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Forwards Duquesne Light Co Annual Rept,1983, & Ohio Edison Annual Rept,1983
	ML20096C821
Person / Time
Site:	Beaver Valley
Issue date:	08/29/1984
From:	Carey J; DUQUESNE LIGHT CO.
To:	Varga S; Office of Nuclear Reactor Regulation
References
	NUDOCS 8409050412
	Download: ML20096C821 (1)
	v • d • e

{{#Wiki_filter:-- t 'Af Telephone (412) 393-6000 Nuclear Division P. O. Box 4 Shippingport, PA 15077-0004 August 29, 1984 . Director of Nuclear Reactor Regulation United States Nuclear Regulatory Commission Attn: Mr. Steven A. Varga, Chief ~ Operating Reactors Branch No. 1 Division of Licensing Washington, DC 20555

Reference:

Beaver Valley Power Station, Unit No. 1 Docket No. 50-334, License No. DPR-66 Licensee Financial Information - 1983 Gentlemen: Forwarded herewith for your information and use are ten (10) copies each of the annual financial reports of Duquesne Light Company, Ohio Edison Company and Pennsylvania Power Company. These reports are filed with your office for Licensees of Beaver Valley Power Station, Unit No.1 in accordance with 10 CFR 50.71b. Very truly yours, J. J. Carey Vice President, Nuclear cc: Mr. W. M. Troskoski, Resident Inspector U. S. Nuclear Regulatory Commission Beaver Valley Power Station Shippingport, PA 15077 U. S. Nuclear Regulatory Commission c/o Document Management Branch Washington, DC 20555 8409050412 840829 PDR ADOCK 05000 \\

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~~Duquesne Light's revenues and net We can reasonably expect that F~~
income were both higherin 1983 recovery and new growth will create than'in the previous year. While as many as 30,000 new jobs in our . heavy industry remained depressed, area next year. However, this . othe'r areas of business advanced. growth will not make up for ourload ~ ' O'ur changing market losses quickly. The expected sources of the growth, such as office build-5 Traditionally'a mainstay of ings and advanced technology ' Duquesne Light's business, the steel industries, do not use electricity in. R ~ industry in this area operated at an the same quantities as steel mills. It. --even lower level than in 1982, with may well be three or four years contimiing high unemployment before we see a summer peak load e amonglocal steelworkers. We expect equal to that of 1981, this area's steel industry, and its con-sumption of electricity, to recover Long-term investment slowly over the next three years, but considerations ~ .not to the level of 1981. Almost cer-Recognizing these limitations on our '.tainly, a part of the decrease in growth prospects, Duquesne Light is steelmaking demand for electricity currently engaged in a strategic will be permanent; some of the older planning process to help establish steelmaking facilities, no longer cost-operating goals. The aim is to_dcter- . competitive, probably will never mine the lowest level of revenue that ; reopen. will provide a reasonable level of Fortunately for our community earnings for stockholders, and to and for Duquesne Light, the trend of determine the lowest level of economic developmentin this area investment that will maintain and over the'past two decades has'been improve service to the 559,000 one of diversification. This trend has customers who depend on us for helped to reduce the effects of the electricity. - decline of the area's heavy industrial Since generating units under con-base'and the loss of steel-related struction are scheduled to give l jobs. Duquesne Light an additional 445 This transition is still in progress. megawatts of capacity during this The Pittsburgh area rariks fifth in - decade, we do not presently foresee the U.S. as a center of research and a need for further generating capa'c-development and continues to ity until about the year 2000. This develop as a corporate and financial should reduce our dependence on center. Additionally, advanced tech-capital financing and thus improve nology is a growing segment of this our ability to hold the line on costs.- new makeup oflocal business and Cost reduction measures industry. Employment also is Cost reduction, always a major man - increasing in service-oriented agement goal,is urgent at this time; ' ~ industries such as banking, transpor-n t only for the sake of earnings, - tation, health care and retail sales. but also to remain competit:ye. Serv-These economic strengths account-ing a maj r n rtheastern metropoh-lfor the fact that our commercial and tan area, as Duquesne Light does,is residential sales were strong last costlier than serving less densely year, considering the recession. populated areas. Loss of busm, ess to neighboring utilities or the move-ment of corporations to the " Sunbelt" could cost us some larger (2;',
customers and have the eventual Our service area effect of raising costs for our other The recession was harder on our customers. We have no higher priori-service area than on most parts of ties than controlling costs with the the country. Local unemployment aim of keeping our rates competitive. persists at a level well above the One means is our continuing national average, with only gradual Company-wide cost reduction pro-relief in sight. In this situation, our gram, which again produced large long-term area development pro-savings. During the year, negotia-gram is of particular interest. In the tion of a new two-year union con-past 12 months, more than 3,000 jobs tract resulted in productivity have been added or retained as a improvements and fringe benefit result of this Duquesne Light effort. modifications. In addition, a new This area faces a difficult come-reorganization plan, which will be back. But people here are a hardy implemented in 1984, will reduce breed. They have weathered worse costs by making our operation leaner storms.
~~and more cost-effective.~~
Our towns ' Management reorganization An underlying strength of our 191o 20 30 40 50 60 70'83'93 l The reorganization plan consolidates larger community is the great diver-Annual system Peak toad i all operating divisions and depart-sity among the many smaller com- . ments under the direction of five munities within it. To illustrate this,
Group Vice Presidents. It should we feature in this report photos of

reduce total staffing by about 100 five of the towns we serve. I cannot

positions. The reduction in number call them typical, because they are

cf employees will be brought about all so different. Perhaps this very largely through a new voluntary variety is a clue as to why, hard

early retirement program, times or not, this region displays such vitality.
Community involvement Although many challenges lie lIn 1983, we recognized a growing ahead, I am optimistic about the problem of people facing a hardship future of our service area. Duquesne because of m, ability to pay the Light's Management and Board of increasing cost of heat and light. T Directors acknowledge and appreci-help alleviate this problem, we pro-ate the support of the many stock-vided strong plannmg and financial holders, employees and customers and fund-raismg support to a new who contributed to the Company's independent agency, the Dollar progress in the past and will help to Energy Fund, which provides meet the challenges of the future. assistance when government help is l inadequate. jyj l Duquesne Light employees "/ ! pledged a total of $333,600 to the John M. Arthur l United Way of Southwestern Penn-Chairman of the Board and isylvania. Additionally, our employ-President ees donated $58,100 in 1983 to a Salvation Army food bank for unem-ployed workers. Approximately 65% February 15,1984 hf our 4,000 employees signed pay-foll deduction cards to contribute $1 aach pay to the food bank. i
Perspective of 1983 I. FINANCIAL MATTERS Cost reduction )un 1 OWNS Last year Duquesne Light expanded Revenue earnings improvement ts cost-reduction program to cover Duquesne Light's revenues rose from $746 million in 1982 to $800 mil-tne efforts of every employee in the lion in 1983. Rate increases were pri. Company. One purpose was to EWICKLEY marily responsible for the higher encourage employees to find new revenues. Earnings per share from ways to save the Company money. continuing electric operations were This program appears to be working. $2.20 in 1983 compared to $1.96 in Identified savings rose from $8.3 mil-li n in 1982 to $14.4 million in 1983. g gf 1982. Looking ahead for savings, Sales: A year of ups and downs Duquesne Light has been using 1853 Total kilowatt-hour sales for 1983 sophisticated computer programs for were slightly lower than last year's strategic load planning. The task is level, and the summer peak load complex and technical. The goalis to increased about 8%. Improved com-determine how to fulfill the Com-Only 15 miles from the hus-mercial and residential sales played pany's load requirements at the ',',* aml bu j e p dow"' ,,,,,gh s c a part m improvmg our financial per-lowest cost to our customers while serenity and charm of formance for the year. maintaining an adequate level of sewickley. Totalindustrial sales dropped 5% earnings for our stockholders. by century o[Eo'a*ks aN i compared to 1982. Sales to steelmak-Other major cost reduction maples, stand stately tli ls huilt f st by c p-h"t,, l ers, our largest single market, fell measures are described on the even lower than last year. However, following pages under " Manage-inter by captains of l there was growth in other segments ment reorganization" and "New industry. l of the market, especially office park early retirement plan." here$nd apartmenIs,"and projects west of Pittsburgh, fast-a shopping district food restaurants, hospital expan-Saving on dividend reinvestment sewickley is a living. sions and office buildings in down. During the last quarter of the year, breathing n not a town Pittsburgh, where large-scale the Company began to admmister the residential streets you the Dividend Reinvestment Plan have the feeling that you development continues. havest d back n t n-house. This will reduce processing costs by approximately $150,000 a somewhat unique. But, the sense of charm and gra-year. clousness it represents is The new system will also enable ,i,,ii,,,,e,,ii in m,y us to supply more complete answers of our other towns. to stockholders' inquiries. The plan is l open to all holders of Common, Pref-erence and Preferred Stock. The number of stockholders taking l f advantage of the plan now stands at 1~ 44,000. For information on benefits and how to participate, write L - --.-- h---- - l - l - - - - - - _. - - - - - Duquesne Light, c/o Dividend Rein-1979 1980 1981 1982 1983 vestment, Box 68, Pittsburgh, Pa. KWii Sales-5 Years 15230-0068. 1 i 4
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Construction and financing issued $20.5 million of tax exempt JUR VRAGES Work continued at the nuclear Bea-pollution control revenue bonds to ver Valley Power Station Unit No. 2 finance the Company's share of and at the nuclear Perry Plant Units the costs for certain pollution con-Nos.1 and 2. Duquesne Light has a trol facilities at the coal-fired ENNSBURY 13.74% ownership interest in each of Sammis plant. Net proceeds to the VILLAGE these units. Other major construc-Company were approximately q tion projects included a new Western $19.8 million. / District Headquarters bilding and a
~~4. On December 6,1983 the Com-7 simulator / training building at pany issued $50 million of 13%~~
Beaver Valley Power Station. First Mortgage Bonds, Series due Our total capital expenditures for December 1,2013. Net proceeds j l the year came to $224 million. About to the Company were approxi-p^r., 4" 26% of this was generated internally. mately $49.3 million. Ei,7eT,7,,","f,I,"3 The balance was raised by outside
~~5. The Company issued 2,524,407 financing. This included:~~
~~shares of Common Stock in 1983 fully grown.it was built in 'he 31xti s '~~
~~1. On April 14,1983 the Company pursuant to its Dividend Rein-~~
,, 1. ent- 0to in-issued $60 million principal vestment Plan. Issuances of Com-houses, mostly two-amount of 12%% First Mortgage mon Stock through this plan bedroom. When the town. Bonds, Series due April 1,2013. aggregated approximately $39 "*"$'n"n u"ms. Ee n"[w Net proceeds to the Company million. In addition, 143,727 shares owners (average age 30 were approximately $59.3 million. of Common Stock were issued dl,{}d,'d *',V,"l,'l,"*[,*[y
~~2. On August 2,1983 the Company pursuant to the Company's municipality.They issued a issued 2,475,000 shares of Com-Employee Stock Ownership Plan.~~
seciaration ajsecessiya. g, _,,,,,,,, mon Stock. Net proceeds to the legal gymnastics, and Parewell, steam heat Company were approximately launched their own unique On May 31,1983, following the plan local government. $39 4 million
~~3. On November 1,1983 the Ohio Air nn unced in 1982, Duquesne N~~
f roads?e"n o ,,r es Quality Development Authority Light s long-unprofitable subsidiary, inws and provides fire pro-Allegheny County Steam Heating tection the Condominium Cl,"" '*"'j,*,'('h Mi,, Company (ACSH) terminated steam service to the public. The estimated includes water. sewage. l loss from discontinued steam heat-y,h,eaing al un 1s f ,,p Ing operations was recogmzed In service fee which also l 1982. The major portion of the steam includes use of the pool and l distribution system which ACSH had lll","","'g,'lllll;,',"liy. operated was transferred to, and is ming shrubs and mowing being operated by, a newly-formed sawns.The 870 people who ~ live in Pennsbury Village cooperative of steam users. know itis never going to I.' expand.They also know Rates thatliving there is never On January 28,1983 the Pennsylva. going to be much trouble. Pennsbury Village is tiny ma Public Utility Comm.ission (PUC) ... not much more than a entered a final order covering the few acres. sut. as we said Company's request for a $165 million ' ' r s ;via ama is nd dd j (subsequently reduced to $155 mil-i I lion) increase in annual rates wnich was filed on April 30,1982. The order 1973 74 75 76 77 '78 79 '80 '81 '82 '83 Cet of Fomil and Nuclear Fuel 6
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i~ allowed $105.8 million or 64% of the Beaver Valley Unit No. 2 is on JUR BOROUGHS rate increase originally requested. schedule On April 29,1983 the Company Construction of Beaver Valley Unit filed a new rate schedule with the No. 2 proceeded on schedule; at year PUC estimated to increase annual end, this nuclear plant was 78% com-OMESTEAD revenues by approximately 5.6% or pleted. The Nuclear Regulatory $49.9 million per year.This was the Commission and the Institute of
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eg lowest general rate increase request Nuclear Power Operations audited (' i by the Company since 1971. On Sep-the engineering and construction ?' tember 16,1983, the PUC approved a work, and both reported acceptable settlement of the rate proceeding performance. Barring unforeseeable 1-which provided for an increase of delays, the operating license should $21 million, or 42% of the amount be granted by the time the unit is requested. The early settlement of ready for its initial core loading near this request allowed the Company to the end of 1985. begin collecting the increase about our other community pro-III. ENVIRONMEN'I' 4% months earlier than the normal tiies show you the diver-decision date. For the second year running, various ,'[l'/,$8d",8l,'y,","' On July 22,1983 the PUC members of Congress proposed leg-otters a more traditional messt re yped approved the Company's request to islation to "do something" about the and o e lower its Energy Cost Rate for serv. acid ram problem. If some of the min town. ice rendered on and after August 1, most stringent proposals are The names of similar decreasing electric bills for the aver. adopted, Duquesne Light could be d,j$l',","*g",',["g88 age residential customer by about required to spend as much as $335 Duquesne. Munhall. 5%- million for flue gas scrubbers and an Monessen. For many years. through the Fifties and Six-additional $100 million a year for ties, muis in these towns II. NUCLEAR operation and maintenance of these roared 'round the clock. Ih Hl' Beaver Valley Unit No.1 is a devices. Customers' bills could , hr v d F a y reliable performer increase as much as 6% to 12%, and of reasons.the boom ended Beaver Valley Unit No.1 was shut this area's already depressed steel in the Seventies and early down for refueling and modifications and coalindustries would be badly hiff rn' aces ha e b on June 11,1983 and was returned to hurt. Duquesne Light has proposed goins cold. 1Is service as scheduled on September an alternative. It calls for acceler- ,,"d",$',*['jts 'he he 24,1983. During the outage,33 ated research (the causes of acid rain butin Homestead. Aliquippa. design modifications were made to are not scientifically established); an Braddock and the rest. the plant,21 of which were required emission ceiling for sulfur dioxide; $Ilr'st h s passe. l by the Nuclear Regulatory innovative alternative methods of Homestead has endured Commission. neutralizing acidity in lakes and ,] hard 'h oe a w h pp n, From the beginning of the year streams; and a trade-off policy Until the answer is in, peo-until June 11, this nuclear unit oper-between types of chemical com. pie here are doing what ated at an availability factor of 96%. pounds that may lead to airborne le"o5t out.' l On an annual basis, taking into acids. The plan would reduce the l account the shutdown period, its emissions that are blamed for l availability factor was 68%. causing acid rain, yet cushion the l In February 1983, the Emergency human and cost impacts. Preparedness Plan for Unit No.1 was tested in a full-scale, all-day drill. Federal agencies determined l that public health and safety can be l adequately protected in the event of a nuclear emergency. l8
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J IV. INTERNAL OPERATIONS 100 positions will be eliminated, )UR CmES AND PERSONNEL including some 20 managerial Management reorganization positions. Duquesne Light's overall organiza-New early retirement plan tional structure has not sigmficantly The reduction in personnel called for ONROEVILLE changed for about 17 years. Early in by the reorganization will be accom-1983, the Board of Directors retamed plished largely by attrition and by a the consultmg firm of Booz, Allen & new limited early retirement pro-Hamilton, Inc. to examine the organ-gram which was entirely voluntary. izational structure of the Company When the option was offered in late Pa and make recommendations for 1983,450 employees were eligible;
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improvement. In November, the 323 chose early retirement. The Board of Directors adopted a new option was terminated in January ~ plan of organization. 1984' { Under the new organization, oper-ations are directed by five Group New two-year union contract Monroevine's expansion Vice Presidents. They are Charles M. Duquesne Light and the Interna- ",'/s'((t[es Ne[e'le p*us Atkinson, Finance and Accounting; tional Brotherhood of Electrical dug up farms and piantes 4 Roger D. Beck, Administrative Ser-Workers signed a new contract $';,'l,','l,[,",',",'l,'*- vices; Clifford N. Dunn, Power Sup-effective October 1,1983. It provides settled into the quiet rou-ply; John J. Carey, Nuclear; and for a 6% increase in wages and a tine of a typical bedroom - William F. Gilfillan, Jr., Customer smallimprovement in fringe benefits ""'"'"broevine wu hen Services. In addition, Walter T. each year of the two-year pact. Most lust in the making, a shop-Wardzinskiis Vice President of important in these times is a provi-(",Q',"'ll ",",ch la ,needed Legal and Corporate Communica-sion that will help reduce costs by was built. it was a catalyst: tions. All report to John M. Arthur, increasing the work week of certain now Monroeville has about Chairman of the Board and Presi-clerical workers from 37% to 40 fdInNN(([pp'e'[db'v'E dent. For a complete list of Company hours at no additionalincrease in miles to get here. Four officers, see the inside back cover of wages. This change results in a stan- 'yl,'fl,7l",$',",5 5,,"P i this report. dard 40-hour work week for all Com-That tilted the populat:en The purpose of the new reorgani-I any employees. mix:them,s a h h pe ent-zation is to provide more efficient ,82 management audit produces '83 accents from Sweden Eng-management and to reduce costs. It land, France, Hungary, l results India. Japan.More recently,, will make our organization leaner by While the PUC-mandated manage-a railroad moved its head-l reducing the number of departments '"*""*"*"'*"d*" ment audit of 1982 by Temple' an$ ncreasing the responsibilities of Barker and Sloane, Inc. found Nh 1i t a the rew over existing managers. A total of about hait a million buyers and conventioneers last year. miles from downtown Monroeville is only 14 Pittsburgh and even closer to three major universities. I It, and other communities, ; ~ are starting to sprout build 4 ings with company names i that don't have any vowels. Advanced-tech is taking root around here. I I l i 1982 1983 Iligh/ low Common Stock The principal trading marketfor the Company's Common Stock is Ihe Nete York Stock Exchange. The stock is also listed on the Philadelphia Stock Exchange. 10
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Duquesne Light's operations to be Duquesne Light has worked with UR TOWNSHIPS generally acceptable, it also made various community groups for over some specific recommendations to two years to establish an energy j further improve our operations. We assistance fund. In 1983, we helped have been implementing certain of found the Dollar Energy Fund, an ENTER TOWNSHIP these recommendations. One visible independent, non-profit agency result in 1983 was a wider use of which was formed to meet the spe-computerized information systems. cific problem of inability to pay. ?- Benefits included increased clerical Duquesne Light supported the Dol-productivity, improved customer lar Energy Fund with start-up, pro-service and enhanced management motion and administration funds. We control. mailed more than a million of the Fund's appeals along with our regu-MD mom lar monthly bills. In addition, we will Early in the year, the Transmission provide up to $50,000 in matching and Distribution Department moved credits for the accounts of eligible Drive along the main north-its Western District headquarters t Duquesne Light customers receiving south road, first cut when this was Indian country. a new buildmg m Center Township. ThLs completed a multi-year consoh.- assistance from the Dollar Energy and you see one side of Fund. While only in existence for a Center Township-a bed-dation of Western District opera-little over three months, the Fund commu$e*t pNbuY'40 tions. There are seven sections and had received $55,970 in cash contri-minutes on the express-ppr xim tely 200 emnloyees at th. butions from customers by year end. way. it's a chore, but is seaver county taxes are location.The consolidation of three facilities has reduced costs and has Conservation @,ThIe'."p'e* opie "It o made it more convenient for several Besides conducting energy audits at the colleges-a community nn ate departments to work together. below cost for residential customers, y,"P,",s a ,pp g,,. Duquesne Light conducted a series very large mail. and their Most,mportant awards of 1983 of free lunchtime energy conserva. friendly neighbors. i We take pride in a good safety tion presentations for the public at y,",$',*,$',*,$'[r s'IN 'if record, and special pride in awards our new headquarters in downtown Center Township-the like these received in 1983: Pittsburgh. We also sponsored a load countryside. Better than From the Pennsylvania Electric management seminar for commer-Unr'e'mlles s$imand Association, an award for the best cial, industrial and governmental failow, water and woods, hills-places quite wild-accident-prevention record in the customers' Commonwealth's electric utility "",dMi,,,,9",'*, hs town-industry. More j,obs ship is more than a in-From the Pennsylvania Electric For the 25th year, Duquesne Light minute walk from where Association, an award for meritori-operated a full-time Area Develop-V'{"*'d',j ous results in the prevention of ment Department that works to have them in center Town. disabling shocks and burns. expand the local economy and, y,P,aj,in other parts of From the Edison Electric Insti-expand employment opportunities m tute, the Injury Frequency Reduc-our service area. The department tion Award certificate, for having staff worked with 180 prospective reduced injury rates 25% in a sin-employers during the year. Their gle year. efforts included finding land or buildings, locating financing, expe-V. COMMUNITY CONCERNS diting permits and providing studies Inability to pay on markets and labor skills. Our With heavy industry in our area still staff secured 52 commitments to in deep recession, the number of our expand or relocate in our service customers unable to pay for electric area. The result was 2,960 jobs service has grown noticeably. added or retained. 12
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e-Company Report en Financial Statem:nts The Company is responsible for the fmancial informa-ance with generally accepted auditing standards and tion and representations contained in the financial included a review of the system of internal accounting statements and other sections of this Annual Report. centrols and tests of transactions to the extent they The Company believes that the financial statements considered necessary to provide reasonable assurance have been prepared in conformity with generally that the financial statements are not misleading and do accepted accounting principles appropriate in the cir-not contain material errors. cumstances to reflect, in all material respects, the sub-The Board of Directors has an Audit Committee stance of events and transactions that should be composed of four non-officer directors which met four included and that the other information in the Annual times in 1983. The Audit Committee has the following Report is consistent with those statements. In prepar-duties and responsibilities:(1) recommend the indepen-ing the financial statements, the Company makes dent public accountants;(2) review the planned scope informed judgments and estimates based on currently and results of their audit and other services to be per-available information of the effects of certain events formed; (3) review the financial statements and the and transactions. related report of the independent public accountants; The Company maintains a system of internal (4) review with the officers, internal auditors and the accounting controls designed to provide reasonable independent public accountants the adequacy of the assurance that the Company's assets are safeguarded Company's system of internal accounting control, and that transactions are executed and recorded in including their recommendations with resnect thereto; accordance with established procedures. There are lim-and (5) review the planned scope and results of the its inherent in any system of internal control based on internal audit function. The independent certified pub-the recognition that the cost of such a system should lie accountants and internal auditors have full and free not exceed the benefits to be derived. The system of access to the Audit Committee and meet with it, with internal accounting control is supported by written pol-and without management being present, to discuss icies and guidelines and is supplemented by a staff of internal accounting controls, auditing and financial internal auditors. The Company believes that the inter-reporting matters. nal accounting control system provides reasonable assurance that its assets are safeguarded and the (h, Q4 h [ financialinformation is reliable. The accompanying consolidated financial statements C. M. Atkinson John M. Arthur have been audited by Deloitte Haskins & Sells, inde. Vice President-Chairman of the Board pendent certified public accountants, whose appoint. Finance and and President .. ment was approved at the 1983 Annual Meeting of Accountmg Group Stockholders. Their examination was made in accord-Opinion ofIndependent Certified Public Accountants DELOITTE HASKINS & SELLS tests of the accounting records and such other auditing Certified Public Accountants procedures as we considered necessary in the Two Gateway Center circumstances. Pittsburgh, Pennsylvania 15222 In our opinion, such consolidated financial state-TO THE DIRECTORS AND STOCKHOLDERS ments present fairly the consolidated financial position f Duquesne Light Company at December 31,1983 and OF DUQUESNE LIGHT COMPANY: 1982 and the results of its operations and the changes i We have examined the consolidated balance sheets of in its financial position for each of the three years in Duquesne Light Company as of December 31,1983 the period ended December 31,1983, in conformity and 1982 and the related statements of consolidated with generally accepted accounting principles applied income, retained earnings, capital surplus and changes on a consistent basis, in financial position for each of the three years in the period ended December 31,1983. Our examinations were made in accordance with generally accepted [ . auditing standards and, accordingly, included such February 15,1984 i l l 14 j
yf g 3 \\ Duquesne Light Company Statement of Consolidated Income. For the Three Years Ended December 31,1983 e . (Thousands of Dollars, Except Per Share Amounts) 1983 1982 1981 . ELECTRIC OPERATING REVENUES $800,345 $746,462 $786,229 - OPERATING EXPENSES: I 192,512 229,693 242,871 l 3 Fuel e ' Purchased power (sales)-net 1 (7,330) (23,172) 16,189 - Other operation i 136,188 126,151 113,423 Maintenance (Note N) 65,016 66,855 63,106 Depreciation 73,682 62,939 60,854 Taxce other than income taxes (Note N) - 60,651 57,476 57,694 li Income taxes (Note H) 1-92,954 71,213 72,263 1 /' Total Operating Expenses : 613,673 591,155 626,400 OPERATING INCOME 186,672 155,307 159,829 OTHER INCOME: i Allowance for equity funds Used during construction 50,709 35,415 24,619_ u Incomn taxes-credit (Note 3) 16,760 17,906 14,462 Other income and deductior.s-net 246 8,913 3,467 . Total Other Income ' 67.715 62,234 42,548 INCOME'BEFORE INTEREST CHARGES 254,387 217,541 202,377 . INTEREST CHARGES: Interest on long-term debt 118,813 111,726 97,404 / 5,736 3,471 6,957 i Otherinterest Allowance for borrowed funds used during construction, not ofincome taxes ( (15,388) (14,853) (11,393) s-TotalInterest Charges 109.161 100,344 92,968 N i 4NCOME FROM CONTINUING ELECTRIC OPJRATIONS BEFORE ' EXTRAORDINARY GAIN 145,226 117,197 109,409 i. DISCONTINUED STEAM HEATING OPERATIONS (Note C): '1 Imss from operations of discontinued ster.m heating subsidiary (924) (538) (9,000) IAss on disposition of discontinued steam heating subsidiary INCOME BEFOREEXTRAORDINARY GAIN 145,226 107,273 108,871{ l EXTRAORDINAILY GAIN ON EARLY EXTINGUISHMENT 9,609 r OF BONDS (Note D) NET INCOME 145,226 116,882 108,871 DIVIDENDS ON PREFERRED AND PREFERENCE STOCK 22.111 22,701 22,976 $122,815 $ 94,181 8 85,895 L EARNINGS FOR COMMON STOCK AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (000) 55,883 48,236 -41,764 EARNINGS PER SHARE OF COMMON STOCK: l J.ncome from continuing electric operations $2.20 $1.96 ,, $S.07 (.21) ' (.01) ! " Loss from discontinued steam heating operations (Note C) .20 . Extraordinary gain (Note D) t Netincome - $2.20
~~$1.95~~
$2.06 DIVIDENDS DECLARED PER SHARE OF COMMON STOCK $2.00 $1.90 $1.85 l The accompanying Notes to Financial Statements are an integral part of these stagments. F r i 15 L 2
Duquesne Light Company . Consolidated Balance Sheet . December 31,1983 and 1982 (Thousands of Dollars) 1983 1982 ASSETS PROPERTY, PLANT AND EQUIPMENT: Electric plant in service $2,434,916 $2,347,640 Construction work.n urogress 856,766 675,621 Held for future use 1,799 1,293 Total 3,293,481 3,024,554 Less accumulated,lepreciation 555,641 504,680 Property, Plant and Equipment-Net 2,737,840 2,519,874 OTHER PROPERTY AND INVESTMENTS: Nonutility property - 2,050 2,008 Miscellaneous investments 12,421 8,489 Total Other Property and Investments 14.474 10,497 CURRENT ASSETS: Cash and temporary cash investments (at cost which approximates market) 73,751 33,663 Accounts receivable: Customers (less reserve for uncollectible accounts of $2,652 and $2,270, respectively) 69,822 60,177 Tax refund - 5,507 Other 19,797 21,284 - Materials and supplies (generally at average cost): Coal 59,205 69,194-Other operating and construction 34,983 33,964 Deferred income taxes 3.121 7,265 Other current assets 13,028 13,851 Total Current Assets 273,707 244,905 f DEFERRED DEBITS: Ex'a aordinary property losses (Note B) 36,565 40,334 . Deferred coal costs (Notes G and M) 22,343 18,338 Other deferred debits 60,882 49,476 Total Deferred Debits 119,790 108,148 Total $3,145,811 $2,883,424 The accompanying Notes to Financial Statements are an integral part of these statements. t 5 16 . ~
1983 1982 LIABILITIES CAPITALIZATION (Note E): Common Stock (authorized-75,000,000 shares; outstanding-58,419,659 and 53,276,525 shares, respectively) $ 58,420 $ 53,277 Capital surplus 724,147 649,376 Retained earnings 175,938 165,340 Total Common Stockholders' Equity 958,505 867,993 Non-redeemable Preferred and Preference Stock 156,137 156,137 Redeemable Preferred and Preference Stock 134,979 140,829 First mortgage bonds 1,100,147 1,006,637 Other long-term debt 231,019 199,934 Unamortized debt discount and premium-net (10.967) (9.488) Total Capitalization 2.572,820 2,362,042 CURRENT LIABILITIES: long-term debt maturing within one year (Note E) 16,700 12,500 Accounts payable 95,030 98,399 Accrued income taxes (Note H) 5,778 6,403 19,430 13,658 Other accrued and deferred income taxes 9,974 Energy cost rate refunds Accrued interest 40,390 29,482 Dividends declared 34,771 30,302 Sinking fund and purchase requirements (Note E) 13,391 10,987 Reserve for loss on discontinued steam heating operations (Note C) 3,181 2,698 Total Current Liabilities 228,671 214,403 l l _ DEFERRED CREDITS: l Investment tax credits 143,764 126,447 l Accumulated deferred income taxes 193,649 172,600 Oth?r deferred credits 6,907 7,932 Total Deferred Credits 344,320 306,979 ' COMMITMENTS AND CONTINGENT LIABILITIES (Notes G, I, L and M) i Total $3,145,811 $2,883,424 ( I l l [ 17
Duquesne Light Company Statement of Changes in Consolidated Financial Position For the Three Years Ended December 31,1983 (Thousands of Dollars) 1983 1982 1981 SOURCE OF FUNDS: ) Continuing electric operations: Income irom continuing electric operations before extraordinary gain $145,226 $117,197 $109,409 Items not affecting working capital: Depreciation - 79,800 66,303 63,560 Investment tax credit deferred-net 17,317 17,335 11,524 Income taxes deferred-net (noncurrent portion) 21,049 18,466 38,040 Allowance for equity and borrowed funds used daring construction (66,097) (50,268) (36,012) Total 197,295 169,033 186,521 Discontinued steam heating operations (9,924) (538) Items not affecting working capital (including depreciation: 1982, $595,1981, $610) (349) 690 Total From Operatiens (excluding extraordinary gain) 197,295 158,760 186,673 Extraordinary gain on early extinguishment of bonds 9,609 Sale of bonds 110,000 65,000 80,000 Issuance of Common Stock 80,485 107,369 61,332 Nuclear fuel obligations 6,125 24,221 Construction costs reimbursed by trustees from proceeds of pollution control financings 19,680 50,000 Decrease in working capital (exclusive of current maturities of long-term debt)(a) 30,312 Total Source of Funds $413,585 $395,271 $378,005 APPLICATION OF FUNDS: Construction expenditures (net of allowance for equity and borrowed funds used during construction) $224,280 $231,022 $178,942 Dividends on capital stock 131,628 115,247 100,268 Reduction of bonds 12,500 43,852 Sinking fund and purchase requirements 4,696 2,691 4,461 Deferred coal costs 4,005 2,669 15,355 Decrease in notespayable 35,000 Other-net 14,742 (210) 15,679 i increase in working capital (exclusive of current maturities of long-term debt and notes payable)(a) 18,734 28,300 Total Application of Funds $413.585 $395,271 $378,005 (a) The components of working capital (exclusive of current maturities of long-term debt and notes payable) were as follows: Current assets: Cash and temporary cash investments 8 73,751 $ 33,663 $ 50,655 j Accounts receivable 89,619 86,968 94,363 Materials and supplies and other current assets 107,216 117,009 95,878 Deferred income taxes 3,121 7,265 Total 273,707 244,905 240,896 Current liabilities: Accounts payable and accrued interest 135,420 127,881 106,337 i Accrued taxes 25,208 20,061 24,280 Energy cost rate refunds 9,974 ) Dividends declared 31,771 30,302 27,232 Sinking fund and purchase requirements 13,391 10,987 9,733 Reserve for loss on discontinued steam heating operations 3,181 2,698 l Total 211,971 201,903 167,582 Working capital at close of year 61,736 43,002 73,314 Working capital at beginning of year-43,002 73,314 45,014 Increase (decrease)in working capital (exclusive of current maturities of long-term debt and notes payable) $ 18,731 $(30,312) $ 28,300 The accompanying Notes to Financial Statements are an integral part of these statements.
18
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Duquesne Light Company Statement of Consolidated Retained Earnings For the Three Years Ended December 31,1983 (Thousands of Dollars) 1983 1982 1981 BALANCE AT BEGINNING OF YEAlt: As previously reported $1(17,149 $158,54fi Less settlement of prior years' income taxes (Note D 3,444 3,444 As restated $165,310 163,705 155,102 NET INCOME FOR TliE YEAR 115.226 11fi,882 108.871 Total-310,566 280,587 263,973 DEDUCT: Cash dividends declared: Preferred Stock: - 47 Series 1,100 1,100 1,100 3.75% Series 281 281 281 4.15% Series 291 291 291 4.20% Series 210 210 210 4.10"4 Series 216 24fi 246 $2.10 Series 516 33fi 33fi $8.64 Series 2,219 2,271 2,323 _ $7.20 Se ies 2,520 2,520 2,520 $8.375 Series 2,512 2,512 2,512 Preference Stock: $7.50 Series 1,9Ii 2,038 2,119 $2.75 Series 891 1,035 1,177 $2.315 Series 2,778 2,778 2,778 $2.10 Series 2,520 2,520 2,520 $9.125 Series 4,563 4,561 4,563 Common Stock (Per Share: 1983--$2.00: 1982-$1.90: 1981-$1.85) 112.217 92,546 77,292 Total Cash Dividends 131,628 115.247 100.268 BALANCE AT CLOSE OF YEAR $175,938 $165.380 $163,705 Statement of Consolidated Capital Surplus For the Three Years Ended December 31,1983 - (Thousands of Dollars) 1983 1982 1981 BALANCE AT BEGINNING OF YEAR $619,376 $550,244 $491,228 Premium on Common Stock issued 75.312 99,39.3-a6,196
~~Expense ofissuing capital stock (571)~~
(2fs0 (180) BALANCE AT CLOSE OF YEAR $721,117 $649,376 $550,244 . The accompanying Notes to Financial Statements are an integral part of these statements. 19
' JDuquesneLightCompany
~~Notes to Fmancial Statements J A.~~
~~SUMMARY~~
OF ACCOUNTING POLICIES: gress. Investment tax credits are deferred and amortized over 4 .~ ' Consolidation the lives of the related facilities. The consolidated financial statements include the Company Deferred Fuel Costs D and its wholly-owned subsidiary. See Note C concerning The Company defers the difference between actual fuel costs idispositionof thesubsidiary. and base fuel costs until the period in which such costs are : Property, Plant'and Equipment ' billed to its customers through its energy cost rate. The energy 1The properties of the Company are carried at original cost and, cost rate is based on projected costs, with provisions for subse- ~. t with minor exceptions, are subject to a first mortgage lien. All quent adjustments to actual cost. Any overcollections of reve-maintenance and repairs and replacements of minor units of nues are refunded to customers. property are charged to income. Replacements of retirement Nuclear Fuel Costs units of property and betterments are capitalized. In connection The Company's share of nuclear fuel costs under non-7 with retirements, reserves are charged with the carrying value, capitalized lease agreements is charged to fuel expense based . plus dismantling charges, less salvage, of property retired. on the quantity of electric energy generated and reflects a zero Revenues net salvage value for the leased nuclear fuel. In 1982 the Com. ? Customer meters are read monthly or bimonthly and bills are pany began capitalizing acquisitions of nuclear material Lrendered on a monthly basis. Revenues are recorded when through a trust arrangement that is intended to finance a por- - Ebilled. ~ tion of the Company's requirements for nuclear fuel. An ' Allowance for Funds Used During Construction. accounting pronouncement issued by the Financial Accounting, . In accordance with the uniform system of accounts prescribed Standards Board in 1982 will result,m, capi,talization of the 0 ' i by regulatory authorities, an allowance for funds used during Company's nuclear fuelleases begmn, g m 1984. m construction (AFC)is included in construction work in progress Under the Nuclear Waste Pohey Act of 1982 (the Act), the c - and credited to other income for AFC attributable to equity United States Department of Energy (DOE)is responsible for - funds and to interest charges for AFC attributable to bor-the ultimate storage and disposal of spent nuclear fuel removed rowed funds, net of income taxes. AFC is a non-cash item and from reactors. Under the Act the Company is required to pay a is computed using a composite rate, which is applied to the bal-quarterly fee to DOE of one mill per kilowatt-hour on nuclear i ance of construction work in progress and assumes that funds generation after April 6,1983 and a one-time fee for nuclear used for construction are provided by borrowings and by pre, generation through April 6,1983. Although the method of ' ferred, preference and common stock equity. The rate, com. payment of the one-time fee, currently estimated to be approxi-pounded semi-annually, was 9.6%,8.5% and 7.6% in 1983,1982 mately $8,921,000, has not been determmed, this amount has f and 1981, respectively.This accounting procedure results in the been recorded as long-term debt with a contra charge to, inclusion in property, plant and equipment of a~ mounts consid-deferred debits. The Company began recovermg the one-time - ered by regulatory authorities as appropriate costs for the fee m rates m I ebruary 1983 and has established a trust, fund
~~purpose of establishing rates for utility charges to customers.~~
f r the deposit of the amounts recovered.The Company is also recovermg the fees for generation after April 6,1983 and mak-3Deprec tion ia ing payments to DOE on a quarterly basis. The Company provides for depreciation of electric plant, Debt discount or pre,m,um and Expense Debt Discount, Premi exclusive of coal properties, on a straight-line basis determined ium and related expenses are amortized in a manner consistent with applicable Pennsylvania law and t with methods applied by the Pennsylvania Public Utility Com. over the hves of the issues to which they pertam. l mission (Commission) in,the determination of depreciation in B. EXTRAORDINARY PROPERTY LOSSES: i rate proceedings. Provisions for depreciation and depletion of In January 1980, the Company and the other CAPCO compa-other Company property are made,on various bases such as nies cancelled the construction of four nuclear generating tons of coal mmed for coal properties. units. The Company received approval from the Federal ' The Company provides for decontamm.ation and dismanth.ng Energy Regulatory Commission (FERC) and the Pennsylvania costs for the Beaver Valley No.1 nuclear generatmg umt m Public Utility Commission (Commission) to amortize and accordance with the, provisions of the orders of the Commis-recover from its customers its share of the accumulated costs - l sion. The Company is allowed to recover from its customers applicable to these units over a ten-year period which began annual decommissiomng annuity payments to provide for the January 29,1983.The unrecovered costs which were L decommissionmg of the nuclear related components. Such unamortized as of December 31,1983 were $31,291,000. u costs are currently. estimated to be approximately $30,000,000. On October 1,1982 the Shippingport Atomic Power Station - The Company deposits certam revenues m a trust fund which was removed from commercial operation after notice from the - has been established to pay for such costs. At, December 31, United States Department of Energy that it was planning to
~~1983, $1,573,000 was meluded in the Decommissionmg Trust terminate operation of the light water breeder reactor core at '~~
Fund, which represents the aggregate value of revenue de-the station as of that date.The Company requested approval _ posits and interest earned on mvestments made by the trustee. from FERC to record the undepreciated cost of the station as Income Taxes an extraordinary property loss and to amortize such loss over a Deferred income taxes are provided principally for differences ten-year period beginning on the date that rates providing for .between depreciation for income tax purposcs and depreciation the recovery of such cost first become effective. Consistent - . for accounting purposes to the extent permitted by the Com-with this request, the Company reclassified the net amount to mission for rate-making purposes, and for fuel and extraordi-extraordinary property losses. The Company has received . nary property losses deferred for accounting purposes but approval from the Commission to amortize and recover a por-
deducted currently for income tax purposes. In compliance tion of this amount, net of income taxes, from its customers with regulatory accounting, income taxes are allocated over a ten-year period which began January 29,1983.-
1 between operating expenses and other income' principally with The Company is not earning any return on the unamortized respect to interest charges related to construction work in pro-costs of either of the property losses.
~~20 L~~
C. DISCONTINUED STEAM HEATING OPERATIONS: 31,1983. These losses were charged against 1982 income, and On September 30,1982 the Pennsylvania Public Utility Co.n-no additional loss is expected to be incurred due to the disposi- - mis: ion approved the application by the Company's steam tion. Prior years' operating results have been reclassified to heating subsidiary, Allegheny County Steam Heating Com-present separately the results of discontinued steam heating . pany, to discontinue steam service to the public effective May operations from continuing electric operations. 31,1983 and to transfer to Pittsburgh Allegheny County Ther. At December 31,1983 and 1982 assets and liabilities included mal, Ltd. (PACT) a major portion of the subsidiary's assets for in the consolidated balance sheet applicable to the subsidiary nomin.1 consideration.The transfer of the assets became effec-were not material. Revenues from discontinued steam heating tive June 1,1983. In addition, a lease to PACT of a steam gener-operations for the five months ended May 31,1983 and for 1982 ating plant for nominal consideration became effective on Jan-and 1981 were approximately $6,884,000, $8,845,000 and . uary 3,1983 after completion by the subsidiary of certain $10,996,000, respectively. demolition work atthe plant. The provision for loss on the disposition of the subsidiary's D. EARIX EXTINGUISHMENT OF HONDS: assets was $9,000,000(net ofincome tax benefit of approxi-In December 1982, the Company exchanged 1,406,898 shares mately $8,712,000) and the loss from operations was $924,000 of Common Stock for approximately $29,852,000 principal (net of income tax benefit of approximately $1,028,000) for the amount of outstanding First Mortgage Bonds which were nine months ended September 30,1982. The provision for loss owned by an investment banking firm. The exchange resulted on disposition included estimated operating losses for the sub-in a nontaxable extraordinary gain of $9,600,000, or $.20 per sidiary of $1,100,000 (net of income tax benefit of approxi-share, which was the difference between the exchange value mately $970,000) for the period October 1,1982 through May of the Common Stock and the net carrying amount of the bonds. E. CAPITALIZATION: December 31,1983 December 31,1982 Shares Shares Outstanding Amount Outstanding Amount Common Stock-$1 par value(1) 58,119,659 $ 58,419,659 53,276,525 $ 53,276,525 iC:pitalSurplus: Premium on Common Stock $731,335,853 $655,993,654 CapFtalstock expense (debit) (7,622,314) (7,065,026) - Other 433,.142 447,147 Capitalsurplus $724,146,951 $649,375,775 Non-redeemable Preferred and Preference Stock: Pref:rred Stock-850 par value (cumulative) (1) 4% Series (2) 589,969 $ 27,498,150 549,969 $ 27,498,450 3.75% Series (2) 150,000 7,500,000 150,000 7,500,000 4.15% Series (2) 140,000 7,000,000 140,000 7,000,000 4.20% Series (2) 100,000 5,000,000 100,000 5,000,000 4.10% Series (2) 120,000 6,000,000 120,000 6,000,000 $2,10 Series (2) 160,000 8,000,000 160,000 8,000,000 $7.20 Series (3) 350,000 17,500,000 350,000 17,500,000 Preference Stock-$1 par value (cumulative)(1) i $2.315 Series (4) 1,200,000 1,200,000 1,200,000 1,200,000 $2.10 Series (4) 1,200,000 1,200,000 1,200,000 1,200,000 I 80,898.450 80,898,450 i Premium on Non-redeemable Preferred and Preference Stock 75,238,760 75,238,760 Non-redeemable Preferred and Preference Stock $156,137,210 $156,137,210 b Involuntary liquidation value $155,998,450 $155,998,450 i Redeemable Preferred and Preference Stock: Pref:rred Stock-$50 par value (cumulative)(1) $8.64 Series (3) 256,872 $ 12,813,600 262,872 $ 13,143,600 $8.375 Series (3) 300,000 15,000,000 300,000 15,000,000 Pref:rence Stock-$1 par value (cumulatke)(1) $7.50 Series (3) 255,920 255,920 268,920 268,920 $2.75 Series (4) 270,570 270,570 365,020 365,020 $9.125 Series (3) 500,000 500,000 500,000 500,000 28,870,090 29,277,540 - Premium on Redeemable Preferred and Preference Stock 109.173,360 113,027,160 Purchase and Sinking Fund Requirements (3.061.2501 (1,475.500) Redeemable Preferred and Preference Stock $131,979,200 $140,829.200 Involuntaryliquidation value $134,979,200 $140,829.200 . (1) Authorizedshares:CommonStock-75,000,000;(increased (2) $50pershareinvoluntaryli uidation value. in 1983 from 60,000,000); Preferred Stock-4,000,000; (3) $100pershareinvoluntary uidation value. and Preference Stock-8,000,000. (4) $25pershareinvoluntaryI idation value. l _ _ _. _ _ _. - _ _ ~ _ _ _ _ _ - - -,
' Duquesne Light Company Notencontinued) The follcwing summary indicates the changes in the number of shares of Common Stock outstanding during 1983,1982 and 1981: Year Ended December 31, 1983 1982 1981 Common SwcI[ Shares outstuding at beginning of year 53.276,525 45,302,520 40,166,083 Issuances: Common Stock sales 2,175,000 4,500,000 4,100,000 Dividend Reinvestment Plan 2,524.407 1,962,320 902,977 Employee Stock Ownership Plan 143,727 104,787 133,460 Exchanged for outstanding First Mortgage Bonds 1,406.898 Shares outstanding at end of year 58,419,659 53.276.525 45.302.520 ' The number of shares reserved at December 31,1983 for 1988, and thereafter at $100 plus the applicable redemption issuance under the Divided Reinvestment Plan and the premium decreasing from $5.03 in 1988 to $.34 in 2003. Employee Stock Ownership Plan are 6,364,124 and 448,115, respectively. Redeemable Preferred and Preference Stock: The Preference Stock is entitled to quarterly cumulatize The shares of $7.50 Preference Stock are entitled to a non-dividends except that no dividends may be paid if dividends on cumulative purchase fund under which the Company offers to any series of the Preferred Stock are accumulated and unpaid. purchase annually at $100 per share up to 4% of the number of In the event that six quarterly dividends on any series of Pref-shares originally issued. The shares of $2.75 Preference Stock crence Stock are in default, the holders of the Preference are subject to a cumulative sinking fund which will retire Stock are entitled to elect two directors until all dividends in 55,000 shares by August 1 in each year at $25 per share. The arrears have been paid. Company may on a non-cumulative basis retire an additional - The outstanding Preference Stock of the Company is 55,000 shares in each such year. The shares of $9.125 Prefer-callable on not less than thirty days' notice at the following ence Stock are subject to a cumulative sinking fund beginning redemption prices plus accrued dividends: $7.50-redeemable with the year 1985 and continuing through 1997 inclusive rt $105 through April 1,1986; $103 through April 1,1989; and which will retire 33,300 shares on January 1 in each year at $101 thereafter; $2.75-not redeemable prior to August 1, $100 per share. The Company may, on a non-cumulative basis, 1984 through certain refunding operations, otherwise redeem-retire an additional 33,300 shares in each such year, provided able at $27.75 through July 31,1984; $26.50 through July 31, that the Company may not redeem through the exercise of this 1989; and $25.25 thereaftar; $2.315-redeemable at $26.60 option more than an aggregate of 150,000 shares. through March 31,1986; $25.90 through March 31,1991; and The shares of $8.64 Preferred Stock are entitled to a non- $25.25 thereafter; $2.10-redeemable at $26.40 through cumulative purchase fund under which the Company offers to March 31,1987; $25.70 through March 31,1992; and $25.00 purchase annually up to 6,000 shares at not more than $100 thereafter; $9.125-not redeemable prior to January 1,1989 per share. The shares of $8.375 Preferred Stock are subject to through certain refunding operations, otherwise redeemable a cumulative sinking fund beginning with the year 1984 which ct $100 plus the applicable redemption premium decreasing will retire 12,000 shares on April 1 in each year at $100 per from $6.72 in 1984 to $.48 in 1998. share. The Company may on a non-cumulative basis retire an The Preferred Stock is entitled to quarterly cumulative additional 12,000 shares in each such year. dividenas. In the event that four quarterly dividends on any The combined aggregate sinking fund and mandatory pur-series of Preferred Stock are in default, the holders of the Pre-chase requirements for the next five years as of December 31, f;.rred Stock are entitled to elect a majority of the Board of 1983 are as follows: Directors until all dividends in arrears and current dividends have been paid. Year Ending Sinking Fund and Mandatory The outstanding Preferred Stock of the Company is callable December 31, Purchase Requirements on not les a than thirty days' notice at the following redemption 1984 $4,364,250 prices plus accrued dividends: 4%$51.50; 3.75%-$51.00; 4.15%$51.73; 4.20%$51.71; 4.10%$51.75; $2.10-$51.84; 1985 7,805,000 $8.64-redeemable at $107 through September 30,1984; $104 1986 7,805,000 2 through September 30,1989; and $101 thereafter; $7.20-1987 7'805,000 redeemable at $102.50 through March 31,1987; and $101 1988 7,805,000 thereafter; $8.375-redeemable at $112 through March 31,
- The foUowing summary indicates the changes in the number of shares of Roleemable and Non-redeemable Preferred and Preference Stock outstanding during 1983,1982 and 1981: Year Ended December 31, 1983 1982 1981 Pref:rence Stock: Shares outstanding at beginning of year 3,533,910 3,565,220 3,678,650 _ Purehases and redemptions --$2.75 Series (91,450) (20,080) (103,750) ~$7.50 Series (13,000) (11.200) (9.680) Shares outstandingat end of year 3,426,490 3,533,940 3.565,220 Preferred Stock: Shares outstanding at beginning of year 2,132,811 2,138,841 2,144,841 Purchases-$8.64 Series (6.000) (6,000) (6,000) Shares outstanding at end of year 2,126.811 2,132,841 2,138.841 First Mortgage Bonds (amount authorized is unlimited by indenture): December 31, 1983 1982 Series due September 1,1983(3%%) - 12,000,000 Series dueJuly 1,19&l(3%%) 16,000,000 16,000,000 ' Series duc April 1,1986(3%%) 20,000,000 20,000,000 Series due Aprill,1988(3%%) 15,000,000 15,000,000 Series due March 1,1989(4%%) 10,000,000 10,000,000 Series due February 1,1996(5%%) 22,800,000 22,800,000 Series due February 1,1997(5%%) 24,600,000 24,600,000 Series due February 1,1998(6%%) 31,700,000 34,700,000 Series dueJanuary 1,1999 G%) 30,000,000 30,000,000 Series dueJuly 1,1999 G%%) 28,917,000 28,947,000 Series due March 1,2000(8%%) 30,000,000 30,000,000 Series due March 1,2001 G%%) 35,000,000 35,000,000 ' Series due December 1,2001 G%%) 26,461,000 26,461,000 Series dueJune l,2002 G%%) 28,470,000 28,470,000 Series dueJanuary 1,2003(7%%) 32,670,000 32,670,000 Series dueJuly 1,2003 G%%) 35,000,000 35,000,000 Seriesdue April 1,2004(8%%) 44,100,000 44,100,000 Series due March 1,2005(9%%) 50,000,000 50,000,000 Series dueJune 1,2006(9%) 80,000,000 80,000,000 Series due April 1,2007(8%%) 97,400,000 97,400,000 Series due February l,2009(10%%) 100,000,000 100,000,000 Series dueJanuary 1,2010(12%%) 60,000,000 60,000,000 Series due September 1,2010(14%%) 50,000,000 50,000,000 Serias dueJune 1,2011(16%) 80,000,000 8'),000,063 Series due May 1,2012(16%%) 65,000,000 65,000,000 Series due Aprill,2013(12%%) 60,000,000 Series due December 1,2013(13%) 50,000,000 Total 1,126,188,000 1,028,148,000 less: 12,000,000 - Current maturities-Series due September 1,1983 (3%%) Current maturities-Series due July 1,1984 (3 %%) 16,000,000 Current sinking fund requirementa 10,001.180 9,511,480 First Mortgage Bonds $1,100,146,520 $1,006,636,520
Duquesne Light Company Nat:s (continued) Other L9ng-Term Debt: serial Maturity Pollution ControlObligations: Average or Mandatory December 31' - Date of Interest Redemption Fina' Issuance Rate Beginning Maturity 1983 1982 September 21,1972 5.49% 1983 2002 $ 23,500,000 $ 24.000,000 June 21,1973 5.685% 1984 2003 12,000,000 12,000,000 October 25,1973 5.755% 1984 2003 16,000,000 16,000,000 August 13,1974 7.97 % 1989 2004 11,000,000 14,000,000 April 2,1975 7.50% 1993 2005 17,000,000 17,000,000 October 29,1975 8.40% 1991 2005 18,000,000 18,000,000 September 29,1976 6.90% 1994 2011 15,000,000 15,000,000 March 24,1981 12.00% 2002 2011 50,000,000 50,000,000 November l.1983 10.50% 2013 20.500.000 Total 186,000,000 166,000,000 Less: Current maturities 700,000 500,000 Current sinking fund requirements 325,000 Pblhition ControlObligations 181.975,000 165,500,000 Nuclear Fuel Obligations 30,343,499 24,221,187 Spent Nuclear Fucl Liability 8,920,790 5% Sinking Fund Debentures (authorized $20,000.000) due Matth 1,2010 9,778.000 10,213,000 Total Otherlong-Term Debt $234,019.289 $199.934.187 The pollution control obligations arise from arrangements Year Ending Dec.31, Sinking Fund Requirements Maturities between the Company and development authorities whereb, 1984 $11,426,480 $16,700'000 the construction of certain pollution control facilities has been 1985 11,426,480 700,000 financed through the sale of bonds by those authorities, and the Company is obligated to pay to the authorities amounts 1986 11,429,480 20,700,000 equal to the principal of and interest on the authorities' bonds. 1987 11,676,480 800,000 The nuclear fuel obligations result from a trust arrange-1988 11,526.480 15.800,000 ment for the procurement of a portion of the Company s requirements for nuclear fuel. Interest amounts applicable to The sinking fund requirements in each year relate primarily the trust are capitalized and included in construction work in to the First Mortgage Bonds, which requirements may be sat-progress, at rates ranging from 1 %% to 1 %% over the isfied by the certification of property additions at 1662/3%of the trustee's commercial paper rate. Trust obligations will be paid Bonds required to be redeemed, and the pollution control obli-by the Company as the related nuclear fuelis withdrawn from gations.The remaining sinking fund requirement relates to the trust. the 5% Sinking Fund Debentures. At December 31,1983, sink-The spent nuclear fuel liability results from a requirement ing fund requirements for the 5% Debentures had been satis-to provide for payment of a one-time fee to the United States fled for 1984 and 1985, and the 1986 sinking fund requir ement Department of Energy for ultimate storage and disposal of had been partially satisfied in the amount of $222,000, spent nuclear fuel used in the generation of electricity through Total interest costs incurred during 1983,1982 and 1981 April 6,1983. See Note A to the financial statements. were $131,248,000, $125,004,000 and $111,331,000, respec-Sinking fund requirements and maturities for the next five tively, of which $73,310,000, $60,075,000 and $42,982,000, years for long-term debt outstanding, exclusive of nuclear and respectively, were capitalized or deferred, including allowance sp2nt fuel obligations, as of December 31,1983 are as follows: for funds used during construction. F. SHORT-TERM BORROWING ARRANGEMENTS: 15,1989. Interest rates fluctuate during the revolving and At December 31,1983 the Company had lines of credit with term periods, depending on the period of borrowings, at two banks totaling $15,000,000, all of which was unused. percentages in excess of prime, Euro-Rate or certificate of Effective February 1,1984 these lines of credit increased to an deposit rates. Until December 15,1986 there is a commitment aggregate of $35,000,600. The range of interest rates under fee of %% per annum on the average unborrowed commit-these lines of credit are from prime rate less one half of one ment. There is no commitment fee during the term period. percent to the prime rate or at a special rate as may be offered During the years ended December 31,1983,1982 and 1981 from time to time by the banks. As part of the arrangement the maximum amount of short-term borrowings outstanding for one of the lines of credit, the Company is required to pay was $48,020,000, $37,000,000 and $80,140,000, the average a commitment fee of %% per annum on the unused portion daily short-term borrowings outstanding were $12,251,000, of the line.There are no compensating balances associated $1,559,000 and $28,341,000 and the weighted average daily with these lines of credit. In addition, the Company has a interest rate applicable to such short-term borrowings was . $60,000,000 revolving credit arrangement available to Decem-9.407c,15.39% and 17.50%, respectively. ber 15,1986, all of which was unused at December 31,1983. G. DEFERRED COAL COSTS: v:rted to term notes payable m,ecember 15,1986 may be con-six equalsemi-annualinstall' long-term coal supply arrangements with Quarto Mining Com 1 Borrowings outstandingat D The Company and the other CAPCO companies have made ments commenemgJune 15,1987 and concludmg December pany (Quarto), an unaffiliated company, to supply coal for the 24
' Bruce M;nsfield Units. In December 1980 the Pennsylvania investigation entered an order, subject to review by the Com-Public Utility Commission (Commission) instituted an investi-mission, approving the Stipu!ation Agreement. On November . gation into the reasonableness of the cost of coal supplied by 19,1982 the Commission remanded the Stipulation Agreement Quarto. By Interim Order entered January 12,1981 the Com-to the administrative law judge for hearings. Hearings were mission directed that, pending conclusion of the investigation held in January and February 1983, and on April 29,1983 the or further order of the Commission, the Company limit its Commission issued an order allowing the Consumer Advocate recov:ry of the cost of Quarto coal through its energy cost to place into the record testimony regarding the prudence of rate to approximately the prevailing market price of similar the Quarto project. Further hearings were held in July and coal rather than the actual cost of Quarto coal. As required by August 1983. On February 3,1984 the administrative law the Interim Order, the Company is deferring the excess of the judge issued a recommended decision, subject to the Com-actu 1 cost of Quarto coal over the cost being recovered mission's approval, concluding that the Company was prudent through its energy cost rate until recovery of the actual cost is by initiating and continuing the Quarto project and that the permitted by the Commission. At December 31,1983 the Stipulation Agreement is in the public interest and is a fair and unrecov: red cost of Quarto coal paid by the Company was reasonable resolution of the investigation into the reasonable-
approximately $21,541,000, including $876,000 applicable to ness of the cost of Quarto coal. The administrative law judge Quarto coal in inventory, If recovery of such excess is disal-recommended that the Stipulation Agreement and its method-
' lowed, the amount deferred would be charged to income in the ology for recovering the cost of the Quarto coal be approved , year of disallowance.Thereafter, any excess of actual cost and the Commission's investigation terminated. The matter is ov:r the amount permitted to be recovered would be charged presently pending before the Commission. Management of the ' to income on a current basis.The deferrals and methods of Company believes that the deferred costs were prudently ultimately recovering such deferrals were the subject of dis-incurred and that the eventual outcome of the Commission's cussions between representatives of the Company and the investigation will not have a material effect on the Company's Commission staff. Such discussions resulted in the filing with financial position or results of operations. Ti.e CAPCO compa-L the Commission of a Stipulation Agreement, which sets forth nies are continuing to evaluate the economics of the Quarto . a method intended to permit the eventual recovery of the arrangements and are considering and implementing various accumulated deferrals of the excess of Quarto coal costs over means for reducing production costs. See Note M to the
~~market price. The administrative law judge assigned to the financial statements.~~
. H. INCOME TAXES: Totalincome taxes in 1983,1982 and 1981 were comprised of the following components: 1983 1982 1981 (Thousands of Dollars) Includedin operating expenses: Currently payable: Federal $ 33,931 $25,257 $20,519 State 14,295 12,694 13,680 Income taxes deferred-net: Federal 22,955 13,997 26,080 State 5,555 (228) (1,057) Investment tax credit deferred-net 16,218 19,493 13.041 Total 92,951 71,213 72,263 Included in other income (income taxes-credit): Currtntly payable: Federal (13.358) (14,267) (11,523) State (3,106) (3.639) (2,939) Totalincome tax expense s 76,198 $53,307 $57.801 Taxes currently payable-federal and state $ 31,866 $20,045 $19,737 , Taxes deferred-net 28,510 13,769 25,023
~~Investment tax credit deferred-net 16,218 19.493 13,041 Totalincome tax expense S 76.198~~
$53,307 $57,801 Total income tax expense is exclusive of income taxes applicable to discontinued steam heating operations. See Note C to the financial statements. Sources of income taxes deferred and the tax effects were: Excess of tax over book depreciation $ 20,920 $14,490 $12,672 Fuel costs expensed on tax return and deferred on books 9,786 (3,552) (3,062) Investment tax credit carryforward recognized 16,932 against income taxes deferred-net Extraordinary property losses expensed on tax return and deferred on books (1,562) 3,019 81 Other (638) (188) (1,600) Totalincome taxes deferred-net 5 28.510 $13,769 $25,023
~~Duquesne Light Company Notes (continued)~~
Total income taxes from continuing electric operations were less than the amount computed by applying the statutory fed-eralincome tax rate of 46% to income from continuing electric operations before income taxes. The reasons for this difference in each year were as follows: . Computed federalincome tax on continuing electric operations at statutory rate $101,853 $78,432 $76,917 Increase (decrease)in taxes resulting from: Allowance for funds used during construction (30.805) (23,123) (16,565) Excess of tax over book depreciation 3.286 1,131 (577) State income taxes, net of federal income tax benefit 8,880 4,766 5,229 Amortization of deferred investment tax credits (5,266) (4,251) (3,663) Other-net (2,11 0 (3Gs., (3.540) Totalincome tax expense S 76.19i $53.307 $57,801 I. PRIOR YEARS' INCOME TAXES: The Company's income tax returns are settled through 1970. pany concerning percentage depletion for the years 1956 Income tax returns for 1971 through 1979 have been exam-through 1961.The settlement resulted in a charge to retained ined, the 1980 and 1981 returns are being examined, and the earnings of approximately $3,444,000. The Company has 1982 return is subject to review. The Internal Revenue Service received approval from the Federal Energy Regulatory Com-assessed deficiencies regarding the Company's computation of mission for this accounting treatment.The Company expects percentage depletion on coal mined for 1956 through 1979, as that this court decision wil' serve as the basis for settlement of well as certain other issues of relatively minor importance for the depletion issue for the years 1971 through 1979. Manage- - 1971 through 1979. A settlement of the depletion issue for the ment of the Company believes that the settlement of federal years 1962 through 1970 occurred in June 1983 based on an and state taxes will not have a material effect on the Com-ccrlier court decision which was generally in favor of the Com-pany's financial position or results of operations. J. EMPLOYEE IIENEFITS: The Company has trusteed retirement plans to provide pen. December 31, sions for all employees, except coal mine employees who are 1982 1981 1980 covered under a plan administered by the United Mine
~~"*""O Workers of America. Information concerning the plan cover-Actuarial present value of ing coal mine employees is not determinable and is not accumulated plan benefits:~~
included in the data below. Pension costs are funded as vested sl59,956 $151,756 $135,345 accrued and include amortization of prior service costs over 30 Nonvested 11,198 11,566 10,750 years. Pension costs charged to expense or construction for Total sl71,850 $163,322 $146.000 the years ended December 31,1983,1982 and 1981 were $10,803,000, $12,313,000 and $10,083,000, respectively. The Net assets available for decrease in pension costs in 1983 resulted principally from an benefits (at fair value) s135,571 $111,013 $107,798 increase in the interest assumption. The increase in pension costs in 1982 was due principally to a plan amendment effec-tiva May 1,1981, increasing pension payments to employees The Company is liable under federal and state laws for the - retired prior to October 1,1979. payment of benefits to coal mine employees disabled by black The accumulated plan benefits and net assets available for lung and to their survivors and dependents.The estimated benefits for the trusteed plans are presented as of the Decem. costs of providing such benefits, including amortization of ber 31 benefit information dates. In 1983 the Company prior service costs over the remaining tstimated life of the adopted an early retirement program in which certain benefits Warwick mine, are actuarially determined and accrued on the will be paid from the assets of the retirement plans. Addition. basis of mine payroll costs and are deposited with a trustee. tily during 1983, the Company refunded from such assets all Such costs were $1,574,000, $1,417,000 and $1,524,000 for the cmployee contributions.The impact of the early retirement years ended December 31,1983,1982 and 1981, respectively. program and the refund of contributions is not reflected in the At July 31,1983 (the date of the latest actuarial valuation), the tmounts below.The assumed rate of return used in determin. unfund d prior service cost for these disability benefits was ing the actuarial present value of accumulated plan benefits approximately $23,513,000. was 5%% for 1982 and 5% for 1981 and 1980. 26
K. JOINTIX-OWNED GENERATING UNITS: The Company, together with other electric utilities, primarily the CAPCO companies, has an ownership interest in certain jointly-owned units. Information regarding the Company's share of such jointly-owned units as of December 31,1983 is as ' followa(thousands of dollars): Company's Interest Utility Plant Accumulated Construction Work Percentage Unit in Service Depreciation in Progress Ownership Megawatts Fort M :rtin No.1 $ 46,131 $ 14,583 966 50.0 276 CAPCO Units: Eastlake No. 5 50,216 11,282 1,606 31.2 202 Sammis No.7 67,484 12,150 3,825 31.2 187 Bruce Mansfield No.1 72,346 15,112 262 29.3 228 Bruce Mansfield No.2 20,221 3,530 106 8.0 62 Bruce Mansfield No.3 70,073 7,194 564 13.74 110 Bruce Mansfield Common and Shared - Facilities 61,297 12,467 2,250 . Beav;r Valley No.1 333,582 52,279 13,660 47.5 385 Beaver Valley No.2 18 287,236 13.74 114 Beaver Valley Common Facilities 47,920 5,361 19,614 I%rry No.1 265,147 13.74 165 ~ Perry No.2 188,165 13.74 165 Total $769,288 $133,958 $783,401 Under terms of the arrangements with the other owners of such jointly-owned units, the Company is required to provide its share of financing the cost of such units. The Company's share of the direct expenses (fuel, maintenance and other operation c xpenses) of the jointly-owned units is included in the corresponding operating expenses in the Statement of Consolidated
~~Income.~~
L. LEASES: Rental payments in 1983,1982 and 1981 amounted to At December 31,1983 minimum rental payments, based $30,028,000, $17,679,000 and $16,389,000, respectively, of principally on estimated usage of nuclear fuel under leaae and , which $31,994,000, $15,393,000 and $14,169,000 were charged building rentals, were as follows: to operating expenses.The Company has an undivided interest crhousands or Donaro m nuclear fuel lease agreements. Rental payments are made Im $37 m 1 monthly during the terms of the leases based on the amount of 1985 32,699
~~nuclear fuel leased and the amount of nuclear fuel burned.~~
The increase in 1983 rental payments and amounts charged to 1986 32,474 operating expenses resulted from higher building rentals and 1987 29,269 an increased amount of nuclear fuel being burned. 1988 23.246 The nuclear fuelleases may be terminated by the lessees or 1989-1993 80,204 ' lessors with notice as defined in the agreements or by casualty After 1993 83.314 or certain other contingencies, including default by the lessees. In certain situations involving a terminatiori, the The Company accounts for all of its leases (exclusive of the lessees may be required to purchase the leased nuclear fuel nuclear fuel trust arrangement described above) as operating at the higher of fair market value or unamortized cost. At leases in accordance with the manner in which the Company's December 31,1983, the Company's share of the lessors' rates have been established by the Pennsylvania Public Utility unamortized cost of the leased nuclear fuel was $124,891,000 Commission. If the noncapitalized financing leases were capi-and the Company expects to lease an additional $81,262,000 of talized as of December 31,1983 and 1982, property, plant and
~~uclear fuel under current leasing arrangements. The Com-equipment-net would have been incrersed by $143,547,000 and pany finalized a nuclear fuel trust arrangcment in 1983 which~~
$117,538,000, respectively, with related increases in current provides an alternative method of financing nuclear fuel. liabilities and long-term debt of $24,271,000 and $119,761,000, The Company has certain buildings under lease, including respectively, in 1983 and $12,154,000 and $105,820,000, respec-its new corporate headquarters, subject to renewal options tively, in 1982. The impact on net income of capitalizing such and in certain cases purchase options. leases in each year would not be material. e.
- Duquesne Light Company -Netcs(c ntinued) M. CO313tlT31ENTS AND CONTINGENT LIABILITIES: sion of time in which to file a refund plan together with an Construction application for a stay of the final order. On August 24,1983 the 1 The Company's current estimate of construction expenditures, Commission denied the application for a stay but granted the exclusive of allowance for funds used during construction and petition for an extension of time in which to file a refund plan. nuclear fuel, during the period 1984 through 1988 amounts to Subsequently, the Company filed an application with the Com - approximately $860 million, principally related to CAPCO monwealth Court for a stay of the final order, ar.d on Septem-generating units. ber 28,1983 the Commonwealth Court granted the application. Quarto afining Company (Quarto) Q Company and outside counsel do not agree with the Com-The Company and the other CAPCO companies have m ssion s order, and no provision has been recorded by the made long-term coal supply arrangements with Quarto, Company for any such refunds. While the Company mmable ni unaffiliated company, to supply coal for the Bruce Mans-to predict what action the appellate courts may ultima.tely take field Units. As part of these arrangements the individual and although the amount of such refunds could be substantial, CAPCO companies are severally, and not jointly, guaranteeing management of the Company believes that the replacement their proportionate shares of Quarto's debt and lease obliga. power costs were prudently mcurred and that the eventual utcome of this matter will not have a material effect on the tions incurred in connection with the development, equipping and operation of two mines from which the coalis supplied. At Company s financial position or results of operations. December 31,1983 the Company had guaranteed the obliga-Perry Unit No.2 tions of Quarto with respect to approximately $54,142,000 of In September 1983, the Ohio Office of the Consumers' Counsel, indebtedness and lease obligations relating to approximately the City of Cleveland, the Board of County Commissioners of $28,239,000 of capital equipment for the mines. The Company Geauga County, Ohio and three citizen groups filed a petition expects that it will make further guarantees with respect to with the Public Utilities Commission of Ohio (Commission) and additional indebtedness and leased capital equipment, the the Power Siting Board of Ohio (Board) against The Cleveland tmount of which will depend on the actual costs of further Electric Illuminating Company, Ohio Edison Company and The - development of the two mines. In general, it is contemplated Toledo Edison Company (respondents) requesting that the that the purchase prices to be paid for the coal to be received Commission and the Board jointly and/or individually investi-under the foregoing arrangements will include amounts suffi-Kate the public need for the Perry Nuclear Power Plant Unit eient to service the guaranteed obligations. No. 2 (Unit) presently under construction by the CAPCO com-Under the terms of the coal supply contracts, which con-panies. The petitions also request that the Commission and the tinue until December 31,1999 with options to extend for ten Board order the cessation of construction of the Unit and of additional years, the CAPCO companies must reimburse the accrual by the respondents of allowance for funds used Quarto for their share of the costs of operating the Quarto during construction with respect to the Unit and a declaration mines, including those costs associated with mine construc-by the Commission that the issuance of securities by the tion, whether or not they receive coal from Quarto. The Com-respondents, the proceeds of which will be used to finance con-pany's total payments under these contracts amounted to struction of the Unit, will not be approved. The respondents $28,512,000 and $24,292,000 for the years ended December 31, have filed a motion to dismiss the petition filed with the Board 1983 and 1982, respectively. and an answer to the petition filed with the Commission The Company's estimated future minimum payments under requesting that the petition be dismissed. While the Company the coal supply contracts related to mine construction and is not a party to the proceedings,it has a 13.74% ownership equipment costs are: interest in the Unit. The Unit, which is presently scheduled to Year Ending December 31. be placed in service in 1988, is about 43% complete. The Com-pany's investment in the Unit, including a!!owance for funds 1984 8 8,773,000 used during construction, was approximately $188 milhon at 188". 8#sm'" December 31,1983. An order requiring the respondents to 1986 s cease or terminate construction of the Unit could have the 1987 8,153 000 effect of cancelling the Unit. In such evere, the Company 1988 7,947,000 would seek regulatory approval for the recovery from its After1988 78.426.000 customers of its then investment in the Unit, together with any related cancellation costs, net of applicable taxes. Based The current price of Quarto coal to the CAPCO compam.es is on its present knowledge of the proceedings, management of based prmespally on the actual current production costs plus the Company has no reason to believe that the proceedings 1 amortization of certam production expenses which were not will result in a decision adverse to the respondents and meluded in the price of coal to the CAPCO companies durmg believes that the ultimate resolution thereof will not have a the development period, which ended on May 31,1980. See material adverse effect on the Company's financial position. Note G to the financialstatements. Nuclear insurnnce Heaver Valley Replacement Power The CAPCO companies have coverage with American Nuclear In connection with a February 20,1981 rate order, the Com-Insurers (ANI) and Mutual Atomic Energy Liability Under-mission found that the Company had not proven that the costs writers (MAELU) to provide primary property insurance cov-of replacement power during a 1979 outage of Beaver Valley erage for Beaver Valley Power Station Units Nos.1 and 2 in Unit No. I were prudently incurred. the amount of $500 million. On November 19,1982 the Commission adopted an order The CAPCO companies are members of Nuclear Electric nii which ordered refunds of $12.5 million plus interest over a Insurance Limited (NElL), a mutual insurer established by the two year period less a $1 million offset from another proceed-utility industry to provide Decontamination Liability and ing. The order nisi became final on June 10,1983. The Com-Excess Property Insurance in excess of $500 million for mem-pany filed an appeal with the Pennsylvania Commonwealth bers' nuclear generating facilities. NEIL presently provides Court and filed with the Commission a petition for an exten-such excess coverage in the amount of $375 million plus 12% 28
1~ m. . _m e + Qf the amount of the loss in excess of $500 million up to $1 bil-Supreme Court. ' lion; Under this policy the CAPCO companies are subject to a On April 30,1982 the Company fded with the Commission a
retrospective premium assessment of approximately $9.5 milf new rate schedule estimated to increase annual revenues by lion per year for a period of seven years in the event of acci-approximately $165 million (subsequently reduced to approxi-
} dents t:t nuclear plants of member companies if losses exceed mately $155 million). On January 28,1983 the Commission 1 premiums, reserves and other NEIL resources. The Com-~ entered a final order allowing an increase of $105.8 million
~~pany's shue of any such retrospective premium assessment beginning on January 29,1983. The Commission's order was 2 would be approximately $2.9 million._~~
~~appealed to the Pennsylvania Commonwealth Court by both t Damages in excess of the primary $500 million coverage are the Pennsylvania Consumer Advocate and the Company.~~
~~dse cov red by an excess property insurance policy issued to Except for the Co isumer Advocate's appeal with respect to -~~
- the CAPCO companies by ANI and MAELU which provides the Commission's allowance of the recovery of the cancellation n468 million of coverage.The ANI/MAELU and NEIL policies ' costs of four nuclear generating units (see Note B to the finan-provide quota sharing coverage for losses in excess of $500 cial statements), both appeals have been discontinued. tmillion upto$1 billion. On April 29,1983 the Company filed with the Commission a The property insurance policies described above provide the _ new rate schedule affecting all classes of customers and esti-l CAPCO companies with approximately $1 b0 lion of coverage mated to increase annual revenues based on projected levels on r,n investment in the two Beaver Valley Units at December of business at December 31,1983 by approximately $49.9 mil-
~~31,1983 of about$2.9 billion..~~
lion.- On September 7,1983 the administrative law judge i .. In addition, NEIL also provides insurance coverage for the assigned to the rate proceeding issued a recommended deci- ! cxtra expense of replacement power during prolonged acci-sion adopting a joint petition for settlement filed by the Com-i dental outages of nuclear plants. Coverage is provided for the pany, the Commission's staff, the Pennsylvania Consumer
~~Company's interest in Beaver Valley Power Station Unit No.1 Advocate and certain of the other parties to the proceeding~~
[ and, efter a deductible period of 26 weeks, weekly payments which provided for an increase in annual revenues of approxi- ) cf up to $588,000 are provided for one year and up to $294,000 mately $21 million. On September 16,1983 the Commission f for an additionalyear. Iflosses exceed accumulated funds approved the settlement. The Company began to collect the i tvailable to NEIL, the Company could be assessed approxi. increased rates effective September 17,1983. Two complaints i mately $L7 million for payment of NEIL's obligations. concerning rate structure issues remain pending, and further The Price Anderson Amendments to the Atom'c Energy Act hearings with respect thereto will be scheouled.
limit liability to third parties to $580 million for ea6 nuclear Management believes that the ultimate resolution of these

incident. Coverage of the first $160 million of such lubility is
- rate matters will not have a material adverse etteet on the i provided through ANI and MAELU. The next $420 r.iillion is Company's financial position or results of operations. ] provided by retroactive assessments of up to a limit t f $5 mil-Other
~~hon per operatmg nuclear reactor per meident, but not more In connection with coal supply arrangements for its wholly-~~
! than $10 milhon per operatmg reactor m any calendar year. owned generating units the Company has contracted with an Based on its present ownership mterest in one operatmg unaffiliated coal supplier to purchase a minimum of 750,000 { nuclear reactor, the Company's maximum potential assess-tons of coal per year through December 31,1986. In 1983 the ment under these provisions would be $2.4 million per incident contract was amended to provide that if the Company
~~but not more than $4.8 million per calendar year.~~
~~requests deliveries in 1983 and 1984 below the mimmum l Rate Mitters annual tonnage, the Company shall make up the shortfall~~
Effectiva July 15,1981 the Company increased its rates by (plus a 63,000 ton shortfall in 1982) by purchasing additional

about $64.2 million annually in accordance with an option tons during the remaining term of the contract or by extend-
~~! order cf the Pennsylvania Public Utility Commission (Com-ing the term of the contract.The contract also provides that~~
mission). On April 15,1982 the Commission adopted its final any shortfall can be sold to purchasers other than the Com-t order in the rate proceeding which determined that the option pany. The total shortfall under the contract at December 31,
~~' rate increase of $64.2 million annually was just and reason-1983 was approximately 317,000 tons.~~
able.The Anal order was appealed to the Pennsylvania Com-The Company is involved in various other legal proceedings.

monwealth Court by a commercial customer. On November 29, In the opinion of management of the Company such legal pro-
!1988 the Court affirmed the Commission's final order.The ceedings will not have a material effect on the financial posi-Court's crder is the subject of a petition for allowance of tion or results of operations of the Company, appeal by the commercial customer to the Pcnnsylvania } N.' SUPPLEMENTARY INCOME STATEM11NT INFORMATION: Year EndedIkcember31, 1983 1982 1981 Under the system of accounting followed by the Company, (rhousands of Dollars) a portion of maintenance expenses and of taxes other than,
~~Maintenance~~
$75.947 878,431 873,029 me me taas mpmsenu amounts charged to coaHnwntas. !< Amortizationof extraordinary The mventory accounts are reheved and operations expense .j ,,,,,,gy i,,,,, ; charged as the coalis used.
~~Tkxes other than payroll~~
! ; ; andincome taxes: Gross receipts 35,576 33,186 34,980 Property 14.374 14,139 12.583 State espitalstock - 5,501-6,601 6.301
- Duquesne Light Company Notes (continued) O. QUAltTEltlX FINANCIAL INFOlGIATION (Unaudited): The following is a summary of selected quarterly financial data (in thousands of dollars, except per share amounts): 1983 Quarter Ended 1982 Quarter Ended March 31 June 30 Sept. 30 Dec. 31 March 31 June 30 Sept. 30 Dec. 31 Electric Operating Revenues (a) $185,818 $198,666 $215,111 $200,690 $207,398 $186,628 $181,720 $170,716 Operating Income (a) 43,918 15,287 19,491 47,976 41,662 38,480 40,223 34,942 Income from Continuing Electric Operations Before Extraordinary Gain 32,975 31,883 39,392 37,977 32,296 28,990 30,845 25,066 Discontinued Steam Heating Operations (b) 371 (484) (9,811) Extraordinary Gain (c) 9,609 Ntt income 32.975 38,883 39,392 37,977 32.667 28.506 21.034 34,675 Earnings PerShare: Income from Continuing Electric Operations Before Extraonlinary Gain .51 .51 .60 .56 .58 .51 .51 .37 Discontinued Steam Heating - Operations (b) .01 (.01) (.20) Extraordinary Gain (c) .19 NetIncome - .51 .54 .60 .56 .59 .50 .31 .56 (i) Certain amounts previo.asly reported as Operating Revenues and Operating income for the first two quarters of 1982 have been reclassified to set forth separately the results of the steam heating subsidiary as discontinued steam heating operations. 1 (b) See Note C to the financial statements for a discussion of diser ntinued steam heating operations. l ' (c).- See Note D to the financial statements for a discussion of the extraordinary gain from early extinguishment of bonds. P. SUPPLE 31ENTAltY INFOlGIATION TO DISCLOSE TIIE EFFECTS OF CHANGING PillCES (Unaudited): The following supplementary information is supplied in accord-dollar) and changes in specific prices (current cost) have had on r.nce with the requirements of the Ste.ement of Financial the Company's results of operations. The data provided are Accounting Standards No. 33, Financial Reporting and Chang-not intended as a substitute for earnings reported on a histori-ing Prices. This Statement requires adjustments to historical cal basis, but offer some perspective of the approximate effects ec;ts to estimate the effects that general inflation (constant of inflation rather than a precise measurement of these effects. STATE 31ENT OF INCO31E ADJUSTED FOlt CIIANGING PitICES ForThe Year Ended December 31,1983 Conver.tional Constant Dollar Current Cost - Historical Avera e Avera -(Thousands of Dollars) Cost 1983 Do ars 1983 Do}w} ars Electric operating revenues $800,345 $800,345 $800,345 ' Fuel 192,512 192,512 192,512 Purchased power (salesF-net (7,530) (7,330) (7,330) Other operation and maintenance expenses 201,204 201,204 201,204 , Depreciation expense 73,682 157,841 174,112 Taxes other thanincome taxes 60,651 60,651 60,651 Income taxes 92,951 92.054 92,954_. Otherincome and deductions-net (67,715) (67,715) (67,715) Interestcharges 109,161 109,161 109,161 655,119 739,278 755,549 Income from continuing electric operations (excluding reduction of property, plant and equipment to net recoverable cost) $145,226 $ 61,067' $ 44,796 increase in specific prices (current cost) of property, plant and equipment held during the year" $251,349 Reduction of property, plant and equipment to net recoverable cost $(18,925) (40,924) i Effect of increase in general price level (213,079) Excess of increase in general price level over increase in specific prices after reduction of property, plant equipment to net recoverable cost (2,654) ] Gain from decline in purchasing power of net amounts owed 67,732 67,732 q N:t $ 48,807 $ 65,078 1 ' Including the reduction of property, plant and equipment to net recoverable cost, the net income on a constant dollar basis would have been $42,142. l "At December 31,1983, current cost of property, plant and equipment, net of accumulated depreciation, was $5,369,693, while historical cost or net rost 30 recoverable through depreciation was $2,739,890.
. FIVE-YEAlt COMPAllISON OF SEI.ECTED SUPPLEMENTAltY FINANCIAL DATA ADKSTED FOlt EFFECTS OF CllANGING PILICES (In Thousands, Except Per Share Amounts) Year Ended December 31, 1983 1982 1981 1980 1979 Average 1983 dollars: - Electric operating revenues $800,315 $770,733 $861,562 $816,090 $839,296 Historical cost information adjusted for general inflation: Income from continuing electric operations (excluding . reduction of property, plant and equipment to net recoverable cost)(1) 61,067 38,247 39,552 42,042 44,888 Income per share from continuing electric operations (af*er dividend requirements on preferred and preference stock)(1) .69 .31 .34 .36 .38 - Net assets at year-end at net recoverable cost 910.851 896,216 832,000 833,932 857,570 Current cost information: Income from continuing electric operations (excluding reduction of pmperty, plant and equipment to net recoverable cost)(1) 48,796 23,564 23,433 23.228 21,453 Income (loss) per share from continuing electric operations (after dividend requirements on preferred and preference stock)(1) .40 (.04) (.13) (.34) Excess of increase in general price level over increase in specific prices after reduction of property, plant and equipment to net recoverable cost 2,651 (237) 120,532 235,444 237,872 Net assets at year-end at net recoverable cost 910,858 896,216 832,000 833,932 857,570 Generalinformation: Gain from decline in purchasing power of net amounts owed 67,732 64,128 148,054 206,745 237,532 Cash dividends declared per share of common stock 2.00 1.96 2.02 2.18 2.43 . Markit price per share of common stock at year-end 13.50 15.23 14.52 15.27 18.70 Average consumer priceindex 298.5 289.1 272.4 246.8 217.5 ' Historicalbasis: Electric operating revenues $800,315 $746,462 $786,229 $674,744 $611,547 Cash dividends declared per share of common stock 8 2.00 $ 1.90 $ 1.85 $ 1.80 $ 1.76 Markttprice pershare at year-end $13.50 $14.75 $13.25 $12.63 $13.63 Pro 7en and probable coal reserves at beginning of year (tons) 25,100 26,300 28,100 29,900 30,650 ' Tor 2 of coal mined 785 942 680 875 928 - Averagecostpertonof minedcoal $36.59 $31.62 $35.10 $31.14 $28.71 ' (1) Amounts for 1982 are before extraordinary gain. Amounts for 1979 are before cumulative effect of accounting change. Constant dollar amounts represent historical costs stated in in nominal dollars. Rate regulation limits the recovery of fuel terms f equal purchasing power, as measured by the Con-and purchased power costs through the operation of adjust-c umar Price Index for all Urban Consumers. Current cost ment clauses or adjustments in basic rate schedules to actual amounts reflect the changes in specific prices of plant from the costs. For this reason fuel inventories are effectively monetary date the plant was acquired to the present and differ from con-assets. . stant dollar amounts to the extent that specific prices have As prescribed in Statement 33, income taxes were not increased more or less rapidly than prices in general. adjusted. The current cost of property, plant and equipment, which The regulatory process limits the Company to the recovery
includes land, land rights, intangible plant, property held for of the cost of service in its rates.Therefore, any excess of the future use, construction work in progress and nuclear fuel in value of plant in constant dollars or current cost must be process, represents the estimated cost of replacing existing reduced to the net recoverable cost, which is historical cost.
plant assets and was primarily determined by indexing sur-The amount of this excess that accumulated as a result of - viving plant by the Handy Whitman Index of Public Utility inflation in the current year must be reduced to net recovera-Construction Costs. The current cost of coal properties was ble cost.
~~determined by indexing coal reserves and machinery and The Company, by holding assets such as receivables, equipment by the Marshall-Stevens Mining and Milling Index.~~
prepayments and inventory, suffers a loss of purchasing The current year's provision for depreciation and depletion on power during periods of inflation because the amount of cash 1 the constant dollar and current cost amounts of property, received in the future for these items will purchase less. Con-plant and equipment was determined by applying the Com-versely, by owing monetary liabilities, primarily long term pany's depreciation and depletion rates to the indexed plant dsbt, the Company benefits because the payment in the future
~~amounts.~~
will be made with nominal dollars having less purchasing 1 Fuelinventories, the cost of fuel used in generation and pur-power. The Company has significant amounts of long-term ! chased power have not been restated from their historical cost debt outstanding which will be paid back in dollars having less at i
Duquesne LightComp:ny . Netcs (continued) purchasing power and, therefore, for purposes of these calcu-equity capital previously invested. While this effect is partially lations, has a net gain from holding monetary liabilities in mitigated by the benefit derived from holding long-term debt, excess of monetary assets. the Company has a net purchasing power loss which is experi-The regulatory process limits the amount of depreciation enced by the common shareholder and can only be overcome cxpense included in the Company's revenue allowance and lim-by adequate rate relief. However, the Company expects that it its utility plant in rate base to original cost. Such amounts pro-will be able to establish rates which will recover the increased d me cash flows which are inadequate to replace such property costs of new plant. in the future or preserve the purchasing power of common Duquesne Light Comgany Selected Fmarmial Data and Statistical Summary (Thousands of Dollars, Except Per Share Amounts) 1983 1982 1981 1980 1979 1973
~~SUMMARY~~
RESULTS OP OPERATIONS Residential revenues 267,110 238,496 223,146 196,400 176,744 79,113 Commercial revenues 290,370 263,374 243,501 209,871 185,880 75,113 Industrial revenues 221,107 225,292 300,066 250,295 232,389 80,274 Street lighting and other revenues 14,357 13,240 12,383 11,052 10,370 4,762 Miscellaneous revenues 7,401 6,060 7,133 '" 126 6.161 2,580 Total electric revenues 800,315 746,462 786,229 674,744 611,547 241,842 Operation and maintenance expenses 386,386 399,527 435,589 380,973 351,731 111,383 ' Depreciation 73,682 62,939 60,851 53,316 47,885 23,211 Taxes other than income tmes 60,651 57,476 57,694 47,637 46,956 20,462 Income taxes 76,191 53,307 57,801 50,643 41,592 15,864 Interestcharges netof allowance for borrowed funds used during construction 109,161 100,344 92,968 75,629 65,414 32,460 Other income, principally allowance for equity funds used during construction 50,955 44,328 28,086 26,749 21,587 13,496 Income from continuing electric operations before extraordinary gain 145,226 117,197 109,409 93,295 79,556 51,958 loss from discontinued steam heating operations 9,924 538 333 1,194 133 Income before extraordinary gain i15,226 107,273 1_08,871 92,962 78,362 51,825 Extraordinary gain 9,609 Net income 115.226 116,882 108,871 92,962 82,207t 51,825 Dividends on Preferred and Preference Stock 22,111 22,701 22.976 23,353 23,721 9,233 Earnings for Common Stock 122,815 94,181 85,895 69,609 58,486 42,592 Av: rage number of common shares outstanding 55,883 48,236 41,764 38,267 32,239 18,181 Earnings per share of Common Stock: Income from continuing electric operations 2.20 1.96 2.07 1.83 1.73 2.35 Net income 2.20 1.95 2.06 1.82 1.81t 2.34 Dividends declared on Common Stock 2.00 1.90 1.85 1,80 1,76 1.72 - tincludes cumulative effect to January 1,1979 of the change in billing practice, net of income taxes, of $3,845 or S.12 per share. PLANT-Property, plant and equipment 3,293,181 3,024,554 2,809,753 2,604,333 2.380,805 1,423,135 Accumulated depreciation 555,611 504,680 477,000 424.653 386,479 265,459 Property, plant and equipment-net 2.737,810 2,519,874 2,332,744 2,179,680 1,994,326 1,157,676 TOTAL ASSETS 3.145.811 2,883,424 2.668,577 2,447,163 2,222.537 1,256,291 P 32
1983 1982 1981 1980 1979 lir73 CAPITALIZATION Cominon Stock 58,420 53,277 45,303 40,166 35,550 20,400 Capite.! surplus 724,147 649,376 550,244 494,228 433,984 214,157 Retained earnings 175,938 165,340 163,705 155,102 155,328 125,261 .Non-redeemable Preferred and Preference Stock 156,137 156,137 156,137 156,137 156,137 96,137 Redeemable Preferred and Preference Stock 134,979 140,829 143,924 146,867 149,998 62,482 First mortgage bonds 1,100,147 1,006,637 983,870 918,230 808,830 578,160 Otherlong term debt 234,019 199,934 176,682 126,981 127,436 66,140 Unamortized debt discount and premium-net (10,967) (9.488) (9,453) (7,161) (5.770) Total capitalization 2,572,820 2,362,042 2,210,412 2,030,550 1,891,493 1,162,737 RESIDENTIAL SERVICES Average use per customer (kilowatt-hours) 5,752 5,668 5,698 5,770 5,629 5,552 Average revenue per kilowatt-hour 9.195v 8.361v 7.806v 6.828v 6.363v 3.031v SALES OF ELECTRICITY (millions of ki'owatt-hours) Residential 2,905 2,853 2,858 2,876 2,778 2,610 Commercial 4,257 4,163 4,069 4,024 3,870 3,638 Industrial 3,717 3,902 6,582 6,272 6,546 6,181 Street lighting and other til 120 125 129 131 118 Total 10,990 11,038 13,634 13,301 13,325 12,547 ENERGY SUPPLY AND PRODUCTION DATA Energy supply (millions of kilowatt hours) Generated in system plants 11,900 12,352 13,914 13,485 13,884 12,979 Purchased and netinterchange (16t) (689) 410 541 125 336 Losses and company use (746) (625) (690) (725) (684) (768) Total 10,990 11,038 13,634 13,301 13,325 12,547 Generating capability (thousands of kilowatts) 3,148 3,144 3,177 3,179 3,294 2,620 Peak load (thousands of kilowatts; 2,188 2,158 2,522 2,474 2,296 2,296 Cost f fu 1permillion BTU 167.140s 167.865v 159.660s 149.768v 131.779p 42.454v BTU per kilowatt hour generated 10,635 10,853 10,931 10,811 10.924 10,333 Average production cost per kilowatt-hour 2.5 tie 2.575v 2.354v 2.202v 1.913e 0.540s NUMBER OF ELECTRIC CUSTOMERS-- At End ef Year Residential 505,781 503,987 503,044 500,466 496,005 471,641 Commercial 49,493 49,320 48,859 48,308 47,978 45,975 Industrial 1,981 1,999 2,016 2,005 1,975 1,765 , Street lighting and other 1,633 1,647 1,713 1,725 1,746 1,852 Total 558,891 556,953 555,632 552,504 547,704 521,233 33
Man 3Fernent's Discussion these issues were used to pay short-term indebtedness o meurred prmcipally for construction purposes, and the balance and Analysis of Financial was applied to construction expenditures. The Company cur-rently estimates that approximately 76% of the funds required - Condition and Results fer its 1984 construction program wiii ceme trom outside financing.The Company plans to sell additional First Mort-cfOperations gage sonds in March iD84. rhe exact timiog and amount of C pital Resources and Liquidity this sale will depend on market conditions. Construction In addition to the funds required for the construction pro-Construction expenditures during 1983, exclusive of allow. gram $16.8 million was required in 1983 for maturities of long-ance for funds used during construction and nuclear fuel, term debt and sinking fund and purchase requirements, and w:re approximately $224 million.These expenditures were pri. $21.4 million will be required in 1984 for such purposes. marily for the construction of three CAPCO generating units Interim financing will be through bank borrowings and in addition to improving and expanding production, transmis-sales of commercial paper. In addition, the Company has avail-sion and distribution systems and pollution control equipment. able a revolving credit arrangement with two banks which The Company currently estimates that it will spend, exclu. allows the Company to borrow up to an aggregate of $60 mil-give of allowance for funds used during construction and lion through 1986 and to convert the revolving loans to term . nuclear fuel, approximately $235, $203, $158, $137 and $127 loans for an additional three ye.rs. See Note Eto the financial. million for each of the years 1984 through 1988, respectively. statements. Variable market and general economic condi,tions These estimates include an aggregate of approximately $294 may affect the Company's selection of financing alternatives ? million for the three jointly-owned nuclear generating units and adversely affect its ability to raise capital. In, order to being constructed under the CAPCO arrangements, including mamtam earnmgs adequate to finance construction expendi-related transmission facilities.See Note K to the financial tures and refunding requirements, the Company requires ra,te etatements. increases sufficient to offset mereased c( sta and provide a fair "~ The amount which the Company must spend for its con-struction program is regularly under review and is subject to The Restated Articles of the Company require that for the changes influenced by business and economic conditions and issuance of Preferred Stock, earnmgs (after income taxes) other factors, such as escalation of labor, material and equip. available for mterest charges be at least 1.5 times the sum of ment costs, rate of construction progress, the development of interest charges on all indebtedness and Preferred Stock divi-environmental and nuclear safety regulations, service reliabil, dend requirements.This restriction currently preclud,es,the ity and system efficiencies. In addition, this review also must Company from issumg Preferred Stock. There is no similar take into account difficulties in obtaining rate increases suffi-restriction upon the issuance of the Company s Preference or Common Stock. . cient to generate adequate earnings, possible changes in load growth trends and,in the case of the CAPCO construction pro-Rate Matters gram, the ability of each of the CAPCO companies to finance On January 28,1983 the Public Utility Commission entered ' its capital requirements. a final order allowing an annual rate increase of $105.8 million The Company finances its nuclear fuel requirements primar. beginning on January 29,1983. See Note M to the financial ily by leasing and through a trust arrangement. See Note L to statements. the financial statements. In the third quarter of 1983 the Com-On April 29,1983 the Company filed a request for a $49.9 pany entered into arrangements permitting the lease of an million annual rate increase with the Commission. On Septem-additional $60 million of nuclear fuel. ber 16,1983 the Commission approved a settlement allowing Financing an increase of approximately $21 million beginning on Septem-The Company anticipates that funds required for planned ber 17,1983. See Note M to the financial statements. construction expenditures in the next several years will be pro-Extraordinary Property Losses vided principally from the issuance of additional equity and In 1980 the CAPCO companies cancelled the construction of debt securities and in part from cash becoming available from four nuclear generating unitc. In January 1983 the Commis-operations. The Company issued $60 million of 12 %% First - sion approved the recovery of the accumulated costs from the ! Mortgage Bonds on April 14,1983 and $50 million of 13% First Company's customers but did not allow any return on these Mortgage Bonds on December 6,1983. On August 2,1983 the costs. See Note B to the financial statements. Company issued and sold 2,475,000 shares of Common Stock. I)ererred Coal Costs Net proceeds from the sale of the Common Stock were By Interim Order entered January 12,1981 the Commission approximately $39.4 million. Funds provided to the Company directed that the Company limit its recovery of the cost of underits Dividend Reinvestment Plan in 1983 amounted to Quarto coal through its energy cost rate to approximately the i approximately $39 million, and an additional $10.2 million was p evailing market price of similar coal rather than the actual reinvested on January 1,1984. On November 1,1983 the Ohio cost of Quarto coal. The Company is deferring the excess of Air Quality Development Authority issued $20.5 million of pol-the actual cost of Quarto coal over the cost being recovered lution control revenue bonds to reimburse the Company forits through its energy cost rate until recovery of the actual cost is i share of the cost of certain pollution control facilities at Unit permitted by the Commission. If recovery of such excess is No. 7 of the Sammis Power Station. The bonds have an inter-disallowed, the amount deferred would be charged to income est rate of 10 %%, and principal and interest on the bonds will in the year of disallowance. See Note G to the financial be funded by the Company, Portions of the net proceeds from statements. 34
' flearer Valley Replacement Power - The Company was permitted two rate increases in 1983 In connection with a February 20,1981 rate order, the Com-effective January 29 and September 17. See Note 31 to the mission found that the Company had not proven that the costs financial statements. The decreases in electrical consumption ' of replacement power durig 21979 outage of Ileaver Valley in 1982 and 1983 were due primarily to the severe impact of ' Unit No.1 were prudently incurred. Further hearings in the ' the economic recession in the Company's service a rea, partic- ' Beaver VJley refund proceedings were held, and on Novem-ularly on steel and other industrial customers. ber 19,1982 the Commission adopted an order nisi which The decrease in operation (fuel, purchased power and other
ordered refunds of $12I> million plus mterest over a two-year operation) and maintenance expenses in 1983 compared to

period. The order nisi became final on June 10,1983, and the 1982 was due primarily to a substantial reduction in fuel Company has filed an appeal with the Commonwealth Court.
expenses resulting from higher generation from the Ileaver See Note 31 to the financial statements. Valley No.1 nuclear unit, decreased deferred fuel expenses l Allegheny County Steam lleating Company and lower kilowatt-hour sales. Net sales of power to other On September 30,1982 a final orderof the Commission utilities decreased as the market for such sales was not as approved the discontinuance of steam service by the Com-favorable in 1983. The decrease in operation expenses in 1982 pany's steam heating subsidiary effective Stay 31,1983 and compared to 1981 was due to substantial reductions in pur-thetransferof amajorportionof theassetsof thesubsidiary chased power and fuel expenses. The significant reduction in to Pittsburgh Allegheny County Thermal, Ltd. for nominal kilowatt hour sales to industrial customers resulted in a sur-consideration.The transfer of assets became effective June 1, plus capacity situation. This available capacity and the require-1983. See Note C to the financial statements. Since the subsidi-ments of neighboring utilities resulted in substantial net sales ary had been losing money over the past several years, the of power in 1982. Other operation and maintenance expenses ' disposition should improve the Company's financial condition increased in 1982 compared to 1981 due to a scheduled outage and results of operations. for refueling and modification work at Beaver Valley Unit No. Other 1 and increased customer, general and administrative Under provisions of the Economic Recovery Tax Act of 1981 expenses. Gligible individuals who are participants in the Company's Depreciation expense increased in 1983 compared to 1982 as @vidend Reinvestment Plan may elect to exclude from cuc-a result of increases in utility plant and changes in deprecia-rent federal taxable income each tax year from 1982 through tion rates to conform with the depreciation rates allowed by 0985 the fair market value of Common Stock received from the Pennsylvania Public Utility Commission in its rate oniers. the reinvestment of dividends to the extent the aggregate fair Additionally, depreciation expense includes the amortization market value of such shares does not exceed $750 (31,500 for of the cancelled nuclear generating units and Shippingport. spouses who file a joint return.) This provision has provided See Note B to the financial statements. incentive for stockholders to reinvest dividends and thereby Income taxes increased in 1983 compared to 1982 principally case the cash requirements of the Company. as a result of increased taxable income. The effective income The Company has generated in each year funds from opera. tax rate for the three years ended December 31,1983,1982 tions sufficient to meet its operating expenses, pay dividends and 1981 was 3&4,31% and 3T/4, respectively. and fin:nce a portion of its capital needs. The demands and The increases in allowance for equity and for borrowed commitments detailed in Note at to the financial statements funds used during construction (A FC) were primarily due to and those noted above are not expected to materially affect the the increased cost of construction and increases in the AFC C:mpany's ability to finance its operations or its construction rate from 7.6% in 1981 to 8.5% in 1982 and to 9.6% in 1983. program. Fluctuations in interest income resulted from changes in cash Results c f Operations available f r temporary investments. Interest expense for Operating revenues from continuing electric operations each of the years 1983,1982 and 1981 was higher due to increased (decreased)in the years 1981 thnsugh 1983 over the increased total borrowings to finance the Company a capit:d respective preceding years, for the following reasons: expenditures. I" 1982 the Company's subsidiary discontinued its steam 1983 1982 1981 heatm.g operations resultmg m a charge to earmngs of $9.9 (3fillions of Dollars) million, or $.21 per share., ee Note C to the financial General rate increases 588.1 $ 43.0 $ 65.6 statements. Electricalconsumption (10.0) (62.3) 10.5 A non-taxable extraonlinary gain of approximately $9.6 mil-Energy cl:use revenues (31.0 ) (19.0) 33.9 lion, or $.20 per share, in December 1982 resulted from the exchange with an mvestment bankmg firm of newly issued State tax adjustment common shares for certain First 31ortgage Bonds having an and other 6.> (1.5) 1.5 exchange value substantially lower than their face value. See $53.9 $(39.8) $111.5 Note D to the financial statements, m Earnings per share of Common Stock for 1983,1982 and The operating revenues of the Company are based on rates 1981 were adversely affected by increases in the average num-
~~sthonzed by the Pennsylvam,a Public Utility Comm,ssion,.~~
ber of shares outstanding, which reduced earnings per share i These rates are designed to recover the Company's operatmg by $.35,8.31 and 8.18, respectively. Ipenses, plus a rate of return on the m, vestment m utility rate mflation and changmg pn,ared information on,the effe , The Company has prep base.The Company also has an energy cost rate which allows ces m acconlance with the hnancial 3 to recov:r the difference between actual fuel costs and fuel
~~osts included in base rates. Any overcollections of revenues ACC'>unting Standants Hoani's Statement No. 33. Such in for-matmn is m Note P to the fmanual statements.~~
are refunded, with interest, to customers. 35
Business of the Company Common Stock Dividends lectively referred to as " junior Duquesne Light Company is The Company has paid cash stock payments"). engaged principally in the produc-dividends on its Common Stock in No dividends or distributions tion, transmission, distribution each year since 1913 and on a reg-may be made on the Common and sale of electric energy. The ular quarterly basis (January 1, Stock if divMends or sinking or Company serves an area of April 1, July 1 and October 1) in purchase fund obligations on the approximately 800 square miles in each year beginning in 19T33 after Preferred Stock or Preference Allegheny and Beaver Counties, becoming publicly owned. Quar-Stock are accumulated and This area, which includes the City terly dividends related to the four unpaid. Furthermore, the aggre-of Pittsburgh, is located in South-quarters of 1982 were paid at the gate amount of junior stock western Pennsylvania and has a rate of 471i v per share. Com-payments which may be made in population of about 1,430,000. mencing April 1,1983 the quar-any 12-month period are in gen-The executive otlices of terly dividend rate was increased eral limited to (1) T>0'J of consoli-Duquesne Light are located at: to T30e per share. Future dividends dated net income for any period of One Oxford Centre will depend upon future earnings, 12 consecutive calendar months 301 Grant Street the cash position of the Company, within the IT) preceding months if Pittsburgh, Pennsylvania IT>279. construction requirements, rate the effect of such payments w ould regulation and other relevant fac-be to reduce the ratio of common Duquesne Light Company.is tors. The Company expects that stock equity to total capitalization an Equal Opportunity dividends will continue to be paid to less than 209 or (2) 7T6 of such Employer. in the future. consolidated net income if the Dividends may be paid on the effect would be to reduce such Common Stock to the extent per-ratio to 207 or more but less than mitted by law and as declared by 2TG. No portion of retained earn-the Board of Directors, subject to ings at December 31,1983 was ~ the provisions of the Company's restricted by virtue of this provi-Restated Articles which restrict sion. The approximate number of the payment of cash dividends or holders of Common Stock as of + N other distributions on, or the pur-the March 2,1984 record date for a a chase of, its capital stock ranking the 1984 Annual Meeting was junior to the Preferred Stock (col-14T),000. y Federal Income Tax Status of Common Stock Dividends The Company estimates that portions of the Common Stock dividends ~~ paid in 1983 represent a return of capitrd and are not taxable as divi-dend income as follows: um <ma y I Payment Taxable As Not Taxable As Dates Dividend Income Dividend Income Jan.I 100.00'A 0.00% 1973-1983 Dimensions Apr.1 87.639 12.37% Magazine July 1 70.309 29.70'J In mid-year 1984, the Company Oct.1 70.309 29.70'A plans to publish Duquesne Light These estimates are subject to audit by the Internal Revenue Service. Dimensions, containing in-depth information concerning the Com-pany. Dimensions will include an Form 10-K Ofter pany's Annual Report on Form 11-year statistical review and a 10 K filed with the Securities and discussion of some of the impor-U you are hohler or benef.. l Exchange Commission for the icia tant issues affecting Duquesne """,r of any dass of the tom-year 1983 (including a list of Light Company. For a copy of p ny s st ek as of March 2,1984, exhibits). All requests must be the record date for the 1984 made in writing to the Secretary, Dimensions write: Annu 1 Meetmg, the Company Duquesne Light Company, One Duquesne Light Company w 11 send you, upon request and at Oxford Centre,301 Grant Street, Public Information (30-T)) One Oxford Centre n charge, a copy of the Com-Pittsburgh, Pennsylvania IT3279. 301 Grant Street Pittsburgh, Pennsy'.vania IT>279 3G
t. q TCAPCO Board of Directors - Company Officers
~~In 1967, Duquesne Lightjoined John M. Arthurt$'~~
John M. Arthur Lwith four other electric utilities to. Chairman of the Board and President Chairman of the Board and President ' form the Central Area Power Charles M. Atkinson Charles M. Atkinson Coordination (CAPCO) group. Vice President-Finance and Accounting Vice President-Finance and Accounting
~~Prior to 1980, ten generating Group -~~
Group units were committed under the Henry G. Allyn,Jr.*t Roger D. Beck CAPCO arrangements, which pro-Retired President and Chief Executive Vice President-Administrative Services vided forjoint ownership interests Officer of The Pittsburgh Group based on individual requirements. - and Lake Erie Railroad Company Duquesne Light shares m nme of Daniel Berg ? $ Vice President-Nuclear Group these units. To date, seven are in Provost and Vice President for Academic ' 1 service; three will be placed in Affairs, Rensselaer Polytechnic Institute Clifford,N. Dunn service, one each in 1985,1986 Doreen E. Bo *ce*t$ !and 1988. Director.The Bu 1 Foundation Wilham F. Gilfillan, Jr. Since 1980 each CAPCO com. Vice President-Customer Services John H. Demmler $ Group pany has been responsible for . Partner, Reed Smith Shaw & McClay establishmg its own level of Attorneys-at-Law George L Rifendifer -reserve and its own generating Vice President-General Services capacity reeds beyond the jointly-Sd. Walter T. Wardzinski* te irector. Ilealth Systems owned umts still under construc-Agency of Southwestern Pennsylvania Vice President-Legal and Corporate - tion. Duquesne Light is now Communications developing a program to meetits [ilIy.,; eft and hi f x cutive caicer, EarlJ. Woolever future capacity requirements. Cyclops Corporation Vica President-Nuclear Engineering and Construction 'Duque:;ne 1.ight L,ompany G. Christian Lantzsch*$ Bearer Valley el Bearer Palley #1 Vice Chairman of 3fellon Bank, N.A. and James 0. Ellenberger Na1 Ownership: 1:.74% Yeit>N.IxiG KW Vice Chairman and Treasurer of Mellon Controller "$!tyT8$fiOO KW D National Corporation Ronald G. Males ownersh:p: 47In DA ShreAAW KW DL Share: 114,000 KW Eric W. Springert t Treasurer $fy*""[,,ld /i fd #1 krtner, lio Springer and Mattern Thomas Welfer,Jr. 1 l Coal-1976 Coal-1977 Secretary - Ca ty: 780,000 KW Capacity 7so.000 KW
~~3femberof Audit Committee~~
~~- IISha V 12 h r 6,h om at n ommittee W r [!"",8%#J-Community Relations committee Lawrence P. Galie Cr $ Member of Nominating Committee Assistant Treasurer~~
~~Dbracity: 800A10 KW Ownership: 13.74%~~
~~DA Share:llo,000 KW Transfer Agents and Joan S. Senchyshyn Assistant Secutary~~
~~Ohio Edison Company Registrars~~
~~[71 Common, Preference and~~
~~Effective December 1,1983, the Boant of D1,acity: w) 000 KW PreferrMI Stock Dimetws appointed Walter T. Wardzinski Ce Ownership 31.2m Vice Pres; dent of l# gal and Corporate~~
' DA Share: 18,,000 KW Pittsburgh National Bank, Communications. Mr. Wanizinski's res- - *The Cleveland Electric Pittsburgh ponsibilities will include legal services. Illuminating Company Chemical Bank, New York public information, public affairs and the Perry #1 Pe>rry #1 Secretary's office. Pnor to his appomt-ment as Vice President, Mr. Wardzinski NucleTr-1945 Nuclear-19ss Annual Meet.ing of was General Attorney of the Company. ~ Capacity: 1.205,000 KW Capacity: 1.205p)0 KW - D.I., Ownership: 13.744 D.I. Ownership: 13.743 stockholders Di Share: 160.000 KW DA Share: 10g000 KW ~ . Eastlakc s.5 The annual meeting of stockhold-Coal-iw2 ers will te held at 10 a.m., Pitts-0"[*8'!$/sTiNE burgh time, on Tuesday, April 17, DL Share: 20k000 KW 1984 in the David L. Lawrence "Ihe T;ledo Edison Company Convention Center, Pittsburgh, Ihri+Besse x1 Pennsylvania. Nucker-1977 Ocpacity: mo#)0 KW D L Ownship:0 DA Share: 0
~~Constructing and operating company~~
~~)F One Oxford Centre Pittsburgh, PA 15279 i~~
L-
OHIOEDISON TheEnergyMakers i 1 l ANNUAL REPORT 1983 s l l 1 s t ~ -..-.,_.m._
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b e a FinancialHigNights ^ i M M_ For the Years En@x1 Decs;noer 31 1983 1982 Change ,n On milhons except ber share amounts) Kilowatt-Hour Sales 24,345.4 24,025 5 +1.3% Operating Revenues 51,515.9 $1,429S +6.0% s Fuel Expense 420.3 432.7 ' -2.9% Operating income 302.8 269 6 + 12.3% Allowance for Funds Used Dunng i Construction, Nyt 203.7 d60.3 + 27.1 % Interest and Othe(Cnarges 319.8 3m4 +3.0% incomo Before Extraordinary item 272.4 19L6 + 39 3% Net income ' 272.4 ' 219.7 + 26.3 % Earnings on Common Stock 227.8 iS1.5 + 25.5% Earnings Per Common Share: Before Extraordinary item 32.22 ~$1.89 6 + 17.5% Earnings on Common Stock 2.22 2.13 +4.2% Dividends Per Common Share * $1.80 _%1.76 +2.3% Dividends on Capital Stock $230.8 5185.8 + 24.2% Construction Expenditures: Constructionof Facilities $690.8 $649.9 Nuclear Fuel 55.0 124.3 internally Genera'ed Funds ~ $745.8 1774.2 -3.7% 204.4 13C.4 + 49.9% Net Financing Activities 483.4 683.5 - 29.3 % i Return on Avera!.e Common Eauity 14.2 % '3.5 % re,b.,9.*.4. .ac =ew46 +, o.,.m as.a.. un o.:... .ti we..d e.,m. = use m. isw. s s s 4 \\ g g Mb I.. .f a m wsm - m m vene . J!t N M .s m.
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i President's Message Many things came together to Aggressive cost-cutting measures .g make 1983 a successfulyear for helped to reduce operation and M [6 the Company. But one of the most maintenance expenses by $19.7 / y important doesn t appear in our million from the previous year...and, 3 g' financial statements: I'm refernng to importantly it was done without e', Q the stockholders' continuing support sacrificing the overall performance i of our efforts to move the Company of generating plants or the reliability j ~ s { j forward. of service to customers. J l f With that in mind, I hope you will Several system improvement l ? share with employees the satisfac-programs were completed during l tion of being an important part of the year, which will further enharice I one of our better years. operating performance. For example, modem computer applications in Earnings were up 4.2 percent over the new System Dispatching Office 1982 to $2.22 per share of common andin wstomer acewndng obs stock, despite a larger number of re making the generation and shares outstanding and an extra-ansnssbn @wqand seh ordinary gain of 24 cents per share to customers more efficient, reduc-in 1982. ing annual operating costs by more An improved economy, sales to than $1 million. Other utilities and rate adjustments And,we are encouraged by combined to push annual revenues rogress made in the strengthening up 6.0 percent to $1.5 billion. of ou financialposition, including Kilowatt-hour sales to retail and improved cash flow and growing f wholesale customers were up 3.7 retained earnings,which should percent, led by significant increases translate into an improved outlook in sales to industrial customers. gg,, wr o ers' investment. particularly in the automotive and steelindustries. Concentrated Efforts What is being accomplished can be The Board of Directors, recognizing attributed to concentrated efforts in that there has been measurable wr map areas: progress in performance which should have long range benefits, Reducing the need forincreased increased the quarterly dividend to rates to the extent possible by con-46 cents per share, effective with trolling costs. Achievements in this, the first quarter of 1984. area are illustrated by lower costs for coal, maintenance and plant opadons for G81 For the third consecutive year, we were highly successfulin selling
Ensuring steady progress in our bulk power to other utilities-construction program and seeing representing $76.2 million of toits timely and most economical revenues in 1983. A portion of those completion. Begun in 1980, our revenues resulted from two major
$600 million air quality control long term sales contracts that program is on schedu!e for com-should add a total of over $553 pletion in 1984. million of predictable revenue into While we ourselves are not build-the 1990s ng a nuclear plant, our partnership. in three generating units under con-struction requires active participa-tion in these projects. Intensive, hands-on project management by l
3 the companies building these Although there isincreasing recog-units, especiallyin the area of nition in Washington that the " acid quality control, has avoided the rain" question must be addressed, kindsof regulatoryandlicensing thereis alsogrowing understanding difficulties that have drawn atten-that further scientific study should tion to other utilities in the past year. precede costlylegislation. Absent this, the Company aqd customers All companies participating in could be faced with enormous new these projects share a total com-costs awe m m tangde mitment to maintaining the highest standards of quality and safety. The Duquesne Light Company, Our Outicok which already has considerable A number of favorable economic nuclear plant operating conditions should provide the experience,is making steady opportunity to further improve progress towards completion of financial performance; a modest the Beaver Valley unit 2 in 1986. in'lation rate, stable fuel prices, Although unit 1 at the Perry lower borrowing costs and, as the Nuclear Plant has been resched-economy gains momentum, an uled for completion in late 1985, increase in the demand for The Cleveland Electric illuminating electricity. Company's management of em W construction at the Plant hac the prospects of a better business consistently earned high marks for climate fuel our optimism for the quality controlin major reviews by future, we will never lose sight of the the Nuclear Regulatory Commission. challenges that yet face the electnc utility industry. They require that we
~~Exploring ne.v anddifferent ways act in the best interest of customers for customers to use electricity as and stockholders. And we will.~~
cost-effectim altemative to other The Ohio Edison System is an energy sources. In 1983, a number o ellesW of proposals were made to the management and hardworking regulatory commissions for their employees whose pride and talent approcl to help customers reduce have us moving toward a more re-energy costs, either by shifting the e M MI MeM m all. use of electricity to off-peak periods or through incentives to expand operations or increase local employment. p/ D Pursuading regulators and legislators to dealwithlong-term Justin T. Rogers, Jr. problems with long-term soluticns. President instead of short-term 'ttuick fixes" M tch 1,1984 of questionable benefit. This attitude is particularlyimportant in the " acid rain" debate, where some m urging that billions of dollars in facilities be added to power plants.
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m , ', t_ e m> 1 Year in Review ) s Earnings and Revenues improve in 1983 mT s 'A Earnings on common stock in 1983 1 D [' 3- _.;3 %l increased 25.5 percent from 1982 K ' 7,.; W^ y ,) d I. to $227.8 million. As a result, eam-3 , 2. g. p wl ings per share grew from $2.13 in 1 1982 to $2.22 in 1983, despite an ~'~ extraordinary gain of 24 cents per l+ 5 share in 1982 and a 17.2 million , ff Q]* increase in the average number of shares outstanding. Total revenues g g 1 $1.5 billion. i increased 6.0 percent over 1982 to I Revenues benefited from the partial te ~~ effects of new retail rates approved t
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by The Public Ut..ities Commission S" y of Ohio (PUCO) late in the year, ,w which should add $94.5 million to .-4 annual revenues. ugj l e Y ]^' But because the overall cost of e ~ w providing electricity continued to 7 d increase, and rates granted in the 4 v 's m.a ] past have not kep' pace with cost .n
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increases, the Companies have g,s 1%- .g ~ ~~~ requested new retail rates. If granted in full, the new rates would j increase annual revenues by $127 ~~ 'i million for Ohio Edison and $19.9 ~ million for Penn Power. +s '# ~ H'7j Sales and local Economy Stronger s,, 7.. s Z Total kilowatt-hour sales reflected 'j improvements in the local economy. 'T 4 ,.l ~ H Sales increased 8.8 percent to 9 j industrial customers and 2.0 ln percent to commercial customers j e from last year, with automotive and O steelindustries showing a strong Q c'
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-C sales to wholesale municipal 'r j customers decreased. For the past several years, the / Companies have been aggressively pursuing sales of bulk power to other utilities. Our success in this highly competitive area continued w.. in 1983 when we negotiated two 2 _D long-term sales arrangements that w S 'n. v m y h should increase revenues by more y:A p-w.~~ M than $553 million over the terms of ') the arrangements. The Companies in May began prnviding up to 150 m megawatts to Pbtomac Electric L f( Power Company for a minimum j; term of five years. And in Juif, the +^ ^ Companies began supplying up w.
Ek' PQ f$&a] y["T i n. 9;4 n ~ gi 6 l to 200 megawatts for a ten-year _ _M second highest peak load in megawatt-hours-equalkng the penod to General Pubiic Utihties Dnpioyns continue Corporation our history to provide custorners with electnc serwce Ohio Edison capped off the year by } Marketing Programs Accelerated that is 99.98 percent winning two Contracts. eaCh to sell 4 y The Ohio Edison System serves a gg 200 megawatts for 12-week penods. -n region of the country where the for an estimated combined total of "i economy. and electnc sales. have $12 million Although relatively traditionally been dependent on the short tarm these and all sales of steel and automotive industnes bulk power not only boost the Com-These industnes. of course. will panies revenues. but make more remain important. but future growth efficient use of our power plants in the economy will come more from and heip hold down the cost of nontraditional sources. including sennng our own customers small manufactunng research-and-Ohio Edison entered into an agree development and service-oriented ment with its wholesale municipal I addition. estimated sales of 943 customers. pending approval by the milhon kilowatt-nours annually could Recognizing the economic pres-l Federal Energy Regulatory Commis-result from new or expanding com. sures on customers and the spint sion (FERCt to provide power over Research and mercial and industnal protects that of cooperation needed to nurture a tive-year penod beginning October were in progress throughout the growth. Ohio Edison and Penn 1 1983 With this settlement. the I*C'hi5' '"'h " System in 1983' Power are seeking regulatory j Comy M wnUnue to supNy wM d ehes fm Wess those at the Goodyear these customers. who had been Near-record peak demand loads expansion through innovative rates l inhnical Center, expected to purchase more were set dunng the summer months For example. One of our economic have buorne a electncity from otner bulk power when high temperatures and hemid' development plans proposed to the source of renewed supphers Upon approval. the ity increased the use of air cordi-regulatory commissions woulo grostit in the local agreement would also finahze three tiornng On July 21. the hourly provide special pncing for a five-econorny. rate cases before the FERC System peak load reached 4.148 year penod to new or existing indus-tnal customers that build new %:,g ~. ' '- [ f p NQ[-..,. ( [, ' . '. Q...II -'~ (.? h b. $. facihties or expand existing facihties <.2. ~ ~f -.P 4 y.y J.. ;. .6.d a.gg.1 Ng... N /s; c - ,. y h-Other marketing efforts are aimed l ~ c. A W.g. 1...c.
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$A[C / h.T *.'f[pc; g %fg. .. 3 ' . GC:j-d.d ;/...}}q [ at helping local companies improve Q9 4 ('-3.Q. ; * ; ' their efficiency and lower their over-G.t:Ty( t.f ' d. . ' D. 3 4 ,a/l - '. 7 j/y." all energy costs. Through Energy ,y., #.4, ; - q; .t Teamwork Conferences. our em- +
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of our power plants. Since the load Companies offer numerous helpful Seaver Valley Power Station unit 1, management program began in programs, such as budget payments the only operating nuclear plant 1977,213 megawatts have been and third-party riotification. In addition, currently supplying the System.
moved to off peak hours. customers are informed of govern-Except during a scheduled shut-mentai or social service agencies down for rriaintenance, testing and , The Companies also help residential 4 that provide financial assistance for refueling, the 810-megawatt unit customers to better manage their I home weatherization and for paying achieved a 94.5 percent operating electric use and enerny costs. A winter heating expenses. This infor-availability for 1983; and it reduced new plan to encourage more use of mation, along with topics on electric our dependence on more expensive electricity, yet lower overall custo-use and energy issues, is also avail-coal-fueled generation by 10.2 per-i j mer costs, was approved by the able through a wide range of litera-cer,t for the year. The Companies PUCO in January 1984. It will pro-ture, films, group presentations and own 52.5 percent of the unit, which vide lower rates for qualifying cus-student education programs. is operated by the Duquesne Light i 4 tomers with electric water heating Company, the other owner. or electric add-on home heating Earnings Continue to Benefit from systems. In return, their service Plant Reliability Additional work done during the I could be interrupted to stabilize Our ability to increase earnings scheduled chutdown will enable the
~~peak loads, but with minimal or no depends not only on efforts to main-unit to operate for longer periods effect on the customer's lifestyle.~~
tain sales growth, but on the per-between refuelings. The modifica-f rm nce of our employees and tions, which included use of more Cuziomers Favor Me on Service and Cost the most effective utilization of our highly enriched uranium fuel, were The Companies continued their long generating facilities. To sustain the partially completed during the shut-history of providing dependable high reliability of these facilities, the down, and wil! be completed at the service, with the average residential Companies have intencive employee next scheduled ref seling in 1984. customer experiencing an average training and preventrve maintenance reliability of 99.98 percent since programs, which significantly reduce Operations Keep Pace m,th 1980. In a December random the likelihood of equipment malfunc. Computer Technology susey of 500 Ohio Edison cus-tions and costly generating unit Modernization and the use of high tomers,96 percent rated their breakdowns, technology plays an ever increasing service favorably, and 91 percent A new Customer rated the cost of their electric 9 h,. ' information System U. g #. service as an average to above ., ' ~. *.$ h Q f ~. g,.[sp..N O....[. I - has imprond our .d l average value. . (l~ W -W egF /; m. - "4. i ; /.3p%5i ability to quickly Ongoing surveys are usefulin deter-A. "5' "" [. a.!E.W 'E Y**v%i "58 "d I'h mo e mining andmeeting customer needs. k'?kJ inquinn wit , ' / */.~ ~i For example, a quarterly survey of (- s customers who contacted the Com- ,'Z !M N 1 191J ' detailed information. 3.. i ? -Q .M ON f 2 Q j K{ panies for service or information ,c; p (%'$'Ma,pWy](,g'..:[jq helps pinpoint where and how serv-3,4 y A WX S ice can be improved. Some feed-U N.k.s b k
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N:: W:. m ' v S a'a k w, QQiyen, pi;M.yiQ Q g pg p ' malt to g] qs % rg g role in our of forts to improve perform-g-g .m. Contracts secured in nce. Our new System Dispatching { .gg O h@3.[ ~-* . ~ q g@q Office has greatly improved effr-O { 6; g$.1 O -e" 1983 helped reduce w - J_,, m ,,.? g;# .L .jq ciency in economically balancing g .y q g.v '* I ' ' [,[ '.; h [,4 MM .f 3 plant generation to meet customer .f j. the lowest levels in load coordinating scheduled out-g'"'MgHii ~ h--e ^ 7 5 " 'I"'* i 'kN ages of generahng and transmission facihties and arranging for the inter- .; @NuilM Y[.,f.7 M change of power with other utihties . y '; ., f i f# ; S ' W N 7f ] [ *'" J % w 4 N A sophisticated system of four ',M-[1.typ(Q ;, Q4, y advanced computers provides .p.3 g improved secunty. faster response .p(j; g, g g*[ yidN to load changes and greater overall efficiency g..) $(-g, y j.,, ' { +18[ h. M, Customer service was improved ,4 during the year with completion 4-3 :*r g: ..'.6.'.' %;3.e of a new computer. zed Customer x - gg c# y, ir , 4 information System. It enab!es employees to respond to inquiries Because of the increased complex-quiCKly Wuh more complete and ity of me@g gems W N _2-accurate information Customers Nuclear Regulatory Commission can request a review of their monthly (NRC) for all nuclear generating bill and obtain other helpful informa-plants under Construction. CEI tion about their service or accounts announced that unit 1 is now scheduled for completion in late Computer processing is also used 1985 The cornpletion date for unit 2 in purchas!ng and receiving coal will be reviewed at the time unit 1 is supphes New computer systems are completed. With the rescheduhng monitonng dehvenes inventones. and the additional work. our portion consumption and quahty of coa l of the Plant's costs rose from $13 received at our power p; ants The bilhon to $1.8 billion An of tne information helps us obtain the companies that share in the most economical supphes of coal ownership of the Plant are com-New Projects Build for the Future mitted to rraking it one of the most Ohio Edison and Penn Fbwer are in ehnt and safest in N cony w' the final stages of a plant construc-Despite the delay the quakty of tion program initiated in the 1970s construction and quick resolution of Three generating units. in which we problems at the Perry Plant were have partial ownersNp. remain to officially recognized during the year. De completed in November, NRC inspectors found Two of those units are at the 2.410-that project management was ag-gressive in finding and resolving megawatt Perry Nuclear Plant The a i construction problems. Also, dunng 8 Companies will own 35 24 percent. . //- pubhc heanngs, the NRC's Atomic ~' or 850 megawatts. of total genera-Safety and Licensing Board sup-tion from both units being t uilt by ported the i.7tegnty of quality as-4 ,he Cleveland Electnc illuminating C surance and other construction g Company (CEh procedures at the Plant. Unit 1 is 913 percent complete, while unit 2 is 43.2 percent complete. L b 4 Y Yh f b] l-N ) 1 4 .r
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13 The third unit is under construction M by the Duquesne Light Company at the Beaver Valley Power Station. Unit 2. scheduled for commercial operation in 1986, was 781 percent complete on December 31 During the year major portions of con-struction were completed. and the Atomic Safety and Licensing Board held public hearings as part of the licensing process Ohio Edison w'll own 4188 percent of the 833-megawatt unit. With the completion of these prop ects in the 1980s, the System snould not require additional capacity until 'NC!l into the 1990s. But the growth in load over the next 20 years is estimated to be equivalent to a 4 J-15 percent annual increase, and the Companies will plan accordingly jA 11 ~ ' - - and continually assess the eco-h/. nomical options in both conventional 4 and alternative energy technologies .: nw -- f/g[ In support of one of the emerging Mjiq q technologies. We are participating in g., ,/ t p. fy? w$r a $155 million cooperative coal-A gas' cation project at lilinois 7 p % >[N[ Power's Wood River Station it is the (p ' VfLf, "l'C, q country's largest operating demon- .%.,En l @ MT. 5 stration facility of its type and will nyT7-- u gj determine if high-suiiur coal. such 4~ Sd. n;gdy Qff as that mined in Ohio, can be 6 E; lta economically converted to a clean-k .,". S ? ~ M
~~7 M-bi'rning gaseous fuel. Through the end of 1983. the facility has success-4 fully met 'ts test objectives.~~
v 'w y. Other System construction includes \\' our $600 million program to meet q ~ existing federal requirements for air 4 quality. Through 1983. the Compa- { gi 1., nies have installed facilities to better %@k pg. remove dust from the emissions of '}' c& 4" ThfI9;ppgsp%Q ten generating units. As the pro-gram successfully approaches its It g.A December 1984 completion. the gqp b} MMe%$j m+.. e :~ ;, j '~ @ .., n:. :w < w % [%,; %5pt QQfA - Y~ ~ [I 56Nh$$ m. yy =
I l 14 j _M only remaining construction is at approved method to recover those l I two units of the W H Sammis costs. Beginning in August 1982. Plant. a PUCO-approced recovery Uw son to For 1983. approximately $691 g costs million was spent on construction of 9 new plants environmental facilities ow new cons-and other System improvements sioners ordered the Company to During the year $421 m@on in capital financing was used to fund which was later approved by the these System improvements Ohio Supreme Court, while they Regulatory and Legislative issues reexamined it. Address Majo: Concerns
o address the concerns of the On January 11. 1983. a new law that Ccmmission and to resume took effect in Ohio changed the ey of peesh @ fem structure and organization of costs. the Company reached an the PUCO. Among other provisions.
agreement with the PUCO staff that it increased the number of commis-recommended to the Commission a sioners from 3 to 5 and created similar but somewhat more restric-i a 12-member nominatng council t j e meg meh WoM W select individuals for appointment the PUCO in January 1984. the new to the Commission by the state s me' hod provides the Company a 90 # "O r' onable opportunity to again One of the most significant rulings recover past and present costs for by the new Comm:ssion concerns coal delivered from the Quarto our recovery of certain costs mines A similar settlement was of coal delivered to the Bruce proposed to the Pennsylvania Puolic Mansfield P! ant from the Quarto Utility Commission. and is currently Mining Company. Prior to August under review by the Commission. 1982. Ohio Edison was requirec to An administrative law judge for the [ defer a portion of its fuel costs Commission recommended that the related to Quarto coal with no settlement be approved. ernpl e directly involved m P cmstruction progress k.- n at the Beaver Valley b- .( v si e,s,a, _ m + w Q'(fplli x 's b N /$ ...r l ^ 2 ii n_ ^ '- < & M fmm b
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h 17 v 1 Another major utility issue is the in supporting or conducting both h allowance of CWIP, or construction local and regional studies and are j work in progress, in electric rates. carrying on research with experi-t,9 Current Ohio law allows utilities to mental equipment to find ways of .b>~ include a portion of construction reducing the cost of sulfur dioxide costs in the rate base. Although control. state legislation to severely restrict p ,g g this allowance has been introduced, p g none hasbecomelaw;and the PUCO To the benefit of customars and in September allowed the Company to collect $24.5 million in financing costs for the Perry Nuclear Plant g ,g unit 1. Also, the Federal Energy from the efforts of 7,702 employees Regulatory Commission in July ruled in the Ohio Edison System. that electric utilities could include an allowance to cover some financ-A wide range of skills and manage-ing costs in rate cases involving ment training programs have been a + { wholesale customers, but federal strong foundation for the System's legislative proposals call for a return improved productivity. The Compa-to more restrictive measures. The nies continue to expand this class-4 i Companies have opposed such room and " hands-on" training. In [= d ) efforts to eliminate or restrict 1983, we took major steps to study I. % j allowances for CWIP because the and improve the effectiveness of / h result would be higher overall con-training, and to help employees to struction costs to the Companies better apply these tools to everyday { and their customers. situations. ( " Acid rain" is a national issue with Individual efforts are recognized by I
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great potential impact on the Com-rewarding employees who suggest ) panies and the area economy. Cur-specific ways of improving produc-rently, some legislative proposals tivity, either through efficiency or L ,ks 3 before Congress could force us to safety. With cash incentives, the spend more than $1 billion over the Employee Suggestion System has g j/ next several years to reduce sulfur saved the Companies more than i %g g dioxide emissions by installing $106 000 since the program began p scrubbers, even though there are in 1981. ggg no assurances of substantial envi-g. s ronmental improvement. Instead, employees also make responsible the Companies urge that the contributions to the community. For y~. sc;entific community be given the example, Company and employee necessary time to better identify contributions to United Way in 1983 A," D_, and understand the problem, and M' f% totaled more than $375,000. And then determine the most effective b
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employees spend countless hours and economically sensible in broad range of community Y-solutions. 1 services, which include providing The Companies have already made food or other gnods to the poor and g V substantial contributions to the handicapped, teaching life-saving u reduction and understanding of techniques and volunteering in local gg sulfur dioxide emissions, which are g fire departments. thought by some to be a major cause of acid deposition. By installing expensive air cleaning facilities, buying more costly low-sulfur coal and other measures, we have reduced sulfur dioxide emis-7 g ~ sions by 30 percent since 1975. We have also spent about $1 million .g r _Z A
Management's Discussion and Analysis of Results of Operations and Financial Condition a s Results of Operations Plant in 1983 compared to 1982. Maintenance on those Results of operations for 1983 reflect improving economic units in 1982, plus maintenance performed during a conditions taking place in the Companies' service area. refueling outage of Beaver Valley Unit No.1 during that increased kilowatt-hour sales to the Companies' year, were primarily responsible for the increase in 1982 commercial and industrial customers of 2.0% and 8.8%, maintenance costs compared to 1981. respectively, were significant to the Company achieving in addition to reduced maintenance costs in 1983, the increases of 39.3%,26.3% and 25.5% in income before improved generating unit availability allowed the extraord, nary items, net income and earnings on common i Companies to reduce their requirements for power stock, respectively. This strong performance increased purchased and interchanged with other utilities by 10.6% 1983 earnings per share of common stock by 4.2%, from 1982, despite an overall increase in kilowatt-hour desp_te a significant increase in the number of shares of i sales from the Companies' system. The significant common stock outstanding in 1983 and the _nclusion in i ncrease in purchased and interchanged power during 1982 earnings of an extraordinary non-cash gain. The rate 1982 compared to 1981 resulted primarily from power of return on average common equity was 14.2%,n 1983 i purchases which were made in 1982 in order to sell short-compared to 13.5% in 1982 and 14.6% in 1981. Excluding term power to other utilities. the effect of extraordinary income in 1982 and 1981, and the settlement of a claimed Pennsylvania tax liability in Additional financing associated with the Companies' 1981, the rate of retum on average common equity was continuing construction programs in 1983 and 1982 12.3% in 1982 and 12.9% in 1981. necessarily resulted in higher interest costs and preferred nd preference stock dividends. However, it is important to increased operating revenues, which served as the basis note that the Companies external financing requirements in for the 1983 earnings improvement, resulted from the we s M ad h costs of Unan&g wm effect of base rate increases and increased kilowatt-hour also at a lows bd As N Companies' consWdon sales to customers, partially offset by reduced sales to other utilities and reduced fuel component rates in 1983 pr ects proceed and until the projects are placed in service and included in rate base, the total allowance for funds used compared to 1982. The reduced fuel rates charged to during construction (AFUDC) will continue to increase in customers were made possible primarily due to lower order to capitalize the appropriate financing costs which are prices paid for coal in 1983, evidenced by the reported not cwently recovered through rates. A sigrJficant factor, decrease in fuel expense. Operating revenues in 1982 increased from 1981 due to increased base rates, and however, is that AFUDC represented 89.4% of 1983 earnings increased fuel component rates. There is a direct correla-U". common sM, a Mm kom Mo in G82 We tion between the fuel Wes charged to the Companies, giving effect to the extraordinary income recorded in that year. customers and the increase in fuel expense reported Iriformation with respect to the estimated effects of inflation in 1982. upon the Companies is given in Note 10. Results of cperations were further improved in 1983 by Capital Resources and Liquidity operating efficiencies achieved and substantially reduced The Companies' 1983 construction program (excluding maintenance costs. The Companies' generating units were nuclear fuel) required approximately $691,000,000 which, in available for operation a greater percentage of the time in addition to approximately $204,000,000 of funds generated 1983 compared to 1982. This increased availability results internally, was funded through external financings. Over the in less unscheduled maintenance and naturally iaads to last five years, the cost of the Companies' construction reduced maintenance expense. This was most noteworthy program was approximately $2,900,000,000, of which at Mansfield Unit No.1 and several units at the Sammis approximately $570,000,000 was available from internally generated funds; approximately $2,700,000,000 is currently forecast to be spent from 1984 through 1988. The issuance of additional common stock and other securities will be necessary to fund a significant portion of this new construction. Also during this five-year period, the Companies A - . p
Management Report n will have additional cash requirements of approximately The consolidated financial statements were prepared by p $638,000,000 to meet debt maturities and sinking fund the management o' Ohio Edison Company, who takes requirements for debt and preferred and preference stock. responsibility for their integrity and objectivity. The statements were prepared in conformity with generally y At December 31,198?, the Companies had available accepied accounting principles and are consistent with approximately $113,000,000 of temporary cash investments other financial information appearing elsewhere in th,s i and approximately $98,500,000 of funds held in escrow from report. Arthur Andersen & Co., independent publ,c i [ previous pollution control financings. The Companies also accountants, have expressed an opinion on the Company's have $235,000,000 of short-term bank lines of credit financial statements, as shown on page 37. available to them for interim financing purposes, none of which had been crawn down at December 31,1983. The The Company's internal auditors, who are responsible to Companies' current financing plans for 1984 include an the Audit Committee of the Board of Directors, review the estimated 8,000,000 shares of common stock to be issued results and performance of operating units within the through the Dividend Reinvestment and Stock Purchase Company for adequacy, effectiveness and reliability of Plan, and issuances of up to: 10,000,000 aaditional shares of accounting and reporting systems, as well as managerial t common stock through public offerings; $85,000,000 of and operating controls. preferred and preference stock; $65,000,000 of pollution The Audit Committee consists of four non-employee control notes; and $170,000,000 of other long-term debt. The directors whose duties include: consideration of the Companies also expect to invest approximately $88,000,000 F adequacy of the internal controls of the Company and the for additional nuclear fuel in 1984 through the incurrence of 2 objectivity of financial reporting; inquiry into the number, additional long-term obligations. extent, adequacy and validity of regular and special avoits Based upon earnings as of December 31,1983, the conducted by independent public accountants and the T Company would be permitted, under its First Mortgage internal auditors; the recommendation of independent Indenture, to issue on the basis of property additions, at least accountants to conduct the normal annual audit and $545,000,000 principal amount of first mortgage bonds special purpose audits as may be required; and reporting assuming an interest rate of 13%; or, under its Articles of to the Board of Directors the Committee's findings and any g_ ? Incorporation, to issue approximately $339,000,000 of recommendation for changes in scope, methods, or preferred stock at an assumed dividend rate of 13%; or to procedures of the auditing functions. The Audit Committee issue some lesser combination of both. The Company is able held three meetings during 1963. to issue $335,000,000 principal amount of first mortgage [ bonds against previously retired bonds without the need to + 1 7 meet earnings coverage requirements. ^ In September 1983, the Company was granted a base rate w / / increace by the PUCO which recognized in rate base uh me ' approximately $126,000,000 of the Company's investment in Emutin vice President comptmiler Perry Unit No.1, a nuc! ear unit currently under construction. Nf Finmia10fficer A January 1984 PUCO order concerning the Company's i electric fuel component rate will allow the opportunity for l recovery of current and deferred Quarto coal costs, as discussed in Note 7. These are favorable develooments which should have a positive effect upon the Company's ability to generate cash internally. RL The Companies currently have rate c'ases pending before the = PUCO and the PPUC which, if granted in full, are designed to increase annual revenues by approximately $127,200,000 m and $19,900,000, respectively. Orders are anticipated from , L the PPUC by the second quarter of 1984 and by the third quarter of 1984 from the PUCO. P ~ =,r
i Ohio Edison o Selected Financial Data s 1983 1982 1981 1980 1979 (in thousands, except per share arnounts) Operating Revenues $1,515,852 $1,429,626 $1,279,649 $1,080,869 $ 994,585 Operating Income 302,751 269,640 252,381 169,383 163,744 Income Before Extraordinary items 272,400 195.571 183,020 135,150 134,807 Net income 272,400 215,729 197,062 135,150 134,807 227,843 181,496 163,892 101,403 105,120 Earnings on Common Stock Earnings per Share of Common Stock (based on weighted average number of shares outstanding dur:qg the year) Before Extraordinary items 2.22 1.89 2.10 1.52 1.80 Earnings on Common Stock 2.22 2.13 2.30 1.52 1.80 Dividcods Declared per Share of Common Stock 1.80 1.76 1.76 1.76 1.76 Total Assets at December 31 5,905,142 5.247,138 4,460,274 3,979,965 3,446,454 Prr.firred and Preference Stock Subject to Mandatory Redemption 158,112 152,560 151,141 156,450 150,850 Long-Term Debt 2,131,404 2,005,436 1,759.771 1,594,384 1,410,782 Construction Energy Trust and Nuclear Fuel Obligations 719,364 656,655 447,484 265,000 Common Stock Data The Company's Common Stock is listed on the New Wrk and Midwest Stock Exchanges and is traded on other registered exchanges. Price Range of Common Stock 1983 1982 First Quarter High-Low 15-7/8 13-7/8 13-1/8 11-3/3 Second Quarter High-Low 16-1/8 14-3/8 14-1/8 12-3/8 Third Quarter High-Low 15-1/4 14 14-3/8 12-1/4 Fourth Ouarter High-Low 16 11-7/8 15-1/8 13-1/4 Yearly High-Low 1 6-118 11-7/8 15 1/8 11-3/8 Prices are as quoted on the New trk Stock Exchange Composite Transactions. Classification of Holders of Common Stock as of December 31,1983 Holders of Record Shares Held Number Number Individuals 181,290 88.8 53,987,585 49.8 Fiduciaries 19,012 9.3 4,462,051 4.1 Brokers 01 1,032,383 1.0 Nominees 556 0.3 40,397,417 42.8 Banks and FinancialInstitutions 31 53,345 Insurance Companies & Other Corporations 1,562 0.8 1,556,028 1.4 Charitable, Religious & Educational Institutions 495 0.3 349,174 0.3 Pensions, Profit Sharing & Other investment Trusts 1,094 0.5 622,071 0.6 Total 204,101 100.0 108,460,054 100.0 As of January 31,1984, there were 203,789 holders Quarterly dividends of 45c and 44c per share were paid on the of 108,758,161 shares of the Company's Common Stock. Company's Common Stock during 1983 and 1982, respectively. Inf< imation regarding retained earnings available for payment of cash dividends is given in Note 4b.
ohio Edison Cons 0lidated Statements Of income n .~ j i or the Wars Ervjed December 31 1983 1%2 1981 (In thousands, except per share arnounts) Operating Revenues $1,515,852 $1,429,626 $1,279,649 Operating Expenses and Taxes: Operation-Fuel 420,336 432,749 413,698 Purchased and interchanged power, net 50,026 52,607 29,L 1 Other operation expenses 234,526 221,129 195,075 Total operation 704,888 706,485 638.094 Maintenance 121,544 139,615 124,213 Provision for depreciation 115,514 103.206 95,830 Amortization of terminated construction project costs (Note 2) 9,058 1,866 3,995 General taxes 126,818 114,569 84,316 income taxes 135,279 94,245 80,820 Total operating expenses and taxes 1,213,101 1,159,986 1,027,268 Operating income 302,751 269,640 252,381 Other income and Deductions: Allowance for equity funds used during construction 121,814 84.210 60,421 Miscellaneous, net 20,812 16,871 17,021 income taxes-credit 64,923 50,166 53.360 Total other income and deductions 207,549 160,247 130,802 TotalIncome 510,300 429,887 383,183 Net Interest and Other Charges-Interest on long-term debt 233,626 211,765 166,378 Interest on long-term obligations 73,177 80,092 69,183 Allowance for borrowed funds used during construction, net of deferred income taxes (81,901) (76.088) (67,381) Other interest expense 5,702 12,449 26,378 Subsidiary's preferred stock dividend requirements 7,296 6.098 5,605 Net interest and other charges 237,900 234,316 200,163 income Before Extraordinary items 272,400 195,571 183,020 Extraordinary items (Note 8): Gain on reacquisition of first mortgage bonds, net of related income taxes 14,042 Gain on exchange of common stock for first mortgage bonds 20.158 Net income 272,400 215,729 197,062 Preferred and Preference Stock Dividend Requirements 44,557 34,233 33,170 Earnings on Common Stock $ 227,843 $ 181,496 $ 163,892 Weighted Average Number of Shares of Common Stock Outstanding 102,414 85.241 71,180 Earnings Per Share of Common Stock (based on weighted average number of shares outstanding during the year): Before extraordinary items (after preferred and preference stock dividend requ;rements) $2.22 $1.89 $2.10 Extraordinary items .24 .20 Earnings on common stock $2.22 $2.13 $2.30 Dividends Declared Per Share of Common Stock $1.80 $1.76 $1.76 The accompanying Notes to Consohdated Fs,ancial s'atements are an integral part of these statements
l Chio Edison n Consolidated Balance Sheets ) At Decernber 31 1983 1982 Assets (In thoucands) Utility Plant: In service, at original cost $3,632,165 $3,417,669 Less-Accumulated provision for depreciation 1,043,679 953,541 2,588,486 2,464,128 Const' Stion work in progress 2,351,089 1,902.310 Nucle fuelin process 211,327 156,295 5,150,902 4,522,733 Other Property and Investments 63,614 69,626 Current Assets. Cash 2,781 2,812 Temporary cash investments, at cost, which approximates market value 112.993 61,500 Rec:ivables-Customers (less accumulated provisions of $1,541,000 and $1,844,000, respectively, for unccliectible accounts) 132,968 116.054 Other 19,416 24,855 MatIrials and supplies, at average cost-Fuel 69,047 92,684 Other 45,657 44,466 Pcpayments and other 41,184 35,966 424,046 378.337 Deferred Charges: Deffrred Quarto coal costs (Note 7) 67,254 71,346 Property taxes 52,575 50,527 Unamortized costs of terminated construction projects (Note 2) 94,747 103,835 Other 52,004 50,734 266,580 276,442 $5,905,142 $5.247,138 Capitalization and Liabili'ies Capitalization (See Consolidated Statements of Capitalization): Common stockholders' equity $1,711,974 $1,488,371 Prtf:rred stock-Not subject to mandatory redemption 312,335 262,335 Subject to mandatory redemption 60,000 64,000 Pr:ference stock-Not subject to mandatory redemption 50,000 50,000 Subject to mandatory redemption 50,641 55,165 Pr ferred stock of consolidated subsidiary-Not subject to mandatory redemption 41,905 41,905 Subject to mandatory redemption 47,471 33,395 Long-term debt 2,131,404 2,005.436 4,405,730 4,000,607 Long-Term Obligations (Note 5): Construction energy trust 500,000 500,000 Nuclear fuel 219,364 156,655 719,364 656,655 Current Liabilities: Current maturities of long-term debt, preferred and preference stoo: 79,594 22,383 Notes payable to banks (Note 6) Accounts payable 154,727 133,776 Accrued taxes 52,564 51.115 Accrued interest 67,891 57,736 Other 44,102 26,390 398,878 291,400 Deferred Credits. Accumulated deferred income taxes 158,437 152,890 Accumulated deferred investment tax credits 107,390 53,727 Property taxes 52,575 50,527 Energy costs recovered in advance 33,335 14,418 Other 29,433 26,914 381,170 298,476 ' Commitments, Guarantees and Contiagencies (Notes 2,3 and 7) $5,905,142 $5,247.138 The accornpanymg Notes to Consohdated Fmancial staternents are an otegral part of these balance sheets.
m. Oho Edison Consolidated Statements of Capitalization n At Decernber 31 1983 1982 Common Stockholders' Eouity: (in thousands) Common stock, $9 par value, authorized 125.000.000 shares-108.460.054 and 96.081.844 shares outstanding, respectrvely (Note 4a) $ 976,140 $ 864.737 Other padin capital 494.520 423.195 Retarned earr ings (Note 4b) 241,314 200.439 Total common stockholders' equity 1,711,974 1.488.371 Optonal Redempton Pnce Number of Shares Outstantting Aggregate 1983 1982 Fbr Share (in Thousands) Preferred Stock (Note 4ck Cumulative. $100 par value-Av'horized 6.000,000 shares Not Subject to Mandatory Redempton: 3.90 % -7.24 % 973.350 973,3A $103.38-108.00 $102,034 97.335 97.335 7.36 % -8.20 % 800.000 800,000 $104 68-107.40 84.968 80.000 80.000 8 64 % -9.12 % 850.000 850.000 $106 43-106 84 90.670 85,000 85.000 Total not subject to mandatory redempton 2.623.350 2.623.350 $277.672 262,335 262.335 Subject to Mandatory Redempton (Note 4d): 61,500 65.963 10.48 % -10.76 % 615.000 659.630 $107.86-111.87 $ 67.537 Redempton within one year (1,500) (1.963) Total subtect to mandatory redempton 60,000 64.000 Cumulatrve, $25 par value-Authonzed 4.000.000 shares Not Subject to Mandatory Redempton- $3.50 Senes 2.000.000 $28.75 $ 57.500 50.000 Preference Stock (Note 4ck Cumulative, no par value-Authonzed 8.000.000 shares Not Subject to Mardatory Redempton: $3 92 Senes 2.000.000 2,000.000 $31.42 $ 62.840 50.000 50,000 Subject to Mandatory Redempton (Note de): $95 00-$102.50 Series 27,000 27.000 $1,095.00L1,102.50 $ 29.700 27,000 27,000 $180 Senes 1,622,546 1.862.181 $16 03 26.001 24.541 28,165 Redempton withm one year (900) Total sublect to mandatory redemption 1.649.546 1.889.181 $ 55.701 50.641 55.165 Preferred Stock of Conschdated Subsidiary (Note 4ck Cumulative. $100 par value-Authonzed 950.000 shares Not Subject to Mandatory Redempton: 424%-916% 419.049 419.049 $102.98-107.32 $ 44.123 41.905 41,905 Subsect to Mandatory Padempton (Note 4d): 8.24 % -15.00 % 473.708 338.951 $103.29114 81 $ 52.056 47,971 33.895 Redempton "nthin one year (500) (500) Total sublect to mandatory redempton 47,471 33 395 t.cOTerm Debt (Note 4fk First mortgage bonds: 5 Ohio Edison Company-8.60% weghted average interest rate. due 1984-1988 153.693 153.693 14 59% weghted average interest rate, due 1989-1903 240,864 223.364 10.88% weghted average interest rate, due 1994-1998 95,215 77.715 8 57% weghted average interest rate, due 1999-2003 242,156 242.156 10.50% weghted average interest rate due 2004-2010 424.310 424.3 0 1.156,238 1,121.238 F%nnsylvania Power Company-10 27% vceghted average interest rate. due 1984-2008 259,000 239.000 Total first mortgage bonds 1,415,238 1.360.238 Secured notes and obi gations: i Ohm Edison Company-8.29% weighted average interest rate. due 1984-2014 281,439 230.914 Amount held by Trustee (985) 280,454 230.914 One Edison Fmance N V-17.38% weighted average interest rate. due 1987-1988 150.000 150.000 Fbnnsylvarua Power Company-9 00% weighted average mterest rate. due 1984-2007 67,661 68.106 Amount held by Trustee (2,572) (5.327) 65,089 62,779 Total secured notes and obligatons 495.543 443.693 Unsecured notes of Oho Edison Company.11.06% weighted average mterest rate. due 1984-2014 402.000 302.000 2 Amount held by Trustee (93.555) (69.026) J Total unsecured notes of Ohio Edison Company 308,445 232.974 Net unamortized discount on debt (11,128) (11.549) long-term debt due within one year (76.694) (19.920) Totallong term debt 2,131,404 2.005.436 Total Capitalization $4.405.730 $4.000.607 The accompanying Notes to Consolidated Financial Statements are an otegral part of these statements. 3
Ohso Ecson l ln Consolidated Statements of Retained Earnings For the Years Ended December 31 1983 1982 1981 (in thousands) Balance at beginning of period $200,439 $171,191 $133,592 N t income 272,400 215,729 197.062 472,839 386,920 330,654 Deduct: Prtferred and preference stock dividends 45,468 34,488 33,160 Common stock dividends 185,309 151,289 126,030 Capital stock issuance expenso 748 704 273 231,525 186.481 159,463 Balance at end of period (Note 4b) 5241,314 $200.439 $171,191 Consolidated Statements of Capital Stock and Other Paid-in Capital Preferred and Preference Stock Not Subject to Subject to Common Stock Mandatory Redemption Mandatory Redemption Number Par Other Paid-Number Par or Number Par or of Shares Value in Capital of Shares Stated Value of Shares Stated Value (Dollars in thousands) Balance, January 1.1%1 68,526.172 $616,736 $317,196 3.069,049 $306.905 3.039.000 $158.450 Sale of Common Stock 7.000.000 63.000 21,875 Dividend Reinvestment Plan 3.122.631 28,103 7,751 Conversion of $1.80 Preference Stock 26.900 242 147 (26.900) (407) Preferred Stock Sinking Fund Redemptions-10.48% Series 585 (27.240) (2.724) 10.76% Series 361 (20.000) (2.000) 11.00% Series 53 (4.016) (402) Other Preferred Stock Redemotions-3.90% Series 271 (3,790) (379) 4.40% Series 251 (3.720) (372) 4.44% Senes 896 (13.440) (1.344) 4.56% Sener 386 (5.700) (570) Balance, Decemt ar 31,,981 78.675,703 708.081 349.772 3.042.399 304.240 2,960.844 152.917 Sale of Commnn Stock 10.000.On0 90.000 42.000 Dividend Reinvestment Plan 4.644,622 41,802 17.647 Exchange of Common Stock for First Mortgage Bonds 2.650.600 23,855 9.463 Conversion of $1.80 Preference Stock 110.919 999 610 (110.919) (1.678) Safe of $3.92 Series of Preference Stock 2,440 2,000,000 50.000 Sale of 15% Series of Preferred Stock 80.000 8.000 Preferred Stock Sinking Fund Redemptions-(5.000) (500) 8.24% Senes 10.48% Series 284 (13,130) (1.313) 10.76'/. Series 435 (20,000) (2.000) 11.00% Senes 44 (4.033) (403) Ba!ance, December 31,1982 96.081.844 864.737 423,195 5,042,399 354.240 2.887,762 155,023 Sale of Common Stock 5.000.000 45,000 33.350 Dividend Reinvestment Plan 7,138.575 64.247 33.056 Conversion of $1.80 Preference Stock 239.635 2.156 1,332 (239,635) (3.624) Sale of $3.50 Series of Class A Preferred Stock 3,140 2.000.000 50.000 Eale of 11.5% Preferred Stock 150,000 15,000 Preferred S,ck Sinking Fund Pedemptions-8.24% Senes (5.000) (500) 10.48% Series 270 (24,630) 6 563) 10.76% Series 160 (20,000) (2.. 0) 11.00% Senes 17 (4.243) (424) Ba!ance. December 31.1%3 108.460.054 $976.140 $494.520 7.042.399 $404.240 2.744.254 $161.012 The accornpanying Notes to consohdated Fmancial statements are an otegral part of these statements.
one.m Consolidated Statements of Sources of Funds for Property Additions n 8 For the Years Ended December 31 1983 1982 1981 Int:rnally generated funds-(In thousands) Income before extraordinary items $272,400 $195,571 $183,020 Principal non-cash items-Depreciation and amortization-Charged to provision for depreciation 115,514 103,206 95,830 Charged to other accounts 2,564 1,953 1,318 Amortization of terminated construction project costs 9,058 1,866 3,995 Deferred income taxes, net 80,814 91,832 99,179 Investment tax credits, net 53,670 7,312 (772) Allowance for equity funds used during construction (121,814) (84,210) (60,421) Deferred fuel and energy costs, net 23,009 4,609 (49,393) 435,215 322,139 272,756 Less-Dividends on common stock 185,309 151,289 126.030 Dividends on preferred and preference stock 45,468 34,488 33,160 Net funds from operations 204,438 136,362 113.566 income from extraordinary items 20,158 14,042 Non-cash items-Gain on reacquisition of first mortgage bonds (26,276) Gain on exchange of common stock for first mortgage t'onds (20,158) 204,438 136,362 101,332 Financing activities-Common stock 175,653 224,767 120,729 Preferred stock 68,140 8,000 Preference stock 52,940 First mortgage bonds 55,000 105,000 95,000 Secured notes, net 71,770 84.173 94,920 Unsecured long-term notes, net 125,471 106,660 24,314 Construction energy trust and nuclear fuel obligations 62,709 209,171 182,484 Redemption of long-term debt and oreferred stock (75,307) (43,295) (202,336) Notes payable to banks (74,400) 32,918 Sale of tax benefits 10,480 37,531 483,436 683,496 385,560 Net change in current assets and current liabilities excluding notes payable to banks and current maturities of long-term debt, preferred and preference stock-Temporary cash investments (51,493) (57,200) (4,300) Receivables (11,475) (9.063) 2.715 Materials and supplies 22,446 (12,045) 3,149 Accounts payable 20,951 (8,942) 39,193 Accrued taxes 1,449 4,041 (12,085) Accrued interest 10,155 17,754 285 Miscellaneous. net 12.525 (7,148) 112 4,558 (72,603) 29,069 Oth:r, net-Construction funds held in escrow, including accrued interest 6,454 711 39,847 Allowance for equity funds used dunng construction 121,814 84,210 60,421 Sale of utility property 13,568 Deferred income taxes on allowance for borrowed funds used during construction (76,982) (67,127) (59,530) Miscellaneous, net 2,080 (4,384) 11,345 53,366 26,978 52,083 Total Sources of Funds for Property Additions $745,798 $774,233 $568,044 Property Additions-Electric plant $689,646 $648,633 $546,996 Nuclear fuel 55,032 124,292 18,945 Nonutility property 1,120 1,308 2,103 $745,798 $774,233 $568,044 The occompanywig Notes to Consoldated Financial statements are an integral part of these statements. I
ONo Edison a Cons 0lidated Statements Of Taxes l For tha Wars Ended December 31 1983 1982 1981 General Taxes: (in thousands) State gross receipts (i) $ 65,495 5 56.808 $ 34,144 Real and personal property 47,099 45,028 39,193 Social security and unemployment 10,097 8.990 8,010 Miscellaneous 4,127 3,743 2,969 Total general taxes $126,818 $114,569 $ 84,316 Prwision for income Taxes: Currently payable-Federal $ 10,119 324 80 State 2,507 2,532 678 Foreign 228 206 59 12,854 3,062 817 Deferred, net (see below)- Federal 75,947 88,666 96,218 State 4,867 3,166 2,961 80,814 91,832 99,179 investment tax credits, net of amortization 53,670 7,312 (772) Total provision for income taxes $147,338 $102,206 $ 99,224 income Statement Classification of Provision for income Taxes-Operating expenses $135,279 $ 94,245 $ 80,82r Other income (64,923) (59,166) (53,360) Allowance for borrowed funds used during construction 76,982 67.127 59,530 Extraordinary items 12.234 Total provision for income taxes $147,338 $102.206 $ 99,224 Sources of Deferred Tax Expense: Allowance for borrowed funds used during construction, which is credited to plant S 76,982 $ 67,127 $ 59.530 Excess of tax over book depreciation, net 23,081 17.387 13,669 Deferred fuel and energy costs, net (10,202) 7,000 12,308 Pensions and taxes charged to utihty plant, net 4,153 2.675 Cost of terminated construction projects, net (3,258) 384 5,197 l D:terred interest on leased nuclear fuel, net (3,165) (2,840) 9,567 Other, net (6,777) 99 (1,092) Total deferred tax expense, net $ 80,814 $ 91.832 $ 99,179 Reconciliation of Federal Income Tax Expense at Statutory Rate to Total Prwision for income Taxes: Book income before provision for income taxes $419,738 $317,935 $296,286 Federal income tax expense at statutory rate $193,079 $146,250 $136,292 Increases (reductions)in taxes resulting from: Allowance for equity funds used during construction, which does not constitute taxable income (56,034) (38,737) (27,794) Difference between tax and book depreciation 9,115 4,026 (2,422) Gain on exchange of common stock for first mortgage bonds, which does not constitute taxable income (9.273) Other, net 1,178 (60) (6,852) Total provision for income taxes $147,338 $102,206 $ 99,224 (i) Amount for 1981 includes a credit of $14.352,000 resulting from a December 1981 settlement apphcable to Fbnnsylvania Excise Tax on Gross Receipts accrued in pnor years. The accornpanying Notes to Conschdated Fmanciaf statements are an otegral part of these statements.
Notes to Consolidated Financial Statements n 1 Summary of Significant Accounting Policies: Utility Plant and Depreciation-The consolidated financial statements include Ohio Edison Utility plant refldcts the original cost of construction, includ-Company (Company) and its wholly owned subsidiaries, ing payroll and related costs such as taxes, pensions and Pennsylvania Fbwer Company (Penn Power) and Ohio Edison other fringe benefits, administrative and general costs and Finance N.V. All significant intercompany transactions have allowance for funds used during construction (see AFUDC). been eliminated. The Company and Penn Power (Companies) The Companies provide for depreciation on a straight-line follow the accounting policies and practices prescribed by basis at various rates over the estimated lives of property The Public Utilities Commission of Ohio (PUCO), the included in plant in service. Th6 annual composite rates for Pennsylvania Public Utility Commission (PPUC) and the electric plant were 3.4% in 1983 and 3.3% in 1982 and 1981. Federal Energy Regulatory Commission (FERC). The Company's depreciation rates include provisions for the Revenues-estimated decommissioning costs for its only nuclear The Companies' residential and commercial customers are generating unit in service. Penn Power provides for the cost metered on a cycle basis. Revenue is recognized for electric of decommissioning radioactive components only,in service based on meters read through the end of the month. accordance with a PPUC rate order. Deferred Fueland Energy Costs-Common Ownership of Generating Facilities-The Company recovers fuel-related costs from its retail The Companies and other Central Area Power Coordination customers through an electric fuel component (EFC). The Group (CAPCO) companies own, as tenants in common, EFC is an estimated fixed rate per kilowatt-hour included on various power generating facilities. Each of the companies is customer bills for a six-month period and is based upon fuel-obligated to pay a share of the construction costs of any related costs for the preceding six month period. Any over or jointly owned facility in the same proportion as its ownership under collection resulting from the operation of the EFC is interest. The Companies' portions of operating expenses included as an adjustment to the EFC rate in a subsequent associated with these jointly owned facilities are included in six-month period. Accordingly, the Company defers the the corresponding operating expenses on the Consolidated difference between actual fuel-related costs incurred and the Statements of Income. The amounts reflected on the amounts currently recovered from its customers. Consolidated Balance Sheet under utility plant at December 31,1983, include the following: Penn Power recovers fuel and energy costs from its retail customers through an annual "levelized" energy cost rate O 'U D* E Y. uw (ECR). The ECR, which includes adjustment for any over or c.-aim una m sm, owwarm %.s. rw under collection from customers, is recalculated each year. m "=au Accordingly, Penn Fbwer defers the difference between b",C '[,t,2 w 3 E 'N Y$ i actual energy costs and the amounts currently recovered Beava< va'w '14.> 447mi a2.eir asss4 s2 sos from its customers. @j,'2 dE $U S'mn s22 w 3
~~s2m, Reference is made to Note 7 with respect to accounting for the cost of coal received from Quarto Mining Company was a-= 'em uuam m eea-vw2 (Ouarto).~~
All nuclear fuel in process relates to the CAPCO units but is not segregated among them. = Nuclear Fuel-The Companies amortize the cost of nuclear fuel based on the rate of consumption. The Companies also make pro-vision for future nuclear fuel disposal costs associated with the fuel.
1 i Notes to Consolidated Financial Statements-(Continued) a Allowance for Funds Used During Construction (AFUDC)- Company's Consolidated Balance Sheets and are being AFUDC, a non-cash item charged to utility plant under amortized over the life of the related property. The remaining construction during the construction period, unless $4,657,000 and $24,856,000, respectively, were recorded as otherwise included in rate base, represents the net cost of reductions to utility plant in service and serve to reduce the borrowed funds and equity funds used for construction total provision for depreciation over the life of the property. purposes. The Company also charges AFUDC to certain The Companies defer investment tax credits utilized and projects which are completed but not yet included in rate amortize these credits to income over the estimated life of base,,in accordance with a PUCO order. AFUDC varies the related proporty. At December 31,1983, approximately according to changes,n the level of utility plant under $63,000,000 of unused investment tax credits were available i construction and in the cost of capital. The Companies o offsd Mure Fe&al ime taes We. Dese Mts compute AFUDC utilizing a net of tax rate, which is expire at the end of the following years: consistent with the rate treatment. The AFUDC rate releted to assets financed only through the incurrence of long-term 1995 $18,000,000 obligations (see Note 5)is based on actual interest accrued 1996 5,000,000 on the obligations during the period. The annual rates used 1997 19,000,000 by the Company for all other construction projects were 1998 21,000,000 10SO%,10.32% and 9.84% during 1983,1982 and 1981, $63,%0,0% respectively. Penn Power's rates applicable to such projects were 9.25% in 1983 and 1982, and 8.50% in 1981. g Income Taxes-The Companies' trusteed, noncontributory pension plans Details of the total provision for income taxes are shown on cover almost all full-time employees. Upon retirement, the Consolidated Statements cf Taxes. The deferred income employees receive a monthly pension based on length of taxes result from timing differences in the recognition of service and compensation. Pension costs for 1983,1982 and revenues and expenses for tax and accounting purposes 1981, were $16,904,000, $15,448,000 and $15,311,000, spec % G hse amms, N,m,M, W,E,M, The Companies allocate the income tax benefit, resulting from n sped @, we darged to operating interest expense related to utility plant under construction, to income taxes-credit included under other income and nsWdon. M costs inMe N amoga@n of deductions on the Consolidated Statements of income. unfunded past service costs on an actuanal basis over For income tax purposes, the Companies claim liberalized approximately 40 years in 1983 and 30 years in 1982 and depreciation and, consistent with the rate treatment, 1981. The Companies fund pension costs accrued. A generally follow " normalization" accounting. The Companies comparison of accumulated plan benefits and plan net expect that deferred taxes which have not been provided will assets from the two latest actuarial reports is as follows: be collected from their customers when the taxes become payable, based upon the established rate making practices of At June 30, 1983 1982 the PUCO, the PPUC and the FERC. Actuarial present value of accumulated plan benefits: The Company received $10,480,000 in 1982 and $37,531,000 Vested $176,732.000 $157,014.000 in 1981 re'.,ulting from the sales of tax benefits applicable to Nonvested 16.939.000 12.862.000 property placed in service during those years in accordance $193.671.000 $169.876.000 with provisions of the Economic Recovery Tax Act of 1981. Of Net assets avaiiabie for benefits 5314.323.000 $224.641.000 the total, $5,823,000 and $12,675,000, respectively, were Assumed rate of retum for actuarial recorded as additional deferred investment tax credits on the present value of accumulated plan benefits 8% 8% The above total actuarial present value of accumulated pian benefits reflects pension benefits applicable to eligible employees based upon present salary levels and past years of service accumulated through the valuation date. This is I
s b* g J
the generally accepted reporting procedure currently set reason to believe that the FERC will not act favorably upon forth by the Financial Accounting Standards Board. The their requests. The PPUC has indicated that it will allow Penn Companies' annual contributions to tne plans, however, Power to begin recovering its share of the costs allocable to consider estimated ultimate salary increases due to inflation < PPUC jurisdictional customers over a ten-year period and'otheriactors and the estimated total service expected beginning with the effective date of new rates resulting from to be accumulated by employees. This is a widely recognized its pending rate increase request.
funding technique and is consistent with the recommenda-tion of the Companies' actuary. In addition, the actuary Nes lease Ms M es Wshim recommended, and the Companies utilized, a discount rate M M eMh of 7% for funding purposes. Differences between funding e%Ie M male bases and reporting requirements can have a significant leases. Total rent expenses included cn the Consolidated effect on the compansons above. Staternents of Income were $34,778,000, $20,766,000 and 2 Terminated Constructien Pmiects: $20,731,000 in 1983,1982 and 1981, respectively. The future in January 1930, the Companies and all other CAPCO minimum rental commitments as of December 31,1983, for ccmoanies terminated plans to construct four nuclear generat. all noncancelable leases recorded as operating leases are: it.g u:,its. Costs, including settlement of all asserted claims 1984 $ 26,696,000 resulting from terminat,on, unrecovereo by the Company and i 1985 24,038 000 Penn Power as of December 31,1983, applicable to these 1986 21,902.000 units amounted to approximately $78,747,000 and 1987 19,325,000 $16,000,000, respectively. 1988 16,177,000 The PUCO had authorized recovery of the applicable portion Years thereafter 398,522,000 of the Company's then known share of the construction costs from its PUCO jurisdictional customers over a ten-year if all noncapitalized financing leases had been capita!ized, period beginning in February 1981. However, due to a July the effect on total assets and liabilities would not have been 1981 Ohio Supreme Court decision which overturned a material. PUCO order including a similar allowance to another Ohio 4 Capitalization: utility, the PUCO subsequently disallowed the Company's recovery of those costs, as service-related costs. effective (a) Common Stock-Through the Dividend Reinvestment and Stock Purchase August 1,1981. Plan, holders of common, preferred and preference stock On November 3,1982, the PUCO decided in the Company's can acquire additional new shares of the Company's then pending rate case to allow a rate of return above that common stock by automatically reinvesting all or a portion which it otherwise would have allowed were it not for the July of their dividends and by making optional cash payments. 1981 Ohio Supreme Court decision. Based on that order. the Purchases made with reinvested cash dividends en Company resumed amortization of the costs of the tNmi. common stock are made at a price equal to 95% of the nated units applicable to PUCO jurisdictional customers over average of the high and low market prices on the investment a ten-year period. A similar adjustment was included in the dates, and purchases made with optional cash payments Company's September 1983 PUCO rate order. are made at a price equal to 97% of such average. Pur-chases of common stock made with reinvested cash The Companies are currently seeking approval from the FERC to recover these costs from FERC jurisdictional customers to the extent they are allocable to those ctjstomers. The Companies are currently collecting interim rates from FERC jurisdictional customers which are intended to provide for recovery over a ten-year period and, accordingly, those costs applicable to FERC jurisdictional customers are being amortized over that period. The Companies believe that the construction costs were prudently incurred and have no
\\ Notes to Consolidated Financial Statements-(Continued) dividends on preferred and preference stock are made at $100 per share plus accrued dividends. Penn Power's a price equal to 100% of the average market price. At 10.50% Series includes a provision for mandatory redemp-Dec mber 31,1983, the Company had 5,893,219 shares tion of the entire series on April 1,2040, at $100 per share r:strved for issuance under this plan and 1,622,546 shares plus accrued dividends. of common stock reserved for possible conversion of the The sinking fund requirements for the next five years are: $1.80 Preference Stock. 1984 $2,000,000 (b) Retained Earnings-1985 4,871,000 Und:r the Company's indenture, the Company's 1986 4,900,000 i consolidated retained earnings unrestricted for payment of 1987 4,900,000 cash dividends on the Company's common stock were 1988 5,220,000 ) $169,267,000 at December 31,1983. Under Penn Power's Charter, $33,773,000 of retained earnings at December 31, 1983, were unrestricted for payment of cash dividends to (e) Preference Stock Subject to Mandatory Redemption-1 the Company. The $102.50 Series and $95.00 Series each include pro-visions for e mandatory sinking fund to retire a minimum of (c) Preferred and Preference Stock-900 and 1,800 shares, respectively, on July 1, in each year At the Companies' option, all preferred and preference beginning in 1984 and 1985, respectively, at $1,000 per stock may be redeemed in whole, or in part, at any time share plus accrued dividends. The $1.80 Series includes a upon not less than 30 nor more than 60 days notice, unless provision for a mandatory sinking fund to retire a minimum othrrwise noted. Redemption of all preferred and preference of 100,000 shares on October 1, in each year beginning in stock issued within the past five years is subject to certain 1985, at $15.125 per share plus accrued dividends. restrictions regarding refunding operations. The optional redemption prices shown on the Consolidated Statements The annual sinking fund requirements are $900,000 for of Capitalization will decline to eventual minimums per 1984, and $4,213,000 for 1985 through 1988. share according to the Charter provisions that establish The $1.80 Series is convertible at any time into common cach senes. stock at a price of $15.125 per share. Hciders receive one (d) Preferred Stock Subject to Mandatory Redemption-share of common stock for each share of $1.80 Preference The Company's 10.48% Series and 10.76% Series each Stock converted, subject to adjustment under certain include provisions for a mandatory sinking fund to retire a conditions. minimum of 20,000 shares every year on December 1, and (f) long-Term Debt-January 1, respectively, at $100 per share plus accrued The mortgages and their supplements, which secure all of dividends. Penn Power's 8.24% Series and 11% Series the Companies' first mortgage bonds, serve as direct first each include provisions for a mandatory sinking fund to mortgage liens on substantially all property and franchises, retire a min,imum of 5,000 shares and 4,000 shares, other than specifically excepted property, owned by the respectively, every year on December 1, and January 1, respective Companies. respectively, at $100 per share plus accrued dividends. Penn Power's 15% Series and 11.50% Series each include Based on the amount of bonds authenticated by the provisions for a mandatory sinking fund to retire a minimum Trustees through December 31,1983, the Companies' of 3,200 shares and 15,000 shares, respectively, on July 15, annual sinking and improvement fund requirements amount of each year beginning in 1988 and 1989, respectively, at to $23,182,000. The Company expects to deposit funds in 1984 which will be withdrawn upon the surrender for can-cellation of a like principal amount of bonds, which are specifically authenticated for such purposes against unfunded property additions or against previously retired
31 s bonds. This method can result in minor increases in the The Company has transferred its interest in Beaver Valley amount of the annual sinking fund requirements. Penn Unit No. 2 (exclus;ve of common facilities and transmission Power expects to satisfy its requirements in 1984 by facilities) to OEET, where the assets are used to secure certifying unfunded property additions of 166-2/3% of the OEET borrowings. All OEET obligations will be assumed by required amount. the Company when they become due, but not later than December 31,1986. At the Company's option, all obligations As of December 31,1983, the Companies' sinking and outstanding under the $400,000,000 revolving credit improvement fund requirements and maturing long-term rr ngement may be converted into a four-year term loan debt for the next five years are: to the Company. 1984 $ 99,876,000 The Company accrues interest applicable to OEET which 1985 76,325,000 is subsequently capitalized, net of income tax ef fect. In-1966 59.260.000 terest on borrowings under the $400,000,000 line of credit 1987 184,260,000 ncludes a commitment fee of 1/2% on the unused portion 1988 194,862,000 of this line. No direct borrowings have been or are expected to be made against the $100,000,000 line of credit, but The weighted average interest rates shown on the OEET has issued and has outstanding commercial paper Consolidated Statements of Capitalization relate to long-supported by this facility To the extent that borrowings are t:rm debt outstanding at December 31,1983. less than the $100,000,000 available under this line of Tot:1 secured and unsecurad notes outstanding at credit, the Company must pay a commitment fee of 1/2%. Dec;mber 31,1983, ano December 31,1982, exclude Under the standby support, an irrevocable bank letter of $97,112,000 and $74,353,000, respectively, of pollution credit has been issued upon which OEET pays a fee of control notes, the proceeds of which were then in escrow 1/8% of the amount of commercial paper notes outstand-pending their disbursement for construction of certain ing. The effective average annual interest rates on OEET pollution control facilities. Penn Power's obligation to borrowings were 10.7%,14.8% and 18.7% during 1983, repay certain pollution control revenue bonds is secured 1982 and 1981, respectively. by c series of Penn Power first mortgage bonds. The Nuclear Fuel Financing-pollution control revenue bonds to which the unsecured in December 1981, Ohio Edison Fuel Corporation and notts relate are entitled to the benefit of irrevocable bank Pennsylvania Power Fuel Corporation (corporations in 1 tt rs of credit of $214,156,000.To the extent that which the Companies have no ownership interest) were dr; wings are made under those letters of credit to pay created to provide funds for the procurement of nuclear principal of, or interest on, the pollution control revenue fuel. The fuel corporations will lease the fuel to the bonds, the Company is entitled to a credit on the notes. Companies under separate fuel leases which require lease The Company pays an annual fee of 1/2%-7/8% of the payments sufficient to permit the fuel corporations to repay cmounts of the letters of credit to the issuing banks the obligations. Under ordinary circumstances, the lease end is obligated to reimburse the banks for any payments will be made at such time and in such amounts drawings thereunder. as will coincide with the burnup of the nuclear fuel. 5 tong-Term Obligations: Financing on behalf of the Companies of up to Ohio Edison Energy Trust (OEET)- $303,000,000 is currently available through the fuei OEET, which finances part of the Company's investment in corporations, either through revolving credit arrangements Berr Valley Unit No. 2, has two lines of revolving credit or the issuance of commercial paper, which is supported r vail ble to it for $400,000,000 and $100,000,000. The by bank letters of credit, rr a combination of both. litt:r credit also serves as a standby facility in connection with OEET commercial paper sales; total borrowings under that credit and ccmmercial paper outstanding may not cxceed $100,000,000 at any time.
n Notes to Consolidated financial Statements-(Continued) in November 1982, the Companies also began participating " float," are expected to be maintained at an average of in arrangements wherein the Central Area Energy Trust approximate!y $5,800,000 and are not subject to any (CAET) finances the acquisition of nuclear material that contractual restriction against withdrawal. The Companies will ultimately be used to fuel various CAPCO generating are required to pay commitment fees that vary from a flat units. As part of these arrangements, the Companies rate of 3/8% to a variable rate of 5% of the applicable have entered into purchase agreements whereby the prime interest rate to assure the availabisty of $80,000,000 Companies are unconditionally obligated to purchase of the lines of credit. th ir share of the nuclear material that has been financed 7 through CAET in not less than two nor more than three ,sars from the date of the agreement, unless the nuclear material reaches the point of fabncation, at which time the tures of approximately $2,700,000,000 for property additions purchase commitment will then be due. Financing of up and improvements from 19841988, of which approximately to $137,000,000 is available to CAET on behalf of the $766,000,000 is applicable to 1984. In addition, the Companies, subject to certain limitations. Companies expect to invest approximately $352,000,000 The Companies accrue interest applicable to the nuclear for nuclear fuel during the 19841988 period, of which fuel obligations which is subsequently capitalized, net of approximately $88,000,000 is applicable to 1984. The major income tax effect. No direct borrowings have been or are portion of the Companies' construction activities during this expected to be made against the lines of credit available to five-year period relates to the CAPCO companies' program the fuel corporations; the fuel corporations have issued for the joint development of power genemtion and and have outstanding commercial paper supported by the transmission facilities, lines of credit. To the extent that borrowings are less than the $303,000,000 available under these credit lines, the n es together with the other CAPCO companies, fuel corporations must pay commitment fees of 1/8% to g 1/2% on the available portions of the fines of credit. They Quarto. The CAPCO companies have also agreed to also pay fees of 5/8% to 7/8% for the letters of credit on the aggregate amount of outstanding commercial paper. es d Om's M M h MWm MM Interest rates on CAET purchase commitments vary from 11/8% to 1-1/2% over the interest rate applicable t 31,1983, the Companies' share of the guarantee was certain dealer placed commercial paper. The effectiv $225'598'000' average annual interest rates applicable to nuclear fuel obligations were 10.6%,12.6% and 13.9% during 1983, Under the terms of the coal supply contract, which expires 1982 and 1981, respectisely. December 31,1999, the Companies must reimburse Ouarto 6 Notes Payable to Banks and Lines of Credit: ! r their shares of the costs of operating the Quarto mines, including those costs associated with mine construction, The Companies have lines of credit with domestic banks whether or not they receive coal from Quarto. These pay-that provide for borrowings of up to $235,000,000 at rates ments will permit Quarto, over the life of the contract, to that vai/ rom prime up to 105% of the prevailing prime meet the debt and lease obligations it incurred while _ f interest rates. Short-term borrovJngs may be made under developing and equipping the mines. The Companies total these lines of credit on the Companies' unsecured notes. payments under this contract, including amounts related All of the current lines expire December 31,1984; however, to mine construction costs, amounted to $92,644,000, all unused lines may be cancelled by the banks. $80,709,000 and $94,379,000 during 1983,1982 and 1981, The Companies maintain cash balances on deposit with respectively. Under the coal supply contract, the Com-banks to provide operating tunds, to assure availability of panies' future minimum payments related solely to mine $124,000,000 of the lines of credit and for other banking construction costs are: arrangements. Such compensating balances, net of 1984 $ 26,082,000 1985 25,463,000 1986 24,846,000 1987 24,228,000 1986 23,610,000 Years thereafter 232,688,000 k
n Based on studies concerning the economics of the Quarto 110% of such prevailing market price. The PUCO order project and the various alternatives available to provide the states that the Company must recover previously deferred long t:rm fuel requirements of the Bruce Mansfield Plant, costs (amounting to approximately $57,375,000 at December chrnges were made in 1981 in the mode of operation of 31,1983) under this method at the rate of at least one-sixth th) Quarto mines which have the effect of reducing the per year. Any previcusly cieferred costs not so recovered ennuti tonnage production of these mines. Additional coal during each year would not be recoverable under ordinary requirements for the Bruce Mansfield Plant are currently circumstances. In addition, any current costs of Quar +o being procured in the open market and the Companies are coal not recoverable under the 125% limitation can r o pr:s ntly continuing to evaluate the alternatives for making longer be deferred under ordinary circumstances. Although additional arrangements to feifill, together with the use of unable to predict the altimate level of recovery, based upon co:l from the Quarto project, the long term fuel current and projected operation of the Quarto mines, and requir ments of the Bruce Mansfield Plant. These changes market prices, the Company believes that this method ara part of a fuel procurement strategy designed to reduce provides a sufficient basis to recover the deferred costs th3 weighted average price of coal used at the Bruce an1 future costs of Quarto coal under the jurisdiction of M:nsfield Plant. The Companies will continue to monitor the PUCO. th3 Quarto project and conduct such additional studies On February 10,1984, an Administrative Law Judge for the of tha economics of the project as are deemed warranted PPUC issued his initial Decision in the proceedings relating by th3 circumstances. to the recovery of :he cost of Quarto coal. The Initial Under the terms of the coal supply contract, the price of Decision would a';ow Penn Power to recover in its ECR the Ouarto coal is based on, among other things, the actual current cost of Cuarto coal and the costs which were production costs plus amortization of certain production deferred in prior years (amounting to approximately cxpenses which were not included in the price of that coal $9,879,000 at December 31,1983) to the extent that the prior to May 31,1980, when the development period ended. actual cost of all coal burned at the Bruce Mansfield Plant is less than the generally prevailing delivered market price Following the end of the developm T,t m riod, the Company for comparable coal. Penn Power may continue to defer was ordered by the PUCO, and Pene her was ordered by costs which are in excess of the amount allowed to be the PPUC, to defer recovery of the cost of Ouarto coalin recwered on a cwent basis. The Initial Decision will excess of gener&Ily prevailing market prices, pending become final, unless it is appealed to the PPUC or the further proceedings. As a result of those orders, the elects to ew me Msbo. h@ ma& M Companies began deferring a portion of the cost of Quarto predict the final resolution of this matter, management coal, rather than including such costs in their respective believes that its ultimate disposition will not have a material EFC and ECR' adverse effect upon the Company's consolidated results of Th:reaf ter, the PUCO allowed the Company to implement operations. a recovery formula with respect to Quarto coal costs that An issue has been raised in the Companies' most recent r:sulted in the recovery of current Quarto coal costs plus rate cases before the FERC concerning the amount of the a portion of its previously deferred costs. However, that cost of Quarto coal that may be included in the recovery mechanism was suspended by the PUCO on Companies' charges for electric service to their wholesale - August 1,1983, pending further review. On January 31, customers. In the case involving the Comparcy, an 1984, following the Company's semiannual fuel hearing, agreement between the Company and its wholesale the PUCO approved a method, effective January 1,1984, customers has been filed with the FERC which provides for which provides an cpportunity for recovery of the current recovery of the cost of Quarto coal pursuant to the method cost of Quarto coal plus costs which were deferred in prior used by the PUCO. The FERC has not yet acted upon the y;ars. The PUCO order allows the Company to recover in agreemm .its EFC the current cost of Quarto coal up to 125% of the prevailing comparable delivered market price. Previously def;rred costs may also be recovered to the extent that the actual cost of all coal burned at the Bruce Mansfield Plant, including the recoverab;s cost of Quarto coal,is less than ~~-.,---___--m#
u Notes to Consolidated Financial Statements-(Continued) EnvironmentalMatters-power plants and other sources located in several states, Various Federal, state and local authorities regulate the including Ohio and Pennsylvania. The Company is unable Companies with regard to air and water quality and other to predict whether the proposed bills will be enacted and, ' cnvironmental matters. The Companies estimate that if so, to what extent, if any, the SO, emission limits at the compliance requires capital expenditures of approximately Companies' plants would be affected. Substantial changes $508.000,000 for projects remaining to be completed. Of in the SO, emission limits could result in the need for this amount, approximately $322,000,000 was spent prior changes la coal supply, significant capital investments in to 1984, and $186,000,000 is included in the construction flue gas desulfurization equipment or the closing of some (stimate given above under " Construction Program" for coal-fired generating capacity to assure compliance. If 1984 through 1988. If Penn Power is required to install off-flue gas desulfurization equipment were to be installed str:am cooling in connection with the operation of the on all of their generating units to achieve compliance, a Ncw Castle Plant, costs (based on a 1980 study) estimated circumstance that may be physically impossible because between $13,800,000 and $31,500,000, depending on the of space limitations at certain of their plants, the Companies required thermal limitations, would be incurred. In addition, estimate that the capital costs associated with such instal-annual operating costs would increase substantially. Penn lation could exceed $1,000,000,000. The Companies expect Power expects that the impact of any such capital and that any such capital costs, as well as any increased operating expenditures would eventually be reflected in its operating costs associated with such equipment, would rate schedules. ultimately be recovered from their customers. On December 19,1980, the Commonwealth of On October 11,1983, the U.S. Court of Appeals for the Pennsylvania petitioned the Federal Environmental District of Columbia reversed several significant portions of Protection Agency (EPA) to make findings under Section the EPA's regulations on the methods used by the EPA to 126 of the Clean Air Act. Section 126 provides a reme dy for determine the amount of stack height credit for establishing a downwind state that can show adverse impact because individual source emission limitations. The EPA is currently air pollution in an upwind state causes nonattainment of air considering changes to its stack height regulations to quality standards in the downwind state. Pennsylvania's conform tnem to the court's decision. Such changes could petition complains of excessive particulate and sulfur result in more stringent emission limitations for existing dioxide (SO,) emissions from a number of sources in Ohio plants and increased capital costs and operating ex-and other states, including potentially all of the Companies' penses. The utility industry is seeking review of the Ohio p! ants. The states of New York and Maine have filed decision before the U.S. Supreme Court. The Company is similar petitions which have subsequently been consoli-unable to predict the ultimate outcome of this proceeding. dated with the Pennsylvania petition. In January 1984, a The Pennsylvania Department of Environmental Resources number of states, together with various environmental has informed Penn Power that it intends to enter into a organizations, sent the EPA a notice of their intent to su eM Pe h b a eM M the EPA for failing to render a timely decision on th substantially reduce alleged opacity violations at the New pending Section 126 petitions. The notice also asserts that Castle Plant. Such Consent Agreement may ultimately l the EPA has a mandatory duty to order cutbacks in SO, nclude capital expenditures and changes in operations at cmissions in Ohio arid other states under Section 115 of the plant as well as an undeterminable penalty payment. the Clean Air Act, which deals with international air Management is unable to predict the terms of the Consent [ pollution. These proceedings could ultimately result in the es M W @l e M revision of the particulate and SO, emission limitations for nereased operating expenses would ultimately be these plants, to make them more stringent. The Company recovered from Penn Power's customers and that any is unable to predict the outcome of these proceedings. enalty payment would not be material to the Company's As a part of the reauthorization of the Clean Air Act, consolidated results of operations. legislation has been introduced in Congress to address the Other Legal Actions and Complaints-so-called " acid rain problem Various bills introduced thus in 1977, the Boroughs of Ellwood City and Grove City, far would require reductions in SO, emissions from utility Pennsylvania, filed a complaint against Penn Power, alleging that Penn Power, individually and in conspiracy with the Company and other CAPCO companies, has l
M violited Sections 1 and 2 of the Sherman Act and 9 Summary of Quarterly Financial Data: Sections 4 and 16 of the Clayton Act by restraining and The following summarizes certain consolidated operating monopolizing trade and commerce in alleged markets for results for the four quarters of 1983 and 1982. electric power. Damages of $7,000,000 (to be trebled) March June september December and injunctiona against the alleged unlawful acts were Three Months Ended 31.1983 30.1983 30,1983 31.1983 originally sought. In February 1984, the Boroughs revised (in thousands. except per share amounts) th: r claimed damages up to $9.743,000. In 1979, the Operating Revenues $378.157 $364.478 $386,400 $386.817 Court granted summary judgment in favor of Penn Power Operating Expenses as to certain allegations of the complaint. In February and Taxes 302.104 296.956 308.288 305.753 1983, Penn Power filed a Motion for Summary Judgment on Operating income 76.053 67.522 78.112 81.064 . th] claims not dismissed by the Court's 1979 Order. Also in Other Income ard Fzbruary 1983, the Boroughs asked the Court to allow Deductions 47,530 50.050 54.668 55.291 them to amend their complaint. In August 1983, the Court "$"'r[a'rge e 59.472 57.578 60.017 60.833 gr nted Penn Power summary judgment on the Boroughs Net income $ 64.111 5 60.004 $ 72.763 $ 75.522 conspiracy claims, denied summary judgment on " price squeeze" and Robinson-Patman Act claims, and denied the Earnings on Common stock $ 54.091 $ 48.708 $ 61.M7 $ 63.927 Boroughs' request to amend their complaint. Trial is weighted Average Number anticipated to begin in the second quarter of 1984. of shares of Common stock outstanding 58241 100.244 105.312 107.261 Management is unable to predict the ultimate outcome of this action. Earnings per share of Common stock S.56 $.49 $.58 $ 60 Th3 PPUC is investinating an outage of Beaver Valley Unit No.1 which occurred during the period March August 1979. The outage had been ordered by the Nuclear March June sep' ember December Regulatory Commission to analyze possible seismic Three Months Ended 31.1982 30.1982 30,1982 31,1982 deficirncies of safety-related piping and pipe supports in (In thousands, except per share amounts) the Unit. Th6 PPUC has ordered that the operating Operating Revenues $361.190 $329.834 $374.328 $365.274 company of the Unit make refunds to that company's 0P*jakg Expenses es 286.837 258.3 M 315.272 299.566 customers based upon that company's expenditures for purchased replacement power during the outage. The nc e d PPUC is currently investigating Penn Power's liability, if Deductions 35.819 30.505 50.212 43.711 any, for the outage and whether refunds are due to Penn Net Interest and Pow:r's customers for purchased replacement power Other Charges 56.335 58.937 59.820 59.224 cxpenses incurred during the outage which were included income Before in its energy clause. if P3nn Power is required at some Extraordinary itera 53.837 42.091 49.448 50,195 Emacenay Mem 20J 58 futura time to make such a refund, it is not expected that Net income $ 53.837 $ 62.249 $ 4R448 5 50M95 th3 amount would be material to the Company's consoli-dated results of operations. Eamings on Common stock $ 45.644 $ 54.095 5 41.326 $ 40.431
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8 Extraordinary income-. of shares of Common During 1982, the Company exchanged 2,650,600 shares of stock Outstanding 79.131 81.122 88.021 92.688 its common stock for $53,432,000 principal amount of its Eamings per share outstanding first mortgage bonds which were subsequently of Common stock: rr. tired. The exchange resulted in a non-taxable gain of Before Extraordinary item $20,158,000, which is included as an extraordinary item (after preferred and ence stock dividend on th31982 Consolidated Statement of income. During 1981, the Company purchased and subsequently retired Extraordinary item .25 $65,821,000 principal amount of its outstanding first mort-Eamings on Common stock $.58 $.67 $ 47 $.44 gage bonds for cash. This resulted in a gain of $26,276,000, which is included as an extrarvdinary item, net of related incom3 taxes of $12,234,000, on *he 1981 Consolidated Stattm':nt of Income.
l a Notes to Consolidated Financial Statements-(Continued) 10 Supplementafy Financial Data-Financial Reportina and formation to disclose the estimated effects of inflation and Changing Prices (Unaudited): changes in prices on property, plant and equipment. This Staternent of Financial Accounting Standards No. 33, data is prescnted in accordance with SFAS No. 33; however, " Financial Reporting and Changing Prices" (SFAS No. 33), it is not intended as a substitute for earnings reported on a provides for the preparation of supplementary financialin-historical cost basis. Adjusted for Adjusted Change in Results of Operations Adjusted for the Effects of for General Specific Prices Changing Prices for the ear Ended December 31,1983 Inflation (Current Cost) (Thousands of average 1983 dollars) income from continuing operations $227,843 $227,843 Inflationary Effects on Common Equity. Capital Investmer.ts Etfects-Increase in specific pnces (current cost) of property hcid during the year (i) 443,524 Change in general price level on property held during the year (336.648) Reduction to net recoverable cost (52,921) (123.622) Additional provision for depreciation (127.538) (163,513) (180,459) (180.459) Advantage from the decresse in purchasing power of net monetary liabilities 120.422 120,422 Met erosion of common stockholders' equity (60.037) (60,037) income from continung operations adlusted for changing pnces (ii) $167.806 $167.806 (i) At December 31,1%3, net property, plant and equipment, adjusted for changes in specific pnces (current cost) was $9,524,525,000, while historical cost (net recoverable cost) was $5.157,196,000. (ii) income from continuing operations, adjusted for generat inflation and adjusted for change in specific prices (current cost) would be $100,305,000 and $6J,330.000, respectively, if only the amount reportable as additional provision for depreciation was included in the adjustment. Comparison of Supplementary Financial Data Fct the Wars Ended December 31 1983 1982 1%1 1980 1979 Operating Revenues-Historical $1.515.852 $1,429,626 $1,279.649 $1.080.869 $ 994.585 Adjusted to average 1983 dollars $1,515,852 $1.475.615 $1.401,789 $1,306.253 $1,363,153 income (Loss) from Continuing Operations-Historical $ 227.843 $ 161,338 $ M3.850 $ 101.403 $ 105,120 Adjusted for changing prices (average 1983 dollars) $ 167.806 $ 115.172 $ 58,785 $ (27,098) $ (8,294) Income (Loss) from Continuing Operations per Common Shue-Historical ' $2.22 $1.89 $2.10 $1.52 $1.80 Adjusted for changing prices (average 1983 dollars) $1.64 $1.35 $.83 $ (.40) $ (,14) Return from Continuing Operations on Average Common Equity-H;storical 14.2 % 12.3 % 13.5 % 17% 11.2 % Adjusted for changing prices 10.5 % 8.3% 4.8 % (2.1)% (C.6)% Effective income Tax Rate-Historical 35.1 % 32.1 % 33.5 % 28.3 % 21.9 % Adjusted for changing prices 41.0 % 38.1 % 49 6 % 82.5 % 61.5 % Excess of increase in the Specific Level of Prices on Property, Plant and Equipment Over General Price Changes (average 1983 dollars) $ 106.676 $ 344,737 $ (40.337) $ (202,722) $ (115.228) Advantage Resulting Inyn the Decrease in Purchasing Power of Net Monetary Liabilities (average 1983 dollars) $ 120.422 $ 110.243 $ 235.821 $ 306,178 $ 339.387 Year End Common Stockholders' Equity-Historical $1.711,974 $1.488,371 $1.229.044 $1.067,524 $ 970,110 Adjusted for changing pnces (average 1983 dollars) $1,682,449 $1,519,188 $1,303,752 $1,226.489 $1.261.648 Cash Dividends DMlared per Common Share-Histoncal $180 $1.76 $1.76 $1.76 $1.76 Adjusted to average 1983 rtollars $1.79 $1.82 $1.92 $2.11 $2.41 Year En( Markti Prke per Common Share-Histoncal $12.25 $14.00 $11.625 $11.875 $13.375 Adjusted to average 1983 dollars $12.04 $14.29 $12.32 $13.72 $17.36 Average Consumer Price Inder 298.4 289.1 272.4 246 8 217.4
Auditors' Report u e ' The increase in specific prices of procerty held during the To the Stockholders and Board of Directors of Ohio Edison . year attempts to measure increasing asset values which Company: approximate do!!ars that would have to be spent today t We have examined the consolidated balance sheets and acquire property, plant and equipment identical to assets consolidated statements of capitalization of Ohio Edison current!y owned. The Companies use the Handy-Whitman Company (an Ohio corporation) and its subsidiary index of Public Utility Construction Costs and the Bureau of companies as of December 31,1983, and 1982, and the Labor and Statistics engineenng indices to calculate the cur-emm%m eM m@ rent cost of those assets. The indices are applied to actual I sM M h pn @M me d N dollars spent on large const uction projects according to the for me@@im W Ws 6 ed d N Me p year of expenditure. For all other plant facilities, the current in the period ended December 31,1983. Our examinations cost is determined based upon the year the facilities were were made in accordance with generally accepted auditing placed in service. standards and, accordingly, included such tests of the Changes in the valuation of assets adjusted for general infla-accounting records and such other auditing procedures as tion are computed by using the average Consumer Price we considered necessary in the circumstances. Index for All Urban Consumers for the calendar year, accord-opi fi ial mess Med Mm ing to the guidelines set forth in SFAS No. 33.. resent fairly the financial position of Ohio Edison As shown on the results of operations adjusted for the effects Company and its subsidiary companies as of December of changing prices, the erosion of common stockholders' 31,1983, and 1982, and the results of its operations and equity is identical either adjusted for general inflation cr ad-the sources of funds for property additions for each of the . lusted for specific price changes. This results from the effect three years in the period ended December 31,1983, in of regulation in setting the Companies' electric rates. Since conformity with generally accepted accounting principles those rates are based upon historical costs of utility plant, applied on a consistent basis. the inflation-adjusted results of operations must recognize this limitation; this is accomplished by the reduction to net recoverable cost shown on the summary. Additional depreciation expense adjusted for general inflation ARTHUR ANDERSEN & CO-rnd for the change in specific prices was determined using the same rates and methods used for computing the histor-New York, N.Y. ical cost provision for depreciation. No inflation adjustment February 14,1984 has been reflected for income taxes, in conformity with the reporting requirements of SFAS No. 33. During periods of inflation, the Companies' net monetary liabilities (principally long-term debt and preferred stock) will be repaid with dollars having less purchasing power than dollars had when the original liability was incurred. This economic benefit is portrayed cc the summary as the advan-tage from the decrease in purchasing power of net monetary li:bilities, which serves as an offset to the inflationary effects i of replacing the Companies' property, plant and equipment.
L Consolidated Financial Statistics 1983 1982 1981 1980 1979 1978 1973 General Financialinformation (Dollars in thousands, except per share amounts) Total Operating Revenues $1,515,852 $1.429.626 $1.279.649 $1,080.869 $ 994.585 $ 862.956 $ 385.806 Operating income $ 302,751 $ 269.640 $ 252.381 i 169 383 $ 163.744 $ 123.945 $ 89.664 l Eamings on Common Stock $ 227,843 $ 181,496 $ 163.892 $ 101,403 $ 105.120 $ 61.259 $ 58.697 Ratio of Earnings on Common Stock to Operating Revenues 15.0T. 12.7 % 12.8 % 9.4% 10.6 % 7.1% 15.2 % Times Interest Eamed Betore incnme Tax 2.31 x 2.02 x 2.11 x 2.05 x 2.31 x 1.67 x 3.02 x Net Utihty Plant at December 31 $5,150.902 $4.522,733 $3.867.757 $3.435.267 $3.012.197 $2.717.820 $1,357,017 Property Add.tions S 745,798 $ 774.233 $ 568.044 $ 515.020 $ 476.746 $ 395.162 $ 227.700 Capitalization at December 31: Common Stockhoiders' Equity $1,711,974 $1,488.371 $1.229.044 $1,067,524 5 970.110 $ 851.686 $ 438.182 Preferred and Preference Stock Not Subject to Mandatory Redemption 404.240 354.240 304.240 306.905 306.905 306.905 160.905 Preferred and Preference Stock Subject to Mandatcry Redemption 158,112 152.560 151,141 156.450 150.850 98.000 Longterm Debt 2,131,404 2.005.436 1,759.771 1.594.384 1,410.782 1.343,195 711.678 Total Capitahzation $4,405,730 $4/J00.607 $3.444.196 $3.125.263 $2.838.647 $2.599.786 $1.310.765 Capitalization Ratios at December 31: Common Stockholders' Equity 38.9T. 37.2 % 35.7 % 34.2 % 34.2 % 32.7 % 33.4 % Preferred and Preference Stock Not Subject to Mandatory Redemption 9.1 8.9 8.8 98 10.8 11.8 12 3 Preferred auf Preference Stock Subject to Mandatory Redemption 3.6 3.8 44 5.0 5.3 38 Longterm Debt 48.4 50.1 51.1 51.0 49.7 51.7 54.3 Total Capitalization 100.0'.' 100.0 % 100.0 % 100.0 % 100.0 % 100 0 % 100.0 % tongTerm Obligations at December 31 5 719,364 5 656.655 5 447.484 $ 265.000 Cost of Preferred & Preference Stock Outstanding at December 31 9.63T. 9.17 % 8.37 % 8.38 % 8.36 % 7.99 % 5.91 % Cost of Longterm Debt Outstanding at December 31 10.82T. 10 69 % 9 99 % 9.16 % 8.13 % 7.71 % 6.26 % Common Stock Data Eamings per Average Common Share $2.22 $2.13 $2,30 $1.52 $1.80 $1.19 $2.14 Retun, on Average Common Equity 14.2T. 13 5 % 14 6 % 9.7% 11.2 % 7.1% 14.7 % Dividends Paid Ft Share $1.80 $1.76 $1.76 $1.76 $1.76 $1.76 $1.58% Common Stock Divx1end Payout Ratio 81T. 83 % 77 % 116 % 98 % 148 % 74 % Ccmmon Stock Dividend Yield at December 31 14.7 % 12.6 % 15.1 % 14 8 % 13 2 % 11.8 % 7.8% l Pocr/ Earnings Ratio at December 31 5.5 66 5.1 7.8 7.4 12.5 9.5 Shares of Common Stock Outstanding at December 31 (000) 108,460 96.082 78.676 68.526 59.622 52.120 28.695 Bcok Value per Common Share at December 31 $15.78 $15 49 $15 62 $15 58 $16 27 $t6 34 $15 27 Market Price per Common SVe at December 31 $12.25 $14 00 $11625 $11.875 $13.375 $14 875 $20.25 3ato of Market Pnce to Book Value per Share at December 31 78 % 90 % 74 % 76 % 82 % 91 % 133 %
Consolidated Operating Statistics ni 1983 1982 1981 1980 1979 1978 1973 Revenue From Electric Sales (thousands): Residential 5 540,167 $ 497.941 $ 442.267 $ 398.832 $360.273 $314.867 $141,473 Ccmmercial 385.277 356.325 308.599 268.788 240.458 205.901 99.428 Industrial 421,736 383.535 381.162 330.717 315,185 258.767 115.320 Othar 69,278 67.828 53,993 50.420 42.607 46.471 17.064 Subtotal 1,416,458 1.305.629 1.186.021 1.048,757 958.523 826.006 373.285 Sales to Utikties 76,220 101,688 73.966 12,381 10.185 9.346 3.300 Total $1,492,678 $1.407,317 $1.259.987 $1,061,138 $968.708 $835.352 $376.585 Rennue From Electric Sales-%: Residential 36.2 7. 35.4 % 35.1 % 37.6 % 37.2 % 37.7 % 37.6 % Ccmmercial 25.8 25.3 24 5 25.3 24 8 24 6 26.4 Industrial 28 3 27.3 30.2 31.2 32.5 31.0 30.6 Other 4.6 48 4.3 4.7 4.4 5.6 45 Subtotal 94.9 92.8 94.1 98.8 98.9 98.9 99 1 Sales to Utihties 5.1 7.2 5.9 1.2 1.1 1.1 0.9 Total 100.0T. 100 0 % 100.0 % 100.0 % 100.0 % 100 0 % 100.0 % Kalowatt Hour Sales (millions): Residential 6,735 6.733 6,747 6.801 6.650 6.501 5.390 Ccmmercial 5,096 4,996 4.917 4.812 4,693 4.470 4.036 Industrial 8,386 7,708 9.352 8.909 9.830 9.600 9,863 Other 1,211 1.227 1,181 1,370 1.346 1,309 1.073 Subtotal 21,428 20.664 22,197 21,892 22,519 21.880 20.362 Sales to Utilities 2,917 3,361 2.465 502 441 429 311 Total 24.345 24.025 24.662 22.394 22.960 22.309 20.673 Customers Served at December 31: Residential 878,949 873.877 872.303 867.447 861,1 % 848.268 786.744 Commercial 90,072 89.706 63.231 88.505 87.425 86.410 81.777 Industrial 1,003 1.048 1.069 1.059 1,161 1.160 1.128 Other 736 724 711 704 693 689 579 Total 970,760 % 5.355 % 3,313 957.715 950.475 936.527 870.228 Average Annual Residential KWH Usage 7,6 % 7,723 7,760 7.870 7,780 7,724 6.935 Anrage Residenhal Price Per KWH 8.02c 7.40c 6.56c 5 86e 5.42c 4.84c 2 62c Cost of Coat Fbr Milhon EITU $1.62 $1.75 $1.81 $1.50 51.26 $1.16 $.40 l j Generat:ng Capabihty at Dccember 31 (megawatts): Coal 4,858 4.858 4.907 4.899 4.861 4,861 3.939 06: 164 354 354 364 423 423 327 l Muclear 425 425 425 425 425 420 Total 5.447 5.637 5.686 5.688 5.709 5.704 4.266 Suces of Electric Generation: Coal 89.8 7. 93.8 % 89 9 % 98.7 % 919% 90.4 % 99 2 % t Oii 0.1 0.2 06 2.0 3.5 08 Nuclear 10.2 6.1 9.9 0.7 4.1 6.1 Total 100.07. 100.0 % 100 0 % 100 0 % 100 0 % 100 0 % 100.0 % Fbah Load-Megawatts 4,148 4.073 4.148 4,210 4.105 4.038 1810 Mumber of Employees at December 31 7,702 7.885 7.669 7,503 7.157 6.765 6.073
Stockholder information Stockholder Profile identification number, or supply a Annual Meeting of Stockholders At the end of 1983,204,000 stock-number if missing. For new Stockholders are cordially invited holders owned 108.5 million sharec accounts opened af ter January 1, to attend the 1984 Annual Meeting of Ohio Edison common stock. 1984, stockholders must provide on Thursday, April 26, at 10 a.m., Approximately 31 percent of those their taxpayer identification local time, in the Company's stockholders are women,25 per-number, plus certification that the General Office auditorium in cent are men and 33 percent are number is correct and the IRS has Akron, Oh;c. Those unable to or joint holders. The remaining 11 not identified them as taxpavers choosing not to attend can vote on percent are trusts, corporations, whose dividends should be subject the items of business presented at institutions, brokers and other to withholding. the meeting by filling out and inv;stment groups. retuming the proxy card that is Stockho!ders who fail to provide m iled to each stockholder approx-N arly 75 percent of common the necessary information will be im tely 30 days prior to the stockholders own 300 shares or subject to certain IRS penalties 9' I:ss. They live it' all 50 states and and a 20 percent withholding tax many foreign countries. on dividends. For additional infor-Additional Information mation on these new requirements, information and assistance on Common Stock Dividends and Taxability contact the IRS or your tax advisor. individual holdings, dividend pay-In the first quarter of 1983, the ments, dividend reinvestment or Company's Board of Directors Dividend Reinvestment e hansW or reghah of sM increased the quarterly dividend on in 1983,14,000 stockholders can M Wa d W wMng b Wo in common stock. Dividends of 45 enrolled in the Company's Dividend Edison Company, Stockholder c nts per share were declared by Reinvestment and Stock Purchase s,M M W n h, th] Board for each quarter of 1983. Plan, raising the total number of Akron, Ohio 44308, or by calling participants to 66'753' or 30 For the year,46 percent of common (216)384-5509. stock dividends were designated percent of all stockholders. By rein-as a retu.n of capital. and therefore vesting $57 million in dividends and Ohio Edison Company common nontaxable for federal income tax making optional cash payments of stock is listed on the New York and purposes, unless the stock was $40 million, they acquired more Midwest stock exchanges and than 7 million shares of common traded on other registered ex-sold Preferred and preference stock dividends paid during 1983 stock during the year. changes under the "OEC" ticker symbol. Newspapers generally w:re 100 percent taxable. These The Economic Recovery Tax Act of use h syM WC in figures are subject to final deter-1981 provides that through 1985, stod hsdngs. mination by the Internal Revenue most participants in qualified divi-Service (IRS) and stockholders will dend reinvestment plans such as A copy of our 1983 Annual Report be notified ot any significant change. Ohio Edison's may exclude from to the Securities and Exchange Dividend Withholding their yearly income up to $750 per Commission, Form 10-K, will be During the summer, Congress year ($1,500 on a joint return)of provided without charge to stock-taxable dividends reinvested. We holders upon request. To receive a repealed a law that would have anticipate that a portion of common copy, please write to Gregory F. required the Companies to with-l . hold 10 percent of most divi 'end stock dividends paid during the LaFlame, Secretary, Ohio Edison payments for tax purposes. But we next few years will be designated Company,76 South Main Street, as a retum of capital. Participants Akron, Ohio 44308. ara required to comply with backup should consult their own tax withholding measures. For information and assistance on advisors to determine the proper the transfer or registration of all According to federal income tax treatment of common stock divi-classes of Company stock, contact: law, each common, preferred and dends on their federal tax return. preference stockholder must Transfer Agent: Additionalinformation about the provide the Company with a tax-Transfer Agent Plan, and a Prospectus, can be payer identification number, which Ohio Edison Company obtained oy contacting Ohio is cither a social security number 76 South Main Street Edison's Stockholder Services. or cmployer identificat;oq number. Akron, Ohio 44308 Beginning December 30,1983, Reg forms were mailed enabling stock-B holders to certify their tarpayer One Cascade Plaza Akron, Ohio 44308
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, n n. k % b CSEPMJbegyhk k.x.. . M4 r2 q.j. 4f37 p!3p[.. sm y;.- OfReus" d' (( ? M~ IM, O _ ~ h.k Beeldof Nuclus M.MM . Donsidc eissius M-NMm$ Justin i Rogers,q.c.MQ. Wh ; 01siniesMaassus = k OwocV Yl:df./bg" Tdnthor'ty N. M esklont w : $ 9. N @.M
~~Chairmanof So BoardandChief NW Akron DMelonM.M~~
.,EmacutiveOfficerof The%per>Compenp OMMD.%r.I W., Mansneid. Ohio (appnances and.fumiehings). Member, Nominating.;M.A #a VIClar n .o. Funesdiyg Vlcg Ptggldggg e.c.'-'. q - $ 'Say De, w l. M.. '. A. ..u5 ev. w f i ~ '. , ' committee, Finance Commitsemed f.4 7 Douglas W. Tschappat Fe.c.. f.g e 3 :M.LaleEJlopMe
~~%;..H~~
.g ;. m.. .i.' m,- ~ ~. 4 o s ,.3 1 A ~ William A Derrick biNU SJ'W"""*!*** ""*"''M 2 l.' ( g i independbnt Electrical and MechanicaK.MLynn Firestone @.% ? d.? M : v,- $.% " N dZ.s Malcolm E.CashV.s.?i
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2' ' . J. Yv k ' Engineering Consultant, ~ .of ESenior'Vice ReelderW % l p..f j, '.y c.W. -i Mansnekt.Divlelon tidi'fc - " i;. W jf.,.. y; Y,E , Ohio]'(; ; ggg$ mo,e.id.end.':;? E < ~~.0 ? '. y.T. J.: 1 f h E.y ' ~ ~ g, AmisureIndustries,inc', t (developer of realestate and - r * *I'.g.4~.. "' 1 ~ h + se. n.ior..Vi Q bulk 5nOs). Chairman,Compensationt..?.'. i t...: 3. . -.m # 7 r 7.i
7
. c.l1 ?.;, .. W L Dr. t.ucille G' Ford @$.S; 7.y4Q,iRobert J. MdWhorter (3 ; 4., ,,1 < f!r. f.. ;3.; V r. T'. (. [. ::..? g - g Committaa f da.6....?* T Vice Reeklont and Dean g Business'.b.: - [.Seniorweemasksong;;jy;\\; f .p;7gg tj.tj 3 [.:i. I: x.# " p 4.: i.'.(. ff $ N. : h, 4: Administration and Ecortomics, and. 6.'.7 L
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~~'H u..*. a.+ <. .O~~
. ~.. ic" D Director, GiB Center for Business &. 8 f

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~~' O. S i. ' ~ * ! % o 9..J '. " ' ij ; (, x ! ' [. i " ' ' ' ' i '. n. -~~
% Economic Fahamdian, AshlandConegEJY '.l '~. -...

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~~. (. L ^ N '.a-] 9 f. f, i %' Ashland,Chict Chairman, Nominating 9 .jy. M L. '... ~ . '" k f. % \\ - Z @% .? Sommittee; Member, Finance Committe&..'.:~~
~~j ; " - 7 6~~
~~.e M ^ d.h Robert L l.oughheSdDMTYb..,..;.I.': f k..<..?DY/I '..,. ;l;) N' "k':;-::b [ d'/ Shairman of the Board, Resident and11... V5,;,-' '" "l..'. Ml.G.~~
~~TJ:.M. 2:l7'.~~
I. f..SF. '. >., T'i ? -:...;. V ? 2 ii Chief Execunwe OfRcer of Weirton Steel - A.. ' 1 "s. ' " " ' - ' O '-- f (. .h products). Member, compensation /% wl< ; ',, - 1. f '-).',f:',.@ f Corporanon, Weirton, West Virginia (steer ..... - f (: : N75 E. '! 1 - 'l :. Sff. ' h, ,f M,y f,',n., ' cln..
s- ' -

,
~~p Committee, AutSt Committea : . v.2 v O~~
~~<g..~~
~~A Glenn H. Meadows %n&r s,.&.?. '- L c. *. fd;~~
~~President of McNeilCorporation.AkronLj].~~
,, M..gc s. ;; : f c. ..,f4 .i [k.S p M f. - // ? (;,..1,91 ' n ( ;} ? . >7 <. ' '" < Ohio (variousmanuiscturedpr'oducts)/';f ~;.7 p. 7.. N f ' ' ~ a e.' ~N - ' : N y N :I;z 7.Auditcommitteeg:%p./-4,7 -fw Member,CompensationCommit - og[ y,,],; ;* j j g yj: t s- / g(g,}{;;p 4 D Ql Q . q CJohn Nelson M
s. -

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~~7 g** CommercialShearing,Inc.,ibungstown, President and Chairman lel the Board of f:. ^ ' ~ ' i f; M,' g " - g..e ~ g Yo 14. 'T ~. y.,Wllb9 . p,,~~
~~. f.~~
...o 3 f Ohio 1engineeredmetalcomponents).'f. -S - P.. ~.F, --ft ' i~'.f. Y.i. .p~.... .".:.'--1. ;.,. '.'(...L) C. ~,, i$ Member,CompensationComnWttoa* X., 4,.- -W . V: 1 1,- G N -... ~ v y,..c' i 1 N.4 Victor A. Owoc Q:dTK.A-;*. 7.:97N .. g.., 3. ,...... ~, f. ' " ' " ' ' ~ l/T T..i.y V; :- % Executive Vice President of Ohio Edson.$X
~~.n ' 4.. 3~~
~~'i V Member, FinanceCommittee.e> :. . L.' t,. '+';. E " f-~~
~~wlustin T. Rogers, Jr.3, gW%tS..u 3:.. =~~
~~~ ~ i ...e e cg. i.: p'.. t.. Q. lcl yf.:f 2 m . ;.t :: ~ e. :; r Q the Board of its enhageery, Pennsylvanlal$. '.' ' ' '. <<f. " ' N. N : al. N 4 ~ S.1:.,. ? L.; 'g - l 0~~
~~.-L 5 7 President of Ohio Edson and Chairman of 1.1/~~
~~J .2'.2 : f " 2..- c - 7... 2 i h;? [ V?- 7 fQ ' 'Yl ' ( 1 1.7j, {Of ' ., i'.;u. [ p.. 'g / g/A.:: Pbwer Company. Chairman, Financepr T+/~~
~~Q};; y~~~
~~N..., ;.:. }/. E'<: committee; Mernber, Nominating 7"7lEyl3 i~~
~~( ; p.~~
~~,g ....x ' Committoa.,c ;Q_l,gg> l; y~~
~~f.._ [;. }g;Q+-:_~ y (,~~
~~j ;u Q [ V j q( f Douglas W. Ts6happatm? j Enocutive Vice President of Ohio geson.@.7.< g ]N[QYy f(% i j j k% j y;M. * ' : " l~.)f i:' ; : ;.~~
~~:.J~~
~~.2 7. N.;- ,. w.W; f : 23 2 C /.->.) g c.. , 1. "f 9 z. 3 S. k:%. ~ :E2"{ $ j President of The ibungstown Weiding an%l; e.[; @i FrankC Watson MfMDND h J...f, : ; ;:, ; a. ~t.n. ;~~
~~sca f.:.g.j., t N. g ' t.. M 4: %~~
~~...MN: d. ' MM p U *i nR J::; d 1 Engineering Company, ibungstown, Ohio (.'. 1 w. N.; 1.Y. M ..W. ...:A W 3'~~
~~lf; i.8P";#~~
(nonferrouseBoys). Chairmen AustfMM :f M f f 4.,?lf i'W ;0.'.O 3,i C 'lJ M W. Committee; Mornber, Nominating l [ ? h ' < < '.[i. C ' '. '4;4 g l l. ' l[k ..~ . 3j..?-: el c ".:.. J ?-;. f-1 B William C Zekan' yg @., M "M sp?.b;Q D. ;l. & gy#p Comnsttes, < t J T ? M f M;.V k. f,;.J ;W.R.?l^.#M f af
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M AM e y.U I % ~ f. S i President andChapmenof thiBoeirdof Q. 2 )dC. + ee W t.M p y 0.f 4[.M -;;M:%.i;Q.d /h.l h plasticcompounds).yember, Audli - %D.i ed.f @M%#MkW %%.. T.M,h d 15.gr% .N. [ A. Schulman, Inc., Akron, Ohio (cultom#c.26 .9 Jf'Q.f.0 M S. ' / 0?,' *hkf ff. .g&,&h$k.&N!.kkhN? ifW?;k N NnghamEnnMan ShlNY+MWi-lp&)y* Wp%'-?g e.
~~p?..p&g.lU&pk 9 OY:WkN5 14 5~~
~~'O iY #i% s S~~
~~pf.T~~
~~? G? W"go.,N R ' "4" . p... Walter H. Sammis Mg;gn. n c P ^~~
I>
3 ~ l ' N ' :;. m ' E. MF. A Ni D. Bruce Mansfield pg 2 Fred H. Zuck ' 4M4 e -1' .a k, ][ L ~ t ogme 1 q. ., _.- M .. 8 ', 6 . '. ' '.. *~ ,1 4 -. - # * ~. ..'.,w ,,.e s / ' 3. b .A .e
Bulk Rate ' US. Ebstage M Akron, Ohio O TheEnergyMakers. permit na set OHIOEM 7e south Main street Akron, Ohio 44308 1 l i l I i 1 1 i i t i ANNUAL REPORT 1983 1 . _ _}}

ML20096C821

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