ML20097D468

Pennsylvania Power & Light Company,1991 Annual Rept

ML20097D468
Person / Time
Site:	Susquehanna
Issue date:	12/31/1991
From:	Hecht W, Kauffman J PENNSYLVANIA POWER & LIGHT CO.
To:
Shared Package
ML17157B826	List: ML20097D468
References
NUDOCS 9206100152
Download: ML20097D468 (52)

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, PENNSYLVANIA POWER, A I.IGEIT COMPANY

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AIOUT THil REPORT W)

FinancialM>perating Highlights I Q7,K

( hairmani and President's letter 2 2

)rar In Resirw 6 k

%< rsi(r Arra Profilt 9 y ') " "

( ommunit) Involvrment ' Photo Insag 10 h- follow PPdl annU31 reports I

finamial Arc 6cm - th

- Finatadal %tatements 24 from } ear to year will notice some changes from recent years This Notes to Financial %tatements 41 report features black and white photographs rather than the full-color

%cletted tinancial and operatias l'ata 42

%harron ner and Imtstor leformation 46 reports utilized since 1983, in the mid- and late /80s, our full color offii rrs and I>irrt tors .

eli dM & Mon's business climate. PP&L chose to match the annual report character of those we competed with in the energy marketplace. This report reflects new realities in today's business world Electric utilities - like many businesses - are implementing ways to be more cost effective, and re-evaluating what messages their publi-cations are sending to their audiences At PP&L, every department, every employee, is being asked to redouble efforts to re-evaluate priorities and k>ok at the way jobs and projects are performed and how goals are met. This report is our effort to give you all the

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I hrough the'decaden. PPal propic have onjoyed a reputation for being deeply good corporate citizen, in a package that reflects our culture of being As -

innolved in the (ommunitics where they

• cost effective in all we do.

, live and work. Indeed. PPal% well-bc-

% ing in atrongly tied to slic' well being of You also may note the " recyclable" logo on this page. Full-color printing on gloss coated paper is difficult or impossible to pro-andt ht c he on an cess for re use. This report meets common standards for recycling page to highlight some of that involwy '~ -

ment. Cover photo, top: Richard Incanth M M re< valuation, we also considered printing this report trentert %cranton arca manager, it co-chair of the %(ranton Plan - the market- on recycled paper. While recycled paper for " low end" use3 is gener-ing arm of the Greater scranton Cham Wv M W onably priced higher grades that h>ok acceptable her of Commertc. With him are t ynthia -

ictich. Ncranton Plan adminentrator. -

and perform reliably on high-speed printing presses are not asailable in the quantity demanded by the market. The company agrees in srn na f > mi a]'

t ommunit3 Development. ne group'n principle with the use of recyc!cd paper, and uses it in a number of main goal in to bring new jobs to the ,

app cations. We will expand our use of recycled paper as appropri-ktanton/l.aci awanna County area.

Bottom right: Bill lietherington (facing ate, and as market availabihty allows.

,a cameral a utility man at the company'n sunbury power plant, chats with George

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Itinney, %clinngrove borough manager. '

Mill in serving in his third four-year icrm am the unsalaried president of borough council - him first clective offi(c. Ilottom left: Jacque treamer Jr.,

mafety an.d health connuhant in,the c6mpany's tiarrisburg Division, unen a Renuci-Anne dummy to demonstrate .

proper renuncitation techniques to , gg

< ,several fclksw employees. Creamer has

- been a comnaunity Red Cronn instructor for 12 yearn. Ele ratimates (lat several PP&lls 1992 annual meeting will be held April 22 at the hundred area citizens have phrticipated Williamsport Scottish Rue Auditonum,3-18 Market St, Williams-in his classes. .

. port, Pa. See page 16 for details.

s 8

3 HIGilLIGitTS (tseselidated) 1990 1991-1990  % Change .1989 1991 l Operating Data (in thousands)

Total Energy Sales, Kilowatt-hours (a) . . .,.. 36,218,811 35,700,394 1,5 35,358,236 System Energy Sales, Kilowatt-hours (b) . . . . 29,036,169 .28,672,040 1.3 28,402,145

- Interchange Power Sales, Kilowatt-hours (a), . 7,553,348 8,970,961 (15.8) 9,233,538 Electricity Generated, Kilowatt hours . . . 41,551,242 41,942,040 (0.9) 43,658,166 Net System Capacity, Kilowatts (c)(d) . . .... 7,797 7,912 (1.5) 7,864

Winter Peak Demand, K!!owatts (e) . . .... 5,974 5,661 5.5 6,000 FinancialData(in thousands)

' Operating Revenues (a) . . . ... ... .. 52,559,696 52,419,717 5.8 52,376,455 4

JOperatingIncome. ... .. . ... 5582,331 S590,366 (1.4) 5618,850 Net income . . . . . . . ..... . ... .. . 5348,414 5343,906 1.3 5353,436 Common Dividends Declared .. . . 5234,626 5224,850 4.3 5215,386 Common Eb ty (c) . . . .. . . . . . ... 52,298,010 52,221,759 3.4 52,139,338

Capital Provided byInvestors (c) . . , . . . 55,623,378 55,573,360 0.9 55,526.408

~

Cotistruction Expenditures ... .. . . 5336,741 5288,278 16.8 527E'.765 Construction Workin Progress (c) .. . $ 183,242 5143,084 28.1 5115,799 Property, Plant and Equipment-Ne t (c) . .. 56,929,578 56,894,221 0.5 56,866,642

, Total Assets (c) . . . . .. . .. .

57,934,595 57,735,442 2.6 57.598,968

' Per Common Share .

Earnings . . . . . . . . . . . . . . .. . ., ,... 54.0I $3.95 1.5 54.05 DividendsDeclared . .. ... . .. . 5 3.1 C 52.98 4.0 52.86 Market Price (c) . . . . ... ., ,

5 52% $43% 20.3 542%

Book Value(c) . .4 . , .. . .. ... . 530.30 529.36 3.2 528.36 OtherInformation-

< Return on Averagc Common Equity . . . 13.42% 13.65 % (1.7) 14.62 %

? Time's Interest Earned Before Income Taxes . 3.06 .2.86 7.0 2.78

.NumberofCustomers-Electric (a)(c) . . 1,173,679 1,161,231 1.1 1,143,592 Comnion Shares outstanding (c) . ...... 75,827,634 75,648,970 0.2 75,422,739 NumbetofCommon Shareowners(c). . . . . 127,272 130,719 (2.6) 132,197

- Number of Employees-Electric (c) . , , 8,144 8,149 (0.1) 8,108

, ( a) Years prior to 1991 have been restated to reflect the reclaulfication of distinct sales of energy to (ertain utilities from interchange power sales to energy sales and operating revenues. See Financial Note t for further discussion of

. interchangepowersales(

, L (b) Excludes contractual sales to other utilities, l? - (c) At year end.-

(d) Total generating capacity plus firm capacity purchases less firm capacity sales.

('e) Except for 1989, winter peaks were reached early in the subsequent year.

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or Pennsyhania firm what we have acknowledged for requires tlT best in customer service, Power & l.ight some time: Change is really the only excellence in operation and sensitivity Co.,1991 was a thing that is constant in today's wodd to all our puh!;cs it requires a con-j year of accomplishment in the face of We will succeed only if we manage tinuing commitment to keep our

ever-increasing challenges. the change that is coming ocr way rates stable, it was a year of achievement

from all directions. In an increasingly As a companion to our vision, we

• We achieved an carnings level competitive atmosphere, those who ako have articulated a set of corporate needed to maintain financial health. manage change will win. Those who values, which are the collective prin-l

• For the sixth year in a row, we don't, will kne That's why we spend ciples and ideals tlut guide our ac-l made good on our objective not to an increasing amount of our time plan- tions. These alues define the charac-increase base rates. ning for the future - a future that ter of our organization. They describe

!

• Our Susquehanna nuclear plant will be markedly different from what what the corporation stands for.

shattered its single-year record for we've known. Defining a vision and establishing generating electricity, breaking the Competition That one word - values were important initiatives of the

! old mark by more than 1 billion more than any other - defmes the past year, but they vceren't the only kilowatt-hours in producmg 15.9 future of PP&L as well as the electric ones. We a!30 surveyed our customers billion kwh. utility industry. We aircady are seeing and the results were very positive. In

• PP&L had the lowest consumer the influence of deregulation on our fact,92 percent of those surveyed have complaint rate among Pennsyhania's industry. Today, we are not only com- a favorable impression of PP&L major electric utilities. peting with oil and gas as energy Imt a more competitive future en.

• Through conschdation of division sources, we are compenng with other sures that we cannot he satisi 'd with activities, more than 900,000 cus. suppliers of electricity. the posuive impressions that n stomers l tomers are now being served by our This is not just a regional concern have of us today. We know that the ex-new centralized customer contact The " global" marketplace is having - pectanons of our customers will con-facihty. and will continue to have - important tinue to rise and that we must improve

• Through an aggressiw collection impacts n our success as a company. our service accordingly. We are ex-A look at the transportation and steel amining closelv the results of this program, we reduced the amount of out overdue customer bills by $11 industries gives us a clear picture of survey to idenufy opportumties to millioti. how global competition translates into more effectively position PP&L m a

'#EI""#I #""" I#" #^ 'I ("*PCIE" #" ""*#*

• Our land management programs American industry is not strong, our To have our vision become reahty, were honored as the best in the '

business will suffer. we must offer the highest quahty ser-nation.

Tbt's dy we are working to shape vice to our customers at competitive 1 But 1991 also was a year in which the future, while we keep close tabs rates As we mentioned earlier, we we responded to the challenges that on the essential dav-to day challenges cannot achieve that level of service come with doing business in today s of doing business. ~ without improving. That's the concept

• "I" What are we doing about our fu;ure? behind our continuous performance

• Central Eastern Pennsyhania, along improvement process. CPIP, as we with the rest of the nation, is endur-call this endeavor, is PP&lls total quali-ing a recession. As a result, total Articulating Our Vision tv effort.

sales to our service-area customers ' CPIP will set the tone for PP&L in One important step is articulating a

- wnen auiumd for weather - v sion, our aspiration for PP&L as we the future. At its heart is the convic-were essentially flat. Industrial sales near the next century After extensive tion that there are better - and more were down by 3 perceat discussions throughout the year, we effectise - ways to do everything thar

• The recession also mean tnat distilled our visio'n to eight concise we do and that, after we find those housing starts were down, putting a words: PPM will be the energy better ways, we begm to search for dent in our marketing and economic supplier of choice. Our vision means even better ones. CPIP will involve all development results. PP&L will position itself so that our employeex everyone will be part of

• For the second year in a row, customers can make a clear choice in the team CPIP means we are commit-milder than-normal weatner also selecting us to provide the energy to ted to listening to our employees, to slowed the rate of increase in our heat their homes and offices, to power our customers, to others in our in-sales. their industrial facilities, to make their dustry, to anyone else who might hold

• A state business tax increase drove lives more productive and enjoyable the keys to a "quahty way."

up our rates while dampening the Striving toward that vision will re. The successf al companies of the

. atmosphere for economic develop- quire an additional commament from future will have a " restless" culture.

ment and business retention. cach PP&L employee and the con. They will encourage aggressive ques-The past year served to further con- tinued support of our shareowners it tioning of the status quo They will 2

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• o 3 percent and mmmert ui sales growth s was not as strong as m pies mus scars.

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• ng L s. h Mdy .R Inhaubte to economic conditions in c our service territut3

. Rates Remain Stable i

Den as we deal witit the prospect

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of a reduced cate of ules growth. we are (onunuing to incet our objectise I of not increasing base rates until at

.- l lea 4 the 199195 period. l'nfortunate-

ly. our customer bdk in<,reased by 3

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• p"rtent during 1991 because of the

-c state tax increases Despue that in-o

~ rease, as we entered 1992, our average pnce per kilowatt-hour was sult at

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about the level it was m 19M0 %c still y beheve that a key to our success is our

- s abdity to keep rates competitisc Clear.

- ly. rate subihty is the key component Kauffman liecht of our marketing and economic development efforts liccause we need to keep rates uhie not be static. They will manage change development programs and continue to improve our carnmas rather than be buffeted by it.

• Effective cost management and dividends, we are placing adde We began CPIP by askmg all our em.

• Operational excellent e tional emphasis on our effectit c cast ployces what they think about the

• Sensitivity to pop!c ananagernent strategy Followmg company, about the way we operate 1.et's uke a biok at how we dH m through on our effort to better plan the business, about the way they are these areas dunng 1991 for the tature, we are mcludmg all involved in our operations, about ways During 1991, we narrowl) achieved area, and leveh of the company in an we can improse. The resuhs of that our snarketing an<f econornic mtegrated plannmg process ba3thne study will provide us with a slet cloprnent guah We thmk thh is a This process provides a long-range -

gtod surung point for CPIP. remarkable achievement in hght of the outlook, so that we can work toward We then will move on to the next challenges of a recession, combined our objecuves with a coordinated part of the process, which will involve with a state tax ncrease that eroded approach.

the drawing up of a " game plan" to Pennsylvaniis stature as a pro-business One of the benefits of our long term improve our performance at Pf&t_ sure. During the summer of 1991, to planmng has always been to provide The game plan will identify ways to resolve a sute budget defica. Pen issl- advance warning where reallocation of more involve all PP&I. people in vanu increased business uses subsun- resources is necessary One area where managing costs and improving our tially, makmg it one of the highest we have concluded change is ap-products, work methods and struces business ux sures in the nation. proprute is in the number ut .ull time Our ultimate objective. complete While we were successful m creating emplo)ces.

customer sansfaction new sales through markenng. those ef- We decided that it is necess.iry to forts were diminished b) detlines in return to the dechning trend that we all customer settors, so our overall had esubhshed in the latter half of the Emphasizing Our Strateg,es i ules were M When adjusting for dif- 1980s. For that reason, we have While we set our sights on the ferences in weather between the two esubhshed a plan that wdl decrease future, however, we cannot afford to scars, our 1991 sales increased over thc number of full tune employees to short change the present. That's w hy I99n 3 ales b~ Nst OJ percent. This. of ahuut '.;no by the mid b)un,.

we continue to emphasize the impor- course, n sig. intly less than the 3 i We have talked with all our em-tant strategies we followed to achieve percent annua: wreases expenented ployees about our long range planning succe,s in the Aos and the early part through the 19% to 1900 period. process, about the compennve re-of the '90s- Sales to residentul customers m- quirements of the future, about the Ourfour-prongest strategy: creased only shghtly when adjusted for need to contain costs and the resu!nng

• Aggressive markenng and economic weather Industnal sales were down h) sufting reduenons. w hich we expet t 1

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to come primarily through normal Assistance Line enables large numbers lor electric utilities in Pennsylvania.

attrition. of customers to tell a computer what Our senutivity to people also is Another important strategy is opera- their problem is. We are using PAL, sellected in our relationship with our tional excelknce. Superior perfor- however, only for brief periods when employees The superior performance

- mance of our power plants is neces- our customet contact representatives of PP&l people resulted in the com-sary if we are to keep costs to cus- are overwhelmed We firmly believe pany achieving seven of our mne tomers down and earn;ngs up. During that our customers want to talk with a employee incentive goals in 1991. The 1991, our fossil fuel, nucler and hydro real person and it is our goal to pro- company's compensation package -

units generated more than 41.5 billion vide that kind of responsiveness, ex- which includes comprehensive benefits kilowatt-hours, _ cept in the most severe circumstances - is meant to encourage that con-The Susquehanna nuclear plant led tinued pursuit of excellence.

the way, breaking its previous station We have not lgnored you, the record by generating netrly 16 billion shareowner. in our people sensitivity kwh. Susquehanna Unit I generated strategy. We think our record of annual electricity for all but sLt and one-half s '

dividend increases since 1979 is an ex-days during the year, rurming up a 95 <t ample of our keen awareness of the percent capacity factor, the best in the N .NN needs of the people who own this world for General Electric boiling business.

. water reactors; Unit 2 at Susquehanna ., PP&l's four basic strategies have operated at a capacity factor of 76 per- ~INCTed$fNjl[ served us well and they remain sery cent, despite a refueling outage during important to our daily operations. We the year. will, however, continue to assess their Tlic superior performance of Sus- :CO#fplillre effectueee,sas we niaeto rneetthe quehanna and our other power plants competition that the future holds.

not only allows us to sell more kwh in Also, these strategies have played an

. a given year, but also earns us a ime rtant r le in maintainin8 the com-.

reputation that paves the way for our "4t#f 0$M --'=7 pany's financial health. Our earnings aggressive effort to sell capacity to for 1991 were 54.01 per share of com-other utilities. mon stock,6 cents higher than in

th0SeIfh0 1990. And, if we had experienced nor-( mal weather in 1991, earnings would Superior Cust0tner Service have been 12 cents per share higher.

Operational exce!!ence, however, #f4N4geCh4Nge: Despite the impact of mild weather does not end with our power plants. and the recession, the 54.01 per share Our commitment to excellence in ser- . ,

earned in 1991 represents a annual vice to our customers is equally impor- ' gpffl gpfg7 growth rate in earnings of 53 percent

- tant if we are to be the supplier of since the end of 196 choice. That commitment again was .

Several factors have played an impor-F clearly translated into action during tant part in that earnings improvement.

1991.

M eIFh0L These include aggressive marketing and By the end of the year, more than economic development programs, ef-900,000 of our 1.2 million customers . ,- fective cost management, and a reduc-were being served by our new system.  ; DON,i Irlll 10Se.,1 uenieinte,e,texpce,caed d,vidends wide Customer Contact Center. Open- 1 on preferred and preference stock.

- ed in June 1990, the center gives Also, our strong generating capacity customers wider access to service ' -

enabled us to add another dimension 24 hour2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br />s-a-day, seven-days-a week. In of revenue, beginning in 1989, by its first full year of operation, the entering into innovative capacity-center handled about 844,000 cus- The center is just one example of related transactions with other utilities.

tomer calls. our continuing commitment to pro- in December, we announced our in-The center offers new features, in- viding the best in services to our tention to split our common stock cluding the Power Assistance Line, customers - an example of our sen- The split would bring the price of our which goes into action if there is a siffrity to people. Our sensitivity to stock, which has doubled since the storm that leads very quickly to a large the concerns of our customers also is mid-1980s, in line with other electric volume of customer calls. While we exemplified by the fact that, for the utilities. Sharrowners will be asked to are staffing up our contact center to sixth year m a row, PP&L had the approve the split at the annual meeting deal with the emergency, the Power lowest customer complaint rate of ma- in April.

4.

=

Environmental Commitment awareness and education. dent powcr suppliers to enter and Even as we do our best to maintain Another environmental concera leave the electric business as they see strong financial performance in a more among some of the peopic in our ser- fit, without regard to any obligation to competitive future, we are addressing the vice area is the question of EMFs - serve customers This is not in the best ongoing challenge to protect the the electric and magnetic fields present interest of the nation and the general environment as we provide an essen- near electrical appliances and our public because electricity is a service tial service to the people of Central facilities. Although the current scien- that is usential to the very survival of Eastern Pennsylvania. tific evidence does not demonstrate a our way of hfe.

As we clearly point out in the en- health problem, we are sensitive to the You can be sure that we will con-vironmental values statement that we concerns of our customers. For that tinue to be active in helping to shape developed in 1991, we are committed reason, we are meeting with as- the future of the utihty industry to serving our customers in a mannet tomers, offering to measure EMF levels As we step forward in the 1990s, the that protects the environment for pres- in their homes and businesses and pro. world is changmg and so is l'P&L We ent and future generanons. We man- vide them with information We're are contentrating on our competitive age our business to minimize waste > even taking steps to reduce EMFs, sltuation, we are kioking beyond to-and emissions that affect the environ- where practica!. In the design of new day's operational concerns and assess-ment. As a company, we manage and transmission and distribution facilities. ing what we need to do to reahze our conserve natural resources, we protect We are respondmg to the percep- vision for the future.

environmental diversity and we pro- tions of our customers as well .3 to Thanks to your continuing support, mote energy efficiency. the cold scientific " facts? PP&L is a healthy company, a company llecause we've done more than sim- that can effectively plan for the future ply comply with previous laws on with the confidence that our ~2 years sulfur dioxide emissions, we expect Deregulation Issues of success have given us.

only a small increase in customer costs in a way, perception also is the We have a vision. We have the lead-

- about I percent - will be needed challet.ge we face as Congress con- ership in place to get us there. We to comply with the first phase of the siders legislation that would change have the strategies to provide the Clean Air Act amendments passed last the very nature of our business In pathway.

year by Congress llecause we have hght of the deregulation that has oc- We will succeed because we're not been making substantial improvements curred in other major industries over shrinking from the uncertain future.

over the years, the early reductions at the years, there is a perception by We're planning to manage the future in our plants will come, in part, from the some in the federal government that a way that wtll assure continued suc-burning of lower-sulfur coal the nation would be better served with cess for your company.

The later reductions, however, will a deregulated electric utility industry.

imolve the installation of "scrubbs" While this is a complicated question. -

on some of our generating units. we must be careful not to put the -

.A M % JA )

While the Clean Air Act amendments long-term best interests of the nation will result in a cleatier environment for at risk. Our pasition on the de.egula-all of us. PP&L has been working tion issue is clear

we support actinn John T. IQiuffman toward this go/ Sr some time, that will maintain competitive, stable Our acuons cominue to demonstrate rates for PP&L customers while main-our clear commitment to the environ-ment. Our land management pr9 tams taining the reliability of electric supply.

None of the electric utility deregula-g ,

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have earned awards. but more impor- tion p.aposals now being discussed tantly, they have increased environ- adequately deal with the challenge of William 11 ilecht mental awareness among people in our maintaining system reliability.

service area. The Montour Preserve, The decisions on these matters must March 1,1992 Susquehanna Riverlands, the IIoltwood result in the highest long-term eco-recreation areas and Lake Wallen- nomic productivity of the nation.

paupack are excellent examples of en- Some of the deregulation schemes be-vironmentai commitment at work to- ing discussed would benefit certain day in our communities. special interest users of the electric We are adding to our environmental supply system while putting the programs in 1992. In the spring we avetage customer, particularly resi-will be giving away more than 120,000 dential customers, at an economic fit seedlings in a program called " Trees disadvantage.

for the Future" The program will in addition, some of the deregula-stress the importance of environmental tion scenarios would allow indepen

YE AR IN REVIEW ,

e ks i y ,

l 7

, anuary in five of seven performance areas in the company's wholesale customer l

• E. Allen Deaver, an assessment by the Nuclear Regula. group.  ;

executive vice tory Commission The second highest president and a member of the board nmk was earned in the other two I of directors of Armstrong World Indus- categories- April l tries, Lancaster, and Dr. Stuart fleydt, e " Working Toward a lirighter Tomor-row ts chosen from among 3.000 cm-

• An agreement calling fot sharing of president and chief operating officer of I nuclear-related information is signed the Geisinger Foundation, Danville, playce entries as the new company '

by PP&I. and top officials of the Kursk l join PP&l's tvard, effective Jan.1. slogan, nuh pr M M Ma 'N  !

• Year end figures show 1990 earnings agreement follows an exchange of delc-of 53.95 per share of common stock as gations between Kursk and the sus-

- energy sales for the year are depressed March quehanna nuclear plant in Im .

by extremely mild weather. With nor-

• 12 dne and support employees are

• PP3 L undertakes initiatives to respond

mal weather, per share earnings would r,ci .o Niagara Mohawk Cols service to customer concerns about the cf fects i have been 54.20. - area to help restore electric service to of electric and magnetic fields These  !

i thousands of customers affected by a init!atives include ' design changes in i I

severe ice storm in New York State- some of its new transmission and dis-l February l

• Unit 2 at the Susquehanna nuclear inbution facilities a customer field

• The quarterly dividend on common plant begins its fourth refuehng and measurement nrogram and support of '

stock is increased by 4 percent, from inspection ounjic. additional EMF research 71.5 cents to 77.5 cents per share. . PP&L a3ks the Federal Energy Reg-

• An agreement is reached between This continues the record of dividend ulatory Commission to approve a PP&l. and the General Electric Co

, increases every year since 1979. 9.65 percent, Sil million, mcrease settling an outstandmg contract claim ,

• The company's Susquehanna nuclear for the 17 municipalities and one in- against G.E. which arose dunng con.

plant earns the highest possible grade vector-owned utility s.hich comprise struction of the Susquehanna piant. ,

i l y ,,

l j g , , A new rotor for the Unit I

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high-pressure and low-f:

pressure turbine at the Martingreek power ' -

i i plant is carefully guided fi.'

t into place. Replacement of the turbine on the coal-l  ?(

~

fired unit. along with in-l

^

stallation of new control-l' > ~

roona panels during a w,. 3

. c. -

well-planned. four-snonth y -

j,, ' I outage, will help the unit rian better and increase Mihm, ll ,  % .

Its efflctency. Furnace l , -

.h  ;.1 4

.and boiler refurbishment '

[ .I 4 6 ,' and lasesnstion of allied 7.x g r gn s  ;

.

t ,he

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i PP&L customers and Allegheny Electric selected group of 36 residential cus- mark reaching 5,398,000 kilowatts.

Cooperathe wil_l share in the benefits tomers are asked to participate in the

• The Pubhc Utility Commission announ-of the settlement. Allegheny is a 1,000-home study conducted by the ces that - for the sixth straight v-ar -

~

10 percent owner of Susquehanna Electric Power Research Institute. Meas- PP&L has the h> west consumer com-uring devices will record the strength plaint rate among Itnnsylvania of magnetic fields in the homes for a utilities.

May six-month period.

• PP&l's dedication to exemplary cus-tomer service is evident as company August residential consultants win six of eight . July

• A group of 20 oil dealers files an ant.i-marketing awards in the annual com-

• The company's stewardship of its land trust suit against PP&L, alleging the petition sponsored by the Pennsyh ania holdings earns a first place "Take Pride company has acquired a t alor share -

Electnc Association. in Pennsylvania" award and a semi- of the residential home heating market

• Susquehanna Unit 2 returns to service finalist spot in national competition througb an electric thermal storage rate after safely completing its fourth refuel- sponsored by the US Department of and an incentive program tied to the ing and inspection outage. The outage the Interior, installation of electric heat pumps. The was completed in 60 days. the shortest

• PP&L sells $150 million of first mort- company beheves its marketing pro-refueling outage in the plant's history gage bcmds io an underwriting group grams are lawful and is vigorously de-and retires short-term debt that was in- fending the htigation.

curred to provide interim fmancing for a A substantial increase in state taxes June the company's capital requirements. forces the company to file for a $3s

• PP&L is one of 25 utihties across the

• Ilot, muggy weather and heavy use of million increase in the State Tax Ad-country to sponsor a nationwide study air conditioners combine to drive cus- justment Surcharge on customer bilk.

of the magnetic fields that exist in and tomer demand for electricity to three The surcharge is allowed to go into

. around people's home3. A randomly new record summer peaks with that cifect, but the new taxes are seen as W ((pl r 3 *@~g-- h)M.fy z-a y- p fJ-Fyy.' g o

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1. 5 ter Edgar Dessen(to Stuffman's righth wheyh chairnsan -

1* ' of GN IMA a Itaaleton-arca econontk developacet grotep,

, were among offh;iah presiding at the October 1991 g 7; .groundbreaking of the company's new system Facilitics Center lb be completed in 1994, the 282,000-square-foot

%' main building and storage areas will replace facilities that k' date back to the company's origin la the 1920s. -

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w w +:y Michele Elecsaries in one of 142 customer service M[

sentativen and servke dispatchers now providing.

round-the-clock staffing at the company's new central- sc g

• M 4 .s J.

\ 4 imcd f untomer Lontact Center in Allentown. The center s., 'e prtwith gater efficicacy and faster response to 4

(4+ - g' n customer inquiries and problems. More than 544,000 .- G " ' '

customer calls were responded to in 1991, . /

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df 's . TWO acw electric,G-vass - GMC vass ccM W7 j & verted to hatecry power - were purchases

[ #" " y".1 is April 1991 and introduced at the coms-pany's annual asectieg in Lancaster. One una d, _ at '

.. was put la service at the SusT'ehme,n En-

_ &f .etty inforssation Center sad the other is

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used for exhibition an$ general banimess

- Purposes ap des-eshar their viability

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I having a dampening effect on the long search both inside and outside JJpan His tour of Chugoku facihnes l company's economic development ac- the comp.my strengthens the relationship begun by tivities in its service area a Drought condaions in both the Sus. the tuu compans in 1990

,

• About 140 employees are sent to help quehanna and Delaware River basins

• susquehanna carns the second high-l utihty crews in New York, Connecticut prompt first ever releases from Cowa- est of five possible rategs for plant l and Massachusetts restore service to nesque Reservoir in Tioga County. and performance in an evaluanon by the hundred3 of thousands of cu*tomers Merrill Creek Reservoir in New Jersey, institute for Nuclear ibwer Operations left withotit power after Hurricane Bob to help replace coohng water used by The evaluations are conducted every rips throughout the Northeast. PP&L power plants along both rivers 18 to 24 months for every nuclear

• The company's land management ac. These reservoirs provide wmer during power plant in the country l tivities win additional natio'nal recogni- Period 5 Of low fitti fl0W to ICP dCe l tion from the Edison Electric Institine. water med by utilities m producmg electricav September

• Members of two locals of the Interna- October

• PP&Us board authonzes a two for-one tional Brotherhood of Electric Work. mmmon sock spht The spht would

. Alden E Wanner Jr, vice president ers, representing about 5,000 PP&L of the com;hny's Lancaster Division, take place in my WE H appod employees, ratify new labor agree- retires after 35 years with PP&L He is by tk hn@am! uh P L,ulay ments with the company after rejecting C"*" """" ##"* "*"

succeeded by N;hn H, $aeger, vice an offer earlier in the year. pre.sident Ma'rketing & Customer Ser- """" * "" "E " ^

• As one of nine utilities that own the vices, and former vice president of the

• Robert J. Shos hn is appointed vice ,

mine-mouth Conemaugh Electne Gen- company's Susquehantia Division president-Power Production & Engi-erating Station in western Pennsylva-

• Edward M Naget vice president- """"E #"U' C 3d" h ,

nia. PP&L commas more than $41 1ederal Policy, reures after 39 years

• Federal Energy Regulatory Commission 1 million as its share of new pollution wah PP&L gives fmal approval to a $41 milhon in-control equipment there Conemaugh crease for PP&L w holesale customers

• The Nuclear Regulatory Commission will be one of the first plants m the PP&Ls nu' clear emergency re-

• Chfford L AlexanderJr, a PP&L direc-country to inst;ill flue gas scrubbers to [sponse organization high marks for its tor for I; vears submits his resigna-comply with the 1990 Clean Air Act performance in an exercise held in co-tion effecove Dec 3L 1991.

amendments.

operation with sute and county emer-

• V ilham E Hecht is named PF&L,s

• $usquehanna's two units generate a gency groups and the 2" municipalities net B % biWon kilowatt-hours of elec-president and chief operating officer in the Susquehanna plant emergency as John T. Kauffman rehnquishes tricity during lWL a plant record.

planmna zone I

the title of president, while continuing

• Despue a rash of generator problems j as chairman and chief executive that affected three major units m the 1 officer The board of directors chooses Lvember last quaner of the year, PP&Ls fossil- '

the 23 year PP&L veteran as the com-

• Chaimun John T IUuf tnun usa, Chuga tuel generaung unas exceed their anul- l pany's seventh president after a year- ku Electric Power Co of Ihroshima. abiht) goal for the year.

s l

. SERVICE AREA PR0 file

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b.  % ennsthania Power MSM & Light Co., head-quartered in Allen-

own, Pa., provides electric service to approxinutely 1.2 million homes and businesses throughout a 10JMsquare mile area in 29 counties of Central Eastern Pennsylvania Ptincipal cities in the PP&l.

service area are Allentown, Bethlehem, liarrisburg.

llazleton, Lancaster, Scranton, Wilkes-Barre and Williamsport. The area is at the beart of the nation's largest industrial and commercial market area.

More than 'O milhon consum 4 lise within a 300 mile radius. __

P' CENTRAL DIVISION St!SQtitIRANNA DIVISION ' NORTIIERN DIVISION ,

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9

l COMMUNiiY INVOLVEMENT .

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$g$N M,sy (US&Ofj hroughout its nearly 7.? years o rate ik PP&L has been a leader in the communities it serycs. As part of their jobs - and as a big part of their off work hours - thousands of PP&L people have sought ways to improve the quality of life in Central Eastern Pennsylvania.

- As Chairman John Kauffman has sai6 30 many times while attending community events,

'The well being of PP&L is closely tied to the well-being of the communities we 3erve. We cannot be a strong, prosperous business organization unless we operate in a strong, prosperous environ-ment. The perception of the quality of life in our 10,000 square mile service area goes a long way in attracting people, business and new jobs to our area. The people who live and work here are special. They will determine what this area will be like generations from now."

PP&L people are committed to sharing their time, their experience, their leadership and

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COMMUN11Y INVOLVEMENT .

i themselm - in hundreds of organizations - to enhance both economic prosperity and quality of life in wamunities. PP&L people are an integral part of the economic, political and social structure of Central Eastern Pennsylvania.

At PP&L, community involvemeni means being a responsible and responsive corporate citizen, it means caring about cultural and civic values in our communities, and operating our business in harmony with those values.

Community involvement means corporate monetary contributions to organizations serving those who live where we serve. It means PP&L people providing leadership roles in L'nited Way campaigns and other community fund raisers; it means making useful community service a part of the lob descriptions of those who work closely with community leaders and economic develop-ment partners; it means encouraging employees to be involtru during their off work hours; and it j . . lt y x f

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COMMUNiiY INVOLVEMENT means setting a good example by making community service and involvement a corporate value.

Each year company employees nominate their fellow employees for one of six division cominunity service awards. One of those six is chosen for company wide recognition. Part of those awards include contributions to oraanizations of the winners' choice. Pictured on these pages are many employees who have won, or have been nominated for, those awards. Some have served quietly - without recognition or fanfare - taking their satisfaction in having made a contri-bution toward making someone's day brighter.

These people are the human face of a corporate entity. They certainly aren't all the peo-ple who serve. They are a small representative handful. For every one shown, there are scores more who make important contributions every day of their lives. These people are the essence of community involvement at Pennsylvania Power & Light Co.

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(.rayson Mt Nair. 4itc president of the Ichigh , ,

af Dhision. Allentown. kan . , -

born 6avulved with 5 4t outing nina e 194 lir' -

I han bren involved at the 4

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Minni Trail ( ount-il lead .

M rrmhip at'thitirs in tantp ing, adsantesagn(and leader training.

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f Heaults of Openstions than normal weither 1hc Comp.in) estimate.s that if noimal wrather had to n nptnenced in both ) cars, sptem saln for lW1 would har mercased by 4* milhon kwh (ner Fno Ed"'N8 .Vtual sn3 to residential and wmmercial etntomers in twl inurased Larninp per share of common stock were 84 01 in IW1. $3S5 in 282 mdhon kwh or 2 RA and 323 milhon kwh. or 3 8% rnpectacly.

1990 and fi.0; m 1989. MilJer than normal weather for the sewnd our Nu llowever, as prniously noted, sales puformana in both year in a row, coupled with the additional preuures in 1991 of the 1991 and lwo were aJscrstl) aficcted b) nulder than normal weather, recewian, had an a.herse ellect on carnings incrgy salo aper enced with 1990 salo being deptewed nure than Iwl due to the weather during ntrtmely hot weather this past summer were not sufhcant to De Company e timates that under normal weather wndmons for both offset the impact of mild temperaturn that occurred dunng the hrst vean sales to residcntial and cominercial customen in IW1 would hac quarter and in December Larmngs would have been 12 cents per share intrceed Ni mdhon kuh. or 0(A and 238 mdhon kwh or 2 8" .

higher had there been normal weather. larnme for IWo were af fccted romcovely, our Pm by ntremely mdd weather and would have been 25 cenn per share he economic rnnuon deprnsed gnmth in saln to all categorin of higher had there been normal scather in the Comp.iny 3 suvice area ..etomers New urWc fanuh nome construction m the Companyi ser-Although there were weather ntremes dunng IVW. weather ended u;' vhc terntory was down 21 % in 1991 compared to IM Certain twing mea ured as ewentially normal for the enure year- cacgonn of wmmercial customen have shown the effats of the Dopite the impact of mild weather and the recosion, the 14 01 per emnomic unsertainn liowever. the largest impact of the rnession we share earned for 1991 represents an annual growth rate in earnings of in reduced salo la iridastnal customen, whkb dnimed 20n nulhon 5 3% since 1986. several facion have played an impartant part in that kuk or 4 0%, m FN1 compared to IVR

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carrungs improvement. Dese include aggressive marketing and The Company currently npera that the economic ruewion wd!

economic dewlepment programs, effectne cost management, and a conanue to adwtse!) affect energy saln m IW2. sptem saln in lW2 reduction in interest opense and dalJends on preferred and are currentiv forecasted to be approumately 29 H hdhon kuk an in-preference stock. crease of 'p4 mdhon kw h. or 2%, over IW1 actual spiem salm. but in addition, the Company) strong generating capacity enabled it t" only a M milhon knh. or 15% increve over 1991 weather normal-add another dimension of toenue beginning in 190, by entering intn id ulcs ne 15% nputcJ mstease in tw2 sptem ule owr IW1 several capacit) related transactium with other utihties. % cst tramac~ weAct normah/cd saln H substantiall) Niow the comparable percen-tiom resulted in net addmonal revenues in IVA of about 131 rmlhon- tue increets nocrienced in lWo and 1989, w hkh wete 3 0% and or higher earnings of about 2 cents per share of common stock, when U A rnpermelv-compared to Fv0 These transacuons increased 1990 earnings per share ' Ahhough slow ' ccononuc growth b anuupeed in 1992, marketing by about 7 cenn over 1989 and increaseu 1989 cartungs gr share by and econonuc development conunun to be a Lc) corporate mitiative about 19 centi One of the Compan) s goA b to shieve a specihed annual Inci of ad ditional energy saln from in marketmg and nononuc development flectric Im rgy Sales programs Thne addmonal sales generally will be reahzed our at leet sptem, or senice area, salts were 29 0 bdhon kw h m 1991, an in- a two-year period, and possibly longer if a maior commercial or m crease of 364 milhon kwk or i n, over 19W Two maior factors dustrial customer k imohed The levtl of additional saln numated adversely affected sales growth in 1991 - the weather and the tecn. from thne programs in 1911 was 436 % tmlhon kwh.

sion. Extremely mild weather deprnsed system sales in both 1991 and The Compami 1992 marketmg and economic derclopment goal b to 1990 primarily due to reduced use of electricity for heating by residen- achieve annual net saln growth of 435 mdkon kwh The IW2 goal tial and comniercial customers. System sales were down an estimated reflects the npectanon that there will continue to be slow economk 287 million kwh in 1991 and Gd mdhon kwh in 1990 due to milder- grawth in the Companyi scnice terntory dunng I?>2 During lWl, GAEtNINGS l npuuts - +

WEATitER-r

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l ftnnsyh.nia enacted legislation that subsuntially mcreased the in from the Martins Creek units and the sale of transmmion entitlementA bnlen of companin doing business in the sutt. The Company is con. net of foregont intenhange smngs w hlch are included in the Com cett ed that the ccrent in structure w til impede economic develop. panyi Energy Cost IUte MRL totaled $35 4 mdlion in lWl, $32 3 rnent in the state and may adversely affect related energy sales grow th- milhon in lWO and $23 i rmlhon in IW9. The Company currenth l The Company is unable to predkt ta w hat extent, if any, the current expects about 133 nulhon of rnenun from ihne transattions tn structure may ulumately be thanged to lessen the current tn dunng IW2 l turden on buunnses lhe Company is mntmuing to kok for opportunnin to dente adJF ,

C(nnpeution from other fuel sounes for certain eocrgy apphcations tional rnenues due to m strong pneratmg capaaty posioon The  !

he increased in recent yean The Companyi c!cctnc heat rnarket share amount of revenues from thtse t) pes of tramactium depends on many in new residenual comtruenon has dropped hom ~4% in 1989 to 69% factors, and it is diffwult to predict the arnount of rnenun the com i in 1991 The Companyi goal for 1992 is a % electric heat market pany will uhimately reah/c from the e tramacuum share m new inidential comtructton- Operating Rettnues Certam large cmtomen have comideredyclf generation of electncity over the past sneral ytan However, the Company has lost no sigmfi iieratin8 revenues increastd $190 a mdhon or 5 8% in 1991

' met im Ntads of changn m operanng rewnun from the' prior par cant load to customet owned generation Total dectric energy sain, w hich include contractual sales to other are een in the seeM Mow

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utihties, were 36 2 billion kwh in 1991, an mcrease of 519 milhon kwh, Changes in Operating Revenuo  ;

or 15%, compared to 1900 Contractual sales to other utihues primarily 1991 1990 1989  !

represent energy sold to Atl2noc City llecine Company (Atlantic). f.Whons q/ lutor s) ,

lultimore Gas & Electric Company $G&P1 and Jersey Central Power & Wholesale rate increase. $ 2.4 1 33  !

laght Company (JCP&ld pursuant to bulk power contracts whereby WpreWoon chango (8 6) '

these utilities purchase a specified percentage of the capacity and Sute in adjustment

, related energy from Company owned gener;:nng units Contractua! sale

• surcharge 22,0 20

, to other utilnics were about 72 bilhon kwh in 1991, or 2 2% higher Special bec rate credu than 1990 udiustment . . . . . . . (l6 ")

Capacity Related and 1Panstnission ketove.y of fuel and intitlement 1Pansactions energy wste '9.9 185 3 A' The Companyi strong generating capacity posioon has enabled it to Change in cetomer enter into a number of capacity-related tramactiom with other electnc usage 3H.2 C a 41 50 6 utihues. These transactium include- (i) the sale of (apacity credits but Contractual sales to no energ) to other utdities in the Penmylvania N w Jersey Manland other utihties . . . 9.1 03) 38 5 Interconnection (PJM) to enable them to sansly their'PJM' contractual Capacity related and ,

c.ipacite obhgations;(ii) agreements uith both PIM and non PJM tramnuwion entitlement utdities for the reservation of output dur" *t'ain periods from the tramactionwnet 3.1 M9 23 3 Companyi Martins Creek units with ,ac op'ti 4 to purthee energy Other. 2.0 (3 2) (53) from those umts; and (in) arrangements whet 9y other PJM utihtin can lou! - - -s140.0 sii 3 s149 3 purchase the Companyi enutlements to use ti.

• PJM tramminion system to import energy frorn utihues outside ti r PJM. Tanffs subject to Pennsylvania Pubbe l'nhry Commission (PlO Revenues from the sale of capacity credas, the reservation of output furtsdiction accounted for approximately m. of the Companyi

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revenues from energy sales in lWl. 't hc remaining 16% of sut h January 1, IW1 Pnot periods h,nt hetn inuud to tonform to the  !

revenun resuhed from sales regulated by the Fedeia! fnergy Regulatory current prestnunon see liruncial Nott P for adduinnal mtornu 1 Commiwon (f ERC) The ILRC also regulates interdunge power tales. uun con (trning the redawihcation and informauon conterntng the ,

whkh arc clasified as a credit to operating expenses. future retimif anon of all mterthange power sales to operaung i liilhngs to customers under Pt'C jurishction indude: (0 base rate tornues charges; (11) the ECR which is a supplemenul charge or (redit for fuel in lWL the ntt rost of rncrgy was IW mdbon. an inatee of $7  ;

and other energy costs over or under the locis included in base ratet mdiion mer IWU The incrent was due to additiorul purchaso of '

(iii) a sute tax adjustment surcharge (9 A%) whah ad!usts reuil enctp from non utibt) generaung companics and leu energy mlJ to customeri bills for the effects of thanges in sute um ratet anJ (is) interconnected unhoes resuhmg from an mcrece in the av.nlabihty of begmnmg in 1991, a special bne rate credit adiustment (SliRCM that nuclear generatmg capacity of iritetuinnected unhan The mcrene we i flows through to customers the effects of cerum nonrecutting items partiall) offset by a dcurase in short term power purc hned in>m other See fmancial Note 3 for additionalinfomation regard ng rate manets unbues and the termmanon on Icbruary L IW1 of an agreement The Company has an objective of not inueemg Pl'C lurisdicional wherthy the Cornpany purtherd a portion of A!!cgheny 1.lecaic base ratn for elecificity until at least the 17419M penod. This prict Cooperstitti share of the output of the 5usquthanna nmlear fue:rd stabihty will help foster pro 3gnty among communion sersed and, at sution -

the same time, enhance the Companyi financial strength through in- Output from the Companyi generanng units in lWI wa 416 bilhon (reased energy saln. The last base rate incease for Pl'C juri3dictional Lwh, a dentee of 0 4 bilhon kwh compared with IWu The drucce cu(tomers went into effect in Apol 1985. was due punupally to trduced output from the Company) coal fired IH!bngs to itkC jurisdictional customers, enludmg contractual sa!cs umts caused by extended outagn at intral large urutt partulle of fset to other uuhtin and upacity.rrled and transmission enntlement trans- by the record output hom the Susquehanna sunon The Companyi actions include base rate charges and a supplemental charge or credit share of Susquchannis generanon wa 14 3 bilhon kwh, an mcene of  ;

for encrgy costs over or under the levels included in base rato in 10 bilhon kwh. or "% ocer the IW record March 1991, the Company filed with the FtRC a base rate matase re- ,

quest of about $41 milhon, or 9 65% on an annual bois for 11 RC lurisdicuonal customers, which became effective Ma) 19, lo91 The last Min 0/>nanon, Maintenanu and &fminuun base rate increase for iFRC jurisdictional customers went into (ffed in Other operahon cmts incrcred $30 5 milhon. or 'l% over two Ikctmber 1988 pnmanly rcCu tmg increets in wago and herafits and higher (mts Contractual sales to other utshoes are regulated by the FI RC Sales to mouated with operatmg the susquehanna station The Company, in Atlantic, liG&f and JCP&L are made at a pnce (me'nng the Companyi addressing the increases in wages and benefits he plans to reduce the cost of service, including a return on investment, Energy saln relaung number of full ume employees by approsimately M to about ',500 to the reservation of output from the Martins Creek uniti and energy by the mid loons This reduction is npected to come pnmanly from sales to catam utihties are generally made at a pnce equal to the cmt normal attnuun of fuel plus an amount to reacct foregonc intnchange savings. The amortintion of the deferred cost of power plant spare parts is Capaaty related and transminion enntlement tramactions are also credited to rnamtenance expense on the Comohdated Sutement of In.

regulate'd by the FERC and are made at pnces negotuted b5 the Com come bee hmer Plant spart Pans on page 19) l uludmg ihn amortia i pany and the purchaser, subject to a pnce cap accepted by'the f ERC tion, mamtenansv cxprmn increascd b) Il 1 milhon in lWI or o %,,

compared to IM Nel Cost of EnerU lhgher deprecanon m IW1 reficcts the scheduled annual inacase Energy salo to terum utthties, prniously included in interchange assocuted with the muhod of Jcprecunng the susquchanna nation power sales, have been reclawified as operaung revenues, ef fccute as of and the depreciation of new property, plant and equipment placed in mi sta a m. , s .m N8W m ,a,,

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semte As appnited by the Pl'C and the IIRC, the deprecianon ct tamed bdh c!!cstnc AprJ IW1. anJ the annual anium< anon applaable pense for the Susquehanna suhon willincrene annually through the to wholesale customers a rtficcted in the base rate m(reast elkcin(

year IWH DegirInlng in IM, dCpreclJuon is gheduled to suitch to Ma) 1991 the straight hne method at a lescl subsuntulh Ic s than the amount Financial Condition expected in tws Capital 12penditure Requirements lhe sc hedule below shows tht ( ornpanyi actual upjul espc nditures in August lWl, Ptnn9 anu h cructed legalanon that increased the Or clmnc utdm ogme br the gn low lwl and current projec-Company) sute tnes by approumate!) 13M nuihon on an annual baus ne br the M 190Mm Dinstrutnon expenditures donng the The Company n retntnng substamu!!y all of the inc reastd sute tac' scan tw9 IWI totaled about loos nulhon and are expected to be through apphuuon of a surtharge on bdhngs to rcud custumers and atuut il 2 bdhon during the )can 1992 hr4 through bdimgs for the (ontractual sale of capacity and related energy to othct utdines financing and liquidity The Tax Reform Act of 1986 repeakd the imcstment in credtt Dur-M die mn 190 pll. tk Compnv Murd IW mdhon of long I ing 1991, the Company udh/ed the remaming $16 nulhon of preuousi) term dcbt ind put IS nuihon of (ommon sta k and aho incurred l unused tax (reits to rtduce its federal income ux habihty liso mdhn d oMgauom under capital lenes (pnmardy nuclear fuch Dunng 1991, the Compnis pnmary source of upital was from intcr.

1/nancing Cons nally genuated funds The company aho sold $150 rndhor pnnapal The Compan) has conunued to take advanuge of opportunmes t" amount of fint mortgage lond m a pubhc offenng and ioued IK reduce its finanting costs dunng the yem 19W 1991 by the retirement milhon of common sto(k to ' te implovce 5to(k Ownership Plan Dur-of long term dtbt and prektred and preferense rtak with ush from ng the scar, the Company r . ired fil9'nothon of short term debt, $37 operanon3 and refmanang at a lower cost Interest on long ttrm debt mhhon UIlang tenn ebthd 119 mdhon of prefened stmk.

and dindends on preferred and prefrience stock have decreased by IH After the paymcnt of dividendt internall) gencated funds durmg the rnilhon from 1320 nothun in 19M to 12" milhon m IWi- gm 19911994 are currendy espected to provide approunutel) H5%

of the Comparni construcuon expcndnures Ibucr />lant Sparr Parts sales of secunues will be underuken danng the 199/ Im pctiod as Lflecthe January 1,1991, the Company began to account for cerum needed to mut the Companyi upiul requirements to retire matunng power plant spare parts usmg a deferred (mventoryl method Under thn long term debt and nreferred sto(k sinking fund requiremeno and to method, purduses of spare part3 under imentory control are included provide funds for the urly retirement of tugh wst secunoes if such in an mventory aucunt and then (harged to the appropnate capiul or retirements are determmed to be appropnate in the lyht of market con expeme accounts when the parts are used or consumed Prior to IW1. danns and other facton power plant spare parn were generally cnher opiulized or charged to The Compny s abihty to issue secunnes dunng the nest three 3 ears expeme at the ume of pun hoc. b not expected to be knuted by earnmp or other nsuante tesh lo The January 1,1991 cost of these spre parts was $116 8 mdhon. Tha enhance Unanong Ocubihty. a $16' mdhon remhmg utda arrange-amount was rnorded n an increase m the materiak and supphes imon- ment is mamtained with a group of banks and b used pnnup!!y as a

, tory account on the balance sheet at January 1.199L The anocuted in- back up for commercu' paper asued h the Company The Company come sutement effret was deferred and is he ng amorti/cd as a creda aho nuinue a $5 nulhon bank kne of atJa A subsidury nuinums a to expense user a fne-year period 1he annual amonizauon apphuhle $10n milhon revoking uetht arranytment. No lurrowings were oub to reuil customers n induded in the %DRCA utdit apphtu to em- sundmg at the end of M1 under these arrangements Capital Expenditure Requirements (a)

-- - ktual - />ma ted -

!989 1990 199; 1992 1993 1994 (thUun of lhllarn Construt tbin espelkhturrs Cientraung Ia( dities . IlO9 Ilhl ll24 II23 5 95 5 95 Transmission and dntribution facihues 131 is 165 186 194 200 Fnvironmenul . 15 to 11 lb 52 98 other 25 23 37 56 60 42 2%O 2% 33? 38) 39] 435 Nuclear futt owned and leased 34 53 il 6 59 4 Other leased property 12 18 l' 23 21 22 Total IW li;9 849; lu9 5#1 1502 co tapaal exnndaure puns are rensed from ame to ome to reneu dungrs m condmons Ac tual expenditures may s ar) tnirn th(we prtge(ted because of (hangn m pbs. (ost Out-tuanons emironmental regubnons and other fx tors Construun m expendaurcs un lude AH' tic w huh b rxpcutJ to be less uun $21 mHhon m rah of the tran !"92 IW i El

I 1

1 In De(ember lWl, the Company's lloard of Directors authorized a ruusi meet more strmgent Phae 11 enmon inch by gnuary 1, Not l two forone spht of the Company's common stock and an m(rease in in adJtuun, the kplanon Apenfin the ummg for u,mphAn(c wnh the the authortrcd number of shares from A00nmi to ln.00n,000, sub nitrogen oude enuwion knutations set forth in the aud rain prousions ject to shareowner and Pl C approval The Company w dl seek Pl'C About %% of the Company 5 coal fired generaung capacity must approval in early IW2 and sharrowner approval at the annual share- meet the Phase i sulfur diotide standards lhe Company expe(ts that it owners' rueenng in Apnl IW2. If approsed, it would be the Companfs wdl be able to meet those standards bs the use of low sulfur wal. aJJe first stock spht since my 1959 and will bang the prke of the Com- tional procewing through uial cleanmg pbnn and the mstalbuon of pany) stock .nore in kne wnh the current sto(k prises in the electnc scrubbers at the Conemaugh sution, in u hhh the Company las an utihty industr). 113+y, ownership internt. In idJnion, the Company expects to install Liw-nitrogen oude burnen on the units that muu meet Pluse I sun.

Ccrrent finanefal Consf/flon dards The Conpany may also choose to hmit the capaat) bcton of The Companyi useral1 financial condmon rematned strong in IWj certain of its auetted units and, to the extent permmed by the leph Earnings per share of (ommon stock of 14 01 eweeded bst year's carn. t on, uke advantage of traJmg emnsion alhiwances among as ings by 6 cents per share farmngs performance for 1991 and IWO was generanny units or w nh other utilnics advers'ely affected 12 cents and S cents, respectMiy, by nuld weather The Company (urrently esumates that the cost of comphance wnh The dcchne m the powth rate of scather.normahred energy saln the Phase I acid ra n standards will rtquire an increase in customer reflects the effects of the recevion, particubtly on sales to industrial rain of about 1% (based on lW1 roenut leulsk customers, and aho adversely affected the Company's earnings Tne To meet the Phase 11 standarck the Company expects to mstall n rub-Company earned a 13 42% return on average common equity dunng ber on about M% of as coal bred geneutmg opnity as well as to 1991 The allowance for funds used doiing construction ( Af t'DC), a continue its Ph.nc 1 comphance acuvmes for the bahnce of its coal non cash credit to income, accounted for only about 4% of earnings fired generaung capacny in addnion, the Company expects to insull Af t'DC is expected to remain tow through th'e mid 1990s During the' lotv narogen oude bumers on the habn(e of its coal-f nd generaung btter part of the lW0s, when the Company will be malmg capital capacity. T he cost of comphance with the Phase 11 standards a current-expenditures to comply with the recenth' enacted clean air k gisbtion, ly esumated to require an increase in customer utes (based on lW1 the amaunt of AFUDC is expected to fac'rnse. The amount of All'DC revenue loch) of about 4% atore the mercase expected to result from recorded will depend on the timing and level of construction work in Phr.c 1 comphance wuh the aud um provisions of the legisbnon progros as wdl as the rate treatment afforded the capiul expendnurn The Company currently expects that capiul expendnutes of a!out required to comply with the clean air legislation. Pennsylvania bw cut. 1130 rni! hon On 1W1 dolbr9 will be required through the beginning of renth' alkms construcuan work in progros to be chimhd in rate base IW5 to comply with the Phaw I acid ram requnements and that an ad for such expendnurn. daional 500 mdhon (ako m 1991 dollar 3) will be required in the rniJ.

The ratio of the Company's preux income to internt charges in. to ble lm to comply with Phase il acid ram requarments l'nder creased sbghtly from 2 9 times in 19W to 31 times in 1991 The Com. current Itnn9lvania bw, construenon work m progrew for non pany has increased common stock daidends each vrar from an annual rnenue producing aucts. such as capnal expendnurn for pollunon per' share ute of 166 m 19H9 to 53.10 in 1991. The rano of the market cor, trol equi ment, can be cbimed m rate base price to book value of common stock was IM, at the end of IW1 The IWO epbnon aho adJrenes geographial areas that do not compared to 119% at the end of 1990 meet fedeul ambient ozone uandards The legnboon pnni.les that all suto wtthm the Northeast Ozone Transport Rcgion Urom New Engbnd Columbu) must require krrnination of Coal) lining Operations to areasavadable of Virg'nia reasonably controlaJycent technolog)to the District of;F) on all suti (RAC The Company is closit g tts subsidiary coal:ntmng operations due of nitrogen oudes wnhin the Region by May 19% It h expect'ed t!ut principally to the depletion of coal reserves and the high cost of mined Penmylvanu will define thn as loorutrogen uuJe burners similar to coal as compared in the price of coal purchased oo the open market those alavdy pbnned by the Company to mec; the acid nin re-One of the thnt opconng mines was shut down at the end of June quirements of the legislation if such a' detennmanon is nude N "

1991. and 'he o'he- two are scheduled to dose by the middle of 1992 s>lvanu, the Company would base to advance the instalbtion of the The imestment in coat, raining equipment and oiber facihtie5 lornurogen oxide burners, with a currently estimated cetal cost of amounted to about lin rnillion at December 31,1991, a decrease of h $110 milhon On 1991 dolbro and pbnned for 1%4 H com-about $20 mdhon from the end of two. The Campany expects that at phance, to meet the May 1995 deadhne. The Company numates that the time the mines are shut down, the subsidiaoes remaining in~ the wst of comphance wnh the RACT proviuons couki requue an in-vestments in coal, nuning equipment and other bethties will have been crease in customer uta of aluut one half of P; tbased on lW1 induded in the cost of coal purchased by the Company and recovered revenue level 4 These estimated cosa are based on the Compans s through encrpy costs collected from customers llowever, the Comp.my prehminarv tTaluation of the ambient ozone prouvons of the le'gbla-cannot predict whether regulatory action, propwed legnbtion rebted tion and would be m addalon to the increase dncuwed abose for com-to heahh care benefits for miners or other nena could have an adscrse plunce with the Phase I acid rain provnions, impact on the Company's earnings. - The lepbuon aho requues modchng studies concerning the imnact The Company will repbce the coal produced by its subsidiaries wnh of nitrogen oxide emnsions from pmer plants hicated in the Nortlicast coal acquired through new contracts with non affiluted supphers and Ozone Transport Region. If the resuhs of those modehng stuthes in-open market purchases dicate that further nitrogen oxide emission reductions are required to meet federal ambient ozone sundards, the Company may be required Clern Airlegislation antf Other EnrironrnentalMatters to tosull in the bst half of the IWos addnional equipment to reduce in November 1990, federal dean air legislation was enacted that nitrogen oude emissions if it should be determm d that the installa.

deals, in part, with acid ram and atuinment of fedcol ambient ozone tion of such addnional equipment is reqmred, the Company's sundank. Under the acid ram provisions of the legisbtion, sulfur diox. prehmmary evinutes mdicate that the cost of con phance could require ide enussions must meet specthed Phase 1 Ictek by January 1,1995 and capnal expendecs of up to 5%n million hn 1991 dollars) and an in-El

e create in nistomer rates of as much as A (berd on lWI revenue remedunon work at sites currently unJcr review. or at uses (urtrntly leve! ' N: otimated emts would be in addition to the amounts unknown, may resuh in substantui operatmg wsts wbnu the Company discussed anne for comphante with the acid rain and the RAC1 o/one cannot reasonably unmate at thn tune provisiom of the legolation. In comph mg with sutuin, regulatiom and A uom 19 regulatory Until action has been taken by the approprute regulatory todies. the bodin imuh mg environmenul matters indudmg the areas of water Company will not be anle to determine the cuct method of com- and air quahty, hnardou and suhd wete handhog and drpisal and phance with the acid rain and ozone prosisium of the legalation, or toxn sutr tances the Company nuy be reymred to modity. replace or the wst thereof and in impatt on customer rates uase operaung (criain of its faohnes The Company may aho incur The Company has disancred groundwatcr degradauon at the Brun- substantul capital cxpcnditures and operaung expenses in amounts r er Nand steam electric 3unon. The degradanon is attribuuble to fuct whhh are not now dettrminable.

oil which has leaked from undergneund facihues and to seepage from cml refuse and dnNnal areas rd from the stationi cual storage ple.

The Company ako dacoveted in lwo that bag bhen, used to tup ny industry Restructuring Initiattws ash from the plant and prniously deposited in an ash basin. leath out The Department of inergy in devtlopmg a nauonal energ) strategy cadmium in sufhcient quantines undct laboratory wndiuom to clawify the i f RC, the la Congreu and others are woudenng (cruin ivucs thern as hnardous waste under Prnmyh'ania Department of i n- whnh could ugmhcantly affc(t the nrutture and compeutive busincu vironmenul Resources (DLR1 regulanom The Company is currently environmrnt of the electoc utihty industr) T hese isson indude, among negotiaang a Con ent Order with the DER to addttu these issun and othen, transmission systern access. voluntary biddmg arrangements for is proceeding to develop and implement various remedul action plans pnnid ng new generating capaaty and amendment of the Pubhc l obty intended to address these ddferent degradanon sour es similar but leu lloidmg Uimpan) Act of 14M (PlllCAL mainl) to create a new clau of subsuntu! groundwater degradauon may exist at some of the other independent pmer producers that would be exernpt hum Pl'ilCA power pbnts regulanon The Company is unable to predKt the ultimate outwmc or Since 19W, the DiR has been considering a program for the han the impact, if anv that these imtiantes rnay have on the Company) dhng and disposal of mdustful(or rnidual) sohd waste The DER has operatiom However. the Company beknes that its strong generating proposed regulanons for this purpoc, wiuch are expected to be hnal capaaty pation, cornpeutnely poced electriaty and gmd customer by rnk!1992. The final icgulations are currently expected to require the senice pl.ne it m a posinon to adapt to changes that rny anse from Company to submit detaded informanon on waste gener uon. these imuathes minimization and disposal practices. The final rtgulations are aho ex-pected to require that the Company repermit existing ash basm3 at all of its coal fired generating sutions'by applying updated sundards for Anunung Rafements W M Mopted waste daposal in heu of insulbng imen and leachate collecuon The linancal Accounting $undards Board (TAsH) has iuued three ac-qNems f9 r apoundments the regulanons would allow the Com- mintmg sutements that the Company has not yet aJopted The effer.

pany to continue to operate an existing ash basin if it can meet the uve date of one of these sutements. $utement of Imancial Accountmg regtulatory uitcria for demomtrating that the facihty is not polluting Standards t%I As) % ' Accounting for Inwme Tnes" wha h was to groundwater. Any aih basins that cannot be repermitted will be re- become effective for focal ) cars begmning after December 15,1991, has quired either to close within five yean or to ble an abatement plan. been deferred until fiscal years beginnmg after December 15, 1992 Any new ash bastn must meet the rigid site and design sundJrds tx- because the IA$B has issued a proposed sutement that would perted to be set forth in the hnal regulation in addition, the smng of supersede sl As 96 and modify coruin of its prosisions Under both the future faahties and waste handhng methods at Company facibues could origmal sutement and the proposed sutement, the Company would also be affected have to record an additional deferred ux habihty for tax benchts The Company currently e91 mates that about $1% milhon of capul previously flowed through to customers and for other temporary tax exprnditures could be required to correct groundwater degradation difference ( The increased ux liabihty would be offset by a wrrespon-problerm at the Brnner bland sution and to meet the residual waste d ng asset representing the future revenue expected through the disposal regulations in the form currently proposed by the DER. raicmaking pn(ess to pay for the taxes Changes to the Anal regulations may lower these costs Such expen- The second sutement, $1As 106, ' Employer's Acwunnng for ditures during the years 1992-1994 could toul about 152 milhon of Postretirement Benchts Other Than Pensions," effecove for hscal ytaa u hich about 59 milhon B included in the Company's estimate of beginning after Dttember 15. 1992, inmlves new requ rements for ac-1992-1994 comtruction expenditures shown in the tabulation on page counting for the costs of pistretirement benefits other than pensions

19. Actions taken to correct the Brunner bland groundwater degrada- The sutement requires acuual, during the ) cars that the employees tion problems and to comply with the DER's proposed regulations are render the necessary service, of the expected cost of providmg tho(e also expected to result in increased operatmg costs in amounts whkh benehtt in 1991, caps were estabhshed on the amount the Company are not now determinable but could be substantial will pay for ret ree health care cost for all employees who retire on or The issue of potential polychlorinated biphenyl(pCB) conumination after April 1,1993. Based on prehminary actuarial studies, the Company at ceruin of the Company's subsutions and pole sites is currently being estimates that its accrued cost for postretirement benefits other than pursued by the DER. In this regard, the DER sent the Company a pro- pensions will be approximately $25 milhon m 1993 This compares to pmed Consent Order under which the Company would awess and, if an esunuted cash payment of about SH milhon for those benehts in necessary, remedute sites where pCB conumination may exist. The W93. These amounts are preliminary estimates and are subject to Company is continuing to negotiate with the DER The costs of address- change as more dehnitive analyses are performed ing these pCB issues are not now determiruble but could be subsuntul The third sutement, $1 AS 107, " Disclosures about fair Value of fman-The Company does nnt anticipate that the costs, w hkh will be cial Instruments," effccuve for years endmg after December 15, 1992, charged to operaung expense, for work currently planned to clean up uires disclosure of the fair value of financialimtrumenn or remedute known sites involvmg the removal of haurdous or taxic req'Ihe Company does not intend to adopt these new statement subsunces will be material in amount. However, future clean up or their effecthe dates il

INDEI 0F FINANCIAL DATA i

l Independent Auditors' Rep >rt , 22 f Management's Report on Rt sponsibihty for 1 inancial butements . 23 Financial Sutements Consolidated Statement ofIncome 24 Comobdated Statement of Cash Flows. 25 Consolidated llalance Sheet 26 Censolidated Sutement of $1unuwners' Common Equity . 2H Cortsolklated Sutement of Preferred and Preference Stoc h 28 Consolidated Statement of Longterm Det>t . 30 Notes to financial Statements 31 helected haancial and Operating Data . 12 Stureowner and Im estor infernution .

• Quarterly hnanelat Common Sta k Price and Dividend Data C INDEPENDENT AUDITOR $' REPORT-Deloitte&

Touche a

lb the Shareow ners and Bo,.rd of Directors of Pennsyh ania Ibwer & IJght Company:

We have audited the accompanying consolidated balance sheets and statements of preferred and preference stock and long term debt of Pennsyh ania Ibwer & Light Company and its subsidtaries as of December 31,1991 and 19m, and the related conso!idated statements ofincome, shareowners' common equity, and cash flows for each of the three years in the period ended December 31,1991. These financial statements are the responsibihty of the Company's matugement. Our responsibility is to express an opinion on these fmancial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards Those standards require that we plan

. and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstate.

. ment. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presenution. We believe that our audits piovide a reav nable basis for out opinion.

la our opinion, such consolidated financial sutements present fairly, in all material respects, the fituncial position of the Itansyh ania Powee & Light Company and its subsidiaries at December 31,1991 and 1990, and the results of their operations and their cash flows for each of the three years in the perk)d ended December 31,1991 in conformity with generally accepted accountingpit etptes.

NN164 Parsippany,NewJersey February 3,1992 E

uARAGE Eji'l REPORT 05 RE8P0581 Bluff FOR filANCIAL 81ATENENil The management of Pennsylvania Pou er & l.lght Company is Thelioardof Dire (tof 6,actingthroughits Audit Committre, respmuble for the preparation, integrity and objectivtt y of the oversees managemt nt's responsibuities in the pnparation of ihe consolhtiled fmancial statements and all other secuons of this haancial statementt in perfornung this functun, the Audit annuai report. T he hnancial statements were prepared in accor. Committee, w hich is c omposed of five independent directors, danc e u ith generally ac( cpted accounting principles and the met ts periodically with inanagemt nt, the intet nal auditors and t'niform $pte m of Accounts prescnbed by the i ederal1:nergy the independent (ettihed pubhc accountants to review the Regulatory Commission in preparing the financial staten,ents. wor k of cat h. Deloitte & Touche and the internal auditors has e management makes informed estimates and judgments of the tree accru to the Audit Committre and io the lioard of Di-expected effects of etents and transactions based upon current - rectors, mthout management present. to discuw internal ac-ly available facts and circumstances. hianagement bc heves that ( ounting control, auditing and financ ial reporting matters the fmancial statements are frec of material misstatement and hianagement also recognizes its responsibiht y lor fositting a present fairly the financial position, results of oper ations and strong ethic al( hrnate so that the Company's af fatts are con-cash flow s of the Company. ducted according to the highest standards of ;wrsonal and cor-The Company's (onsohdated financial statements have been porate conduct. This responsibthty su hara( tcrized and re-audited by Deloitte & Touche, independent certified pubhc ac - flected in the Company's 5.tandards of Integrity, w hit h is countants, whose repor t with tespect to the fmancial statements pubhcized throughout the company. The Standards of integrity appears on page 22 0f this report. Deloitte & Tout he's appoint- addrewet the nc(cuity of ensuring open (ommunication rnent as auditors was previously ratified by the sharrow nert withm the Company; potential conflicts of interest, proper pro.

hianagement has made available to Deloitte & Touche all the curement acuvities, comphance with all apphs able laws, in Company's financial records and related data, as wc!! as the duding those relatmg to financial disclosure, and the mnfi.

minutes of sharcowners' and directors' rnectingt hianagement denttabty of proprictary information:The Company maintains a beheves that all representations made to Deloitte & Touc he dur- systematic program Io aucw mmphance wnh these policies ingits audit w cre vahd and appropriate.

The Company maintains a system of tnternal control designed to provide reasonabic, but not absolute, awurance as to the in-tegrit y and rehabihty of the financial sr.nementr., the protection of auets itom unauthorired use or dispmition and the preven-(_ 1X phu_)

tionanddetectionof fraudulent Anancial eporting Thecon- --

cept of reasonable assurance recognizes that the cost of a sptem of internal control should not exceed the benefits derived and that there are inherent hmitations in the cffcctiveness of any John T Kauffman, r alt trol system is the selection and train-ing of quahhed personnel, an organirational structure that pro-vides appropriate segreganon of duties, the utthration of written pohcies .,nd procedures arJ the continual monitoring of the system for compliance. In addition. the Company maintains an internal auditing program to evaluate the Company's sptem of internal cont rol for adequacy, application and compliance.

hianagement considers the internal auditors' and Delott te &

Touche's recommendations concerning its system of internal /f .

control and has taken actions which are believed to be cost- VL tAA effective in the circumstances to respond appropriately to these recornmendations Management believes that the Company's system ofinternal controlls adequate to accomplish the objec. C. L Ruwoli, tives dtscussedin this terort. Executice \*uel'residentamlCbwff mamialofficer D

e C0880LIDA'TED li ATE #Eli 0F INCOME 1991 1990 1989 (ll.omamis ofIbollars)

Operating Revenues (Notes t ,2,3 and l7) . . . .. ,. $ 2,5 59,696 $ 2.419.717 32.376,455 .

Operating E> penses Operation Fuel. . ...... .. .. .. . . 586,325 579,272 625,993 Powerpurchases . ... .. . . ... 256,320 228,336 171,437 Interchange power sales (Note 17) . . . . . . . (l

_ 80,2_31) (217.546) (255,987)

Net cost ofenergy . . .... . .. .

662,414 590,062 541,443 Other . . . . . . . . ...... . .. .. . .

461,133 430,681 411,525 Maintenance . . . ...... .. .. . . 206,861 223,528 234,063 Depreciation (Notes 1 and 4). . . . .. .. . . .. 246,212 234,252 222,536 Deferred depreciation (Notes 1 and 4). . (7,047) (15,707) (23,475)

Income taxes (Notc H). . . . ... ... .. . 217,366 196,301 207,189 Taxes. other thanincome(Note 8) . .. . . , 190,426 170,234 164.324

[1,977,365 1,829,351 1,757,605 OperatingIncome . ..... ... . . . .

582,331 _

590,366 618.850 Other Income and(Deductions)

Allowance for eqmty funds used during construction (Note 1) . .... .. ....... . 2,961 3,512 2,728 income tax credits (Note 8) . . .. .. .. 903 2,174 3,514 Other-net . . . . ... . ..... .. .... .. . . 7,616 5,903 4.227

_ 11,480 11,589 10.469 IncomelleforeIntee. : Charges ,. . . . 593,811 601,955 629.319 Interest Charges Long term debt ...... ... ....,.. .. .. . , 232,092 239,250 255,223 Short-term debt and other . . . ..... ,, ,... . . . 22,254 27,559 31,799 Allowance for borrowed funds used during const ruction andjnterestcapitalized(Note l) . . . .. ... (8,949) (8,760) (11,139) 245,397 258.049 275,883 Net Income . . ..... .. ...... . .. . .

348,414 343,906 353,436 Dividends on Preferred and Preference Stock .....

44,687 46,125 48,418 Earnings Applicable to Common Stock . .. . .. . . $ 303,727 5 297,781 5 305,018 Earnings Per Share of Common Stock (a) . . ., , $ 4.01 5 3.95 ~ $ 4.05

Average Number of Shares Outstanding (thousands) .. .

75,691 75,462 75,314 Dividends Declared Per Share of Common Stock . . .. $ 3.10 $ 2.98 $ 2.86 (a) Dasedonaveragenumberof sharesoumanding.

See accompanying Notes to Financial s'atements 54

C0580Ll0AIE0 ti ATERENT OF Calli FLOWS - -

1991 1990 1989 (1hnnands c,Jlwllars)

- Cech Flows From Operating Activilles Net income . . . . . . . .. .........., ... ............ . $ 34H,414 8 343.906 8 353,436 Adjustments to reconcile net income to net cash provided by operatingactivities Depreciation . . ........... ., .. . .. .. . 261,180 242,661 220,373 Amortization of property under capitalleases . . .. .. 96,565 90,701 82,138 Amortization of deferred cost of power plant spare parts . .. (17,H18)

Deferredincome taxes andinvestment tax ctedits . . . . . .. . 5 2.11 H 81,509 106,693 Equity component of AFUDC . . .... ... .. . (2,96I) (3.512) (2,728)

Change in current assets and current liabilities Accounts receivable . . . ............ . . . . (14,3H0) 15,627 (1,788)

Unbilled and refundable electric revenues . ... .... (45,725) (5,042) (22,927)

Materials and supplies (Note 16). . . . . . . ...... ... ... 1.200 1,793 499 Fuelinventories. . . .... ..... ,, ...... . . .. . 25,887 (8$,379) 6,445 Accounts payable . . . . . . . . . . . . ..... . . (lI,H35) 9,397 (6,457)

Accruedinterest and taxes . . ... ... ... . 17,H58 (14,086) 13,862 Other...... ... ............ . .. .. . . . H,012 33,015 (38,776)

Other operating activities-net . ... ..... . .. .. 49,432 42,760 40,186 Net cash provided by operating activities ... . 767,947 753,353 750.958 Cash Flows From Investing Activities

Property, plant and equipment expenditures . . . . . . . . . . . (374,397) (337,995) (307,688)

Proceeds from sales of nuclear fuel to trust . . . .. .. 48,914 30,014 31,809

' Financialinvestments . ...... .. ... . .. .. .. (50,876) (43,052) (3,513)

Otherinvesting activities-net . .... ...... . .. . ... . 4,191 7,093 5,715 Net cash used in investing activities . .. .. ... (372,I68) (343,940) _(273,677)

, Cash Flows From Financing Activities issuance oflong term debt . . . . .. . ........ .. . 150.000 375,000 issuance ofcommon stock . . . ............. .... . .. H,401 9,371 6,884

. Itetirement oflong terrn debt . . . . . . . . . . .. ... . . . ... (37.460) (l82,335) (350,300)

Retirement of preferred and preference stock .... ... ... .. (l9,100) (26,300) (28,300)

Payments on capitallease obligations . . . . ............. .. ... ( t 00,2 27) (94,461) (85,697)

Di viden ds paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (277,323) (269,186) (262,401)

Netincrease(decrease)inshort termdebt . ... .... .,, ,, .. (11 H,770) 170,511 (106,223)

Costs associated with issuance and retirement of securities . . .. (2,136) (13,347) (27,308)

Otherlinancingactivities-net ............... . ...... . (160) 95 (280)

Net cash used in financing activities . . . . ... .. (396,775) (405,652) (478,625)

. Net increase (Decrease)ln Cash and Cash Equivalents . . . . . . (996) 3,761 (1,344)

Cash and Cash Equivalents at Beginning of Period . , .... .... 8,508 4,747 6.091 Cash and Cash Equivalents at End of Perk >d . . . . . . . . . . . . . . . . . ., $ 7,512 8 8.508 $ 4.747 Supplemental Disclosures of Cash Flow Information cash paid during the year for

. Interest (net of amount capitalized) . .... . ... ... ... $ 229,066 $ 252,325 $ 255,425 income taxes . . . . . . . . . . . . . . . ... ... .. . . .. $ 154,136 $ 117,597 8 87,016 see accompanyng nres to Etna ncialstatements.

E

.- CONSOLIDATED BALAllCE lilEET AT DECilllER 31 .

Assets - 1991 1990 (nousaadwttwtian>

Property. Plant and Equipment Electric utility plant in service-at original cost . .... . ... $ H,300,914 $ 8,095,363 Accumulated deprecialion (Notes 1 and 4) ... . ... (2,304,266) (2,147,603)

Deferred depreciation (Notes t and 4). . . . . . 299,H4 8 792,848 6,296,496 6,240,608 Construction Wolk in progress-at cost . . . .. I H 3,24 2 143,084 Nuclear fuelowned andleased-net of amortization (Note 11) 197,794 238.360 Otherleased property-net of amortization (Note 11) . .

76,35l _

76,576 Electric utility plant-net . . ... .... .. .. . 6,7 5 3,8H 3 6,698,628 Other property-net of depreciation, amortization and depletion (1991,5135,050: 1990,5142,188) . . . 175,695 195,593

_6,929,5 7 H 6.891,221 Investrnents Associated compariy-at equity . . . . .. .. . ... .... I 7,I i 5 17,121 Nuclear plant decommissioning trust fund (Notes 1 and 6) . . 58,043 46,86i Financial investments (Notes 1 and 9) , ......,.... . I13,951 61,077 Other-at cost oriess . . .... ........ .. .. . ... .

7,511 6,587

_ 96,620 1 131,649 Current Assets Cash and cash equivalents (Note l) . . . . . . . .. ... . 7,512 8,508 Accounts receivable (less reserve: 1991, $ 27,655; 1990, $ 27,198)

Customers . . . . . . . . . . . .. . .... ........ . . . .. 183,735 177,153 Interchange power sales . . . .. ..... .,...... . .

I H,33 2 15,979 other ........ ...... ..... . .. . . .... 19,4 H9 15,292 Unbilled revenues . . . . . . . . ........ . .... .. . . 7 2,2 H 5 70,281 Fuel (coaland oil)-at average cost . .. . . ... . . I59,371 185.258 Materials and supplies-at average cost (Note 16) . . . . . . . . . I 4 H,4 31 32,845 Common stock held for dividend reinvestment plan-at cost (Note 10) . . . . ..... . ....... .... ... .... 12,225 11,384 Other. . .... . .. .. . ....... . .. .... .. 44,266 41.454

_ 665,646 558,154 Deferred Debits Utility plant carrying charges-net of amortization (Note 1) . . . . . 25,757 26,500 Unamortized debt expense and reacquired debt costs ..... . . 69,321 74,167 Other......... .... .. .... ,, .. .... . .. . .. .

_ 47,673 50,751 142,751 151,418

$ 7.93 4,595 $ 7,735,442 See acconsfunying Notes to financialStatements.

4 I

Liabilitics 1991 1990 (1botuands of D<4 tars)

Capitallration Conunon equity Contmon stock . . , ,. .. $ 1,3 5 H,091 $ 1,351,016 Capitalstock expense . ... . . . . . (12.187) (12,449)

I?arnings reinvested . . , .. _ 952,106 885.162 2.298,010 2,221,759

'< referred and preference stock With sinking fund requirements . .. . . 364,590 383,690 Without sinkinglund requirements . 231,375 231,375

1 ong term debt .. .... . . , .. . .. . 2,575,794 2,434,143 5.469,769 5,270.967 Current Liabilities Conunercialpaper(Note 13) . .. . . . . . . 74,000 209,000 Ilank loans and other notes (Note 13) ... . . .. . 73,170 56.940 t ong term debt due within one ycar. . . .. . . 6,439 36 453 Capitallease obligations due within one year (Note 11) NO,4H9 88,533

. Accountspayable . . . . . ... . , ..., . .. 105,211 117,046 Taxesaccrued ...... . . .... 4H,521 34,521 Interest accrued . .. . .. . . . 69,450 65,592 Dividends payable ..... . .. ... ... . .. 69,615 67.626 linergy revenues to be refunded . . . . ..... ... . 407 44,128 Other. . ...... . .. ........ . .. . ... 118,414 101,247 645,716 821,086 Deferred Credits and Other Noncurrent 1. labilities Deferred investment tax credits (Note 8) . . .,,.. .., .. 269,852 270,244 Deferredincometaxes(Note 8) . . ... . .. . .. 1,040,429 985,730.

Capitalleascobligations(Note i1) . . , . . . .

191,187 214.221 Unamortized cost of power plant spare parts (Note 16). ...,,.. 98,968 Accrued nuclear plant decommissioning costs (Notes 1 and 6) . 59,963 48,431 Accruedmineclosingcosts . ... .. . . ... ,. . 55,244 48,583 Other . . .. .. .. ...., .. . .. . .. . . 103,167 76,180 1,819,i10 1,643,389 Commitments and Contingent i.labilitics (Note 18) . .. .

$ 7,934.59 5 $7,735,442

' hecoccompanying.%otes tolinancialstatements.

El

Coll 0Ll0ATED STATERERT OF 8 HARE 0W8E88' COMMON E00lTV .

Cornanon stock Outstanding Capital htock I'arnings Sharce(s) Annount I spensc (b) Heinve6ted Total (1bouuuulwflh,ilan) llalance at Decemlier 31,198H 75,24 H,4 55 $ 1,334,424 $(12,672) $ 728.079 $2,049.831 Netincome . . ... .. .

353,436 Cash dividends declared Preferredstock , (37,H98)

Preferencestock . . .

(10,520)

Common stock ($ 2.86) . (215,386)

Stack redemption costs . .

(6,001)

Employee stock ownership plan (c) . , 174,281 5,H00 Other . . .. . .. 76 Italance at December 31,1989 . 75,422.739 $ 1,340.224 $(12,596) $ HI1,710 $2.139,338 Net income . . . . . . . ... .. 343,906 Cash dividends declared Preferred $tock .

(36,485) l' reference stock .. (9.610)

Common stock ($2.98) .

(224,H50)

Stock redemption costs . .

(1,479)

Employee stock ownership plan (c) . 22u.231 10,822 Other .. , . .

14' 11alance at Deceml>cr 31,1990 75,648,970 $ 1,351,040 $(12,449) $ H83,162 $2,221,759 4 4 x ,414 Netincome . . .... ..

Cah dividends declared Prefer ed stock ,. . 66.0i~)

Preference stock . , . . . .

tomin:

(244.02n; Common stock ($3.10) . .

Stock redemption costs . . .

(1;~)

Employee stock ownership plan (c). I ~H noa ~.oa; other .. .. . .... . 202 Italance nt December 31,1991 's.82 ~ 031 $ 1.3;x.091 $( 12.18~ ) $ 9s2,100 $ 2.298.010 (a) No par value. HS.ho(Un0 *.hnes authortied. f ac h sture cntitics die holders to one vt ot on any question presented to any shatrow ners' nicutng in December 1991, the board of director > authonrtd a tw o lot.one 3pitt of the Company'nommon sto( L and tnrrt ased the number of shaf en authoracd from H$ 000.000 to 1 ?0.(0U00. subject to sharrow ner and Prnnu itanta Pubbt etilu) Cornmisuon apptoval (b) in<ludes the nct untrahied lou apphoble to marketable kecurines (c) includes emplo)ce subsu1pttons

' CON 80Ll0 ATE 0 STATE 9ENT OF PREFERRED ARO FREFERENCE 81008 A,i DECEMBER 31 Shares outstanding Outstanding shares 1991 1990 1991 Authorised (Thousarnis of Dollars)

Preferred Stock- $ 100 par, cumulative (a) 4%% .. ,. . ,, .. . . . . $ 53,019 $ 53,019 530,189 629,936 Series ... .. ..... .. . . . _4_27,946 447,046 4,279,456 10,000,000

$ 4 HO,965 $ 500.065 Preference Stock-no par, cumulative (a) . $ 115,000 $ 115,000 1,150,000 5,000,000 Sec accornpanying Notes to Hna ncial staternen ts.

EI

Details of l' referred and Preference Stock (b)

Optional Sinking Fund Hedemption l'rottslons o )

Shares Prke Per Shares to he Outstanding Outstanding Sharc Hedeemed Hedemptlun 1991 1990 1991 1991 Annually l'eriod (lbosmonts ofIhollan)

With Sinkingl'und Hequirements Series Preferred 6.875 % (d) . . $ 50,000 $ 50.000 500,000 $ 106.88 100,000 1993-1997 7.00% (d) . . . ..... . 100.000 100,000 1,000,000 107.00 200,000 1993 1997 7.375% (d) . . . .. 50,000 50,000 500,000 107.38 25,000 1993 2012 7.40% . . . .. 19,200 20,800 102,000 102.07 16,000 1992 2003 7.82 % (d) . . .. 50,000 50,000 500,000 107.82 100,000 1993 1997 7.927 % . .. . 6,000 9,000 60,000 100.00 30,000 1992 1993 H.00% . . . .. , 27,500 30,000 275,000 102.40 25,000 1992 2002 H.75% (d). . . .. ... . 36,000 42,000 360,000 103 98 30.000 1992 2003 9.24 % (d)(e) _ 25,890 31,890 25H,900 101.00 30.000 1992 2000

$ 364,590 $ 383.600 Without Sinking Fund Requirements 4 % % Preferred . . . $ 53,019 $ 53,019 530,189 $ 110.00 Series Pteferred 3.35% . ... 4.17H 4,178 41,783 103.50 4AO% . .. . . . 2 2,H 7 H 22,87H 22H,773 102.00 4.60 % . . 6,300 6,300 63,000 103.00 H.60% . . . .. .. . 22,237 22,237 222,370 101.00 9.00% (c) . . .. .. .. . 7,763 7,763 77,630 101.00 Preference

$ 8.00 . ... . . . .. 35,000 35,000 350,000 101.00

$ H.40 . .. . .

40,000 40,000 400,000 101.00

$ 8.70 . .. . . . . 40,000 40,000 400.000 101.00

$ 231.375 $231.375 Decreases in Preferred and Preference Stock (7hmsands of Dollars) 1991 1990 19H9 Shares Amount Shares Amount Sharen Amount Series Preferred Stock 7.40 % .. .. . . (l6,000) $(1,600) (16,000) $(l,600) (l6.000) $(l,600) 7.927 % ... . . (30,000) (3,000) (30,000) (3,000) (30,000) (3,000)

H.00% . ...... . ., (25,000) (2,500) (25,000) (2,500) (25,000) (2,500) 8.00%, Second . . . .. (20,000) (2,000)

H.7 5 % . . . . . . . . .. . (60,000) (6,000) (30.000) (3,000) 30,000) (3,000) 9.24% . .... . .. (60,000) (6,000) (60.000) (6,000) (60,000)

( (6,000)

Preference Stock

$ 8.62 5 . . . . . ... (102,000) (10,200) (102,000) (10,200)

Decreases in Prc ferred and Preference Sto( ks represent. (y the redempt son of stock pursuant to sinking fund requiretnents, or 01) shares tedeemed put suant to optionalledemption provisions.

( a ) Each share of prektred and preference stock entitles the holders to one wie on any que).tlan presented to any sbarrow neri meet mg

( b) The involuntary hquidation pnce of the preferred and preference stock n $ 100 per share The optiona' voluntary hquidauon pra e h the optional retk mpdon price per share in effect except for the 4 % %. Preferred Stock for a b ch such prit e is 8100 per share (plus in eat h case any unpaid divkiends) 1.iquidauon paymentwn pieletred sto( k have priority to suc h pa) n nts on the preference stoc k .

( c ) The aggregate amount of smkmg iund redemption requirements through Uph..e Ohousandml dollars) 1W2. 811.wo. lW3. 8 %oo, IW4, IWat IW5. 8 52 Moo. UpA 5 52 f,00

( d ) On certain smking fund redeniption dates, a&hdonal shares mr; be redeemed up to the nurnre of shares requirc d to be redectned annually .

( c ) On rebruary 1,1992. the company redeemed all outstandmg sh aes of the 0 24 % and the 9 (WA M s PrtIerred stocks at their opOonal redempdon prices per share plus any unpaid dividends Sec accompanying Notes to I inancial Statements.

El s

• e

. C0880L10ATED ST ATENENT OF LONG TERN DEST AT DECEMBER 1 Outstatiding 1991 1990 Maturity (h)

Company (Thousamis of l>vilan)

First Mortgage llonds(a)

$ 30,000 December 1,1991 4%% .. ..... .. .

30,000 March 1,1994 4%%. .. . . ... ... $ 30,000 9%% . ... . . . I25,000 125,000 l'ebruary 1,1996 5%% . . . . . .. . 30,000 30,000 June 1,1996 6%% to9%% . . . . . .

470,000 470,000 1997 2001 7%% t09%% . .. . ... 610,000 610,000 2002 2006 8%% . . .. .... . . .. . 100,000 100,000 2007-2011 9% to l0%% . ... .. . .. . 375,000 375,000 2012 2016 9%% to 10% . . ... . 525,000 375,000 2017-2021 First Mortgage Pollution Con t rol llo nds (a) 5%% Series A(e) . . . . . .,. I5,500 16.560 (d) 7%% to 8%% Series C . .. . 20,000 20,000 (d) 11%% to 11 %% Series D . .. .. 70,000 70,000 (d) 10%% Series E . . .. . . 37,75() 37,750 March 1,2014 10%% Series F . . . .. , 115,500 115,500 September 1,2014 9%% Series G .. .. .. . . _ 55,000 55,000 July 1,2015 2,578,750 2,459,P ! O Miscellaneous promissory notes . . .. . 155 194 1992 1995 2,57 H,905 2,460,004 Unamor tized (discount) and premium-net (20,672) (l9.822) 2,558,233 2,440,182 Less amount due within one year . _

39 30.039

_2,558,194 2,410,143 Subsidiaries Notes (c) ..... ..... .. ... 24,000 30,414 1992 1996 Less amount due within one year . .. 6,400 6,414

_ 17,600 24,000 Totallong-term debt . ... ... . $ 2,57 5,794 $ 2.434.143

( a ) Substantially all owned electric utility plant luubject to the ben of the Company'i> hrst mortgage.

( b ) Aggregate long term debi tuatutities tbrough lwo are (thousands of dollars) 1992,56,439, IW3,86,434. lW4. 8 R 4 98, IWS,53,33H.1996,8102,300. Maximum smking iund requirements aggregate $ 29 0 milhon through 19(iai'id rna) he met u ith propcrty additions or retirement of bonds.

( c ) The Company acquired on the open mar krt during 199181,04000 prindpal amount of pollution control revtnue honds hiued b3 the i ehigh County Industrtal Development Authority whkh are supported by the serten A bonds. This ac quisition satisfied the May 1.1 W2 matunt) of

$ 160 000 of 5er6cs A Bonds and the May 1,1093 maturity of 59(Kt0000f Senes A bonds (d) mmd n.ature annually as follows(thousands of dollars) (n senes A on May 1. l W i-2002. 5900. 2003. 57,1(Hlhihseries C on Apttl 1, 2000,8 4,000,2006 2009, $ 2,000; 2010. $ N,tKK)(uu %ertes D on N n ember 1,2002,81%JWKA 2012,l' %JKio

( e ) Various ftsed rates ranging from 9% to 12%, During 1991, subs!dtary companies trured $6 4 milhon of maturing nates See accompanying Notes to Financial Sta tcments El

NOTES 10 FIN ANCI AL ST ATERElil Mj$$%@

- 7 1.I Summpey of Significant Accounting Policle's' 'CiSM Arrounting Rrrords the specine cost idenaficanon methodt Investments in f!nancul lirnited Accounting records for utihty operatiom are maintained in accor. partnctships are accounted for using the equity method of accounung dance uith the Uniform Systeth of Accounts prescribed by the icdcral and venture capital investments are recorded at cost. bec Note 9 )

inergy Regulatory Commnsion (flRO and adopted by the Penn.

sylvan'ta Pubhc l'tihty Commission (Pl'C) (s,ee Note II) Premium on Reacquired Long@rm Debi As provided in the l:mform System uf Accounts, the prermum paid Principles of Consolidation and expenses mcurred to redeem long term debt are dcferred and All wholly ow ned subsidianes (pnnapally involved in cual mming, amoruzed over the life of the new debt issue or the remaming life of holding coal resenes, oil pipchne operanons and pawive financu! in- the retired debt when the redempuun is not financed by a new issue.

vestments) have been consolidated in the accompanying finandal statements and all sigmficant intercompany transacuans have been Allouancefor funds Used During Construction ehminated. Income and expenses of subsiduties not related to utihty As provided in the t'ntform System of Accounts, the cost of funds operations have been clawfied under other income and deducuons on used to finance construction projects is capitalued as part of construc.

the Consohdated Sutement of Income. non cost. The components of allowance for funds used dunng con The investment in Safe liarbor Water Power Corporation Safe llar- struction (All'DC) shown on the Consohdated 5tatement of Income bor), of uhich the Company owns one-third of the outsund ng capital under other income and deductions and interest (harges are non= cash stod represenung one half of the roung securities, is recorded using items equal to the cost of funds capitahzed dunng the penod.

the equity method of accounting. The Company's principal transacton Al CDC serves to offset on the Consolabted Sutement of Income the with Safe liarbor h the purchase of electrioty amounung to (millions interest charges on debt and dnidends on preferred and preference of dollars) 1991,19 3,19M 19.5 and 19f>,19h l'nder equity acwunt- stock incurred to fmance construction in addition, a return on com.

tng, the operations of Safe llarlxir resulted in addiuonal income to the mon equity used to fmance mnstrucuon is imputed Company of (millions of dollard 1991,12.2,1990, $2.5 and 1989,12 &

Capitalleases Offlity Plant and Depreciation trased pro ierty ca xtahzed on the consohdated tulance sheet is Addnions to uuhty plant and replacement of units of property are recorded at t e prese'nt value of future lede payments and b amortl/ed capiulized at cost. The cost of units of property retired or repuced is so tha the total of interest on the lease obhganon and amortizauon of removed from utikty plant accounts and charged to accumulated the leased property equah the rental expense allowed for ratemaking deprecution Expendnutes for maintenance and repairs of property and purposes. ($ce Note 11.)

the cost of replacing items determined to be less than uruts of propert) are charged to operaung expense.

nuts For financial sutement purposes, depreciation is being prosided mer the estimated usefu!ines of property and is computed usmg a straight. Electric revenues are recorded beed on the amounts of clestriot) line method for all property except for property placed in sen we pnor delivered to customers through the end of each accountmg period. T,his to January 1,1989 at the nuclear fueled Susqueiunna steam electnc includes amounts customers will be billed for clectricity delivered fro n stauon Current PUC and IERC rate orders provide for an increasmg the time meters were last read to the end of the respective period.

amount of annual depreciation for propent placed in service pnot to The Companyi Pl'C tanth contain an Energy Cost Rate iECR) urder January 1,1989 at the Susquehanna sution until the late W90s at which customers are billed an estimated amount for fuel and othe' which time depreciation is scheduled to switch to the straight hne energy costs. Any difference between the actual and esumated arr aunt method. Provisions for depreciation, as a percent of average depreciable for such costs is collected from or refunded to customers in a su'se-property, approximated 31% in 1991,2.9% in 1990 and 2 M, in 1989 quent period Revenues applicable to ICR billings are recorded at the level of actual energy costs and the d:fference is recorded as payable to Ctllity Plant Carrying Charges or teceivable from customers Carrying charge accruah on certain facihties for the ,usgochanna and The Company, in April 19% began to a;1 ply a 5pecul liase Rate Martms Creek stations are recorded as deferred debits in accordance Credit Adjustment (SBRCA) to Pl'C customers bilh to reficct two with a FERC order. These amounts are being amortited to expense over nonrecurnng items rel2ted to (i) the use of an inventory method of ac-the remairung lives of the sutions counting for certain power plant spare parts and (ii) the sale of capaaty and related energy from the Company's wholly owned coal fired sta-Nuclear Decommissioning and fuel Disposal tions to Atlantic City Electric Company (Atlantic) (See Note 1)

.An annual prosision for the Company's share of the future demm, in August 1991, Pennsylvania enacted legislation that increased the missioning of the Susquehanna sution, equd to the amount allowed for Company s sute taxes The Company) .etail tanffs include a provision ratenuking purposes, is charged to operating expense. such amonms for a $ute Tax Adjustment Surcharge (STAS) which provides for the are invested in a trust fund which can be used only for future decom. recovery of new or increased sute taxes. On August 24,1991, the Com-missioning costs (see Note 6 ) pany began recmenng through the STA5 the increase in taxes The t!1 Department of Energy (DOE) is responsible for the perma. apphcable to retail customers. (See Note 3.)

nent storage and disposal of spent nuclear fuel removed from nuclear reactors The Company currently pays DOE a Ice for future dhrosal Income Taxes services and recovers such costs in customer rates The Company and its wholly owned subsidiaries file a consohdaicd federal income tax return. Income taxes are allocated to operaung financialIntestments expenses and other income and deductions on the Consohdated Markeuble equity securities are carried at the lower of their aggregate Statement of Income.

cost or market value, deterrnined at the bahnce sheet date. Marketable Deferred income taxes are recorded for timing d:fferences between debt securities are carried at amoruzed cost Gains and lowes on the book and tauble income to the extent they are permitted in rate deter.

sale of marketable secunties are recognized upon reahrmion ubbzmg minations by regulatory agenaes The principal item for which deferred M

taxes are not currently recorded is the difference between ut deprecu ernplo)ees f undmg is based upon actuarul!) deternuned tompuunons tion and book depaciation related to property placed in sen we pnor that take into account the amount deductible hit muime us purpses to 1981 and the minimum contobunon required under the i mplo3ec Rehre-Investment tax credits are deferred when unlized and amoru/cd ment locome $ccurny Act of 19N bec Note 14 ) '

over the average ines of the related property. The mvestment tax creda was repealed offectne December 31,194 The haancul Accounting Sundards Board 0 Ash) has iuued new Casb Equhalents accounting rules that will affect deferred income taxes recorded by the The Company considus all hight) hquid dtbt instrumenn purchased Company bec Note 8 ) with ongmal matunties of thne months or leu to be cash equwalents Pension Plan The Company has a noncontributory pension plan cotering subson Reclassification tially all employees, and subsiduty mmmg companies have a noncon- Ceruin amounts from pnor 3eati hnantial sutements have been tributory pctr 1 plan for substantially all non barg ming full ume reclawf ed to conform to the (urrent 3 ear presenuuan f 2. . Sounes of. Revenues- j -

The Company is an operating electric unlity serving approximately electne energy sales with M coming from reudenhal cu40mers. 28%

12 milhon customen in a 10Suo square-mile territory of central eastern froni commercial customen,21% from industrial (ustomen,13% from l* nnsyhania with a population of approumately 2 6 milhon persons. contractual sale $ to othu utthties and 3% from othert The Companyi substantially all of the Companyi operating rever ues are derived from largest industrial customer provided about 16% of revenues from the sale of electric energy subject to PL'C and FERC regulation. energy sales dunng 1991 lwenty m mdustrial customen, whase bdi-Customers are generally bdled for ?!ectric service on a monthly basis inp exceeded 53 mdhon each, provided about '% of such revenuet after electricity is dehvered Industrial customen are broad!y dntnbuted among mdustnal During 1991, about 9'% of toul operatmg revenues was derived from (lasubcanons.

L..l

.S. Rate Mattess ~ _' .

Cettain industrial customers have fded complaints with the PL'C address the complaints of certam other mdustrul customen currently against the Companyi ECR for the 199091 and 199192 ECR periodt pending against the Company's FCR The Company filed a petition

. The PliC permitted the FCRs to become effective, as filed, subject to requesung that the PUC reconsider its decnion to hold hearings the pendmg complaints. The industrial custamen generally oppw.e the rtgardmg capacity related off 4ystem sales Companyi recosery on a current bash through the ECR of the cost of in October 1991, a group of Penns3lvania mdustrul customen ptu output purchased from certain non uuhty generating compames or noned the PUC to insutute a generic mvesugatioa of the procedures question the manner in which the cost of such purchases is recovered and pohcies of junsdictional electnc utihties with respect to their ECRs through the ECR. The Company included the cost of output purchased and to issue appropriate regulations with respect to the ICR The Com-from non-utility generemg companies in its ECR filings on the basis of pany filed an answer in opp % tion to the pention in November 1991 prior Pl'C orders that determined such costs were just and reasonable in June IWl, the Court mued a decision that revened a PUC ordct and could be recovered by the Company on a current basis through the regarding a w aner of artam fuel use standards in an agreement with ECR, The industrial customers have aho requested a full invesugation Continental Energy Assocutet a non utity generaung company, and by the PUC into the Company's sale of capacity credits, reservauon of remanded the case back to the PLC for funher con.siderauon Subv output and sale of transmksion entitlements (off4ystem sales) Certam quently, the Company hied a supulation settlu,g all .aues in the case of the industrial customers contend that the revenues from these off- and the PUC approved that stipulation m October lWL system sales should be credaed against the ECR. These transactions are in March 1991, the PCC approved the Company's request to imple.

discussed in Nue 7 ment a >BRCA to reduce retail customers' bilh effectivt April 1.1991 in May 1991, the PUC dismissed the complaint filed by certam in- The SBRCA flows through to retad customers the effects of m dustrial customers against the Companyi ECR for the 19893)0 period nonrecuting items The hrst involves the effect of uung an imentori That complaint aho opposed the Companyi recovery on a current method of accountmg for certam power plant spare parts that were basis through the ECR of the cost of output purcha. sed from certain previously capitah7ed or charged to expen.e when purchased The cost non-utihty generating companies Those industrial customers did not of the spare parts recorded as an increase in the matenals and supphes appeal the PUC's dechion Previously, in an appeal pertaining to a PLC inventory account at January 1, lWI was $116 8 mdhon The conespond-decision dismissing a similar complaint against the ECR for the 19A8 89 ing credit to income was deterred and is being amortued over a hve-period, the Commonwealth Court of Pennsyhania (the Court) issued an lear penod with the annual amonuation apphcable ta retail customen opmion affirming the PUC order s hich damissed the complaint. included in the >BRCA in November 1911, the PCC accepted an Administrative Law Judge's The second item in the SBRCA relates to a change in the Companyi (AlJh recommended decision that, in most respects, dismissed the com contractual sales of capacity and related energy to other utihties On plaint filed by a group of industrial customers against the Companyi September 30. lW1. the agreement that provided Atlantic with 126,000 1991-92 FCR. This acuan accepts the Alfs recommendauon to hold kdowatts of the Companyi share of capacity and related energy from hearings regardmg capacity-related off+ystem sales but does not the Susquehanna station spired and was replaced on October 1.1991 32

by a simdar agrccratnt pursuant to w huh the ( ompany wdi sell Compan) fded a requtst u ah the tl C on Auget 1L Iwl io rtuarr 12WO Ldowatts of the Company s share of $usquchanna capaat) and through the STAS the instcase to uws ;.pphtaNr to rcud rates lhc l tchted encrp to Mumurt Gas A Uccuic Compan) (BGAh through prop ned sie rate brume c ficctne for ticcinan used on and after Mn 21OL 1he osts preuously recovered from Atbnuc for the sale of August 24 IWI and is drugned to rnoser the rouvattne part of the Susquehanna apaat) and rebted energy will now he recosued from inctreed taxes our the penod endmp Man h Al, tw21he Company liG&F. On Octoter 1. IM. Atlanne began partbeing 125W Lilow4ts Jcierred approunutcly $214 nulhon of the mucased uws whkh are of (apaeny (summer ratmp and rebted encrp from the Companii appbcablc to the perioJ pour to August 2t IW1 The am.iunt defctred uhuUy onned cual futd stanons flowescr the wso that the Company n bemg amortved over the penod the inueded ut expnse n bema wdi reuwer from the sale of coal fired capaaty and reb cd encrp to recoured through apphcanon of the Alb The Offae of Consumer Ad-A!!anuc arc (urrently rtficctcJ in retad hoc rate tenfh Lffcctne Apnl 1. voute and the Office cd ', null butmew Aduate have fded a emt pch UN1 the Company included tn the $BRCA a ordit for the costs twcpt non requesung that .he Pl!C rcquire a demonstution by major Penn energy cost ( recostled from the de of coal fired opaaty and rtbted ylvanu unhues that any pnened mucce m the 5Te will not result energy to At'anhc The thange in energy costs awcuted unh the sale m unjust and unrceonable recs The ( ompany fikd an answer in op is rtfleded in the LCR. p smon to the pconon The porunn of the inutocJ uws appbcable The $bRCA rtJuced revenues from rcud customen by about $16 ' to the ( ompan)i contractual sales of capaat) and rebted encrp to nulhon m 1991, but did not aJtersel) affect oct mcome other unhoes n recovered as a cost of pnwidmg such scrute in May IWh the Company fded unh the Pl'C a request for approcal The Company annot prednt the ulunute outwme of the vanous of a proposed settlement wnh the Gencul Ucctoc Company of rae natters pendmg before the Pl~C outsundmg contract (Imms ansing from wnstrucnon of the Susquthan- In March DNb the Company hird wah the i LRC a bar ute inocer na suuon As part of the request, the Compan) he proposed to flow request of la 1 nul hon or 9 6% for wholesale custurners, (fles tne protteds of the seulement luck to its reud customen through the May K 1901 The I LRC permuted the poposed rates to bewmc offu.

$bRCA at the rate of ill mdhon per year over fne )ean, begmnmg inc May 19. lW1. subicct to hearinp A scultment agreemtnt was Aptd 1, PS2 Tho matte r remams pendmg before the Pl'C. wbsequeml) entered mto by all parnes that resuhed m the full amount ln August IWh Penngivanu enacted legnbnon that inacased the of the matase remammg in clic t and the Compan) agreed not to fue Company 4 sute uses by approumately 538 mdhon on an annual hm anv who!csale base rate murde request that would propme an ettec-Cerum of those in mucasts are effective as of January 1,1991 The tne dAe before August b FN4 lhe li kC anepted the sculcment Company's feud raes include a prusnion for a STW whwh prouJes greement for fihng m Dnember Fr>l for recmcry of costs awociated unh new or in reased sute uws The fhkh$f h{?&hhh$&?&WihkW&h& f The Company records the annual deprecianon for the $usquehanna The ddlerence between straight hne depret ution and the amount of sution in comphante u nh the provmons of Sutement of linancul AO deprecuuon for the $usquehanna sunon refwcted in electra rates is counung Sundards plW 92,

• Regubted 1.nterpnses -Accountmg for shown as dcferred deprecianon on the Consohdard Nutement of Phase-m Plans," whkh estabhshed accountmg ruics for ute phase in income and the Consohdated Babnte sheet plans awoaated w th a nuior newly (onstructed generaung sunon.

h $YY hhh h '

in accordance with orden of the Pl'C, the Company deferred terum The defericd nats plus rebted dcferred mmme tnes tou!cd $39 2 operatmg and capiul costs, net of energy sanngs, awociated u nh I'nns mdhon at December 31 FNI. The Company expects to ult matelv 1 and 2 at the susquehanna sution The costs defctred were incurred recovtr thn amount in rates (harged to rustomers hoch recovery w di from the date the unas were p!ard m commercial opennon unhl the be subicci to Pl!C reuew and approsal. No return is bemg accrued on offectne dates of the tale mercases reflectmg operanon of the unns the deferred cmts b N f bN The Companyi most recent study indicates the its shue of the total decommissionmg wso. The babnce m the trust fund at Decen her 31 estimated w3t of decommbsioning the udhucuve poruun of the 1991 we approunutr!y $% o milhon Susquehanna sunon h approomately 1350 mdhon in 19M doibn The neat retent estm - 31 of decomnussionmg Nusquchanna 6 Undu current rates the Company colicct about th9 mdhon annual- higher than the esumre uu ' ! determme the amount current!) co!

13 from customtts for the (ost of decommissioning the susquehanna lected m reuil recs As a result the Company would expect to request stJtion The amounts collected, less apphcable taus, are depnued in rewtery of a h@her Icwl of deuimmnstinmg exptne m in neu rcuil an citemal trust fund for imestment and can be used only for future base rec proc ccdmg 33

k . . b u The Company provided Atlantic with 126Joo kilowatts of the Com- capacn> under the IJM grement The length of thcsc agreements and panyi share of capacity and related energy from the Susquchanna sta- the amount of capacar utd:ts sold varv The longe t agreement sur-uon fnim 1983 through September 30, lWI Another agirement pro- remly m cf tect is shrdaled to terminate m the vcar 20n1 vides Atlantic with 125,0W) Lilowatts of capacity isummer utmg) and The Company has entered into arrangements w ah several vuhun related energy from the Company) w holly owncd coal fired suuons both m4de and outude the PJM for the roervation of outpat from from October 1, lW1 through September 2000 other the oil fired or cual futd units at the Marons fred suuan dunng On October 1, IWI, immedutely following the expuation of the cerum penods of ume $peufic dcIntries of energ) are requnted by agreement with Atlantic, the Company began pniuding itG&l with the purchamg unha as nttJed dunng the incrvation irrioJ One 12M00 kilowatts of the Company's share of capacity and itlaird unht) has agreed to purihase a maumum of to meganatt houn per energy from the $usquchanna sution S2les to BG&l: will wnunut hour of the output the Compam purchaso from non unhty generaung through May 20nl companin for the pcnod June lwn thniugh May IWA The Company The Company provides jersey Central Power and ught (JCP&ll with includes as a credit to the 1:CR the revenue receirc.J for thne delnerio 96000 kdowatts of capacity and rehited energy from aH of the Com of energy. g panyi generating units Sales to JCP&l. began in 196 and w di wntmue Arrangements aho have been emcred mto whereb) PJM unhoes can g at the 94000 kdowatt loel through IW5. with the amount then pur,hase a portion of the Compan)'s enutlement to use the PJM dechmng urufurmly each year until the end of the agretment in tranummun system to im;urt energy from utihtin oantde the PjM De(ember IW9 Thne transadions may i e made through monthly aucuons or b)

Thne agretments proside that sales are to be made at a pnre equal negotuted pntn over extended penods of time The Company in-to the Company's cost of providmg scruce, which mcludes a return on (ludn, as a credit to the iCR, the bregone inter hange snings that the Company's investment in generating capacity wtre not reahnd when the sale of tunsmouon enuticmeno reducn in addit ion to thne bulk power contractual sales, the Company ha the amount of energs the Company imports and selk to other unhan cateted into several agreements with othu electric utihan in the Revenues from the sale of capatit) (redits. the reservation of output Penn3ylvania-New Jency Maryland Interconnect on (PJM) fur the sale of from the Maruns Cred uniS and the sale of tuasmission entiticments capacity credits from the Companyi system capacity These capacit) (net of foregone micrthange saungs included in the f CIO totaled 135 4 credits are used by the other unhues to meet their insulled capaaty mdhon in IWl,132 3 nuthon in PNO and 12H mdhon in 19W lot obhgation in the PJM. The prke received for thne sales is based on a information relatmg to proceedmgs pendmg before the Pl'C with percenuge of the ute the utthues would hase paid to purchase msulled ropect to capaat) ttlated sales see Note 3 h h b hh (

In August 1991, Pennsylvania enacted legislanon that increased the would change or mtahfy ceruin provnions of $le % 'Ihe proposed Company's sute income and other taes retroacave to January 1, lW1 sutement, if adopted, would be effecthe for fncal years begmmng after See Note 3 for information concernmg the rewtery of thne inaeded December 15, 199 1 The Company does not intend to adopt the new tu es. accountmg rules on income uses until the final effccuve date During lWl, the Company utillied the remainmg $16 mdhon of 11 is expected that w hen the Company adopts the new accounung prniously unused ta credits to reduce its federal mcome ta lubinty rules on mcome inn. an mcrease m the delerted tu habihty wdi be ln accordance with PUC rate treatment, the Company has not recorded recorded far in benefits premusly flowed through to customers and deferred income ines for ceruin timing differences. The cumulatne for < 3er temp >rary tn differences The mereded in habihty w dl be net amount of such timing differences for which deferred income taes offset by a curropondmg awet reprocnung the future rnenue have not been recorded approximated $541 mdhon at December 31. expected to be provided through the ratemakmg pnxtw to pay for 1991. The Company would expect to recover through electric revenun the ux habihty the tnes when due in future years Because the mnimum corpirate federal mcome in rate we lowcred in December 190, the I A$11 issued SFAS % "Accountmg for incotne from 40% to 3 m m IM most entines when adopong the not ac.

Tan," which esublished new accountmg rules that w dl (hange the counting ruin on income tnes wdl be required to adiust their deferred manner in w hkh income tn experne is determined for accounung put- inwme tu rnenes in flect the lower tn raic Ilowever federal poses. Pnot accounting ru!cs utihzed a deferred method whik slA5 96 legislation essentally prohibits utihties from immedutcly adjustmg. to utihzes a liabihty method under which deferred ux habihues are the M% tn rate, certain delerted tn reserves related to dep&Huon recorded and adjusted for the effect of a thange in tn law or uto As a result. w hen the Company adopts the new accounung rules on m-The FASIl has delayed the effective date for $FAS 00 to fiscal years come tncs, no substantui reduction in custmg deferred income in begmning after December 15, 199 1 in June IWl, the I AS11 hsued a resenn is expected because of the lower fedcol tn ute.

proposed statement on income tan that would supersede SFU 90 and 5

A reconcihation of federalincome tan derived from sututor) tn rates apphed to income from watmumg opruaum for acwont:ng pur)xnn and such taes (harged to expeme for the conwhdated Company is n follows (thomands of dollars) 1991 1990 19N9 income Tas impense laduded in operaung expenses Provmon-lederal $ 114,904 8 86960 1 85.6.\4 Sute . 49,534 30366 30.8;3 16 6,43 N

~

!!?314 110.4M' Ikff, rred-Federal Il,5 ON393 '5,418

$ tate 225 310 1308 51,7"2 M 903 '6.' N6 investment tn credit, net-Tetkral 7,~15is 9.844 13 916 21",366 199.301 20',189 7 locludtd in other income ad deductiom Provbion (credit)-Federal . (l26) (4.901) (1MMI)

'iute _

33 (9 M) (443) 193) (4.896) (19305)

Ikferred-Federal (640) 2,6'3 15,853 sute (l'0} 49 138 (MIO) 2 ?22 15,991 (903) (2,1741 (5311)

Total income ta expeme-Federal 166,M41 163,639 172,160 Sute 49,622 30,4MM 31,515

$ [16,463 $ 19 6,127 $203.6'5 Ikuil of deferred taes in opeuting expenses Tu depreciation 8 "2,113 8 93,367 8 95,475 Reacquired debt costs . (I,93H) 3.6'2 6.148 l'nhilled revenues (8,142) (8,142)

Other, (1H,403) (19,996) (16,695)

$ 51,"2 3 M 903 $ 76?46 ,,

Reconcillation of income Tax Expense Indicated federal income ux on preta income at statutory tax rate (34%) . $ 192,05 H 5182,931 $ 189.418 increase (decrease) due to State income tnes . . ... 34,319 20,970 22.205 Ikprecution differences not normah/cd . 9,0h0 12.229 9,49' Amortkation of investment tax credit . ( 15,04 H) (14,201) (13,0l?)

AFlTX: (Note 1) . . (1,007) (1,194) (927)

Other. (2,939) (6339) (3301) 24,405 11,190 14,257 Totalincome ta expense . 8216,463 $ 194,127 8203.6'5 Effective income ux ute 38.3 % 36 1% 366%

D

Tues, other than inconie, consist of the folkming (thousands of dollan) 1991 1990 1989 Tates, Other Than income State gross reaipt3 5 91,50i i M.304 5 83Mi

$ tate utihty realty , 43,432 34,11; 34."82 Sute capiul stack . 32,5"9 24r5 23,795 Social t.ecunty and other 22,911 22.910 21.043

$ 190,426 51'0,234 5164.324

., . .l N; ' . , f f. \ k[. I. hhY ,l . ]f .

Financialinvestments consisted of the following intcstmtnts neld by subsidiary companies (thousands of dollars):

Decembec 31 1991 1990 Marketable equity secur! ties At cost . . .. 5 9,192 l6%5 Net unreali/cd hm (175)

At lower of aggregate cost or market . Tl"U b,No Markeuble debt secunties 63,155 29,617 Financial hmited partnerships. 35,069 18,169 Yenture capiul investments 6,535 6.50!

Total $ 113,951 501.0 "

The market value of markeubic equity securities was $9,364.000 at pheable to markcuble equity secunnes, net of apphcable incoine ines, December 31,1991 The net unreahzrd loss at December 31.1990 ap- is included in mmmon equity

.' ' .l . .{  % -j g ig g g g g g ], g .], ,. At December 31,1901, the Company temporaruy held 240,515 shares shares were distnbuted to participants in the lhvidend Reinvestment of Common Stock which were acquired in the open market. These Plan in ,lanuary 1992. ( . .][ ( f k[ [i . "/[. -( 1((((h.[hkhh . [ lh ;[ ] [I The Company and a subsidiary have entered into capital leases con-sisting of the following (thousand3 of dollars)- December 31 1991 1990 Nutlear fuel, net of accumulated amortization (1991, 5238F6; 1990,1213,755) . I192,596 1222.369 Vehicles, oil norage tanks and other property, net of m.umulated amortization (1991, 583,254; 1990, $73.810) . '9,3'9 80,385 Net property under capitalleases $ 2' t ,9* 5 $302,7;4 38

Ca;utal lene obbg200ns incurred for the acquhition of nudear fuel milhon, m(luJmg $15 8 rmlhon in impated imcrest Dunng the fne and other property were (mL,a of dollars) FN1,1691 Im,154 3 ycars endmg IV>o, such payments would date.oc from $24 3 milhon and 1989,155 ti per year to 89 2 nuthon per Scar Nudear fuellease payments. which are tharged to npeme as the Interest on caplul lease obhgauons was ruorded as opcratmg er fud is used for the generation of electncity were (mil l kins of dollars) penses on the tonsobdated Sutement of Inwmc m the following IWI,195 5, twt 192 6 and 19W 180 i future nucleat fue! lease amounts (nu! bons of dollars). 1991.120 5, l&,123 0 and 19W, IS 2 pa)ments will be based on the quantity of electriaty produced by the Generally capial leases (ontain renewal opuuns and obbgate the Susquehanna suthin The mnimum amount of unamurtved nuclear Company and a subuduty to pn mamtaunce, msurante and other fuci kasable under (urrent arrangements n $30 rmilion. related costs Yarious operaung leases have aho been entered mio f uture rmnimum lease payments under capui leases m effect at which are not materul wnh respnt in the Compami financul December 31,1991 fueludmg nuclear fuch would aggregate 19; 2 p nmon.

                                               ] {j '%((],                                          g}]J                             j] (( ( N .                   ((

The Company purchases coal from (crum subsiduries at prices equal The Company n (hning its subudury oul mirung operauons dut to the cost of mming These purchases totaled approximately llM pnncipally to the deplenon of coal reserves and the high cost of mmed milhon in 1991, $14 million in 1990 and $163 mdhon in 19W The coal a compared to the pnce of oul purchased on the open market cost of coal purdased h included m the energy costs wilected faim One of the three operating rmnes wn shut down at the end of June customert The cost of coal purchased from subsiduries (parucularly IW1. The Greenwnh mines are xheduled to close at the end of Mar h coal from the Greenwich mines) has generally been higher than the 1992 and the third mine is scheduled to cime by the middle of IW2 cost of coal purchned from other sources lhe Company npetts that at the ume the rmnes are shut down, the All the coal produced at the Greenwkh mines is delncred to the subsidunes' remaimng investments in coat mming equipment and Companis Montour steam electric sution The PUC has adopted a stan other facihties wdl har been induded in the cost of coal pur based by dard based on the cost of coal purchased by other lennsyh2nu electrw the Company and recovered through energ) (osts collnted from utthnes against which the cost of all coal delivered to Montour is customers flowever, the Company cannot pinbet w hether regulatory menured. The standard mven the three year period from April 1,1990 action, proposed legislation related to heahh care benefits for miners or through March 31,1993. The Company anucipates that the net amoum other events could have an adverse impxt on the Companyi carmngs of any costs in excess of the sundard during this three. year priod will At December 31, lW1 the capul investment m subsiduty wal-be rtturned to PUC customen through the Companvi 1994 95 ECR minmg ograuons amounted to about $10 rmihon, a decrease of about Data as to the standard B avadable for the penod from Apnl 1 1990 120 milhon from the end of 1990 through July 31, 1991 for this penud, the cost of coal dehvered to Montour was less than the standard

                         ;l f f f[.lfhfllf                                                                             ( f l)S-{.l,.l- [               .f l .ll The Company issues commercial paper and, from time to time, tur-                             group of banks n a bak up for shon-term borrowings. The banks have rows from banks to provide short term funds required for general cor-                            agreed to lend the subsidiary up to $100 milhon on a revolving basis in porate purposes in addition, certain subsiduries aho borrow from                                 return for the payment of commitment fees Interest rates for borrow-banks to obtain short term funds. Itank borrowmgs generally bear                                 ings would be bned on the Inndon interbank offered rate in effect at interest at rates negotuted at the time of the borrowmg                                           the time of the borrowmg. No borrnwmgs were outsundmg at Revolving credit arungements are mainuined with a group of banks                              December 31, IW1 under either of these revohing credit arrangements in return for the payment of commitment fees The hne of credit is                                           The Company aho maintams a $5 mdhon hne of credit with a bank maintained principally as a bak-up for the Companyi commercul                                     m return for the mamtenance of a compensatmg balance. No borrow-paper The banks have commmed to lend the Company up to lib'                                       ings were outstandmg at December 31, 1991 under this hne of credit.

milhon on a revolving basis. Any loans made under these cred:t ar- T he Company leases its nuclear fuel from a trust funded by sales of rangements would mature on June 30,1994 and, at the option of the commercul paper backed by a letter of credit The maumum fmancmg Cornpany, interest rates would be based upon ceruheate of depmt capaaty of the trust under exisung credit arrangemeno is ISO milhon. rates, Eurodollar deposit rates or the prime rate. In addition, a sub- Commitment fees incurred were (milhum of dollars al,10 3, siduty of the Company has a revolving credit arrangement with a IWO, $0 2 and 1989. foi

f. .hkfhh[f h??$Y&fkhh h,hhhk 'fc The Company has a noncontributory defined benefit pension plan meeting ceruin minimum requirements tPlan) covenng suhstantially all employees benefits are based upon a The Company abo has two supplemenul retirement plans for ceruin participanti catmngs and length of paracipation in the Plan, suhic(t to mangemcat employees and directors lienefit payments pursuant ta 37

these supplemental plans are made directly by the Company. At - The components of the Companyi net periodic pension cost for the December 31,1991, the projected benefit obligation of these sup- three plans were (thousands of dollars): plemental plam was approximately 19.0 million. 1991 1990 1989 Service cost benefits catned dunng the period 8 28,188 520,712 $ 25,565 Interest cost .. 40,605 36,993 33,925 Actual retum on plan assets . (182,956) 4,968 (119.5'2) Net amortization and deferral 134,268 (50.22') " 468 Net p riahc pension cost 5 20,105 $18A46 1 17.386 The net periodic pemion cost charged to operating expemes was The balance was charged to construction and other accounts. The

             $12.6 million in 1991, 512.1 milhon in 1996 and $109 milhon in 1969.            fund, sums of the Companyi Plan was (thousands of dollars)-

December 31 1991 1990 Fair value of plan assets . .

                                                                                                                $ 804,210         $ 642 f '

Actuarial present value of benefit obliptions. Vested benefits. . . , 358,6*6 333,197 Nomested benefits , 1,228 1.338 Accumulated benefit obhption. 359,904 334,535 Effect of prajected future compensation , 198,734 168A07 Prgvd benefit obligation , 558,638 502.942 Plan assets in excess of projected benefit obligation . 245,572 139,835 Unrecogniaed transition assets (being amortized , over 23 years) . (81,356) W5,875) L Unrecognized prior service cost 29,392 4,861 Unrecognized net gain . , , (244,225) (90,56M Accrued expeme , I (50,617) 5 (31,'39) The weighted average discount rate and rate of increase in future and 1989 aggregated 854 milhon, f 4 8 million and 33 7 milhon, resnec-compensation used in determining the actuarial present value of pro- tively. Unfunded vested bene 0ts of employees participanng in the lected benefit obligations were 15% and 6AE respectively, on both UMWA Health and Retirement Funds have not been determined December 31,1991 and December 31,1990. The assumed long-term subsidiary min.ag companies are liable under federal and state laws rates of return on assets used in determining pemion cost in 1991 and to pay black lung benefits to claimants and dependents, with respect to 1990 were 775% and 7.5% respectively. Plan as. sets consist primarily approved claims, and are members of a trust which was established to of common stocks, government and corporate bonds and temporary facilitate payment of such liabihties The actuarially determined < < pense cash investments. for black lung benefits for 1991,1990 and 1989 was 50.5 million, $0 6 Subsidiary mining companies have a noncontributory defined benefit million and 10.5 million, respectively. pension plan covering substantially all non-bargaining, full-time Substantially all employees of the Company and its subsiduries will employees which is fully funded primarily by group annuity contracts become ebgible for certain health care and life insurance benefits upon E with insurance companies. Substantially all union employees of these retirement. The Company recognizes the cost of these benefits for subsidunes are covered by a pension plan administered by the T.ustees retired employees when premiums are paid. Ilowever. the subsiduty of the United Mme Workers of America (UMWA) Health and Retirement mining companies include in an accrual for future mine closing costs Funds. The pension cost for non-bargaining employees together with an amount to pay for such benefits after mining operations have ended contributions to the UMWA Health and Retirement Funds for 1991, 1990 The cost of retiree heahh and hfe insurance benefits recognized as ex-G

  ,        z.

pense by the Company and its subsiduries was approxinutely (mdkons pares to an estinuted cash payment of about 18 milhon for those of dollars) 1991 $9.5; 1990, l'6 and 1989,151. benefus m 1991 These amounts are preliminary esumates and are sub-In December 1990, the FASB inued SFAS 106, 'Tmpkwer's Account- lect to change as raore defirunte analyses are performed. ing for Postretirement benefits Other Than fensions" which er,ublished The Company has an Employee Stock Ownership Plan (ESOP) for all new rules for accounting for the costs of these benefits SfA510n is ef- full-ame employees having more than one lear of senice Contritu-fective for fiscal years beginning after December 15,1992 and requires tions to the ESOP hae been funded with investment and payroll bred accrual, during the years that the employees render the necessary ser- in credas previously available to the Company under federal law to ac. vice, of the expected cost of providmg those benefits. During 1991. quire shares of the Company's Common Stock. Contnhutions funded caps were estabbshed on the amount the Company wdl pay for retiree wnh these tu credits were completed in 1991. As of January 1.1900, health care cost for all employees w ho retire on or after April 1.1991 dividends on all shares credned to partiapants' accounts have been B8ed on prehminary actuarial studies the Company estimates that its paiJ m cash. The Company deducts the amount of those dividends for accrued cost for postrctirement benefits other than pensions wdl be ap- income tu purposes and contnhute3 to the L50P shares having a cost proximately $25 milhon in 1993 nhen it adopts $fAS le This com- equal to the ux savings resulung from that deduaion and contnbution.

     ]. J         1      ,
                                            .g g                g At December 31,1991, the Company or a subsidiary owned undivid-ed interests in the following facilities (milhons of dollar 3)

Merrill Generating 5tations- Creek Susquehanna Keystone Co temaugh Reservoir Ownership interest . 900 % 12.3 4 % it.39% 83% Electnc utility plant in service . $ 3.9il $49 $4' Other property ill Accumulated depreaation . 404 23 21 3

                 ' Construction work in progrest                           57                  2               9

. Each participant in these facthries provides its own nnancing The the Consohdated Sutement of Income, The Merrill Creek Roervoir pro-Company receives a portion of the total output of the generating su- vides water dunng penods of low iiver fl m to replace water from the tions equal to ts percentage ownership The Company's 3 hare of fuel Delaware River used by the Company and other uuhues in the produc-and other operating costs associated with the sutions is reflected on tion of electrichy. ((hh hhh h k N [ $ k ,1 M k d kl h h [ .h

  - EffectiveJanu'ary 1,1991, the Company began to account for certain         to expen3e over a five-year period. The PUC has approved the Com-power plant spare parts using a deferred (inventoryJ method I!nder this        pany's proposal to include the annual amortization applicable to retail med d. purchases of spare parts under inventory control are included           customers in the SBRCA credited to customers' bd!s effective Apnl I, in an inventory account and then charged to the appropriate capiul or          199L(See Note 1) expense accounts when the parts are used or consumed. Prior to 1991,              The Company filed an applicauon with the internal Resenue Service power plant spare parts were generally either capaahzed or charged to          (IRS)in July 1940 requesting permisston to use this method of accoun-expense at the time of purchase.                               .

ung for income ux purposes. The IRS has not acted on the Company's The January 1,1991 cost of these spare puts was $116fi mdbon. This request, but it the reque3t is approved. the Company would include the arr.ount was recorded as an increase in the matenals and supphes inven cost of the spare parts as of January 1,1991 in taxabie income over tory account on the ha!ance shett at January 1,1991 The associated in- several years come statement effect was deferred and is being amortized as a creda 39

                                                                                                                                                                            \

b Y In Nosember 1991, the FFRC issued Accounting Release Number wil! be reclesified for pnor years are (thousands of dollarst IWI, AR 14 that wouki require the Company to reclassify interchange power $181.019,1990 !!!8.205 and 1%9,12%,*0 such rnlass:fication will sales to PJM member companies from a credit to operating expenses to hase no clicct on net income. o;ierating revenues effective as of January 1,1091. The Company and in the third quarter of 1991, the Company reclassified, as of January several other electric utihues disagreed with this accounting release and 1.1991, the receipts from distinct sales of energy n ceruin utihties filed reque<ts for reheanng with the FERC l'pon considenng these re- from interchange power sales to opeutmg trvenu .n the Consob qutsts, the FERC reaf6tmed its position that interchange power sales dated Sutement of income TLh reclnsification niore appropriatdy must be recla<sified to operating revenues, but postponed the effecure records these transacoons in accordance with the l'nitorm syster.. of date of Accounting Release Number AR 14 to January 1,1902. Accord Accounts. The rettassification had no effect on net mcon e Inergs sales ingly, bepnmng January 1,1W2, the Company will reclasify it3 inter- to these unhues in 1900 and 1989 of f al o milhon and $20 0 milhon, change power saks from a credit to operating expenses to operating respecthely, h.ne becn reciassified to conform with the current revenues on the Consohdated butement of income The amounts that prestnution s Wp kN N ;h hf, hh hk h&&fh {kf h fhkh fff.k M M TL Company's construction expenditures are estimated to aggregate deak, in part, with acid rain and atumment of fedeul ambient o7one pn $1 milhon in 1992, 5391 milhon in 1993 and $135 milhon in 19% sundare l'nder the acid ram provisions of the legalation, sulfur d:ov ide eminions must meet specified Phase i lesch by .lanuary 1, lW5 and jf jcludmp Aft:DC See "Capiul Expenditure Requirements" on page 19 %g& hr addittonalinformation. must meet more stringent Phase 11 emission leveh by January 1,2000 eb The Company is a member of ceruin insurance programs w hich pro- In addiuon, the legislahon speci6es the timing for compliance with the vide coverage for property damage to members' nuclear generaung su- narogen oxide emnsion knuunons set forth in the acid rain provNous tkini Facihties at the Susquehanna station are insured against propert) About 5% of the Company's coal fired generaung capacuy must damage losses up to $2 5 bdlion under these programt The company meet the Pluse I sulfer dioxide sundards The Company expects that it is also a member of an insurance progum which provides insurance wi!! be able to meet those sundards by the uw of low sulfur coal. addi-coverage for the cost of replacement power during prokmged ouuges tional processing through coal clean ng plants and the installation of of nuclear units caused by certain specified conditions Under the pro. icrubbers at the Conemaugh sut on in which the Compan) has an petty and replacement power insurance programs, the Company could 1139% ownership mterest. In addaion, the Company expects to insult he assessed retrospective premiums in the event the insurers' losses !aw nitrogen oxide bumers on the unus that must meet Phase I sun exceed their reserves The tnaximum amount the Company could be dards The Company may ako choose to linut the capacity factors of assessed under these programs at December 31,1901 was about $14 8 certain of its affected units and, to the extent ptrnuned by the tegnia million. tion uke advanuge of tradmg emission allowantes among its in Apal 1990. the Nuclear Regulatory Commission amended its generating units or wuh other utihnes ( regulations to require that in the event of an acddent, where the The Company currently estimates that the cost of comphance wah estimated cost of stabihzation and decontamination excee6 $100 the Phase I acid rain sundards will require a increase in customer milbon, proceeds of property damage insurance be segregated and rates of about 1% (b.tsed on IW1 revenue leveh) used, first, to place and maintain the reactor in a safe and suble conde To meet the Phase 11 sundards, the Company expects to in3u!! scrub-tion and. second, to complete required decontamination operations bers on about 65% of us coal fired generating capacity as wc!) as to before any insuranu procetds would be made available to the Com- continue its Phase I complunce actnities for the balance of its coal-pany or the trustee under the mortgage. L'nder these regulations, such nred generating capacny in addinon. the Company expects to insull requirements were incorporated in the Company's on-sue property low-mtrogen oxide bumers on the balance of its coal tired geneuung damage insurance policies for the Susquehanna sution effective capacity The cost of compliance with the Phase 11 sundards is current. April 1991. . ly estimated to reqmre an mcrease in customer rates (based on IW1 The Company's pubhc lubihty for claims resulting from a nuclear in- revenue levels) of about A above the increase expected to resuk from cident at the Susquehanna station is hmited to about $78 bilhon under Pluse I complance weh the acid ram provisians of the legniation provisions of The Price Anderson Amendments Act of 1988 (the Act) The Company currentiv ex The Company is protected against this liabihty by a combmation of 5130 million (in 1991 dollars)pects that capiul expendaurts commetcialinsurance and an industry assessment program A utihtis 19% to comply with the Phase 1 acid ram requirements and that an ad-lability under the assessment program will be indexed not less th m daional $670 milhon (also m W91 dollars) will be required in the nu cnce during each fhe-year penod for inflanon and will be subiect to an to-late 1990s to comply with Phase 11 acid rain reqmrements, l'nder addnional surcharge of 5% in the event the total amoum of pubhc current Pennsylvania law. construcuan work in progress for non-claims and costs exceeds the basic assessment. In the event of a nuclear revenue producing assets, such as capnal expenditures for pollution ir.cidem at any of the reactors covered by the Act, the Company could control equipment, can be daimed in rate base. be assessed ut h to $126 million per iacident. payable at a rate of $20 The IWn legniation aho addresses geographical area 3 that do not

     - m lhon per year, plus the additional 5% surcharge, if apphcable.                     meet federal ambient omne sundards The legislanon provides that al1 In November 1990, federal clean air legislation was enacted that                 sutes wohin the Northeast Omne Tunsport Region (from New England 40

r .. to areas of Virginia adpcent to the Dntrict of Columbia) must require future facibues and uaste handhng methmh at Company facihties could - reasonably available control technokigy (RACT) on all stationary sources aho be affected. of nitrogen oxides within the Region by May 1995. It is expected that The Company cunently estimates that about $155 milhon of capiul Pennsyhunia will define this as low-nitrogen oxide burners similar to expendnures could be required to correct the groundwater degradation

- those phead> planned by the Company to meet the acid rain re-                              problems at the ikunner Ishnd sunon and to meet the residual uste

- ouirements of the legisbtion. If such a determination is aude by itnn- disposal regubtions in the form currently proposed by the DiR. sihania, the Company would have to advance the msulbuon of the Changes to the final regubtions may lower these costs $uch expen-low n!trogen oxide burners, wah a currently estinuted capiial cost of da m during the )can 1992 1994 could total about 152 milhon of about Illo million (in 1991 dollars) and pbnned for Phase 11 com- which about 19 milhon is included in the Company's esumate of phance, to ineet the my 1995 deadhne The Company estimates that IPElm construction expenditures shown m the tabulation on page the cost of compliance with the RACT provisions could require an in- 19 Actions taken to correct the Brunner Island groundwater degrada-crease in customcr ratcs of about one-half of 1% (based on 1991 tion problems and to comply with the DER's proposed regubtions are revenue leveh) These estinuted costs are based on the Compann abo expected to resuh in increased opcrating costs in amounts whith prehmirury evaluation of the ambient ozone provisions of the leghb are not now determinable but could be substannal tion and would be in addition to the increase dncussed above for com The issue of potential pol ychlonruted biphenyl (PCB)(onumination phance with the Pha3e I acid rain provisions. at cerum of the Companyi subsutiom and pole sites b currendy bemg

   ~ The legislation aho reqmres modehng studies concerning the impact                         pursued by the DER. Ir, this regard, the DER sent the Company a pro-of n!trogen oxide emissions from power plants kicated in the Northeast                      posed Consent Order under w hich the Compan) would assess and, if Ozone Transport Region If the resuhs of those modchng studies in-necessary, remedire sites where PCB comaminauon may exist The dicate that further nitrogen oxide emission reductions are reymred to                       Company is continuing to negouate with the DER The costs of ad-meet federal ambient ozone standards, the Company may be required                           dressmg the3e PCllissues are not now determinable but could be to insull in the last half of the IWh addnional equipment to reduce                          substantial                                                                                                                  ,

nitrogen oxide emissions if it should be determmed that the imtalla- The Company does not anticipate that the costs, w hich will be tion of such additional equipment is required, the Company's pre- charged to operating expense, for work currently planned to clcan up hminary estinutes indicate that the cmt of comphance could require or ternedute known sites involvmg the removal of hazardous or toxic capital expenditures of up to $580 million (in 1991 dollars) and an substances wiu ne material in amount lloweser, future clean-up or increase in customer rates of as much as 4% (based on W91 revenue remediation work at sites currently under review, or at sites currently level 4 These estimated costs would be in addition to the amounts unknown, may r sult in substantui operating costs S hich the Company discussed above for compliance with the acid rain and the RACT omne cannot reasonably estimate at this ame provNons of the legislation In complvmg S nn sututes, regulations and actions by regulatory Ontil action has been taken by the appropnate regulatory bodies, the bodies invoking environrnental maners, including the areas of water Company will not be able to determine the exact method of com- and air quahty, hazardous and solid waste handhng and disposal and pliance with the acid rain and ozone provisions of the legislanon, or toxic substances, the Company may be required to modify, repbce or the cost thereof and its impact on customer rates. cease operating ceruin of its facibues. The Company may ako incur The Company has discovered groundwater degradation at the Brun- substantul capital expenditures and operating expemes in amounts ner Island steam electric sution. The degradation is attribuuble to fuel which are not now determinable oil which has leaked from underground facihnes and to seepage from in August 1991, a group of fuel oil dealers in the Company's setsice coal refuse and doposal areas and from the stathn's coal storage pilt area filed a complaint agamst the Company in l'nited States Distnct The Company abo discovered in 1990 that bag fdters, used to trap fly Court for the Eastern District of Pennsylvania alleging that the Com ash from the plant and previously deposited in an ash basin. leach out pany's promotion of electric heat pumps and off peak thermal storage cadmium in suflicient quantities under laboratory conditions to classify systenu had violated and continue, to violate the federal antitrust laws . them as hazardous waste under Penruyhania Department of En- Specifically, the compbint alleges that the Company's use of its PUC-vironmental Resources (DER) regubtions The Company is currently filed tariff to provide a lower electra rate for newly constructed negotiating a Con 3ent Order with the DER to address these issues and residences equipped wnh thermal storage systems. combmed wnh the is proceeding to derclop and implement various remedu! action pbns Company's program of providmg cash grants to developers and contrac- c intended to address these different degradation sources. Similar but less tors for the insultation of high efficiency heat pumps in these substantul groundwater degradation may exi3t at some of the other residences, allowed the Company to illegally capture at least -'0% of power plants. . the market for heating in new residential construction within its service Since 1980, the DER has been considenng a program for the area. The compbint also alleges that the cash grant program viobted handhng and disposal of industnal(or residual) sohd waste The DER and continuc3 to viobte the Racketeer Influenced and Corrupt has proposed regubtions 101 this purpose, which are expected to be Organizations Act (RICO). final by mid 1991 The fbal regubtions are currently expected to re- The compbint requests ludgment against the Company for a sum in quire the Company to submn deuiled infotmation on waste generation, excess of $10 milhon for the alleged antitrust violations, treble the minimization and disposal pracuces The fmal regulations are also ex- damages alleged to have been sustained by the puinuffs over the past peeted to require that the Company repermit existing ash basins at all four years Separately, the comphint requests ludgment for a sum in ex-of its coal fired generating stations by applying updated sundards for cess of $10 milhon for Oc alleged RICO viobuons, treble the damages waste disposal. In heu of instalhng hners and teachaic collection alleged to base been susuined by the pbintiffs oser the past four years. systems for ch impoundments. the regubtions would 200w the Com- Finally, the complaint requests a permanent injunction against all ac-pany to continue to operate an existing ash basin ifit can meet the tivities found to be illegal, including the cash grant program regubtory criteria for demonstrating that the facihty b not pouunng The Company beheves that the aneganons made in the compbmt are grounduter. Any a3h ba-ins that cannot be repermmed wil! be re-wnbout ment. However, the Company cannot predict the ulumate out-quired either to close within five years or to fde an abatement plan. come of this litigation Any new ash b,tsin must meet the rigid site and design standards et At December 31,1991, the Company had guaranteed $1' nuthon of peeted to be set fonh in the fmal regulations in addhnon, the siting of obligations of certam unconsohdated compames 41

l t. 4 "3El,ECTED FIN ANCI AL AND-0PER ATING D AT A 1991 1990 1989 1988 , , MONSOLIDATED OPERATIONS

        . Income Items-thousands -

Operating revenues (a) . ,,,,, . , , . , , $ 2,5 59,696 $ 2,419,717 $ 2,376,455 $ 2,227,114 Operatingincome ; , . .. .. . .., 582,331 590,366 618,850 605,051 Net income (b) . . . . . . , ,, , , ...... . 348,414 343,906 353,436 332,042 Earnings applicable to common stock (b) . 303,727 297,781 305,018 279,865

       . Calance Sheet it ems-thousands (c) -

Electric utility plant in service-net . ., $ 6,296,496 $6,240,608 $ 6,198,693' $6,056,723 Construction workin progress . . . . 183,242 143,084 115,799 177,333 Other property, plant and equipment-net . .. 449,840 510,529 552,150 607,528 Total assets. . . . . . .,, , .. .. .... 7,934,595 7,735,442 7,598,968. 7,524,648 Long term debt , . o. . , ,.., , , 2,582,233 2,470,596 2,650,276 2,626,784 Preferredand preference stock With sinking fund requirements . . . 364,590 383,690 409,990 438,290 Without sinking fund requirements . . . 231,375 231,375 231,375 231,375 Commonequity . . . , . . . .. 2,298,010 2,221,759 2,130 338 2,049,831' Short. term debt . . . . . . . . .. . . ... ., 147,170 265,940 95,429 201,652

              ' Total capitalprovided by investors . . . . .                                                                   ..                                 5,623,378               5,573,360       5,526,408       5,547,932 FinancialRatlos Return on average common equity-% (b)                                                                      .            .                               13.42                   13.65           14.62            13.86 Embedded cost rates (c)

Long-termdebt-% . . . . ... . 9.72 9.69 9.80 10.15 Preferred and preference stock-% . . , . . 7.51 7.54 7.62 7.66 Times interest earned before income taxes '. 3,06 2.86 2.73 2.65 Ratio of earnings to fixed charges-total enterprise basis (d) , . . .... .... . 3.04 2.81 2.69 2.57 Depreciation as % of average depreciable property 3.I 2.9 2.7 2.6

         ' CommonStockData Number of shares outstanding-thousands Year-end , ,                  , ,,                             ,. .                   .             .                                              75,828                  75,649          75,423          75,248 Average . . .                       . . ..                            .                             ,                 ,

75,691 75,462 75,314 75,071 Number of shareowners(c) ,,, . . 127,272 130,719 132,197 137,450 Earnings per share (b) . . . . ., , 5 4.01 $ 3,95 5 4.05 5 3.73 5 3.10 5 2.98 5 2.86 5 2.76 Dividends Book value per declared share c) p(er , , . share . .

                                                                                                  ..    .         ,                                                    530.30                  $29.36          528.36           $27.23 Market price per share (c) , ..                                          .                                                         .                 5 52%                   $ 43%           5 42%            $ 36%
                ~

Dividend payout rate-% (b) . 77 76 71 74 Dividendyield-%(e) . . . . . , , 6.69 7.15 7.33 7.70 Pricc earmngs ratio (b)(e) . . I1.55 10.56 9.63 9.61 ELECTRICOPERATIONS s.

          ~ RevenueData By class of service-thousands Residential ,                    ,       ,                                                           ,

3 842,771 $ 800,587 $ - 776,673 $ 768,051 Cc.mmercial . . , , . 687,632 M7,949 612,762 592,023 Industrial . .. . , , , 406,038 503,806 488,691 495,968 Otherenergysales . _ 83,630 78,489 80,144 75,507

                          . System sales                       ..             .... . .                                                                             2,120,071                2,030,831       1,958,270       1,931,549 Contractual sales to ot.her utiuties (a)                                                                                                         322.298                 313.207         316,508          277,971 Total from energy sales billed (a) .                                                                                              2,442,369                2,344,038       2,274,778       2,209,520
                    < Unbilledrevenues-ne.t                                   .                                                                    .                    47,022                   5,043          39,628         (18,187)

Other operatingrevenues ,. 68,283 68,950 60,373 34,073 Total electric operating revenues (a) . 52,557,671 -52,418.031 $ 2.374,779 32,225,406

                  . Average price per kwh billed-cents Resid* ntial . . .                                 ...                          ..,                                ,,.                                    8. I 2            7.92            7.72             7.79 Commercial ,                         . .                       ,,          .                                       ..               ,                     7.76              7.59            7.40             7.46 Industrial , . .                    .                          .                                     .                                                   5.98              5.78            5.60             5.64 Total for ultimate customers .                                 ,,..                                                                          7.39              7.17            6.97             7.02 Total for system sales                                      ..                .                            ..                                7.30              7.08            6.89             6.91
           - ( a ) . Years 1982 through 1990 have been restated to reflect changes due to the reclassification of receipts from the distinct sale of energy to certain vttlities. which began in 1982, from interchange power sales to encrgy sales and operating revenues. see l'inancial Note 17 ror information con-cerning the future reclassificanon of interchange pow er sales to operating revenuet
            . ( b ) 1981 net income and carrungs apph(able to common stock include a nonrecurnng credit related to an accounting char.ge, w hile indicated finan-cial ratios and common stoc k data for the year are computed excludmg the nonrecurrmg credit fmn. carnmgs M

1981 1991 1987 1986 1985 1984 1983 1982 1981  % Change

   $2,097,731          $2,197,747 '         $2,001,258           $ 1,585,457       $ 1,270,589         $ 1,233,154        $ 1,134,903           125.5 590,637            597,529              536,115              418/W9            300,563             236,430            227,044           156 5 302,461             300,108              290,613              318,903           296,011             278,886           241,077               42.7 248,035             231,051               199,327             226,758           210,l'3             210,572            183,182             65.8
   $ 5,970,000       '$ 5,815,838           $ 5,776,687          $3,856,738       $ 3,842,826          $2,107,651        82,049,418             207.2 141,9(O           224A26                 161/64            2.020,780         1,730,223          2,923,744          2,312,289             (92,1) 655.254            691,820               699,448              733,002           670,239             582,740           496,739               (9.4)
  ' 7,457,346           7,413,105            7,255,918            7,231,058         6,741.1 e           6,152,976          5,410,245              467 2,587,500           2,849,972            2/61,564              2,674,036        2A77.700            2,417.244          2,261,767               14.2 495,590             175,239 .          - 691,010              738,027           714,830             621,634           544,231             (33.0) 231,375            231,375               231,375              231,375           231,375             231,375           231,375 1,5 @ .971          1,915,649             1,905,700            1,896,987         1,767,949          1.613,695          1,435,437              60.I 298,321            243,588               247,260              278,652           351,194             324,( 6)          321,481             (54 2) 5,582,757           5,715,823            5,739,909             5,819,077        5,543,048           5,238,612          4,794,291               17.3 12.78              12.11                 10.42                12.30            12.29               13.60              12.74              5.3 10 31              10.53                 11.23                11.11            10 98               10 80              10.84           (10.3) 7.77                8.33               10.02                  9.94              9fs                9.41               8.93           (15.9) 2.62                2 69                 2.28                 2.24              2.20                1,94               1.79           70.9 2.53                2.58                 2.19                 2.06              2.05                1.81              1.77            71 8 2.5                2.3                   2.3                  2.7              29                  3.4                3.4            (8 8) 74,972             74,513                74,513               74,513           70,335              66,461             58,447             29.7 74,644             74,513                74,513               72,767           68,612              62,809             53,912             40A 141,843            147,611               151,025              162,903           169,142             169,127            165,0(Xi          (22.9)
         $ 3.32             $ 3.10                $ 2fa                5 3.12           $ 3.06              $ 3.35             5 3.17             26.5 3 2.68             8 2.58                $ 2.56               3 2A8            $ 2.40              $ 2.32             $ 2.24             38 4
         $26.26             $25.71                $25.58               $25A6            $25.12              $24.71             $245)              '3.6 8 33               $ 365/2               5 28%                $ 25%            $ 20%               $     21           5 17 %           207.3 81                  83                   96                   80                79                  70                 72             6.9 7.37               7.30                  9 81                11.00            10 48               11.95              13.34          (49.9) 10.95              11.39                  9.76                 7.24              7A8                5.79               5.30          117.9

' $ ' 737,066 $ 714,753 $ 634,669 $ 591,922 5 529,911 $ 503,557 5 411,668 1 41.7 572,623 557,216 492/66 441,651 386,617 363,233 292,984 134.'

     '492,491             473,488               438A27               411,533          367,950             347,726            295,006              71.5 74,228             74,047               64,223              -59,526            47,275              47,731             39A84            111.8

1,876,408 1,819,504 1,630,005 1,504,632 1,331,753 1,262,247 1,039,142 1040 282,799 299,663 255.875 52,724 39,012 $ 1,775 2,159,207 2,119,167 1,885,880 1,557,356 1,370,765 1,274,022 1,039,142 135.0 (84,888) 52,344 78,545 ~ - (9,725) (119,539) (61,652) 76,884 (38.8) 21,900 25,033 30,059 29,960 12.972 12,708 10,142 573.3

 $2,096,219          $2,196,544            $ 1,994,484          $ 1,577.591       $ 1,264,198         $ 1,225,078        $ 1,126,168            127.1 8.05               8.15                  7fo                  7.00             6.51                6.26               5.09            59.5 7fe                7.78'                 7.32                 6.77             6.32                6.11               4.97            56.1 5.84               5.93                  5.55 ~               5.07             4 83                4 75               3.70            61.6 7.23.              7.34                 6.85                  6.30             5.91                5.74               4.59            61.0 7.12               7.25                 6.77                  6.23             5.83                5 66               4.53            61.1 (t ) Year.cnd.

( d ) Cornputed using carnings and fixed charges of the Company and all of its affiluted compnes. Futed charges consnt of interest on sig irt and long4erm detx, other interest clurgn. interest on capital k ase obhgarm and the es'imated interest comp ment of other rentah. ( e ) RecJ on average of month end market prxrs. O

SELECTED FINANCIAL AND OPENATING DATA i ip .

                                                                                       .           .                                                                                 1991                                1990           1989             1988
          - ELECTRIC OPERATIONS (Continued)-
          , Sales Data '

Customers (a)(b) . . . . . . . . . . . . .., , .. . 1,173,679 1,161,231 1,143,592 1,122,632 L Average annuai residential kwh use . . . . . , . . . 10,101 9,947 10,064 10,059

             ' Electric energy sales. billed-millions of kwh
     '              Residential . . . ....                                   .. ..                   .            .. .                          ...                                            10,385                     10,103         10,061             9,856 Commercial . . , .                    , .. .,                                        ,              ..             . ..                                                           8,861                 8,538          8,285            7,932 -

Industrial . . . . . .. .. ... .. . 8,456 8,716 8,723 8,799

                  ' Other . . . . . .... ... .                                                                                 .. .                           .

1,334 1,315 1,333 1.360 System sales . .... ... . . . . . .. . 29,036 28,672 28.402 27,947 Contractual sales to other utilities (a) ... 7,183 7.028 6,956 6.268 Total electric energy sales billed (a) . .. . 36,219 35,700 35,358 34,215 Sources of ener gy sold-millions of kwh Generated Coa! fired steam stations . , , .. .. 24,805 26,409 27.104 26,607

               .         Nuclear steam station (c) .                                      ...                       .

14,271 13,254 11,916 12,867 Oil. fired steam station i . . . . . . . . . . . . . 1,939 1,442 3,817 4,186 - Combustion turbines and diesels (oil) . . . 15 33 107 57 liydroelectrie stations . . . , .. .. 521 804 714 573 41,551 41,942 43,658 44,290 Power purchases . . . . . . . . . . ., 4,542 4,634 3,586 3,027 Interchange power sales (a) . . . . . . . . . . , (7,553) (8,971) (9,234) (10,855) Company use,linelosses and other .. .. (2,321) (1.905) (2.652) (2,247) Total electric energy sales billed (a) . 36,219 35,700 35.358 34,215 GenerationData Net system capacity-thousands of kw (b)(d). . 7,797 7,912 7,864 7,479 Winter peak demand-thousands of kw(c) J . 5,974 5,661 6,000 5,566 Generation by fuelsource-% .

                    . Coai . . . . . . . . . . . ... .                                   ....                                         .                 .                                                       59.7           63.0           62.1               60.1 Nuclear (c)          .                               .                            . .. .                                .                                                                34.3           31.6           27.3               29.0 011 .............                                .      . . . ..                                .              ,                         ,                                                 4.7            3.5            9.0                  9.6 -

Hydroelectric . . . . . . . ... ,. ,, . 1.3 1.9 1.6 1.3 a- Steam station availability-% Coal-fired . . , . ... .. . . 78.1 82.5 81.1 81.3

                     . Nuclear (c) .                                                                              .           .                     .                                                           86.3           80.2-          72.1                77.7-
                     , Oil-fired . . . .         ......                         . .,                 .            ..                                                                                            86.7           82.8           76.3                90.1 Steam stationcapacity factor-%

Coal fired , . .,. .. . .. , . .. 68.2 72.7 74.6 73.1 85.8 80.1 72.0 77.7 7 Nuclear (c) . . . . . . . ,, , ,

                     ' Oil-fired .            ..      ......:....,                                    .                  .. ..                       .                                                           13.5           10.0          26.6                  29.l' FuelCost Data Cost per kwhgen'etated-cents Coal-fired steam stations                                           .                      .           .                                                                                 1.75           1,66           1.61              't.64 Nucicar steam station (c) .                                 ..           ...                     .....                        .                                                          0.57           0.59           0.58                 0.56 Oll-firedsteam station . . . . . .                                                 ... .                        .                                                                        3.58           4.18           3,03                 2.76 Combustion turbines and dicscis (oil) .                                                                         .                         .                                              7.52           7.68           5.95                 5.89 1.43           1,41           L46                   1.44 1 Average . .                          . . . , . ..                               ..                               .
                  ~ Cost of fossil fuel received at steam stations Coal-per ton -. .. ...                                         ,                             .          .                                                                        S42.87              $40.64         839.04           $ 39.52 .
                       , Residualoil-per barrel                                  .            .                      .                   . .. .                                                          $ 18.76             521.52         517.71           515.95 Capitalization Ratlos-%

Long-term debt . , . .. . 46.3 44.5 48.3 47.9 Short termdebt . . .. ... . . .. . ... 1.3 3.8 0.2 1.7 Prcierredand preference stock: .. . . 10.t 11.2 1 ! .9 . I 2.4

Common equity, . . . . . .. . .. 41.6 40.5 39.6 38.0 Times interest Earned Before Income Taxes . 3.11 2.93 2.88 2.73 Employees (b) . . . . . . .. . 8,144 8,149 8,108 8,306

( s } Yeun 1982 through 1990 have been restated to reflect changes due to the reclassification of receipts from the distinct sale of energy to certain utihues.

                    ~ . which began in 1982, from interchange power sales to energy sales and operating revenues. Ser hnancial Note 17 for information concerning the future
                  , reclassification oflaterchange power sales tooperating resenues (b) Year-end,

( c ) - The Company's first nuclear unit was placed in commercial operation onJune 8,1983 and the second unit on February 12.198$. 44

1981 1991 I IT87 1986 1985 1984 1983 1982 1981  % Change 1,097,521 1,073,150 1,055,549 1,039,381 1,026,148 1,013,625 1,006,570 16.6 9,565 9.344 9,034 9,282 9,051 9.039 9,157 10.3 9,157 8,771 8,354 8.454 8,138 8,045 8,088 28.4 7,457 7,159 6,728 6,527 6,119 5,946 5,893 50.4 8,438 - 7,986 7,907 8,117 7,623 7,324 7,968 6.i 1,285 1,170 1.082 1,043 968 982 1,005 32.7 26,337_ 25,086 24,071 24,141 22,848 22,297 22,954 26.5 6.201 5,602 4.850 1,002 845 348 32,538 30,688 28,921 25,143 23,693 22,645 22,954 57.8 26,465 25,151 26,237 26,695 26,885 25,477 24,841 (0.1) 13,285 10,151 11,534 6,295 4,509 293 4,095 5,453 4,316 4,121 5,581 3,186 4,705 (58.8) 28 17 18 32 45 13 32 (53.1) 689 739 612 747 700 612 622 (16.2) 44,562 41,511 42,717 37,89u 37,720 29,581 30,200 37f 2,707 2,032 3,716 3,765 3,880 1,414 744 510.5 (12,682) (11,018) (15,433) (14,732) (15,769) (6,552) (6,274) (20A) (2,049) (1,837) (2,079) (1,780) (2,138) (1,798) (1,716) (35.3) 32,538 30,688 28,921 25,143 23.693 22,645 22,954 57.8 7,499 7,519 7,513 7,484 7,494 6.546 6,546 19.1 5,591 5.154 4,981 5,519 4,869 4,489 5,20? 14.7 59.4 60.6 61.4 70.4 71.3 86.1 82.2 (27.4) 29.8 24.4 -27.0 16.6 11.9 1.0 9.3 13.2 10.2 11.0 14.9 10.8 15.7 (70.1) 1.5 1.8 1A 2.0 1.9 2.I 2.1 (38. I) 83.3 78.8 78.6 75.2 78.8 79.1 74.7 4.6 80.4. 61.7 70.7 66 7 67.7 84.7 84.7 87.2 68.0 75.8 80 4 73M 18.I 72.9 - 69.3 72.3 73.3 74.0 70.2 68.4 (0.3) 80.5 61.3 70.5 65.7 67.5 28.5 38.0 30.0 28.6 38.8- 22.2 32.8 (58.8) 1.63 1,67 1.78 1.75 1.68 1.77 1.64 6.7 0.56 0.58 0.61 0.54 Of>6 3.23 2.96 5.02 5.31 5.23 5.62 5.75 (37.7) 6.51 7.81 9.31 9.82 10.21 10.74 10.51 (28.4) 1A6 1.57 1.81 1.98 2.15 2.20 2.30 (37.8) 539.30 540.17 542.00 542.75 539.37 $42.32 $39.59 8.3 518.51 516.83 528A2 53!.32 529.79 530.94 533A7 (43.9) 46.9 50.4 47.1 46.7 45.1 46.7 47.6 (2.7)

         = 3,1                2.1               1.7               1.9                3.6        _ 3.2         3.9    (06.7) 13.5               12.8              16.7              17A                17.9         17.1         17.0    (36.5) 36.5               34.7            '34.5               34.0               33.4         33.0        31.5      32.1 2.71               2.80              2.37              2.35               2.29         2.05         1.91     62.8 8.301.             8,339             8,433             8,386              8,160        8,208        7,999         1.8 (d) Total generaung capacity plus firm capacity putt hases less firm capacity sales.

( e ) F.xcept for 1989, the winter peaks shown were trahed early in the subsequent year. 4

SH ARE0WNER AND INVESTOR INFORM ATION-WM N m g J p b M M e* d he follow. Record Dates: The 1992 record Lost Stock or liond Certificates: inginforma- dates for dividends are March 10 Please callor write to investor Ser-tion is provided as a service to June 10, September 10 and vices for an explanation of the pro-shareowners and other investors. De cemher 10. cuJure to replace lost stock or bond For any questions you may have certificates. or additionalinformation you Direct Deposit of Dividends: may require about PP&L or your Shareowners may choose to have PuWeadons kmalpuMeahans investments in the company, their dividend ch'ecks deposited are prep red each year and sent to all please feel free to call the toll- directly into their checking or sav. htors of record and to others free numberlisted below, or w ho request their names be placed ings account. Quarterly dividend write toi payments are electronically credited on our mailinglists. These pubHea. Gurge /. Kt/nc. Manager on the dividend date, or the first d "8

• Investor 5ervices Department business day thereafler. A nnualReport-published and Pennsylvania Pou er Might Co- malled to all shareownets of record Tuv Nortb Nintb street in mid March.

Allentoren. Fa 1s101 Dividend ItcInvestment Plan: , Shareowners may choose to have dividends on their common, prefer. easy-to read newsletter containing Toll Freel3honc humber: 1orin- & nvested current items ofinterest to share-formation regarding your investor wners-published and mailed at in PP&L common stock instead of account, or other inquiries, call toll- the beginning ofeach quarter. Addb free: 800-322-9532 when calling receiving the dividend M check tionally, a special year-end edition from inside Pennsylvania, or containing unaudited results of the 800-345-3085 when calling from Certificate Safekeeping: year's operations is mailed in early outside Pennsylvania. Shareowners participatingin the February. Dividend Reinvestment Plan may Quarterly Rerictr-published in Annual Meeting: The annual choose to have their common stock May, August and November ta pro-meeting of shareowners is held each certificates forwarded to the com' v de quarterly financialinformation year on the fourth Wednesday of pany for safekeeping, These shares to investors. April. The 1992 annual meeting will will be registered h1 the name of the be held at 1:30 p.m.on Wednesday, company as agent for plan par- Periodic Mallings: Letters from the April 22,1992, at the Williamsport ticipants and will be credited to the company regarding new investor Scottish Rite Auditorium,348 Market participant's account. Dividends programs, special items of in terest , St.,Wi!Uamsport,Pa. A reservation paid on any shares heldin the plan or other pertinent information are card for meeting attendance is in_ will be reinvested. mailed on a non-scheduled basis as cluded with shareowners' proxy necessary. material. Lost Dividend or Interest Checks: Dividend or interest checks Duplicate Mallings: Annual k)st by investors, or those which reports and other investor rublica. Proxy Materlah A proxy state. tions are mailed to each investor - ment, a proxy and a reservation card may be lost in the mail, will be replac_ ed if the check has not been located account. If you have more than one for the company's annual meeting account, or there is more than one m-are mailed in a package which in. by the loth business day following the payment date. vestor in your household, you may cludes the annual report. This ma. c Horwdtdorequesdatonhone terial was mailed beginning March " "' 16,1992, to all shareowners of Transfer of Stock or Bonds: Stock P" " #

                                                                                      "      ** l"'" P '"      "CC "I record as of March 10,1992,                or bonds mav be transferred from          ""*  I"
                                                          ^

one name to another or to a new ac-

                                                                                                           "P"'"I# "    "E Dividends: For 1992, the declara.          cout.t in the name of another person. Form 10-K and PP&L Profile: The tion of dividends is considered by         Please call or write regarding transfer   company's annual report, filed with the board, orits executive commit.         Instructions.                             the Securities and Exchange Com-tee, on February 26, May 27, August                                                  mission on Form 10-K,is available 26 and November 25, for payment            Bondholder Information: Much              about mid-March. The PP&L Profile, on April 1, July I and October 1,          cf the information and many of the        a 10-year statistical review contain-1992, andJanuary 1,1993, respec-          procedures detailed here for share-       ingin depth information about the tively. Dividend checks are mailed         owners also apply to bondholders.         company, is avaHable in May. In-ahead ofIhose dates with the inten-        Questions related to bondholder           vestors may obtain a copy of these tion they arrive as close as possible to   accounts should be directed to            publications, at no cost, by calling or the payment dates.                          Investor Services.                       writing to Investor Services.

46

e e Listed Securities: Fiscal Agents: Neuc York Stock Exchange Philadelpbla Stock Exchange Stock Transfer Agents and Common Stock (Code: PPL) Common Stock Registrars 4 '/3% Preferred Stock 4 %% Preferred Stock First Chicanc 7' rust Co. of Wu > c (Code: PFLPRB) 3.35% Series Preferred Stock P O lloX1981 MO% Series Prefened Mock Cburch Street Station 4.40% Series Preferred Stock A,CH' F"'k. A cu- } ork hmW98/ 4.60% Series Preferred Stock (Code: PPLPRA) 8.60% Seoes Preferred Stat k Pennsylt ania Pouvr & light Co. 8f>0% Series Preferred Stock Preference Stock, $ 8.00 Series Int estor Services Department (Code: PPLPRG) Preference Stock, $ 8.40 Setics Dividend Disbursing Office and ( de l I .I Dividend Reinveshnent Plan Agent

                                 ~)

Preference Stor k, $ 8.40 Series Pennntrania Pou vr & l.ight Co. bu rstorSert ices Department (Code: PPLPRil) Preference Stock, $8 'O Series Mongage pond hustec (Code: PPLPRI) glorgn 6uaranty 7rusao g,g ud M E.uhange Plat e-Basement A Neus York, Nete York 10260 llandinterest Paying Agent Pennsylt ania Poteer & Light Co. Int estor Sert ices Department

                                                                                                                                                      ~

QU ARTERtY FIN AllCI Al., COMMON TOCI'PalCE AllD DI.Vi0END D AT A (Unaad. lied) For the Quarters Ended (a) March 31 June 30 Sept. 30 Dec. 31 (7'housamts of Dollars. Except l'er %a re A mouras) Operating revenues (b) . 5673,835 5599,606 5630,721 $655,534 Operatingincome 169,960 131,049 139,615 141,707 Net income . I10,382 72,475 80,851 84,706 Earnings applicable to common stock 99,036 61,189 69,733 73,769 Earnings per common share (c) 1.31 0.81 0.92 0.97 Dividends declared per common share (d) . 0."75 0."75 0.775 0.775 Price per common share

     - liigh                          ,                                                                       .                            45              46%             48           52%

Low 41% 42% 43% 47% 1990 Operating revenues (b) . $645,386 $ 568,900 5582,470 $622,961 Operatingincome 170,409 129,147 144,293 146,517 Net income . 107,626 66,820 82,858 86,602 Earnings applicable to common stock 95,937 55,191 71,39, < 5,2 56 Earnings per common share (c) 1.27 0.73 0.95 1.00 Dividends declared per common share (d) . 0.'45 0.745 0.'45 0.745 Price per common share liigh 43% 43% 42% 44% Low . 40 39% 39 39% ( a ) The Company's electric utihty husiness is sta3onalin tuture wuh peak sales penods generally os.curnng in the w inter months Accordmgly, com pansons among quarters of a year m.ny not be indicative of os crall trends and changes in operations ( h ) operating tevenues for Pr>0 and the qu triers ending March 31 andJune 30,1991 have been restated to renect changes due to the reclassihcat on of receipu from the dnunct sale of encrgy to cerum utihues from interchange power sales to operaung resenues See Hnancul Note 1"' for informanon concerning the future rettas ,ifitanon ofinterchange power sales to operating resenues T he arnounts to be reclassified for the quarters ended Man h 31, June 30. Sept. 30 and Det. 31 are(thou, ands of dollarQ P)9t, $ C '12, $ % f4 $40A'H. 8 3',$M Prio. $C20, S P 9N. 5 8 %.20'. $ 30,'o9, respectncly ( e ) The sum of the quarterly amounts rnay not equal annual earnings per share due to changes n; the number of tommon dures outsunding dunng the yeat or rounding (d) The Company has paid quarterly ca,h dn idends on its common suwk in n cry > car sm(c 19m The dn idend3 paid per shart m F)91 and 1990 were

          $3 07 and $2 95 respectively The most recent regular quarterly dmdend paid by the Company w as 7'n ( ents per share (equn alent to S 310 per annun0 paidjanuary 1.1992 hiture do,tdends wdt he depen. lent upon futurc earningx financui rcquiremems and other fat tors Q

0FFICER8 AND DIRECTORS Officers JOllN T. KAUFFMAN 65 (41), chairman and anc/ nauure ogi<er i - WILLIAM F. IIECllT 48 (27), Pre 3taent and cdu/ operating offuer

             . CliARLES E. RUSSOLI 58 (36), Axecutive race cres,aent ana chwf innamiui off,cer GENNARO D. CALIENDQ 51 (23), senior vice Prestaent. Generalcounset andsecretary llAROLD W KEISER 48 {11), Senior r,ce Presidentwudear JOSEPl1 ClKRUM 54 (32), senior rice ivesidenboiriston operations
              .YRANCIS A. LONG 51 (28), senior rue Presiaentsystem rouer & rnginecrung LINDA CURRY BARTtlOLOMEW 43 (21), rice Prestaent-rubuc affairs JOllN R. BIGGAR 47 (22), r/ce Prestaent Finance ROBERT G. BYRAM 46 (15), vtce presidentwuclear operations i               STEVEN 11. CANTONE 48 (12), rice crestarnt centrat oss tison JOliN M. CilAPPELEAR 53 (13). rice President./nressments una rensions ROBERT S. GOMBOS 48 (26), rue Pres,aent.numan Resource & inuetoinnent RONALD E. tilLL 49 (27), rice President and comptroner
        ,      JOfiN P. KIERZKOWSKI 52 (20), rice president and Treasurer GRAYSON E. McNAIR 51 (29), r,cc PresidenI4ebtge onision

! JOllN R. MENICil!NI 44 (23), rice crestaent narrisburg virtston l CLAlR W. NOLL 58 ($1), rice Prestaentinformanon sertices , l EDWARD F. REIS 61 (35), r,ce Prestaent Corporate Planmng , l JOliN E. ROTli 63 (37), rice Prestaent. Northern n<riston c

             ~ JOHN 11. SAEGFR 53 (31), rice Presraentlancaster utviston                                                                                                 >

ROBERT J. SilOVLIN 51 (29), ruc Prestaeni rouer Producuan 6 Engmeering '"'P"','",*""8'*'"'w'~"""" we,vav u.nv . I JEAN A, SMOLICK 57 (39), assistant saretary . , nun, i na . on. ' i %_r RAYMOND F. SUllOCK! 46 (18), rice Prestaentousquebanna olenson " " < e" o ""* " PAULINE L VETOVITZ 45 (27), assistant secretarv '" M i U ","'l"f Il Z [ ["" i-flELEN J. WOLFER 63 (44), a.ssistant secretary and assistant Treasurer " " " ' " < ' < ~ " " " ' ' " " - Numbers indicate age and years of service ( ) as of March 1,1991 - Directors

             'CLIFFORD L. Al.EXANDER JR. 58 (16), Washington, D.C., cresiaent. Alexanaer &

Associates Inc. Consultants to business, got ernment and industry JEFFREY J. BURDGE 69 (9), Camp Hill, former chairman ofibe naard, u<.rsco Corporation Manufacturer of processed andfabricatea metals l' E. ALLEN DEAVER 56 (1), Lancaster, Emunre rice cresiaent armsinmg wortainaustries l . Inc- Manufacturer of snteriorfurnishings ans specially products i EDWARD DONLEY 70 (9), Allentown, cbuseman Decutere commstree; asr Proaucts and c;' Che 7als inc, Manufaaurer of industrial and commercial gases and dwmicats WlLLI AM J. FLOOD 56 (2), Hazlcon, secretary-Treasurer, nigbu ay Equipment & supply , Co Supplier of heavy equipmentfor hightcay wnstruction and snaustry l REV. DANIEL G. G AMBET, O.S.F.S. 62 (5), Center Valley, Prestaent, auentou n Conege of St Francis de Scdes ELMER D. GATES 62 (2), Bethlehem, rice chairman. runer company manu/aaurer of - '

                                                                                                                           '"y"*;'

f'"' y' """",["""[' '""["

                                                                                                                    ~

plants, machinery ans equipment for industry ,, WILLIAM F. HECHT 48 (1), Allentown, President and chief operating ogicer u n < g .,n,, m,, STUART IIEYDT 52 (I), Danville, Prestaent and chte/ hecutive offuer. ceisinger i n- mor  % >< y a w '< . <. & s ~ ; foundation Parent company of Geissnger neaHb care system w CLIFFORD L JONES 64 (3), Mechanicsburg, former President, renm,imnia chamber of nusiness and industry ' L "'F*'*V R"9"**MH ' ""

           - JOllN T. KAUFFMAN 65 (13), Allentown, chairman ans asief necuure officer                                       7 Z"[(ll" 1 f ,                            .

RUTil LEVENTHAL 51 (3), Middletown, provost and than, venn state i utt"ra i um ~ nn : ou narrisburg (The Capital Couege) manancmcan u m 'nemcm and NORM AN ROBERTSON 64 (22), Pittsburgh, senior rice cre3rdent and chief Economut. o*re="a= *= h* ' " - Menon Bank. NA. W '"" *gila""'" *""' ' I ~ .n i < l Om j: Cil ARLES E. RUSSOLI 58 (5), Allentown, necutive rue President ar,a chwf Financial h,intgr,,g (, -I  % ,,, y a , . % n , officer ,, ,w, , , DAVID L. TRESSLER 55 (10) Scranton, rmuur e otreaor ofibefoserb a ma>aae cemer now n>nnuo s2. oa omnio for Technology ana Appliea Research at the timrersity of sr.ranton w,nran, ; n ><.a wan un a, 2na

                                                                                                                            '""""I       h*"

Numbers indicate age and years of service ( ) on PP&L twsd as of M.irch 1,199.! l *Mr Alcunder resigned from the tard effective Dec. 31.1991.

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