ML20092D046
| ML20092D046 | |
| Person / Time | |
|---|---|
| Site: | Vermont Yankee  |
| Issue date: | 12/31/1994 |
| From: | VERMONT YANKEE NUCLEAR POWER CORP. |
| To: | |
| Shared Package | |
| ML20092D041 | List: |
| References | |
| NUDOCS 9509140017 | |
| Download: ML20092D046 (34) | |
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OntentS Description ofBusiness President's Letter Highlights Common Stcck Ownership Management Review
- FinancialReview I Report ofIndependent Public Accountants Statements ofIncome & Retained Earnings Balance Sheets Assets Capitalization and Liabilities Statements of Cash Flows Notes to Financial Statements Board ofDirectors Officers U)9d Annual Report VERMONT YANKEE NUCLEAR POWER CORPORATION ,
FERRY ROAN BRATTTLEBORO, VERMONT 05301-7002
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Vermont Yankee Nuclear Power Corporation was gp, wh MM Y
.pgy pg ,h , 7 incorporated under thelaws of Vermont on August 4,1966.
The Company was formed by a group of New England
-]d f glegpwy ? 7 ] . utilities for the purpose of constructing and operating a .
W i " 9 . % 9~ m m y44 # 3 nuclear-powered generating plant (the " Plant").
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The Plant commenced commercial operation on s ;W>y4 , , 4 November 30,1972, and, except during maintenance and 1] refueling outages, has been in full operation since that
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, j time. The Plant is licensed by the Nuclear Regulatory Com-tm ,
,; W; ; j mission to operate until 2012.
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dj Located in Vernon, Vermont, the facility has a gross
, % gy VJ maximum dependable capacity of approximately 535 mega-
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j] watts. The common stock of Vermont Yankee is owned by
' '* thirteen utilities, nine of which are the sponsoring utili-
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.,,,u Under the terms of the Company's Power Contracts
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";e )j regardless of the Plant's operating level, or whether or not 1 j% it is operating, an amount equal to its entitlement per-
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@ y / Y centage of Vermont Yankee's total fuel costs, operating
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d expenses, decommissioning costs and an allowed return 3.[j ' 1 ~
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on equity. Also, under the terms of the Capital Funds Agree-
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ments with its sponsors, the sponsors are committed to j
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make funds available for changes or replacements needed
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or maintain licenses necessary for its operation. The names N^ -
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- i s ages of capacity and output are as follows
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Wj G, " y Entitlement Sponsor Percentage m Central vermont Public service Corporation l
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N. ,M Green Mountain Power Corporation 20.0 y, gy ' ' g.7 gg
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+
7 i;j New England Power Corporation 20.0
' gp p a e 4 y , The Connecticut I.ight and Power Company 9.5
., 2 e i p ,1 $ ]j Central Maine Power Company to 40 fp R'fy , f 7: ]
" hM ,, e Public service Company of New Hampshire L R, ,;, Western Massachusetts Electric Company 2.5 n M 1>f s sN Montaup Electric Company 2.5
y o , f: g;p a:: * , ' ' i;j Cambridge Electric Light Company 2.5 W ; / , , ig gg
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A year of exceptional operating performance placed Ver.nont Yankee at the ?
top of its class worldwide. Our capacity factor for 1994 wt < 97.7% That means F F the plant produced 97.7% of the power it could generate it operated at full "
l power 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> a day,365 days a year. This capacity factor 5 as the highest in our l, 22 years of operation and was the best of all General Electric boiling water 3 .
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reactors for the year. ..Q.
w h% I For the last several years, Vermont Yankee has operated at average capacity [
factors in excess of 85%, approximately 20% higher than the industry average for plants of similar design. During 1994, Vermont Yankee became the only boiling e
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- ?{U water reactor of the 24 that went on-line before 1985 to achieve a lifetime p ,
capacity factor above 75%. .
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In addition to our excellence in operating performance during 1994, we are $
also proud of some of our other accomplishments. During 1994 we continued our M MF excellent industrial safety record and had one of the lowest personnel radiation h exposure averages for all boiling water reactors. % l A d Vermont Yankee also performed well financially in 1994, finishing the year $
under budget and generating electricity at a cost of 3.77 cents per kilowatt hour. 3 This cost includes all facets of Vermont Yankee's operations, including decommis- Q sioning, low-level radioactive waste disposal and fees paid to the Department of [W ;i y.
Energy for high-level radioactive waste disposal. The more widely reported statistic, operations and maintenance cost (excluding fuel), was a very p[f ' S ,
I competitive 1.17 cents per kilowatt hour. Q pe g kb
%Q jff l During 1994, Vermont Yankee received approval from the Federal Energy Regulatory Commission (FERC) to begin investing the assets of the decommission-l Ing fund in a diverse mix of investments, including common stocks and corporate
$h;m/lh. -
k bonds. The resulting improvement in the expected earnings on fund investments is projected to save ratepayers in excess of $70 million over our remaining license h
}"9(j$g 4-y life (1995-2012). ;j Vermont continues to lead the nation as the state with the highest percentage of total electrical generation -79.5% - that is produced from nuclear power. As
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you can see from the following pages of this report, we continue to fulfill our d y",ge p[
obligation to safely and successfully manage nuclear technology to produce 74
. competitively priced electricity for Vermonters and other New Englanders. hg dp b gdy h
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- <:p Gij 1994 1993 % Change e
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Financial (dollars in millions):
, , <d Operating revenue $162.8 $180.1 (9.6) tk Net income 6.6 7.8 (15.4)
Fk$ Total assets 512.1 469.8 9.0
$ Average number of shares of common stock outstanding (thousands) 392 392 0.0
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@ Earnings per average common share $16.79 $19.86 (15.4)
Dividends paid per common share 16.00 20.14 (20.6)
W j@ Book value per common share (year end) 138.80 138.01 0.6 i
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g 9 Operating:
M Kilowatt-hour sales (billions) 4.3 3.4 26.5
, J Cost per kilowatt-hours (cents) 3.77 5.34 (29.4) .
Y@4 Number of employees (year end) 340 338 0.6 U[ 4 -
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Percentage Shares Owned Owned g 1 1 l 1!
Central Vermont Public Service Corporation 31.3 % 122,653 i New England Power Company 20.0 78,402 U Green Mountain Power Corporation 17.9 70,088 k; Connecticut Light and Power Corporation Central Maine Power Company 9.5 4.0 37,242 15,681 fl Public Service Company of New IIampshire 4.0 15,681 ]
Ilurlington Electric Department 3.6 14,301 [ 5:
Montaup Electric Company 2.5 9,801 Cambridge Electric Light Company 2.5 9,801 #(A Western Massachusetts Electric Company 2.5 9,800 ga Vermont Electric Cooperative, Inc. 1.0 4,213 1' {
Washington Electric Cooperative,Inc. 0.6 2,431 gi i
Lyndonville Electric Department 0.6 2,387 6 100.0 % 392,481 i
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v l l Plant Performance
, Capacity Factor y
During 1994, Vermont Yankee achieved a capacity
? factor of 97.7%, broke its previous record of 94.5% and 8
led all General Electric boiling water reactors world- .
g wide. With this performance, we continue to improve j s upon our already outstanding record of reliability. Once again, Vermont Yankee ranks as one of the world's best e
(~ w nuclear power plants. The graph below depicts the Company's annual capacity factor since the commercial
, operation began in 1972 and compares it to the industry average for both pressurized and boiling water reactors.
h "elyear of 5 l
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,g On August 18,1994, Vermont Yankee achieved a ;
operatin# 75% lifetime capacity factor, making it one of the top 7l performance f ?
1 five boiling water reactors nationwide for consistent electricity production. This distinction also makes us f placet/
R -) the only boiling water reactor of the 24 that went on-l'ermont l'ankee Q l line before 1985 to have a lifetime capacity factor of L 1 75%.
at the top h of//s class k{; From the beginning of its commercial operation in 1972 through the end of 1994, Vermont Yankee gener-irortelu'/de~ :
ated over 78 billion kilowatt-hours of electricity.
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72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 g VERMONT YANKEE CAPACITY FACTOR
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(Cenu per KWH)' Vermont Yankee,despite
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s 1990 1.94 1.47 .
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>- costs that are competitive with 3 'v 4fe 4 1991 1.22* 1.47 the industry as illustrated by b'y w s 1992 1.95 1.54 the chart. 4 kn ,,M 4 ,d$ $ 1993 2.36 1.55
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n i 1994 1.17* .. s" ' .
>l O' Excluding fuel and General and ', #'
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Total Cost of 05 * .
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.aw Power yL 0 (Cents per KWH)' D, ", -
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\,er m on t i,an kee 1990 4.61 ?
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- N*d continues to be a low-cost 1991 3.69
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i h producer of electricity. The 1992 4.70 table illustrates Vermont 1993 5.34 ky, M }i '
Yankee's cost per kilowatt 1994 - 3.77
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5-year average: 4.42 i k
Cumulative Cost ti:- Lp
-e of power: 3.26 2 [([
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$ o' inclusive of all costs.
"' Since commercial operations h
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-,p @@ Nuclear Fuel Costs bes^" " '72
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ye,, Vermont Industiy h A g.
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A 1990 0.67 0.76 4 l<,uel h, con o mics
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y M; 1992 0.57 0.63 Vermont Yankee's fuel IA g6 7) 1993 0.582 0.60 costs continue to be below the fCM Q
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1994 0.522 . industry average asillustrated h 7
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? y 50 includes spent fuel disposal rates $w 6 Jy~ '
"' Includes DOE enrichment site cleanup fee. IQ:
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4 :p W Q$lM':& up . ,^ iG Low-LevelRadioactive (l'aste Disposal '
M M @ mmA@ W ff Ws . . :9 u D s ; M;Thel yproposed Compact between Texas, Vermont NG/yWN% Tc : -}-
4 M C9J 6w &fS ~ i- 3a and Maine was approved by the respective states during T1 7 '
,g 1994 and is expected to be ratified by the U.S. Congress gg%whg a3 gy M ,, ' pj during early 1995. Construction of a disposal facility in s g.g y
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, , ,3 the host state of Texas will begin when ratified and 4 deliveries are projected to start during 1997.
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Inspact on the Vermont Economy .
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d@ C' j> Vermont Yankee makes substantial direct contri-butions to the Vermont economy in the form of em-W Whh,g'3[@W, s ?
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y; W playee wages, state and local taxes and fees, payments to Vermont vendors, and dividends to Vermont sharehold-gy; n
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M ?a ers. The chart below shows the amount of these pay-
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W. & ments during 1994.
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"* ,orgr' ' ",1 q 'r w DOL L AR5 IN MIL LIONS $ 18
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VERMONT . sm .- .
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VENDORS ,
DIVIDENDS A% s; , . 4#
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v i gj f, LOCAL TAXE5 STATE TAXE5
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, N, gg q The Company provides 55"o of the electricity we sgV, ' o '
4 produce to Vermont utilities, which gives Vermonters ym ,
,j the benefit of our low cost electricity. Also, since 45"6 of
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, ,fMig a. } ', y, our output is sold to utilities outside of Vermont, we are one of \,ermont,s largest exporters. ,I,he value of our
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electricity exported to other New England states during d ' g' f " '-pd 1994 was over $73 million. Vermont leads the Nation -
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'is($@.[MUfM: M j LOCATION OF MassACHustris
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( W+' d d VERMONT CONNECTICUT
$' 1 0' Qb YANKEE
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1/# NEW H AMPSHIRE
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with the highest percent of total electric generation in m -:
4 g' i mes_2a m the state from nuclear power (79St during 1994). The s 4 -
f chart to the right compares percent of nuclear genera- t.4 tion by state based on year-end 1993 statist.ics (1994 ee US Leaders o c
statistics not available at time of this publication). a Nuclear Power J Generated by State Fundingfor Decommissioning (,993; Vermont Yankee continues to fund for the ulti- h STATE % NUCLEAR f F
mate decommissioning of our plant with the goal of restoring the plant site to its original condition once we ed V]g$7 cg 7N 7 G have concluded operations. At the end of 1994, the 9j Ntw itRsty 72.7 '
Decommissioning Trust totalled $113.3 million out of a Ff MAINE 71.7 i NEW H AMPSHIRE 62.0 D projected decommissioning cost of $329.6 million (1994 .
SO C AROLIN A dollars). The chart below depicts decommissioning fundillg stattis:
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F w VIRGINI A 43.5 l fD PE NNSYLVANI A 35.7 k, ARKANSAS 35.6 l DECOMMISSIONING e <~
PERCENT - " mSrw
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93 94 95 95 97 98 99 OO Of O2 Ol 04 05 06 07 08 0910 11 12
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R Industrial Safbty - f -
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I Tbrre years ago, Vermont Yankee enhanced its '
7 y industrial safety program by appointing a full-time i safety coordinator to implement a program of formal [' -
safety inspections. The Company also instituted a pro-gram for employees to submit safety suggestions, an p
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industrial safety program which rewards employees each month for achieving safety goals, and revised the f:{:
E g 4 employee safety manual. These efforts contributed to [p a the achievement of an important milestone during .
February,1994 - one million hours without a lost time q accident. [:g '
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Operating revenues of the Company are billed and received from customers based on the terms of the Power Contracts. Under those contracts, customers are severally required to pay the Company an amount equal l to their respective entitlement share of the Company's
! total fuel costs, operating expenses, and a return on net .
unit investment.
r N Operating revenues decreased in 1994 from 1993 by $17.3 million, or 9.6%, primarily due to lower operat-
- q ing and maintenance costs. Maintenance expense de-creased $13.2 million and other operating expenses de- i creased $5.4 million, both reflecting differences in costs between a year with a scheduled refueling and mainte-nance shutdown (1993) and one without (1994). The f plant operates on an eighteen-month refueling cycle,
.J with the last scheduled refueling completed in October, M 1993 3 s; N f) Nuclear fuel expense increased by $3.0 million in J Qi 1994 from 1993 reflecting excellent operating perfor-mance and the lack of a scheduled refueling shutdown l
.gghgj Y which allowed the plant to generate 26% more electric- -
J $;j ity in 1994.
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' ? gg Depreciation expense increased by $0.7 million in pgeg 1994 as a result of an increase in depreciable assets s'7f % including two major additions, a new spent fuel pool
$4 cooling system and new feedwater heaters, which were G placed in service in 1993. Decommissioning expense 9 increased $0.5 million in 1994 due to the inflation factor 1 included in the Company's decommissioning rate sched-1 ule as approved by the Federal Energy Regulatory Com- .
g mission (FERC).
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m[ gggg:.A.ap @w; f Interest income increased by $0.8 million in 1994 L- 21
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due to an increase in the Spent Fuel Disposal Fee Defeasance Trust balance and higher interest rates .
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W^ n,x arfnn[$f during 1994. liigher interest rates were also responsible f59myWpNytm for the $1.1 million increase in interest expense on the "
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disposal costs for spent nuclear fuel because the interest m ; ,
rate charged by the DOE is related to the rate of thir- 1
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teen-week U.S. Treasury Bills. Interest expense on long- .? "
... operations :h term debt decreased by $1.1 million in 1994 reflecting the m 1 ""'f tb Series 16.48% first mortgage bonds issued by the Com-
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i pany in November,1993. The proceeds of the Series I bonds were used to retire the Company's then outstand-
[ (T inaintenance cost p
'W ing Series D, E, F, G, and 11 bonds that liad coupon rates K 4 @' (c.vcInding'hiel),
-i raaging from 8.25% to 10.125%. E n'aN n ;(.;
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ren' :g Net income and the associated income taxes decreased by $1.2 million and $0.6 million, respectively in ('3j competitire $
l 1994. These decreases were the result of lower differ- d" t.17 cents I l ences between the Company's net unit investment and I" * %
total capitalization computed in accordance with the FsJ. Q l
j Company's formula rate, and a settlement approved by p^j hilmratt bour." p the FERC which reduced the Company's authorized d D return on equity from 12.25"o to !!.0"o on August 1,1994. I[ .
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,f W g,d The Stockholders and Board of Directors k"
my:r "e% Vermont Yankee Nuclear Power Corporation:
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We have audited the accompanying balance sheet of Vermont Yankee a0 Nuclear Power Corporation as of December 31,1994 and 1993, and the related p4 yp e 4 statements of income and retained earnings and cash flows for the years then j g .y, , ' ( [l @y '
ended. These financial statements are the responsibility of the Company's l
l"~,S V wx '3 management. Our responsibility is to express an opinion on these financial l ,
1> statements based on our audits. The financial statements of Vermont Yankee
( .
~
x 4 ? (n Nuclear Power Corporation as of December 31,1992, were audited by other auditors whose report, dated February 5,1993, expressed an unqualified
'4 , gi' , l ' ,f4 jj Og opinion on those statements and included an additional paragraph discussing
, ? ** m% the Company's 1992 change in accounting for postretirement benefits other
%s e
s s
- @s ..,
than pensions.
L.y , y z ,-.
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' 'y~^ We conducted our audits in accordance with generally accepted audit-g~ q. inqp, ,
qq ing standards. Those standards require that we plan and perform the audit to l 4
% " ~
- L obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
'g ,
f
. , , h evidence supporting the amounts and disclosures in the financial statements.
p 50 An audit also includes assessing the accounting principles used and significant
. , , 4 4
- q estimates made by management, as well as evaluating the overall financial 7
l E E <
% statement presentation. We believe that our audits provide a reasonable basis l p'
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for our opinion.
a , > ' a.e g;5
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c in our opinion, the financial statements referred to above present y, ; 'i fairly,in all material respects, the financial position of Vermont Yankee Nuclear
([?
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f N
Power Corporation as of December 31,1994 and 1993, and the results of its operations and cash flows for the years then ended,in conformity with gener-y, . <,M,j ally accepted accounting principles.
wL ~ ~9 w*r. se u n
4 ,;
.L . JVa As discussed in note 10 of the accompanying financial statements, y
w1 effectiveJanuary 1,1993 the Company adopted the provisions of Statement of .
e
, yc f.,
.Y 7V Financial Accounting Standards No.109," Accounting for income Taxes."
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. i,M tatements or Income anc Retainec sarnings =m O < i M~ jgu W 9 -i ri
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w 1994 1993 1992 W c -
l4I , ,(
._ m ~g (Dollars in thousands except per share amounts) W ..
C' ~ g yo :l
, ',j Operating revenues 5162,757 5180,145 5175,919 q
y, '
- U q4 Operating expenses
W,. .
' O C Mj Nuclear fuel expense 22,520 19.526 21,240 2
Other operating expense 68,591 74,013 72.967 ,
W Maintenance expense 18,193 31,405 27,878 4
T T !%@@ '
Depreciation and amortization expense Decommissionmg expense (NOTE 2) 14,401 11,860 13,707 11,315 13.253 10,649 y
Z@
,.z Taxes on income (NOTE 10) 2,830 3,777 3,4 01
$4b Property and other taxes 10,004 9,961 10127
$y
%g .g ik Total operating expenses 148,402 163,704 159,615 '
p 16,441 16,304 sp
- g. f.p Operating income 14,355 4
M.- ,A N M'
.4 Other income and (deductions):
j$ Net earnings on decommissioning trust (NOTES 2 and 5) 5,271 5.653 5.395 4 L 'N Decommissioning expense (NOTE 2) (5,271) (5,653) (5,395) )
kg :[? Allowance for equity funds used during construction 110 92 89 j~
t Interest 2,397 1,550 2,046 dfj Taxes on other income (NOTE 10)
Other, net (986)
(5)
(623)
(232)
(756)
. (199) *
,87 tdc 1,516 1,180 L$,
n
]a Income before interest expense 15,8'l 17,228 17,481 y- .
d, Interest expense:
- -g :Q interest on long-term debt 6,173 7,281 7,101 s
~
Interest on spent fuel disposal fee obligation f NOTE 8) 3,367 2,450 2,801 F 5 MP_ M [ Allowance for borrowed f unds used during construction (257) (297) (339) [
" :7l Total interest expense 9,283 9,431 9,563 y m'
6,588 7,794 7,9 21 Q
4 '
,j!l Net income i 'a (a e
g
.. n s
"$ ii Retained earnings at beginning of3ear 1,067 1,178 1,166 M 7,655 8,972 9,087 g iH 7,909 4
_.._ T :N Dividends declared 6,279 7,905 a, g- ; m(" 9
- . gg Retained earnings at end of3ear 51,376 5 1,067 5 1,178 y' 4 q
@ Aserage number of shares outstanding in thousands 392 392 392 l ',.
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Disidends per aserage share of common stock outstanding 51600 52014 52015 '
e 9 +
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12 .
alance Sheets assas i December 31,
>- 4 1994 1993 (Dollars in thousands)
F
%4 Utility plant:
af Electric plant, at cost (NOTE 6) $ 376,551 $ 374,736 .
Less accumulated depreciation 212,569 198,38.9 U- $@@p 163,982 176,347 Wh Construction work in progress ._645 _ 597 Net electric plant 164,627 176,944
}
Y Nuclear fuel at cost (NOTE 6):
L I Assemblies in reactor 69,108 69,063
, p. Fuel in Stock 20,038 -
Spent fuel 287,700 287,700 g 376,846 356,763 j y:
l less accumulated amortization of burned nuclear fuel 333,990 42,856
_ 7,849 317,039 39,724
_ 7,220 Q&If
%e Less accumulated amortization of final core nuclear fuel hM Net nuclear fuel .35,007 _32,504 W;).%
fjfl$ j Net utility plant 199,634 209A48 v
@g ig Current assets:
2,349 l n Cash and cash equivalents 1,285 12,235 l
l . fg fQ Accounts receivable from sponsors Other accounts receivable 16,742 1,471 4,522 Materials and supplies, net of amortization 17,165 17,081 g M..
y {jf Prepaid expenses _ 4,733 .3,949 M
pp Total current assets 41,416 _40,136 kM $ Deferred charges:
h..E Deferred decommissioning costs (NOTE 2) 38,238 34,379 QD' f/jNg Accumulated deferred income taxes (NOTE 10)
Deferred DOE enrichment site decontamination 20,740 18,231 and decommissioning fee (NOTE 4) 14,200 18,627 g@p j Deferred low level radioactive waste expenses (NOTES 4 and 15) 26,458 2,118 ,
- Net unamortized loss on reacquired debt 2,698 2,942 other deferred charges _ _1.,563 _ l,525 kf{gh- ,
Eg,Q Q Total deferred charges 103,897 ._77,822
,%i&
WM long-term funds, at fair market:
Decommissioning trust (NOTES 2,5, and 7) 113,256 98,880
( h[d 1< km Spent fuel disposal fee defeasance trust (NOTES 5,7, and 8) _53,939 _43,484 4 Total long term funds 167,195 142,364
- . $512,142 $469,770
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December 31, 1994 1993 j,.h f ;p" ' ,
(Dollars in thousands) fd ,",.
Capitalization:
Common stock equity: %W h,'
Common stock, $100 par value; authorized 400,100 shares; issued 400,014 shares of which 7,533 are held in Treasury 8 40,001 8 40,001 Os a Additional paid-in capital 14,226 14,226 (1,130)
(1 Q y A jf Treasury stock (7,533 shares at cost) (1,130)
Retained earnings _l,376 1,067 k"'
Total common stock equity J4,473 J4,164 fh7" t' h
Long-term obligations, net (NOTES 6 and 7) _15,845 _79,636 p
- f',
Total capitalization 130,318 133,800 L.W g s, Commitments and contingencies (NOTES 2,14 and 15) k ";
Spent fuel disposal fee and accrued interest (NOTES 7 and 8) 84,055 _ 80,688 }p?y '
6k~ :
Current liabilities:
22,160 21,487 ggg ,
Accrued liabilities LK
Accounts payable 4,072 2,117 EP Accrued interest Accrued taxes 1,116 1,767 . _1,206 635 h.
4 A
h Total current liabilities _ 29,115 _ _25A45 9< - >
^i .
Deferred credits: fi '
Accrued decommissioning costs (NOTE 2) 155310 134.614 Ty W Accumulated deferred income taxes 55,763 56.478. d .
Net regulatory tax liability (NOTE 10) 8,351 8,351 @
Accumulated deferred investment tax credits 6,581 7,013 G >
l Accrued DOE enrichment site decontamination D and decommissioning fee (NOTE 4) 12,092 15,966 T' p
l Accrued low level radioactive waste (NOTES 4 and 15) 23,935 -
I
- 6,622 Accrued employee benefits 1 415 ,
a 268,654 229,837 Total deferred credits h,ym.
$l l
$512,142 $469,770 3e -
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Years ended December 31, -% <c dh 1994 1993 1992 4 N; ,
% (Dollars in thousands) /f ,
- 3
@, F Cash flows from operating acthities: m
~ E ;j Net income $ 6,588 $2794 $ 1921 yc,y
,, 'f j" ~ Adjustments to reconcile net income to net cash provided E' by operating activities: 4 .$
Amortization of nuclear fuel 17,581 15,410 18,143 y ,s%
4' s
if Depreciation and amortization 14,404 13,707 13,253 rf%g <
^
P Decommissioning expense 11,860 11,315 10,649 , '&
4$
(2,169) "
Deferred tax expense (3,225) (979)
Amortization of deferred investment tax credits (431) (577) (641) W
'% Nuclear fuel disposti fee interest accrual 3,367 2,450 2,802 f , "@.
'?g interest and dividends on disposal fee defcasance trust (2,265) (1,402) (1,385) - l' W 3 1@;
mmh (Increase) decrease in accounts receivable (1,457) 1,365 688
- bk #
Mf (Increase) decrease in prepaid expenses (locrease)in materials and supplies inventory (804)
(84) 432 (219 )
(1,159)
(454) %4- ,E
'O N Increase (decrease)in accounts payable and accrued liabilities 2,628 3,729 (8,534) 4 - Pj increase (decrease)in interest and taxes payable Other 1,042
_2,086 (605)
_.(111) 306
__(329) y(psD1; f
Total adjustments Net cash provided by operating activities 44,702
_51,290
.. 44,515
_ 52,309
_ 31,170 39,091
. ' N[
Q+ sg.] w 1,
O Cash flows from investing activities: x
- jj Electric plant additions and retirements (2,086)
(20,083)
(7,229)
(18,303)
(10,750)
(4,707)
M -'
d Nuclear fuel additions
',W4 '
+
r,, ,
1 , j4 Payments to decommissioning trust (11,925) (11,250) (10,612) 3 Payments to spent fuel disposal fee defeasance trust . (8,190) . (8,190) (5,190)
- %yp" 4-
% Net cash used in investing activities (42,284) (44,972) (31,259)
.w Q~
A
, %@Mj Cash flows from financing activities: ,' M '
'b Dividend payments (6,279) (7,905) (7,909) , -
d issuance of Series I first mortgage bonds, net - 75,125 -
FM L' ' ?N Retirement of first mortgage bonds including redemption costs -
(74,629) (6,521) , 3i
@o d Payments of long-term obligations (131945) (137,911) (107,763) i' Wg"Q)
Borrowings under long-term agreements 130,154 138,410 . 111,215 d~ @% '
gq , ,.
Net cash used in financing activities .(10,070) . (6,910) (10,978) 8
^
[ G Net increase (decrease) in cash and cash equivalents (1,064) 427 (3,146) , [7[3 ,
m,];
w
- "gh} Cash and cash equivalents at beginning of year 2,349 _ 1,922 _5,068 ,
- a > .
f Cash and cash equivalents at end of year $ 1,285 $ 2,349 $ 1,922 -
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NOTE 1. Summary of S.igni .ficant Accounting Polic.ies E s%'a c wy hBIhcr
- s -
(a) Regulations and Operations l
s N
)* % A M M p i k?%Y?-
Vermont Yankee Nuclear Power Corporation ("the Compan)")is T MET 7 3d3)ect to regulations prescribed by the Federal Energy Regulatory Commission ("FERC"), and the Public Service lloard of the State of Q i?W)
. @" D
'N & We: WF ' ,
hk ^
h ,
Vermont with respect to accounting and other matters. The Company is kj , - -
also sub}cct to regulation by the Nuclear Regulatory Commission ("NRC") qj . l ' *; ,
for nuclear plant licensing and s::fety, and by federal and state agencies y , Jf , '>inip '<*
f, for environmental matters such as air quality, water quality and land use.
m
- t ,' .
a.
Prior to November 1993, the Company was subject to regulation by the Securities and Exchange Commission. As a result of the debt refinanc- ,1 '
4n- @-
'y V n l ing discussed in NOTE 6, the Company is no longer subject to such
~ -
- gu.i w V l regulation. ,
- ~g ,
s
' ! p: Q '
The Company recognizes revenue pursuant to the terms of the '&* , J Power Contracts and Additional Power Contracts. The Sponsors, a group m a 1 y y + , _
"W of nine New England utilities, are sescrally obligated to pay the Company > n ., . 'A cach month their entitlement percentage of amounts equal to the f ',' '
, , tdQ '
Company's total fuel costs and operating expenses of its Plant, plus an '
allowed return on equity (12.2% through July 31,1994 and lim thereaf- Q .
ter). Such contracts also obligate the Sponsors to make decommissioning &> ,
~ '
payments through the end of the Plant's service life and the completion f W of the decommissioning of the Plant. All Sponsors are committed to such &
payments regardless of the Plant's operating level or whether the Plant is s y out of sersice during the period. ~'N l'nder the terms of the Capital Funds Agreements, the Sponsors are 1 y '
committed, subject to obtaining necessary regulatory authorizations, to g 7n ~
g ,
make funds asailable to obtain or maintain licenses necessary to keep the ,
i Plant in operation. . , ;
e
\ q r ,s (b) Depreciation and Maintenance , . ,
+
qs '
1 Electric plant is being depreciated on the straight line method at rates designed to fully depreciate all depreciable properties over the lesser [G g of estimated useful lives or the Plant's remaining NRC license life, which N f M
- extends to March,2012. Depreciation expense was equivalent to overall l, i ,
effectise rates of 18A,176 and 369"., for the years 1994.1993 and 1992, r
, respectively. [g gg "- 4 g, n. . .
Renewals and betterments constituting retirement units are charged <
y, ,
to electric plant. Minor renewals and betterments are charged to mainte- ,1
[a- t' , ,
nance expense. When properties are retired, the original cost, plus cost of
- p. -
removal,less salvage,is charged to the accumulated provision for depre- _
ciation. pf <
p ,
- V.u
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nj
,y
-,i y(' Mya
, y' (c):Imortization ofNuclear Fuel p?..x - .
1 2, -
t .. .
The cost of nuclear fuel is amortized to expense based on the rate m. , %
of burn-up of the individual assemblies comprising the total core. The R .
l-"
Company also provides for the costs of disposing of spent nuclear fuel at p, ' ~
rates specified by the l'nited States Department of Energy (" DOE") under a P s -
contract for disposal between the Company and the DOE.
, 3 X('
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MQLW+.M c Th Cong amoh N expense on a straight line basis the g f 9 estimated costs of the final unspent nuclear fuel core, which is expecttd 4 Wm. W to be in h gj $$ $ i c
, 1 g; (=$$gEC '""""*" place Y " that theauthm rates expiration red bphe of HRC the Plant's NRC operating license in e yw QN > g tw ;
l (d) Enf ortization ofAlaterials and Supplies qD4l } The Company amortizes to expense a formula amount designed to ey@c #h hMA$ fully amortize the cost of the material and supplies inventory that is
$U # 4 00 sy expected to be on hand at the expiration of the Plant's NRC operating
_ -a]hhbN h , % license. , y f t (e) Long-terin Funds y g og
~ 6 9j n VE l, e alh;aw ^A Effective January 1,1994 the Company began accounting for its e u-sa investments in long term funds at fair value as required by Statement of
$ Financial Accounting Standard 115. See NOTE 5 for further discussion of this change in accounting method.
"Vertnant tW{t}
continnes @ Ani rtization ofLoss on Reacquired Debt q
/u leart s ix The difference heiween ine amouni paid upon reacquisiiion of any debt security and the face value thereof, adjusted for any unamortized
%h i'
{ lhe nul/On hj premium or discount, related unamortized debt expense and reacquisition costs, applicable to the reacquired debt,is deferred by the Company and
'- ns the s/n/e - ef yd amortized to expense on a straight-line basis over the remaining life of Irl/h the h/ghesi B1 the new debt issuance.
h I"""'"R" "S -h (g) dilowancefor Funds Used During Qti-total electrical G a< Construction generallon. . . 4; i b Allowance for funds used during construction ("AFUDC") is the j% front -f @2 estimated cost of funds used to finance the Company's construction work in progress and nuclear fuel in process which is not recovered from the .I nuclear froirer. " y1.9 1 Sponsors through current revenues. The allowance is not reah, red in cash Eh .. -6 y currently, but under the Power Contracts, the allowance will be recovered Q mj in cash over the Plant's service life through higher revenues associated g w m ,;f 313 gpq with higher depreciation and amortization expense. %'sg y p' p y e. gyy AFUDC was capitalized at overall effective rates of 5.42%,5.92% and gug 4 tr'j ,
.d (t82% for 1994,1993 and 1992, respectively, using the gross rate method.
pga M%JganM,ic RWR]M46
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yp vbxMQ s?f , h %y (b). Deconunissioning 9, '22 D 49 y e,gy N gLga-n >op4 s '
; O o
The Company is accruing the estimated costs of decommissioning its
.f
'%gh Q4 ~
M hy @ggf@a M@fd% Plant over the Plant's remaining NRC license life. Any amendments to ' these estimated costs are accounted for prospectively. See NOTE 2 for ( M: .dM k; -,4,w4% ,tk .N;N M sT further detail. W 4
%vm%fe MMW %' ,L (i) Taxes on incoine ppr -w ,- Effective January 1,1993, the Company began accounting for taxes 1 , MA * ^l -
Q on income under the liability method required by Statement of Financial
'?
4;. J
~
3 d Accounting Standard 109. See NOTE 10 for a further discussion of this change in accounting method.
,. g.,. J3mf 3&. %: -.m. . ,.
n .
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'% investment tax credits hate been deferred and are being amortized to income over the lives of the related assets.
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For purposes of the Statements of Cash Flon, the Company consid- ,
' O( ,' - -i, '
ers all highly liquid short. term investments with an original maturity of @- + three months or less to be cash equivalents. @4 & E , - . _. - K@N g , Q s Ly' ' ; (k) Reclassifications ,
; l- mg ,,% - 'y y g' ,
. ' ff' + ,
ie
* ,a Certain information in the 1993 and 1992 financial statements has _
t --
>i M%<W.
l been reclassified to conform with the 1994 presentation. B
', ' * [.1 y;,
,y <~^ , u
[M
, , - .sw ,e (I) Earnings per Common Share ,
' a9 % ;f+ . , - Q -
l p tp s g p g l $ E (;g # *;' Earnings per common share base been computed by dividing 7 *
' TQyD4 ,, , % e .
% %' g TR i
earnings available to common stock by the weighted average number of k f.i shares outstanding during the year, g*+ ' s .p ,
@ 8}p y , >
P i ~ J, u %' s s ? A,_. , yf n QMM NOTE 2.Deconunissionin8 c . :4;n, r, 77 v n gn <
, 4 The Company accrues estimated decommissioning costs for its ; ['?, l ~ :' m 9 L -@ d $%[ W S
M-i M iQ'4" , -)O; '& nuclear plant mer its remaining NRC licensed life based on studies by an , independent engineering firm that assume that decommissioning will be iM ' N 4' accomplished by the prompt removal and dismantling method (DECON). l '?2 f ,'N This method requires that radioactive materials be removed from the
;y '
- G'N4 -
plant site and that all buildings and facilities be dismantled immediately 2 A ,@.%m after shutdown. Studies estimate that approximately seven lears would pi'," '
' ~ ^ '
be required to dismantle the Plant at shutdown, remove nomfuel wastes [ h* % and restore the site. Studies also assume that spent fuel will be stored on-p% x; Qy , site in a dry fuel storage facility until 2021 The Company will implement 9 ' t r 4 Sy Ny f q",'
.ci;
}
rate changes ef fective January 1,1995 based on a settlement agreement , with the FLRC which allowed $312.7 million in 1993 dollars, as the yJ q. . T j # l, 4J estimated decommissioning cost (NOTE 3). This allowed amount is used to ,If , 5 3; %^E '. 4 tg, compute the Company's liability and billings to the Sponsors. Based on an ~s l
~
y mg* e i, r" assumed cost escalation rate of in per annum and an expiration of the 7 . , y
m ? v " 4; ( '
p N Plant's NRC operating license in 2012, the estimated current cost of , decommissioning is $3296 million and, at the end of 2012,is approxi- p5 s;. / - QM f, (3 mately 58166 million. The present value of the pro rata portion of -
* $ Of decommissioning costs recorded to date is $1513 million. On December 31, ,
- 3;;V, , s g.J' y ' s 1991, the fair market value of the market value in the Decommissioning p -
l ,2 H > ; '[.4 h
- A ~' 4 l.
i Trust was $113.3 million. k - 3 m ,
- - y* "
Billings to Sponsors for estimated decommissioning costs commenced j _ - % s during 1983, at which time the Company recorded a deferred charge for j y
+
4 Q o 4 the present value of decommissioning costs applicable to operations of the > < Plant for prior periods. Current period decommissioning costs not funded V " (^ ' , , , , , e
+
through billings to Sponsors or earnings on decommissioning fund assets , W , . a< 7j' 4C ]jL' are also deferred. These deferred costs will be amortized to expense as a
, f' i r s ll they are funded over the remaining life of the NRC operating license. p g g ,
%y k,. .
4 <~.s __ ,, ~.. e T 4 st. 4
, fyQ(gf %,,y, -*f jy Cash received from Sponsors for plant decommissioning costs is t ,
-4 g deposited directly into the Vermont Yankee Decommissioning Trust in either the Qualified Fund (i e., amounts currently deductible pursuant to g[, 1, J ' ~ ~ ~ "
.A .M'f 4 the IRS regulations) or the Nonqualified Fund (i.e., excess collections p' '
W' pursuant to FERC authorization which are not currently deductible). @ ,, Through December 31,1994, funds held by the Trust were invested in e' sd , M-high-grade U.S. gmernment securities and municipal obligations. As discussed in NOTE 3,in connection with the rate changes effectise N _ , U4 -
-( .-
Gy ; W JE g
.s Zs , W T ~ .U y : ,
January 1,1995, the Company will change its decommissioning strategy as WM rw' -n
. ?! , 79. ,
2
.f'.
- . 5,
'i't Y y ' q.~k
- 4 ff f 4 -< p ,
- 34 4
S "; m ', _ <I/ k kyC
N Y + . < - < ,u 4 1 "1 ,
3
@ W s
~ .i i a; ;
^
k , fl,; # F
's l w,)
- s s U:
4 - m f authorized by the FERC. Interest earned by the Decommissioning Trust m yp assets is recorded in other income and deductions, with an equal and
.g ( [g ,
s < j offsetting amount representing the current period decommissioning cost
! F*f sQ ( 3 funded by such earnings reflected as decommissioning expense. , by ? $ MQW Q!
k9 Chhh . g
,?'
The staff of the Securities and Exchange Commission has questioned certain of the current accounting practices of the electric utility industry, 4 y1:E..gvg
/4
%n.g?% g$y wy,, M F'
Uh including the Company, regarding the recognition, measurement and classification of decommissioning costs for nuclear generating stations in
. g 4 W4 g . 4: d the financial statements of electric utilities. In response to these ques-
,' tions, the Financial Accounting Standards Board ("FASIF) has agreed to ,
@' ~" M N~ h' AM ' ]Q M,(g- resiew the accounting for removal costs, including decommissioning. The FASB has not yet reathed any conclusion on this matter. Ilowever, the
@n <, ,
, a L'. Company does not believe that any changes to the Company's current ,
f, accounting practices for decommissioning costs,if required, would hase 9]dWq an adserse effect on the results of operations due to its current and future ability to recmer decommissioning costs from sponsors. w_ m. e
+
m ff . y > i@c y , '
-a NOTE 3.FERC Rate CaseMatters G
l
~
'1 On March 26,1993, the FERC initiated a review of the return on
,'M- ,
d common equity component of the formula rates included in the Y > W #* A Company's Power Contracts. On October 22,1993, the FERC apprmed a
] settlement whereby the Company retained its 12.25% authorized rate of q@ '; .
1
, ag; d return on common equity and agreed to credit monthly power billings by approximately 585,(H)0 plus a tax impact of $54,0(H) beginning in June, d k- (
, j a 1991
- 4 On June 15,1994, the Company filed an application with the FERC to s
'~
,s
, change its wholesale rates based on a settlement reached in adsance with
^g? '
,Q interested parties. The primary changes to the Company's wholesale rates y, k
^
3 included (1) an increase in the decommissioning cost estimates, a revised y[ ,' j decommissioning funding schedule, and a revised decommissioning ",id investment strategy,(2) a reduction in the rate of return on common
~ ij J equity from 12.25% to 11.0%, and (3) various billing changes necessary to reflect the implementation of the requirements of Statement of Financial s ]
4 Accounting Standards No.109, Accouhung for Income Taxes, to deduct
] certain reserses from the calculation of net unit investment under the
+
i Power Contracts, and to include in rates certain payments that the j W - 0- , Company will be required to make for low level radioactive waste disposal T> - jn , y (NOTE 15). On September 2,1994, the Company received FERC approval. 4
, 'i 4 The rate decrease related to the reduction in the rate of return on ,
": , common equity went into effect on August 1,1994. All other rate changes
+ a, will commence on January 1,1995.
,v . .
J
- 3 The revised estimate of decommissioning costs approved by FERC,is
~j $312.7 million,in 1993 dollars, and the revised schedule of future annual
, decommissioning fund collections refletts an annual decommissioning C'
~
, r
' %y cost escalation rate of 5#o and a financial inflation rate of 4"o. The M y 4
7- M approved insestment strategy for decommissioning funds under which f
^
j those funds will be insested uses a balanced approach subject to strict
' Q[jrEd N ,
p - N guidelines which cover permissible and impermissible investments, y qwe E > h ,
'Mq disersification criteria, and quality standards. l'nder the approved investment strategy, no more than 30% of the Decommissioning Trust
. ., , g funds can be invested in common or preferred equities and no more than g .
+ ,
3 35% in corporate bonds. k
] p' e g i r' @Q On October 28,1994, the Company filed an application with the
,<ig M. FERC to effect a $175,632 reduction for 199 6 mer 1993 and an increase of d
b, $230,32 6 for 1995 over 199 6 in one component of its rates - the amount OM,*y~~ ' " M d
" ,' recmered for Post. retirement Benefits Other than Pensions (NOTE 13). On
, h .,
W
.._ ]i December 9,199 6, the Company received FERC approval allowing all such f .... , s
'j costs to be recovered in rates.
W
~
m ' y' h,i x ^
; i, n i .
o k- ['N m- ~ ' '> _M [ W s
s > [y - + 7 b NOTE 4. 0ther Deferred Charges and Credits In October,1992, Congress passed the Energ) Policy Act of 1992 w hich requires, among other things, that certain utilities help pay for the cleanup of the DOL's enrithment facilities mer a li-year period. The , a '" Company's annual fee is estimated based on the historical share of 9 enrichment sersice provided by the DOE and is indexed to inflation. e These fees will not be adjusted for future business as the DOE's future cost . of sales will include a deomtamination and decommissioning component. p[ ' The Act stipulates that the annual fee shall be fully recmerable in rates E in the same manner as other fuel costs. { p 4 , , f in 199 6, the Company paid the second and third of the 15 annual p fees. As of December 31,1991, the Company has recognized a current b r accrued liability of $11 million for the fee payment expected to be made [;^ in 1995, a deferred credit of $12.1 million for the expected 11 annual fee [ , , , gg s pa>ments that are due subsequent to 1995 and a corresponding regulatory p K asset of $112 million which represents the total amount includable in !? F future billings to the purchasers under the Power Contracts. These i t amount 3 were changed during 199i to reflect a reduction in Vermont {d '
"../heonll' '
f f Tankee's assessment resulting from the Company's successful appeal of the b .. 3 initial assessed amount. E hotling Iraler t h n i, reactor n in 1991, the states of Vermont, Maine and Texas each ratified e g legislation to join a low-lesel radioactise waste disposal compact for the of/he If y purpose of disposing of low lesel radioactise waste in the s'.:te of Texas & E (NOTE li) During 199L the Company recorded a deferred credit of $219 b , lbulIffMI U M gy fjyp ) million to recognize the $27.5 million compact fund requirements less the [ fund balance remaining for the Vermont 1.ow I.evel Radioactise Waste b ; hep >re l9M
~
Authority (" vel.RV A") and a corresponding deferred debit of $2M millioe D '
?
w hich represents the total amount to be included in future billings to the f purchasers under the Power Contracts. On June 30,1991, the Vll. RWA was
/0 hare a 1 eliminated and it3 responsibilities transferred to the Vermont Department %p ,
fjg,ffjyp , t E V of Natural Resources. f capacilyfarlor b NOTEi Long-tenn Funds K v ur m.. - 4 V s i* i 1.ffectise January 1,1991, the Compan) adopted Statement of ; l
-me Financial Accounting Standard No.115. " Accounting for Certain Insest- -
ments in Debt and Equit) Securities", which established standards for L
- financial accounting and reporting for insestments in equity securities ['
that hase readil) determinable fair values and for all intestments in debt L securities. All imestment securities impacted by the guidelines of this prmision must be (lassified as either trading, asailable-for-sale, or held- [L l to maturity securities. Both trading and available for-sale securities must be reflected on the balance sheet at their aggregate fair values. J, . . Prior to 199L the Company accounted for its insestments in long- =. term funds at amortized cost. Prior periods base not been restated to reflect this new accounting. (f , The Company has tuo irresocable trusts which are impacted by the , .kh P" 4 provisions of the Statement. The Company has classified the Decommis- [ sioning Trust as available for-sale securities. This trust had an unrealized p (g ' net loss of 51001000 as of December 31,1991 w hith is ofIset in deferred decommi3sioning costs. The Spent Fuel Disposal fee Defeasance Trust is F ,. classified entirel) as held to maturity as the Company has the positise [f intent and abilit) to hold all securities in this trust to maturity These ( Y- ' securities require no adjustment to market as of December 31,1991 f p t? . L - s )
The lxxik value and estimated market value of long-term fund investment securities at December 31,is as follows: 1994 1993 Book Market Ikxik Market yalue value yalue value (Dollars in thousands) , Decommissioning Trust: U.S. Treasury obligations $29,296 528,836 $17,262 18,666 Municipal obligations 83,530 81,986 79,755 84,576 , Accrued interest and money market funds 2,434 _ 2,434 _ 1,863 _ 1,863 y.% < % & ~ . , .- 115,260 113,256 3 8,880 105,103 y Spent Fuel Disposal Fee
. Defeasance Trust:
Short term investments 53,17 6 39,870 39,870 53,17 6 3,195 3,083 7 ,,Ollff##(l/11' j
. Corporate bonds and notes - -
l[. , Accrued interest Veruious rankee l and money market funds ._J63 _ 763 _ 419 __419 i- 31939 53,939 43,484 43,372 s ranks as e 5 Total long term investments $169,199 $167,195 $142,364 $148,477 y One of the ivorldS bf## Pursuant to the Company's arrangements with its customers, the difference between market value and book value of the Decommissioning nuclearpoirer - Trust has been recorded as an increase to deferred decommissioning costs. pl##lS. " Specifically, the Company's contracts with its customers provide for full
. , ,.c j - recovery of decommissioning costs and any excess or shortage in the fund 3
i ' ' including those resulting from investment performance will be refunded
? to or collected from the customers.
, ,s , , jj (-
" At December 31,1994 and 1993, gross unrealized gains and losses pertaining to the long-term investment securities in the Decommissioning
! , fund were as follows:
's 1994 1993*
* (Dollars in thousands)
Unrealized gains on U.S. Treasury obligations $ 48 $1,431 Unrealized losses on U.S. Treasury obligations (508) -(27) Unrealized gains on Municipal obligations 728 4.843 Unrealized losses on Municipal obligations (2,272) (22) l
! Unrealized losses on corporate bonds and notes .__.- _(112)
$ (2,004) $ 6,113
- Includes Spent Fuel Disposal Fee Defeasance Trust
_ _ _ _9 _& 9,5: d
+ , g m+e h'
' #w '
= - r
. 9
.. (<L 7, 9
\' ' i[ .; K r, '
y ,< r , on m.. p v V
' N
.ll , k '* t n:, 1 .N-4,4 ,
1 ..t , Of , _ ' k? '. ' k , y f _, hv 'Wp At December 31,1994, gross realized gains and losses pertaining to 4MJ jldNWQf 1, . q the long-term investment securities were as follows *-c g
~ We . g- f,n; 1 'W (A e
g;
,y e m.,-, ,g 3sgg..rg% o L u; pm g , ,,.;g Total Sale Gross Realized I , h%;V Nh)hhh kh Proceeds Gain 1.oss g ;
e& ' %. ;MNyQpMg ' M c N.pn - 4 Decommissioning $35,826,252 $210,900 $(613,540) k' - s' M 1N{h M$heit. hj Spent fuel p < J RM M disposal fee defeasance $3.200,000 $7,500 $(2,000) y~.' C J 44), j]% gggp9,- : a w . d &m,s ,cn y p; e, N;#,gm %y g g A a ; Maturities of short term obligations, bonds and notes (face amount) , % M y p g3 gw# W n v! ,' at December 31,1994 and 1993 are as follows (dollars in thousands): (4,w,y m . m w' ug"<g
- g g f g W ,M 8 m J
%c.' ;
<g- w e Disposal 1994 1993 Disposal I% gg OO$~$h n - -
1994 Fee 1993 Fee , WM *3@gg.yD MQW '
.k J > T %j yW'l Decommissioning Defeasance Decommissioning Defeasance 5 , @$ $ $ g Trust Trust Trust Trust g.9 1
$j A Within ' 7..
one year $25,335 $52,237 $2,000 $40,200
))y W 5 W @$#3% , 7# >
f a s ,N W r One to 4 , m L /4 wp fhe years 42,069 - 13,277 3,200 [y ', , , <.4 WUNbd2 ' r
- e, nj M3 d> wp$
e.. 2.. y t l'ise to b' , ,
~
% MMS %; ,;. ., a ten years 30.210 - 54,530 -
- y , ' @y4' 7Qygg Over <
wonq o.4 IM$$ $ s(Nhhphh m A < "v op.m ten years 13,638 - 23,500 - 4 f' V, s Ms WO. $a:%<', W ,;sa4w.nai
$Ii1,252 $52,237 $93,307 $43,400
'. ,, s
,w q%e s *
- QN ff .. s gf As ff e Q Q; . ' :-w 7 Wg n M i
'.: Lys " .,
,, jt ! yW;ggshy. q% > 9- g NOTE 6. Long-temi Obligations t.
<; D .
WRQMP x n , n;m enn w av
.p u a :w :w -
n~g% ' ' % M'n' k: nhij A summary of long-term obligations at December 31,1991 and 1993 p < gp is as follows: I
%t .y;
?' 7
- JL M'. Jn p >
4:4d6 p:WQ ? g Q 9, u W , L'
,L~ i.g
<b ,
,- .Wy ~tn% n 1994 1993 d f aM s
*,' M M W P (Dollars in thousands) 44 -
T. . f A ' y@m..
- V, M .V 1e.
.m m ,m First mortgage bonds:
Series 1 - 6a8"u due 2009 $ 75,845 75,845 i;< 7 Nyu & %.;
' 4 4.,2 g;~w %y - Q " /, ,y
-. g
< ' - A m.f M 8
. Eurodollar Agreement Commercial Paper - 3,791
~ '
43 % . c w $mffg u m
$ggg% ,, j l g p Q];syg 4 -.. ,m Total long-term obligations 5 75,845 $ 79,636 y, (
l .
- Q pn.y W]Q 7 g 4 ,
s
' %n 4 4&s y 4'; <,v,$ && Rb , g;g ' y$W% - Y:
The first mortgage bonds are issued under, have the terms and p - m , provisions set forth in, and are secured by an Indenture of Mortgage dated ' ej ;g$y#y mg% A SO 4,9.Eg t > p W( * g Q ~ ~& 1% $ , '@.Jh(X{ as of October 1,1970 between the Company and the Trustee, as modified , and supplemented by 13 supplemental indentures. All bonds are secured 5 "
. ; " 'l N hqf
- by a first lien on utility plant, exclusive of nuclear fuel, and a pledge of -D % W. ' f e 7M W the Power Contracts and the Additional Power Contracts (except for fuel +
f s %ggM @ payments) and the Capital Funds Agreements with Sponsors. m+ f M'. a s
- QF ' l U~Cy _
On July 1,1993, the Company retired the outstanding Series 11 and i; , ~ $y,1 ,
- l:C , j M.. y_.M$[ g Series C first mortgage b<mds. In November,1993, the Company issued f g& ' % a g;y;;g@A q l
M;,n.p ,% , . ! $7i8 million of Series I, first mortgage bonds stated to mature on n i y y c u, r- :, , , ,s 1 ,,m . . . ,; a.n, i s ~ ,,
~
. Y.M
- 5W j :.
n-
, , a ,C a:n .
a u %nyv+ wy n av [ , . . :+ . . ' ,
, ,r #
. . wm , m . m c. r O..
l
;c j,ff] T y'WT ""T p ,3 y
9; q y e ,
', U% fff h'lf }
g 4 hf m'A s - [ ,m - g 4 e yZw %gy.g'g
- y..,g>
g,y," 1 d November 1,2009. The Company applied the proceeds of the bond 7 i issuance principally to retire the remaining Series D, Series E, Series F,
- !J ; 3.j Series G and Series 11 first mortgage bonds including call premiums My p, tw%pakrCN 4 7 s _,
4+ . v m totalling 53.7 million. Cash sinking fund requirements for the Series I first fp*h i M Pe hnhli ' " g , The Company has a 575.0 million Eurodollar Credit Agreement that m tira M, [MD)g d S gQT*WN fl i_
'5j '
expires on December 31,1996 subject to one optional one-year extension. The Company issued commercial paper under this agreement with pcgi, 'g g gg {< weighted average interest rates of 4.28". for 1994 and 3.22% for 1993 Payment of the commercial paper is supported by the Eurodollar Credit
?g ', ' w 4 O y4phy d3 ,f<%;
> f
) 0 Agreement, which is secured by a second mortgage on the Company's
!'4 j ,
f
? ,g , @ sj i <
_3 generating facility. m a w<. < y
#w .
.o .
a ?, nLJ W%e ,% i i NOTE 7. Disdosures About the Fair Value of Financial
, m e- 4 u -
h#
-j .
InstRlments L 3;
@ %[fy M
.Q % The carrying amounts for cash and temporary investments, trade
( %
; @ yJ g$ 0 M Q@' fdp@;]ON 'C Hreceivables, accounts receivable from sponsors, accounts payable and s
Pgq 3:pa;3, , ggg , , accrued liabilities approximate their fair values because of the short inh ME f#jg , g maturity of these instruments. The fair values of long-term funds are estimated based on quoted market prices for these or similar insestments.
< Tj9 %gMg%p% g jk ,
' Mg "4 " i ,
- W; '< ' u j The fair values of each of the Company's long term debt instruments are K .&' l ME , d estimated based on the quoted market prices for the same or similar a
ii/% _ y ?( f ^ QWTN m ;_ my < ,,, ~ M9 N
. issues, or on the current rates offered to the Company for debt of the same remaining maturities.
4 N " g ; 5 Q g ,1 , Jy; The estimated fair value of the Company's financial instruments as g~ , g , '*r J A ^ MfgJ'.. m 4 g , of December 31 are summarized as follows (dollars in thousands):
, ,__n m -
(g ' s $g '
,s g
@M y M %, y e y' ;4 1994 j993 g '7, AJW ' @
?;hg$y wp;_
, " "% Carrying Estimated Carrying Estimated
&k4 + ;vs,.
- g. +.< ;di Amount Fair Value Amount Fair Value te a gg ~ t4 9Tp m ,.ge[%
2 ji ^ Q Decommissioning Trust $115,260 SI13,256 598,880 5105,105 5%" a ~W l, ,, $ Spent Fuel Disposal Fee
> 4
, , 4 y n p ; :n jU Defeasance Trust 53,939 53,939 43,484 43,372 7& f'? -
* % " S d Long-term debt 75,845 63,331 79,636 77,361 s"Y
\_' . y Spent fuel disposal fee G 80,688 80,688 me ej lW ~ rl1Q * . (
] @W~f ,',
,~...
YQ s Q and accrued interest 8t055 84,055 mm
, .+ " Mt y
l
/ m _
O _' 4
% Fair value estimates are made at a specific point in time, based on My EM < % E /m '
'?$ relevant market information and information about the financial instru-g m./ 7 g . 4- ;d ment. These estimates are subjective in nature and insolve uncertainties
?
M g& K T~~L and matters of significant judgment and therefore cannot be determined
- f, w~ ,
~
with precision. Changes in assumptions could significantly affect the
% ,, @; J 7a I "
,g estimates.
, , y f-.*,'ngJT gj j_
-V e.a rh
. > r < . ,
y
,n e . -Q
- f. V NOTE 8. Spent FuelDisposalFee ML i MP l ' ' Q The Company has a contract with the DOE for the permanent
@7
$ W( h9%, chy[_d - W jj disposal of spent nuclear fuel. L'nder the terms of this contract,in exchauge for the one-time fee discussed below and a quarterly fee of I mil h7s%d , N[$ 'y per kw h of electricity generated and sold, the DOE agrees to provide gh9 7L t' +, &
4 I disposal services when a facility for spent nuclear fuel and other high-level radioactive waste is available, which is required by contract to be v4t @y# _ @fa # 4L..I z , < y 0 %.s gprm M ,', <Ep 3g 1 (N w priot to january 31,1998. p p. c s y3j . . $fg i
. , , gg*^'a
) ((VM ,M i' h%lg$[l'
%p[4{%g .. %[.%[ i " d, i l [1, m"m -; Q. > _ _ y- .
j
- G.a w m M k 2 m m d _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
g
. jy . ..
. r; V 1,e i 'j i The DOE umtratt obligates the Company to pa) a one time fee of [ a i
J approximately 539.3 million for disposal aists for all spent fuel distharged [ < through April 7,1983 Although su(h amount has been udlected in rates [: f rorn the Sponsors, the Compan) has elected to defer pay ment of the fee $ to the DOL as permitted by the IH)L omtract. The fee must be paid no I' / later than the first deliser) of spent nuclear fuel to the IH)E. Interest [ ' a(crues on the unpaid obligation based on the thirteen-week Treasur) llill [ rate and is compounded quarteri); Through 1991, the Compan) auumu- [ lated 5i39 million in an irresocable trust to be used cuiusisel) for [- , defeasing this obligation (5811 million including aurued interest) at some F f uture date, prmided the Dol: uimplies with the terms of the aforemen- ,U. tioned contract. { , y ' i; 4 ,r
~
NOTE 9. Short-tenn Borrowings [C , .- a:a . The Company had lines of credit from various banks totalling 56.3 $- ( million at De(ember 31,199 6 and 1993. The maximum amount of short- [ ' [ term borrowings outstanding at an) month-end during 1991,1993 and [ 1992 was approximatelv $12 milhon. 50 2 million and 506 million, respec- F p i ,,IbfIdlHP tisci). The aserage daii) amount of short-term borrowings outstanding f-was approximately 50 2 million for 1991,50.3 million for 1993, and 501 k , g[ gyp million for 1992 with weighted aserage interest rates of 66"o in 199 6. 5.7% in 1993, and 612 "o in 1992. There were no amounts outstanding p[ cler/r/r//r ' f? under these lines of credit as of December 31.199 6 and 1993 [
- l expor/etl NOTE 10. Taxes onIncome I.
7
/" "ther i a.
{- NVir llnjllnntl
- In lebruary,1992, the financial Accounting Standards lloard issued ! 6<
Statement of fin'ancial Auounting Standards No. In9,"Auounting for [ Mn/N locome Tases", w hith required the Company on January 1,1993 to change tlu ri n ^" / 9 9 1 [ from the deferred method to the liabilit) method of accounting for l [ inomic taxes, The liability method accounts for deferred income taxes by F tras orer F applsing enacted statutor) rates in effe(t at the balance sheet date to I . ,, : diffe'rences between the book basis and the tax basis of assets and , 3. J nu.l/ Inn. j., liabilities ("temporar) differen(es"). This new statement requires reuignition of deferred tax liabilities n g for (a)inoime tax benefits associated with timing differen(es presiousi) [ s passed on to (ustomers and (b) the equity aimponent of allowance for [; f unds used during omstruction and of a deferred tax asset for the tax }. effect of the auumulated deferred insestment tax credits. It also requires
'o
( , the adjustment of deferred ias liabilities or assets for an enicted (hange [ l in tax law s or rates. among other things - p , l r u l Although .tdoption of Illis new statement has not and is not > l* expected to hase a material impJct on the Company's cash flow, results of , operations or financial position because of the effect of rate regulation, j. > 4 the Company was required to reoignite an adjustment to auumulated L _ deferred inuime taxes and a corresponding regulatory asset or liability to h W .p F . customers (in amounts equal to the required deferred inuime tax adjust- [ -n p ment) to reflect the future resenues or reduction in resenues that will be < required w hen the temporars dif ferences turn around and are reunered i: ,Am or settled in rates. In addition, this new statement required a redassifica- [ 3D. tion of certain deferred inoime tax liabilities to liabilities to customers in b . ??R. order to reflect the Company's obligation to flow ba(L deferred inuime [' f{3Ki ~a taxes provided at rates higher than the current 3% federal tax rate. The h $ Y ,' '. Company has applied the prmisions of this new statement without p Y L' restating prior year financial statements. [ g - . c . .. y \ l p .' ' f: . ,. e o i 4 r: [; "!!]j c> . Lr 4 ,
, , , ~ mmp~ , U jif' s ua, '* ' ' '
%(, , $ ~
~ ,
y' ,:
- a 4,
?? n J % +n_ s -
,7 ;a "
4 ~ s
-u $s", .. W ,< ',. +, ',
' ~
7 , ;;!;>;e: , y3.g % + G
-.Q u ,
;g <s t +
[? w
, ,, ng
%}%s p[, } , +Washen 4ngQQg&se gd$hrden ; m a g x & g ; Q gj,es ,
^ r I',
+
s. 7 ,j
.@& {g The components of income tax expense for the Sears ended December 31,1991,1993 and 1992 are as follows: g
.. ;. s Q, ,+p [,m f 3+
, AJ 1994 1993 1992 7 .g:
d,a (Dollars in thousands)
~
11, :a l, axes on operating income: , 4
^% M Current federal income tax 5 5,111 5 4,236 5 4,926 4 ' ;ym d Deferred federal income tax (2,839) (1,059) (1,840) #1 -
W A 'p@ Current state income tax 1,376 1,097 1,285 4+ 'A' S!?d Deferred state income tax (386) 80 (329) 9c 4
, Sj Insestment tax credit adjustment (432) (377) (6 41) r '
V
. TH '830 3,777 3,401 %* M^ ?q : n s , *4.%^. L s Taxes on other income: -
[6 9I '% Current federal income tax 784 496 598 - y'7 3 Current state income tax 202 986 127 623 158 756
- 'N' , ;
J%v(( wWV pLJ f( ' l % , W} Total income taxes 5 3,816 5 4,400 5 4,157 & g, egg 4 gg s Q +$ , p[ !/1
, "w .ij (n -
A' s;e lQ ,J s V 'i
,s '
k%
$g .'
1 W~ "i!@ A reconciliation of the Company's effective income tax rates with ,-
++
-$ the federal statutory rate is as follows: d p I
,di;,
' e%
- q7 -
, , 1
' 4 3, p 4
42 ' 199j 1993 1992
+
^ b. L<
^ 1;d'4 Federal statutory rate 35 0 % 310% 310% 4, , g D ;e State income taxes, net of federal income tax benefit "4 6.9 6.1 (i3) p[
$ *Q," Insestment credit Book depreciation in excess of tax basis (4.2) 2.3 (4.7) 20 (36) 1.9 (31) p)
- l u i Flowback of excess deferred taxes (3.5)
F
'4 + e
@ Other (0.3) 0.5 0.8 p yf '
; $ 44 36.7% 36.1% 31.4% y ~
?
- k
@ 3 i s. s; e;; P, ~]$dv The items comprising deferred income tax expense are as follows: 1, m t .~9.,,
,m y
A. .. q b e N+
. MW 1994 1993 (Dollars in thousands) 1992 :..
W d . 1 h@"' ' M@iil Decommissioning expense not currently deductible 5 (432) 5(351) 5(104) 4 g Tax depreciation over (under) financial statement depreciation (1,566) (978) (679) gj ; @ 'g N. Tax fuel amortization mer (under) financial statement amortization (19) (255) (637) Q/ - p $"i % ? 4 Q Tax loss on reacquisition of debt over (under) financial statement expense Pension expense not currently deductible (99) 1,887 (397) (167) 187 (192) M& gpgg Postemplo) ment benefits deduction over (under) financial statement expense Amortiration of materials and supplies not currently deductible (325) 77 67 (335) (141) (343) f;' f 49 g g s hydfi Low-lesel waste deduction mer (under) financial statement expense ( 211) (596) 139 O Flowback of excess deferred taxes (359) (442) (376) f g' ; i1 Other 106 191 (23) 4
. ~
d, % 5 (3,225) 5 (979) 5 (2,169) @ if' ~Y$ p
' (
f6 p, .m W y-
$0YJh5W$ftf( &$ Yh!.T 5h ? L LN
,, lh?5$f T .fCNlleJU x e + o c -
.~ . , , , , ~
, ^'
Q1 :$ .' })',. .+ ,4 f, 'k&~
;3
,c ,,
, Q' Z !M@;. .q+ * ' , ,M.r?. QL W' t h, ( r+ e v--
mp s
> J: .-
'. .fs -
m -
,,,Q. .M"," 7.i,h m 1 iQy jg b'
; ,., ' . , , . ]! + .@ ,, s U ';, ' * ' ' .
(8{L:d? .7 # g , ,
. . , a b
- b. ? . 1 *k . '. . j 1 ' i _. _
uu.W.isii.e.aieguyuy,,,,,,,,,,Y,,,1,u,, u y, %uuuusu uupm qi ( ' y; < n x,+94 a
' ,, e
( q w V'
- y. < ,v ,
. W .t;g" c
L
.typ j .;<
M,y
%m
,;h',
.A d, . . .
+ .,
A e 6g w[ % h h e $'c . a\: K pt % g*: 4& The tax effects of temporary differences that give rise to significant ' portions of the deferred tax assets and deferred tax liabilities at Decem-
' ~ _b, d '?
N !% : - w ; ,> H ber 31,1994 and 1993 are presented below: >~
?n %s t ..
' dt $ P wllGyw+..,H,, ,
~
- f %:gg - ,,,
@ umyn MlIQll w ;d,c' ,y SW
.mt
\. December 31,
, S #M < t December 31 1994 1993 "M1e% W (Dollars in thousands) >
l* g jp4 ?- ' ,( - 4 Deferred tax assets: 10 D . Accumulated amortization ' "* f [" 5 2,914 NNM
$3,168 of final nuclear core Nuclear decommissioning liability 3,309 2,810
^"'f @@ Mf 1(egulatory liabilities 5,619 5,856 "w gH gy --
',[W]. hn, .
Accumulated deferred s
- g.g , 's pj %' W' ~
investment credit 2,656 2,830 [. ,
$ " "O $2 i 1- , ,
Accumulated amortization k$~*j of materials and supplies 2.657 2,281 h' t ' 0: *
- M 2,673 2,353 Pension and retiree benefit liabilities 2,042 418 h ,
, V'5 Other .
s S'> 22.124 19,462 Total gross deferred tax assets ' , . l.ess valuation allowance (1,384) (1,23l) # ..;- 20,740 18,231 r ( s , Net deferred tax assets > Deferred tax liabilities: (50.805) (51,258) , m Plant and equipment ,
+ <
(4,958) (5,220) - Other [ Total gross deferred tax liabilities (55,763) (56,478) m < Net deferred tax liability $ (35,023) $ (38,247) L W h t l
;a c6
^
~
o The valuation allowance is the result of a prmision in Vermont tax ? . , law which limits refunds resulting from carr> backs of net operating }E ,i ";f Jg , losses. [7
> w: s, ew .
NOTE 11. SuPP l emental Cash Flow Informationn b_ . ,, 14 . The following information supplements the cash flon information , provided in the Statements of Cash Ilows: f(' '
, MM . N .x ,
J. ' g ,
'j.
- 1994 1993 199)
K s (Dollars in thousands) Cash paid during the 3 ear for: e Interest (net of amount capitalized) $ 5,108 $ 7,632 $ 7,062 6 y Ah, - i. .
- . :~
V , .
, t g,< j; 4y>
^
income taxes s 7,525 s 7,070 5 6,192 , ,
' ~ ' -
g, y V 2:, g
), . - 4, . . 4 s,.
f- - ,
% o -
g p; + .
, ; y hn ,
6^ ' [.: ;g , f' < (
.s
, .. .y .
,% s l ' . . y, L :i s-1 Q'Y. .
a r% d. g:, v a
a
,, ,n
$y ::,[ 4 ( "[ ]
, ,, ja m% % ,. ..u;
. ig v6 " , .y 4a NOTE 12. Pension Plans g r. n0- yl Q 'N,' f;l b : \
'd
~ .c G m , j The Company has two noncontributory pension plans covering iq i;$ substantially all of its regular employees. The Company's funding policy lir@Qibe; is to fund the net periodic pension expense accrued each year.15enefits
%M v ,9Q k .,>
r are based on age, years of service and the lesel of compensation during the final years of employment.
%( ,emg x' n$1,
. yf G' - -
% d@ The aggregate funded status of the Company's pension plans as of December 31,1994 and 1993 is as follows:
G h}nQ l%:n.7Qh #, ~jf ] g34 . t , g. 7 December 31, mif hj j p$m[% g, AM ( 1994 1993 (Dollars in thousands)
%; M' , ^ a;g %]
5 8,882
% M g; ' , ' T$$1)$ Vested benefits 5 8,718
&t ', z.
' %g[ $
Nonvested benefits Accumulated benefit obligation _ 1,13 6 9,854
. 1,338 10,220
(( 'Bf gg.f' V' M Additional benefits related to future compensation levels 5,126
' Vj 8340 I t
($g$ 7_L t,
W x
( , i
,b Projected benefit obligation 14,980 18,760 y#{g"4 gy
;.y - d Fair value of plan assets, invested b" ; s y g. "
primarily in equities and bonds 16,539 16,343 ef, w m nj g ( > m' j Projected benefit obligation
, AM ,;- ~
," ut in excess (less than) of plan assets 5 (1,579) $ 2,417
.myA % q, <
, bt h 44 gy;b ,.hJh The decrease in the projected benefit obligation from 518.8 million in 1993 to $15 million in 1994 is primarily the result of changed plan
- NA
- n. , y J . '.
m
<q
') assumptions.
. y .< . 1 3 q
- e b:a Certain changes in the items shown abose are not recognized as UMY - '
? ]9
+
they occur, but are amortized systematically over subsequent periods. 1kh Qh / 'i, q
~
Unrecognized amounts still to be amortized and the amount that is included in the balance sheet appear below.
%%sh
,;; ww qv?., . m %
' wM i n
%A a 1 2 d
nitrc(p ,
- Jy 4
,r ps ps N["if
_c] December 31,
~1' ,
4 1 1994 1993 M ,
%j (Dollars in thousands) y qa.%q,>f,g7
.t rJ 4 Unrecognized net transition obligation 5 936 5 996 M" j., , V7 4l 1
W'Q 1 Unrecognized net gain Pension liability included in balance sheet (8,559) 5,511 (4,086) 4,866 f M f j Unrecognized prior service costs 533 _ . 641 ,
.pp AQN 'g,"
.d Projected benefit obligation y@ l j)% 7 s y (less than) greater than plan assets 5 (1,579) $ 2,417 y
pg e , m
@(
u: s g' t
.j
~ 9'Y , aGw9i
-~ -
The following are pension plan assumptions as of December 31,1994 and 1993:
. .. # , .j j ' , [ yxnw
], ,hNOf', , DQ 4 p y ye w d December 31
- l -
e,' i 5 1 1994 1993
@~'
. g}
i
,, ,, Discount rate 8.0% 7.0%
9 ,
o y Compensation scale 4.5% 5.5% h' ' e T4 Expected return on assets 8.5% 8.5%
$ql Q 4.;s* ' T ;~y , ,g y hh[QP ij k ,\ &;?y, ,
.$ b
,, .y . . . , ,,
g x. , . , , . , . , . _ . . . n .e. Ty ;
> ~ ' 9 a. a&
fQ w , i _. f: ,, ; y y < _
*d NM(bk l}
5 js p j
& ', 1~
M+ yl ' L W\
. i v.
s %. 3 hM
~ , "
e
. * ,i 4
y "'# Y-**eg, qlc ^ i . r
~
e M , f. eq ((, NI ,
+
j (o
* . + ap 1TgL.
Net pension expense for the three years ending December 31,1994 k%' vq.po a s f, 4 f" ' * ' uynt Included the following components: . w ,eg,9_ 'g . a w, ,
- . a: > 33 ,
l
- g + ; I &^*
z y a N
} ~
1994 1993 1992
~ /
(Dollars in thousands) G. m;% ' ,
~ ,W < t /
W b~ " * ' '
- 1 M W MV6a~ '
4~ Service cost - benefits earned $ 1,282 $1,141 $ 1,275 , - . 1,288 $ 1,305 [ i 9~ j[@ ' Interest cost on projected benefit obligathm 1,361 Actual (return) loss on plan assets (1,550) (1,792) (867) y . L , y + , 186 631 78 {y W g" x m 2 m" w 4 af< a n &cauyG. Cw &@ $ , Net amortization and deferral b, Net pension expense $ 1,299 $ 1,268 $ 1,791
,cs .
f'",d W h;k "l'Yont the h? m { $a0' heqinning of flS NOTE 13. Postretirement Benefits Other Than Pensions m (J.
- M~ aW operallon coininercial M{w 4 9
On January 1,1992 the Company adopted Statement of Financial Accounting Standards Na 106," Employers' Accounting for Postretirement g'h $<
/n /972 h Benefits Other Than Pensions"(SFAS 106). This statement requires througu, lhe entl :{,
companies to use accrual accounting for postretirement benefits other than pensions ("Plu)P" on " Pit 0P3"). Prior to 1992, the Company accrued gjd.y gff994 p R and collected a portion of PBOP costs through decommissioning billings while the remaining cost was expensed when benefits were paid. Since ,. s
,j fernloni rankee g 4 F January,1992, the Company has accrued PBOP costs determined in accor-d generatell orer .p dance with SFAS 106 and has included the incremented cost in excess of tne amount being collected through decommissioning billings,in its %[y.4 7g gjfffon .Y ie monthly power billings to Sponsors. The Company is funding this liability by placing monies in separate trusts. In order to maximize the y i h//otrn/l-honrS b.
deductible contributions permitted under IRS regulations, the Company w' V . LP - g of,cler/r/cIly. ,, 4 amended its pension plans and established separate VEBA trusts for management and union employees. f4 {" d, '@>o in December,1992, the FFRC issued its policy statement setting forth r
' s.m.myppy '
y,
'* < :ymmyyyyygQQ; ? ., g how utilities can recover in rates the increased costs associated with the m
MM'
@ 'e "
d ! .j' implementation of SFAS 106. The policy statement specifies three condi- 'g#~ e, ,
"M tions that must be met before FFRC will consider companies' election of
the accrual method (a) the Company must agree to make cash deposits to i ,,VW, b 'Q6 f R M an irresocable external trust fund, at least quarterly,in amounts that are . , V l 4 g' proportional and, on an annual basis, equal to the a'nnual test period
- allowance for postretirement benefits other than pensions;(b) the
. / 3 S '7 4
9lj- 4
.fr Company must agree to maximize the use of income tax deductions for py contributions to funds of this nature; and (c)in order to recover the +
'f ,~ , 9.Q f ' s Wy transition obligation, the Company must file a general rate change within ,
th " 'M ' three 3 ears of adoption of SFAS 106. , y
, @' s.
On September 2,1994, the FERC approved the Company's rate filing ' @'T fghW}
' [ ?*
w hich included establishing an additional SFAS 106 transition obligation
.f!1 <
PW
*47 '4e f~g of $2.7 ruillion, the total amount deposited in the decommissioning fund <
for PBOPs during 1992,1993 and 1991 The $2.7 million amount in the W, x . k # decommissioning fund for PBOPs will remain in the decommissioning
- V ,^
fund and reduce future decommissioning funding requirements. This d, 9
# a >m ,'
additional transition obligation will be amortized into expense in future Q'? ' f. 1 - s41 WC
- 9 scars and recovered from customers as amortized. As a result of this filing and compliance with other FERC regulations, the cost for PBOP's is RfSM m i
d'j$(#,e
< y.
N' fully recmerable from customers. G <f j" T' ~ ; y g4 K '
$s 4 _gl' 4 %
i- - * - s
> Gy h' !, k 's c-fj&(n;M
%. , " ,u .}'
y ,
.p.vs.- , , . .q; *^
. ,m. ,
mb a gy
, ,, _ _ _p D B " ,' &,
y]h g @[ N y m% - f f The following table presents the plan's funded status reconciled I 4 y[PSSgMQx t
>da with amounts recognized in the Company's balance sheets as of December 31,1994 and 1993 (dollars in thousands)-
4 ; g~ & % - cv. : g
. y sc , y fi
} [; , y ;f:
r $ W jfd , Accumulated postretirement benefit obligation: 1994 1993 g h $ + Retirees $ 1,187 $ 1,078 MQ _Y Mt Ed g) gtJQWWPWWJ Fully eligible active plan participants Other active participants 1,100 8,209 9 21 8A71
' N;M@N: M aQ HK gR. ll l;t 194;q--.o%gg M Total accumulated po< atement P
- Wu + gw p , b , c ,
g, p.' ? benefit obligation 10,496 10.070
' w' i VAW I MN .
( Fair value of plan assets, invested primarily , g
'j in short-term investments 2,891 2,457 g W@ @& G h* ,7 @ 1 1
M Accumulated postretirement benefit
. g.g guy pg '
5 7,605 $ 7,613
&g. hM ~ r wj^' ;et*
obligation in excess of plan assets tS QM L WM3n,R, < >yd 5 7,030 $ 7,933 Wh,MgM$4@n)' Unrecognized net transition obligation . Additional unrecognized transition obligation 2,563 -
'g l' ff jd Unrecognized net gain (1,988) (1,980) s M W J '. ' d Accrued postretirement benefit cost
.N. HKj M94 7 4M - '3 included in accrued liabilities _- 1,660
%q g' ;M g 1+:x ; A:;; q 8 gQg
, 5o"y' '-
s , Accumulated postretirement benefit obligation
$ 7,605 $ 7,613
. $gm'w g[,4 M} g5 ^# ,
W @4 in excess of plan assets M ,-'y 'M
~
N{.( */.(@ ' s ,
' e; %
The net periodic postretirement benefit cost for 1994 and 1993 / 7g m
< ~q y ,
gp includes the following components (dollars in thousands):
,~ ;
y~ - ,, y fQ ,
}- ' , 1 i w&m ...
, u q; 3 < K, 3 * *
,}} 1994 1993
%~ *: a v . . T
[;he b7;<, W ,o
'a.[N d ? dj Service cost 5 732 $ 735 MMT Interest cost 691 749 g
", s lM { ,
' fj Actual return on plan assets 84 (97) g ' >' ,
s* ' d Net amortization and deferral 54 .350
'm3
- 4 3; -
, f 4., $.
m o , m1 -
,, Net periodic postretirement benefit cost $ 1,561 $ 1,737 ge W C ',
vph x 4 ; ,7
, ,9g g
% "'^}g l
,,' 4 4 ;
- w[ ' For measurement purposes, a 13% annual rate of increase in the per capita cost of covered benefits (i.e., health care cost trend rate) was d M i& +
l' ','
<d assumed for 1994; the rate was assumed to decrease gradually to 6% by
.y ' [i ' f A ( , '. . j' the year 2001 and remain at that level thereafter. The health care cost
!ga (' ^ a trend rate assumption has a significant effect on the amounts reported.
u( dW > W*-
' :d %yg For example, increasing the assumed health care cost trend rates by one b- percentage point in each year would increase the accumulated y%g M:e h1" W 'R' 1 postretirement benefit obligation as of December 31,1994 by $2.3 million gf%gb " ,* $ gy 'd3 6,- m and the aggregate of the service and interest cost components of net h'& R-periodic postretirement benefit cost for the lear ended December 31,1994 by 50.3 million. The weighted-average discount rate used in determining 1 cgy . ...
%'d p @ m( y, 3 W o w S[ b/ ,P > m$ D the accumulated postretirement benefit obligation was 7% at December 31, M, ,s , gn ' g% r 'd 4 1994. s , I 4 g*e , L .a' p(f~ A : The change in the accumulated postretirement benefit obligation M W i - 1 fiom $10 million in 1993 to $10.5 million in 1994 is the result of additional 3[:@,[F 3 , ]& , .- Tu. . , igi
- y
( - 9 rvice accruals. The reduction in the unrecognized net transition obligation from $7.9 million in 1993 to $7.0 million in 1994 is primarily 1%M 4 +
$ ?s % 4 the result of one additional year of amortization.
hkW Q ' ' , l $ ', ) [2 ' ' k Q( - d " , *z a J., 1 q
;&f N
, r o, o,l @- l-e t c'i . , .,' 2 9 b
a
.g NS .M 4mt./ [I.* g.a. .) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . _ _ . _ _ . _ _ _ _ _ _ _ . _ _ _______ _ _ _ _ _ .
.--...-..-...-..._,,,,,,,,--,,,,p.,,,,,,, , , , , , , , , , , , , , _ ,
e e. b, ; mg
- w w u . wem, n w y;g x 7> ,;. m .
[ c. p .; ' , 1:4 ifi }y
+
7
, t v
'~
- g. .- w, w, y p*
'. gO P /,
NOTE 14. Lease Commitments g ' The Company leases equipment and systems under noncancelable o, g , 1
,, y s
Q"M.'4. _ r i, ?' K ',sp , , operating leases. Charges against income for rentals under these leases 6 4 JM, , py ' py ' ' " , #
<C *i were approximately $3.1 million in 1994, $3.7 million in 1993 and $2.6 1 ,
million in 1992. Minimum future rentals as of December 31,1994 are as
,c1 , qe _
follows: ; ." s .
+
< g %w W
$.6 / 3 t 7f 4 ,
, p, , ,
e 1
;c " " y
{^ , :. p
' ( y q.
e j; , N>vm ; fiscal years ended Annual rentals Jj ' *.s. a % h' %n. ' s ;j s . jM (Dollars in thousands) # 2 g ; C Jg 1995 $ 6,397 ! ~a ^> ~ y '
~ER 4f ;
1996 7,888 ; ;f ' m ,A b' I [ W[ Y _ 7,966 N(.M, w m s 1997 ., 1998 7,944 LM M 5 1999 Thereafter 7,425 28,192 YM Y N .. . s T,yw $,./m ? @ @ @
,jff , ,
t~ % .' gv lg ;y 1 [:Q n i lf s nn; , + n;u> , x pmQ m2 >a.- ..c%
%;q" "' ' , 'y , ,*7 9 i n;m% %
The Company has entered into an agreement with General Electric 1; , m']' W
^ C, " ' @eyy4%
C , Capital Corporation to lease turbine components being constructed by , , General Electric Corporation valued at approximately $33.4 million including installation costs. Under the lease agreement, the Company W 4~ ~ ' lW ,.s,- 1 will make 120 monthly payments of $440,464 each commencing on the , ',l'(!? , 4 -'# r M@fi y4 later of (1) April 15,1995 or (2) the commissioning date of the equipment. q, s , , q ;; V , " " ' s N
'; y The lease will also include the sale and leaseback of a $2 million turbine f , m ;[J '
7 , . . rotor forging previously owned by the Company. The lease will be w ~
, fl $ l classified as an operating lease for accounting purposes. g" g* M 1
2 j: a p The contract with General Electric for turbine components required ; M ;7O Q", d progress payments by Vermont Yankee prior to installation of the p* ' f . f
%@f(' , %n
~
equipment. Just prior to the first delisery of the equipment, General ,
,1 A '
- Electric Capital Corporation reimbursed Vermont Yankee $11.3 million for ,
those pa)ments and will continue to make the remaining payments until
, , ';* - _ Q (, .
the commencement date of the lease. g, R
*;~ >
y, a
- m '
FW NOTE li Commitments and Contin 8encies ,. 2 s - w+ a Low-lewi Waste ' ' L w # ;w
,- ~.
,c ,/
J All efforts to site a low-level radioactive waste facility in Vermont h '
, b , 6'-
ended during 1994. The Vermont Low Lesel Radioactive Waste Authority , j
,gL 4 3[ ". + ,
("VLLRWA") was eliminated and its responsibilities transferred to the 4 Vermont Department of Natural Resources. < .
;p u 1 -
n 3 !]( . , [ Qf During 1994, Vermont }oined with the states of Texas and Maine in ,
'~
( j rp; m {' ,' ,
- p~?q7 a three-state compact to site a facility in Texas for the disposal of low- n ,
f4 4 lesel radioactive waste. Currently, each participating state has obtained ,
< @QAg " ' 7:p$
approval from its respecti e legislature. The compact is expected to be ratified by the U.S. Congress early during the 1995 session. If such g fl w ' 1 ". M hk tE A:[ _ @ 4 O approval is recched and facility deselopment proceeds on schedule, , t Vermont Yankee will begin sending its waste to Texas during 1997. The W : *g]$ y
$g Company has stored low-level radioactise waste on its plant site since 3; N~
July 1,1994. Under the proposed compact, Vermont would pay the State s , of Texas $25 million ($12.5 million when the U.S. Congress ratifies the '[.m
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;%W compact and 512.5 when the facility opens). In addition, Vermont must pay 52.5 million (5125 million when Congress ratifies the compact and
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. g g jQ 51.25 million when the facility is licensed) for community assistance projects in liudspeth County, Texas, where the facility will be located.
l y P Hg Vermont would also pay one-third of the Texas Low Level Radioactive gl ;f ,$ l M Waste Disposal Compact Commission's expenses until the facility opens. g a 9'M The disposal fees for generators in Vermont and Maine would then be set b
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1 gdj $h at a level that is the same as charged generators in Texas. During 1994, the company received approval from FERC to recover the cost of this ,} . H fM c mpact from sponsors over the remaining license life of the Plant. 4 -
.*, cr yd ' s.AM Mj During 1994, the Company recorded a deferred credit of $23.9 million to recegnize the $27.5 million compact fund requirements less the 4 ')'
f p% oa+< g{ gmpy(MC " remaining fund balance from the VLLRWA and a corresponding deferred k debit of $26.5 million u hich represents the total amount to be included in 0 . .. ? MCMdh[p , .9 future billings to the purchasers under the Power Contracts. p' Mh k ,,
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.hm Nuclear Fuel
[ /ntpor/ntil U. VMfM The Company has approximatelv $141 million of " requirements g OQ based" by purchase contracts for nuclear' fuel to meet substantially all of its p wer production requirements through 2002. Under these contracts, any h infles/nne [ T,$ disruption of operating activity would allow the Company to cancel or f tlttr/ttg . @p e postpone deliveries until actually needed. '; fichrstoty' ; %u N ~ Y~ ' InSurnuCe 1 199.) \ D The Price-Anderson Act currently limits public liability from a y one in////nu ~#g g singicincioent ,, ,nocic,,po ,c,piani ,o ss.9 3iiiion. 3ny a ,maycs beyond $8.9 billion are indemnified under an agreement with the NRC, [ hottrS y %p Gd but subject to congressional approval. The first $200 million of liability b n'// hon / # g coverage is the maximum provided by private insurance. The Secondary A
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. NN Financial Protection program is a retrospective insurance plan providing additional coverage up to $8.7 billion per incident by assessing each of the
[' d nrr/t/ent. " .[ hy 110 reactor units that are currently subject to the Program in the United States a total of $79.3 million, limited to a maximum assessment of $10
$p @ million per incident per nuclear unit in any one year. The maximum sT ' pd assessment is expected to be adjusted at least every five years to reflect mymapmegpew inflationary changes.
g(MM MQ %QW4 ,i & 's MQ[ q -h4$W Qg $fg d M s , The above insurance covers all workers employed at nuclear W $9 - facilities prior to January 1,1988, for bodily injury claims. The Company D%k LMxim ,i QO $Ja has purchased a Master Worker insurance policy with limits of $200 f W" : 4Y million with one automatic reinstatement of policy limits to cover hJ/@MF@% MV $ $ '$$y7p workers employed on or af ter January 1,1988. Vermont Yankee's contin-kp$( ? 'd Tl d gent liability for a retrospective premium on the Master Worker policy as .
#N3e; 7dp%ljf M;R$N f f CN of December,1993 is 53.1 million. The Secondary Financial Protection Qk fh la)er, as referenced above would be excess of the Master Worker policy.
% h gA _yghg yMy%EIhh gp insurance has been purchased from Nuclear Electric Insurance F e Limited (NEIL 11 and NEIL 111) to cmer the costs of property damage, i
) %p30%gQ$y S decontamination or premature decommissioning resulting from a nuclear d ' g ph incident. All companies insured with NEll are subject to retroactive d p assessments if losses exceed the accumulated funds available. The maximum potential assessment against the Company with respect to NEll i?1g;pG 11 losses arising during the current policy year is 56.4 million at the time QWJF yJff of a first loss and 513.8 million at the time of a subsequent loss and the
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b# QhNhd NEIL 111 maximum retroactive assessment is $8 4 million. The Company's liability for the retrospective premium adjustment for any policy year p llk a V# gM ceases six years after the end of that policy year ur.less prior demand has
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1 l b li q .j (. , e 9 i Oart 0? 31 rectors [bW$i
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o L w. [I hq Q Vice President, Production Operations em e Central Maine Power Company, Augusta, Maine
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.; g Vice President Director o New England Power Service Company, Westborough, Massachusetts "
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h[ " { g; , i President and Chief Executive Officer Green Mountain Power Corporation, South Burlington, Vermont d , ' b; b Vice President and Treasurer
- ~ . a Northeast Utilities, llattford, Connecticut cp #
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g 1 Ch irman, Central Vermont Public rvice Corporation, Rutland, Vermont b If( .hy ' , . g
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' N p B New England Electric System, Westborough, Massachusetts *
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"%glph l h&'?.hh. d) Northeast Utilities Service Company, liartford, Connecticut "
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' fd Chairman and Chief Executive Officer Vp: y% [$ Eastern Utilities Associates, Boston, Massachusetts h5fkh _ rm &W& k g Vice President, Engineering pbg# M.8-Q "w Y ?[q Central Maine Power Company, Augusta, Maine "
iy yl, V. T & ; ?g4 9 x: A u }h '~ Vice Presiden:, Nuclear Operations Services
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e]qjf mgne ~ ,.;gw p & w;.V-[ Northeast Utilities,llartford, Connecticut
- cv Senior Vice President and Chief Operating Officer h'j Green Mountain Power Corporation, South Burlington, Vermont Q N " hklk ; h-s..[i. s'f[I:g
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- Chairman i.
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4 President and Chief Executive Officer yg?o f xg q t cp. .y yh( Central Vermont Public Service Corporation, Rutland, Vermont Myjg lyff ' T President and Chief Executive Officer Vermont Yankee Nuclear Power Corporation, Brattleboro, Vermont 4 ,4 l hN g ,
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President and Chief Operating Officer Commonwealth Electric Company, Wareham, Massachusetts hh c d. <' ;gg; 4 Executive Vice President and Chief Operating Officer y Central Vermont Public Service Corporation, Rutland, Vermont yM d,. 3U4.m..b If
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