ML20083L691
| ML20083L691 | |
| Person / Time | |
|---|---|
| Site: | Vermont Yankee File:NorthStar Vermont Yankee icon.png |
| Issue date: | 04/13/1984 |
| From: | Morgan G VERMONT YANKEE NUCLEAR POWER CORP. |
| To: | Vassallo D Office of Nuclear Reactor Regulation |
| References | |
| NUDOCS 8404170332 | |
| Download: ML20083L691 (77) | |
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VEllMONT Y ANKEE NUCLEAlt POWER CORPORATION
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. MS_ no s. ac, ie9. rerry naao. Brattiedoro vr osaoi k 5 (80?) 257 s27i April 13, 1984 United States Nuclear Regulatory Comm.
Office of Nuclear Reactor Regulation Washington, D.C. 20555 Attn: Dominic Vasallo Re: NRC License No. DPR 28, Docket 50-271
Dear Mr. Vasallo:
Enclosed are ten (10) copies of Vermont Yankee's certified financials for the year ending December 31, 1983.
Very truly ours, i
Glenn J. Morgae Assistant Treasurer GJM/ljk encl.
cc: J. Sinclair 8404170332 840413 PDR ADOCK 05000271 1
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r e FORM 10-X SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) 0F THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended Connission File No.1-6557 December 31, 1983 VERMONT YANKEE NUCLEAR POWER CORPORATION (Exact name of registrant)
Vermont 03-0217843 (State of incorporation) (IRS Employer Identification No.)
RD 5, Rox 169, Ferry Road, Rrattleboro, Vermont, 05301 802-257-5271
( Address of principal executive offices) (Telephone Number)
Securities registered pursuant to Section 12(h) of the Act:
Name of each exchange on Title of each class which registered First Morgage Bonds, Series A New York Stock Exchange 9-5/8% Oue 1998 First Mortgage Ronds, Series 9 New York Stock Exchange 8 1/2% Due 1998 Securities to be registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 40 days: Yes X No State the aggregate market value of the voting stock held by non-affiliates of the registrant: $40,001,400, based upon the par value of the common stock. There is no market in this security.
400,014 shares of common stock, $100 par value, are outstanding as of December 31, 1983.
DOCUMENTS INCORPORATED 9Y REFERENCE The following documents, or indicated portions thereof, have been incorporated herein by reference: None, d
e o Varmont Yankee Nuclear Power Corporation Form 10-K 1483 PART I Item 1 - Business The Company,' incorporated under the laws of Vermont on August 4,1066, has constructed and owns and operates a nuclear-powered generating plant (the
" Plant") with a capacity of about 528 megawatts (net). The Plant is located in Vernon, Vermont. The Company sells the Plant's capacity and output to its nine sponsoring utilities. The Company's principal office is located at RD 5, Box 169, Ferry Road, Brattleboro, Vermont 05301.
The Plant commenced commercial operation on November 30, 1972 under the terms of a temporary operating license issued by the Atomic Energy Commission, predecessor to the Nuclear Regulatory Commission. A 40 year operating license was issued on February 78, 1473 and expires in December, 2007. (See item 3 for additional information regarding licensing.)
Events at Three Mile Island Nuclear Unit No. 2 in Pennsylvania ("TMI")
have prompted a rigorous reexamination of safety related equipment and operating procedures in all nuclear facilities. New regulatory requirements involving both physical and procedural changes have been and are being promulgated, with which all nuclear facilities will have to comply. Until the scope of these requirements, as they apply to the Plant, and the schedules for compliance have been fully defined, neither the cost of all modifications nor their effect, if any, on the operation of the Plant can be definitively determined. The Company anticipates these and other requirements will necessitate significant capital expenditures in the future.
Relationship to Sponsors The Company is sponsored by nine investor-owned New England utilities (the " Sponsors"). The Company has entered into long-term contracts with its Sponsors relating to the sale of the Plant's capacity and output and the provision of capital.
Power Contracts: Each Sponsor has entered into a Power Contract, dated as of February 1,1968, as amended as of June 1,1972 and April 15,1083, with the Company (the " Power Contracts"). Under the Power Contracts each Sponsor is committed to purchase a specified percentage of the capacity and output of the Plant and pay therefor, beginning December 1,1972, a like percentage of amounts sufficient to pay its fuel costs, total operating expenses
-(including a depreciation accrual not less than the rate of 3.846% per annum),
interest on its debt and a return on its equity equal to 8 1/2% or such-greater percentage, if any, as shall be obtained by dividing (a) the sum of (i) 10% multiplied by common stock equity investments as of such date plus (ii) the stated dividend rate per annun of each issue of preferred stock' bearing a particular dividend rate outstanding on such date multiplied by the aggregate par.value of said issue, by (b) equity investment as of such date.
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e a Vermont Yankee Nuclear Power Corporation Form 10-K 1983 In addition, the Company has filed with the FERC Additional Power Contracts intended to; (1) insure the availability of adequate decommissioning funds in the event the plant terminates operations prematurely; and (2) extend the terms and conditions of the existing Power Contracts beyond November 30, 2002 to the end of the service life and the completion of the decommissioning of the unit.
I The Company has no liability under the Power Contra':ts to any Sponsor on account of non-delivery of power for reasons beyond the Company's reasonable {
control and a Sponsor has no right to set off against payments required to be made by it under its Power Contract amounts cwed to it by the Company or claims by it against the Company. A Sponso; is not excused from performing its Power Contract by reason of the failure of another Sponsor to perform its Power Contract, nor is any Sponsor obligated to purchase a defaulting Sponsor's entitlement percentage of the capacity and output of the Plant.
Cancellation by Sponsors: The obligations of the Sponsors to make payments under the Power Contracts are unconditional, subject only to each Sponsor's right to cancel its Power Contract if deliveries cannot he made to the Sponsor because either (i) the Plant is damaged to the extent of being completely or substantially completely destroyed, or (ii) the Plant is taken '
by exercise of the right of eminent domain or a similar right or power, or l (iii) (a) the Plant cannot he used because of contamination or because a )
necessary license or authorization is made subject to specified conditions I which are not met, and (b) the situation cannot be rectified to an extent which will permit the Company to make deliveries to the Sponsor from the Plant.
With respect to (iii) (a) above, all permits of regulatory bodies required to date for construction and operation of the Plant have been obtained.
As to any further permits required to he obtained for the future operation of the Plant and the continuing jurisdiction of regulatory bodies over the Plant and Company, see " Regulation" below. The cancellation right under (iii) above exists only if the situation there referred to cannot be rectified. In the opinion of management such circumstances are remote. As indicated below under
" Capital Funds Agreements" the Sponsors are required to furnish all funds necessary to keep the Plant in operation or to make any changes or additions required to meet regulatory conditions for operation of the Plant.
Regulatory Aoproval: The obligations of the parties to the Power Contracts are subject to all applicable state and federal laws and orders and other duly authorized action of governmental authority.. The Power Contracts N e been filed with the Federal Power Commission (now the Federal Energy Regulatory Commission ("FERC") as a rate schedule under the Federal Power Act and are sub-ject to the continuing jurisdiction of FERC. The Power Contracts have also been filed with the Vermont Public Service Board. In the opinion of the Company's counsel, no other state regulatory authority has jurisdiction with respect to the making or performance of the Power Contracts.
< a Vermont Yanken Nuclear Power Corporation Form 10-X 1983 Capital Funds Agreements: Each Sponsor has also entered into a Capital Funds Agreement, dated as or February 1,196R, as amended March 12, 1968 with the Company, pursuant to which each Sponsor agreed to provide its
-percentage of the Company's capital requirements not obtained from other sources, subject to obtaining necessary authorizations of regulatory bodies in each _ instance. " Capital requirements" is defined as funds required (i) to complete construction of the plant and place it in commercial operation at a gross capability of at least 520 mw electric, (ii) to make necessary additions and replacements to insure continued regular operation or to restore regular operation at that level, (iii) to make any changes necessary to meet regulatory conditions for operations at that level, (iv) to provide materials and supplies required for operation and to finance the cost of the fuel inventory, (v) to operate the plant at a gross capability of less than 520 mw electric, if the Company should at any time determine that it would he desirable and if the Company holds or can obtain the public authorizations required so to operate the Plant, and (vi) to repay bank debt incurred for any of the foregoing purposes. The Capital Funds Agreements provide that any loans or advances obtained by the Company from the Sponsors, in lieu of offering additional shares of its Common Stock, shall bear interest at rates not less than 1 1/2%
in excess of the lowest prime rate then in effect at any bank in New York, New York.
Offerings to Other !!tilities: As a result of a reoffering of the common stock of the Company made by Central Vermont and Green Mountain (the " Vermont Sponsors") in 1967 to all other electric distribution utilities in Vermont, four municipal and cooperative utilities purchased 5.8328% of the Company's common stock. Consummation of this transaction reduced the Vermont Sponsors' actual holdings of the Company's stock to 31.3% and 17.9%, respectively, but did not affect the obligations of the Vermont Sponsors to the Company under their Power Contracts and Capital Funds Agreements.
Reanlation NRC As the owner and operator of a nuclear reactor, the Company is ' subject to the jurisdiction of the Nuclear Regulatory Commission under the Atomic Energy Act of 1964, as amended. The NRC has broad supervisory and regulatory jurisdic-tion over the construction and operation of nuclear reactors, particularly with regard to public health and safety.
SEC The Company and five of its Sponsors are subsidiaries of registered holding companies and as such are subject to regulation by the Securities and Exchange
1 s Vermont Yankee Nuclear Power Corporation Form 10-X 1983 Commission ("SEC") under the Public Utility Holding Company Act of 1935 (the "1935 Act") with respect to various matters, including the issuance of securi-ties. The acquisition by these five Sponsors of securities of the Company (including any acquisitions pursuant to the Capital Funds Agreements) is subject to approval by the SEC under the 1935 Act. In addition, the Company is a " subsidiary" under the 1435 Act of the Vermont Sponsors, which Sponsors have informed the Company that, although they are " holding companies" under the 1935 Act, they are exempt holding companies pursuant to Rule 2 promulgated by the SEC under such Act.
FERC The Company is a "public utility" within the meaning of Part II of the Federal Power Act and is subject to regulation thereunder by FERC as to its rates (which include the Power Contracts) and other matters.
State Commissions The Company is subject to regulation by the Vennont Public Service Roard with respect to various matters, including the issuance of securities.
The Company is also subject to the jurisdiction of the Vermont Environmental Protection Agency (including its subdivisions), the Vermont Water Pesources Roard, the Vermont Department of Water Resources (which both have jurisdiction in respect of discharges into the Connecticut River and related impacts on the environs) and the Vermont Roard of Health.
Nuclear Fuel Supply The cycle of production and utilization of nuclear fuel for nuclear generating units consists of (1) the mining and milling of uranium ore, (2) the conversion of the resulting concentrate to uranium hexafluoride, (3) the enrichment of the uranium hexafluoride, (4) the fabrication of fuel assemblies, (5) the utilization of the nuclear fuel and (6) the storage, reprocessing or disposal of spent fuel.
The Company has commitments for nuclear fuel purchases through 1988 approximating $76,600,000 Expenditures for such commitments will be approxima-tely $10,400,000, $24,300,000, $13,300,000, $13,600,000 and $15,000,000 in the-years 1984 through 1988 respectively.
The Company has contracted for uranium concentrate to meet substantially all its power production requirements through 1991. It has two long-term contracts for uranium by-product extraction for 20 and 12 years, respectively, each of which was expected to provide up to about 20% of its uranium require-ments during these periods. Under the 20 year contract, the Company is
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- committed to make minimum payments, aggregating $5,341,000 plus interest l~ as of December 31, 1983, over a period ending not later than 1943 regardless l
of the amount of uranium that is actually produced. After prolonged start-up problems, the uranium by-product extraction facility achieved commercial operation in June 1983 and has since been producing near design capacity. In January 1983 the Company and others initiated legal action to determine whether the 12 year contract could he terminated because of the seller's failure to perform properly thereunder.
The Campany has an enrichment contract with the United States Energy Research and Development Administration through 2001 and has contracted for fuel fabrication requirements through 1091 and conversion services through 1995. On June 10, 1983, the Company entered into a contract with the United States Department of Energy (00E) for the permanent disposal of spent nuclear fuel. Disposal services will be provided to the Company when the DOE's disposal facility for spent nuclear fuel and other high-level radioactive waste begins operations, expected to be prior to January 31, 1998. Under the terms of the contracts, the Company is obligated to pay a one-time fee of
$39,285,000 for the disposal costs associated with all fuel burned through April 7,1983. The Company had collected the disposal fee from Sponsors prior to April 7,1483. Effective April 7,1983 the Company began charging the Sponsor's $.001 per gross kilowatt hour of generation for estimated disposal costs of spent nuclear fuel, pursuant to the terms of the above contract. These funds are remitted to the DOE on a quarterly basis. This fee is subject to annual adjustment by the 00E. Also see note 2 of Notes to Financial Statements.
Item 2 - Properties I
The Plant is located in Vernon, Vermont, on the west bank of the Connecticut River. The site is approximately 125 acres in size, is owned in fee by the Company and is adequate for the Plant and for the associated switchyard facilities.
l The Plant is a nuclear-powered electric generating plant, utilizing a single-cycle, forced circulation, hoiling water reactor, fueled with slightly enriched uranium. The nuclear steam supply system, the turbine generator, the nuclear fuel assemblies, and othor major elements and systems for the Plant
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were designed and furnished by General Electric Company. Ebasco Services
- Incorporated, as architect-engineer and constructor, designed, fabricated and-constructed the Plant and obtained the remaining systems and compo.,ents.
Operation of the Plant is subject to regulation by the Nuclear Regulatory Commission.
The Plant operates principally in a closed-cycle mode, which cools con-densing water exclusively with cooling towers, from May 16 through October'14 each year. After October 15 and prior to May 15 of each year the Company oper-ates in an open-cycle mode, discharging about 600 to 840 cubic feet per second of condensing water into the Connecticut River. This discharge is permitted
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e e during winter months under the Company's National Pollutant Discharge Elimination System (NPDES) permit, reissued January 19, 1981. The NPDES permit contains criteria designed to insure protection of the aquatic environment and Connecticut River biota. This permit will expire on January 19, 1986 The Company has leased a 20,000 square foot office facility located on approximately 3 acres of land in Brattleboro, Vermont. The lease terminates in October,1986 and the Company has agreed to purchase the facility upon termination of such lease.
Item 3 - Legal Proceedinas Certain litigation challenging the sufficiency of the Nuclear Regulatory Commission's (NRC) regulations on environmental review of portions of the fuel cycle, which has been pending for several years, was favorably resolved by the United States Supreme Court on July 13, 1983. This resulted in dismissal of an individual case challenging the Company's operating license and the termination of further NRC review of remanded aspects of the -Company's license 4
amendment for expansion of the fuel rack capacity for storage of spent fuel.
In January,1983 the Company and others initiated a declatory judgment proceeding with respect to a long-term uranium supply contract to determine whether such contract could be terminated because of the seller's failure to perform properly thereunder.
Item 4 - Submission of matters to a Vote of Security Holders None 1
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e s Vermont Yankee Nuclear Power Corporation Form 10-K 1983 PART II Item 5 -- Market for Registrant's Common Stock and Related Security Holder Matters There is no market for the registrant's Common Stock, $100 Par Value, which is closely held by the Sponsors and four other utilities (see Item 4 above).
Dividends on the Common Stock are customarily declared and paid quarterly.
In 1981, the dividends paid were $6,G00,210 annually; and in 1982 and 1983 the dividends paid were $5,760,202 annually.
The provisions of the registrant's Cumulative Preferred Stock, 7.48%
i Series, $100 Par Value, provide that, before dividends are paid on the Common l Stock, the holders of. the Cumulative Preferred Stock are entitled to receive, when and as declared by the Board of Directors, cumulative dividends at the rate of 7.48% per annum. So long as any shares of the Cumulative Preferred l Stock are outstanding, the payment of dividends on the Common Stock (other than dividends paid in Common Stock) and the making of distributions thereon (other than redemptions thereof pursuant to the provisions described under
" Redeemability of Common Stock") is limited to 50% of Net Income Available for Dividends on Common Stock for the preceding twelve months if the Common Stock Equity (after such action) is less than 70% of Total Capitalization, and to 75%
of such Net Income if such Common Stock Equity is 20% or more but less than 25%
of Total Capitalization.
Item 6 - Selected Financial Data (dollar in thousands-except amounts per share) 1983 1982 1981 1Q80 1979 i
Operating Revenues $113,070 $106,256 $ 88,170 '$ 78,340 $ 65,987. j Net Income 6,969 6,91 3 7,095 7,170- 7,258' Net Income per average share of common stock outstanding 14.64 14.33 15.34* .13.70** 14.53 Total assets ?47,771 232,759 242,552 226,785 217,664 ,
Long-term obligations l (long term debt and redeemable preferred stock) -92,269 87,595 88,301 93,977 99,604 Cash dividends declared per share of common stock $ 14.40 $ .14.40 $ ~ 15.00 -$ 15.00 - $ 15.00
- Reflects three quarterly dividends declared on preferred stock, 7.48% Series, during-1981.
- Reflects five quarterly dividends declared onL preferred stock, 7.48% Series, during 1980
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- Vermont Yankee Nuclear Power Corporation Form 10-K 1983 Item'7 - Managements' Discussion and Analysis of Financial Conditions and Results of Operations.
The Company's operating results for years 1981 through 1983 reflect the increased costs of operation and the continuing effect of inflation associated with improvements and modifications necessary to meet the stringent safety and other standards of Federal and state regulatory agencies. In 1982 the Company produced its highest level of electrical output since the plant's inception which also contributed to the significant increa::e in fuel expense compared to other years.
Operating Revenues Operating revenues of the Company are based on the terms of the power contracts, under which the sponsors are obligated to pay the Company an amount equal to the Company's total fuel costs and operating expenses with respect to the plant including a depreciation accrual of not less than 3.846% per annum, and a return equal to the " composite percentage" of the " net unit investment," both terms as defined in such power contracts. Operating revenues increased in 1983 and 1982 over the preceeding year by 6.4% and 20.5% , respectively.
Operatino Expenses Nuclear fuel expense decreased in 1983 compared to 1982 primarily as a result of (1) decreased generatinn during 1983 due to a fif teen week refueling and maintenance outage to repair portion of the plant's recirculation piping system and (2) decreased charges for disposal of spent fuel. Nuclear fuel expense
' increased in 1982 over 1981 as a result of (1) a slight increase in the estimated cost for disposal of spent fuel; (2) the effect of inflation on the cost of fuel purchased to operate the Company's nuclear reactor and (3) a significant increase in the generation of electricity in 1982.
Effective April 7, 1983 the Company began charging the 5-onsors 5.001 per gross kilowatt hour of generation for disposal costs of spent .. clear fuel, pursuant to the terms of a June 10, 1983 contract with the United States Department of Energy (DOE) for the permanent disposal of spent nuclear fuel.
See Note 2 to Financial Statements.
0ther Operatinn and Maintenance expenses increased in 1983 o ur 1982 reflecting the increased costs associated with downtime for replacemeqt of nuclear fuel assemblies, performance of major maintenance, replacement of piping supports and related seismic analysis, and weld overlays on the recirculation piping system.
In addition, in 1982 the Company began expensing, as incurred, costs associated with scheduled plant downtime for replacement of nuclear fuel assemblies and major maintenance. Prior to 1982 such costs were deferred and amortized to expense over the estimated period until the next succeeding downtime (normally between twelve and seventeen months). Other operating expenses continue to increase reflecting the effect of inflation and increased regulatory require-ments.
Interest Expense Interest expense increased in 1983 as compared with 1982.due to anticipated iWest charges on the one-time fee the Company is obligated to pay the Department of energy (00E) for disposal costs associated with all fuel burned through April 7,1983. See Note 2 to Financial Statements. Interest expense.
decreased in 1982 as compared with 1981 as a result of sinking funds reducing the amount of the Company's First Mortgage Bonds outstanding and decreased levels of and lower-interest on short term indebtedness.. '
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Item 7 - (continued)
Decommissionin9 Effective September 24, 1983 the Company began including $72,700,000'of esti-mated costs of decommissioning its plant in its monthly billing to purchasers.
This amounted to $2,754,000 (including related income taxes) in 1983. The funding of estimated decommissioning expenses is based on the results of a cost study prepared for the Company by an engineering consulting organization. The study results are subject to periodic updates in the future and the Company can-not estimate how the results of such updates will impact on the future cost estimate for decommissioning or future adjustments in the amounts to be collected therefor. (See Note 3 to Financial Statements).
Nuclear Fuel procurement and Disonsal Reauirements The Company has commitments for nuclear fuel puchases through 1404 approxi-mating $134.9 million, and has contracted for uranium concentrate to meet substantially all estimated fuel requirements through 1991. The Company has an enrichment contract with the United States Department of Energy through 2001 and has contracted for fuel fabrication requirements through 1991 and conversion services through 1995. The Company has two long-term contracts for uranium by-product extraction for 20 and 12 years, respectively, each of which was expected to provide up to about ?O% of its uranium requirements during these periods. Under the 70 year contract, the Company is committed to make minimum payments, aggregating $5,341,000 plus interest as of December 31, 1983, over a period ending not later than 1o93 regardless of the amount of uranium that is actually produced. After prolonged startup problems, the uranium by-product extraction facility achieved commercial operation in June 1983 and has since been producing near design capacity. In .lanuary 1083 the Company and others initiated legal action to determine whether the 12 year contract could be terminated because of the seller's failure to perform pro-perly thereunder.
The Company estimates that under present conditions.it has sufficient
, capacity in its spent fuel pool through 1o89 to discharge the entire nuclear core of the reactor. The Company is presently studying the various alternatives available to it tr, extend full core discharge capability beyond 1989 Recirculation piping System Reolacement The Company has announced -its decision to replace the plant's recirculation piping system during an outage scheduled to begin in September,1985 and to continue for an estimated thirty' two weekr.
The Company has. periodically inspected the recirculation piping system over the past several years in an effort to determine the presence.of intergranular stress corrosion cracking. During the refueling outage which commenced. in. March,1983 the inspection effort revealed the cracking phenomenon existed to some degree in 2? of 40 recirculation. system piping
. welds which were inspected and the outage was extended for a period of seven weeks into June,1483 to allow -for. weld overlay repairs to be made to the Item 7 (continued) e s R:cicrulation Pipino System Replacem:nt (continued) affected welds. Subsequent to the commencement of operations after the 1983 outage, the Company analyzed the alternatives available and made a determination to replace the piping system. The Company has informed the NRC of its plans.
The Company is presently soliciting hids from installation and engineering contractors and is unable at the present time to estimate the total cost of replacement effort, which is expected to be significant.
Other Capital Expenditures The Company is presently constructing a simulator and emergency offsite headquarters facility which is expected to be operational by October,1985.
The cost of this facility is presently estimated at $12,000,000, exclusive of certain personnel training and other costs.
The Company estimates it will incur capital expenditures of $14,100,000,
$10,300,000, $11,100,000 and 9.400,000 in the years 1984 through 1987 exclusive of the capital expenditures associated with recirculation piping system replace-ment and the simulator and emergency offsite facility capital items.
Financina Capacity To meet the needs of nuclear fuel requirements and the installation of plant capital improvements, the Company, on November 5,1981, entered into a nuclear fuel financing arrangement with a bank to provide up to $40,000,000 principal amounts of loans througn the year 2000 unless terminated. The principal of the loans will be repaid as the fuel is utilized by the Company during the electrical generating process. The Company's Sponsors have guaranteed the payment obligations. In addition the Company had bank lines of credit of $16,000,000 at December 31, 1983.
The Company is in the process of arranging a $50,000,000 Eurodollar Credit Agreement.
Emeroency Plan The Company has successfully exercised its emergency plan on an annual basis since 1982 and the annual exercises have been accessed as satisfactory by the NRC under its current rules and regulations. (0654)
Net Income Available for Common Stockholders The Company declared five dividends during 1980 on its preferred stock', 7.48%
series. Four of these dividends were actually paid during the year 1980, and the fifth dividend declaration was for the quarter ending February 28, 1981.
Had the fifth declaration not been declared until 1981, the stated amount of net income per average share of common stock outst:' ing during 1981 would have been $14.56 per share rather than $15.34 per share. The decrease in net income for 1982 from the above is primarily due to an increase in expenses paid for by shareholders rather then charged to customers during 1982.
Current year operations resulted in an increase in earnings per common share of $0.31.
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ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA December 31,-1983, 1982, and 1981 VERMONT YANKEE NUCLEAR POWER , CORPORATION FORM 10-K ANNUAL REPORT f
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ACCOUNTANTS' REPORT The Stockholders and Board of Directors Vermont Yankee Nuclear Power Corporation:
We have examined the financial statements and related schedules of Vermont Yankee Nuclear Power Corporation as listed in the accompanying index. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the financial statements in the accompanying index present fairly the financial position of Vermont Yankee Nuclear Power Corporation at December 31,1983 and 1982 and the results of its operations and the changes in i its financial position for each of the years in the three year period ended December 31, 1983, in conformity with generally accepted accounting principles applied on a consistent basis. In our opinion, the related supporting sche-dules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth there-in.
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i PEAT, MARWICK, MITCHELL & CO.
Boston, Massachusetts February 9, 1984 12
VERMONT YANKEE NUCLEAR POWER CORPORATION Index to Financial Statements and Schedules Financial statements:
Balance Sheets, December 31, 1983 and 1982 Statements of Income and Retained Earnings, years ended December 31, 1983, 1982, and 1981 Statements of Changes in Financial Position, years ended December 31, 1983, 1982, and 1981 Notes to Financial Statements Schedules:
V - Electric Plant and Nuclear Fuel, years ended December 31, 1983, 1982, and 1981 VI - Accumulated Depreciation af Electric Plant and Accumulated Amortization of Nuclear Fuel, years ended December 31, 1983, 1982, and 1981 All other schedules are omitted as the required information is inapplicable or the required information is included in the financial statements or related notes.
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,. . l VERMONT YANKEE NUCLEAR POWER CORPORATION Balance Sheets December 31, 1983 and 1382 Assets 1983 1982 (Dollars in thousands)
Utility plant:
Electric plant, at cost $ 263,425 246,991 '
Less accumulated depreciation 90,430 79,942 Net electric plant 172,995 167,049 Nuclear fuel, at cost Assemblies in reactor 76,991 71,167 Fuel in process 30,932. 32,330 Spent fuel 87,615 70,702 195,538' 174,199 Less accumulated amortication: -
Original cost 129,845 114,403 Permanent disposal 39,285- 38,851 169,130 153,254' Net nuclear fuel ,26,408 -20,945 Net utility plant 199,403 187,994 Current assets:
Cash (note 4) 1,280 806 Restricted fund (note 3) 593 -
Accounts receivable, principally from sponsors 16,443 14,013 Income tax refunds receivable 10,884 -
Materials and supplies, at cost 7,430 6,009 Prepaid expenses 1,140 1,830 Totai current assets 37,770 22,658 Deferred charges Restricted fund (note 3)- '599 -
Unamortised debt expense 895 .671 Accumulated deferred income taxes (note 7) 1,680 19,450
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Deferred reload analysis development costs 1,465 .1,983 Other deferred charges 959 3 Tota 1' deferred charges 5.598 22,107
$ 242,771'~ 232,759 See accompanying notes to financial statements.
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9 Capitalization and Liabilities 1983 1982 -
f l (Dollars in thousands)
Capitalization:
Common stock equity (note 5):
Common stock, $100 par value; authorized 400,100 4 shares; outstanding 400,014 shares $ 40,001 40,001 other paid-in capital 13,953 13,735 Retained earnings 5,259 5,165 Total common stock equity 59,213 58,901 i
- Redeemable cumulative preferred stock, 7.48% series;
$100 par value; authorized 300,000 shares; out-
, standing 138,941 shares (149,066 shares in 1982)'
! (note 5) 13,894 14,907
- Long-term debt, net (note 6) 78,375 72,688 Total capitalization 151,482. 146,496 4
- Current liabilities:
Long-term debt to be retired within one year (note 6) 2,202 4,831 Notes payable -4,100 -
Accounts payable 12,233 10,577 i' Accrued interest 1,639 1,572 Accrued taxes 3,511 8,828 i
Total current liabilities 23,685 25,808 Accrued decommissioning costs (note 3) 1,125 -
Unamortized gain on reacquired debt, net 4,306 _ 4,372 Accumulated deferred income taxes (note 7) -
50,603 '50,338 Accumulated deferred investment can credits ,(note 7)' '8,962 5,745 i Accrued interest on disposal costs of-spent nuclear fuel (note 2) 2,608 -
i Total-deferred credits 67,604 60,455 Commitments and contingencies (notes 2, 3 and-9) i
$ 242,771 232,759 4
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s VERMONT YANKEE NUCLEAR POWER CORPORATION Statements of Income and Retained Earnings Years ended December 31, 1983, 1982 and 1981 1983 1982 1981 (Dollars in thousands -
except per share amounts)
Operating' revenues $ 113,070 106,256 88,170 Operating expenses:
Nuclear fuel expense (note 2) 18,750 31',725- 22,134 Other operating. expenses 33,992 29,758 21,128 Maintenance 20,398 10,718 '9,705 4
Depreciation 10,889 9,942 9,323 i Decoassissioning expense (note' 3) 2,234 - -
Taxes on income (note 7) 5,558 5,048' 5,184 l -
4,279 i Property and othat taxes 4,192 4,349 Total operating expenses 96,013 91,540 71,753 i
Operating income 17,057 14,716 16,417 Other income and deductions, net.
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31 (12) (3)
Income before interest expense 17,088 14,704 16,414
{. Interest expense 4 Interest on long-term debt, net- 7,192 7,684 7,048 l Interest on disposal costs of spent' nuclear
- fuel (note 2) 2,508 - -
! Other interest expense 319 107 2,271 Total' interest expense 10,119 7,791 9.319 l
Net income 6,969 6,913' 7,095' i Retained earnings at beginning of year. 5,165 5,193 5,057 12,134 12,106- 12,152 Dividends declared:
Preferred stock, $7.48 per share in 1983 and 1982,
. and $5.61 per share in~1981 .
1,115 1,181 959-i Common stock, $14.40 per share in 1983 and 1982, ..
and $15.00 per share in 1981 5.760 5,760 6,000 Retained earnings at end of year !$- 5,259 5,165 g i Net income per average share of cormon stock' outstanding $ 14.64 14.33' ~g
. See accompanying notes to financial statements.-
i l16
- - . _= . .- -- - - _ _ - - - . .. _
i VERMONT YANKEE NUCLEAR POWER CORPORATION Statements of Changes in Financial Position
~
Years ended December 31, 1983,'1982 and 1981 1983 1982 1981
) (Dollars in thousands)
- Source of funds:
1 Net income $ 6,969 6,913 7,095
-Charges (credits) to income not requiring funds:
- Depreciation 10,889 9,942 9,323 i hsortization of nuclear fuel 18,750 31,725 22,134 1 Amortization of deferred downtime costs -
7,876 6,348 Deferred income taxes -
18,035 (11,213) 714 Investment tax credit adjustments 3,217 (592) 2,068
- Amortization of deferred reload analysis development ,
! costs 518 517 307 other , (93) (96) (67) j Total funds from operations 58,285 45,072 47,922 Additions to long-term debt 8,948 6,233 12,099 Increase in decoassissioning costs 1,125 - -
3 Interest on disposal costs of spent nuclear fuel 2,608 - -
! Other, net 80 146 (232)
I $ 71,046 51,451- 59,789 Total funds provided l Use of funds: r i Electric plant additions 18,650 8,674 10,198
- Nuclear fuel additions 22,678 21,205 19,321 j Restricted fund 599 - -
j Downtime costs deferred - -
8,926 Deferred reload analysis development costs -
201 2,606 j Increase in deferred charges 956 - -
i Reduction of long-term debt 3,040 4,135 2,956 i Redemption of preferred stock 1,013 1,158 1,155 Preferred stock dividends 1,115 1,181 959 j Common stock dividends 5,760 5,760 6,000 j
Increase in working capital 17,235 9,137 7,668 j ' Total funds applied S 71,046 51,451 59,789
! Changes in components of working capital l Increase (decrease) in current assets:
l _ Cash 474 (339) (494)
Restricted fund .
593 - -
I Temporary investments - -
(200)
! Accounts receivabic 2,430 2,387 3,868
! Income tax refunds receivable 10,884 - -
! Materials and supplies 1,421 1,596 501
! Prepaid expenses (690) 1,387 (534) 5,031 15,112 3,141 l Increase (decrease) in current liabilities:
l Long-term debt to be retired within one year (2,629) (8,694) (803)
Notes payable 4,100 .
(5,200)
Accounts payable 1,656 -(2,957) 1,513 l Accrued interest 67 (354) 58.
! Accrued taxes (5,317)- 7,899 225 Dividends payable - -
(320) l ,
(2,123) (4,106) (4,527)
Increase'ih working capital .$ 17,235 gg See accompanying notes to financial statements.
17' L ..
VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements December 31,1983,1982 and 1981 (1) Summary of Significant Accounting Policies (a) Regulation and Operations The Company is subject to the regulatory authority of the Federal Energy Regulatory Coaunission (FERC), the Securities and Exchange Comunission (SEC) and the Public Service Board of the State of Vermont as to accounting, transactions with associated companies, and security issues, respectively.
The Company is also subject to regulation by the Nuclear Regulatory Connais-sion (NRC) with respect to nuclear plant licensing and safety, and by-Federal and state agencies with respect to air and water quality, land use and other environmental matters.
Pursuant to the terms of Power Contracts with Sponsors, which terminate on November 30, 2002, each Sponsor is obligated to pay the Company each month (regardless of the Plant's operating level or whether it is-operating or shutdown during the period), an amount equal to its entitlement percentage of the Company's total fuel costs and operating expenses with respect to the Plant, and an allowed return on equity. Also, under the terms of the Capital Funds Agreements, which terminate on December 31, 2002,' the Spon-sors are. commaitted, subject to obtaining necessary regulatory -authoriza-tions, to make funds available in amounts required to obtain or maintain licenses necessary to keep the Plant in operation. In addition, the Company has flied with the FERC Additional Power Contracts intended to; (1) insure the availability of adequate decommissioning funds in the event the plant terminates operations prematurely; and (2) extend the terms and conditions of the existing Power Contracts beyond November 30, 2002 to the end of the service life and the completion of the. decommissioning of the unit.
(b) Depreciation and Maintenance Electric. plant is being depreciated on the straight-line method at rates de-signed to fully depreciate all depreciable properties by 1998. Total depre-ciation' expense was . between 3.999% and 4.176% of the cost of depreciable utility plant for the years 1981'through 1983.
Renewals and betterments constituting' retirement units are charged to electric plant. Minor renewals and betterments'are charged to maintenance expense.
At the time depreciable properties are retired, the original cost, plus cost of removal, less salvage of such property is charged to the accumulated
~
provision for depreciation.
(c) Amortiestion of Nuclear Fuel The cost of nuclear fuel is.amortised to expense on the basis of'the rate of burn down of the individual assemblies comprising the ~ total core. The.
Company also accrues' the estimated future ccets. of disposing 'of spent -
nuclear fuel. See note 2 to the financial statements.
(Continued) 18
. =
- - _ _ _ _ _ _ _ _ _ ._. .__-__a
VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements (d) Deferred Charges '
In 1982 the Company began expensing, as incurred, costs associated with sche-duled plant. downtime for replacement of nuclear fuel assemblies and major maintenance. Prior to 1982 such costs were deferred and amortized to expense over the estimated . period until the succeeding downtime (normally between twelve and seventeen months). The effect of.this change was to increase operating . revenues and operating expenses by approximately ,$5.9 million 'and $1.6 million in 1983 and 1982, respectively.
(e) Taxes on Income The tax ef fects of timing dif ferences are accounted for as prescribed by and in accordar.ce with the rate-making policies of FERC. Provisions for deferred income taxes reflect the tax effects of all timing differences.
Investment tax credits are deferred and amortized to income over the lives c~
the related assets.
(f) Decommissioning The Company believes that complete inneediate dismantling is the most desirable method of decommissioning its nuclear reactor. Effective September 24, 1983 the Compny began' including estimated cost of such dismantling in monthly billings to its Sponsors. See note 3 to the financial statements.
(2) Nuclear Fuel Expense On June 10, 1983, the Company entered ~into a contract with the United States Department of Energy (DOE) for the persanent disposal of spent nuclear fuel.
Disposal- sarvices will be provided to the Company when the DOE's disposal '
facility for spent nuclear fuel and other high-level radioactive waste-begins operations, expected to be prior to January 31, 1998.
Under the terms of the contract, the Company is obligated to pay a one-time fee of $39,285,000 for the disposal costs associated with all fuel - burned through April 7, 1983. This amount can be paid by one of ' three payment options.- Such options include a lump sua payment of the. fee. anytime prior to June > 30, ,1985; ' a . lump sua payment of the fee plus ' accrued interest-anytime prior to the first delivery of spent nuclear fuel to the DOE; . or quarterly' payments'of the fee plus accrued interest over a ten-year period beginning anytime prior to January 31, 1988. The first< option is without interest charges while the latter two'. options laclude interest . charges based on the thirteen-week Treasury-Bill' rate . and a combination of; the thirteen-week Treasury Bill and ten-year Treasury Note rates, respectively.
The Company began collecting these anticipated interest charges from their sponsors based on the thirteen-week Treasury-Bill rate in June,1983.' ~ ' As of December 31,'1983, $2,608,000 of such interest has been collected which is subject to refund, depending on the method of payment selected. The Company also has a remaining overcollection'for this one-time fee of $510,000 as of December 31, 1983., This amount is being _ refunded to the Company's Sponsors is'a credit to the cost of-the current fuel cycle through June, 1984.
. (Continued).
19: <
i VERMONT YANKEE NUCLEAR POWER CORPORATION-1 4 Notes to Financial Statements l 4
k 1 Effective April 7,1983 the Company began charging the Sponsors $.001 per gross l' kilowatt hour of generation for estimated disposal costs of spent nuclear fuel, pursuant to the terms of the above contract. These funds are remitted to the DOE on a quarterly basis. This fee is subject to annual adjustment
- by the DOE. ,
i The Company accrues estimated costs of disposal of spent nuclear fuel based on the rate of burn-down of assemblies in the reactor. Accruals for such disposal costs increased 1983,1982 and 1981 nuclear fuel expense by approx-l' imately $3,300,000, $10,500,000 and $8,500,000, respectively.
l (3) Decommissioning L
The NRC has responsibility for approving the method of decommissioning. The Company anticipates that ~any of three methods of . decoussissioning nuclear power plants will be acceptable to the NRC. These methods include complete
! dismantling and removal, entombment, and mothballing; or a combination of I these methods. The Company is funding for the complete, immediate dis -
l mantlement method, as management presently believes this is the most desir-l able alternative. Based on a consultant's study ' the estimated cost of.
decoassissioning using this methodology is approximately $72,700,000 in 1981 dollars.
j Pursuant to an amendment to the existing Power Contract filed with the FERC, I the ' Company began billing these estimated decommissioning costs to its >
l Sponsors on September 24, 1983. In addition, the company has filed with the
- FERC Additional Power Contracts which, . among other items, insures ~ the availability of adequate decommissioning funds until the 'decoassissioning process is completed. The decommsissioning liability above is being funded I
based on a 7% ~ annual escalation factor through ' 2007. The accompanying i financial statements include the liability for decoussissioning costs to the extent of related billings'to' Sponsors. Since the company fully recognizes. ,
the relative uncertainty of the future costs involved with decommissioning, the changing technology available for decommissioning'and new requirements under the law, it plans to periodically monitor and adjust, if necessary, *
- the amount of billing necessary to adequately fund these' costs.
f A'decommsissioning escrow account has been established for receipt of all funds; i
collected, including both decoussissioning. fund amounts and aJeociated' tax i liability thereon. The balance of this escrow account at December 31, 1983,
!- of approximately $1,192,000 is subject to refund pending a final rate order-I' by the FERC. The Company and lall' other partie~s . have flied 's proposed
- - settlement agreement with the FERC which, if . accepted, would result in a
- refund of $304,000. - Additionally, approximately - $593,000 of the above i balance, which represents Federal ' income taxes, could also be . subject to i - refund pending resolution by the Company and the . Internal Revenue Service j (IRS) on the tax status of the decoussissioning funds. ' Upon. receipt of a
! final order'by the FERC, the' Company plans to trannfer the-decommissioning
(
. component.of the escrow account to a Decommissioning Trust. Fund.
(Continued) 4 20 t
l
-- . , , , , _ .. , . - _ . . _ _ . . . _ _ _ . _ . . , _ c m _ ,. _ --_;,, ,,, ,. , , _ . . . _ _
VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements (4) Compensating Balances and Short-term Borrowings The Company had lines of credit from various banks totalling $16,000,000 and
$7,000,000 at December 31, 1983 and 1982, .respectively. Of these amounts
$10,000,000 and $7,000,000 required average compensating balances equal to 7.1% and 7.5% of the outstanding line. Additionally $1,000,000 and
$7,000,000 required average compensating balanens equal to 2.5% and 7.5% of the outstanding' loans. The maxmimum amount of shott-term borrowings out-standing at any month-end during 1983 was $5,600,000. The average daily amount of such borrowings outstanding was $2,236,800 with a corresponding
~
weighted average interest rate of 10.12%. There were no borrowings under these credit lines during 1982.
The Campany has also arranged a $50,000,000 Eurodollar Credit Agreement effec-tive October 4, 1983. This agreement, which expires October 4, 1987, is secured by the nuclear core of the Compacf's generating facility.
(5) Ca9 ital Stock So long as any chares of the Cumulative Preferred Stock are outstanding, the payment of cash dividends and distributions on Ccumon Stock (other chan redemptions, which requires 30%' common equity after redemption) is limited when Common Stock Equity' (as defined) is less than 25% of Total Capitaliza-tion (as defined). At December 31, 1983 Common Stock Equity was 38% of Total Capitalizatier..
The 7.48% series Preferred Stock is redeemable (1) at par through a mandatory sinking fund in the amount of $1,100,000 per annum, (2) at the option of the company,-at par, an additional $1,100,000 per annum and (3) in whole or in part from time to time, at redemption prices per share ranging from $105 in -
1983 to $100 in 1998, together in each case with accrued and unpaid divi-dends to the redemption date. Any gains or losses on redemption of pre-ferred stock are charged or' credited to ether paid-in capital.
(6) Lona-Tern Debt A summary of long-tere debt is as follows:
1982 1983 (Dollars in thousands)-
First mortgage bonds:
Series A 5/8% due 1998 $ 45,529' 46,129-Series B 1/2% due 1998 8,024 8,126 Series C - 7.70% due 1998 11.738 12.088 Total first mortgage bonds 65,291- 66,343 Unamortised premium on debt 105 112 Net first mortgage bonds 65,396 66,455 Obligation under capital lease 643' h33'
'Vernon Energy Trust borrowings 14.538 10.431' Total long-term debt 80,577- 77,519 Less-long-term debt to be retired within one year 2.202 4.831 Long-term debt, net '$' g . g 21 (Continued)
j d
VERHONT YANKEE NUCLEAR POWER CORPORATION i Notes to Financial Statements ;
1 y.
i The Mortgage constitutes a first lien on utility plant, excluding nuclear fuel.
Bonds issued uvider the Mortgage are further secured by the terms of the l
Power Contracts (except for related fuel payments) and the Capital Funds j - Agreements with the sponsors. . Sinking fund requirements with respect to ,
i First Mortgage Bonds amount to $4,514,000 annually. l In November 1981, the Company entered into agreement s to.-finance its nuclear fuel through the . Vernon Energy Trust. The Trust finances nuclear fuel
! through the issuance of commercial paper .and bank loans on a revolving credit basis up to an aggregate amount of $40,000,000 outstanding. The Trust may acquire an inventory of nuclear fuel in process from or on behalf of the Company. Af ter fabrication is completed, the Trust may sell the fuel to the Company and lend the Company funds to pay - for such fuel. Loans j issued by . the Trust are . secured by a pledge. of the Company's right to 4 receine fuel costs under power contracts with its sponsors. Loans out-i' standing to the Trust are to be paid as fuel is consumed.
I I The Company has initially borrowed under the agreement based on the fuel in its b reactor. As additional financing is needed, the Company plans to assign its interest in uranium and fuel contracts.to the Trust. The initial term of
) the agreemant is through 1985; however, if the Trust fails to give written i notification of termination on' atty anniversary date commencing November 1, i 1984, the term will continue on a year to year basis through the year 2000.,
I The outstanding debt of the Trust is comprised of ' commercial paper. The i commercial paper is due within a maximum of 45 days' from issuance and had a 1 weighted average interest rate'of 9% for 1983. A portion of the Company's
- obligation to the Trust has been classified as long-term debt based upon the j intent and the ability of the Companf to finance this debt on a long-term
- basis.
{ (7) Income Taxes i .
! The components of income-tax expense ares j
i - 1983 1982. 1981 i 4' (Dollars in thoueands)
L
! Taxes on operating incomes .
- i. Federal current- $-(14,106)= 14,416' 1,605 l Federal' -' de.ferred 15,510 (9,644) '614
- state - current' ' (1,588)- 2,437 .
797 1 state - deferred .
2,525; .(1,569). 100 Invesemer.t tax credit adjustments 3.217 (592) t2 068-3,558- 5,04"I ,
!- Taxes on other'inec,me .
I Federal - current 40- .38 19 stste - current. 7 5 -
(i , -
Total, income-taxes ($ g g :g i . ,
.(Continued)j
, i.e 22'
-c ,
9 ,,%ee-- ,.4.6 g ,w - += w m- y*64 --.-y 5 = * = *y er y a 5 4 f *e v ,*-9*99e~94=-"Vt'-eJ-eW7 f P % * -
- O VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements A reconciliation of the Company's effective income tax rates with the Federal statutory rate is as follows:
1983 1982 1981 Federal statutory rate 46.0% 46.0% 46.0%
State income taxes, net of Federal income tax benefit 4.0 3.9 3.9 Investment credit (9.1) (9.0) (9.5)
Other 3.7 1.5 1.9 44__. 6_% 42.4% 42.3%
The items comprising deferred income tax expense are: .
1983 1982 1981 (Dollars in thousands)
Excess of tax depreciation over financial statement depreciation $ 265 1,726 2,402 Fuel amortization for financial statement purposes less (greater) than tax amortisation 17,770 (9,236) (3,103)
Deferral of maintenance expenses for financial -
statement purposes - (3,920) 1,472 Other - 217 (57)
$ 18,035 (11,213) 714 (8) Pension Plans ,
The Company has two non-contributory trusteed pension plans covering all regu-lar employees and follows the consistent policy of funding all costs accrued. Pension cests were $320,000, $254,000 and $250,000 for the years 1983,1982 and 1981, respectively, including amortization of unfunded lia-bilities over a period ending in 1998. . A comparison of accumulated plan benefits and plan net assets is presented below:
January 1, 1983 1982
.(Dollars in thousands)
Actuarial present value of accumulated plan benefits:
Vested $ 965 607 Nonvested 206 131 8d 3 Net assets available for benefits $ g' g An assumed weighted average rate of return of 8.5% was used in determining the actuarial present value of accumulated plan benefits.
(Continued) 23 1
VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statementr.
(9) Commitments and Contingencies Certain litigation challenging the sufficiency of the Nuclear Regulatory Commission's (NRC) regulations on environmental review of portions of the fuel cycle, which has been pending for several years, was favorably resolved by the United States Supreme Court on July 13, 1983. This resulted in dismissal of an individual case challenging the Company's operating license and the termination of further NRC review of remanded aspects of the Company's license amendment for expansion of the fuel rack capacity for storage of spent fuel.
The Company has commitments for nuclear fuel purchases through 1999 approxi-mating $134,900,000. Expenditures for such commitments will be approxi-mately $10,400,000 in 1984 and, approximately $24,300,000, $13,300,000,
$13,600,000 and $15,000,000 in the years 1985 through 1988, respectively.
Vermont Yankee has contracted for uranium concentrate to meet substantially all its power production requirements through 1991. It has two long-term contracts for uranium by-product extraction for 20 and 12 years, respec-tively, each of which was expected to provide up to about 20% of its uranium requirements during these periods. Under the 20 year contract, the Company is committed to make minimum payments, aggregating $5,341,000 plus interest as of December 31, 1983, over a period ending not later than 1993 regardless of the amount of uranium that is actually produced. After prolonged start-up problems, the uranium by-product extraction facility achieved commercial operation in June 1983 and has since been producing near design capacity.
In January 1983 the company and others initiated legal action to determine whether the 12 year contract could be terminated because of the seller's failure to perform properly thereunder.
The Company has announced its decision to replace the plant's recirculation piping during a scheduled outage in late 1985. The duration of the outage and the magnitude of the cost remain uncertain.
Events at Three Mile Island Nuclear Unit No. 2 in Pennsylvania ("TM1") have prompted a rigorous reexamination of safety related equipment and operating procedures in all nuclear facilities. New regulatory requirements involv-ing both physical and procedural changes have been and are being promul-gated, with which all nuclear facilities will have to comply. Until the scope of these improvements, as they apply to the Plant, and the time schedules for compilance have been fully defined, neither the cost of all modifications nor their ef fect, if any, on the operations of the Company can be definitively determined. The Company anticipates these and other requirements will necessitate significent capital expenditures in the future.
(Continued) 24
VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements The Price-Anderson Act currently limits public liability from a single acci-dent at a nuclear power plant to $570,000,000. If the total damages result-ing from an accident exceed the private pool insurance coverage of
$160,000,000, then the Company would be required to pay its share of the ,
excess up to a maximum of $5,000,000 per accident with a maximum of
$10,000,000 per year. Under the provisions of the Power Contracts, the Company's share of any such payments would be passed on to the Sponsors.
(10) Unaudited Quarterly Financial information The following quarterly financial information is unaudited and in the opinion of management includes all adjustments (consisting only of normal recurring accruals) necessary to a fair statement of results of operations for such periods.
Quarter ended j
1983 March June September December
? (Dollars in thousands - excep'. per share amounts)
Operating revenues $ 23,845 31,064 23,707 34,454 operating income 3,409 3,609 3,597 6,442 Net income 1,736 1,740 1,742 1,751 Net income per share of common stock 3.64 3.65 3.65 3.70 Quarter ended 1982 March June September December (Dollars in thousands - except per share amounts)
Operating revenues $ 24,935 25,784 25,883 29,654 Operating income 3,906 3,761 3,482 3,567 Net income 1,745 1,737 1,737 1,694 Net income per share of common stock 3.61 3.59 3.59 3.54 Operating income increased in the fourth quarter of 1983 by $2,608,000 due to a reclassification of interest on disposal costs of spent nuclear fuel from nuclear fuel expense to interest expense.
(Continued) k 25
N VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements (11) Unaudited Information on the Effects of Changing Prices The following information is supplied for the purpose of providing certain information about the effects of chang:ug prices. It should be viewed as an estimate of the approximate effect of changing prices, rather than as a precise measure. A state-ment of income adjusted for changing prices follows (dollars in thousands):
Year ended December 31, 1983 Adjusted for Conventional Adjusted for changes in historical general specific cost inflation prices Operating revenues $ 113,070 113,070 113,070 Operating expenses:
Nuclear fuel expense 18,750 34,340 31,220 Other operating expenses 33,992 33,992 33,992 Maintenance 20,398 20,398 20,398 Depreciation 10,889 24,325 25,703 Decommissioning expense 2,234 2,234 2,234 Taxes on income 5,558 5,558 5,558 Property and other taxes 4,192 4,192 4,192 Total operating expenses 96,013 125,039 123,297 Operating income (loss) 17,057 (11,969) (10,227)
Other income and deductions, net 31 31 31 Interest expense (10,119) (10,119) (10,119)
Net income (loss) excluding reduction to net recoverable cost $ 6,969 (22,057) (A) (20,315)
Gain from decline in purchasing power of net amounts owed 6,645 6,645 Reduction to net recoverable cost (13,671) (10,154)
$ 20,316 16,799 Increase in specific prices (current cost) of property, plant and equipment held during the year (B) 25,674 Effect of increase in general price level 18,082 l
Excess of increase in specific prices over increase f in general price level $ 7,592 (A) Including the reduction to net recoverable cost, the net loss would have been $35,728.
(B) At December 31, 1983, the current cost of utility plant net of accumulated depreciation l and amortization was estimated to be approximately $455,468,000 as compared with net utility plant recoverable through depreciation and amortization of $199,403,000.
(Continued) 26
I VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements A five-year comparison of selected supplementary financial data adjusted for the af fects of changing prices follows (in thousands of average 1983 dollars except per share amounts):
1983 1982 1981 1980 1979 Operating revenues $ 113,070 109,674 96,586 94,718 90,565 Historical cost information adjusted for general inflation:
Net loss (excluding reduction to net recoverable cost) 22,057 15,302 11,210 6,416 920 Net loss per share of common stock (excluding reduction to net recoverable cost) 57.93 31.72 30.66 21.14 7.27 Net assets at year-end at net recoverable cost 46,857- 55,595 61,248 71,990 75,336 Current cost information:
Net loss (excluding reduction to net recoverable cost) $ 20,315 12,122 9,524 8,445 5,421 Net loss per share of common stock (excluding reduction to net recoverable cost) 53.57 .25.12 26.43 26.23 18.52 Increase in-general price level over (under) increase in specific prices (7,592) (27,617) 12,627 28,457 15,785 Net assets at year-end at net recoverable cost 46,857 55,595 61,248 71,990 75,336 General information:
Gain from decline in purchasing power of net amounts owed $ 6,645 6,676 15,713 22,235 25,037 Cash dividends declared per.
20.59
~
common share $ 14.40 14.86 16.43 18.15 Average consumer price index 298.4 289.1 272.4 246.8 217.4-Dollar amounts adjusted for general inflation (constant dollar amounts) repre-sent historical costs stated in terms of dollars of equal purchasing power, as measured by the Consumers Price Index for all Urban Consumers (CPI-U).
Dollar amounts adjusted for changes in specific prices ~ (current cost amounts) reflect the changes in . specific prices. of net utility plant from the date - the plant was acquired to the present, and differ from constant.
dollar amounts to the extent that' specific prices have increased more or less rapidly than prices in general.
(Continued) 1 2'7
4
. a t.
I VERMONT YANKEE NUCLEAR POWER CORPORATION i
i Notes to Financial Statements i
l The current cost of property, plant, and equipment, which includes land, land
[ rights, intangible plant and construction work in progress, represents the
]
estimated cost of replacing existing plant assets and was determined by i
indexing surviving plant by the Handy-Whitman Index of Public Utility Con-d struction Coats. The current cost of nuclear fuel was determined by engi-
[' neering estimates of the replacement cost of fuel currently in the reactor.
The current year's provisions for nuclear fuel expense and depreciation on the constant dollar and current cost-amounts of utility plant were deter-mined by applying the Company's depreciation and amortization rates to the
, ' restated plant amounts.
i
! As prescribed in Financial Accounting Standard No. 33, income taxes were not adjusted.
j Under terms of the Power Contracts, which specify costs billable to the Com-l pany's sponsors, only the historical cost of utility plant is recoverable in j revenues as depreciation. Therefore, the excess of the cost of plant stated ,
in terms of constant dollars or current cost that exceeds the historical l cost of plant is nct presently recoverable in rates as depreciation, and is I reflected as a reduction to net recoverable cost. The . Company wil1 ~ be allowed to earn on the increased cost of its net investment when replacement of facilities actually occurs.
! To properly reflect the economics of rate regulation in the statement of income I adjusted for changing prices, the reduction of net property, plant, and equipment should be offset by the gain from the decline in purchasing power i of net amounts oued. During a period of inflation, holders of monetary assets suffer a loss of general purchasing power while holders of monetary I
j liabilities experience a gain. The gain from the decline in purchasing l power of net amounts owed is primarily attributable to the substantial-l amount of debt which has been used to finance property, plant, and equip-ment. Since the depreciation on this plant is limited to the recovery of
- historical costs, the Company does not have the opportunity to realize a holding gain on debt and is limited to recovery only of the embedded cost of debt capital.
I a
f l
I i
l-l 28
. . ~ . _ . . . . . - . __ _ _ ._ m_..__ _ ._ .... . . . _ _ _ . _ . _ _ _ . _ _ . ~ ~ . . _ . . - . _ _ . . . . _ _ _ . ._..e _ . , _ . _ . _ . . _ _ . . . _ . _ _ _ __ .
i y +
Schedule V i VERM006T YAIOKEE NUCLEAR POWER CORPORATIOlt Electric Plant and Nuclear Fuel Year ended December 31,.1983 Balance at Additions Balance at December 31, 1982 at cost Retirements Transfers December 31, 1983 (Dollars in thousands)
Electric Plants
! Land and land rights $ 630 - - - 630 Structures and improvements 49,950 - -
210 50,160 asactor, turbogenerator and accessory equipment 181,300 -
332 23,501 204,419 .
Transmisison equipment 6,066 - - - 6,066 Otleer I,116 - - -
1,116 .;
Construction worlt in progress 7,929 18,650 - (25,545) 1,034 246,991 18,650 38_2 2 (1,834) 263,425 i lanclear Fuelt i Assemblies'in reactor 71,167 - - 5,824 76,991 ;
Fuel in process 32,330 22,678 - (24,076) 30,932 Spent fuel 70,702 - - 16,913 87,615 ;
174,199 22,678 - (1,339) 195,538 Total $ 421,190 41,328 3822 (3,173) 458,963 . i
't 1 0-29 i
l i
Schsdule V VERMONT YANKEE NUCLEAR POWER CORPORATION Electric Plant and Nuclear Fuel Years ended December 31, 1982 and 1981 1982 1981-(Dollars in thousands)
Electric Plant:
Land and land rights _$ 630 601 Structures and improvements 49,950 48,917 Reactor, turbogenerator and accessory equipment 181,300 176,597 Transmisison equipment 6,066 6,066 Other 1,116 1,116 Construction work in progress 7,929 5,107 246,991 238,404 Nuclear Fuel:
Assemblies in reactor 71,167 71,167 Fuel in' process 32,330 11,126 Spent fuel 70,702 70,701 174,199 152,994 Total $ 421,190 391,398 Neither total additions of $29,879,000 and $29,519,000 nor total retirements of
$87,007 and $741,864 during the years ended December 31,1982 and 1981, respec-tively, exceeded.10% of the utility plant balance at the end of the year.
A 4
4 30 O
I l .. ..
Schtdule VI ;
VERMONT YANKEE: NUCLEAR POWER CORPORATION Accumulated Depreciation of Electric Plant and t Accumulated Amortization of Nuclear Fuel Years ended December 31, 1983, 1982 and 1981 Accumulated Depreciation of Electric Plant:(1) 1983 1982 1981 (Dollars in thousands)
Balance at beginning of year $ 79,942 70,129 61,267 Additions:
Charged to expense 10,889 9,942 9,323 Salvage and removal costs (net) 382 (42) 281 Deductions:
Pla t retired 783 -87 742 Balance at end of year 90,430 79,942 70,129 Accumulated Amortization of Nuclear Fuel:
Balance at beginning of year 153,254 121,529 99,395 Additions charged to expense 18,750 31,725 22,133 s Other (2,874) (2) - -
Balance at end of year 169,130 153,254 121.529 Total balance at end of year $ 259,560 233,196 191,658 (1) Depreciation is being calculated on the entire plant as a composite unit (see note 1 to the financial statements).
(2) Represents disposal costs of spent nuclear fuel associated with fuel burned af ter April 7,1983 (see note 2 to the financial statements).
.31
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l Vermont Yankee Nuclear Power Corporation 'f
[ Form 10-K 1081 1 PART III Item 10 - Directors and Executive Officers of Registrant (a) Directors of the Registrant:
- Name (Position with Director Reaistrant, if any) Ace Since Principal Occupation Edward A. Brown 54 06/19/81 Chairman, New England Power Director Service Company William F. Burt 57 04/25/79 Assistant to President Director COM/ Energy Services Company John V. Cleary, Jr. 54 02/16/78 President and Chief Executive Director Officer, Green Mountain Power Corporation William F. Conway 52 06/28/82 President and Chief Executive Director Officer, Vermont Yankee Nuclear Power Corporation Raymond C. DeForge 64 06/21/76 Senior Vice President Director- Operations and Engineering Green Mountain Power Corporation John F. G. Eichorn,Jr. 59 04/12/71 President, Eastern Utilities Director Associates Walter F. Fee 62 04/03/81 Executive Vice President Director Engineering A Operations Northeast Utilities Service Company E. James Ferland 41 04/03/81 President and Chief Operating Director Officer of Northeast Utilities James E. Griffin 56 04/09/73. . President and Chief Executive Director and Chairman Officer, Central Vermont Public Service Corporation John F. Kaslow 51 06/19/81 . President Director New England Power Company l . . .. ,. .
s
Vermont Yankee Nuclear Power Corporation l
, , Form 10-K 1983 Name (Position with Di rector Reaistrant, if any) Aae Since Principal Occupation s
F. Ray Keyser, Jr. 56 01/28/82 Chai rman, Keyser, Crowley, Director Banse, Abell & Facey, ,
Lawyers *_
Director, Central Vermont Public Service Corporation
- David N. Merrill 59 08/08/66 Executive Vice President Director Public Service Company of New Hampshire Gordon P. Mills 47 05/16/83 President, EHV-Weidmann Director Industries Director, Central Vermont Public Service Corporation i John B. Randazza 55 11/02/78 Executive Vice President A Chief Director Operating officer, Central Maine Power Company Robert C. Young 46 11/10/75 General Manager, City of Director Burlington Electric Department The. term of each director is for. one year or until a successor is elected.
(b) Executive Officers of the Registrant:
i Name (Aae) Office Officer Since i James E. Griffin (56) Chairman 1473 William F. Conway (SP) President and Chief 1980 l Executive officer Warren P. Murphy (42) Vice President and 1982 Manager of Operations 4
John T. Pearson (39) Vice President, Finance 1982 and Administration and Treasurer James E. Tribble (52) Vice President 1980 Louis H. Haider (52) Vice President 1980
- Willis W. Carey (65) Secretary 1983
, The term of each officer is for one year or until'a successor is elected.
(d) There are no family relations between any director and/or executive
- officer.
- Mr. David N. Merrill retired as of February 22, 1984 and Mr. Robert' Harrison was elected a Director as'of that date.
~
- Vermont Yankee Nuclear Power Corporation Form 10-K 1983 l
(e) Business Experience:
l Each of the Directors referred to under Item 10(a), and the Executive
! Officers referred to under Item 10(b), with the exception of Messrs. Mills, i Ferland, Keyser, Conway, Murphy, Pearson and Carey, has for the past five years been and is now an Executive Officer of one of the stockholders or an associate company thereof. Each of the sponsors is represented on the Company's Board of Directors, but there is no agreement or formal understanding with respect to such representation. Mr. Eaton is of Counsel to Messrs. Ropes A Gray which serves as counsel to the Company and to Central Vermont Public Service Corporation. Mr. Ferland came to Northeast Utilities in 1964 and held the position of Station Superintendent at their Millstone plant, then Director of the Rate Regulatory Project in 1978 prior to his election in 1980 to his position as Executive Vice President and Chief Financial Officer of Northeast Utilities Service Company. He was elected President and Chief Operating Officer of Northeast litilities and its principal subsidiary companies, effective May 1,1983. Mr. Keyser is a partner of Keyser, Crowley, Banse, Abell & Facey,l.awyers, and is also a Director of Central Vermont Public Service Corporation. Mr. Mills is President of EHV - Weidmann
' Industries, and is also a Director of Central Vermont Public Service Corporation. Mr. Conway was Plant Superintendent of the Company from October,1977 until March,1980 at which time he was elected Vice President and Manager of Operations. On May 8,1981, he was elected President and Chief Opearating Officer and on March 28, 1982 he was elected President and Chief Executive Officer. Previous to October,1977 he was Technical Services Supervisor for the Company. Mr. Murphy first came to Vermont Yankee in 1971, leaving in 1975 to work for Yankee Atomic Electric Company and returning to Vermont Yankee Nuclear Power Corporation in 1977. Mr. Murphy recently held the position of Plant Manager until'his election on August 17,1982 to his current position of Vice President and Manager of Operations. Mr. Pearson came to Vermont Yankee Nuclear Power Corporation in 1978 as Director of Administration. On April 28, 1082 he was elected Acting Treasurer and on August 17, 1982 he was elected to his current position of Vice President, Finance & Administration and Treasurer. Prior to joining Vermont Yankee in 1978, Mr. Pearson was employed by Central Vermont Public Service Corporation.
Mr. Carey previously served as Treasurer of Vermont Yankee from April,1973 and Assistant Secretary from June,1977 until his resignation in April,1982.
He was elected to his current position of Secretary on May 16, 1983.
Other Directorshios: The following directors of the registrant held other directorsnips as rollows:
Director Other Directorships Held Edward A. Brown New England Power Service Company-New England Energy Incorporated Maine Yankee Atomic Power Company Yankee Atomic Electric Company NEES Energy,Linc.
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Vermont Yankee Nuclear Power Corporation Form 10-K 1983 Director Other Directorships Held William F. Burt Maine Yankee Atomic Power Company Yankee Atomic Electric Company Connecticut Yankee Atomic Power Company Hopkinton LNG Corporation COM/ Energy Services Company-John V. Cleary, Jr. Green Mountain Power Corporation Vermont Electric Power Company Leaselec, Inc.
Green Mountain Power Real Estate Corp.
Vermont Energy Resourcos, Inc.
Cynosure, Incorporated John F. G. Eichorn, Jr. Principal Subsidiary Companies of Eastern Utilities Associates Yankee Atomic Electric Company Connecticut Yankee Atomic Power Company l Maine Yankee Atomic Power Company Walter F. Fee Principal Subsidiary Companies of Northeast Utilities Connecticut Yankee Atomic Power Company Maine Yankee Atomic Power Company Yankee Atomic Electric Company E. lames Ferland Principal Subsidiary Companies 'of Northeast Utilities and the.
Connecticut Yankee Atonic Power Company l
Maine Yankee Atomic Power Company '
Yankee Atomic Electric Company l James E. Griffin Central Vermont Public Service Corp.
Connecticut Valley Electric Co.,'Inc.
Vermont Electric Power Company.
Yankee Atomic Electric Company Connecticut Yankee Atomic Power Company Maine Yankee Atomic Power Company Vermont National Bank - '
Vermont Financial Services Corporation
Vermont Yankee Nuclear Power Corporation Form 10-X 1983 Director Other Directorships Held John F. Kaslow New England Power Company New England Power Service Company New England Energy Incorporated NEES Energy, Inc.
New England Electric Transmission Corp.
New England Wholesale Electric Company Connecticut Yankee Atomic Power Company Maine Yankee Atomic Power Company Yankee Atomic Electric Company F. Ray Keyser, Jr. Associated Industries of Vermont Central Vermont Railway, Inc, Central Vermont Public Service Corp.
i Grand Trunk Corporation Hitchcock Foundation Keystone Custodian Fund, Inc.
New England Guaranty Ins. Co.
Proctor Bank Sherburne Corporation Union Mutual Fire Insurance Company United Vermont Bancorp College of St. Joseph the Provider White Pigment Corporation
- David N. Merrill Public Service Company of New Hampshire Gordon P. Mills . Central Vermont Public Service Corporation John B. Randazza Maine Yankee Atomic Power Co. j Connecticut Yankee Atomic Power Co.
Robert C. Young Vermont Electric Power Company American Public Power Association National Wood Energy Association
- Mr. Merrill resigned as a Director of Vermont Yankee effective 2/22/84 l
Vermont Yankee Nuclear Power Corporation Form 10-K 1483 Item 11 - Executive Compensation REMllNERATION TABLE Name of Individual or All Capacity Cash Compensation number of persons in which in Group served (A) Cash Compensation:
Five Executive Officers William F. Conway President & Chief $
Executive Officer Warren P. Murphy Vice President and $
Manager of Operations John T. Pearson Vice President, Finance $
& Administration, Treasurer All executive officers:
7 Individuals Executive Officers $
(B) Compensation pursuant to plans:
Five executive officers:
- a. On January 1, 1984:
William F. Conway - had 30 years of credited service and 1983 base compensation of $
Warren P. Murphy - had 12 years of credited service and 1983 base compensation of $
John T. Pearson - had 9 years of credited service and 1983 base compensation of.$
i 'i g ,
- h. ANNUAL PENSION RENEFIT RASED ON FULL YEARS OF SERVICE
. Final Average i Compensation 10 Years 20 Years 30 Years 40 Years i
$30,000 $ 5,100 $10,200 $15,300 $16,800
$40,000 6,800 13,600 20,400 22,400 l $60,000 10,200 20,400 30,600 33,600 i
$80,000 13,600 27,200 40,800 44,800
$90,000 15,300 30,600 45,900 50,400 i
, Plan benefits are subject to an offset of benefits payable under Social Security. The amounts shown are not reduced for such offsets.
The Plan provides service credit for prior service with an affiliated l employer, in which event, t.he plan benefits are further reduced by any benefit the employee receives from the affiliated employer's plan for this service.
I Plan benefits are based on base compensation for the five highest consecutive calendar years in the last ten years of employment.
l C. Other Compensation i
The aggregate amount is less than $25,000 times the number of persons in the grouo in the Cash Compensation table pursuant to paragraph (a) of this section.
O. Compensation of Directors Mr. Keyser and Mr. Mills who are also Directors of Central-Vermont Public Service Corporation, were reimbursed for expenses and paid ,
a fee by that Company.
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Vermont Yankee Nuclear Power Corporation Form 10-K 1983 Item 12 - Security Ownership of Certain Beneficial Owners and Manaaement As of January 1,1084 the directors and officers of the registrant beneficially owned no equity securities of the registrant. The following table shows the ownership of the Company's 400,014 shares of $100 Par Value Common Stock, all of which is issued and outstanding and all of which is held of record and beneficially, except the Director's Share which is held beneficially by Public Service Company of New Hampshire.
Shares Percent Name and Address Owned of Class Central Vermont Public Service Corporation 125,156 31 .3 77 Grove Street Rutland , Vermont 05701 New England Power Company 80,007 90.0 95 Research Drive '
Westborough, Mass. 01581 Green lbuntain Power Corporation 71 ,51 8 17.9 One Main Street Burlington, Vermont 05401 The Connecticut Light and Power Company 38,002 0.5 P.O. Box 2010 Hartford, Connecticut 06141 Central Maine Power Company 16,001 4.0 Edison Drive Augusta, Maine 04336 Public Service Company of New Hampshire 16,000 4.0 1000 Elm Street Manchester, f!ew Hampshire 03105 i
City of Burlington 14,301 3.6 Burlington, Vermont 05401 i
I'(
Vermont Yankee Nuclear Power Corporation Form 10-K 1983 Name and Address Owned of Class Western Massachusetts Electric Company 10,000 2.5 174 Brush Hill Avenue Box 10 West Springfield, Massachusetts 01089 Montaup Electric Company 10,001 2.5 P.O. Box ?333 Boston, Massachusetts 02107 Cambridge Electric Light Company 10,001 2.5 P.O. Box 190 Cambridge, Massachusetts 02139 Vermont Electric Cooperative Inc. 4,21 3 1.0 Johnston, Vermont 05656 tlashington Electric Co-operative, Inc. 2 ,4 31 .6 East Montpelier, Vernant 05651 Village of Lyndonville 2,337 .6 Lyndonville, Vermont 05851 Director's Share 1 -
400,014 100.0
====... ======= .
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Vermont Yankee Nuclear Power Corporation Forn 10-K 1983 Listed below are the principal holdings of th Cumulative Preferred Stock, 7.48% Series, $100 Par Value. None is held by management.
Shares Percent Name and Address Owned of Class CEDE & Co. 115,522 76.5 Box 20 Bowling Green Station New York, New York 10004 l
American Amicable Life Insurance Company 8,500 5.6 c/o American Amicable Bldg.
Box 1844 Waco, Texas 76703 Monumental Life Insurance Co. ,
Attn: Treasurer Office Charles A Charles Sts. l Raltimore, Mn. 21702 8,000 5.3 Item 13 - Certain Relationshios and Related Transactions (a) Transactions with Manaoement and others The Company made the following payments during the year 1083 to stockholder companies and to companies associated with the stockholder companies: Central Vermont Public Service Corporation, $17,830 for administrative services l excluding $15,000 included in item 11 (A) above, and $633,278 for electric power; Yankee Atomic Electric Company, $11,470,850 for engineering and related services; Mew England Power Service Company, $3,349,000 for construction, operation and maintenance services: New England Power Company, t364,404 for charges in connection with the use of Vernon Pond; Maine Yankee Atomic' Power Company, $674,114 for enriched uranium; an aggregate of $131,533 to Sponsors and associated companies for miscellaneous items, and $5,760,202 in dividends on common stock to the common stockholders.
Also, Messrs, Ropes A Gray, of which Mr. Ritsher, Assistant Secretary, is of Counsel, was paid $107,487 in legal fees.
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. . Vermont Yankee Nuclear Power Corporation Form 10-K 1983 PART IV Item la - Exhibits. Financial Statements, Schedules and Reports on Form 8-K (a) The following documents are filed as part of this report:
Incorporated Documents- Filed Sec Herewith Exhibit Docket at Pace
- 1. Financial Statements:
1.1. Financial statenents, December 31, 1983, 1082 and 1981 (with Account-ant's Report thereon) 11-28
- 2. Financial Statement Schedules:
2.1 Utility Plant and Nuclear Fuel, and Accumulated Depreciation of Utility Plant and Accumulated Amortization of Nuclear Fuel. 29 - 31
- 3. Exhibits :
(3) Articles of incorporation and By-Laws Incorporated herein by reference:
3-1 Articles of .issociation, Attachment A as amended.
Filed herewith:
3-2 By-laws , as anended. Attachment B (4) Instruments defining the rights of security holders.
Incorporated herein by reference:
4-1 First Mortgage Indenture from the Company to Bankers Trust Company, Trustee, dated as of October 1,1970, together with a cross-reference sheet locating the Trust Indenture Act of 1939 provisions therein. 4.1 2-38291
.42 Supplemental Indenture dated as of March 1,1971, modi-fying 4-1 4.? 2-39670
, , Vermont Yankea Nuclear powar Corporation Form 10-X 1983 incorporated 00cuments Filed Sec Herewith Exhibit occket at page 4-3 Supplemental indenture dated as of October 1,1071 A-3 70 5783 4-4 Instrument of Resignation, Appointment and Acceptance Dated April 18,1477 relat-ing to Resignation as Trustee of Bankers Trust Company, modifying 4-1 and Appointment as Trustee of Chemical Bank. A4 70 ;?a3 4-5 Supplemental indenture dated as of July 13, 1977. A-4 70-5783 4-6 Supplemental indenture dated as of August 1, 1972, modi fyinq 4-1 A-5 70-5283 4-7 Supplemental indenture dated as of January 15, 1973 relating to Series C 9 ands. Company's 10-K for 1080 4-8 Supplemental indenture dated as of October 23, 1970, modi fying 4-1. A6 70 6747 40 Supplemental Indenture dated as of March 1, 14R3, modi fying 4-1 Attachment C (10) Material contracts incorporated herein by reference:
10-1 Composite copy of power Contract between the regis-trant and each of the Spon-
. sors dated as of February 1, 1968, as amended b.y amendment dated as of June 1,1977. 13.1 9 44964 10-2 Composite copy of Capital Funds Agreement between the registrant and each of the Sponsors dated as of February
. 1, 1068, as amended by amendment dated !! arch 12, 1968 13.2 2-46564 i
s ,
I l Vermont Yankee Nuclear Power Corporation I i
Form 10-K 1983 Incorporated Documents Filed Sec Herewith Exhibit Docket at Pace 10-3 Sponsors Agreement dated as of August 1, 1068 among the Sponsors (executed in ;
counterparts). 4.27 2-32333 10-4 Indenture dated as of August 1,1970 between the Company and New Engl.and Power Company. 13.9 2-38201 l 10-5 Agreement dated October 28, ,.
1970 among the Company, the i State of Vermont, The I Conservation Society of I Southern Vermont, Inc., !
The Vermont Matural Re- !
sources Council, The I.ake Champlain Committee and National Wildlife Federa-tion, including attachments thereto,i.etter dated Octo-ber 28,1970 from the Com-pany to the Honorable . lames M. .leffords, Attorney General '
of the State of Vennont, and Letter dated October 28, 1970 to the Company from The Honorable James M. .leffords, Attorney General of the State of Vermont. 13.12 2-38?91 10-6 Agreement dated September 8, l 1971 hetween the Company +
and United States of America i as represented by the Atomic Energy Connission relating i the the enrichment of uranium. 13.10 2-39670
- 10-7 Production Purchase Agreement, dated August 4, 1978,'among E1rth Sciences, Inc., the Company, and Yankee Atomic Electric Company. R-1 70-6188 i
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Vermont Yankee Nuclear Power Corporation
. . Form 10-K 1983 Incorporated Documents Filed Sec Herewith Exhibit Docket at Page 10-8 Uranium Concentrates Sales l Agreement, dated as of December 6,1978, between International Minerals and l
Chemical Corp. and the Company's 10-X Company. for 1981 10-9 Conversion Contract, dated June 7,1976, between British Nuclear Fuels Limited and the Company's 10-K Company. for 1981 10-10 Conversion Contract, dated April 2,1481, between British Nuclear Fuels Company's 10-K Limited and the Company. for 1981 10-11 Conversion Contract, dated July 25,1977 hetween Eldorado Nuclear Limited Company's 10-K and the Company. for 1981 10-12 Contract dated July 11, 1975 between General Electric Company and Company's 10-K the Company. for 1081 10-13 Uranium Concentrates Sales Agreement, dated as of February 15, 1082 hetween Energy Fuels Limited and the Company's 10-X Company, for 1487 10-14 Uranium Concentrate; Sales Agreement dated as of April 15,1082 hetween Saskatchewan Mining Development Corporation and Company's 10-K the Company. for 1487 10-15 Conversion Contract, dated July 4,1982 between Eldorado Nuclear Limited Company's 10-K and the Company. for 1987 1
10-16 Contract for disposal of spent l nuclear fuel and high-level radioactive waste dated as of June 10,1983 hetween the United
.. States Department of Energy (00E) and the Company. Attachment 0 (b) No reports on Form 8-K were filed during the last quarter of the fiscal year ended December 31, 1983.
l
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Vcrmont Yankee Nuclear power Corporation Form 10-K 1983 D. Statement re computation of per share earninas The computation can be clearly deter-mined from the information contained in the Statement of Income and Retained Earnings.
E. _S_tatements re comoutation of ratios Not applicable.
F. Annual recort to security holders Not applicable.
G. I.etter ce change in accounting princioles Not applicable.
H. Previous 1v unfiled documents Not applicable.
I. Subsidiaries of the recistrant Not applicable.
]
V:rmont Yanksa Nuclear Power Corporation Form 10-K 1983 SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
VERMONT YANKEE NUCLEAR POWER CORPORATION March 30,1984 By William F. Conway William F. Conway, President & Chief Executive Officer Director March 30,1984 By ,1ohn T. Pearson John T. Pearson, Vice President Finance A Administration and Treasurer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
March ,1984 Edward A. Brown President March ,1984 '
William F. Burt Director March ,1984 John V. Cleary, Jr.
Director March ,1984 Raymond C. Deforge Director
Vermont Yankee Nuclear Power Corporation Form 10-K 1983 i
- SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
VERMONT YANKEE NUCLEAR POWER CORPORATION March ,1984 By william F. conway, President & Cnter ;
Executive Officer Director March ,1984 By John T. Pearson, Vice President Finance 4 Administration and Treasurer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
March 30,1984 Edward A. Brown Edward A. Brown President
, March ,1984 William F. Burt i Director March ,1984
- John V. Cleary,.Jr.
Director 4
March ,1984 Raymond C. Deforge Director e-Vermont Yankee Nuclear Power Corporation Form 10-K 1983 SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
VERMONT YANKEE NUCLEAR POWER CORPORATION March ,1984 By william t. conway, President a Unier Executive Officer Director March ,1984 By John T. Pearson, Vice President Finance A Administration and Treasurer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the .
registrant asid in the capacities and on the dates indicated.
March ,1484 Edward A. Brown President March ?0,1084 William F. Rurt William F. Burt Director March ,1984 John V. Cleary, Jr.
Director March ,1984 Raymond C. Deforge Director
-49 I
-. . _ . ~ .__ - . .. - -.
! Vermont Yankee Nuclear Power Corporation l Form 10-K 1983 l
SIGNATilRES ,
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
VERMONT YANKEE NUCLEAR POWER CORPORATION March ,1984 By William t. Conway, President A Chlef Executive Officer Director !
March ,1984 By John T. Pearson, Vice President i Finance & Administration and Treasurer i Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the l registrant and in the capacities and on the dates indicated.
March ,1984 1 Edward A. Brown l President l
March ,1984 William F. Burt Director f March ,1984 l John V. Cleary, Jr.
l Director March 28,1984 Raymond C. Deforge Raymond C. Deforge Director I
V2rmont Yankee Nucicar Power Corporation Form 10-K 1983 l.
l
! March 30 ,1484 John F.G. Eichorn j John F.G. Eichorn, Jr.
l Director March ,1484 ,
Waltar F. Fee Director March 1984 L. James teriano
- Director March ,1484 James E. Gri f fin, Chairman Director
! March ,1984 l Robert d. Harrison Director March ,1484 John F. Koslow Director March ,1984 F. Ray Keyser, Jr.
Director March ,1484 Gordon P. Mills l Director l
March ,1984 John R. Randazza Director March ,19R4 Robert C. Young Director
Vermont Yankee Nuclear Power Corporation Form 10-K 14R3 March ,1484 John F.G. Eichorn, Jr.
Director March 30.1484 Walter F. Fee Walter F. Fee Ofrector March 30,1484 E. James Forland L. .Jame% terland Ofrector March ,1084 James E. Griffin Chairman Director March ,1084 Robert J. Harrison Director March ,1984 ilohn F. Kaslow Director March ,1084 F. Hay Keyser, Jr.
Alrector March ,10R4 Teordon P. Mills Director l March ,1084 John B. Rantiaita Director March ,1084 Robert G. Young' Director f> ?.
o .
Vermont YankCO Nuclear Power rerporation Form 10-K 1083 March ,1084 John F.G. Etchorn, ilr.
i Director March ,1984 Walter F. Fee Director March ,1984 t.. aamos terland Director l
March 30 .10A4 James E. c.rtffin
. lames E. rirtrrin, chairman Director Kirch ,1084 Rohnrt .l. Harrison Director Marr.h ,10R4 John F. Kallow Director 1
! March ,1484 F. Ray Keyser, dr.
Ofrortar March ,1084 i F.orefon P. Mills I Director March ,1084 John II. Hantiasta Otractor t
march .IO84 Rohnet c. Young Director
=M.
. s Vermont Yankee Nuclear Power Corporation Form 10-X 1983 March ,1984 John F.G. Eichorn, Jr.
l Director March ,1984 Walter F. Fee Director March ,1984 E. James Ferland Director March ,1984 James E. Gri f fin, Chairman Director March ,1984 Robert J. Harrison Director March 30,1984 John F. Kaslow John F. Kaslow Director March ,1984 F. Ray Keyser, Jr.
Director March ,1984 Gordon P. Mills Director March ,1984
. John 8. Randazza Director March ,1984
. Robert C. Young Director
'i.;;
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I Vermont Yankee Nuclear Power Corporation Fo rm I D-K 1983 March ,1984 John F.G. Eichorn, Jr.
Director March ,1984 Walter F. Fee Director March ,1984
- t. . James terland Director March ,1984 James E. Gri f fin, Chai rman Director March ,1984 Robert J. Harrison Director March ,1984 '
John F. Kaslow Director March -30,1484 Ray Keyser F. Ray Keyser, Jr.
Director March ,1984 Gordon P. Mills s Director March ,1984 John B. Randazza Director
~'c 3 March' .s,1984D
. Robert C. Young
-- Director' s .
., g . -
-,s N'. %
,1 .,,. -
.. e Vermont Yankee Nuclear Power Corporation Form 10-K 1983 March ,1984 John F.G. Eichorn, Jr.
Director March ,1984 Walter F. Fee Director March ,1984 L. James terland Director March ,1984 l James E. Grif fin, Chairman Director March ,1984 i Robert J. Harrison Director March ,1984 John F. Kaslow Director March ,1984 l F. Ray Keyser, Jr.
Director March 30,1984 Gordon P. Mills Gordon P. Mills Director March ,1984 John B. Randazza
' Director March ,1484 Robert C. Young
~ Director
.a
5
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Vermont Yankee Nuclear Power Corporation Form 10-X 1983 March ,1984 John F.G. Eichorn, Jr.
Director March ,1984 Walter F. Fee Director March ,1984 E. James terland Director March ,1984 James E. Griffin, Chairman-Director March ,1984 Robert J. Harrison Director March ,1984 John F. Kaslow Director March ,'1984 F. Ray Keyser, Jr.
Director March ,1484 Gordon P. Mills Director March 22,1984 John R. Randazza John B. Randazza Director March ,1984 Robert C. Young Director
3 o e Varmont Yankee Nuclear Power Corporation Form 10-X 1983 March ,1984 John F.G. Eichorn, Jr.
Director March ,1984 Walter F. Fee Director March ,1984 E. James Ferland Director March ,1984 James E. Griffin, Chairman Director March ,1984 Robert J. Harrison Director March ,1984 John F. Kaslow Director March ,1984 F. Ray Keyser, Jr.
Director March ,1984 Gordon P. Mills Director March ,1984 John B. Randazza Director March 30,1984 Robert C. Youno Robert C. Young Director 1
O 1 PEAT l E MARWICK ,
1 O
O VERMONT YANKEE NUCLEAR POWER CORPORATION Financial Statements
,0 December 31, 1983, 1982, and 1981 (With Accountants' Report Thereon) j
.O O -
O O
O e
Put, Mmid, Mitchell & Co.
PEAT Certified Public Accountants f MARWICK One Boston Pba Boston, Massachusetts 02108 617-723-7700 i
)
The Stockholdees and Board of Directors
) Vermont Yankee Nuclear Power Corporation:
We have examined the balance sheets of Vermont Yankee Nuclear Power Corporation as of December 31, 1983 and~ 1982 and the related statements of income and retained earnings and changes in financial position for each of the years in
) the three year period ended December 31, 1983. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, in-cluded such tests of the accounting records and such other auditing procedures as we considered nocessary in the circumstances.
In our opinion, the aforementioned financial statements present fairly the
) financial position of Wrmont Yankee Nuclear Power Corporation at December 31, 1983 and 1982 and the results of its operations and the changes in its finan-cial position for each of the years in the three year period ended December 31, 1983, in conformity with generally accepted accounting principles applied on a consistent basis.
} dAtt/l. Y February 9, 1984 I
)
A 1
3
) i t
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) -
)
O VERMONT YANKEE NUCLEAR POWER CORPORATION Balance Sheets December 31, 1983 and 1982 Assets 1983 1982 (Dollars in thousands)
Utility plant: gp Electric plant, at cost S 263,425 246,991 Less accumulated depreciation 90,430 79,942 Net electric plant 172,995 167,049 Nuclear fuel, at cost:
hssemblies in reactor 76,991 71,167 sp Fuel in process 30,932 32,330 Spent fuel 87,615 70,702 195,538 174,199 Less accumulated amortization:
Original cost 129,845 114,403 Permanent disposal 39,285 38,851 dp
( 169,130 153,254 Net nuclear fuel 26,408 20,945 Net utility plant 199,403 187,994 O
Current assets:
Cash (note 4) 1,280 806 Restricted fund (note 3) 593 -
Accounts receivable, principally from sponsors 16,443 14,013 Income tax refunds receivable 10,884 -
Materials and supplies, at cost 7,430 6,009 GD Prepaid expenses 1,140 1,830 Total current assets 37,770 22,658 Deferred charges:
db Restricted fund (note 3) 599 -
Unamortized debt expense 895 671 Accumulated deferred income taxes (note 7) 1,680 19,450 Deferred reload analysis development costs 1,465 1,983 l
Other deferred charges 959 3 l
Total deferred charges 5,598 22,107 O
$ 242,771 232,759 II See accompanying notes to financial statements.
O O
Capitalization and Liabilities 1983 1982 (Dollars in thousands)
O-Capitalization:
Common stock equity.(note 5):
Common stock, $100 par value; authorized 400,100 shares; outstanding 400,014 shares S 40,001 40,001 Other paid-in capital 13,953 13,735
() Retained earnings ,
5,259 5,165 Total common stock equity 59,213 58,901 Redeemable cumulative preferred stock, 7.48% series;
$100 par value; authorized 300,000 shares; out-() standing 138,941 shares (149,066 shares in 1982)
(note 5) 13,894 14,907 Long-term debt, net (note 6) 73,375 72,688 Total capitalization 151,482 146,496
() Current liabilities:
Long-term debt to be retired within one year (note 6) 2,202 4,831 Notes payable 4,100 -
Accounts payable 12,233 10,577 Accrued interest 1,639 1,572 Accrued taxes 3,511 8,828 O
Total current liabilities 23,685 25,808 Accrued decommissioning costs (note 3) 1,125 -
Unamortized gain on reacquired debt, net 4,306 4,372 Accumulated deferred income taxes (note 7) 50,603 50,338
() Accumulated defeired investment tax credits (note 7) 8,962 5,745 Accrued interest on. disposal costs of spent nuclear .
fuel (note 2) 2,608 -
l Total deferred credits 67,604 60,455
,() Commitments and contingencies (notes 2, 3 and 9)
$ 242,771 232,759 r
.O O
)
VERMONT YANKEE NUCLEAR POWER CORPORATION Statements of Income and Retained Earnings Years ended December 31, 1933, 1982 and 1981 1983 1982 1981 (Dollars in thousands -
) except per share amounts)
Operating revenues $ 113,070 106,256 88,170 Operating expenses:
Nuclear fuel expense (note 2) 18,750 31,725 22,134
) Other operating expenses 33,992 29,758 21,128 Maintenance 20,398 10,718 9,705 Depreciation 10,889 9,942 9,323 Decommissioning expense (note 3) 2,234 - -
Taxes on income (note 7) 5,558 5,048 5,184 Property and other taxes 4,192 4,349 4,279
. Total operating expenses 96,013 91,540 71,753 operating income 17,057 14,716 16,417 Other income and deductions, net 31 (12) (3)
)
Income before interest expense 17,088 14,704 16,414 Interest expense:
Interest on long-term debt, net 7,192 7,684 7,048 Interest on disposal costs of spent nuclear
) fuel (note 2) 2,608 - -
Other interest expense 319 107 2,271 Total interest expense 10,119 7,791 9,319 Net income 6,969 6,913 7,095
)
Retained earnings at beginning of year 5,165 5,193 5,057 12,134 12,106 12,152 DIu'iends declared:
Preferred stock, $7.48 per share in 1983 and 1982, j and $5.61 per share in 1981 1,115 1,181 959 Common stock, $14.40 per share in 1983 and 1982, and $15.00 per share in 1981 5,760 5,760 6,000 Retained earnings at end of year $ 5,259 5,165 5,193
, Net income per average share of common stock outstanding $ 14.64 14.33 15.34 See accompanying notes to financial statements.
6- .
- O vEan0NT YANKEE NUCLEAR POWER CORPJRATION Statements of Changes in Financial Position Years ended December 31, 1983, 1982 and 1981 1983 1982 1981
!O (Dollars in thousands) i Source of funds:
Net income $ 6,969 6,913 7,095 Charges (credits) to income not requiring funds:
Depreciation 10,889 9,942 9,323
^" reizati n f nuclear fuel 18,750 31,725 22,134
- O Amortization of deferred downtime costs -
7,876 6,348 Deferred income taxes 18,035 (11,213) 714 Investment tax credit adjustments 3,217 (592) 2,068 Amortization of deferred reload analysis development costs 518 517 307 Other (93) (96) (67)
- O Total funds from operations 58,285 45,072 47,922
! Additions to long-term debt 8,948 6,233 12,099 Increase in decommissioning costs 1,125 - -
Interest on disposal costs of spent nuclear fuel 2,608 - -
j Other, net 80 146 (232)
- O Total funds provided $ 71,046 51,451 59,789 I Use of funds:
I Electric plant additions 18,650 8,674 10,198 Nuclear fuel additions 22,678 21,205 19,321 Restricted fund 599 - -
IO Downti"e costs deferred - -
8,926 Deferred reload analysis development costs -
201 2,606 r Increase in deferred charges 956 - -
Reduction of long-term debt 3,040 4,135 2,956 Redemption of preferred stock 1,013 -1,158 1,155 Preferred stock dividends 1,115 1,181 959
.O Common stock dividend. 5,760 5,760 6,000 Increase in working capital 17,235 9,137 7,668 Total funds applied $ 71,046 51,451 59,789 t Changes in components of working capital:
Increase (decrease) in current assets:
Cash 474 (339) (494)
O Restricted fund 593 - -
Temporary investments - -
(200)
. Accounts receivable 2,430 2,387 3,868 Income tax refunds receivable 10,884 - -
Materials and supplies 1,421 1,596 501 Prepaid expenses (690) 1,387 (534)
'O 15,112 5,031 -3,141 Increase (decrease) in current liabilities:
! Long-term debt to be retired within one year (2,629) (8,694)' (803)
Notes payable 4,100 - (5,200)
Accounts payable -1,656 (2,957) 1,513 20 Accrued interest 67 (354) 58 Accrued taxes (5,317) _ 7,899 225.
Dividends payable ~- -
(320) t (2,123) (4,106) (4,527)
Increase in working capital $ 17.235 9,137 7,668
'O See accompanying notes to financial statements.
l l
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. . . ,_ . . . . - . - --_ _~ -_
s VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements
!O- l December 31, 1983, 1982 and 1981 (1) Summaary of Significant Accounting Policies (a) Regulation and Operations 10 The Company is subject to the regulatory authority of the Federal Energy Regulatory Comunission (FERC), the Securities and Exchange Connaission (SEC) and the Public Service Board of the State of Vermont as to accounting, transactions with associated companies, and security issues, respectively.
! The Company is also subject to regulation by the Nuclear. Regulatory Connais-
, sion (NRC) with respect to nuclear plant licensing and safety, and by 10 Federal and state agencies with respect to air.and water quality, land use and other environmental matters.
i
, Pursuant to the terms of Power Contracts with Sponsors, which terminate on November 30, 2002, each Sponsor is obligated to pay the Company each month (regardless of the Plant's operating level or whether it is operating or iO shutdown during the period), an amount equal to its entitlement percentage
- of the Company's total fuel costs and operating expenses with respect to the i
Plant, and an allowed return on equity. Also, under the terms of the
{ , Capital Funds Agreements, which terminate on December 31, 2002, the Spon-sors are comunitted, subject to obtaining necessary regulatory authoriza-
, . tions, to make funds available in amounts required to obtain or maintain
!O licenses necessary to keep the Plant in operation. In addition, the Company has filed with the FERC Additional Power Contracts intended to; (1) insure the availability of adequate decosusissioning funds in the event the plant terminates operations prematurely; and (2) extend the_ terms and conditions of the existing Power Contracts beyond November 30, 2002 to the end of the
, service life and the completion of the decommissioning of the unit.
- O (b) Depreciation and Maintenance Electric plant is being depreciated on the straight-line method at rates de-signed to fully depreciate all depreciable properties by 1998. Total depre- -
ciation expense was between 3.999% and 4.176% of the cost of depreciable utility plant for the years 1981 through 1983.- '
I'O Renewals and betterments constituting retirement units are charged to electric plant. Minor renewals and betterments are charged to maintenance expense.
At the time depreciable properties are retired, the original cost, plus cost of removal, less salvage of such property is charged to the accumulated
- provision for depreciation.
!O 1 (c) Amortisation of Nuclear Fuel l The cost of nuclear fuel is amortised to expense on the basis of the rate of' l burn down of the individual assemblies comprising the total core. The
- Company also accrues the estimated future costs of disposing of spent nuclear fuel. See note 2 to the financial statements.
'O t (Continued) i .
4 1
!O 9
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lO '2 i
VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements
!O 1 (d) Deferred Charges !
In 1982 the Company began expensing, as incurred, costs associated with sche-duled_ plant downtime for replacement of nuclear fuel assemblies and major maintenance. Prior to 1982 such costs were deferred and amortized to to *XPense over the estimated period until the succeeding downtime (normally between twelve and seventeen months). The effect of this change was to increase operating revenues and operating expenses by approximately $5.9 million and $1.6 million in 1983 and 1982, respectively.
(e) Taxes on Income
'O The tax effects of timing differences are accounted for as prescribed by and in accordance with the rate-making policies of FERC. Provisions for deferred income taxes reflect the tax effects of all timing differences.
Investment tax credits are deferred and amortized to income over the lives of the related assets.
'O i (f) Deconumissioning The Company believes that complete iimmediate dismantling is the most desirable method of decommissioning its nuclear reactor. Effective September 24, 1983 the Company began including - estimated cost of such dismantling in monthly billings to its Sponsors. See note 3 to the financial statements.
- O (2) nucl a r ruel Expens.
On June 10, 1983, the Company entered into a contract with the United States Department of Energy (DOE) for the permanent disposal of spent nuclear fuel.
! Disposal services will be provided to the Company when 'the DOE's disposal facility for spent nuclear fuel and other high-level radioactive waste
!O begins operations, expected to be prior to January 31, 1998.
' Under the terms of the contract, the Company is obligated to pay a one-time fee of $39,285,000 for the disposal costs associated with _ all fuel burned 4
through April 7, 1983. This amount can be paid by one of three payment options. Such options include a lump sua payment of the fee anytime prior O to June 30, 1985; a lump sua payment of the fee plus accrued interest anytime prior to the first delivery of spent nuclear fuel to the DOE; or quarterly payments of the fee plus accrued interest over a ten-year period beginning anytime prior to January 31, 1988. The first option is without .
interest charges while the latter two options include interest charges i
based on the thirteen-week Treasury-Bill rate and a combination of the
'O
~ thirteen-week Treasury Bill and ten year Treasury Note ratu, ruputively.
The Company began collecting these anticipated interest charges from their sponsors based on the thirteen-week Treasury-Bill rate in June,1983. As of December 31, 1983, $2,608,000 of such interest has been collected which is subject to refund, depending on the method of payment selected. The Company also has a remaining overcollection for -this one-time fee of $510,000 as of -
December 31, 1983. This amount is being refunded to the Company's Sponsors -
as a credit to the cost of the current fuel cycle through June, 1984.
(Continued) 16
- O 3
, VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements Effective April 7,1983 the Company began charging the Sponsors $.001 per gross kilowatt hour of generation for estimated disposal costs of spent nuclear fuel, pursuant to the terms of the above contract. These funds are remitted to the DOE on a quarterly basis. This fee is subject to annual adjustment
- O by the DOE.
The Company accrues estimated costs of disposal of spent nuclear fuel based on the rate of burn-down of assemblies in the reactor. Accruals for such disposal costs increased 1983,1982 and 1981 nuclear fuel expense by approx-imately $3,300,000, $10,500,000 and $8,500,000, respectively.
(3) Decommissioning The NRC has responsibility for approving the method of decommissioning. The Company anticipates that any of three methods of deconunissioning nuclear power plants will be acceptable to the NRC. These methods include complete
,0 dismantling and rem val, ent mbment, and mothballing; or a combination of these methods. The Company is funding for the complete, inanediate dis-
~
mantlement method, as management presently believes this is the most desir-able alternative. Based on a consultant's study the estimated cost of deconsnissioning using this methodology is approximately $72,700,000 in 1981 dollars.
- O Pursuant to an amendment to the existing Power Contract filed with the FERC, the Company begaa billing these estimated deconnaissioning costs to its Sponsors on September 24, 1983. In addition, the Company has filed with the FERC Additional Power Contracts which, among other items, insures the availability of adequate decommissioning funds until the decommissioning process is completed. The decommissioning liability above is being funded
.O based on a 7% annual escalation factor through 2007. The accompanying financial statements include the liability for deconsnissioning costs to the extent of related billings to Sponsors. Since the Company fully recognizes the relative uncertainty of the future costs involved with deconunissioning, the changing technology available for decommissioning and new requirements under the law, it plans to periodically monitor and adjust, if necessary,
- O the amount of billing necessary to adequately fund these costs.
A decommissioning escrow account has been established for receipt of all funds collected, including both decommissioning fund amounts and associated tax liability thereon. The balance of this escrow account at December 31, 1983, of approximately $1,192,000 is subject to refund pending a final rate order O by the FERC. The Company and all other parties have filed a proposed settlement agreement with the FERC which, if accepted, would result in a refund of $304,000. Additionally, approximately $593,000 of the above balance, which represents Federal income taxes, could also be subject to refund pending resolution by the Company and the Internal Revenue Service (IRS) on the tax status of the decommissioning funds. Upon receipt of a O final order by the FERC, the Company plans to transfer the deconnaissioning component of the escrow account to a Decommissioning Trust Fund.
(Continued)
O
. L
}
'O - '
VERMONT YANKEE NUCLEAR POWER CORPORATION ;
Notes to Financial Statements (4) Compensating Balances and Short-term Borrowings The Company had lines of credit from various banks totalling $16,000,000 and
$7,000,000 at December 31,1983 and 1982, respectively. Of these asounts O $10,000,000 and $7,000,000 required average compensating balances equal to 7.1% and 7.5% of the outstanding line. Additionally $1,000,000 and
$7,000,000 required average compensating balances equal to 2.5% and 7.5% of the outstanding loans.. The maxmimum amount of.short-term borrowings out-standing at any month-end during 1983 was $5,600,000. -The average daily amount of such borrowings outstanding was $2,236,800 with a corresponding O weighted average interest rate of 10.12%. 'There were no borrowings under these credit lines during 1982.
The Company has also arranged a $50,000,000 Eurodollar Credit Agreement af fec-tive October 4, 1983. This agreement, which expires October 4, 1987, is secured by the nuclear core of the Company's generating facility.
O (5) Capital Stock So long as any shares of the Cumulative Preferred Stock are outstanding, the payment of cash dividends and distributions on Common Stock (other than redemptions, which requires 30% common equity af ter redemption) is limited when Common Stock Equity (as defined) is less than 25% of Total Capitaliza-O tion (as defined). At December 31, 1983 Common Stock Equity was 38% of Total Capitalization.
The 7.48% series Preferred Stock is redeemable (1) at par through a mandatory '
sinking fund in the amount of $1,100,000 per annum, (2) at the option of the Company, at par, an additional $1,100,000 per annum and (3) in whole or in O part from time to time, at redemption prices per share ranging from $105 in 1983 to $100 in 1998, together in each case with accrued and unpaid divi-dends to the redemption date. Any gains or losses on redemption of pre-ferred stock are charged or credited to other paid-in capital.
(6) Lons-Term Debt O A summary of long-term debt is as follows:
1983 1982
-(Dollars in thousands) ,
First mortgage bonds:
Series A 5/8% due 1998 $ 45,529 46,129 ;
Series 5 1/2% due 1998 8,024 8,126 O Sertes C - 7.70% due 1998 11,738 12.088 Total first mortgage bonds 65,291 66,343 .
Unamortised premium on debt . 105 112 Net first mortgage bonds 65,3 % .66,455 t Obligation under capital lease 643 633 O Vernon Energy Trust borrowings. 14.538 10.431 Total long-term debt 80,577 77,519 i Less long-term debt to be retired within one yearL 2.202 4.831 Long-term debt, net. $g g-
,(Continued) . I
!O 5
VERMONT YANKEE NUCLEAR POWER CORPORATION
!O Notes to Financial Statements
- The Mortgage constitutes a first lien on utility plant, excluding nuclear fuel.
Bonds issued under the Mortgage are further secured by the terms of the Power Contracts (except for related fuel payments) and the Capital Funds
'O
- A8r****nt8 with the 8Ponsors. Sinking fund requirements with respect to First Mortgage Bonds amount to $4,514,000 annually.
! In November 1981, the Company entered into agreements to finance its nuclear fuel through the Vernon Energy Trust. The Trust finances nuclear fuel through the issuance of commercial paper and bank loans on a revolving
- '*dit b**i' uP to an aggregate amount of $40,000,000 outstanding. The
!O Trust may acquire an inventory of nuclear fuel in process from or on behalf i of the Company. Af ter fabrication is completed, the Trust may sell the fuel to the Company and lend the Company funds to pay for such fuel. Loans issued by the Trust are secured by a pledge of the Company's right to receive fuel costs under power contracts with its sponsors. Loans out-1 standing e the Trust are e de paid as fuel is consumed.
0 The Company has initially borrowed under the agreement based on the fuel in its reactor. As additional financing is needed, the Company plans to assign its
, interest in uranitan and fuel contracts to the Trust. The initial term of I the agreement is through 1985; however, if the Trust fails to give written
" *i'i**'l " - i "I"**i " " *"Y """i"****"7 d*** * 'onencing N vember 1, 10 1984, the term will continue on a year to year basis through the year 2000.
The outstanding debt of the Trust is comprised of comunercial paper. The l commercial paper is due within a maximum of 45 days from issuance and had a i weighted average interest rate of 9% for 1983. A portion of the Company's obligation to the Trust has been classified as long-term debt based upon the
- O
- intent and the ability of the Company to finance this debt on a long-term
! basis.
j (7) Income Taxes l The components of income tax expense are: ,
!O 1983 1982 1981 i (Dollars in thousands)
Taxes on operating income:
Federal - current $ (14,106) 14,416 1,605 Federal - deferred 15,510 (9,644) 614
!O (1,588) 2,437-State - current '797 State - deferred 2,525- (1,569)' 100 i Investment tax credit adjustments 3,217 (592) 2,068 I 5,558 5,048 5,184 Taxes n other income:
O Federal - current 40- 38 .19 State - current ~7- 5 -
l Total income taxes. $ 5,605 5,091 SE (Continued)
?O
- O 6 s
VERMONT YANKEE NUCLEAR POWER CORPORATION g Notes to Financial Statements l A reconciliation of the Company's ef fective income tax rates with the Federal 1 statutory rate is as follows:
1983 1982 1981 O
Federal statutory rate 46.0% 46.0% 46.0%
State income taxes, net of Federal income tax benefit 4.0 3.9 3.9 Investment credit (9.1) (9.0) (9.5)
Other '3.7 1.5 1.9
- O
. 44.6% 42.4% 42.3%
- The items comprising deferred income tax expense are
- -
i 1983 1982 1981 jO (Dollars in thousands)
- Excess of tax depreciation over financial
- statement depreciation $ 265 1,726 2,402
! Fuel amortization for financial statement i purposes less (greater) than tax amortization 17,770 (9,236) (3,103)
Deferral of maintenance expenses for financial jO statement purposes. -
(3,920) 1,472 Other -
217 (57)
$ 18,035 (11,213) 714 (8) Pension Plans-10 The Company has two non-contributory trusteed pension plans covering all regu-l i lar employees and follows the consistent policy of funding all costs accrued. Pension costs were $320,000, $254,000.and $250,000 for the years
. 1983,1982 and 1981, respectively, including amortization of unfunded lia-bilities over a period ending in 1998. A comparison of accumulated plan benefit 8 and plan net assets is presented below:
{O l January 1, I 1983 1982 (Do11ars in thousands) i Actuarial present value of accumulated 10 plan benefits:
i Vested $ '965 607
.Nonvested 206 '131
$ 1,171 738 f0 Net assets available for benefits $ 2,604 1,931 An assumed weighted average rate of return of 8.5% was used in determining the actuarial present value of. accumulated plan benefits.
- (Continued)
Y
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- VERMONT YANKEE NUCLEAR POWER CORPORATION O N tes t Financial , Statements !
l (9) Consitments and contingencies Certain litigation challenging the sufficiency of the Nuclear Regulatory
- Commission's (NRC) regulations on enviromnental review of' portions of the
- O fuel cycle, which has been pending for several years, was favorably resolved by the United States Supreme Court on July 13, 1983. This resulted in dismissal of an individual case challenging the Company's operating license
! and the termination of further NRC review of remanded aspects of the '
- Company's license amendment for. expansion of the fuel rack capacity for storage of spent fuel.
10 - .
i The Company has commitments for nuclear fuel purchases through 1994 approxi- -
I mating $134,900,000. Expenditures for such commitments will be approxi -
I mately $10,400,000 in 1984 and, approximately ~ $24,300,000, $13,300,000,
$13,600,000 and $15,000,000 in the years 1985 through 1988, respectively.
Q Vermont Yankee has contracted for uranium concentrate to meet substantially 1 all its power production requirements through 1991. It has two long-term i contracts for uranium by-product extraction for 20 and 12 years, respec-j tively, each 'of which was expected to provide up to about 20% of its uranium
- requirements during these periods. Under the 20 year contract, the Company is committed to make minimum payments, aggregating $5,341,000 plus interest jO -
as f necember 31, 1983, over a period ending not later than 1993 regardless of the amount of uranium that is actually produced. After prolonged start-up problems, the uranium by-product extraction facility achieved commercial operation in June 1983 and has since been producing near design capacity.
In January 1983 the Company and others initiated legal action to determine j whether the 12 year contract could be terminated. because of the seller's f*il" t Perform properly thereunder.
10 l 1 .
i The Company has announced its decision to replace the plant's recirculation A pipicg during a scheduled outage in late 1985. The duration of the outage and the magnitude of the cost remain uncertain.
IO Events-at Three Mile Island Nuclear Unit No. 2 in Pennsylvania ("TMI") have i prompted a rigorous reexamination of safety related equipment and operating j procedures in-all nuclear facilities. New regulatory requirements involv-
! ing both physical and procedural changes have been and are being promul- "
j gated, with which all nuclear facilities will have to comply. Until the-
, scope of these improvements , as they apply to the Plant, and the time
! 8Ch'dul*8 ff C *Pliance have been fully defined, neither the cost of all. {
}O modifications nor their effect, if any, on the operations of the Company can i
[ be definitively determined. The Company . anticipates these and other; j
] requirements will necessitate significant capital expenditures in the -
- future. I
! (Continued) 10 i'
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) 8 VERMONT YANKEE NUCLEAR POWER CORPORATION j Notes to Financial Statements The Price-Anderson Act currently limits public liability from a single acci-dent at a nuclear power plant to $570,000,000. If the total damages result-ing from an accident exceed the private pool insurance coverage of
$160,000,000, then the company would be required to pay its share of the
) excess up to a maximum of $5,000,000 per accident with a maximum of
$10,000,000 per year. Under the provisions of the Power Contracts , the Company's share of any such payments would be passed on to the Sponsors.
(10) Unaudited Quarterly Financial Information The following quarterly financial information is unaudited and in the opinion
) of management includes all adjustments (consisting only of normal recurring accruals) necessary to a fair statement of results of operations for such periods.
Quarter ended
) 1983 March June (Dollars in thousands - except per share amounts)
September December Operating revenues $ 23,845 31,064 23,707 34,454 Operating income 3,409 3,609 3,597 6,442 Net income 1,736 1,740 1,742 1,751
) Net income per share of common stock 3.64 3.65 3.65 3.70 Quarter ended 1982 March June September December (Dollars in thousands - except per share amounts)
) Operating revenues $ 24,935 25,784 25,883 29,654 Operating income 3,906 3,761 3,482 3,567 Net income 1,745 1,737 1,737 1,694 Net'inecae per share of common stock 3.61 3.59 3.59 3.54
> Operating income increased in the fourth quarter of 1983 by $2,608,000 due to a reclassification of interest on disposal costs of spent nuclear fuel from nuclear fuel expense to interest expense.
(Continued)
)
)
1 0- ,
VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements (11) Unaudited Information on the Effects of Changing Prices The following information is supplied for the purpose of providing certain information about the effects of changing prices. It should be viewed as an estimate of the
.O approximate effect of changing prices, rather than as a precise measure. A state-ment of income adjusted for changing prices follows (doll.tes in thousands):
1 Year ended December 31, 1983
- Adjusted for j- Conventional Adjusted for changes in
!O historical general specific j cost inflation prices i
l Operating revenues $ 113,070 113,070 113,070 j Operating _ expenses:
j Nuclear fuel expense 18,750 34,340 31,220 th*r Perating expenses 33,992 33,992 33,992
!O Maintenance 20,398 20,398 20,398
- Depreciation 10,889 24,325 25,703 l Decommissioning expense 2,234 2,234 2,234 j Taxes on income 5,558 5,558 5,558 Property and other taxes 4,192 4,192 4,192 10
! Total operating expenses 96,013 125,039 123,297 f Operating income (loss) 17,057 (11,969) (10,227) l Other income and deductions, net 31 31 31-j Interest expense (10,119) (10,119) (10,119)
{O 3,e toco , (to,,) ,xetoatog r, auction to
] net recoverable cost $ 6,969 (22,057) (A) (20,315)
Gain from decline in purchasing power of net amounts owed 6,645 6,645 I Reduction to net recoverable cost -(13,671) (10,154)
- O I
$ 20,316 16,799 Increase in specific prices (current cost) of property, j
plant and equipment held during the year (B) 25,674
- O Effect of increase in general price icvel 18,082 J Excess of increase in specific prices over increase j in' general price level $ 7,5924
!O (A) Including the reduction to net recoverable cost, the not loss would have been $35,728.
(B) At December 31, 1983, the current cost of utility plant net of accumulated depreciation and amortisation was estimated to be approximately $455,468,000 as' compared with not utility plant recoverable through depreciation and amortisation of $199,403,000.
(Continued)
IC) 10
~
VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements
)
I A five-year comparison of selected supplementary financial data adjusted for the affects of changing prices follows (in thousands of average 1983 dollars except per share amounts):
IC) 1983 1982 1981 1980 1979
$ 113,070 109,674 96,586- 94,718 90,565 Operating revenues i
) Historical cost information adjusted for general inflation:
4C)
Net loss (excluding reduction to net recoverable cost) 22,057 15,302 11,210 6,416 920 i
Net loss per share of common .
- stock (excluding reduction to
! net recoverable cost) 57.93 31.72 30.66 21.14 7.27
(() Net assets at year-end at net recoverable cost 46,857 55,595 61,248 71,990 75,336 Curcent cost information:
Net loss (excluding reduction to
- s. net recoverable cost) $ 20,315 12,122 9,524 8,445 5,421-iC) Net loss per share of common stock (excluding reduction to 4
net recoverable cost) 53.57 25.12 26.43 26.23 18.52 l Increase in general price i level over (under) increase in l
specific prices (7,592) (27,617) 12,627 28,457 15,785 j C) Net assets at year-end at net recoverable cost 46,857 55,595 61,248 71,990 75,336 i General-information:
l Gain from decline in purchasing i power of net amounts owed $ 6,645 6,676 15,713 22,235 25,037
!)
!C Cash dividends declared per common share $ 14.40 14.86 16.43 18.15 20.59 j Average consumer price index 298.4 289.1 272.4 246.8 217.4 l Dollar amounts adjusted for general inflation (constant dollar amounts) repre-
. sent historical costs stated in terms of dollars of equal purchasing power, l() as measured by the Consumers Price Index for all Urban Consumers (CPI-U).
Dollar amounts adjusted for changes in specific prices (current cost amounts) reflect the changes in specific prices of net utility plant from the date the plant was . acquired to the present, and differ from constant dollar amounts to the extent that specific prices have increased more or less rapidly than prices in general.
lO (Continued) l l
l O
g 11 VERMONT YANKEE NUCLEAR POWER CORPORATION Notes to Financial Statements The current cost of property, plant, and equipment, which includes land, land rights, intangible plant and construction work in progress, represents the estimated cost of replacing existing plant assets and was determined by indexing surviving plant by the Handy-Whitman Index of Public Utility Con-struction Costs. The current cost of nuclesi fuel was determined by engineering estimates of the replacement cost of fuel currently in the reactor. The current year's provisions for nuclear fuel expense and depre-ciation on the constant dollar and current cost amounts of utility plant were determined by applying the Company's depreciation and amortization rates to the restated plant amounts.
As prescribed in Financial Accounting Standard No. 33, income taxes were not adjusted.
Under terms of the Power Contracts, which specify costs billable to the Com-pany's sponsors, only the historical cost of utility plant is recoverable in revenues as depreciation. Therefore, the excess of the cost of plant stated in terms of constant dollars or current cost that exceeds the historical cost of plant is not presently recoverable in rates as depreciation, and is reflected as a reduction to net recoverable cost. The Company will be allowed to earn on the increased cost of its net investment when replacement of facilities actually occurs.
To properly reflect the economics of rate regulation in the statement of income adjusted for changing prices, the reduction of net property, plant, and equipment should be offset by the gain from the decline in purchasing power of net amounts owed. During a period of inflation, holders of monetary assets suffer a loss of general purchasing power while holders of monetary liabilities experience a gain. The gain from the decline in purchasing power of net amounts owed is primarily attributable to the substantial amount of debt which has been used to finance property, plant, and equip-ment. Since the depreciation on this plant is limited to the recovery of historical costs, the Company does not have the opportunity to realize a holding gain on debt and is limited to recovery only of the embedded cost of debt capital.