ML20104A514
| ML20104A514 | |
| Person / Time | |
|---|---|
| Site: | Pilgrim, 05000471, 05000472 |
| Issue date: | 02/28/1979 |
| From: | BOSTON EDISON CO. |
| To: | |
| References | |
| NUDOCS 7903220275 | |
| Download: ML20104A514 (24) | |
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l Over the past few years Boston Edison has dealt with the impact of a variety of changing factors upon energy growth, while simultaneously assuring an adequate and reliable supply of energy. With lower than ! anticipated growth, sales increases provide a decreasing percentage of the ! I revenues necessary to offset the cost impacts of inflation. This forces in-creased reliance upon rate relief, which is politically and socially sensitive. Prior to 1972, the Company's territory sales grew by approximately 7 percent annually. Inflation, the oil embargo and the 1974 recession resulted in a growth slowdown. Sales declines were experienced late in 1973 and i continued through 1975. Since then, sales growth recovery has been l realized, but below historicallevels. In 1978, territory sales growth was 1.8 percent. For the period 1979 through 1989, current estimates indicate approximately a 3 percent annual growth rate in territory sales. The Company's planning process, while reflecting this reduced growth, offers the flexibility necessary for growth to increase. The poten-tial for such changes exist. . Boston and the surrounding area is experiencing renewed vitality. Boston is a 'living' city, financially healthy, with leadership that is sincerely , interested in its well-being. The Mayor's ' Boston Plan' reflects a strong commitment to a new urban strategy designed to redevelop targeted areas through a mix of public and private funding. This public commitment is accompanied by increasing private development throughout the area. Many major projects are in the planning stage or already under con-struction: Copley Place, a $250 million investment in luxury shopping, a Te amedneve** ($-5) hotel and a 30-story office tower; the conversion of three closed naval facilities to commercial, industrial and residential uses; Park Plaza, the l , commercial redevelopment of the historic Park Square area; and revi-
- u. 554 58' talization of the downtown shopping district. Major additions to area no colleges and universities, significant expansion of hospital facilitiea
** .,n , and substantial modernization of existing public transportation facilities are also planned.
High technology, an area trademark, is also experienc-
, ing renev ed growth and vigor. Recently the Massachu-
" 7+ " " " 78 setts Hign Technology Council, comprising 89 techno-l_
logical companies, and the Governor entered into . ! a social compact designed to yield 150,000 jobs during the next four years, in exchange for action by the Commonwealth to reduce i taxes and create a healthier climate for I industry's economic growth. e w s m s ucs ($) 4 1 99 1 43 l 2.M 2 f D 74 D % H 78 2.
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Large new office buildings have been completed and others are planned as the inventory of quality commercial space is being rapidly depleted. The construction of new hotels is being explored by major inter-national firms, as the serious shortage of adequate hotel facilities becomes evident. Additional convention space is planned. Apartment and condo-minium construction continues. A number of development plans have been presented to continue the widely acclaimed restoration of Boston's historic waterfront. As the economic tide is turning in the City of Boston, so too is change taking place in the suburbs. Route 128, which has had a surplu s of office, research and industrial space for nany years, now is experiencing a l buildup of demand and new construction. Confidence has been restored to the point that developers are now building in anticipation of growth. The outlook is encouraging. The metropolitan Boston area posser,ses the capability for strong eco-nomic growth. The Commonwealth's new Admin-istration realizes the importance of a healthy [ economy and has vowed to support construc-tive economic activity. l i The Companyis well positioned to provide generating capability adequate to j meet expected sales and peak demands. l {. Oi - e~- h l r / Cb s v , i
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AMTFAK h W h RE\lENUE l 30.2% FU5LANVPURCVAGEO POWSRAPJusTMENT ' 26 4% COMMERCIAL lEE _ 16 5% RESIDENTIAL. IEE E
' (2.2% OTHERUTIuTIES IEE 8.4% INpuSTRIAt. lE 4.5% MISCBLLANE00S l f.0% STREETUM4 TING l i
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l l Present plans assure adequate capacity through the 1980s. In the mid 1980s, Pilgrim Unit 2, an 1150 MW nuclear unit, is scheduled for commercial operation and will strengthen operating capacity levels for the late 1980s and early1990s. Assuring an adequate supply of energy for the economic development of the Boston area is one of the Company's responsibilities. Assuring that , . electricity is reasonably and fairly priced is another critical concern and the primary reason behind the Company's support of nuclear energy. Whether generation be coal, oil, nuclear or gas fired, the Company has nothing to gain. Recently enacted legislation prohibits the construction of oil or gas fired units for base load power. In New England coalis more
. expensive, while other forms of energy are not available in the decision-making time frame necessary to provide reliable base load power on an economical basis. Comprehensive studies have shown that for New England nuclear is the most economical form of generation. Its reliability I has been successfully demonstrated, as has its low environmental impact. For these reasons, Boston Edison is firmly convinced d g\ that nuclear energy is in the best interests of the region and its consumers. '
\ New England is more dependent upon im-s ported oil than other regions of the country.
NN g It has, however, made significant progress to decrease this dependence. Nuclear en-p' % ergy supplied over a third of the region's
% - and the Company's electric energy '
% e o, i requirements in 1978 and is expected -
. to play an even greater role m the L .
'% future. The1978 performance record l 1 illustrates theimportanceof this
,g g j source of power.
mwacuw/e w , a b te ' , l; EXPENSE m W W W IFUEL.ANDPURcHA6EDFbWER 35.6% tat &S 20.7% MMSSl' PMROLL ANDSENEFETS 12.0% E E l- dTHER EXPENGES 9.2% EEI DEPRECIATION 7.5 %
.__llllEEEliI EI DNIDENDS DECt.ARED 7./ %
ItJTEREGTANDOTHER CHARGES- NET
- 7.0 %
RETAINED IN BUSINESS l.0 % l 5
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I l l Pilgrim Unit I achieved a 75 percent capacity factor; New England's nuclear units operated at 76 percent. Savings were substantial. New England's units saved the burning of_47 million barrels of oil, amounting to a $517 million fuel savings for customers. Of that, Pilgrim Unit I contrib-uted a savings of 7 million barrels for a fuel savings of $78 million. In Jan-uary 1979, the unit continued its strong performance, attaining over a 98 percent capacity factor and setting an all-time monthly production record. The nation's increasing dependence upon foreign oil has adversely affected national security. It has been a primary source of record balance of payments deficits and has contributed significantly to persistent inflation. National economic performance has been and will continue to be seriously affected by problems related to oil supplies and prices. The need for Pilgrim Unit 2 becomes increasingly evident as the L volatile oil supply situation over the Iranian crisis illustrates the nation's vulnerability. _' Pilgrim Unit 2 has been involved in a long and extensive licensing process which has resulted in delays in the projected schedule for com-mercial operation. The Company continues to target a December 1985 in-service date, but recognizes the potential for further regulatory delay. Hearings are continuing in the Nuclear Regulatory Commission (NRC) review of the construction permit application with very few issues remain-ing. Hearings are also in process before the Massachusetts Department of Public Utilities (DPU) relative to the Company's construction program focusing on the need for Pilgrim Unit 2. These hearings have been expedi-ted by the DPU's new Commission. - In 1978, substantial financial improvements were realized. Revenues advanced to $613 million, while net income increased from $38 million to
$49 million, a 31 percent improvement. The balance available for common stock improved to $34 million. Earnings per share rose to $2.96 from $2.06 in 1977 while return on average common equity improved to 9.63% from 1977's 6.80%. Coverage of fixed charges increased from 2.26 times in 1977 to 2.50 times. Continued progress is expected in these key areas.
The Company's strong cash flow position has been maintained, re- c*U*Domm"Um (* =ad maining well above the industry average. Funds generated internally in , 1978 amounted to over $63 million or 53% of construction expenditures. In 1978, Boston Edison expended $118 million on construction proj- ., ects. In addition to Pilgrim Unit 2, major expenditures were made for an na oil storage facility at Mystic Station which provides the Company im- == - proved fuel purchasing flexibility, Pilgrim Unit i security and fire protec- " tion modifications required by the NRC, nuclear fuel, and a 35 MW ownership in Yarmouth Unit ft4 built by Central Maine Power 78 7+
- 7+ 77 78 Company.
In 1978, the Company retired Units 4,5 and 6 at gw gregww , Edgar Station. Constructed in the period from 1949 ,,, to 1954, the units would have required sub-stantialinvestment for extensive repairs as s ,, wellas to meet air and water environ- u mental standards. Since the Com- so pany possesses adequate n n 13 M 75 % T1 M 7
? l i capability now and for the foreseeable future, and because these units . were oil-fired, these expenditures could not be justified.
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, The Company anticipates construction expenditures of $159 million, ' L $195 million and $207 million in 1979,1980 and 1981, respectively. Some of i the larger projects include work on Pilgrim Unit 2, major transmission and station facilities needed to meet cui tomer requirements, a supervisory control and data acquisition systen for improved system reliability and additionalnuclear fuel. 1 i Innovative financing augmented internally generated funds in 1978. l i The Company negotiated a nuclear fuel financing obligation through - which about $44 million was obtained at favorable rates. In December, $95 ' i. million of first mortgage bonds were placed with a group of institutional p . investors, $49.5 million delivered in December and used to reduce short-- term debt, and $45.5 million to be delivered in 1979 for the payment of maturing securities. The 1979 program anticipates issuing additional debt . to be applied to the repayment of maturing securities. Market conditionsi permitting, a'dditional shares of common equity will be issued.
?The Company continued to strengthen its capital structure through -
- , enmurmped N ; the year. Long-term debt has been reduced from a high of 60 percent in =
1974 to 52 percent of capitalization, continuing the trend of past years.
. u .e # = a ai a g IMired and preference equity rern dned at 15. percent, while common :
1 equity represented 33 percent of capitahration. Although these levels are
,i . is i. - ex. p : within target.ed objectives, further improvements are planned.
emm ~ 1The Company's financial objectives are to continue .to improve its - earnings and return on equity, maintain its favorable cash flow ~ posture,t
= e ** a
- am gwp" strengthen further the capital structure and improve fix_ed charge coverage ratios. Dudng the year 1978, signi6 cant strides were made in these : ,
i<' directions.
' ~ ~
n.n .-n'"' n-
- Actions have been taken to effect continuing financialimprovement in : '
L
' 1979. A new system of budgetin'g review and control has been imple?
. mented; various forms of external Anancmg to obtain the investment mix most bene 6cial to the Company are being explored. ..
AThe Massachusetts regulatory process in recent years has been rated i below average by the investment community, it is expected that the newly > ' Lappointed Department of Public Utilities Commissioners will be cognizant
. of the needs of the utilities in the Commonwealth. This is necessaryif c p, : Governor King's commitment to economic growth is to be realized, and ~ .
Jean be achieved with regulation thst is fair to both consumers and investors.3 y
; L In 1978, the Company obtained approximately $27 million in retail rate 3. y
- increases, $23 million from the February DPU decision ~and $4 million ! '
from the related appeal to the_ courts. On February 13,1979, the; DPU was notified of the Com sany's intent to file new rate ? F 1 schedules on March 16,1979.1 n addition,' revised rate - U - schedules for the wholesale for resale customers -
- have been filed with the Federal Energy Regulatory Commission, requesting anincrease of approximately7
$1 million.
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l 9.
Management's Discussion and Analysis of Statements of Income MANA6PEM5k9 pggg g Operating revenues increased $24,061,000 in 1978 and $35,391,000 in 1977. Base electric revenues increased $29,437,000 and $21,248,000 in 1978 and 1977, respectively; of TO these increases 83% in 1978 and 60% in 1977 resulted from retail rate increases. Kilowatthour sales to our retail customers increased 1.7% and 2.5% in 1978 and 1977, respec-tively; while territory kilowatthour sales increased 1.8% and 2.5% for the same periods. It is esti-mated that sales of approximately 25,000,000 kilowatthours were lost due to the February 1978 blizzard which shut down the metropolitan Boston area for a week and that absent such loss,1978 territory kilowatthour sales would have increased approximately 2.0 percent. The following table provides a summary of the changes in operating revenues for the years 1978 and 1977. Inerease (Decrease) Operating Revenue Changes 1978 1977 Electric Revenues: (in thousands) Retail Sales: Rate Increases $24,346 $12,614 Increase in Energy Sold 2,517 5,631 Subtotal 26,863 18,275 Sales for Resale 2,574 2,973 Total Base Electric Revenues 29,437 21,248 Other Electric Revenues (39) 729 Fueland Purchased Power Adjustment Revenues (2,101) 11,8(M Total Electric Revenues 27,297 33,781 Steam Revenues-including Fuel Adjustment (3,236) 1,610 Total $24,061 $35,391 In 1978 total fuel and purchased power adjustment revenues and net fuel and purchased power expenses decreased $4,494,000 and $2,610,000, respectively. This compares with a 1977 increase in like revenues and expenses of $14,233,000 and $15,549,000. A principal factor in these fluctuations was the availability of the Company's nuclear facility, Pilgrim Unit I, which had been shut down for refueling during approximately five months in 1977. Furthermore, the 1978 average cost per barrel of oil decreased by $0.88 compared with an increase of $1.89 in 1977. Electric fuel and purchased power adjustment revenues include primarily the recovery of costs applicable to retail customers. Base revenues reflect the major portion of fuel and purchased power costs attributable to sales for resale. Other operation expenses increased $5,894,000 in 1978 primarily as a result of increased labor costs reflecting the effect of the 1978 increases in Union contract wages and Management salaries, as well as increased rents, insurance, and regulatory commission expenses. Other operation and maintenance expenses increased in 1977 primarily because of additional transmission line and office rentals, additional fossil fuel ger.erating station maintenance and labor and employee bene-fits resulting from a three-year union contract entered into in May,1977. The increases in Taxes Other than Income Taxes are primarily attributable to property tax increases resulting from higher tax rates and valuations. The effective income tax rates for the years 1978 and 1977 were 46.7% and 47.4% respectively (see note G of notes to financial statements). Other interest increased $2,729,000 in 1978 principally as a result of an increase, from 6.9% in 1977 to 9.6% in 1978, in average interest rates. The prime lending rate as of December 31,1978 and 1977 was 11% % and 7% % respectively. Total Allowance for Funds Used During Construction increased $7,997,000 in 1978 due primar-ily to increased average construction work in progress and an increase in the Allowance for Funds ; Used During Construction accrual rate. (See note B of notes to financial statements). ; M-
Years ended December 31, 1978 1977 1976 1975 1974* gqgg Operating Revenues (notes A and G): cf WCoME Electric $400,553 $371,116 $349,868 $290,186 $261,791 Steam . 15,439 16,282 17,101 15,925 14,244 Fueland purchased power adjustment 184,960 189,454 175,221 184,557 180,101 Other 12,486 12,525 11,796 10,458 3,3 % Total Operating Revenue 613,438 589,377 553,986 501,122 459,532 Operating Expenses: Operation: Fuel (note A) 220,015 207,565 188,511 173,049 160,817 Purchased power (note A) (1,710) 13,350 16,855 28,873 34,605 218,305 220,915 205,366 201,922 195,422 Other 97,300 91,406 83,972 73,359 67,051 Total Operation Expense 315,605 312,321 289,338 275,281 262,473 Maintenance 32,812 33,659 31,875 25,090 23,012 Depreciation (note A) 45,936 44,814 42,815 38,324 34,522 T"xes other than income taxes 82,931 79,781 71,288 60,136 57,567 Provisions for income taxes (notes A and 11): Current 27,123 3,%9 3,011 1,153 (747) Deferred 9,102 18,827 13,032 24,916 11,853 Insestment tax credit-Net (notes A and II) 7,470 12,0G8 16,362 (312) (312) Total Operating Expenses 520,979 505,375 467,721 424,588 388,368 Operating income 92,459 M,002 86,265 76,534 71,1M Other Income: Allowance for other funds used during construction (note B) 4,266 236 4,651 6,494 7,883 Other-Nat (161) (494) 179 70 130 . Operating and Other Income %,564 83,744 91,095 83,098 79,177 Interest Charges: Interest on iong-term debt 48,119 47,595 47,413 45,376 41,955 Nuclear fuel financing obligation (note D) 1,702 - - - - Other 10,110 7,381 7,462 9,660 14,032 Allowance for borrowed funds used during construction-credit (note B) (12,798) (8,831) (3,805) (5,314) (6,45_01 Total 47,133 46,145 51,070 49,722 49,537 Net Income 49,431 37,599 40,025 33,376 29,M0 Preferred dividends provided 5,512 5,512 5,512 5,512 5,512 Preference dividends provided 9,780 9,780 8,362 4,503 - Ba_lante Availabig for Common Stock $ 34,139 $ 22,307 $ 26,151 $ 23,361_ $ 24,128 Common Shares Outstanding (weighted average) 11,535 10,852 9,535 9,535 9,535 Earnings per Share of Common Stock $2.% $2.06 $2.74 $2.45 $2.53 The notes on pages 14 through 21 are an integral part of the financial statements. Management's Discussion and Analysis of Statements of Income is on page 10.
- Restated, see note G.
//.
r i
$QC3 December 31,1978 December 31,1977'_ i P rty, Plant and Equipment, at onginal cost MwWes) (notes A, C, L and ht)
Utility plant in service: I Electric plant $1,459,340 $1,426,730 l Steam heating service plant 46,269 45,606 1,505,609 1,472,336 Less: Accumulated depreciation 367,926 $1,137,683 387,418 $1,034,918 Nuclear fuel 84,127 77,595 Less: Accumulated amortization 45,663 38,464 34,046 43,549 Nonutility property 927 885 _' Less: Accumulated depreciation 28 899 1% 689 Construction work in progress (note G) 169,960 141,519 1,347,006 1,270,675 Investments in Nuclear Electric Companies, at equity 6,498 6,498 Current Assets: Cash 15,327 18,833
' Accounts receivable:
Customers 90,202 84,385 Other 4,110 139 hlaterials and supplies, at average cost (note C) 27,077 21,425 Prepaid expenses and other current assets 967 137,683 1,087 125,889 Deferred Debits (notes A, C and G) - 53,483 M,454
$1,544,670 $1,467,516 Liabilities and Capital Common Stock par value $10 >r share (note F):
Shares authonzed 14,534, in 1978; Shares outstanding 11,534 500 $115,345 $115,345 Premium on Common Stock (note F) 129,812 129,812 Retained Earnings 112,480 106,485 Surplus Invested in Plant 405 405 Capital Stock Expense-net (426) $ 357,616 (497) $ 351,550 Cumulative Preferred Stock, par value $100 per share, authorized, issued and outstanding (note F): 4.25% Series-180,000 shares 18,000 18,000 4.78% Series-250,000 shares 25,000 25,000 8.88% Series-400,000 shares 40,000 40,000 Capital Stock Expense-net (28) 82,972 (42) 82,958 Cumulative Preference Stock, par value $1 per share, authorized 8,000,000 shares, issued and outstanding (note F):
$1.175 Series-5,000,000 shares 5,000 5,000 Premium on $1.175 Series ' 41,650 41,650 Capital Stock Expense-net (193) 46,457 (224) 46,426 '
$1.46 Series-2,675,000 shares 2,675 2,675 Premium on $1.46 Series 35,658 35,658 Capital Stock Expense-net (146) 38,187 (166) 38,167 TotalCapital 525,232 519,101 Long-Term Debt (note C): l First mortgage bonds 541,680 506,838 Secured notes 19,720 21,360 Term note payable to bank - 561,400 75,000 603,198 i Nuclear Fuel Financing Obligation (note D) 43,789 -
l Current Liabilities: ' Long+ term debt due within one year 91,148 1,640 1 Notes payable to banks (note E) 52,180 108,680 l Accounts payable 43,738 43,020 1 Customer deposits 4,493 4,129 Taxes accrued 22,559 2,856 Interest accrued 9,609 9,071 Dividends deciared 8,412 8,412 Other current liabilities 2,220 234,359 3,265 181,073 Deferred Credits: Accumulated deferred income taxes (notes A and 11) 135,o;? 125,497 Accumulated deferred investment tax credit (notes A and iI) 41,509 35,422 Unamortized premium on debt, less expense (note C) 369 351 Other 2,994 179,890 2,874 1M,144
$1,544,670 . $1,467,516 The notes on pages 14 through 21 are an integral part of the financial statements.
' Restated, see note G.
IL 2
)
Yrars ended December 31, 1978 1977 1976 1975 1974' goupg y CONG UCT'oM
. Statements of Sources of Construction Funds pyg Funds Generated Internally:
Net income $ 49,431 $ 37,599 $ 40,025 $ 33,376 $ 29,640 h' m M Add-Amounts charged (credited) not requiring funds currently: Depreciation 46,015 44,904 42,864 38,452 34,702 Deferred income taxes 9,103 18,827 12,937 24,699 11,655 Amortization of nuclear fuel 11,618 4,136 5,118 4,515 4,3% Investment tax credit-net 7,470 12,004 16,362 (312) (312) Allowance fo- funds used during construction (17,064) (9,067) (8,456) (11,808) (14,333) Total from operations 106,573 108,403 108,850 88,922 65,748 Less-Preferred dividends declared 5,512 5,512 5,512 5,512 5,512 Less-Preference dividends declared 9,780 9,780 8,037 4,020 - Less-Common dividends declared 28,144 26,924 23,2M 23,2M 23,264 Funds generated internally 63,137 66,187 72,037 56,126 36,972 Funds Obtained from Outside Sources:
. Sale of Securities:
Common Stock - 51,560 - - - Preference Stock - - 38,333 46,650 - First Mortgage Bonds 49,500 60,000 - - 60,000 Less-Sinking Fund & other retirements (150) (358) (175) (200) - Decreasein term notes payable to banks - (60,000) - - - Sale (redemption)of Secured Notes (1,640) - - 23,000 - Increase (decrease) in notes payable to banks (56,500) 14,000 (12,500) (12,320) 40,970 Proceeds from Nuclear Fuel Financing Obligation 43,789 - - - - Sale of utility property - - - - 7,940 Funds obtained from outside sources 34,999 65,202 25,658 57,130 108,910 Other Funds Provided (Used): Deferred fuel costs 11,030 (11,743) 798 (2,198) (12,818) Working Capitaland other changes 8,989 (10,958) 6,220 (124) (29,381)
J,019 (22,701) 7,018 (2,322) (42,199)
Total funds provided $118,155 $108,688 $104,713 $110,934 $103,68't Construction Expenditures: Plant 112,102 109,727 86,507 94,131 102,088
- Nuclear Fuel 6,053 (1,039) 18,206 16,803 1,595 Total construction expenditures $118,155 5108,688 $104,713 $110,934 . $103,683 _
Statements of Retained Earnings Balance at beginning of year: As previously reported $107,302 $111,919 $108,707 $108,127 $106,940 At$$7 Cumulative adjustment to reflect refunds to certain custemers (note G) (817) (817) (817) (817) (494) f IN N As restated 106,485 111,102 107,890 107,310 106,446 * *^**) Net income 49,431 37,599 40.025 33,376 29,640 155,916 148,701 147,915 140,686 136,086 Cash Dividends Declared: Preferred 5,512 5,512 5,512 5,512 5,512 Preference 9,780 9,780 8,037 4,020 - Common 28,144 26,924 23,2M 23,2M 23,2M 43,436 42,216 36,813 32,7 % 28,776 Balance at end of year $112,480 $106,485 $111,102 $107,890 $107,310 The notes on pages 14 through 21 are an integral part of the financial statements.
' Rest:ted, see note G.
/3.
L
n - , 1 The Company is subject to regulation by various agencies. Because of the ! effect in regulated businesses of the rate-making process, differences may arise in the application of generally accepted accounting principles as between regu- l lated and nonregulated businesses. Such differences are related principally to the time at which various items enter into the determination of net income in accordance with the principle of matching costs and revenues.
- 1. Depreciationand Amortization .
O Physical property is depreciated on a straight-line basis at approximately 3.16% , , annually. At the time of retirement of property units, their cost and the cost of L removal are charged to and salvage is credited to accumulated depreciation. jJ Maintenance expense is charged for the cost of current repairs, replace-; MM
. ment of items not accounted for as units of property, and minor betterments of { in
~
plants and properties as they are incurred. ' .. 4 L-i The cost of nuclear fuel is amortized to fuel expense based on engineering
^
estimates of usagt . Nuclear fuel cost does not include salvage v z cessing costs, since the Massachusetts Department of Public Utilities (MDPU)? A has not e.llowed estimates of these items to be used in the determination'of J ' ^ fs gu-.[_.7 current fueladjustment chargesc , ( -
, -- . . - y _. , .
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.F L2. C , " ". . of Costs DuringConstruction '1cm' < ; QQ p5 '
wy L in accordana with regulatory accounting,- the Compsny capitahzes as part of g
# Vconstruction costs certain general and administrative costs, and Also capihhws[g
~4 ' y and includes in income an allowance for funds used during construction (sesyp f y~ ,
Jnote B)[ p_ -p c w s ,'# +
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- ^ iThe Company defers uhbilled fuel and purchased power costs /certain promo _*
m , s
~ ptional expenses and _other costs deemed recovera=
g j process.'In addition, sertain interest costs' deemed to be recoverable underf + M i financing arrangemsnts have b, een dd.ml(see note C)g.W
- . ' M $g.%
_a 1 - V4. In-= Taxes E ' a , b ' 1 i: . , 6' W Ti# < 0 --. JDsferred inconie~ tax expense rehdts'from Iir'ning differences inIhd rec 6gnition UU
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- Lof certain expeh'ses for tax' And Anancial statenient purposes.114 major comy .
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, ; ponents of deferred income tax expsnse are summarized in note H/ f.2% MM
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. 1 f f Investment taicredits are reflected in income over ths estimated useful t M
' j}4y
[ ,
] livesof therelated'propertyn , ,
g g y. , , v >c ,' . - J 5; Pensions ' T7 m ?' Amg . , - m - k The Compan/[polic[is toldnd pehsion costs accru lipension ehense fof? 3 ca f the year consists of normal cost plus 10% smortizatioffvf initial p'rior service $ & 6 , ; costs (see note l). 1 >
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i bndAr the rate-making process l the amounts rekorded as' Allowance for Funds ( a g P j Used During Construction (AFUDC) are not realized in cash' currently but willi ' W
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f be recovered byer the service life of plant in the form of incndsed revenue PM /$
'collectedasa'resultof higherdepreciati6nexperise! $ ' .. S
- A W[ ; l _
s 1 Commencing in 1977, pursuant to Order #5611ssued by the Federal se > R J Energy Regulatory Commission (FERC), the Compariy' changed its method forj ~ y ? determining the rate used in computing AFUDC and its method of presenta-1 y
,, J ~ tion'of'AFUDC in the statemehts of income. In accordance with the Order, ths #
P
, m AFUDC rates for 1977 and 1978 were 98/J and 11% The rate used by the Com-p '
pany in 1974 through 1976 was 9%% computed in accordance with ths! C; " , 4 8
~~
method allowed by the MDPU; . L ' An MDPU rate order dated February 28,1978 did not allow the method ) ' N prescribed by Order #561, nor did it allow the additional deferred Income taxes 2 , y/ g resulting from that method to be included in the cost of service. The Companyf ', is currently discussing this matter with the appropriate regulatory authorities u 4M%g p , _s . .-.
1 to determine the applicable method to be used. In the meantime AFUDC has been recorded in 1978 and 1977 consistent with Order #561. Had the Company uscd the method prescribed in the AIDPU's rate order, the effect on 1978 net income would be immaterial; however,1977 net income would have been increased by approximately $2,153,000 (5.20 per common share). First Mortgage Bonds Substantially all property, plant and equipment and materials and supplies owned by the Company are subject to lien under the terms of the Indenture of Trust and First Mortgage dated December 1,1940, and supplements thereto. Series Rate Maturity 1978 1977 (in thousands) O 't2 % Aug.15,1979(1) $ 60,000 $ 60,000 B 2% Apr. 1,1980 13,688 13,838 D 3%- July. '1,1982 15,000 15,000 1 E- 3- Aug. 1,1984 18,000 . 18,000 F- 4% June 1,1987- 25,000 ' 25,000
.H- 4%- June 1,1992 . 15,000 ' 15,000 I- 4%' NovJ 1,1995 ~ 25,000 - 25,000 J 6% June ' 1,1997 - : 40,000' ' 40,000 m, K '6%f j L Nov.1,1998 L ~ 50,000 ' .'50,000
'Li 9- - Dec.1 1,1999 50,000' 50,000 .
~
M 9%' - ' July 1,2000 60,000 60,000 N. -8%. . May 15,2001 - 75,000- - T 75,000
-Q '9%
. Dec.15,2003(1). 49,500 -- .-
P 9% Apr.15,2007 60,000 J 60,000 Total First Mortgage Bonds ~ 556,188 - 506,838 > Other Long-Term Debt ~ Term Note Payable to Bank, maturing on l October 31,1979 (2) -75,000- 75,000 - ,
. Secured Notes, due November 15,1985, with interest at11%%(3) . -21,360 23,000- c?
p"
. Total Long-term Debt 652,548- . 604,838 ' ~
. Less: Long-term Debt due within one year 91,148 i 1,640 >
Long-term Debt-Net : $%1,400 ' $603,198 1 (1) As of December 15,1978, the Company executed a Bond Purchase Agree-ment for the private placement sale cf $95,000,000 aggregate principal amount - of First Mortgage Bonds, Series Q,9% %, due 2003. The bon _ds were sold to a group of institutional investors with $49,500,000 delivered in December 1978 : E and $45,500,000 to be delivered in ' August 1979. The proceeds of_ the December 1978 delisery were applied to the payment of outstanding short-term debt.
- The proceeds from the Aegust 1979 delivery will be applied to the payment at -
matmity of the outstanding First Mortgage Bonds, Series O,12%%,'due August 15,1979; accordingly, that amount of the Series O Bonds is included in ' L Long-term Debt--Net above. Under the agreement the bonds are redeemable at prices declining from 109.75% at the present time to 100.00% of par value in the year 2002 and may not_be refunded prior to December 15,1988 with in-
'debtedness having a shorter life to maturity or a lower interest rate. The Com-pany will be required to make annu'al sinking fund deposits of $2,375,000 in the years 1983 through 1989, $3,800,000 in the years 1990 through 1995 and
$6,935,0001,n the years 1996 through 2002. .
(2) The note bears interest at the lender's prime rate plus 22% of such rate (9.46% and 14.34% at December 31,1977 and 1978, respectively); however, to the extent that the average interest paid exceeds 7,75% per annum over the period of the loan (November 15,1972 to October 31,1979), the excess amount will be refunded to the Company at maturity. Cumulative excess interest of
$8,430,000 through December 31,1978 has been deferred in the accompanying balance sheet.
15.
. - - _ _ _ _ - - _ _ _ _ _ _ _ _ _ _ ~ .- - .
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(3) The notes are secured by five gas turbine facilities and have annual prepay-ment requirements et $1,640,000 through November 15,1984. The aggregate principal amounts of long-term debt due in the tive years . 1979 through 1963 are $91,148,000, $15,320,000, $1,640,000, $16,640,000 and )
$4,015,000, respectively.
The unamortized premium on the Company's outstanding debt, less expense of issue, is being amortized ratably to the maturities of the respective j ' debt.
- Under the terms of an August 1,1978 agreement, with Prulease, Inc., the
- Company.is able to finance from time to time the acquisition costs of nuclearj
~
- , fuel up to a maximum amount of $50,000,000 at any one time outstanding. As
, ,i~ '
J.of December 31,1978, $43,789,000 had been drawn down by the C,mpany tPrincipal will be paid quarterly, beginning January 25,1979, on the basis of. T
? nuclear fuel burnup. Interest, at a rate equal to Prulease's ninety. , day commer- -
cial paper rate plus 1%% is payable monthly. Prutcase has a secured interest e;
- in the assets financed by the agreement which is subordinate to the tien of the s.
, l Indenture securing the Company's First Mortgage Bonds. The Company is t
' considered to be the owner for all purposes including accounting,; tax,' utilityj ' ,
4 regulation and rate" making?After the first year, the Company has the right toS - terminate the agreement on thirty days notice and PruLease has the right to , terminate on two years notice , w .
+ -
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4At December 31,1977 and 1976, the Company had lines of credit with commer-? m
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' j I cial banks aggregating approximately $160,000,000.The Company maintains ? N
- 7: _ y- ,
T < tcompensating balances that approximate 10% of certain credit lines plus10%1 ' g f '\ ' ? lof the loans ~ outstanding under these lines; Compensating balances based upon b Nv q' a _ ,; ' l cash balances reflected in the Company's records represented approximatelyQg? g s. p~ 3 13% and 11% bf the lines of eredit at December 31,1977 and 1978, respectively/ - ~ ; W iThere are no. legal restnctons on the_ withdrawal byfthe Chmpany of compen 1 7 5 ' d
~
1:. _ - sating balances; however, the maintenance of such compensating balances isi
,, '~$>. ,
~
irequired to obtain'shdrt-term lines of credit at favorable interest ratese m s' y R ,' s The weighted average interest rate on short-term commercial banigloans S.h v_g lJ , C
- s outstanding at December 31;1977 was 7.77%and at December 31,1978 was W " "
_" @4
- O
~
t , jS~((11.46%iThe' maximum am6unts' o f short-term commercial bankloans out Mb ,
~
, , y% Q ^istandirig wers $138,680,000 in'1977 and $124,180,000 in 1978.' Average shorth y .
T
' . aA Vid s i term borrowings outstanding and related average interest rates during the di N q y. #p dfX Y . * ,
- iyear's1977 and 1978 wers $95,520,000 at 6.94% and $96,162,000jt 9.55% re-7 , < ~
? Q" f g g &Q m h. A s
s - ' f based spectively.The on daily weighted averageaverages; amounts but withoutoutstanding considering theand effectthe' avera of som%
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# l At the Annual Meeting held April 18,1978, Shareholders voted to amend theid , .
< jArticles of Organization to increase the authorized capital stock of the'Com- 1 wW,g% g e,'
, g panj by 3,000,000 additionhl shares of $10 par value common stdck.
f@ ~ J On May'4,1977, the Company sold 2,000,000 shares of common dock fAr 9
]d 1 ., - , a - 3 .' ; t $51,560,000 of which $20,000,000 was' credited to common stock'at par value @
f(
-[: - ]Q - .
\ and $31,560,000 was credited to premium on common stockl
+
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m ; l F Cumulative Prefened Stock y Series Current Redemption Price 4.25% (1) $103.625 per Share 4.78% (1) $102.80 perShare 8.88% (1) $107.00 per Share (1) Upon involuntary liquidation of the Company, holders will be entitled to receive $100 per share. Cumulative Pmference Stock Series Current Redemption Price
$1.175(2)(3) Not Redeemable Prior to March 1,1980
$1.46 (2) Not Redeemable Prior to May 1,1961
- (2) Subject to the prior preferential rights of the Cumulative Preferred Stock-
. holders, upon involuntary liquidation of the Company, holders are entitled to receive $10 per share.
, (3) Commencing in 1980, the Company is required to offer to purchase not exceedmg 200,000 shares of the $1.175 Series at a price of not more than $10 per i share if during a period of twelve consecutive months ending the last day of
_.. > Februaryin that year there was a period of forty-five consecutive calendar __
~ f days during'which the last reported sale price for such shares was less than $10
- per share.
n
- 11. Capital Ca==lements . . . .
? At December 31,1978, contractual obligations for plant and equipment were g'
- epproximately $153,000,000. Of this amount $77,000,000 was for Unit 2 at -
i Pilgrim Station of which $31,000,000 is to be borne by the other joint owners of
;. Unit 2.-' As of December 31,1978 the Company's portion of constructio'n expen-
- ditures for Unit 2 included in' construction work in progress totaled ? 4
; $139,000,000, including $22,000,000 of AFUDC.
- 2. Rate n=-::: " y and Restatements . _ .. .
; ' information regarding certain pending Wholesale Rate proceedings at Decem- --
s ber31,1978, was as follows: { During the penod January 1,1973, through February 27,1976, the Company K L increased its rates to its wholesale electnc utility customers subject to Snal ( We pproval by FERC and possible refund. Based on a FERC compliance order c , - l and other' developments with respect to settlement negotiations in late 1977,1 te
. ~" '
, t' he Company estimated the amount of revenues to be refunded. Accordingly, , ,
noperating revenues, net income and earnings per share of common stock for. . _the years 1973 through 1976 were restated in the Company's 1977 anancial' , y statementt . ,, , , .
- On' October 5,1978, the Company and one of itsl wholesale customers Gled ~ ' '
; with FERC a settlement agreement with respect to the rates collected in 1973 '-
'. and 1974. Earlier in 1978, a similar settlement agreement with that customer, ; , ;
;concerning rates collected in 1975 through 1978, was approved by FERC sub-i ject _to possible rehearing. The Company has offered to join in similar settle a (ment agreements with.the other wholesale customers. Based upon these set Y
F ' tiement agreements, the years 1973 and 1974 have been further restated since 1 Dm.. Ar 31,1977, to record the effect of estimated additional refunds. The " t
- Effect of the' additional restatement was to reduce net income by $494,000 ($.06' q < 7 per share) and $323,000 ($.03 per share) for the years 1973 and 1974, .N '
--'e5P'Ctively-l ,
; n ,
> y ,
y. e a 17 2_t
_m . _ _ _ - - m . , nn ,- 11
- After giving (ffect to the above restatements, the net amount of such rate
, increases over the rate last approved by FERC reported as revenues for the six years ended December 31,1978, are approximately $6,599,000, $6,978,000,
$3,671,000, $5,275,000, $6,938,000 and $4,956,000, respectively. The Company
. does not believe that material amounts in addition to those provided will have to be refunded. The exact amount of any refunds will depend upon the final - . outcome of the pending proceedings. . I e . . In 1976, the Company began billing to wholesale customers $1,900,000 of ' t , deferred fuel costs over a 24-month period. On January 12,1979, FERC issued :
. : an order denying the collection of these costs. The Company believes its bill : _ _
Li ng method was proper and intends to seek rehearing of the decision. Should i
~
.,_ refunds be required, earnings per common share for 1976 would be reduced by .
~ '
jayy.mi wately $.10i x n 1
~
w 4 3. Litigation s
4
,,~ 47 .
T , 0The Company is a deferidant in antitrust suits brought bylthe Town of ;
-3
- ' Norwood in 1974 and the Towns of Concord and Wellesley in 1976. The plain _ _ ,
' "#~~ _ M tiffs claim treble damages totaling $69,000,000 based on their dealings with the - F
,~ Company as" wholesale purchasers of electne power. Hernck & Smith, special icounsel to the Company, have stated that they cannot predict the outcome of ' , ,
these lawsuits, since they cannot be certain what facts might be found in a trial':
. - t or how some legalissues might be resolved, but that in the pretnal proceed $ *-
~
~
1.ings to date, nothing has come to their attention indicating to them that the s ,
" plaintiffs' claims have merit.
- 4.I - N ==de===an p : At December 31,1977 and1978, the Company had leases covering certain faciliy +
' ties and equipment. Some of these leases are " capital le'ases," as de6ned by the /
, . Financial Accounting Standards Board. Under regulatory accounting, leases -
' are not capitalized. : . _
. . . . . ~l .
" Had all operating leases which meet the' criteria for capital leases been F . capitalized, the amounts of_ the asset and the liability that would have been ,
included in the_ balance sheets for the years ended December 31,'1977 and 1978j , and the effect on expenses.would be immaterial.: ', ' Estimated minimum rental commitments 'under noncanceliable leases and - - l: -- the amounts applicable to capital leases for years subsequent to 1978_are as follows: Total Capitalteases .
"(in thousands) :
- 1979 .$ 7,700 $_5,800L ,
4 1980 . 6,700 l 5,400 1981 6,300 .5,000 : 1982~ 5,700 c , t 4,400_ t 11983 4,600 ; t 3,300f . , (1984 -1988 ' 21,300 14,700 - l1989-1993 - 14,400'- 11,100 r 1994-1998 : .
- 8,500 ' 7,400 .
1999 and subsequent - 6,500 ' 5,800 t
' A portion of the aforementioned rentals may be capitalized as part of construction costs in the future. , ./d
i Rent expense reflected in the results of operations from 1974 through 1978 and the portion thereof related to capitalleases is as follows: Portion Related Rent Expense to Capital Leases 1978 $7,500 $5,300 , 1977 8,700 6,400 4 1976: 5,600- 3,800 1975- 4,800 7-3,200 1974~ ' 5,401 4,000 : Re:.t expense for the years 1974 through 1978 excludes $700,000,
- $1g 100,000, $1,500,000, $1,700,000 and $1,900,000, respectively, of rentals ,
1 capitalized as part of construction costse s Components of J.fi..N income tax expense are a follows:
<-1978 . :1977, .1976 1975 1974 n Excess tax depreciation over book j s depreciation - $4,005 $ 5,337s.$ 4,863 ' $ 9,399. $ 3,889 '
> 1 Deferred fuelexpense; ^ '(4,950) J 5,270 ' ' (358) : 5,580 ^ 3,647 r; - Chpitalized property taxes ; ., 60f ?-l . - :1,887- 840 F : Deferred interest expense = _. ,' . :1,108 ; 158 - - '105 ; (1,652 :975
; Debt portion of allowance for funds i used during constructen (note B) . l5,744 ' 3,964[ B1,708 3,067 ( 837; F - ' Contested property taxes s. '__ -. l --- ,380 ,1,299- 824 Otherindirect construction costs :-; . 1,386 -1,225 . 1,432 - -366- '
; Massachusetts corporate franchise tax ; i 1,152 7 ;2,382 1,512- 2,139 - --
. :. 1,471 ~--
e JAbandonmentloss ( : - 1,985- 1,865 - (1,721) ' Other ~ 330 - 277~ , Total $9,104 $18,827 = $12,771 - $24,7341 $11,655 - The effective income tax rates reflected in the financial statements and the - 2 reasons for their differences from the statutory Federal income tax rate are - i explained below: 1978- -1977 1976 1975- 1974* Stctutory rate . . ; 48% ' 48 % 48 % 48 % 48% - Allowance for funds'used during construction (note B) , (2.2) (.2) (3.1) (5.3) (13.6) MTsachusetts corporate franchise tax ? 3.2 3.3 3.1 3.2 - Fxcess of tax straight-line depreciation L over book depreciation - - - . (4.0) Indirect construction costs - - - - (1.6) Other - (2.3) : (3.7) (3.4) (2._5) - (2.5) .
' Effective Rate 46.7 % - 47.4 % 44.6 % ' 43.4 % 26.3 %
- Restated, see note G.
The Company estimates that it will utilize all 1978 investment tax credits.
' Federal income tax returns through 1973 have been examined and closed.' ,
- The Company has a noncontributory funded plan (with voluntary _
. contribu tory features) covering substantially all employees. Pension accruals cnd the portion added to construction costs were as follows:
1978 '1977 1976 1975 1974 Totalaccrued ~ $7,808 ' $7,406 $6,389 $5,974 $4,955
- Added to construction costs 1,810 1,841 1,659 1,542 1,174 1Jnfunded prior service costs as of December 31,1977 and 1978 were
$12,100,000 and $11,000,000, respectively. -
19. l
Net Earnings income Per Available Share Net for of I Operating Operating Net Common Common l Quarter Revenues income income Stock Stock * ! 1978 I First $164,815 $18,117 $ 7,149 $ 3,336 $0.29 Second 140,584 21,875 11,450 7,614 0.66 Third 160,456 29,272 17,973 14,134 1.22 Fourth 147,583 23,195 12,859 9,055 0.79 1977 First $146,282 $18,844 $ 7,151 $ 3,339 $0.35 Second 134,498 17,769 6,051 2,215 0.20 Third 156,577 24,337 12,739 8,900 0.77 Fourth 152,020- 23,052 11,658 7,854 0.68
- Based on quarterly weighted average number of shares, it is the Company's opinion that the quarterly financial data has been prepared by the application of consistent accounting practices and pohcies and -
reGects all adjustments necessary for a fair presentation of the quarterly results : ofoperations.
- The signi6 cant increases in second, third and fourth quarter 1978 earnings 1 are due in part to rate increases that became effective in February and June of -
' 1978. Third and fourth quarter earnings for both years were also increased by f
'theeffectof asummerratesurcharge. '
- Presently there is no facility in operation to reprocess spent n'uclear fuel.and, ;
as a result, the Company's spent nuclear fuel assemblies may have to be stored
; . Indefinitely. No provision has been made for the costs of inde6 nite storage,
. because such ultimate costs cannot be reasonably estimated at this time. 'the ; ,
~ Company is, however, in the process of expanding storage facilities at the -
- Pilgrim Station site suf6cient to store spent fuel through approximately the~- -
'iyear1990. The added capital. costs of these expanded storage facilities are :
estimated to be $2.8 million, excluding construction overhead costs, which will ! L be amortized over the usefullife of the facility. _.
. ' The depreciation rate for Pilgrim Unit 1 does not_ include provision for the 4
. - cost of decommissioning the Unit at the end of its useful life; however, such e costs will be included in the depreciation rate when they can be reasonably; -
determined bp the Company and approved by the appropriate regulatory . authorities '
' ~
The Company also participates as an investor in other nuclear generating ;
~
units. At this time, the Company cannot reasonably estimate the ultimate cost l '
- of inde6 nite storage of spent nuclear fuel assemblies'and the cost of decom- : ;) ;missioning those units.
- The impact of the rate of inflation experienced in recent years has resulted in ?
c replacement costs of productive capacity that are significantly greater than the historical costs of such assets reported in the Company's Snancial statements.
- In compliance with reporting requirements, quantitive replacement cost information in disck> sed in the Company's 1978 Annual Report to the Securities .
E and Exchange Commission (SEC)in Form 10-K. i J2A , , w.
e The Company owns 59.026% of the Unit 2 nuclear facility to be constructed at Pilgrim Station (see note G). In addition, the Company is a joint owner of Yarmouth Unit #4, which was constructed by Central Maine Power Company; included in the accompanying December 31,1978 balance sheet is the Company's proportionate share (5 888%) of plant in service and accumulated depreciation of $10,684,000 and $32,000, respectively. The Company has certain long-term contracts for the purchase of electric power. Information relating to contract terms and significance, expiration dates and other pertinent data is disclosed in the Company's 1978 Annual Report to the SECin Form 10-K. To the Stockholders and Directors of Boston Edison Company We have examined the balance sheets of Boston Edison Company at De-cember 31,1978 and 1977 and the related statements of income, retained earnings c nd sources of construction funds for each of the five years in the period ended December 31,1978. Our examinations were made in accordance with generally accepted auditing standards, and accordingly included such tests of the account-ing records and such other auditing procedures as we considered necessary in the
' circumstances.
In our report dated January 24,1978, our opinion on the financial statements referred to therein was quali6cd with respect to certain revenues collected subject to refund. As explained in Note G.2. to the financial statements, the Company has adequately provided for possible refunds of ievenues collected from certain wholesale customers that are pending final determination by regulatory authori-ties. Accordingly, our present opinion on the financial statements for each of the four years in the period ended December 31,1977 is no longer qualified with re-spect to such revenues. In our opinion, the financial statements referred to ab(we present fairly the financial position of Boston Edison Company at December 31,1978 and 1977 and the results of its operations and sources of construction funds for each of the five years in the period ended December 31,1978 in conformity with generally accepted accounting principles applied on a consistent basis. Boston, Massachusetts y. January 24,1979 21.
yg@fgD 1978 1977 1976 1975 1974 1973 CIPEf% T G kN New sIo tation Pilgrim Station 760 670 760 670 760 670 760 670 760 670 760 670 Mystic Station 1,026 1,020 1,047 1,0 % 633 633 Edgar Station - 297 2M 294 2M 291 L Street Station 48 48 43 46 46 46 Yarmouth Unit #4 35 - - - - - Gas Turbines 267 237 234 232 232 232 Total 2,806 3,032 3,048 3,058 2,635 2,632 Contract Purchases 317 261 216 315 3M 257 Contract Sales (329) (323) (313) (453) (497) (353) Net Capability at Year-end 2,794 2,970 2,951 2,920 2,532 2,536 Net Capability at Peak 2,716 2,980 2,926 2,905 2,606 2,671 Capability Responsibility to NEPOOL at Peak 2,462 2,895 2,765 2,631 2,585 2,283 Edison Territory Hourly Peak-MW 2,031 2,013 1,970 1,933 1,891 2,030 Edison Territory Load Factor 57.7 % 57.2 % 58.7 % 57.9 % 59.7 % 59.0 % Generating Station Economy-BTU per Net kWh Generated 10,149 10,190 10,290 10,250 10,363 10,309 Average Cost of Fuel-Cents per Million BTU: Fossil 208.20 218.28 188.68 200.92 1%.15 80.50 Nuclear 25.61 14.77 19.72 16.41 21.49 23.05 Composite 142.57 168.89 149.16 150.97 159.13 61.19 Capability (net kW): Fossil 80 % 81 % 81 % 80 % 77 % 77 % Nuclear 20 % 19 % 19 % 20 % 23 % 23 % Generation (system kWh): Foull 70 % 79 % 80 % 78 % 82 % 71 % Nuclear 30 % 21 % 20 % 22 % 18 % 29 % Flant Investment (000h Additions (gross) $126,625 $118,075 $95,552 $105,534 $114,352 $134,061 Retirements 64,869 11,475 12,888 26,760 16,210 12,890 Accumulated Depreciation 367,954 387,614 354,577 322,454 305,630 279,290 Amount of Depreciable Plant 1,474,742 1,441,653 1,386,772 1,312,886 1,124,990 1,091,914 Total Plant Investment 1,676,4 % 1,614,740 1,508,140 1,425,476 1,346,702 1,248,560 Per Average Customer (dollars) 3,053 2.963 2,777 2,627 2,489 2,324 Per Average Employee (dollars) 433,764 405,408 377,318 356,191 326,949 298,985 Per $1 Base Operating Revenue (dollars) 3.91 4.04 3.98 4.50 4.81 4.47 Electric Plant in Service per Edison Territory Hourly Peak (dollars per kW) 825 802 693 673 587 532 Numberof Employees at Yearend 3,837 3,921 3,999 3,972 4,Gl2 4,183 l 22,
1978 1977 1976 1975 1974 1973 E l,E c, W P Electric Energy:(kWh in W9 sands) STATISTICS
- Net system output:
Generated 13,0N,323 11,387,793 10,768,527 10,224,573 9,316,510 12,373,0N Purchased 1,330,998 1,454,494 1,397,566 1,604,852 1,477,803 1,458,366 Interchange (1,746,756) (1,043,802) (455,177)(a)_ _(607,749) 375,772 (1,661_,658) Total 12,588,565 11,798,485 11,710,916(a) 11,221,676 11,170,085 12,169,712_ Disposition: Sales: Commercial 4,428,213 4,276,644 4,144,283 3,924,3 % 3,691,526 3,755,949 Residential 2,559,654 2,538,806 2,488,673 2,441,688 2,404,665 2,524,436 Industrial 1,749,563 1,779,245 1,756.663 1,702,007 1,778, % 9 2,051,011 Street Lighting 120,838 116,334 108,094 105,708 100,074 97,743_ Total Retail 8,858,268 8,711,029 8,497,713 8,173,799 7,975,234 8,429,139 Sales for Resale-Total Requirements 453,184 439,561 426116(b) 2 742,972 I M 68 1,205,250 Edison Territory Total 9,311,452 9,150,590 8,923,829(b) 8,916,771 9,028,402 9,634,389 Sales for Resale-Partial Requirements 2,315,731 1,705,129 1,805,2_99.(b} 1,417,205 1,269,359 1,668,557 Total-Edison System 11,627,183 10,855,719 10,729,128 10,333,976 10,297,761 11,302,946 Miscellaneous Usage: Company 112,477 100,124 91,685 83,005(c) 13,880 19,570 Transmission 323,167 283,584 395,672(a) 303, % 9 350,535 M5,158 Distribution 399,852 440,077 449,926(a) 460,491 463,560 453,359 Other 125,886 118,981 44,505(a) 40,235 44,349 48,679 Total 12.588,565 11,798,485 11,710,916(a)_II,221,676 11,170,085 12,169,712 Kilowatthours-Annual Gmwth Percent: Commercial 3.5 3.2 5.6 6.3 (1.7) 12.3 Residential 0.8 2.0 1.9 1.5 (4.7) 5.7 Indu; trial (1.7) 1.3 3.2 (4.3) (13.3) 4.6 Street Lighting 3.9 7.6 2.3 5.6 2.4 7.3 Total Retail 1.7 2.5 4.0 2.5 (5.4) 8.3 Sales for Resafe-Total Requirements 3.1 3.2 (42.6)(b)_(29.5) (12.6) (30.5) Edison Territory Total 1.8 2.5 0.l(b) (1.2) (6.3) 1.2 Sales for Resale-Partial Reguirements 35.8 ($J) 27.4(b) 11.6 (2L9) 332.8_ Total-Edison System 7.1 1.2 3.8 _ 0.4 (8.9) 14.1 Territory Sales by Clase:(%)
~ Commercial 48 47 46 44 41 39
- Residential 27 28 28 27 27 26 Industrial 19 19 20 19 20 21 Other 6 6 6 to 12 14 Sales Statistics:
Residential Averages: Annual kWh Use 5,310 5,303 5,195 5,088 5,024 5,318 Revenue per kWh 5.85' 5.59' 5.48' 5.36' 5.06' 3.57'
- Annual Bill $310.62 $2%.33 $284.46 $272.88 $253.% $190.01 . C:sfomer Meters at Year-end 594,713 592,720 591,335 591,524 593,752 592,415 Avxge Number 549,063 544,989 542,996 542,629 541,126 537,270
( ) Restated to reflect a 1976 metering adjustment. (b) In November 1976 the Town of Reading changed from a total requiremtnts customer to a partial require-ments customer. The entire year of 1976 has been restated to effect these changes. (c) Adjusted from prior years due to changes in reporting of station service energy. L 23.
gg g 1978 1977 1976 1975 1974* _1973* FINANCIAL ""i"" "*"""es - $6i ,438 $589, 77 $553,986 $5 i,122 959,532 $3i7,227 r7ATl5 I TICS I Balance for Common (000) $34,139 $22,307 $26,151 $23,361 $24,128 $24,199 Earnings Per Share $2.% $2.06 $2.74 $2.45 $2.53 $2.78 , Dividends Per Share $2.44 $2.44 $2.44 $2.44 $2.44 $2.44 j Payout Ratio 82 % 118 % 89 % 100 % %% 88 % l Book Value per Share $31.00 $30.48 $31.% $31.61 $31.54 $31.45 Cash Flow Per Share $7.91 $8.58 $10.00 $8.33 $6.32 $7.35 Returnon Average Common Equity 9.53 % 6.80 % 8.63 % 7.76 % 8.11 % 8.55 % Year-end Dividend Yield 10.22 % 9.48 % 8.91 % 10.61 % 15.87 % 9.38 % Fixed Charges Coverage (SEC) 2.50x 2.26x 2.27x 2.05x 1.74x 1.87x Capitalization: Long-Term Debt 52 % 54 % 56 % 58 % 60 % 58 % Preferred and Preference Equity 15 % 15 % 16 % 13 % 9% 9% Common Equity 33 % 31 % 28 % 29 % 31 % 33 % Funds Generated Internally (000) 563,137 $66,187 $72,037 $56,126 $36,972 $42,527 Construction Expenditures (000) $118,155 $108,688 $1M,713 $110,9M $103,683 $129,632 Per Cent Internal Generation 53 % 61 % 69 % 51 % 36 % 33 % Stockholders at Year-end 57,667 57,302 51,720 52,427 51,317 49,659 Shares Outstanding: (Wtd. Ave.) 11,5M,500 10,851,7M 9,534,500 9,534,500 9,5M,500 8,701,167 (Year-end) 11,5M,500 11,534,500 9,534,500 9,534,500 9,5M,500 9,534,500 Stock Price-liigh 26 % 28 % 27 % 24 % 29 % 39 %
-Low 22 % 24 % 22 % 15 % 14 24 %
-Year-end 23 % 25 % 27 % 23 15 % 26 Year-end Market Value (000) $275,386 $297,012 5261,007 $219,294 $146,593 $247,897 Trading Volume (Shares) 2,087,000 1,982,000 1,570,000 1,563,000 2,245,000 1,267,000 Market / Book (Year-end) .77 .84 .86 .73 .49 .83 Price / Earnings (Year-end) 8.1 12.5 10.0 9.4 6.1 9.4
- Restated, see note G Quarterly Stock Data Following are the reported high and low sales prices of Boston Edison Company's common stock on the New York Stock Exchange for the quarters of 1978 and 1977 and the dividends per share paid during those quarters:
1978 1977 liigh Low Dividends High Low Dividends First Quarter 26 % 22 % .61 27 % 25 % .61 Second Quarter 24 % 22 % .61 28 25 % .61 Third Quarter 25 % 23 % .61 28 % 26 .61 Fourth Quarter 25 % 22 % .61 26 % 24 % .61 Additional Financial Data Long Term Debt -Page 15 Pensions -Page 19 Capital Stock -Page 16 Selected Quarterly Lease Commitments-Page 18 Financial Data -Page 20 Income Tax Data -Page 19 Mention here is not intended to give increased emphasis to a particular note, but merely to avoid repetition of detaded financial data. The notes in their entirety are an integral part of the financial statements.
. , 29.
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.- Itichard ). Coughlin, Dirersor of Sforts and Sernior l .h V M W . ; :.. . . g .1.2, . 5;;
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