ML20091D775
| ML20091D775 | |
| Person / Time | |
|---|---|
| Site: | Comanche Peak  |
| Issue date: | 04/08/1992 |
| From: | William Cahill, Woodlan D TEXAS UTILITIES ELECTRIC CO. (TU ELECTRIC) |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| TXX-92187, NUDOCS 9204130017 | |
| Download: ML20091D775 (70) | |
Text
3 Log # TXX-92187 2
File // 10045 841.1
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Ref.
- 10CFR50.71(b) nlELECTRIC wiluam j. c tan, Jr-April 8, 1992 arm w rmuee U. S. Nuclea* Regulatory Commission Attn: Document Control Desk Washington, D.C.
20555
SUBJECT:
COMANCliE PEAK STEAM ELECTRIC STATION (CPSES)
DOCKETS NO. 50 445 AND 50-446 SUBMITTAL OF ANNUAL REPORT FORM 10K Gentlemen:
Pursuant to 10CFR50.71(b) TU Electric hereby submits five (5) copies of the Annual Report Form 10K.
Sincerely, William J. Cahill, Jr.
d By:
D. R. Woodlan Docket Licensing Manager JDR/
Enclosures c
Mr. R. D. Martin, Region IV, w/o enclosures Resident inspectors, CPSES, w/o enclosures l
'J
... I l
hk DO 3
400 N. OHve Stad LB. 81 DaHan, Texas 75?N 15 L
r bl /v a L SECURITIES AND EXCIIANGE COhlS11SSION WASil1NGTON, D.C. 20549 Form 10-K
[v'] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF Tile SECURITIES EXCII ANGE ACT OF 1934 for the riscal Year Ended December 31,1991 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF Tile SECURITIES EXCIIANGE ACT OF 1934 Commission rile Number 011412 Texas Utilities Electric Company IDort name tf reglosront es specyled in su therter)
A Tesus I.R.S. Emplo,ser Corporation No. 751837355 2001 Bryan Tower, Dallas, Tesas 75201 Telephone Number (214) 812 4600 Securities Registered Pursuant to Section 12(b) of the Act: None Securities Registered Pursuant to Section 12.g) of the Act: Preferred Stock, without par salue Indicate by check mark whether.he regi.trant (1) has filed all reports required to be filed b)
Section 13 or 15(d) of the Securities Est'sange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was re fuired to file such reports), and (2) has been subject to such filing requirtments for the past 90 days.
Yes f. No I a.icate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S.K is not contained henin, and will not be contained, to the best of registrant's knowledge,in definitis e pros)
- or information statements incorporated b) reference in Pari Ill of this form 10.K or any amendment to this form 10 K. [ ]
Aggregate market salue of Common Stock on February 28,1992 held by non affiliates: None Common Stock outstanding at February 28,1992: 141,125,000 shares, without par ialue DOCUMENTS INCORPORATED BY REFERENCE None L
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TA Hil OF CONTI'NTS e
tiem fleu ription l'a r e PART1 1
Ilusiness 1
The Coropany I
pe ak Loa d a nd Capability.........................................
2 Fuel Supply and Purchased Pow er....................................
3 R e g ul a t i on a n d R a t e s............................................
6 Comanche Peak Nuclear Oenerating Station.............................
9 E n vi r on me n t al M a t t e r s...........................................
9 2
Properties......................................................
12 Coratruction Program 13 T ho Co mpa ny S p l e m............................................ 15 3
Legal Psoceedings 16 4
Submission of Matters to a Vote of Security lloiders.............
16 PART 11 Market for Registrant's Common Equity and Related Stockholder Matters...
16 6
Selected Financial Data 16 Financial Statistics........
18 Operating Statistics 19 7
Management's Discuoion and Analpis of Financial Condition and Results o f Op e r a t i o n s..................................................
20 Financial Statements and Supplementary Data 26 9
Changen in and Disagreements with Accountants on Accounting a nJ Fin a ncial Disclosu r e.................................
50 PART 111 10 Directors and Executhe Officers of the Registrant 50 11 Executive Compensation 52 12 Security Ownership of Certain Beneficial Owners and Management 54 13 Certain Relationships and Related Transactions 54 PARTIV 14 Exhibits. Financial Statement Schedules and Reports on Form 8.K....,......
$5 s
PARTI Item 1,11USINESS, illE COMPANY a esas Utilities Electric Cornpany (Company) was incorporated under the laws of the State of Texas in 10** ud has perpetualexistence under the prositions of the Texas Business Corporation Act. The Company
- an electric utility engaged in the generation, purchase, transmission, distribi',s o and sale of ele-ctric energy wholly witbin the State of Texas. The Company possesses all of the ne-cessary franchises and certificates required to enable it to conduct its business (see Regulation and Rates).
The Company is the principal subsidiary of Tetas Utilities Cornpany (Texas Utilities). Texas Utilities also has three other subsidiarjes whid perform specialized services for the Texas Utilities Company System (System Companies), inckJing the Company: Texas Utilities Fuel Comtany (Fuel Company) owns a nstural gas pipeline system, acquires, stores arid delivers fuel as and pro $ ides other fuel senices at cost for the t
genershon of electric energy by the Cott:pany; Texas Utilities Mining Company (Mining Company) owns, lenses and operate) fuel production facilities for the surface mining and recov try of lignite at cost for use at the Company's generating stations; end Texas Utilities Services Inc. (TU Services) provides financial, accounting, computer, telecommunications and other administrative services at cost. TU Services also acts as transfer spent, registrar and dividend paying agent with respect to the preferred stock of the Company.
The Company's service area covers the north central, eastern and western giarts of Texas, with a ponulation estimated at 5,500,000-about one third of the population of Tenas, Electrie service is provided in I,7 counties and 372 incorporsted municipalitics, including Dallas, Fort Worth, Midland, OJessa, Wichita Falls, Arlington, Irving, Plano, Mesquite, Richardson, Waco, Tyler and Killeen. The area is a diversified commercial and industrial center aith substantial banking, insurance, electronics, aerospace, petrochemical and specinhzed steel manufacturing, and automotne and aircraft assembly. The territory served includes major portions of the oil and gas fields in the Permian Basin and East Texas, as well as substantiel farning and ranching sections of the State, it also includes the Dallas Fort Worth International Airport, Alliance Airport and the site of the Superconducting Super Collider. For energy sales and operating revenues contributed by each class of senice, see item 6 Selected Financial Data - Operating Statistics.
At December 31,1991, the Company had 11,738 full t;me employees.
1
!!een 1. BUSINESS (Continued).
PEAK LOAD AND CAPABILITY The Company's net capability, peak load and reserve, in megawatts (MW), at the time of peak were as follows duritig the years indicated:
Peak 1.eed (el lettesse firas Net Over Peak Year
,Cedility
_Amonst_
(5.9)W
_ 16,831 5,018__
Prior Year
- l. sed (b)
Reseree(cl 1991................ 21,819 16 952 1990................ 21,949 18,007 5.0 17,795 4,154 i
19t9................ 20.448 17,146 (2.7) 16,944 3,504 (a) The Compny teek load includes interrvptitle load at the time of peak of 241 htW in 1991,247 ktW in 1990 and 202 ktW in
- 1969.
@) The Company firm reek load eaclodes intettvptible load et the time of system 3 esk and snelvdes 220 ktw ln 1991 and 133 ktw in 1990 oflood associated whh sertain wholesale customete she more purchasing non firm energy from sources othat than the Comr8 hy.
(e) Amount of net sepetility in essess of firm resh load et the time of reek.
The peak load changes for 1991 and 1990 tesulted primarily from acather factors in the service area and from customer growth. The peak load in 1991 oc urred on August 8. Included in the 199! net capability was 1,921 MW of firm purchased capacity, including 1,841 MW of cogeneration and small power production. The Company espects to continue to purchase espacity in the future from various sources. (see Fuel Supply and Purchased Power and Note 1: to Financial Statements.)
Firm peak load increases over the nett ten years are expected to average apptr>ximately 2.0% annually, after giving effect to an aggressive load m..: rement program (including interrup'ible contracts). The Company's ten year resource plan provides for meeting the increases in required net capability through the completion of nuclear, lignite and gas / oil. fueled combustion turbine capacity additions, t5 rough purchased 3
power capacity (including cogeneration and small power production) and through the Company's load management programs. The ten year resource plan is subject to ennual review as part of a regular planning process. When compared to the previous ten year resource plin, the current plan reflects a reevaluation of growth expectations which has resulted in the deferral ofin. service dates of the Company's Forest Grove lignite unit (Forest Grove. nd a coal utait to a date beyond the ten year planning horizon. The components of the ten year resource pian (see Itun 2, Properties - Construction Program) are as follows:
Resouree Plan 1992 2001 Capability Resource Additicos_
61W1 Percent Combu stion Turbines.........................
1,580 25 %
Lignite...................................
1,500 24 Load Management 1,218 20 Nuclear 1,150 18 Pu rc h asC Powe r............................
800 13 To ta l.................................
6.248 100 %
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Item 1. BUSINESS (Continued).
FUEL SUPPLY AND PURCil4 SED POWER Net input for 1991 was 87.354 million kilowa,'-hours (LWh) of which 76.327 million kWh we'e generated by the Cornpany. During this period 836.2tG,Mt million British thermal units (Deu) of fuel (including 40,555,430 million Blu furnished by Aluminum Coropan) of Arnerica (Alcoa) at no cost) wcre consumed for c'e<tric generation.
Average fuel and purchase <l power cost (escluding capacity charges) per kWh of net input was 1.82 cents for 1991,1.83 cents for 1990 and 1.96 cents for 1989. A cormparison of tbc resource mis for net kWh input and the unit cost per million Dtu of fuel to the Company during the last three years is as follows:
hile for Net Unit Cost b Wbloput Per,Million Blu Fuel for Electric Generation-3"8 I '"
8"3 3"0 8"'
Gas.......................
37.3 % 37.7 %
39.4 %
$2.47
$2.48
$2.53 Oil.......................
0.1 0.2 1.7 6.07 5.30 4.37 Lignite (s) 43.9 44.4 44.5 1.05 0.96 0.92 Nuclear....................
6.1 3.9 0.33 0.64(b)
Total / Weighted Average Fuel Cost 87.4 86.2 85.6
$1.62
$163
$1.74 Purc hased power...............
12.6 13.8 14.4 To t a l....................
100.05 100.05 100.05 (e) Lignite so ret tori to the Compery ses $13.48 for 1991,112.38 for 1990 and $12.07 for 1989.
(b) Unit cut per million IHu in 1990 includes ocided test of fuel du.'ing trial cretations. The 1990 cost evbsequent to scenmersist operation on 10,38 ret snithon Ilia.
Gas Fuel gas for units at nineteen of the principal generating stations of the Company, having an aggregate net gas /cil capability of 12.933 MW, w as provided during 1991 by Fuel Company. Fuel Company supplied approximately 43 % of such fuel gas requirements under contracts with producera at the wellhead and under other contracts with dedicated reserses and 57% under contracts with commercial suppliers, Additional gasloil. fueled combustion turbines, with an aggregate net capability of 1.580 MW, are planned for the future (see item 2. Properties - Construction Progra r).
Fuel Company has acquired under contracts espiring at intervals through 2008, with producers at the wellbead, supplies of gas which are generally espected to be produced over a ten to fifteen year period. As gas proc'uction decimes and/or coctracts espire, new contracts are expected to be negotiated to replenish or augment such supplies. During 1991, no curtailments were esperienced under these contracts.
Fuel Company has negotiated gas purchase contracts, rangins in term from one to twenty years with a number of commercial suppliers. AdJitionally Fuel Company has entered into a number of short.ter n gas purchase contracts with other commercial suppliers at spot market prices; however, these contracts typically do 'not provide for a firm supply obligation from the seller nor a firm purchase obligation from Fuel Company. During periods of winter peak gas demand. curtailments of gas deliveries have been experienced; however, such curtailments have been of relatively short duration, have had minimal impact on operations and have generally required u'ilization of fuel oil and gas starage inventories to replace the gas curtailed.
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Ittm 1, DOSINESS (Continued).
TUEL SUPPLY AND PURCll ASED POWER -(Continued)
Gas - (con cluded)
Tuel Cornpany owns and operates an intrastate natural gas pipeline 63 stem which estends from the gas-producing area of the Permian Basin in West Tetas to the East Texas gas fields and southward to the Gulf Coast area. This sptem includes a one balfinterest in a 36 inch pipeline which entends 395 miles from the Permian Basin area of West Tetas to a point of termination south of the Dallas Fort Worth area and has a total estimate ! capacity of 600 million cubic feet per day with ctisting compression facilities. Additionally, Fuel Company owns a 39 % undivided interest in another 36. inch pipeline, connecting to this pipeline and entending 58 miles eastward to one of Fuel Company's underground gas storage facilities. Fuel Company also ou os and operates approtimately 1,000 rniles of various smaller capacity lines w hich are used to gather and tranig. ort natural gas from other gas producing areas. The pipeline facilities of Fuel Company form an integrated network through which fuel gas is gathered and transported to certain generating stations of the Company for use in the generation of electric energy.
Tuel Cornpany also owns and operates three underground gas storage farilities with a usable capacity of 27.2 billion cubic feet with approsimately 20.7 billion cubic feet of gas in inventory at December 31,1991.
Gas stored in these facilities can currently be withdrawn for use during periods of peak demand, to meet seasonal and other fluctuations or curtailment of deliveries by gas suppliers. Under normal operating conditions, up to 500 million cubic feet can be withdraw n each day for a two week period, with withdrawals at lower rates thereafter Oll During 1991, the Company's utilitation of fuel oil as an alternate source of boiler fuel amounted to 107,220 barrels or 0.1 % of total fuel requirements. Tuel oil is stored at all nineteet of the principally Fas fueled generating stations. At December 31,1991, the System Companies had fuel oil storage capacity suf ficient to accommodate approximately 6.6 million barrels of oil, with approximately 2.4 million barrels of oilin inventory. Fuel Company has access to an oil pipeline and owns a terminal facility to provide for mere dependable and efficient movement of oil. Generall), oil required to replenish that remcned from storaya will be obtained through purchases in the open market.
Lignite Lignite is used as the primary fuel in two units in service at the Big Brown generating station (Big Brown), three units at the Monticello generating station (Monticello), three units at the Martin Late generating station (Martin Lake) and one unit at the Sandow generating station (Sandow), having an aggregate net capability of 5,B45 MW (see item 2, Proper,ies). Two other lignite fueled units, with an aggregate net capability of 1,500 MW, are included in the current ten year ter.ource plan (see Peak Load and Capability and item 2, Properties-Construction Program). The Company's lignite units, which are o will be base loaded to operate at the maximum practical capacity factor, have been or will be constructed adjacent to surface mined lignite reserves. At the present time, the Company owns in fee or has under lease an estimated 933 million tons of proven reserves dedicated to existing power plants, plants under construction or plants in the advanced stages of design. Mining Cornpany owris, leases and operates equipment to remove the os erburden and to recover lignite. One of the Company's lignite units, Sandow 4,is fueled from lignite deposits owned by Alcon, which furnishes fuel at no cost to the Company for that portion of energy generated from such unit and dedicated to Alcoa (see item 6, Selected Financial Data - Operating Statistics). For information conceming applicable air quality standards, see Environmental Matters.
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9 Itan 1. BUSINESS (Continued),
FUEL SUPPLY AND PURCllASED POWER -(Continut.1, Lignite - (concluded)
Lignite production operations at Big Brown, Monticello and Martin Lake are accompanied by an estensive reclamation program which returns the land to productive uses and includes a vegetation l
restoration progrm. $1milar programs are planned for future lignite fueled generating stations. For information concering federal and state laws with respect to surface mining, see Environmental Matters.
i Coal The Company continues to evaluate the use of pulverized western coal to supplement its existing lignite fuel supply. The Company has delayed the in service date of its 650 MW coal unit beyond its ten year resource plan. (See Peak Load and Capability).
Nutitor The Company is operating one 1,150 MW nuclear fueled generating unit at the Comanche Peak nuclear generating station (Comanche Peak). A second unit is being constructed at Comanche Peak and is designed for a net capability of 1,150 MW. (See Peak Load and capability, Comanche Peak Nuclear Generating Station and item 2, Properties - Construction Program.) Enriche<l uranium has been purchased for Unit I through 1994 and the first Gree ) cars of operation for Unit 2. Commitments have been obtained for fuel fabrication services for Unit I through 1999 and Unit ? for the first seven years of operation. Uranium heaafluorid conversion services have been contracted for through 2003t and a uranium enrichment contract taving a duration of approximately 23 years has been made with the U. S. Department of Energ).
" Commitments have been obtained for uranium ore concentrates for both units for the period 1993 through 1998. Additional contracts for uranium ore concentrates and nuclear fuel cycle services will be required in the future; however, it is not possible to predict the ultimate availability or cost thereof.
The Nuclear Waste Policy Act of 1982, as amended (NWPA), provides for the development by the federal government of interim storage and permanent disposal facilities for spent nuclear fuel and/or high level radioactive waste materials. The Cornpany is unable to predict when the federal government will be able to provide such storage and disposal facilities. Under provisions of the NWPA, funding for the program will be provided by a one mill per kWh fee currently levied on electricity generated and sold from nuclear reactors, including the Comanche Peak units. There will be onsite sto. rage capacity for spent fuel sufficient to accommodate tbs operation of Comanche Peak for approximately 20 yars and this storage capacity can be increased, subject to approval by the Nuct n Regulatory Commissiori(NRC).
Purchased Power in 1991, the Company purchase.d 11.027 million kWh or approximately 13 % ofits energy requirements and had available 1,921 MW of firm purchased capacity or approximately 9% of net capability under contract at the time of peak load. The Cornpany may acquire purchased power capacity in the future to accommodate a portion of its system load and continues to investigate potential available sources. For information concerning the Company ten year ressource plan, see Peak Load and Capability.
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Jtem 1, IlPSINESS (Continued),
ITEL SUPPLY AND PURCl( ASED POWER -(Concluded)
General The Cotnpany is not able to predict: (i) whether or not problems may be encountered in the future in obtaining the fuel and purchased power it will require,(ii) the effect upon its operations of any difficulty it may experience in prote< ting its rights to fuel and purchased power now under contract, or (iii) the cost of fuel and purchased power. All reasonable costs of fuel and purchased power are generally recoverable subject to the rules of the Public Utility Commission of Tetas (PUC). (See Regulation and Rat-s for information pertaining to the method of recovery of purchased power and fuel costs.)
REGULATION AND RATES Regulation Texas Utilities and its subsidiaries, including the Company, are exempt from the provisions of the Public Utility Holding Company Act of 1935, except Section 9(s)(2) which relates to the acquisition of securities of public utility companies.
The Cornpany does not transmit electric energy in interstate commerce or sell electric energy at u holesale in interstate commerce, or own or operate facilities therefor, and its facilities are not connected directly or indirectly to other systems which are involved in such interstate activities, except during the continuance of emergencies permitting temporary or permanent connections or under order of the Federal Energy Regulatory Commission (FERC) esempting the Company from jurisdiction under the Federal Power Act.
In view thereof, the Company believes that it is not a public utility as defined in the Federal Power Act and has been advised by its counsel that it is not subject to general regulation under such Act.
The FERC has taken action and Congress is considering proposals desigacd to increase competition.
These developments are designed to promote competition in the generation segment of the industry and increase access to electric transmission systems. Changes to the Public Utility }1olding Company Act of 1935 have also been proposed. The Company is unable to predict the ultimate outcome of these developmentr, or what impact, if any, they may have on its operations.
The PUC has original jurisdiction over electric rates and service in unincorporated areas and those municipalities that have ceded originaljurisdiction to the PUC and has exclusive appellate jurisdiction to review the rate and service orders and ordinances of municipalities. Generally, the Texas Public Utility Regulatory Act prohibits the collection of any rates or charges (including charges for fuel) by a public utility that do not have the prior approval of the PUC (see Rates). The provisions for inclusion of construction work in progress (CWlPJ in rate base provide tkt such inclusion is an exceptional form of rate relicf to be granted only wben necesrary to the financialintegrit) cf the utility and that it shall not be included for major projects to the extent they have been inefficiently or imprudently planned or managed.
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l Itern 1, BUSINESS (Continued).
REGl'LATION AND RATES-(Coritinued)
Regufarlon - (concluded)
The construction of new production facilities of the Company is subject to PUC certification. In January 1992, the PUC approved the Notice ofIntent (NOl) applications wbich were filed by the Company in June 1991 for 1,512 MW of combustion turbines and 650 MW of coal fired generation. An N01is the first urp of a process for PUC approval for cc,nstruction of utility plant. (See Peak Load and Capability and item 2, Properties - Construction Programs.)
The System Companies are also subject to various other federal, state and local regulations. (See Comanche Peak Nuclear Generating Station and Environmental Matters.)
Rates Pursuant to a PUC rule, the recovery of fuel costs is provided through fixed fuel factors. The rule requires refunds of material over recoveries of fuel cost resenues and redur' ions in tbc fixed fuel factors in the event that the utility is materially over recovered and projects that it will materially over recover its known or reasone'l> predictable fuel costs. Material, as defined in the rule, is the lesser of $40 million or 4% of the annual known or reasonably predictable fuel costs rnost recently approved by the PUC. Final reconciliation of fuel costs is to be made in a utility's general rate case or at a reconciliation proceeding.
The rule also provides for an emergency request to increase the fised fuel factors, w hich must be acted upon within thirty days on an interim basis by the PUC, if reasonably unforeseeable circumstances have resulted in a material under recovery of known or reasonably predictable fuel costs. Reconciliation of fuel costs takes place in a general rate case and may be requested otberwise if it has either been over one year since the utility's last fuel reconciliation or the utility has materially under recovered its known or reasonably predictable fuel costs, la such reconciliation, the utility has the burden of proving that it has generated electricity efficiently, maintained effective cost controls, its non af61isted fuel and fuel related contracts have produced the lowest reasonable cost of fuel to ratepayers, and, for fuels acquired from affiliates, all fuel related expenses are reasonable and necessary and that the prices charged are no higher than prices charged by the supplying affiliate to other of its affiliates or divisions or to unaffiliated persons or corporations for the same item or class ofitems. Under recovery reconciliation will be granted only for that por* ion c' fuel costs increased by conditions or events beyond the utility's control. Interest will be paid or received by the utility on any over or under recovery of fuel costs at the utility's composite cost of capital as established by the PUC in the utility's most recent general rate case. The rule imposes penalties of up to 10% in the event that interim refunds, when required, are not timely requested and in the event that an emergency increase is granted w ben there w as no emergency, in addition, the PUC rules contain a provision which generally allows recovery through a Power Cost Recovery Factor, on a monthly basis, of purchased power capacity costs from cogenerators not included in base rates. The portion of purchased power costs for fuel is included in the fixed fuel factor.
in January 1990, the Company made applications to the PUC and to its municipal regulatory authorities for upward adjustments in rater, for electric service throughout its service area which would increase operating revenues by approximately $442 million, or 10.2 W, based upon the test year ended June 30,1969.
Such requesi reflected costs associated with the commercial operation of Unli 1 of Comanche Peak. On August 13,1990, pursuant to rules of the PUC, the Cornpany placed its ter:uested rate increase into effect applicable to energy sales on or after such date.
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Itsm 1, ItUSINESS (Continuedl, REGt'IATION AND R ATES - (Cor -luded)
Rates - (roncluded)
In August 1991, the PUC issued a final order in the rate case. This order was revised and reissued in
)
September 1991. The order provided for a total revenue increase of approximately $442 million and included
$695 million of CWIP in rate base to support the res enue increase. It also included a prudence disailow ance of $472 million with respect to certain Comanche Peak costs relating to 87.8 % of the Company's ownership interest in both units of Comanche Peak. With respect to the Company's reacquisition of the remaining 12.2 5 minority owner interest in Comanche Peak, the order included an additional disallowance of $909 million. In addition, the order included tefunds aggregating $56 million, including interest, principally with respect to fuel gas costs considered imprudent by the PUC. Such amount is being refunded to customers, with interest, over a two > ear period that began November 1991. The Company strongly disagrees with the order and in November 1991 filed a petition in the 250th Judicial District Court of Travis County, Texas requesting a reversal and remand of the order. Other parties to the PUC proceeding have also filed appeals with respect to various portions of the order. The Cornpany is unable to predict the outcome of these appeals. (See item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.)
Pursuant to the PUC rule for recovery of fuel costs, and in connection with tbc September 1991 order in its rate case, the Company received approval from the PUC to reduce its composite fixed fuel factor by 13.4 % from its previous interim fuel factor and reconciled its fuel cost through June 30,1969. Since the beginning of 1986, the Company has been authorized on ten different occasions to refund approtimately 5685.7 million of over recovered fuel revenues, including interest. In each instance, the refund has been implemented in billings soon after authoriration, in August 1990, the Company ceased AFUDC accruals and began depreciation provisions on approximately $1.3 billion of insestment in Comanche Peak Ucit 1, incurred after the end of the June 30, 1969 test year. Depreciation and rate of return on this insestment is not provided for in current electrje service rates but will t e included in the next rate increase request of the Connpany. As a result, the Company's earnings and hquidity will continue to be affected until the investment incurred subsequent to the end of the test year is included in rates.
Unit 2 at Comanche Peak is scheduled for operation for the peak season of 1993 and the Company believes it will be necessary to request additional rate relief from its regulatory authorities, the amount and exact timing of which is presently undetermined. Upon commencement of operation of Unit 2, the Company currently expects to cease accrual of AFUDC on the Unit 2 investment that raceeds the $695 million included in rate base (523 million of AFUDC for the month of December 1991); begin depreciation accruals on the accumulated investment in Unit 2 ($3.479 billion at December 31, 1991) and to incur operation and maintenance expenses on the generating unit; all of which are not currently included in the Company's present electric service rates.
A request to place additional amounts of Cot,anche Peak investment in rate base will be subject to a review by the PUC for prudence of costs iner red, in connection with the September 1991 rate order, the PUC essentially review ed costs incurred through June 1969 on Unit 2 and through fuelload in February 1990 on Unit 1. At December 31,1991, the Company had appronimately $1.8 billion invested in Comanche Peak that had not been reviewed for prudence. The Company cannot predict the outcome of any future prudence review. (See item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 12 to Financial Statements.)
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--___c, -,
~wm-------,--n~<~--,
- ~ - - ~ ~ ~ ~ ~ ~ ~
Itan 1. BUSINESS (Continue +
COhl ANCilE PEAK NUCLEAR GENER ATING STATION The Company is subject to the jurisdiction of the NRC with respect to nuclear power plants. NRC regulations govern the granting of licen6es for the construction and operation of nuclear power plants and subject such plants to continuing resiew and regulation. In April 1990, the NRC issued a full power operating license for Unit 1. The construction permit for Unit 2 is in effect and has been extended until a
' latest date for completion
- of August 1,1992. The Company has filed an application with the NRC to etter d this construction permit for a sufficient period of time to allow for completion of the unit and espects to obtain approval for the ettension. For information relating to cost and schedule estimates see item 2.
Properties - Construction Program.
In July 1988, NRC proceedings before an Atomic Safety and Licensing Board, which involved an intervenor, w cre dismissed pursuant to ajoint motion for dismissal filed by the Company, the intervenor and the NRC Staff. Under the terms of this motion, a representative of the intervenor was appointed as a member of the Operations Review Committee (ORC) for Comanche Peak. The ORC is required by the Comanche Peat technical specifications and reviews operational and other safety related matters.
At various times in the past, the Company has paid civil penalties to the NRC for violations of NRC regulatory requirements.
ENVIRONhlENTAL hl ATTERS The System Companies are subject to various federal, state and local regulations dealing with air and water quality and related environmental matters (see item 2, Properties - Construction Program for scheduled ensironmental espenditures).
Air Under the Texas Clean Air Act, the Texas Air Control Board (TACD) has jurisdiction over the permissible level of air contaminant emissions from generating facilities located within the State of Texas.
In addition, the new source performance standards of the Environmental Protection Agency (EPA) promulgated under the federal Clean Air Act, which have also been adopted by the TACD, are applicable to such generating units, the construction of wr.ich commenced after September 16,1978. The Company's generating units have been constructed to operate in compliance with current regulations and emission standards promulgated pursuant to these Acts; however, due to variations in the quality of the lignite fuel, operation of certain of the lignite. fueled generating units at redred loads is required from tirne to time in order to maintain compliance with these standstds. Generating facilities under construction have received state and federal permits and are generally designed to comply with applicable statutes and regulations.
The federal Clean Air Act Amendments of 1990(Clean Air Act) include provisions which, among other things, place limits on the sulfur dioxide emissions produced by generating units. The Clean Air Act requires that fossil fueled plants meet new sulfur dioxide emission standards by 1995 (Phase 1) and additional sulfur dictide emission standards by 2000 (Phase 11). The Company's generating units are not affected by the Phase 1 requirements. The Phase 11 requirements n e currently rnet by all but four of the Cornpany's generating units. Because the sulfut dioxide emissions from these four units are relatisely low and attematives are available to enable these units to reduce sulfur dioxide emissions, compliance with the applicable Phase 11 sulfur dioside requirements is not eape<ted to have a significant impact on the Company.
The Company has not finalized a compliance plan due to the uncertainty of the requirements which the EPA may include in the segulations.
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llan 1.11USINESS (Continued).
ENVIRONhlENTAL hl ATTERS -(Continued)
Att - (con cluded)
To meet these sulfur dioxide requirernents, the Clean Air Act provides for the annual allocation of sulfur dictide emission allowances to utilities. Utilities will be permitted to transfer allowances within their own systems and to buy or sell allowances in a new allowance trading market to be established under the Clean Air Act. The EPA will grant a maximum number of allowances annually to the Company based on the amount of emissions from units in operation in 1985. The Clean Air Act also provides that the Company will be granted additional annual allowances for certain Company units under construction based on part of their anticipated emissions. The Company intends to utilir.e internal allocation of emission allowances within its system and,if necessary, to purchase emission allowances to enable both existing and future electric generating units to meet the requirements of the Clean Air Act. The Company is unable to predict the extent to which it may generate etcess allowances or will be able to acquire allowances from others if needed.
Other provisions of tbc Clean Air Act may require the Compsny to take other actions. The Company's lignite fired genersting units currently rneet the required nitrogen oxide limits in the Clean Air Act. The requirements of the Clean Air Act for orone nonattainment areas may require nitrogen oxide emission reductions at the Company's natural gas fired units in the Dallas Fort Worth bres by 1990. The Clean Air Act also requires studies over a four y ear period by the epa to assess the potential for toxic emist. ions from utility boilers. The Company is unable to predict whether any reductions in toxic emissions will ultimately be required. Continuous emission monitoring systems are required by the Clean Air Act to be installed by 1995 on all of the Company's fosul fueled units.
Only certain parts of the regulations implementing the Clean Air Act base been adopted. Until more of these regulations has e been promulgated. the Company will not be able to fully determine the cost or method of compliance for these requirements. Similar capital and operating costs associated with new requirements or compliance measures have histurically been recovered through rates. The Company espects any such future costs would be recovered through rates as well.
Water The Tetas Water Commission (TWC) and the EPA bave jurisdiction over all water discharges (including storm water) from generating stations and n ining areas. The Company's generating stations presently in operation have been constructed to operate in compliance with applicable state and federal requirements relating to discharge of pollutants into the water. The Company and hiining Company hase obtained all required waste water discharge permits from the TWC and the EPA for facilities in operation and hase apphed for or obtained all such permits for facilities under construction. The Company and 1.bnmg Company believe they can satisfy the requirements necessary to obtain any required permits or renewals.
Diversion, impoundment and withdrawal of water for cooling and other purposes is subje.ct to the jurisdiction of the TWC, The Company possesses all necessary permits for these activities from the TWC for its present operations and plants under construction.
10
Item 1. BUSINESS (Concluded).
ENVIRONMENTAL hl ATTERS - (Concluded)
Other Federallegislation regulating rurface mining was enacted in August 1977 and regulations implementing toe law have been issued, Mining Company's lignite mining operations are currently regulated at the state level by the Railroad Commission of Texas. Surface mining permits have been issued for current Mining Cornpany operations that provide fuel for Big Brown, Monticello and Martin 1.4ke.
Treatment, storage and disposal of solid and barardous wast, are regulated at the state level under the Texas Solid Waste Disposal Act and at the federallevelunder the Resource Conservation and Recovery Act of 1976, as amended (RCRA). The EPA has issued regulations under the RCRA and the TWC has issued regulations under the Texas act applicable to tbc Company generating units. The Company has registered ite disposal sites and has obtained or applied for such permits as are required by such regulations.
Under the fcderal Low Level Radioactive Waste Policy Act of 1980, as amended, the State of Texas is required to provide by 1996, either on its own or jointly with olber states in a compact, for the disposal of alllow level radioactive u aste generated within the state. The State of Texas is taking steps to site, construct and operate a low. level radioactive w ante disposal site by 1996. Although the state failed to meet the January 1,1992 federal deadline for filing a license application for a low level waste disposal fscility, progress is being made loward the filing of the application by mid 1992.
11 l
1 i
l litm 2, PROPERTIES.
At December 31,1991, the Company owned and operated sixty nine electric generating units at tw enty-four stations having a total net capability of 18,953 MW. The locations of the principal electric generating stations and transmission lines of the Company are indicated on the map included herein. Forty generating units with a net capability of 8,506 MW use natural gas as the primary fuel and are desi.ned to use fuel oil for short periods when the gas supply is interrupted or curtailed; two 9 nits with a net capability of 750 MW use natural gas only; five units with a net :apability of 2,680 MW use natural gas as the primary fuel and are designed to use fuel oil for estended periods; rine units with a net capability of 5,845 MW use lignite u fuel; twc!ve units with a net capability of 22 MW ate diesel units; and one unit with a net capability of 1,150 MW u es nuclear fuel.
Tbc Company currently leases fifteen combustion turbine generating units. The t; nits are designed to use natural gas or fuel oil and have a total net capability of 975 MW, The principal enerating facilities and load centers of the Company are connected by 3,823 circuit miles E
of 345,000 volt transmission lines and 9,028 circuit miles of 138,000 and 69,000 volt transmission lines.
The Company is connected by sis 345,000 volt lines to liciuston IJghting & Power Company; by three 345,000 volt, seven 138,000 volt and nine 69,000 solt lines to West Texas Utilities Company; by two 345,000 volt, seven 138,000 volt and one 69,000 volt lines to Lower Colorado River Authority; by fout 345,000 volt and eight 138,000 volt lines to the Texas Municipal Power Agency; and at several points with smaller systems operating wholly within Texas. The Company is a member of the Electric Reliability Council of Texas (ERCOT), an intrastate network of investor-owned entities, cooperatives and public entities. ERCOT is the regional reliability coordinating organization for member electric power sy stems in
'l e m a s.
The generating stations and other important units of property of the Company are located on lands owned primarily in fee simple. The greater porthn of the transmission and distribution lines of the Company, and of the gas gathering and transmissic lines of Fuel Company, has been constructed over lands of others pursuant to casements or flong t olic highways and streets as permitted by law. The rights of the System Compardes in the realty on whWh their properties are located are considered by them to be adequate for their use in the conduct of their business. Minor defects and irregularities customarily found in titles to properties oflike site and character may exist, but any such defects and irregularities do not materially impair the use of the properties affected thereby. The Company and Fuel Company have the right of eminent domain whereby they may,if necessary, perfect or secure titles to privately held land used or to be used in their operations. Electric plant of the Company is generally subject to the liens ofits mortgages.
During the period from Januaty 1,1989, to December 31, 1991, the Company mde gross property additions of approximately $3,321,310,000 and retirements of property aggreg. ting approximately 1160,792,000. Such gross additions amounted to 17.0% of electric plant at December 31,1991.
12 l
Item 2. PROPERTIES (Continued).
CONSTRUCTION PROGRAM Constructirn expenditurcs, escluding an allowance for funds used during construction (AFUDC)
(see Note I to Financial Statements), for the years 1992 through 1994 are estimated as follow s:
1993 1993 1994 Thessands of Dollars Electric Propertyt Production Comanche Peak Unit 2.....................
$400,0k
$$0,000 Othe r Produc tion.........................
71,000 247,000 438,000 Other Production Environmental (s) 13.000 65,000 87.000 Total Prod uc tion........................
$484,000
$362,000
$$25,000 Transmission 40,000 41,000 43,000 Di st ri bu tion.............................
201,000 235,000 241,000 G e n e ral................................
15,000 26,000 28,000 Total................................
$740,000
$664,000
$ 637,000
~
Such expenditures do not include amounts for:
Nuclear Fuel (excluding AFUDC)...............
$6,000
$ 10,000
$ 12,000 (e) The Company is owyect to federal, state and local regulations destieg with envl.,nenental protection (see liern 1.
liusiness-Environmental Matters). $wch eatenditures fot nistir;; ush orproximated $10.4Dr,000 fo,1991.115.500,000 for u
1990 and 16.400,0'10 for 1989.
Additional generating units planned for future years are described as follows:
Cornanche Peak Nuclear Generating Unit 2 Unit 2 is scheduled for service for the peak season of 1993. At December 31,1991, the Company had
$3.479 billion invested in Unit 2 (net of $485 million included in the reserve for regulatory disallowances required by the PUC order, see Note 12 to Financial Statements), including AFUDC. The estimated cash requirements in 1992 and 1993 to complete Unit 2 are approximately $450 million in the aggregate. No estimate fcor AFUDC tecrvals on Unit 2 is provided due to the uncertainty of regulatory treatment and the exact month of commercial operation. Such accruals approximated $23 million for the month of Decer.ier i991 for Unit 2.
Other Generating Units The Company's ten year resource plan includes two lignite. fueled 750 MW units at Twin Oak scheduled for service for the peak season of 1997 and 1998, respectively. Active construction and the accrual of AFUDC on the Twin Oak units was suspended in September 1987 and is expected to resume in 1993. Estimated construction expenditures, excluding AFUDC, for the 1992 1994 period include approximately $4J1 million applicable to these generatirg units. The lignite fueled Forest Grove unit, previously scheduled for acrvice in the peak season of 1999, has been deferred beyond the ten year resource plan period. Construction activities and accrual of AFUDC for Forest Grove Unit I were suspended in September 1987, 13 l
~
l 11ern 2. PROPERTIES (Continued).
CONSTRUCTION PROGR AM - (Concluded)
Other Generating Units-(concluded)
The reinainder si the Company's ten year resource plan includes 1,580 MW of gesloil fueled generating units, none of which require significant construction espenditures in the 1992 1994 period reflected above. (See Itern 1 Dusiness -Peak Load and Capability.)
%e effects of inflation on construction costs, the reevaluation of growth espectations or additional regulatory requirements enay result in changes in estimated cornpletion costs and in service dates for certain generating units in design or under construction. Actual sspenditures and dates of completion may further vary because of other uncertain factors such as licensing delays, changes in peak load requirements and cost and availability of fuel, labor, tnaterials and capital. Commitments in connection with the construction program, prie.cipally for generating stations and related facilities, are generally revocable subject to reimbursement to manufacturers for espenditures incurred or other cancellation penalties.
For information regarding financing of the construction program see item 7 Management's Discussion and Anal) sis of Financial Condition and Results of Operations.
4 14
Item 2. PROPERTIES (Concluded).
TIIE COhlPANY SYSTEh!
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15
l Item 3 LEGAL PROCEEDINGS, On November 21,1991,3beree Anne hieyer, as custodian for Adam Joseph Davenport, allegedly as a shareholder of Texas Utilities, fileJ suit in tbc United States District Court for the Northern District of Texas derivatively on behalf of Texas Utilities and the Company against Texas Utilities and the Company as nominal defendants and J. S. Farrington, Erle Nye, James K. Dobey, Jack W. Evans, William ht. Grif6n, h!argaret N. hinney, Jatnes A. hiiddleton, Charles R. Perry and William H. Seay, directors of Tezus Utilities, and James H. Zumberge, a former director of Texas Utilities, S. S. Swiger, an officer of Texas Utilities, and T. L. Baker, an of6cer of the Company. The plaintiff alleges breaches of fiduciary duty and negligence primarily relating to Comanche Peak, which the plaintiff claims bas e resulted in damages in an amount not less than $1.381 billion. In December 1991, the Court entered an order which stays this suit until thirty days after entry of a finaljudgment by the District Court in the Company's appeal of the final order of the PUC in its rate case. (See item 1. Business Regulation and Rates.)
Item 4. SUB511%SION Of h!AlIW Hr A VOTE OF SECURITYllOWERS.
None.
PART 11 Item 5. 51 ARKET FOR REGISTR ANT'S COh1510N EQUITY AND RELATED STOCKilOLDER h1ATTERS.
All of the Company's c mon stock is owned by Texas Utilities.
s Reference is made to Note 6 to Financial Statements regarding limitations upon payment of dividends s.
on common stock of the Company.
"t 16
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[ Tills PAGE INTENTIONALLY LEFT BLANKl 17
Item 6. SELECTED FINANCIAL DATA.
FINANCI AL STATISTICS
'lest Ended December 31, 1993*
1990 1989 1968 1987
. TOTAL ASSETS end of year (thousseds),,,..,..
$17,093.474 517.387,276 116,173.648 114,B28.250 112.938,655 ELECTRIC PLANT-OROSS end of > car (thousands)....... 120,865.047 $19,693.580 318,116,758 516,370.676 114,149,647 Accumulated depreciation and amortization end of year......
3,417,856 3,038,302 2.762.101 2,558,282 2,355,827 Reserve for regulator) disallowenets end of year.......
1.308.460 Construt ion expenditures (including allowance for funds used during construction)...................
1.195,680 1.431,647 1,773.890 1,542,974 1,662,483 car"~
~ * "
- nd of year (thousands) 1A
$ 7.253.626 5 6.750.635 5 6,079,503 $ S,872,613 1 4.639,111
%:vha; Not rutt
-ory redernption,
1,007,728 1,007.726 1.007,732 909,582 909.633
&bjr redemption 425.758 426.737 320.009 32 B,770 232.906 5.741,437 6.452,690 5,614,013 5.278.697 4.627.145
+
114,428.549 514,637.790 313.230,257 $12.389.662 $10.605.795 EM r, REST COST ON LONG. TERM DEBT end of > car..
9.7%
9.8%
P'%
99%
9.6%
EMBEDDED DIVIDEND COST ON PREFERRED
- STOCK end of) car..
85%
6.6%
8.3%
B.3%
g.3%
NET INCOME (LOSS)(thousands).
5(259.173) 5964,276
$$$6.176 3747.062
$781.178 DIVIDENDS DECLARED ON COMMON STOCK (thousands).
5 650.940 3607.230 1542.298 1500,965 5447,200 RATIO OF EARNINOS TO ElXED CilARGES 0.3 2.5 2.6 26 3.3 ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION AS PERCENT OF
' EARNINGS TO COMMON STOCK 73.1 %
65.1G 59 3G 5599 RETURN ON AVERAGE COMMON STOCK EOUlTY (6.7)Q 13 SG 14.0 %
12.9 %
15.2 G CASil ELOWS FROM OPERATIONS (less dividends paid) AS A PERCENT Of CAsil CONSTRUCTION EXPENDITURES.
27.1 %
24.0 %
12.6 %
10.74 20,6 %
Certain financial statistics for the year 1991 were affected by the Company's recording a charge against earnings, representing provisions for disallowances in the rate order issued by the Public Utility Commission of Texas. (See Note 12 to Financial Statements.)
IS
11em 6. SELECTED FINANCIAL DATA (Concluded).
OPERATING STATISTICS Year Ended December 31, 1991 1990 1989 1988 1987 ELECTRIC ENERGY GENERATED AND PURCHASED (MWh)
Generated - nct station output....
76,326.601 76,044,403 74,925.395 73,493.397 71,878.925 Purchased and net interchange.
11,027.061 12,179.724 12,588,k99 12.095,385 11.019.037 Total generated and purchased 87,333.662 ES,224,127 17,514,294 85,588,782 82,897,962 Company use, losses and unaccounteJ for 4.996,123 4.496,294
$,571,768 4.864.236 3.125.310 Total electric e nergy sales,,,..........
82.357,539 E3,727.833 81,942,526 10,724.546 77,772.652 ELECTRIC ENERGY SALES (MWh)
Residential 28,505,885 28,157,802 27.294.613 26,722,'482 25,801.012 Commercial.
23.012,114 23,429,101 22.539,351 21.899.895 21.084,673 Ind ustrial,
21,4 B2.750 21,839,196 21.377,542 21.516.862 20,678.324 Gosernment and municipal,
5,056.858 4.914.503 4.683.259 4.583,505 4,397.085 Toist gerieral business.
76,057 6 6 78.340,602 75.694,765 74.722,604 71,961.094 Other electric utihiics.
4.299.922 5.387,231 6_047.761 6.001.942 5.811.558 Total cicetric er.crgy sales 82,357.539 81,727,533 81.942.526 60.724.546 77,772.652 OPERATING REVENI.*ES (thousands)
Residential 52.043.421 11.859.239 11.732.679 51,704,219 11,609,491 Comrrercial..
1.391,995 1,266.030 1,228.672 1,1E2,869 1.105.179 Industrial.
852,951 601,821 817.802 815,157 766.657 Governtnent and municipal,.
303.597 273.596 251,941 245,249 229,877 Total genera 1 business 4.591,965 4,200,666 4,051,094 3.948,224 3,711.204 Other electric utilitics....
228.075 232,755 245.821 239,937 221.413 Totaf from electric energy sa!cs.
4,820.040 4,433,441 4,296,915 4.1ES.161 3,932.617 Other operating revsnees (including over/under-recoscred fuct tevenue) 71.452 107,474 21,650 (36,343) 146384 Total operating revenues 54.591.522 54,540.915 54.316.565 54,151.618 54.079.301 ELECTRIC CUSTOMERS (cnd of year)
Residential 1,921.119 1.900,005 1.675.524 1.S58.727 1,544.024 Commercial.
205.555 205.359 210,824 209,520 208,727 Indust rial.
22.156 22,214 22.024 22,179 22.39S i
Government and municipal.
27,719 24.533 23.434 20.037 19.655 Total general business 2,176.549 2,152,116 2,131,806 2,110,463 2,094.501 Other electra utihtics.
247 63 64 64 62
- Total electric customers.
2,176.796 2,152.179 2.131,870 2,110.527 2,094E6 RESIDEN'11AL FTATISTICS (crcludes traster.meiered cuucmers, MWh sales and revenues)
Avcrag: LWh per customer...
14,099 14,050 13,754 13,505 13,153 Aserage revenue per kWh 7.26e 649:
6.50c 6 48e 6 33c inlunral classification includes service to Alcoa.Sandom Electric energy sales (MWh) 3,359,824 3.517,431 3.276.303 3.525.a16 3,409.332 Operating teveriues (thousands) 555,987 155,271 556,985 156,606 562.630 In 1991, a change was tr.ade in the method of countig other clectric utility customers ar'd pric,r periods have been changed to reficci a reclassification inade in 1991 of certain customers amag various classes, principally from co nmercial to government and municipal 19
t item 7, MANAGEMENT'S DISCUSSION AND ANAISSIS OF TINANCIAL CONDITION AND RESULT'; OF OPERATIONS.
Liquidity and Capital Resources 1
The primary capital requirements of Texas Utilities Electric Company (Company) in 1991 and as estimated for 1992 through 1994 are as follows:
1991 1992 1993 1994 Thousands of Dottars Cash construction expenditures (eaciuding allowante for funds used during construction)
- 804,000 5 140.000 5664,000 3 837.000 Nuclear fuel (excluding allor s te for funds use d during construction)............
4.000 6.000 10,000 12,000 Maturities and redernptions of long-term det>t.
sinking fund requirements and redemptions of pre ferre o stock..........................
237.000 540.000 173.000 157.000 Total...
31.195.000 31.286.000
$849,000 - $1,006.000 for detail concerning major constructiori work now in progress or contemplated by the Company and the commitments with respect thereto, see item 2, Properties - Construction Program and Note 13 to Financial Statements.
The Company has generated cash from operations sufficient to meet operating needs, pay dividends or, capital stock and finance a portion of capital requirements. Factors affecting the cbility of the Company to continue to fcnd a portion ofits capital requirements from operations include adequate rate relief in the future reflecting regulatory practices allowing recovery of capital investment through adequate depreciation rates, normalization of federal income taxes, recovery of the cost of fuel and purchased power and the opportunity to earn competitive rates of return required in the capital markets.
For 1991, approximately 27% of the cash needed for construction expenditures was generated from operations by the Company.
In August 1990, the Company placed Comanche Peak Unit 1 in commercial operation and implemented its requested rate increase under bond, based on a test year ended June 30,1989. In a September 1991 order, the Public Utility Commission of Texas (PUC) substantisely approved the lesel of rates implemented under bond and, pursuant to this order, which the Company has appealed in state distri;. court, the Company recorded the provision for regulatory disallowances of certain costs associated with Comanche Peak in the amount of $1.3S1 billion ($1.011 billion after tax). In addition, the Company recorded a charge of $56 million, including interest ($37 million after tax), representing principally fuel gas costs disallowed by the order. (For additionalinformation regarding the rate decision, see Results of Operations and Note 12 to Financial Statements.) As a result, the Company will be precluded for a period of approximately twelve months from the date of recording such disallowances from incurring cetain forms of debt and issuing preferred stock. The Company has taken a number of steps to reduce expenses, including a hiring freeze, and continues to review melbods to permanently reduce its operating and capital expenditures. The approved rates have improved cash flows from operations and will reduce future financing requirements. Because of the Company's current cash and cash investments, credit lines, sales of common stock and cash from operations, the Company does not anticipate a significant change in its ability to fund continuing operations and its capital requirements.
I 20
I Item 7. h!ANAGEh!ENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued).
Liquiftty and Capital Resources - (continued).
In August 1990,the Company ceased allowance for funds used during construction (AFUDC) accruals and began depreciation provisions on approximately $1.3 billion ofinvestment in Comanche Peak Unit 1, incurred after the end of the June 30,1989 test year. Depreciation and rate of return on this investment is not provided for in current electric service rates but will be included in the next rate increase request -
of the Company, As a result, the Company's earnings and liquidity will continue to be affected until the investment incurred subsequent to the end of the test year is included in rates. See item 1, Business -
Regulation and Rates and Note 12 to Financial Statements regarding the Company's need for future rate
' increases.
Although the Company cannot predict the outcome of its appeal of the recent rate decision, future regulatory action or any changes in economic and securities market conditions, no changes are expected in trends or commitments which might significantly alter its basic financial position.
External funds of a permanent or long-term nature are obtained through the sales of common stock to Texas Utilities Company (Texas Utilities), preferred stock and long term debt, subject to the current limitations previously discussed. The capitalization ratios of the Company at December 31, 1991, consisted of approximately 50% long-term debt,10% preferred stock and 40%- common stock equity.
These ratins were primarily affected in 1991 by the recording of the Comanche Peek disallowances and the financing activities described belotv. The Company expects these ratios to return to their previous lesels mer time, assuming adequate rate relief and recovery of capitalinvestment.
Financings in 1991 by the Company included the following:
L.ong Term Debt:
Priacipal Mouth Atuount Ducription January 5 17,000.000 Secuted Medium Term Notes - Series C February 40.000.000 Secured Medium Term Notes - Series C March 100.000,000 7 7/89 Collateralued Pollution Control Resenue Bonds duc 2021 May 300.000.000 9 3/4% First Mortgage and CollaicialTrust Ibnds due 2021 July 75.000.000 Coitateralued Pollution Control Revenue Bor.ds-Tanable 'crics 1991A due 2021 July 50.000,000 Collateral. red Pollution Control Revenue Bonds - Taxabic Series 199111 due 2021 July 50,000.000 Collateratred Polluuon Control Resenue Bonds-Tanable Series 1991C dwe 2021 July 100.000.000 Collateralized Pollution Control Revenue Bonds -Tasable Series 1991D due 2021 Total 5732.000.000 Common Stock' Month Shares Net Proceeds Description
-June 3,125,000 s150.000,000 without par value December 3,950,000 200,463.000 Without par value 5350,463.000 In 1991, the Company redeemed or made principal payments aggregating $237,178,000 on preferred stock and iong term debt. Early redemptions oflong term debt and preferred stock may occur from time to time in amounts presently.mdetermined. For information regardmg short term financings of the Company, see Note 3 to Finanual Statements.
21
)
n
Item 7. MANAGEMEN'Ib DISt.USSION AND ANALUlG Or FINANCIAL COND! TION AND REST'LTS OF OPERATIONS (Continued),
Liquidity and Capital Resources - (concluded)
Although the Company is currently restricted from issuing certain forms of debt, the Company is able to replace existing debt under its mortgages. In February 1992, the Company sold $150,000,000 of its First Mortgage and Collateral Trust Bonds,81/SG series due February 1,2002 and 5175,000,000 ofits First Mortgage and CollateralTrust Bonds,8 7/S% series due February 1,2022. The funds acquired from these sales and funds from operations were used to redeem the fo.owing series of the Company's First Mortgage and Collateral Trust Bonds: 5100,000,000 ofits 12% series due August 1,2015; $75,000,000 of its 12% series due September 1,2015; and $150,000,000 ofits 11 1/S% series due December 1,2015. Also in February 1992, the Company announced plans to redeem $50,000,000 of its Texas Power & Light Company First Mortgage Bonds,101/S% series due October 1,2004 and $75,000,000 ofits Texas Electric
^
Service Company First Mortgage Bonds,115/S% series due December 1,2012.
Sales of additional equity securities may occur from time to time,in amounts and of types presently undetermined, subject to the preferred stock limitations previously discussed.
In November 1990, the federal Clean Air Act Amendments of 1990 (Clean Air Act) were enacted which, among other things, place limits on the sulfur dioxide emissions produced by generating units. The Clean Air Act requires that fossil fueled plants meet new sulfur dioxide emission stardards by 1995 (Phase 1) and additional sulphur dioxide emission standards by 2000 (Phase 11). The Company's generating units are not affected by Phase I requirerr.ents. The Phase 11 requirements are currently met by all but four of the Company's generating units. Other provisions of the Clean Air Act may require the Company to take other actions; how ever, only certain parts of the regulations implementing requirements have been adopted. Until these regulations have been promulgated, the Company will not be able io fully determine the cost or method of compliance for these requirements.
The above capital requirements have not been significantly affected by the Clean Air Act's requirements. Although the Companyis unable to fully determine the cost to comply with the Clean Air Act,it is not expected to have a significant impact on the Company. Any additional capital costs, as well as any increased operating costs associated with these new requirements, are expected to be recovered through rates, as similar costs hase been recosered in the past. (See item 1, Business - Environmental Matters, and Note 13 to Financial Statements.)
See item 6, Selected Financial Data - Financial Statistics foi additional information.
22
Item 7. MANAGEMENT'S-DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
^
RESULTS OF OPERATIONS (Continued).
Results of Operations Operating revenues increased 7.79c and 5.1% for the years ended December 31,1991 and 1990, respectively. The following table details the factors contributing to these changes:
lucrease (Decrease) l' actors 1991 1990 Thousands of Dellars Base rate revenut...........
$ 548.973
$ 367,249 Fuelrevenue........
(73.527)
(107.197)
Power cost recovery factor revenus.
(129.073)
(26,426)
Other...............
4.5 34 (11.276)
To t a l.......,....
3 350.607 s 222.350 Base rate revenue in both periods was affected by higher rate levels in 1991 and a portion of 1990. Energy sales decreased 1.67c for 1991 and increased 2.2% for 1900. The decrease in 1991 is due to decreased customer usage resulting from the effects of econvmic conditions and milder weather, partially offset byincreased customers. The increase in 1990 was primarily due to increased customers and customer usage. The rate increase placed in effect in August 1990 increased base rate revenue approximately 55S3,000,000 for 1991 and $294,000,000 ier 1990, inc1uding approximately $132,000,000 for 1991 and 567,000,000 for 1990 reclassified from power cost recovery factor revenue to base rate revenue. Fuel revenues have decreased, reflecting a lower fuel factor in connection with the new rates, and in 1991
' included a reduction of approximately $29,000,000, principally due to the PUC's order to refu*ad dist.!1 owed fuel gas purchases incurred during the period from April 1983 to June 1989. (See Note 12 to Financial Statements.) -
Fuel and purchased power expense decreased 1.3?c and 3.1% for 1991 and 1990, respectively. The decrease for both periods was due to a lower cost of nuclear fuel and gas and in 1991 to a reduction in off. system power purchases, The decrease in 1991 was partially offset by a higher unit cost for fuel oil and lignite. (See item 1, Business - Fuel Supply and Purchased Power and liem 6, Selected Financial Data - Operating Statistics.)
Total operating expenses, excluding fuel and purchas. : power, increased 18.7% and 16.0% for 1991 and 1990, respectively. Operation, maintenance and depreciation expenses increased in both years prima'rily due to the commercial operation of Comanche Peak Unit 1. Amortization of rate case related expenses and iner eased employee related costs also contributed to the 1991 increase in operation expense.
The increase in opciation expense in 1990 was due to increased combustion turbine leas: expense and costs associated with the sales of customer accounts receivable. Maintenance expense for 1990 also incre. rd Ne to the timing of certain plant overhauls and increased maintenance on distribution eq uip.:.: ~. Tr i other than income increased in 1991 due primarily to increased property taxes, franchise tay.;, and increased state and local gross receipts taxes. In 1991, property taxes reflect the effects of legislation passed creating county education districts. This legislation was declared unconstitutional by the Texas Supreme Court on January 30,1992 and the court has instructed the State legislature to provide a revised plan for school funding by June 1,1993 with the current plan to remain in effect pending action by the legislature. Taxes other than income increased in 1990 primarily due to the effect of a franchise tax refund recorded in the prior year.
23
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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS 0F FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued).
Results of Operations - (concluded)
AFUDC decreased 41.1% in 1991 and increased 22.1% in 1990. The decrease in 1991 was due primarily to the full year's effect of the discontinuation of the accrual of AFUDC on Comanche Peak Unit I when the unit was placed in commercial operation in August 1990 and the effect of the implementation of the rate order in October 1991 by placing 5695 million of construction work un progress (CWIP)in rate base and the exclusion of $485 million of CWIP disallowed on Unit 2 of Comanche Peak.
The decrease was partially offset by the effect of the increase in AFUDC rates in 1991. (See Note 1 to Financial Statements.) The increase in 1990 was primarily due to the resumption of the accrual of AFUDC on Comanche Peak Unit 2 and the Company's continuing construction at Comanche Peak. The increase was partially offset by the discontinuation of the accrual of AFUDC on Comanche Peak Unit I when the unit was placed in commercial operation in August 1990.
The provision for regulatory disallowances reDects a charge to comply with the PUC's decision in the Company's rate case. The decision, which the Companyis appealing, included a prudence disallowance of $472 million with respect to certain Comanche Peak costs relating to 87.8% of the Company's ownership interest in both units of Comanche Peak. In addition, the decision provided for a disallowance of $909 million for costs associated with the Company's reacquisition of the remaining 12.2% minority owner interest in Comanche Peak. (See Note 12 to Financial Statements.)
Other income and deductions - net increased for 1991 primarily due to increased interest income.
Federal income taxes - other income decreased in 1991 due to the effect of recording the taxes associated with the provision for regulatory disallowances. (See Notes 8 and ?2 to Financial statements.)
Totalinterest charges, excluding AFUDC, increased 6.0Q and 11.9G = 1991 and 1990, respectively.
Interest on mortgage bonds increased due to new issues sold during cturent periods and annualized interest on issues sold in prior periods, partially offset by retirements and redemptions of certain higher interest rate issues. Interest on other long term debt decreased in 1991 due to the continuing retirement of debt incurred on the purchases of the minority ownership interests in Comanche Peak. Other interest expense increased in 1991 due to interest associated with the PUC's order to refund disallowed fuel gas costs and interest associated with the settlement of prior years' federalincome tax returns.
The net loss in 1991 was due to the recognition of the provision for regulatory disallowances and the prosision for refunds and related interest described above and in Note 12 to Financial Statements.
Another major factor affecting earnings was the di; continuation of the accrual of AFUDC on approximately $1.3 billion ofinvestment in Comanche Peak Unit 1, incurred after the end of the test year, which is not provided for in new rates but which will be included in future rate increase requests. Net income increased in 1990 primarily due to the resumption of the accrual of AFUDC on Unit 2 of Comanche Peak.
Preferred stock dividends increased 2.8% and 8.8% in 1991 and 1990, respectively, due to the full periods' effect of prior period issuances. Also in 1990, the incre"e was affected by new issues sold.
24 i
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Item 7. hl ANAGE51ENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Concluded).
Pending Accounting Changes in December 1990, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No.106,
- Employers' Accounting for Postretirement Benefits Other Than Pensions *, which is effective for fiscal) ears beginning after December 15,1992. The Statement requires a change in the accounting for a company's obligation to provide health care and certain other benefits to its retirees from the
- papas you go* method to an acerual method and requires the cost of the obligation to be recognized in the period from employment date until full eligibility for benefits. The Company currently estimetes that the unfunded actuarial present value of employee service rendered to the c>pected date of adoption (transition obligation at January 1,1993), to be approximately $210 million to $260 million. The Statement allows the transition obligation to be either recognized immediately as the cumulative effect of a change in accounting principle or amortized evenly over the longer of the average remaining service lives of covered employees or 20 years. The Company expects to recognize the transition obligation over the average remaining service lives of covered employees. The total annual benefits cost is estimated to be approximately $35 million to $50 million. The Company expects that the accrual of benefits cost will either be recosered currently through rates, similar to retirement plan costs, or, pursuant to certain provisions of the Statement, that a regulatory asset will be recorded to reflect amounts, if any, whose future recovery is probable through sates as costs are paid. Therefore, this Statement is not expected to hase a material effect on the Company's financial position or results of operations.
In February 1992,the FASB issued Statement of Financial Accounting Standards No.109,* Accounting for income Taxes', which is effective for fiscal years beginning after December 15,1992. The Statement, among other things, requires the liability rnethod of recognition for all temporary differences, requires that deferred tax liabilities and assets be adju;ted for an enacted change in tax laws or rates and prchibits net of tax accounting and reporting. Certain provisions of the Statement provide that regulated enterprises are permitted to recognize such adjustments as regulatory assets or liabilitics ifit is probable that such amounts will be recovered from or returned to customersin future rates. Although application of the Statement willincrease both total assets and liabilities, these requirements are not expected to have a material effect on the Company's financial position or results of operations.
Effective January 1992,the Company began recording base rate revenue for energy sold but not billed to achieve a better matching of revenues and expenses, The cumulatise effect of the change for prior
~
periods willincrease 1992 carnings after income taxes by approximately $SO million.
25
r Item 8. FINANCIAL STATEh1ENTS AND SUPPLEh!ENTARY IIATA.
TEXAS UTILITIES ELECTRIC COh1PANY STATEh!ENTS OF INCOh1E Year Ended December 31, 1991 1990 1989 Thousands of Dollars OPERATING REVENUES..
54.891.522 14.540,915
$4.318,565 OPERATING EXPENSES Tuel and purchased power..
1.156.423 1,779.854 1,837,025 Operation 729.615 645,857 541,652 Ma in te na nce.................
304,683 289.949 259.693 Depreciation and amortization 425,216 316.527 240,466 Federalincome taxes...
152.963 136.060 146,589 Tames other than income.
437,347 338.323 299.588 Total operating crpenses..
3.806.247 3,506.570 3.325.013 OPERATING INCOME 1,085.275 1.0M.345 993.552 OTilER INCOM E (LOSS)
Allomante for equity funds used during construction.
251,744 402.447 331,365 Provision for regulatory disallowanc'.s iNote 12).
(1,381.145)
Other income and deductions - nt.-
12.462 4,687 6.612 Federalincome taxes (Notes 8 and 12).
362.852 (1.435)
(2.209)
Total othe r income (loss)
(754.087) 405.699 335.768 TOTAL INCOME,
331.188 1.440.044 1.329.320 INTEREST CilARGES Interest on mortgage bonds 608.729 551.986 518.29u Interest on other long-term debt 61.822 92,749 59,278 Other interest 62.111 46,604 40.400 Allouance for borrowed funds used during construction (112.301)
(215.571)
(174.824)
Total interest charges 620.361 475.768 443.144 NET INCOME (LOSS)
(289.173) 964.27t>
856.176 PREFERRED STOCK DIVIDENDS 121.603 118.268 105.712 NET INCOME (LOSS) ATTER PREFERRED STOCK DIVIDENDS 5 (410,776)
S.46.006 5 777.464 See accompanying Notes to Financial Statements.
26
TEXAS UTILITIES ELECTRIC COMPANY STATEMENTS Of CASil TLOWS Year 1:nded December 31.
1991 1990 1989 Thousands of Dc.llars CAS11 TLOWS FROM OPERATING ACTIVillES Net income (less)...
5 (289.173) 5 964.276 5 866,176 Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation....
418,899 314,044 240,466 Deferred federalinsome taats-net.
(247,264) 27,464 14.429 Federalinvestment tar credits - pet
($3,498) 33.641 26.090 Allomante for equity funds used during construction.
(251,744)
(402,447)
(331,365)
Amortitation of regulatory assets.......
17,540 11.087 Amortization of nuclear fuel....
14.086 8,016 Provision for regulatory disallowances (Note 12)..
1.361.145 Provision for refunds and related interess - net (Note 12) 44,893 Cash flows from ope rations.........
1,034,684 956.281 635.796 Changes in assets and liabilities:
Receivables - ne t.
(29.654) 59.820 125.764 Inventones........
(19.214)
(45.215) 16.729 Accounts payable - net (17.095)
(39,429) 46.256
.4 Interest and taxes accrued.
64,021 16,608 5,052 Other worhng capital 42,999 (13,882) 653 Oscr/under.recostred fuel revenue (43,529)
(53,704) 32,568 Deferred taats on over/under.reco<cred fuel restnue 14,800 16,259 (11,052) 0:her - net 21,105 45.044 (5,470)
Net cash flows from operating activitics.
1,088.107 943.782 1,046,266 CASil FLOWS FROM TINANCING ACTIVITIES:
Sales of securities:
First mortgage bonds 737,296 590,790 650,115 Commercial paper...
215,000 Preferred stock 98,625 98.150 Common stock 350,463 399,900 330,150 Retirement of long term debt and preferred stock (237.178)
(73,838)
(453,009)
Increase (decrease)in notes payable to parent (134,000)
(240,750) 374,750 Incrcase in notes payable to banks 35,000 Preferred stock dividends paid (121,610)
(99,719)
(107,694)
Common stock dividends paid (650,940)
(607.230)
(542.293)
Debt premium, discount and financing expenses,
(22.298)
(6,2E3)
(44.673)
Net cash floss from financing s etivities 136.715 94,495 275.491 CASil FLOWS FROM (FOR) INVESTING ACTIVITIES Construction capenditures.
(1,195.650)
(1,431,647)
(1.7v3,890)
Allowance for equity funds used during construction (excluding amount for nuclear fuel),
232,068 397,289 331.365 Change in construction receivables /payables - net.
(6,074)
(3.606)
(15.506)
Cash construction expenditures..
(969,656)
(1,037,964)
(1,478,031)
Non. utility property - net (27)
(69)
(79)-
Nucicar fuel (excluding allowance for equity funds used during construction)...
(16.694)
(2,180) 1,606 Purchase of minority onenhip interests in Comanche Peak.
(18.000)
Other investments.........
(11,278) 1,454 (21,103)
Net cash flows from (for) investing activities (997,685)
(1.038,759)
(1.515,607)
NET CilANGE IN CA511 AND CAS11 EOL'lVALEN75.
227,157 (4B2)
(193.850)
CASil AND CASH EOUlVALENTS-BEGINNING BALANCE.
4.644 5,126 19S,976 CASil AND CASil EQUIVALEN75 - ENDING BALANCE 1 231.801 5
4.644 5
5,126 See accompanying Noter, to Financial Statements.
27 1
TEXAS UTILITIES ELECTRIC COMI'AST
!!ALANCE SilEETS ASSETS Det einber 31 1991 1990 Thousands of Dollars ~
ELECTPJC l'1 ANT in sersice:
Production.
$10,421,387
$10J42.116 Transmission......
1.443.565 1.3S8.%9 Distribvtion..
3.377.396 3.100.258 Ge ne ral.......
425,448 408.294 Total 15.667,796 15.329.627 Less accumulated depreciation.
3,392.463 3.026.995 Electric ;bnt in service less accumulated depreciation...
12.275,333 12,302.632 Construction work in progr:.s 4.809.0S8 4.012,241 Nuclear fuel (net of accu 'ulated amortization - 1991, 125.393.000.
1990. 111.307.000).
333,701 311,416 11:1d for future use 29.069 28,989 Dectric plant less accumulated depreciation brid amorutation.
17.447,191 16,655.276 l ess reserse for regulator)' disallomanres (Note 12).
1.308,460 Nci electric plant 16.138.731 16.655.276 INVESTMENTS.
28,919 17.614 CURRENT ASSITS Cash in banks 5.451 4.644 Temporary cash investments -
226,350 Special deposits.
22.171 22,497 Acccunts receivable:
Customers.
85,010 58,299 Other 39.840 37.450 Allowance for uncollectible accounts (2.93!)
(2.290) inseniories - at average cost:
Malenals and supplacs.
174,977 147.661 f uel stock.
66,066 94.159 Deferred federalincome taxes (over.recoscred fuel revenue) 3.597
~
Prepaid taxes.
10.771 21.501 Other current assets 22.953 35,% 6 Total current assets 670.660 423 314 DEFERRED DEBITS Unamortized regulator) assets:
Debt reacquisition costs.
109.708 99.512 Cancelled lignite unit costs 25.563 30.533 Rate case costs..
48.328 45,962
- itigation and settlement costa 72.685
'1.991 Under-recovered fuel tevenue 32.950 Other deferred debits 38415 39.772 Total deferred debits.
327.849 291.070 Less reserse for regulatory disatiomances (Noic 12).
72.655 Nei deferred debits 255.164 29' 370 Total
$17.093,474 117.357.276 See accompanying Notes to Financial Statements.
i 28
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TEXAS UTILITIES ELECTRIC COMPANT BAL ANCE SilEETS CAPITALIZATION AND LIAlllLITIES Deccinher 31, 1991 1990 Thousands of Dollars CAPITALIZATION Common stock withov par value:
Authorized shares. 180,000,000 Outsiandirig shares - 1991.141.125,000; 1990, 134.050,000 5 4,315.f.53 5 3,966,000 Retained earnings,,
1,424,974 2,486.690 Total commen stock equity 5.741,437 6,452,690 Preferred stock:
Not subject to rnandatory redemption 1.007,72B 1.007,72B Subject to mandatory redemption 425,758 426,737 Long. term debt,less amounts duc currently.
7,253.626 6.750.635 Total capitalization 14.428 549 141.37,790 ClJRRENT LIABILITIES Notes payable:
Parent.
134.000 Banks 250,000 35,000 Long term debt due currently 82,522 65.J 21 Total (to be refinanced) 332,522 254.421 Accounts payable:
I Afhhates 109,255 116,750 Oiher 149,950 170.565 DMdends declared 30,225 30,63S Custome rs' deposits
$2.159 50.699 Taics accrued 251,303 174,667 Intercsi acer6ed.
185,923 175.595 Over recoscred fuel restnue.
10.579 Other current habilitics 72,562 37.236 Totai current liabilities 1,154.292 1.024.153 DEFERRED CREDITS AND OTilER NONCL'RRENT LIABILITIES Accumulated deferred fedcrat income taxes.
655,585 395.056 Unamortised federalinvestment tax credits 727,896 751,426 Other deferred credits and noncurrent habilities.
94,152 48.821 Total deferred credits and other noncurrent habihties 1,4 B0,633 1.725,333 COMMITMENTS AND CONTINGENCIES (Notes 2 and 13)
Total
$17.093.474
$17.M 7.276 See accornpanying Notes to Financial Statements.
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TEXAS UTILITIES ELECTRIC COMPANY STATEMENTS Ol' RETAINED EARNINGS
~
Year Emded December 31 1991 1990 1989 Thousands of Dollars BALANCE AT BEGINNING OF YEAR..
$2,486,690
$2.247,913
$2,012,747 ADD - NET INCOME (LOSS).,.
(289,173) 964,276 E60,176 To t al.................
2.197.537 3,212,189 2,895.923 DEDUCT Cash Dividends:
Preferred stock:
$ 4.50 series ($ 4.50 per share per annum).....
334 334 3 34 4.00 series ($ 4,00 per share per annum) 280 280 280 4.56 series ($ 4.56 per share per annum).
609 609 609 4.00 series ($ 4.00 per share per annum) 440 440 440 4.56 series ($ 4.56 per share per annum)..
296 296 296 4.24 series ($ 4.24 per share per annum).
424 424 424 4 64 series ($ 4.64 per share per annum)..
4M 4 64 4
4 54 series ($ 4.64 per share per annum).
339 339 339 4.00Nries ($ 4.00 per share per annum)
'80 280 280 4.76 series ($ 4.76 per share per annum) 476 476 476 5.08 series ($ 5 08 per share per annum) 407 407 407
& series ($ 4.80 per share per annum) 480 480 450 4 44 series ($ 4 44 per share per annum) 666 666 666 7.20 series ($ 7.20 per share per annum) 1,440 1,440 1.440 7.80 series ($ 7.50 per share per annum).
2.339 2.239 2,339
. 8 92 setics ($ 8 92 per share per annum) 1.784 1,784 1,754 6.54 series ($ 6 64 per share per annum) 1,36S 3.368 1,368 7.24 series ($ 7.24 per share per annum) 1,609 1,809 1,609 7.44 series ($ 7.44 per share per annum) 2,232 2,232 2.232 7.4h series ($ 7 48 per share per annum) 2.244 2.244 2.244 8.20 series ($ 8.20 per share per annum) 2,460 2,460 2,460 8 44 series ($ 8 44 per share per annum) 2.532 2,532 2,532 9.32 series ($ 9.32 per share per annum) 2,796 2.796 2.796 9.36 series ($ 9.36 per share per annum) 2,805 2.h0S 2,605 '
8 68 series ($ 8.68 per share per annum) 2.604 2.604 2.604 616 series ($ 8.16 per share per annum) 2.444 2.444 2.444 6 32 series ($ 6 32 per share per annum) 2.496 2.496 26 8 54 series ($ 8 54 per share per snnum) 2,652 2.652 2.652 9 48 series ($ 9.45 per share per annum) 9,236 9.236 9,236 8.92 series ($ & 92 per share per annum) 4,460 4.460 4,460 10.00 series ($10 00 per share per annum),
5,000 5,000 5,000 10.92 series ($10.92 per share per annum).
3.276 3,276 3.276 1012 series ($1D,12 per share per annum),
3,544 3.542 3.542 20 05 series ($10.0$ per share per annum).
3.140 3.278 3.377 11.32 series ($11.32 per share per annum),
3,396 3.396 3.396 9.64 series ($ 9 64 per share per annum) 9.640 9440 9,640 10,378 - *ies ($10.375 per share per annum).
7,781
$,793 9.875 cries ($ 9.875 per share per annum).
2.4 fA 555 Adjustable rate series A 6,500 6,613 6.637 Adjustable rate series B -
6,014 6.162 6,205 Stated rate auction series A 8.240 8,240 8.240 Flexible adjustabic rate series A.
4.500 4,619 2,960 Flexible adjustable rate series D,
4,500 4.619 2.950 Common stock (per share: 1991. 34.80, 1990. 54.68, 1989, 54.56).
650,940 607.230 542.295 Totai cash dividends 772.136 725.162 650,770 Dividends other than cash - accretions.
407 337 240 Total dwidends 772,543 725.499 651,010 BALANCF AT END OF YEAR
$ 1.424.974
$2,456,690
$2.247.913 See accompanying Notes to Financial Staternents.
30 l '
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TEXAS UTILITIES ELECTRIC COMPANY
' NOTES TO FINANCI AL STATEMENTS 1.
SIGNtMCANT ACCOUNTING Pot.lCIES ElectricFlant-Electric plant is stated at original cost. The cost of property additions to electric plant includes labor and materials, applicable overhead and payroll related costs and an allowance for funds '
used during construction.
Allowance For Funds Used During Construction - Allowance for funds used during construction (AFUDC)is a cost accountin'g procedure whereby amounts based upon interest charges on borrowed funds and a return on equity capital used to finance construction are added to electric plant. The accrual of AFUDC is in accordance with generally accepted accounting principles for the industry, but does not represent current cash incorne.
' Texas Utilities Electric Company (Company)is capitalizing AFUDC, compounded semi enually, on expenditures for ongoing construction work in progress (CWIP) and nuclear fuel in process not otherwise allowed in rate base by regulatory authorities. In 1989 and 1990, the Company used a net of tax rate of 9% on projects commenced before March 1,1986, and a gross rate of 10.5% on projects commenced thereafter. The net and gross rates were increased for 1991 to 10.4% and 12%, respectively.
Rates were determined on the basis of, but are less than, the cost of capital used to finance the construction program.
Depreciation ofElectric Plant - Depreciation is generally based uponan amortization of the original cost of depreciable properties (net of regulatory disallowances) on a straight line basis over the estimated service lives of the properties. -Depreciation as a percent of average depreciable property approximated 2.9%,2.9% and 3.3% for 1991,1990 and 1989, respectively. Depreciation also includes an amount for Comanche Peak nuclear generating station (Comanche Peak) decommissioning costs which is being' accrued over the life of the unit and deposited to an external trust fund.- (See Note 13.)
lAmorti:ation of Nuclear Fuel-The amortization of nuclear fuel in the reactor _(net of regulatory disallowances)is calculated on the units of production method and, subsequent to commercial operation, is included in nuclear fuel expense c Reyenucs - Revenues include billings under approved rates (including a fixed fuel factor) applied to
- meter readings each month on a' cycle basis and an amount for under or over recovery of fuel revenue 4
representing the difference between actual fuel cost and billings on the approved fixed fuel factor.
- Beginning in 1992 an accrual will be made for base rate revenues earned but unbilled. Revenues also.
include a provision that generally allows recovery through a Power Cost Recovery Factor, on a monthly basis, of the capacity portion of purchased power cost from cogenerators not included in base rates. The
' fuel portion of purchased power cost is included in the fixed fuel factor. Pursuant to a Public Utility -
n
- Commission of Texas (PUC) rule, the Companyis requ_ ired to refund over recovered fuel revenue if the
'smount of over recovery, including interest, exceeds the lesser of $40 million or 4% of its annual known or reasonably predictable fuel costs most recently approved by the PUC. Reconciliation of fuel costs is
- to be made in a general rate case or a reconciliation procee_ ding. Reconciliation may be requested only
-if it has either been over one year since the utility's last final reconciliation or the utility has materially under recovered it's known or reasonably predictable fuel costs.
f 31 l
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e.
4=,.
TEXAS UTILITIES ELECTRIC COMPANY NOTES TO FINANCIAL STATEMENTS - (Continued) 1.
SIGNirlCANT ACCOUNTING POUCIES - (concluded) g Federallncome Taxes - The Company is included in the consolidated federalincome tax return of Texas Utilities Company (Texas Utilities) and its subsidiaries (System Companies), and federal income taxes are allocated to all System Companies based upon their taxable income or loss. Deferred federal income taxes are currently provided for timing differences between book and taxable income (including the provision for regulatory disallowances) Generally, such differences result primarily from the use of Alberalized depreciation and cost recovery deductions allowable under the Internal Revenue Code, the under-or over-recovery of fuel revenue and unbilled revenues accrued for tax purposes. Cumulative timing differences in carher years for which deferred federal income taxes were not provided approximated $203,000,000 at Decemb;r 31,1991, Investment tax credits are normally amortized to income over the estimated service lives of the properties. (See Note 8 for pending change in accounting W
for income taxes.)
Cash Flows - For purposes of reporting cash flows, temporary cash investments purchased with a remaining maturity of three months or less are considered to be cash equivalents.
Supplemental schedules of cash payments and noncash insesting and financing activities and are provided below:
Year End December 31, 1991 1990 1959 Thousands of Dollars CASil PAYMENTS:
Interest (cet of amounts capitalacd) 5605.545 5455.52s 5416.574 locome taxes 70.325 59.390 145,02 E NONCASilINVESTING AND TlNANCING ACTIVITIES-Purchase of minority ownership interests in Comanche Peak Production and iransmission pant 5 -
1153.501 5 -
Nuclear fuel 13.709 Reimbursement of certain expenses (deferred debits) and scrLing funds adsanced 32 695 Total purchase price 229.905 Plus finaneirg charges.
6.634 a
Less amounts due from minority owners 45.518 Less promissory note, obbgetion and debt assumed.
174,721 Less payment made in prior period.
16.000 Cash paid on the purchase.
5 -
5 -
5 -
2.
AFFILIATES Texas Utilities provides common stock capital and partial requirements for short term financing to the Company. Texas Utilities has three other subsidiaries which perform specialized services for the System Companies, including the Company: Texas Utilities Services Inc. provides financial, accounting, computer, telecommunications, shareholder services and other administrative services at cost; Texas Utilities Fuel Company (Fuel Company) owns a natural gas pipeline system, acquires, stores and delivers fuel gas and provides other fuel services at cost for the generation of electric energy by the Company; and Texas Utilities Mining Company (Mining Company) owns, leases and operates fuel production facilities for the surface mining and recovery oflignite at cost for use at the Company's generating stations.
32 I
TEXAS UTILITIES ELECTRIC COMPANY NOTES TO FINANCIAL STATDIENTS - (Continued) 2.
AITILI ATES - (concluded)
The Company has entered ir*o agreements with Fuel Company to procure certain fuels and related services and with Mining Company for the procurement and production oflignite; payments are at cost for the services receised and are required by the agreementa to be *at least equivalent in the aggregate to the annual charge toincome on the books'of Fuel Company and of Mining Company The Company is,in effect, obligated for the principal, $404,940,000 at December 31,1991, and interest on long term notes of Fuel Company and of Mining Company through payments described above. Such notes mature at various dates through 2001 and have interest rates tanging from 8.50% to 10.85%
3.
Sil0RT.TERs! FINANCING The Company and Texas Utilities have joint lines of credit aggregating $1,025,000,000 under a credit facility agreement with a group of commercial banks The facility, for which Texas Utilities pays a lee, will be reduced in 1993,1994 and 1995 by $325,000,000, $350,000,000 and $350,000,000, r espectively. This credit facility may be used to finance new construction, as backup for commercial paper and for general corporate purposes. At Dccember 31,1991, the Company had $250,000,000 outstanding under this credit facility. From time to time Texas Utilities makes short term loans to the Company.
4.
CoststoN STOCK The Company issued and sold shares of its authorized but unissued common stock to Texas Ut"Nes as follows: December 1991, 3,950,000 shares for $200,463,000; June 1991, 3,125,000 shares for
$150,000,000; May 1990, 8,600,000 shares for $399,900,000; Decembcr 1989, 6,525,000 sbares far
$300,150,000, No shares of the Company's common stock are held by or for account of the Company, nor are any shares of such capital stock reserved for officers and employees or for options, warrants, conversions and other rights in connection therewith.
5.
PREFERRED STOCK (cumulathe, without par salue, entitled upon liquidation to $100 a share; authorized 17,000,000 shares)
Redetuptiou Price Per Share Shares Outstooding Amount (tiefere Adding Accumulated Ditidends)
Series Groups December 31.
December 31 Current Eventual N1inimum from To 1991 1990 1991 1990 Frous
'I o Frota To Thousands of Dollars Not Subject to blandalor) Redemption 54 00 3484 1,142,942 1,142,942 3 114,588 $ 114.568 $101.79 $112.00 3101.79 ' 5112 00 5.0$
7.50,,
1,629.675 1,629,675 163,270 163,270 102.40 103 60 102.40 103 60 8.16 8 92,.
1,999,475 1,999,475 198,642 198,642 101.92 104 09 101.0.)
103 60 9.32 11.32,
1,550.000 1,550.000 153,205 153,205 102.33 107.55 100 00 102.7,3 Ad;ustable rate (a),
1.E50,000 1,150.000 181,713 181,713 103.00 103 00 100 00 100 00 Sisted rate surtion (b).
1,000.000 1,000,000 98,164 98,164 100 00 100.00 Flesibic adjustable rate (c),,
1,000.000 1,000,000 98.146 98,146 100.00 100 00 Total 10.172.091 10.172.092 31.007,72s 31.007,728 33
1 l
TEXAS UTILITIES ELECTRIC COMPANT l
NOTES TO FINANCIAL STATEMENTS - (Continued)
- 5. PREFERHpD STOCK (cumulathe, without par salue, entitled upon liquidation to $100 a share; authorized M,0K 300 Aares)--(continued)
Redemption Price Per Share Shares Outstanding Amonet (Before Adding Accumulated Disidends)
Series Groups December 31 December 31 Current Es ectual Miniinru From T6 1991 1990 1991 1990 From To From To Thousands of Dollars Subjwt to Mandatory Redemption (dHe) 58 92 5 9.4 8....
1,474,250 1,474,250 1 146,781 5 146 661 5103 00 1105.00
$100.00
$100.00 9 64 10.375.,,,,.
2,60B,000 2.122.000 276,977 280,076 105.00 107.56 100.00 100.00 Total.,
4.262.250 4,296,230 5 425.758 1 426,737 (a) Adjustabla raic series A bears a dividend raie for the period ended January 31,1992, of 6 507c per annum and adjustable rate series B bears a dividend rate for the period ceded December 31,1991, of 7.007, per annum, both of which are based on a fined aiquidation price of $100 per share.
(b) Stated rate auction strics A bears a dividend rate of 8 2F*c per annum for the fined dwidend period through September 30, 1992, based on a fixed liquidation price of $100 per share. The dividend rate for each 49 day dividend period thereafter will be determined on the basis of certain aucuon procedures. All redemptions are at a price of $100 per share plus accumulated dividends. The shares are not redeemabic prior to September 29,1992 (c) flexible adjustabte rate series A and B bear a diudend rate for the period ended December 31,1991 of 6.80c per annum, c
based on a fined liquidation prict of $100 per share, The shares will continue to bear an adjustable dmdend rait, based on the rates of certain U. S. Treasury securities, through June 30, 1991 During this initial period, under certain circumstances relating to a change in federal 14: law goserrung the dmdends tercived deduction applicable to cligible corporations, the dmdend rate mm) increase or decrease accordingly In no case will the per anrum dindend rate during this in:t.al period be grcater than 147c or less than 77<. After June 30,1993, dividends will be determined on the basis of certain auction procedures The shares are not redeemable before June 30,1993, unicss a change in the federal tan la.
governirg the disidends rectised deduction occurs, at which time the shases rna) be redeemed on an) quarterly dividend payment date through April 30,1991 (d) The Company is required to redeem at a price of1100 per share plus accumulated dividends a specified minimum numt cr of shares annually or semi-annually occurring on the initial /nent dates shown below, except for the 55 92 series m hich docs not base a sinking fund provision. These redeemable shares rney be called, purchased or otherwise arquired. Certain issues may not be redeemed prior to 1995. The Cornpan) may annually call for redemption, at its option, an aggregare of up to twice the number of shares shoan below for each series at a price of $100 per share plus accumulated dividends,except for the 59 64 strics which may be redeemeu in a minimum amount of10,000 shares at any time at a price of $100 per share plus accumulated dmdends pies a component at a sariable prict per share w hich is designed to maintain the expected yield at issuance:
Minimutu Redeemable Initial $ent Date of Series Shares Mandatory Redemption 110.08 14,000 annual!y 4/1/92 9 48 66,700 ann ually 4/1/92 10.00 20,000 annually 7/1/92 9.64 125,000 semi-annually
$/1/95 10.375 150,000 annually 4/1/96 8 92 All outstanding shares 7/1/96 9.875 50,000 annually 10/1/96 The ct.rrying value of preferred stock subject to mandator) redemption is being increased periodically to equal the redemption amounts at the mandatory redemption dates with a corresponding increase in preferred stock dmdends. At December 31, 1991, 25,750 shares of the 59.48 series had been purchased by the Company and will be applied to the redemption requirements shown abose.
(c) 1/nder certain circumstances relating to a change in federal tax law governing the dividends received deduction applicable to chgible corporations, the dmdend rait of the 59.64 series may increasc to a maximum of 5)0 74 34
TEXAS UT' TIES ELECTRIC COMPANY NOTES TO FIN ANCIAL STATEMENTS - (Continued) b 5.
PREFERRED STOCK (cumulatite, without par talue, entitled upon liquidation to $100 a sharci uuthortred 17,000,000 shares) - (concluded)
In 1991, the Company redeemed 14,000 shares of its 110.08 series which fulfills its mandatory rademption requirements until April 1,1992.
The Company issued and sold shares of its authorized preferred stock as follows: October 1990, 250,000 s, hares of $9.875 series, subject to mandatory redemption, for $24,531,250; April 1990,750,000 shaies of $10.375 series, subject to m andatory te demption, for $74,093,750 and M ay 1989,1,000,000 shares of flexible adjustable rate series A and B, for $98,150,000.
6.
RET AtNED E ARNINGS RESTRICTIONS The Company's articles of incorporation, the mortgages, as supplemented, and the debenture agreements contain provisions which, under certain conditions, restrict distributions on or acquisitions of its common stock, At December 31,1991, $178,007,000 of retained earnings were thus restricted as a result of the provisions of such articles of incorporation.
The articles of incorporation restriction provides in effect that the Company shall not pay any common disidend which would reduce retained earnings to less than one and one half times annual preferred disidend requirements The mortgage restrictions are based primarily on the replacement fund requirements of the mortgages. The restriction contained in the debenture agreements is designed to maintain the aggregate preferred and common stock equity at or abose 331/3G of total capitalization.
tce
~
TEXAS UTILITICS ELECTRIC COMPANY NOTES TO FINANCIAL STATEMENTS - (Continued) 7.
LONG. TERM DEDT,less amounts due currently Maturity Croups Interest Rate Groups Decensber 31.
Trum - To f rom To 1991 1990 Thoussods of Dollars First mortgage bonds:
1993 1997 41/4%
91/2%...................................
1 356.000 $ 356.000 1998 2002 6-5/8 10 3/8 690.000 690.000 2003 2007 71/2 10 1/8 750,000 750,000 2008 2012 9-3/8 11 5/8 400.000 400,000 2013 2017-91/4 12...........................
1,675.000 1.825A00 2018 2021 93/4 11 3/8 950,000 650.000 Pollution control series:
2007 2021 73/4 10 990.000 890.000 Funds on deposit with trustee (5.298)
Taxable pollution control series: (a) 2021 Various 275,000 S;nking fund debentures:
1993 1994 65/8 73/4 29.05) 29,915 Secured medium term notes, series A through C:
1994 2003
- f. 72 10.50 600.000 543.000
- Tot al...
6.715.033 6,126.617 Pollution control revenue bonds:
2004 2009 5,70 75/8, 158,930 -
160,000 Promissory note, obligation and debt assumed for purchase of electric plant:(b) 1993 2021 8.25 9.7).
437,773 518.721 Unamortized premium and discount (38.130)
(56.703)
Totallong term debt,less amounts due currently 37.253.626 5L750 (J5 (a) Tanable pollution control series consist of four series' 375.000,000 of Series 1991A at 7.25% through June 1,1992 150,000,000 of Series 1991D at 8.10% through June 1,1993,350,000.000 of Series 1991C at B 494 hrough June 1,1994; and
$100.000.000 of Series 1991D at 8 E54 through June 1.1995. The interest rates on such bonds will be repriced at s arious mandatory tender daies beginning in 1992. The Company has costing imes of credit to allow refinancing of the bonds on a long term basis should remarketing prove unsuccessful.
' (ti) In 1986, the Company purchased the ow nership interest in Comanche Peak of Brazos Electric Powe r Cooperative and issued a promissory note payabic over 33 years The note is secured by a mortgage on the acquired interest, Also in 1981L the Company purchased the ownership inieresi in Comanche Peak of the Texas Municipal Power Agency under an installment sale agreement obbgating the Company to rnake semi annual payments through 1993, The transaction is treated as a completed purchase of electric plant; however, under terms of the agreement. legal title to the purchased assets passes to the Company at the time of, and in proportion to. cach payment made, in 1990, the Company purchased the ownership interest in Comanche Peak of Tex.La Electric Cooperative of Texas. Inc. (Ten.La) and assumed debt of Ten.La palable over approximately 32 years. The assumption is secured by a mortgage on the acquired interest. Texas Utihties has guaranteed these various paymenn.
36
TEXAS UTILITIES ELECTRIC COhlPAhT NOTES TO FINANCI AL STATEh1ENTS - (Continued) 7.
LONG.TEiot DEBT,less amounts due currently - (concluded)
Sinking fund and maturity requirements for the years 1992 through 1996 und' e anc term debt instruments in effect at December 31,1991, were as follows:
Sinking hiloimum Cosh Year l'u o d(a) hiaturit)(b) Requireinent(c)
Thousnuds of Dollars 1992.
1101,683 5-5 62,522 1993,
65,682 117,011 164,70B 1994 24,314 140.500 147,193 1995.
24,364 60,000 67,153 1996 24,176 96,000 103,652 (a) Encludeg requirements satisfied prior to December 31.1991;11,327,500 for 1992.
(b)The maturity requiremenis do not include the mandatory tenden of the Company's tauble pollution contic1 series, equal to 575,000,000 in 1992,150.000,000 in 1993,550,000,000 in 1994 and $100,000,000 in 1995, w hich are expected to be remarketed.
(c) Oth r requr'ements may be satisfied by cer'afication of property additions at the rate of 167% of such requircri.ents, except for sateen issues at 1004, From time to time, various principal amounts of first mortgage bonds have been redeemed by the Company prior to maturity. The debt reacquisition costs base been deferred and are being amortited over the remaining lises of the bonds retired.
37
TEXAS UT!LITIES ELECTRIC COMPANY NOTES TO FINANCIAL STATEMENTS - (Continued)
- 8. FEDER AL INCOME TAXES The d* tails of federalincome taxes are as follows:
Year Ended December 31, 1991 1990 1989 Thousands of Dollars Charged (credsted) to operating cupenses:
Current.
. 3 60.751 3 56,828 1117.248 Deferre d - net:
Differences between depreciation methods an.d hves 222,766 155,587 44.537 Certain capitalized construction costs...
2,706 4,601 18,198 Over/under recovered fuel revenut 14,800 18.259 (11.115)
=-
Early redemptions of long-term debt 3,364 (1.736) 12.031 Prepaid (accrued) pension cost (3,858) 2,942 5.999 Unbilled resenues 277 (14,165)
(20.965)
Minority onners settlement.
190 5,971 Alternative minimum tau.
(111.379)
(60,162)
(42.895)
Investment tan credit carryforward 16,243 (37.171)
Amortization of tax rate differences (20,336)
(10.083)
Provision for refund and retaico interest - nei.
(15.541)
Pric t year adjustments -
(18.883)
(1.562)
(9.565)
Other.
'4,819) 2.910 7.029 Total 65.530 45,391 3.251 In cstment tax credits - net.
(13318) 31.641 26.090 a
Total io operating expenses 152.963 136.060 14 t..s sv Charge d (credited) to other income.
Cutreni.
(4.678) 1.102 2.113 Deferre d - net:
Provision for regulator) disalto.ances (327,178)
Amortization of regulatory disallowances -
5.767 Other.
377 333 96 Total,
(317.994) 3. M5 2.209 Insestment tax credits - regulate.r> disallowances.
(4'.le0)
J Total to other income (Jf 2.852) 1.435 2.209 Total federalincome tates 3(209,8S9) 3137.495 3145.798 38
TEXAS UTILITIES ELECTRIC CO5! PANT NOTES TO FINANCIAL STATEh!ENTS - (Continued) 8.
FEDER AL INCOA1E TAXES - (concluded)
Federalincome taxes were less than the amount computed by applying the federal statutory rate to pre tax book income (loss) as follows:
Year Ended December 31 1991 1990' 1989 Thousands of Dollars Fcderal income taxes at statutory rate of 14%.............
$(169.681) 1374.602 5331.891 Reductions in federalincome taxes resulting from:
A11onance for funds used during construction.
118.603 207,702 171A32 Depletion altos ance..
21.1D4 24.973 22.523 Amortization of investment van credits...
20,401 16 647 13,848 Amortisation of tan rate differences 20.336 10,0'3 Reversal of prior book / tar differences:
Provision for regulatory desatiomances.
(142.412)
Invcstment tax credit - regulatory disallowances 40,180 Other.,
(23,273)
(11.816)
(4.360)
Prior year adjustments.
(11,694) 389 2,060 Other (3.032)
(10.673)
(2.430)
Totai reducticr.s 40.208 237.107 203.093 Total federal income taxes :.
5(209.659) 5137,495 5148.798 Effective tax rate.
42.1 %
12Er 14.4 %
in February 1992, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No.109," Accounting for Income Taxes *,which is effective for fiscalyears beginning after December 15,1992 The Statement, among other things, requires the liability method of recognition for all teinporary differr oces, requires that deferred tax liabilities and assets be adjusted for an enacted change in tax laws or ;ates and prohioits net of. tax accounting and reporting. Certain provisions of the Statement provide '.nat regulated enterprises are permitted to recognize such adjustments as regulatory assets or liabilit'es if h is probable that such amounts will be recovered from or returned to customers in future rates. Although application of the Statement willincrease both total assets and liabilities, these requirements are not expected to have a material effect on the Company's financial position or results of operations.
9.
RETIREA1ENT PLAN AND OTilER POSTRETIREA1ENT BENEFITS The Company has a retirement plan covering substantially all employees. An employer's benefits are based on years of accredited service and average annual carnings received during the three years of highest earnings. The costs of the plan were determined by independent actuaries. Contributions to the plan were determined using the frozen attained age method which is one of the several actuarial methods allowed by the Employee Retirement Income Security Act of 1974. For financial reporting purposf s,
~
- pension cost has been determined using the projected unit credit actuarial method. The cumulative difference between pension cost as determined for financial reporting purposes and contributions to the plan is recorded either as prepaid pension cost or as accrued pension liability.
39
)
TEXAS UTILITIES ELECTRIC COMPANY NOTES TO FINANCIAL STATEMENTS - (ContinuedJ 9.
HE'llREMENT PLAN AND OIllER POSTRETIRE\\ TENT BENErlTS - (continued)
The following table sets forth the plan's funded stat'- : nd amount recognized in the Company's balance sheets:
Deceinber 31, 1991 1990 Thousands of Dollars Actuarial present salue of accumulated benefits:
Accumulated benefit obbgation (including sesied benefits of 5584.120.000 for 1991 and 5505,257,000 for 1990) 5(622,537) 5(531.640)
Projected benefit obbgation for service rendered to date 5(760,502) 5(650.3)>)
Plan assets at fair valve, primarily equity investments, gosernment bonds and corporait bonds 995.743 E25348 Pian assets in emects of projected benefit obbgation 235.236 14 5 Or>
L'nrecognized net gain from past experience differer.t from that assumed ar.d effects of changen in assurrpoons (241,433)
(117 533)
Prior senke. cost not 3ci recognaed in net periodic pension expense.
21,949 (2,717)
L'nrecogniacd plan assets in encess of projected bcncfit c,bbgation at ininal apphcanon (8.660)
(9 348)
Prepaid pension cost 5 7.094 5 15.441 D
Assumptions used in determination of the projected benefit cbligation include the following:
1991 1990 Discount rate 8309 Ed5 lecrcase in compensanon lese!>
5 30
$30 Total pension costs, including amounts charged to fuel cost and capitali sere comprised of the following components:
Year Ended Decsinher 31, 1991 1990 1989 Thousauds of Dollars
~
Senice cost -- benefits carned during the period.
5 23.560 5 22.231 5 21.150 Imcrest cost on projected benefit othgation -
38.115 5 3.04S 50.322 Actual return on p:an assets (207,126) 13.628 (149.941)
Net amortization and deferral.
136 494 (El 767) f,0.259 Total pension cost.
5 11346 5 7,140 5 11.9')0 The assumed long term rate of return on plan assets was 87/5% for 1991,1990 and 1989.
Effective January 1,1989, vesting in the retirement plan was reduced from 10 years to 5 years in addition to the retirement plan, the Company offers certain health care and life insurance benefits to active and retired employees. The costs of such benefits are gener.,lly recognized as claims are paid.
The costs of providing such benefits to retired employees, net of employee contributions, approximated
$13,781,000 for 1991, $12,342,000 for 1990 and $10,639,000 for 10S9
.t 40
TEXAS UTILITIES ELECTRIC COMPANY NOTES TO FINANCIAL STATEMENTS - (Continued) 9.
RETIRDIENT PLAN AND OTilER POS1 RETIRE %fENT BENEFITS- (concluded)
In Decernber 1990, the FASB issued Statement of Fieanual Accounting Standards No,106,
' Employers' Accounting for Postretirement Benefits Other Than Pensions",which is effective for fiscal years beginning after December 15,1992. The Statement requires a change in the accounting for a company's obligation to provide health care and certain other benefits toits retirees from the " pay as you.
go" method to an accrual method and requires the cost 9 the obiic;ation to be recognized in the period from emi.loyment date until full eligibility for benents. The Company currently estimates that the unfunded actuarial pre >ent valu, of employee service rendered to the expected date of adoption (transition obligation at January 1,1993), to be approximately $210 million to $260 million. The Statement allows the transition obligation to be either recognized imrnediately as the cumulative effect of a change in accounting principle or amortized evenly over the longer of the average remaining service lives of covered employees or 20 years. The Company expects to recognize the transition obligation over the average remaining service lives of covered employees. The total annual benefits cost is estimated to be approximately $35 million to $$0 millien. The Comrany expects that the accrual of benefits cost will either be recovered currently tl, rough rates, similar to retirement plan costs, or, pursuant to certain provisions of the Statement, that a regulatory asset will be recorded to reflect amounts,if any, whose future recoveryis probable through estes as costs are paid. Therefore, this Statement is n,i expected to have a material effect on the Company's financial position or resuhs of operations.
- 10. sat.ES OF ACCOl'NTS RECElvADt.E in 1989, the Company entered into a five year agreement with certain financialinstitutions whereby the Company is entitled to sell and such financialinstitutions are required to purchase, on an ongoing basis, up to an aggregate of $300,000,000 of undivided interests in customer accounts receivable.
Additional receivables are continus'!y sold to replace those collected. At December 31,1991 and 1990 5200,000,000 of such receivables were owned by financialinstitutions.
- 11. CostANCitE PEAK Nt'CEEAR GENERATING STATION The Company is operating one nuclear fueled generating unit and constructing a second unit at Comanche Peak, each of which is designed for a capability of 1,150 megawatts. The Company owns all of the plant. (See Note 7.)
The Company is subject to the jurisdiction of the Nuclear Regulatory Commission (NRC) with respect to nuclear power plants; NRC regulations govern the granting of ficenses for the construction and operation of nuclear power plants and subject such plants to contiruing resiew and regulation. In April 1990, the NRC issued a full power operating license for Unit 1. The consttuction permit for Unit 2 is in effect and has been extended until a
- latest date for completion
- of August 1,1992. The Company has liled an application with the NRC to extend this construction permit for a sufficient period of time to allow for completion of the unit and expects to obtain approval for the extension.
In July 1983, NRC proceedings before an Atomic Safety and Licensing Board, which involved an intervenor, were dismissed pursuant to a joint motion for dismissal filed by the Company, the intervenor and the NRC Staff. Under the terms of this motion, a representative of the intervenor was appointed as a member of the Operations Review Committee (ORC) for Comanche Peak. The ORC is required by the Cornanche Peak technical specifications and reviews operational and other safety related matters.
41
1 7
TEXAS UTILITIES ELECTRIC COh1PANY NOTES TO FINANCIAL STATE lENTS - (Continued)
- 11. CostrNellE PEAK NUCLEAR GENERATING STATION - (concluded)
At various times in the past, the Company has paid civil penalties to the NRC for violations of NRC regulatory requirements, Unit 1 and common facilities were placed in commercial operation on August 13,1990, and Unit 2 is scheduled for service for the peak season of 1993. At December 31,1991, the Company had $3.479 billion invested in Unit 2 (net of $485 million included in the reserve for regulatory disallowances :equired by the PUC order), including AFUDC. The estimated cash requirements in 1992 and 1993 to complete Unit 2 are approximately $450 million in the aggregate Due to the uncertainty of regulatory treatment and the exact month of completion no estimate for AFUDC accruals on Unit 2 is included. Such accrual approximated $23 million for December 1991.
- 12. RATE INCREASE In January 1990, the Company made applications to the PUC and to its municipal regulatory authorities for upward adjustments in rates for electric service throughout its service area which would increase operating revenues by approximately $442 million, or 10.29c, based upon the test year ended June 30,19S9. Such request reflected costs associated with the commercial operation of Unit 1 of Comanche Peak. On August 13,1990, pursuant to rules of the PUC, the Company placed its requested rate increase into effect applicable to energy sales on or after such date, in August 1991, the PUC issued a final order in the rate case. This order was revised and reissued in September 1991.The order provided for a total resenue increase of approximately $442 million and included $695 million of CWIP in rate base to support the revenue increase. It also included a prudence disallowance of $472 million with respect to certain Comanche Peak costs relating to 87.S9c of the Company's ownership interest in both units of. Comanche Peak. With respect to the Company's reacquisition of the remaining 1129c minority owner interest in Comanche Peak, the order included an additional disallowance of $909 million. In addition, the order provides for refunds aggregating 556 million, including interest, principa'!y with respect to fuel gas costs considered imprudent by the PUC.
Such amount is being refunded to customers, with interest, crer a two year period that began in November 1991.
The Company strongly disagrees with the order and in November 1991 filed a petition in the 250th Judicial District Court of Travis County, Texas, requesting a reversal and remand of the order. Other parties to the PUC proceeding have also filed appeals with respect to various portions of the order. The Companyis unable to predict the outcome of these appeals.
In September 1991, the Company recorded a charge against earnings, as a provision for regulatory disallowances, of $1.381 billion (SLO 11 billion after tax) as a result of the PUC order. The charge is comprised of the $472 million of costs associated with Comanche Peak that were disallowed and the disallowance of 5909 million related to the minority owner reacquisitions. Also, the Company recorded a charge of $56 million, including interest ($37 million after tax), representing principally fuel gas costs disallowed by the order. As a result, the Company will be precluded from incurring certain forms of debt and issuing preferred stock for a period of approximately twelve months from the date of recording such disallowances.
42 N
TEXAS UTILITIES ELECTRIC COMPANY NOTES TO FINANCI AL STATEMENTS - (Continued)
- 12. RATE INCREASE- (continued)
The following schedule details the components of the charges and their effect on net income (loss):
Provision for Proels!onfor Regulatory Refunds and Disatlowsoces Related sterest Totat Thousands of Dollars OPE RATINO REVENUES...............
5 Sg.m) 5 (36.584)
OPERA 5ING EXPENSES Operating expenses excluding federalincome saa...
(4,213)
(4,213)
Federat income taxes - deferred.
1.432 (19.163)
(17.733)
OPERATINO INCOME.
2.761 (17.419)
(14.638)
OT}!ER INCOME (LOSS)
Prowsion for regulsiory dkallowances (1.381.145)
(1.381.145)
Federal intome taics - deferred..
327.178 327.178 Federalincome taxes -investment tan credits 40.180 40.150 Total other income (loss)...
(1.013.787)
(I.013.767)
TOTAL INCOME (1,011.006)
(17.419)
(:.028.425)
OTlIER INTEREST 19.678 19.676 EFTECT ON NET INCOME (LOSS) 5 { 011.006) 1(37.097) 5(1,018.103)
Pendingthe outcome of the appeal,the disallowed t' arche Peak related costs are reflected as resen es
' for regulatory disallowances on the Company's balan eet.
in August 1990, the Company ceased AFUr accruals and began depreciation provisions on approximately $1.3 billion ofinvestment in Comanche
.k Unit 1, incurred after the end of the June 30,1989 test year. Depreciation and rate of return on this investment is not provided for in current electric service rates but will be included in the next rate increase request of the Company. As a result, the Company's earnings and liquidity will continue to be affected until the investment incurred subsequert to the end of the test year is included in rates.
Unit 2 h, Comanche Peak is scheduled for operation for the peak season of 1993 and the Company believes it will be necessary to request additional rate relief from its regulatory authorities, the amount and i
exact timing of which is presently undetermined. Upon commencement of operation of Unit 2, the Company currently expects to cease accrual of AFUDC on the Unit 2 investment that exceeds the $695 million included.
in rate base ($23 million of AFUDC for the month of December 1991); begin depreciation accruals on the accumulated investment in Unit 2 ($3.479 billion at December 31, 1991) and to incur operation and '
anaintenance expenses on the generating unit; all of which are not currently included in the Company's present electric service rates.
A request to place additional amounts of Comanche Peak investment in rate base will be subject to a review by the PUC for prudence of costs incurred. In connection with the September 1991 rate order, the PUC essentially reviewed costsincurred through June 1989 on Unit 2 and through fuelload in February 13 1
0 TEXAS UTILillES ELECTRIC COMPANY NOTES TO l'INANCI AL STATEMENTS - (Continued) i 12 R4TE INcatrst-(concluded) 1990 on Unit 1. At Decernber 31,1991, the Company had app oximately $1.8 billion invested in Comanche Peak that had not been reviewed for prudence. The Company cannot predict the outcome of any future prudence review,
- 13. C0%1%tlThttNTS AND CONTINGENcit5 Corrstructier l'ropam i
Construction expenditures, excluding Al'UDC, for the years 1992 through 1994 are estimated at 5740,000,000, 5664,000,000 and $537,000,000, respectisely. The effeett of inflation, additional regulatory requirements, resisions in the expected demand growth or other unknown factors could affect estimated templetion costs and in service dates of generating units under construction. Commitments in connection s 8 h the conuruction program are generally revocable subject to reimbursement to manufacturers for expendituus incurred or other cancellation penalties.
Clean Air Act In November 1990,the federalClean Air Act Amendments of 1990(Clean Air Act)were enacted which, among other things, placed limi,s on the sulfur dioxide emissions produced by generating units. The Clean Air Act requires that fossil. fueled plants meet new sulphur dioxide emission standards by 1995 (Phase 1) and additional sulfur dioxide emission standards by 2000 (Phase 11) The Company's generating units are not affected by the Phase ! requirements. The Phase 11 requirements are currently met by all but four of the Compan ~ generating units. Beccuse the sulfur dioxide emissions from ti.ese four units arc <clatively low and alternatives are available to enable these units to reduce sulphur dioxide emissions, compliance with the applicable Phase 11 r.ulfur dioxide requirements is not expected to base a significant impact on the Company.
The Company has yt finalized a compDance plan due to the uncertainty of the requirements uhich the Envirrnmentut Protection Agency (EPA) may include in its regulations. The Company intends to utilire internal allocation of emission allowances withinits system and.if necessary,to purchase emission allowances to enable both existing and future electric generating units to meet the requirements of the Clean Air Act.
The Co panyis unable to predict the extent to which it may generate excess allowances or will be able to acquire allowances from others if needed.
Other provisions of the Clean Air Act may require the Company to tale other actions. The Company's lignite fired generating unita currently meet the required nitrogen oxide limits in the Clean Air Act. The requirements of the Clean Air Act for ozone nonattainment areas may require nitrogen oxide emission reductions at the Company's naturalgas. fired units in the Dallas Fort Worth arcs by 1996. The Clean Air Act Lho requires studies over a four year period by the EPA to assess the potential for toxic emissions from uidity boilers. The Company is unnie to predict whether any reductions in toxic emissions will ultimately be required. Continuous emission monitoring systems are required by the Clean Air Ac to be installed by 1995 on all oj the Company's fossil fueled units.
Gr.:y certsin parts of the regulations implementing the Clean Air Act have been adopted. Until more of these regulations base been promulgated, the Company will not be able to fully determine the cost or 44
________._--.m.____.__
e TEXAS UTILITIES ELECTHIC C0hipANY NOT ES TO i IN ANCI AL STAT DIENTS - (Continued)
- 13. Cost %tlDtLN1S AND CON 11NcrACll 5-(continued) melbod of cotopfiance for these requirements. Tbc Company belieses thalit can meet t'e requirements necessary to be in cornpliases with these provisions as they are developed, Capital requirements related to the Clean Air Act are included in the Company's construction program. Any additional capital costs, as well as anyincreased operating costs associated with new requirements or compliance meas,res, are expected Io be recovered through rates, as similar costs have been recovered in the past.
Furthosed Power Contracts The Compa!,y has entered into purchased power contracts to purchase partions of the generating culpp of certain cogenerators and small power producers througn the year 2003, These contracts provide for espacity payments 1,ubject to a facility meeting certain operating standar ds and energy payments based on the actual power Ialen under the contracts. The cost of these purcha3ed powet contracts is recovered currently through base rates, power cost and fuel recovery factors applied to customer billings. Capacity payments under these contracts ici the y ears ended December 31,1991,1990 and 1989 w etc $229,953,000, $226,0S3,000 and $185,236,000, testeetively.
Assuming operating standards are achicted, future capacity payments under the agreements are estimated as follows:
h ors Toshi 1tMinde er Dollars IV92 1 240.342 1V93 249,109 1994 244.799 1993.
2M.513 199f.
225.337 Theresiter 1.1 % 430 Total.
52.337.5$0 Leases The Company has entered into operating leases covering various facilities and properties including such liem s as transportation, data processing equipment. office spacc and combustion turbines. Operating
- lease agreements were entered into in late 1987 and in December 1989 on certain combustion turbine generating units, each with an initial lease terrn of approximately 27 years. Lease costs' charged to operation expense for the years ended December 31,1991,1990 and 1989 were 560,0S5,000, $51,783,000 and $37,016,000, respectively.
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TEXAS UTILITIES ELECTRIC COMPANY NOTES TO l'IN ANCIAL FTATEMENTS - (Continued)
- 13. CoststithstN1s AND CONTINctNeits- (continued)
The Company's future minimum lease commitments under such operating leases that have initial or i
remaining noncancelable Icase terms in excess of one year as of December 31,1991, were as follows:
Comt.ustles Years Tut tilots O gt total l
lhousands of !)ollars 1992..................................................
$ 28.34B 314.197 5 43.243 199)...........
28.347 12.052 40.399 1994...........
28.343 3,636 34,101 19 0 $....................
2s.343 3.200 31,543 1996...............
28.627 2,127 30.734 11rreaf ter.....
697.203 6,0s5 703.2sk
'lotal tninimum leanc eommstmerits... <......
1639,215
$46,197 5hs3 412 CooHng 1 Voter Contratti The Company has entered into contracts with public agencies to purchase cooling water for use in j
the generation of c!ccitic energy. In connection with certain contracts,the Company has agrced,in effect, to guarantee the principal, $41,885,000 at December 31,1991, and interest on bonds issued io finance the reservoirs from which the watet is supplied. The bonds mature at sarious dates through 2011 and have interest rates ranging from 51/2 to 7L The Companyis required to make periodic payments equal to such principal and interest for the ) ears 1992 through 1996 as follows: $3,826,000 for 1992, $4,422,000 for 1993, $4,423,000 for 1994, $4,431,000 for 1995 and $4,430,000 fo 1996. Payments made by the Company, net of amounts assumed by a third party under such contracts, for 1991,1990 and 1989 were
$2,596,000, $3,437,000 and $3,210,000, tespeclively, in addition, the Company is obligated io pay cer ain variable costs of operating and maintaining the reservoirs. The Company has assigned to a municipality all contract rights and obligatiens of the Companv in connection with $94,240,000 remaining principal amount of bonds at December 31,1991, issued for similar purposes which had previously been guaranteed i
by the Compan;. The Company is, however, contingently liable in the unlikely event of default by the municipality.
Nuclear insurance With regard to Hability ' merage, the Price Anderson Act (Act), as most recently amended in 1988 to extend its effectiver.ess through 2002, was enacted by Congress to provide financial protection for the public in the event of a significant nuclear power plant incident. The Aet sets the ststutorylimit of public liabilit/ for a single nuclear incident currently at $7.8 billion and requires nuclear power pl at operators to provide financial protection for this amc unt. As required, the Company provides this financial protection for a nuclear incident at Comanche Peak resulting in public bodily injury and property damage through a combination of prhate insurance and industry. wide retrospective payment plans. As the first layer of financial protection, the Company has purchased $200 million of liability insurance from American Nuclear Insurers (ANI), which provides such insurance on behalf of two major stock and mutua! insurance pools, Nuclear Energy Liability insurance Association and Mutual Atomic Energy Liability Underwriters. The second layer of financial protection is provided under an industry r"trospective payment program called Secondary FinancialProtection (SFP). Under the SFP, each 46
TEX AS UTILillES ELECTHIC COMPANY NOTES TO FINANCI AL STATEMENTS - (Concluded)
- 13. CostMITMENTS AND CON 11NctAcit.s - Uoncluded) operating licensed reactor in the United States is subject to an assessment of up to 566.15 mi!! ion in the event of a nuclear incident at any nuclear plant in the United Sintes. Assessments are limited to $10 million per operatinglicensed reactor per y ear per incident and are subject su increases for inflation every five years.
With respect to nuclear detontamination and property damage insurance, NRC regulations equire that nuclear plant license. holders maintain not less than $1,06 billion of such insurance and require the proceeds thereof to be used to place a plant in a safe and stable condition, to decontaminate it pursuant to a plan submitted to and approved by the NRC before the proceeds can be used for plant repair or restoration or to provide for premature decommissioning.
The Company rnaintains nuclear decontamination and property damage insurance for Comanche Peak in the amount of $2.515 billion, abose which the Company is self. insured. The primary layer of coverase of 5500 million is provided by ANI. The remaining coserage includes prernature decommissioning coverage and is provided by AN) in the amount of $765 rnillion and Nuclear Electric Insurance Limited (NEIL), a nuclear el*ctric utility industry mutual insurance company, in the amount of $1.25 billion. The Company is..sbject to a maximum annual assessment from NEIL of SS million in the event NEIL's losses under this type of insurance for major incidents at nuclear plants participatingin this program exceed its accumulated funds and reinsurance.
in conjunction with commer cial operaiion of Comanche Peak Unit 1, the Company began maintaining Estra Espense Insurance through NEll to coser the additional costs of obtaining replacement power from another source if Comanche Peak Unit 1is out of service for more than twenty one wceks as a result of covered direct physical damage. The emenage provides for weekly payments of up to $3.5 million, 52.333 million and $1.167 million for ti.e first, second and third fifty two week periods of each outage, respectisely, after the initial twenty one week period. The total maximum coserage is $364 million.
UnJer this to erage, the Company is subject to a maximum assessment of 55 million per > car.
Nuclear Decommissionru.g and Disposal of Spent Fuel The Company has established a reserse (included in accumulated depreciation) for the decommissioning of Comanche Peak Unit 1, whereby decommissioning costs are being recovered from customers over the life of the plant and deposited to an externai trust fund (included in other investments). Recoscry of these costs began in August 1990, when Comanche Peak Unit 1 began commercial operation. As of December 31,1991,511,657,000 has been deposited to the external trust fund for decommissioning. Based on a site specific study during 1988 using then current dollars, decommissioning costs for Comanche Peak Unit I were estimated to be 5193.000,000.
The Company has a contract with the United States Department of Energy for the future disposal of spent nuclear fuel at a cost of one mill per kilowatt hour of Comanche Peak Unit I net Feneration. The disposal fee is included in nuclear fuel expense.
General in addition to the above, the Company is involved in various legal and administrative proceedings which,in the opinion of the Company, should not hase a material effect upon its financial position or results of operations.
47
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ = = _ =
i 1ENAS UTILITIES ELECTRIC COMPANY ST AT EMENT OF RESPONSIBILITY The rnanagement of Texas Utilities Electric Company is responsib!c for the preparation, integrity and objectisity of the financial staternents of the Company and other informatsoa includ,d in this report. The financial statements have been prepared in confortnity with generally accepted a$ counting principles. As appropriate, the statements include amounts based on informed estimates and judgments of management, The managernent of the Company has established and maintains a system ofinternal control designed to provide reasonable assurance, on a cost effective basis, that assets are safeguarded, transactions are esecuted in accordance with management's autburiution and financial records are reliable for preparing financial statements. Management believes that the sptem of control provides reasonable assurance that errors or irregularities that could be rusterial to the financial statements are prevented or would be detected within a timely period. Key elements in this spiera include the effective communication of established written policies and procedures, selection and training of qualified personnel and organiutional arrangements that provide an appropriate disision of responsibility. This system of controlis augmented by an ongoing internal audit program designed to evaluate its adequacy and effectiveness Management considers the recomrneridations of the internal auditors and independent certrfied public accountants concerning the Company's sptem ofinternal control and takes appropriate actions which are cost. effective in the circumr.tances. Management believes that, as of Dec ember 31, 1991, the Company's sptem of internal control was adequate to accomplish the objectises discussed herein.
The independent cerofied public accounting firm of Deloitte & Touche is engaged to audit, in accordance with generally accepted auditing standards, the financial statements of the Company and to issue their report thereori.
/s/ ERLE NYE Eric Nye, Chairman of the Board and Chief Esecutisc Officer
/s/11. J ARRELL G1BBS
}{. Jarrell Gibbs, Esecutive Vice President and Principal Financial Officer
/s! S. S. SWlGER S. S. Swiger, Senior Vice President and Controller 48
- - - _ _ __- - __ --_- -._-_-_ - -_-_=.==_- -______-__
- - - - -- A
INDEPENDENT AUDITORS' HEPORT Texas Utilities Electric Company:
We have audited the balance sheets of Texas Utilities Electric Company as of December 31,1991 and 1990, and the related statements ofincome, retained earnings and cash Dou for each of the three years in the period ended December 31,1991. Our audits ciso included the financial statement schede!cs listed in Item 14.(a)2. These financial statements and financialstatement schedules are the responsibihty of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits.
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 mlistatement. An audit includes examining, on a test basis, evidence 4
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for out opinion.
In our opinion, the financial statements referred to above present fairly,in all material respects, the financial position of the Company at December 31,1991 and 1990, and the results of its operations and its cash flows for each of the three years in the period ended December 31 1991 in conformity with generally accepted accounting principles. Also,in out opinion, the financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE Dallas, Texas March 13,199:'
49
,, _,.. _ _ _.. ~, _ _.,..., _ _ -
litrnD. CilANGESIN ANDDISAGREEMENTSWITil ACCOUNTANTSON ACCOUNTING AND FINANCI AL DISCEOSURE.
None.
PARTIll item 10. DIRECTORS AND EXECUTIVE OITICERS OF Tile REGISTRANT.
1 Identification of directors, business caperience and otber directorships:
Olber Positions and Offitta Prestatly llend Prestat Prlacipal Oct spotloa With the Company Date first s r Emplopentet and Prindpal (Corrent Teria l'inted as Butotse (ptw eding $ p rs.t.
Name e,f Officer Age i s pires May 15.1992)
Dirwter Other DirectorstJp T. L. Bak er 46 Enerutive Vice Fet ruary 20,1987 Euestise Vire f* *'A it of the Corntatiy; Pre sident prior thereio, *. <
Ice President of the Cornpeny.
Tom Biakey
$9 Etetutive Vice July 14,198 8 Enecutive Vlte President of'he Cornpany; Pre side nt pnot thereto. Enseutive Vice President of Tenen Poner Division, trior theretc.,
utved in other snariege.nent positions wu Te nos Power Division.
J. 6. I erririgton
$7 None Serie rnbet 17,1982 Chairman of the Bosed and Chief Etesutive Officer of Tense Utihiiss, the torent so..ipeny of the Company; print thersio, President of Teses Util.iies; other directorshi s: Te nas Utihiite.
t H. J errill Git tsa
$4 Esecutive Vise Me) 24,1959 Vic e Pre side nt end Principal Fina ncial Pre sident Officer of Toise Utilities and I secutise Vise Pruident cf the Company; prior thereto, Esecutive Vise President of Tosee Electric Service Dnision; e'rior thersio, Vice President of the Corntony; prior thereto, Tveesurer end Assisiant Secretasy of the Comreny.
Erie Nyt 54 Chairman and bettember 11.1682 President of Tense Utilities, prior thereto, Chief Euroisse Esseutive Vice Pruident of'he Company and Esecutive Vice President of Tetas Utihties; othe r directorshirs: Tense U tilit.e s.
Mic hsel D. $pe nte
$0 Eiecutise Vice
$eperntserl7.1982 Executive Vice P re sid e nt of the Pre side nt Cornpenyi yrior thereto. President of Generating Division.
W. M. Taylor 49 Eututive Van May 20,1986 Ennutive Vice Presioent of the Cornpeny; he eident rnor thereto, President of Do!'u Power Division.
E. L. Watson
$7 Esecutive Vice February 20,1987 Eueutive viu President of the Company; Pre s,de nt prior thereto, Eerdor Vice President of the Compa ny.
50
i Ilern 10. DIRECTORS AND EXECUTIVE OFFICERS OF Tile REGISTRANT (Concluded).
Identification of executive officers and business experience:
Positloot and Ofnces Presecti; litid (Current Tena Date 11nt Dwled Builuti Esperience Naise of Ofncee Age Espires Ms) 15.19911 to Present Offices (Precedint riee Yean)
Erle Nye
$4 Chairman and Febrvery 20.1987 President of Tenet Utilit!se; Prior thereto.
Chief Esecutive Esecutive Vice Pres 6 dent e.f the Company and Enscutive Vice President of Tsuse Utilities.
T. L. Beket 46 Etesutive Vsco October 1.1991 Senior Vice Pruident of the Ct.mpny.
Pre side nt Tom B skey
$4 Eteewtive Vice Octobet t.1991 Essective ~e'6:e President of Tenas Power Preside nt Divialen; Prior thereto, verved la other management Poeltions shh Tease Power
- Division, ll. hrrell Oibbe
$4 Enecutive Vice October 1.1991 Vice rnsident and Princirst FinancialOfficer Preside nt of Tense Utilaies; prior thereto. Eueutive Viet lessident of Teiss Electric Division; prior thersio. Vas Pre side nt of the Corr.psny; prior thereto.
- essurer and Assistant &errotary of the Ce ran}.
M a boel D. Ste nt e 50 Etteutise Vice October 1.1991 President of Generatirig Division.
Pre side nt W. M. Te) lor 49 Etscutise Vice Octot.et 1.1991 President of Ostles l'ow er Division.
Preside nt E. L. Watson
$7 thvcutive VI.
October 1.1991 Senior Vice President of the Company.
President There is no fatnily relationship between any of the above namd executive officers.
Due to a clerical error, the initial Statements of Beneficial Ownership with respect to shares of preferred stock of the Cornpany. as required by Section 16(a) of the Securities Enchange Act of 1934 w ere not timely filed by hir. H. Jarrell Gibbs and hir. W. hi. Taylor. Neither hir. Gibbs nor hit. Taylor owns any shares of preferred stock of the Compan). Such forms were filed in October 1991.
51 o
..___:r__--_----___--__
Item 11. EXECUTIVE COMPENSATION, The company paid tash compensation during 1991 to the following executive officers for services in all capacities:
Name of Isdieldual and Neder ef Capult, le which Cash hrsons la Croop Compensatios Was Receleed Com pesta tion Erle N;e Cheltman of the Board and Chief Executive
$493,750(1)
Michael D. Spence...............
Executive Vice President 285,000(2)
T. L. B ak e r....................
Executive Vice President 223,417 E. L. Watson Executive Vice President 213,333 W. M. Ta ylor..................
Executive Vice President 198,750 All executive officers of the Company as a group (7), including those named above.
1,786,416(3) i (1) Consists intirely of compen,siion paid tiy Teses Utilities, Q) In oddation to the amounts reported es Cash Compensation, a performance t> onus oss roid to Mr. $ pence in the amount of 840,000.
- 0) includes ompenssiion paid l'y the Company. Tesse UtiMes and TV Services. Does not include psyments for any pertion of the period duririg thich ersy individual e as not an esecuuvs offket of the Company.
Under the Employees' Thrift Plan of the Texas Utilities Company System, all employees with at least one year of full time service with any of the System Companies may invest up to 12% of their regular salary or wages in common stock of Texas Utilities, a United States Government Bond fund, a guaranteed fixed income fund, an e-quity mutt.al fund or a percentage in each. Employer. corporations make a contribution to each participant's account of 40%,50% or 60% of tbr employce's savings, up to the 6% level, depending upon length of service, wbich amount is invested in the common stock of Texas Utilities. The Plan includes a leveraged employee stock ownership component under which certain shares of common stock acquired by the Plan Trustee from the Company become available,in accordance with a formula, for periodic allocation to participants' accounts to satisfy, in part, the employer corporations' obligations to make the contributions discussed above. During 1991, employer contributions under t!!s Plan for all executive officers of the Company as a group (7), amounted to $33,001 including contrib.tions made for Messrs. Nye, Spence.
Baker, Watson and Taylor in the amounts of $8,000, $1,503, $1.791,56,139 and $5,725, respectively.
Ercployer contributions are not included in amounts under Cash Cornpensation in the table above.
Under the Deferred and incentive Compensation Plan of the Texn Utilities Company System, officers of Texas Utilities and its subsidiaries with a title of Vice President or above may defer a percentage of their compensation not to execed a maximum percentage determined by the Board of Directors of Texas Utilities for each Plan year and in any cunt not to exceed 15 % of the participant's compensation. For the Plan year 1991 the maximum deferral percentage was 12%. Such defer:ed compensation is included in amounts reported under Cash Compensation in the table above. The Company makes a matching award equal to 150% of the deferred compensation. In tdition, the Cumpany can also m.ke incentive awards. Such matching and incentive awards are subject to forfeiture under certain circumstances. In no event will the sum of all incentive awards in any Plan year exceed 25% of the aggregate compensation of eligible employees. Tbc Company establishes accounts for each participant containing performance units equalin number to the number of shares of common stock purchased by a trustee with An amount of cash equal to tbc deferred compensation, matching award and any incentive award. On the expiration of the applicable maturity period (three yea rs for incentive awards and five years for deferrals and matching awards) the value of the participants' accounts will be paid in cash. The maturity requirement is waived if the participant dies 52 l
J
Itern 11. EXECUflVE COMPENSATION (Cc:tinued).
or becomes totally and permanently disabled. During 1990, the Tenas Utilities Board of Directors amended the Plan to waive the maturity requirement and accelerate the distribution of the deferred amounts and matching aw ards which would base been paid under the Plan in 1992. Inecntive awards under the Plan w ere distributed in 1991 to all executive officers of the Company as a group (7) la the amount of $82,000, including aw ards distributed to Messrs. Nye, Spence, Baker, Watson and Ta31er in the amounts of $25,000,
$20,000, $20,000, $7,000 and $5,000, respectively. Such amounts are not included under Cash Compensation in the table above.
Texas Utilities has established a Salary Deferral Program effective April 1,1991, under which each employee of Texas Utilities and its subsidiaries wbose annual salary is $80,000 or more may elect to defer a percentage of their annual salary for a period of seven years, a period ending with the rstiternent of such employee, or for a combination thereof. Such deferrals may not exceed in the aggregate 10% c(such annual salary, provided that no more than 6% tnay be deferred under the retirement option for the period ending with the retirement of such employee. Such deferred compensation is included in amounts reported under Cash Compensation in the table above. The minimum eligible annual salary smount will be indesed in future years to reflect changes in the consumer price inden. The Company will make a matching award, subject to forfeiture under certain circumstances, equal to 100% of the deferred compensation. A trustee will distribute at the end of the applicable maturity period cash equal to the amounts deferred and matching awards plus earnings equal to the greater of the actual carnings of Program assets, or the average interest rate during the applicable maturity period of U.S. Treasury Notes with a maturity of ten years. The distribution of the amounts due under the Program will be in a lump sum if the maturity period is seven years or, if the retirement option was elected, in twenty annual installments. The Company is financing the retirement portion of the Program through the purchase of corporate owned life insurance on the lives of the participants and the proceeds from such insurance are expected to allow the Company to fully recover the cost of the retirement option.
The Company rosintains a retirement plan qualified under applicable provisions of the Internal Revenue Code (Code). Annual retirement bentfits are computed as follows: for each year of accredited service up to a total of 40 years of service,1.3% of the first $7,800, plus 1.5 % of the excess over $7,800 of average annual earnings received by the participant during their three years of highest earnings. Such benefits are not subject to any reduction for Social Security payments. Amounts reported as cash compensation for specified officers approximate carnings as defined by the retirement plan. As of February 28,1992, years of accredited service under the plan for Messrs. Nye, Spence, Baker, Watson, and Taylor were 29,25,71, fi2, and 23, respectively. The table below illustrates the annual benefit payable at retirement under this formula:
- 3. pear aversge 20 )ea rs 30 ) ears 40 ) ears ampuel earnless serilce service serilce
$ 50,000
$ 14,688
$ 22,032
$ 29,376 100,000 29,688 44,532 59,376 200,000 59,6BS 89,532 119,376 400,000 119,688 179,532 239,376 500,000 149,688 224,532 299,376 600,000 179,688 269,532 359,376 800,000 239,688 359,532 479,376 53 i
__ _ o
Item 11. EXECUTIVE COMPENSATION (Concluded).
i Benefits payable from a qualifits, 'tirement plan are limited by provisions of the Code. The Company maintains a Supplemental Retirement Plan which rrovides for the pay nent of actirement benefits calculated in accordance uith the foregoing retirement plan formula which would otherwise be limited by the provisions of the Code. The Company has established a trust to retain funds rnade available by the Compr.ny for the payment of all or a portion of the benefits payable ut.ae, the Supplement,1 Retirement Plan to certain participants in such Phn. Any benefits not paid from the trust are payable from the Company's general 0
funds.
Item 12. SECURITY OWNERSillP OF CERTAIN HENEFICI AL OWNERS AND M ANAGEMENT.
j Security ownership of certain beneficial owners at Februsty 28,1992:
Assount satt Natere Name and Address of Beneficial Title of Class ef_Be ne ficial Om mer,
_ O wnershlp Percent of Class Common Stoc k.
Te ses (Niities Company 141,125,000 sharts 100.05 mithout par salue.
2001 Bryan Tower sole votieg and of the Compen)
Dallas. Tems: 75201 insee. ment pow er Security ownership of management at February 28,1992:
Numtier of Eberes h9f of Cl*9.
El!!f!L*ULO**'d*- fHient of Clay I
PreferreJ 5 ack, without ret salue, of the Company..
36 Less then I %
Common Sto<k of Teiss Utilities (pstent).
114,640 1.ese then 15
' Amount of shares with respect to which such persons have the right to acquire beneficial ownership:
None.
litm 13. CERTAIN RELATIONFillPS AND RELATED TRANSACTIONS, None.
54 s
PARTIV litm 11. EXillulTS, FINANCIAL STATEhfENT SCllEDULES AND REPOR15 GN FORh! 8.K.
Page (a) Documents filed as part of this Report:
1.
Financial Statements (included in Item 8 Financial Statements and Supplementary Data):
Statements ofincome for each of the three years in the period ended Decernber 31,1991......................... 26 Statements of Cash Flows for each of the three years in the period ended December 31, 19 91....................... 2 7 Dalance Sheets, December 31,1991 and 1990..............
....28 Statements of Retained Earnings for each of the three years in the period ended December 31,1991..........
.....30 Notes to Financial Statements
.............................31 S t a t e me n t of R. spon sibility............................... 48 Independent Auditors
- Report
. 49 2.
Financial Statement Schedules.
For each of the three > cars in the period ended December 31, 1991:
Schedule V-Electric Plant 62
$6hedule VI-Accumulated Depreciation.......
. 63 Schedule Vill-Valuation and Qualifying Accounts..
64 Schedule IX-Short term borrowings.......
. 65 Schedule X-Supplementary Information...
. 66 ine following financial statement scheJules a.c omitted because of the absence of the conditions under which the, se required or because the required information is included in the Financial Statements or notes thereto: 1, 11. 111 IV, Vil, XI. X11 and X111.
(b) Reports on Form S K:
Reports on form B K filed since September 30.1991, are as follows:
Att or Herare funn Rentuul October 25,1991 Item 5. OTiiER EVENTS December 23,1991 Item 5. OTIIER EVENTS February 5,1992 Item 5. FINANCIAL STATEh1Eh. S AND EXHIBITS (c)
Exhibits:
Preoiousti filed
- Mnh file As I's hitills N u ru ber E s bit,it Nuna ber Dated 3(a) 2 91002 4(a)
Articles ofincorporation of TU Electric.
3(a).1 2 91002 4(b) 1
- Statement of Resolution establishing Thirty third Scrit.s of Preferred Stock of the Company.
3(a) 2 2 97786 4(b) 2 - Statement of Resolution establishing Thirty fourth Series of Preferred Stock of the Company, 3ta).3 33 5528 4(b) Sistement of Resolution establishing Thirty fifth Series of Preferred Stock of the Company.
e
Item 14. EXillBITS, FINANCIAL STATEhlENT SCl!EDULES AND REPORTS ON FORhl 8.K r
(Continued),
Pmi yst, Iilef f
With File As E s bit >it s Number Fabibit Number Dated 3(a) 4 33 14585 4(b) 4
- Statement of Resolution establishing Thirty sixth Series of Preferred Stock of the Company.
3(a) S 33 14585 4(b) $
Statement of Resolution establishing Thirty seventh Serier of Preferred Stock of the Company.
3(a) 6 33 33432 4(b) 6 Statement of Resolution establishing Thirty eighth Series of Preferred Stock of the Company.
3(a) 7 33 33432 4(b) 7 Statement of Resolution establishing Thirty ninth Series of Preferred Stock of the Company.
3(a) B 33 33432 4(b) 8 Statement of Resolution establishing Fortieth and Forty first Series of Preferred Stock of the Company.
3(a) 9 0 11442 4
Statement of Resolution establishing Forty second Form 8 K Series of Preferred Stock of the Company.
( Apr. 2,1990) 3(a) 10 0 11442 4
Statementof Resolutionestablishing Forty third Series Form 8 K of Preferred Stock of the Company.
(Oct. 2,1990) 3(b)
Bylaws of TU ' Electric, as amended.
4(a) 2 90185 4(a)
Mortgage and Deed of Trust, dated as of December 1, 1983, between the Company and Irving Trust Company (now The Bank of New York). Trustee.
4ta) 1
- Supplemental Indentures to Mortgage and Deed of Trust:
2 90135 4(b)
First April 1,19 84 2 92738 4(a) 1 Second September 1,1984 2 97185 4(a) 1 Third April 1,1985 2 99940 4(a) 1 Fourth August 1,1985 2 99940 4(a) 2 Fifth September 1,1985 33 01774 4(a) 2 Sisth December 1,1985 33 9553 4(a)1 Seventh March 1,1986 33-9583 4(a) 2 Eighth May 1,1986 33 11376 4(a) 1 Ninth October 1,1986 33 11376 4(a)-2 Tenth December 1,1986 33 11376 4(a) 3 Eleventh December 1,1986 33 14584 4(a) 1 Twelfth February 1,1987 33-14584 4(a) 2 Thirteenth March 1,1987 33 14584 4(a) 3 Fourteenth April 1,1987 33 24089 4(a) 1 Fifteenth July 1,1987 33 24089 4(a) 2 Sixteenth September 1,1987 33 24089 4(a) 3 Seventeenth October 1,1987 33 24089 4(a) 4 Eighteenth March 1,1988 33 24089 4(a) 5 Nineteenth May 1,19a 8 33 30141 4(a) 1 Twentieth September 1,1988 33-30141 4(a) 2 Twenty first Novernber 1,1988 33 30141 4(a)-3 Twenty second January 1,1989 56 l
Item 14. ENiilillTS, FINANCIAL STATEMENT SCllEDULES AND REPORTS ON FORM 8 N (Continued).
tut!!'s.*f' Fi1+d' With File A:
Eibibits humber Embibit Number Dated 33 35614 4(a)1 Twenty third August 1,1989 33 35614 4(a)2 Twenty fourth Novernber 1,1989 33 35614 4(a) 3 Twenty fifth December 1,1989 33 35614 4(a)*4 Twenty six February 1,1990 33 39493 4(a)l Twenty seventh September 1,1990 33 39493 4(a)2 Twenty eighth October 1,1990 33 39493 4(a) 3 Twenty ninth October 1,1990 33 39493 4(a) 1 Thirtieth March 1,1991 33 45101 4(a) 1 Thirty first May 1,1991 33 45104 4(a)2 Thirty-second July 1,1991 4(a) 2 Thirty third February 1,1992 4(b) 2 2801 B2 Mortgage and Deed of Trust, dated as of February 1, 1937, betw een Dallas Power & Light Company and Old Colony Trust Cornpany Trustee (The First National Bank of Boston, successor Trustee).
4(h) 1 Supplemental Indentures to Mortgage and Deed of Trust:
2 7855 7(a)
First April 1,1049 2 8466 7(a)2 Second Jtne 1,1950 2 10071 4(b) 3 Third March 1,1953 2 12200 2(b) 1 Fourth Februar) 1,1956 2 77857 4(b) 5 Fifth December 1,1956 2 77857 4(b)+6 Sixth December 1,1959 2 20997 2(b) 7 Seventh February 1,1963 2 77857 4(b) 8 Eighth January 1,1966 2 25805 2(b) 9 Ninth February 1,1967 2 37161 2(c)
Tenth June 1,1970 2 42043 2(c)
Eleventh Novembn 1,1971 2 45403 2(c)
Twelfth September 1,1972 2 52708 2(c)
Thirteenth March 1,1975 2-77857 4(b) 14 Fourteenth May 1,1977 2 71621 4(c)
Fifteenth June 1,1981 2 773$7 4(b) 16 Sixteenth November 1,1981 2 77857 4(c)
Seventeenth July 1,1982 2 81476 4(b) 18 Eighteenth November 1,1982 2 81476 4(c)
Nineteenth February 1,1983 2 90185 4(c) l Twentieth June 1,1983 2 90185 4(c) 2 Twenty first January 1,1984 2 90185 4(c)3 Twenty second April 1,1984 2 92738 4(b)1 Twenty third '
September 1,1984 2 99940 4(b)1 Twenty fourth September 1,1985 33 11376 4(b) 1 Twenty fifth October 1,1986 33 14584 4(b) 1 Twenty sixth March 1,1987 33 24089 4(b)-1 Twenty seventh July 1,1987 57 i
i
m l
litm 14. EXillDITS, FINANCIAL STATEhlENT SCl!EDULES AND REI' ORTS ON FORhl 8 K (Continued).-
E!!!.3ff1!1.f,ite d
- With File As Ethibits Number Es bibit Number Dated 33 30141 4(b)1 Twenty eighth January 1,1989 33 35614 4(b)1 Twenty ninth November 1,1989 No) 2 Thirtieth February 1,1992 4(c) 2 5609 7(b)
Afortgage and Deed of Trust, dated as of hf arch 1, 1945, between Texas Electric Service Company and The Fort Worth National Bank Trustee (Team Bank, successor Trustee).
4(c)1 Supplemental Indentures to blortgage and Deed of Trust:
2 7186 7(b)
First October 1,1947 2 7423 7(c)
Second April 1,1948 2 7894 7(d)
Third April 1,1949 2 8982 7(e)
Fourth June I,1951 2 9547 4(c)
Fifth hiny 1,1952 2 10118 4(c)
Sixth April 1,1953 2 12227 2(c)
Seventh hf arch I,1955 2 60449 2(b) 1 Eighth blar.;h 1,1956 2 60449 2(b) 1 Ninth July 1,1957 2 60449 2(b)1 Tenth November 1,1958 2 21105 2(b)
Eleventh April 1,1963 2 23056 2(b)
Twelfth Fsbruary 1.1965 2 24384 2(c)
Thirteenth February 1,1966 2 26297 2(c)
Fourteenth llay 1,1967 2 31474 2(c)
Fifteenth hlarch 1,1969 2 38358 2(c)
Sixteenth October 1,1970 2 39627 2(c)
Seventeenth -
April 1,1971 2 42552 2(c)
Eighteenth January 1,1972 2 60449 2(b)1 Nineteenth
' April 1,1974 2 60449 2(b) 1 Twentieth December 1,1974 2 60449 2(b) l Twenty first June 1,1975 2-60449 2(b) 1 Twenty second hiarch 1,1976 2 63425 2(c)
Twenty third February 1,1979 2-66633 2(c)
Twenty fourth Af arch 1,1980 2 74809 4(c)1 Twenty fifth November 1,1981 2 74809 4(d)1 Twenty sixth December 1,1981 2 76675 4(c)
Twenty seventh April 1,1982 2 80329 4(c)
Twenty eighth November 1,1982 2 80329 4(d)
Twenty ninth.
December 1,1982 2 90185 4(d) 1 Thirtieth June 1,1983 2 90185 4(d) 2 Thirty first January 1,1984 2 90185 4(d) 3 Thirty second April 1,1984 2 92738 4(c) 1 Thirty third September 1,1984 2 99940 4(c)-1 Thirty fourth August 1,1985 33-9583 4(c) 1 Thirty fifth hiarch I,1986 58 J
llem 14. EXillBITS, FINANCIAL STATEhlENT SCllEDUll'.S AND REPORTS ON FORhl 8 K (Continued),
P ni $l.dited'
! ff With File As t a hildts Numbee Fabibit Number Dated
-33.!!376 4(c)1 Thirty sixth December 1,1986 31-14584 4(c) 1 Thirty seventh February 1,1987 as 24089 4(c)l Thirty eighth September 1,1987
-33 24089 4(c) 2 Thirty ninth October 1,1987 33 24089 4(c) 3 Fortieth blarch 1,198 8 33 30141 4(c)1 Forty first September 1,198 8 33 39493 4(c)1 Forty second September 1,1990 33 39493 4(c) 2 Forty third hiarch 1,1991 4(c) 2 Forty fourth February 1,1992 4(d) 2 5718 7(c) blortgage and Deed of Trust, dated as of hiny 1,1945, between Texas Power & Light Company and Republic National Bank of Dallas, Trustee (NationsBank of Texas, N. A., successor Trustee).
4(d) 1 Supplemental Indentures to hjortrage and Deed of Trust:
2 7204 7(a)
First October 1,1947 2 7446 7(a)
Second April 1,1948 2 9474 4(c)
Third April 1,1952 2 10204 4(c)-
Fourta hiny 1,1953 2 11162 2(b)
Fsith October 1,1954 2 12856 4(c)
Sixth November 1,1956 2 14553 2(b)
Seventh December 1,1958 2 19452-2(b)1 Eighth January 1,1961 2 21028 2(b)
Ninth February 1,1963 2 24326 2(c)
Tenth January 1,1965 2 24326 2(d)
Eleventh February 1,1966 2 25885 2(c)
Twelfth Fchruary 1,1967 2 27853 2(c)
Thirteenth January 1,1968 2 35941-
.2(c)
Fourteenth.
February 1,1970 2 38171 2(c)-
Fifteenth September 1,1970 1 39083 2(c)
Sixteenth February 1,1971 2 42763 2(c)
Seventeenth Febt uary 1,1972 2 46740 2(c)
Eighteenth February 1,1973 2 73790 4(b) 19 Nineteenth February 1,1974 2 73790 4(b) 20 Twentieth October 1,1974 2 52865 2(c)
Twenty first April 1,1975 2-55210 2(c)
Twenty second January 1,1976 243363 2(c)
Twenty third February 1,1977 2 63369 2(c)
Twenty fourth February 1,1979 2 67594 (b)(2) 2 Twenty fifth hiny 1,1980 2 73790 4(c)
Twenty sixth September 1,1981 2 ???33 4(b)--
Twenty seventh November 1,1981 2 77733 4(c)
Twenty eighth June 1,1952 2 90185 4(c) 1 Twenty t.inth November 1,1982 59
.~
Item 14. EXillBITS, FINANCIAL STATEhfENT SCIIEDULES AND REPORTS ON FORhl 8 K (Coniinued).
Pre,lovth filed
- With ille As Ishibits hornher Es bibit Number Dated 2 90185 4(e)2 Thirtieth June 1,1983 2 90185 4(e) 3 Thirty first October 1,1983 2 90185 4(e)4 Thirty second January 1,1984 2 90185 4(e) $
Thirty third April 1,1984 2-92738 4(d)1 Thirty fourth September 1,1984 2 9718$
4(d) l Thirty fifth April 1,1985 33 01774 4(d)1 Thirty sixth December 1,1985 33 9583 4(d)1 Thirty seventh hfay 1,1986 31 11376 4(d)1 Thirty eighth December 1,1986 33 14584 4(d)1 Thirty ninth April 1,1987 33 24089 4(d)1 Fortieth May 1,1988 33 30141 4(d) l Forty first August 1,1988 33 35614 4(d)1 Forty second August I,1989 33 3$614 4(d) 2 Forty third December 1,1989 33 35614 4(d) 3 Forty fourth February 1,1990 33 39493 4(d)1 Forty fifth October 1,1990 33 45104 4(d)1 Forty sixth May 1,1991 33 45104 4(d) 2 Forty seventh July 1,1991 4(d) 2 Forty eighth February 1,1992 4(e) 1 28016 2(b) 13 - Debenture Agreement, dated as of February 1,1968, between Dallas Power & Light Company and Morgan Guaranty Trust Company of New York. Trustee.
4(e)1 0 11442 4(c) 3 First Supplemental Agreement, dated as of June 21, Form 10 K 1983, to the Debenture Agreement dated as of February (1983)
I,1968, between Dallas Power & Light Company and Morgan Guaranty Trust Cornpany of New York.
Trustee.
4(e)2 0 11442 4(c) 4 Second Supplemental Agreement, dated as of Form 10 K January 1,1984, to tbc Deberture Agreement dated as (1983) of February 1,1968, between TU Electric and Morgan Guaranty Trust Cornpany of New York, Trustee, 4(O 2 27908 2(d)
Debenture Agreement, dated as of February 1,1968, between Texas Electric Service Company and The First National Bank of Fort Worth, Trustee (Team Bank, successor Trustee).
4(f)1 0 11442 4(d) 3 First Supplemental Agreement, dated as of June 29, Form 10 K 1983, to the Debenture Agreement dated as of February (1983) 1,1968, between Texas Electric Service Company and The First National Bank of Fort Worth, Trustee (Team Bank, successor Trustee).
l 60 l
l l
\\
l Item 14. EXillillTS, FINANCI AL ST ATEh!ENT SCllEDULES AND REPORTS ON FORM 8.K (Concluded),
rre.icn12 rued
- With File As Tihlt.lts Numt.e r Fibit>lt Number Deted 4(f) 2 0 11442 4(d)-4 Second Suppitmental Agreement, dated as of January Form 10 K 1,1984, to the Debenture Agreement dated as of (1983)
February 1,1968, between TU Electric and InterFirst flank Fort Worth. N. A., Trustee (Team Bank, successor Truste<).
4(g) 2-31966 4(c)
Debenture Agreement, dated as of April 1,1969, between Texas Power & Light Company and First National Bank of Dallas, Trustee (NationsDank of Texas, N.A., successor Trustee).
4(g)1 0 11442 4(e) 5 First Surplemental Agreement, dated as of June 28, Form 10 K 1983, to the Debenture Agreement dated as of April (1983) 1,1969, between Texas Power & Light Company and InterFirst Bank Dallas. National Association, Trustee (NationsBank of Texas, N. A., successor Trustee).
4(g) 2 0 11447 4(c) 6 Second Supplemental Agreement, dated as of January Form 10 K 1,1984, to the Debenture Agreement dated April 1, (1983) 1969, between TU Electric and laterFirst Bank Dalla.,
National Association Trustee (NationsBank of Texas, N. A.,
successor Trustee).
4(b)
Agreement to furnish certain debt instruments.
12 Computation of Ratio of Earnings to Fixed Charges.
24(a)
Consent of Counsel.
24(b)
Independent Auditors' Consent.
28(n) 0 11442 26(b)
Agreement, dated as of February 12,1988, betw een Form 10 K TV Electric and Texas Municipal Power Agency.
(1987) 28(b) 0 11442 28(c)
Agreement, dated as of July 5,1988, between the Form 10-Q Company and the Brazos Electric Power Cooperative, (Quarter Ended inc.
June 30,1988) 28(c) 0 11442 28(d)
Agreement, dated as of February 1,1990, between Form 10 K TU Electric and Tex.La Electric Cooperative, Inc.
(1989) 28(d) 0 11442 Amended and Restated Credit Agreement, dated as of Form 10 K April 1,1990, among the Company, Texas Utilities, (1990) certsin banks and Morgan Guaranty Trust Company of New York Agent.
- locorporated herein by reference.
61 1
U
TEX AS UTILITIES ELECTRIC COMI'ANY SCllEDULE Y - ELECT RIC l'LANT Ecr Each of ihr Three Years in the Period Ended Deternber 31,1991 COLMtN A COLL'AlN D COLL'htN C Cott'AtN D C O Lt'hlN L C O tt'h1N l llalance at Olber linlac e Beglanleg Additions Chaste:-
elEnd Cla s sific alles of1't6r 61 Cost R ellr esn e st s Add of)bt
~
1boussods ei Dollars Yest Etided December 31,1991 Liectric plant in senice:
Prodvetion...
$10.142.116 8 90,446 111,175 1
11 D.421.387 Tra n smission............
1.3kt,959 37,829 3.223 1,443.565 Dist rib ution..............
3,190.238 220.796 33.f.5 B 3.377,396 General...........
403.294 26.419 9.265 425.448
~
Total...
15.329.027
)VS,d VD
$ 7,321
~ 15,t.67.796 Construction work in ptcsgress..
4.012,241 796.647 4.609.066 Nuclear fwel-net 31),416 47,678 (25.393) 333,701 Iltid for foi9te use 2 8.91.9 60 29.069
~
!!!ertric plant before resene.
19M 2.273 1,240.o95 57.321 d5,393) 20.639,654 L46: resens for regulatory disallomartes (1.3Db 460)(a) fl.3Dh.400)
Total electric plant 519 6h2.273 51.240t93 557.321 5(1.333 A$ 3) 519.531,194 c= _
Yest Lnded December 31.1990 Lietirir plant in scrure.
Production.
, 5 3,12?.303 1 1,237,355 116.002 1
510.3423 16 Transmi.sion 1.321,739 68.526 2,652 1,544 (b) 1,3En.959 Distribution.
3,040,114 163.134 34.990 3.190,25 h General,
390,716 24.235 6,659 4 3.294 Total 7,673.934 7,515,252 41,103 1,544 15,329,6;7 Corisituction work in prc gress,,
9.915.190 (6.MS.612) 111.957 (b) 4.012 241 Nuclear fuel-nel 301.676 7.3%
2,402 (b)(t) 311.416 Ileid for future use 25.252 3.737 25 9L9 7otal electric plani 516.116,756 5 1.440.715 561.103 5 165.903 EfA2 2?3 Year Ended December 31.1969 3
Liettric plant in senice.
Product.pn.
5 3,069,LSI
$ 54,145 5 2.633 5
5 3.121.% 3 Transmission 1.277.096 48.472 3.631 1,321,739 Distribution.
2.tB2,M6 167 %9 29,341 3.040,114 General 351.414 15.867 6,563 390,71h Total 7.610.449 305.653 42.Eh 7.673 934 Construction work in prc.gress.
6,433,261 1,4 82.r.35 9.915.696 Nuclear fuel 303.282 (1.606) 3016%
llend for future use.
23,654 1.566 23.252
~
Total electric plar.t 516.370,676
$ 1'.7b 8,450 342. 5 5
518.llt. 75h (a) Disalto.cd Comanche Peak related costs. (See Note 12 to l'inancial Statements )
(b) Purctase of minority ownership interesi
.) Comanche Peat ($ce Note 1 to financial Statements )
(c) Other changes to nuclear feelinclude 513.709.000 added upon purchase f rom Ten.La and $11,307,000 deducted for amortastion 62
___m____
__._m.-_
l TEX AS UTILITIES ELECTitlC CObli'ANY SCllEDULE VI-ACCUhlOLATED del'ilECIATION For Each of the Three Years in the l'erlod Ended December 31.1991 Cott'htN A Cott Ata B COLChtN C COLChtN D COLL'AtN r C o tt'htN r
~
Additicus Balante at Charged to Othee Datance Besloolog Costs and Net Cheeses -
et red Classification 6fYear Es penses (a)
Retiress ents Add (L) of Year 1bousseds of Dollars Yest finded Dettmtier 31,1991 Accumulated depreciation..
13,026.995 1418.899 100.St 2 17.151 13.192.403 Year Ended Decemtier 31.1990 Atcumulated depreciatic.n.
12.702.101 1311.044 157,000 IB.456 13.026.993 Yver Ended Desemt>tt 31,1969 Att9mulated depreciation.
12.536.2E2 1240.406 140.203 19.556 12.4 2.101 (a) includes depreciation on lignite fuel produtison fa:ihties charged to fuel and tiegirining in 1990 decommissioning cepense for Comenthe l'eak.
(ti) Deprenation and deptstion chstged tosarious arrownis. including deptersaison of ttarisportation and monk equipment. based on estimated hves thereof, are rharged to clearing accourits and allocated o. the tiasis of the wie of such equirem.nt.
L I
i N
63 4
J
- _.. _ _ = _.
'IEXAS UTILITIES ELECTRIC COMi'ANY SCllE!)ULE Ylli-VALUATION AND QUAllfYING ACCOUNTS 6
l for Enth of ihr Three Years in the l'eriod Erided Deternber 31,1991 COLL'hlN A COtt'A1N D COLL'AlN C COLL'htN D COLL'hlN E Additions
!!alaute at Charged la Charged Desloning Costs and to Osber Balante at Classificatles of Ytar Espenses Ateeunts Deduttlons (el End of Ytar lbossaeds of Dollars hluatitia attount. deducled frotu related miset on the balante it.eet -
Year ended December 31.1991 Reserve for tegulatory disallowances..
$1.381,145 1-
$ 1,361,145 Allomante for untollectet le artownis.
2.290 14.226 13.583 2,931 Year ended Decembit 31.1990 Allemente los untollettible attownts.,
1 3,141 113.fa0
$14.521 1
2.290 Year Ended December 31.1%9 Allemente for uncollettsble accountt 113.012 114.346
$24.417 1
3,141 (a)
DcdStiroris from the allomance represe nt untolictiitle accour.is written off. less reco$eries of amounts previously written off. Intivded in 1989 is $7,067,(iOD of allowante for uncollectible actownts associated with the sales of attounts strestab.e.
64 I
I.
l
TEX AS UTILITIES ELECTHIC COh!!'ANY e
SCllEDULE IX - SilOltT.TERh! ILORitOWINGS l'or Enth of tiie Tliree Years in the l'eriod Ended Desstnber 31,1991 COLL'htN A C OLL'klN 11 COtt'MN C COLL'hlN D COLT'h1N I:
COLUhlN l'
~
h eighte d Weighted Aterage Italante Weighted blealic um Attrage luttrest At Astrage Armount Atmount Hale Colegory of Aggregste f ed of lettrent Outstandlag Outstaedlog Durlog i,bca t. term Ilvrtomleg s Year Rate Durlog Year Durlag Year (a)
Yeat(al
'Ibousseds of Dollars Year Ended December 31,1991 Amounts pa3abit to beriks for torrowit-gs
$250,090 S.77 %
$300,000 1229,081 0$1%
lloidtta of commetrial partt 133,600 33,156 6 $4 Yest I nded Decemtet 31,1990 Amounts papble to bants for bottomirgi (ti) 1 35,000 10 00%
$ 35,000 5
91 9 st,q lloiders of commetrial Uptr 303,235 66,914 R $3 Yeat finded December 31,IV69 6
5 S
c (a)
Weighied astrages att based upon dail) amo cts outatendir+g and equisaltet 6enus) satettst therton.
u (b) llank icon is at a tatt at all times equal to the prime commernalIthdirg felt, such loan was repaid on January 2,1991
(>$
_. a
l TEXAS UTILITIES ELECTitlC COMi'ANY SCllEDULE X - SUPI'LEMENTAltY INEORM ATION Eor Each of the Three Years In the l'eelod Ended December 31,1991 COLDIN A coggyN gi Charged to 1:spenses antl Olber Actoun.ts Year I:oded Deceinber 31,
~
a tttu 3993 gppg gygy
~
1boutands of Dollsas Taies othet than income:
Ad natore m....
5116.414
$113.320
$102.t72 Loca) grosa receipts.
122.683 ll2.76's 109.217 State gross receipts...
71.$12 64.$70 61.841 4...
State franchise....
49.162 31.481 14,261 Social security and vi errployment 38,170 36.934 36.063 l'utslit Ulihly Commission assessment 7.064 7.011 6.753 Miscellaneous 18.L21 16.146 1 $.7(.0 10:41 54 h4.446 5152.253 1346,767 Derged to-Operatirg eng.erises.
1837,347 533(n323 5299,$th Licetric plant stad sundry accounts 47,099 43,933 47,399 Maintenance and repairs. depiction.amortiraisc,n. ro>sities. research and desetopment and ed.criisirg. other than amos.nis set out separately in the finar.tial statements. are t'oi maistaa!
66 1
\\
e 4
SIGNATURES Pursuant to the requirstnents of Settlon 13 or 15(d) of the Securities Enchange Act of 1934, the registrant has dul) caused this report to be signed on its behalf b) the undersigned, thereunto dul) authorind.
Tr.xAs UitttTits Ettc7 ate COMPANY Date: March 13.1n92 y:
/s/ EkLt Nyt (t.tle h,* t, Chairsmen of the Doord and Chief Estruthel Pursuant to the regulrcruents of the Securities Eschange Act of 1934, this repori has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
Signature Title Date
/s/
EkLt Nyt Principal Esecutive
< tile Np, chairman er the board end chief tiecuiive)
Officer and Director
/s/
- 11. JAkRELL Gibbs Principal Financial
~
(H. Jerrell o.t.t.e. ties uii.e vic e tre nedent)
Officer and Director h/
S. 5. $wiatk Principal Accounting
<> s. s m ip r. Se nir., vis e Pie.;de ni end centroise r)
Officer I5/
T. L.11 Auit Director (T. L. Bak er) hl TOM DEAxty Director March 13,1992 (Torn Blakey)
/s/
J. 5. F AkklNGTON Directog (J.S. F erringtont Ih/
MICH ALL D. Sri NCE
_ Director (Muheel D. spense) h/
W. M. TAYLOR Director (W. M. Taylor)
/s/
E. L. WATSON Director
~
(E. L. Watson) 67 a