ML20083L658
| ML20083L658 | |
| Person / Time | |
|---|---|
| Site: | River Bend  |
| Issue date: | 12/31/1983 |
| From: | Booker J, Lee N, Murrill P GULF STATES UTILITIES CO. |
| To: | Harold Denton Office of Nuclear Reactor Regulation |
| References | |
| RGB-17-581, NUDOCS 8404170322 | |
| Download: ML20083L658 (49) | |
Text
{{#Wiki_filter:_ _ _ _ . _ . . _ _ _ _ _ - l GULF STATES
} UTILITIES CO.
A-p e e. d 4
'". a ~~"
~ - - - - ' - ' '
p _ . -y. _ 7 ' g?,, . ng ~
- n. z _ .
~ -
.y 4 3 mn* r m O V ,a C:D. :3,7'i ;a;pt _.ve Q .. r g'y..
, _. r;gw
* ,_Ce
. _ &.L - -
'yq ,
^ ' '
9 - - " ' -
. j -,- , , m w+ c **
~
n d u F l
. - ~ ~ -
- . - n Et L ,.
" **~'
' . _ ;nQ$ ._ .;~~:_,,._ .-,y.~.m,. , u.
m~_ l];}f. , ' ' _:^ ' ~y ? f4.b ' i- ?
, c. . ,
- s, .. .
m- :A, A.._ . .
- +. r o ; ,
.~,.
v- 4 5'a- - & s.
* .1
~ ' '. . . _ .- - -~-
~
- .y* -
s'
. _ - -*y.^
_ u ;,. .,< ;4
. _ _ . _ .- _ _ _; - . .e i *b 1
L l 8404170322 831231 PDR I ADOCK 05000459 PDR ej
.About the covsr Industrial life along the
- e. 3 Mississippi River awakens to l *
,e the sunrise over the y' petrochemical complex of
, pf" w Baton Rouge, La. The follow-
-w a wiriis '
ing pages chronicle Gulf States
Utilities' role in providing the energy needed to power the area's economy as it recovers from economic recession.
k J
.o t Description of Business Gulf States Utilities was in-corporated in 1925 and is primarily in the business of generating, transmitting, and distributing elec- i tricity to 543,000 customers in Southeast Texas and South Loui-siana. The service area extends 350 miles westward from Baton Rouge, La., to a point about 50 miles east of Austin, Tx. The service area encom-passes the northern suburbs of Houston and maior cities such as Conroe, Huntsville, Port Arthur, Orange and Beaumont Tx.: Lake Charles and Baton Rouge, La.
GSU also sells electricity to municipalities and rural electrical cooperatives in both Texas and Louisiana. In Baton Rouge, GSU supplies steam and electricity to in-dustrial customers through a cogeneration facility and the com-pany owns and operates a natural gas retail distribution system serving 86,000 customers. As a member of the Southwest Power Pool, the company has the ability to interchange electricity be-tween the 38 members serving eight states in the South and Southwest. < The company had a peak load of 5.348 megawatts in 1983 while it had installed capacity and firm power purchase agreements totaling 7,152 megawatts. The company has a wholly-owned subsidiary, Prudential Drill-ing Company, engaged primarily in exploration, development and operation of oil and gas properties. l l
=-
i Contents f ' ,' c ' "
% W*i ) {e #. s Report to Shareholders. .2 iS .* * #I' Sales . .4
, : '$h
( . >- / . l~? f,,
' }l. 'I' ,1,),i, i
Construction . .6 3 *,' Rates and Regulation . . 12 ,k. y j Financing . . 14 ,-l, * (h y y%v.
; i: <
General Operations. .16 [..,f 'c 3 (. cl *
;1 'O 3* A=
l GSU Weathers 1983 . . 21 7.-
- J h
FinancialInformation . . 22 I '
. f. ,
% ,. /, -
7 c u> w 3 p:'. .
. ., iv D. . . ,
i 4 l p f ., _ [.MK, i s .- g ;
?-L, M f N i
, . . .O Lik i Gulf States Utilities' Service Area Financial Highlights 1983 1982 Change Total Operating Revenue (000) $1,436,188 S1,307,259 9.9 Operating Expenses and Taxes (000) 51,122,895 S1,036,850 8.3 Net Income (000) S 229,799 - S 165,979 38,5 Income Applicable to Common Stock (000) S_ 180,747 $ 127,030 42.3 Earnings per Average Share of 1 Common Stock Outstanding 52.31 ' $1.95 18.5 l Dividends per Share 51.62 $1.56 3.8 Average Common Shares Outstanding (000) 78,233 65,056 -20.3 Number of Electric Customers (end of year) 543,099 529,709 _ 2.5 i Total Kilowatt-Hour Sales (000) . 29,005,483 28,968,502 ,1 System Peak Load - Kilowatts 5,348,000 5,164,000 3.6
[ i l l l \ t I t i ___71 --___.- * - - - _ _ _ _ . - _a _ ~ * - --m- 4 m _ _ _ _ _ _ _ . _ _ _ _ _ - -________._.__.--m__.-.
fy# 'withMy
,Wmd
- p. f' )
- [ W]=%)
easured by virtually any (standard,1983 was a year of [g-[ g F solid achievement and progress - ,' ffgf/ p h pffgr for Gulf States Utilities, " its shareholders, employees T U / and customers. % Earnings for the year ended , December 31,1983, were $2.31 . per share of common stock com-pared to $1.95 per share in 1982 -
' "p - .h [.
~g.
y' J 0j when there were 17 percent X MP D: fewer average shares outstand- , p ing. The regular quarterly divi- +
]
dend was raised during the 1-j/,i }gl, ib- 'E - ' second quarter of the year to 41 Q j cents from 39 cents, which m.
,i
-j!fjh4E%
?
represents an annual rate of $1.64
- l! j/ f h p/ !
per share of common. Return on ,- j[!! J e ' average common equity was ./j
/ '
14.78 percent, compared to 12.32 Y percent just one year ago. Norman R. Lee q A In addition to these favorable President and . y .
<fp financial indicators, several posi- Chief operating office , ,
tive events took place. Without
-[yf? 4 j'.? 4/
'r being overly optimistic, we see ,
I ' 1. , [ indications that our service area -! "" D'; * ' 4- ,.1 and Gulf States are beginning to
^
? k /h_ ',
move in a more positive Paul W. Murrill direction. Chairman of the Board 9nd Chief Executive Officer On the plus side: n Construction work at the against United Gas Pipeline Co. modest increase, from 28.97 bil-River Bend nuclear plant site was settled, much to our cus- lion kwh in 1982 to 29.01 billion made good progress, finishing tomers' benefit n Big Cajun 2, kwh in 1983. the year ahead of schedule, on Unit 3, of which GSU owns a 42 Each of these highlights of budget and meriting high marks percent share, went into com- 1983 will be discussed in more for management control from mercial operation a An auto- detail elsewhere in this report. ' the Nuclear Regulatory Commis- mated materials management There were also other, less sion a Replacement gas was system became fully operational positive notes in 1983. Most dis-obtained for the still needed por- - saving time and money a concerting of these was the tion of the 20-year-old, low-cost Project CARE helped more than Louisiana Public Service Com-Exxon gas contract that expires 3,100 elderly people pay their mission's decision denying the in January 1985 a A new pipe- energy bills during its first year company's $119.4 million rate line to provide additional gas to of existence n Employees faced increase request and ordering a Nelson Station was completed a series of weather-related chal- $1.1 million rate reduction. This , a The high-voltage trans- lenges - May tornadoes, an was a disappointing, unaccept- ! j mission tie to import coal August hurricane and frigid able decision which GSU has produced power from the winter storms - and continued appealed to a state district court. l Southern Companies is more to provide reliable service to our We plan to file again in than 63 percent complete customers u And our overall Louisiana soon and we will O Our long-standing lawsuit kilowatt-hour sales showed a probably seek interim rate relief. GUL F 5 T A T[S U TILITlf 5 CO 2 l
One immediate result of the board of directors concluded Louisiana Commission's action Unit 2's 940 megawatts of capac-i came in January, when Moody's, ity would not be needed in the y citing among other things the foreseeable future and formally -f ,/ unfavorable Louisiana rate deci- canceled the unit in January /j 6//P sion, downgraded the company's 1984. The company will ask the '
/
first. mortgage bonds, com- regulatory authorities for permis- // f//f(f g' W h j ,f mercial paper and unsecured debt. sion to amortize and recover through rates our net
/m-j_
IW
'g In early January 1984, Gulf investment. g4 States filed a two-step rate case We launched Project CARE last M' /F W with the Public Utility Commis- year to provide financial assist- 7'g #j g' #
sion of Texas. The company is ance to elderly customers who ' requesting $161.2 million in have problems paying their additional revenues later in 1984 energy bills. The company has and an additional $264.6 million numerous programs to help our 1976 and materially aided in at the beginning of 1985, most customers, ranging from low-cost establishing this company's of which is to cover increased do-it-yourself conservation course for the 1980s. She will be fuel and purchased power costs information, to special billing both personally and profession-resulting from the Exxon contract arrangements for those in ally missed. The name of Gen. expiration. financial straits. We can't promise Robert H. Barrow has been GSU took significant steps dur- them lower bills, but we can placed in nomination for election ing the year in its fuel diversifi- show them we are concerned and by the shareholders. Gen. Bar-cation strategy. We need the are making every effort to help. row retired last July as com-broadest possible array of gener- GSU people do have a genuine mandant of P. > U.S. Marine ating fuels to cope with any concern for the people we serve. Corps. He is a resident of West unexpected developments that Employees showed themselves Feliciana Parish, Louisiana, might make a particular fuel to be tough and persevering after where River Bend is located, and unavailable. River Bend is a criti- storms devastated our area last has been retained by the com-cal element in that strategy. year. At one time during Hurri- pany as a consultant on the off-We are proud of the progress at cane Alicia, more than 100,000 of site emergency plan for River River Bend. The 940-megawatt our 265,000 Texas customers lost Bend. River Bend Unit I was 82.1 electric power. The men and We cannot afford to ponder the percent complete as 1983 ended. women of GSU worked long past too long; there is too much The December 1985 in-service hours, often under difficult and to be done in 1984. We have a date remains on target and the dangerous conditions, to restore tough job ahead - a job that will current construction schedule service. That kind of dedication call for mustering every bit of and cost estimate of two and one- does not come from just doing a our creativity to confront the half billion dollars, which were job. It comes from true concern challenges. Nobody ever said it established in 1981, were and caring. was going to be easy. But it's not recently reaffirmed. We still Two new officers were named going to be impossible. believe the current schedule can by the board last year - George b'."'I Y ' be met. Given today's national T. McCollough Jr., vice presi-nuclear environment, this is dent - fuels and materials, and truly remarkable progress. Albert H. Newton, vice presi-It should be recognized, dent. Mr. Newton was also however, that our schedule is an elected in August to be president f, ""R 'i , , ee ambitious one and that we are and chief operating officer of Chief Operating Officer now entering the toughest GSU's Prudential Drilling Co. stages of the project. subsidiary. The company originally We regret to report that the ( planned to build River Bend Unit Gulf States board of directors ~.4(LJ m3,]. 2 as a twin to the facility now will lose the services of one of Paul W. Murrill under construction. That project its members to retirement. Dr. Chairman of the Board was put on hold several years ago Lorene L. Rogers, president and Chief Executive Officer when the company's load emeritus of the University of growth began slowing. The Texas, joined the GSU board in l 198 3 ANNU AL R EPOR T 3
r n l i P E EARNINGS AND DIVIDENDS PER SHARE - h{hh L a r s Te -
..,n
/ @.
;@g w =
' f f j 2.50 4 s
M;pp'jM@ .54@ % g.. . .gp y hn :.-% LJ.fj l WM W 72 J es %- W ' f/i : L ao ' , c 2.05 i o i.
, f 2'.00, M
khhdk '
)'Nh g
, t.74 ) ' ,
1s. 9 v. . ( ,, .er r i
, gp- g
{i " 1. - N.N N Gr I * { { t:- , y - ,. ; t..
, . , t , ~. . W
[ d t;" ' Qy i. > t
-g j C4 m -
, 1 .- m - * -2
. :.m w ;
V L
$:;;%;;} , ' il!;% ,
Y
- t. ~ . ,
h y
,, : a I .,
my;p: > . : :% -
+ >
E ! N ff.hk_M'r,; Wi@ k*,[,g:
- , i S
T
$6M1M ..
1979 1980 19 81 1982 1983 Sales he economic recession that hit load increase and continued for our area of the Sunbelt with the rest of the year. Disregard-full force in 1982 dampened ing this increase, however, the the economic climate in 1983 last two months of the year and caused a slump in electric showed increases in sales over sales that continued during the the corresponding periods in first half of the year. Kilowatt- 1982. Industrial sales ended the hour sales to industrial cus- year four percent higher than . tomers picked up by midyear, they did in 1982. Overall however, and began an upward kilowatt-hour sales showed a trend that continued through modest increase of 37 million the end of the year. kwh. The comeback began in June While this is good news, it with increased sales to a major may be still too early to say that chlorine manufacturer under this is a trend that signals an terms of an interruptible rate improvement in the overall tariff. This was an important economic health of our service GUL F ST A T L5 UTILITIES Co. 4
i . ELECTRIC DEPARTMENT CUSTOMERS m, r- ,~ . , jfIt0lISANDS - y, 7 m; ,. .. 4
; Q -; w i'E h ul w %M
- myyym73y lN ' e2
(.;; '
---mnwrngm py~g ** ' ' ' - 'm" y ?>
, . , , . ;5r, 2, ~
d .n,
, , - . . _ g .; .. . ., ,
[. g%? 1 . 5500 # 7.4 W, - -: t .
~,,_
it i . - g 1 , p h ' $400 tith - - 7 { 9' ,, X , l,94 : [h m. NN g y, w : , s.y, .- : .. N-g ;- y= c JM?% ,P l: l l. M
...% 9 e, ::(- . , ,
, ,- w
, g . 1 (?M w w' p % n , ,.c
+ Q*
1979 1980 1981 1982 1983 area. Even though we moved Sales for the weather-sensi-ahead of last year's electric tive residential sector were five sales,1982 sales were some six percent below last year, in percent below those of 1981. So, spite of a two percent increase while we are making progress, in new residential customers at we still have not fully year's end. The generally mild recovered from the economic weather the area experienced is buffeting we received in 1982. primarily responsible for this The industrial load, which decrease. It was not until the accounted for 41 percent of the last two weeks of December l total electric revenues for the that weather played a notable year, remains an important part part in both electric and gas of GSU's customer mix and is sales, when unseasonably frigid a widely considered an economic weather drove winter demand barometer. We are viewing to new peaks. these improvements with cau- During the year, GSU added tious optimism. some 13,000 new electric cus-i i 198 3 ANNU AL REPoRI 5
._- =--
fM b 11/ W yviowvvvrvvvvr tomers, increasing the total The earnings increase is The people who will be , receiving electric service to primarily attributable to rate running River Bend will i h" " t ~ 543,000 at the end of 1983. increases granted for Texas and ed p a ors Gulf States ended 1983 with Louisiana retail customers and nation. In addition to earnings per share of common higher wholesale rates completing an intensive stock increasing to $2.31 from authorized by the Federal training course and being
$1.95 per share in 1982, when Energy Regulatory Commission jlcenj,b t lear
_ ,, ,n, there were 17 percent fewer (FERC), all during the second csu operators wiliget average shares outstanding. The half of 1982. Another factor extensive hands-on common stock dividend that contributed to GSU's training using this control reached $1.62 per share for progress during 1983 was a con- ""Pujenzj9 1983, up from the $1.56 per tinued cost consciousness on duplicates the actual share paid in 1982. The regular the part of management and River send control room quarterly dividend was raised employees. Through effective and simulates potential problems. during the second quarter of cost containment, operations the year to 41 cents from 39 and maintenance expenses were
. cents, which represents an reduced more than $6 million annual rate of $1.64 per share of below budgeted amounts.
common. Operating revenues Construction were $1.4 billion in 1983 and
$1.3 billion in 1982. Return on Iuring 1983 GSU made major average common equity was progress in moving away from 14.78 percent, compared to its historic dependence on 12.32 percent just one year ago. natural gas as a boiler fuel. The Another financial indication of two alternative fuels - coal moderate improvement was and nuclear energy - are both the fact that our fixed charge critical elements in the com-coverage ratio increased to 2.4 pany's fuel diversification.
times in 1983, up from 2.1 times River Bend, GSU's nuclear in 1982. facility, is the company's most 1 r i cutr srA TEs uillirits co. 6
5 e
- 4
? 4
%' V m%
%%4, 4
f 5 {. l
%= = =%,
m-S -' h' . ,, 8 i i,.
*9 s.
a*% ' eh\ Ns b
\.
1 4p h
,P
/k
^
V .g 2, n m - g~ ~ - . <-J,
. __ m -
f'_ .
s . *
+
# , ' . 7+ #
<* #h.'. '_f-
-gge"y_ *
. ~-
4L - , ? ca$.g',
, ..g
-.1 a .'4 -"
,..(Pk4 Y -f f_
3",,4, :W,' Ip y. k w- .dC (~-m,,;.D.e,,.1.
, ; ')e,v -'
<;~'f>,
- y. ~ * #, ..
.A
.'7f( ~% ' *'?YT A; . -A N*',
. v wa. - .., , .;y, -k
,.q .;-
m
-. ( . A. n , v *; ; . ,. .
.h. *. < 9.y5,Y., L
,' ac g
- .- z .keu y :
A u v: s _g ,n e .,7 yu. + ,y >' 1
.% 1. %^,e'. , y ..c t_s,'s.4 r..+>'
+ e M m&pr_g;. -
y 3 47. y f'r A y
;r - ?
,'g., - .
h , i4,g$,,,.,,.s,.,',"..Q'Y,
%d _j ;_e,I' '.*
.v , w avP' . 2 y 4
af) 3 a
/
J w 0
>N -
? '
's 4
5 5 4 4
.s M
\{ _- 4, 'c ,ase,
.s .
* + '
y E 1
, j-- I a
- w n
f h % t 9 x 4> 5 A m y p 1 - A e' _ Y s 4 k
+
t
.1- . -' $ [' Y-
,- - 3 m 3 f y / '
' A #
+
n
/N M /#( ,
I l l l CONSTRUCTION EXPENDITURES ]
,-,,,,.g- ~ - - - - - - - -- - - - -
l
!snemuous
% , 4 y x e;r j t
' 700 d:#6t # @+ b M Ndr.[6,-,M [-[.[~[
e { i
,- w. +
n {: ,^ ' ['.
- 600 e;@lg % g
~, ,e %
,q~'
j
~
l b' i500 Mp.f=qhid .N#_,m y e :,. . t
'400 :sb $ M l P ,,
5 r j
.- 300 :Eijl 2 .
5 . it. -
- .h .
N e
~. (_200 #~"0:
S , fg.[ - > + p'd ,_6 4 .. 2
-; g, q g*;- 1
;m w <
jut 3g ! MhEih M, j hI I i 1 1979 1980 1981 1982 1983 : 1 1 important and expensive con- In its 1983 annual review of struction project. River Bend the project, the Nuclear Regu- i ended 1983 slightly ahead of latory Commission (NRC) gave j i schedule and within budget. Gulf States the highest ratings l At year's end, River Bend possible in the areas of manage- i Unit I stood at 82.1 percent ment control and design con- l complete. The December 1985 trol. The top category rating j in-service date for the 940- means that " licensee manage- i megawatt unit being built near ment attention and involve- l Baton Rouge, Louisiana, ment are aggressive and ' remains on target. The current oriented toward nuclear l construction schedule and the safety." We have consistently I j current cost estimate of $2.5 bil- received good marks from the l l lion were established in 1981 NRC and were cited for only : and have been recently reaf- one minor violation of federal ! firmed. River Bend Unit 1 is the rules and regulations during all ! only generating unit GSU has of1983. j under construction. t t GULT ST ATE S UTILITIESCO 8
c Throughout its construction ing with fuel loading in April j history, River Bend has made 1985. As construction of the t above average progress when River Bend project draws nearer compared to 15 other nuclear to completion, preparation for plants of similar size and actual start-up of the unit has design. Using that same yard- become more intense. A start-stick,it had taken River Bend up planning and scheduling less time to reach four major group has been formed, staffed construction milestones. by experienced personnel. The For example, the average top GSU people responsible for nuclear construction project managing the start-up program takes 50 months to reach the share some 124 man-years of halfway mark. River Bend experience in bringing nuclear reached its halfway mark at 34 plants into service. GSU is months. In fact, each of the first monitoring the start-up activi-19 construction milestones was ties of other nuclear plants and reached on or ahead of is benefiting from their schedule. experience. In March, the containment Our commitment to success-dome was successfully placed fully completing River Bend inside the reactor building extends into other areas of using one of the world's largest company operations. In an cranes. This construction economy move, GSU's previ-accomplishment was over- ously announced construction shadowed the following eve- budget projections for 1984 ning when the crane collapsed have been revised downward. as it attempted to lift the struc- However, the portion of the tural steel roof. River Bend budget designated for River quickly recovered, however, Bend construction remained and plans were drawn up for unchanged. The current 1984 the erection of a second struc- construction budget has been tural steel roof without delay- set at $568 million, down from ing the overall construction the $600 million originally fore-schedule or compromising cast for 1984. Actual construc-safety. tion expenditures for 1983 were It should be recognized, $643 million. however, that our schedule is Financial participation in an ambitious one and that we River Bend by Cajun Electric are now entering the toughest Power Cooperative Inc. stages of the project. (CEPCO) was reconfirmed in There are six construction late September, when the Rural , milestones remaining, climax- Electrification Administration l 19 8 3 A N N U A L R E P O R T 9
L . M ( (REA) approved CEPCO's miles of the line are being built -coal by wire is one way to de th application for an additional in Louisiana north of Lake Pontchartrain, with the remain- y , ab long-term loan guarantee. The voltage line witi carry REA action was designed to ing 70 miles being constructed when completed later - permit CEPCO to finance the in Mississippi by subsidiaries of this year. It wili tink csu i Ib e balance of its share of the cur- the Southern Companies. ' j'y's nA a rently estimated total costs of GSU's portion of the line was southern companies and ; the unit. CEPCO owns 30 more than 63 percent complete help stow the rising cost percent of River Bend, while by the end of the year, with of energy. The 70-mile more than 200 transmission f li"* i" CSU's ownership portion is 70 **'.ch percent. structures erected and wire- a f iN"a'n'd$o' ti$"' GSU's portion of another stringing underway. The line is terrain. major construction project scheduled for completion in undertaken jointly with CEPCO May 1984 and will allow GSU
- Big Cajun 2, Unit 3 - was to receive 1,000 megawatts of declared to be in commercial coal-generated power through ,
operation during September 1992 at an advantageous price and has been providing power from the Southern system, to our customers since that which includes companies in time. The 540-megawatt coal- Mississippi, Alabama, Georgia fired generating unit is located and Florida. across the Mississippi River River Bend Unit 2 Canceled from River Bend. GSU owns a 42 percent share of that unit, n January 5,1984, the board which was built and is operated of directors formally canceled by CEPCO. River Bend Unit 2, the twin to The final major construction the unit now under construc-project in which GSU is tion. That project was put on involved is the 140-mile-long hold several years ago when the 500-kilovolt transmission line company's load growth began linking Gulf States with the slowing. Sufficient data are now Southern Companies. About 70 available to show that capacity { l Gulf ST Ait S U TILITif 5 CO 10
4 , ', ._.%-_ e -
.=e, g e
,,,- ' 'f I ./'W -
'g4* '
. 'O d "mS
',.* . _ '* ** += . *' . #+ 4I 1.' A* '* '- ,
b' 'f-
'hh.'.'..*> -
1
~1 l
~
* , hhil. '4';.' J %> - -.~7- 1-w *y,. -
3 w ~ T%m"" 'gf - 6 m g,,4
, s s ey , et
. .g 4 .
-4 -g /' . "p# 9 .g' # . , m.
~
n. s . : y - 4. : '
.F4
#m.
p .. -. . g, g.. . . .
, ' , % w w ,, p y 7 .. , g ;p Agf6
~ n977. ^ puW
,g a ca .,.^ ,d,.: T- ..
. ,~ , , -y .m.
43 9.- .- .f. ?P & " .Qx
,wg - g, ..t Q% .. ]. . ;,
p p3
' .- .,; g -A
-gg 'wQ:&,;g&y ,V?g%g
{:Q..R.'QN f??Q,s. fg? . a . y GfQ , f .g.. ; 7. . . . . ,:y .. . ... _ ga u; g y
.. z ..- ;. . :=..;
7p pg A' Q my 'lQ ;u
. s _
s._ . .s ,.. o>. .. 1 ,
- t. 4.;c. - - "' +,,' '-'t '
% M, L. .i. 'e .. :. : ..\-
4', l
;N%.; % G< .2 f :y y::~
y~ '%: %%a Mn%.. N:
.s : , (s.w. .f..^',.. ,4 . .
,. r
; M Jf+ 7;'
. w...
y . . - ,.- ~-
~. . . , ' ,.-
m',.n ..:; ;;5. , , -h,x y, ,);;M. , n.f 4. ,. g,y? u..' g.
, - . -.. ug; *- , .
y; ~.t- , .
,. ..cn 7e b ,r , , .b, },9
_ b &,y?z y *, . . ' ' ). . , ' h -.,
. ;*_, y % IG;5 " f _: . (R
. x , . . + s*f3. .: q .'
.-" . -: v,:# 2 m. S,M.;., , ~ -
- 4. % ,-
y p c;;
-% .-. f, o 5'.mgg
. gg % ,p f. g:y,,Q,
.s ng.. # 47.* . . . *. '.r; 2 c
=% \ ., ,
M ..mp M_ky.s a, ,o>, . , .- quo c,w -e g e4 ; 4s,- % , gy), -w
, qwg...w.f * ' y. - , g#.~ .
',. ~,r . "/
.f R M 4k mQ sye(Q = .f m.l
[p. f^ 3,. , [s.
~ .. ' ' .
m , .
.- / f'"+ &
= y7 W.4 1;~ *,
,3 ,. ' .
3, . m +. , . , n.
,4 _ p 4:
7..
}W*' ,
, ,n ,,
p .'.
.( A sp 5
j+h:'
/
. a.
' , g
.k.._.
* '[_,.
'*~~
3 %A .,,, s ~g
.- .;,.4.--
,? 9' N . ,.m % .w,.^ff I'
^
,.j
.' f, _
~
x > ,, W .>s ..
. .. . .n
- 4- ~%: . , -:
*%,{ -
r s - , , , , 4 .-=.=.-: j . - ~w.e,.$:vgc f <n & f
.'y *,:y V* .,r7; ". , ., .l o ::. .,
... . . . . ,s - c
.. ' . . $~
^ ^
"f.'....- '..-
'. . ] e ?. ' "' :
1, e
- . . :m.
.'*i...~..'... , c..
---I_
y y 3
. .p w : ..
, V: . .
fr ;.4_ ),..
.s . , . . ,. y > sup
. ,. : 2 83 -
'
- Y
, ~
$f?k}&
. :., g . . .
g , .
. '_ W '
.~
5 Y v 1
,4
l N$ J U Te/ ('({kihl" TOTAL LITILITY PLANT g 7,7 . ,., y. - i
;$ AIELIONS ^ ,
, , _;@ s;ydy ,;. ! ,
I
'4,000 "f ;-M;Wyi j
[ '
"p ,. , .1 .~ ; -N -
1
;3,500 , y i..'t:WiON. _ Win"r#,
y, .-
.. i, l f 'yj.
-c * 'L'
( ,'- 3,000 rd "O"-by
, -i ~.s !
1 {- i3,500 %$qir$. lb y , ,Y t
,I,000 O^ ..
yl 7 l I l j y
- n,500 c,
s Q , (1,000 - d
@~;500 4 -
c 8 4
? <
i -
$.c d w., :? t e. x1.. _
1979 1980 1981 1982 1983 from Unit 2 will not be needed cancellation of River Bend Unit in the foreseeable future. Actual 2 and its resultant tax benefit construction was less than one could result in a portion of the percent complete. Some $120 1984 dividends paid to common i million are attributable to shareholders being treated as a engineering work, equipment return of capital for federal tax orders, financing charges and purposes. Current estimates are
; estimated costs associated with that about 50 percent of GSU's i
the cancellation. The net book 1984 dividend may qualify as ' loss as a result of the cancella- return of capital. However, tion amounts to approximately such events as the level of sales
$82 million. GSU is asking its and rate relief granted during regulatory authorities to amor- 1984 will influence the return tize and recover through rates of capital position. No change is ,
this amount over a five-year expected in the amount of divi- ' , period. dends paid to shareholders as a It now appears that the result of this treatment. Return l i Gilt. f S T A T E S U T I L I T I E S C O. 12 ' l
l 1 i l . of capital, if it does occur, can rate base. In a separate rate deci-offer shareholders some attrac- sion issued the same day, the
- tive tax benefits. LPSC granted $1.5 million of i Rates and Regulatory Matters the requested $2.2 million natural gas rateincrease.
J here were significant de- This was clearly an unaccept-velopments in all three of able decision and GSU has GSU's rate jurisdictions during appealed it to a state district
; the year. court in Louisiana. We plan to In October the FERC ap- f le another rate case in Loui-
. proved a $28.75 million rate siana soon and will probably l increase settlement negotiated seek interim rate relief. j by the company and its It is too early to tell what
- wholesale customers. This was effect the new makeup of the i less than the $32.6 million Public Utility Commission of increase the FERC approved in Texas (PUCT) and the new laws I July 1982 for billing subject to governing utility operation in refund. A refund of approxi- the state will have on CSU. On mately $7.8 million was made January 6,1984, the company during November 1983. This f led its first Texas rate request
; had no impact on earnings since May 1982 and the first it
- because the overbilling was has filed with the PUCT under i recorded in a reserve account in the revamped state laws and j anticipation of the refund. regulations. In this two-step i The Louisiana Public Service rate case, the company has 1
Commission (LPSC), in a disap- requested $161 million in addi-pointing decision on tional revenues taterin 1984
- December 12, denied the com- and an additional $265 million i pany's request for a $119.4 mil- at the beginning of 1985 to lion electric rate increase and cover increased fuel and
. ordered a $1.1 million reduc- purchased power costs.
l tion in GSU's Louisiana The first-step request in- + revenues.The original request cludes the Big Cajun coal unit had been made a full year ear- and known increases in cost of lier on December 10,1982. The service, as well as the River rate order provides for a 14.5 Bend Unit 2 cancellation percent return on common charges. This request seeks a equity (reduced from.16.25 17.5 percent return on equity percent) with no cash earnings and a cash return on $594 mil-on Construction Woa in lion of CWIP.
- Progress (CWIP). The decision . . The second step of the rate allowed the Big Cajun coal unit case. was necessary because of to be placed in the company's 1983 ANNU AL REPoR T I3 i
___ ~ -. __
r> 0 MIGHffM RETURN ON )WERAGE CAPITAElZATION g----mn.. y - - -.--~.-,,-. . g., - 3 n .
- n. :!y pu '
idSk ';
*U "
? i l gg. E
&;h g m a; mpwzpm er ";- p;
[ :M v g^ { 3 ds 1 A [.)>YW ll((a;g y- g , y; y .. i;pg? t , , , p;. s.
-or
&p;2, QA M. ;u ,
h
-v t
r, y - f 5ty " %gf: ;.y ^5,
;- w
~
ryjne:g a . v. 1 . y 29 DL . gis alh~ji e!.~ ? e a 1979 1980 1981 1982 1983 changes i' the law governing PUCT has' scheduled h6arings the op r tit n of the PUCT, to beginen the GSU casein April. which were e.' acted last year by p;,,,c;ng the state legislarire. Fuel cost charges are no longer automati- - fo finance the company's cally passed on to customers through the fuel adjustment ( onstruction costs, we issued m' ore than $382 million of clause. The commission will securities in 1983. now hold hearings on changes ' In summary, the 1983 financ-in fuel costs and issue an order - ing program was as follows: before the new costs may be ' n In March, the company billed to customer bills ~. The sold $100 million of 30-year second-step increase is virtually first mortgage bonds at 13% all for additional fuel sad percent. . purchased power costs that will m In April, CSU guaranteed result from the expiration of an the payment of principal and
-inexpensive natural gas con- interest on $17.45 million of
-tract on January 1,1985. The tax exempt pollution control We k
w t JL: 5 T A TE S U TILITIL5 CO , , 14 5
l 2 l ELECTRIC SALES
~ .n . ':: 3 _.. ., .
f .~ (.J ' . . ' W . ,. I 1 - '- l 4- _- ;.,, ,- . l . a 5 is- q- F _- .s . j E .;l4W. ' , .~. c.
- . - r
$ /._-;s.
.. j. Mi' WEq.{
;:; y ; . g: .:'.
- h. ~ _. j). -
~ 4 g 1 >. q; y.7.. . . . . , e j
. :. . c;
, f:
2 [_ , ,f +v . ' .. .
..'. . ,' .';~;g n; _
.. 4 '
i% . c. ' ,
? ? - "
. . . 'o E.-Q' A 71..'
. . f. ' .. .
He a _
. ;. . . q.Q;g
~ -
$6 s.. .
y
~
j
- q. :. , , j
!.9 : .
nf- . 1 Q '.:;' T, ~ ~ - j s y;.
. -?. ... .
1979 1980 1981 1982 1983 3 revenue bonds issued at 9.5 B During the year, $50 mil-percent to help finance the lion of common stock were company's portion of pollution issued through company plans control facilities at Big Cajun 2, - Employees Thrift Plan, Unit 3. Employee Stock Ownership B in May, the company sold Plan, and Dividend Reinvest-l 300,000 shares of adjustable ment and Stock Purchase Plan. rate cumulative preferred stock. The use of traditional securi-The $100 par value shares sold ties markets continues to be i at an initial dividend yield of backed by an $800 million 11.5 percent. revolving credit agreement U In July, six million share > between GSU and more than of common stock were sold 100 U.S. and international with net proceeds to the com- banks. This agreement is pany of $83.67 million. designed to backstop the com-U In November, GSU sold pany's normal debt financing
$100 million of 30-year first through the completion of mortgage bonds at 13% percent. River Bend.
l l 108 3 ANNU A L R EPOR T 15
$wid a s7 r,w rrrr Financing construction ex- General Operations Relocation of new penditures for this year will be ,
3"d"i '"ch < P a virtual replay of 1983. We significant event for Gulf will need some $385 million States and its customers will h".y,',"i
,o N.
i_ ., plays a vital roi,in from securities sales - about a occur on January 1,1985, with reshaping the area's j econ my by providing million dollars a day - to keep the expiration of a low-cost construction financing on a natural gas contract which will $'m"d isPQQunitws; c9 , pay-as-you-go-basis. We expect have supplied about one-half main a factor in attrac-to issue about $200 million in of the company's boiler fdel for ting and servicing new inducin s. j long-term debt, some of which 20 years. In anticipation of the may be pollution control bonds possible' impact this could have associated with River Bend. We on customer bills, we began will also issue more preferred several years ago taking posi - ' and common stock during the - tive actions to lessen the brunt year. _of cost increases and help our Under the best of circum , customers through this difficult stances this financing plan time. would be considered challeng- We have arranged to replace ing. It was made even more so the still needed portion of the when we received the disap- Exxon gas from multiple sup-pointing news in early January plierr. and multiple supply that Moody's had downgraded lines. The new contracts have i our first mortgage bonds a been executed with terms rang-notch to Baa3 from Baa2. Citing ing from 5 years to 12 years and among other things the provide for purchases gener-unfavorable Louisiana rate deci- ally at prices based upon the sion, Moody's also downgraded market price of gas at tne time our commercial paper to P-3 of purchase. This flexibility from P-2 and'our unsecured ' allows GSU to take maximum debt to Bal from Baa3. advantage of changes in the. i l' l l , g Y a:s GULF ST ATES U TILITtLS CO. d - q Ll6
- 3 1
s-
'<x
= or--,b
_ ~ ~- Tf} m Y a, s . r _,
--{- j d. :
n.m. <: 1
] Y. .. . o. .. .
d - J s a f a
\. , .
i f[' , . 1: .
. ~
~. ,
} = ;_ .:
; i s- k .r ,.
I
f ernaW 16atf natural gas market price. A new included. Energy Talks has Providing assistance to pipeline to carry the replace- been promoted through bill m""a p,","d[5 3g,,
*n ment gas into Sabine Station inserts, radio and newspaper operations. speciany
{ ' will be completed this year, advertisements. trained employees in adding to this flexibility. Each of the company's five each division work di- , New programs to help operating divisions has at least h mtome recjl , gem customers cope with rising one Consumer Affairs Coor- cies to keep the lights on energy costs were also added in dinator who works with low- and avoia disconnec-1983. Project CARE, designed income and other customers tions. Project CARE provided emergency aid to assist elderly customers on with financial hardships to fixed incomes, earned marked explore the possibility of secur- ' ""$'",(',I7 jy pi , 'Id"~ success in its first year. The ing aid from various social ser-program began in March with a vice agencies. These employees
$100,000 contribution from have been highly successfulin GSU shareholders. Through the helping customers make bill-end of the year, employees and paying arrangements and thus customers had contributed avoid disconnection of service.
some $174,000 to the program. A computerized materials In human terms, more than management system was put 3,100 elderly people have been into full operation last year. helped by Project CARE to pay This aided GSU storekeepers in electricity, gas, propane and reducing inventories in the butane bills. Direct assistance is transmission and distribution administered by social services storerooms and achieving agencies in Texas and tangible cost savings. By : Louisiana. strengthening management The company also in- control of inventory and its car-augurated a new service to help rying cost, a savings of $1 mil-customers unaerstand the over- lion per year has been made. all energy picture and control Another savings was made their personal energy use. last year through more efficient Called " Energy Talks," the disposition of obsolete mate-program provides callers with rial and equipment. More than tape-recorded messages on a $2.7 million was recovered in l variety of subjects.The topics 1983 through sales of scrap l range from the basics of how to metals and coal ash and by ( read an electrie meter, to con- reclaiming equipment l servation measures, to the most whenever possible. , GSU's long-standing litiga-economical ways to heat and cool a home. Larger issues such tion on behalf of its customers as acid rain and solar energy are GULF STAT E S U T!LITIES CO 18
k m- mn:L ;- n.,
-ffl-Ki
,kN$
' .s cy
+ . , - ,. $
7
- C""'] ~*c1 ;e. %' Y g
_._ _ e y _ 1
.4 y : v7-
#'~
s%d\ > ' _
- w. 4m j
.(-[
i Y W g a 0
+
N., v-emTt. mer e .i e
.am .
l l ) l P
l l 5 I i j AVER AGE RESIDENTIAL ELECTRIC USE i i p ., y , g ~. , - ... . - - - 1 IKWil g g g, A .o jy;{.:Q.; '
)
- 1s :q.g .; e r
iY ,
}l L '.?
Qi$2000i - M-j l 6 ;f .n . .:
- y. Q l Q c80000 > ~. :
V -
;x y&,'
s ht
,.c } ,
- v. ..
nm . . . .. e . t p,q400$Y
--=? . t h;. , s .CM, 9.: y E ,
'q y$5i-j$;q
{ ? - ' - l y ",gf 4 _ :
;rf, % .. s ,, 9 ? 1 trY c gnei& [
8 n n ' L
- ll '
M5k. 1979 1980 1981 1982 1983 against United Gas Pipeline Drilling Company, GSU's was settled in March. Under wholly-owned subsidiary, terms of the settlement, United expended $18.2 million for Gas made a $112 million cash exploration, completion and payment, which was placed in development of oil and gas an interest-bearing escrow reserves in the Texas and Loui-account, with the method of siana Gulf Coast region. This returning the money to cus- included $10.7 million in joint tomers to be determined by ventures with independent regulatory authorities. A pro- operators. At year's end, posal was submitted in January Prudential's proved reserves 1984 which,if approved by the were estimated by the company PUCT, could lead to the actual to be in the range of 16.5 mil-return of about $42 million to lion mcf of gas and 1.3 million Texas customers. There are no barrels of oil or condensate. tentative settlements yet for For exploration, completion and I either Louisiana customers or development in 1984, Pruden-federally regulated wholesale tial has planned and budgeted I l customers. expenditures totalling $14.0 During 1983, Prudential million. gut F S T A r t s U Tit.f rlE S CO 20 I
Line crews from Texas and t_,,,_a ,om ,n ee rebuilding effort to GSL*' yA7 eat ers 1983 replace one of hundreds of transmission and distribution poles in Texas flattened by llurricane Alicia. l
~ ~
1 / crews in the Western Division I 9Q e ;-
-I, eather took its toll on f Southeast Texas during 1983.
was augmented within 24 hours by more than 200 addi-A series of savage wind tional line and service crews s$[I -- .- storms swept across virtually from other GSU divisions and the entire Texas portion of the from neighboring Texas Power i 4 GSU system May 20 and 21. & Light and Dallas Power & These were the most devastat- Light.
. . N, ing tornadoes to strike the area Damage to the GSU system in more than two decades, kill- has been assessed at $5.9 mil-
. m. . it ing at least 10 people and doing lion, making Alicia more g '
hundreds of millions of dollars severe than the May storms that iJf in property damage. hit the same area. However, g* At one point, about 65,000 of financial impact to the company GSU's 265,000 Texas customers was lessened by insurance were without electric power. coverage which allows the
. Dozens of line crews from Loui- company to recoup all losses siana and a neighboring Texas except for the $1 million utility were called in to help deductible for each occurrence.
One final weather assault l repair the more than $3 million in damage to GSU's lines and occurred around Christmas,
- facilities. It took four full days when unseasonably frigid to restore power to all cus- weather blew into the Texas-tomers,and during that time Louisiana area and drove company employees distributed winter demand to new peaks. A more than 87,000 pounds of newly-established winter peak dry ice free to customers to help of 4,480 megawatts that was set prevent thawing and spoiling December 29 was eclipsed on of food in freezers. January 20,1984, when the sys-Just a few months later, Hur- tem reached a new all-time ricane Alicia slammed into the winter peak of 4,651 megawatts.
upper Texas coast with 135 On that same day, the highest mile per hour winds. After roar- single day winter consumption ing directly through Houston in Gulf States history was also August 18, Alicia raged north recorded - 103,240 megawatt-into the western portion of hours. This compares to a max-GSU's service territory. At the imum single day summer con-height of the storm, nearly sumption for 1983 of 107,781 100,000 - almost half - of megawatt-hours.
, CSU's customers in Texas lost Gas operations in Baton i
their electric service. Rouge set record sales on GSU employees responded Christmas day with 120 million { quickly to the emergency. The cubic feet of natural gas j normal complement of 51 delivered to GSU for resale. 19 tt 3 A N N U A L R L f'O R T 21
~. . - .- .
d i 'kWwinh if11t& Financial Section Contents i Management Responsibility for Financial Statements. .22 Selected Financial Data. . .. . .23 Common Stock Prices and Cash Dividends Per Share . . 23 i f 4 . . . j Management's Discussion and Analysis of Results of Operations and Financial Condition . . .24 Statement of Income . .. . . . .27
}
Statement of Sources of Funds Invested in Utility and Other Plant . . . .. .28 Balance Sheet . . . .. .. . 29 Statement of Capitalization . . . . 30 I Statement of Changes in Capital Stock and Retained Earnings . . . . 32 Notes to Financial Statements . . . . . . . 33 } Auditors' Report . . . . . . .42 Statistical Summary . . . . . . . . . .43 Management Responsibility for Financial standards include a review of internal Statements accounting controls, tests of transactions, and t hanagement is responsible for the other procedures sufficient to provide
/i y preparation, integrity, and objectivity of re sonable assurance that the financial the financial statements of Gulf States Utilities st tements are neither materially misleading Company. The statements have been r r c ntain material errors.
prepared in conformity with generally The Board of Directors, through its Audit accepted accounting principles applied on a Committee, has general oversight of consistent basis and, in some cases, reflect management's preparation of the financial amounts based on estimates and judgment of statements and is responsible for engaging, management, giving due consideration to subject to shareholder approval, the - materiality. independent accountants. The Audit - The Company maintains a system of C mmittee, comprised entirely of outside internal controls designed to help give directors, reviews with th( independent-reasonable assurance that the books and accountants the scope of their audits and the ~ records properly reflect the transactions of accounting principles applied in financial the Company and that established policies reporting. The Audit Committee meets I and procedures are followed. Internal control regularly, both separately and jointly, with : systems are subject to inherent limits in the independent accountants, representatives j recognition of the need to balance their costs f management, and the internal auditors, to - with the benefits they produce. The review activities in connection with financial Company's management strives to maintain reporting. The independent accountants have , this balance. full and free access to meet with the Audit Committee, without management Coopers & Lybrand, independent certified . representatives present, to discuss the results , public accountants, are engaged to examine, of their examination and their opinion on in accordance with generally accepted the adequacy of internal accounting controls ! auditing standards, the financial statements ' and the quality of financial reporting. of the Company and issue.a report thereon, - which appears on page 42. Such auditing
- 4
- GULF ST ATES UTILITIES CO. 22 I
I k-
Selected Financial Data For the years ended December 31 (in thousands except per share amounts, ratios, and sales) 1983 1982 1981 1980 1979 Electric Sales (millions of KWH) . 29,005 28,969 30,697 30,585 29,742 Operating Revenue $1,436,188 $1,307,259 $1,221,714 $1,005,226 $ 864,338 Net Income . 229,799 165,979 150,931 117,189 84,181 Income Applicable to Common Stock 180,747 127,030 120,550 92,309 68,559 Earnings Per Average Common Share Outstanding . 2.31 1.95 2.24 2.05 1.74 Dividends Per Share of Common Stock 1.62 1.56 1.48 1.39 1.36 Total Assets, end of year 4,353,398 3,806,111 3,343,419 2,925,701 2,439,345 Long-Term Debt and Preferred Stock Subject to Mandatory Redemption, end of year 2,044,169 1,771,078 1,642,894 1,444,505 1,066,938 Capitalization Ratios: Common Shareholders' Equity. 36.6% 36.0% 34.4% 32.6% 35.6% Preference Stock 2.8 3.2 - - - Preferred Stock Not subject to mandatory redemption 3.8 4.3 5.0 5.8 7.3 Subject to mandatory redemption 5.7 5.6 6.5 7.5 4.0 Long-Term Debt . 51.1 50.9 54.1 54.1 53.1 Return on Average Common Equity 14.78% 12.32% 14.21 % 12.94 % 10.91% Book Value Per Share, end of year $ 15.73 $ 15.25 $ 15.41 $ 15.60 $ 15.53 Ratio of Earnings to Fixed Charges 2.43 2.10 2.10 2.38 2.42 Common Stock Prices and Cash Dividends Per Share For the years ended December 31 Dividends Dividends Paid Paid 1983 Ifigh Low Per Share 1982 Ifigh Low Per Share Fourth Quarter. $ 16% $ 12% $.41 Fourth Quarter. . $ 14 $ 12 $.39 Third Quarter. . . 15 13 % .41 Third Quarter. .. 13 % 11% .39 i Second Quarter 15 % 13% .41 Second Quarter 13% 11% .39 i First Quarter . 14 % 12?4 .39 First Quarter . . 12% 11 % .39 ! The Common Stock of the Company is listed on the New York, Midwest and Pacific Stock ) Exchanges. The approximate number of common shareholders on December 31,1983, was 111,000. ) 1 1983 ANNU AL RF PORT 23 1
) N$h Afanagement's Discussion and increase approved by the Louisiana Public Analysis of Resuits of Operations Service Commission (LPSC). On December and Financial Condition 12,1983, the LPSC denied the Company's Results of Operations application for a $119.4 million elatric rate increase and ordered a $1.1 million reduction Net income and income applicable to in electric rates. At the same time, the LPSC common stock increased by 38 percent and granted the Company $1.5 million of a 42 percent, respectively, during 1983, as requested $2.2 million gas rate increase. The compared to 1982. Earnings per share of Company has filed an appeal with a District common stock also increased by 18 percent Court in Louisiana seeking a reversal of the over 1982, when there were 17 percen* fewer LPSC's action and an order to grant the average shares outstanding. The Company's requested increases. The Company plans to improved financial performance during 1983 file an application for an electric rate resulted primarily from increases placed int increase in Louisiana during the first quarter I effect during the second half of 1982 in the of 1984. Company's wholesale and retail rates. The The Company was granted a $28.8 million beneficial impact of these rate increases will rate increase in its wholesale rates during begin to lessen due to continuing increases f July,1982. in the Company's cost of service and embedded cost of capital. If the Company is During 1983, kilowatt hour sales remained to maintain its current financial condition, it virtually unchanged from the 1982 level. must regularly receive rate increases which This compares to a sales decline of 6 percent recognize these increased costs. (See during 1982, and a sales increase of less than discussion of rate matters under " Operating 1 Percent during 1981 (see the Statistical Revenue.") Summary on page 43). An increase during 1983,in sales to industrial customers of 4 Operating Revenue percent was offset by decreases i,n sales to Operating revenue increased 10 percent residential and wholesale customers of 5 during 1983, as compared to increases of 7 percent and 8 percent, respectively. The percent and 22 percent during 1982 and increase in industrial sales is in part a 1981, respectively. The primary causes of reflection of the improvement in economic these increases are detailed below: conditions experienced in the Company's service area during the latter part of 1983. 1983 1982 1981 The decrease in sales to residential customers Rate Increases . . . . . $127,915 93$3 $120,036 was primarily the result of the milder than Changes in Fuel Cost normal summer weather and the continuing Recovery . . . . . . . (27,205) (19,411) 77,519 effects of price elasticity. The decrease in < Fuel Included in Base . Rates . . . 19,794 13,598 - sales for resale also resulted from the milder sales volume and... summer weather along with the transfer of Other. 8,425 (1,675) 18,933 certain municipal customers to another
$128,929 $ 85,545 $216,488 power supplier during the second half of the The Public Utility Commission of Texas year. The decrease in total sales during 1982, (PUCT) approved a $63.7 million increase in was primarily attributable to decreases in sales to industrial and wholesale customers, rates which was placed in effect during October,1981, and a $57.5 million increase offset in part by increases in residential and which was placed in effect during October, commercial sales. Reduced industrial sales in 1982. The Company currently has pending 1982 were a reflection of the economic an application for a two-step rate increase in recession experienced throughout the year.
Texas (see Note 11 to the Financial Operating Expenses and Taxes Statements). Fuel expenses decreased by 2 percent During September,1982, the Company during 1983, and 7 percent during 1982. placed into effect a $97.3 million rate These decreases followed a 27 percent ( l GULF S T AT ES U TILITIE S CO. 24 i l 1 I
_- _ . . _ _ _ - - _ . - _ - .~- f' increase in fuel expense during 1981. A increases in the cost of gas purchased for reduction in the unit price paid for fuel resale, and increased administrative and during 1983 was the primary reason for the general expenses. Costs associated with the decrease in fuel expense. This reduction in operation of new generating units have also unit price reflects a greater availability of contributed to the increase in other operating lower priced natural gas and the increased expenses. Increased labor and material costs utilization of lower priced coal-fired associated with the performance of scheduled generation in the Company's fuel mix. The and unscheduled maintenan'ce resulted in decrease in fuel expense during 1982, was increases in total maintenance expense due to reduced generation requirements - during 1983 and 1981. A decrease in the caused by lower sales, partially offset by amount of unscheduled maintenance increases in the unit price of fuel. Increased performed during 1982, offset these increased fuel expense during 1981 resulted primarily costs and resulted in a decrease in from increased unit prices paid for fuel and maintenance expense during 1982. mcreased generation requirements. Substantially all fuel and purchased power Depreciation expense increased as a result costs in excess of those included in base rates of Pl acing the Company's portion of Nelson are deferred or accrued until such costs are Unit 6 and Big Cajun 2 Unit 3 into approved by regulatory authorities and commercial operation. reflected in customer billings and thus have income taxes increased during 1983, as a no effect on net income. result of the increase in pre-tax income. An Purchased power expense increased 11 increase in pre-tax income during 1982,- percent during 1983, compared to increases combined with the effects of certain tax of 21 percent and 10 percent during 1982 and adjustments recorded during 1981, resulted 1981. The 1983 increase is attributable to in the increase in income taxes during 1982. increased unit prices resulting primarily Non-Operating Items from costs associated with the Company's buyback of the co-participants share of increases in allowance for funds used capacity in Nelson Unit 6, a 540 MW coal. during construction (AFUDC) are the result fired generating unit placed in service on of increases in the rate used to compute May 31,1982. The increased unit prices were AFUDC, along with a decrease in the amount offset in part by decreased energy purchases. of construction work in progress (CWIP) The increase in purchase 3 power expeme upon which the Company is allowed to earn during 1982 and 1981 was caused primarily a cash return. The increase in the'AFUDC by increases in the unit price paid 'or energy ate results from the continuing increases in
> purchased. the Company's embedded cost of capital.
On January 1,1985, the Company's long. Increased interest on long-term debt term contract for the purchase of low-cost resulted from the interest requirements on , natural gas expires. The Company expects first mortgage and pollution control bonds i that the contract expiration will have a . issued during 1983, and the latter half of - significant impact on total fuel and' 1982, offset in part by reduced interest
- purchased power expense and anticipates .
requirements on the revolving credit facility that the additional costs attributable to its due to a decrease in the average amount . wholesale and Louisiana retail customers will outstanding and lower interest rates. The be recovered through fuel adjustment issuances of long-term debt were used to clauses. The Company has filed a request *refund short and intermediate-term with the PUCT to recover these additional borrowings incurred in connection with the fuel costs through a fixed fuel factor in its Company's construction program.The Texas retail rates. decrease in short term interest expense - l Other operating expenses increased as a - resulted primarily from lower short-term
- result of higher labor and material costs,- interest rates.
1983 ANNU AL REPOR T 25
l ntancinh hMmatiW Financings and Capital Resources securities at reasonable rates. This can only During 1983, the Company invested $643 be accomplished if the rates which the million (including $127 million of AFUDC) Company is allowed to charge are sufficient in utility and other plant. It is currently to provide the necessary levels of debt and estimated that the Company's construction preferred stock coverage ratios and common expenditures will total $568 million in 1984, stock equity earnings. During January,1984, ' and $500 million in 1985 (including $160 the Company's credit rating, as assigned by million and $179 million of AFUDC, independent credit rating agencies, was respectively). A total of $436 million or 68 lowered. Despite the lower rating, the percent of the Company's 1983 investment in Company's first mortgage bonds and utility and other plant was attributable to the preferred stock remain investment grade ! Company's investment in River 13end Unit 1, securities. The impact which the new ratings a 940 MW nuclear-fueled generating unit. will have on the Company's ability to fund During 1983, the Company also continued its construction program is indeterminable at funding its 42 percent share of Big Cajun 2 this time. During 1983, the Company Unit 3 which was placed in commercial financed $424 million of its total capital operation on September 1. In addition to requirements of $663 million through sales funding the construction program, the of longuerm debt ($217 million), common Company must periodically redeem preferred stock ($137 million), preferred stock ($30 stock in accordance with sinking fund million), and net increased borrowings under ' provisions, and pay dividends to the holders the revolving credit agreement ($40 million). of its preferred and preference stock. A total of $10 million of debt matured and The Company's construction program is was repaid during 1983. Average daily short-funded primarily through the use of short term borrowings were approximately $96 and intermediate-term borrowings, which are million during 1983, up five percent from subsequently refinanced using proceeds from last year. (For information concerning funds long-term debt and equity issues. During available to the Company under a revolving 1983,66 percent of the Company's credit agreement, bank lines of credit, and construction expenditures were funded from short-term borrowings, see Notes 8 and 9 to external sources. Internally generated funds the Financial Statements.) and AFUDC equal the remaining 34 percent The Company's Mortgage Indenture places of construction costs during 1983, compared limitations on the amount of first mortgage to 26 percent during 1982. It is currently bonds which the Company is allowed to estimated that internally generated funds issue. The most restrictive of these is and AFUDC will be equal to an average of presently that based on the ratio of pre-tax approximately 45 percent of construction earnings to interest on such bonds. Ilased on costs (including AFUDC) during 1984 and the results of operations for the year ended 1985. In proved internal cash generation will December 31,1983, the Company would be directly related to adequate and timely have been able to issue at year end, $452 rate relief which recognizes increases in the million in additional first mortgage bonds Company's embedded cost of capital and its (assuming an interest rate of 13% percent for cost of service and allows the Company to such bonds). earn a cash return on a significant portion of Limitations based on the ratio of after-tax CWIP. While the PUCT and the Federal earnings to fixed charges and preferred Energy Regulatory Commission currently dividends are imposed by the Company's allow the Company to earn a cash return on Restated Articles of Incorporation upon the a portion of its CWIP, the LPSC, in its order issuance of additional preferred stock. Ilased issued during December,1983, disallowed on the results of operations for the year the inclusion of any CWIP in rate base. ended December 31,1983, the Company The Company's ability to adequately fund would have been able to issue at year end, its construction program continues to be $300 million in additional preferred stock dependent upon its ability to gain access to (assuming a 12% percent dividend rate for the capital markets and issue debt and equity such stock). GULF ST ATES UTILITitS CO. 26 .
Statement of Income For the years ended December 31 (in thousands except per share amounts) 1983 1982 1981 I Operating Revenue Electric . . . $1,305,449 $1,188,944 $1,106,522 Steam . . . . . .. 83,646 75,213 77,624 } ) Gas . . . . . . .. . 47,093 43,102 37,568 1,436,188 1,307,259 1,221,714 Operating Expenses and Taxes Fuel. . . . . 438,154 446,521 481,285 Purchased power (Note 5). . . . . .. . 201,325 182,106 150,463 Other operations . . .. .. . . ... 173,151 151,660 133,647 Maintenance . . .. . . . . . .. . . 78,971 65,321 70,867 Depreciation and amortization . .. 103,251 89,291 78,194 Income Taxes Federal (Note 2). .. .. .. . .. . . . . . . 70,538 52,847 32,187 State . .. . . . ....... . . . . . 4,236 3,314 2,933 Other taxes .. . .. .. .. . .. ... . . . 53,269 45,790 41,845 1,122,895 1,036,850 991,421 Operating Income . . . . ... .. . . .. . 313,293 270,409 230,293 Other Income and Deductions Allowance for equity funds used during construction ... 88,172 56,141 40,741 Nonutility subsidiary operations. . . .... . . (2,228) (206) 11,498 Other - net . . . . ... .. . .... ...... .... .. . . .. (1,172) 2,581 1,996 Income Before Interest Charges . . . . .. . . ...... ... . 398,065 328,925 284,528 Interest Charges Long-term debt (Note 8) . .. . . ........ . . .. . 196,502 181,985 151,427 Short-term debt and other . . . . . . . . . . . . . . ... ... . .. 10,577 14,398 17,698 Allowance for borrowed funds used during construction . . . (38,813) (33,437) (35,528) 168,266 162,946 133,597 Net Income. , . . . . .. . .... .. . .. . .. .. ... 229,799 165,979 150,931 Dividends on Preferred and Preference Stock . . . . . . . . . . . . . . 49,052 38,949 30,381 Income Applicable to Common Stock . . . . . . . . . . . . . . . . .. . $ 180,747 $ 127,030 $ 120,550 Average Shares of Common Stock Outstanding ...... . . ..... 78,233 65,056 53,851 Earnings Per Average Share of Common Stock Outstanding . $ 2.31 $ 1.95 $ 2.24 The accompanying notes are an integral part of the financial statements. 198 3 ANNU AL REPOR T 27
kiflHCitih '/IflH/(l$tyl' Statement of Sources of Funds Invested in Utility and Other Plant l For the years ended December 31 (in thousands) 1983 1982 1981 h Provided From Operations f Net income $ 229,799 $ 165,979 $ 150,931 - s Principal income items not requiring current funds ' 103,251 89,291 78,194 Depreciation and amortization , Deferred income taxes - net . 37,246 32,684 (6,252) ; 24,670 14,020 32,029 investment tax credits - net . Equity component of allowance for funds used during construction (88,172) (56,141) (40,741) [ Nonutility subsidiary operations. 2,228 206 (11,498) , 309,022 246,039 202,663 Total provided from operations . L)ividends , Preferred and preference (49,052) (38,949) (30,381) Common (127,263) (101,223) (79,379) i Reinvested funds provided from operations 132,707 105,867 92,903 Provided from Financing h Sales of securities ; Common stock . 136,481 164,820 132,762 [ Preferred stock subject to mandatory redemption 30,000 - - t Preference stock - 100,000 - First mortgage bonds (principal amount) 200,000 167,000 168,000 Guaranteed debentures .
- 60,000 60,000 Change in escrow deposit . (11,048) (24,000) -
Pollution control bonds. 17,450 48,285 - i 3,093 52,162 (20,433) I Net change in short-term borrowings Retirement of first mortgage bonds and convertible , debentures (11,049) (26,507) (41,970) (53,691) (16,181) i Equipment purchase obligations . - Nuclear fuel lease transaction - 108,969 - Net change in revolving credit agreement . 40,000 (120,000) 30,000 Term loan agreement . . _ _ 24,000 _ _ _ _ Total provided from financing. _ 404,927 _ 501,038 . 312,178 i Other Sources and Uses Investments in and advances to subsidiary companies (13,973) (11,582) (1,123) i Retirement of Uranox Trust - (27,216) - Other - net (including changes in working capital) . 31,253 5,246 (8,014) Total other sources and uses. _ 17,28_0 _ (33,552) J ,137) Expenditures for Utility and Other Plant . . . . 554,914 573,353 395,944 Equity component of allowance for funds used during 56,141 40,741 construction 88,172 Invested in Utility and Other Plant . . . . . $ 643,086 $ 629,494, $ 436,685 The accompanying notes are an integral part of the financial statements. GULF S T A TES UTILITl[5 CO. 28 1
i k Balance Sheet December 31 (in thousands) 1983 19s2 Assets Utility and Other Plant, at original cost (Note 5)
, Plant in service. . . . ...... ... . .. . $3,106,834 $2,760,434 Less: Accumulated provision for depreciation . . . 904,919 811,853 2,201,915 1,948,581 Construction work in progress (Notes 10 and 11) . . . 1,844,163 1,574,925 4,046,078 3,523,506
( Other Propert and Investments Non-utili subsidiary companies . .. . 55,595 43,850 Other. . .. . .. ... 6,791 7,035 62,386 50,885 Current Assets Cash and temporary cash investments . .... .. . .. 3,026 6,230 Receivables Customers . . . . . . . . 94,532 102,188 Other.... ... . . . . 20,780 11,563 Afaterials and supplies . . . . . . . . ... 13,224 16,111 Fuel stock . . . . . . . . . . . . .. . . . .. .. . 42,330 42,526 Prepayments and other . . . ... . .. . .... . 16,574 6,560 190,466 185,178 Deferred Charges Unamortized debt expense . . .. . . .. . .......... 16,777 14,567 Unamortized project cancellation costs .. .. . . . .. ... ....... .. 9,594 13,451 Accumulated deferred income taxes . . ... .. , . . . 10,831 8,378 Other. . . . .. . .. .. . 17,266 10,146 54,468 46,542
$4,353,398 $3,806,111 Capitalization and Liabilities
~ ~ ~ -
Capitalization (See Statement of Capitalization) Common shareholders' equity .. .. . .. ..... .... $1,316,599 $1,128,991 Preference stock . , , . . .. . . .... .. . 100,000 100,000 Preferred stock Not subject to mandatory redemption ... . .. ..... .. .... 136,444 136,444 Subject to mandatory redemption . ..... .... ...... . . 204,336 175,553 Long-term debt. . . . . ..... ... . .... ... ... 1,839,833 1,595,525 Current Liabilities Lon);-term debt due within one year ............ ... . . .... - 10,000 Preferred stock sinki fund requirements (Note 7) ....... .. ... .. 1,217 -
> Notes payable (Note lla n ks . .. .. .. .. . . . . ... .. ...... ... . . .. 90,000 69,000 Commercial paper . . . . .. . . .... ....... . . ... - 17,907 Accounts payable 3 Trade . . . . .... .. . . . . ........ . ...... 98,955 88,456 '
Subsidiaries . . . ....... .... .. ..................... 3,819 2,350 Customer deposits . . . . ..... .. ...... ............. .... . 12,212 9,599 Taxes accrued . . ....... . .... .. . ................. .... 12,011 15,073 Interest accrued . .... .. .. ... ..... ... .............. 61,695 55,221 Other. . ... . . .... .. .... ...... .. .............. 49,911 40,855 Deferred Credits investment tax credits. . . ..... ..... ... ........... ........ 176,399 151,696 l Accumulated deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . .. . .. 239,2 % 199,842 Other.. ... . ... . . .. .... ...... .. ... ................ 10,665 9,599 426,360 361,137 i ! Commitments and Contingencies (Notes 5,10 and 11) . . . . . . ... .. .... - -
- $4,353,398 $3,806,111 l
m l The accompanying notes are an integral part of the financial statements. 198 3 ANNU AL REPORT 29 l
1 MWICih 'l #IHiGiitV l Statement of Capitalization l December 31 l (in thousands) l 1983 1982 Common Shareholders' Equity (Note 6) Common stock Authorized 200,000,000 shares without par value Outstanding 83,687,644 and 74,049,921 shares, respectively . . . . $ 903,606 $ 767,125 Premium and expense on capital stock . . . .. . . . 3,601 4,501 Other paid-in capital . ... ... . . . ... .. .. .. . . . 25,876 25,876 Retained earnings .. . . . . . ... . ... . . . 383,516 331,489 1,316,599 1,128,991 Preference Stock (Note 6) Authorized 20,000,000 shares without par value, cumulative Outstanding 4,000,000 shares Current J Dividend Shares Redemption Series Outstanding Price
$4.40 ... . . ... ... ... ,,, .. 2,000,000 $31.90 50,000 50,000 3.8 5 . . . . . . . . . . . .. . 2,000,000 31.35 50,000 50,000 100,000 100,000
, Preferred Stock (Notes 6 and 7) Authorized 6,000,000 shares, $100 par value, cumulative Outstanding 3,419,970 and 3,119,970 shares, respectively l i Current Dividend Shares Redemption Series Outstanding Price Not subject to mandatory redemption
$4.40 . . .... . . . .. . .. .. . 51,173 $ 108.00 5,117 5,117 4.50 . . . . . . .... ...... ...... ., 5,830 105.00 583 583
! 4.40 1949 . . . . . . . . . ...., . . . 1,655 103.00 166 166 ( 4.20 . .. . . .... .. . 9,745 102.818 975 975 4.44 .. ... .. ..... ... .. . 14,804 103.75 1,480 1,480
- 5.00 . . . . . , . .. 10,993 104.25 1,099 1,099 5.08 ....... . .. . . . . . ... . 26,845 104.63 2,685 2,685 i 4.52 . . . .. .. .. .. ... ......... 10,564 103.57 1,056 1,056 1 6.08 ....... .... . ... .. . 32,829 103.34 3,283 3,283 7.56 . . . .. . . . ... . . . . . 350,000 103.80 35,000 35,000 4
4 8.52 .. .. . ....... ...... ..... 500,000 106.43 50,000 50,000 9.96 . . ... .. . . .......... 350,000 111.60 35,000 35,000 136,444 136,444 Subject to mandatory redemption l 8.80 . ..... .. ... . ......... 371,835 105.00 37,183 37,183 9.75 . , . .... ... ... . 33,697 105.00 3,370 3,370 8.64 . . . . . . ...... ..... . .... 350,000 108.64 35,000 35,000 11.48 .., . . .... . . ... .. .. 500,000 111.48 50,000 50,000
- 13.64 . . . . . . . . . . . . . . . ..... ... 500,000 113.64 50,000 50,000 Adjustable Rate . . . . . . . . . . . . . . . . . . . . 300,000 111.50 30,000 -
205,553 175,553 l Preferred stock sinking fund requirement (1,217) - 204,336 175,553 (Statement continurJ 1mfollowing page) ( GULF S TAfl5 U TILITitS CO. 30 I
1983 1982 Long-Term Debt (Note 8) , First mortgage bonds hiaturing 1984 through 1988 - 4%% due September 1,1986 . . 15,000 15,000 14%% due hfarch 1,1987 . .. .... .. 100,000 100,000 4%% due October l,1987. . . . . .. . ,, . 17,000 17,000 4% due Afay 1,1988. . . . . .. . . . 20,000 20,000 hiaturing 1989 through 1993 - 4%% through 17%% . .. . 295,000 295,000 hiaturing 1994 through 1998 - 5% through 6%% . . .. 120,000 120,000 hiaturing 1999 through 2003 - 7%% through 8%% . .. 195,000 195,000 hiaturing 2004 through 2008 -- 8%% through 10.15% . . 220,000 220,000 hiaturing 2009 through 2013 - 10%% through 15% . . .. 525,000 325,000 1,507,000 1,307,000 Pollution control and industrial development bonds 7% due 2006. ... . .. . . .. . . .. . . .. . .. 25,000 25,000 5.9% due 2007 . . . . . . . .. . .. .. 23,000 23,000 10%% due 2012. .. .. . . . ... ..... . . 48,285 48,285 9%% due 2013. .. .. . . ... . . .. .. 17,450 - Debentures Guaranteed debentures 17%% due 1988. . . . ....... .... . .. . . ... 60,000 60,000 16% due 1990 . . ............ ..... .... . . .. ... .... 60,000 60,000 Escrow deposit . . . . ... . . . ..... . .. .. . .. . . .. (35,048) (24,000) Convertible debentures - 7%% due 1992. . ... .. ..... . .. .. 2,927 3,976 Term loan agreement Variable rates (11% at December 31,1983) due 1987. . . .. . 24,000 24,000 Revolving credit agreement ... ... ... ... .. . .......... 110,000 70,000 1,842,614 1,597,261 Unamortized premium and discount on debt - net . ...... .. .. . (2,781) (1,736) 1,839,833 1,595,525
$3,597,212 $3,136,513 First mortgage bond and preferred stock sinking fund requirements and long-term debt maturities for each of the nest five years are as follows:
Sinking Fund Requirements First Mortgage Bonds Preferred Long-Term Cash Other Stock Debt Maturities 1984. .. ... ... . ... .. . $ - $14,064 $ 1,217 $ - 1985. . . .. ............ .. - 14,064 2,617 - 1986............ .. ........ - 14,064 6,617 15,000 1987...... ... .. ... .. .. 8,570 13,680 6,617 141,000 1988.............. ......... 27,320 13,440 6,617 80,000 The accompanying notes are an integral part of the financial statements. 1983 ANNU AL REPOR T 31
MGMCih i91HRh$0V Statement of Changes in Capital Stock and Retained Earnings For the years ended December 31 (in thousands) Preferred Stock Sub'ect l to Premium Other Mandatory Preference Common (Less Paid-In Retained Redemption _ Stock Stock Expense) C_apital Earnin55 Balance: January 1,1981. . .. . $175,553 $ - $469,543 $(2,169) $25,847 $269,975 Net income 1981 . . . . 150,931 Common stock sold: Public offerings (8,000,000 shares) . . 92,375 Conversion of debentures (1,625,572 shares) . . .. ............. . 23,791 Dividend reinvestment and stock Purchase plan (570,428 shares) . 6,648 Employ)ee shares benefit plans (883,053
. ... ..... .......... . 9,936 i Acquisition of subsidiary (588,000 s h a res) . . . . . . . . . . . .. 12 29 Dividends declared:
Preferred . . ... . (30,381) Common . . . . .. . . (79,379) Capital stock expense . . ... . 81 (3,856) Balance: December 31,1981 . . 175,553 - 602,305 (2,088) 25,876 307,290 Net income - 1982 . . . . . . . . . . . . . . . . . . 165,979 Preference stock sold (4,000,000 shares) 100,000 5,840 Common stock sold: Public offerings (10,000,000 shares) . 121,250 Conversion of debentures (1,245,746 shares) . . .... ............... 16,291 Dividend reinvestment and stock purchase plan (1,636,481 shares) . 20,056 Employ)ee benefit shares .......... . plans (592,817 .. . ... 7,223 Dividends declared: Preferred and ... (38,949 Common . . . preference.
.. .. ... ... . (101,223 Capital stock expense . . . . . .. .. 749 _(1,608 Balance: December 31,1982 . ....... 175,553 100,000 767,125 4,501 25,876 331,489 Net income - 1983 . ... . . ..... 229,799 Preferred stock:
Public offering (300,000 shares) . . . . . 30,000 Sinking fund requirements. . . . . . . . (1,217) Common stock sold: Public offerings (6,000,000 shares) . 85,500 Conversion of debentures (79,141 shares) . . . .................... 1,036 Dividend reinvestment and stock i purchase plan (2,534,689 shares) . . . . 35,025 1 Employ)ee benefit shares ............ plans (1,023,893
.. ..... ..... 14,920 i Dividends declared:
Preferred and .......... (49,052 Common . . . . ............ preference .
.. ... .. (127,263 l
Capital stock expense . ......... ..... _(900) (1,457 Balance: December 31,1983 . . ....... $204336 $100,000 $903,606 $_3,601 $25,876 $383,516 l The accompanying notes are an integral part of the financial statements. l GULF STATES UTILITits CO. 32
Notes to the Financial have the effect of increasing the Company's reported net income by their full amounts. Statements nowever, when the reiatea utiiity piant is 1.
. placed in service, a return on and recovery of Summary of s.i nificant these costs is permitted, subject to regulatory Accounting Po scies approval, in determining the rates charged System of Accounts. The accounting for utility service. The Company computed records of the Company are maintained in AFUDC at the following net of tax rates accordance with the Uniform System of compounded semi-annually:
i Accounts as prescribed by the Federal Energy Regulatory Commission (FERC) and adopted J nuary 1,1981-March 31,1981 . 8.50% A Pril 1,1981-December 31,1981 9.00 by the Louisiana Public Service Commission . (LPSC) and the Public Utility Commission of I#"" 'I ' 198 -September 30,1982 . 9.50 Texas (PUCT). Utility Plant and Depreciation. Utility and Effective January 1,1984, the AFUDC rate other plant is stated at original cost when was reduced to 10 percent. first dedicated to public service, and the Revenue, Tucl and Purchased Forcer. The amounts shown do not represent Company records revenue as billed to its reproduction costs or current values. Costs of customers on a cycle billing basis. Revenue is repairs and minor replacements are charged not recorded for energy delivered and to expense as incurred. The original cost of unbilled at the end of each fiscal period. The depreciable utility plant retired and cost of Company's wholesale and Louisiana retail removal, less salvage, are charged to rate schedules provide for adjustments to accumulated provision for depreciation. The substantially all rates for increases or provision for depreciation is computed using decreases in the costs of fuel for generation, the straight-line method at rates which will Purchased power, and gas distributed. amortize the unrecovered cost of depreciable Effective with customer billings after plant over the estimated remaining service September 15,1983, the Company's Texas life. retail rate schedules were revised to include Composite depreciation rates were as an interim fixed fuel factor based on fuel I"" ** costs actually incurred during the twelve months ended June 30,1983. Such factor us3 9 82 9 81 remains the same until the Company files for Electric . . . . . . .. 3.60% 3.66% 3.70% a general rate increase or until the PUCT Steam . .. . 2.34 2.44 2.80 orders a reconciliation for any over or under Total 3mpa'n[ . . ' .' 3 e llecti ns of fuel c st. Fuel and purchased power costs in excess of those included in Allowance for Tur.ds Used During Construction base rates in both Texas and Louisiana are and Capitali:ation of Interest. Allowance for deferred (or accrued) until such costs are funds used during construction (AFUDC)is a billed (or credited) to customers. l utility accounting practice calculated under Inventories. The Company's fuel I guidelines prescribed by the FERC and inventories are comprised of fuel oil, valued capitalized as part of the cost of utility plant at average cost, and coal, valued at last in, representing the cost of servicing the capital first-out (LIFO) cost. Materials and supplies invested in construction work in progress. inventories are valued at average cost. Such AFUDC has been segregated into tw Income Tarcs. The Company and its component parts - borrowed and equity subsidiaries file a consolidated federal funds. That portion allocated to borrowed income tax return. Income taxes are allocated funds is reflected as an adjustment to interest to the individual companies based on their
- charges. Iloth the equity and the borrowed respective taxable income or loss and portions of AFUDC are non-cash items which investment tax credits.
1983 ANNU AL RE PORT 33
-- - - - _ - .. - - - . . _ - - .~.-. -
HIGMClY Y
! The Company follows a policy of 2. Federal Income Taxes 4
comprehensive interperiod income tax The provisions for federal income taxes allocation where such treatment is permitted were less than the amounts computed by for ratemaking purposes by regulatory applying the statutory federal income tax bodies. Deferred income taxes result from rate to net income before federal income timing differences in the recognition of taxes. The reasons for these differences are as revenue and expenses for tax and accounting foggow3; purposes. These deferred income taxes are 19s3 1982 19s1 charged or credited to income and recorded (in thousands) m' bef '* j as deferred debits or credits. N' g M ,'i ,,m [ taxes $304,330 $221.526 $185,016 ! Investment tax credits have been deferred rederat income taxes at statutory tax rate . . . . $139,992 $101,902 $ 85.107 and are being amortized ratably over the d j useful lives of the related property. "$'[f",',',", i ','es u'It i n g I Nonutility Subsidiary Companies. The "y",;,,,,,, g,,, l Company has made investments in and taxable income of AFUDC . . . . . . . . . (58,413) (40,875) (32,053) advances to its whollI -owned nonutilitI Items capitalized for subsidiary companies, Prudential Drilling book purposes but Company (Prudential) and Varibus expensed for tax l Corporation (Varibus), and accounts for its d,"n'.P
' (' ' (* " (' 4' de Y[r/EE investments on the equity basis. Prudential is degreciation d ' * " *' '
engaged primarily in the exploration for,
! gds's d r[WJ/
m[E*f' development, production and marketing of years taxes an other i oil and gas properties. Varibus operates (1,172) (13,159) pipelines and holds lignite reserves. rehs't[ne
,d es . . . . .(4,056) ..
j Equity in earnings of Retirement Plan. Effective January 1,1983, "osidiN#es.... . .. i,025 95 (5,289) the Company's pension plan, which covers Amortization of l all employees meeting certain age and dh[r i ms ' .1 ($f22 ((9l ((U >! l service requirements, was changed from a Total federal l contributory to a non contributory plan.The income taxes . . $ 74,531 $ 55,547 5 34.085
; Company's policy is to fund accrued pension Effective federal income cost annually, Past and prior service costs are tax rate . . . . . . . , 24.5% 25.1% 18.4 %
i being funded and amortized by the Company over periods of up to forty years.
! Earnings Per Share. Earnings per share are based on the weighted average number of i common shares outstanding during the
- period. Earnings per share assuming
- conversion of convertible debentures are not l presented because the amount of dilution which would result if the outstanding convertible debentures had been converted ;
on the date of the original issue is immaterial. I l 4 I i l GULF ST AT E 5 UilllflES CO. 34
( The components of federal income tames are as I ""*"; income with the balance of such costs for 39g3 3982 1981 each period charged to construction and (in thousands) other accounts. Charged to operating empenses: The valuation date of the latest pension inc$"ne' tai"es $ 9.276 $ 7.317 $ s779 Deferred federal ye rs for each plan year ended December 31. income tases - net: The information for the plan years 1982 and Tas de reciation . 30,477 21,468 9,255 1981, is shown below. Such valuation cNsIr'#" uct Yon costs .8,686 2,751 (4,392) inf rmation is not yet available with respect Amortised nuclear to plan year 1983. unit cancellation 1982 1981 costs . . . . ... (1,629) (1,629) (1,659) Fuel and purchased... (in thousands except percents) power costs Actuarial present value of deferred (accrued) 339 4.554 (6,532) accumulated plan benefits: M espenses Vested . $56,508 $44,189 Nonvested . 4,003 2,912 pur ss. (1,441) 2,300 (2,300) Other. 160 2,066 7 Prasent value of accumulated Total deferred plan benefits . $60,511 $47,101 federal income taxes - net 36,592 31.510 (5,621) Net assets available for
, benefits . $95,474 $69,730 credits - net . 24,670 14,020 32.029 Assumed rate of return in Total federal income determining actuarial tases charged to {enefitsresent values of plan operating expenses. 70,538 52,847 32.187 9% 10%
Charged to other income - net . 3,993 2,700 1,898 Total federai 4. Leases income tases $ 74,531 $ 55,547 $ 34,085 The Company has existing agreements for The Company was able to reduce its the leasing of certain vehicles, coal rail cars income tax liability for the years 1983,1982, and other equipment, and buildings. Lease and 1981, by utilizing investment tax credits. rental payments were $13,867,000, At December 31,1983, the Company had $12,799,000, and $6,830,000 during 1983, accumulated carryforwards of investment tax 1982, and 1981, respectively. Of such credits of $111.9 million. Included in this mounts, $12,064,000, $10,395,000, and amount was $13.2 million of investment tax $5,679,000, respectively, were charged to credits claimed by the Company as permitted income, with the remainder charged to by the internal Revenue Code as a result of c nstructi n and other accounts.
> the provisions of the Employee Stock Future minimum lease payments under Ownership Plan (ESOP). The provisions for noncancellable capital and operating leases, claiming the additional 1% percent (excluding those payments to be due under investment based tax credit expired the nuclear fuel lease as discussed below) for December 31,1982. The investment tax credit each of the next five years and in the carryforwards, including those related to the aggregate at December 31,1983, are ESOP, expire through 1998, and will be used estimated to be (in thousands):
to reduce income taxes in future years. $ 17,040 1984 ........ . ......
- 3. Retirement Plan 1985 ...... ........... 17,475 i The total costs of the Company's pension I 86 .. ..... .... ....
g3 l plan for the years ended December 31,1983, g9gg;',',;;',',';,, , 12,386 1982, and 1981, were $8,213,000, $3,698,000, Remaining years ...... 227,718 l and $6,696,000, respectively. Of such j305,982 amounts, 55,343,000, $2,472,000, and
$4,245,000, respectively, were charged to 1983 ANNU AL REPOR T 35
JMH/H$Hh 'Nff/H6$W The Company has a nuclear fuel financing agreement, purchased approximately $11 agreement with a non-affiliated third party million of nuclear fuel from Sam Rayburn fuel corporation (tne Lessor). The agreement G&T (SRG&T). The Company subsequently provides for the Lessor to finance up to $300 sold the nuclear fuel to the Lessor. million of nuclear fuel for future use at River in accordance with the ratemaking llend Unit 1, a 940 MW nuclear-fueled treatment afforded its leases by regulatory generating unit. Once River llend Unit 1 is agencies, the Company does not capitalize placed into commercial operation, the those leases which meet the criteria for Company will make quarterly payments to capital leases under the guidelines of the Lessor for the cost (including capitalized Statement of Financial Accounting Standards interest) of fuel consumed during the (SFAS) No.13. However, had such leases quarter. The Lessor's investment in nuclear been accounted for as capital leases, the fuel was approximately $142 million and balance sheet would have included leased
$115 million (including accumulated carrying assets and related liabilities of approximately charges) at December 31,1983 and 1982, $168.5 million at December 31,1983, and respectively. During December,1983, the $154.9 million at December 31,1982.
Company,in accordance with a prior
- 5. Jointly-Owned Facilities The Company owns an undivided interest in three jointly-owned electric generating facilities as detailed below (dollars in thousands):
Company Ownership as of December 31,1983 Accumu- Construc-Plant lated tion l'uel in Depre- Work in In Service
% MW Source Service clation Progress Dates Roy S. Nelson Unit 6 70% 378 Coal $408,015 $21,180 $ -
May 31,1982 liig Cajun 2 Unit 3. 4 2 ' 71 227 Coal 210,465 2,283 - September 1, 1983 River llend Unit 1 70'7e 658 Nuclear - - 1,677,639 December,1985 (Estimate) The Company's share of operations and The fixed costs applicable to the buybacks maintenance expense related to the jointly- of power are based on gross plant investment owned units is included in the Company's and other factors which are not currently Statement of Income. determinable for years subsequent to 1983. The Company has agreements with the For the years ended December 31,1983 and 1982, the fixed costs associated with the participants in Nelson Unit 6 to purchase all or a portion of their share of the unit's buybacks were $37,346,000 and $22,302,000, capacity for periods ranging from seven to respectively. fourteen years. Through May 31,1983,the River llend Unit 1 is jointly owned by the Company purchased 100 percent of such Company (70 percent) and Cajun Electric capacity from the participants. Effective June Power Cooperative, Inc (CEPCO)(30 1,1983, SRG&T, owner of a 10 percent percent). On September 30,1983, the Rural undivided interest, began utilizing 1 percent Electrification Administration approved of the capacity of the unit. The variable costs CEPCO's application for an additional loan associated with such buybacks are composed uarantee designed to permit CEPCO to of fuel costs and operations and maintenance finance the present estimated balance of its expenses.1or the years ended December 31, share of construction costs. 1983 and 1982, variable costs applicable to the buybacks were $25,878,000 and The Company has an agreement with
$12,816,000, respectively. CEPCO whereby, after River llend Unit 1 30 GUL F 5 T Af t S UTILtilt s CO.
f
e I goes into commercial operation, the For information with respect to the amount Company will be obligated to purchase 100 of preferred stock currently issuable subject percent of CEPCO's share of the unit's to this limitation, see " Management's capacity for one year. Thereafter, the Discussion and Analysis of Results of Company is obligated to purchase declining Operations and Financial Condition." amounts for two years. The fixed costs At the Company's option, all or part of its applicable to the buybacks of power are preferred and preference stock may be based in part on final unit costs and other redeemed at stated prices. Certain issues are factors and are not determinable at this time. subject to restrictions which prohibit The variable costs associated with such
)
redemption for a period of time, directly or buybacks will be composed of fuel costs and indirectly out of the proceeds of or in operations and maintenance expenses. anticipation of borrowings or issuance of
- 6. Capital Stock and Retained additional stock of equal or prior rank Earnings having a lower interest cost or dividend rate.
Certain limitations on the payment of cash 7. Preferred Stock Subject to dividends on common stock are contained in Mandatory Redemption the Company's Restated Articles of Incorporation, as amended, and indentures. The dividend rate on the Adjustable Rate Cumulative Preferred Stock Series A,(ARPb) The most restrictive limitation is contained is adjusted quarterly based upon certain in the Trust indenture, dated as of September I,1977. Ilased on such limitations, the applicable U.S. Treasury rates. In no event retamed earnings available for payment of will the dividend rate be less than 7 percent dividends as of December 31,1983 and 1982, nor greater than 13 percent.The dividend rate for the quarter ended March 14,1984, is amounted to approximately $289 million and
$234 million, respectively (see Note 7 for 12.55 percent per annum.
restrictions on the payment of dividends on The $8.80 and $9.75 Dividend Preferred common stock under the sinking fund Stock are entitled to mandatory sinking provisions for preferred stock). During May, funds sufficient to retire 3 percent of the 1983, the Company increased the number of shares of each series beginning in 1984. The authorized common shares from 100,000,000 $8.64, $11.48, and $13.64 Dividend Preferred to 200,000,000. Stock, along with the ARPS, are entitled to mandatory sinking funds sufficient to retire 4 At December 31,1983, the Company had reserved 6,110,217 shares of common stock to percent of the shares of each series be issued in connection with its employee beginning in the sixth year after the date of benefit plans and Dividend Reinvestment issuance. Sinking fund requirements for the f and Stock Purchase Plan. next five years are detailed in the Statement of Capitalization. Payment of dividends on preference stock is subordinate to payment of dividends on Preferred stock sinking fund provisions preferred stock and preferred stock sinking restrict the payment of dividends on fund obligations, but has priority to payment common and preference stock and the of dividends on common stock. There are no purchase of such stock by the Company limitations in the Company's Restated unless the sinking fund requirements are Articles of Incorporation, as amended, on the issuance of preference stock. 8. Long-Term Debt At December 31,1983, the Company had The Company's Mortgage contains sinking authoriecd 10,000,000 shares of preferred fund provisions which require, generally, stock without par value (none issued). The that the Company make annual cash deposits Company's Restated Articles of equal to 1.2 percent of the greatest aggregate incorporation, as amended, place limitations principal amount of first mortgage bonds on the issuance of additional preferred stock. outstanding or, in lieu thereof, to apply 198] ANNU AL RtPOR T 37
- s. , i ,
//16/ICIHV * // 61//H1+1If/fr property additions or reacquired first $2,552,000, from the escrow deposit has been ;
mortgage bonds for that purpose. The offset against long-term interest expense for Company has satisfied the mortgage 1983 and 1982, respectively. requirements in past years and plans to meet 9. Notes Payable current and future requirements by As f December 31,1983, the Company certifying "available net additions" to the trustee. Those series of the Company's first had agreements with banks and banking institutions which provided for short-term mortgage bonds which were privately placed lines f credit totaling approximately $190 require cash sinking funds beginning in 1987. First mortgage bond sinking fund million. Interest rates associated with these lines are based on the LIBOR, prime or requirements for each of the next five years certificate of deposit rate or other mutually are detailed in the Statement of agreeable rate to be determined at the time Capitalization. of borrowing. Commitment fees range from The Company's Mortgage Indenture % of I percent to % of I percent of amount of contains an interest coverage covenant which available credit. In lieu of commitment fees, limits the amount of first mortgage bonds certain banks require a cash balance be which the Company may issue. For maintained equal to 5 percent to 10 percent information with respect to the additional of the commitment. amount of first mortgage bonds which the Inf rmation regarding short-term debt Company is currently able to issue under this utstanding is detailed below: limitation, see " Management's Discussion and Analysis of Results of Operations and 1983 1982 1981 Financial Condition". (in thousands) During 1982, the Company entered into an Maximum amount utstanding during agreement for an $800 million revolving credit agreement to be made available until l'a'nk notes . . $146.000 $141,750 $ 35.000 commercial paper . 120,000 121,s85 122.840 September 12,1986, with the balance then outstanding being repayable over a three- Average daily year period beginning in 1987. Borrowings * *""g"[o,",',sta n , nd i n g 56,265 43.661 1I,930 during the revolving credit term of the commercial paper . 39,470 47,795 69,782 agreement bear interest based on the Prime Weighted average Rate as determined by Irving Trust interest rate for u Company, the London Interbank Offering ',"',","/enpanding Rate (LIBOR) plus % percent and the idnk notes . . 10.01s 9.s8% - c mmercial paper . - 9 61 13.28 % Certificate of Deposit Rate plus % percent. At h ge December 31,1983, the amount outstanding $nNe*r,ted, av under the revolving credit agreement was Bank notes . . 9.56 12.53 18.41 Commercial paper . 9.32 15.18 17.64
$110 million bearing an interest rate of 11 percent (a) Calculated b dividing the sum of the effective
*: n$[ng! #*"*" #
The Company and Gulf States Overseas i['"'$'b
,,d Finance, N.V. (Finance), a wholly-owned subsidiary of the Company, entered into an
- 10. Commitments and Contingencies escrow agreement, whereby Finance Construction. The 1984 construction deposited with an escrow agent $24 million program is currently estimated to be $568 in certificates of deposit. Since the use of the million, including approximately $160 deposit is restricted to payment to the trustee millio.i of AFUDC. In connection with the for both series of guaranteed debentures in construction program, the Company has the event of default, the deposit has been incurred substantial expenditures and treated as an offset to such debentures in the commitments prior to receipt of all required financial statements presented herein, governmental permits or licenses, including Related interest income of $2,807,000 and the license required to commence GULF S TATES UTILITIES CO. 38
( l commercial operation of River Hend Unit 1. 11. Subsequent Events No provision is made in the financial At the January,1984, Board of Directors' statements for possible losses which could meeting the Company cancelled construction occur if such permits or licenses should not of River Bend Unit 2, a proposed 940 htW be obtained. nuclear-fueled generating unit. Cancellation l Purchase Power Agreement. The Company costs are expected to total $120.4 million and the Southern Companies have entered before considering the related tax reduction into an interchange arrangement, subject to of $38 million. The cancellation costs include approval by the FERC, which replaces an approximately $38.5 million of AFUDC. The / earlier contract. The arrangement, as recently Company has requested authorization from amended, provides for the Company to the PUCT to allow the cancellation costs to purchase capacity and energy from coal-fired be recovered through rates over a five year units in amounts ranging from 400 htW in amortization period. The Company intends 1985 to 700 MW from 1988 through 1992. to seek similar recovery through rates from The arrangement also provides for purchases the LPSC and the FERC. The Company of long-term power expected to be lower in cannot presently predict the amount of cost than the unit power (phasing from 650 cancellation costs, if any, which the A1W in 1984 to 300 htW in 1988-1992). The regulatory bodies will allow to be recovered agreement requires the Company to build a through rates. 500 kilovolt line scheduled for completion in During January,1984, the Company filed an 1984, that will tie the Company's system application with the PUCT for a rate increase with that of the Southern Companies and to be implemented in two steps. The provido for purchases of up to 500 htW of Company is requesting a $161.2 million power prior to the expected completion of increase to become effective in 1984, with the the new interconnection facilities when additional $264.6 million becoming effective other transmission can be arranged. in 1985. Virtually all of the second part of The fixed costs applicable to the purchases the rate increase is to cover the increased of power are based in part on costs of fuel and purchased power costs to be existing and future generating units and incurred beginning in January 1985, when a other factors and are not determinable at this long term contract for the purchase of low time. The variable costs associated with such cost natural gas expires. purchases will be composed of fuel costs and During January,1984, the Company issued operations and maintenance expenses. 450,000 shares of $100 par value, Adjustable Proposed Remedial Order, A Proposed Rate Cumulative Preferred Stock, Series B. Remedial Order (an " Order") was issued by The dividend rate for the initial and second the Economic Regulatory Administration dividends, payable on March 15 and June 15, (ERA) of the Department of Energy (DOE) 1984, will be 12.50 percent per annum, which alleged Varibus charged the Company Thereafter, the dividend rate will be adjusted approximately $7.5 million in excess of the quarterly based upon certain applicable U.S. maximum lawful selling price on fuel oil Treasury rates; however,in no event will the sales made during late 1973 and early 1974. dividend rate be less than 7 percent per The Company and Varibus have reached a annum nor greater than 13% percent per settlement agreement with the ERA which annum The Adjustable Rate Cumulative provides that Varibus will deposit $750,000, Preferred Stock is entitled to a mandatory representing principal and interest,in an sinking fund beginning in 1990, sufficient to escrow account pending a decision by the redeem annually 5 percent of the shares DOE on Varibus' request to exempt its fuel originally issued. oil sales from the mandatory petroleum price regulations. 198 3 ANNU AL R EPOR T 39
NIG//$ l Nff
- 12. Quarterly Financial Information (Unaudited)
(in thousands except per share amounts) Earnings Per Average Common O_perating Operating Net Share 1983 Kevenue Income Income Outstanding
- First Quarter .. ... ... ....... $340,070 $ 65,804 $ 45,332 $.45 Second Quarter. . . .. .. . .. . ... 328,662 73,492 52,935 .54 Third Quarter . .. .. . .. . .. . . .. . 420,560 99,151 80,933 .85 Fourth Quarter . . . . . .. . .. ...... 346,896 74,846 50,599 .46 1982 First Quarter. .. . .. . .. . . .. $285,737 $ 51,728 $ 26,242 $.31 Second Quarter .... .. ... .. .. . .. 309,758 61.939 34,464 .40 Third Quarter. . . . .... . . ........ 375,816 85,277 56,885 .69 Fourth Quarter. .. .. .. ... . .. ..... . ... 335,948 71,465 48,388 .53
- The individual quarters may not add to the yearly totals since the per share amounts are based upon the average number of shares outstanding during each quarter.
- 13. Supplemental Information on effect of in0ation on the economy as a Changing Prices (Unaudited) whole.
In the past years, inflation has had serious Current Cost Method effects on the utility industry. High rates of inflation affect the Company's financial The Current Cost Method, as applied by position in several ways: 1) Provisions for the Company, utilizes the Handy-Whitman depreciation to replace plant and equipment Index of Public Utility Construction Costs. become inadequate as construction costs This method measures the specific increase. 2) As construction costs have risen, inflationary effect on utility plant, such effect so have the amounts of capital which must being greater or less than the effect of , be acquired. The Company, therefore, is general inflation rate. ; financing larger amounts and paying more Neither of the two methods should be for them. 3) In addition to the rise in c nstrued as anything but an estimate of the construction costs, the cost of providing eHects of inflation on the Company. The capital to build and operate the business
' APPli cation of both methods require continues to rise. 4) Conservation efforts on subjective assumptions which have affected the part of the consumers,in response to the statements presented.
rising utility bills, has slowed the rate of growth in sales. (1) Depreciation - Under both the i Generally accepted accounting principles Constant Dollar and Current Cost make no provision to account for the effects methods, depreciation was computed
/
of inflation. Under the mandate of Financial by applying the Company's Accounting Standards Board (FASil) depreciation rates to the indexed plant Statement No. 33, however, an attempt is amounts. Under the ratemaking k made to measure these effects upon the prescribed by the regulatory Company. Two methods of measurement are commissions to which the Company is used: 1) Constant Dollar and 2) Current Cost. subject, only the historical costs of Constant Dollar Method plant is recoverable as depreciation. The adjustment to net recoverable cost The Constant Dollar method attempts to reflects this policy. gauge the general effects of inflation on the Company. It utilizes the Consumer Price (2) Taxes - FASil No. 33 does not Index (CPI U) for all Urban Consumers in its provide for the adjustment of income approach. The CPI U measures the general taxes. i i GULF STAfis UTILITIES cO. 40
f l i i (3) Gain from Decline in Purchasing the Company has resulted in an Power of Net Amounts Owed - In unrealized holding gain because periods of inflation, holders of future payment of the debt will be monetary assets suffer a decline in made with inflated dollars. Because purchasing power, while holders of present ratemaking limits the recovery
} monetary liabilities experience a gain. of depreciation to historical cost, this The large amount of long-term debt of gain will not be realized.
Statement of Income Adjusted for Changing Prices (Unaudited) Constant Currr nt Conventional Dollar Cost IIIstorical Average Average Cost 1983 Dollars 1983 Dollars (in thousands) For the year ended December 31,1983 Operating revenue. . . . ..... . .. . $1,436,188 $1,436,188 $1,436,188 Fuel . ..... .. . 438,154 438,154 438,154 Purchased power . . . .. ...... . 201,325 201,325 201,325 Other operations and maintenance . .. . .. .. 252,122 252,122 252,122 Depreciation and amortization . .... . ... . . 103,251 219,599 234,312 Taxes . . .. ..... ... .... 128,043 128,043 128,043 Other - net . . .. . ... ...... ... .... (84,772) (84,772) (84,772) Interest charges. . . . . ... .. ... 168,266 _ 168,266 168,266 1,206,389 1,322,737 1,337,450 Net income (excluding reduction to net recoverable cost) . .. . ..... . . .. . ... .... .. $ 229,799 $ 113,451' $ 98,738 Increase in specific prices (current cost) of utility and other plant held during the year * * . . . . . . . . . . . $ 176,487 Adjustment to net recoverable cost . ...... . . ..... $ 322 15,035 Effect of increase in general price level ... .. .... (171,231) Excess of increase in general price level over increase in specific prices after reduction to net recoverable cost . .. . .. ... . ..... . ..... . . 20,291 L Gain from decline in purchasing power of net amounts owed . . . ... .... . .. ... .. 71,737 71,737 N?t . .. .. ... . . ........... . . ....... $ 72,059 $ 92,028
- Including the adjustment to net recoverable cost, the gain on a constant dollar basis would have been $113,773 for 1983.
*
- At December 31,1983, current cost of utility and other plant, net of accumulated depreciation was $5,882,894 while historical cost or net cost recoverable through depreciation was $4,046,078.
e 10H 3 ANNU AL R EPOR T 41
1 l
'blGHCIRW/ th/Huiif/r i 4
1 Five Year Comparison of Selected Supplementary Financial Data Adjusted for Effects of Changing Prices (Unaudited) l Years Ended December 31, 1983 1982 ~ 1981 1980 1979 (in thousands of average 1983 dollars) k Operating revenue. .... ... $1,436,188 $1,349,312 $1,338,324 $1,215,395 $1,186,377 llistorical cost information adjusted for general inflation: Net income (excluding reduction to net recoverable costi . ... ..... 113,451 57,914 63,151 45,605 29,683 Net income per common share (after dividend requirements on preferred and preference stock). . .82 .27 .55 .34 .21 Net assets at year-end at net recoverable cost ... . . . . . 1,526,946 1,360,014 1,127,275 1,033,470 1,038,327 Current Cost Information: Net income (excluding reduction to net recoverable cost) . .... . .. 98,738 35,835 48,709 24,313 7,550 income (Loss) per common share ' (after dividend requirements on preferred and preference stock and excluding reduction to riet recoverable cost) . . ....... . ... .64 (.07) .29 (.13) (.35) Excess of increase in p neral price level over increase in specific prices i after reduction to net recoverable wst . . ... ... .. .. 20,291 (l5,885) (l54,729) (249,056) (235,003) . Net assets at year-end at net recoverable cost . . . . . ... 1,526,946 1,360,014 1,127,275 1,038,470 1,038,327 General Information: Gain from decline in purchasing power of net amounts owed . . 71,737 96,771 180,378 227,060 217,915 Cash dividends declared per common s ha re . . . . .... .. .. ... .. 1.62 1.61 1.62 1.68 1.87 Market price per common share at ' year-end . . .. ....... ...... 12.54 13.56 12.59 13.42 14.28 Average consumer price index . 298.4 289.1 272.4 246.8 217.4 Auditor's Report To the 5!urcholders of Gulf States Utilities Crimpany: We have examined the balance sbeet and statement of capitalization of GULF STATES UTILITIES COMPANY as of December 31,1083, and 1982, and the related statements of Ireome, sources of funds invested in utility and other plant, and < hanges in capital stock ind retained earnings for each of the three years in the period ended' December 31.198?. Our examinations we e made in accordance with generally accepted auditing standan'.s and, accordingly, included such tests of the accounting records and such other auditing procedures as we es ns:dered necessary in the circumstances. In our opinion. the financial statements referred to abovipresent fairly the enancial position of GULF STATES UTILITIES COMI'ANY as c Decernber 31,1983 and 1982, and the results of its operations and sources of its
- funds invested in u
- ility and other plant for each of the three years in the period ended December 31,1983, in .
! conformity with generally accep:ed accounting priatiples applied on a consistent basis. COCrLRS A L) BRAND , i flouston, Texas Febnury 3,1984 ,- - r v GULT S T A T E5 U TILITIE 5 CO. 42 i 4
Statistical Summary For the years ended December 31 1983 1982 1981 1980 1979 ELECTRIC Number of customers at year end: Residential . 475,782 465,162 455,160 438,560 423,830 Commercial 57,446 55,265 52,955 52,731 50,807 Industrial 4,146 4,165 3,852 3,414 3,386 Temporary construction 3,624 3,132 2,871 3,354 3,279 Other. 2,101 1,985 1,974 1,984 1,873 Total . 543,099 529,709 516,812 500,043 483,195 Sales - Kilowatt hours (thousands): Residential . . 5,686,436 5,991,578 5,717,715 5,682,016 5,147,436 Commercial 4,341,093 4,359,739 4,178,126 3,969,390 3,759,289 Industrial . 14,257,141 13,728,469 15,066,330 14,870,419 14,961,211 Temporary construction , 55,927 48,170 50,306 37,691 44,059 Other. 2,109,974 2,261,350 2,797,761 3,098,910 2,638,490 Total Sales. 26,450,571 26,389,306 27,810,238 27,658,426 26,550,485 Revenue - (thousands): Residential . . . $ 3%,026 $ 362,223 $ 315,625 $ 249,603 $ 203,029 Commercial . . 255,147 226,104 198,676 157,616 133,988 Industrial ... 534,066 495,461 494,388 413,265 364,797 Temporary construction 3,699 2,786 2,723 1,728 1,673 Other, , . 116,511 102,370 95,110 82,659 65,928 Total Electric Revenue . . $1,305,449 51,188,944 $1,106,522 $ 904,871 $ 769,415 Average Annual KWi{ Use Per Customer Residential . 12,097 13,015 12,786 13,173 12,374 Commercial . , 77,138 80,814 79,558 76,529 75,291 Industrial .
. . 3,431,322 3,451,098 4,095,224 4,340,461 4,402,946 Revenue Per KWil - (cents):
Residential . 6.% 6.05 5.52 4.39 3.94 Commercial . 5.88 5.19 4.76 3.97 3.56 Industrial ... .. .. .. . . 3,75 3.61 3.28 2.78 2.44 Electric Energy Output - Thousands of KWil Net Generated . . . . . . .. . . 25,846,238 25,523,512 28,115,700 27,775,374 25,381,996 Net Purchased and interchanged . 4,987,292 5,160,731 4,411,795 4,507,245 5,871,615 30,833,530 30,684,243 32,527,495 32,282,619 31,253,611 Syster, Peak Load - Including Interruptible Load - (MW) . , , .... .. . . . .. ,. 5,348 5,164 5,542 5,604 5,229 Total Capability, including Contract Purchases at Time , of System Peak Load (MW) . . ... .. 7,152 7,208 6,745 6,602 6,169 Load Facter .. . . 65.8% 67.8% 67.0% 65.2% 68.2% STI:AM Steam Revenue (thousands) . . , , , $ 83,646 $ 75,213 $ 77,624 5 69,346 $ 68,278 Steam Sales - KWII (millions). . . . . .- . 2,555 2,579 2,887 2,927 3,191 Steam Salen - millions of pounds . . . . 8,559 9,447 12,209 14,906 14,796 GAS Gas Resenue (thousands) . . . . . $ 47,093 $ 43,102 $ 37,568 $ 31,009 $ 26,645 Number of Customers . . . .,
.. .. .. , 85,737 85,394 85,664 85,218 83,910 Output - MM eu. ft.cf natural gas purchased . . 9,149 8,229 8,738 9,148 10,333 Sales - MM cu. f t. .. ... . .. . .. ,, 8,498 8,535 8,599 9,097 9,892 Wl:ATIIER DATA:
Cooling degree days (Normal 2,732) . . . . .. . . 2,418 2,901 2,775 2,910 2,502 Percentage change from normal ,. , (11.5) 6.2 1.6 6.5 (8.4) IIcating degree days (Normal l,570) . ., . . , , 1,647 1,587 1,620 1,637 1,885 Percentage change from normal . . . .. 4.9 1.1 3.2 4.3 20.1 1983 ANNU AL REPORT 43
- _ _ . - ~ ~ ~ ~ s .p . I i s Officers (; ' i jj s Chairman
~ _ _ . - - - -
- Albert 11. Newton, Ill, (0) 47 p g, 9,, gg Vice President-Prudential Drilung Co.
Chairman of the Board and Chief Executive Officer Fred C. Repper (5) S6 Vice President-Public Affairs President Edward J. Servan (5) 62 Nc,rman R. Lee (35) 59 Vice President-Production President and Chief Operating Officer Aubrey D. Sprawls (34) 55 Vice President-Marketing and Executive Vice Presidents Consumer Services Joseph E. Bondurant (26) 54 Summa L.Stelly (35) 57 Executive Vice President-Operations Vice President-Louisiana Operations Joseph L. Donnelly (5) 54 J. Gary Weigand (6) 48 Executive Vice President-Finance Vice President-Nuclear Operaticns Edward M. Loggins (25) S3 Jasper F. Worthy (28 > 55 Executive Vice President- Administrative Vice President-General Services and TechmcalServices Senior Vice Presidents John W. Conley (26) 52 f
" '" ~
- Seni r cP d nt Executive Projects James E. Moss (25) 47 William J. Cahill, Jr. (3) 60 Division Vice President-Baton Rouge Senior Vice President-River Bend Nuclear Group Arden D. Loughmi!!er (23) 45 E. Linn Draper (5) 41
'l Senior Vice President-External Affairs J. Ted Meinscher (33) 51 Division Vice President-Lake Charles Vice Presidents Ronald M. McKenzie (16) 43 James R. Aldridge(3)53 Divisi n Vice President-P rt Arthur Vice President-Human Resources Other Officers William E. Barksdale (26) 52 Vice President-Technical Services Leslie D. CobH23) 48 ccretary James C. Deddens (:) 55 Vice President- Bobby J. Willis (22) 47 River Bend Nuclear Group Controller James 11. Derr, Jr. (43) 63 Jack L Schenck (2) 45 Vice President-Power Plant Engineering Treasurer and Design Roy E. Eyler (25) 59 Anthony 1. Gabrielle (3) 56 Assistant Secretary Vice President-Computer Applications Jon P. Trevelise (3) 38 Charles D. Class (34) 55 Assistant Controller Vice President-Texas Operations ' Clyde W. McBride (6) 31 ,
Assistant Treasurer Calvin J. liebert P1) 49 Vice President-Financial Services , William J. Jef ferson (3) 54 ( ) Years of senice Vice President-Rates and Regulatory Affairs George T. McCollough (4161 Vice President-Fuels and Materials e t A j / 5 e L
'N
r Directors Principal Offices 350 Pine Street
" John W. Barton Beaumont, Texas M01 President -C.B. Enterprises, Inc.
Baton Rouge, La. (1970) Divisions Martin Goland - President-Southwest Research Institute 285 Liberty Avenue San Antonio, Tx. (1983) Beaumont, Texas M01 Edwin liiam 1540 Ninth Avenue Vice President-Tucker Anthony Port Arthur. Texas 77640 Management Corp. Highway 75 North
' Boston, \ tass. (1959) Conroe, Texas 77301 i
Dr. Frederic A. llolloway 446 North 3oulevard Consultant Baton Rouge, Louisiana 70802 Retired Exxon Vice President-Science 314 Broad Street and Technology Lake Charles, Louisiana 70601 Baton Rouge, La. (1979) William II. LeBlanc, Jr. Stockholder Information President-Baton Rouge Supply Co., Inc. Stock Listing Baton Rouge, 12.(1974) Gulf States Utilities Company's
- Norman R. Lee Common Stock is traded under the j- President and Chief Operating Otficer symbol GSU on the New York.
Beaumont, Tx. (1967) Midwest and Pacific Stock Exchanges.
- Paul W. Murrill Chairman of the Board and St ck Transfer Agents Chis f Executive Officer Beaumont, Tx. (1978) Gulf States Utilities Company l
Beaumont, Texas Alvin T. Raetnch, Sr. htorgan Guaranty Trust Company R,etired Assistant to the New York, New York
\ ice President and General Manager-U.S. Chemical Division First National Bank of Chicago of PPG Industries. Inc. Chicago, Illinois Lake Charles. La. (1975)
Registrars Monroe 1. Rathbone, Jr. First City National Bank of Beaumont Medical doctor and partner- Beaumont, Texas The Surgical Clinic Baton Rouge, La. (1975) M rgan Guaranty Trust Company New York, New York tus, The First National Bank of Chicago Ir i! nt Chicago, Ilhnois University of Texas at Austin Austin. Tx. (1976) Dividend Reinvestment Plan Agent
! 'Nat S. Rogers Gulf States Utilities Company Chairman of the Board-First City P. O. Box 1671 Bancorporation of Texas, Inc. Beaumont. Texas mM Houston, Tx. (1978)
- Bismark A. Steir.hagen Partner-Steinhagen Oil Co.
Beaumont, Tx. (1974) James E. Taussig 11 Real Estate Developrr.ent Lake Charles, La. (1975)
*Etecutive Committee
' Chairman. Executive Committee
. ( Wear Elected Form IO.K The Form 10-K Annual Report to the Securities and Exchange Commission and GSU's 1983 Financial and Statistical Report can be obtained f
l without charge from Leslie D. Cobb, Secretary. P. O. Box 2951, Beaumont, Texas mm. l ! Notice of Annual Meeting The 1084 Annual Meeting of Shareholders will be held at 2 p.m., Thursday, May 3,1934. in the company's headquarters,350 Pine Street, Beaumont, Texas. Formal notices of the meeting. proxy statements and proxies will be mailed to the common shareholders on or about March 28.1084. Shareholders are invited to attend, but if they cannot, they are urged to fill out and .eturn their proxies.
i Gulf States utilities Bulk Rate P. O. Box 2951 U.S. POSTAGE Beaumont, Texas 77704 PAID Houston, Texas Permit Number 8048l l 1 2
O GULF STATES UTILITIES COMPANY
.g PO%T OFFicrHOX 295i
- 8 L A U M O PJ T TEXAS 77704 AREA CCDL 713 838-6631 April 13, 1984 RBG- 17,581 File No. G9.5 Mr. Harold R. Denton Director, Nuclear Reactor Regulation U. S. Nuclear Regulatory Commission Washington, D. C. 20555
Dear Mr. Denton:
River Bend Station Unit 1 Docket No. 50-458 Annual Financial Report Enclosed are ten (10) copies of the Gulf States Utilities Company 1983 Annual Report. This report is being submitted in accordance with Section 50.71 of Title 10 of the Code of Federal Regulations and U. S. Nuclear Regulatory Commission Regulatory Guide 10.1. Sincerely, L$ s
~
n- J . E. Bo'oker / Manager-Engineering Nuclear Fuels & Licensing River Bend Nuclear Group JEB/WJR/ /lp Enclosures
\ ge
.}}