ML20084P338
| ML20084P338 | |
| Person / Time | |
|---|---|
| Site: | Davis Besse, Perry  |
| Issue date: | 12/31/1994 |
| From: | CLEVELAND ELECTRIC ILLUMINATING CO. |
| To: | |
| Shared Package | |
| ML20084P268 | List: |
| References | |
| NUDOCS 9506080264 | |
| Download: ML20084P338 (26) | |
Text
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l The Cleveland Electric Illuminating Company A subsidiary of Centerior Energy Corporation
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l lli Annual Report 1994 9506080264 950601 PDR ADOCK 05000346 I
Z Contonts About ciovoiand eioctric I Management's Financial The Company, a wholly owned subsidiary of Centerior Energy Corporation, Analysis Financial provides electric service to an area of northeastern Ohio extending 100 miles long the southem shore of Lake &ie from Pennsylvania on the east through Statements and Notes the city of Avon Lake on the west. The southem boundary of the service area 21 Report of Independent is approximately 17 miles south of Lake Erie. The complete boundary prescribes Public Accountants an area of about 1,700 square miles. Total population served is about 1,830,000.
Although the principal city in the service area is Cleveland, the Company 22 h,.nancial and Statistical derives about 77c7c of its total electric retail revenues from customers outside Review of the city. The Company's 3,547 employees serve about 747,000 customers.
24 Investor Information Executive offices The Cleveland Electric illuminating Company 55 Public Square Cleveland, OH (216) 622-9800 M a il Address L
The Cleveland Electric illuminating Company P.O. Box 5000 Cleveland, Oil 44101 Directors Robert J. Earling, Chainnan and Chief Executive Officer of the Company and The Toledo Edison Company and Chainnan, President and Chief Executive 00ker of Centerior Energy Corporation and Centerior Service Company.
Afurray R. Edelman, President of the Company, Vice Chairman of The Toledo Edison Company and Executive Vice President of Centerior Energy Corporation and Centerior Service Company.
Fred J. lenge.Jr., Vice President of the Company, President of The Toledo Edison Company and Senior Vice President of Centerior Energy Corporation and Centerior Service Company.
Officers Chainnan and Chief Executive Officer.
. Robert J. Farling President..
. Afurray R. Edelman Vice President & Chief Financial Officer..
. Gary R. Leidich Vice President.
,,Jacquita K. Hauscrman l
Vice President.
. Fred J. txnge, Jr.
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j Vice President.
. Terrence G. Linnert l
Treasurer.
. David Af. Blank Controller.
. E. Ly/c Pcpin Secretary.
..Janis T. Pertio
@nnwa~mwame, e
(PUCO) to be effective in 1996. Meaningful cost control Management,s Financial Analys.is and marketing strategies will mitigate the need for addi-ti n rate ime ses and help us meet competition.
Outlook Strategic Plan Competition We made significant strides in achieving the objectives of We are implementing strategies designed to create and the comprehensive strategic action plan announced in enhance our competitive advantages and to overcome the January 1994. Centerior Energ~y Corporation (Centerior competitive disadvantages that we face due to regulatory Energy), along with The Cleveland Electric illuminat.
and tax constraints and our high retail cost structure.
ing Company (Company) and The Toledo Edison Com-Currently our most pressing competition comes from two pany (Toledo Edison), created the strategic plan to municipal electric systems in our senice area. Our rates strengthen their financial and competitive position are generally higher than those of the two municipal through the year 2001. The Company and Toledo Ed: son systems due largely to their exemption from taxation, the are the two wholly owned electric utility subsidiaries of lower cost financing available to them, the continued Centerior Energy. The plan's objectives relate to the availability to them of lower cost power through short-combined operations of all three companies. The objec-term power purchases and their access to cheaper govern-tives are to achieve profitable revenue growth, become an mental power. We are seeking to address the tax dispar-industry leader in customer satisfaction, build a winning ity through the legislative process. In 1994, the Ohio employee team, at:ain increasingly competitive power Governor's Tax Commission recommended the replace-supply costs and maximize share owner return on Center-ment of the gross receipts and personal property taxes ior Energy common stock. To achieve these objectives, currently levied only on investor-owned utilities and we will continue to control expenditures and reduce our collected through rates with a different tax collected from outstanding debt and preferred stock. In addition, we will customers of all electric utilities, including municipal increase revenues by finding new uses for existing assets systems. Investor-owned utilities would reduce rates upon and resources, implementing new marketing programs repeal of the existing taxes. We are now working to and restructuring rates when appropriate. We will also submit this proposal to the Ohio legislature.
improve the operating performance of our generating plants and take other appropriate actions.
We face the threat that mumcipalities in our senice area could establish new systems and continue expanding During 1994, we made progress toward most of our long-existing systems. We are responding with aggressive mar-term objectives. The Company and Toledo Edison initi-keting programs and by emphasizing the value of our ated a marketing plan designed to increase total retail service and the risks of a municipal system: substantial, revenues (exclusive of fuel cost recovery revenues and long-term debt; no guarantee of low-cost wholesale elec-weather influences) by 2-3% annually through 2001. Our tricity; the difficulty of forecasting costs; and the uncer-new customer ser ice activities are intended to raise our tainty of market share as a result of our aggressive customer satisfaction rating. Our employees achieved competition. Generally, these municipalities have deter-enough of their established objectives for the year to mined that developing a system is not feasible or have receive a 5500 per eligible employee incentive compensa-agreed with us not to pursue development of a system at tion award. The work undertaken during refueling out-this time. Although some communities continue to be ages at the Davis-llesse Nuclear Power Station (Davis-interested in municipalization, we believe that we ofter flesse) and Perry Nuclear Power Plant Unit 1 (Perry the best value and most reliable source of electric senice Unit 1) as well as the outage work at our fossil-fueled in our territory.
plants should help us achieve our long-term objective d reducing variable power costs to a more competitive The larger mun..icipal system in our service area, Cleve-level. Strong cash flow continued in 1994 and the Com-1 nd Public Power (CPP), is constructing new transmis-si n nd distnbution facilities extending into castern pany's fixed-income ob!igations were reduced by $77 million. Also, the Company's total operation and mainte-p rtions of Cleveland. CPP also plans to expand to nance expenses declined $71 million, exclusive of one-western portions of Cleveland. CPP's expansion reduced time charges in 1993.
ur annu 1 net income by about $4 milhon m 1993 and an additional $3 million in 1994. We estimate our net l
We are taking aFgressive steps to increase revenues income will continue to be reduced by an additional $4 l
thmugh our enhanced marketing plan and to control million to 55 million each year in the 1995-1999 period costs. The full impact of these efforts will take time. In because of CPP's expansion. Despite CPP's expansion the meantime, the Company and Toledo Edison must efTorts, we have been successful in retaining most of the raise revenues by restructuring rates. Accordingly, the large industrial and commercial customers in the expan-Company and Toledo Edison are preparing to file a sion areas by providing economic incentives in exchange request with Tae Public Utilities Commission of Ohio for sole-supplier contracts. We have similar contracts 1
2
r 1
I with customers in other parts of our service area. Approxi-regulatory assets and (2) a significant change in the mately 90% of our industrial revenues under contract will manner in which rates are set by the PUCO from cost-not be up for renewal until 1997 or later. As these based regulations to some other form of regulations. In contracts expire, we expect to renegotiate them and retain the event we determine that the Company no longer the customers. In addition, an increasing number of CPP meets the criteria for following SFAS 71, the Company customers are converting back to our service.
would be required to record a before-tax charge to write oft the regulatory assets shown in Note 7. In addition, we The Energy Policy Act of 1992 willincrease competition would be required to evaluate whether the changes in the in the electric utility industry by allowing broader access cmr.petitive and regulatory environment which led to to a utility's transmission system. It should not signifi-discontinuing the application of SFAS 71 would also cantly increase the competitive threat to us since we have result in an impairment of the net book value of the been required to wheel electricity to municipal systems Company's property, plant and equipment.
in our service area since 1977 under operating licenses for our nuclear generating units. Further, the government The Company's write-oft in 1993 of the phase-in deferred could eventually require utilities to deliver power from operating expenses and carrying charges (phase-in defer-i other utilities or generation sources to their retail custom-rals) discussed in Note 7 resulted from our conclusion ers. To combat this threat, we are ofTering incentives that projected revenues for the 1994-1998 period would such as energy-elliciency improvements and reductions in not provide for recovery of such deferrals as scheduled by demand charges for increased electricity usage to our the PUCO order. This short time frame for recovery of industrial and commercial customers in return for long-the phase-in deferrals is a requirement under the account-term commitments.
ng standard for phase-in plans of regulated enterprises, SFAS 92. The remaining recovery periods for all remain-Rate Matters ing regulatory assets are between 17 and 34 years. We Under the Rate Stabilization Program discussed in Note believe the Company's rates will provide for recovery of 7, we agreed to free 7e base rates until 1996 and limit rate these assets over the relevant periods and SFAS 71 increases through 1998. In exchange, we are permitted contmues to apply.
to defer through 1995 and subsequently recover certain costs not currently recovered in rates and to accelerate Nuclear Operations the amortization of certain benefits. Amortization and recovery of the deferrals are expected to begin in 1996 The Company has interests in three nuclear generating with future rate recognition and will continue over the units - Davis-Besse, Perry Unit I and Beaver Valley average life of the related assets, or between 17 and 30 Power Station Unit 2 (Beaver Valley Unit 2). Toledo years. The continued use of these regulatory accounting Edison operates Davis-Besse and the Company operates measures in 1995 will be dependent upon our continu-Perry Unit 1. Davis-Besse and Beaver Valley Unit 2 ing assessment and conclusion that there will be probable have been operating extremely well, with each unit having recovery of such deferrals in future rates. Our analysis a three-year availability average at year-end 1994 that leading to certain year-end 1993 financial actions and the exceeded the three-year industry average of 80% for strategic plan also included an evaluation of our regula-similar reactors. Ilowever, the three-year availability av-tory accounting measures. See Regulatory Accounting erage of Perry Unit I was below the three-year industry below and Note 7. We decided that, once the deferral of availability average for that reactor type.
expenses and acceleration of benefits under the Rate Stabilization Program are 'ompleted in 1995, we should in 1994, Davis-Besse had an availability factor of 88%
no longer plan to use these measures to the extent we Further, Davis-Besse completed the shortest refueling have in the past.
and maintenance outage in its history in 1994, returning to service just 46 days after shutting down. The Com-Regulatory Accounting pany is in the process of upgrading Perry Unit I to the same level. For seven months in 1994, Perry Unit I was As described in Notes 1(a) and 7, the Company complies out of sersice for its fourth refueling and maintenance with the provisions of Statement of Financial Accounting outage. Work was also performed in connection with the Standards (SFAS) 71. We continually monitor changes comprehensive course of action developed in 1993 to in market and regulatory conditions and consider the improve the operating performance of Perry Unit 1.
effects of such changes in assessing the continuing appli-Work in connection with that course of action is ongoing.
cability of SFAS 71. Criteria that could give rise to discontinuation of the application of SFAS 71 include:
We externally fund the estimated costs for the future (1) increasing competition which significantly restricts decommissioning of our nuclear units. In 1993 and 1994, the Company's ability to establish rates to recover operat-we increased our decommissioning expense accruals be-ing costs, return requirements and the amortization of cause of revisions in our cost estimates. See Note 1(c).
2
.t t
. Our nuclear units may be impacted by activities or events dividend demand on the Company. The Company is using t
' beyond our control. Operating nuclear units have exper-the increased retained cash to redeem debt and preferred ienced unplanned outages or extensions of scheduled stock more quickly than would otherwise be the case.
outages because of equipment problems or new regula-This has helped improve the Company's capitalization tory requirements. A major accident at a nuclear facility structure and fixed charge coverage ratios.
anywhere in the world could cause the Nuclear Regula-l i
tory Commission to limit or prohibit the operation or Merger of Toledo Edison into the Company licensing of any domestic nuclear unit. If one of our nuclear units is taken out of service for an extended period We continue to seek the necessary regulatory approvals to i
for any reason, including an accident at such unit or any complete the merger of Toledo Edison into the Company i
other nuclear facility, we cannot predict whether regula-which was announced in 1994. The Company and tory authorities would impose unfavorable rate treat-Toledo Edison plan to seek preferred stock share owner ment. Such treatment could include taking our afTected approval in mid-1995. The merger is expected to be effective in 1995. See Note 15.
.j uriit out of rate base, thereby not permitting us to recover I
our investment in and earn a return on it, or disallowing
[
certain construction or maintenance costs. An extended Inflation outage coupled with unfavorable rate treatment cod Although the rate of inflation has eased in recent years, have a material adverse effect on our financial condition we are still afTected by even modest inflation which causes s
and results of operations.
increases in the unit cost of labor, materials and services.
[
llazardous Waste Disposal Sites Capital Resources and Liquidity The Comprehensive Environmental Response, Compen-ash Muhmenh sation and Liability Act of 1980 as amended (Superfund) established programs addressing the cleanup We need cash for normal corporate operations, the l
of hazardous waste disposal sites, emergency prepared-mandatory retirement of securities and constructing and ness and other issues. The Company has been named as a modifying facilities. Construction is needed to meet antic-l "potentially responsible party" (PRP) for three sites ipated demand for electric service, comply with govern-
^
listed on the Superfund National Priorities List ment regulations and protect the environment. Over the l
(Superfund List) and is aware of its potential involve-three-year period 1992-1994, construction and mandatory ment in the cleanup of several other sites. Allegations that retirement needs totaled approximately $940 million. In
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the Company disposed of hazardous waste at these sites, addition, we exercised options to redeem and purchase i
and the amounts involved, are often unsubstantiated and approximately $470 million of our securities.
l subject to dispute. Superfund provides that all PRPs for a particular site can be held liable on a joint and several We raised $989 million through security issues and term j
basis. If the Company were held liable for 100% of the bank loans during the 1992-1994 period. The Company cleanup costs of all of the sites referred to above, the cost also utilized short-term borrowings to help meet its cash j
could be as high as $350 million. However, we believe needs. The Company had $58 million of notes payable i
that the actual cleanup costs will be substantially lower to aftiliates at December 31,1994. See Note 12. Although than $350 million, that the Company's share of any write-offs of the Company's Perry Nuclear Power Plant j
cleanup costs will be substantially less than 100% and that Unit 2 (Perry Unit 2) investment and phase-in defer-most of the other PRPs are financially able to contribute rals in 1993 negatively affected earnings, they did not their share. The Company has accrued a liability total.
adversely affect cash flow. See Notes 4(b) and,.
ing $8 million at December 31,1994 based on estimates j
of the costs of cleanup and its proportionate responsibil-1995 and Beyond Cash Requirements j
ity for such costs. We believe that the ultimate outcome Estimated cash requirements for 19951999 for the Com-of these matters will not have a matenal adverse efTect on pany are $802 million for construction and $832 million our financial condition or results of operations.
for the mandatory redemption of debt and preferred s
h Con pany expects to Snance extanaHy aW Common Stock Disidends two-thirds of its 1995 cash requirements of approximately Centerior Energy's common stock dividend has been
$451 million and about one-third of its 1996 cash re-funded in recent years primarily by common stock divi-quirements of approximately $320 million. The Company dends paid by the Company. We expect this practice to expects to meet nearly all of its 1997-1999 requirements
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continue for the foreseeable future, in 1994, Centerior through internal cash generation and current cash re-l Energy lowered its common stock dividend which re-sources. If economical, additional securities may be re-i duced its cash outflow by over $110 million annually.
deemed under optional redemption provisions. We This action, in turn, reduced the common >id cash expect that the Company's continued strong cash flow t
3 r
i 4
,--,-m-
Millions will reduce borrowing requirements and outstanding debt inerene mecrease) in oxratine Revenues or nonars and preferred stock during this period.
KwH sales volume and Mix 5 2 Wholesale Revenues (48)
Cash expenditures to comply with the Clean Air Act l'uel Cost Recovery Revenues (13)
Miscellane us Revenues J
Amendments of 1990 (Clean Air Act) are estimated to be approximately $65 million over the 1995-1999 period.
gg Total The Company experienced good retail kilowatt-hour sales growth in the co.nmercial and industrial categories in Liquidity 1994; the residential category was negatively impacted by weather conditions, particularly during the summer. The Additional first mortgage bonds may be issued by the revenue decrease resulted primarily from milder weather Company under its mortgage on the basis of property conditions in 1994 and 53% lower wholesale sales.
additions, cash or refundable first mortgage bonds. If the Weather reduced base rate revenues approximately $8 applicable interest coverage test is met, the Company million from the 1993 amount. Although total sales may issue first mortgage bonds on the basis of property decreased by 4.6%, commercial sales increased 2.4%.
additions and, under certain circumstances, refundable Industrial sales increased 0.7% on the strength of in-bonds. At December 31,1994, the Company would have creased sales to large automotive manufacturers and the j
been permitted to issue approximately $487 million of broad-based, smaller industrial customer group. This j
additional first mortgage bonds.
growth substantiated an economic resurgence in North-I eastern Ohio. Residential sales declined 0.2% because of The Company also is able to raise funds through the sale the weather factor. Other sales decreased by 42% be-of subordinated debt and preferred and preference stock.
cause of the lower sales to w holesale customers attributa-There are no restrictions on the Company's ability t ble to expiration of a wholesale power agreement, softer issue preferred or preference stock.
wholesale market conditions and limited power availabil-ity for bulk power transactions at certain times because in 1995, the Company plans to raise funds through the
"# ' f * '* '
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sale of first mortgage bonds and the collateralization of ery revenues resulted from favorable changes m the fuel accounts receivable. In addition, the Company expects f
The weighted average of these factors to issue first mortgage bonds as collateral security for the dropped by approximately 55 sale by a pubh.c authority of tax-exempt bonds.
For 1994, operating revenues were 31% residential,32%
The Company is a party to a $205 million revolving credit commercial, 30% industrial and 7% other and kilowatt-facility which runs through mid-1996. See Note 12. The hour sales were 24% residential,29% commercial,39%
Company had $66 million of cash and temporary cash industrial and 8% other. The average prices per kilowatt-investments at the end of 1994. The Company is unable hour for residential, commercial and industrial customers to issue commercial paper because of its below invest-were $.11, $.09 and $.06, respectively.
ment grade commercial paper ratings.
Operating expenses were 15% lower in 1994. Operation The foregoing financing resources are expected to be and maintenance expenses for 1993 included $130 million sufTicient for the Company's needs over the next several of net benefit expenses related to an early retirement years. Ilowever, the availability and cost of capital to program, called the Voluntary Transition Program meet the Company's external financing needs also depend (VTP), and other charges totaling $35 million. The VTP upon such factors as financial market conditions and its benefit expenses in 1993 consisted of $102 million of credit ratings. Current credit ratings for the Company costs for the Company plus $28 million for the Com-are as follows:
pany's pro rata share of the costs for its afliliate, Centerior Standard Moody's Service Company (Service Company). Two other signif-chr$rNn serYtSc.
icant reasons for lower operation and maintenance ex-1irst mortgage bonds HH Ha2 penses in 1994 were a smaller work force and ongoing Unsecured notes B+
Ha3 cost reduction measures. More nuclear generation and Preferred stock H
b2 less coal-fired generation accounted for a large part of the lower fuel and purchased pow er expenses in 1994. Depre-ci ti n na mortization expenses increased primarily Results of Operations because of higher nuclear plant decommissmmng ex-199-8 is. 1993 penses as discussed in Note 1(e). Deferred operating expenses were greater primarily because of the write-off Factors contributing to the 3% decrease in 1994 operating of $117 million of phase-in deferred operating expenses in revenues are as follows:
1993 as discussed in Note 7. The 1993 deferrals also 4
included $52 million of postretirement benefit curtail-increased sales to wholesale customers. The decrease in ment cost deferrals related to the VTP. See Note 9(b).
1993 fuel cost recovery revenues resulted from changes in Federal income taxes increased as a result of higher the fuel cost factors. The weighted average of these pretax operating income, factors decreased approximately 5%. Base rates and mis-cellane us revenues decreased in 1993 primarily from As discussed in Note 4(b), $351 million of our Perry Unit 2 investment was written off in 1993. Also, as discussed I **'. revenues under contracts having reduced rates with certam large customers and a dectmmg rate structure in Note 7, phase-in deferred carrying charges of $519 tied to usage. The contracts have been negotiated to meet million were written oft in 1993. The change in the c mpetition and encourage economic growth.
federal income tax credit amounts for nonoperating in-come was attributable to these write-offs.
For 1993, operating revenues were 31% residential,31%
commercial, 29% industrial and 9% other and kilowatt-1993 m 1992 hour0.0231 days <br />0.553 hours <br />0.00329 weeks <br />7.57956e-4 months <br /> sales were 23% residential,27% commercial,37%
Factors contributing to the 0.5% increase in 1993 operat-industrial and 13% other. The average prices per kilo-ing revenues are as follows:
watt-hour for residential, commercial and industrial cus-Malions tomers were $.11, $.10 and $.06, respectively. The l
Increase (Decrease) in Oxratier Revenue 3 sf Dollars changes from 1992 were not significant.
KWil Sales Volume and Mix 5 27 Fuel Cost Recovery Revenues (I3)
Hase Rates and Miscellaneous (10)
Operating expenses increased 12% in 1993. The increase r
Wholesale Sales
__1 in total operation and maintenance expenses resulted Total 1.J.
from the $130 million of net benefit expenses related to the VTP, other charges totaling $35 million and an The revenue increase resulted primarily from the different increase in other operation and maintenance expenses.
weather conditions and the changes in the composition of The increase in other operation and maintenance ex-the sales mix among customer categories. Weather ac-penses resulted from higher environmental expenses, counted for approximately $32 million of higher 1993 power restoration and repair expenses following a July base rate revenues. Ilot summer weather in 1993 boosted 1993 storm, and an increase in other postretirement residential, commercial and wholesale kilowatt-hour benefit expenses. See Note 9 for information on retire-sales. In contrast, the 1992 summer was the coolest in 56 ment benefits. Deferred operating expenses decreased years for Northeastern Ohio. Residential and commer-because of the write-off of the phase-in deferred operating cial sales also increased as a result of colder late-winter expenses in 1993. Federalincome taxes decreased as a temperatures in 1993 which increased electric heating-result of lower pretax operating income.
related demand. As a result, total sales increased 2.9% in 1993. Residential and commercial sales increased 4.4%
As mentioned above, $351 million of our Perry Unit 2 and 3.1%, respectively. Industrial sales decreased 1%
investment was written oft in 1993. Credits for carrying Lower sales to large steel industry customers were par-charges recorded in nonoperating income decreased be-tially offset by increased sales to large automotive manu-cause of the write-off of the phase in deferred carrying 3
facturers and the broad-based, smaller industrial charges in 1993. The federal income tax credit for nonop-
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customer group. Other sales increased 12% because of crating income in 1993 resulted from the write-offs.
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w-Income Statement 1se ciercians ricaric rituminarine company ans sussisiacies For the years ended December 31.
1994 1993 1992
~
(millions of dollars)
Operating Resenues
$1.698
$1.751 51.743 Operating Expenses Fuel and purchased power (1) 391 423 434 Other operation and maintenance 394 433 410 l
Generation facilities rental expense, net 56 56 55 Early retirement program expenses and other 165 Total operation and maintenance 841 1,077 899 Depreciation and amortization 195 182 179 Taxes, other than federal income taxes 218 221 226 Deferred operating expenses, net (34) 27 (35)
Federal income taxes 82 22 89
!.302 1.529 1.358 Operating Income 396
_2_22 385 l
Nonoperating income (Imss)
Allowance for equity funds used during construction 4
4 I
Other income and deductions, net 6
(5) 8 Write-o!T of Perry Unit 2 (351)
Deferred carrying charges, net 25 (487) 59 Federal income taxes - credit (expense)
(4) 270 (5) 3 l.
(569) 63 Income (less) liefore Interest Charges 427 (347) 448 Interest Charges Debt interest 247 244 243 Allowance for borrowed funds used during construction (5)
(4) 242 240 243 Net Income (Loss) 185 (587) 205 Preferred Diiidend Requirements 45 45 41 Earnings (less) Aiailable for Common Stock
$ 140
$ (632)
$ 164 (1) Includes purchased power expense of $lli million. $120 million and $130 million in 1994,1993 and 1992, respectively, for all purchases from Toledo Edison.
Retained Earnings For the years ended Decen,1ber 31.
1994 1993 1992 (millions of dollars)
Retained Earnings (Deficit) at fleginning of Year S(280)
$ $45
$ 578 Additions Net income (loss) 185 (587) 205 j
Deductions Dividends declared:
Common stock (122)
(189)
(195)
Preferred stock (45)
(48)
(41)
Other, primarily preferred stock redemption expenses (1)
(2)
Net increase (Decrease) 18 (825)
(33)
Retained Earnings (Deficit) at End of Year
$(262)
$(2RO)
$ 545 The accompanying notes are an integralpart of these statements.
6
hash YlOWS ne Cleveland Electric illumsnasing Company and Subsidiaries For the years ended December 31.
1994 1993 1992 (millions of dollars)
Cosh Flows from Operating Actitities (1)
Net income (Loss)
$ 185
$(587)
$j_0.5 Adjustments to Reconcile Net income (Loss) to Cash from Operating Activities:
Depreciation and amortization 195 182 179 Deferred federal income taxes 50 (292) 66 Investment tax credits, net (8)
Ur. billed revenues 27 (6)
(7)
Deferred fuel (20) 4 6
Deferred carrying charges, net (25) 487 (59)
Leased nuclear fuel amortization 55 47 70 Deferred operating expenses, net (34) 27 (35)
Allowance for equity funds used during construction (4)
(4)
(1)
Noncash early retirement program expenses, net 125 Write-off of Perry Unit 2 351 Changes in amounts due from customers and others, net 10 5
6 Changes in inventories 2
17 (2)
Changes in accounts payable (34) 18 7
Changes in worLing capital afTecting operations 3
29 (4)
Other noncash items 4'
5 (11)
Total Adjustments 229 995 207 Net Cash from Operating Activities 414 408 412 Cash Flows from Financing Actisities (2)
Bank loans, commercial paper and other short-term debt (10) 10 Notes payable to afliliates 58 (11)
(13)
First mortgage bond issues 46 280 324.
Secured medium-term note issues 35 90 Term bank loan 40 Preferred stock issues 100 74 Maturities, redemptions and sinking funds (116)
(345)
(481)
Nuclear fuel lease obligations (60)
(59)
(65)
Dividends paid (142)
(232)
(235)
Premiums, discounts and expenses (l)
___L11)
(7)
Net Cash from Financing Activities (215)
(213)
(303)
Cash Flows from imesting Actisities (2)
Cash applied to construction (164)
(167)
(152)
Interest capitalized as allowance for borrowed funds used during construction (5)
(4)
Contributions to nuclear plant decommissioning trusts (14)
(5)
(5)
Other cash received (applied)
(27) 24 (15)
Net Cash from Investing Activities (210)
(152)
(172)
Net Change in Cash and Temporary Cash Insestments (11) 43 (63)
Cash and Temporary Cash Insestments at Beginning of Year 77 34 97 Cash and Temporary Cash Iniestments at End of Year
$ 66
$ 77
$ 34 (1) Interest paid (net of amounts capitali:ed) was $203 million, $204 million and $205 million in 1994,1993 and 1992, respectively. Income taxes paid were $15 million in 1994 and $28 million in both 1993 and 1992.
(2) Increases in Nuclear Fuel and Nuclear Fuel Lease Obligations in the Balance Sheet resultingfrom the noncash capitali:ations under nuclearfisci agreements are excludedfrom this statement.
The accompanying notes are an integral part of this statement.
7
Balance Sheet December 31.
1994 1993 (millions of dollars)
ASSE15 Property, Plant and Equipment Utility plant in service
$6,871
$6,734 Less: accumulated depreciation and amortization 2,014 1.889 4,857 4,845 Construction work in progress 99 141 4,956 4,986 Nuclear fuel, net of amortization 174 202 Other property, less accumulated depreciation 21 41 5.151 5.229 Current Assets Cash and temporary cash investments 66 77 Amounts due from customers and others, net 146 156 Amounts due from afliliates 5
5 Unbilled revenues 72 99 Materials and supplies, at average cost 95 93 Fossil fuel inventory, at average cost 16 20 Taxes applicable to succeeding years 180 179 Other 4
3 584 632 Deferred Charges and Other Assets Amounts due from customers for future federal income taxes 641 586 Unamortized loss on reacquired debt 58 60 Carrying charges and operating expenses
$78 519 Nuclear plant decommissioning trusts 44 30 Other 95 103 1.416 1.298 Total Assets
$7.151
$7.159 The accompanying notes are an integralpart of this statement.
8
The Cleseland Electric illuminating Contpany and Subsidiaries December 31.
1994 1993 (millions of dollars)
CAPITAll7AT10N AND LIABILITIES Cepitalization Common shares, without par value: 105 million authorized; 79.6 million outstanding in 1994 and 1993 51,241
$1,241 Other paid in-capital 79 79 Retained earnings (deficit)
(262)
_(280)
Common stock equity 1,058 1,040 Preferred stock With mandatory redemption provisions 246 285 Without mandatory redemption provisions 241 241 Long-term debt 2.543 2.793 4.088 4)$9 Current Liabilities Current portion of long-term debt and preferred stock 282 70 Current portion of nuclear fuel lease obligations 47 63 Accounts payable 88 122 Accounts and notes payable to afIlliates 118 61 Accrued taxes 310 305 Accrued interest 62 60 Other 51 52 958 733 Deferred Credits and Other Liabilities Unamortized investment tax credits 192 235 Accumulated deferred federal income taxes 1,234 1,105 Unamortized gain from Ilruce Mansfield Plant sale 327 343 Accumulated deferred rents for Bruce Mansfield Plant 84 77 Nuclear fuel lease obligations 132 151 Retirement benefits 59 52 Other 77 104 2,105 2,067 Total Capitalization and Liabilities
$7.151
$7.159 e
9
i m.
Siatament ot eraterred stock l
n ac,,i.,s ei,c,,1c rii. i i., c.-,..,..s s.s.is,.cic, Current 1994 Shares Call Price December 31.
Outstandine '
Per Share 1994 1993 f
(millions of dollars).
. Without par value, 4,000,000 preferred shares authorized.
Subject to mandatory redemption:
$ 7.35 Series C 140,000
$ 101.00
$ 14
$ 15 88.00 Series E '
18,000 1,019.13 18 21 Adjustable Series M 100,000 100.00
'10 20 9.125 Series N 410,766 102.03 41 59 91,50 Series Q 75,000 75 75 88.00 Series R 50,000 50 50.
90.00 Series S 75,000 74 74 282 314 Less: Current maturities
_),6 29 Total Preferred Stock, with Mandatory Redemption' Protisions g,44 E
Not subject to mandatory redemption:
$ 7.40 Series A 500,000 101.00 5.50
$.50 7.56 Series B 450,000 102.26 '
45 45 l
Adjustable Series L 500,000 100.00 49
.49 42.40 Series T 200,000 97 -
97 I
Total Preferred Stock, without Mandatory Redemption Prosisions M
'M The accompanying notes are an integralpart of this statement.
'l b
9 i
t I
i i
I t
r I
[
10 i
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I i
i A fuel factor is added to the base rates for electric service.
NOtOS to the Financial Statements This ractor is designed to recover from customers the costs of fuel and most purchased power. It is reviewed (1) Summary of Significant and adjusted semiannually in a PUCO proceeding.
Accounting Policies (o) General (d) Fuel Expense The cost of fossil fuelis charged to fuel expense based on The Company is an electric utility and a wholly owned subsidiary of Centerior Energy. The Company's financial innntory usage. The cost of nuclear fuel, mcluding an statements have historically included the accounts of the interest component, is charged to fuel expense based on Company's wholly owned subsidiaries, which in the
$"I*
IC "S"*PIi n. Estimated future nuclear fuel disposal costs are bem.g recovered through base rates, j
aggregate were not material. During 1994, the Company transferred its investments in its three wholly owned The Company defers the differences between actual fuel subsidiaries to Centerior Energy at cost ($26 million) via costs and estimated fuel costs currently being recovered 1
, property dividends.
from customers through the fuel factor. This matches fuel expenses with fuel-related revenues.
The Company follows the Uniform System of Accounts prescribed by the Federal Energy Regulatory Commis-Owners of nuclear generating plants are assessed by the j
sion (FERC) and adopted by the PUCO. Rate-regulated federal government for the cost of decontamination and j
utilities are subject to SFAS 71 which governs account-decommissioning of nuclear enrichment facilities oper-ing for the effects of certain types of rate regulation.
ated by the United States Department of Energy. The Pursuant to SFAS 71, certain incurred costs are deferred assessments are based upon the amount of enrichment for recovery in future rates. See Note 7.
services used in prior years and cannot be imposed for The Company is a member of the Central Area Power m re than 15 years (to 2007). The Company has accrued a liability for its share of the total assessments. These Coord.mation G,roup (CAPCO). Other members are To-costs have been recorded m. a deferred charge account ledo Edison, Duquesne Light Company, Ohio Edison smcc the PUCO is allowing the Company to recover the Company and its wholly owned cubsidiary, Pennsylvania ssessments through its fuel cost factors.
Power Company. The members have constructed and operate generation and transmission facilities for their (c) Deprec. tion and Amortizat. ion ia use.
The cost of property, plant and equipment is depreciated (b) Related Party Transactions over their estimated useful lives on a straight-line basis.
The annual straight-line depreciation provision for non-Operatmg revenues, operating expenses and interest charges include those amounts for transactions with aflili-
".ucle r property expressed as a percent of average depre-ciable utility plant in service was 3.4% in 1994,1993 ated companies in the ordinary course of busm.ess operations, nd 1992. The annual straight-line depreciat,on rate for i
nuclear property is 2.5%.
The Company's transactions with Toledo Edison are pri-marily for firm power, interchange power, transmission The Company accrues the estimated costs of decommis-line rentals and jointly owned power plant operations and
'**"8 '.ts three nuclear generating units. The accruals are required to be funded in an external trust. The PUCO construction. See Notes 2 and 3.
requires that the expense and payments to the external The Service Company provides management, fmancial, trusts be determined on a levelized basis by dividing the administrative, engineering, legal and other services at unrecovered decommissioning costs in current dollars by l
cost to the Company and other aflitiated companies. The the remaining years in the licensing period of each unit.
)
Service Company billed the Company $136 million, $167 This methodology requires that the net earnings on the million and $150 million in 1994,1993 and 1992, respec-trusts be reinvested therein with the intent of allowing net tively, for such services.
earnings to ofTset inflation. The PUCO requires that the estimated costs of decommissioning and the funding (c) Resenues level be reviewed at least every five years.
Customers are billed on a monthly cycle basis for their in 1994, the Company increased its annual decommis-energy consumption based on rate schedules or contracts sioning expense accruals to $13 million from the $4 authorized by the PUCO. An accrualis made at the end million level in 1992. The accruals are reflected in current of each month to record the estimated amount of rates. The increased accruals were derived from recently unbilled revenues for kilowatt-hours sold in the current updated, site-specific studies for each of the units. The month but not billed by the end of that month.
revised estimates reflect the DECON method of decom-11
p l~
l missioning (prompt decontamination), and the locations tion ( AFUDC). AFUDC represents the estimated com-1 and cost characteristics specific to the units, and include posite debt and equity cost of funds used to finance costs associated with decontamination, dismantlement construction. This noncash allowance is credited to in-and site restoration.
come. The AFUDC rate was 9.68% in 1994, 9.63% in 1993 and 10.56% in 1992.
The revised estimates for the um.ts in 1993 and 1992 dollars and in dollars at the time of license expiration, Maintenance and repairs for plant and equipment are assuming a 4% annual inflation rate, are as follows:
charged to expense as incurred. The cost of replacing IJecnse plant and equipment is charged to the utility plant ac-c unts. The cost of property retired plus removal costs, Generatine Unit r
Arnount no nt
(,ninions or after deducting any salvage value, is charged to the dollars) accumt' lated provision for depreciation.
Davis-Hesse 2017
$178(l) $ 443 Perry Unit t 2026 156(1) 554 amer vancy unit 2 2027
_ E (2) 233 (g) Deferred Ga.m from Totai g
smn Sale of Utility Plant The sale and leaseback transaction discussed in Note 2
[""$ [
resulted in a net gain for the sale of the 13ruce Mansfield 3
Generating Plant (Mansfield Plant). The net gain was The updated estimates reflect substantial increases from deferred and is being amortized over the term of leases.
the prior PUCO-recognized aggregate estimates of $142 The amortization and the lease expense amounts are million in 1987 and 1986 dollars.
reported in the income Statement as Generation Facili-ties Rental Expense, Net.
The classification, Accumulated Depreciation and Amor-j tization, in the llalance Sheet at December 31,1994 (h) Interest Charges l
includes $53 million of decommissioning costs previously expensed and the earnings on the external trust funding.
Debt Interest reported in the Income Statement does not This amount exceeds the llalance Sheet amount of the include interest on obligations for nuc! car fuel under external Nuclear Plant Decommissioning Trusts because construction. That interest is capitalized. See Note 6.
the reserve began prior to the external trust funding. The Losses and gains realized upon the reacquisition or re-trust earnings are recorded as an increase to the trust demption of long-term debt are deferred, consistent with assets and the related component of the decommissioning the regulatory rate treatment. See Note 7. Such losses reserve (included in Accumulated Depreciation and and gains are either amortized over the remainder of the Amortization).
original life of the debt issue retired or amortized over The staff of the Securities and Exchange Commission has the life of the new debt issue when the proceeds of a new questioned certain of the current accounting practices of issue are used for the debt redemption. The amortiza-l the electric utility industry, including those of the Com-tions are included in debt interest expense.
pany, regarding the recognition, measurement and clas-(i) Federal Income Taxes sification of decommissioning costs for nuclear generating l
stations in the fmancial statements. In response to these The Company uses the liability method of accounting for questions, the Financial Accounting Standards lloard is income taxes in accordance with SFAS 109. See Note 8.
reviewing the accounting for removal costs, including This method requires that deferreu iaxes be recorded for decommissioning. If such current accounting practices all temporary differences between the book and tax bases are changed, the annual provision for decommissioning of assets and liabilities. The majority of these temporary could increase; the estimated cost for decommissioning differences are attributable to property-related basis dif-could be recorded as a liability rather than as accumu-ferences, included in these basis differences is the equity lated depreciation; and trust fund income from the exter-component of AFUDC, which will increase future tax nal decommissioning trusts could be reported as expense when it is recovered through rates. Since this investment income rather than as a reduction to decom-component is not recognized for tax purposes, the Com-missioning expense.
pany must record a liability for its tax obligation. The PUCO permits recovery of such taxes from customers (f) Property, Plant and Equipment u hen they become payable. Theiefore, the net amount due from customers through rates has been recorded as a Property, plant and equipment are stated at original cost deferred charge and will be recovered over the lives of less amounts ordered by the PUCO to be written off.
the related assets. See Note 7.
Construction costs include related payroll taxes, retire-ment benefits, fringe benefits, management and general Investment tax credits are deferred and amortized over overheads and allowance for funds used during construc-the lives of the applicable property as a reduction of 12
depreciation expence. See Note 7 for a discussion of the Valley Unit 2 and Mansfield Plant leases, the Company amortization of certain unrestricted excess deferred taxes would be obligated to make such payments. No such and unrestricted investment tax credits under the Rate payments have been made on behalf of Toledo Edison.
Stabilization Program.
Future minimum lease payments under the operating
' * " ' ' ' " ' * * ' ' ~ ' ' ' ' '
(2) Utility Plant Sale and Leaseback Transactiors Ile' r!$do g
Company Edison The Company and Toledo Edian are co-lessees of (mmions or doitars) 13.26% (150 megawatts) of Beaar Valley Unit 2 and 1995 5 63 5 103 6.5% ($1 megawatts), 45.9 % (358 megawatts) and 1996 63 125 44.38% (355 megawatts) of Units I,2 and 3 of the 1997 63 102 Mansfield Plant, respectively, all for terms of about 29%
1998 63 102 years. These leases are the result of sale and leaseback 7g gg transactions completed in 1987.
Later Years 1.321 i,918 Under these leases, the Company and Toledo Edison are Total ruture Minimum Lease responsible for paying all taxes, insurance premiums, Payments si m s? w operation and maintenance expenses and all other similar costs for their interests in the units sold and leased back.
Rental expense is accrued on a straight-line basis over the They may incur additional costs in connection with capi-terms of the leases. The amount recorded in 1994,1993 talimprovements to the units. The Company and Toledo and 1992 as annual rental expense for the Mansfield Edison have options to buy the interests back at the end Plant leases was $70 million. Amounts charged to ex-of the leases for the fair market value at that time or pense in excess of the lease payments are classified as renew the leases. Additional lease provisions provide Accumulated Deferred Rents in the Balance Sheet.
other purchase options along with conditions for mandatory termination of the leases (and possible repur.
The Company is buying 150 megawatts of Toledo chase of the leasehold interests) for events of default.
Edison's Beaver Valley Unit 2 leased capacity entitle.
These events include noncompliance with any of several ment. Purchased power expense for this transaction was financial covenants discussed in Note 11(d).'
$108 million, $103 million and $108 million in 1994,1993 and 1992, respectively. We anticipate that this purchase As co-lessee with Toledo Edison, the Company is also will continue indefinitely. The future minimum lease obligated for Toledo Edison's lease payments. If Toledo payments through the year 2017 associated with Beaver Edison is unable to make its payments under the Beaver Valley Unit 2 aggregate $1.413 billion.
1 9
F 13 l
l
'(3) Property Owned with Other Utilities and Investors i
- The Company owns, as a tenant in common with other utilities and those investors who are owner-participants in various
~
- sale and leaseback transactions (Lessors), certain generating units as listed below, Each owner owns an undivided share in the entire unit. Each owner has the right to a percentage of the generating capability of each unit equal to its ownership
{
. hare. Each utility owner is obligated to pay for only its respective share of the construction costs and operating expenses.
Each Lessor has leased its capacity rights to a utility which is obligated to pay for such Lessor's share of the construction costs and operating expenses. The Company's share of the operating expenses of these generating units is included in the l
Income Statement.The Balance Sheet classification of Property, Plant and Equipment at December 31,1994 includes the i
following facilities owned by the Company as a tenant in common with other utilities and Lessors:
In.
Plant Construction Service Ownership Ow nership Power in Work in Accumulated f
Generatinr Uni,)
Date Share McFawatts Source Service Procress Depreciation
[
(millions of dollars) i
~
Seneca Pumped Storage 1970 80.00%
351 Ilydro 5 66 5-
$ 22 Eas: lake Unit 5 1972 68.80 411 Coal 156 1
Davis-Besse 1977 5 t.38 454 Nucicar 664 2
190 p
Perry Unit I 1987 31.11 371 Nuclear 1,774 5
3I4 incaver Valley Unit 2 and 5
Common Facilities (Note 2) 1987 24.47 201 Nucicar
,,,,M26
,,,,,,2
,,21Q f
Total M
.g 3
{
i Depreciation for Eastlake Unit 5 hrs been accumulated with all other nonnuclear depreciable property rather tan by i
specific units of depreciable property.
r (4) Construction and Contingencies in Perry Unit 2 at December 31,1993 after we deter-
[
mined that it would not be completed or sold. The write-l (a) Construction Program off totaled $351 million (5258 million after taxes) for the Company's 44.85% ownership share of the unit. See The estimated cost of the Company's construction pro-Note 14.
[
gram for the 1995-1999 period is $851 million, including AFUDC of $49 million and excluding nuclear fuel.
W hdous Waste Disposal Sites The Clean Air Act requires, among other things, signifi-The Company is aware of its potential involvement in the cant reductions m the emission of sulfur dioxide and cleanup of three sites listed on the Superfund List and l
nitrogen oxides by fossil-fueled generatmg units. Our several other waste sites not on such list. The Company strategy provides for compliance primarily through has accrued a liability totaling $8 million at December greater use of low-sulfur coal at some of our units and the 31,1994 based on estimates of the costs of cleanup and its use of emission allowances. Total capital expenditures proportionate responsibility for such costs. We believe from 1991 through 1994 in connection with Clean Air that the ult.imate outcome of these matters w.ll not have i
Act compliance amounted to $34 milh.on. The plan will a material adverse effect on our financial condition or I
require additional capital expenditures over the 1995-results of operations. See Management's Financial Analy-t 2004 period of approximately $125 milhon for nitrogen sis-Outlook-llazardous Waste Disposal Sites.
I oxide control equipment and plant modifications. In addi-tion, higher fuel and other operation and maintenance expenses will be incurred. The anticipated rate increase (5) Nuclear Operations and i
associated with the capital expenditures and higher ex-Contingencies i
penses would be about 1-2% in the late 19903. The Company may need to install sulfur emission control (a) Operating Nuclear Units l
technology at one ofits generating plants after 2005 which could require additional expenditures at that $ime.
The Company's three nuclear units may be impacted by activities or events beyond our control. An extended j
(b) Perry Unit 2 outage of one of our nuclear units for any reason, i
coupled with any unfavorable rate treatment, could Perry Unit 2, including its share of the facilities commen have a material adverse effect on our financial condition f
with Perry Unit 1, was approximately 50% complete and results of operations. See the discussion of these when construction was suspended in 1985 pending con-risks in Management's Financial Analysis-Outlook-t sideration of various options. We wrote oft our investment Nuclear Operations.
14 I
(b) N cle:r hsurtnca with remaining lease payments for the Company of $67 -
million, $57 million and $14 million, respectively, at The Price-Anderson Act limits the public liability of the December 31,1994. The nuclear fuel amounts financed owners of a nuclear power plant to the amount provided and capitalized also included interest charges incurred by private insurance and an mdustry assessment plan. In by the lessors amounting to $7 million in 1994 and $9 the event of a nuclear mcident at any unit m the United million in both 1993 and 1992. The estimated future lease States resultmg in losses m exccu of the level of pnvate amortization payments based on projected consumption insurance (currently $200 million), the Company's max-are $57 million in 1995, $52 million in 1996, $46 million imum potential assessment under that plan would be $85 in 1997, $43 million in 1998 and $36 million in 1999.
million (plus any mflation adjustment) per mcident. The assessment is limited to $11 million per year for each nuclear incident. These assessment limits assume the (7) Regulatory Matters other CAPCO companies contribute their proportionate The Company is subject to the provisions of SFAS 71.
share of any assessment.
Regulatory assets represent probable future revenues to The utility owners and lessees of Davis-Besse, Perry and the Company associated with certain incurred costs, Beaver Valley also have insurance coverage for damage which it will recover from customers through the to property at these sites (including leased fuel and ratemaking process. Regulatory assets in the Balance cleanup costs). Coverage amounted to $2.75 billion for Sheet are as follows:
each site as of January 1,1995. Damage to property could
_Dssember 31.
1994 1993 exceed the insurance coverage by a substantial amount.
If it does, the Company's share of such excess amount M"3[
could have a material adverse efTect on its financial Amounts due from cusiomers for ruture rederai condition t id results of operations. Under these policies, income taxes s 641 5 586 the Company can be assessed a maximum of $12 million Unamortiica loss on reacquired debt 58 60 during a policy year if the reserves available to the Pre-phase-in deferrals' 341 351 insurer are inadequate to pay claims arising out of an Rate stabilization Program dercrrais 237 168 accident at any nuclear facility covered by the insurer.
Totai 51777 Si ie The Company also has extra expense insurance coverage.
- Represent dererrais or operating expenses and carrying charges for it includes the incremental cost of any replacement Perry Umt i and Heaver valley Unit 2 in 1987 and 1988 uhich are being amonized over the lives or the triated property.
power purchased (over the costs which would have been incurred had the units been operating) and other inci-As of December 31,1994, customer rates provide for dental expenses after the occurrence of certain types of recovery of all the above regulatory assets, except those accidents at our nuclear units. The amounts of the cover-related to the Rate Stabilization Program discussed be-age are 100% of the estimated extra expense per week low. The remaining recovery periods for all of the during the $2-week period starting 21 weeks after an regulatory assets listed above range from 17 to 34 years.
accident and 80% of such estimate per week for the next We continually assess the efTects of competition and the 104 weeks. The amount and duration of extra expense changing industry and regulatory environment on opera-could substantially exceed the insurance coverage.
tions and the Company's ability to recover the regula-tory assets, in the event that we determine that future (6) Nuclear Fuel revenues would not be provided for recovery of any regulatory asset, such asset would be required to be Nuclear fuel is financed for the Company and Toled written oft. See Management's Financial Analysis -
Edison through leases with a special-purpose corporation.
Outlook-Regulatory Accounting.
At December 3t,1994, $307 million ($182 million for the Company and $125 million for Toledo Edison) of The Company will file a request with the PUCO to nucicar fuel was financed ($157 million from intermedi-restructure rates to increase revenues to be efTective in ate-term notes and $150 million from bank credit 1996 which willinclude provision for recovery of the Rate l
arrangements). The intermediate-term notes mature in Stabilization Program deferrals. We believe that rates 1996 and 1997. The Company and Toledo Edison sever-will be set at a level consistent with cost-based regula-ally lease their respective portions of the nuclear fuel and tions and will provide revenues to recover the then-are obligated to pay for the fuel as it is consumed in a current operating costs, return requirements and amorti-reactor. The lease rates are based on various intermedi-zation of all regulatory assets listed above.
ate-term note rates, bank rates and commercial paper The Rate Stabilization Program that the PUCO approved in October 1992 was designed to encourage economic The amounts fmanced include nuclear fuel in the Davis-growth in the Company's service area by freezing the Besse, Perry Unit I and Beaver Valley Unit 2 reactors Company's base rates until 1996 and limiting subsequent 15
i i
rate increases to specified annual amounts not to exceed
[8) FederallifC0ine Tax
$216 million over the 1996-1998 period.
The components of federal income tax expense (credit)
'As part of the Rate Stabilization Program, during the recorded in the income Statement were as follows:
1992-1995 period the Company is allowed to defer and
, gy g subsequently recover certain costs not currently recovered
{gilions or dollars) in rates and to accelerate amortization of certain benefits.
operating Expenses:
i The continued use of these regulatory accounting mea.
Current s 53 s 64 5 47 sures will be dependent upon our continuing assess.
Deterred 19 _ E 2) 42 ment and conclusion that there will be probable recovery Totai Charged to operating Expenses
_.82
_.22 E
i of such deferrals in future rates.
Nonoperating incorne:
Current (17) (20) (19)
The regulatory accounting measures we are eligible to gg,g record through December 31,1995 include the deferral of Total L.xpense (Credit) to Nonoperating post-in-serv cc interest carrying charges, depreciation ex-Income
_.4 RZ9) _.1 9
pense and property taxes on assets placed in service after htal Federat income Tax Expense (Credit) 5 R6 st m ) 5 04 February 29,1988. The cost deferrals recorded in 1994, 1993 and 1992 pursuant to these provisions were $66 The deferred federal income tax expense results from the million, $56 million and $52 million, respectively. The temporary differences that arise from the difTerent years j
regulatory accounting measures also provide for the accel-certain expenses are recognized for tax purposes as crated amortization of certain unrestricted excess de-opposed to financial reporting purposes. Such temporary ferred tax and unrestricted investment tax credit balances ditTerences arTecting operating expenses relate principally and interim spent fuel storage accrual balances for to depreciation and deferred operating expenses whereas Davis-Bess l'he total amount of such regulatory benefits those afTecting nonoperating income principally relate to recogniicd pursuant to these provisions was $28 million deferred carrying charges and the 1993 write-ofTs.
in both 1994 and 1993 and $7 million in 1992.
Federal income tax, computed by multiplying income The Rate Stabilization Program also authorized the Com-before taxes by the statutory rate (35% in 1994 and 1993 pany to defer and subsequently recover the incremental and 34% in 1992), is reconciled to the amount of federal expenses associated with the adoption of the accounting income tax recorded on the books as follows:
standard for postrctirement benefits other than pensions
% gy g (SFAS 106). In 1994 and 1993, we deferred $4 milhon t minions or donars) and $60 million, respectively, pursuant to this provision.
d*k income (Loss) Berore Federal income Amortization and recovery of these deferrals are expected to commence in 1996 and to be completed by no later Tax (Credit) on Book income (Loss) at than 2012. See Note 9(b).
Increase (Decrease) in h.t:
In 1993, upon completing a comprehensive study which write-oft or Perry Unit 2 30 led to our current strategic plan, we concluded that write-off or phase-in deferrais 20 projected revenues would not provide for recovery of Depreciation 6
6 (3) deferrals recorded pursuant to a phase-in plan approved Rate stabilintion Program (18) (20) (5) by the PUCO in 1989. Such deferrals were scheduled to other iicms 3
8 be recovered over the 1994 through 1998 period. The total Total Fedcral income Tax Expense (Credit) _ 5 ka $D4k) y phase-in deferred operating expenses and carrying charges written oft at December 31, 1993 by the Com-The Company jo.ms m the filing of a consolidated federal in me tax return with its affiliated companies. The pany were $117 million and $519 million respectively method of tax allocation reflects the benefits and burdens (totaling $433 million after taxes). See Note 14. Addi-tionally, based on our assessment of business conditions, reanzed by each company's participation in the consoli-we concluded that, once the deferral of expenses and dated tax return, approximating a separate return result acceleration of benefits under our Rate Stabilization Pro-f r each company.
gram are completed in 1995, we should no longer plan to For tax reporting purposes, the Perry Unit 2 abandonment use regulatory accounting measures to the extent we was recognized in 1994 and resulted in a $187 million have in the past.
loss with a corresponding $65 million reduction in fderal income tax liability. Because of the ahernative minimum tax ( AMT), $38 million of the $65 million was realized in 1994. The remaining $27 million will not be realized until 1999. Additionally, a repayment of approximately
$32 million of previously allowed investment tax credits was recognized in 1994 P
In August 1993, the Revenue Reconciliation Act of 1993 resulting from a settlement of pension obligations through was enacted Retroactive to January 1,1993, the top lump sum payments to almost all the VTP retirees marginal corporate income tax rate increased to 35%
partially offset the VTP expenses.
The change in tax rate did not materially impact the results of operations for 1993, but increased Accumulated Pension and VTP costs (credits) for Centerior Energy Deferred Federal income Taxes for the future tax obliga.
and its subsidiaries for 1992 through 1994 were comprised tion by approximately $61 million. Since the PUCO has of the following components:
historically permitted recovery of such taxes from cus-L993 M L492 tomers when they become payable, the deferred charge, (minions or doti-s)
Amounts I)ue from Customers for Future Federal In.
Pensi n costs (credits):
- cmi for benc6a carned dunng tw come Taxes, also was increased by $61 million.
,3 g
g
' " ' ' ' ' " ' " ' " P*5'd "'"'* "# """"-
37 3"
8 Under SFAS 109, temporary differences and carryfor-Actual return on plan assets (2) (65) (24) wards resulted in deferred tax assets of $418 million and Net amortization and deterral
_(y3_4 ) _4
. 1 42 )
deferred tax liabilities of $1.652 billion at December 31, Net pension costs (credia) 3 (9)
(16) 1994 and deferred tax assets of $426 million and de-VTP cost 205 ferred tax liabilities of $1.531 billion at December 31, seuicment gain
_: _(n) _-
1993. These are summarized as follows:
Net costs (credits)
$ 1 Tils $f16)
.])ecember 3I.
7,1;j","r Pension and VTP costs (credits) for the Company and its dollars) pro rata share of the Service Company's costs were $2 Propert), plant and cquipment
$1,429 si,311 million, $62 million and $(16) million for 1994,1993 and Dercrred carrying charges and operating espenses _
132 127 1992, respectively.
Net operating loss carryformards (88)
(69)
The following table presents a reconciliation of the funded investmeni tu credits (los) (128) status of the Centerior Pension Plan. The Company's sale and icaschack transactions (12s) (126) share of the Centerior Pension Plan's total projected Other (9) 00) n ga n appdmam M Net dercrred in liabihty si ?tt ti. los December 31.
For tax purposes, net operating loss (NOL) carr> forwards L994
.1191 of approximately $252 million are available to reauce U"$,,') r future taxable income and will expire in 2003 through Actuarial present value or benent obligations:
2009. The 35% tax cifect of the NOLs is $88 million.
Vested benc6ts
$278 5333
" "'*"*d
"'0 "
2 2
Additionally, AMT credits of $99 million that may be Accumulated bene 6t obli ation 280 370 F
carried forward indefinitely are availabic to reduce future Urect or future compensation levels 17 si regular tax.
Total projected benc6t obligation 317 423 Plan assets at rair market value Jh2 J)%
(9) Retirement Bemfits
'""*d*"'
(
Unrecognized net loss (gain) from variance (3) Nelirement IllCome Plan between assumptions and experience (79) 11 U"'emniecd p r se cc cut 10 m
Centerior Energy sponsors jointly with its subsidiaries a Tran n auct at January 1. Im being anmnized noncontributing pension plan (Centerior Pension Plan) 9 w hich covers all employee groups. The amount of retire-Net accrued pension liability 5(61 st*9
~) ~)
ment benefits generally depends upon the length of service. Under certain circumstances, benefits can begin as early as age 55. The funding policy is to comply with A Septem r 30, IW measurement date was used for the Employee Retirement income Security Act of 1974 1994 rep rting. At Deccmber 31, 1994, the sett ement l
guidelines.
(discount) rate and long-term rate of return on plan assets assumptions were 8.5% and 10%, respectively. The in 1993, eligible employees were offered the VTP, an long-term rate of annual compensation increase assump-early retirement program. Operating expenses for Center-tion was 3.5% for 1995 and 1996 and 4% thereafter. At ior Energy and its subsidiaries in 1993 included $205 December 31, 1993, the settlement rate and long-term million of pension plan accruals to cover enhanced VTP rate of return on plan assets assumptions were 7.25%
benefits and an additional $10 million of pension costs and 8.75%, respectively. The long-term rate of annual for VTP benefits paid to retirees from corporate funds.
compensation increase assumption was 4.25% At Decem-The $10 million is not included in the pension data ber 31,1994 and 1993, the Company's net prepaid reported in the following table. A credit of $81 million pension cost included in Deferred Charges and Other 17 1
l l
Ascets - Other in the Balance Sheet was $7 million and The Balance Sheet classification of Retirement Benefits
$9 million, respectively, at December 31,1994 and 1993 includes only the Com-pany's accrued postretirement benefit cost of $59 million Plan assets consist primarily of investments in common and $52 million, respectively, and excludes the Service I
stock, bonds, guaranteed hvestment contracts, cash Company's portion since the Service Company's total equivalent securities and real estate.
accrued cost is carried on its books.
[
A September 30,1994 measurement date was used for (b) Other Postretirement Benefits 1994 reporting. At December 31,1994 and 1993, the i
Centerior Energy sponsors jointly with its subsidiaries a settlement rate and the long-term rate of annual compen-postictirement benefit plan which provides all employee sation increase assumptions were the same as those groups certain health care, death and other postretirement discussed for pension reporting in Note 9(a). At Decem-ber 31,1994, the assumed annual health care cost trend l
benefits other than pensions. The plan is contributory, with retiree contributions adjusted annually. The plan is rates (applicable to gross eligible charges) are 8.5% for medical and 8% for dental in 1995. Both rates reduce r
not funded. The Company adopted SFAS 106, the accounting standard for postretirement benefits other than gradually to a fixed rate of 4.75% by 2003. Elements of l
pensions, effective January 1,1993. The standard re-the obligation affected by contribution caps are signifi-
[
quires the accrual of the expected costs of such benefits cantly less sensitive to the health care cost trend rate than ther elements. If the assumed health care cost trend during the employees' years of service. Prior to 1993, the costs of these benefits were expensed as paid, which was rates were increased by one percentage point m each consistent with ratemaking practices, future year, the accumulated postretirement benefit obli-gation as of December 31,1994 would increase by $3 L
The components of the total postretirement benefit costs million and the aggregate of the service and interest cost j
for 1994 and 1993 were as follows:
components of the annual postretirement benefit cost M. M would increase by $0.3 million.
I (milhons of dollars)
Service cost for benefits carned during the period
$1 $2 (IO) Guarantees i
interest cost on accumulated postrctirement bencht obhgation 11 to The Company has guaranteed certain loan and lease Amortintion of transition obhgation at January 1,1993 obligations of two coal suppliers under two long-term coal 5
5
" * * ' [
,cj ],, 3,g,;giu,,,,,,;,;,,
supply contracts. At December 31, 1994, the principal obhration adjustment)
__ 3 amount of the loan and lease obligations guaranteed by Total costs
_M E the Company under both contracts was $50 million. In addition, the Company may be responsible for mine These amounts included costs for the Company and its closing costs when one of the contracts is terminated. At pro rata share of the Service Company's costs.
December 31,1994, the unfunded costs of closing this mine as estimated by the supplier were $54 million.
t In 1994 and 1993, the Company deferred incremental SFAS 106 expenses (in excess of the amounts paid) of $4 The prices under both contracts uhich include certain million and $60 million, respectively, pursuant to a provi.
minimum payments are sufficient to satisfy the loan and sion of the Rate Stabilization Program. See Note 7.
lease obligations and mine closing costs over the lives of the contracts. If either contract is terminated early for The accumulated postretirement benefit obligation and any reason, the Company would attempt to reduce the accrued postretirement benefit cost for the Company and termination charges and would ask the PUCO to allow its share of the Service Company's obligation are as recovery of such charges from customers through the fuel follows:
factor.
Recember 31.
1994 1993 (millions of dallars)
Accumulated postrciirement bencht obligation attributuble to:
Retired participants
$(124) $(141)
Fully eligible active plan participants (1)
(1)
Other active plan participants (14)
(19)
Accumulated postretirement benefit obhgation,__ (139) (161)
[
Unrecogniecd net loss (pain) from variance between awumptions and esperience (16) 9 Unamortiicd transition obhgatiot 84 ku Acerued postrctirement beneht cost 5 (71) % iet) 18
I market conditions. The dividend rates for these issues J(11) Capitalitell0N averaged 7.17% and 7.01%, respectively, in 1994.
i
~ (o) Capital Stock Transactions Preference stock authorized for the Company is 3,000,000 Preferred stock shares sold and retired during the three shares without par value. No preference sharr.s are cur-years ended December 31,1994 are listed in the following rently outstanding.
table.
L924 1993 1921 With respect to dividend and liquidation rights, the Com-f (thousands of shares) pany's preferred stock is prior to its preference stock and i
Subget to Mandatory Redemption:
common stock, and its preference stock is prior to its
{
$90.00 Series S 75 common stock.
Retirements
$ 7.35 Series C (10)
(10)
(10)
(d) Long-Term Debt and Other 88.00 Senes E (3)
(3)
(3)
Adjustable Series M (100)
(100)
( RIO)
Horrow.ing Arrangements 9.125 Series N (189)
(150) bt Subject to Mandatory Redemption:
Long-term debt, less current maturities, was as follows:
[
Sales Actual i
$42.40 Series T 200 or Average f
Retirements Interest Remarketed Series P (1)
Rate at 1
~)
December 31 December 31.
t f(d Net (L)ccrease) fin?)
(19
~)
Year of Maturity 1944 1994 1993 (b) Equity Distribution Restrictions
("l$"')"'
f N monsage bonds:
Federal law prohibits the Company from paying dividends 1996-1999 13.75 %
$ 17 5 21 out of capital accounts. Ilowever, the Company may pay
,99 g,99 g
3 4
preferred and common stock dividends out of appropri-I 1997-1999 m8 a
18 ated retained earnings and current earnings. At Decem-1999 00 2
2 4
ber 31, 1994, the Company had $144 million of 2000-2004 192 396 Ao appropriated retained earnings for the payment of pre-2005-2009 8.33 202 202 l
ferred and common stock dividends.
l 2010-2014 8.50 365 365 2 is-20w 8m 459 459 (c) Preferred and Preference Stock 2020-2023 8.75 518 518 6
Amounts to be paid for preferred stock which must be 1,980 1,989 l
redeemed during the next five years are $36 million in Secured medium term notes due 1995, $30 million in both 1996 and 1997, $15 million in 199o.202 8.68 516 713 1998 and $33 million in 1999.
Term bank loans due 1996 8.50 2
45
[
Pollution contro: notes duc 1996-I The annual preferred stock mandatory redemption provi-2012 6.82 52 53 sions are as follows:
Other - net (7)
(7) 3 Total Long-Term Debt gg i
e Beginning I er Redeemed in Share Long-term debt matures during the next five years as
(
$ 7.35 Series C 10,000 1984
$ 100 f 11 ws: $246 million in 1995,$151 million in 1996,$55 j
88.00 Series E 3.000 198 I,000 million in 1997, $78 million in 1998 and $159 million in Adjustable Series M 100,000 1991 Klo 999*
9.125 Series N 150.000 1993 100 91.50 Series Q io,714 1995 i.000 The Company issued $125 million aggregate principal 88m Series R 50.000 200l*
1.000 amount of secured medium-term notes in 1992 and 1993, 90.00 Series S 18.750 1999 1.000 The notes are secured by first mortgage bonds.
- All outstanding shares to be redeemed on December I,2001.
The Company's mortgage constitutes a direct first lien on in 1993, the Company issued $100 million principal substantially all property owned and franchises held by the Company. Excluded from the lien, among other amount of Serial Preferred Stock, $42.40 Series T. The Series T stock was deposited with an agent which issued things, are cash, securities, accounts receivable, fuel and Depositary Receipts, each representing b of a share of supplies.
i the Series T stock.
An unsecured loan agreement of the Company contains l
- " "" '*lating t c pitalization ratios, fixed charge l
The annualized preferred dividend requirement at De-c verage rat.ios and limitations on secured financing other cember 31,1994 was $44 million.
than through first mortgage bonds or certain other trans-4 The preferred dividend rates on the Company's Series L actions. Two reimbursement agreements relating to sep-and M fluctuate based on prevailing interest rates and arate letters of credit issued in connection with the sale j
I 19
I and leaseback of Beaver Valley Unit 2 contain several D"'"*3'y
, 9,.
financial covenants afTecting the Company, Toledo carrying Fair carrying Fair Edison and Centerior Energy. Among these are covenants Amount Value Amount Wlue (mn ns r donars) relating to fixed charge coverage ratios and capitalization
^ " ' ' '
ratios. The write-offs recorded at December 31,1993 Nuc r Plant Decommissioning caused the Company, Toledo Edison and Centenor En-crgy to violate certain covenants contamed in the loan g
agreement and the two reimbursement agreements. The l
afTected creditors waived those violations in exchange for
- I;
""d"'
'I g
a subordinate mortgage security interest on the proper-(including current portion) _
282 245 314 307 ties of the Company and Toledo Edison. The Company tong. Term Debt (including provided the same security interest to certain other credi-current portion) 2.795 2.503 2.841 2,946 tors because their agreements require equal treatment.
At December 31, 1994, the Company provided The Nuclear Plant Decommissioning Trusts at Decem-
[
subordinate mortgage collateral for $45 million of un.
ber 31,1994 included $25 million of federal governmental j
secured debt, $228 million of bank letters of credit and a securities and $17 million of municipal securities. The
$205 million revolving credit facility. The bank letters of securities had the following maturities: $11 million due credit are joint and several obligations of the Company within one year; $8 million due in one to tive years; $10 and Toledo Edison and the revolving credit facility is an million due in six to 10 years; and $13 million due after obligation of Centerior Energy that is jointly and severally 10 years. The fair value of these trusts is estimated based guaranteed by the Company and Toledo Edison.
on the quoted market prices for the investment securi-ties, As a result of adopting the new accounting standard (52) Short-Term Borrowing for certain investments in debt and equity securities, Arrangentents SFAS 115,in 1994, the carrying amount of these trusts is equal to the fair value. The fair value of the Company's Centerior Energy has a $205 million revolving credit preferred stock, with mandatory redemption provisions, facility through May 1996. Centerior Energy and the and 1 ng-term debt is estimated based on the quoted Service Company may borrow under the facility, with all market prices for the respective or similar issues or on the basis of the discounted value of future cash flows. The borrowings jointly and severally guaranteed by the Com-j discounted value used current dividend or mterest rates j
pany and Toledo Edison. Centerior Energy plans to transfer any of its borrowed funds to the Company and r ther appropriate rates) for sumlar issues and loans i
Toledo Edison. The facility agreement as amended pro-with the same remaining maturities.
vides the participating banks with a subordinate mortgage The estimated fair values of all other financial instru-security interest on the properties of the Company and ments approximate their carrying amounts in the Balance Toledo Edison. The banks' fee is 0.625% per annum Sheet at December 31,1994 and 1993 because of their payable quarterly in addition to interest on any borrow-short-term nature.
ings. There were no borrowings under the facility at December 31,1994. The facility agreement contains cov-enants relating to capitalization and fixed charge cover.
(54) Quarterly NCSults of Operations age ratios for the Company, Toledo Edison and Centerior
({Jnan(lite (l)
Energy.
The following is a tabulation of the unaudited quarterly i
Short-term boriowing capacity authorized by the PUCO results of operatioru for the two years ended December annually is $300 million for the Company. The Company 31,1994, and Toledo Edison are authorized by the PUCO 1 ourten Ended borrow from each other on a short-term basis. At Decem-Marcs 31, June 30. sept,10, Iten 1J.,
ber 31,1994, the Company had total short-term borrow.
(minions or dotiars) ings of $$8 million from its afliliates with a weighted 1994 avelage interest rate of 6.14%.
Operating Revenues 5408
$415 5474
$ 401 Operating income 86 91 132 88 l
Net income 33
^18 79 35 (l.5) 5'.inanelal lltstrHinents rarnings Availaste vor common Stock 21 27 68 24 Except for the Nuclear Plant Decommissioning Trusts at 1993 December 31 1994, as discussed below, the estimated Werating Revenues
$421
$417
$507 5 406 fair values at December 31,1994 and 1903 of financial
[j"
"]"
y
(
instruments that do not approximate their carrying rarnings (Loso Avmiab'e amounts in the Balance Sheet are as follows:
for common stock 23 19 27 (701) 20
Earnings for the quarter ended September 30,1993 were stock. Share owners of the Company's preferred stock decreased by $46 million as a result of the recording of must approve the authorization of additional shares of
$71 million of VTP pension-related benefits.
preferred stock. When the merger becomes efTective, share owners of Toledo Edison's preferred stock will E,arnings for the quarter ended Decernher 31,1993 were exchange the.ir shares for preferred stock shares of the decreased as a result of year-end adjustments f.or the Company having substantially the same terms. Debt
$351 million write-oft of Perry Unit 2 (see Note 4(b)),
- 'E E ' *E# **
the $636 million write-off of the phase-in deferrals (see holders of the Company. The merging companies plan to Note 7) and $38 million of other charges. These adjust-seek preferred stock share owner approval m mid-1995.
ments decreased quarterly earnings by $716 m.lh.on.
i The merger is expected to be efTective m 1995.
(15) Pending Merger of To/cdo Edison For the merging companies, the combined pro forma perating revenues wem $2.422 billion, $2.475 billion and into the Company
$2.439 billion and the comb.med pro forma net income in March 1994, Centerior Energy announced a plan to (loss) was $268 million, $(876) million and $276 million merge Toledo Edison into the Company. Since the Com-for the years 1994,1993 and 1992, respectively. The pro pany and Toledo Edison afliliated in 1986, efTorts have forma data is based on accounting for the merger on a been made to consolidate operations and administration method similar to a pooling of interests. The pro forma as much as possible to achieve maximum cost savings.
data is not necessarily indicative of the results of opera-Various aspects of the merger are subject to the approval tions which would have been reported had the merger of the FERC and other regulatory authorities. The been in etTect during those years a which may be re-PUCO and the Pennsylvania Public Utility Commission ported in the future. The pro forma data should be read in have approved the merger. In addition, the merger must conjunction with the audin <1 financial statements of both be approved by share owners of Toledo Edison's preferred the Company and Toledo Eden.
Report of Independent includes assessing the accounting principles used and Public Accountants significant estimates made by management, as well as t
~
4 evaluating the overall financial statement presentation.
To the Share Owners and We believe that our audits provide a reasonable basis for Iloard of Directors of our opinion.
The Cleveland Electric lliuminating Company:
In our opinion, the financial statements referred to above We have audited the accompanying consolidated balance present fairly, in all material respects, the financial posi-sheet and consolidated statement of preferred stock of tion of The Cleveland Electric illuminating Company The Cleveland Electric illuminating Company (a wholly and subsidiaries as of December 31,1994 and 1993, and owned subsidiary of Centerior Energy Corporation) and the results of their operations and their cash flows for subsidiaries as of December 31,1994 and 1993, and the each of the three years in the period ended December 31, related consolidated statements of income, retained earn-1994, in conformity with generally accepted accounting ings and cash flows for each of the three years in the principles.
period ended December 31.1994. These financial state-ments are the responsibility of the Company's manage-As discussed further in Note 9, a change was made in the ment. Our responsibility is to express an opinion on these method of accounting for postretirement benefits other financial statements based on our audits, than pensions in 1993.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable
(([
assurance about whether the financial statements are free of material misstatement. An audit includes exammmg, on a test basis, evidence supporting the amounts and Cleveland, Ohio disclosures in the financial statements. An audit also February 17,1995 21
=
Financial and Statistical Review Operating Retenues (millions of dollars)
Total Total Total Sicam Operuimg Year Hesidential Corrimercial Industrial Other Retail Wholesalc I lectric Ileating Revenuen 1994
$531 541 508 98 I 678 20 1698
$1698 1993 539 536 510 98 1683 68 1 751 t 751 1992 517 531 530 101 1 679 64 1 743 1743 1991 547 540 547 l17 1 751 75 1 826 1 826 1990 495 494 544 123 1656 35 1691 1 691 1984 376 339 441 44 1200 6
l 206 15 1 221 Operating Espenses (millions of dollars)
Other Generation Deferred i vel &
Orieratiori I acihties Depreciation Tames.
Operating F ederal Total Purchased Rental Other Than L apenses, income Operuimg Year Pow er Maintenance I upenw. Net A morti ra tii.n iIT Net T mes I spenses 1994
$391 394 56 195 218 (34) 82 51 302 1993 423 598(a) 56 182 221 27(h) 22 1529 1992 434 410 55 179 226 (35) 89 1 358 1991 455 414 56 17l (c) 2 l t-(7) 106 1 411 1990 412 460 54 170 19* -
(24) 75 1 344 1984 319 281 95 s32 131 958 Income (I.oss) (millions of dollars) i ederal income Other DcIerred income
( L<m )
Income &
Carrying Taxes-liefore Operntmg Al L. DC-DedacLeons,
- Charges, Credit Interest Year income i uuits Nei Net il spenge)
Charges 1994
$396 4
6 25 (4)
$ 427 1993 222 4
(356)(d)
(487)(b) 270 (347) 1992 385 1
8 59 (5) 448 199/
415 8
6 88 (24) 493 1990 347 5
1 162 (20) 495 1984 263 130 3
35 431 Income (l oss) (millions of dollars)
LarninFS Preferred &
(Lou)
Not Preference Asailable for Debt All DC-Income Stixk Common i car Intercu Debt (Inu)
Dividends Nimk 1994
$247 (5) 185 45
$ 140 1993 244 (4)
(587) 45 (632) 1992 243 205 41 164 1991 251 (4) 246 36 210 l
1990 255 (3) 243 37 206 1984 181 (41) 291 43 248 (al includes early retirement program expenses and other charges of $165 million in I993 el>I includes write-of of phase-in deferrals of $636 millum in i993. consisimg v) $iI7 million ofdeferred operating expenses and $$I9 million of deferred Iarrrang charges.
(c) In i991. a change in accountingfor nuclear plant Jerreciarian sus adoptrJ < hanging) rom the umts-of-pnxtu; tion merluni to the straight-line method at a.!N rate 22
m
}
The Cleveland Electric illuminating Company and Sul>sidiaries b
Electric Sales (millions of KWil)
Electric Customers (year end)
Residential Usage f
Average Averuge e
Average Price Revenue Industrial KWil Per Per Per Year Reddential Commercial Industrial Wholesale Other Total Residential Commercial
& Other Total Customer KWil Customer 1994 _ _
4 924 5 770 7 970 1073 575 20 312 668 346 71 609 7 401 747 356 7 370 10.79c $795.11
[
1993_ _
4 934 5 634 7 911 2 290 532 21 301 669 118 70 442 8 149 747 709 7 373 10.93 805.68
- 1992 _
4 725 5 467 7 988 1 989 533 20 702 669 800 70 943 8 375 749 118 7 071 10.94 773.77 i
1991___
4 940 5 493 8 017 2 442 565 21 457 667 495 70 405 8 398 746 298 7 170 11.08 797.25 1990 _ _
4 716 5 234 8 551 1607 463 20 571 665 000 68 700 8 351 742 051 6 867 10.53 723.15 1984 _._
4 446 4 396 7 997 142 431 17 412 644 904 61 934 7 930 714 768 6 646 8.48 563.60 lead (MW & %)
Energy (millions of KWII)
Fuel Net Liliciency-(.nmpang G.enerated Purchased Fuel Cost itTU Per Scawnal Peak Capacity load Year Capahikev t.oad Margin f actor l ossil N uclear Total Power Total Per KWil K% ll 1994 4 497 3 740 16.8%
62.4 %
12 986 6 405 19.', i 2 022 21 413 1.35c 10 538 1993 4 497 3 862 14.1 59.9 15 557 5 644 21 201 1 454 22 655 1.37 10 339 1992 4 701 3 605 23.3 63.0 12 715 7 521 20 236 1 649 21 885 1.47 10 456 1991 4 701 3 886 17.3 61.8 13 193 7 451 20 644 2 144 22 788 1.49 10 503 1990 4 686 3 778 19.4 63.3 15 579 5 262 20 841 964 21 805 1.52 10 417 1984 3 696 3 371 8.8 64.5 14 749 2 212 16 961 1770 18 731 1.70 10 416 Imestment (millions of dollars)
Construction work in Total Utiktv Accumulated Progress Nuclear Property.
Ututy Plant in Depreciation &
Net
& Per*y I ucl and Plant and Plant Total i car Nervice Amorivation Plant Umt 2 Other
[ quitsment Adnitions Assets 1994
$6 871 2 014 4 857 99 195
$5151
$156
$7151 1993 6 734 1 889 4 845 141 243 5 229 175 7 159 1992 6 602 1728 4 874 501 261 5 636 156 8 123 1991 6 196 1 565 4 631 545 305 5 481 150 7 942 1990 6 032 1 398 4 634 572 344 5 550 165 7 821 1981 2 909 799 2 110 2 114 289(c) 4 513 582 5 120 Capitalliation (millions of dollars & %)
J Preferred & Preference Preferred Stack, without Stak. with Mandatory Mandatory Redemption Year Common St.wk f uuits Redemption Provisions Provmons 1.ong-Tern, Debi Total I
1994
$1058 26%
246 6%
241 6%
2 543 62%
$4 088 T993 1 040 24 285 7
241 5
2 793 64 4 359 1992 1 865 39 314 6
144 3
2 515 52 4 838 1991 1 898 38 268 5
217 4
2 683 53 5 066 f990 I 884 38 171 3
217 4
2 632 55 4 904 1984 1 593 41 293 7
144 4
1 884 48 3 914 (di includes write-up of Perry Unit 2 vf $.Ul million in 1993 (r) Restatedfor efects of capitali:ation of nuclearfurt lease andfmancing arrangements punuant to Statement of Fmancial Accounting Standards 71.
23
}NVESTOR I N F O:R M A T l O N SHARE OWNER INFORMATION Independent Accountants Arthur Andersen LLP Share Owner Services 1717 East Ninth Street l
Communications regarding stock transfer requirements, Cleveland, Off 44114 lost cenificates, dividends and changes of address should be directed to Share Ow ner Services at Centerior Energy Environinental Report Corporation. Correspondence should be sent to the The Company will furnish to share owners, without I
address indicated below for the Stock Transfer Agent.
charge, a copy of a report on its environmental performance.
To reach Share Owner Services by phone, call:
Requests should be directed to Share Owner Services.
In Cleveland area 642-69(X) or 447-24(X)
I Form 10-K l
Outside Cleveland area 1-8(X)-433-7794 The Company will furnish to share owners, w hout charge, it Please have your account number ready when calling.
a copy ofits most recent annual report to the Securities l
and Exchange Commission. Requests should be directed i
Stock Transfer Agent to Share Owner Services.
Centerior Energy Corporation Share Owner Services P.O. Box 94661 L
Cleveland, OH 44101-4661 BONDHOLDER INFORMATION Stock transfers may be presented at Bond Trustee and Paying Agent Society Trust Company of New York The Chase Manhattan Bank, N.A.
5 llanover Sqeare,10th Floor Institutional Trust Group New York, NY 10004 4 Chase Metrotech Center,3rd Floor Brooklyn, NY l1245 Stock Registrar (7jg) 242 72g7 Society National Bank Corporate Trust Division P.O. Box 6477 Cleveland. Oil 44101 l
Investor Relations l
Inquiries from security analysts and institutional 7
investors should be directed to Terrence R. Moran, Manager-Insestor Relations, at the address of the Stock Transfer Agent or by telephone at (216) 447-2882.
Exchange Listings Preferred Stock Series A. B,1. and Depositary Shares, 1993 Series A, are listed on the New York Stock Exchance.
I Dividend Reinrestment and Stock Purchase Plan andIndividualRetirement Account (CX*lRA)
Centerior Energy Corporation has a Dividend Reinvestment and Stock Purchase Plan which provides Cleveland Electric share owners of record and other investors a convenient means of purchasing shares of Centerior common stock by ins esting all or a part of their quarterly dividends as well as making cash investments. In addition, indis iduals may establish an Indisidual Retirement Account (IRA) w hich insests in Centerior common stock through the Plan.
Information relating to the Plan and the CX lRA may be obtained from Share Owner Services.
24
4' The Cleveland Electric Illuminating Company BULK RATE P.O. flox 500()
U.S. POSTAGE Cleveland, Oli 44101 -
PAID i
CLEVELAND,01110 i
PERMIT NO. 409 i
?
4 1
I b
h L
i i
i
?
o G
+