preferred Stock 3 Leases At the Companies' option, all preferred and preference stock may be redeemed in who!e. or in part. at any time upon not The Companies lease nuclear fuel. certain transmission less than 30 nor more than 60 days notice, unless otherwise facihties, computer equipment. Office space and other incidental property and equipment under cancelab e and noncancelable leases Total rent expenses included on the Statements of Consobdated locome for 1982,1981 and 1980 were $20.766.000. $20.731000 and $9.373.000, respectively. The future minimum rental commitments as of December 31 1982 for all noncancelable leases are. 1983 $ 23.299.000 1984 22.765.000 1985 20.488.000 1986 16.525 000 1987 14.030.000 Years thereatter 348.404.000 If all noncapitahzed financing leases had been capitakzed, the e!!ect on total assets, total habihties and expenses would not be matendf. 30
rtoted Redemption of all preferred and preference stock issued Based on the amount of bonds authenticated by the Trustees within the past five years is subject to certain restrictions through December 31,1982, the Companies' annual sinking regarding refunding operations. The optional redemption poces and improvement fund requirements amount to $22,504,000. shown on the Statemants of Consoldated Capitalization wilt The Company expects to deposit funds in 1983 which will be decline to eventual minimums per share according to the withdrawn upon the surrender for cancellation of a like prin-Charter provisions that establish each series. cipal amount of bonds, which are specifically authenticated for such purposes against unfunded property additions or against (d) Preferred Stock Subject to Mandatory Redemption previously retired bonds. This method can result in minor The Compan/s 10 48% Senes and 10.76% Series each in- increases in the amount of the annual sinking fund require-clude provisions for a mandatory sinking fund to retire a ments. Penn Power expects to satisfy its requirements in 1983 nunimum of 20.000 shares every year on December 1 and by certifying unfunded property additions of 166-2/3% of the January 1, respectively, at $100 per share plus accrued divi- required amount. dends. Penn Power's 8 24% Senes and 11% Senes each include provisions for a mandatory sinking fund to retire a As of December 31,1982, the Companies' sinking and im-minimum of 5.000 shares and 4,000 shares, respectively, every provement fund requirements and matunng long-term debt for year on December 1 and January 1, respectively at $100 per the next five years are. share plus accrued divdends, and its 15% Senes includes a provision for a mandatory sinking fund to retire a minirnum 1983 $ 42,424,000 of 3.200 shares on July 15 of each year beginning in 1988, 1984 149,330.000 at $100 per share plus accrued dividends. Pena Power's 1985 75.647.000 l 10.50% Senes includes a provision for mandatory redemption 1986 58,582.000 -' of the entire senes on Apnl 1,2040 at $100 per snare p!us 1987 183,582,000 accrued divdends. The weighted average interest rates shown on the Statements l The sinking fund requirements are $2.463.000 for 1983 and of Consoldated Capitalization relate to long-term debt outstand-
$4.900.000 for each of the years 1984 through 1987. ing at December 31,1982.
(e) Preterence StocA Sub/ect to Mandatory Redemption Total secured and unsecured notes outstanding at December The $102 50 Sents and $95 00 Senos each include provisions 31,1982 and 1981 exclude $74,353.000 and $75,686.000, for a mandatory sinking fund to retire a minimum of 900 and respectively, of pollution control notes, the proceeds of which 1.800 shares, respectively, on July 1 in each year beginning in were then in escrow pending their disbursement for con-1984 and 1985, respectively, at $1.000 per share plus accrued struction of certain pollution control facilities Penn Power's divdends The $180 Senes includes a provision for a manda- obligation to repay the pollution control revenue bonds is tory sinking fund to retire a minimum of 100.000 shares on secured by a series of Penn Power first mortgage bonds. The October 1 in each year beginning in 1985, at $15.125 per share pollution control revenue bonds to which the unsecured notes p!us accrued divdends relate are entitled to the benefit of irrevocable bank letters of credi' of $159.802.000. To the extent that drawings are made The sinking fund requirements will begin on July 1,1984 and under those letters of credit to pay principal of, or interest on, will amount to $900,000 for 1984 and $4,213.000 for each of the pollution control revenue bonds, the Company is entitled the years 1985 through 1987. to a credit en the notes The Company pays an annual fee of 1/2%-7/8% of the amounts of the letters of credit to the The it 80 Senes is convertible at any time inte common stock issuing banks and is obligated to reimburse the banks for at a pnce of $15.125 per share. Holders will receive one share any drawings thereunder. of come an stock for each share of $160 Preference Stock cor'verted, subject to adjustment under certain cond Nns. (f) Long Term Debt The mortgages and their supplements. which secure all of the Companies' first mortgage bonds, serve as a direct first mortgage lien on substantially all property and franchises. Other than specifically excepted property, owned by the respective Companies. t
N9000 W mem-mmum-wa.uu.mmismastnina such time and in such amounts as will coincide with the burn-5- LonpJerm OMysWons up of the nuclear fuel. Financing on behalf of the Companies of up to $135,000,000 and $30,000.000 is available through the Ohio Edison Fuel Corporation and Pennsylvania Power Fuel Ohio Edison Energy Trus/(OEET) Corporaton, respectrvely, either through revolving credn in November 1980. OEET was created for financing part of the arrangements or the issuance of commercial paper, wh "h is
- Company's investment in Beaver Valley Unit No. 2. OEET has supported by bank letters of credit, or a combination of both.
- two knes of revolving credit available to it for $400,000.000 and
$100.000.000. The latter credit also serves as a stand by facihty in November 1982 the Companes also began participating in in connection with OEET commercial paper sales, total borrow- arrangements wherein the Central Area Energy Trust (CAE0 ings under that credit and commercial paper outstanding may finances the acquisition of nuclear material that will ultimately.
not exceed $100,000.000 at any time. be used to fuel various CAPCO generating units. As part of these arrangements, the Companies have entered.into pur. The Company has transferred its interest in Beaver Valley Unit chase agreements whereby the Companies are unconditionally No. 2 (exclustve of comnon facihties and transmission facihtes) obhgated to purchase their share of the nuclear material that to OEET. where the assets are used to secure OEET borrow- has been financed from CAET in not less than two nor more . ings. All OEET obhgatons will be assumed by the Company than three years from the date of the agreement, unless the when they become due, but not later than December 31.1986. nuclear matenal reaches the point of fabrication, at which time At the Company's opton, all obligations outstanding under the the purchase commitment will then be due. Financing of up to
, $400,000,000 revolving credit arrangement may be converted $137.000,000 is available to CAET on behalf of the Companies.
into a four-year term loan to the Company. Of the increase in the Companies' nuclear fuel obligations during 1982 approximately $58.000,000 was the result of a The Company accrues interest apphcable to OEET which is transfer to CAFT of nuclear material which was previously subsequently capitalized, net of income tax effect. Interest on financed by a lessor under lease arrangements with the borrowings under the $400.000.000 line of credit is computed CAPCO companies. at the apphcable prevaihng pnme interest rate plus 1/4%, plus a commitment fee of 1/2% on the unused portion of this line. The Companies accrue interest apphcable to the nuclear fuel No direct borrowings have been or are expected to be made obhgations which is subsequently capitalized, net of income tax - against the $100,000,000 line of credit. but OEET has issued etfect. Interest on the fuel corporations
- bank borrowings is ' '
and has outstanding commercial paper supported by this computed at 110% of the apphcable prevailing pnme interest - facili ty. To the extent that borrowings are less than the rate. plus a commitment fee of 1/8% on the available portions ,
$100,000,000 available under this line of credit. the Company of the lines of credit. The fuel corporations also pay a 5/8% -
must pay a commitment fee of 1/2%. Under the stand by letter of credit fee on the aggregate amount of outstanding support, an irrevocable bank letter of credit has been issued commercial paper. Interest on CAET purchase commitments; upon which OEET pays a fee of 1/8% of the amount of com- are at rates which vary from 1-1/8% to 1-1/2%'over the interest mercial paper notes outstanding The effective average interest rate applicable to certain dealer placed commercial paper. The - rates on OEET borrowings were 14.8%,18.7% and 21.4% effective average interest rates applicable to nuclear fuel obliJ dunng 1982,1981 and 1980, respectively Of the total OEET - gations were 12.6% and 13.9% in 1982 and 981, respectively.; obhgations outstanding at December 31,1982 and 1981,-
$100.000.000 relates to outstanding commercial paper and the balance to borrowings under the $400,000.000 line of credit.
Nuclear Fuel Financing in December 1981. Ohio Edison Fuel Corporation and
~
Pennsylvania Power Fuel Corporation (corporaticos in which : the Companies have no ownership interest) were created.to. . '
. provide furids for the procurement of nuclear fuel. The fuel '
corporatons will ! ease the fuel to the Companies under ., c -
- separate fuel leases which require lease payments sufficient to . -
- permit the fuel corporations to repay the ob;igations. Undsrf .
ordinary circumstances, the lease payments will be made at -
~
?' #
+
_ ki
)--
M
'h 29 .- . _ _ _ _ _ _ - -
_. . . . ~ . > _ _ m, 7 5 annamamwrenmasema - m Ouarto Project
- O Notes PayaWe Te senars and Lines of Credit The Companies, together with the other CAPCO companies,
!- have made tong. term coal supply arrangements with Quarto. The CAPCO companies have agreed to severally, and not > The Companies have lines of credit with domestic banks that jointly, guarantee their porportonate shares of Ouarto's debt - provide for borrowings of up to $235,000.000 at rates that vary and lease obligatons incurred while developing and equipping from pome up to 105% of the prevailing pnme interest rates. the mines. The guarantees will remain even if environmental L Short term borrowings may be made under these lines of credit regulations prohibit the use of this coal. As of December 31, on the Companies' unsecured notes. All of the current lines 1982 the Companies' share of the guarantee was $235,414,000 expire December 31,1983: however, all unused lines may be ($121.878,000-long-term debt; $79,190,000-lease cbligatons; cancelled by the banks. and $34,346.000-short-term bank credit).
'i he Companies maintain cash balances on deposit with banks tJnder the terms of the coal supply contracts, which expire to provide operating funds, to assure availability of $90,127,500 December 31,1999, the Companies must reimburse Quarto for of the hnes of credit and for other banking arrangements. Such their shares of the costs of operating the Ouarto m!nes, includ-l compensating balances, net of " float," are expected to be ing those costs associated with mine construction, whether or
- maintained at an average of approximately $3,000.000 and are not they receive coal from Quarto. The Companies' total pay- -
j not subt ect to any contractual restriction against withdrawal. ments under these contracts amounted to $80,709.000 and
- The Companies are required to pay commitment fees that vary $94.379.000 dunng 1982 and 1981, respectively. The Com-:
from a flat rate of 1/2% to a vanable rate of 5% of the apple panies' future minimum payments under the coal supply con-cable pnme interest rate to assure the avallobility of $99,000.000 - tracts related to m:ne constructon costs are: of the hnes of credit. 4 1983 $ 26,538.000 ' 1984 25,920.000 sxmuwasw.mm-a -m--amira 1985 25.302.000
, 7 Commitments, Quarantees and Contingencies ~
1986 . 24,684,000 ! 1987 24,066.000' Years thereafter 245.245.000
; Construction Program . .
The Companies' current budget forecasts reflect expenditures Based on recent studies conceming the economics of the ' ', of approximately $2.700.000.000 for property additions and Quarto project and the various alternatrves available to provide-- improvements from 1983-1987, of which approximately the long-term fuel requirements of the Bruce Mansfield Plant. .
$637,000.000 is applicable to 1983. In addition, the Companies the coat supply contracts were amended and changes were :
~
expect to incur additional nuclear fuel obligations of approxi- made in the mode of operation of the Ouarto mines which mately $145.000,000 in 1983. The major portion of the Com- have the effect of reducing the annual tonnage production of - panies' construction activities dunng this five-year period these mines. Additional coal requirements for the Bruce, relates to the CAPCO companies' program for the joint devel- Mansfield Plant are currently being procured in the open - [ opment of power generation and transmission facihties, and to market and the Company is presently continuing to evaluate' . ! bring the Companies' existing generating units into compliance . the alternatives for making additional arrangements to fulfill,'
- with environmental regulations. The CAPCO companies have together with the tase of coal from the Quarto p'roject, the tong- '
i entered into other commitments (the Companies' share being - term fuel requiremen's of the Bruce Mansfield Plant, These . ? $295.000.000, of whrch approximately $200.000.000 is appli- changes are part of a fuel procurement strategy designed to cable to the 1983-1987 period) for the supply of nuclear fuel reduce the weighted average price of coal used at the Bruce , in connecton with the future commercial operation of nuclear Mansfield Plant. The Company will continue to monitor the ~ t generating units- > The Companies' financtng programs during 1983' through 1987
- - will include the sale or issuance.' from time to time, of appro -
pnate additional amounts of first mortgage bonds, secured or; s unsecured pollution control and environmental notes and obli- > 7 gatons, unsecured long-term notes, preferred stock, preft ' A- " erence ' stock, common stock and proceeds from other long-- s term financing arrangements (see Note 5). The Companies are 1 ,
'7 ".
. $ kmited by their respective' indentures and Charters as to the ' 4 4 ! amount of additional first mortgage bonds and preferred stock , they may issue. , ,
"f
' ~
l_ . m t
--e- ,-m- g . .c.. .
r.-" - .,y.r. - 3 ,. -4
NotesMondinesesO
? Quarto project and conduct such additional studies of the pollution source as a result of failure to comply with pollution ' , . ecortamics of the project as are deemed warranted by the - control laws and regulations after January 1,1981. The _. . circumstances Any action by the Company affecting the Companes filed Petitions for Revew of these regulations. On Quarto project as a result of such studies will now have to take January 7,1983, the U.S. Court of Appeals for the District of -
into account the principles expressed in the Ohio Supreme Columbia upheld the validity of most of these regulations. The Court decision referred to in Note 2. Companies did not achieve comphance with all such regula-tions by January 1,1981 so that such penalties could be sought The current price of Ouarto coal to the Companies is based onc against them, but the Companies cannot determine at this time . , among other things, the actual production costs plus amorttza- whether they will be or, if they are, the amount of economic
.tson of certain production expenses which were not included in benefit that could be estabhshed._If sought and imposed, such the pnce of coal to the Companies dunng the development . penalties could be significant. However, the Federal Environ 1 pencd. which ended on May 31,1980. The current price of mental Protection Agency (EPA) has acknowledged in earher Quarto coal exceeds the current generally prevailing market sett!ements of proceedings involving the Companies
- Ohio '
price of coal Reference i:5 made to Note 1 for a discussion of plants that its pokcy is to assign a low enforcement priority to PUCO and PPUC orders with respect to the cost of Ouarto coal companies in comphance with outstanding consent orders such currentty being recovered from customers. The Company be- as embodied in those settlements. Also, approval of a Pennsyl-heves that the PUCO method for recovery of the costs of vania State implementation Plan revision,which was effective Ouarto coal. including recovery of the deferred costs. is appro- January 15,1982, brings Penn Power's New Castle Plant into - poate under the reduced mode of operation of the mines compiiance with sulfur dioxide (SO,) emission standards. , because this method is consistent with the fuel procurement j strategy for reducing the overall cost of coal for the Bruce On December 19,1980, the Commonwealth of Pennsylvania i Mansheid Plant Despite the delay in the final resolution of this petitioned the EPA to make findings under Section 126 of the matter by the PPUC management believes that its ultimate Clean Air Act. Section 126 provides a remedy for a downwind , disposit on by the PPUC will not have a matenal adverse effect State that can show adverse impact because air pollution in upon the Company's consohdated results of operations. an upwind State causes nonattainment of air quahty standards in the downwind State. Pennsylvania's petition complains of An issue has been raised in the Companies' most recent rate excessive particulate and SO, emissions from a number of cases before the FERC conceming the amount of the cost of sources in Ohio and other states, including potentially all of the Quarto coal that may be included in the Companies' charges Companies' Ohio olants. The States of New York and Maine for elecinc service to their wholesale customers. have filed similar petitions wh_ich have subsequently been conschdated w4h the Pennsylvania petition. The Section 126 Enwonmental Matters proceeding could ultimately result in the revision of the partic- ; Various Federal. state and local authonties regulate the Com- u; ate and SO, emission limitations for these plants, to make panics with regard to air and water quahty and other environ- them more stnngent. The Company is unable to predict the mental matters. The Companies estimate that comphance outcome of this proceeding. requires capital expenditures of approximately $488.000.000 for i propcte semaining to be completed. Of this amount approxi. As a part of the reauthorization of the Clean Air Actl tegislation 4 mately $237.000.000 was spent poor to 1983, and $242.000.000 has been introduced in Congress to address the so-called " acid ; is included in the construction estimate given above under rain problem." Various bills introduced thus far would require
" Construction Program" for 1983 through 1987. If Penn Power reductions in SO, emissions from utihty power plants and other
!s required to install off-stream coohng in connection with the sources located in several states, invuding Ohio and Pennsyl-operation of the New Castle Plant costs estimated between vania. The Company is unable to predict whether the proposed '
$13.800.000 and $31.500.000, depending on the required ther- bills will be enacted and, if so, to what extent, if any, the SO,
, mal hmitations, would be incurred. In addition, annual operating emission hmits at the Companies' plants would be affected. costs would increase substantially. Penn Power expects that Substantial changes in the SO, emission limits could result in - the impact of any such capital and operating expenditures the need for changes in coal supply or significant capital it' vest-would eventually be reflected in its rate schedules ments in flue gas desulfurization equipment to assure compli. ance. If flue gas desulfurization equipment were to be installed ; final regulations implementing certain provisions of the Clean on all of their generating units to achieve compliance, a cir- . Air Act Amendments of 1977 have now been promulgated cumstance that may be physically impossible _ because of space l- which provide for the imposition of noncomphance penalties limitations'at certain of their plants, the Companies estimate l based on any economic benefit reahzed by the operator of a that the capital costs associated with such installation could , exceed $1,000.000.000. The Companies expect that any such:
, capital costs; as_ well as any increased operating costs asso<
l ciated w.th such eco(ment, would ultimately be recoveredj from their customm I
. .7
- i f; x 4 '
) f
Other Legal Actions and Complarnts + ~ ~ - ~ ~~--- ~ ~ ~ ~~~ ~ In 1977, the Boroughs of Ellwood City and Grove City. 9 Summary of Guarterly Financial Data Pennsylvania. filed a complaint against Penn Power, aheging that Penn Power individually and in conspiracy with the Company and other CAPCO companies. has violated Sections The following summarizes certain consolidated operating 4 and 16 of the Clayton Act by restraining and monopokzing results for the four quarters of 1982 and 1981. trade and commerce in aneged markets for electnc power. Damages of $7.000.000 (to be trebled) and injunctions against the aueged unlawful acts are sought. In 1979, the Court granted c" ' ' *"' '
,, , 98 summary judgment in favor of Penn Power as to certa n anega-
[','3g2 3 N I,,,',$"98 ,,_n,,, tions of the complaint On February 14.1983. Penn Power filed operanng nevenues s361.190 5328 834 5374 328 5365274 a Motion for Summary Judgment on the claims not dismmed opsahnq Espenses and Tases 286 837 258 311 315 272 299 566 by the Court's 1979 Ordet On February 11,1983. the Boroughs om rai ng income 74 353 70 523 59 0ss 65.708 aOed the Court to allow them to amend their complaint Man. omer income and De*ctons 35 819 30 505 50.212 43.711 in am om s o e agement ts unable to predict the uitimate outcome of this ac!#on frKOme Ortore Estraord. nary items 53 837 42 091 49.448 50.195 E pf raord na*y items - 20.158 - - The PPUC n investigating an outage of Beaver Vaney Unit No- % incum s 53 a37 5 62249 5 49 448 5 50.195 1 which occurred dunng the penod March-August 1979 The e armngan conem sec. 5 4w44 sm 5 41326 5 4a431 outage had been ordered by the Nuclear Regulatory Commis-von to analy2e possible seismic deficiencies of safety-related %"'ed ^d'89' Nu"* 'S"8'*S c1 Common stock Outsta%ng 79 131 81.122 88.021 92488 pong and poe supports in the Unit. The PPUC has ordered Inat the operating company of the Unit make refunds to that f d'*"0 P"' 5"d'e + common stoch eefore E ntiaard nary nems company s customers based upon that company's expenditures iatter preened and peerence for porchased reo!acement power dunng the outage. The stoca dev+nd requ rementsi s 58 s 42 5 47 s 44 Espaortnary hems - 25 -- -- PPUC is cunently investigating Penn Power's habihty, if any. E anun% on commm sak 5 sa 5 67 547 5 44 for the outage and whether refunds are due to Penn Power's custmners for purchased rep'acement power expenses in-curred donng the outage which were included in its energy clause Il Penn Power is required at some future time to make such a refund, it is not expected that the amount would be Marcn June september December material 10 the Cof .pany's consolidated resu!!s of rperations. Th'ee Monms Ended 31.1981 30.1981 30.1981 31.1981 (In InousaMs. except ger share amounts) opera 5ng bvenues $308 837 $293.500 $337249 $340.063 operattnq Espanses and Tames 254 891 237 668 270.449 264 260
, ,w . , u.m mmw wnma. ,. wn-,wm @ Extraordinary income ome, income and eedactions 27994 29.212 35,860 37.736 Net interest and other Charges 44 729 49225 51.049 55.160 income Before Entraordmary items 37211 35.819 51 611 58.379 E =traordinary items 9 516 4.526 - -
Dunng 1982. the Company exchanged 2.650.600 shares of its common stock for $53 432.000 pnncipal amount of its out, Ne income s 46 727 5 40 345 5 51.611 5 58.379 standing first mortgage bonds which were subsequently retired. E anunas on common stock 5 38 354 s 32.042 5 43 369 s 50.127 i The exchange resulted in a nontaxable gain of $20,158.000. Weeed Avarage Number of shares which is included as an extraordinary item on the 1382 of Common stock outstanding 68.844 69 585 70 410 75 881 Statement of Consohdated income. During 1981, the Company E3,n.ngs per snare or common sioce purcnased and subsequently retired $65.821.000 pnncipal Before Emiraordinary items amount of its outstand:ng first mortgage bonds for cash This ("$ P,("Md [,#$s"*
, , , s 42 s 40 s 62 s 66 resulted in a gain of $26.276.000. which is included as an E xtraordinary items 14 06 - -
extraordinary item, net of related incomes taxes of tamines on common stocx s 56 5 46 s 62 5 66 i $12.234.000, on the 1981 Statement of Consohdated Income. M Resuits for rne three monms ended oeCemoer J r.19s f inciude a cred<r et aDDronernarely $7.012.000 g$ 09 per share of Common $rockt ner of Income taxes. ADDhCab> 10 rne reversal of prewouSly accrued Pennsylvansa Escose Tax on Gross Recetors (set Sta'ements of Conschdar ed Taxes) l l l l l 1 1 I
'as
Notes (Continued) l l rameammsamm mmeamcamaama-a - - m- prov des for the preparation of supplementary financial i f3 Supplementary Financial Data-Financial information to disclose the estimated effects of inflation and Reporting and Changing Prices (Unaudited): changes in pnces on property. plant and equipment. This data is presented in accordance with SFAS No. 33. however, Statement of Financial Accounting Standa ds No. 33, it is not intended as a substetute for earnings reported on a
" Financial Reporting and Changing Pnces" (SFAS No. 33). histoncal cost basis.
As RepoMed Adjusted for on the Pr emary Adjusted Change in Adgred for the Effects of Cheg,ng Pnces Consondared for General Specif c Pnces F of the (car Enced Det. ember 31 1982 on Thousands) Statemen:s inftahon ICurrent Cost) (Average 1982 Doriars) Operahng Ibenues $ 1429 626 $1.429 626 $1,429 626 Dr.oratong E spun es and Tases Operanon and marntenanc e 846.1 C0 846.100 846.100 Provivon tu deprecubon and amorbiahon 105.072 219.966 253.304 General ta s es 114569 114.569 114.569 income tases 94 245 94.245 94.245 Total operahng empenses and ta=es 1.159 956 1 274 880 1.308.218 Operating income 269 640 154.746 121.4n8 Other income and Deduchans 160.247 160.247 160 247 Not Interest and Other Charges 234 316 234 316 234,316 P'eferred and Preference Stock Dmdend Peomrements 34 233 34.233 34.233 income from Continuing Operahons tencluding reduction to net recoverable cost) $ 161.338 $ 46 444h) $ 13.106 increase .n spec,f,c pnces icurrent cost) of property. p> ant and eqwoment held dunng the year 99 $ 633 0:8 Paturtion to net recoveratJe cost 5 (41 E 9) (342.314) feect of increase in the general pnce level on property. p! ant and equipment #299 065) t ac ev: of increase in the general pnce level over increase in specibc pr ces of property. plant and equipment af ter reduc hon to net recoverabe cost (8 331) Advantage resuihng from the decrease in purchasong power of net monetary hatet es 106.804 106.804 Net $ 65.135 $ 98.473 p)inclwl.ng the reduction to not recoverable cost. Income (n) At December 31.1982. property plant and equipment net of from continwnq operations ad1usted for generalinflahan would accumulated cepreciahon. adjusted for changes in specofoc prices have been $4.115 000 (current cost) was $8 615.953 000. whole %storicalcostinet recoverable cost) was $4 529.489.000. Fiv> Year Comparison of Selected Supplementary Fin:ncial Data Edjusted for the Eftects of Changing Pnces Year Ended December 31. 1982 1981 1980 1979 1978 Cpercting Revenues (Dollars in thousands, except per share amounts) As reported on the pnmary concohdited statements $1 A29.626 $1.279 649 $1.080.869 $ 994.585 5 862.956 Adi usted to average 1982 doliarn $1429.626 $ 1.358.100 $ t.266.123 $1.322.606 $1.273.769 Hittrrical Cost Information Adjusted for General inflation do Average 1982 Dollars) income from continwng operatPons tencluding reduction to net recoverable cost) $ 46.444 $ 52,161 $ 24.478 $ 55.618 int ome trom conhnuing operahons per common share tenciuang veduct nn to net recoverable cost) $ 54 5 73 $ 37 $ 95 Curr:nt Cost Information (In Average 1982 Dollars) incorre (loss) f rom conhnwng operabons (excluding reduction to net recoverable cost) $ 13.106 $ 25.925 5 (14 436) $ 18.822 income posM from continuing operations per common share tescluding reduction to net recoverable cost) $ .15 5 .36 $( 22) $ 32 [ acess of increase in the general pace level over increase in t,pecif+c paces of property, plant and equ pment af ter reduchon to net recoverable cost 5 (8.331) $ (197.439) $ (308A43) $ (355.655) Cthxr information Common stockholders' equity at December at at net recovemb'e cost (Average 1982 Dollars) $ 1.4 71.796 $12M 081 $1.188228 $1222.290 Advantage resuthng from the decrease in purchasing power of net monetary hab.bhes (Average 1982 Dollars) $ 106.804 $ 228 464 $ 296 627 $ 128.800 Cash d vdends declared per common share-As repo ted $ 1.76 $176 5 f .76 $1.76 $ 1.76 Adiusted to average 1982 doilars $ 1. 76 $ t .86 $2 04 $2 33 $2 58 Market once per common snare at December 31-As reported $ 14 00 $11925 $11875 $13.375 $14 875 Adi usted to ave age 1982 doNrs $13 84 $11.94 $13 29 $16 82 $2120 Average consumer poce inder 289 1 272 4 246 8 217.4 195.4 33
Auditors' Report The Consumer Price Index for All Urban Consumers (CPI-U) r em wn+new=m --- was used for converting actual dollars spent for property, plant g gg and equipment into average 1982 dollars. This adjustment 1345 Avenue of the Americas illustrates the estimated effect that inflation has had upon the New York, N.Y.10105 Companies' principal assets. Th3 HandyWhitman Index of Pubhc Utikty Construchon Costs for the North Central Division and the Bureau of Labor and To the Stockholders and Board of Directors of Ohio Edison Statistics engineenng indices were used to calculate the Company: current cost of property, plant and equipment, excluding land Thsse indices were apphed to actual dollars spent on large We have examined the consolidated balance sheets and construction projects according to the year of expenditure statements of consoldated capitalization of Ohio Edison Current cost of all other construction projects was based upon Company (an Ohio corporat:on) and its subsidiary companies ongnal cost in the year Gf its transfer to plant in service. The as of December 31,1982, and 1981, and the related state-current cost of land is the same as the computed amount ments of consoldated income, retained earnings, capital adjusted for general inflation. The current cost adjustment stock and other paidan capital, sources of funds for property reflects the approximate dollars that would have to be spent additions and taxes fo. each of the three years in the period today to acquire property, plant and equtoment dentical to ended December 31,1982. Our examinations were made in assets currently owned accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and Depreciation expense was determined using the same rates such other auditing procedures as we considered necessary in and methods under general inflation and changing prices as the circumstances. the provision for depreciation reported on the primary con-sohdated financial statements. The accumulated provision As discussed in Note 2 to the consolidated financial statements. for deprectahon was estimated by using the Handy-Whitman the Company has incurred costs related to four nuclear units index A theoretical reserve balance was estimated for each which were terminated in early 1980. Pursuant to a Public Utili-class of property by year that the property was placed in ties Comrnission of Ohio (PUCO) order, the Company had been service The index was then apphed to each reserve balance recovering applicable construction costs from its customers for the respective year to determine the composite current over a ten year period. In light of a 1981 Ohio Supreme Court cost accumulated provision for depreciation, rukng, the PUCO did not allow these costs as service-related costs in the Company's most recent rate case, but did permit The total provision for income taxes has not been adjusted an increment to be added to the allowed rate of retum to re-for general inflation or changing pnces, in conformity with cover these costs. In 1982, another Ohio utility was granted a the reporting requirements of SFAS No. 33. similar increment in the allowed rate of return, but that decision has been appealed to the Ohio Supreme Court by Censumers' The reduction to net recoverable cost anses because the cur- Counsel. How this appeal will ultimately affect the Company's rent rate making policies to which the Companies are subject recovery of these costs from its retail customers is uncertain allow recovery through revenues of only the histoncal cost of at this time. utikty property During aflationary penods, however, the invest-ment necessary to replace that property will be more than its In our opinion, subject to the effect of such adjustments, if any, onginal cost. In order to properly reflect property, plant and that might have been required had the outcome of the matter equipment at its economic value to the Companies, the adjust- referred to in the preceding paragraph been known, the finan-ment for reduction to net recoverable cost must be made due cial statements referred to above present fairly the financial to the additional constraints present in the rate making process. position of Ohio Edison Company and its subsidiary companies as of December 31,1982, and 1981, and the results of their Consokdated net monetary habihties consist pnmanly of long- operations and the sources of funds for property additions for term debt and preferred stock. Dunng inflationary periods, net each of the three years in the period ended December 31, monetary habikhes will be repaid with dollars having less 1982, in conformity with generally accepted accounting prin-purchasing power than dollars had when the habihties were ciples applied on a consistent basis. originally incurred. Adjustment for the advantage resulting from tha decrease in purchasing power of net monetary habikties is necessary to adequately reflect these differences and serves to offset the adverse inflationary effects of replacing the Com-panies' property, plant and equipment. p - February 8,1983.
-37
Consolidated Mnancial Statistics
.._m , .
1982 1981 1980 1979 1978 1977 1972 Ceneral n'ineneses sntermetnen (Dottars in thousanos. emcept per share amounts) Total Operat ng f'evenues $ 1,429,626 $ 1.279.649 $1.080.869 $ 994.585 $ 862.956 $ 796.289 $ ' 343.204 Operating income S 269,640 $ 252.381 $ 169.383 $ 163.744 $ 123 945 5 146.508 $. 76.155 Eamings on Common Stock S 161,496 $ 163 892 $ 101.403 $ 105.120 $ 61.259 $ 87.863 $ 49,130 Rano of Earnings on Cnmmon Stock . to Operating Hevenues 12.7 % 128% 94% 10 6 % 7.1 % 11.0 % 14 3 % ' Times interest Earned Defore fncome tan 2.02 m 2.11 x 2 05x 2 31x 167x 2 38x 3 01: Net Uhhty Plant at December 31 $ 4,522,73 3 13.867,757 $3.435.267 $3.012.197 $2.717.820 $2.403.810 $1,173.233 Property Additions S 774,233 $ 568.044 5 515.020 $ 476,746 $ 395.162 $ 358.105 $ 166.035 Capitahzaton at December 31- , . Common Stockholders' Equity S1,466,371 $1.229.044 $1.067.524 . $ 970.110 $ 851.686 $ 867,292 $ 360.011 Preferred and Preference Stock Not Subject to Mandatory Redemption 354,240 304.240 306.905 306.905 306.905 261,905 119.905 - Preferred and Preterence Stock Subsect to Mandatory Redemphon 152,560 151.141 156.450 150.850 ~ 98.000 ' 98.000 .- Long Term Debt 2,005.436 1,759.771 1.594.384 1.410.782 1.343.195 1.189.821 629.140 Total Capitahtaten 54,000,607 $3.444.196 $3.125.263 ' $2.838.64 7 $2.599,78d . $2.417,018 $1,109.056 Capitaltzation Ratios at December 31 Common Stockholders' Equety 37.2% 35 7 % 34 2 % 34 2 % 32.7 % 35 9 % 32.5 % Preferred and Preference Stock Not Subject to Mandatory Redempton 6.9 88 98 10 8 11.8 -- 10 8 10 8 ~ Preferred and Preterance Stock Subsect to Mandatory Pedemption 3.6 44 50 53 38 4.1 '- - Long Term Debt 50.1 51 1 51.0 49 7 51.7 49 2 56.7 Total Capitahtation 100.0% 100 0 % 100 0'h - 100.0 % 100.0 % 100.0 % - .100 0 % Long Term ODhgatons at December 21 $6 56,6 5 5 $44 7.484 $265.000 - - - - Cost of Preferred & Preterence Stock Outstanding at December 31 9.17% 8 37 % 8 38*4 8 36 % 7 99 % 7 85 % 5.40 % Cost of long Term Debt Outstanding at December 31 10.69% 9 99 % 9.16 % 8.13 % 7 71 % 745 % 5 92 % Common Stock Date Earnings per Average Common Share S2.13 $2.30 $152 $180 $1.19 $197 - $191 Return on Average Common Equity 13.5% 14 6 % 9.7% 11 2 % 7.1% 11.7 % 13 8 % Dividends Pad Per Share $ 1.76 $1.76 $1.76 $176 $ 1.76 $1.715 $ 1.54 Common Stock Dividend Payout Ratio 63% 77% - 116 % - 98 % ' 148 % - 87% - 81 % ' Common Stock Dividend Yield at December 31 12.6% - 15 1 % 14.8 % -13 2 % 11 8 % 90% 6.7% Price / Earnings Hatio at December 31 6.6 5.1 7.8 7.4 12.5 99 12.1 Shares of Common Stock - Outstanding at December 3;(000) 96,062 78.676 68.526' '59.622 52.120 ' 51,207. 25,695 Boob Value per Common Share at December 31 S15.49 : $15 62 $15 58 - - $16.27 $16.34 $16.94 $14 01 Marbet Pnce per Common Share at December 31 S14.00 $11.625 - $11.875 - $13.375 - $14 875 $19 50 . $23.125 . Rato of Market Puce to Book Value per Share at Decemoer 31 90% 74 % 76 % 82 % 91 % ~ 115 % 1165 % . 36
Consolidated Operating Statistics m m wa,-ma m_ . = _ - = - - - - -.~ - - - . . . - . -- . - - . .. - 1982 1981 1980 1979 1978 1977 1972 Revereue From Dectric Sales (Thousanos) Residential S 497.941 $ 442.267 $ 398.832 $360.273 $314.867 $284.512 $124.930 Commercial 356,325 308.599 268.788 240.458 205.901 191.381 87,844 lodustrial 383,535 381.162 330.717 315.185 258.767 236.434 102,207 Otner 67,828 53.993 50.420 42.607 46.471 31.744 14.785 Sub total 1,305,629- 1.186.021 1.048.757 958.523 826.006 744.071 329.766 Sates to Utihties 101,888 73.966 12.381 10.185 9.346 7.825 2.698 Total $ 1,407,317 $1.259.987 $1.061.138 $968,708 $835.352 $751.896 $332.464
. . _ - - -_ _. -- .=
Revenue F rom Electric Sales-%: Residential 35.4% 35 1 % 37 6 % 37 2 % 37 7 % 37.8 % 37 6 % Commerceat 25.3 24 5 25.3 24 8 24 6 25 5 26.4 Industrial 27.3 30 2 31.2 32 5 31 0 31.5 30.7 Other 4.8 4.3 4.7 44 56 4.2 4.5 Sub total 92.8 94 1 98 8 98 9 98.9 99 0 99 2 Sales to Utihties 7.2 59 1.2 1.1 1.1 1.0 08 Total 100.0% 100 0 % 100 0 % 100 0 % 100.0 % 100.0 % 100 0 % Kdowatt Hour Sales tMdlions) Residential 6,733 6.747 6.801 6.650 6.501 6.334 5.023 Commercial 4,996 4.917 4.812 4.693 4.470 4.549 3.692 industnal 7,708 9.352 8.909 9.830 9.600 9.671 9.250 Other 1,227 1,181 1.370 1,346 - 1.309 1.253 1.023 Sub total 20,664 22.197 21.892 22.519 21.880 21.807 18.988 Sales to utdities 3,361 2.465 502 441 429 422 284 Total 24,025 24.662 22.394 22.960 22.309 22.229 19.272
~
--wwun +uwne~ w.- - ~ ~ mm w .. . ~
Customers Served at December 31 Re9dential 873,877 872.303 867.847 861.196 848.268 836.500 767.261 Cnmmercial 89,706 89.231 88.505 87.425 86.410 85.002 80.219 industrial 1,048 1.004 1.059 1.161 1.160 1,147 1.129 Other 724 711 704 693 689 682 557 Total 965,355 % 3.313 957.715 950.475 936.527 923.331 849.166 Average Annual Residential KWH Usage 7,723 7.760 7.870 7 780 7,724 7.637 6.668 Average Residential Price Per KWH 7.40s 6 56c 5 86e 5 42e 4.84c 4 49e 2.49C Cost of Coat per Mdtion BTU $1.75 $181 $150 $126 $1.16 $2. $.36 Generating Capatxhty at December 31: (Megawatts) Coal 4,858 -4.907 4.899 4.861 4.661 4.861 '3.939 Oit 354 354 3C.4 423 423 423- 132 Nuclear 425 425 425 425 420 420 - Total 5,637 5.686 5.688 5.709 5.704 l 5.704. 4.071
. . . , . .... . g . . . . , . . . . . . . . . .
Sources of Oectric Generation-Coal 93.8% 89 9 % 98 7 % ' 93 9 % 90.4 % . 90 0 % 99 8 % Od 0.1 02 .06~ 20 3.5 2.6 0.2 Nuclear 6.1 99 0.7 41 6.1 7.4 ~ - Total 100.0 % ' 100 0 % ~ 100 0 % 100.0 % 100 0 % .100 0 % - .100.0 % 9 ...;... . , , _ , , - _ , . c .r e - . ' . , . . _v Peah load-Megawatts 4,073 :4.148 4.210 4.105 4.038 - 4,134 3.530 Number of Employees at December 31' 7,885 7.669 7.503 - 7.157 -6.765 6.609 6.040
;39
Stockholder Information Stockholder Proffie As another stockholder benefit, the for a joint retum). On joint tax etums. At the end of 1982,194.877 stockholders Economic Recovery Tax Act of 1981 the age qualificaton is met if either owned 96.1 rrullion shares of our com- provdes that from 1981 through 1985, spouse has reached the age of 65 at mon stock. Approximately 33 percent of most participants of qualified dividend any time in the year which the exemp-cur stockholders are women,25 per- reinvestment plans such as Oho Edison's ton certificate is filed: cent are men and 31 percent are joint may elect to exclude from their yearly For divdends paid to corporations, tax holders The remaining 11 percent rep- income up to $750 per year ($1,500 exempt organizations, individual retire-resent trusts, corporatons, institutions, on a joint return) of divdends that are ment accounts (IRAs), and other brokers and other investment groups. reinvested. However, regutations have exempt recipients; and not yet been issued explaining how this For that portion of the Company's Nearly 75 percent of our stockholders exclusion apphes to companies with dividends estimated to be a return own 300 shares or less. They hve in all return of capital divdends. We antici- of capital. 50 states and some foreign countries, pate that a porton of common stock but more stockholders resde in Ohio dividends paid dunng the next few years Except for participants in our Dividend than in any other state, followed by New will be designated as a return of capital. Reinvestment and Stock Purchase Plan, York. Flonda, Cahfomia and Pennsylvania. Therefore, participants should consult who are having all of their dividends their own tax advisers to determine the reinvested, all stockholders eligible for Common Stock Olyldend proper treatment of common stock an exemption must have an exemption increased dividends on their federal tax return. certificate on file with the Company. Effective the first quarter of 1983, the Exemption certificates will be sent Company's Board of Directors increased Additionalinformation about the Plan, during the second quarter to all stock-the quarterly dividend on the common and a Prospectus, can be obtained by holders, except those reinvesting all of stock of Oho Edison Company to 45 contacting Ohio Edison's Stockholder their dividends. A certificate must be cents per share from 44 cents. Services. filed for each account eligible for an exemption and must be received by the Divdends of 44 cents per share of com- Dividendincome Taxability Company at least 45 days prior to the mon stock outstanding were declared by For 1982,75 percent of common stock record date for the dividends subject to the Board of Directors for each quarter divdends were designated as a return withholding. Stockholders who have an of 1982. of capital, and therefore nontaxable for exemption certificate on file with us, but federal income tax purposes. Preferred no longer meet the requirements for ex-Dividend Reinvestment and and preference stock dividends paid emption, must notify us so the certificate Slock Purchase Plan Grows during 1982 were totally taxable. These may be canceled. The Company's Dividend Reinvestmert figures are subject to final determination and Stock Purchase Plan continues to by the Internal Revenue Service (IRS) Annual Ateeting of Stockholders ce popular with stockholders. In 1982, and stockholders will be notified in the Stockholders are cordially invited to about 15,500 stockholders joined the event of a significant change. attend the 1983 Annual Meeting on Plan, raising the total number of partici- Thursday, April 28, at 10:00 a.m., local pants enrolled at the end of the year to Law Requires Withholding Taxes t:me, in the Company's General Office 52.807, or 27 percent of a!! stockholders. from Dividends auditorium in Akron, Ohio. Those unable By reinvesting $37.7 milkon in divdends With the passage of the Tax Equity and or choosing not to attend can vote on and making optional cash payments of Fiscal Responsibility Act of 1982, the the items of business presented at the $21.7 milkon, they acquired more than IRS requires that 10 percent of most meeting by filling out and retuming the 4 G milhon shares of common stock dur- divdend payments be withheld for tax proxy card that is mailed to each stock-ing the yet. purposes, beginning with dividends paid holder approximately 30 days prior to after June 30,1983. The withholding the meeting. The Plan was expanded in 1982 to and reporting of this tax will be similar include preferred and preference stock- to that of income taxes currently with. Additionallnformation Ayallable holders Participants may automatically held from wages For other items of interest and sources invest all or part of their quarterly divi- of additional information, remove the dends to purchase shares of common Regulations issued on this withholding pull-out stockholder reference card stock at 95 percent of market value with provision (subject to change) specified opposite this page . Also attached is a common stock divdends, or at full mar- that withholding will not be required duplicate mailing notice. To help us re-ket value with preferred and preference under the following circumstances: duce expenses by ehminating unneces-stock divdends. They may also buy,
- For dividends reinvested in com- sary duplicate mailings, please complete directly through the Company, additional mon stock under the Company's and return the postage-paid notice.
shares of common stock at 97 percent Dividend Reinvestment and Stock of market value through optional cash Purchase Plan; paymer'ts of up to $40,000 per year. + For dividend recipients who during the previous year did not pay more than
$600 in federal income tax ($1,000 on
- a joint retum)
+ For dividend ecipients age 65 or older who dunng the previous year did not 40 pay taxes of more than $1,500 ($2,500
Ohlo Edtson Company Stockholder Reference Card For your future reference, remove this specialstockholder information card, which may be kept with your account records. Stock Listing Ono Edison Company common stock is listed on the New York and Midwest stock exchanges and traded on other registered exchanges under the "OEC" ticker 9 symbol. Newspapers generally use the symbol "OhioEd" in stock listings. Annuni Meeting
~ '
q The 1983 Annual Meeting of Stockholders will take place on Thursday, April 28, at T( 3). 10 00 a m., local time, in the Company's General Office auditonum in Akron, Ohio. Transfer Agent and Registrar g To improve our services to stockholders and to reduce costs, we became the sole transfer agent for all classes of our stock in November 1982. Transfer Agent: Registrar: Transfer Agent BancOhio National Bank Oho Edison Company One Cascade Plaza 76 South Main Street Akron, Ohio 44308 . Akron, Ohio 44308 Availability of Form 10.K A copy of our 1982 Annual Report to the Securities and Exchange Commission. Form 10-K, will be provided without charge to Stockholders upon request. To receive a copy, please wnte to Gregory F. LaFlame, Secretary, Ohio Edison Company,76 South Main Street, Akron, Ohio 44308. Dupilcate Malling Notice if you are receiving more than one copy of the Annual Report because of multiple holdings, please complete and return the duplicate mailing notice attached below.
Dear Stockholder:
If you receive more than one copy of the Ohio Edison Company is hereby autho-Annual and Quarterly reports in your rized to discontinue sending duplicate household, and have no need for the Annual and Ouarterly reports to the extra copies, you can help our cost con- account identified below. trol program by completing and returning this card. Eliminating duplicate mailings of Annual and Quarterly reports will not affect the Signature of Stockholder (s)
,lj $ * ' mailing of dividend checks, proxy state-M ments or other communications.
dt, Pleasedo NOT retum this ca, j if you Q y,, G. E Laflame, Secretary are present'y receiving only one copy N Ohio Edison Company in your household. m { f 't t ,j ' C .? ,4, '8 A _l,' f.* a ' [ t , 6 .hp ' *
\ t'Q,
- mw'
, . - . . , _ - r m.._, _ m.
- .. m Additional Sources of Information Information and assistance pertaining to individual holdings, dividend payments, 9, divdend reinvestment and the transfer or registratiort of stock can be obtained by writing to Ohio Edison Company, Stockholder Services,76 South Main Street,
.g Akron, Ohio 44308, or by calling one of the following:
.' i $j~
dE'S Divdend Reinvestment and Stock Purchase Plan informatioa (216)384 5513 Nonreceipt of dividend checks (216)384 5199 TransferAgent (216)384 7926 (216)384-5509, Other stockinformation Our Stockholder Services group has experienced employees dedicated to pro-viding prompt and reliable service to stockholders. If you have a problem with any transaction, please write to the Supervisor of Stockholder Services at the above address. musumunummmeerr No Postage Necessary If Maded in The
%'; . United States "p '")~ ***""*""~
Business Reply Card - First Class Permit No.1047 Akrors, Ohio -
' ~
Postage Will Be PakiBy Acdressee N GC 6' l Ohio Edison Company M
-m Stockholder Services ~r
-m 76 South Main Street Akron, Ohio 44308 _ [
_ , , - _ -m
' 4
. P v-T A
g -*s4 ; W 4
% \ .. >
4-l 5- e t *'. d P s *s %Y f 4
~ !
F e 4
+ y y
. 4.-
%W', .. ?
+
3
# 1 N 4 9 \ % 4.'..
4
,.},.- g t r' '
;-_ 4 4
- I
- e c x .-
. ty
* ,fi 4 2,, .. .,.
.y 5, M.'[-' .) . ' W p 14 23 .
, ; , )
q. . 't ,,+ n '.'.yl , s.% e' .- q t* 1
, , ) f*
.j g % M --I ; ' '
^
t, , w ,
~
- 4 y',
.l g 3
s,
, %f
'_%'*T' v,
y
,, e % 1 y }^ -)
h)Y 'f,'- ? &WO f. *f
^
- l. - L ff '640 * *QY
'R q' ' f , M
- j.,tg* *
- ../,.,,1,c-
?- .,%,-,.
,m- n g, %o , qg. y, e .3 f
+
{,"." ,
~-b .e P 4 ' ; A.,
N, e I. gd, a e. 4 y -f.W.,s , py
+,
l ,
- 4 4
'4 .ew4 r
.- js7 .1-- "s A q '^pi$~~ '"
34 9 $.h g s. J
- 3 7 q e t
gJ r,)" ' g x
' 's r w%s ' p.c r- 3-e.-q up, ag .
el-w4 < +k 47p op , y,.,,gApy.g
' d F.'h.hgyr pg s j, gg t ,,4 ;
, y 9. g
+p, a:- s: .wwwx;g wa A.a ;
r .e< $ - 1 > n y ,. w.3 -w ; wp , z am,.-y'q , pp + ( j
- d3 my>
6 . . mp.? w , 4w.+
+cr* e- e( ,4-u t- - T s x
g . a , w wA ' sI. , % s 4 wr. .
. . ,g e
',J, y, 4
d *#,,..
'-i.,6 g ' h t-iw ;
l W'Agr._'_.yk 3,sI-].-
) T
. p h */ h fi ,' J C.
, s c4 g
%E
- 3,'"0 r [l * ,'h g - 2e- 3 p 27')y a '.
%. < +. , vf . 6 m' w4Y b} _ >V ge',-%) A f f = *. f g-gs -
* + , .
F
- ).d ' -#'".
- 4-Q( ' - g g C.'g-fi'g' ,_ ; j.m .w . g ,
y , , , .r. [-., -
<% ;.- %k p ;y y. ,d a h,ewghd 4(,p e p/ . ,
s.e m <gy ;%v W.wp.mwqp .
-r
. * , . a p w k* %([- I /T D I -k $' kp i t'l% % -
*i ,-
e .-mn es e s a.e,, r,:
. - ;<3 ,e ; T u-
- e s .
t a n ..
~
. k: ,~ * , 2, -] a gn ~.::Aq rv5 , "p ? Mg; L! &, . '
^
,\ Y lt $Yf r~.J\ 'r'N u fab% 0 _h y% %' A t --
+es - -;- ,.. . ; ;
': nW-cy,; p %a + y w gyw .fyp g y,mysyh ,f,vg*]'$ ',q, q&
j
-E t f ? 7 WM2 t . ;. t eq y
, ; l q .i g -
+ ,. % .r. 5-% p mf3 * .y.r mM.g uugM,fwqq t p r e+ - ,' -
.. , s n 1 u
;w ,' - m. , ,
+yl -
E.O A,%g4%fguggw
< g ; ,.n pg+.p g. ., .,
).
;)pp <n:!ci % % w w, .y g %. ngggy yq4'4(g,
. n .u , vy n. .' ' . - + -
o c_ c -
=
~
AQW&.,neaanp. %. p#gm,. . ;{' , : e ' V 4 ' 4 ;, ,. ( V,? 'g%,cw'.9 g
'- +
>gy $ 44- 4 d,' *-- ,'- - q
--3 - , ,,
a g _ % -v,r x s m < > . . .1 t e ,9*,' t '
. .d.'- . ;ly.a C s..
fgg 5
%s p
g ,
+ r ,.
1 M-
~
' F, 2
.a..,. &.. - 'i s s '
_ ' _ *!<43wn.@, ' .s MC s x ; r- ' + c.. 1 m, %:; p;.,s.u .- y :; = .g ,
,, q.*
-3" W a ,, c 4y ,' .s ^'*y K ; . 3,.
n - e .
,e ...; , cj, se s s qr m -a / ,,?
.s - r' >. C', n :s -. Yb,
;^' t. ,
e ,, -
- a. -
r a
,. r:c 's
- i 's'4 eV:/- *^_'
,$~.-. x
' h,4
- 1 n,- # ,
4 4 '[. -I h , L s- le d " i rN 9 3 N64, -
*p, j.. wASQ
;p.
'yg c . , ,.
+
' ' < % g:3pyrr;+',., >
, ,y.d
> j s
r
- '- .Q : s. , ,/ - .. w'm. %se i *
,-r* W, W-a.- j , .-
,.c _r
,I'
- e P;,
5 ,,, .h '/S *g' 4 y { < (
*- \ , -: *-
a t4 g .- 7 u' ,~~
,xhl l-% .'%. ui "4 ' c._ u&f -1'
'^
- y s .-
11 ,
* ' s "w [ + .0' r #. %_ s 4 -3, m t,m..s + W= %e 4
~ _ I - { .~2 m5 4 . * - i 2 4 r va.4 e'
.-. < g' < .
l
.,;y '*,% D '"
v n%'t , ' g% ' . %' } .2+
-- g % n,
,'-f 3.,y,.19 g. ,
J,'
. , e pe , ,
' , zs, > ,w.s.. , 0 e .h_p .q \
,k#c'_'*',* o' + rC h, 4 :'.
u'.. A.-'..,A [#f b ' '.-
,},' , . . -3s 5 IIr.r.,-' j s v. :
's' 5
>>-.4 9 r ~ > s %- .si.w mjg ,. . u ,, ; ,. h s k .. ygg'd4 -->
-en. e
}
,' % l - * . . ' ,. ;* a' _ Y _
h .,' , f'f.-N c
?h~.f l*,l
=
0 8 I g e pi u. a 2 1 P_I"
h $DuquesneUjitCompany AnnualReport1982
, e .
,y:hy
[' k :i , :: , ..; } . q: ' s . -=
., ... .- P. .
5 ' '
?
. .Nhi.
~ $l, ,' :j 'w' * 'H' o
[.?,., ,'- u ;:, n'u:, . - s - : . 'Y.
;r >. .j;j
,~.A .. f : y, .,. - e . . . . - ,
., . Q _.;.> g .
*b,
~. . [, . . .5 * (lj ;:.'l ',
$Y.l . , . t. .+-. ' :f.;
'~
-4 7F7 .; .. .
g.. .- c ; *?,,:,
... n, y>.
. .; - ~ - ~ . .,.; -(j
, , rb 3 r .. .
h: : : N:. . , * : :: t^','
.. T '.
~
;.. ,b. ."...
.n
,~p , ._:t Y ' .-:.. y
..n ..
. ! .: .*. ..a. . .
,a Y - f, e' l .' , \
e ..
'; * * .. ~ S;* . ',
6i l ht? ;/t,' - :n ' 'M .-La
' ~
) .
, # ;. . 's. gG , g
' '4,
.,2 ,} .
. . ',.. V..
,g-.
,; c
-, -, s j
~
.. . . dr , , . . ,
',',.-.' . g. . 'y
)
y.. , ;... -
, R; ' .'-
.j_ . '
.:~~ h ,I , .c" s g, __ _
e 4 f f' ^ 6 boff 90$ % l
People Power 1982 was a year l#ke few others in the history of Duquesne Light Company The severe economic climate brought with it added chal-tenges that demanded the most dedicated and creative efforts by our employees Ihis annual report is dedicated to our employees-the reat strength of the Company On the following pages, we spot-hght five of the many Duquesne Light people whose dedication extends to community service as well Employees pictured on the cover are (lef t to right) h >p row onnna chappvi. Protossional fhy rcpfer 3)pphany) cumm#ngs Remit-tant e Jork Wdham i Gdfdlan Jr V#ce k.. ' Prosutenf ! (;stomer herV#CrW D# vision k ' Muldlo How Wdham Whitworth. Hot Silck .] '5, (; row ' eader Rotmrt O Hara [nv#ron montal I nqir,eer. k , iron Parkhdl Senior g. M aves ,l. -Qss
, W 'x.%
nonnm now cary storuman wepnone Sorvn o Hopresentaisve Rob 3r ott. Rosi 'h denttal Representat>vo Donald 1 os'er stabsta al Ac ( nuntant ,
,% .g Contents Highhqhts - 1982 1 To Our Stockholders 2&3 Perspective of 1982 4-13 Company Report on Financial
- Statements 14 Opinion of Independent Cer,ified Pubhc Accountants 14 7
F anancial lnformation 15-35 ee i -. a .;j " " " , Company Service Area Map 36 Common Stock Dividends 36 Form 10-K Offer 36 Board of Directors Company Otticers inside back inside back [khYd y ^, O i ? , :6 M # CAPCO enside back i' ' $D
" " ' 'l -+ S ,
iho relocateam of Duquesne Lrght's corporate headquartms was completed early in 1983 Because of the omtremely I competittvo development situation in the . downtown area Duquesne Light was able ,
" ij to uso es negotiaang strongin as a maior '- ,
fOnant tO securo an attraCIIVO N year lease at One Omford Contre
- - - - _ - _ - - - _ _ _ _ - - - - L
Financial and Operating Highlights-1982 Duquesne Light Company Percent 1982 1981 Change - Financial Electric Operating Revenues ,000) $746,462 $786,229 - 5.1 Income From Continuing Electnc Operations (000) $117,197 $109,409 4 7.1 Not income (000) $116,882 $108,871 + 7.4 Earnings Per Share of Common Stock From Continuing Electric Operations $1.96 $2.07 - 5.3 Dividends Per Share of Common Stock $1.90 $1.85 + 2.7 Shares of Common Stock Outstanding at Year End 53,276,525 45,302,520 + 17.6 Opsrating Electnc Plant (000) $ 3,024,554 S 2,786,172 + 8.6 MWH Sales 11,037,681 13,633,742 -19.0 Peak Load Megawatts 2,158 2,522 - 14.4 Cost of Fuel Per Million BTU 167.9e 159.7c + 5.1 Average BTU Per KWH Output 10,853 10,931 -
.7 Annual System Output MWH . 11,662,379 14,323,618 - 18.6 s N s o
t : N
\
N aj; - Cornpany Vice Presidents (left to nght) Earl J Woolever. Nuclear Construction Division; George 1. Rifendifer, General Services Drvision; William F Gi!fillan. Jr . Customer Services Division; Charles M. Atkinson. Fiscal Division; Clifford N. Dunn Operations Dtvisicn; John J. Carey Nuclear Division. and Roger D Beck Engineenng and Construction Division
~ ~
1
1 To Our Stockholders For the first time since 1958, of Beaver Valley Power Station Construction Reorganization Duquesne Light's revenues were Unit No.1. The nuclear unit was Early in the year, the Nuclear Con-less than in the previous year: out of service for the first half of struction Division was established S746,462,000 in 1982 compared to 1982 for refueling and for to focus attention on our largest
$786,229,000 in 1981. The national modifications required by the construction project, Beaver Val-recession was magnified for us by Nuclear Regulatory Commission. ley Power Station Unit No. 2. The a sharp drop in demand by the For most of the balance of the decision to establish this division area's major steel producers. year,it operated at or close to 100 was made because of the sizable percent of its rated capacity. This investment the project represents Fighting the Recession and the desire to have personnel nuclear unit generates power for The continuing recession presents assigned to this project full-time.
a challenge to your Company's less than one-third the fuel cost of our coal stations, saving substan. This reassignment of responsi-management. Measures taken in bility preceded the reorganization tial operating expenses. 1982 to maintain the Company's of the Engineering and Construc-financial health during this difficult Cost Savings Program period included cost savings pro- As in all good businesses, cost on Dw,i ,sion. Rojeckoodna@n arid cost controlin the E&C Divi-grams which benefit both our savings are an integral part of our sion will be strengthened during stockholders and our customers. day-to-day operation. Tradition- 1983 through an expanded Project ally, each division and service al s Management Department. This department has been responsible On February 20,1981, the Pennsyl- department will control and coor-for identifying and implementing .,, vania Public Utility Commission dinate the division's projects from ways to cut costs. In 1982, we initi-(PUC) ruled that the Company,s inception to completion, including ated an experimental program that Warwick Mine should be taken out functions such as scheduling, of rate base, so we considered co ers cost savings efforts by coordination among departments every employee in the Company. selling the mine. However, the and budgeting. in the normal course of busi-PUC also noted that if the War-ness, Company employees imple-wick mine is efficient enough t ment many cost savings meas-produce coal for less than the l ures throughout the year. The average pnce of comparable ANNUAL SYSTEM PEAK LOAD l urpose of the riew Cost Savings Pennsylvania coal, the Company *S**** Program is to identify, document
- may earn a reasonable retum on its investment. Therefore,,ti makes and record in a centralized place ,
in the Company all of these cost good economic sense for / savings actions and,in turn, pro-Duquesne Light to retain owner- vide encouragement for further ship. Warwick Mine contributed co g } about $2.5 million to earnings in he pro ram covers all Com-pany activities and includes capi- mii '
~
~
g[ = ' Tho price we charge our cus-
- tal as weH as operating and main-y[
tomers for Warwick coalis subject ' tenance expenditures. Results are ~ to an annual PUC audit. formally reported on a semi- ei N Nuclear Unit Returns to Service One development in our efforts to annual basis to the Chairman of the Board. In 1982, the results T sf'// cf were gratifying: reductions during " +,sG offset the effects of the economic - downturn was the return to service the year of $4.7 million in operating ~ expenses and $3.6 million in capi-tal expenditures. =: Ms d_ %.:.;Nf,y, . e :[ Y *? / L. e m m 5[ ji ! Vy - 1910'20 '30 '40 '50 '60 '70 '82 '92 2
._ _ ... . ._ . . . . . .. . . . . . . . .. . . . _ . _ _. .~ ~ __
-u-
?
-d m-ir Management's decision to reor- Inflation Moderates Another benefit for exempt ;
ganize the E&C Division was later On the brighter side of the coun- employees is the recent introduc- = affirmed by a PUC mandated man- try's gioomy economy was a sig- tion of a flexible 40-hour work @ agement audit which arrived at nificant reduction in the inflation week schedule. This plan will per- t essentially the same conclusions in its recommendations. The PUC rate during 1982. The benefits of reduced inflation are quickly felt in mit exempt employees some lati-tude to select their work hours
'l M-routinely orders such manage- a capital-intensive industry such while still meeting their job com- ,
ment audits so that utilities may as ours in the prices we pay for mitments and responsibilities. } have the opportunity to evaluate equipment, vehicles and supplies. the opinions and recommenda- Duquesne Light People tions of an experienced third party Area Diversification Credit for our longstanding record As we mentioned above, sales of reliability belongs to our > in conjunction with their continuing efforts to mprove performance were depressed by the severe Duquesne Light employees. They ~i drop in demand by local industry, are an outstanding group, both - especially steel. However, the personally and professionally. In y Offsetting a Loss with a Gain continuing diversification of the the following pages you will see - Although not caused by the area's industrial base lessens the pictures of five Duquesne Light i recession, the decision to dispose impact of this dramatic downturn. employees, and read about their -? of the major portion of the assets While still working to revitalize activities, both on and off the job. of our unprofitable subsidiary, Alle- our current industrial base, local in a way, this may tell you more _ gheny County Steam Heating area development groups have abnut your Company than all the ':- Company (described on page 4), been attracting service busi- facts and figures of this report. resulted in a $9.9 million after-tax nesses and high-technology com- ; loss. However, we were able to panies in robotics, computers, ' substantially offset this loss with a microelectronics, instrumentation ;
$9.6 million tax-free extraordinary and op;ics. Pittsburgh, an impor- q.
gain. tant corporate headquarters cen- A The tax-free gain was made fer, ranks third among U.S. cities in ? possible by taking advantage of total research and developrr.ent an opportunity for a favorable expenditures. m W"' 4 yJ .,9:%, fM . .. '
- s exchange of equity for debt. Spe- E @" ' Y '
I 4 m' cifically, the Company exchanged Cart on the Tradition . 1,406,898 newly-issued shares of ,,A new beginning,, b a catch- ,?0 . 0 w .
-r
%.9 pl4-j.1 [,
phrase that often ,s i mentioned ,7 r Common Stock for outstanding First Mortgage Bonds of various when a company relocates its g., y J . ; headquarters. Not at Duquesne p series with a face value of
$29,852,000. The exchange Light. Through our 100-plus years yygg4 3. ;f.4 _;g.4Qg
.-7 g..,qg,ghr, of peration, we have earned an ;g. .H j.;4.g.7 3 .s.; 7.: y resulted in an extraordinary gain of g
$9,609,000. excellent reputation for providing y .. . ..y.4 4. :r , . . c.3 . a. ;
reliable service to customers. We + 5 ;q p + . g ,q. p. . . -
> 4 Mt 4 ';% M see our relocation to One Ocord 1 Centre as a means to build upon [ .I I that already-strong foundation.
Scores of Duquesne Light h(76;. #" ISTM'y":"M.2,.;
~ ' ' " #
E employees worked long and hard 'n to make our new headquarters a pleasant and efficient place to [ gf h, kj i-work. Early indications are that the John M. Arthur new surroundings will enable all of Chairman of the Board and President [ us to do our jobs even better.
-r' February 17,1983 m
i 3. 3 -I
1 Perspective of 1982 i Financial Matters steelindustry harder than many rate increase that went into effect industries. Total sales were 19% in mid-1981, the tariff provision Rsvenues, Sales and Earn- lower. Commercial sales ran covering rates for large busi-Ings-a Change in the Pattern against the recessionary tide and nesses and industry, and sales of During 1982, our industrial custom- increased 2%. Sales to residential power to other utilities. The 1981 ers used approximately 41% less customers were about the same. rate increase contributed to our electricity than in the previous Revenues decreased $40 mil- 7% imptoved earnings from con-year. The primary reason was the lion for the year, although the tinuing electric operations. recession, which has hit the basic reduction was moderated by the Steam Heating Affects Earnings ,
= Losses connected with the opera- I
%. ; . . .- .- .- .. .j 4 #' tion of our subsidiary, Allegheny
' ~
m - -- - -
. .: . County Steam Heating Company '
J ...
~ ~.
~
'.u .. ;
(ACSH), and the decision to dis-
! : pose of the major portion of its g( ,,V assets reduced 1982 earnings by
~n '9
' i
.. ,e .,- a' W e 21t per share. On August 30,1982 the Public Utility Commission 9
', c .
.- ; ; (PUC) entered an Order authoriz-7w . 4 ing ACSH to discontinue steam 13 1' L s.
y r 'l 3g j heating service effective May 31, l 6 j.]y,, y ]/ 1983 and to dispose of certain of its assets. 7 i
* ]I!jj^, a a - s -
f,-( ; t Q( The estimated loss from discon- [- , _ c y;t - y l tinued steam heating operations t ,.
;i+
. O- of $9,924,000, net of related tax (1 1 ,- ? - , !_
[ r;l i M benefits, was recognized in 1982 PM g ' '
, , j i i 4 .i and included operating losses for
[ the nine months ended Septem-
~
( g; I ' l { -l < , 7 ber 30,1982 and estimated oper-
"' i ( a' FNg > 1 i $*; ~ ating losses from October 1,1982 y ..
, _ . through May 31,1983, the date a e uy new steam-user group will take
, pd ; over the major part of the ACSH 6
system. This loss was substan-P tially offset by an extraordinary l
)
gain of $9,609,000 resulting from
,,, l l mm -
an exchange on December 22,
..U p , 1982 of 1,406,898 shares of the V) p u i. !!
Company's common stock for
~ - ! 1 .
$29,852,000 principal amount of Yl 4- .
the Company's outstanding First 9 . . Mortgage Bonds of various series. The discontinuance of steam
, heating service of ACSH is
; y expected to strengthen Duquesne Light financially. ACSH Iosses 1 -
x, over the previous five years,1977 5
' :? - -
through 1981, totalled about
$3,041,000, and such losses would Pittsburgh currently is in the midst of Renaissance ll--a multi-billion dollar project have continued orincreased in involving public and private construction work in the greater downtown area. PPG Place future years.
(foreground) the 40-story future home of PPG Industries, will dominate the city's new skyline, which will include six other skyscrapers by the mid-1980s. 4
y Albert Grimes "I love children," said Albert "Shindles the Clown" Grimes.
"Not just certain ones, but all chil-dren." Al, an equipment operator
, from the Central-North T&D Dis-trict, shows that love by donating his own time and money to enter-tain at children's birthday parties and charitable events, especially Muscular Dystrophy backyard carnivals. A 36-year Company veteran, Al began his hobby as "Shindles" as the result of a not-too-serious suggestion by a co-worker that he should have a
<.- clown costume made. "It was just
. Ng a joke, believe it or not," recalls Al with a chuckle. "But I gave it a try k
(Q%[kk and my interest and involvement
, i- grew from there. Now it's actually become a part of me. In fact, I think my family gets peeved a little because it seems like I spend two-s jy thirds of my time with make-up
? -A on."
$l' l., . i?f
% _ /:'.
- f. ifyd {yggqig gg 'd
,A *.4j g
j g %j ',_ g ;... g'ry .
- gy,. u . , ; - - -_ .
*- 3 --..., -
; de
[N@4
.,t'.
. . ' .g * .'}
. . _, ;, n, ;g, lr > ,
E.1 .% 'k l,. l_
'i:; . .. ;; . . <,. _
9 = ~ f. . .; ; '-. ', ,f y , , i 1 :9 "y,,. ,, s -y W ! ' ' N Y. L .
- ^
; ys 3 , , . , . ;. , ; y.3 : e y_ . ., , . 7 - ;m .j -' 3 ,,,. -
[*'
'. -1,.
>e
'o.-
[(a 7=.:. h #~[ +,. v
, c ,-
f, f
<- t mE h 4 :
(q < 5
, y
,* ff 4
Srecrupa Mitra A project engineer in the System Planning Department, Sreerupa ' Mitra has been with Duquesne Light since 1975. For the past year hh. and a half, the Calcutta, India _. ,.
~ '
native has been actively involved ' N E, I
'~'
with the Company Speakers' 1 1 Team Sreerupa and 20 other -- co-workers, representing a cross- l A section of the Company's major operating areas, volunteer their , time to speak before community organizations. A typical presenta- es, p4 u ; tion involves a bnef talk, the view- 6 $- i 3 ing of a Company-produced movie -
; y'
.p {$
and a free-form question and "4 answer session. The key element 4
- 1, 1 > ?
9 of a Speakers' Team presentation hy is that it is personal. It provides an
*; t .
[p.k" yp w, ij ! N' opportunity for a customer to con- pd ' fj duct a one-on-one dialogue with -h. ? 4: : 4 4 .g the Company.
- ihlP. $'Mf A - Y ( d$.d!' S --
% et ;
; g
- M,9M st a . 0+4%rm 4"g)d- -;f N*G**p 't } } g4 n.. -
j see p. w; ( :e 1. c ' h*h
/_,%
/~ n 2 '
'. j i hlrf f? P~l} 4 mlyP
-&: ' " l]
3abg%:- . i.
. .
- se i .
tW
'c/f/t f Y]%g -A'
; J13 4, i t=%
tf j:[;; Y
-k wa
< , ?ce
,. p op.g:-
gr q 3 R)- 4 . f}E 1 5
} .
gA ^ k , g . y , dR 1
*3 %.w.
m ,o 934%
-. 7
- t. -. 3 _ 3.. r.,0 hNh
- dhk.ym, kh ~Y%
MQ; x;WW% ' W"%,-
' ' " %s ;;h$J$@S M 3
6
. . . . . . , _ , . ~ . . _ . . . _ , . __ . . .
a
- 4 g..X.V ~; ,. f . gv" ? .'.*m. H. ~lX Construction and Financing i
,, ,j .e . G f 1 %:, "t, Capital expenditures for i
" MD. p.,
. w J'
(, y.p $
~
- f. # (. - .. Duquesne Light totalled $231 3 I g[C:[.jp miilion in 1982. Major prciects f
$ge p ~ ' j' ' s
. ... - g e '1
- 7. l g ,,3., ,s . . included two large substations, a ;
, , ;me======
wy -
.. district operations headquarters a d j f.j Nw L-i /
. /5 . building, special buildings for f w k
- a. -
-alflin m, / > . 3 /. u nuclear training and nuclear emer- e
/, .1 w*N ,
, : ;,% j"f.
, ,, gency response, and continued H%
construction of Beaver Valley l n ,, y. ..,g . q ; J # ~.] : j j; AK-(k.k. p). "M,.: t
. : ..%.. ; . f. % - . y . . . .. y q*
rs '. -
'.-. g. '
,~ + . . ' M I' '.C r N ,.
Power Station Unit No. 2 and Perry Units 1 and 2,in each of which the
.c , J. % ; . i :
}... ,n Company has a 13.74% ownership
-) . .
y ,. - k f interest. About 22% of the money q .5. p 2
- 2. . -,
..._-( .1.. =ffW M ..{[ % UM, a
M r . 4s Q
; . l 7; .- M v '. .Lip7.-required to pay for such expendi-
.y.
-Q
.p{ [ p.,:gggQ._j -
,4j q.g. J . . ;- y.. .
. . %f j; -
N9.
% L :.
tures was generated internally; the remainder was raised t'v outside .T Qy Q #.(g F .N ZlS ; ; 4., j^3. ..g; j .3 77 ;;}'.E J.W..; P. ~financing. This includedi i
%* ' 7Q , . Q. :f 7. j.ID.2. hi. '?;.- .. [ ,WPN M.J.
- 1. On May 6,1982, Duquesne Construction cf the downtown subway section of the Port Authority of Allegheny County's ss , ,000 principal _
new Light Rail Transit System continues on schedule towards its projected November amount of 16'1% First Mortgage = WM start-up date The systern will feature electncally. powered vehicles that will be Bonds, Series due May 1,2012. -- constructed in the Pittsburgh area Net proceeds to the Company , were approximately $64.4 million. Recession, Rates and Cost Savings Program Payoff 2. The Company issued i Development In 1982, Duquesne Light estab- 4,500,000 shares of Common - Duquesne Light was able to find a lished a cost savings ?rogram to Stock on August 10,1982. Net pro-small silver lining in the current identify and encourage cost sav-recession; it became possible for ceeds to Duquesne Light were - ing ideas initiated within the Com-approximately $59.5 million. us to use only our most efficient pany. Each department is respon-
- 3. The Company issued generating units. As the industnal sible for identifying, analyzing and 1,962,320 shares of Common -
consumption of electricity drop- documenting all cost savings - Stock in 1982 pursuant to its Divi- - ped, we were able to generate measures for its area. The 1982 I elecincity almost entirely with coal dend Reinvestment Plan. In addi-goal was a savi. gs of $500,000 in tion.104,787 shares of Common ; and nuclear fuel and hold our operating costs. Documented ; costiier oil-fired generating equip- savings were $4.7 million in ^.per- ; ment in reserve. We were then ating expenses and $3.6 million 5-YEAR GROWTH KWH SALES able to pass the savings along to in capital expenditurec. g,,,,on 7 our customers by reducing our omws Energy Cost Rate. The savings for Dividend Reinvestment Plan 14 the average residential curJomer Growth y - a#p(~ T Q1 i was approximately $1.50 per month for the last six months of The number of stockholders who applied their dividends to buy
!( Q ^l. l 'n ienw d n y ' :;
the year. Despite the rece: 3 ion, substan-more stock under the Company's dividend reinvestment plan, p L.~. s_ { ,]C' [] . tial commercial construction con- instead of taking cash, grew 46% M1i I f M,.f @N"'"N*[* i C' # ' tinued in the Duquesne Light in 1982-from 23,300 to 34,066. ' a service area. Large projects com- For an explanation of the plan, f' ? " y d g 1,: & - M d pleted or underway at year end which was recently amended, V 1 included four high-rise officc and for necessary forms, write Wy y ! buildings in downtown Pittsburgh and two large suburban shopping Duquesne Light Stockholder Rela-tions Section, One Oxford Centre, k' ; malls. Our Area Development 301 Grant Street, Pittsburgh, PW Department helped attract new Pennsylvania 15279. business to Duquesne Light's two-
- h. (
county service area, adding about 0" 3,000 new jobs in the area. 1978 1979 1980 1981 1982 i 7
- Stock were issued pursuant to the HIGH/ LOW COMMON STOCK Company's Employee Stock Own-ership Plan Sales of Common "$ . - .
Stock through these plans aggre- k # M M WM - at 15% . ' iten gated approximately $27.2 milhon l16' M
'W h 11sw; stan J , ~ 13% c14% ; ' ' '
g#" The Rate Increase Picture p p g7 ,y . g4 in 1981 we apphed for a $100 mil- y * ' - hon (15 o) rate increase. On June 29 of that year, we accepted an R.__ option offered by the Pennsylva- D# ~* A W ~ nia Pubhc Utihty Commission p 11w inn 39411n . 11 % (PUC) allowing us to put a 564.2 7sT 2nd 3rd 4th 1 st 2nd 3rd 4th milhon rate increase into effect for The pnncipal trading market for the Company's Common Stock is the New York Stock service rendered on and af ter July Exchange The stock is also listed on the Philadalphia Stock Exchange. 15,1981. On Apnl 15,1982, the PUC gave its final approval to the increase. On Apnl 30,1982, the Pennsylvania and the Nuclear Company filed a new rate sched- tions (INPO) reaffirmed that the Beaver Valley Unit No.1 is oper- Regulatory Commission. ule that would increase revenues ated in a safe manner by qualified on an annual basis by $165 milhon' Oldest Nuclear Power Station ersonnel. iNPO is a nonprofit which was subsequently reduced Retired corporation croated by the nuclear to approximately $155 mithon. On President Eisenhower launched utility industry in 1979 to enhance aanuary 28,1983, the PUC entered the safe operation of the nation's the peaceful use of nuclear an order allowing a total annual nuclear power plants. energy when he switched the increase of $105.8 milhon. In February 1982, Beaver Valley Shippingport Atomic Power Sta-Power Station held the first full- tion into service in 1957. Duquesne scale drill to test its Emergency Light operated the plant under ll Nuclear Preparedness Plan. The station's government contract until October .- An evaluation made in June by the performance was rated a success 1,1982, when, having generated Institute of Nuclear Power Opera- by both the Commonwealth of 7 billion kilowatt-hours of electric-ity with an excellent safety record,
. .. ., . . . Shippingport was shut down for i the last time.
} p& % ) g.l 2 Q D, Q W . %; u.i Iy f &g' fKa g.y [ y *.g .; Nf.$':,a. ? .fy.g;;.*Next E;step: the U.S. Department F. A 1 l, i ,' p (: .,. /.; N. . .l 1- ,.W* of Energy will remove the fuel and (L'MJ jM %?. 7 ;, U -( i ," ,; { . [( % {: M [ i decommission the station. Some fd {.
%j ^'% . g < Q ..
g' A . - l ;. '
-l' .
WQ7y) employees will continue to work at the Shippingport station for the
%,i i% %. . ,
m i. _M y, ~P5 '
% . ~.
' "I j J . Q [~ 0:' b , . M
.E *[
next 4 or 5 years. Other station
.' ' j; j f JiiiiC.C 1_ c f M M c [. % $' ._g(q z=_E employees will be transferred to
.y < y Af' P (.g ~g, C
w4 = .; e _ .; .T. :
~
nG; other Company locations including
$x
- s:: t/ - Beaver Valley Units Nos.1 and 2.
,, V. .
-M3=
" 2 [ME:'rqgg , ,
dl E5== #7 Some will continue training as D.- dr.O
.w. . .g ..y.,
'S _ .u . .
.-pR1
,. - . Q. ' %;
licensed form the operators; others will nucleus of the supervi-f., , N. sory staff at Beaver Valley Unit M l..~; P T g{p.y. m4y. p_ ' g q4;. y-n.3
;p 5 A~
$g y7-9, E c'
g:. ; y n$
'*f. - [m tlE.7.' . .
4;.gg y't.i3 No.
.. T .
]f 2.,". N ' k '_'
- h. h.) J,.[A
- Q New Nuclear Construction i '
. Md 3. 6 : .O . <. ' A .h .Q : L , %.,.-: ~.w:4 Division Formed in order to provide better control Light-Up Night returned November 8. after a 10-year absence. Corporations and busi-onsses throughout the " Golden Tnangle" left lights on in their buildings unt:1 midnight, of the desi9n and construction providing photographers and the general public with a panoramic view of the city. of Beaver Valley Unit No. 2, Light Up Night was initiated in 1957 as a means to help usher in the Chnstmas season. Duquesne Light created a new it was discontinued in 1973 due to the OPEC oil embargo 8
Harry Butler During the day, Harry Butler is a hot stick crew leader in the
- Central-North District of the j Transmission and Distribution Department. He's on a different fgN type of " hot" crew during his off-M?}- the-job hours. Harry and his wife,
?.
Z' [ Lois, serve as volunteers for the West Deer Fire Company. Men and women have been fighting fires side by side in West Deer
,, . since the mid 1970s. "The women ph ,* '/;:3'*
g handle the same chores as the men do and many of them have _7_ the added advantage of being able to respond to daytime fire
'~
e.. alarms when many of the men are working," Harry said. "At our fire s co.npany, everyone shoulders an equal amount of responsibility." w+ - - ",- .
. e . . -- . .. . . w ;+; -
~
ri ,-_
,_ Cf.jV.h _
.l.'
=
Y ??.q, g,'
,r.
'.' :. '. d ,'e4 i,_ ', . 4 - , E"
' "~ . . ,,.
m l1*
.,. : 7 e . : o,. g'ye s. 3 g
.l _',~
Hi.!_.[$}'\ '
. . .. .. u I '. / @ L O-i : '" . ' : .i
, Nuclear Construction Division. The Division Vice President, Earl IV Personnel, Inter. Company appreciate the dedica-1 ti n ne guid n e pr vided by Woolever, had previously been nal OEerations and Mr. Schaffer during his many Vice President-Engineering and Customer Relat. ions years of service. Construction. He picked up the President Retires construction project at a little over Stanley G. Schaffer retired as midpoint. Unit No. 2, expected to President and as a Director of the i go on line in 1986, is now approxi- Company effective February 1, ' mately 59% complete. Mr. ; 1983. Mr. Schaffer served the Woolever's extensive nuclear Company for nearly 42 years in expenence goes back to the various positions. From 1958 beginning of Duquesne Light's through 1966, he held various
" 1
, nuclear involvement when he supervisory positions in the Com- ' helped design the Shippingport pany's Power Stations Depart-4
- Atomic Power Station. ment. In 1966, he was elected ~
Vice President of Operations and 111 Environment Director or the Company. This Meeting Clean Air Goals appointment was followed in ' A new electrostatic precipitator June 1967 by his election as { was retrofitted on a power plant in Executive Vice Pres,i dent. ln July West Virginia; work is in progress 1968 he was elected Pres,i dent of - I to replace another at a power Duquesne Light. The employees, l plant in Ohio. Both plants are Directors and Officers of the partly owned by Duquesne Light; Stanley G. Schaffer our share of the costs totalled
$30 million.
Management Audit As part of the Pennsylvania Public ' , Acid Rain: Will Haste Make $335 0 Utility Commission's (PUC) Man-i Million Waste? Bills addressing " acid rain" were '
/ agement Audit Program, the PUC considered by Congress during routinely orders management aud-
- 1982. Although none progressed ) its of utilities.
l past committee stage,,fi certain of Duquesne Light Company's management audit was completed i these bills were to be reintroduced n the third quarter of 1982 by the and passed by Congress, it could consulting firm of Temple, Barker require coal-burning power plants,
& Sloane, Inc. The 500 page audit I
especially those located in the report prepared by the consultant middle and eastern parts of the made many constructive recom-country, to install " scrubbers" to mendations, and the Company remove sulfur from the stack gases. has decided to implement most of them. This could cost Duquesne Light Overall, the audit findings sup-as much as $335 million, require an increase of 6% to 12% ,n port the position that Duquesne i Light is effectively managed by customers' electric bills and Duquesne Ught has forg nad a gocd rep-utation ih and nationaIy forits skilled and professional employ-threaten thousands of coal and steelindustry jobs in this region.
, n , p, , , , e e elede pnatips Power station. electrostatic service at reasonable rates.The The Company believes that " acid precipitators and flue gas scrubbers col- report gave our Company high rain" legislation is premature at lect 99 percent of the fly ash before it can this time, and that extensive scien- enter the station's stack. The accumu-marks forits record of service reli-Iated fly $h $h n h re mixed with ability (99.95%), sound financial tific research must be completed before the nature, causes and , er sl dg , ,nd trucked to a site for proper disposal. It is coal buying, and the good per-effects of acid rain can really be interesting to note that in 1982, about 15 formance of many departments.
understood. percent of each dollar received in revenue by the Company was expended for envi-ronmental control expenses. - 10
3,v i g Y_,; u , Centrella Ziegler
~, Centrella (Cindy) Ziegler's daugh-ter, Rita, had a problem. Her Jun-ior Girl Scout group needed a troop leader. At the top of her likely list of candidates was gcod
', old mom. As all good moms do,
\; Cindy, a file clerk / typist in the General Purchasing Department,
,g " volunteered" her services. For
. Ff e : .,f-the past three years she's been a special friend for a group of girls.
- ages 9-11, from the Hill District 2-72 section of Pittsburgh. The group's many field trips included this visit to the Buhl Science Center.
. As l i,i',i,,i,, .
.}.54*
* * ' ar*
'. ,. . ,- g y
m , L. -. :1 y . ;r. ;
- x. - . , .
iI y ,'4,.'- g - s,[. _ m<.? - M kb_%, ._!' ',. 1
- } Y *
. yh,;. .
' s; c
- n. .s..... . z. y, n
'Y' 5 h&pm
- 4 ,,
, ad , A.
t 3 ' 5 # }.;,
. ., c. _we[.
it;. '. h
&}
p p-
..b(i :-[ ,
s , ..-
,=
\
. g?k m_ 4 ,,
h I %?
,. y ,
.m
tw :
. W M)p o-Clemente Runas 3 On the job, Clemente "Clem" 1 4
"7 Runas is an equipment mainte- !s M r nance repairman, first class in the Substations and Shops Depart- - 5 ment Maintenance Shop. In his + M _2 spare time, he serves as an emer-gency medical technician for the ..
l Deer Lakes Youth Organization. Clem's training for the Emergency - Medical Technician certification . , (' involved 82 hours of classroom work and 20 hours of actual hospi- g , tal procedure. ,
' A, e-
" " ' * ,e . -. *
.?,.w.x a.q;h;~
S -
- x';.y,yykc:L.~7 3..s-Jg blQ. j , .[', -
.t. E.Q:p $ -
... .c .. - .: -
. ?~~ '_,' f i . -
. L-l, . . -,z ;% }y }
3.c ::.; y c _ yy _9 ,. 9 e3 y ? c . ; . ., y ,
$' _, . M' .:.: "
p
? _ ; 'sfY, E .' T ' .;Q '_~
l % $? % -
^
WW
'e dW & >
,, ::** N us r. , ,f
%y T O V.*. Q' [x )Ty% dype g'it/'
. ' .' , 9 -
"i 7 w: , . gf
. '7. 9.y' . . , ??
w
. . .s
;. &w,e+ g,y, _
. y_. - .
$. ~ w d).
~
f,5f""f: @ jj - my: 3.. . g~<-s : .9y .,4((. %4ff:rg:q%::'*;N;m/}f
;g, 4 3a
.+ ; g . ,_. . ., .y ql% ??--
%;S R_ff
' "Q :./x-den *Q' 12
- y N ] [,d <N
D ta Processing Department ~"""~""7 N '/ 7 " " ~ " " ~ 7 A new computer system with four V - T x , - J ty,. times the capacity of the com-4 h7 . uw* * "g bined previously existing equip-ment was installed in November at s y' g ; .,V
% Q .
-[ % %6
%@ ' *~ h'Qez the Company's Woods Run Com.
puter Center. It gives the Data Processing Department the ability oG L 3[Wd ", - to better serve the operating -
"~%
departments and other service ,, _ _ _ , . departments of the Company. "~ e , , , ' The Data Processing Depart-ment designed and implemented g , ,, , g a new computerized system that , records, stores and retrieves infor- n 3 4 " mation on overtime hours, vaca- t_ ' tion time, and sick days for each ; department in the Company. The system greatly improves the Construction of Beaver Valley Power Station Unit No. 2 (right) is approximately 59% accuracy and timeliness og th i s complete. Duquesne Light owns 13.74 percent of Unit No. 2, which is scheduled to go on line in 1986. Like Unit No.1 (left), Unit No. 2 is jointly owned by members of the Central infermation for better manage- Area Power Coordination (CAPCO) group but is being constructed and will be operated by ment control. Duquesne Light. For more information on CAPCO, see the inside back cover of this report. A systems plan, covering the next three to five years, has been Helping Customers Reduce that identifies the best opportuni-developed and is being imple- Their Electric Bills ties for savings. We also con-mented by the department. The The desire to save on energy is ducted energy conservation semi-plan identifies potential systems much more widespread than the nars for residential customers and projects, resources and man- knowledge of how to do it cost- load management seminars for power requirements, establishes effectively. During 1982, Duquesne managers in business and indus-priorities and designs implementa- Light mailings offered residential try. A Duquesne Light employee, tion programs. customers a home energy audit Jane Cricks, serves as a radio COST OF FOSSIL AND NUCLEAR FUEL hostess. Her weekly 90-minute Employees and Union Contracts Cenu Per question-and-answer show covers Experience is an important factor " w eru a wide range of energy conserva-behind the managemant audit's 18L tion and homemaking topics. recognition of our employees' f]. professionalism. The average see New Headquarters Location Duquesne Light supervisory / C The recent relocation of employee has 15 years experi- [, j Duquesne Light's headquarters once with the Company (yet is into 13 floors of One Oxford Cen-Y '1 only 40 years old). . . tre provides long-term relief from Our union represented 8 !' three problems: serious over-employees are members of the p^ f/ crowding in the old headquarters, International Brotherhood of Elec-trical Workers, AFL-CIO or the see
<j. .
4e3 high maintenance costs and low energy efficiency. (It would have UMWA. Our two-year contract with the IBEW runs until October 1, n i (// been too costly to renovate our old headquarters.) Also, the new 1983. Our hourly coal mine f- offices will give our employees a employees are covered by the #- } more productive, pleasant working industry-wide Bituminous Coal Wage Agreement, which runs until 4 g y environment. The downtown Me" Pittsburgh office space market September 30,1984. [ <W was extremely competitive at the Duquesne Light had 4,960 g~ time we were looking for space. employees at the end of 1982. n We were able to negotiate a very F > >- favorable 20-year lease for our 1972 73 '74 '75 '76 '77 '78 '79 '80 '81 '82 13
Company Rcport on was approved at the 1982 Annual Meeting of Stock-holders. Wir examination was rnade in accordance Financial Statements with generally accepted auditing standards and The Company is responsible for the financial informa- included a review of the system of internal accounting tion and representations contained in the financial controls and tests of transactions to the extent they statements and other sections of this Annual Report. considered necessary to provide reasonable assur- . The Company believes that the financial statements ance that the financial statements are not misleading have been prepared in conformity with generally and do not contain material errors. accepted accounting principles appropriate in the cir- The Board of Directors has an Audit Committee cumstances to reflect, in all material respects, the composed of four non-officer direct >s which met four substance of events and transactions that should be times in 1982. The Audit Committee has the following - included and that the other information in the Annual duties and responsibilities: (1) recommend the inde-Report is consistent with those statements. In prepar- pendent public accountants; (2) review the planned ing the financial statements, the Company makes scope and results of their audit and other services to informed judgments and estimates based on currently be performed; (3) review the financial statements and available information of the effects of certain events the related report of the independent public at: count-and transactions. ants; (4) review with the officers, internal auditors and The Company maintains a system of internal the independent public accountants the adequacy of accounting controls designed to provide reasonable the Company's system of internal accounting control, assurance that the Company's assets are safe- including their recommendations with respect thereto; guarded and that transactions are executed and and (5) review the planned scope and results of the recorded in accoraance with established procedures. intemal audit function. The independent public There are limits inherent in any system of internal con- accountants and internal auditors have full and free trol based on the recognition that the cost of such a access to the Audit Committee and meet with it, with system should not exceed the benefits to be derived. and without management being present, to discuss ~ The system of internal accounting control is supported internal accounting controls, auditing and financial by wntten policies and guidelines and is supplemented reporting matters. by a staff of internal auditors. The Company believes that the internal accounting control system provides reasonable assurance that its assets are safeguarded and the financial information is reliable. (, , QQ [ The accompanying consolidated financial state- C. M. Atkinson John M. Arthur ments have been audited by Deloitte Haskins & Sells, Vice President Chairman of the Board and , independent public accountants, whose appointment Fiscal President Opinion of Independent Certified Public Accountants DELOITTE HASKINS & SELLS Certified Public Accountants Two Gateway Center .. Pittsburgh, Pennsylvania 15222 TO THE DIRECTORS AND STOCKHOLDERS in our opinion, such consolidated financial state-OF DUQUESNE LIGHT COMPANY: ments present fairly the consolidated financial position of Duquesne Light Company at Decem-We have examined the consolidated balance ber 31,1982 and 1981 and the results of its opera-sheets of Duquesne Light Company as of tions and the changes in its financial position for December 31,1982 and 1981 and the related statements of consolidated income, retained each of the three years in the period ended December 31,1982, in conform,ty i with generally earnings, capital surplus and changes in financial accepted accounting principles applied on a position for each of the three years in the period consistent bas,s. i ended December 31,1982. Our examinations were made in accordance with generahy = accepted auditing standards and, accordingly, included such tests of the accounting records Qg and such other auditing procedures as we con- _ sidered necessary in the circumstances. February 17,1983 14
Duquesne Light Company Statement of Consolidated Income For the Three Years Ended December 31,1982 (Tbusands of Donars. Except Per share Amounts) 1982 1981 1980 ELECTRIC OPERATING REVENUES . . . . . . . . . . . . . . .. .... $746,462 $786,229 $674,744 OPERATING EXPENSES: Fuel .......................... .... .... .. . .... . . ...... 229,693 242,871 202,797 Purchased power (sales)-net . . ... .. ...... . .. ...... (23,172) 16,189 18,524 Other operation . . . . . . . . . . . . . . . . ... ... ............. ... .. 126,151 113,423 99,251 Maintenance (Note N) ......... ......... ..... ...... ..... 66,855 63,106 60,401 Depreciation . . . . . . . . ................. ............ 62,939 60,854 53,316 Taxes other than income taxes (Note N) .. .... ......... . 57,476 57,694 47,007 income taxes (Note H) . . . . . . . . . . . . . . . . . .. .......... 71,213 72,263 60,654 Total Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . 591,155 626,400 542,580 OPER ATING INCOM E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 155,307 159,829 132,164 OTHER INCOME: Allowance for equity funds usea during construction . . . . . . . . . . . . . . 35,415 24,619 22,325 income taxes-credit (Note H) .......... .. ........... ..... 17,906 14,462 10,011 Other income and deductions-net . ....... .................. 8,913 3.467 4,424 Total Other income . . . . . .... .... .. ..... .. . . 62,234 42,548 36,760 INCOME BEFORE INTEREST CHARGES . . . . . . . . . . . . . . . . . . . . . . . . 217,541 202.377 168,924 INTEREST CHARGES: Interost on iong-term debt . ... ... ... ..... ............. 111,726 97,404 80,558 Othor interest .. ............ ................ .... . ....... 3,471 6,957 4,267 Allowance for borrowed funds used during construction. not of income taxes . . ... . ........... ... ............. (14,853) (11,393) (9,196) Total Interest Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,344 92,968 75,629 INCOME FROM CONTINUING ELECTRIC OPERATIONS BEFORE EXTRAORDINARY GAIN . . . . . . . . . . . . . . . . . . .............. 117,197 109,409 93,295 DISCONTINUED STEAM HEATING OPERATIONS (Note C): Loss from operations of discontinued steam heating subsidiary . . . . (924) (538) (333) Loss on disposition of discontinued steam heating subsidiary ..... (9,000) - - INCOME BEFORE EXTRAORDINARY GAIN ........ ... .... . . 107,273 108.871 92,962 EXTRAORDINARY GAIN ON EARLY EXTINGUISHMENT OF BON DS (Note D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,609 - - N ET IN COM E . . . . . . . . . . . .......... . ................... ... 116,882 108,871 92,962 DIVIDENDS ON PREFERRED AND PREFERENCE STOCK ... ...... 22,701 22.976 23,353 EARNINGS FOR COMMON STOCK . . . . . . . . . . . . . . . . . . ...... . $ 94,181 $ 85,895 $ 69,609 AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (000) .. 48,236 41,764 38,267 EARNINGS PER SHARE OF COMMON STOCK: Income From Continuing Electric Operations . . . . . . . . . . . . . . . . . . . . . . $ 1.96 $ 2.07 $ 1.83 Loss From Discontinued Steam Heating Operations (Note C) . . . . . . (.21) (.01) (.01) Extraordinary Gain (Note D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 - - N e t I n co m e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.95 $ 2.06 $ 1.82 DIVIDENDS DECLARED PER SHARE CF COMMON STOCK . . . . . . . . $ 1.90 $ 1.85 $ 1.80 The accompanying Notes to Financial Stateraents are an integral part of these statements. I I l 15 1 a
Duquesae Light Company Consolidated Balance Sheet December 31,1982 and 1981 (Thousands of Donars) 1982 1981 ASSETS PROPERTY, PLANT AND EQUIPMENT: Electric plant: In service . . . . . . . . . . . . . . . . . . . . . . . ... . .. .. .. .. ..... ...... $2,347,640 $2,202,613 Construction work in progress . . .... . .... . .. ..... .. ..... .. 675,621 582,734 Held for future use . . . ... ... ... . ..... .... ........ ...... 1,293 825 Total wctric plant . . . . . . . . . . ... ...... .......... ..... 3,024,554 2,786,172 Steam heating plant (No's C): In service .... ... . .. . ... . .. . .... ....... ..............
- 23,371 Construction work in progress ..... . . ... .... ............
- 210 Total property, plant and equipment . . . . ... . ... . ... ........ 3,024,554 2,809,753 Less accumulated depreciation . .............. ............. _504,683 477,009
~
Property, Plant and Equipment-Net . . . . . . . .. ..... ........ 2,519,874 2,332,744 4 OTHER PROPERTY AND INVESTMENTS: Nonutility property (at original cost less accumulated depreciation of
$308 and $278, respectively) .. . . .. .. ...... ........ . 2,008 1,565 M;scelianeous investments . . . .. . .... ... . .. ... ....... 8,489 275 Total Other Property and Investments . . . .. . . .. .... .... 10,497 1,840 CURRENT ASSETS: .
Cash and temporary cash investments (at cost which approximates market) 33,663 50,655 Accounts receivable: Customers (less reserve for uncollectible accounts of
$2.270 and $2,242 respectively) . .. ... .. . ... .. . ........ .... 60,177 71,089 Tax refund .. . . .. . ..... .... .. ..... .............. 5,404 2.875 Other . . . . .. .. .............. ...... .... ......... .... . 21,284 20,386 Materials and supplies (generally at average cost):
Coal . . . . ... .. .. . ... . .. ... ... . ........ ...... .. 69,194 53,111 Other operating and construction . . . . . . . ... .. .... ...... 33,964 30,767 Deferred income taxes . . . . . . . . . . .. . . ... .. . .. ............. 7,265 - Other current assets . . . . . . . . . .. . ......... .. ..... ... ...... 13,851 12,000 Total Current Assets . . . . . . . ....... ........ ... ........ ... 244,892 240,883 DEFERRED DEBITS: Extraordinary property losses (Note B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,334 31,443 Deferred coalcosts (Notes G and M) .. . . .. ......................... 18,338 15,669 Other deferred debits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . ... .. 49,476 45,998 Total Deferred Debits . . ... ................... . ... .......... 108,148 93,110 Total .......... .......... . .................... ..... 52,883,411 $2,668.577 The accompanying Notes to Financial Statements are an integral part of these statements. 16 r
l 1982 1981 LIABILITIES CAPITALIZATION (Note E): . Common Stock (authorized-60.000,000 shares; outstanding-53,276,525 and 45.302,520 shares, respectively) . . . . . . . . . . . . . . . . . . . .......... .. S 53,277 $ 45,303 Ca pital surplu s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........ 649,376 550,244 R e tained ear ning s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168,784 167,149 Total Common Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 871,437 762,696 Non. redeemable Preferred and Preference Stock . . . . . . . . . . . . . . . . . . . . . . 156,137 156,137 Redeemable Preferred and Preference Stock,less sinking fund and purchase requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... 140,829 143,924 First mortgage bonds (less sinking fund requirements and current maturities) 1,006,637 983,870 Other long term debt (less current maturities) . . . . . . . .... . ... . ........ 199,934 176,682 Unamortized debt discount and premium-net . . . . . .... ..... .... . .. (9,488) (9,453) Total Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,365,486 2,213,856 CURRENT LIABILITIES: Long. term debt maturing within ore year . . . . . . . . . . . . . . . . . . . . . . ......... 12,500 14,000 Accounts payable . . . . . . . . . . . . . . . . . .. ...... .... .. .... . .. 98,399 80,010 Accrued income taxes (Note H) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 4,931 4,427 . Other accrued taxes . . .... . . . . .. . . . .. . 13,658 18,381 Energy cost rate refunds . . . . . . . .. . . .. .. .. ..... ....... 9,974 - Accrued interest . . . . . . . . . . . . . . . . .... .. .... .. ...... .... . .. 27,497 24,342 Dividends declared . . . . . . . . . . . . . . . . . .... .............. ......... 30,302 27,232 Sinking fund and purchase requirements (Note E) .. ....... ...... . . . 10,987 9,733 Reserve for loss on diccontinued steam heating operations (Note C) . . . . . . . . . . _ 2,698 - Total Current Liabilities . . . . .... .. . . . ........ . .. 210,946 178,125 DEFERRED CREDITS: 5 Investment tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _ . . . . . . . . . . . . . . . 126,447 109,866 Accumulated deferred income taxes . . . . . . ......... .. ........... ..... 172,600 158,463 Other deferred credits .. .... ................ ....... ... .... ... .. 7,932 _ 8.267 Total Deferred Credits . . . . . . . . . .. ... .. . ................ 306,979 276,596 -- COMMITMENTS AND CONTINGENT LIABILITIES (Notes G, I, L and M) ..... . Total . . ... ..... .. .. .. ........ ................ ..... $2,883,411 $2.668,577 17 _ - - - _ _ _ _ _ _ _ _ _ _ _ _ - . _ __ _ _ a- um ain
Duquesne Ught Company Statement of Changes in Consolidated Financial Position For the Three Years Ended December 31,1982 (Thousands of Dollars) 1982 1981 1980 SOURCE OF FUNDS: Continuing electric operations: Income from continuing electric operations before extraurdinary gain $117,197 $109,409 $ 93,295 llems not affecting working capital: Depreciation . . . . . . . . . . . . . . . . . . . . . .... .... . 66,303 63,560 5S,156 Investment tax credit deferred-net . . . . . . . . . . .... .. 17,335 11,524 16,021 Income taxes deferred-net (noncurrent portion) . . . . . . . . . . 18,466 38,040 17,550 Allowance for equity and borrowed funds used during construction . . . . . . . . . . . . .... . ... ... .. (50,268) (36,012) (31,521) Total........ . . .......... . .. .. ... 169,033 186.521 151,501 Discontinued steam heating operations . ... .. .. . ... ... (9,924) (538) (333) Items not affecting working capital (including depreciation: 1982, $595; 1981, $610; 1980, $581) . . ....... . (349) 690 576 Total From Operations (excluding extraordinary gain) . 158,760 186,673 151,744 Extraordinary gain on early extinguishment of bonds ... . . . . 9,609 - - Sale of bonds . . . . . . . . . . . . . . . . .. .. . .. . .... . 65,000 80,000 110,000 issuance of Common Stock .. . . ..... . .. . ....... . 107,369 61,332 65,309 Nuclear fuel obligations .. . . .. . ... .. .... 24,221 - - Increase (decrease) in notes payable . .... . .. ..... .
- (35,000) 24,000 Construction costs reimbursed by trustees from proceeds of pollution control financings . . ... .. . ...... ... . . ....... - 50,000 3,223 Decrease in working capital (exclusive of current maturities of long-term debt) (a) . . .. . . . . .. 30,312 - -
Total Source of Funds . . ... .... .... ....... . $395,271 $343,005 $354,276 APPLICATION OF FUNDS: Construction expenditures (net of allowance for equity and borrowed funds used during construction) . .. .. . . . . . .... $231,022 $178,942 $209,778 Dividends on capital stock ..... ... . . .. ... . ....... 115,247 100,268 93,188 Reduction of first mortgage bonds ... . .. . . . .. .. ... . 43,852 - 12,000 Sinking fund and purchase requirements . . . . . . . . . . . . . . . . . . . . . 2,691 4,461 3,740 Deferred coal costs . . . . . . . . . . . . . . . . . . . ... . .. .. . . . 2,669 15,355 314 Other-net . .. ........ ... .. . ... . ... . ..... ...... (210) 15,679 7,202 increase in working capital (exclusive of current maturities of long. term debt and notes payable) (a) . . ... .......... .. - 28,300 28,054 Total Application of Funds . .... ...... ........ $395,271 $343,005 $354,276 (a) The components of working capital (exclusive of current maturities of long term debt and notes payable) were as follows: Current assets: Cash and temporary cash investments . ............ . $ 33,663 $ 50,655 $ 3,550 Accounts receivable . . . . . . . . . . . . . . . .. ...... . ... ... 86,955 94,350 84,816 Materials and supplies and other current assets . . . . . ... . 117,009 95,878 111,892 Deferred income taxes .... .. ... .. .... . . ... . 7,265 - - Total ............... ....... . .... .. ..... . .. 244,892 240,883 200,258 Current liabilities: Accounts payable and accrued interest . . . . . . . . . . . . . . . . . . . . . . 125,896 104.352 87,297 Accrued tax e s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,589 22,808 30,023 Energy cost rate refunds . . . . . . . . . . . . . . . . . . . . . .. .. . .... 9,974 - - Dividends declared ........... ... ................ .. .. 30,302 27,232 23,889 Sinking fund and purchase requirements . . . . . . . . . . . . . . . . . . 10,987 9,733 10,591 Reserve for loss on discontinued steam heating operations . . . . . . . 2,698 - - Total .... ...... ................... ....... ... ... . 198,446 164,125 151,800 Working capital at close of year . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 46,446 76.758 48,458 Working capital at beginning of year . . . . . . . . . ....... . 76,758 46,458 20,404 increase (decrease) in working capital (exclusive of current maturities of long-term debt and notes payable) . . . . . . . . . . . . . $(30,312) $ 28,300 $ 28,054 The accompanying Notes to Financial Statements are an integral part of these statements. 18
Duquesne Light Company
^
Statement of Consolidated Retained Earnings For the Three Years Ended December 31,1982 (Thousands of Dollars) 1982 1981 1980 BALANCE AT BEGINNING OF YEAR . . . . . . . . . . . . . . . . . . . . . . . . . $167,149 $158,546 $158.772 i NET INCOME FOR THE YEAR . . . . . . . . . . . . . . ... . ..... .. 116,882 108,871 92.962 Total....... .. .... ............. . .... ....... . 284,031 267,417 251,734 DEDUCT: Cash Dividends Declared: Preferred Stock: 4 % Serie s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,100 1,100 1,100 . 3.75% Series . . . . . . . . . . . . . . .. ........... .... .. 281 281 281 : 4.15% Series . . .. .... .. .... ..... .... .. ... . 291 291 291 4.20% Series . . .. .... .... ..... .. . .. ......... 210 210 210 < 4.10% Series ... .. ..... ......... ... ..... ... . ... 246 246 246
$2.10 Series ............ .... .. .. .. .. ........ 336 336 336
$8.64 Series . . .. ... .. . .. . .. . ....... . 2,271 2,323 2,375
$7.20 Series . .... . ...... . . .... . .. ... . ... 2,520 2,520 2,520
$8.375 Series . . . . .. .. .... . ............ .. . 2,512 2.512 2.512 _
Preference Stock:
$7.50 Series . .......... .. ........... .. .... .. 2,038 2,119 2,195
$2.75 Series . . . . . ... ........ . .. .. .... ......... 1,035 1,177 1,426
$2.315 Series . . . . . . . ..... . . ........... . .. .. 2,778 2,778 2,778 i
$2.10 Series . . . .. ............. . .. ............. 2 520 2,520 2,520
$9.125 Series . . . . . . . . . . . . . . . . . . . . . . . . . . .... .... . 4,563 4,563 4,563 Common Stock (Per Share: 1982-$1.90; 1981-$1.85; 1980-$1.80) 92,546 77.292 69,835 Total cash dividends .. . . ... . .... ... . ... 115,247 100,268 93,188 BALANCE AT CLOSE OF YEAR . . . . . . . . . . . . . . . . . . . . ... .. . .. $168,784 $167,149 $158,546 Statement of Consolidated Capital Surplus For the Three Years Ended December 31,1982 (Thousands of Dollars) 1982 1981 1980 B ALANCE AT BEGINNING OF YEAR . . . . . . . . . . . . . . . . . . . ....... $550,244 $494,228 $433.984 Premium on common stock issued . . . . . . . . . . . . . . . . . . . . .. . 99,395 56,196 60,693 Expense of issuing capital stock (debit) . . . . .. ....... .. ...... (263) (180) (449)
BALANCE AT CLOSE OF YEAR , . . . . . . . . . . . . . . . . . . . . . .. $649,376 $550,244 $494,228 The accompanying Notes to Financial Statements are an integral part of these statements. - 19 mismammman
pany provides for decontamination and dismantiing Notes to Financial costs for the Beaver Valley No.1 nuclear generating Statements unit in accordance witn tne provisions of tne orders of the Commission. The Company is allowed to recover A.
SUMMARY
OF ACCOUNTING POLICIES: annual decommissioning annuity payments to provide for the decommissioning of the nuclear related com- = Consolldation ponents. Such costs are currently estimated to be The consolidated financial statements include the approximately $30,000,000. The Company deposits Company and its wholly-owned steam heating ain mes b a M funhM has Wn estab subsidiary. See Note C concerning disposition of the lished to pay for such costs. At December 31,1982, subsidiary. $1,199,000 was included in the Decommissioning Trust Property, Plant and Equipment Fund, which represents the aggregate value of reve-The properties of the Company are carried at original nue deposits and interest eamed on investments cost and, with minor exceptions, are subject to a first made by the trustee. Provisions for depreciation and mortgage lion. All maintenance and repairs and depletion of other Company property and the steam replacements of minor units of property are charged heating subsidiary's property are made on various to income. Replacements of retirement units of prop. bases such as tons of coal mined for coal properties. erty and betterments are charged to property. In con-Income Taxes nection with retirements, reserves are charged with Deferred income taxes are provided principally for dif-the carrying value, plus dismantling charges, less sal- ferences between depreciation for income tax pur-vage, of property retired. See Note C concerning dis- oses and depreciation for accounting purposes to position of the subsidiary,s properties. the extent permitted by the Pennsylvania Public Utility Revenues Commission for rate-making purposes, and for fuel Customer meters are read monthly or bimonthly and and extraordinary property losses deferred for bills are rendered on a monthly basis. Revenues are accounting purposes but deducted currently for recorded when billed. income tax purposes. In compliance with regulatory accounting, income taxes are allocated between oper-Allowance for Funds Used During Construction ating expenses and other income, principally with in accordance with the uniform system of accounts respect to interest charges related to construction prescribed by regulatory authorities, an allowance for work in progress. Investment tax credits are deferred funds used during construction ( AFC) is included in and amortized over the lives of the related f acilities. construction work in progress and credited to other income for AFC attributable to equity funds and to Deferred Fuel Costs interest charges for AFC attnbutable to borrowed The Company defers the difference between actual funds, not of income taxes. AFC is a non-cash item fuel costs and base fuel costs until the period in which and is computed using a composite rate, which is such costs are billed to its customers through its applied to the balance of construction work in prog- energy cost rate. The energy cost rate is based on ress and assumes that funds used for construction are projected costs, with provisions for subsequent provided by borrowings and by preferred, preference adjustments to actual cost. Any overcollections of and common stock equity. The rate, compounded revenues are refunded to customers. semi-annually, was 8.5%,7.6% and 7.4% in 1982,1981 Nuclear Fuel Costs and 1980, respectively. This accounting procedure The Company's share of nuclear fuel costs under non-results in the inclusion in property, plant and equip- , capitalized financing lease agreements is charged to mont of amounts considered by regulatory authorities fuel expense based on the quantity of electric energy as appropriate costs for the purpose of establishing generated and reflects a zero net salvage value for rates for utikty charges to customers. the leased nuclear fuel. In 1982 the Company capital-Depreciation ized acquisitions of nuclear material through a trust The Company provides for depreciation of electric arrangement that is intended to finance a portion of plant, exclusive of coal properties, on a straight-line the Company's requirements for nuclear fuel. A new basis determined in a manner consistent with applica. accounting pronouncement issued by the Financial ble Pennsylvania law and with methods applied by the Accounting Standards Board late in 1982 and becom-Pennsylvania Public Utility Commission in the determi. ing effective in 1984 will result in future capitalization nation of depreciation in rate proceedings. The Com. of the Company's nuclear fuelleases. 20
The Nuclear Wasta Policy Act cf 1982 provides for amount, net cf income taxis, from its customers ov:r the cdministration by the United Stat:s Department of a tin y ar period beginning on Jinuiry 29,1983. Energy (DOE) of a nuclear waste desposal fund and The Commission did not allow any retum on the en interim storage fund. The funds will be used to unamortized costs of either of the property losses. dispose of high-level radioactive waste and spent nuclear fuel from nuclear power reactors. Disposal C. DISCONTINUED STEAM HEATING costs will be borne by the owners and generators of OPERATIONS: such fuel and waste. Beginning on April 7,1983 the On August 30,1982 the Pennsylvania Public Utility Company will be required to provide for a fee of one Commission entered an order approving the applica-mill per killowatt hour on electricity generated and sold tion by the Company's steam heating subsidiary, Alle-by its nuclear power plants in addition to a one-time gheny County Steam Heating Company, to discon-f e for nuclear fuel used prior to April 7,1983. The tinue steam service to the public effective May 31, emount of the one-time fee and other related matters 1983 and to transfer to Pittsburgh Alleghei,y County are the subjects of proposed DOE regulations and the Thermal, Ltd. (PACT) a major portion of the subsidi-method of providing for such fees has not yet been ary's assets for nominal consideration. Tne order determined. Although no provision for such costs has became final on September 30,1982. The transfer of been made at December 31,1982, management the assets is expected to become effective on May 31, beheves that such costs should be recoverable from 1983. In addition, a lease to PACT of a steam generat-its customers. Ing plant for nominal consideration became effective on January 3,1983 after completion by the subsidiary Debt Discount, Premium and Expense of certain demolition work at the plant. Debt discount or premium and related expenses are The provision for loss on the disposition of the sub-amortized over the lives of the issues to which they sidiary's assets is estimated to be approximately pertain. $9,000,000 (net of income tax benefit of approximately
$8,712,000) and the loss from operations is approxi.
D, EXTRAORDINARY PROPERTY LOSSES: mately $924,000 (net of income tax benefit of approxi. In January 1980, the Company and the other CAPCO mately $1,028,000) for the nine months ended Sep-companies cancelled the construction of four nuclear tember 30,1082. The provision for loss on disposition generating units. The Company's share of the accu- includes estimated operating losses for the subsidiary mulated costs applicable to these units was of $1,100,000 (net of income tax benefit of approxi-
$34,528,000 as of December 31,1982. The Company mately $970,000) for the period October 1,1982 his received aproval from the Federal Energy Regu- through May 31,1983. The 1981 and 1980 operating latory Commission (FERC) and the Pennsylvania results have been reclassified to present separately Pub;ic Utikty Commission (Commission) to amortize the results of discontinued steam heating operations and recover from its customers these accumulated from continuing electric operations.
costs over a 10-year period beginning on January 29, At December 31,1982 assets and liabilities included 1983. A petition for reconsideration and modification in the consolidated balance sheet applicable to the has been filed by the Pennsylvania Consumer Advo* discontinued steam heating subsidiary were not mate-cate to the portion of the Comm!ssion's January 28, rial. Revenues from discontinued steam heating oper-1983 rate order allowing such recovery. ations for 1982,1981 and 1 were approximately On October 1,1982 the Shippingport Atomic Power $8,845,000, $10,996,000 and $15,071,000, respectively. Station was removed from commercial operation after notice from the United States Department of Energy D. EARLY EXTINGUISHMENT OF BONDS: that it was planning to terminate operation of the light in December 1982, the Company exchanged 1,406,898 water breeder reactor core at the station as of that shares of Common Stock for approximately date. The Company has requested approval from $29,852,000 principal amount of outstanding First FERC to record the undepreciated cost of the station Mortgage Bonds which were owned by an investment as an extraordinary property loss and to amortize such banking firm. The exchange resulted in a nontaxable loss over a ten-year period beginning on the date that . extraordinary gain of approximately $9,609,000, or $.20 rates providing for the recovery of such costs first per share, which is the difference between the become effective. Consistent with this request, the . exchange value of the Common Stock and the net Company reclassified the net amount to extraordinary - carrying amount of the bonds. property losses. The Company has received approval from the Commission to amortize and recover this
'21 L_____ _ _ ._______._____m______. ____ ___ __ - ..
E. CAPITAUZATION: Capital Stock: December 31,1982 December 31,1981 Shares Shares Outstanding Amount Outstanding Amount Common Siock-51 par value (1) . 53,276,525 $ 53,276,525 45,302.520 $ 45,302,520 Capital Surplus: Premium on Common Stock . . $655,993,654 $556,598,987 Capital stock expense (debit) (7,065,026) (6.607,112) Other. 447,147 252,261 Total capital surplus . $649,375,775 $550.244,136 Non-redeemable Preferred and Preference Stock: Preferred Stock-550 par value (cumulative) (1) 4% Senes (2) 549,969 $ 27,498,450 549,969 $ 27,498,450 3.75% Senes (2) . . .. . 150,000 7,500,000 150,000 7,500,000 4.15% Series (2) 140,000 7,000,000 140,000 7,000,000 4.20% Senes (2) . . .. . 100,000 5,000,000 100,000 5,000,000 4.10% Series (2) , 120,000 6,000,000 120,000 6,000,000
$2.10 Senes (2) . . 160,000 8,000,000 160,000 8,000,000
$7.20 Senes (3) . . 350,000 17,500,000 350,000 17,500,000 Preference Stock-$1 par value (cumulative) (1,
$2.315 Series (4) . . 1,200,000 1,200,000 1,200,000 1,200,000
$2.10 Series (4) 1,200,000 1,200,000 1,200,000 1,200,000 80,898,450 80.898,450 Premium on Non-redeemable Preferred and Preference Stock , . . 75,238,760 75,238,760 Non-redeemable Preferred and Preference Stock . $156,137,210 $156.137,210 involuntary liquidation value . . $155,998,450 $155,998,450 Redeemable Preferred and Preference Stock:
Preferred Stock-$50 par value (cumulative) (1) 58.64 Series (3) . . 262,872 $ 13,143,600 268,872 $ 13,443,600
$8.375 Series (3) . . . .. 300,000 15,000,000 300,000 15,000,000 Preference Stock-$1 par value (cumulative) (1)
$7.50 Series (3) 268,920 268,920 280,120 280.120
$2.75 Series (4) . 365,020 365,020 385,100 385,100
$9.125 Senes (3) . . 500,000 500,000 500,000 500,0no 29,277,540 29,60i',820 Premium on Redeemable Preferred and Preference Stock . 113,027,160 114,917,880 Purchase and Sinking Fund Requirements . (1,475,500) (602,500)
Redeemable Preferred and Preference Stock . , $140,829,200 $143,974,200 involuntary liquidation value . . . $140,829,200 $143,924,200 (1) Authonzed shares: Common Stock--60,000,000; Preferred Stock---4.000,000; and Preference Stock--8,000,000. (2) $50 per share involuntary liquidation value. (3) $100 per share involuntary liquidation vatte. (4) 525 per share involuntary liquidation value. The following summary indicates the changes in the number of shares of Common Stock outstanding during 1982,1981 and 1980: Year Ended December 31, 1982 1981 1980 Common Stock: Shares outstanding at beginning of year .. . 45,302,520 40,166,083 35,550,000 Issuances: Common Stock sales . . . 4,500,000 4,100,000 4,000,000 Dividend Reinvestment Plan . 1,962,320 902,977 446,172 {j, Employee Stock Ownership Plan . . .. 104.787 133,460 169,911 -2 Exchanged for outstanding First Mortgage Bonds .. 1,406,898 - - .Y' Shares outstanding at end of year . .. .. 53,276,525 45,302,520 40,166,083 22
. . ., m - . , ._ ,, ,,. .
The number of nhares reserved at December 31, share. The Company may on a non-cumulative basis 1982 for issuance under the Dividend Reinvestment retire an additional 55,000 shares in each such year. Plan and the Employee Stock Ownership Plan are The shares of $9.125 Preference Stock are subject to 888,531 and 591,842, respectively. In January 1983, an a cumulative sinking fund beginning with the year 1984 additional 3,000,000 shares were registered for the and continuing through 1997 inclusive which will retire Dividend Reinvestment Plan. 33,300 shares on January 1 in each year at $100 per The outstanding Proforence Stock of the Company share. The Company may, on a non-cumulative basis, is callable on not less than thirty days' notice at the retire an additional 33,300 shares in each such year, following redemption prices plus accrued dividends: provided that the Company may not redeem through $7.50-redeemable at $112 through April 1,1983; $105 the exercise of this option more than an aggregate of through April 1,1986; $103 through April 1,1989; and 150,000 shares. The Preference Stock is entitled to $101 thereaf ter; $2.75-not redeemable prior to quarterly cumulative dividends except that no August 1,1984 through certain refunding operations, dividends may be paid if dividends on any series of the otherwiso redeemable at $27.75 through July 31,1984; Preferred Stock are accumulated and unpaid, in the $26.50 through July 31,1989; and $25.25 thereafter; event that six quarterly dividends on any series of $2.315-redeemable at $26 60 through March 31,1986; Preference Stock are in default, the holders of the $25.90 through March 31,1991; and $25.25 thereafter; Preference Stock are entitled to elect two directors $2.10-redeemable at $26.40 througn March 31,1987; until all dividends in arrears have been paid. $25.70 through March 31,1992; and $25.00 thereaf ter; The shares of $8.64 Preferred Stock are entitled to a $9.125-not redeemable prior to January 1,1989 non-cumulative purchase fund under which the Com-through certain refunding operations, otherwise pany offers to purchase annually up to 6,000 shares at redeemable at $100 plus the applicable redamption not more than $100 per share. The shares of $8.375 premium decreasing from $7.20 in 1983 to $.48 in 1998. Preferred Stock are subject to a cumulative sinking The outstanding Proferred Stock of the Company is fund beginning with the year 1984 which will retire callable on not less than thirty days' notice at the fol- 12,000 shares on April 1 in each year at $100 per lowing redemption prices plus accrued dividends: share. The Company may on a non-cumulative basis 4%-$51.50; 3.75%-$51.00; 4.15%-$51.73; 4.20%- retire an additional 12,000 shares in each such year.
$51.71; 4.10%-$51.75; $2.10-$51.84; $8.64- The Preferred Stock is entitled to quarterly cumulative redeemable at $107 through September 30,1984; $104 dividends. In the event that four quarterly dividends through September 30,1989; and $101 thereafter; on any series of Preferred Stock are in default, the $7.20-redeemable at $102.50 through March 31,1987; holders of the Prderred Stock are entitled to elect a and $101 thereafter; $8.375-not redeemable prior to majority of the Board of Directors until all dividends in April 1,1983 through certain refunding operations, oth- arrears and current dividends have been paid.
erwise redeemable at $112 through March 31,1988, The combined aggregate sinking fund and manda-and thereaf ter at $100 plus the applicable redemption tory purchase requirements for the next five years as premium decreasing from $5.03 in 1988 to $.34 in 2003. of December 31,1982 are as follows: Redeemable Preferred and Preference Stock: Year Ending Sinking Fund and Mandatory The shares of $7.50 Preference Stock are entitled to December 31, Purchase Requirements a non-cumulative purchase fund under which th 1983 Company offers to purchase annually at $100 per share up to 4% of the number of shares originally 1984 $2[775[500 7 805 000 1985 7,805, @ issued. The shares of $2.75 Preference Stock are sub-1986 7,805, @ ject to a cumulative sinking fund which will retire 1987 7,805,000 55,000 shares by August 1 in each year at $25 per The following summary indicates the changes in the number of shares of Redeemable and Non-redeemable Preferred and Preference Stock outstanding during 1982,1981 and 1980: Year Ended December 31, 1982 1981 1980 Preference Stock: Shares outstanding at beginning of year 3,565,220 3,678.650 3,751,360 Purchases and redemptions -$2.75 Series . . . . (20,080) (103,750) (61,150)
-$7.50 Series . . (11,200) (9,680) (11.560)
Shares outstanding at end of year . 3,533,940 3,565,220 3,678.650 Preferred Stock: Shares outstanding at beginning of year 2,138,841 2,144,841 2,150,841 Purchases--$8f>1 Series . . (6,000) (6.000) (6.000) Shares outstanding at end of year . . 2,132,841 2,138,841 2,144,841 23
^
First Msrtg:gs Ocnds (amount authorized is unlimited by indenture): December 31, 1982 1981 Senes due September 1,1982 (3% %) . . . . . $ - $ 14.000,000 Senes due September 1,1983 (3%%) .. . .. . 12,0C0,000 12,000,000 Senes due July 1,1984 (3%%) . . . . . 16,000,000 16,000,000 Senes due Apnl 1,1986 (3%%) . . . 20,000,000 20,000,000 Series due Apnl 1,1988 (3% %) .. . . . 15,000,000 15,000,000 Series due March 1,1983 (4%%) . . . .. . . . 10,000,000 10,000,000 Senes due February 1,1996 (5%%) . . . .. . . . 22,800,000 25,000,000 Sones due February 1,1997 (5% %) . . . .. .. . . 24,600,000 25,000,000 Senes due February 1,1998 (6%%) . . . . . 34,700,000 35,000.000 Senes due January 1.1999 (7%) . . . . ... .. 30,000,000 30,000,000 Senes due July 1,1999 (7%%) . . .. . . 28,947,000 30,000,000 Senes due March 1,2000 (8%%) . . . . . 30,000,000 30,000,000 Senes due March 1,2001 (7%%) . . . . . . 35,000,000 35,000,000 Senes due December 1,2001 (7%%) , . . .. . . 26,461,000 35,000,000 Senes due June 1,2002 (7%%) . . . . . . 28,470,000 35,000,000 Senes due January 1,2003 (7% %) . .... . ,, . . .. 32,670,000 40,000,000 Series due July 1,2003 (7%%) . . . . .. . 35,000,000 35,000,000 Series due Apnl 1,2004 (8% %) . . .. .. 44,100,000 45.000,000 Series due March 1,2005 (9%%) . . . .... . 50,000,000 50,000,000 Senes due June 1,2006 (9%) . . .. . , . . 80,000,000 80,000,000 Senes due Apnl1,2007 (8%%) .. . .. . 97,400,000 100,000,000 Sones due February 1,2009 (10%%) .. . . 100,000,000 100,000,000 Senes due January 1,2010 (12% %) . . . 60,000,000 60,000,000 Series due September 1,2010 (14% %) . . . 50,000,000 50.000,000 Series due June 1,2011 (16%) . .. .. 80,000,000 80,000,000 Series due May 1,2012 (16% %) . . . 65p09,000 - Total. . . . 1,028,148,000 1,007,000,000 Less: Current matunties--Series due September 1,1982 (3% %) . . .
- 14,000,000 Current matunties-Senes due September 1,1983 (3%%) . . .. 12,000,000 -
Current sinking fund requirements . . ... 9,511,480 9,130,000 First Mortgage Bonds (less sinking fund requirements and current matunties) . . . 31,006,636,520 $ 983.870,000 Other Long-Term Debt: Pollution Control Obligations: Serial Matunty Average or Mandatory December 31 Date of Interest Reder.iption Final Issuance Rate Beginning Matunty 1982 1981 September 21,1972 5.49 % 1983 2002 $ 24,000,000 $ 24,000,000 June 21.1973 , 5.685 % 1984 2003 12,000,000 12,000,000 October 25,1973 5.755 % 1984 2003 16,000,000 16,000.000 August 13,1974 7.97 % 1989 2004 14,000,000 14,000,000 Apnl 2,1975 7,50 % 1993 2005 17,000,000 17,000,000 October 29,1975 8.40 % 1991 2005 18,000,000 18,MO,000 September 29.1976 . 6.90 % 1994 2011 15,000,000 15,000,000 March 24,1981. 12.00 % 2002 2011 50,000,000 50,000,000 Total. . . . . . 166,000,000 166,000,000 Less: Current matunties . . . ,, 500,000 - Pollution Control Obligations (less current maturities) .. 165,500,000 166,000,000 Nuclear Fuel Obligations . . . .. . .. .. 24,221,187 - 5% Sinking Fund Debentures (authorized $20,000.000) due March 1,2010 . .. .. 10,213,000 10.682,000 Total Other Long-Term Debt . . .. . . . . $199,934,187 $176,682.000 The pollution control obligations arise from arrange- The nuclear fuel obligations result from a trust monts between the Company and two local industrial arrangement providing a financing vehicle for the pre- = development authorities whereby the construction of curement of a portion of the Company's requirements certain pollution control facihties has been financed for nuclear fuel. Interest amounts applicable to the t'. rough the sale of bonds by those authorities, and trust are capitalized and included in construction work the Company is obligated to pay to the authorities in progress, at rates ranging from 1%% to 1%% over amounts equal to the principal of and interest on the the trustee's commercial paper rate. Trust obligations , authorities' bonds relating to such facihties, will be paid by the Company as the related nuclear fuelis withdrawn from the trust.
Sinking fund requirements and maturities for the ment; M N WMsfied by the ceh.a af property n@xt frve years for long-term oeot outstandy aclu- a64 tics a ;G%% of the Bonds required to be sic of the r.uclear fuel obligations. as of December redeemed, and the ponuuan control obligations. The 31,1982 are as fold: remaining 9Hng tr d requirement relates to the 5% Year Ending Mng Fund Sinking Funa Debentures. At December 31,1982, sink-December 31 Requirements Maturities ing fund requirements for the M Debentures had n sabsW W M83 aM N, and N %85 sWng 198' 161 $12 500,000
# " U# * "
1984 $10[326[480 10 48C- 16 700,000
**U '
1985 10,539*480 700,000 Totalinterest costs . incurred during 1982, i981 and tudv 10,551,480 20,700,000 1980 were $125,004,000, $111,331,000 and $91,091,000, 1987 10,576,480 800,000
.espective!y, of which $60,075,000, $42,982,000 and $37,788,000, respectively, were capitalized or The sinking fund requirements .in each ;G Nidte deferred, including allowance for funds useo during primarily to the First Mortgage Bonds, which require-construction.
F. SHORT-TERM BORROWING prevailing market price of similar coal rather than the ARRANGEMENTS: actual cost of Quarto coal. At December 31,1982 the At December 31,1982 the Company had lines of credit unrecovered cost of Quarto coal reflected in the Com-with two banks totaling $15,000,000, ail of which was pany's records was approximately $18,338,000, includ-unused. The range of interest rates under these lines ing $1,486,000 applicable to Quarto coalin Mventory. of credit are from prime rate less one half of one per. As required by the Interim Order, the Company is cent to the prime rate. There are no commitment fees deferring the excess of the actual cost of Quarto coal l or compensating balances associated with these lines over the cost allowed to bt recovered through its of credit. In addition, the Company has a $60,000,000 energy cost rata until recovery of the actual cost is revolving credit agreement available to DecemMr 15. permitted by the Commission. If recovery of such 1986, all of which was unused at December 31,1982. excess is disallowed, the amount deferred would be Borrowings outstanding at December 15,1986 may be charged to income in the year of disallower.a. There-converted to term notes payable in si)r Mual semi- after, any excess of actual cost ove De umount per-annual instaliments com,mencing Juno 15,1987 ano mitted to be recovered would be charged to income concluding December 15,1989. Interest rates fluctuate on a current basis. The deio ..is and methods of during the revolving and term periods, depending on ultimately recFW ; sucn deferrals were the subject l the puiod of borrowings, at percentages in excess of of discussba? between representatives of the Com-prime, Euro-Rate er CD rates. During the revolving peny and the Commission staff. Such discussions period there is a commitment fee of %% per annum resulted in the filing with the Commission of a Stipula-on the average unborrwed commitment. There is no tion Agreement, which sets forth a method intended to commitment fee during the term period. permit the eventual recovery of the accumulated During the years ended Dactc7 01,1982,1961 deferrals of the excess of Quarto coal costs over mar- ! and 1980 the maximum amount of short-term ket price. The administrative law judge assigned to the bortcwings outstanding was $37,000,006,560,140,000 investigation entered an order, subject to review by anu $63,500,000, the average daily short-term the Commission, approving the Stipu!ation Agree-borrowings outstanding were $1,559,000, $28,341,000 ment. On November 19,1982 C.u Commission and $23,408,000 and the weighted average daily inter- remanded the Stipulation Agreement to the adminis-est rate applicable to such short-term borrowings was trative law judge for hearings. Management of the ' 15.39%,17 p% and 12.47% respectively. Company believes that the deferred costs were pru- g-dently incurred and that the eventual outcome of the , G. DEFERRED COAL COSTS: Commission's investigation will not have a materiat The Company anc $c cther GAPCO companies 1 ave effect on the Company's financial position or results of made long term coal supply arrangements with operations. The CAPCO companies are continuing to Quarto Mining Compariy (Quarto), an unaffiliated ev60tc the economics of the Quarto arrangements . compa yA O wpply coal for the Bruce Mansfield Units. and aro considering various means for reducing pro-h Deew uc 1030 the Weylvania Public Uti&y duction costs. See Note M to the financial statements. Commissten (Commission) instituted an investigation into the reasonab;eness of the coct of coal supplied . by Quarto. By inWm Uroer entered January 12,1981 the Commission directed that, pending conc!=cn cf the investigation or further order of the Commission, the Company limit its recovery of the cost of Quarto coal through its energy cost rate to appioximately the 4 25 L _
H. INCOME TAXES: T;ti income taxis in 1982,1981 cnd 1980 wers comprised of the following components: 1982 1981 1980 included in operating expenses: Currently payable: Federal . . . . .. . . . . . 325,257 $20.519 $12.990 State . . . . . . . . .. .... .. ..... . 12,894 13.680 5.335 income taxes deferred-net: Federal . . .. . . .. . . .. ... .. ..... 13,997 26,000 17,063 State . . . .. . . ... .... ... . . .. (228) (1,057) 7,581 investment tax credit deferred-net . . ... . .. 19,493 13.041 17.685 Total . . . ... . . . ....... . . . .. .. 71,213 72.263 60,654 Included in other income (income taxes-credit); Currently payable: Federal . . . . . ... .. .. .... . (14,267) (11,523) (7,977) State . .. . . . . .. ... (3,639) (2.939) (2.034) Totalincome tax expense .. . . . .. S53,307 $57.801 $50.643 Taxes currently payable-federal and state . . . . . .. $20,045 - $19,737 $ 8,314 Taxes deferrod-net . .. ... .. ... 13,769 25,023 24,644 investment tax credit deferred-net .. . .. . .. ..... 19,493 13.041 17.685 Totalincome tax expense . . . ... 853,307 $57,801 $50,643 Total income tax expense is exclusive of income taxes applicable to discontinued steam heating operations. See Note C to the financial statements. Sources of income taxes dsferred and the tax effects were: Excess of tax over book depreciation . . . . . 314,490 $12,672 $18.249 Fuel costs expensed on tax retum and deferred on books . . (3,552) (3.062) 5,526 Investment tax credit carryforward recognized againstincome taxes deferred-net . . .. . .. . .
- 16,932 (13,844)
Extraordinary property losses expensed on tax return - and deferred on books . .. ... . . ... ..... .. 3,019 81 13,894 Other . . . .. .. . .. . . (ISS) (1,600) 819-Totalincome taxes deferred-net . .. .... . $13,700 $25,023 $24,644 Total i icome taxes from continuing electric operations were less than the amount computed by applying the statutory federal income 6 rate of 46% to income from continuing electric operations before income taxes. The reasons for this difference in each year were as follows: Computed federal income tax on continuing electric operations at statutory rate . . . 878,432 . $76,917 $66,211 - Increase (decrease) in taxes resulting from: Allowance for tu.2 med durir a construction . . . .... ..... . .. . (23,123) (16,565) . (* 4,500) Excess of tax over book depreciation . . . . . .. . . .. ... 1,131 . (577) 22 ' State income taxes, net of federalincome tax benefit ..... .. .. ... . 4,766 ~ 5,229 5,876 AmortizatKn of deferred investment tax credits .. .. . . ... . . (4,251) - (3,663) (3,090) Other-net .. . . . .. .. . . .. ..... .. (3,648) (3.540) (3,876) Totalincome tax expense .. . .. .. .. . $53,307 $57.801 - ~ $50.643 l l
- 1. PRIOR YEARS' INCOME TAXES:
The Company's income tax returns are settled - certain other issues of relatively minor importance for l through 1970 with the exception of the percentage 1971 through 1979. The Company expects that an ear-depletion issue discussed below. Income tax retums - lier court decision in favor of the Company concerning - for 1971 through 1979 have been examined, and the percentage depletion for the years 1956 through 1961 1980 and 1981 retums are being examined. The Inter .- will serve as the basis for settlement of the issue for- ~ nal Revenue Service assessed deficiencies regarding the years 1962 through 1979. Management of the - . the Company's computation of percentage depletion - Company believes that the settlement of federal and
- on coal mined for 1956 through 1961 and proposed state taxes will not significantly affect the Company's similar deficiencies for 1962 through '.9/0. u wo?! as financial position or results of operations.
s q-
' 26
J. EMPLOYEE BENEFITS: December 31. The Company has trusteed retirement plans to pro. 1981 1980 1979 vido pensions for all employees, except coal mine Actuanal present value of employees who are covered under a plan adm,nis- i accumulated plan benefits: tered by the United Mine Workers of America. Infor- Vested . . . . $151,756 $135,345 $126,308 mation concerning the plan covering coal mine Nonvested 11,566 10,750 10,562 employees is not determinabic and is not included in Total, $163,322 $146,095 $136,870 the data below. Pension costs are funded as accrued Net assets available for and include amortization of prior service costs over 30 benefits (at market value) $111,013 $107,798 $ 91,167 years. Pension costs charged to expense or construc-The Company is liable under the Federal Coal Mine tion for the years ended December 31,1982,1981 and 1980 were $12,313,000, $10,083,000 and $9,392,000, Health and Safety Act, as amended, and similar state laws for the payment of benefits to coal mine respectively. The increase in pension costs in 1982 and 1981 is due principally to a plan amendment effec-employees disabled by black fung and to their survi-vors and dependents. The estimated costs of provid-tive May 1,1981, increasing pension payments to employees retired prior to October 1,1979. The ing such benefits, including amortization of prior serv-accumulated plan benefits and net assets available ice costs over the remaining estimated life of the Warwick mine, are actuariall/ determined and accrued for benefits for the trusteed plans are presented as of on the basis of mine payroll costs and are deposited the December 31 benefit information dates. Th w th a trustee. Such costs were $1,417,000, $1,524,000 assumed rate of return used in determining th and $1,494,000 for the years ended December 31, actuarial present value of accumulated plan benefits was 5% for each year. 1982,1981 and 1980, respectively. At July 31,1982 (the date of the latest actuarial valuation), the unfunded prior service cost for these disability benefits was approximately $23,670,000. K. JOINTLY-OWNED GENERATING UNITS: The Company, together with other electric utilities, primarily the CAPCO companies, has an ownership interest in certain jointly-owned units. Information regarding the Company's share of such jointly-owned units as of Decem-bor 31,1982 is as follows (thousands of dollars): Company's Interest Utihty Plant Accumulated Construction Work Percentage unit in service Depreciation in Progress Ownership Megawatts Fort Martin No.1 . .. $ 45,833 $ 13,185 $ 187 50.0 276 CAPCO Units: Eastlake No. 5 . 49,900 9.861 582 31.2 198 Sammis No. 7 41,577 10,579 21,570 31.2 187 Bruce Mansfield No.1 72,115 13,042 261 29.3 228 Bruce Mansfield No. 2 . 20,200 2,960 502 8.0 62 Bruce Mansfield No. 3 . 70,956 4.952 455 13.74 110 Bruce Mansfield Common and Shared Fac& ties . . 57,969 10,809 3.301 Beaver Valley No.1 321,339 41,576 15,522 47.5 385 Beaver Valley No. 2 . 18 - 186,437 13.74 114 Beaver Valley Common Facihties . . ,, 43,847 3,999 35,366 Perry No.1. - - 181,722 13.74 165 Perry No. 2 . . . 163.664 13.74 165 Total . . $723,754 $110,963 $609.569 Under terms of the arrangements with the other expenses (fuel, maintenance and other operation owners of such jointly-owned units, the Company is expenses) of the jointly-owned units is included in the required to provice its own share of financing the cost corresponding operating expenses in the Statement
. of such units. The Company's share of the direct of Consolidated Income.
L LEASES: three CAPCO generating units. Rental payments are Rental payments in 1982,1981 and 1980 amounted to made monthly during the terms of the leases based
$17,679,000, $16,389,000 and $10,388,000, respectively, on the amount of nuclear fuelleased and the amount of which $15,393,000, $14,169,000 and $4,778,000 were of nuclear fuel burned. The nuclear fuelleases may be charged to operating expenses. The Company has an terminated by the lessees or lessors with notice as undivided interest in nuclear fuel lease agreements for defined in the agr3ements or by casualty or certain 27
other contingencies, including defluit by the 1:ssees. tion of two mines from which the coilis supplied. At in certin situations involving a termin: tion, the Dec mber 31,1982 the Company hId guar nteed the lessees may be required to purchase the leased obligations of Ouarto with respect to approximately nuclear fuel at the higher of fair market value or $57,209,000 of indebtedness and had guaranteed unamortized cost. At December 31,1982, the Com- lease obligations relating to approximately $28,999,000 pany's share of the lessor's unamortized cost of the of capital equipment for the mines. The Company leased nuclear fuel was $106,968,000 and the Com- expects that by 1984 it will have made further substan-pany expects to lease an additional $41,016,000 of tial guarantees with respect to additional indebted-nuclear fuel under current leasing arrangements. The ness and leased capital equipment, the amount of Company finalized a nuclear fuel trust arrangement in which will depend on the actual costs of further devel-1982 which will provide an alternative method of opment of the two mines. In general,it is contem-financing nuclear fuel. plated that the purchase prices to be paid for the coal The Company has certain buildings under lease, to be received under the foregoing arrangements will including its new corporate headquarters, subject to include amounts sufficient to service the obligations renewal options and in certain cases purchase so guaranteed. options. Under the terms of the coal supply contracts, which At December 31,1982 minimum rental payments, continue until December 31,1999 with options to based principally c.i estimated usage of nuclear fuel extend for ten additional years, the CAPCO compa-under lease and building rentals were as follows: nies must reimburse Ouarto for their share of the (Thousands of Dollars) Costs of oporating the Quarto mines, including those 1983 . $ 29,474 costs associated with mine construction, whether or y not they receive coal from Quarto. The Company's total payment under these contracts amounted to 1986 . 23,470 1987 ..... 19,646 $24,292,000 and $28,603,000 for the years ended 1988-1992 . . 80.229 December 31,1982 and 1981, respectively. AH 2. 69 The Company's estimate of future obligations for fixed costs associated with the Quarto coal supply The Company accounts for all of its leases (exclusive anangements as of the nuclear fuel trust arrangement described 1983. . .. . S 9,228,000 above) as operating leases in accordance with the manner in which the Company's rates have been 1986. . [ 8.608,000 established by the Pennsylvania Public Utility Com. 1987..... ... . .. 8,401.000 Aner 1987 . 86,245,000 mission. If the noncapitalized financing leases were . capitalized as of December 31,1982 and 1981, prop- The current price of Quarto coal to the CAPCO erty, plant and equipment-not would have been companies is based principally on the actual current increased by $117,538,000 and $64,978,000, respec- production costs plus amortization of certain produc-tively, with related increases in current liabilities and tion expenses which were not included in the price of long-term debt of $12,154,000 and $105,820,000, coal to the CAPCO companies during the develop-respectively,in 1982 and $4,722,000 and $60,644,000, ment period, which ended on May 31,1980. The cur-respectively, in 1981. The impact on not income of rent price of Quarto coal exceeds the current prevail-capitalizing such leases in each year would not be ing market price of coal. See Note G to the financial material. statements. M. COMMITMENTS AND CONTINGENT LIABILITIES: Beaver Valley Replacement Power Construction in connection with a February 20,1981 rate order, The Company's current estimate of construction the Pennsylvania Public Utility Commission found expenditures, exclusive of nuclear fuel and allowance that the Company had not proven that the costs of for funds used during construction, during the period replacement power during a 1979 outage of Beaver 1983 through 1987 amounts to approximately $974 mil- Valley Unit No.1 were prudently incurred. lion, principally related to CAPCO generating units. On November 19,1982 the Commission adopted an order nisi which ordered refunds of $12.5 million over a Quarto Mining Company (Quarto) two-year period. The Company expects to appeal this The Company and the other CAPCO companies order if it becomes final. The Company and outside have made long-term coal supply arrangements with counsel do not agree with the Commission's order, Quarto, an unaffiliated company, to supply coal for the and no provision has been recorded by the Company Bruce Mansfield Units. As part of these arrangements for any such refunds. While the Company is unable to the individual CAPCO companies are severally, and predict what action the Commission or an appellate not jointly, guaranteeing their proportionate shares of court may ultimately take and although the amount of Quarto's debt and lease obligations incurred in con- such refunds cculd be substantial, management of the nection with the development, equipping and opera- Company believes that the replacement power costs 28
were prudently incurrad and that the eventual out- ment of NEIL's cbligations. come of this matter will not have a materia l effect on The Price Anderson Amendments to the Atomic the Company's financia! position or results of Energ/ Act limit liability to third parties to S560 enillion operations. for each nuclear incident. Coverage of the first $160 million of such liability is provided through ANI and Nuc! car Insurance Mutual Atomic Energy Liability Underwriters The Company has coverage with American Nuclear ("MAELU"). The next $400 million is provided by ret-Insurers ("ANI") and Mutual Atomic Energy Liability roactive assessments of up to a limit of SS million per Underwriters ("MAELU") to provide primary property operating nuclear reactor per incident, but not more insurance coverage for Beaver Valley Power Station than $10 million per operating reactor in any calendar Units Nos.1 and 2 in the amount of $500 million. The year. Based on its present ownership interest in one Company's interests in Perry Nuclear Power Plant operating nuclear reactor, the Company's maximum Units Nos.1 and 2 are also covered under policies potential assessment under these provisions would be issued by ANI and MAELU which are administered by S2.4 million per incident but not more than 54.8 million The Cicveland Electric illuminating Company, the per calendar year. CAPCO company which is constructing those units. The Company is a member of Nuclear Electric Rate Matters insurance Limited ("NEIL"), a mutualinsurer estab-
~
Effective July 15,1981 the Company increased its lished by the utility industry to provide Decontamina- rates by about $64.2 million annually in accordance tion Liability and Excess Property Insurance in excess with an option order of the Pennsylvania Public Utility of $500 million for members' nuclear generating facili- Commission. On April 15,1982 the Commission ties. NEll presently provides such excess coverage in adopted its final order in the rate proceeding which the amount of $345 million plus 14% of the amount of determined that the option rate increase of $64.2 mil-the loss in excess of $500 million up to S1 billion. lion annually was just and reasonable. The final order Under this policy the Company is subject to a retro- has been appealed to the Pennsylvania Common-spective premium assessment of approximately $2.8 wealth Court by the Pennsylvania Consumer Advocate million per year for a period of seven years in the and certain other complainants. Management believes event of accidents at nuclear plants of member com- that the ultimate resolution of this rate matter will not panies if losses exceed premiums, reserves and other have a material adverse effect on the Company's NEIL resources. financial position or results of operations. Damages in excess of the primary $500 million Cm April 30,1982 the Company filed with the Penn-coverage are also covered by an excess property sylvania Public Utility Commission a new rate sched-insurance policy issued by ANI and MAELU which ute affecting all classes of customers and estimated to presently provides $68 million of coverage. Tha increase annual revenues based on projected levels ANI/MAELU and NEIL policies provide quota sharing of business at December 31,1982 by approximately coverage for losses in excess of $500 million up to $165 million (subsequently reduced to approximately S1 billion. $155 million). On January 28,1983 the Commission in addition, NEIL also provides insurance coverage entered a final order allowing an .ncrease of $105.8 for the extra expense of replacement power during million beginning on January 29,1983. prolonged accidental outages of nuclear plants. Cov-erage is provided for the Company's interest in Beaver Other Valley Power Station Unit No.1 and, af ter a deductible The Company is involved in various other legal pro-period of 26 weeks, weekly payments of up to ceedings. In the opinion of management of the Com-
$1,187,500 are provided for one year and up to pany such legal proceedings will not have a material S593,750 for an additional year. If losses exceed effect on the financial position or results of operations accumulated funds available to NEIL, the Company of the Company.
could be assessed approximately S3,400,000 for pay-N. SUPPLEMENTARY INCOME STATEMENT INFORMATION: Year Ended Decernber 31, taxes other than income taxes represents amounts n82 mai 8 80 J. charged to coal inventories. The inventory accounts (Thousandsof Dollars) are relieved and operations expense charged as the Maintenanco $78,431 $73,029 $71,697 Coalis used. Ta[nco a os Charges for depreciation and amortization of intan-Gross receipts 33,186 34.980 30,012 gible assets, royalties and advertising costs have not t$c pital stock '. #" 3 1% of total revenues. Under the system of accounting followed by the The above amounts are exclusive of discontinued Company, a portion of maintenance expenses and of steam heating operations. 29
O. QUARTERLY FINANCIAL INFORMATION (Unruditsd): The following is a summary of selected quarterly financial data (in thousands of dollars, except per share amounts): 1982 Quarter Ended 1981 Quarter Ended March 31 June 30 sept. 30 Dec. 31 March 31 June 30 Sept. 30 Dd Electnc Operating Revenuos (a) $207,398 $186,628 $181,720 $170,716 $185,787 $184,928 $215,250 $200,264 Operating Income (a) 41,662 38,480 40,223 34,942 36,212 35,117 45,535 42,966 income from Continuing Electric Operations Before Extraordinary Gain . 32,296 28,990 30,845 25,066 23,717 21,599 32,655 31,440 Discontinued Steam Heating Operations (b) . 371 (484) (9,811) - 823 (619) (618) (124) Extraordnary Gain (c) .
- - - 9,609 - - - -
Net income . 32,667 28,506 21,034 34,675 24,540 20,980 32,037 31,316 Earnings Per Share: Income from Continuing Electric Operations Before Extraordinar/ Gain . 3.58 S.51 $.51 S.37 $.44 S.39 S.66 $.57 Discontinued Steam Heating Operations (b) .01 (.01) (.20) -
.02 (.01) (.02) -
Extraordinary Gain (c) - - - .19 - - - - Net income . .59 .50 .31 .56 .46 .38 .64 .57 (a) Certain amounts previously reported as Operating Revenues and Operating income for 1981 and the first two quarters of 1982 have been reclassified to set forth separately the results of the steam heating subsidiary as discontinued steam heating operations. (b) See Note C to the financial statements for a discussion of discontinued steam heating operations. (c) See Note D to the financial statements for a discussion of the extraordinary gain from early extinguishment of bono 3. P. SUPPLEMENTARY INFORMATION TO DISCLOSE the effects that general inflation (constant dollar) and THE EFFECTS OF CHANGING PRICES (Unaudited): changes in specific prices (current cost) have had on The following supplementary information is supplied in the Company's results of operations. The data pro-accordance with the requirements of the Statement of vided are not intended as a su'ostitute for earnings Financial Accounting Standards No. 33, Financial reported on a historical basis, but offer some perspec-Reporting and Changing Prices. This Statement tive of the approximate effects ofinflation rather than requires adjustments to historical costs to estimate a precise measurement of these effects. STATEMENT OF INCOME ADJUSTED FOR CHANGING PRICES For The Year Ended December 31,1982 (Thousands of Dollars) Conventional Constant Dollar Current Cost Histoncal Average Average Cost 1982 Dollars 1982 Dollars Electric operating revenues . $746.462 $746,462 $746,462 Fuel 229,693 229,693 229,693 Purchased power (sales)-net . , (23,172) (23,172) (23.172) Other operation and maintenance expenses 193,006 193,006 193,006 Depreciation expense , 62,939 143,093 157,314 Taxes other than income taxes . 57,476 57,476 57,476 Income taxes - 71,213 71,213 71,213 Other income and deductions-net . (62,234) (62,234) (62,234) Interest charges . . 100,344 100,344 100,344 629.265 709,419 723,640 Income from continuing electric operations (excluding reduction of property, plant and equipment to net recoverable cost) $117,197 $ 37,043* $ 22,822 increase in specific prices (current cost) of property, plant and equipment held during the year * * $259,022 Reduction of property, plant and equipment to net recoverable cost $(13,991) (68,120) Effect of increase in general price level . (190,672) Excess of increase in general price level over increase A specific pr;ces af ter reduction of property, plant and equipment to net recoverable cost . 230 Gain from decline in purchasing power of net amounts owed 62,109 62,109 Net . . . . . $ 48,118 $ 62,339
' including the reducten of property, plant and equipment to net recoverable cost, the net income on a constant dollar basis would have been
$23.052.
" At December 31,1982, current cost of property, plant and equipment, net of accumulated depreciation, was $5,252,097, while historical cost or not cost r.coverable through depreciation was $2,521,882.
30
FIVE YEAR COMPARISON OF SELECTED SUPPLEMENTARY FINANCIAL DATA ADJUSTED FOR EFFECTS OF CHANGING PRICES (in Thousands, Except Per Share Amounts) Year Ended December 31, 1982 1981 1980 1979 1978 Average 1982 dollars: Electric operating revenues . $746,462 $834,430 $790,391 $812,865 $831,951 Historical cost information adjusted for general inflation: Income from continuing electric operations (1) (excluding reduc-tion of property, plant and equipment to not recoverable cost) 37,043 38,306 40,718 43,474 income por share from continuing electric operations (1) (after dividend requirements on preferred and preference stock) $ .30 $ .33 S.35 S.37 Net assets at year-end at net recoverable cost . 861,602 783,287 775,267 790,037 Current cost information: Income from continuing electric operation 1(1) (excluding reduc-tion of property, plant and equipment to net recoverable cost) 22,822 22,695 22,497 20,777 Loss per share from continuing electric operations (1) (after divi-dend requirements on preferred and preference stock) . ... -
$(.04) $(.13) $(.33)
Excess of increase in general price level over increase in specific pnces after reduction of property, plar'.t and equipment to net recoverable cost 230 116,736 228,030 230,381 Net assets at year.end at net recoverable cost . . .. . 861,602 783.287 775,267 790,097 Generalinformation: Gain from decline in purchasing power of net amounts owed 62,109 143,392 200,234 230,052 Cash d:vidends declared per share of common stock . $ 1.90 $ 1.96 $ 2.11 $ 2.35 $ 2.55 Market pnce per share of common stock at year.end . $14.75 $14.06 $14.79 $18.11 $21.82 Average consumer price index . . 289.1 272.4 246.8 217.5 195.4 Historical basis: Electric operating revenues . . ... . $746,462 $786,229 $674,744 $611,547 $562,308 Cash dividends declared per share of common stock . $ 1.90 $ 1.85 $ 1.80 $ 1.76 $ 1.72 Market pnce per share at year.end . . $14.75 $13.25 $12.63 $13.63 $14.75 Proven and probable coal reserves at beginning of year (tons) 26,300 28,100 29,900 30,650 31,650 Tons of coal mined . .. 942 680 875 928 699 Average cost per ton of mined coal . $31.62 $35.10 $31.14 $28.71 $30.72 (1) Amounts for 1982 are before extraordinary gain. Amounts for 1979 are before cumulative effect of accounting change. Constant dollar amounts represent historical costs recovery of the cost of service in its rates. Therefore, any stated in terms of equal purchasing power, as measured excess of the value of plant under constant dollars or by the Consumer Price Index for all Urban Consumers. current cost must ba reduced to the net recoverable Current cost amounts reflect the changes in specific cost, which is historical cost. The amount of this excess prices of plant from the date the plant was acquired to that accumulated as a result c,f inflation in the current the present and diffor from constant dollar amounts to year must be reduced to net recoverable cost. the extent that specific prices have increased more or The Company, by holding assets such as receivables, less rapidly than pricesin general. prepayments and inventory, suffers a loss of purchasing The current cost of property, plant and equipment, power during periods of inflation because the amount of which in ;ludes land, lar d rights, intangible plant, property cash received in the future for these items will purchase held for future use, construction work in progress and less. Conversely, by owing monetary liabilities, primarily nuclear fuelin process, represents the estimated cost of long-term debt, the Company benefits because the replacing existing plant assets and was pra narily deter- payment in the future will be made with nominal dollars mined by indexing surviving plant by the Handy-Whitman having less purchasing power. The Company has signifi-Index of Public Utility Construction Costs. The current cant amounts of long-term debt outstanding which will be cost of coal proporties was determined by indexing coal paid back in dollars having less purchasing power and, reserves and machinery and equipment by the Marshall- therefore, for purposes of these calculations, has a net Stevens Mining and Milling Index. The current year's pro- gain from holding monetary liabilities in excess of vision for depreciation and depletion on the constant dol- monetary assets. lar and current cost amounts of property, plant and equip- The regulatory process limits the amount of deprecia-ment was determined by applying the Company's depre- tion expense included in the Company's revenue allow-ciation and depletion rates to the indexed plant amounts. ance and limits utility plant in rate base to original cost. Fuel inventories, the cost of fuel used in generation Such amounts produce cash flows which are inadequate and purchased power have not been restated from their to replace such property in the future or preserve the pur-historical cost in nominal dollars. Rate regulation limits chasing power of common equity capital previously the recovery of fuel and purchased power costs through invested. While this effect is partially mitigated by the the operation of adjustment clauses or adjustments in benefit derived f rom holding long-term debt, the Com-basic rate schedules to actual costs. For this reason fuel pany has a not purchasing power loss which is experi-inventories are offectis oly monetary assets. enced by the common shareholder and can only be over-As presenbed in Statement 33, income taxes were not come by adequate rate relief. However, the Company adjusted. expects that it will be able to establish rates which will The regulatory process limits the Company to the recover the increased costs of new plant. 31
Duquesne Light Company Sel:Sted Fin:nzi:1 D:ta cnd Statistical Summary (Thousands of Dollars, Except Per Share Amounts) 1982 1981
-~
1980 1979 1978 1972
SUMMARY
RESULTS OF OPERATIONS Residentialrevenues, . .. . . .. 238,496 223,146 196,400 176,744 167,338 72,490 Commercial revenues . . .. 263,374 243,501 209,871 185,880 173,940 67,952 Industrialrevenues . . . 225,292 300,066 250,295 232,389 205,149 68,392 Street lighting and other revenues 13,240 12,383 11,052 10,370 9,942 4,389 Miscellaneous revenues . .. 6,060 7,133 7,126 6.164 5,939 1,939 Total electric revenues . . 746,462 786,229 674,744 611,547 562,308 215,162 Operation and maintenance expenses , . 399,527 435,589 380,973 351,731 328,955 98,757 Depreciation . . .. . . . 62,939 60,654 53,316 47,885 45,104 20,726 Taxes other than income taxes .. .. 57,476 57,694 47,637 46,956 41,471 17,073 Income taxes . . . . . 53,307 57,801 50,643 41,592 37.802 16,666 Interest charges, net of allowance for borrowed funds used during construction . 100,344 92,968 75,629 65,414 60,613- 26,586 Other income, principally allowance for equity funds used during construction . . 44,328 28,086 26,749 21,587 17,868 10,109 income from continuing electric operations before extraordinary gain . .. 117,197 109,409 93,295 79.556 66,231 45,463 Loss (i'1come) from discontinued steam heating operations . . 9,924 538 333 1,194 508 (530) income before extraordinary gain . . 107,273 108,871 92,962 78,362 65,723 45,993 Extraordinary gain .. 9,609 - - - - - Net income . *16,882 108,871 92.962 82,207t 65,723 45,993 Dividends on Preferred and Preference Stock 22,701 22,976 23,353 23,721 12,915 7,014 Eamings for Common Stock 94,181 85,895 69,609 58,486 46,808 38,979 Average number of common shares outstanding . . . 48,236 41,764 38,267 32.239 31,464 16,G91 Earnings per share of Common Stock: Income from continuing electric operations . 1.96 2.07 1.83 1.73 1.50 2.30 Not income . . . 1.95 2.06 1.82 1.81t 1.49 2.34 Dividends declared on Common Stock . 1.90 1.85 1.80 1.76 1.72 1.66 tincludes cumulative effect to January 1,1979 of the change in billing practice, net of income taxes, of $3,845 or $.12 per share. PLANT Property, plant and equipment . . 3,024,554 2,809,75's 2,604,333 2,380,805 2,201,805 1,255,726 Accumulated depreciation .. . 504,680 477,009 424,653 386,479 349,668 247,162 Net property, plant and equipment 2,519,874 2,332,744 2,179,680 1,994,326' 1,852,137 1,008,564 TOTAL ASSETS . .. ,, , 2,P83,411 2,668,577 2,447,163 2,222,537 2,068,753 1,082,412 CAPITAllZATION Common Stock . . . 53,277 45,303 40,166 35,550 31,750 18,150 Capital surplus 649,376 550,244 494,228 433,984 387,185 174,955 Retained eamings . . . . .. . .. 168,784 167.149 158,546 158,772 158,035 117,332 Non-redeemable Preferred and Preference Stock . . .. . . . 156,137 156,137 156,137 156,137 156,137 96,134 Redeemable Preferred and Preference Stock 140,829 143,924 146,867 149.998 154,572 29,985 i First mortgage bonds (less sinking fund l requirements and current matunties) . . . . . 1,006,637 983,870 918,230 808.830 721,710 503,910 i Other long-term debt (less current maturities) 199,934 176,682 126,981 127,436 128,358 30 765 - l Unamortized debt discount and premium-net . . . . . . . .. .. . . (9,488) (9,453) (7,161) (a,770) (4,977) - Total capitalization , , , , , 2,365,48s 2,213,856 2,033,994 1,864,937 1,732,770 979,231 RESIDENTIAL SERVICES Average use por customer (kilowatt-hours) . . 5,668 5,698 5,770 5,629 5.765 5,297 Average revenue per kilowatt-hour . . . .., 8.361t 7.806t 6.828t 6.363t 5.924t 2.928t SALES OF ELECTRICITY (millions of kilowatt-hours) Residential .. ..... . .... .... . . .. 2,853 2,858 2,876 2,778 2,825 2,475 Commercial . . . . . . . . . . . . .. ...... 4,163 4,069 4,024 3.870 3,766 3,460 l Industrial . , .... . .......... .,., ... - 3,902 6,582 6,272 6,546 5,908 5,445 l Street lighting and other . . . . . .. . .. . . 120 125 129 131 130 111 Totat. , . . .... . ., .... ... 11,038 13,634 13,301 13,325 12,649 11,491 32
1982 1981 1980 1979 1978 1972 ENERGY SUPPLY AND PRODUCTION DATA Energy supply (millions of kilowitt-hours) Generatod in system plants . . . . 12,352 13.914 13.485 13,884 12,252 12,136 Purchased and net interchange . . . (689) 410 541 125 1,089 150 Losses and company use . .. . (625) (690) (725) (684) (692) (795) Total... ... . . .. . ... .. .. 11,038 13,634 13,301 13,325 12,643 11,491 G:norating capabihty (thousands of kilowatts) 3,144 3,177 3,179 3,294 3,289 2,453 Prik load (thousands of kilowatts) . . 2,158 2,522 2.474 2,296 2,379 2,075 Cost of fuel por milhon BTU . .. 167.865t 159.660t 149.768t 131.779t 125.349t 36.844t BTU per kiiowatt hour generated . . .. 10,853 10,931 10,811 10,924 11,031 10,647 Average production cost per kilowatt-hour . . . 2.575v 2.354t 2.202t 1.913t 1.919e 0.522t NUMBER OF ELECTRIC CUSTOMERS-At End of Year Residential . . . . 503,987 503,044 500,466 496,005 491,698 468,425 Commercial . . .. . . 49,320 48,859 48,308 47,978 47,681 45,717 Industrial . . . .... 1,999 2,016 2.005 1,975 1,932 1,727 Street lighting and other . . . . 1,647 1,713 1,725 1,746 1,747 1,794 Total. . . .. 556,953 555,632 552,504 547,704 543,058 517,663 Management's Discussion the case of the CAPCO construction program, the bility f e h of the CAPCO companies to finance its cnd Analvsis i of capital requirements. Financial Condition and Results of Operations Financing The Company anticipates that funds required for C:pital Resources and Liquidity planned construction expenditures in the next several y ars will be provided principally from the issuance of Construction additional equity and debt securities and i,n part from Construction expenditures daring 1982, exclusive of cash becoming available from operations. The Com-cllowance for funds used during construction, were pany issued $65 million of 16% % First Mortgage approximately $231 million. These expenditures were Bonds on May 6,1982. Funds provided to the Com-primanly for the construction of three CAPCO gener- pany under its Dividend Reinvestmont Plan in 1982 ating units in addition to improving and expanding pro- amounted to approximately $25.7 million and an aadi-duction, transmission and distribution systems, pollu- tional $7.4 million was reinvested on January 1,1983. tion control equipment and some of the Company's On August 10.1982 the Companyissued and sold 4.5 nuclear fuel requirements. Additional nuclear fuelis million shares of Common Stock. Net proceeds from being leased. the sale of the Common Stock were approximately The Co,npany currently estimates that it will spend, $59.5 million. Portions of the net proceeds from these exclusive of nuclear fuel and allowance for funds used issues were used to pay short-term indebtedness and during construction, approximately $214, $234, $208, the balance was applied to construction expenditures.
$174 and $144 million for sach of the years 1983 In addition, the Company intends to file a registration through 1987, respectively. These estimates include statement in March 1983 for the sale of up to $60 mil-cn aggregate of approximately $5d million for the I on First Mortgage Bonds. The exact timing and -
three jointly-owned generating units being constructed amount of this sale will depend on market conditions. l under the CAPCO arrangements, including related The Company currently estimates that approximately tr:nsmission facilities. See Note K to the financial 65% of the funds required for its 1983 construction st1tements. program will come from outside financing. The amount which the Company must spend for its in addition to the funds required for the construction construction program is regularly under review and is program, $14 million of long-term debt matured in subject to changes influenced by business and eco- 1982, and $12.5 million will be required for maturities of nomic conditions and other factors, such as escala-long-term debt in 1983. I tion of labor, material and equipment costs, rate of Interim financing will be through bank borrowings construction progress, the development of environ- and sales of commercial paper. In addition, the Com-I mental and nuclear safety regulations, service reliabil- pany has available a revolving credit agreement with j ity and system efficiencies. In addition, this review two banks which allows the Company to borrow up to l must also take into account difficulties in obtaining an aggregate of $60 million through 1986 and to con-l r'.t increases sufficient to generate adequate earn- vert the revolving loans to term loans for an additional l ings, possible changes in load growth trends and, in 33
three ynrs. See Nota F to tha financiil statim:nts. und:preciited cost from its custom rs over a 1:n-yar Vari bla mirk t and g:ntral econ:mic conditions may period. S e Nota B to tha financial stat:rn:nts. affect the Company's selection of financing alterna. No retum was allowed on either of the property loss tives and adversely affect its ability to raise capital. In amounts. order to maintain earnings adequate to finance con-struction expenditures and refunding requirements, Deferred Coal Costs the Company requires rate increases sufficient to off- By Interim Order entered January 12,1981 the Com-set increased costs and provide a fair rate of return. mission directed that the Company limit its recovery of The Restated Art;cles of the Company require that the cost of Quarto coal through its energy cost rate to for the issuance of Preferred Stock, eamings (after approximately the prevailing market price of similar income taxes) available for interest charges be at coal rather than the actual cost of Quarto coal. The least 1.5 times the sum of interest charges on all Company is deferring the excess of the actual cost of indebtodness and Preferred Stock dividend require- Quarto coal over the cost allowed to be recovered ments. This restriction currer.tly precludes the Com- through its energy cost rato until recovery of the pany from issuing Preferred Stock. There is no similar actual cost is permitted by the Commission. If recov-restriction upon the issuance of the Company's ery of such excess is disallowed, the amount deferred Preference or Common Stock. would be charged to income in the year of disallow-ance. See Note G to the financial statements. Rate Matters Eflective July 15,1981 the Company increased its Beaver Valley Replacement Power rates by $64.2 million annually in accordance with an in connection with a February 20,1981 rate order, option order of the Pennsylvania Public Utility Com- the Commission found that the Company had not mission. The final order which approved this amount proven that the costs of replacement power during a has been appealed to the Pennsylvania Common- 1979 outage of Beaver Valley Unit No.1 were pru-wealth Court by the Pennsylvania Consumer Advocate dently incurred. Further hearings in the Beaver Valley and certain other complainants. refund proceedings have been held, and on Novem-On April 30,1982 the Company filed with the Com- ber 19,1982 the Commission adopted an order nisi missica a new rate schedule affecting all classes of which ordered refunds of $12.5 million over a two-year customers and estimated to increase annual revenues period. The Company expects to appeal this order if it based on projected levels of business at December becomes final. See Note M to the financial 31,1982 by approximately $165 million (subsequently statements. reduced to approximately $155 million). The Com- [ mission's final order allowed an increase of $105.8 mil- Allegheny County Steam Heating Company ( lion beginning on January 29,1983. This rate filing On August 30,1982 the Coinmission entered an used a future test year which should help reduce reg-order which became final on September 30,1982 ulatory lag and improve l,quidity, i approving the discontinuance of steam service by the l Effective May 1,1981 the Company's energy cost Company's steam heating subsidiary effective May 31, l rate was changed from a historical cost basis to a 1983 and the transfer of a major portion of the assets l meted cost basis, with provisions for subsequent adjustments to actual cost. This change reduced the of the subsidiary to Pittsburgh Allegheny County Ther-time lag in the recovery of energy costs througn reve- mal. Ltd. for nominal consideration. See Note C to the f nancial statements. Since the subsidiary has been nues that existed in the previous net energy clause osing money over the past few years, the disposition l and significantly reduced deferred fuel costs. Any should improve the Company's financial condition and overcollections of revenues are refunded t results of operations. customers. Extraordinary Property Losses Other In 1980 the CAPCO companies cancelled the con- Under provisions of the Economic Recovery Tax Act of 1981 eligible individuals who are participants in the l struction of four nuclear generating units. In January 1 1983, the Commission approved the recovery of the CompaTs Dividend Reinvestment Plan may elect to accumulated costs from the Company's customers. exclude from current income for federal income tax purposes for each tax year from 1982 through 1985 the See Note B to the financial statements. On October 1,1982 the Shippingport Atomic Power fair market values of Common Stock received by rea-Station was removed from commercial operation after son of reinestment of dividends to the extent the aggregate fa,ir market value of such shares does not notice from the United States Department of Energy exceed $750 ($1,500 for spouses who file a joint that it was planning to terminate operation of the light return). This provision has provided incentive for water breeder reactor core at the station as of that stockholders to reinvest dividends and thereby ease date. The Company has received approval from the the cash requirements of the Company. Commission to amortize and to recover the net The Company has generated ,n i each year funds 34
e (*.' f -, .h' 7
. p , 's A (,; . - y f'" ,y, , ,
{t-fl., ,$ _( p', , ' . ic- ..i f S
. / .p. ,. , [ l [ '. . ,.7h .( .i.-
.g ,. .7,. e .g, e
.' . k Th. +, . l
=,4.-
j_& '* -.
, ,-3
' . .J yi 4.
' x ,. -
[ i.', from operations sufficient to meet its operating manly to increased generation, higher fuel costs and
- c. Q '
expenses, pay dividends and finance a po tio' :f n increases in deferred energy expenses. Purchased d* I' capital acods. The demands and commitments power expense decreased in 1981 compared to 1980 g.
;[ I; detailed in Note M to the financial statements and due pnmanly to increased sales of power to other p 3Q those noted above e not expected m matenally utilities, the availability of Mansfield Unit No. 3 as ;g.
. g = .f affect the Company's ability to finance us operations noted above and the above-average performance of g h I. .. or its construction program. Beaver Valley Unit No.1. These increases in available 43
% generation were partially offset by the stnke of the iR fD Results of Operations United Mine Workers of Amenca in the second quarter ).
NN Ope ating revenues from continuing electnc opera _ of 1981. Other operation expenses increased in 1981 N* tions increased (decreased) in the years 1980 through compared to 1980 due to expenses at Mansfield Unit y[.
- 5. Ny, 1982 over the respective preceding years, for the fol- No. 3, the effects of inflation and increased general y; and administrative expenses.
Icwing reasons: 3 1N 1982 1981 1980 s @s M em tam MM M N ,.g p k[J i (Minions oi ooliars) pnmanly due to increased Pennsylvania gross receipts :.g N.. _b General rate increases . . S 43.0 $ 65.6 taxes, which vary in direct relationship to revenues, 534.3 and as a result of increased capital stock tax expense. { h'$ Electncal consumption . (62.3) 10.5 5.5 Fluctuations in income taxes are due primanly to g3
'7'
'Q Energy clause revenues (19.0) 33.9 20.0 g:. ,
State tax adt ustment changes in taxable income. See Note H to the finan-e and other (1.5) 1.5 3.4 cial statements. The effective income tax rate for the 4 year ended December 31,1982 was 31% and was J, t 8]6#j $_(39.8) S111.5 563 ] 35% for both 1981 and 1M0. Ih j [.f.] The above compansons do not include revenues from discontinued operations of the Company's steam The increases in allowance for equity and borrowed Y.y 7 funds used during construction ( AFC) were primarily ; 3.; .g!
$ ,;j heating subsidiary. See Note C to the financial state- due to the increased cost of construction and C.;
k ,k,. monts increases in the AFC rate from 7.4% in 1980 to 7.6% in .jf. -h.P.j['
. . The operating revenues of the Company are based 1981 and to 8.5% in 1982. Return on investment in F.:
MI'f on rates authonzed by the Pennsylvania Public Utility Warwick mine (which is permitted to be recovered ,C. i.%e - Commission These ra'es are designed to recover the through the energy cost rate to the extent that the
- k. *. .: Company's operating expenses, plus a rate of return actual cost per ton is less than the prevailing market Q]
(. on the investment in utility rate base. The Company pnce of similar Pennsylvania coal) and increased [.-: l--?$4 y,. also has an energy cost rate which allows it to recover interest income resulting from increases in cash avail- , 4 -. # the difference between actual fuel costs and fuel able for temporary investments were primarily respon-
?) s9. . costs included in base rates. Any overcollections of sible for the increase in other income and deductions- Y p!. G revenues are refunded to customers. net in 1982 compared to 1981. Interest expense for 3fg
." 7.%.y Sales of electncity decreased by approximately each of the years 1982,1981 and 1980 was higher due 'p 7.V.
.4 19% for the year 1982 compared to 1981 due pnmanly to increased total borrowings and higher average ..y g.y to the severe economic recession in the Company's interest rates. The weighted average interest on all P. W y
service area Almost all of the decrease pertains to sales to industnal customers, particularly the steel debt for 1982 was 9.6%. compared with 8.8% in 1981 and 7.8% in 1960. The increases in total borrowings i[i ,,,i ; . . industry, which decreased by approximately 41 %. The
.].
were due to the issuance of additional debt to finance
- k..' g . ,. economic recession is expected to continue to the Lompany's capital expenditures. %(
'I adversely af fect sales through the first quarter of 1983 The aaverse effect of the discontinued steam heat- %
M,'[. and beyond. ing operations is reflected in the Statement of Consoli- f 1."
"'9
, The decreases in operation (fuel, purchased power dated Income. See Note C to the financial statements. y,;
? and other operation) and maintenance expenses in A non-taxable extraordinary gain of approximately y b ,' j 1982 compared to 1981 were due to substantial reduc- $9.6 million, or S.20 per share, in December 1982 ?j j7 tions in fuel and purchased power expenses. The sig- resulted from the exchange with an investment bank- :.y M. g nificant reductions in kilowatt-hour sales to industnal ing firm of newly issued common shares for certain $1
; M jl customers resulted in a surplus capacity situation.
This available capacity and the requirements of neigh-First Mortgage Bonds having market values substan-tially lower than the face value of the bonds. See Note hM,
,%Q, bonng utilities resulted in substantial net sales of D to the financial statements. jP gyj powe- Other operation expense increased in 1982 Earnings per share of Common Stock for 1982,1981
, ' ,f compared to 1981 due to a scheduled outage for and 1980 were adversely affected by increases in the '.
"'$3 refueling and modiffration work at Beaver Valley Unit average number of shares outstanding, which reduced f
,J No 1 and increased customer, general and adminis- earnings per share by S.31, S.18 and S.34, respectively. e
*p7 trative expenses In September 1980, the CAPCO The Company has prepared information on the
, ?, ' ; y companies placed Mansfield Unit No. 3 in commercial effects of .nflation and changir g prices in accordance M
, dj operation which increased operation, maintenance with the Financial Accounting Standards Board's s
- l. . f and depreciation expenses in 1981. Additionally, fuel Statement No. 33. Such information is ir Note P to the
]
sl
~
2 ) expense increased in 1981 compared to 1980 due pn- financial statements. W 9 ' y
. . '? 35 1
[- [
,. . .~ _.f.a
'~
t'* / . [ .
~ /' .
~
( b .
. ^ .
Business of the Common Stock Dividends Company The Company has paid cash junior to the Preferred Stock (col-Duquesne Light Company is dividends on its Common Stock in lectively referred to as " junior engaged principally in the produc- each year since 1913 and on a stock payments ,). tion, transmission, distribution and regular quarterly bas,si (January 1, Ne dividends or distributions sale of electric energy. The Com- April 1, July 1 and October 1) in may be made on the Common pany serves an area of approxi- each year beginning in 1953 after Stock if dividends or sinking or mately 800 square miles in Alle- becoming publicly owned. Quar- purchase fund obligations on the gheny and Beavor Counties. This terly dividends related to the four Preferred Stock or Preference area, which includes the City of quarters of 1980 and the first two Stock are accumulated and Pittsburgh,is located in South. quarters of 1981 were paid at the unpaid. Furthermore, the aggre-western Pennsylvania and has a rate of 45g per share. Commenc- gate amount of junior stock population of about 1,430,000. ing October 1,1981 the quarterly payments which may be made ,n i Allegheny County Steam Heat, dividend rate was increased to any 12-month period are in gen , ing Company, a wholly-owned 47%g per share and was erallimited to (1) 50% of consoli-subsidiary of Duquesne Light increased to 50g per share com- dated netincome for any period of Company, provides steam heating mencing April 1,1983. Future 12 consecutive calendar months service in the principal business dividends will depend upon future within the 15 preceding months if section of the City of Pittsburgh. earnings, the cash position of the the effect of such payments would Company, construction require- be to reduce the ratio of common (See Note C to the financial state. ments for details regarding the ments, rate regulation and other stock equity to total capitalization discontinuance of steam service relevant factors. The Company to less than 20% or (2) 75% of and the disposition of certain expects that dividends will con- such consolidated net income if assets of the Steam Heating tinue to be paid in the future. the effect would be to reduce such Company.) Dividends may be paid on ihe ratio to 20% or more but less than Common Stock to the extent per- 25%. No portion of retained earn-The executive offices of mitted by law and as declared by ings at December 31,1982 was Duquesne Light Company the Board of Directors, subject to restricted by virtue of this provi-are located at the provisions of the Company's sion.The approximate number of One Oxford Centre Restated Articles which restrict holders of Common Stock as of 301 Grant Street the payment of cash dividends or the February 25,1983 record date Pittsburgh, Pennsylvania 15279. other distributions on, or the pur- for the 1983 Annual Meeting was chase of,its capital stock ranking 138,000. Duquesne Light Company is an Equal Opportunity Employer. Federal Income Tax Status of Common Stock Dividends The Company estimates that portions of the Common Stock dividends Service Area paid in 1982 represent a return of capital and are not taxable as dividend income as follows: _ Payment Taxable As Not Taxable As [],N , Dates Dividend Income Dividend Income = l I .f Jan.1 86.56 % 13.44 % Apr.1 74.13 % 25.87 %
,L:_M ^ " l , ?[~ ~j July 1 74.13 % 25.87 %
e / / Oct.1 74.13 % 25.87 % h gC ~b / These estimates are subject to audit by the internal Revenue Service. k h._ ~/ 1~m W_
/ Form 10-K Offer x j , , . . . . .
/
with the Securities and Exchange h _ .,
/ if you are a holder or beneficial p
~
w' / owner of any class of the Com-pany's stock as of February 25, Commission for the year 1982 (in-cluding a list of exhibits). All
- - 1983, the record date for the 1983 requests must be made in writing
~
~ Annual Meeting, the Company will to the Secretary, Duquesne Light
,J1. -
send you, upon request and at no Company, One Oxford Centre, w ee -* s charge, a copy of the Company's 301 Grant Street, Pittsburgh, Annual Report on Form 10-K filed Pennsylvania 15279. 36
l \ l B2crd of Directors Company Officers CAPCO l ! John M. Arthur 4 John M. Arthur
- In 1967, Duquesne Light joined Chairrran of the Board and President Chairman of the Board and President with four other electric utilities to Stanley G. Schaffer* form the Central Area Power President Coordination (CAPCO) group.
e ddent iscafof theCompany Charles M. Atkinson Prior to 1980, ten generating H:nry G. Allyn,Jr.*t Vice President-Fiscal units were Committed under the Ritared President and Chief Executwo officer
- The P tsburgh and Lake Erie Railroad Roger D. Beck CAPCO arrangements, which pro-Vee President-Engineering & Construction yided forjoint ownership interests John J, Carey based on individual requirements.
Doreen E. Boyce*t Vice President-Nuclear Duquesne Light shares in nine of Director, The Buhl Foundation Clifford N. Dunn these units. To date, seven are in Vce President-Operations service; three will be placed in John H. Demmler t Partner, Reed smith shaw & McClay William F. Gilfillan, Jr. service, one each in 1984,1986
^"orneys-at. Law Vice President-Customer services and 1988.
Sigo Falk. George I. Rifendifer Since 1980 each CAPCO com-Associite Director, Health systems Agency Vice President--General services pany has been responsible for of southwestem Pennsylvania Earl J. Woolever establishing its own level of Vice President-Nuclear Construction reserve and its own generating kI lid e xecutwe offcer of James O. Ellenberger controner capacity needs beyond the jointly-Cyclops Corporation owned units still under construc-Ronald G. Males tion. Duquesne Light is now G. Christian Lantzsch*t Treasurer developing a program to meet its future capacity requirements.
$airm nd Tre r$of eH Na on om s Welfer, Jr.
tay Richard J. Ciora Duquesne Light Company Eric W. Springer t Assistant Treasurer Beaver Valley # f Beaver Valley #2 Putnsr, Horty, spnnger and Mattern ucle 6 ue Attorneys-at-Law 00N Assistant Treasurer D.L Ownership:47.5 % D.L Ownership: 13.74%
- Member of Audit Committee am 384,750 m E 2a* m,454 m n y t Member of Compensation Committee A s s a t sec e a g oP,a"b ed
$ Member of Nominating Committee Coal-1976
- stanley G. schaffer retired as President and Coal--1977 7 P as a Director of the Company effectue Feb- hapa L 9 h L er h 8 ruary 1,1983. At the January 18 Board of D.L share:228,540 KW D.L share: 62,400 KW Directors meeting. John M. Arthur was appointed to the position of President effec. Mansfield #3 tue February 1,1981, in addition to his present Coal-1980 responsibility as Chairman. pa e ' 3 %
D.L share: 109,920 KW 1972-1982 Dimensions Annual Meeting of 3,h) ,j,d'* n; Company M gazine Stockholders g g 7'600,000 Kw h 32 in mid-year 1983, the Company The annual meeting of stockhold- OE0"d'ie 2 K plins to publish Duquesne Light ers will be held at 10 A.M., Pitts- The Cleveland Electric Dimensions containing in-depth burgh time, on Tuesday, April 26 liluminating Company inform tion concerning the Com- 1983 in the second floor ballroom Perry #1 Perry #2 piny. Dimensions willinclude an of the Hyatt Hotel at Chatham Nucleu-1904 Nuclear-1988 11 y::r statistical review and a Center, Pittsburgh, Pennsylvania. D E*Me'dnipS74 , D [*Me'r's$8'S.7N discussion of some of the impor. D.L snare: 165,567 KW D.L share: 16 .567 KW tant issues affecting Duquesne Transfer Agents E88'l8** #8 Light Company. For a copy of Dimensions write: and Re9istrars SE5* kw 0.L ownership: 31.2% D.L share: 198,120 KW Duquesne Light Company Common, Preference and Public Information Department Preferred Stock [,',j,To do
. s,E , son Company One Oxford Centre Pittsburgh National Bank, Nuclear-1977 301 Grant Street Pittsburgh KW gagag8 9 Pittsburgh, Pennsylvania 15279 Chemical Bank, New York o L share:o
~ , . .--.....--.. -..-+ - .~.--..,ns - -n..~ ..~,++ ~ ~ u ,a~.u-n, ~:--.. a.. e a s. n+.n~.~.>---.. > y +-- m .- e , ,.~.a.s.~.w ~
e' r I s 4 g-> e 4 s : . - r
- ~
T4F .
.o,,, -. .
j , Pittsburgh, PA 15279 ..p 9-
- e 4
, e A k k :)
E. . > I -
- 4. .
4 F I s'- L t - t t f - 3 3 4 .*~ i f i e g .-
' I e
- v. p 9
h k^ fr - ! 1-a 4 A f 4'
+
l t ~
- j. I .
t: i
.}
/ 1 7. ,- 'M' .
a 1 t... Ic ?, # v I.
- t 4
?
g
-I-
).- i 4
Y N
- 4 .
P s i 1 ?; I ' a ^ - -
.-j m
sq ::.
.l IkDUF 'h. . , -WOW'M.M' E F N' Y M MW M9 6""* *N%N-'bW@"dWN"W W-W O* W W% ' ' ' -MW,'6"W'"#E W.
e wes- M WeuWmNde-Gr R W'# 4Wwf$v *mh eJ"N E M"em 'WM P ' - W W W W"MSTEM -@'O ' WU W I'#4WM U"E-*M * * * " ' ' ' TI' # MT '# Y # #}}