RBG-20-547, 1984 Annual Rept

1984 Annual Rept

ML20112G528
Person / Time
Site:	River Bend
Issue date:	12/31/1984
From:	Booker J GULF STATES UTILITIES CO.
To:	Harold Denton Office of Nuclear Reactor Regulation
References
RBG-20-547, NUDOCS 8504010148
Download: ML20112G528 (43)

Text

, . . - .. . .

W.

((

~

6 he GULF STATES UTILITIES CO.

{

. g%.

?

1984 ANNUAL REPORI I

u.

n  %

k 1-Q

..,r,-

e - , sj-/

• , ' '[

• . . y t,<

4 :,,' $ .

, . 3 4 3

~ * . .

c- - s ,, gw _ . . . . . . _ .

- --~ ~ -

k3 r .. -

• L', _ -1 ,)

9 ,

I g . . . . . -v.>

?q W k','.

• % .fj -.,,,,._l

_' l ,,

f' .

l +

e-

- . .9

~ c

.,u _

s - %: ' . . ..?

..! . w - . .f'. y ,,;f ' ?$N'

^ A

' T;r 'q?f g... '

'?  %.,' ;g _ s .,

.~, . -

1. ___'_....... - ;4 ' '$-

-  ;#'. s

, , ;{ .

. .y .

. a a '

s.

i'.

I ,

j .

a);.' .

p. .. .;,, y

'- _'>i \ -

, y. .. %, ':. l-

. m_ ___

^

.', . "T . ,- # r

4

-)

il d

'l

__ About the Cover -

' A public utility. more -

than any other business.

. has very real ties to its..-

- communities. It knows thelayof theland.the neighborhoods. . ' ' ' '

livelihoods-virtually

, everything about the people, places and

- ?{M- , . . quality oflife. Gulf States -

Utilities' 1984 Annual

- Report to Stockholders combines a look at our

-t . past year of operations with photographs of g scenes from day-to day -

d livingin Southeast Texas -

and South Louisiana.

Description of Business -

Gulf States Utilities was incor-~

porated in 1925 and is primarilyin the business of generating.

+

transmitting and distributing elec-tricity to 555.000 customers in .

Southeast Texas and South Loul-siana.The service area extends 350 miles westward from Baton Rouge, Louisiana, to a point about 50 miles ,

. east of Austin. Texas. The service

- area indudes the northern suburbs

. of Houston and major dries such as -

Conroe. Huntsville. Port Arthur.-

Orange and Beaumont, Texas, take Charles and Baton Rouge.

Louisiana. . .

-_ GSU also sells electricity to municipalities and rural electrical '

cooperativesin both Texas and -

Louisiana. In Baton Rouge, CSU : .

supplies steam and electricity to In'-

. dustrial customers through a cogeneration fadlity and the com-pany owns and operates a natural gas retail distribu'Jon system serv-Ing 86.000 customers. l As a member of the Southwest -

. Power Pool. the company may In-terchange electridty with the 38 members serving eight statesin the South and Southwest.The com-pany had a peakload of 5,475 megawatts in 1984 while it had in-stalled capadty and firm power purchase agreements totaling 6.780 megawatts. s The company has a wholly-l owned subsidiary. Prudential Drill-Ing Company. engaged primarily in exploration, development and operation of oil and gas properties.

L - a __. c._ _ . L_ _2 _ -. _ _ _.

o l

l l

Contents ' FinancialHighlights 1984- .1983 Change TbtalOperating Revenue (000) $ 1.547.041 $1.436.188 7.7 Report to Shareholders . . 2 Sales . . . . . . . . . . . . . . . . 5 Operating Expenses and Taxes (000) - $1.203.357 $1.122.895 7.2 Construction . . . . . . . . . . . .- 6 River Bend Developments . 9 Net incorne (000) $ 258.171 $ ' 229.799 12.3 Financing . . . . . . . . . . . ..10 Rates and Regulation . . . . . I I - Income Applicable to Common Stock (0001 $ 202.511 - $ 180.747 12.0 -

1 General Operations . . . , , .14 EaMngs per Amage hre d FinancialInformation ' * *

• I8 -

Common Stock Outstanding $2.30 $2.31 (0.4)

' Divider.dsperShare - $1.64 $1.62 1.2

- AverageCommonShares Outstanding (000) 88.164 78.233 12.7 Number of Electric Customers (end of year) 555.49I 543.099 2.3 Tbtal Kilowatt-Hour Sales (0001 31.693.898 29.005,483 9.3 System Peak load- Kilowatts 5.475.000 5.348.000 2.4 x,,w.:t t

.L W $ k $ y,:o 1 i.t

^ - -

. ?:

g/_

ggg WP.. -

n. gar :f% k:.,Q , ,.5%Q . . . .;, ?.

y

'b Y h:.M;:)p$% :s~'(kkg%t

-m%.u 9 .w egh . L L .f..'.

?

_- m anraam, MMP=.

Ip, M M L lIh -

New Orleans nroe Baton Rouge Lake Charles Port Arthur Beaumont Houston f States Utilities' Service Area cutsswts untmos E - . - . . . - . -- _ _ _ _ _ _ _ _ _ - _ _ _ _ , - - _ _ _

Report to Shareholders

Dear Fellow Shareholders:

link Gulf States to the coal-produced design. If we are able to complete this last year began a marathon thattook p wer from The Southern Company ambitious. 68-month schedule, it will 0d Gulf States Utilities from uncertainty, was completed in May. the fastest construction time for a l promise and hope to hope rewarded.

• Expiration of the 20-year-old. low-cost nuclear plant in the United States since promise realized and achievementin Exxon gas contract tmched virtuaHy 1972.

the face of uncertainty.To be sure. every employee and customer. New Not onlyis River Bend beingbuilt ;

there were disappointments and diffi- pipelines, new contracts, new quickly and efficiently, it is setting suppliers and a whole new strategy . standards of construction, labor-cult challenges, but on balance.1984 was a good year. for buying gas were put into place. All management relationships and safety Our eamings for the year ended 555.000 customers were contacted for the rest of the industry.

December 31,1984, were $2.30 per by mailand every regulator was in- Re mistaken notion that somehow share of common stock. just one cent formed in preparation. In the end. the marketing electricity is incompatible pershareless than in 1983 when there transition from 1964-priced gas to with conservation has no placein GSU were 11 percent fewer average shares 1984-priced gas went smoothly. marketing strategy. Our marketing outstanding. %Is earnings performance

• We negotiated and signed a very objective is simple. to seuas much of represents a significant achievement for favorable 10-year agreement with our product as we can in order to make e couple of reasons. First. sales were Kansas City Southern and Burlington full use of our existing generating good- more than 9 percent above Northern railsystems to transport facilities and yet not be forced into 1983 and 4 percent better than we had c alfrom the Powder River Basin to a position of having to build new our Nelson Station in 12ke Charles, generation. An active. value-driven, anticipated. Second, and equally impor.

tant in helping to maintain our earnings, louisiana. customer oriented marketing plan will

• Our ieturn to marketing after almost help us competein the changing was a continued cost consciousness decade met with success andled to residential, commercial and industrial that pervaded every sector of the com-pany. By controlling costs. our the development of a strategic arenas.

employees reduced our operations and m rketing plan to best use our Gulf States' leadership role in pro-maintenance expenses more than $6 existing facilit:es. moting economic development in the

• We received modest rate increases areas we serve has been one of helpini million below budgeted amounts.

Our annualdividend paidin 1984 was from the Public Utility Commission of existing customers grow and new Texas and the Federal Energy customers relocate in Southeast Texas SI.64 per share of common stock com-Regulatory Commission in 1984. and South I.ouisiana. We plan to retain pared to $1.62 paid per share in 1983.

• Donations to Project CARE existing customers and recruit new Last year saw GSU's capitalization approached the half-million dollar business wherever we can. And we will cxceed $4 billion for the first time in the mark. but more importantly, more in 1985 through a revitalized marketing company's history.His was a 13 per-than 6.000 elderly families were and economic development program.

cent increase over 1983. To put this helped with paying their energy bills Norman f.ee, wholoined GSU as an growth into perspective, Gulf States, during the year. engineer 35 years ago and has served capitalization in 1979 was $1.9 billion it was an impressive year. as the company's president and chief and has more than doubled in five short

'lwo areas will capture the focus of operating officer since 1973, was years nmch of wr attendon during 1985 - elected to the additional position of Those five years brought tremendous change for this company-change that the promptcompletion of River Bend vice chairman of the board of directors and its successful inclusion in the rate in early September.

challenged and strengthened our base and the best utilization possible of 'Iwo new members joined the board management talents and creativity. We ur facilities through aggressively of directors since last year's report.

have drawn on those strengths through Gen. Robert H. Barrow, former com-some tough times, and 1984 was one of markedng our product wherever customers need energy, mandant of the U.S. Marine Corps. wa<

the tough ones. It also brought out the Manpowerand budget are centered elected to the board in May. In January l bestin our people and we came on chieving the early 1985 fueHoading 1985, Charles W. McCoy, president an<

through it with solid - f River Bend, with commercial opera- chief executive officer ofImuisiana A more detailed discussion of the d n scheduled for the end of 1985. Bancshares Inc.and chairman of events of 1984 will be found later in th!s Sinceits beginningin August 1979, louisiana Nadonal Band Baton report, but here are some of the River Bend has been on an aggressive Rouge, became the newest member of highlights.

schedule. %roughout its construction the board. Our company is fortunate t<

o Construction work at GSU's River history the plant has made better than have these two men put their talents Bend nudear plant site in louisiana average progress when compared to and abilities to work for us.

was virtually completed by year's end ther nuclear plants of similar size and Also in January. Dr. E. IJnn Draper 11 tnd the critical startmp and test stage was promoted from senior vice is progressing smoothly.

president to executive vice president c

! o %e high-voltage transmission line to external affairs and production.

l 2

On a sad note, the year witnessed the ,.g ; , '4g c -

assing of two men who provided GSU -( -cg g' JlJ .,

, V & .' - .- 4. ' f ith extraordinary leadership in very .,.

'p. ' .!.i .' L

'.1 E.[

fficult times. Former chairman and  ; &@3 "

.~ #c.j

. 'Y d ?4,{n..'

ilef executive officer W. Donham * ;,4

.I' ' '

awford, and Thomas H. Burbank.  : .~-I

-nior vice president - executive pro- 4 Li cts, died during the year. They will be , i 1

. issed. -

.- , -Y 7-

Finally, it should be pointed out that a

. gnificant portion of the 1984 common hh .

t h h.

1

ock dividends will be return of capital

' id therefore not taxable as dividend g 1. f 'y g

[g se p7P^

y 1 - .,

come.Thisisprimarilya resultof the ~

b

']',],

~

g 'c '

[. gj ncellation of River Bend Unit 2 last nuary.The proper income tax forms . L

- . ' ; (:M , M;

,.. y, g. .

9i

= me been mailed to all shareholders.  : %., ( . '1  ;' N ,Id 9 ig'

-st additional information is provided "' f .x . 6 L j ' .e.' ' (3f -

_i page 10.

. Thekindsof thingsthatwere 4 :{-

1p* ' -

< . :. L , <

p'x t-c., g j:k:

_:cornplishedin 1984 were people . . s.g

"?

, 2. % ;, s

-rids of things.They didn't happen J ,u g. . .> 7.b 'i

• " I, J i ,./ a . . , .

advertently.They represent hard. in .  ; j. ..g ,s' ' .

_nse work and effort by many very

_ # L / f A " ' .-

pable people at Gulf States Utilities. ~ ) - 2. :. '3~ i ."y.- .; .  ; g

-tose people whose work made last Paul W. Murrill Norman R. lee aar a success deserve our thanks and aise for a job well done. If 1984 was a

= arathon,1985 will be a dash, with the

. jish line clearly in sight.

N prman R. Lee

e Chairman of the Board.

' sidentand iief Operating Officer

- t^

- iul W. Murrill

airman of the Board

1 Chief Executive Officer GULF STATES lintmES M

,... .. . . z.r, v.: ~; 7.> _

.r y n -! .

,y , .,. y ~ .y ; m w. . y a w r e v ,e > v .v -c. .

.w- .

. . . .~ -p

.- . ..m

. .' k

.N

~

. ..[ ' . -

.e :. -

?.

k g

.~.

..a. *

.)

F

.c,,

. h

-. .. y

.r ... \ .;. +- .

w . ~ ,

..l ".. i,

. 4

e. .

9.-

'f, .. .

e -

4 *:

, . . .>-. . .y: . -E e .u i ;. '/-.'- . Jf .. , '.t.

?' ..

...n'>- -

.Y , ' ' ' ' .' . , ', * '

. . . 1

, .p

$.a. . ' . _j. %.'.w..,  ::-lkf ,

-4 0  :

( g&

- :- + c. ., a j

'?- y , . f ,' , ' # p.

i J..,. g. . , ,

n --  ;. 9 e'. . - ' , . , . ", . ,

.'t.

o 8. < .s.,-... u .

-l.  : .y

^

.~ _. ; I' . '

~~

J ,i .

M: ..w

.me... - - -  : .

v .-

t

'Ef5 Skt., * * : ., . . -, '

4. . .j- ,. .--

. p: . . , , K

. 7.q ; % . - p .$ ., .; : i. ~

_l

\

4 '

\ - ' , .f. c

. .~ . 7 ...

~ .

r. .

n

. ~ . :..

+-_..nx &. ; .~,,

.', ' ~  :, :.' y ' ..? . .&. ,,;. r~' , . .t- ? a -f .:' E .

> i . *.. ,l,{: "'N&AQ...[.~h%g.g_hp;i;, f. :, -%I.'

.l : .. '? - ~ ~ C:' 'J.

I-

) i '

[. . . ,

f.

F n

.p- ..

. .gw . ~ .

y npk.L l &&^,( ' . J'

.j.,s _

~

. .. .. c..

'$ O

'l

+

.jfgg,D

~

. ;. l... l q.-: .

)_,

- ' ., I;l

~

' ' .2 ;. ,,

y.4

.g .. ._ 4 4p, . _

+

• • i

~

? .

99f . .

Q  ?

.. I 4 . ' ' ,,

Y w:de.q . b . ._5; . . . . _

_ [ .' .

.. . _ _. ,_ . _.. , ; [, _ , ,. .

Sales 1

i l lectricity sales to every I customer class - residential, l commercial and industrial - increased l during 1984. Overall kilowatt-hour l sales grew by 9.3 percent over 1963, an increase of 2.7 billion kwh for the year.

The economic recovery that began to make itself feltin Southeast Texas and South 1.ouisiana in mid-1983 continued to show strength during 1984.

Ma r.

. (l j s

$e:.

~ . * ' ,

,s:,,, .; .

+ ,-

,Q

. sv .. ..z.=

^

g., . ; ., .. .x.,....-,. ,, ((', : <

3' '._ /

,U dA , A Wp ..,i,g . ' " 1,n,.".~ .

. .?

_, ..; g. ; [ ,,. . .. .(

g t..

Y'jf h $_? a, f.%l I- . $I  ?'f- .y .

l .,

N.f.O [. Q,. -' #' [ j '~.

Wi?. . -9 , , . 'M 55 th lW :l . ., .N.07:. Asiq, 4-

-:4, - 5_ ; . g y - _ ,.

. Wu,u,-

~, .

..,-_c ,_,;

(., ,._ . _ .s ._

y.a

.. N _

.-. - _. m

- 4 ^- .

g

.- -.u.-..

, hisis the life. It doesn't takelong to get comfortableliving in Southeast Texas and South Louisiana. The best part is all the days ar.d ways you can enjoy being outside - from it was reflected in GSU's in- discovering backroads dustrialload, which began the year and an old general store strong and continued its momen- or fishing holes, to tending a garden or tum during the year. atteno,ng a crawfisn boii.

Sales to industrial customers Thereis ampleland, accounted for 41 percent of GSU's schools and oppor-tunities ... a fu'ure as well annual electric revenues and as a glorious past.

showed the largest sales increase of GULF STATES UTILmES any customer class, a substantial 12 percent growth during 1984. A por-tion of this is a result ofimproved 5

l Construction economic conditions experienced Gulf States ended 1984 with earn- -

by some of GSU'slarge industrial ings of $2.30 per share of common customers. Some of the sales in- stock compared to $2.31 per share crease, however, reflected the fact in 1983, when there were 11 ""

that a number of customers who percent fewer average shares ' . 4_,

have generation capabilities of their outstanding.The common stock ,

own opted to take power from Gulf dividend paid in 1984 was $1.64 ',s States because of the advantages per share compared to $1.62 paid g/ fk '

4 '

offered by innovative rates and per share in 1983. Operating cheaper costs revenues were $1.5 billion in 1984 . x If ratesincrease as they are and $1.4 billion in 1983.

expected to during 1985, itis The Public Utility Commission of anticipatedthatmanyof these Texas (PUCT) and the Federal customers will return to the use of Energy Regulatory Commission their own facilities. (FERC) both granted modest rate

"'*'"""*'8"

The highly weathersensitive increases above the cost of fuel to residential and commercialsectors GSU during the year. Additional fac- m.

8 58 both experienced impressive tors that influenced 1984 earnings growth in sales during 1984. The in- included a solid achievement in tense cold weather that gripped the sales and cost containment efforts GSU service area during January- which reduced operation and and February set an all-time winter maintenance expenses more than peak demand and drove residential $6 million below budgeted sales upward. However, a cooler amounts.

than normal summer.during the air conditioning season tended to moderate overall sales for the year. Construction Kilowatt-hour sales to residential customers still ended 1984 with an - -!!!!!

Impressive 9 percentincrease.

The number of GSU's new . or the past decade Gulf States' commercial customers grew by 5 construction program has been m 3,,,,

percentlast year, which accounted aimed at moving the company substantially for the 9 percent away from its heavy dependence y" increase in sales to commercial on natural gas as a boiler fueland toward a greater diversification of =- --

customers.

During the year GSU added more . fuel sources and supplies. Great u. _

than 12,000 new customers, in- strides were witnessed in this area - -

creasing the total number receiving in 1984.

electricservice to 555,491 at the One major construction project to_ . i s --

end of 1984.- bring " coal by wire"into the Gulf ,, _

. States system was completed, while -

another to add nuclear power to s -

the generation mix neared , _

!' completion.

On May 17. GSU and The !E!!!

Southern Company-a group of  !

l utilitiesin Alabama, Georgia.

l Mississippi and Florida - placed 6

. . l l

Into operation a 50& kilovolt Estimated construction costs do g transmission line linidng the two notindude carrying costs during systems for the first time. The construction or capital expenditures Q-

~

150-mile line, which runs from near to be paid after the plant goes into Baton Rouge. Louisiana, to near operation. Most of the project's in-Pascagoula, Mississippi, began crease in costs is related to main-delivering coal-fired power after taining schedule and assuring safety more than two years of planning of operation of the plant. Greater  ;, c m and construction. GSU's 70-mile than expected expenses associated y portion of the line indudes more with testing and start-up and addi- _

than 360 transmission towers and tional staffing for the plant once it is -

was built using helicopters, frogmen operational have also been iden-and marsh buggies to overcome the tified as contributing to the cost g unusually heavy rains and high increase.

water during much of the construction.

The newline willallow GSU to m receive up to 1,500 megawatts of he company recognizes that power while giving the company a

, River Bend is on on aggressive, more diversified fuel m,ix and pro- * -

ambitious schedule. However.

viding an opportunity to exchange throughout its construction history, power with additional utilities.

River Bend has made above- i.oo - -

As 1984 ended. River Bend average progress when compared Station, GSU,s 940-megawatt w th other nudear projects ofits nudear facility being built north of '*~

size and design. A number of Baton Rouge, was almost 95 per-systems that would not have had cent complete. Manpower and roles to play until the plant was a -

budget were shifted by mid-year t focus on achieving the spring 1985 ready to actually produce electricity ggggg

""""~

were resequenced last year to fueHoading date, with commercial enable management to focus man-operation scheduled for the end of power and budget on achieving the 1985. The start-up schedule was spring fueHoading date. Finally. F l almost 60 percent completed by the enp of the year.

GSU has been successfulin attrac-ting some of the most experienced r2 w" In mid-November, Gulf States and people in the nudearindustry to '

Stone & Webster Corp., general ~

staff the start-up program at River contractor on the project, reaffirm-Bend' e -

ed the construction schedule The Nudear Regulatory established in 1981. The projected *- ~

Commission (NRC) Caseload cost of putting River Bend into Forecast Panelin the past had in- '~

commercial service wasincreased ~

dicated that it did not feel that GSU at that time to $2.72 billion. The could achieve its 68-month River 2 -

previous project estimate of $2.5 Bend construction schedule, but the billion had been established in NRC is working to support the ' ~ -

19 81.

schedule. l!Ell GULF STATES UTILmEs M

, .,, ..g- .." c

_? -

.-n .-

.s

,a-y ..

, , . V . .

-a.-

Pyy=semipquaggquev.rpr 7 m*I--- 1 . e m m - y*+f5-y 7 ey  ;.* .+/-19PP'"-]~ ; . ' d' T" '

.. . '. ^ g '," _ . - ' ,;_,_,.  ?

~

• O. .,'.

y { . . '

...~-. ,

W- l' :,

.g _ -,_ '. . h f .. t . ,. . . j . f 4-[_'^ .. ,1,g;sg. ~'N Q-

. ., _- (t a

\ .

r-

- .. . ..N,- .

,',,...:..,,y 4

.I - 5'

~

s .

' ~

l[ I .I.  ;

[ .

[ _

.c.wa .

m. . - i,

, mm w

-;c.

~-

- ' - 1 .%

, ,. ,4,:

.. e gem . A, DA :  ;-

.'i 'g"h , :l . h4 '_ ;Q,

%.)

i p

y n

.) . . .

., . .y .

U -

g i4 1 - .

. 3 r. -

1.#

...q y

'* .?,

' M .. ,,,, ,,,, ~.

' *' .

• I

,,. ( eg .

g .

m. u . ..

s.

- s,.y?

,,g 1 g .-

- ~

2:w ge r

4.? ,,,i.,

..,.,.d.. .'

~'

]% -

L w.g t .

a . g., l.

j. i,.,,.

.......  ;. '4. .

nyy

..,,p hy,"g<g ., , _.

,'p , ' . i.{l ., ;,C '

I 'r .4 , t Y i g ,. > (P

' - 44 kW. ,f8 ),, y Z % 1, .; p Y

V l.2.?y.'-i , ': ; s. ' . W, . , .

\n..:'y- l '

)g a .~ , n f,

\

.{r

-l.

p '? 'W gf.&; . + - m.y}h m. , .

~- -

.* :q

. )q-

. ;;V

- -

. .n '4L- .

i L i

'r, ce -M- h .

..'f [..

- .. ,7 .- ,.

c .

'x-

\ - .~:?,.: . j l*)

'r ' d '. ?

p- 2 r ., . , . \

}' 7 ';

y:: ...) p. .h

j. -

• : . .f ,

1 .- --

, s ]'

' .' : 'y. - - .s -

~

,.i  ;

.;_;=. . g .t.. ;,y}' -w p,.

,- * .c'

.g-

..s

_, te

.g%

.'q-

'll a

f

, .];.ns V g .,e, . -r

, . i_ . ~ :y.y f..

^ j ~,,e}s g?  :

. . ')l l'V ' (. ' , f a . ; ,.

e

, r: . .- . . .

.--. .;. . , g .

. ; ....-n

, x y v , .- ; . , . . , , ,_..  ; > ;,5

=\ *

f,. ., ?. 'y .h ' ?; py . .' $_ '. ? *; .lf f

} .f. ' 1

• = e~-

[ . g <a m.

e. ,..;..c . 9

.kQ ,g. /3.- .yL ;c3s.  ; , .;; L f ;, .,

4

. ~Q.;-

%.pO_3y WWOn

7. -

i agir,%, .,

y ..  ;< 3,;? :p h

., annaw w

?, .

,,a y,_g _4 .

g ;. . ;,m s 7; p e

.o a. , , 1. ; . c Qg g .;;,;, <pg?.. s 3.2,

.y.

. , ; yy4 . n w.y l,- ..

.- v~

, oP. ,, Q,9

.j ;.g: . :. e - :._&% 4*a . a .A .:

, ,.7 i..

fd - -

D t A ...,;.....s.--

, - .,, -N g ^ [,

. .. , *b W R.[, Q.lg .Q;[ . y./y . , . :l* _y e?. '; -d

g. [, .b l5_ m_, .s R .f, . ,QQ. n ,,Qgl. _

v . .

- , - ~ u, ... ,, .g ,;

s 7,b i., ,-

s L ,

. .r '

, 4 *p g -

gr

~g _

a, Q-

,y 3

~

.a ,

9;*.. . -

.- . w -

. %g ..

s *y . [l *;. _'; .

.m f .,3

+.,py% ' .. - -. . ,;/.J:NA

. .. . . .. . ,  ; . . ...r .

k

~

4

, .E

~,..- [ . '.,. . . .

. , .} [ ',, ' (( ' . '. '.,,:

~~'

-y, -

a

. y,x.I , , . :] - '.';_'

s

River Bend Developments he Advisory Committee on Reactor Safeguards, which con-ducts highly technical safety reviews for the NRC recommended to the commission that GSU be granted a temporary low-power operating license when itis ready for testing.

Low-power operation means that the reactor runs at only 5 percent capacity while the various systems and components are tested.

As part of the licensing procedure for River Bend, the NRC requires GSU to have an emergency J

~ ~ " ~ ~

W* m C , -

y-I.2 %

[;

,. ._ x;].

~

c 's ~ ~ ,t;;pr: 3 t'

y7

/s

(( f [. q,fM - ~^

preparedness plan in place. GSU employees, plus representatives of W

diver [Eg w rd petrochemical and the states of Louisiana and agriculture remain top i.n-d o eo y is Missiscippi and the five parishes 9 near the plant, began traininglast pettive and diversified.

a pa fall to prepare for an emergency in gg ger p

the unlikely event of an accident at companics, oties and the site. On January 16,1985, GSU states are paying offin a 9

personnel working with state and hindhlQ , fgce parish officials conducted a new business.

simulated emergency drill at River GULF STATES UTILmES Bend under the direction of the NRC. An NRC spokesman observing 9

s

• Financing the drill noted that the exercise was unit also was prudent. m= -

c successfuland that the NRC As a result of the cancellation of considered it an adequate perfor- River Bend Unit 2. a portion of the d<% hW gY mance. Successfulcompletion of an emergency drill exercise is one 1984 common stock dividend will be treated as return of capital for b/i M S p - d #1_.}

requirement for approval of River fedcral tax purposes.The company %_' i Bend's operating license. anticipates that 72.27 percent of '

I the third quarter common stock Also in January 1985 the NRC Office of Nudear Material Safety dividend and 76.41 percent of the and Safeguardsissued GSU a fourth quarter common stock divi- >

license that allows the company to dend will not be taxable for federal .,

receive and store fuel for River income tax purposes as dividend in-Bend.The first shipments of nudear come. Return of capital reduces the fuel began arriving at the. plant site tax cost basis of the shares on in early February 1985 in prepara- which the dividends are paid.The ,

tion for this spring's scheduled fuel first and second quarter common loading.The fuel bundles will be stock dividends, as wellas all D t l*

keptin a storage poolinside the preference and preferred stock V"

• fuelbuilding until the NRC grants a dividends, are 100 percent taxable low-powerlicense and GSU is as ordinary dividends. j ,

ready to load fuel. 9 '

Hearings scheduled for early October 1984 were canceled when Financing y #

i .

intervenors in the operating licens- d

= ing proceedings said they were i satisfied with GSU's plans for deal- - o finance the company's ing with their three areas of constmction program. GSU issued concern and decided against raising securities totaling $462 million, or

' tlie issues in formal hearings. more than a million dollars a day.

. As one ofits first acts of 1984, the GSU's goalis to finance each year's board of directors of GSU formally demands as it goes along.To  %

canceled River Bend Unit 2. the chieve the " pay as you go" goal, nn.

in 1984 the company sold $296

• twin of the unit now under construction. It was a case of million in long term debt. $45 ._ ___

I recognition following fact. million of preferred stock and $121 The net book loss. after taxes, as a million in common stock.

About $196 million, or two-thirds 4m -

l

' result of the cancellation amounts to approximately $82 million. of GSU's debt financing, was in the , _

The Public Utility Commission of form of tax-exempt pollution con-i Texas conducted hearings on River trol bonds. Nearly $64 million of 2" -

Bend Unit 2 and the hearing these pollution control financings . _

are being held in construction trust l

examiner reached two condusions:

• accounts to be spent during 1985 to i first, the dedsion to build River l Bend Unit 2 was prudent, and pay for the cost of building pollu-tion control facilities for River Bend.

second, the decision to cancelthe l In July 1984.81 U.S. and foreign l l- banks completed approval of an ex-  !

tension of GSU's $800 million revolving credit agreement. The credit agreement was primarily ar-10

l l

ranged to provide a back-up source vestors, have exhibited support for i of funds for construction of River the company by participatingin the Bend,in the event that funds were Dividend Reinvestment Plan. At the l not available from public markets, present, some 43 percent of GSU's ,

The agreementis extended until common stock shareholders are September 1988, with payback of reinvesting their dividends.This any balance to be made over three rcpresentsinvestmentof 20 per-years, ending September 1991. cent of common stock dividends.

In summary. the 1984 financing in anuary the y sold Rates & Regulation 900,000 Depository Preferred Shares each representing 1/2 share of Adjustable Rate Cumulative Preferred Stock, uch of the rates Series B.The $100 par value shares sold at an initial dividend and regulatory activities that took place in 1984 centered on GSU's

[ , g rate of 12.5 percent. actions to recover the costs of fuel A o in March GSU completed the sale through rates. Nearly 50 percent of of $100 million of 10-year first the fuel GSU used to make electrici-mortgage bonds with a coupon ty for the past 20 years has been rate of 13.75 percent. purchased through a singl(icontract o in AprilGSU filed shelf registra- at about 23 cents per thousand -

tion statements relating to cubic feet. Expiration of this con-

..d, proposed offerings of up to 6 tract on January 1,1985, forced l

! million shares of common stock,3 GSU to ask for higher rates to million shares of preference stock recover the increase in fuel costs j and $100 million in first mortgage in early January 1984 the com-bonds. pany filed a twostep rate case with o in May the company guaranteed the Public Utility Commission of

$102 million of pollution control Texas (PUCO. The request con- "*v =

revenue bonds, sold at 100 per- sisted of $161.2 million in additional %

cent of the principal amount plus revenues laterin 1984 and $264.6 4m -

accrued interest to help finance million at the beginning of 1985 to 3m .

pollution control facilities at River coverincreased fuel expenses. ,, _

Bend. In its first decision under new o In August the company raised state laws governing utilities, the

$66 million through the sale of 6 PUCT voted in early July to grant 2m - -

million shares of common stock. GSU a modest rateincrease. Of the i,a - _

o in September GSU filed a shelf $161.2 million originally requested , , _ _

registration statement related to in January, the company received

"~ ~

proposed offering of up to

• 750,000 shares of new preferred stock - $100 par value.  !![gj o In December GSU closed on $94 million of 30-year pollution control bonds for River Bend.The wsTAmmums interest rate is adjusted daily, GSU shareholders, primarily individual and small institutional in-11

P3QSEK3N?f?!??!

+ ~

. Ac. .. _

- Q.1r-6.f 3 '.i'. fy;

.M, .s4 '-

en

. a. .

v. ,

e ,

g3

~$. , , . . :i_:. y , S W

' , l:p{:^..? ' ? f fy['*h:f

~

1:; {; '.; } . ))Q9

\

g '

Jg' .\ &. j ,

i  %'c~

~

. ~

Qgg e:k;;

w:

% -y (

1. fn ?

_ 1 ~. H .

)

n x -

a ~

_._9-m _ -

~

3 l h.

- ,rn -

s, 4 4 \

1. 4

.= J s

,,. s

~

a. # *

: ?,y ? .

[: k *,

<j i

? ,y; .

,, Y' h/h

n. .

n. r .,  ; . ., . . ,

~

4:5 , L, A .r *. -

a  ;; ,

, .p;. .- .

.. ,. 2 r. , _ . ,

l ;, . . . u a y--

,f-n "

. > ~

w fan.< '. 7k 4,2

-.s , ,

. s; -; .. . 3 4: ~"' ,$ ,

e

• ~?'

• N s ' ; ?. * ,

6

• &E V Q't')

.m.

" 2. ' '

f/i .

.llwq} % 's ,*-4

..;. Q"*l;,*,I[* % a "M;

m. , o ,, . ,. Q'W j i

ct 5I h, . v s _,,&* l;~ ;s .

a .

[2.'  % - ; - ., _, __ . _

,,'g,.-  % ,._

g:

......,n . m; T'I':

p y A* _

_T _ . _ _

~

.mh3 L.g

_ m .

i: .

k

[ ,-

. A' ' F,

s [

DNA T

4 ,,

' h, 3

w .

• w: k.

v. "

3 y# _l, ' '

mak?

.a w.. ..

.~ n

) T 5, ); b

~l ' \ ^

3 .;> u 7 -, ,

y ,, n;c  : :_ ,

~ ,

l (_

4 iya. , 2

-- . , w ._ .

- . , - - __ f( ", , 'fl& :GY -th '

R '

L; q

Rates & Regulation approximately $27.5 million.The new rates were putinto effect under bond the next dayin all unin-corporated areas of the company's Texas service area and became effective in the cities a short time i later.

s the market price of natural gas continued to go down during the l

year, the company reduced its fuel rate request to $191.2 million in l  ;

September and then to $166 million l in December. The short-term gas .

price reflected thelower costsin t

f - - , - --

ryu .  ; g;~3stg _ _

. 's ,

.l _ :q

, u- : *r. . 3,1 .) _

fuel contracts GSU signed after the . hardENthe iYt PUCT finished its hearings. Finally, : just to unwind or to enjoy on December 20, the Texas com . Q$$,f mission approved approximately-. countless recreational -

$166 million to cover expected fuel opportunitiesin our sec-costincreases. GSU was allowed to N e/o"r N ' " w begin billing at the new rates on coHegiate sports or the sport of and after January 1,1985. , , , .m bi#

,a Fuel cost recovery is regulated iirestyie, differentlyin louisiana. In December the Louisiana Public GULF STM5 tmuMS ,

Service Commission (LPSC) ,

I approved a plan for the recovery of fuel costs resulting from the u l

General Operations l

1 expiration and replacement of the of the Exxon gas contract on low-cost Exxon gas contract. The January 1.1985. This single event i plan calls for increases in rates over touched literally every customer 1 a five-month period startingin and employee.Through a single January with complete fuel cost source of supply. GSU was able to l recovery by May 1985. secure about one-half of the com- l In other l_ouisiana rate activity, pany's boiler fuel for the past 20 l GSU's appeal of a $119.4 million years at a low, fixed price of 23 l electric rate increase request of cents per thousand cubic feet. Over December 1982 spent the entire the years, the contract had saved year waiting action in a state district GSU customers nearly $2 billion.

court.The LPSC had denied the But all good 'hings come to an end. $

original requestin December 1983 Even though 20-year-old prices $ j" and ordered a $1.1 million reduc- could notbe kept from rising to to- -

tion in electric rates stayed by the day'slevel. GSU began taking steps court. GSU appealed the decision in several years ago to minimize the court, and the court remanded the impact on customers. Prime among i

. case to the commission for further them was the shift from increasingly consideration. The LPSC recon- expensive natural gas to such

~ sidered the case, but did not cheaper fuels as coal, nuclear and '

change its previous decision.The coal-based purchases.

case was then returned to the Aslate as 1981. Gulf States was M district court. The date of any ac- virtually a 100 percent gas-burning - I tion cannot be predicted. utility. By next year, it is projected

, Things were better at the federal that gas usage will fall to around 42 ( _

l level. In September the Federal percent of the needs, with coal and Energy Regulatory Commission - purchased power making up about (FERQ ruled that new wholesale 45 percent and River Bend account-rates requested in July could be put ing for the final 13 percent.Thisis a into effect after a one-day suspen- dramatic, but necessary transition. ,

sion.This allowed the full $29.6 Adding multiple gas suppliers has cumm=

million proposed increase to increased fuel flexibility. Instead of hana become effective at the end of a single pipeline to a plant, now September, subject to refund after multiple pipelines from different gas a _

full hearings.The rate increase was systems serve each plant.This allows a choice from among several *- -

later lowered to $29.3 million. GSU serves 11 communities and three natural gas suppliers rather than , _

rural cooperatives affected by the beinglocked into a single supplier.

Increase. This diversity of suppliers, contracts .- _

and pipeline connections provides General Operations GSU with the flexibility and reliabili- * -

ty to take full advantage of today's ,

natural gas market-all to the benefit of customers.  ! ! ,! ! !

ne event that has com-l manded the attention and activities of Gulf States since the beginning of the 1980s has been the expiration 14

During the past year, communica- ments of this effort have prompted tions programs were intensified to Gulf States to extend the program inform customers ofimpending to Louisiana and to repeat the ac- ,

, price increases expected to result tivitiesin Texas during the spring i from expiration of the Exxon con- of 1985. _

y tract. Besides using mass media to In June the company and Local .

provide this information to 2286 International Brotherhood of "

customers,individualletters were Electrical Workers, AFL-CIO, signed mailed to all customers explaining a new two-year labor contract, the situation. An opinion survey which calls for a 4 percent wage taken in December showed that the increase each year, along with im-vast majority of customers realized p'rovementsin various employee that fuel prices would cause their benefits. Of GSU's 5,100 regular electric bills to increase durinF 1985 employees as of the end of 1984.

and that Gulf States was we ong to approximately 3,150 operating and hold these increases down. clerical personnel are represented Project CARE-Community by IBEW. GSU's employment prac- ~

Assistance Relating to Energy- tices are guided by the principles of A

~GSU's program to aid elderly equal opportunity for all employees . A customers in meeting energy and applicants. Implementation of i ,

emergencies, gained public support Affirmative Action Programs has during 1984. As the year ended, contributions from GSU customers, helped Gulf States obtain skilled personnel from all community sec-8 J h shareholders and employees tors, and fair employment policies

. topped the half-million dollar mark. are one way the company develops I in human terms, more than 6,000 its human resources to more effec-elderly people have been helped tively serve customers.

by Project CARE to pay electricity, During 1984, Prudential Drilling gas, propane and butane bills since Company, GSU's wholly-owned the program began in early 1983. subsidiary, spent $17.8 million for Direct assistance is administered by exploration, completion and o.cmeu encumm.o social service agencies in Texas and development of oiland gas -

Louisiana. reservesin the Texas and Louisiana Another program aimed at help- Gulf Coast region.Thisincluded $3 im - -

ing customers deal with higher million in joint ventures with in- , , . _

energy costs was carried outlast dependentoperators. Atyear's spring by Gulf States and Texas end, Prudential's proved reserves "- -

Governor Mark White's office.The were estimated by the company to m. -

three month Residential Cost be in the range of 22.1 million mcf Controller Program was created to - of gas and 1.5 million barrels of oil show electric customers how they or condensate. For exploration, m -

could have greater controlof their completion and developmentin ,

energy use and thus, control their 1985, Prudential has planned and costs. More than 12,000 customers budgeted expenditures totalling $14  !!!!!

were directly contacted through the million.

program which included air condi-tioning tune up, water heater wrap cutrsTATES UTILmES up and energy audit check up activities. The positive achieve-l 15

.. ... 3;:,? .

~ - .

- - - g,- '

.p .u .c,4. 4g.+., , , ,. . , _ , _ , , _ _

' ~

_j . "?

Q_. ~l-l_ ~ :-?.  : )  : lkl' yih d l:fl.;

L ic_t: j;.f.-[ f. Q_,lp.-p.,?  ;'bN~: Y_ . %t f $~&.

$li

' '  ?-

pp.?  ?. y , (. v. . . : ?; . . . .- .  ; ;p . , . . . . w. .,

.~

v._..~., .n..  :

E..'.:%~

,_.v.

( j',

, ' N_ (.; h ': .

p 'wgj w . , y n wvyn

+ y'.. n

. g g :. . . .'

.g

y

?

.a .

7 v, -

_'n

4)  : . ); ...'5 '

,.b.^

. ') .;li , . ' ..^

. ; (..< . ":... f..

~

.- w ,. -

.  : F. ..,3 ..

,ev e - > .

pg. . g . -

x ny[f n y *. . . . . . .: . _. - .: . 3 . 4_ t . . . ...+r  : w ;; . ,. ,ivn n. .

.c c ,:v j., ; c.

0 UH:

~

s- g 4 y . - _ :; ..

~

'j , .

e .

..+

(

. ._... . .y , .

. ., ; . (.. Y

~v .' . . .. .- .- -

f .:.. . . , . . . . < s . . . - .-

' , j W ;*s

=

+

s'

_..'.v

• . ' ' . 'i: '; '-

• y ~i ' ... 2 si J'd,.

.%- . , w!.y: d ;k .e hk;. ._ . .i ' . '

. ... .. num a . m~

v

>  : . . .. x ;. - . .-g - .- .y;> > ..

. . + .*~:..;.y. . .% . r

• a

._f- - ~

• 4 __ -

- g ,- +

Q

.e

_ r _ . ;.; ' .

' Q .p s ._ - <

..y . t .. ,

.ym -ggy - Mn 7 7; ,y33 y <_3

.....- ' _- - . . . . *7-f: '  :. g3 . w.

. _. ~ '. ..

-Q7 f .; -yf:. t ?. [ . ' .

9:p ;< . .

} _L f:. : n-

.?

g g%.M .

j . . - .. _ }_ , - ,7%

' _l " . .

\ ~ r

_, .[ _

.? e O . . '; .. ' . . . . Y ., ' \ .

. .'[-.

N. . - *l

~...5.  ?

^ I ' I ' ? ~. ' ~ '

- b' 2' ' ~  :

x NN%q,ff

% .. g , l . .' ; i 1

. f .'. .,l -_ 7$s N M $astasquv3$y '..

Westlemasspeen

?~

9tsequeur Sensa

~

_ L td o w nd i tiggs' .'2

' w$

c.: . .efshe:8005 ~ ~

^f JO43l~-

?.'

p g:f .. . ' x

> rW. estenspesandespeedse-

~ -

- c% l .1-me

. +

m .  ;.

. 4,a ,4py,,,mm,

g. >

wg4 geg; .

. 7- . .j g g ogsgespagg .

- A;:y.. u y-( E.

~

? . desdeeme(. ~ x.V. .

. :st>m .

, EN L^ % i.teamshar atensli . slumsm ~

% m %py i '..(E

...V .

. - gymand dw ~ quud '

,ssap ..... 1 .

4 passem

? xgym

.h.,.-: .+ - .. .

7.:meuskers1

. sans ames.~<z-

.. f smus ~ -

b, rdN.$.L.::LI"...7ffI8 M i,lff h ((h-j...

. I i 819$d .

kfV d'

b' S' 1)

.g n

• s) g

$P T g'. S k

• t *

+ *"Y .

n .

- * ^" ~ ,

~

1. pqunkgArmngwe ~

4m eswyn%Anen q :w f y *was aqqggmh ae> u %+4

. a .

"Qt &&W}- If;Yf 'R .l & . ;.

. f c, &

.3 e p3 i

<.x.- .t 3

,- x.

-f.

,,-4..-

-A

==== -

msz - v -

fn ;y

. QM_ =

e star:'z :';!. ' . -

o) y" f . .,,, 4? ..

~

[(-

-t 4 a!gg[M' .-- CAB. T' S. E]:.j

== - --

i-  %

J AMtWISLTc-g

% u n A p g F'MI a e eM

.- w ;,. .' .' % ; -  ;.

33 .(, ,

• N l.gY9:.i

• L'fs,.jp:64

( 4 Qys. $)).J

~

s. .. . p q. c .4.s i P jR.Kq::y

.. . t.

h. W- ,

.7 l[ W.f.b.fk[q).l..l

.; N ;t' ;Sii.? .p ' A;>h,f.:;

l  : .

>f-c.

qq;

. +

!ategies .

w ii - o iOur staff actsasa matcli- as electricity and steam -at the 9

. - betweenpotentialcustomers same time. We have generating i pdtenhallocationsusingour q.

units available at Louisiana Station. , r g . Analysisof Buddingand " Neches Station and Nelson Station 44 e ' w . Community profHes thatcould be usedexclusively as ': ?j r litcludea multitudeof useful cogenerators for spedliccom- .

staaggsupplied to prospectswith '

panies. Thisisattractive to GSU for . .

+$

a.;

7d, WISreport. a coupleof reasonrewe retainload h QSU1sinthesec'ond phaseof a we might otherwise havelost , ,

. programtorevitalizethe Ithough we wiB be servingit in a dif- p.

t o. - ntheservice area ferent manner).and we gain steam J'i;:

, . better our existing . load we would not have had. /@

f.m r. prcidiE2Edditi5ftli -

Our gWrmary goalls fdr.a8 .'...c hw customers to maintain their service .

A recent studyindicated thatif with Gulf States. Not only does this alldings currently available in take mean sellingelectricity tothose %y Sadesand Beaumont were whocan web afford it. It means .

$}.

g

. 4 to80percentcapacity. -workingdirectly withlowincome -

L would gain $3.2 mlDion in andelderly customers whoare ~,

iditionalr.evenu,e. - hard pressed to pay higher energy Gogenerationisgoingto be a

~

costs. We wiR continue to offer 4lorcontributor tothisregion's customer benefit programslike 6

tergy mixin the future.and Gulf, Project CARE for the elderly. . ..

steswiB bea part ofit. energy audits. weatherization

. ted powerisdefined as

~

services and ra.te options to meet akingtwoformsof energy -such _ individual needs. Thisis a social .

responsibinty we recognizeand 1 acce dULFSTATES

• As we retum to our marketing .

rootsin 1985.Our aim wlR be to provide our customersthe product and service they need and expect. -

L '

in ways that wlR continue to win their favor.

u.

=

Y

FinancialInformation i FINANCIAL SECTION Contents Management Responsibility for Finandal Statements . 18 19 Selected Finandal Data . . . . . . .

19 Common Stock Prices and Cash Dividends Per Share . . . .. . .

Management's Discussion and Analysis of Results of Operations and Finandal Condition . . .20 Statement of Income . . .. . . ... . . . .. .23 Statement of Sources of Funds invested in Utility and Other Plant . . . . . . . .24 Balance Sheet . .. . . .. . . . .. .. . . .25 Statement of Capitalization. . . . .. .. . . .. .. .26 Statement of Changes in Capital Stock and Retained Earnings . . . . . 28

. Notes to Financial Statements . . . . .. . . 29 Auditors

• Report . . . .. . . 38

. Statistical Summary . - . . . . . . .. . . . . 39 The Board of Directors. through its Audit Commit-MANAGEMENT RESPONSIBILITY FOR tee. has general oversight of management's prepara-FINANCIAL STATEMENTS tion of the finandal statements and is responsible for Management is responsible for the preparation. engaging, subject to shareholder approval, the in-Integrity, and objectivity of the finandal statements of dependent accountants. The Audit Committee. com-Gulf States Utilities Company. The statements have prised entirely of outside directors, reviews with the been prepared in conformity with generally accepted . Independent accountants the scope o' their audits accounting prindples applied on a consistent basis, and the accounting prindples applied in financial and, in some cases, reflect amounts based on reporting. The Audit Committee meets regularly both ,-

estimates and ludgment of management giving due separately and lointly, with the independent accoun-consideration to materiality. tants, representatives of management, and the inter-The Company maintains a system of internal con ' nal auditors, to review activities in connection with trols designed to help give reasonable assurance that financial reporting. The independent accountants -

the books and records properly reflect the transac. have full and free access to meet with the Audit Com-tions of the Company and that established policies mittee, without management representatives present.

' End procedures are followed. Internal control systems to discuss the results of their examination and their are subject to inherent limits in recognition of the opinion on the adequacy of internal accounting con-need to balance their costs with the benefits they trols and the quality of finandal reporting.

produce. The Company's management strives to

. maintain this balance.

Coopers & Lybrand independent certified public accountants, are engaged to examine in accordance .

with generally accepted auditing standards, the finan-cial statements of the Company and issue a report -

thereon, which appears on page 38. Such auditing standards include a review of Internal accounting con-trols, tests of transactions, and other procedures suffi-dent to provide reasonable assurance that the finan-dal statements are neither materially mis!cading nor contain material errors.

18

M GULF STATES UTILITIES Selected Financial Data (in thousands except per shwe amounts and ratios)

. For the Years Ended December 31 19si 1982 19si 19e0 Operating Revenue .. . $1.436.188 S1.307,259 St,221,714 $1.005.226

!' Net income . ... .. .. 229.799 165,979 I 50.93 I I I 7,I89 l- Income Applicable to Common Stock .. . . 180.747 127,030 120.550 92.309 Earnings Per Average Common Share Outstanding . .. 2.31 1.95 2.24 2.05 Dividends Per Share of Common .

Stock .. .. .. ... .. ... l.62 . 56 1.48 1.39 Return on Average Common Equity . 14.78 % 12.32 % 14.21 % 12.94 %

. Ratio of Earnings to Fixed Charges . 2.43 ,2.10 2.10 2.38 As of December 31 Total Assets . . .. . .. . . . $4.349.524 $3,806.1 I I $3.343.419 S2.925,701 Iong-Term Debt and Preferred Stock Subject to Mandatory Redemption 2.040,295 1.771.078 I.642.894 1,444.505 Book Value Per Share . . . .. I5.73 15.25 15.4I I5.60

. Ccpitalization Ratios:

Common Shareholders' Equity . . 36.6 % 36.0 % 34.4 % 32.6 %

Preferred and Preference Stock ' . 12.3 13.1 11.5 13.3 Long-Term Debt ... . . . 51.1 50.9 54.1 54.I 100.0 % 100.0 % 100.0 % 100.0 %

Common Stock Prices and Cash Dividends Per Share For the years ended December 31 ca.h cash o ud 4. oud d.

Paid Pahl 1984 High tow Per Shere - 1981 High Low Per Share First Quarter . . . . . $13% $11% S.41 First Quarter . . .. $14% $12% . $.39 Second Quarter . . 12 'l0% .41 Second Quarter .. 15 % 13 % .41 Third Quarter . . , 11 % 10 .41 %ird Quarter ' . . 15 ' 13% .41

- Fourth Quarter . , 13 % 11 .41 Fourth Quarter . .. 16 % 12 % - 41:

The Common Stock of the Company is listed on the New Yo'rk, Midwest and Pacific Stock Exchanges. %e approx-Imate number of common shareholders on December 31,1984, was i 15,000.

L

{

l 19 l

FinancialInformation Management % Discussion and During December,1983, the Louisiana Public Ser-Analysis ofItesults of Operations vice Commission (LPSQ denied the Company's re-and FinancialConchtlon quest for a $119.4 million electric reta0 rate increase and ordered a $1.1 miDion decrease in rates. Concur-RdMW iently, the LPSC granted the Company $1.5 million of Net income and income apphcable to common a requested $2.2 miDion gas rate increase. The Com-stock both increased by 12 percent during 1984, as pany has filed an appeal with a District Court in Loul-compared to 1983. Despite these increases, earnings siana seeking a reversal of the LPSC's actions and an per share of common stock remained virtuaDy un- order to grant the requested increases. During changed at $2.30 per share as compared to $2.31 per September,1982, the Company placed into effect a 1 share during 1983, as a result of the dilutive effect of $97.3 million rate increase approved by the LPSC.

having 13 percent additional average common shares  ;

outstanding during 1984. Increased revenues. During September,1984, the Company placed into resulting primarily from increased sales volume, and 2 effect a $29.3 million increase in wholesale rates .

rate increases granted by the Public Utility Commist authorized, subject to hearing and refund, by the f sion of Texas (PUCD and the Federal Energy - - FERC. The Company cannot piedict when a final

. Regulatory Commission (FERQ along with higher- order will be rendered or the amount of increase, if

- levels of allowance for funds used during construction any, that will ultimately be granted. The FERC approv-

. (AFUDC), were the primary reasons for the increase in -

ed. and the Company placed into effect. a $28.8

net income experienced during 1984 The inadequate million increase in wholesale rates during July,1982.

rate rel ef recewed during 1983 and 1984, has caused c weakening in the Company's overall financial condi- The Company antidpates filing requests with the tion. Unlesr and until the Company receives adequate LPSC and PUCT for increases in its electric retail rates, rate relief which recognizes increases in both its cost and with the FERC for an increase in its wholesale and of service and embedded cost of capital, the Ccw transmission rates during 1985. The primary purpose

. pany's overall financial condition will continue to be of these proposed rate increases is to cover the addi-adve sely affected.~ tional msts which the Company expects to incur in -

connection with the anticipated commercial operation Operating Ilevenue ; of River Bend Unit I, a 940 MW nudear4ueled

' Operating revenue increased 8 percent during generating unit, beginning in December,1985. The 1984, as compared to increases of 10 percent and 7 Company has no assurances as to the type, timing, or percent during 1963 and 1982, respectively.1he amount of any rate treatment which may be granted '

~ primary causes of these increases are detailed below-.

In the rate cases.

Kilowatt-hour sales increased 9 percent during -

19s4- 19s3 19e2 1984, as compared to a sales increase of less than 1 :

1 on W percent during 1983, and a sales decline of 6 percent

, Rate increases , ,, ,. s 17,993 - $127.915 s 93.033 during 1982. Sales to industrial and commerdal Fbel Cost Recovery . . . . 46.856 - (7.4I ll 15.813) customers increased by 12 percent and 9 percent. -

sales volume and other. 46.004 _ _ 8.425 11.675) respectively. during 1984, and reflected the improving si10.853 $128.929 s 85.545 economic conditions experienced in the Company's service area since the beginning of the third quarter of During July,1984, the PUCT approved $27.5 million 1983. A 9 percent increase in sales to residential ~

of a requested $161.2 million electric retail rate in-customers resulted from the colder than normal crease based upon a test year ending June 30,1983. weather experienced in the Company's service area The PUCT did not indude the Company's 42 percent during the first quarter of 1984. combined with the share of Big Calun 2 Unit 3, a 540 MW coal-fired warmer weather experienced during the second and

. generating unit, as plant-in service, although the Com- fourth quarters of 1984. During 1983, a 4 percent pany had dedared its portion of the unit to be in com increase in sales to Industrial customers was offset by mercial operation in September,1983.The PUCT fail- decreases of 5 percent and 8 percent, respectively, in ed to include the unit as plant-in service because it sales to residential and wholesa!e customers and

. was dedared commercial after the end of the test year. The Company has appealed the rate order to a 7 strict Court in Texas. The PUCT had previously ap-p.oved a $57.5 miDion rate increase which was placed into effect during October,1982.

20

--H/

GULF STATES UTILmES resulted in sales remaining virtually unchanged during Company began purchasing coaMired power under l 1983. The increased industrial sales reflected the irn- the terms of a long-term interchange agreement with I proving economic conditions in the area, while the The Southern Company. The 1983 increase is at:ri-decreases in residential and wholesale sales resulted butable to increased unit prices associated with the from milder than normal summer weather. Another Company's buyback of the co-participants share of factor in the decrease in wholesale sales was the capacity of Nelson Unit 6.a 540 MW coaHired transfer during 1983, of certain municipal customers generating unit placed in service during May,1982.

to another supplier. The decrease in total sales during The increased unit prices were offset in part by 1982, was primarily attributable to decreases in in- decreased energy purchases. W increase in pur-dustrial sales resulting from the economic recession chased power expense during 1982, was caused experienced throughout that year. primarily by increases in the unit price paid for energy -

On January I,1985, the Company's long-term con- purchased.

tract for the purchase of low <ost natural gas expired. The Company expects that as a result of the exoira-Under the contract, the Company purchased the tion of its contract for the purchase of low cost natural

'maior portion of the fuel used in its Texas generating gas, total fuel and purchased power expense will in-stations. As a result of the increased availability of crease significantly during 1985. The Company has

_ purchesed power and other Company-owned generai . received authorization from the PUCT to increase its 2

tion. the Company has arranged to replace only about Texas retail rates by $166 million effective January 1, 60 percent of the gas supplied under the old contract. 1985, to cover these anticipated additional costs. The While this will lessen the impact of the contract expira-- LPSC has approved a plan under which the Company tion, the Company expects that the higher fuel and will phasein the higher fuel costs through the fuel ad-purchased power costs may result in fewer kilowatt- justment dause over a five month period. The Com-hours bcIng sold during 1985. pany anticipates that the additional fuel costs attributable to its wholesale customers will Operating Expenses and Thzes be recovered through its wholesale fuel adjust-The Company's fuel expense has dedined during rating expenses haveincreased as a each of the three years from 1982 through 1984.

result of higher labor and material costs, increases in Decreases in fuel expense of 5 percent and 2 percent during 1984 and 1983, respectively, were primarily

& ost of mchased Mehnd h;d administrative and general expenses. Costs associated the result of reductions in the unit price paid for fuel.

with the operation of new generating units have also These reductions reflect a greater availability of lower contributed to the increase in other operating ex-priced natural gas and the increased utilization of enses. Increased labor and material costs associated lower priced coaMired generation in the Company.s me pMonmMMdd ed Mddd fuel mix.1he average cost per kilowatt-hour of natural maintenance resulted in increases in total mainte-gas, the Company's primary source of generation. has l decreased from 1.74 cents in 1982, to 1.50 cents innance expense during 1984 and 1983. A decre se in the amount of unscheduled maintenance perfe rred 1984. While the unit price of the Company's coaHired during 1982, resulted in a decrease in mainten. nee generation has remained stable during the period ex ense during that year.

from 1982 to 1984, the increased usage of such Depreciation expense has increased primanly as a generation has helped displace more expensive result of placing the Company's portion of Big Cajun 2 Company-owned generation. The 7 percent dedine in Unit 3 Into commerdal operation. This increase was

- fuel expense during 1982, was due to reduced genera-offset in part by a slight reduction in the Company's tion requirements caused by lower sales, offset in part com osite depreciation rates. Amortization expense by increases in the unit price of fuel. Substantially all increased by $1,559.000, or 40 percent, during 1984.

fuel and purchased power costs in excess of those ir" as com ared to 1983. During the e cond half of 1984, duded in base rates are deferred or accrued until the Company began amortizing the wholesale and such costs are approved by regulatory authorities and Texas retail portions of its Investment in River Bend reflected in customer billings and, thus, have no effect

, Unit 2. a proposed 940 MW nudear-fueled generating unit, which was cancelled in January.1984. See Note sed power expense increased by 33 percent 10 m the mancial Statents.

during 1984, as compared to increases of 11 percent Inane taWncead 3 percendudng N. as and 21 percent during 1983 and 1982 respectively.

compared to increases of 33 percen and 60 percent The increase in purchased power expense during during 1983 and 1982. The 1983 increase was primari-1984, resulted from increased purchases of energy ly the result of increased pre-tax income, while the made as a result of higher load requirements. offset in 1982 increase reflected the effects of certain tax ad-part by a reduction in the unit cost of kilowatt-hours gustments. Other taxes continue to increase primanly purchased. During the second quarter of 1984. the as a result of higher franchise and revenue-related taxes.

21

{

f

l FinancialInformation Non Operating items adequate and timely rate relief which recognizes

'" "'# '" "#"" #* #d * #E' "'

The increases in AFUDC during 1984, resulted from *

"" # " " " *N""Y an increase in the amount of Construction Work in earn a return en the fuH portion of its investment in Progress (CWIP) qualifying for AFUDC. offset in part River Bend Unit I once it is placed in commercial by a decrease in the AFUDC rate. The increase in the operation, amount of CWIP qualifying for AFUDC is due to the The Company's ability to adequately fund its core Company's ongoing construction program, along with struction program continues to be dependent upon its reductions in the amount of CWIP included in the ability to gain access to the capital markets and issue Company's rate base by the LPSC and the PUCT. debt and equity securities at reasonable rates, and increases in AFUDC during 1983 and 1982. were the the continued participation by Cajun Electric Power result of increases in the rate used to compute Cooperative. Inc. In River Bend Unit 1. The Corn-AFUDC. along with a decrease in the amount of CWIP pany's ability to obtain the needed financing is '

upon which the Company was aHowed to earn a cash affected by credit ratings assigned by rating agencies.

return. The increase in the AFUDC rate resulted from If the Company's ratings should be lowered below increases in the Company's embedded cost of capital. present levels, certain markets may not be available increased interest on long-term debt resulted from and the Company may be unable to raise necessary the interest requirements on new borrowings made to capital. In order to maintain or improve its credit refund short and intermediate-term debt incurred in rating. the Company must be allowed to charge rates connection with the Company's construction program. which are sufficient to provide the necessary levels of debt and preferred stock coverage ratios and com-Financings and Capkal Resources mon stock equity earnings. During 1984. the Company During 1984, the Company invested $625 million financed $502 million of its total capital requirements

. (including $159 million of AFUDC)in utility and other of $642 million through sales of long-term debt ($296 plant. It is currently estimated that the Company's mililoni, common stock ($121 millioni, preferred stock construction expenditures will total $610 million in ($45 millioni, and net increased borrowings under the 1985,(including $208 miHion of AFUDC). Assuming revolving credit agreement ($40 million). A total of that River Bend Unit i goes into commercial operation $196 million of the long-term debt issued during 1984, in 1985. the Company antidpates that its 1986 con- was in the form of pollution control bonds. Of such struction expenditures will decline to approximately total, approximately $64 million is being held by a

$250 million (including approximately $21 minion of trustee and will be used during 1985 to fund pollution AFUDCI. A totalof $514 million of the Company's control expenditures at River Bend Unit 1. During 1984 investment in utility and other plant was attri- 1984, the Company retired $6.8 million of preferred butable to the Company's investment in its 70 percent - stock subject to mandatory redemption. Average dah o'vnership share of River Bend Unit 1. In addition to . ly short-term borrowings were approximately $84 funding the construction program, the Company must million during 1984. For information concerning funds

- periodically redeem preferred stock In accordance available to the Company under a revolving credit with sinking fund provisions, retire long-term debt. agreement, bank lines of credit. and short-term bor-

- and pay dividends to the holders of its preferred and . rowings, see Notes 8 and 9 to the Financial .

preference stock. For information on preferred stock - Statements.

sinking fund requirements and long-term debt - ,

The Company's Mortgage Indenture places limita-maturities, see Notes 7 and 8 to the Financial tions on the amount of first mortgage bonds which the Statements. Company is allowed to issue. The most restrictive of The Company's construction program is funded L these is presently that based on the ratio of pre-tax primarily through the use of short and Intermediate- earnings to interest on such bonds. Based on the term borrowings, which are subsequently refinanced results of operations for the year ended December using proceeds from long-term debt and equity . 31.1984, the Company would have been able to issue issues. During 1984. 61 percent of the Company's at year end, $445 million in additional first rrortgage construction expenditures were funded from external ' bonds (assuming an interest rate of 14 percent for sources. Internally generated funds and AFUDC equal such bondsl.

' the remaining 39 percent of construction costs during .

Umitations based on the ratio of after-tax earnings

' 1984, compared to 34 percent during 1983. This to fixed charges and preferred divklends are imposed increase is primarily attributable to increases in the by the Company's Restated Articles of Incorporation amount of AFUDC recorded during 1984. It is cur- upon the issuance of additional preferred stock. Based rently estimated that internally generated funds and on the results of operations for the year ended AFUDC will total approximately 33 percent of con- December 31.1984, the Company would have been struction costs (including AFUDCI in 1985. Improved able to issue at year end $316 miHion in additional internal cash generation will be directly related to preferred stock lassuming a 13.5 percent dividend rate for such stocki.

22 L_

M CULF STATES trrlUTIES Statement of Income For the years ended December 31 (in thousands except per share amounts) im im Operating Revenue Electric ..... . ... . . . . $1.305.449 $1.188.944 Steam .. ... . . . . , 83.646 75,213 Gas . . .. . 47.093 43,102 1,436.188 1.307.259 Operating Expenses and Taxes Fuci ... .. .. . . .. . . 438.154 446.521 Purchased power . . .. .. . .. . .. . . 201.325 182.106 Other operations .. . .. . . .. .. I73.151 151.660 Maintenance . . .. . .. . 78.971 65.321 Depreciation and amortization . . .. . 103.251 89.29I Income Taxes Federal . .. .. . . 70.538 52.847 State . .. .. , . .... . 4.236 3.314 Other taxes . . . .. 53.269 45.790 1.122.895. _ l.036.850 Operating income . ... .. .. . . 313.293 270.409 Other income and Deductions Allowance for equity funds used during construction 88.172 56.14i Nonutility subsidiary operations . .. . (2.228) (206)

Other-net . . .. .. .. .

11,1721 2.581 income Before Interest Charges . . . 398.065 328.925 Interest Charges Long-term detst . . ... . ... . . .. 196.502 181.985 Short-term debt and other . . . . . . .... . . 10.577 14.398 Allowance for borrowed funds useo during construction . .. . 138.813) (33.437) 168.266 162.946 Net income ...... ... . .. ... .. . ... . 229.799 165.979 Dividends on Preferred and Preference Stock , .. ... . ... ... 49,052 38.949 income Applicable to Common Stock , .. .. .... . .. . .... $ 180.747 $ I27.030

- Average Shares of Common Stock Outstanding . .... . . ....... 78.233 65,056 Earnings Per Average Share of Common Stock Outstanding . . . . , . . $ 2.31 $ l.95 Divkiends Per Share of Common Stock ... . . . .. .. . .. $ l.62 $ l.56 The accompanying notes are an integral part of the financial statements.

23 t

L

i-mas FinancialInformation Statement of Sources of Funds Invested in Utility and other Plant For the years ended December 31 (in thousands) 1983 1982 Provided From Operations Netincome . . .. . . .. . . . . . . $ 229.799 $ 165.979 Prindpal income items not requiring current funds Depredation and amortization . . . . 103.251 89.79I Deferred income taxes- net . ... .

37,246 32.684 investment tax credits--net . . . .. . . . 24.670 14,020 Equity component of allowance for funds used during construction . . . . . .. . . (88.1721 (56.14I)

Nonutility subsidiary operations . . . 2.22$ 206 Totalprovided from operations .. . 309 122 246.039 Dividends -

Preferred and preference . .. . .. (49.052) (38.949)

Common - ... . .. . . . Il27.263) (101.223)

Reinvested funds provided from operations . .. I32.707 105.867 Provided From Financing Sales of securities Common stock . . . . . . 136.481 164.820 Preferred stock subject to mandatory redemption 30.000 -

Preferencestock . . .. . . . . .. .

- 100.000 First mortgage bonds (principal amounti . . . . 200.000 167.000 Guaranteed debentures . . . . . . . .. . . .

- 60.000 Changeinescrowdeposit . . . .... .. . . . . (I1.048) (24.000)

Pollution control bonds (principal amount) .. .. . . . I7.450 48.285 Changein funds held by trustee . ... ......... . .

Net change in short-term borrowings . . . . . . . . . ... .. . 3.093 52.162 Retirement of first mortgage bonds and convertible debentures . . . . . . . ... . ... . . (11.049) (26.507)

Retirement of preferred stock subject to mandatory redemption . . . ....... .. . .. .. . . . .

Net change ln revolving credit agreement . . ... . .. .. .. . 40.000 (120.000)

Equipment purchase obligations . . . . . . . . . . . . . . . . . . .

(53.691)

Nudear fuellease transaction . . .. .... .... . . ...

108.969 Term loan agreement . . . . . . . .. . .... . ... . .. ......

- 24.000 Total provided from finandng . . . . . . . . . . . ... 404.927 501.038 Other Sources and Uses investments in and advances to subsidiary companics . . . . . . . . , (13,973) (11,582)

Temporary cash investments . . . . . . . . . . . . . . . . . . . . . . . . . . 3.219 (1.733) ,l

' Other-net (induding changes in working capital) ....... .. . 28.034 (20.237)

Total other sources and uses . . . . . . . . . . . . . . . . . . . . . . . 17,280 (33.552) t Expenditures For Utility and Other Plant . . . . ...., ....... . . 554.9I4 573.353 flI

=

Equity component of allowance for funds c used during construction ..... . . ... . . .

88,172 56.14I invested in Utillty and Other Plant . . . .. . .. . $ 643.086 $ 629,494 y.

The accompanying notes are an integral part of the finandal statements. i y pW i

HHH GULF STATES UTILITIES g.

f,' lI fi,:Q s

'. I we.- '

Balai ce Sheet.

December 31 pq SPe f

- o Assets 19s3 Utility and Other Plant at original cost Plant in service . . . . ........ ... .. . . . .. . S3.106.834

- Less: Accumulated provision for depreciation . . . .. . . 904.919 2.201.915 Construction work in progress . . .. . . . . .

1,844.163 4.046.078 Other Property and Investments NonutiPty subsidiary companies . . . .. . 55.595 Other . . . . .. .. .. . , .. . 2.917 58.512 Current Assets Cash and temporary cash investments , . .. 3.026 Receivables Customers . . . . . . 94.532 Other .. . . 20.780 Fuelinventories .. . 42.330 Materials and supplies 13.224 Prepayments and other 16.574 190.466 Deferred Charges Unamortized debt expense . . . 16.777 Unamortized project cancellation costs 9,594 Accumulated deferred income taxes . 10.83i Other . . 17.266 54.468 S4.349.524 Capitalization and L! abilities Capitalization ISee Statement of Capitalization)

Common shareholders' equity SI.316.599 Preference stock . .

100.000 ..

bg aw Preferred stock > ! $/l ;"

Not subjectto mandatory redemption . 136.444 'll % 2 Subject to mandatory redemption 204.336 long-term debt 1.835.959 3.593.338 Current Liabilities Preferred stock sinking fund requirements . .. . . 1.217 Bank notes payable . .. . . . . . 90.000 Accouats payable Trade . . , 98.955 Subsidiaries . .. . ... . . . 3.819 Customerdeposits . . .. .. .

12,212 Taxes accrued . . . .. . .. . . . . 12.0l l l Interest accrued .. . . . . 61.695 Other . .. .. . . . . , . 49.917 329.826 Deferred Credits and Other Liabilities investment tax credits . . .. . .. I76.399 Accumulated deferred income taxes . 239.296 Other. . . . . _ 10.665 426.360 Commitments and Contingencies S4.349.524 The accompanying notes are an integral part of the financial statements.

25

FinancialInformation M

=

Statement of Capitalization ,x December 31 V. .W On thousands) .T-

". v,4 a 1983 d'; . 2 'el Common Shareholders' Equity  ?!.dl Common stock " ' ? .4 Authorized 200.000.000 shares without par value Outstanding 94.465.634 and 83.687.644 shares respectively $ 903.606 Dg 7 t ;; ; .

Premium and expense on capital stock 3.601  ?,X \

Other paid 4n capital 25.876 Uf(j:

Retained earnings 383.516 g'; .'

Preference Stock 1,316.599 g' g 3' . . . . g '

Authorized 20.000.000 shares without par value, cumulative Outstanding 4.000.000 shares Current 7('

U b.

p.

Dividend shares Redemption yc ;. ;}h-series outstanding Price f 3 .,[ '

$4.40 . . . . 2.000.000 $ 31.90 50.000 y' 3.85 .. . .. . . . . . 2,000.000 31.35 50.000 100.000 Preferred Stock .

. Authorized 6.000.000 shares. $100 par value cumulative Outstanding 3.802.11 I and 3.419.970 shares, respectively shares Outstandingat Current Dividend December 31 Redemption series 1984 Price Not subject to mandatory redemption

$4.40 . . . . . . . . . . 51.173 $108.00 5.117

, 4.50 . . . . . . . . .. . .. .. . . 5.830 105.00 583

! 4.40-1949.. . . . . l.655 103.00 166

4.20 . .. . . .. . . . - . . . 9.745 102.818 975 4.44 . . . . . . . .. . . . 14.804 103.75 1.480

5.00 . ....... . .. .. . 10.993 104.25 1.099 5.08 . . .. . . . ... . . .. 26.845. 104.63 2.685 4.52 . .. . . .. . ..... . 10.564 103.57 1.056 6.08 . . . . . . . .. . .. . 32.829 103.34 3.283  %

7.56 . . . . . . . . . .. . . ... 350.000 103.80 35.000 l E

8. 5 2 ; . . . . . . . . . . . . . .. .... . 500.000 106.43 50.000

, ~ 9.96 . . . . . . . . . .. . .. . . . . 350.000 106.64 35.000  ? '

136.444 1

Subject to mandatory redemption 8.80 . . . . . . . . . .. .. ........ 335.029 105.00 37,183 f .l

~

9.75 . . . . . .. .. . ... .. . 31.544 105.00 3.370 8.64 . ... . . .... ... . . 321.100 105.00 35.000 11.48 .. ... . . . . . ... . . . .. 500.000 111.48 50.000- ,

13.64 .. . . . . . . . . 500.000 l 13.64 50.000

.- .j l Adjustable Rate 4 series A . .. . 300.000 108.10 30.000 -

Adjustable Rat & ries B. . .... .. 450.000 I I 2.50 -

205.553 Preferred stock sinking fund requirements (1.217) 204.336 26 - . _-

---um a m -

H/

GULF STATES UTlWTIES l l

l l

1983 long-Term Debt :

. First mortgage bonds'.

Maturing 1985 through 1989- -

' 4-%% due September 1.1986 . . . . 15.000 14-%% due March I.1987 . . . . . .

100,000

. 4-%% due October I,1987 .. .

I7,000 4% due May I.' l.988 . 20.000

. 4-h% due January 1.1989 . . . .. . . 10.000 5-%% due December I.1989 . . .. .

16,000 Maturing 1990 through 1994-4-%% through 17-%% . 269.000 Maturing 1995 through 1999-5% through 8-%% . . -170.000 Maturing 2000 through 2004-7-H% through 8-%% 205.000 -

Maturing 2005 through 2009-8-%% through 12.3% . 310,000

. Maturing 2010 through 2013-1l-%% through 15% . . 375,000 1.507.000 Pollution control add industrial development bonds

= 7% due 2006 . .. . . .. . .

25,000 5.9%'due 2007 , . . .. . .. . . .. . 23.000 10-%% due 2012 : . . , . . . . . .. .. . 48.285 9.%% due 2013. . . . .. .. . .. . 17.450

%% due 2014 . .. . .. ... . . . .... .

12% due 2014 . . . ....... . . . . . .. .

i- Variable rates (6.875% at December 31,1984) "

due 2014 . . ... . . . . . . . . . . . . .

Pollution control funds held by trustee . . . . . . .. . . (3.874)

Debentures Guaranteed dcbentures 17-h% due 1988 . . . ... . . . , . , . . 60.000 16% due 1990 . .. ... . . .. . . . 60.000

' Escrow deposit . .. .... . . .. . . . . (35.048)

Convertible debentures-7-%% due 1992 . . . .. 2.927 Termloan agreement Variable rates (13.1875% at December 31.1984)

- due 1987 . . ... . . . . 24.000 Revolvingcreditagreement . .. . . . .. . . .

I10,000 1.838,740 Unamortized premium and discount on debt-net . . . . (2.781) 1,835,959

$3,593,338 The accompanying notes are an Integral part of the financial statements.

27 L

FinancialInformation Statement of Changes in Capital Stock and Retained Earnings For the years ended December 31 On thousands)

I' eferred Stock Sublect to Prendum Other Mandatory Preference Common (14ee PahHn Ra*h Redempti_on Stock Stock Empense) Capital Earnimas Balance: January 1,1982 . . .. .. $ 175,553 . S -

S 602,305 S (2.088) S 25.876 $ 307,290 Net income-1982 . . . . . ...... .

165.971 Preference stock sold (4.000,000 shares) 100.000 5.840 Common stock sold:

Public offerings (10,000.000 shares) . I21.250 Conversion of debentures (1,245.746 shares) . . . . . . . . . . . .. 16.29i Dividend reinvestment and stock purchase plan (1.636.481 shares) . . . 20.056 Employee benefit plans (592.817 shares) 7.223' Divklendsdeclared:

Preferred and preference . . .... . (38,947 Common . . . . . .. . . . . .... . ...

(101.221 Capital stock expense ~ , ........ .. 749 (1,608 Balance: December 31.1982 .. .. .. 175.553 100.000 767,125 4,501 25.876 '331,489

= Netincome-1983 . . ............ .. 229,799

Preferred stock sold (300.000 shares) . . . 30.000 Preferred stock sinking fund requirements (1,217)

Common stock sold:

Public offerings (6.000.000 shares) . . . 85,500 -

- Conversion of debentures (79.14 I shares) 1,036 Dividend reinvestment and stock purchase

' plan (2.534,689 shares) . . ...... 35.025 Employee benefit plans (ID23.893 shares) . I4.920 Dividends dedared:

Preferred and preference . . . . , , . . . .

Corrmon . .. .,.... ..... .....

(49.05[

_(127.261 Capital stock expense . . . . ... ...... (900) -(1.457 Balance: December 31,1983 . . . ..... '204.336 100.000 ' 903,606 ' 3.601 25 876 ~ -383.516 Net income-1984 . . . ........... 258.17i Preferred stock sold (450.000 shares) '. . . 45.000 -

- Retirement of preferred stock '. . . . . .. (5,569) 1,766

- Common steck sold:

Public offerings (6.000.000 shares) . . . . . 66.000  :.

Conversion of debentures (26.026 shares) 340 Dividend reinvestmentand stock purchase plan (3.662.855 shares) . . . . 42.130 Employee benefit plans (1,089.109 shares) 12.677 Dividends dedared. ' ,

Fi '.. i cd and p ',.. m ice . . . . . . . . . . . 155.660 Common . . . .... ...... ...... (145.663 i Capitai stock expense . . . . . . . . . . . . . . . (5,242) 6n0 Balance: December 31,1984 . . . . . . . . $ 243,767 $ 100.000 $ I.024.753 S 27.642 S 441.044 (I.64 l) S The accompanying notes are an integral part of the financial statements.

1 1

r 28 b ---

GULF STATES UTIUTIEs M

January I i982 -September 30.1982 . . 9.50 %

Notes to the Financial october i. i982 - December 3i. i983 . io.25 I nu ry 1.1984 - December 31.1984. . . 10.00 Statements .

L Summmy M Slyd& ant Rewnue. Fuel, and Purcleased Powr. The Company Acc- " - Pouch rec rds revenue as billed to its customers on a cycle billing basis. Revenue is not recorded for energy System of Aaounts. The accounting records of the delivered and unbilled at the end of each fiscal Company are maintained in accordance with the period. The Company's wholesale and imuisiana Uniform System of Accounts as prescribed by the retail rate schedules provide for adjustments to sub-Federal Energy Regulatory Commission (FERC) and stantially all rates for increases or decreases in the adopted by the imisiana Public Service Commission costs of fuel for generation, purchased power and (LPSC) and the Public Utility Commission of Texas gas distributed. The Company's Texas retail rate (PUCT). schedules include a fixed fuel factor approved by the PUCT. Such factor remains the same until the Com-Utility Plant and Deprtriation. Utility and other plant is pany files for a general rate increase or until the PUCT stated at original cost when first dedicated to public orders a reconciliation for any over or under collec-service, and the amounts shown do not represent tions of fuel cost. Fbel and purchased power costs in reproduction costs or current values. Costs of repairs excess of those induded in base rates or recovered and minor replacements are charged to expense as through fuel adjustment clauses are deferred (or Incurred. The original cost of depreciable utility plant accrued) until such costs are billed (or credited) retired and cost of removal, less rulvage. are charged to customers.

to accumulated provision for depreciation. The provi-sion for depredation is computed using the straight- Imyntories. The Company's fuel inventories are com-line method at rates which will amortize the prised of fuel oil, valued at weighted average cost, unrecovered cost of depredable plant over the and coal valued at last-in, first-out (LIFO! cost.

estimated remaining service life. Materials and supplies are valued at weighted Composite depredation rates were as follows:

Income Taxes.The Company and its subsidiaries file a ns4 i9si ns2 consolidated federalincome tax return. income taxes Electric . . 3.52 % 3.60 % 3.66 % are allocated to the individual companies based on

$sY. . . . .

their respective taxable income or loss and invest-Total Company .. 3.50 3.58 3.63 ment tax credits.

Allownce kr Funds Used During Construction and Capitafi:ation o(interest. Allowance for funds used during construction (AFUDC) is a utility accounting practice calculated under guidelines prescribed by the FERC and capitalized as part of the cost of utility plant representing the cost of servicing the capital invested in construction work in progress. Such AFUDC has been segregated into two component parts - bor-rowed and equity funds. That portion allocated to borrowed funds is reflected as an adjustment to in-terest charges. While that portion applicable to equity funds is shown as a source of other income. Both the equity and the borrowed portions of AFUDC are non-cash items which have the effect of increasing the Company's reported net income by their full amounts.

However, subject to regulatory approval, when the related utility plant is placed in service, a return on tnd recovery of these costs is permitted in determin-Ing the rates charged for utility service. The Company computed AFUDC at the following net of tax rates compounded semFannually:

ee

,A E

FinancialInformation

The Company follows a policy bf comprehensive in- 2. Federalincome Tlaxes terperiod income tax allocation where such treatment The provisions for federal income taxes were less is permitted for ratemaking purposes by regulatory than the amounts computed by applying the statutory bodies. Deferred income taxes result from timing dif-federal income tax rate to net income before federal ferences in the recognition of revenue and expenses income taxes. The reasons for these differences are for tax and accounting purposes. nese deferred as follows*

income taxes are charged or credited to income and ,93, ,,33 ,93, recorded as deferred debits or credits. on thousands except percentasess Na investment tax credits have been deferred and are te taxes . s333.305 $304.330 $221.526 l being amortized ratably over the useful lives of the related property. Federalincorne taxes at statutory tax rate. . . . $153.320 $139.992 $101.902 Reductjons in federalincome Nonutility Subsidianj Companies. The Company has made investments in and advances to its wholly- Q"I,dg,,"jble owned nonutility subsidiary Companies. Prudential income of AFUDC . . .. (73.079) 158.413) 140.s75)

Drilling Company (Prudential) and Varibus Corpora- Items capitalized for book tion (Varibusi, and accounts for its investments on purposes but expensed the equity basis. Pruder.tial is engaged primarily in the W g ,rred depreciation exploration for, development, production and mar- differences . 5.502 5.236 6.825 keting of oil and gas pinperties. Varibus operates Adjustment for prior pipelines and holds lignite reserves for possible use years taxes and other by the Company or sale to others. regulatory adlustments. (2.366) (4.056) (1.172)

Equity in earnings of nonutility subsidiaries . l.991 1.025 95 Petirement Plan and Other Post Employment Benefits. The Amortization of investment Company has a norKontributory pension plan, which tax credit . t5.103) 14.7 0 s: 13.848) covers all employees meeting certain age and service Other items . 3.734 3.523 (l91) nequirements. The Company'r pohcy is to fund the Totallederal accrued pension cost annually. Past and prior service income taxes . . . $ 75.134 --~s 74.531 $ 55.547

. costs are being funded and amortized by the Company over periods of up to forty years. Fffective federat income tax rate , ,. 22.5 % 24.5 % 25.1%

in addition to the pension plan, the Company provides retired employees with life and health care insurance i benefits. Allof theCompany'semployeesmay become eligible for these benefits upon reaching nor-mal retirement age. %e cost of such benefits, which is currently not material, is recx)gnized as claims are actually paid.

Redass#icatkm of Prior Year Finandal Statements. Prior year finandal statements have been reclassified in order to be consistent with current year presentation with no effect on net income.

30

M 111 GULF STATES UTILmEs The components of federal income taxes are as Of such amounts, $5.703.000, $5.343.000, and follows:- $2.472.000, respectively, were charged to income 1984 1983 1982 with the balance of such costs for each period charged (in 'e- to construction and other accounts.

expenses:

current federalincome The valuation date of the latest pension information tax provision . . $ - 8.522 - $ 9.276 $ 7.317 is January I of the subsequent year for each plan year

$*,",T[*l '"' '"' ended December 31. The information for the plan Tax depredation 34.933 - '3'0.477 21,468 years 1983 and 1982,is shown below. Such valuation capitalized information is not yet available with respect to plan contruction cx>sts . . 9.120 8.686 2.751 Arnottized nudear unit - year 1984.

cancellation costs . (2.023) 11.629) (1.629)

Nudear unit 1983 1982 cancellation costs . 30.958 - -

Fueland purchased - (inthousandsexcept percentagest power costs deferred . I41 339 4.5 54 ~ . Actuarial present value of Bookexpenses - accurnulated plan benefits- .

deferred for tax Vested . . . . $ 63.043 $ 56.508 purposes 263 (l.441) 2,300 Nonvested , 5.034 4.003

- Other. . (744) 160 2.066 Present value of accurnulated Totaldeferred plan benefits . $ 68.077 $ 60.51I federalincorne taxes - net . . 72.648 36.592 ~ 31.510 - Net assets available for benefits $118.578 $ 95.474 credits- net . (8.9I il 24.670 - 14.020

- Assurned rate of return in Total federalincome determining actuarial present taxes charged to values of plan benefits . 9% 9%

operating expenses 72.259 73.538 52.847 Charged to other 4, g ggg income - net . . 2.875 - 3.993 2.700 The Company has existing agreements for the leas-7,,,, g,,

Irxx>me taxes . . S 75.134 $ 74.53I $ 55.547 Ing of certain vehicles, coal rail cars and other equip -

ment, and buildings. I. ease rental payments were

$16.404.000 $13.867.000, and $12.799.000 during Currently, timing differences exist for which deferred 1984,1983, and 1982. respectively. Of such amounts, taxes have not been provided and, therefore, have

$12.912,000, $12.064.000, and $10.395.000, respec-not been recovered through rates. The cumulative amount of timing differences for which no deferred tively, were charged to income, with the remainder taxes have been provioed was approximately $110 charged to construction and other accounts.

million at December 31.1984.

Future minimum lease payments under non-The Company was able to reduce its income tax canceliable capital and operating leases, (excluding liability for the years 1984,1983, and 1982, by utilizing those payments to be due under the nuclear fuel investment tax credits. At December 31.1984, the Company had accumulated carryforwards of invest- lease as discussed below) for each of the next five ment tax credits of $153.3 million.The investment tax years and in the aggregate at December 31,1984, are credit carryforwards expire through 1999, and will be estimated to be lin thousands);

used to reduce income taxes in future years.

1985. . . $ 17,777 3 Retirement Plan 1986. . 17.180 The total costs of the Company's pension plan for 1987 16.500 the years ended December 31,1984,1983, and 1982, 1988 17,146 were $8,721.000 $8.213,000, and $3.698.000. 1989. 10,390 respectively. Remaining years . 217.328

$296.32 l 31 w

FinancialInformation _

The Company has a nudear fuel financing agree- In accordance with the ratemaldng treatments af-ment with a non-affiliated third party fuel corporation forded its leases the Company currently does not (the Lessor). The agreement provides for the Lessor capitalize those leases which meet the criteria of -

to finance up to $300 million of nuclear fuel for future capitalleases as defined by Statement of Financial use at River Bend Unit 1, a 940 MW nuclear-fueled - Accounting Standards (SFAS) No.13. Under the provi-generating unit. Once River Bend Unit 1 is placed into sions of SFAS No. 71, beginning in 1987. the Company commercial operation, the Company will make quar- will be required to record all of its capital leases as

' terly payments to the Lessor for the cost (including assets and related liabilities. Had such leases currently capitalized interest) of fuel consumed during the been accounted for as capital leases, the balance previous quarter. The lessor's investment in nuclear sheet would have included leased assets and related fuel was approximately $174 million and $142 million liabilities of approximately $198.3 million and $168.5 (including accumulated carrying charges) at December million at December 31,1984 and 1983, respectively.

31,1984 and 1983, respectively.

5. Jointly Owned Facilities AsofDecember3I,1984 theCompanyownsundividedinterestsinthreelcintly-ownedelectricgeneratingfacilities as detailed below (dollars in thousands):

Roy S. Nelson . Big Calun -2 River Bend Unit 6 Unit 3 Unit I Plant in service . . . $412,194  ; $212.948 $ -

Accumulated depredation . . . . . . 34.794 - 9.210 - --

Construction work in progress . . . .

2.191,389 Plant capacity. . ... <,. . . . . . 540 MW 540 MW 940 MW Fuelsource . , .. 4 , . . Coal - Coal Nudear Ownership share . . . . . ~ 70% 42%' .70%.

The Company's share of operations and .

River Bend Unit 1 is jointly owned by the Company maintenance expense related to the jointly-owned . and Cajun Elactric Power Cooperative. Inc. (CEPCO) units is included in operating expenses. The Company has an agreement with CEPCO .

whereby, after River Bend Unit I goes into commer-The Company has agreements with the participants cial operation, the Company will be obligated to pur-

. In Nelson Unit 6 to purchase all or a portion of their ~

chase 100 percent of CEPCO's share of the unit's share of the unit's capacity for periods ranging from - capacity for one year. Thereafter, the Company is seven to fourteen years. The variable costs assodated obligated to purchase dedining amounts for two with such buybacks are composed of fuel costs and years. The fixed costs applicable to the buybacks of operations and maintenance expenses. For the years power are based in part on final unit costs and other ended December 31,1984,1983, and 1982, variable factors and are not determinable at this time.The costs applicable to the buybacks were $24.070.000, variable costs assodated with such buybacks will be

$25,878.000, and $12.816.000, respectively. composed of fuel costs and operations and mainte-nance expenses.

The fixed costs applicable to the buybacks of power are based on gross plant investment and other factors and are not currently determinable for periods subse-quent to 1984. For the years ended December 31.

1784,1983, and 1982, the fixed costs assodated with the buybacks were $32.851.000, $37.346,000, and

$22.302.000, respectively.

32 i

M Gulf STATES UTILITIES

6. Capital Stock and Retained Earnings 7. Preferred Stock Subject to Mandatory Redemption The Company offers its common, preference, and The dividend rate on the Adjustable Rate preferred shareholders the opportunity to reinvest their dividends and to make additional cash payments Cumulative Preferred Stock (ARPS) Series A and Series B is adjusted quarterly based upon certain ap-to acquire shares of the Company's common stock through its Dividend Reinvestment and Stock Pur- plic ble U.S. Treasury rates. In no event will the divi-chase Plan (DRIP). The Company also offers all dend r te be less than 7 percent nor greater than 13 percent for Series A and less than 7 percent nor employees meeting designated service requirements greater than 13-l/2 percent for Series B. At December the option to partidpate in benefit plans which pro-31,1984, the dividend rates on the ARPS Series A and vide an opportunity to obtain common shares of the ARPS Series B were 12.20 percent per annum and Company. At December 31,1984, the Company had 12.25 percent per annum. respectively.

reserved 7.608.253 shares of common stock to be Issued in connection with its DRIP and employee The preferred stock subject to mandatory redemp-benefit plans.

tion is entitled to a sinking fund which provides for the At the Company's option, all or part of its preferred annual redemption of shares at $100 per share com-gnd preference stock may be redeemed at stated mendng on the dates indicated:

prices. Certain issues are subject to restrictions which '

prohibit redemption for a period of time, directly or Number of indirectly out of the proceeds of or in anticipation of Shares to be Date of Initial Sinking borrowings or issuance of additional stock of equal or series Redeemed Fund RwL..;..t i m prior rank having a lower interest cost or dividend s 8; l98j rate. s 8.64 14.000 September 15.1985 At December 31,1984, the Company had authoriz-ed 10.000.000 shares of preferred stock without par N

ARPS Series A N

12.000 N

ber 15'. i986 September 15.1989 ARPS Series B 18.000 March 15.1990 value (none issued). Limitations based on the ratio of after-tax earnings to fixed charges and preferred dividends are imposed by the Company's Restated During 1984, the Company purchased in the open market shares of the applicable series of preferred Articles of Incorporation upon the issuance of addi-stock in excess of the amount needed to satisfy the tional preferred stock. For information with respect to the additional amount of preferred stock which the 1984 and 1985 sinking fund requirements. At December 31,1984, assuming that the additional Company would have been able to issue at year end.

shares purchased during 1984 are used to satisfy see " Management's Discussion and Analysis of Results of Operations and Finandal Condition."

future sinking fund requirements, minimum redemp-tion requirements amount to $4.088.000. $6.193.000.

$6.617,000, and $7,817.000 during the years 1986 Certain limitations on the payment of cash through 1989, respectively. Preferred stock sinking dividends on common stock are contained in the fund provisions restrict the payment of dividends on Company's Restated Artides of Incorporation, as common and preference stock and the purchase of I mended, and indentures. The most restrictive limita- such stock by the Company unless the sinking fund re-

tion is contained in the Trust indenture, dated as of quirements are met.

September I,1977. Based on such limitations. the i retained earnings available for payment of dividends 3. Long-Term Debt as of December 31.1984 and 1983, amounted t The Company's Mortgage Indenture contains sink-approximately $342 million and $289 million, respec-ing fund provhions which require, generally, that the j tively isee Note 7 for restrictions on the payment of Company make annual cash deposits equal to 1.2 per-dividends on common stock under the sinking fund cent of the greatest aggregate principal amount of first provisions for preferred stock). mortgage bonds outstanding or, in lieu thereof, to apply property additions or reacquired first mortgage

, Payment of dividends on preference stock is subor. bonds for that purpose. The Company has satisfied dinate to payment of dividends on preferred stock the mortgage requirements in past years and plans to and preferred stock sinking fund obligations. but has meet current and future requirements by certifying priority to payment of dividends on common stock.

There are no limitations in the Company's Restated l Articles of Incorporation, as amended, on the is-i suance of preference stock.

33

i l

FinancialInformation  !

available net additions" to the trustee. Those series . 9. Notes Payable

. of the Company's first mortgage bonds which were As of December 31,1984, the Company had privately placed require cash sinking funds beginning

agreements with banks and banking institutions which . l in 1987. First mortgage bond sinking fund re-provided for short-term lines of credit totaling approx-quirements, along with long-term maturities, for each imately $196 million. Interest rates associated with . 1 of the next five years are detailed below (in these lines are based on the LIBOR, prime or cer-thousands)

tificate of deposit rate or other mutually agreeable sinking Fund Requirements 'Long Term

, rate to be determined at the time of borrowing. Com-3M y,$

g mitment fees range from 3/8 of I percent to 1/2 of i 1985. .$ -

$15.264 $ - percent of amount of available credit. In lieu of com-1986. -

15.084 15.000 mitment fees. certain banks require a non-restricted 1987. 8.570 14.880 141.000 cash balance be maintained equal to 4.5 percent to 10 percent of the commitment.

The Company's Mortgage Indenture contains an in- Information regarding short-term debt outstanding terest coverage covenant which limits the amount of is detailed below:

first mortgage bonds which the Company may issue.

For information with respect to the additional amount 1984 1983 i9s2 of first mortgage bonds which the Company is cur- lin thousandsexcept percentagesi rently able to issue under this limitation, see Maximum amount

" Management's Discussion and Analysis of Results of utstand during year Operations and Financial Condition., commercial paper 51000 120.000 121.585 During 1984, the Company amended its $800 Average daily million revolving credit agreement in order to extend amount outstanding the availability of credit from September 12,19,86, to " r' N per.

September 12,1988. with the amount outstancing at that date being repayable over a three year period. Weighted average interest with the first payment due on September 12.1989. rate for amount outstanding Borrowings made until September 12.1986, bear -

interest based on the Prime Rate as determined by Ir*

• gj , , ,,, , , , g,g , ,,33 g commercial paper - , - - 9.61

ving Trust Company, the landon Interbank Offering Rate (LIBORI plus 5/8 of I percent or the Certificate of Weighted average Deposit rate plus 5/8 of I percent.Thereafter, annualinterest ratelai borrowings will bear interest at Prime plus I/4 of I percent as determined by Irving Trust Company,

$ p g ,, [$ Ml. '$

g , ,,

LIBOR plus 3/4 of I percent or the Certificate of year by the averase daily shortierm debt outstanding.

Deposit rate plus 3/4 of I percent. At December 31 -

1984, the amount outstanding under the revolving credit agreement consisted of $70 million bearing an 10. Commitments and Contingencies interest rate of 10 3/8 percent and $80 million at ll-5/8 percent.

Castrwtim. The 198$ construction program is cur-rently estimated to be $610 million, including approx-imately $208 million of A RJDC. In connection with the construction program, the Company has incurred substantial expenditures and commitments prior to receipt of all required governmental permits or licenses, including the license required to commence commercial operation of River Bend Unit I, No provi-slon is made in the financial statements for possible losses which could occur if such permits or licenses should not be obtained.

34

M GULF STATES UTILWLS The estimate of the cost of River Bend Unit i Purdiase Power Agrrrment. The Company and The through December,1985 ithe scheduled date for com- Southern Company have entered into an interchange mercial operation) has been increased to $2.72 billion agreement which provides for the Company to pur-exduding ACUDC) from the previously estimated chase capacity and energy from coal-fired units in

$2.5 billion. Estimates of costs to complete the unit amounts ranging from 400 MW In 1985. to 700 MW after commerdal operation are not finalized but will from 1988 through 1992. The agreement also pro-cxceed $100 mi!! ion.The Company has previously vides for purchases of long-term power expected to reported that if the cost of the project should exceed be lower in cost than tre unit power iphasing from the $2.5 billion estimate. CEPCO has indicated it may 650 MW in 1984, to 303 MW from 1988 through discontinue payment of its share of the construction 1992). In accordance with the agreement, the Com-costs. If CEPCO does not pay its share. the Company pany completed a 500 kilovolt line in 1984, that tied would have to obtain funds through external finan- the Company's system with that of The Southern cings to pay the additional completion costs. No Company.

assurances can be given that the Company will be allowed to earn a return on or recover its total invest- The fixed costs applicable to the purchased power ment in the plant once it is placed into commercial from The Southern Company are based on costs of operation. existing and future generating units and other factors.

For the year ended December 31,1984, the fixed Canteffcd Nudcar Unit. The Company previously costs assodated with the purchased power totaled reported that it has cancelled construction of River approximately $50.562.000. The variable costs Bend Unit 2, a proposed 940 MW nudcar-fueled assodated with such purchases are composed of fuel generating unit. The Company has received authoriza- costs and operations and maintenance expenses. For tion from the PUCT to recover all allocated costs the year ended December 31,1984, the variable costs assodated with River Bend Unit 2 incurred before assodated with such purchases totaled approximately December 31.1983, (approximately $41.3 mi!! ion) $109.279.000, through amortization over a 15-year period, with no return on the investment. The PUCT did not consider recovery of estimated concellation costs on the pro. I1. Subsequent Events (Unaudited) lect. Therefore, the Company intends to request the During March.1985, the Company issued $75 recovery of these additional costs at a later date. million prindpal amount of 13 percent debentures due 1992. The proceeds from the sale were used to The Company requested authorization from the repay short-term debt incurred primarily in connee-FERC to amortize that portion of the cost of River tion with the Company's construction program.

Bend Unit 2 allocabic to the Company's wholesale operations over a fNe year period with no return on the unamortized balance. During September.1984.

the Company began recovering through rates that portion of the loss applicable to its wholesale opera-tions subject to hearing and refund. The Company

. also intends to seek recovery through rates from the LPSC. The Company cannot presently predict the l amount of such costs. If any, which the LPSC and l - FERC will ultimately allow to be recovered through rates or the amount of additional costs, if any, which the PUCr will allow to be recovered. At December 31, 1984, the unamortized balance of the Company's In-vestment in River Bend Unit 2 totaled $107,722.000.

L 35

7 FinancialInformation

12. Quarterly Financial information (Unaudited)

(in thousands except per share amounts) 1981 First Ouarter . . . . . . . ..... . . ..... . . $340.070 $ 65.804 S45.332 $.45 Second Ouarter . .... .. . .... ... .

328,662 73.492 52.935 .54 Third Quarter . . . ... ... . . .... . .. .. 420.560 99.151 80.933 .85 Fourth Quarter . . . . . . . . .. . . . . .. . . . 346.896 74.846 50.599 .46 i The Individual quarters do not add to the yearly totals since the per share amounts are based upon the average number of shares outstanding during each quarter.

-13. Supplementalinformation on The amounts presented should not be construed as Changing Prices (Unsudited) anything but an estimate of the effects of changing prices on the Company. The application of this in past years, inflation has had serious effects on the method requires subjective assumptions which have utility industry. High rates of !nflation affect the Com- affected the statements presented.

pany's financial position in several ways: 1) Provisions for depreciation to replace plant and equipment II) Depreciation was computed by applying the become inadequate as construction costs increase. Company's depreciation rates to the Indexed

2) As construction costs h ve risen, so have the plant amounts. Under the ratemaking amounts of capital whkh rr.ust be acquired. The Com- prescribed by the regulatory commissions to pany, therefore, is financing larger amounts. 3) In which the Company is subject, only the -

addition to the rise in construction costs, the cost of historical cost of plant is recoverable providing capital to bt.ild and operate the business as depreciation.

continues to rise. 4) Conservation efforts on the part of the consumers, in response to rising utility bills, has (2) Taxes - SFAS No. 33. as amended. does not slowed the rate of growth in sales, provide for the adjustment of income taxes.

Generally accepted accounting principles make no (3) Cain from Dec!!ne in Purchasing Power of Net provision to account for the effects of changing prices- Amounts Owed - In periods of inflation.

Under the mandate of SFAS No. 33 subsequently holders of monetary assets suffer a decline in amended by SFAS No. 82. an attempt to measure purchasing power, while holders of monetary these effects upon the Company is made using the liabilities experience a gain. The large amount Current Cost Method. of long-term debt of the Company. used to invest in plant and equipment, the cost of The Current Cost Method, as appl ed by the which is recovered through depreciation, has Company, utilizes the Handy-Whitman Index of Public resulted in an unrealized holding gain Utility Construction Costs to measure the specific infla- because future payment of the debt will be tionary effect on utility plant, such effect being greater made with inflated dollars. Because present or less than the general rate of inflation. ratemaking limits the recovery of deprecia-tion to historical cost, this gain will not be realized.

30 L

M CUtf STATES UTlWTIES Statement of Income Adjusted for Changing Prices (Unaudited)

For the year ended December 31.1984 c_. . --

curent cost Historkal .A cost 19s4 Gn thousands 6 Operating revenue . . .... .... ........ .. ... ... . ... . $1.547.041 $1.547.041 Operations and maintenance expense . . . . ...... ... ... . .. . 951.575 951.575 Depreciation and amortization . . . . . . .... . ... .. . . . . . . ... I12.291 237.710 Taxes ................ ... .. ..... .. .... . ... .... . .. .. 139.491 139.491 Other - net . . .... .......... .. . . . . .. ... . ..... .. (105.288) (105.288)

Interest charges . . . . . . . . . . . . . . . . . . . . . .. . .. . ... 190.801 190.801 1.288.870 1.414.289 Net income (exduding adjustment to net recoverable cost) . ...... . . . . $ 258.171 $ 132.752 Increase in spedfic prices (current cost) of utility and cther plant held during the year * . . . . . . . . . . ...... ....... ..... . $ 182.732 Adjustment to net recoverable cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... 29,855 Effect of increase in general price level . . . . . ....... .... .......... (140.151)

E.xcess of inciease in spedfic prices after adjustment to net recoverable cost over increase in general price level . . . . . . . . . . . . . . . . 72.436 Gain from decline in purchasing power of net amounts owed . . . . . . . . . . . . . . . . 97.955 Net ........ ........................... . . . . $ 170.391

'At December 31.1984. current cost of utility and other plant, net of accumulated depreciation was $6.353.872 while historical cost or net cost recoverable through depredation was $4,459.742.

l l

l 37 l

Financial Information

^

Five Year Comparison of Selected Supplementary Financial Data Adjusted for Effects of Changing Prices (Unaudited)

Years Ended December 31 1984 1983 1982 1981 1980 (in thousands of average 1984 doBars) W Operating revenue . ... .. . . $1.547.041 $1.497.313 $1.406,739 $1.395.283 $1.267.123 Current Cost infonnatbn:

Net income (exduding adjustment to net recoverable cost) . . ... , 132.752 102.940 37.360 50.782 25.348 Income (loss) per common share after

^

dividend requirements on preferred and 4 preference stock and exduding adjustment to net recoverable cost . . . . .87 .66 (.07) .30 (.I 3)

Excess of increase in general price level over increase in specific prices after adjustment

~

to net recoverable cost . . .. .. .. 72.436 21.155 (16.561)- (161.314) (259.656)

Net assets at year end at net recoverable cost . .. ... ......... . l.706.303 1,591.933 1.417.897 1.175.252 1.082.668 Generallnformation

Gain from dedine in purchasing power of ,

net amounts owed . . . . . . . . . . . . . . 97.955 -74.790 100,890 188.055 236.724 .}.N._' [:[

~ Cash dividends dedared per common share 1.64 1.69 - 1.68 1.69 I.75 g ;.~. j.?

Market price per common share at year-end 12.83 - 13.07 14.14 13.13 13.99 ~ [i '

Average consumer price index . . . . . . . . . 311.1 .298.4 289.1- 272.4 246.8 ..

.[l p ..'- ' .

. .;[ :..

q l 4.l>.s Audtors' Report J;f . :h.

p Tb the Shareholders of Gulf States Utgities Company: .//'%

We have examined the balance sheet and statement of capitalization of GULF STATES UTillTIES COMPANY as - h h:

of December 31.1984 and 1983, and the related statements of income, sources of funds invested in utility and .

other plant, and changes in capital stock and retained earnings for each of the three years in the period ended

(@

T. ? 1 December 31.1984. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we i2h f j.y.

considered necessary in the drcumstances. C .F

. %;c.)

In our opinion, the financial statements referred to above present fairly the finandal position of GULF STATES 9;.:, j UTitJTIES COMPANY as of December 31.1984 and 1983. and the results of its operations and sources of its .i .: .?f .

funds invested in utility and other plant for each of the three years in the period ended December 31.1984, in $h conformity with generally accepted accounting prindples applied on a consistent basis.

ff  :.

COOPERS & LYBRAND

$}?b:

4::

h $j Houston Texas lanuary 25,1985

~ .9; w;

' QQ ~

d4i

M MHH GULF STATES UTIUTIES I

e 4--

Statistical Summary j For the years ended December 31 =

1983 1982 1981 1980 ]

ELECTRIC DEPARTMENT "

Number of customers at year end:

Residential . 475.782 465.162 455.160 438.560 5 Commerdal 57.446 55.265 52.955 52.731 4 Industrial . 4.146 4.165 3.852 3.414 -e Temporary construction 3.624 3.132 2.871 3.354  %

Other . 2.101 f.985 f.974 1.984 g 543.099 529 709 516.812 500 043 Total Customers .

]

SJes-Kilowatt-hours (thousands): /

Residential . 5.686 436 5.991.578 5.717.715 5.682.016 L Commercial 4.341.093 4.359.739 4.178.126 3.969.390 f industrial . 14.257.141 ,13.728.469 15.066.330 14.870.419 i Temporary constnen 55.927 48.170 50.306 37.691 j Other . 2.109.974 2.261.350 2.797.761 3.098.910 _! _

Tota! Sales . 26.450.571 26.389.306 27.810.238 27.658.426 i

' 4 Revenue- 4 thousands):

Residential . S 396 026 S 362.223 $ 315.625 $ 249.603 _"i Commercial . 255.147 226.104 198.676 157.616 32 Industrial 534.066 495.461 494.388 413.265 Temporary constructk 1 3.699 2.786 2.723 1.728 Other . I16.511 102.170 95.110 82.659 5 Total Revenue . St.305 449 S t .188.944 $1.106.522 S 904.871 3 Average Annual KWH Use Per Customer y Residential . 12.097 13.015 12.786 13.173 y

- Commerdal . 77.138 80.814 79.558 76.529 _

E Industrial . 3.431.322 3.451.098 4.095.224 4.340.461 2

Revenue Per KWM-tcentst -

Residential . 6.96 6.05 5.52 4.39 Commercial 5.88 5.19 4.76 3.97 3 Industrial . 3.75 3.61 3.28 2.78 Dectric Energy Output-Thousands of KWH -[

Net Generated . 25.846.233 25.523.512 28.115.700 27.775.374 -j-

-- Net Purchased and interchanged 4.987.292 5.160.731 4.41:.795 4.507.245 e 30.833.530 30 684.243 32.527.495 32.282.619 -

J

-4 System Peak load-including interruptible Load-Megawatts . 5.348 5.164 5.542 5.604 _-

- Total Cacability, including Contract Purchases at Time of System _]

Peak load (MW) 7.152 7.208 6.745 6.602 M Load Factor 65.8 % 67.8 % 67.0 % 65.2 %

STEAM PRODUCTS DEPARTMENT Steam Revenue lthousandsl S 83.646 S 75.213 S 77.624 5 69.346 Steam Salas-KWH (millions) 2.555 2.579 2.887 2.927 4 Steam Sales-millionsof pounds . 8.559 9.447 12.209 I4.906 y GAS DEPARTMENT 5

Gas Revenue tthousands S 47.093 S 43.102 S 37.568 5 31.009 g Number of Customers 85.737 .$5.394 85.664 85.218

= Output-MM cu. ft. of natural gas purchased 9.149 8.229 8.738 9.I48 Sales-MM m. ft. 8.498 8.535 8.599 9.097 [

=

= WEATHER DATA:

Cooling degree days (Normal 2.732) 2.418 2.901 2.775 2.910 $

Percentage change from normal 111.5l 62 1.6 6. 5 g Heating degree days (Normal 1.570) 1.647 1.587 l.620 1.637 3

Percentage change from normal 4.9 II 3.2 4.3 3 b

- =

39 E

" d a m

I Offi rs M v

I i Chairman Aubrey D. Sprawls (35) 56 s - - - - Vice President- Marketing and T ~~

Paul.Murrill(2)

W 50 Consumer Services

Chairmanof theBoard Summa L Stelly (36) 58 and Chief Executive Officer Vice President-laulslana Operations

( t

l. Gary Weigand (6) 49 Vice President - Safety and Environment

- Norman R. Lee (35) 60 River Bend Nuclear Group i Vice Chairman of the Board. President I and Chief Operating Officer lasper F. Worthy (28) 56 7

Vice President- GeneralServices Executive Vice Presidents t -- --

Division Vice Presidents ~~~~

Joseph E. Bondurant (27) 55 t

~

Executive Vice President- Administrative John W. Conley (26) 53 ~

and Technical Services Division Vice President- Western h loseph L Donnelly (5) 55 James E. Moss (26) 48 p

Division Vice President - Baton Rouge f Executive Vice President- Finance E E. Linn Draper (5) 42 Arden D.loughmilier (23) 46 -

l Executive Vice President - External Division Vice President- Beaumont Affairs and Production 1.Ted Meinscher (34) 52 g

Edward M. Loggins (26) 54 Division Vice President - Lake Charles

. Executive Vice President - Operations Ronald M. McKenzie (17) 44 Division Vice President- Port Arthur

. - - - - _ - ~_-

t William 1.Cahlu. Ir. (4) 6I - -- --

1. Senior Vice President 14slie D. Cobb (29) 49 g River Bend Nuclear Group Secretary f Vice Presidents Bobby J.Winis (22) 48 t . . - - - - - ~ - - -- Controller f James R. Aldridge (4) 54 Jack L Schenck (3) 46

{ Vice President- Human Resources Treasurer f William E. Barksdale (27) 53 Vice President- Engineering Timothy L Morris (5) 33 g Assistant Secretary

• " *'

• Jon P.Trevelise (3) 39 f.

.I lames C. Deddens (1) 56 Assistant Controller C' '"I ~

- Clyde W. McBride (7) 32

' River Bend Nuclear Group f Anthony F. Gabrieue (4) 57 2 Vice President - Computer Applications g 4 Charles D. Glass (35) 56 Ages and years # service Vice President -Texas Operations as # Dntm6er 31.1984 I Calvin I. Hebert (22) 50 '

. Vice Presidem- Financial Services p

S WiluamI.lefferson(4) 55 Vice P.esident- Rates and

- Regulatory Affairs h George T.McCoBough (4) 62 Vice President - Fuels. Materials and Executive Projects Abert H. Newton. II(1) 48 Vice President Fred C.Repper (6) 57 Vice President- Public Affairs Edward J.Serwan (6) 63 Vice President- Production m

r" _ _ . . . . . . .

Directors Directors

• Bismark A.Steinhagen Partner - Steinhagen Oil Co.

Robert W. Barrow Beaumont.h. (1974)

General. Retired Commandant James E. Taussig ll United States Marine Corps Real Estate Development St. Francisville. La. (1984)

Lake Charles. b. (1975)

" John W. Barton . Executive Committee President - C. B. Enterprises. Inc.

.. Chairman. Executive Committee Baton Rouge, b. (1970)

( lYear Elected Martin Goland President - Southwest Research institute Principal Offices San Antonio. h. I1983)

Edwin Hlam Vice President-Tucker Anthony Management Corp.

Divisions Boston. Mass. (1959)

Frederic A.Holloway 285 Liberty Avenue Consultant Beaumont. Texas 77701 Retired Exxon Vice President- Science 1540 Ninth Avenue and Technokigy Port Arthur. Texas !7640 Baton Rouge. La. (1979)

Highway 75 North William H. LeBlanc. fr. Conroe. Texas 77301

' President- Baton Rouge Supply Co., Inc.

Baton Rouge. La. (1974) . 446 North Boulevard

, Baton Rouge. Loulslana 70802

.Vice Chairman. President 314 Broad Street and Chief Operating Officer Lake Charles. Loulslana 70601 Beaumont. Tx. I1967) -

Charles W. McCoy Stockholder Information President and Chief Executive Officer Stock Listing Loulslana Bancshares. Inc. Gulf States Utilities Company's Baton Rouge. La. (1985) common stock is traded under the

' Paul W. Murrill .

symbol GSU on the New York. Form 10-K Chairman of the Board and Midwest and Pacific Stock

' Chief Executive Officer Exchanges. The Form 10-K Annual Report to the Beaumont, h. (1978) Securities and Exchange Commission Alvin T. Raetzsch, Sr St ck Ransfer Agents and GSU's 1984 Finandaland Gulf States Utilities Company Statistical Report can be obtained Retired Assistant to the Beaumont. Texas without charge from Les!Ie D. Cobb.

Vice President and General Manager- U. S. Chemical Division Morgan Guaranty Trust Company Secretary. P. O. Box 2951. Beaumont.

of PPG Industries. Inc. New York. New York Texas 77704.

Lake Charles. La. (1975) First National Bank of Chicago Chicago. Illinois Notkeof AnnualMeeting Monroe 1.Rathbone Jr. .

Medical doctor and partner The 1985 AnnualMeetingof The SurgicalClinic Registrars First City National Bank of Beaumont Shareholders will be held at 2 p.m..

Baton Rouge La. (1975) . Thursday. May 2.1985,in the com-

• Nat S. Rogers pany's headquarters. 350 Pine Chairman of the Board - First Oty Morgan Guaranty Thist Company Street Beaumont. Texas. Formal

. Bancorporation of Texas. Inc. New York. New York noticesof themeeting. proxy Houston. Tx. (1978) . First National Bank of Chicago statements and proxies willbe Chicago. Illinois mailed to the common shareholders on or about March 22.1985.

Dividend Reinvestment Plan Agent Shareholders are invited to attend.

Gulf States Utilities Company but if they cannot, they are urged to P. O. Box 1671 fill out and return their proxies.

Beaumont. Texas 77704 GULF STATES UTILITIES

• ' .W '? .V

= ' ' ,p ~+- ., . .

') . , > p - . '. *__ .

b

,,?'.,

m -

.. g

,- y , .

' , - ,*,-,g

- .'.. . - - ,-p'- - -,' .. .

p .9 e c g, . . . - ,. , ..

u. ' -- - -

.--.-_y - . - v-- - - - -- - - -

i -l 4 .

g . .

4 . - - ,a MOMk -

~

Mh

=

~

P.O.Bos2951' . .

hwyrgg '

U.S. POSTAGE PAID  :.s.p. .i -

i

. Houston.1hzas .M\

- 'j. Permit Number 4126 ,fs ,,#.c m -

,[e N-

- , s

$. y,*8.

ll 1 .

2 <

' 3 M.

n);ygf e- 4...

W. lad ,,

. ~,j .

• M.. ~ e? ,

m

,z ..

A ..' a,.

- * ,.f,,'.^.

~s , , 7 3 j ',)k -

/,'.' , C . ?/ .J.%

, .. .. - w w

. ,..~ * .N. _.-

, 'hj h J-

% A f...-

.-.3

., G , ,

--'l e ab.$.g

- s si? .-., A h .s'.-

. . .. t . . . op g - .-

e.

sh " p, .

>. , g'-lw

), .'...,<..y  ;

. e 8 - .

,.,9 .* ?., .,...

' %/

v '-. ,

_ .. l , g' w ' . e x-[. j. _ . . .

s q. -

i . +

I ac .. . ..

g '

PP

, ' . ]

,. .[...m .

. .o n '

. . g! ;- ',

, ,.?, 3 ,

p ii. W * , .-

.1 - ' ],, . T 2 +.. -

- l  %. u) ,g

-+ -

w .t. e

• +

, g

. f .

4

'.': '., I / .,f,j.r. r():

,.e ,I

. - 1,-

a

- : .'1 . , . ,a 4

jf p.-w

'.* b ,_

. j' .

-4 h, . 5,

, w  :

1

• e, T I .

, g. .,

(

^

,., 0 -

~

- g .

, . 2T ..

<2.

4 a

• \.Il e . . l . w ..

y

.. z. 3 .

A s .

.gg. w ,.. - '

e zy.

' ~

. i ,, -. - -

r .

a ,

y -s *~ ,

. s .- _ ). . ,y w-

. a l '

"c. .,

. 4

.T . ; , ,. . . . .. .

1. . . . . . . ....;; . . . ...

. . , . . - .=

..w . . , - ,y...

d m - - - :. . : ;. ,: ~

. . . a . , .

x.

. bg GULF STATES UTILITIES COMPANY POSTOFFICEBOX 2951

• DEAUMONT, TEXAS 77704 AREA CODE 713 838-6631 March 26, 1985 RBG- 20547 File No. G9.5 Mr. Harold R. Denton Director, Nuclear Reactor Regulation U. S. Nuclear Regulatory Commission Washington, D. C. 20555

Dear Mr. Denton:

River Bend Station Unit 1 Docket No. 50-458 Annual Financial Report Enclosed are ten (10) copies of the Gulf States Utilities Company 1984 Annual Report. This report is being submitted in accordance with Section 50.71 of Title 10 of the Code of Federal Regulations and U. S.

Nuclear Regulatory Commission Regulatory Guide 10.1.

Sincerely, J. E. Booker Manager-Engineering, Nuclear Fuels & Licensing River Bend Nuclear Group JEB/MWH/lp Enclosures h<,,

,