ML20116E463
| ML20116E463 | |
| Person / Time | |
|---|---|
| Site: | Cooper  |
| Issue date: | 08/01/1996 |
| From: | Graham P NEBRASKA PUBLIC POWER DISTRICT |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| NLS960147, NUDOCS 9608060001 | |
| Download: ML20116E463 (95) | |
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O COOPER NUCLEAR STATION P.O. BOX 98. BROWNVILLE. NEBRASKA 88321 Nebraska Public Power District "TaEE""
NLS960147 August 1,1996 U. S. Nuclear Regulatory Commission Attention: Document Control Desk Washington, DC 20555
Subject:
Licensee Guarantees of Payment of Deferred Premiums Cooper Nuclear Station NRC Docket No. 50-298, DPR-46 l Gentlemen:
3 In accordance with the requirements of 10 CFR Part 140.21, relative to deferred insurance premiums, the Nebraska Public Power District submits the following information, which we )
believe, demonstrates our ability to obtain funds in the amount of $10 million for payment of i such premiums within the specified three month period.
The Nebraska Public Power District has renewed a Credit Agreement, which is included as an enclosure, with the American National Bank and Trust Company of Chicago, which indicates i that said bank will lend the District funds, not to exceed $5 million as specifically required to pay public liability claims arising from nuclear incidents. This Credit Agreement is valid
. through July 31,1997, at which time the District will submit the appropriate documentation to verify the guarantee requirements for the following year.
MidAmerican Energy Company, under the terms of a power purchase contract, has ;
acknowledged its responsibility to assume 50% of the respective premium requirements in an 1
amount not to exceed $5 million in one year. MidAmerican Energy Company has chosen to utilize the type of guarantee defined in 10 CFR 140.21(e). Therefore, as enclosures to this letter, we are submitting the following documents in support of 50% of the required $10 million premium.
MidAmerican Energy Company, Inc.,1995 Annual Report to the Securities and Exchange Commission - Form 10-K.
- Credit Agreement between the Nebraska Public District and the American National Bank and Trust Company of Chicago.
9608060001 960001 PDR ADOCK 05000298 PDR
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- I NLS960147 August 1,1996 Page 2 We believe that the enclosed information is sufHeient to demonstrate our ability to generate the necessary funds required by the deferred premium; however, should you require additional information, please do not hesitate to contact me.
Sincerely, i P. D. Graham Site Manager
/nr l
Enclosure cc: U. S. Nuclear Regulatory Commission Attn: Mr. Ira Dinitz .
Mail Stop 12-E-4 Washington, DC 20555 U. S. Nuclear Regulatory Commission ;
Regional OfHee - Region IV Arlington, TX NRC Resident Inspector Cooper Nuclear Station w/o encl.
NPG Distribution w/o encl.
T. L. Bender w/o encl.
P. G. Lindner (MidAmerican resources) w/o encl. !
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4 ATTACHMENT 3 LIST OF NRC COFNITMENTS Correspondence No: NLS960147 The following table identifies those actions committed to by the District in this document. Any other actions discussed in the submittal represent intended or planned actions by the District. They are described to the NRC for the NRC's information and are not regulatory commitments. Please notify the Licensing Manager at Cooper Nuclear Station of any questions regarding this document or any associated regulatory commitments.
COMMITTED DATE COMMITMENT OR OUTAGE None i
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PROCEDURE NUMBER 0.42 REVISION NUMBER 1.2 PAGE 8 OF 10
i CREDIT AGREEMENT CREDIT AGREEMENT, dated as of August 1, 1996, between NEBRASKA PUBLIC POWER DISTRICT (herein called the " District") and i' AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO (herein called the " Bank").
The District desires to provide for future borrowings, and the Bank is willing to commit to lend to the District, upon the terms and conditions herein set forth, the aggregate sum of up to
$5,000,000, in such installments and at such times as hereinafter provided, to be evidenced by notes of the District therefor.
In consideration of the foregoing and the covenants and conditions herein contained, the parties hereto agree as follows: i
- 1. Definitions. The following terms shall, for all purposes of this Credit Agreement, have the following meanings:
"Act" shall mean the Public Power and Irrigation District' Law, constituting Article 6 of Chapter 70 of the Revised Statutes of Nebraska, as amended and supplemented.
" Electric Resolution" shall mean the resolution entitled " Electric System Revenue Bond Resolution" adopted by the Board of Directors of the District on August 22, 1968, as supplemented or amended in accordance with the terms thereof.
" Electric System Bonds" shall mean Electric System Revenue Bonds of the District authorized to be issued under the Electric Resolution. ,
" Electric System General Reserve Fund" shall mean the Electric System General Reserve Fund established in Section 502 I
of the Electric Resolution.
" Loans" shall mean the loans provided for in this Credit Agreement.
" Note or Notes" shall mean any note or notes, as the case may be, issued pursuant to this credit Agreement by the District to evidence any Loan as such note or notes are renewed, replaced, amended or substituted.
" Note Resolution" shall mean the resolution of the District entitled " Resolution Authorizing $5,000,000 Bank Credit !
of 1996," adopted July 12, 1996 authorizing the issuance of the ;
Notes and authorizing the execution and delivery of this Credit Agreement, a true and correct copy of which resolution is annexed hereto as Annex A.
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- 2. Commitment to Lend. The Bank hereby agrees, upon the terms and conditions herein set forth, to make one or more Loans to the District, in accordance with the provisions of this Credit Agreement in an aggregate principal amount up to, but not I exceeding $5,000,000, each Loan to be in the principal amount of l
not less than $250,000. The Bank's commitment to loan shall expire on the earlier of: (i) July, 31, 1997, or (ii) the l
occurrence of an event of default under any of the notes.
l 3. Borrowings. The District shall give the Bank at least two (2) days prior notice of the date and amount of each borrowing hereunder. Each borrowing pursuant thereto shall take place at the principal office of the Bank at LaSalle and Washington Streets, Chicago, Illinois. Not later than 11:00 a.m.
on the date of each borrowing, the Bank shall, subject to the terms of this Credit Agreement, make available to the District, Federal Reserve or other immediately available funds in the principal amount being borrowed, upon delivery to the Bank of a Note in such principal amount.
- 4. The Notes. Each Note shall be designated as
" Electric System Note, Series NRC of 1996," shall be payable to the order of American National Bank and Trust. Company of Chicago, shall be dated the date of its delivery, shall be payable one year from its date of issue (subject to optional prepayment as provided in Section 8 hereof), and shall bear interest (payable on the first day of each January, April, July and October) on the unpaid principal amount thereof from its date fluctuating at the rate per annum equal to 87% of the rate of interest announced or published publicly from time to time by the Bank as its base rate or equivalent rate of interest. Such interest rate shall be computed on the basis of a 365/366-day year.
The Notes shall be executed on behalf of the District by the manual signature of its Chairman, Vice Chairman, President, Treasurer or Assistant Treasurer and its corporate seal shall be affixed, imprinted, engraved or otherwise reproduced thereon and attested by the manual signature of its Secretary or any Assistant Secretary and shall be otherwise in substantially the form annexed hereto as Annex B.
- 5. Commitment Fee. The District shall pay to the Bank as a commitment fee contemporaneously with the execution of this Credit Agreement the sum of $5,000.
- 6. Tax Indemnification. ;
I (i) The parties intend that the Bank shall receive in respect of the Notes amounts equal to the principal thereof and interest thereon as provided hereunder, when due, without deductions, penalties, charges, or withholdings as a result of the imposition of any federal income or similar federal tax imposed on the Bank as a holder of any of the notes (collectively
" Taxes").
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Any such Taxes shall be paid by the District. The District will pay the Bank the amounts necessary such that the net amount of the principal and interest received and retained by the Bank is not less than the amount payable under this Agreement had such l Taxes not been imposed. l If, notwithstanding the previous two sentences, the Bank pays any such Taxes, the Bank will_ furnish to the District official tax ;
receipts or evidence of payment of all such Taxes and the l District will promptly reimburse the Bank therefor. J (ii) If the Internal Revenue Code of 1986, as amended, (the " Code"), or any other federal income tax law, rule, regulation, or governmental interpretation thereof hereafter enacted, adopted or issued, other than any such change mentioned I in (iii) below, when affecting the Bank as a holder of the Notes I or compliance by the Bank as a holder of the Notes with such, (a) subjects the Bank to any tax, duty, charge, or withholding due on the principal of or interest on the Notes or changes the basis of taxation of payments to the Bank in respect of the principal of or interest on the Notes, including, without limitation, the effect of any limitation on the deductibility of interest on the funds obtained to purchase or carry the Notes; or (b) imposes any other condition or circumstance the result of which is to increase the cost to the Bank of purchasing, funding or carrying the Notes, or reduces any amount receivable by the Bank in connection with the principal of or interest on the Notes or requires the Bank to make any payment calculated by reference to the amount of ;
the Notes or interest received by it in an amount deemed !
material by the Bank; l then, within thirty days of demand by the Bank, the District shall pay the Bank an amount which will be equal, on an after-tax i basis to the Bank (taking into account any taxes payable by the Bank on such amount), to (a) that portion of such increased cost incurred or (b) the amount or reduction in an amount received which the Bank determines is attributable to purchasing, funding or carrying the Notes to the extent of the principal amount thereof outstanding from time to time. The effect of any such increased cost which is imposed on the Bank generally may be allocated to the Notes on any reasonable basis in the discretion of the Bank.
(iii) If at any time or times while the Bank is the Holder of the Notes there is a change in the maximum marginal tax rate (the " Tax Rate") at which the Bank could be taxed for federal income tax purposes, the interest rate on the Notes shall be decreased (in the case of a decrease in the Tax Rate) to an interest rate equal to the product of (i) the interest rate on the Notes in effect immediately prior to a change in the Tax Rate times (2) a fraction (expressed in decimals) the numerator of which is the number one (1) minus the applicable Tax Rate after such change and the denominator of which is the number one (1) minus the Tax Rate which had been in effect prior to such change in the Tax Rate.
(iv) Notwithstanding any of the other provisions of this Agreement, if the District has paid the additional amount specified in (ii) and (iii) above, the District shall not be obligated to pay or reimburse the Bank for any tax on the income of the Bank to the extent that such income tax is attributable to the inclusion in the gross income of the Bank for federal tax purposes of interest on the Notes as if such interest had been timely reported and timely paid.
- 7. Conditions Precedent to Loans. The Bank shall not be obligated to make any loan unless at the date specified for the making thereof the District delivers to the Bank:
(a) The opinion of the General Counsel to the District, dated as of such date, to the effect that:
(i) There is no li-tigation pending in any court, either State or Federal, questioning the creation, organization or existence of the District or the validity of this Credit Agreement or the Note being issued to evidence such Loan; and (ii) The District has the power to borrow the amount being loaned; to execute and deliver this Credit Agreement; to evidence the Loans by its Notes to be made and delivered in accordance herewith, and to perform and observe all of the terms and conditions of this Credit Agreement on its part to be performed and observed; and (b) A certificate of the Chairman, President, Treasurer, Assistant Treasurer or any Vice Presidents of the District, dated as of such date, to the effect that the representations and warranties of the District contained in Section 15 of this Credit Agreement are true and correct as {
of such date; and '
(c) A certificate of the Chairman, President, Treasurer, Assistant Treasurer or any Vice Presidents of the District, dated as of such date, setting forth the aggregate amount of bonds and notes of the District that will be ,
outstanding immediately after the issuance of the note then {
being issued and stating that no default has occurred in the payment of principal of or interest on any indebtedness for borrowed
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money of the District which remains unsecured; and I (d) The opinion of O'Melveny & Myers LLP, Bond Counsel i to the District, dated as of such date, substantially in the form annexed thereto as Annex C; i l
(e) A Tax and Non-Arbitrage certificate, dated as of such date, in accordance with the provisions of the Code; and
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(f) Such additional certificates, instruments and other l documents as the Bank or its counsel may deem necessary to i effect good delivery of the Note being delivered on such l date or evidence the due performance by the District of the I conditions precedent hereunder. l
- 8. Optional Prepayment. The District may prepay any Note as a whole or in part, at any time or from time to time, without penalty or premium, by paying to the Bank all or part of the principal amount of the Note to be prepaid, together with the unpaid interest accrued on the amount of principal so prepaid to the date of such prepayment. Each prepayment of a Note shall be ,
made on such date and in such principal amount as shall be l specified by the District in a written notice delivered to the Bank not less than 10 days prior thereto. Notice having been given as aforesaid, the principal amount of the Note stated in i such notice or the whole thereof, as the case may be, shall l become due and payable on the prepayment date stated in such notice, together with interest accrued and unpaid to the prepayment date on the principal amount then being paid; and the amount of principal and interest then due and payable shall be paid (i) in case the entire unpaid balance of the principal of any Note is to be paid, upon presentation and surrender of such Note to the District or its representative at the principal office of the Bank, and (ii) in case only part of the unpaid balance of principal of any Note is to be paid, upon presentation of such Note at the principal office of the Bank for notation thereon by the Bank of the amount of principal and interest on such Note then paid. If on the prepayment date moneys for the payment of the principal amount to be prepaid on such Note together with interest to the prepayment date on such principal amount, shall have been paid to the Bank as above provided and if notice of prepayment shall have been given to the Bank as above provided, then from and after the prepayment date interest on such principal amount of such Note shall cease to accrue. If said moneys shall not have been so paid on the prepayment date, such principal amount of such Note shall continue to bear interest until payment thereof at the rate provided for in Section 4 of this Credit Agreement.
- 9. Application of Note Proceeds. The proceeds of the Notes shall be used to pay amounts required to be paid by the District as a result of one or more nuclear incidents, as provided in the Price-Anderson Act, as amended (Pub. L.94-197, as amended and as compiled in 42 U.S.C. Section 2210 and pertinent subsections of 42 U.S.C. Section 2014, as amended) and certain regulations of the Nuclear Regulatory Commission (10 ,
C.F.R. Part 140, as amended in particular by 42 Fed. Reg. 46-54 l (January 3, 1977)) or any act or regulation supplemental thereto I or amendatory thereof. I
- 10. Payment. The obligation to pay the principal of and interest on the Notes and the other amounts payable hereunder ,
is a special obligation of the District payable solely from such l amounts in the Electric System General Reserve Fund as may be available therefor under the District's bond resolutions then outstanding; provided, however, that such obligation to pay the principal of and interest on the Notes and the other amounts payable hereunder from amounts in the Electric System General Reserve Fund shall be subject and subordinated in all respects to the pledge of the Revenues (as defined in the Electric Resolution), moneys, securities and funds created by the Electric Resolution and, provided, further, that the obligation to pay the principal of and interest on the Notes and the other amounts payable hereunder from amounts in the Electric System General l Reserve Fund shall be subject and subordinated to any payments which shall at any time be required to be made from Electric System General Reserve Fund pursuant to Section 713 of the District's Power Supply System Revenue Bond Resolution, adopted by the Board of Directors of the District on September 29, 1972, as supplemented and amended in accordance with the terms thereof.
The District shall duly and punctually pay or cause to be paid from the Electric System General Reserve Fund, in Federal Reserve or other immediately available funds, the principal of the Notes, the interest thereon and the other amounts payable hereunder at the dates and place and in the manner provided herein and in the Notes according to the true intent and meaning thereof. If the principal of the Notes becomes due and payable on a Saturday or Sunday or a day which is a Bank holiday, such payment shall be made on the next succeeding Bank business day and the extension of time for payment shall be included in computing interest in connection with such payment.
- 11. All of the Bank's rights and remedies under this Credit Agreement are cumulative and nonexclusive. The acceptance by the Bank of any partial payment made hereunder after the time when any of District's Loans become due and payable will not establish a custom, or waive any rights of the Bank to enforce prompt payment thereof. The Bank's failure to require strict performance by the District of any provision of this Credit Agreement shall not waive, affect or diminish any right of the Bank thereafter to demand strict compliance and performance therewith. Any waiver of an event of default hereunder shall not suspend, waive or affect any other event of default hereunder.
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- 12. Rate Covenant. The District covenants and agrees with the Bank that so long as any credit shall be available hereunder or any Note or interest thereon is unpaid it shall comply for the benefit of the Bank with requirements of Section 712 of the Electric Resolution.
- 13. Negative Covenants of the District. The District, if and so long as credit shall be available hereunder or any Note l or interest thereon is unpaid, will not alter, amend or repeal l the Note Resolution, or take any action impairing the authority l thereby or hereby given with respect to the issuance and payment of the Notes.
- 14. Tax Covenant. In order to maintain the exclusion from gross income for purposes of federal income taxation of interest on the Notes, the District shall comply with the provisions of the Code applicable to the Notes, including without limitation the provisions of the Code which prescribe yield and other limits within which the proceeds of the Notes and other amounts are to be invested and require that certain investment earnings on the foregoing be rebated on a periodic basis to the Treasury Department of the United States of America. The District shall not take any action or fail to take any action, which would cause the Notes to be " Arbitrage Bonds" within the meaning of Section 148(a) of the Code.
- 15. Representations and Warranties. The District represents and warrants that:
(a) The District has the power to borrow the amount provided for in this credit Agreement; to execute and deliver this credit Agreement; to evidence the Loans by its Notes to be made and delivered in accordance with the provisions hereof and to perform and observe all of the terms and conditions of this Credit Agreement on its part to be performed and observed; (b) The making and performance by the District of this Credit Agreement will not violate any provision of the Act, or any bond or note resolution of the District, or any regulation, order or decree of any court, and will not result in a breach of any of the terms of the petition for creation, as amended, of the District or any agreement or instrument to which the District is a party or by which the District is bound; and (c) The District, by adoption of the Note Resolution has duly authorized the borrowing of the amount provided for in this Credit Agreement, the execution and delivery of this Credit Agreement, and the making and delivery of the Notes to the Bank as herein provided; and to that end the District warrants that it will take all action and will do all things
which it is authorized by law to take and to do in order to fulfill all covenants on its part to be performed and to provide for and to assure payment of the Loans as herein provided.
- 16. Acceleration of Due Date Upon Default. If one or more of the following events of default shall occur and be continuing:
(a) Default shall occur and be continuing in the payment when due of any principal or interest on any Note; (b) Any representation or warranty made herein or pursuant hereto shall prove to be untrue in any material respect; (c) Default shall occur in the performance of any of the other covenants or agreements of the District contained herein or in any note, and the act or-omission creating such default shall continue for a period of 30 days after written notice thereof shall have been given to the District; or (d). Default shall be made in the payment of the principal of or interest on any Electric System Bonds when due, and as a result of such default, the maturity of such Bonds is accelerated; then, and in any such event, the Bank shall have the right to declare the principal of and all interest then accrued on all Notes to be due and payable immediately, and upon such declaration the Notes and the interest accrued thereon shall become due and payable, anything in this credit Agreement or in ,
the Notes contained to the contrary notwithstanding.
- 17. Defeasance. If the District shall pay or cause to be paid, or there shall otherwise be paid, to the Bank the principal of and interest on the Notes at the times and in the manner stipulated herein, then the covenants, agreements and other obligations of the District hereunder shall thereupon cease, terminate and become void and be discharged and satisfied.
If moneys sufficient to pay the principal amount of the Notes and interest thereon until maturity or a date fixed for repayment shall have been paid to the Bank for application to such purpose, the Notes and the interest thereon shall be deemed to have been paid within the meaning and with the effect expressed in this Section. Amounts so set aside and held may be invested in obligations of, or guaranteed by, the United States of America, provided, however, that said obligations shall mature not later than the maturity date of the Notes. All earnings from such investments shall be paid over to the District, as received, free and clear of any trust, lien or pledge.
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- 18. Notices. All notices under this Credit Agreement I shall be in writing and written notices shall be deemed to have I been duly given if delivered or mailed by registered mail,-in the l case of the District, at Box 499, Columbus, Nebraska 68601, Attention: President, and in the case of the Bank, at its principal office at LaSalle and Washington Streets, Chicago, Illinois 60690, Attention: Steven H. Abbey.
- 19. Counterparts. This Credit Agreement may be executed in any number of counterparts, and all such counterparts executed and delivered, each as an original, shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the District and the Bank have caused this Credit Agreement to be duly signed on their respective behalf by their officers thereunto duly authorized, all as of the date and year first above written.
NEBRASKA PUBLIC POWER DISTRICT (SEAL]
By -
Vice President 1
Attest:
6%6u &
Assistant Secretary AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO ,
[ SEAL) l By ~-~' %
Vice President !
Attest:
ns & 4 FV aqeau
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4 ANNEX A Resolution Authorizing $5,000,000 Bank Credit of 1996 Be it Resolved, by the Board of Directors of Nebraska Public Power District, as follows:
Section 1. Pursuant to the Public Power and Irrigation District Law, Article 6 of Chapter 70 of the Revised Statutes of Nebraska, as amended and supplemented (herein called the "Act"),
Nebraska Public Power District (herein called the " District")
shall be authorized to enter into a credit agreement (herein called the " Credit Agreement") for one or more loans in an aggregate principal amount up to, but not exceeding, $5,000,000 from American National Bank and Trust Company of Chicago (herein called the " Bank") in substantially the form submitted at this meeting, to which shall be annexed, as Annex A, a copy of this resolution adopted by the District. Each loan shall be made in the principal amount of not less than $250,000 on any date on or before July 31, 1997; provided that the District shall give the Bank two (2) days prior notice of the date and amount of each borrowing and shall be evidenced by an Electric System Note, Series NRC of 1996 (herein called a " Note"; all Notes made under the Credit Agreement are herein collectively called the " Notes")
of the District in the aggregate principal amount of each loan, which Note shall be issued and delivered by the District to the Bank in the principal amount and on the date of the loan evidenced thereby. Each Note shall be payable to the order of '
the Bank from the sources set out in Section 10 of the Credit Agreement, shall be dated the date of its delivery, shall be payable one year from its date of issue (subject to optional prepayment as a whole or in part, at any time or from time to time, without penalty or premium, as provided in the Credit Agreement) and shall bear interest (payable on the first day of each January, April, July and October and upon maturity) on the unpaid principal amount thereof from its date fluctuating at the i rate per annum equal to 87% of the rate of interest announced or j published publicly from time to time by the Bank as its base rate or equivalent rate of interest. Interest is to be computed on the basis of a 365/366-day year. Each Note shall be in substantially the form set forth in Annex B to the Credit Agreement.
Section 2. The proceeds of the Notes shall be applied by the District to the purpose and in the manner provided in Section 9 of the Credit Agreement.
Section 3. The President, any Vice President, the Treasurer, and the Assistant Treasurer of the District are each hereby authorized to execute the credit Agreement and the l Secretary, or any Assistant Secretary, are each hereby authorized to affix the seal of the District on the Credit Agreement.
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Section 4. The Chairman, Vice Chairman, President, any Vice President, Treasurer or Assistant Treasurer of the District are each hereby authorized to execute the Notes by manual signature and the Secretary or any Assistant Secretary are each hereby authorized to cause the seal of the District to be affixed, imprinted, engraved or otherwise reproduced on the Notes and to attest the same. Any of the foregoing officers are hereby authorized to deliver the executed Notes in accordance with the .
provisions of the Credit Agreement. I Section 5. The Chairman, Vice Chairman, President, Treasurer or Assistant Treasurer of the District and the Secretary or any Assistant Secretary are, and each of them hereby is authorized to do and perform all things and to execute all papers in the name of the District or otherwise, as they deem advisable, and to make all payments, necessary or convenient in their respective opinions, to the end that the District may carry
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out the objects of this resolution and its obligations under the terms of the Credit Agreement and of the Notes.
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ANNEX B (FORM OF NOTE) l NEBRASKA PUBLIC POWER DISTRICT ELECTRIC SYSTEM NOTE, SERIES NRC OF 1996 No. $ l l
FOR VALUE RECEIVED, the undersigned, NEBRASKA PUBLIC l POWER DISTRICT (the " District"), a public corporation and political subdivision organized and existing under and by virtue I of the laws of the State of Nebraska, hereby promises to pay to I the order of American National Bank and Trust Company of Chicago )
(the " Bank") on , 19 upon presentation and surrender of this Note at the principal office of the Bank, the principal sum of Dollars ($ ),
in lawful money of the United States of America, and to pay interest (payable on , 19__ and quarterly thereafter on the first day of each January, April, July.and October and upon maturity) on said principal sum at said office in like money from the date hereof fluctuating at the rate per annum equal to 87% of the rate of interest announced or published publicly from time to time by the Bank as its base rate or equivalent rate of interest. Such interest shall be computed on the basis of a 365/366-day year.
This Note is a special obligation of the District and is one of a duly authorized issue of notes of the District (the " Notes")
issued and to be issued under and pursuant to the Public Power and Irrigation District Law of Nebraska, as amended and supplemented (herein called the "Act"), and under and-pursuant to a resolution of the District, adopted July 12, 1996, entitled Resolution Authorizing $5,000,000 Bank Credit of 1996 (the " Note Resolution"), and under and pursuant to a Credit Agreement (the
" Credit Agreement"), dated as of August 1, 1996 by and between the District and the Bank. j The obligation to pay the principal of and interest on this Note is a special obligation of the District payable solely from such amounts in the Electric System General Reserve Fund (as defined in the Credit Agreement) as may be available therefor under the District's Bond resolutions then outstanding; provided, however, that such obligation to pay the principal of and !
interest on this Note from the Electric System General Raserve Fund is subject and subordinated in all respects to the pledge of the revenues, moneys, securities and funds created by the Electric Resolution (as defined in the Credit Agreement); and, provided, further, .that the obligation to pay the principal of and interest on this Note from the Electric System General B-1
Reserve Fitnd is subject and subordinated to any payments which shall at any time be required to be made from the Electric System General Reserve Fund pursuant to Section 713 of the District's Power Supply System Revenue Bond Resolution, adopted by the Board of Directors of the District on September 29, 1972, as supplemented and amended in accordance with the terms thereof.
- This Note is subject to the terms and conditions contained in the Note Resolution and the Credit Agreement, copies of which j are on file at the principal office of the District, and reference is made thereto for a complete statement of such terms
- and conditions.
i The District shall have the right to prepay this Note as a j whole or in part, at any time or from time to time, without
- penalty or premium, in accordance with the terms of the Credit
, Agreement. The prepayment date and the principal amount of the Note to be prepaid shall be specified by the District in a written notice to the Bank not less than 10 days prior to any 4
prepayment. If on the prepayment date moneys for the payment of the principal amount of this Note to be prepaid, together with interest to the prepayment date on such principal amount, shall have been paid to the Bank as above provided, then frcm and-after the prepayment date interest on such principal amount of this Note shall cease to accrue. If said moneys shall not have been so paid on the prepayment date, such principal amount of this Note shall continue to bear interest as provided above until payment thereof.
This Note is not an obligation of the State of Nebraska and the Act provides that the State of Nebraska shall never pledge its credit or funds, or any part thereof, for the payment or settlement of any indebtedness whatsoever of the District.
IN WITNESS WHEREOF, Nebraska Public Power District has caused this Note to be signed in its name and on its behalf by its President or Vice President or Treasurer or Assistant Treasurer, and its official seal to be hereunto affixed and attested by its Secretary or any Assistant Secretary, as of ,
day of ,
19__. )
I NEBRASKA PUBLIC POWER DISTRICT '
By Vice President (SEAL]
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Attest:
Assistant Secretary B-2
ANNEX C 19__
Nebraska Public Power District Columbus, Nebraska American National _ Bank and l Trust Company of Chicago l Chicago, Illinois Gentlemen: ,
We have examined the record of proceedings relating to the issuance of the $ Electric System Note, Series NRC i of 1996, No. , dated ,
19__ (the " Note"),
of Nebraska Public Power District (the " District"), a body corporate and politic, constituting a public corporation and political subdivision of the State of Nebraska.
The Note is issued under and pursuant to Chapter 70, Article 6, of the Revised Statutes of the State of Nebraska, as amended (the "Act"), and under and pursuant to a credit Agreement (the l
" Credit Agreement"), between the District and American National !
Bank and Trust Company of Chicago (the " Bank"), dated as of August 1, 1996, authorized by a resolution (the " Note !
Resolution") of the District adopted on July 12, 1996 and )
entitled " Resolution Authorizing $5,000,000 Bank Credit of 1996."
The Note is payable to the order of the Bank, matures on l 19__ (subject to prepayment in accordance with the terms of the Credit Agreement) , and bears interest (payable on 19__ and quarterly thereafter on the first day of January, April, July and October and upon maturity) from its date fluctuating at the rate per annum equal to 87% of the rate of interest announced or published publicly from time to time by the Bank as its base rate or equivalent rate of interest. Such interest rate shall be computed on the basis of a 365/366-day year.
The obligation to pay the principal of and interest on the Note is a special obligation of the District payable solely from such amounts in the Electric System General Reserve Fund (as de fined in the Credit Agreement) as may be available therefor under the District's bond resolutions then outstanding; provided, however, that such obligation to pay the principal of and interest on the Note from the Electric System Reserve Fund is 1 subject and subordinated in all respects to the pledge of the ;
revenues, moneys, securities and funds created by the Electric Resolution (as defined in the Credit Agreement; and provided, further, that the obligation to pay the principal of and interest l
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i on the Note from the Electric System General Reserve Fund is j subject and subordinated to any payments which shall at any time be required to be made from the Electric System General Reserve i Fund pursuant to Section 713 of the District's Power Supply System Revenue Bond Resolution, adopted by the Board of Directors of the District on September 9, 1972, as supplemented and amended in accordance with the terms thereof.
We are of the opinion that:
! 1. The District is duly created and validity existing under the provisions of the Act, with power to adopt the Note i
Resolution, to enter into the Credit Agreement, to issue the Note thereunder and to make and. perform the covenants contained in the Credit Agreement.
- 2. The Note Resolution has been duly adopted by the District, is in full force and effect and is valid and binding on the District and enforceable in accordance with its terms, and the Credit Agreement has been duly authorized and executed by the District, is in full force and effect, is valid and binding upon the District and enforceable in accordance with its terms.
- 3. The Note has been duly authorized and issued by the District in accordance with law and in accordance with the Note Resolution and the Credit Agreement, and is a valid binding and l
direct obligation of the District enforceable in accordance with its terms and entitled to the benefit of the Act and of the Credit Agreement.
4.
The Internal Revenue Code of 1986 as amended (the
" Code") sets forth certain requirements which must be met subsequent to the issuance and delivery of the Note for interest thereon to be and remain excluded from gross income for purposes of federal income taxation. Noncompliance with such requirements may cause interest on the Note to be included in gross income retroactive to the date of issue of the Note. The District has covenanted to comply with such requirements.
In our opinion, under existing law, and assuming compliance with the aforementioned covenant, interest on the Note is excluded from gross income for federal and State of Nebraska income tax purposes. The Note is not a "specified private activity bond" within the meaning of Section 57(a) (5) of the Code and, therefore, the interest of the Note will not be treated as a preference item for purposes of computing the federal alternative minimum tax imposed by Section 55 of the Code.
However, we note a portion of the interest on the Note owned by corporations may be subject to the federal alternative minimum tax, which is based in part on adjusted current earnings.
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. I Except as stated in the preceding two paragraphs, we express I no opinion as to any federal or state tax consequences of the ownership of, receipt of interest on, or disposition of the Note.
The opinions contained in paragraphs 2 and 3 above are qualified to the extent that the enforceability of the Note i Resolution, the Credit Agreement and the Note, respectively, may be limited by any applicable bankruptcy, moratorium or similar laws relating to the enforcement of creditors' rights.
We have examined the Note, as executed, and, in our opinion, the form of said Note and its execution are regular and proper.
Very truly yours, )
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One)
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of1934
[ Fee Regured]
i For the fiscalyearended December 31.1995 l or
[] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (No Fee Requued]
For the transition period from to Commission file number 1-11505 MIDAMERICAN ENERGY COMPANY (Exact name of registrant as specified in its charter)
IOWA 42-1425214 (State or otherjunsdiction of (LR.S. Employer incorporation or orgnm7ation) Identification No.)
666 Grand Ave.. P.O. Box 657. Des Moines. Iowa 50303 (Address of principal executive offices) (Zip Cc&)
Registrant's telephone number, including area code 515-242-4300 Securities registered pursuant to Section 12(b) of the Act Name ofeach exchange Title ofeach class on which reiiad COMMON STOCK,NO PAR VALUE NEW YORK STOCK EXCHANGE PREFERRED STOCK, S 1.7375 SERIES, NO PAR VALUE NEWYORK STOCK EXCHANGE Securities registered pursuant to Section 12(g) of the Act PREFERRED STOCK, $3.30 SERIES, NO PAR VALUE PREFERRED STOCK, $3.75 SERIES, NO PAR VALUE PREFERRED STOCK, $3.90 SERIES, NO PAR VALUE PREFERRED STOCK, S4.20 SERIES, NO PAR VALUE PREFERRED STOCK, S4.35 SERIES, NO PAR VALUE PREFERRED STOCK, S4.40 SERIES, NO PAR VALUE PREFERRED STOCK, $4.80 SERIES, NO PAR VALUE PREFERRED STOCK, S5.25 SERIES, NO PAR VALUE l PREFERRED STOCIC $7.80 RERIES. NO PAR VALUE
- Title ofeach class
l l Indicate by check mark whether the registrant (1) has filed all reports requned to be filed by Section 13 or 15(d) of the hn*c Evehny Act of 1934 dunng the precedmg 12 months (or for such shorter period that the regarant was requned to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X*_ No l
i Indrate by check mark if%ccianne of dehnquent filers pursuant to Item 405 of Regulation S-K is not contamed herein, and will not be canamed, to the best of registrant's knowledge, in definitive proxy or infonnation statements incorporated by reference in Part III of this Foun 10-K or any amendment to this Form 10-K [X].
The aggregate market value of voting stock held by non-affihates of the registrant was S 1,824,198,890 as of February 26,1996, when 100,751,713 shares ofcamman stock, without par value, were c Eng -
I DOCUMENTS INCORPORATED BY
REFERENCE:
Portions of the Company's Anmal Report to Shareholders for 1995 is incorporated by reference in Parts I and !
H hereof A portion of the Company's Proxy Satament relatmg to its 1996 Anmmi Meetag of Shareholders is incorporated by reference in Part III hereof.
- MidAmerican Energy Company ("MidAmencan") is the successor by merger of Midwest Resources Inc.
("Madwest Resources"), Midwest Power Systems Inc. (" Midwest Power") and Iowa-Illinois Gas and Electric Company (" Iowa-Ilhnois") with and into MidAmerican.. The effectrve date of the merger was July 1,1995, !
and prior to such effectrve date, MidAmenmn had no assets or operanons. Prior to such effective date, each ofIowa-Illinois, Midwest Resources and Midwest Power was subject to the requurments of Section 13 or 15(d) of the Secunties F-d =5 Act of 1934, as amended ("Evebaaa Act"), and accordagly filed in a t amely manner allreports Hg&M to be filed pursuant to Secuons 13 or 15(d) of the Exchange Act durmg the preceding 12 months.
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MIDAMERICAN ENERGY COMPANY 1995 Fonn 10-K AnnualReport TABLE OF CONTENTS Eattl Eags item 1 Business General Development of Butmans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Financial Infonnation About Industry Segments . . . . . . . . . . . . . . . . . . . . . . . . 4 Nanative Desenption of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Rate Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Electric Operations ........................................... 7 Natural Gas Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Construction Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I1 General Utility R=W . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1I Nuclear Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Environmental Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
+
InterCoast Energy Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Midwest Capital Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Item 2 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Item 3 Legal Pr* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Item 4 Submasion ofMauers to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . . 17 OtherInfonnation Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Business Transaction Policy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 EaELII Item 5 Market for the Registrant's Common Equity and Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Item 6 Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Item 7 Mana.?cmant's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Item 8 Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 ;
Item 9 Changes in and Disagreements with Accountants l on Accountmg and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 ERII.III Item 10 Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . . . . . 20 item 11 Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Item 12 Security Ownership of Certam Beneficial Owners and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Item 13 Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 EatLIE Item 14 Exhibits, Financial Statement Schedules, and Reports on Form 8.K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 S ignatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Exhibits Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 3
PARTI ITEM 1. BUSINESS (a) GeneralDevelopment of Business MidAmarican EnerEy Campany (MidAmerican or the Ca=nany), an Iowa corporation, was fonned on July 1,1995, thmugh the merger oflowa-Illinois Gas and Electric Company (Iowa-Illinois), Midwest Resources Inc. (Midwest Resources) and %dwest Power Systems Inc. (Midwest). The merger was accounted for as a pooling-of-interests. %dAmerman is primarily engaged in the buanea of generating, tranc=heia= distributing and selhng electric energy and disaimg, selling and transportmg nanual gas. The Company has two wholly owned subsidianes: InterCoast Energy Company (InterCoast) and Midwest Capital Group, Inc. (Midwest Capital). InterCoast engages in nonregulated energy-related businesses. Midwest Capital conducts econonne development activities in the Company's semce temtory. Prior to the merger, Iowa-Illinois was engaged in business actrvms sinnlar to those ofMidA=arinan InterCoast was a wholly owned subsidiary ofIowa-Illinois.
Midwest Resources was an exempt public uniny holding company with two wholly owned subsidiaries: Midwest and Mdwest Capital. Midwest was =amaad in utility activities similar to those of MidAmerican and Midwest Capital was engaged in nonregulated bunnen activities.
In January 1996, the Campanfs board ofdurctors approved an Agreement and Plan ofExchange related to the fonnation ofMidAmama Energy Holdings Campany (Hokhngs), a holding company. .ioldings will have three wholly owned subsidiaries, MidAmencan (dlity operations), Mdwest Capital and InterCoast.
Consummation of the holding ev-y.-y structure is subject to approval by holders of a majority of the ce= '=g shares of the Campanfs enmman stock. In aM*aa certam orders must be received from the Illinois Commerce Comm>= ion (ICC), the Iowa Utilities Board (IUB), the Federal Energy Regulatory Commmion (FERC) and the Nuclear Regulatory Comminion (NRC). Subject to the receipt of such orders, each share of MidAmencan common stock will be exchanged for one share ofHoldings common stock. It is n=7 ;-*s intent, ifpossible, to complete the formation of the holding company and share exchange by the end of 1996. ;
(b) Financial Information About Industry Segments Financial information on the Company's segments of business is included under the Note " Segment Infonnation" on page 35 of the Company's Annual Report to Shareholders for 1995, which page is incorporated herem by reference.
(c) Narrative Ds ;pilon of Business GENERAL The Company danism electric energy in Council Bluffs, Des Moines, Fort Dodge, Iowa City, Sioux City and Waterloo, Iowa, the Quad-Cities (Davenport and Bettendorf, Iowa and Rock Island, Moline and East Moline, Illinois) and a number of adjacent commumties and areas.
The Company distributes natural gas in Cedar Rapids, Des Moines, Fort Dodge, Iowa City, Sioux City and Waterloo, Iowa; the Quad-Cities; Sioux Falls, South Dakota; and a number of adjacent comnumities and are85.
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MidAmencan's electnc and gas operations are conducted under fmachises, cernficates, permits and
- bcenses obtamed from state and lomi authonties. The Sanchises, with various expiration dates, are typically for
- 25-year tenns.
$ The population of the Company's utility semce territory is approximately 1.7 million. As of j December 31,1995, the Company had 635,000 retail electric customers and 601,000 natural gas customers.
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- The Company has a residental, agricultural, commercial and diversified industnal customer group, in wtuch no single indistry or customer accounted for more than 3.5% (food and kindred products mdustry) of the Company's total 1995 electne operatung revenues or 3.6% (food and kmdred products mdusay) ofits total 1995
, gas operatmg margm. Among the pnmary nuhstnes served by the Company are those which are concemed with the n=nnbawing. processmg and fabrication of pnmary metals, real estate, food products, farm and other
- j non. electrical machmery, and cement and gypsum products.
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) For the year ended December 31,1995, the Company derived approximately 64% ofits gross operatmg j revenues from its electric busmess and 27% from its gas business. For 1994 and 1993, the conesponding j percentages were 60% electric and 29% gas, and 60% electric and 32% gas, respecuvely.
Histoncal elecuic sales by customer class as a percent of total electric sales and retail electric sales data by state as a percent of total retail sales are shown below:
) Tota 1 Electric Sales l By Customer Class l 1921. 1221. 1223 Residential 23.2 % 24.7 % 22.7 %
l SmallGeneralService 19.1 22.3 19.9 Large GeneralService 26.1 28.0 24.5 j Other 4.7 5.2 4.7 j Sales for Resale _2fL2 _123 2JL2 l
i Total 3% 3% 3%
) RetailElectric Sales )
- By State l i
I 1921. 1224. 1223.
j Iowa 89.5 % 88.6 % 88.7 %
- Illinois 9.9 10.9 10.9
! South Dakota Q.fi 03 04 i
'I Total 3% M/. 3%
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Hiearmi gas sales, excluding transportation throughput, by customer class as a percent of total gas sales
- and by state as a percent of total retail gas sales are shown below
h l TotalGas Sales
- By Customer Class e
1221 12M. 1221 j Residential 57.3 % 55.3 % 55.6 %
Smn11 GeneralService 32.9 33.0 31.6 i Large GeneralService 6.2 8.4 8.9 l Sales forResale and Other lfi 13 ,12 -
l Total 1QQg/. 1QQg'. igg %
l Retad Gas Sales i By State 1221 12M. 1221 1
Iowa 78.0 % 76.6 % 74.5 %
I 111inois 10.7 11.9 11.4 i South Dakota 10.6 10.8 5.4 Other 01 D;Z JL2 Total M. 1QQg/. 1QQg/.
There are seasonal va:iations in the Company's electric and gas businences which arero Arelated to the use of energy for air conditionmg and heateg. In 1995,403% of the Company's electric revenues were reported in the months of June, July, August and Swa , reflectmg the use of electncity for cooling, and 503% of the Company's gas revenues were reported in the months ofJanuary, February, March and December, reflecung the use of gas for heating.
At December 31,1995, the Company had 3,602 full-time employees, of which 3,331 were employed in utility operations and 271 were employed by the Company's nonregulated subsidiaries.
InterCoast and its subsuharies manage the nonregniated businesses of the Company. The nonregulated businesses mehvie oil and gas production, fmancial invantmaak leasing activities, energy semces and railcar leasing and rnanagement.
Midwest Capital and its subsidiaries manage the Company's economic development investments. The economic development investments are pnmarily real estate.
RATE MATTERS Under lowa law, +-y collection ofIngher rates can begin (subject to refund) 90 days after fding with the IUB for that pomon of such lugher rates approved by the IUB based on prior raremaMag principles and a rate ofreturn on common equity previously approved. If the IUB has not issued a final order within ten months after the fuing date, the temporary rates cease to be subject to refund and any balance of the r~=Mai rate increase may then be collected subject to refund. Exceptions to the ten month limitation are provided for extensions due to a unhty's lack ofdue Am==e* in the rate pic-7 "=E judsnal appeals and situations involvmg new genemtmg i unis being placed in semce. l i
Under Illinois law, new rates may be put into effect by the Company 45 days after filing with the ICC, l or on such earlier date as the ICC may approve, subject to the power of the ICC to suspend the proposed new
{ rates for a period not to exceed eleven months after fihng, pendmg a heanng.
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! South Dakota law authorizes the South Dakota Public Utilities Cammmion (SDPUC) to suspend new i rates for up to six months dunng the pendency of rate p@a=; however, the rates are pennitted to be implemented after six months subject to refund pendag a final order in the proceedag.
Additional infonnation on the Company's current rate pra~~h==c is included under the Note " Rate
- Matters" on page 34 of the Company's Annual Report to Shareholders for 1995, wluch page is incorporated i berem by reference.
. In April 1992, the FERC issued OrderNo. 636, d. i-g a restructunng by interstate pipeline companies l for their natural gas sales and transpannten savees. The FERC Order contemplated that tnesitional gas supply
! realignment costs related to this restructunng may be billed by interstate pipehnes to their customers. At j December 31,1995, a regulatory asset of 540.8 nulhon, with an offsetung non-current Other Liability, had been l recorded. in addition, the Company esamates it may incur other funne billings of appmximately $15.8 million j related to such restructunng. The Company is currently recovenug such cosa through rates.
i l The Company has established an extemal trust for the investment of funds collected for nuclear i dernemianianmg associated with Quad-Cities Nuclear Sation (Quad-Cities Station) ofwhich the Company is i a 25% owner. The owner and opsator of CooperNuclear Station (Cooper), from which the Company purchases 50% of the output pursuant to a long-term agreement, maintains a decammissianmg fund into wluch the
, Company makes contributens as a companan ofim powerpurchase paymens. Electric tanffs in effect for 1995 i mclude provnions for annual daramemasiamng costs at Quad-Cities Sation and Cooper of approxirnately $17.5 ,
i l nulhon. In Illinois, nuclear decommmionmg costs are included in customer bilhngs through a mechamsm that 1 penmts anmini adjustments. In Iowa, such cosa are reflected in base rates.
l The Company's Iowa electric tariffs consin a Uniform Electnc Energy Adjustment Clause under which i the Company's billmes reflect changes in the cost of all fuels used for electne generation, including nuclear fuel i dnposition costs, as well as the net effect of ensgy tranamenana (other than capacity) with other utilities. Changes in the cost of gas to the Company are reflected in its Iowa gas rates through the Iowa Uniform Purchased Gas j
3 Adjustment Clause.
! i i Under Illinois. electric tariffs, the Company's Fuel Cost Adjustment Clause refleem changes in the cost i of all fuels used for eleenic generation, includmg allowable fuel transportation costs, nuclear fuel disposition
} costs and the effects of energy transactions (other than capacity and margms on iuM-ngc sales) with other utilities. Changes in the cost of gas to the Company are reflected in its Illinois gas rates through the Illinois I
- Uniform Purchased Gas Adjustment Clause, t i
- ELECTRIC OPERATIONS ,
i The nnmini hourly peak demand occurs pnncipally as a result of airconditioning use dunng the cooling i season. MidA-n's highest hourly peak demand in 1995 was 3,553 mgawatts (MW), which was 269 MW more than the combined hourly peak of the predecessor companies.
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@ L MidAmencan is interconnected with certain Iowa and naighhanng utilities and is one of 29 utilities involved in an electric power pooling agr=nant known as the Mid-Conunent Area Power Pool (MAPP). The purpose of MAPP is to coordinate the plannmg. consnucnon and operation of generation and unnsmission facilities, including the purchase and sale of power and energy among members.
In October 1992, the Nananal Energy Policy Act (NEPA) was signed into law. NEPA allows all electric generators, whether subject to utihty regulanon or not, to ti.-yoil wholesale power acmss utilities' trananission faciteiam and is ine-W to pmmote compenten in the wholesale electric market. The FERC has also developed, and is in the pmcas of developag, policies to encourage open-access to utilities' transmianian facilities. These 1
policies include pncmg, good faith requests and responses for trnnemiazion semees and recovery of stranded costs bypublic and transmannt unhnes. In addition, the IUB has imnated a fonnal inquiry pir = :=g entitled- !
"Emergmg Competition in the Electnc Utility Industry." The Cm is pamcipatmg in these various i preaadia*=, as appropriate, in an attempt to assist in the development of public policy in these areas. The Company has and will contume to evaluate the impact on MidAmencan of policy decisions that result from these ;
pr== ham Annnnal informatian on - u- ;-- 4 changes in the utility industry is included in the " Operating Acuvatics" section of V=- - =t Discussion and Analysis ofFinancial Condinon and Results of Operations ,
(MD&A) on pages 18 and 19 of the ConWs Annual Report to Shareholders for 1995 winch pages are liwiyor.Ed herem by reference.
The Company's accredited 1995 munmar net generstmg capacity was 4,384 megawatts. The net generatmg capacity at any time may be less due to regulatory restnetions, fuel restnctions and generatmg units ,
being temporarily out of semce for inspection, mamtenance, refueling or modifications.
Fuel Supply for Electric Operatens The Company's sources of fuel for electnc generation have been as follows for the periods shown:
i YearEnded December 31, ,
1221. 1994. 1211.
FuelSource:
Coal 77.6 % 83.4 % 77.8 % ,
Niclaar 21.6 15.7 21.5 !
Gas 0.7 0.7 0.7 l Oil Q,1 02 -
Total 100.0 % 100.0 % 100.0 % i I
The average costs of fuels received (includmg transportation and handling costs) in cents per nulhon BTU's consumed have been as follows for the periods shown. l q
YearEnded DEQs31, l 1921. 1224. 1223 1 J
FuelSource:
Nuclear 44,19 47.08 47.72 Coal 95.14 95.90 97.12 Gas 226.92 297.08 303.21 Oil 422.80 422.13 438.68 TotalWeighted Average 90.21 90.96 88.99 j q
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The average cost of coal received (including transyvii. tion) per ton for the years 1995,1994 and 1993 has been $15.61, $15.67 and $15.91, respectively.
MidAmancan has connacts with rail shippers providing for the delivery of coal to is generating stations.
In =Maan, the Company has used spot market purchases of coal to effectively manage inventory levels and take advantage of near-teun coal market opportunities. The Company is contirmung to satisfy its coal requirements with a combinannn ofcontract and spot pah The Company believes its sources ofcoal for is fossil-fueled generanng stations are and will continue to be satish imy. Renewal of expirmg connacts and negotiations of new agreemena will be pursued as reqmred. Nanual gas and oil are uscd for peak <Wnand electric generation and for stancby purposes. These sources are presently in adequate supply and avadable to meet the Company's needs.
The Company is a 25% joint owner of Quad-Cities Station. The Company has been advised by Commonwealth Edison (Comed), the joint owner and operator of Quad-Cities Station, that the majority ofis ummum concennate and uramum conversion requuements for Quad-Cities Station for 1996 can be met under exisung supplies or commitments. Comed foresees no problem in Obi ining the remammg m@- now or utg 4 unne f requnwnank Comed further advises that all enrichment ry. have been contracted through 1999. Commitments for fuel fabrication have been obtamed at least through 2000. Comed does not anticipate that it will have any difficuhy in contracung for uranium concentrates for conversion, enrichment or fabrication of nuclear fuel needed to operate Quad-Cities Station.
The Company pine == one-half of the power and energy of Cooper through a long-term power purchase contract with Nebraska Public Power Distnct (NPPD). Approximately 30% of the fuel in the core at Cooper Inust be replaced every 18 monthc. The next refueling cycle is currently scheduled to begm in March of 1997.
NPPD has infonned the Company that it either has munbent matenals and services available to meet foreseeable Cooper requuements or that such matenals and services are readily avadable from suppliers.
Under the Nuclear Waste Policy Act of 1982 (NWPA), the Department of Energy (DOE) is responsible ,
I for the selection and development of repositories for, and the pennanent disposal of, spent nuclear fuel and high-level radioactive wastes. Comed and NPPD, as required by the NWPA, have signed a contract with the DOE to provide for the disposal of spent nuclear fuel and high-level radioactive waste b;.c. mg not later than Jarmary 1998. The DOE has stated, however, that the delivery schedule for spent nuclear fuel may be delayed, and it is expected that it will be significantly delayed. The costs incurred by the DOE for disposal activities will be financed by fees charged to owners and generators of the waste. Comed has 191. <ed the Company that there is on-site storage capability at the Quad-Cities Station sufficient to permit such intenm storage at least through 2007. NPPD has infonned the Company that there is on-site storage capability at the Cooper Station sufficient to permit such intenm storage at least through 2004, the innammg term of the long term power purchase contract. Meeting spent nuclear fuel storage requirements beyond such time could require modifications to the spent fuel storage pools or new and separate storage facdines, the costs of which have not been de6. "=d at this time. Industry activities are underway to unhze dry casks for the interim storage of high-level radioactive waste.
This may provide an altemative for interim on-site storage of such waste.
NATURAL GAS OPERATIONS MidAmencan is engaged in the procurement, transportation, M distribution of natural gas for utility and end-use customers in the Midwest. With the implementation in 1991 7C Order 636 and related orders (Order 636 or Orders), MidAmerican began operating in a more competitive m vironment. MidAmerican now has complete responsibility for natural gas procurement, transportation and storage, a responsibility which had
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prevmusly raided with the intennate pipeline suppliers. These Orders directly unpact the operations, revenues and costs oflocal distnbution compames (LDCs), including MidAmencan, and create new oppornmities.
The Company has fum rights to pipeline capacity to transport gas from the production area to its service temtory. With the swi humg of the indusay, if the Cn=nany does not need the capacity (due to fluctuations in anrrystad system damand), it can "sublesse" such capacity to other compames. To provide incernives for the achievement of 93 -. -- use of available transportation espacity, an IUB ruhng allows the Company to retam 30% ofIowa revenues earned on the " subleased" capacity and returns 70% to customers through the purchased gas adjn=='*
Infonnation on the impact of FERC Order 636 is inchwiad in the "Opemdag Acuvities" section of MD&A on page 19 of the Company's Annual Report to Shareholders for 1995, which page is incorporated herein by reference.
Fuel Supply and Capacity The Canaany pmchases the majority ofits gas supplies from producers or third party marketers and nansports the gas on a fnm or intemiptible basis through the Northern Naniral Gas (NNG), Natural Gas Pipeline Company of Amenca (NGPL) and ANR Pipeline C==nany (ANR) systems. To insure system reliabdity, a geographically diverse supply portfolio with varymg tenns and conditions is utihzed for the gas supplies.
The Company utihzes leased gas storage to meet peak day requnemens and to manage the daily changes in demand due to changes in weather. The storage gas is replaced dunng the summer months. In addition, the
. company also utilizes three hquefied nanual gas plants and five propane-air peak shaving plants to meet peak day demands On February 2,1996, the Company had an estanated new peak-day delivery of 1,140 million cubic feet.
This peak-day delivery included approximately 88% from traditional sales service customers and 12% from customer owned gas transported through the Cnmpany's system. The supply sources utilized by the Company to meet its peak-day deliveries to its sales service customers were:
Mdhons Percent .
ofCubic of Feet Total Unkyvuud Storage 349.4 34.7 Finn Supply 485.3 48.2 LNG Facilities 116.5 11.6 LP Facilities .,_ifi,2 1,1 Total 1.002.d 100.0 The Company does not anticipate any dif5culties in meeung its future demandc through the use ofits supply portfolio and pipeline interconnections for the f0Mle funne.
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CONSTRUCTION PROGRAM The table below shows actual utility capital expenditures for 1995 and budgeted utility expenditures for 1996 and for the period 1997- 2000.
1995 1996 1997-2000 ACult! Bud 8ERid Budgeted (Thousands ofDollars)
Electnc Propeny Prd* $32,919 $ 28,826 S152,544 Trinamienion 15,550 25,300 -
96,600 Distribution 53,670 35,200 142,800 Gas 51,310 37,585 127,972 Administration and Other 23.531 13.547 40.789 Subtotal 176,980 140,458 560,705 Quad-Cities Fuel 2,293 17,300 38,300 CooperAdditions 11.498 E.574 5? M6 Total 1120,221 11(ifi.132 Efiil,fifil The amounts shown above include allowance for funds used dunng constmetion. Of the $181.4 millio: of MdW electne production a=ad~es for the 1996-2000 period,337.6 million are for expenditures at the Quad-Cities Station. Also included in the amounts above, are capital Wa-es requued to mamenm compliance with the Clean Air Act Amendments of1990 (CAA). See Environmenent Regulations. In addinon to the amoums shown above, the C=aaay also expects to contribute a total of approximately $45 milhon to an external trust for Quad-Cities nuclear decammincioning dunng the 1996-2000 period.
GENERAL UHLITY REGULATION -
MadAmencan is a public utility within the meanmg of the Federal Power Act and a nanual gas company within the meanmg ofthe Nannal Gas Act. Therefore,it is subject to regulation by;FERC, in regard to numerous activities, includmg the issuance of secunties, m--- c policies and pracaces, sales for resale rates, the esablishment and regulation of electric interconnections and transmission services and replacement ofcertain gas utilitypropeny. t The Company is a public utility under the laws ofIlhnois and is regulated by the ICC as to retail rates, services, accounts, issuance of secunties, affihate aansacnons, consuuction,l acquisition and sale of utihty property, acqmsition and sale of securmes and in other nupects as provided by the pws ofIllinois. The Company is also a public utility under the laws ofIowa and is regulated by the IUB as to atail rates, services, accoums, construction of utility propeny and in other respects as provided by the laws ofIowa. MidAmencan is also ,
subject to regulation by the SDPUC as to electric and gas retail rates and semes.
Iowa law requires electric and gas utilities to spend 2.0% and 1.5%, respeenvely, of their annual Iowa junsdictional revenues on energy efficiency activities, including demand-side management. Additional mfnrmarian on the Company's energy efficiency activities is included under the Note " Rate Matters" on page 34 of the Company's Annual Repon to Shareholders for 1995 which page is incorporated herem by reference.
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NUCLEAR REGULATION 1
The Company is subject to the junsdiction of the NRC with respect to its bcense and 25 percent j ownership mterest in the Quad Cities Station. Comed is the operator of the Quad-Cities Station and is under )
contract with the Company to secure and keep in efect all necessary NRC licenses and authorizations. ,
Under the tens ofa long-ten power purchase agreement, the Company has contracted to purchase one-I half of the power and energy from Cooperlocated nearBrownville,NE, through Sp 1er 22,2004. Cooper is owned and operated by the NPPD. Under the terms of the contract, NPPD is the sole NRC licensee of Cooper l and is requued to comply with all NRC r**alah MidAmencan is responsible for one-half of the fixed and !
operatmg costs of Cooper (excludmg depreciation but including debt service) and the Company's share of fuel j costs (k
- hi isposal d costs) based upon energy delivered. Refer to "M:=i==fs Discussion and Analysis" and Notes 1(i),4(c),4(d) and 4(e) on pages 15,17,27,29 and 30 of the Company's Annual Report to Shareholders for 1995 which pages are incorporated herem by reference. The Company is not s. abject to the jurW w of the NRC with respect to Cooper and the long-term power purchase contract with NPPD. NPPD, because it is the sole owner, leannee and operator of Cooper, is thereby the only enity subject to the jurisdiction !
of theNRC. Under the terms of the long-term power p J.u; connact, N?PD is requued to assure that Cooper is in compliance with all the NRC regulations.
The NRC regulations control the grantag ofpenma and licenses for the consnuction and operation of !
=riemr gueranng stannac and subject such sations to connnumg review and regulation. The NRC review and regulatory process covers, among other thmgs, operations, mamtenance, and envimamental and radiological aspecs ofsuch stannac The NRC may modify, suspend or revoke licenses and impose civil penalties for fadure to comply with the Atonne Energy Act, the ragakh under such Act or the terms of such licenses.
Federal regulations provide that any operatag facility may be required to cease operation if the NRC j determmen there are deficiencies in state, local or utility emergency preparedness plans relating to such facility i
and the deficiencies are not corrected. Comed and NPPD have advised the Company that emerBency preparedness plans for the Quad-Cities Station and Cooper, respeenvely, have been approved by the NRC.
Comed andNPPD have also advised the Company that state and local plans relating to the Quad-Cities Station !
and Cooper, respecovely, have been approved by the Federal Emergency M:=i- = Agency. l In June 1988, the NRC adopted final regulations with respect to the decommmiomng of nuclear power >
plants. Among other things, the regulations address the pinnnmg and funding for the eventual decommmioning ,
of nuclear power plants. In response to these regulations, the Company subnutted a report to the NRC in July 1990 indicating that it will provide " reasonable assurance" that fimds will be available to pay the costs of decommmioning its share of the Quad-Cities Station, by makmg monthly deposits to an extemal trust fund.
NPPD has advisee the Company that a decommmioning plan for Cooper has been submitted and approved by theNRC. Monthly paymmts to NPPD by the Company mclude monies to fund decommissiomng as detenmoed by NPPD. ;
ENVIRONMENTAL REGULATIONS The Company is subject to numerous legislative and regulatory envimnmental protection requirements involving air and water pollution, waste management, hazardous chamical use, noise abatement, land use aesthetics and atomic radiation. l State and federal ene- a 1 laws and regulations currently 1 ae, and future modifications mry have, i
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the effect of(i) increasing the lead time for the construction of new facilities, (ii) sigmficantly increasing the total cost of new facilities, (iii) requiring modification ofcertam of the Company's existing facilities, (iv) increasing the risk of delay on construction pmjects, (v) increasing the Company's cost of waste disposal and (vi) possibly reducing the reliability of service provided by the Company and the amount of energy available from the Company's facilities. Any ofsuch items could have a substantial impact on amounts required to be expended by the Company in the future.
Air Quality EssmtinHy all unhty ommting units are subject to the provisions of the CAA which address continuous emission monitoring, pennit regmrements and fees and emission of toxic substances. The Company has five jointly owned and six wholly owned coal-fired generating stations, which represent approximately 65% of the Companys electric generating capability.
Two of the Company's coal-fired gmmting units were subject to the regmrements of the CAA begmmng in 1995. These units were given a set number of allowances by the United States Environmental Protection Agency (EPA). Each allowance pemuts the units to emit one ton of sulfur dioxide. The Company has completed most of the modtfications necessary to one unit to bum low-sulfur coal and to install nitrogen oxides controls and an emissions monitoring system. Under proposed regulations, the second unit will regmre additional capital expenditures to reduce emissions of nitrogen oxides.
The Companfs other coal-fired gmmting units are not materially affected by the provisions of the CAA.
Due to the use oflow-sulfur westem coal, the Company does not anticipate the need for additional capital expenditures to lower sulfur dioxide emission rates to ensure that allowances allocated by the federal govemment are not exceeded. While the Company esumates that sufficient emission allowances have been allocated on system-wide basis for its units to operate at the capacity factors needed to meet system energy requirements, additional purchases of allowances may be necessary to meet desired sales for resale levels. By the year 2000, some Company coal-fired generating units will be required to install contmls to reduce emissions of nitrogen oxides. Based on currently proposed CAA regulations, the Company does not anticipate its remammg consuuction costs for the installation oflow nitrogen oxides bumer technology and emissions monitoring system upgrades to exceed $16 million of which $3.4 million and none are expected to be expended in 1996 and 1997, respectively.
Water Quality Under the Federal Water Pollution Control Act Amendments of 1972, as amended, the Company is required to obtain National Pollutant Discharge Elimmation System (NPDES) permits to discharge effluents (including thermal discharges) from its properties into various waterways. All NPDES permits are subject to renewal after specified time periods not to exceed five years. The Company has obtained all necessary NPDES permits for its generating stations and, when such permits are expected to expire, the Company will file applications for renewal.
Hazardous Materials and Waste Management The EPA and state environmental agencies have ddc.uuiaed that contaminated wastes remaining at cert decommissioned manufactured gas plant (MGP) facilities may pose a threat to the public health or the 13-
mynmunet if such contammann are in sufficient quantities and at such concentrations as to warrant remedial action. I The Company is evaluanng 26 propernes wluch were , at one time, sites of MGP facilities in which it may be a pormrinHy responsible party. The Company's present estunate ofprobable remediation costs of these sites is $21 million. The ICC has approved the use of a tariff rider wluch permits recovery of the actual costs of litigation, investigation and remediation relatmg to fonner MGP sites. The Company's present rates in Iowa provide for a fixed anmial recovery ofMGP costs.
Additional information relatmg to the Company's MGP facilities is included under the Note "en-mamme= and C&" on page 29 ofthe Company's Annual Report to Shareholders for 1995 which page is incorporated herein by reference.
Pursuant to the Toxic Sd,.mir Control Act, a federal law admimstered by the EPA, the Company developed a comprehensive program fe: .ne use, i r E g control and disposal of all polychlorinated biphenyls (PCB's) contamed in elecincal equipu:ent. The future use of eqmpment contammg PCB's will be m ^121 r=: =-s transfonness and other nnardiananne ognymmt are being purchased with a non-PCB dielectric fluid.
The Company's exposure to PCB habihty has been reduced through the orderly replacement of a nun.ber of such electncal devices with simdar non-PCB electncal devices.
An unresolved issue is whether exposure to electric and magnenc Selds (EMFs) may resu'r in adverse health effects. EMFs are produced by all devices canymg or using electncity, includmg trmammaion and
&stnbunon lines and home appliances. The Company cannot predict the effect on constructim costs of electne utility facilities if EMF regulations were to be adopted. Although the Company is not foe subject of any suit involvirig EMFs, MW has been filed in a raimber ofjunsdictions agamst a variety of defendants allegmg that EMFs had an adverse effeet on health. If such hagation were =Wl. the impact on the Company and on the eleenic utility indusay in general could be significant.
INTERCOAST ENERGY COMPANY InterCoast is a wholly owned nonregulated subsidiary of the Company. The nonregulated activities emphasize energy-related diversification, credit quality and liquidity.
t l InterCoast takes advantage of a core experuse in energy, paracipating in the energy indusny through four nonregulated business groups: Medallion Production Company (Medallion), InterCoast Energy Marketing and Services Company (Energy Services), Rail Car Services and Investments (Rail Services) and InterCoast Capital Company (InterCoast Capital).
Medallion is an indmandant oil and gas u op.iry based in Tulsa, Oklahnma Medallion's oil and gas assets at December 31,1995 and 1994 were $161 million and $142 million, respectively. Medallion's reserves totaled 32.1 million barrels of oil equivalent at December 31,1995. Principal oil and gas production facilities are in Texas, Lomsiana, Califomia, Oklahoma and Colorado.
Energy Service:: provides electric, natural gas and energy management services to both retail and wholesale markets. Energy Services' assets at December 31,1995 and 1994 were $13 million and S 11 mraon, l respwtively.
AmGas Inc., a part of the Energy Services group, was v w . ..W in" :- ienon of ne v opportunities under ,
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1 i
j i
Order 636. AmGas Inc. madets natural gas and energy management semces to commarcial and industnal clients ;
in the Midwest and areas of the Nonheastern United States. t i
l Continental Power Fwh==ae, Inc. (Continental), a pan of the Energy Services group, was established 1 i in March 1994. Continental operates a comy.i hd infonnation system facilitating the real-time exchange of
. powerin the electric indusay.
! InterCoast Power Ma*dag Company (IPM), a pan of the Energy Services group, was established in j hpa-lw 1993 to offer wholesale power brokenng and =? "-- g semees to utilities and otherpower supply
! agencies. In July 1995, IPM was granted " marketer" status by the FERC enabling it to duectly buy and sell i Power.
f l InterCoast Trade and Resources, Inc., was established dunng 1995. GED Energy Services, Inc. was t j purchased in November of 1995. These companies, which are pan of the Energy Semces group, provide wholesale natural gas meksimg semces.
r
, Rail Semces provides radcar leasmg, management and maintenance semces through UNITRAIN, Inc.
and Cornhusker Radcar Semees Inc. This semce is pnmarily provided to electne utility companies within Iowa ,
i and sunonn&ng states. In addition, Rail Services has indirect investments in a variety of nonregul=H energy l l produenon technnlogies includmg wmd, solar, hydroelectric, and natural gas and coal-fueled generation, equity j
- investments in two developing enmpames which pmvide produca and semees for the electric and gas unhty 1
! industries, an equity investment in a company that semees and markets fiber-optic and telwc ans j systems and equity interess in special purpose funds that invest in venture capital and leveraged buyout
{ opportunities.
- InterCoast Capital manages InterCoast's fmancialinvestments Such investments consist primanly of i mvestment grade marketable secunties and ancraft leases. InterCoast Capital's total investmens at December 31,1995 and 1994 were $362 million and S324 million, respectively, i
i InterCoast Capital's marketable securities ponfolio, totaling $270 million and $200 million at December 31,1995 and 1994, respeenvely, focuses on energy securities consisting pnmarily ofpreferred stocks issued by utshty campames.. All such y. Lod stocks have been issued by companies havmg investment grade senior debt i raungs by Moody's or Standard & Poots. In aMman to the preferred stocks, InterCoast Capital has investments in common stocks and independently managed mutual fimds.
InterCoast Capital holds InterCoast's equity participations in equipment leases for passenger and freight transport aucraft. Such investments totaled $91 million and $124 million at December 31,1995 and 1994, respeenvely.
MIDWEST CAPITAL GROUPINC.
Mxiwest Capitalis a wholly owned nonregulated subsidiary of the Company. Midwest Capital's pnmary activity is the Inanagement of utility service area investments to support econonuc development. Midwest Capital's two principal interests are an office tower in downtown Des Moines, Iowa, and a 2,000-acre planned resWnnal and business m ay near Sioux City, Iowa. The office tower is more than 97% leased to various businesses. The major consuuenon phase of the planned community is complete, and the ma*dag phase to sell developed residential and commercial lots is in pmgress.
ITEM 2. PROPERTIES The Company's unhty propernes consist ofphysical assets necessary and appropriate to rendenng electric and gas semce in its semce territories. Electric property consist prunarily of generation, transmission and distribunon facdrues. Gas property consists prunanly ofdistribution plant, includmg feeder lines to communities served from natural gas pipehnes owned by others. It is the opinion of management that the principal depreciable properties owned by the Company's subsidiaries are in good operating condition and well maintamed.
The net accredited generstmg capacity, along with the participation purchases and sales, net, and firm purchases and sales, net, are shown for annmer 1995 accreditanon. !
Company's Share of Percent Accredited Generating Plant Ownership fugl Canahility (km Steam Electric Ganaating Plants:
CouncilBluffs Energy Center UnitNo. I 100.0 Coal 46,000 UnitNo. 2 100.0 Coal 88,000 i Unit No. 3 79.1 Coal 533,900 '
GeorgeNeal Station UnitNo. I 100.0 Coal 135,000 1 UnitNo. 2 100.0 Coal 300,000 Unit No. 3 72.0 Coal 370,800 Unit No.4 40.6 Coal 253,200 Louisa Unit 88.0 Coal 616,000 ,
Otmmwa Unit 52.0 Coal 372,100 '
Riverside Station UnitNo. 3 100.0 Coal 5,000 ;
UnitNo. 5 100.0 Coal 130.000 -
2.850.000 CombustionTurbines: ;
Coralville- 1 unit 100.0 Gas / Oil 64,000 i Electnfarm - 3 units 100.0 Gas / Oil 185,600 :
Moline - 1 unit 100.0 Gas / Oil 64,000 '
River Hills Energy Center- 8 units 100.0 Gas / Oil 116,000 Sycamore Energy Center- 2 units 100.0 Gas / Oil 149,000 !
Parr-2 units 100.0 Gas / Oil 30,800 Pleasant HillEnergy Center- 3 units 100.0 Oil 14R_000 757.400 Nuclear: ;
Quad-Cities Station UnitNo.1 25.0 Nuclear 192,300 :
Unit No. 2 25.0 Nuclear 192,500 Cooper (1) (1) Nuclear 389.000 ,
773.800 l Hydro: !
Moline - 1 unit 100.0 Water 3 200 Net Accredited Generating Capacity 4,384,400 1 Add: Participation Purchases and Sales, Net (53,000) L Finn Purchases and Sales, Net ;
(115.000)
Adjusted Net Accredited Generating Capability allfL4QQ ]
)
)
(1) Cooper is owned byNPPD and the amount shown is MidAmencan's entitlement (50%) of Coopets accredited capacity under a powerpurchase agreement extendmg to the year 2004.
The electne system of the Company at December 31,1995, included 871 miles of 345-kV transmiazion lines,1,294 miks of 161-kV lines,1,812 miles of 69-kV lines and 342 miles of 34.5-kV lines. Distribution lines inchuled 24,403 miles ofoverhead conductor and 7,244 miles of un%vund conductor at December 31,1995.
The gas d6ha,uGoe fanimes of the Company at December 31,1995, included 18,284 miles of gas mams and services.
Substannally all the fonner Iowa-Illinois utility propeny and franchises, and substantially all of the former Midwest electric utility property located in Iowa, is pledged to secure mongage bonds ITEM 3. LEGAL PROCEEDINGS ,
The Company and its subsidiaries have no matenal legal prr~dV except for the following:
EnvimnmentalMatters Infonnanon on the Company's envannmment marem is inchuted in Item 1 - Business and under the Note "Envannmental Matters" on page 29 of the Company's Annual Report to Shareholders for 1995, which page is i
incorporated herem by reference.
CooperLitigation On May 26,1995, the Company filed a lawsuit nammg Nebraska Public Power District (NPPD) as M R The action is filed in the U.S. Distnet Court for the Southern District ofIowa and is identified as No.
4-95-CV-70356. The legal proceedag is based upon a long-term power purchase agreement between the Company and NPPD, pursuant to winch the Company M = one-half the output ofNPPD's Cooper Nuclear Station (Cooper) and pays one-halfthe cost ofoperatnig Cooper. NPPD, in turn, is obligated to operate the plant in an efBeient and econonucal manner and in compliance with the tenns ofits operating license issued to it by theNuclear Regniatary Cneminainn (NRC). In 1993 and 1994, as a response to NPPD actions, the NRC issued annescus nonces of violations to NPPD; as a result of these violations and other safety issues idennfied by the NRC and NPPD, Cooper expenenced unplanned outages and outages were unduly extended. NPPD's faihue to meet its obligations with respect to the operation of Cooper deprived the Company of the benefits it was entitled to under the power sales contract, causing the Company to lose profits and incur increased costs of operation, wtuch damaEen the Company seeks to collect from NPPD. Similar litigation has been filed agamst NPPD by the Lincoln Electric System (LES), a mumcipal utility serymg the City ofLincoln, Nebraska, and purchasing one-eighth of the output of Cooper pursuant to a similar power purchase contract. The LES legal pr=ading is pendmgin Nebraska state court.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS None.
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l OTHERINFORMATION EXECUTIVE OFFICERS OF THE REGISTRANT The names, ages and positions of the executive officers of the Company are listed below.
Nang Agg Positions Held Russell E. Christiansen 60 Chairman and Chanman of the Office of the CEO Stanley J. Bright 55 Presulent and President of the Office of the CEO l LynnK.Vorbrich 57 President, Electric Division Beverty A. Wharton 42 President, Gas Division Richard C.Engle 61 Executive Vice President Lance E. Cooper (a) 52 Group Vice President '
Phihp G. Lindner 52 Group Vice Presulent
{
John A. Paemn==an Jr. 50 Group Vice President and General Counsel Ronald W. Stepien 49 Group Vice Presulent President (Midwest Capital)
Donald C.Heppennan 53 President and Chief Operatmg Officer (InterCoast) i Officers are elected annnally by the Board ofDueetors. There are no fannly relationships among these officas, nor any arrangenents or understandiaa between any officer and any other persou pursuant to which the offiarwas wierd Each ofthe officers has served in the above stated capacity since July 1,1995, and has been ;
employed by the registrant and/or its subsidiaries or pr*===r companies for five or more years as an executive officer except where noted.
1 (a) Serval as Vice President ofpredecessorIowa-Illinois from October 1991 to June 30,1995. Priorto that time, Mr. Cooper was Vice President - Control, Atlantic City Electric Company. :
BUSINESS TRANSACTION POLICY STATEMENT -
In response to the c%GJve forces and regulatory changes being faced by the Company, the Company has from time to time considsed, and expects to continue to consider, various snategies designed to enhance its competitive position and to increase its ability to adapt to and anticipate changes in its utility busmess. These strategies may include busmess combinations with other companies, internal restructurings involving the '
complete or partial separanon ofits wholesale and retail t==i
, and additions to, or dispositions of, portions ofits franctused semce terraones. The Company may from time to time be engaged in prelimmary discussions, eitherinternally or with thirti parties, regardmg one or more of these potential strategies. No assurances can be given as to whether any potential uansacnon of the type desenbed above may actually occur, or as to the ultunate effect thereof on the f==eial condition or competitive position of the Company.
The Company's management is mmMul of the importance ofirfe rt nvestors i about Company operations. Management must also pay heed to the legally sensitive nature of certam matters, and that is pamcularly true about any business nansaction involving an acquisition, disposition or combination of businesses ,
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which the Companymaybeconsidenng t
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4 EXHIBIT 13.1 4
! MANAGEMENI'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
- OPERATIONS i
i
{ CORPORATE OVERVIEW
! MidAn=rean Energy Company (the Company or MidAmencan) was formed on July 1,1995, as a result of the nuqpr ofIowa-Illinois Gas and Electne Company (Iowa-Illinois), Midwest Resources Inc. (Resources) and 4
its utility subsidiary, Midwest Power Systems Inc. (Midwest). Pursusnt to the merger, each ou*anding share ;
j of preferred and preference stock of the predecessor enmpaman was converted into one share of a similarly i designated series of MidAm**== preferred stock, no par value. Each outstandmg share of common stock of l Resources and Iowa-Ilknos was converted into one share and 1.47 shares, respectrvely, of MidAmencan common stock, no parvalue.
The Company's utahty operations (the Utility) consist of two pnncipal business units: an electric business unit headquartered in Davenport, Iowa, and a natmal gas business unit haat= tered in Sioux City, Iowa. The Cortpanys corporate hanM= ters, which includes various staff functions, is in Des Moines, Iowa. InterCoast Energy Company (InterCoast) and Midwest Capital Group, Inc. (Midwest Capital) are the nonregulated subsidiaries of the Company and are hW-;=G in Des Moines. InterCoast conducts various nonregulated actmnes of the Company, while Midwest Capital functions as a regional business development ww iryin e the utility service temtory.
M=; = nmespatas that the nuxEer will penst the Company to derive benefits from more efficient and annname use of the combined facilities and resources ofits predecessors. Savings from avoided costs and cost rwhimanc are eshmatad to totalin excess of$500 million over the next 10 years. Although the Company began renhzug some benefhs of the snenpr in 1995, additional benefim and savings will be reahzed in 1996 and future years. As &scussed below, the Company has incurred significant cosa related to consummation of the merger, business resuuctunng and work force reducnon.
The merger is bemg accounted for as a pooling-of-interests, and the Consolidated Financial Statements urhidad in this Annual Report are presented as if the InerBer was consummated as of the haeinning of the earliest period presented. Portions of the followmg discussion provide information related to material changes in the Compan/s fmancial condition and resula of operations between the periods prusented, based on the combined lustoncal infonnation of the prab=ar campann It is not necessarily indicative of what would have occurred l had the merger actually been ennemmatad at the % r5 of the earliest period.
In January 1996, the Companfs Board ofDnectors approved the fonnation of a holding company structure.
The holding con pany would have two wholly owned subsidianes consisting of MidAmerican (utility operations) and InterCoast. Midwest Capital would remam a =heidia'y of MidAmencan. The Board of Directors and management believe a holding company structure will provide a more flexible orgamration better designed to operate in a more competitive envuonment. Conmmmation of the holding company structure is subject to approvalbyholders ofamajorityofthee-- 05 shares of the Company's common stock. In addition, certam orders must be received from the Illinois Commerce Commmion (ICC), the Iowa Utilities Board (IUB), the Federal Energy Regulatory Commmion (FERC), and the Nuclear Regulatory Commmion (NRC). Subject to such approvals, each share of MidAmencan common stock will be exchanged for one share of the holding companys common stock. It is management's intent, if possible, to complete the formation of the holding company and share exchange by the end of 19%.
i 10.26 Change in control agreement between Russell E. Chnsuansen and Mxlwest Energy Company dated f as of May 5,1989. (Filed as Exhibit 10(e) in MWE's Form 10-K for the year ended December 31, !
1989, Commiaion File No.1-8708.)
10.29 Am=dmants to Midwest Resources Executive Deferred Compensation Plans, dated October 30, '
1992. (Filed as Exhibit 10(h) to MWR's Anmini Report on Form 10-K for the year ended December 31,1992, Comminion File No.1-10654.)
10.30 Midwest Power Systems 1993 Key Executive Incentive Compensation Plan. (Filed as Exhibit 10.30 in MWR's Anmini Report on Form 10-K for the year ended December 31,1993, Commimion File :
No.1-10654.)
10.31 Supplemental Retirement Plan for Prmcipal OfBeers, as amended as ofJuly 1,1993. (Filed as Exhibit 10.K.2 to Iowa-Illinois' Annual Repon on Form 10-K for the year ended D-har 31,1993, Comminion FileNo.1-3573.)
10.32 Compensation Deferral Plan for Pnncipal OfBeers, as amended as ofJuly 1,1993. (Filed as Exhibit 10.K.2 to lowa-Illinois' Annual Repon on Fonn 10-K for the year ended December 31,1993, Comminion File No.1-3573.)
10.33 - Board of Directors' Compensation Deferral Plan. (Filed as Exhibit 10.K.4 to Iowa-Illinois' Anmini Repon on Form 10-K for the year ended December 31,1992, Comminion File No.1-3573.)
- 10.34 Revised and amended Supplemental Retnement Income Plan for Iowa Resources Inc. and Subsidiaries dated October 24,1984. (Filed as Exhibit 10.15 to Midwest Resources' Anmial Report on Form 10-K for the year ended December 31,1994, Ca==i= ion File No.1-10654.)
10.35 Amendment No.1 to the Midwest Resources Inc. Supplemental Retirement Plan. (Filed as Exhibit 10.24 to Midwest Resources' Annual Report on Form 10-K for the year ended December 31,1994, Comnussion File No.1-10654.)
10.36 Defened Compensation Plan of Midwest Energy Company and Subsidiary Corporations. (Filed as Exhibit 10.25 to Midwest Resources' Anmini Report on Form 10-K for the year ended December 31, 1994, Comnussion File No.1-10654.)
Note: Pursuant to (b) (4) (iii)(A) ofitem 601 of Regulation S-K, the Company has not filed as an exhibit to this Form 10-K certain instruments with respect to long-term debt not being registered if the total amount of securities authonzed thereunder does not exceed 10% of total assets of the Company but hereby agrees to furmsh to the Comminion on request any such instmments.
I 10.14 Midwest Resources Inc. Supplemental Returment Plan (fonnerly the Midwest Energy Company Supplemental Rettrement Plan). (Filed as Exhibit 10.10 to Midwest Resources' Annual Repon on Form 10-K for the year ended December 31,1993, Comminion File No.1 10654.)
10.15 Power Sales Contract between Iowa Power Inc. and Nebraska Public Power Distnct, dated September 22,1%7. (Filed as Exhibit 4-C-2 to Iowa Power Inc.'s (IPR) Registation Statement, Regisuation No. 2-27681.) i 10.16 A==i==ts Nos. I and 2 to Power Sales Contmet between Iowa Power Inc. and Nebraska Public Power District. (Filed as Exhibit 4-C-2a to IPR's Regisuation Statement, Regisaation No. 2-35624.)
10.17 Amad==t No. 3 dated August 31,1970, to the Power Sales Contract between Iowa Power Inc. and Nebraska Public Power District, dated Santamhar 22,1967. (Filed as Exhibit 5-C-2-b to IPR's Regisuation Statement, Regasuntion No. 2 42191.)
10.18 A maad=aat No. 4 dated March 28,1974, to the Power Sales Contract between Iowa Power Inc. and Nebraska Public Power Distnet, dated SP 2-s 22,1967. (Filed as Exhibit 5-C-2-c to IPR's Regisustion Statament, Registration No. 2-51540.)
10.19 Revised and amended Executive C :- :- ==:an Plan for Iowa Resources Inc. and Subsidiaries, dated July 24,1985. (Filed as Exhibit 10.21 to Iowa Resources Inc.'s (IOR) Annual Report on Fonn 10-K for the year ended December 31,1985, Commmaion File No.1-7830.)
10,20 Revised and amendad Execuuve Defened Compensation Plan for IOR and Subsidiaries, dated July 24,1985. (Filed as Exhibit 10.22 to IOR's Annual Repon on Form 10-K for the year ended December 31,1985, Comminion File No.1-7830.)
10.21 Revised and amended Defened Cn=aaa=+ ion Plan for Board of Directors ofIOR and Subsidiaries, dated July 24,1985. (Filed as Exhibit 10.22 to IOR's Annual Repon on Form 10-K for the year ended December 31,1985, Commission File No.1-7830.)
10.22 Revised and amended Executive Compensation Plan for IOR and Subsidiaries, dated December 18, 1987. (Filed as Exhibit 10.14 to IOR's Annual Repon on Form 10-K for the year ended December 31,1987, Comminaion File No.1-7830.)
10.23 Revised and amended Execuuve Deferred Compa== tion Plan forIOR and Subsidiaries, dated December 18,1987. (Filed as Exhibit 10.15 to IOR's Annual Repon pn Form 10-K for the year ended December 31,1987, Commission File No.1-7830.)
l 10.24 Revised and amended Defened Compensation Plan for Board of Directors ofIOR and Subsidiaries, dated December 18,1987. (Filed as Exhibit 10.16 to IOR's Annual Repon on Fonn 10-K for the year ended December 31,1987, Commmaion File No.1-7830.)
10.25 Employment Agreement between R. E. Chnsnansen and C&P Holdings Company dated as of '
March 15,1990. (Filed as Exhibit 10.24 to IOR's Annual Report on Form 10-K for the year ended December 31,1989, Commission File No.1-7830.)
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4.12 Twenty-Eighth SupplementalIndenture dated as of May 15,1992. (Filed as Exhibit 4.31.B to Iowa.
Illinois' Current Report on Foun 8-K dated May 21,1992, Comnussion File No.1-3573.)
4.13 Twenty-Ninth SupplementalIndenture dated as of March 15,1993. (Filed as Exhibit 4.32.A to Iowa-Illinois' Current Report on Fonn 8-K dated March 24,1993, Comminion File No.1-3573.)
4.14 Thutieth Supplemental Indenture dated as of October 1,1993. (Filed as Exhibit 4.34.A to lowa-Illinois' Current Report on Form 8-K dated October 7,1993, Cnmmmion File No.1-3573.) l 10.5 Deferred Compensation Plan for Executives ofMidwest Resources Inc. and Subsidiaries. (Filed as Exhibit 10.1 to Midwest Resources' Annual Report on Fonn 10-K for the year ended December 31, 1990, Commmion File No. 1-10654).
10.6 Defened Cc ;==:on Plan for Board ofDuectors of Midwest Resources Inc. and Subsidiaries.
(Filed as Exhibit 10.2 to Midwest Resources' Annual Report on Fonn 10-K for the year ended December 31,1990, Commmion File No.1-10654).
10.7 Midwest Resources Inc. Directors Retuement Plan. (Filed as Exhibit 10.3 to Midwest Resources' Annual Report on Form 10-K for the year ended December 31,1990, Commmion File No.1- ;
10654.) ]
10.8 Non-Cash Bonus Award Plan for Executives ofMidwest Resources Inc. (Filed as Exhibit 10.4 to !
Midwest Resources' Anmual Report on Fonn 10.K for the year ended December 31,1990, ,
Commmion FileNo.1-10654). j 10.9 Midwest Resources Inc. revised and amended Executive Deferred Compensation Plan for IOR and Subsidiaries, dated January 29,1992. (Filed as Exhibit 10.5 to Midwest Resources' Annual Report on Form 10-K for the year ended December 31,1991, Commmion File No.1-10654.)
10.10 Midwest Resources Inc. revised and amended Board of Ducetors Deferred Compensation Plan for IOR and Subsidiaries, dated January 29,1992. (Filed as Exhibit 10.6 to Midwest Resources' Annual Report on Form 10-K for the year ended December 31,1991, Commmion File No. 1-10654.)
10.11 Midwest Resources Inc. revised and amanded Executive Incentive Cog- -- = on Plan for IOR and Subsidiaries, dated January 29,1992. (Filed as Exhibit 10.7 to Midwest Resources' Annual Report on Form 10-K for the year ended December 31,1991, Commmion File No.1-10654.)
10.12 Midwest Resources Inc. and Participating Subsidiaries Long-Term Incentive Cornpensation Plan.
(Filed as Exhibit 10.8 to Midwest Resources' Anmm1 Report on Form 10-K for the year ended December 31,1991, Comnussion File No.1-10654.)
10.13 Midwest Power Group 1992 Key Executive Incentive Compensation Plan. (Filed as Exhibit 10.9 to Midwest Resources' Anmal Report on Foun 10-K for the year ended December 31,1991, Commmion File No. 1-10654.)
f
. 31-
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, 3.2 Restated Bylaws of the Company. (Filed as Exhibit 4 to the Company's Registration Statement on
- Form 8-B, File No. 1-11505.)
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l 4.1 General Mongage Indenture and Deed ofTmst dated as of January 1,1993, between Midwest Power j Systems Inc. and Morgan Guaranty Trust Ca===ny ofNew York, Trustee. (Filed as Exhibit 4(b)-1 to Midwest Resources' Annual Report on Form 10-K for the year ended December 31,1992, Comminion File No. 1-10654.)
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- 4.2 First Supplementa1 Indenture dated as ofJanuary 1,1993, between Midwest Power Systems Inc. and
) Morgan Guaranty Trust Company ofNew York, Trustee. . (Filed as Exhibit 4(b)-2 to Midwest l Resources' Annual Report on Form 10-K for the year ended Deamber 31,1992, Commission File j No.1-10654.)
i 4.3 Second Supplementa1 Indenture dated as ofJanuary 15,1993, between Midwest Power Systems Inc.
l and Morgan Guaranty Trust Company ofNew York, Trustee. (Filed as Exhibit 4(b)-3 to Midwest j Resources' Annual Report on Form 10-K for the year ended December 31,1992, Camminion File
) No.1-10654.)
i
- 4.4 Tiurd Supplemental Indenaue dated as of May 1,1993, between Midwest Power Systems Inc. and l
1 Morgan Guaranty Trust Company ofNew York, Tmstee. (Filed as Exhibit 4.4 to Midwest j Resources' Annual Report on Form 10-K for the year ended December 31,1993, Comrmssion File ;
j No.1-10654.)
l 4.5 Fourth Supplemental tevL 'am dated as of October 1,1994, between Midwest Power Systems Inc. l
- and Harris Trust and Savings Bank, Tmstee. (Filed as Exlubit 4.5 to Midwest Resources' Anmal l l Report on Form 10-K for the year ended December 31,1994, Comminion File No.1-10654.)
i l 4.6 Fifth SupplementalIndenmre dated as ofNovember 1,1994, between Midwest Power Systems Inc.
4 and Harris Trust and Savings Bank, Trustee. (Filed as Exhibit 4.6 to Midwest Resources' Anmmi
- Report on Form 10-K for the year ended December 31,1994, Comminion File No.1-10654.)
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! 4.7 Indenture of Mortgage and Deed of Tmst, dated as of March 1,1947. (Filed by Iowa-Illinois as
. Exhibit 7B to Comminion File No. 2-6922.)
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4.8 Sixth Supplemental 1ndenture dated as ofJuly 1,1967. (Filed by Iowa-Illinois as Exhibit 2.08 to l
Comnussion File No. 2-28806.)
- 4.9 Twentieth Supplementa1 Indenture dated as of May 1,1982. (Filed as Exhibit 4.B.23 to Iowa-l Illinois' Quarterly Report on Fonn 10-Q for the period ended June 30,1982, Comrmssion File No.
i 1-3573.)
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{ 4.10 Resignation and Appointment of successor Individual Trustee. (Filed by Iowa-Illinois as Exhibit 4.B.30 to Commission File No. 33-39211.) '
- 4.11 Twenty-Seventh Supplemental 1ndenture dated as of October 1,1991. (Filed as Exhibit 4.31.A to j lowa-Illinois' Current Report on Form 8-K dated October 1,1991, Comnussion File No.1-3573.)
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EXHIBITINDEX ;
Fvhihits Filed Herewith 2 Agreement and Plan of Exchange dated as ofJanuary 24,1996.
4.15 Sixth Supplemental Indenaire dated as ofJuly 1,1995, between Midwest Power Systems Inc. and :
I Harris Trust and Savings Bank, Trustee.
l 4.16 Thirty-First Supplemental Indenture dated as ofJuly 1,1995, between Iowa-Illinois Gas and Electnc Company and Hams Trust and Savings Bank, Trustee.
10.1 MidAmencan Enetgy Company Deferred CWan Plan for Duectors. l 10.2 MidAmencan Energy Company Deferred Cnmpenantian Plan for Executives.
10.3 MidAmam an Energy Company Supplemental Renrement Plan for Designated OfBeers.
10.4 MidAmencan Energy Company Key Employee Shon-Tenn incentive Plan.
10.37 Form ofIndemnity Agreement bet..a MidAmencan and its directors and ofBeers. l 12 Computation ofratios of cammet to fixed charges and computation of ratios of earnmgs to fixed charges plus preferred dividend rq=- .
13.1 " Management's Discussion and Analysis of Financial Condition and Results of Operations,"
appeanng on pages 13 - 20 of the Company's Annual Repon to Shareholders for 1995, incorporated 4 >
by reference into Items 1 and 7 of this Form 10-K.
13.2 " Financial Statements and Supplementary Data,"appeanng on pages 21 - 39 of the Company's Annual Repon to Shareholders for 1995, incorporated by reference into items 1(b),1(c),3,8 and 14(a)(1) of this Form 10-K.
13.3 " Operating Revenues," Income From Continnmg Operations," "Famingc Per Average Share-Continumg Operations," " Total Assets," "Capitahneion," " and " Cash Dividends Declared Per Common Share" for the years 1991-1995, appearmg on page 41 - 43 of the Company's Anmint Repon to Shareholders for 1995, incorporated by reference into Item 6 of this Fonn 10-K.
21 Subsidiaries of the Regisaant.
23.1 Consent of Arthur AndersenLLP 23.2 Consent ofDeloitte & Touche LLP Fvhihits Incomornted by Refw - e 3.1 Restated Articles ofIncorporation of the Company, as amended (filed as Exhibit 3 to the Company's Registration Statement on Foun 8-B, File No. 1-11505). j l
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/s/ J. M. Hnak Jr. Director March 8,1996 (J. M. Hoak, Jr.)
/s/ R. L Lawson Director March 8,1996 (R. L Lawson)
/s/ R. L Peterson Duector March 8,1996 (R. L. Peterson)
/s/ R. A. Schneider Director March 8,1996 (R. A. Schneider)
/s/ N. L Seifert Director March 8,1996 ,
(N. L. Seifert) i l
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/s/ W. Scott Tineman Director March 8,1996 (W. S. Tineman)
/s/ L L Woodruff Director March 8,1996 (L. L. Woodruff) l
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/s/ Robert A Bumett
. Director March 8,1996 (R. A. Burnett)
/s/ Ross D. Chrictancen Dnector March 8,19%
(R. D. Chnstensen)
/s/ John W. Colloton Director March 8,19%
(J. W. Colloton) i
)
/s/ Fmnk S. Cottrell Dnector March 8,19%
(F. S. Cottrell)
/s/ Jack W. Enocter Dutctor March 8,19% *
(J. W. Eugster) i
/s/ W. C. Fletcher Director March 8,1996 (W. C. Fletcher)
/s/ Mel Foster Jr. ' Director March 8,1996 (M. Foster, Jr.)
{
/s/ Nolden Gentry Director March 8,1996 !
(N. Gentry) 1 l
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l SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MIDAMERICAN ENERGY COMPANY Date: March 8,1996 By /s/ S. J. Brinht )
(S. J. Bright) !
Presideat and President of the Office ofthe ChiefExecutive Officer i Pursuant to the requamucats of the Securities Erchanoe Act of 1934, this' report has been signed below by the l following persons on behalf of the registrant and in the capacities and on the date indicatad- l sianature .Titic Duc l l
/s/ R. E. Christiancen chairman and chairman ofthe Office March 8,1996 (R. E. Christiansen) of the ChiefExecutive Officer and Director ,
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/s/ L E. Cooner Group Vice President Finance and Accounting March 8,1996 l (L. E. Cooper) (Pnncipal Accounting Officer)
/s/ J. W. An1fc Director March 8,1996 (J. W. Aalfs) l l
/s/ Betty Turner Acher Director March 8,1996 (B. T. Asher)
)
/s/ S. J. Bricht Director March 8,1996 (S. J. Bright)
.. _ . _ . . _ . . . . _ _ _ _ . _ . _ . _ ~ ~ _ . _. _ - - _ . - _ ___ _ . _ _ _ ___. _
DELOI'ITE & TOUCHE LLP Northwest Bank BdWag 101 West Second Street Davenport, Iowa 52801-1813 319-322-4415 i
INDEPENDENT AUDITORS' REPORT To the Shareholders and Board of Duectors of MidAmencanEner1Dr Cornpany We have audited the consohdated balance sheet and statement of capienirration ofIowa-Illinois Gas and Electric Company and subsidiary as of December 31,1994, and the related consolidated statanents of income, retamed earmngs and cash flows for the years ended December 31,1994 and 1993, and have issued our report thereon dated January 25,1995. Our audis also included the financial statanent schedule ofIowa.
Illinois Gas and Electric Company and subsidary as of C+=ds 31,1994 and 1993 and for each of the two years in the period ended December 31,1994, listed in Item 14. The finanani statanent schedule is the responsibility of the Cornpany's == = Our responsibility is to express an opinion based on our audis. In our opinion, such financial statement schedule, when considerediin relation to the basic fmancial i
statemens taken as a whole, presens fairly in all matenal respecs the infonnation set forth therem.
t
/s/DELOITTEh TOUCHE LLP '
January 25,1995 }
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DELOITTE & TOUCHE LLP Northwest Bank Building 101 West Second Street Davenport,IA 52801-1813 319/322-4415 INDEPENDENT AUDITORS' REPORT To the Shareholders and Board of Dunctors of MidAmencanEnergy Company We have audited the consohdated balance sheet and statement ofcapitalization ofIowa-Illinois Gas and Electnc Company and subsxhary as of December 31,1994, and the relmed consolidated watements of income, renamed carmngs and cash flows for the years ended December 31,1994 and 1993. These financial statements are the responsibility of the Company's ==; 2==t Our responsibility is to express an opinion on these nnancial statements based on our audits.
We conducted our audits in accordance with generally accepted audinng standards. Those standards reqmre that we plan and perfonn the audit to obtam reasonable assumace about whether the fmancial statemens are free ofmaterialnusstatement An audit includes *remming on a test basis, evidence supporung the amounts and disclosures in the fmancial statemens. An audit also includes assessmg the accounting pnneples used and significant esumates made by ===i===t. as well as evaluatmg the overall fmancial statement presentation. We believe that our audis provide a reasonable basis for our opinion.
In our opinion, such consolidated fmancial statements present fairly, in all material respects, the Anancial position of the companies as of December 31,1994, and the resula of their operations and their cash flows for the years ended December 31,1994 and 1993, in conformity with generally accepted acWe principles.
/s/ DELOITTE & TOUCHE LLP January 25,1995 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholders and Board of Directors of MidAmencan Energy Company and Subsidiaries:
We have audited, in accordance with generally accepted auditing standards, the consolidated fmancial statemens included in MidA-n Energy Company's annual report to shareholders for the year ended December 31,1995, incorporated by reference in this Foun 10-K, and have issued our report thereon dated January 26,1996. We did not audit the 1994 and 1993 fmancial statemenn ofIowa-Illinois Gas and Electric Company, one of the campames merged in 1995 to fonn MxlAmencan EnerEy Company in a nansaction accounted for as a pooling-of-interests, as discussed in Note (1)(a). Such statements are included in the consolidated financial statamann ofMadAmencan Energy Company and subsidiaries and reflect total asses constitutmg 42 percent in 1994 and total revenues c u. ^ g 36 percent in 1994 and 1993, of the related consolidated totals. These setements were audited by other auditors whose report has been furmshed to us l and our opinion, insofar as it relates to the amouns included for lowa-Illinois Gas and Electric Company, is based solely upon the report of the other auditors.
Our audis were made for the pupose of fannmg an opinion on those consolidated financial i
<intaments taken as a whole The schedule listed on Page 22, Item 14 is the responsibility ofMidAmencan Energy Company m'n*8ement andisr-oed for purposes of complying with the Securities and Fehanaa Commmsion's rules and is not part of the basic fmancial statements. This schedule has bean subjected to the auditmg procedures applied in the audiu of the basic fmancial sentamants and, in our opinion, based on our audits and the report of other auditors, fairly states in all material respeca the fmancial data requued to be set forth therein in : elation to the basic fmancial statam' ents taken as a whole. l l
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/s/ ARTHUR ANDERSEN LLP l Chicago, Illinois January 26,19%
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SCHEDULEII MIDAMERICAN ENERGY COMPANY AND SUBSIDIARIES CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS FOR THE THREE YEARS ENDED DECEMBER 31,1995 (In Dolitafidt)
Column A Column B Column C Column D Column E hiaire at Additions Balance at Begmmng Charged End s Descnption ofYear toIncome Deductions ofYear i
Reserves Deducted From Assets To Which They Apply-Reserve for uncollectible accounts:
Year ended 1995 . . . . . . . . . . . . . . . . . . . . 12 &22 M M) 12.226 Year ended 1994 . . . . . . . . . . . . . . . . . . . . 11122 1L220 M) 12.022 Year ended 1993 . . . . . . . . . . . . . . . . . . . . 11.ifia $14.96 ILL221) M Reserves Not Deducted From Assets:
Propertyinsurance Year ended 1995 . . . . . . . . . . . . . . . . . . . . M 1 12 1 II.42) 12a28 Year ended 1994 . . . . . . . . . . . . . . . . . . . 124.fil ! ,200 m) 12.22a Year ended 1993 . . . . . . . . . . . . . . . . . . . . M M S -
M Injuries and damages Year ended 1995 . . . . . . . . . . . . . . . . . . . . 12210 M IM) 11.022 Year ended 1994 . . . . . . . . . . . . . . . . . . . . M M 1I2 3.01) 12210 Year ended 1993 . . . . . . . . . . . . . . . . . . . 11221 12.211 if.LS.Q1) 11101 E
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PARTIV ITEM 14. EXHIBITS. FINANCIAL STATEMENT SCHEDULES. AND REPORTS ON FORM 8-K (a)1. Financial Statements The following financial statements (whuiing the notes thereto) and the related audit reports, incorporated herein by reference, are included in the Company's Anmini Report to Shareholders for 1995.
Page No. in 1995 I Annual Report I to Shareholders l Consolidated Statements ofinenme For the Year Ended December 31,1995,1994 and 1993 . . . . . . . . . . . . . . . 21 l l
Consolidated Statements of Cash Flows l
For the Year Ended December 31,1995,1994 and 1993 . . . . . . . . . . . . . . . 23 ConsolidatedBalance Sheets As ofDecember31,1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Consolidated Statements of Retained F2miar For the Year Ended December 31,1995,1994 and 1993 . . . . . . . . . . . . . . . 25 Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26-39 Report ofindependent Public Accoimtant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 (a)2. Financial Statement Schedules (included herein)
The following schedule should be read in conjunction with the aforementioned financial statements.
Page No. in this Anmial Report on Form 10-K Consolidated Valuation and Qualifying Accounts (Schedule II)
For the Year Ended December 31,1995,1994 and 1993 . . . . . . . . . . . . . . . . . 22 Reports ofIndependent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-25 Other schedules are omitted because of the absence of carvimann under which they are required or because the required information is given in the financial statements or notes thereto.
(a)3. Exhibits See Exhibit Index on page 29.
(b) Reports on Form 8-K None.
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i ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND KESULTS OF OPERATIONS
! The information required by this Item is included on pages 13 through 20 of the Company's Annual ,
Report to Shareholders for 1995, which pages are incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information reqmred by this Item is included on pages 21 through 40 of the Company's Anmini i
Report to Shareholders for 1995, which pages are incorporated herem by reference. 1
- ITEM 9. CHANGES IN AND DISAGRFFMENTS WITH ACCOUNTANTS ON ACCOUNTING l AND FINANCIAL DISCLOSURE
- None.
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- PARTIII ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT
! The information reqmred by Item 10 relating to directors who are nommees for election as directors at J
the Company's 1996 Annual Meeting of Shareholders is set fonb in the Company's Proxy Statement filed with j the SEC pursuant to Regulation 14A under the Securities Exchange Act of 1934. Therefore, such information j is incorporated herem by reference to the material appearmg under the caption " ELECTION OF DIRECTORS"
- on pages11 through 16 of the Proxy Statement. Information requued by item 10 relating to Executive Officers 4
of the Registrant is set forth under a separate caption in Part I hereof ITEM 11. EXECUTIVE COMPENSATION i
- The informanon required by Item 11 is incorporated herem by reference to the material pysuiug under ,
j the caption " EXECUTIVE COMPENSATION" on pages 19 through 28 of the Company's Proxy Statement filed with the SEC.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (a) Security Ownership of Certain Beneficial Owners To the Company's knowledge, no single entity has beneficial ownership of 5 percent or more of the outstanding Common Grock of the Company.
(b) Security Ownership of Management Security ownership of manaaement as outlined on pages 17 and 18 of the Company's Proxy Statement filed with the SEC under the caption " SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" is incorporated herein by reference.
(c) Changes in Control There are no amn- known to the ip ; the operation ofwhich may at a subsequent date result in a change in control of the registrant.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS None.
. . - - - - . -- . . - = - . . - . . - . _ _ ..-
Therefore, the Company's management has adopted a policy to announce consideration of any such
! transaction only after it would enter into a defnutive agreement or an agreement in principle desenbing the matenal terms of such a transaction.
.i i Until that point, the Company would respond with "no comment" to any inquiry concemmg any such transaction, whether or not the Company is considenng, discussing or negotiating for any acquisitions, dispositions or combinanons of businesses. The Company's management believes this policy is consistent both
. with investors' need for information and with the Company's concern for appropriate disclosure regardmg legally l sensitive matters.
PART H ITEM 5. MARKET FOR THE REplSTRANT'S COMMON EOUITY AND RELATED STOCKHOLDER MATTERS MARKETINFORMATION AND DIVIDENDS The Company's enmmnn stock is listed on the New York Stock Exchange under the symbol "MEC." The followmg table sets forth, for the periods indrated, the dividends declared per share ofcommon stock and the high and low market prices of the common stock of MidAmerican, Midwest Resources and Iowa-Illinois, as reported in The Wall Street Joumal for the New York Stock Exchange Composite Tape.
Price Ransa Dividande Declamd MidAmarican Iowa.rHinnic Racnurces
.MEC_ IWG .h E E. _1hgh_ .lm _lhatt low _lkstL Im_
1995 4th Quarter S 0.30 $ -
5 - $171/8 SIS S - S -
S -
S -
3rd Quaner 0.30 - -
15 5/8 13 5/8 - - - - ;
I 2nd Quarter -
0.4325 0.29 - - 22 19 7/8 15 13 5/8 Ist Quarter -
0.4325 0.29 - - 22 1/8 19 14 5/8 13 3/8 )
1994 4th Quaner S -
S0.4325 $0.29 - -
$20$/8 $18 7/8 $141/2 512 7/8 ,
3rd Quaner - 0.4325 0.29 - - 22 la 19 1/4 15 3/8 13 1/2 1 2nd Quarter -
0.4325 0.29 - -
24 1/2 19 7/8 16 3/4 13 7/8 ,
1st Quarter -
0.4325 0.29 - - 24 3/4 22 3/8 18 16 i l
HOLDERS On February 26,1996, there were approximately 70,000 shareholders of record of MidAmerican's common stock.
ITEM 6. SELECTED FINANCIAL DATA l l
The i4vuu tion required by this Item is included in the following captions and pages of the Company's ;
Anmial Report to Shareholders for 1995, which captions are herein incorporated by reference: 1 Caption Page (1) Operating Revenues 42 (2) Income From Connnmng Operations 42 (3) Emminge Per Average Share -
Continumg Operations 41 (4) . Total Assets 43 (5) Capitalization 43 _. !
(6) Cash Dividends Declared Per Common Share 41
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RESULTS OF OPERATIONS ,
Earnings The followmg tables provide a summary of the earmngs contributions of the Company's operations for the pastthree years:
_122L _12sL _122L l
F*mine (inmillions)
Utility operations. .. .. $124.5 S110.6 $125.5 Nonregulatedoperations . (2.1) 15.2 13.8 Income (loss)imm discontimed opemtions.. __L4 _ cito ._.cuu l Consolidated earnings E m m Faminy PerCommon Share Utility operations . St.24 S1.12 $1.29 Nonregulated operanons. (0.02) 0.16 0.14 Income (loss)imm disconnnued oper=*ia== . -
-(02) .402) ,
Consolidated earnings M M M l l
Famine per share for 1995 were = +=fd compared to 1994. Increases in the gross margas ofunhty elecinc and natural gas opermanna favorably afrawd ernmgs for 1995. Omss margm is the amount of revenues e mammt after f-' ' -5 electnc fuel costs or the cost of gas sold, as appropnate. Decreases in nuclear operations and mamtenance costs also favorably affected earnings. Merger-related costs and write-downs of certam nonregulated assets had a significant adverse affect on 1995 earnings.
The increases in uniny gross margms were due pnmanly to electne and gas semce rate increases filed prior to the merger. Recent rate activity is discussed in greater detail later in this seenon. A portion of the rate screases relate duectly to increases in certam operstmg expenses. The gmss magpn for electric operations, net of the increase in duectly-related operateg expenses, contributed 50.26 per share more to earmngs in 1995 than in 1994. In aMman to increases in electnc rates, increased sales due to hot weather in the third quarter of 1995, though offset somewhat by less extreme temperannes in the heating season, resulted in a 3% increase in electric retail sales for 1995 compared to 1994. The gmss margm for gas operations, net of the increase in directly-
, related operatmg expenses, contributed 50.07 per share more to earnings in 1995 than in 1994. An increase in retail natural gas sales also contributed to the improved gross margm due to colder temperatures in the fourth quarter of 1995 compared to 1994.
As part of the process ofmenpng the operations of MidAmerican's prhrs, the Company developed a retructunng plan which nrhulas employee incennve cariy renrement, relocation and separation programs. The restructunng plan, which was completed in 1995, resulted in the elimmation of over 700 positions. Dunng 1995 the Company recorded $33.4 million of r tructunng costs which included the Company's estimate of the remamme amount ofsuch costs to be incurred. Dese costs are pnmanly reflected in Other Operating Expenses in the Consolidated Statements oflacome.
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l In addition, the Company mcuned nomecurnng cosa to accomplish conmmmatino of the merger. 'liese
" transaction costs," which are included in Other Non-Operanng Income, in the Consolidated Statemens of Income, totalled $4.6 million in 1995 and S4.5 million in 1994.
In total, restructunag and trananman costs reduced 1995 carmngs by 50.24 per share, while transaction costs reduced 1994 earnmgs by 50.05 per share.
Write-downs of cernin assets of the Company's nonregulated subsidiaries reduced 1995 earmngs by opphy $10.2 million, or 50.10 per share. The pre-tax amount of the write-downs, which is included in Other Non-Operatmg innnme, in the Consolidated Statemante ofincome, reflects other-than-temporary declines of$18.0 nnihnn in the value ofthose nonregulated investmmts. The investmens are pnmanly altemative energy ,
projects. !
Fara=== for 1994 decreased $15.3 million from the 1993 level due pnmanly to merger transaction costs in 1994 and recognition of an $11.5 million aftertax gain on the exchange ofgas service territory in 1993.
Unhty Operatmg Revenues Psetnc:
A combmation of factors contributed to the $73.0 million increase in electric operaung revenues for 1995.
Vanous meresses in retail electne rates contributed to the increase in electric revenues. In October 1994 and January 1995, the Company implemantad rate increases forIowa energy efBeiency cost recovery fihngs which allow a total increase in electric revenes of$31.7 mdhon over a four-year penod. In August 1995, the Company ,
began collection of $18.6 nulhon over a fbur-year p+We penod related to another energy efficiency cost recovery fihng. In connaman with an Iowa eleenic rate filing, the Company began collectmg in January 1995 '
metrim rates reWaa an increase of $13.6 million in anmm1 electne revenues. A final rate increase in the prr=dma repr=ennne an increase of$20.3 mWor :n anmm1 electnc revenues, was effective in August 1995. ;
The new rates include a component for the reco. m of other postren==aat employee benefit (OPEB) cosa on an accrual basis instead'of the pay-as-you-go basis previously used. Approximately $8 million of the $20.3 ,
nulhon mcrease in anmm1 revenues relates to additional expensing of OPEB costs. Increases in revenues due to l OPEB and energy efficiency costs have an immaterialimpact on net income due to corr *=pandina increases in :
operating expenses.
An 11% increase in retail sales of electricity for the 1995 third quarter compared to the 1994 third quarter I was the main cause of the increase in electne retail sales for 1995. The increase in sales was pnmarily the result ,
I ofwarmer temperatures winch, measured in cooling degree days, were 56% wanner in the 1995 third quarter than in the comparable 1994 quarter. l The Company has been allowed current recovery from most ofits electric utility customers for fuel and purchased power costs through energy adjustment clauses (EACs). As the cost of energy to serve those customers fanata, revemes fluctuate - d-gly with no impact on gross margm or net income. In 1995, the average energy cost per unit decreased 4.5%. As a result,1995 revenues collected through the EACs decreased compared to 1994.
Revenues from sales for resale accounted for $21.2 million of the increase in electnc revenues. Sales for resale volumes increased 53% for 1995 cump sd to 1994. Greater availability of nuclear generating facilities in 1995 increased the amount of energy available for sales for resale. Coal delivery uncertamties also limited the
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!L j Company's sales for resale activity in 1994. Sales for resale have a lower magpn than other sales and,'
. accordingly, increases in related revenues do not increase net income as nach as increases in retail revenues.
i j The Company is a 25% owner in Quad-Cities Nuclear Power Station (Quad-Cities Station), which is jointly
- owned and operated by Crr a-- wealth Edison. The Cewanany also purchases 50% of the energy of Cooper l
Nuclear Station (Cooper), which is owned and operated by Nebraska Public Power District (NPPD), through a power purchase agreement which termmatas in 2004. NPPD took Cooper out of semce on May 25,1994.
- Pending satisfaction of the concerns of the NRC, Cooper remamed out ofservice until February 1995 when it
- retumed to semce followmg NRC approval to restart. In May 1995, the Company filed a lawsuit seekmg
! ===nar46d damages fromNPPD related to the 1994-95 Cooper outage. In June 1995, the NRC removed Cooper j and the Quad-Cities Station from its list of adversely trendmg plants.
j Total elecine operatmg revenus for 1994 increasei S18.7 imumwM to 1993. Electnc retailrevenues i i increased $38.2 millionin 1994 ww M to 1993. The increase in retail revenues was partially offset by a !
l decrease of approximately $20 million in sales for resale revenues. As discussed above, outages at Cooper in "
1994 and coal delivery uncertamties limited the Company's sales for resale activity. An increase in retail sales, ,
due mostly to increased sales to general semce ena==*rs, was the pnmary cause of the increase in retail i revemes. An inmense in the cost of energyperunit sold also increased revences through the EACs in 1994. Rate j increases also contnbuted to the increase in electnc revenues for 1994 compared to 1993 as daen=ed below.
In July 1993, the Company implemented electric rates for some ofits Iowa customers designed to increase '
annual electric revenues by $6.8 million. Also in July 1993, an annual electnc rate increase in Illinois of $9.6 million became effective. I l
GRE Gas operating revenues for 1995 decreased $32.4 unthon sw M to 1994. A reduccon in revenues collected through the purchased gas adjnenaw clauses (PGAs) was the pnmary cause of the decrease in revenues. This was dine to a cianine== decrease in the average cost of gas per unit sold. Variations in revenues collected through the PGAs reflecting changes in the cost of gas and volumes sold do not affec: gmss margm or net income.
An increase in sales and rates offset part of the impact oflower PGA revenues. In January 1995, the Company implemented a gas service rate increase resulting from findags in an Iowa energy efBeiency cost recovery filing winch allows an increase in gas revenues of$6.7 vmilm over a four-yearperiod. In October 1994, the Company began collectmg mienm rates for an Iowa gm rate filing representing an increase of $8.2 million in annual gas revenues. A final rate increase of $10.6 million in anmm1 gas revenues was effecuve in August 1995. Approximately S2.5 million of the $10.6 nulhon meresse in annual revenues relates to the recovery of OPEB costs on an accrual basis. Increases in revenues due to OPEB and energy ef5ciency costs have an immaterial unpact on net income due to correspondag meresses in operating expenses. Retail sales of natural gas increased slightly due to a 4% increase in residential sales. This was due mostly to colder weather in the fourth quarter of1995. .
Gas operatmg reveues for 1994 decreased S47.0 mium ww M to 1993 due to a decrease in retail natural gas sales. Temperatures, measured in heatmg degree days, decreased considerably in 1994 composed to 1993, resulung in the decrease in retail sales. In addition, an exchange ofgas service territories in the thiid quarter of !
1993 resuhed in a decrease in natural gas customers. A reduction in revenues collected through the PGAs also ;
contributed to the decrease in retail revenues. The effect of rate increases pamally offset the decreasein revenues :
due to reduced sales volumes and PGA revenues.
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j Utihty Opemnng Expenses 1
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- Changes in the cost of electnc fuel, energy and capacity (collectively, Energy Coss) reflect fluctuations in I
! generation levels and mix, fuel cost, and energy and capacity purchases. Energy Coss for 1995 increased 8%
! compared to 1994 che primanly to a 13% incmase in total electric sales. The increase in Energy Coss as a result i ofgrarer sales of electrierty was pernally offset by a 5% decrease in the average Energy Cost per unit. Energy Coss for 1994 decreased 2% compared to 1993 due primanly to the reduction in sales for resale. The decrease 1
! che to reduced sales ofelectncaywas parnally offeet by a 7% increase in the average Energy Cost per unit. Part ,
j of the fluctuation in the average Energy Cost per unit was due to the changes in the availability of nuclear !
j generation throughout the three-year penod.
Cost ofgas sold for 1995 decreased compared to 1994 che to a 15% decrease in the average cost of gas per I unit sold. Cost of gas sold decreased in 1994 cow to 1993 due g.a0y to a 9% decrease in sales which
! was due in part to a gas property ~hr. .
l Other operstmg expenses meressed $45.5 million in 1995 co-,4 to 1994 due pnmanly to coss related !
- to the restructunng plan discussed in the opemng secuou of Results of Operations. Utility operatmg expenses I
- include $31.9 mdlion of the 533.4 million toni restructunng costs. As chscussed above,1995 expenses also l
! menude acreases fmm defened energy emei y and OPEB cosa. The increases for 1995 were pamally offset l l by an $8.6 million reduction in nuclear operations costs. Expenses for 1994 were reduced by $3.0 million due j to capitalmng previously a--A energy efficiency cosa to comply with the IUB regulation of these costs.
i j Other opesatmg expenses in 1994 increased $13.5 million compared to 1993. Increased nuclear operations costs related to extended outages at Cooper and Quad-Cities Sation dunng 1994 contributed to the increase, f i The increase in nuclear costs was pamally offset by the a@-- - = to energy efficiency costs mentioned above. I 1 1
! Maminnanm e' penses decreased $15.9 miH=n in 1995 compared to 1994. Quad-Cities Sation mamtenance l l expenses decreasa! $5.5 million due in part to the 1994 outage. The tunng of power plant mamtenance and a !
- reduction in vari % distribunon mamtenance accoumed for much of the remaining variation between years. ;
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! Depreciation expense meressed compared to each prior year due pnmarily to additions to utility plant in )
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i l Nonregulated Operanng Revenues
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- Revenues for the Company's nonregulated subsidiaries decreased $7.8 million for 1995 compared to 1994.
! A decrease in real estate revenues and reduced revenues due to the impact of the sale of a telecommumcations subsidiary in cady 1995 Ec "4 for most of the decrease. Revenues from the Company's oil and gas pr**ian subsidiary were basically n=h===l with increases in gas production vohimes and oil prises offsettag decreases che to lowerpnces for natural gas. A 16% decrease in sales vohunes for a nonregulated retail natural i gas marketing subsidiary resulted in a $13.9 million decrease in nonregulated gas revenues for 1995. This decrease was offset by S14.2 miumn in revesmes of a wholesale natural gas marketing finn acquired in December 1995. l Revenues for 1994 increased $36.3 million evoysed to 1993 due pnmanly to a 533.4 milliet increase in revenues from retail sales .of nanual gas. The increase in retail natural gas sales and revenues for 1994 is attribatable pnmanly to the purchase of the asses of an existmg nonregulated natural gas busines in January 1994. Higher production volumes reflectmg additional acqmred reserves and successful dnihng results also contributed to the increase in revenues for 1995.
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Nonregulated Operanng Expenses j Cost of sales includes expenses directly related to sales of oil, natural gas and real estate. The factors :
! dismccM above for revmun, inchidina natural gas sales volumes, lower gas prices and reduced real estate sales, I also affected the vanances in cost of sales for the years 1993 through 1995. Cost of sales for the newly acquired j natural gas finn also contnbuted to the increase in 1995 compared to 1994.
) OthernonrTua'M expenses mcreasedS3.0 =1han for 1995 cornpared to 1994. The 1995 amount includes l 51.5 mihnn of expenses for the Cornpany's restructunng plan. The $5.7 million increase in 1994 compared to j 1993 was due pranarily to expenses of the natural gas ==E g business acquued in January 1994.
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! Reahzed Gains and Losses on Secunnes. Ner
, .t i Reahzed gains and losses on securities decreased $6.9 million for 1995 cump M to 1994. The decrease )
resuked pnmarily fromthe sale ofa single holding in 1994 which gaaa=*=d a S5.9 million pre-tax gain. Dunng 1993,1merCoast reahzed 42-- ; gains on some ofis investmens in marketable securities due to the impact of favorable market conditions.
Non-h-..a Incame - Other Net The =di=anan's to nonregulated investments discussed at the t - '=g of Results of Operations were the prunarycause of the decrease in Other, Net, for 1995 cu-y M to 1994. In addition, merger transaction costs reduced Other, Net in 1995 and 1994. A gain on the sale of an investment in a leveraged lease in 1994 also contnbuted to the co-y Mye decrease for 1995 compared to 1994. Gains totalling $8.5 million on the sales of a y-dip interest in a gas ==C..t orgamzation and a teleenmmuneatian subsidiary in 1995 partially offset the decreases. The decrease from 1993 to 1994 is due primarily to an $18.5 mdhon pre-tax gain on the exchange of natural gas service territories in 1993.
Interest Charges Increased interest on long-term debt in 1995 compared to 1994 was due pnmanly to the i=enance of $60 rnillion of 7.875% Senes ofmortgage bonds inNovember 1994. The decrease in interest on long-term debt from 1993 to 1994 reflects refinancing of several series oflong-tenn debt at lower interest rates in 1993.
Discontinued Oneratianc I
in 1994, the Company annanacad its intent to divest its construction subsidanes and st=1 =4 the anticipated loss on disposal. The sale of cenam assets of one of the subsidianes was completed in December 1994, and the sale of the other construction subsidiary was completed in March 1995. Setdement of a construction receivable in the second quaner of 1995 resulted in $0.4 million ofincome in 1995. ;
Preferred Drvidends The decrease in the preferred dividend requuement for 1995 cump M to 1994 was due mostly to the redemption of three series of ou'a=ading preferred shares in December 1994.
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LIQUIDITY AND CAPITAL RESOURCES
- The Company has avadable a vanety of snirces ofliquidity and capital resources, both intemal and extemal ;
i These resources provide funds required for current operations, debt retirement, dividends, construction !
cxpenditures and other capitaliequirements.
For 1995, the Company had net cash provided from operating activities of $382 million and net cash used i of $320 million and $54 million for investing and financing activities, respectively. :
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j Investmg Activines
{ Unhty construction arpand*=es, includag allowance for funds used dunng constmetion (AFUDC), Quad- !
! Cities Station nuclear fuel purchases and Cooper capim! y_......., were S191 million for 1995. The !
- decrease from the 1994 total of $212 million reflects the Company's efforts to limit construction expenditures. l l !
! Forecasted utility construction e.=P ... for 19% are $166 million includmg AFUDC. The 1996 plan j i
j includes $35 million for Cooper capital unpmvemenn and Quad-Cities Sution nuclear fuel purchases and j construction experGrures. For the yens 1996 through 2000, the C=====y forecass $818 million for utility l consnuction sgsdiuun, $154 million ofwhich is for nuclear expenditures. The Company presently expecs that all utility consuuction expediu== for 1996 through 2000 will be met with cash generated from utility l operations, net of dividends.
! In general, h=== of a =rimr facdny means to safely remove the facility from service and restore j l the property to a condition allowmg unrestncted use. Dunng 1995, the Utility contributed approximately 59 l i nunmn to an external aust established for the investment of funds for decommissionmg the Quad-Cities Station. l j Based on infonnation ydy avadable, the Unhty expecs to contnbute 545 million to the trust dunng the j l penod 1996 through 2000. The funds are invested pr=da=i==*aly in investment grade -aiaiaat and U.S. ]
- Treasury, bonds. In addition, approxanately 59 million of the 1995 paymens made under the powerr.'=: l
! contract with NPPD were for decammmioning fundmg related to Cooper. The Cooper costs are reflected in I' i Other Operating Expenses in the Consolidated Setements ofIncome. Based on NPPD estunates, trie Utility i expecs to pay approximately $54 million for Cooper decommmioning dunng the period 19% through 2000.
i NPPD invests the funds in insnumens simdar to those of the Quad-Cities Station aust fund. The Company's i obliganon for Cooper decomnussiomng may be affected by the actual plant shutdown date and the satus of the j power purchase contract at that time. The Company currently recovers Quad-Cities Sation decomnussiomng j costs charged to Illinois customers through a rate rider on customer billings. Cooper and Quad-Cities Station i dammmininnmg costs charged to lowa cusmmm are ' m eluded in base rates, and increases in those amounts must
- be sought through the nonnal ratamaking pmcess. Refer to Note 4(d) of Notes to Consolidated Financial 1
Statements (Notes) for additional details regarding decommmioning. .
l 8 l Capital expenditures of nonregulated subsidiaries were $56 million for 1995. Capital expediu== of i nonregulated subsidiaries depend upon the availability of suitable investment opportunities and other factors.
l For 1996, such expenditures are fos.swd to be approximately $85 million, primarily related to InterCoast.
i l InterCoast invess in a variety of marketable secunties which it holds for indefmite periods of time. For
" 1995, InterCoast had net cash outflows of $67 million imm is marketable securities invesenent activities. In the Consolmated Statements of Cash Flows, the lines Purchase of Securities and Proceeds fmm Sale of Securities
- consist pnmanly of the gross amounts of these activities, includmg renhed gains and losses on investmens in j marketable secunties.
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Fmancmg Activines The Utility currently has authonty fmm the FERC to issue short-term debt in the form of commercial paper i and bank notes aggregatung S400 mdbon. As ofDecember 31,1995, the Utility had bank lines of credit of $250 million to pmvide short-term C =d=g for utility operations. In January 1996, the Utility entered into a S250 .
million revoMag credit facility agreement to replace those lines of credit. The Utility's commecial paper buuvmes, which totalled S185 million at December 31,1995, are currently supponed by the revolving credit facdzty. The Utility also has lines ofcredit and revolving credit facilities which are dedicated to provide liquidity for its obligations under ou= =S=3 pollution control revenne bonds that are periodically remarketed.
In January 1995, $12.75 million offloatmg rate pollution control refundmg revenue bonds due 2025 were issued. Proceeds from this financing were used to redeem S12.75 million of collateralized pollution control revenue bonds,5.8% Series, due 2007.
t The Utility has $347 milhon oflong-term debt matunties and sinhng fund ryu-mo. for 1996 through l 2000, $1 million of which matures in 1996.
The Utility is currently considenng several long-term E =:=5 options for 1996. Pmceeds fmm those amances would be used to reduce commercial paper t hg and to refinance higher cost secunties.
As of December 31,1995, the Utility had the capability to issue appmximately $1.3 billion of mortgage bonds under the current Mx! west mdenne. The Utility does not expect to issue additional debt under the Iowa. ,
Illinois indenture, but may if necessary.
Dunng the first six mnnehs of 1995, Resources and Iowa-Illinois sold ongmal issue shares of common stock l through certam of their employee stock pad r.e and dmdend reinvestment plans. On a MidAmencan share i basis,1,065,240 shares of common stock were issued. The Company has the necessary authonty to issue up to j 6,000,000 shares ofenmmnn stock through its Shareholder Opnons Plan (the Company's dividend reinvestment and stock purchase plan). Since the effective date of the merger, the Company has used open snarket purchases ofits common stock rather than ongmal issue shares to meet share obliganons under hs Employee Stock Purchase Plan and the Shareholder Opnons Plan. The Company currently plans to continue using open market purchases to meet share obligations under these plans.
Subsequent to the conemmation of the merger, the Utility made a 555 million equity contribution to InterCoast. In addition, nonregulated businesses not related to regional business development were transferred from Midwest Capital to InterCoast. The equity contnbution was then used to extinguish Senior Notes and vanable interest rate Notes Payable, thus al% several fmancial relationslups between the Company's utility and nonregulated operations.
One support agreennent remama between the Utility and Midwest Capital related to a perfonnance guarantee by Midwest Capital of a joint venture nimkey engmeenng, procurement and construenon contract for a !
cogeneration project. The project received preliminary acceptance from the owner in 1995, which pursuant to i the construction contract, eliminates the potential for liquidated damages being incurred related to the project.
Midwest Capital also has $25 milhnn oflong-term debt outstanding at December 31,1995, that matures in 19% i I
and is supported by a guarantee fmm the Utility. In addition, Midwest Capital has a $25 million line of credit with the Utility.
Dunng the third quarter of 1995, InterCoast entered into a $64 million unsecured revolving credit facility agreement which matures in 1998. The facility was used pnmanly to refmance matunng Senior Notes.
InterCoast also has a S110 million unsecured revolving credit facility agreement which matures in 1999.
Borrowings under these agreemente may be at a fixed rate, floating rate or competitive bid rate basis. All bommags under these agreements are without recourse to the Utility. At Ihhar 31,1995, InterCoast had
$130 million of debt outstanding under these two revolving credit facility agreements.
In addition, InterCoast has entered into two floating rate to fixed interest rate swaps each in the amount of
$32 mdhon. 'Ibe interest rate swaps have fixed rates of 5.97% and 6.00%, reverdvely, and are for three-year and two-year terms, wy Gyely, with an optional third year on the latter. ,
IrerCoasts aggtegate amounts ofmatunties and <mkmg fund requirements for long-tenn debt ou==_adine -
at December 31,1995, are $39 milhon for 19% and $287 million for the years 1996 through 2000. Amounts due in 1996 are expected to be refinanced with debt instmments On January 24,1996, the Carnanny's Board of Directors declared a quarterly dividend on common shares of $0.30 per share payable March 1,1996. The dividend represents an annual rate of S1.20 per share.
Operstmg Acevities
'Ibe Unhty is subject to reenlannn by several utihty regulatory agencies. The operating envnenment and the recoverability ofcosts framutikty customers are W'y influenced by the regulation of those agencies. The Cortpany "i--i-- : that changes in the utahty mdustry will create a more competitive envimnment. Although these anticipated changes may create oyyosuGGes, they will also create additional challenges and risks for unhnes. The Company is evabannt strategies that will assist it in a more competitive environment.
A possible consequence of competition in the utility industry is the discontmued applicability of Statement '
ofFinancial Amu--g, Standards (SFAS) No. 71. SFAS 71 sets forth accountmg principles for all, or a portion, of a company's operannna that are regulated and meet certam enema. For operations that meet the enteria, SFAS 71 allows, among other thmgs, the deferral of costs that would otherwise be =paamad when incuned. The Company's electric and gas unhty operations are cunendy subject to the pmvisions of SFAS 71. Should the J utility industry become more an=na*ve as presently - a- .;=+1 the Company will reexamme the applicability of SFAS 71. If a portion of the Company's utility operations no longer snects the criteria of SFAS 71, the Company could be required to elimmate fmm its balance sheet assets and liabilities related to those operations that resulted fmm actions ofits regulators (i.e., regulatory assets and habihties). A material adjumoco; to j earnmgs in the appropriate period could result from the disconnnnance of SFAS 71. Refer to Note (1)(c) of i Notes for a discussion of regulatory assets.
The Energy Policy Act (EPAct) was enacted in 1992. This law promotes competition in the wholesale electne powermarket. The FERC has taken action to establish rules and policies in compliance with provisions of the EPAct through a Notice of Proposed Rular=*ing issued March 29,1995. The Company has been active in pmvxhng filed, wnteen commenrm with the FERC in an effort to shape new transnussion policies in ways that will best serve the interests ofits customers and shareholders. In conjunction with the Merger, the Company subantted an open access tran=masion tariffin 1994 which was accepted for filing by the FERC in June 1995.
Legislation enacted by the State ofIllinois in 1995 allows public utilities to file for regulatory approval of nontraditional rate design. Altemative fonns of rate design may inchide price caps, flexible rate snuctures and ;
othermommaa== of the cost-based mahad currently used to determme rates for electric and gas services. The !
Company is evahnstmg its opnons in light of the new legislation. If myywydh, the Company may file a request in 1996 for alternate rate design in Illinois.
In 1992, the FERC issued Order No. 636, directing a restructunng by interstate pipeline companies for their i nannal gas sales and Ei.-yd Gee semees. The un6adling ofpipeline services incitased the Company's access !
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) to supply options and its supply ig- .ailities. Certam transition costs incuned by interstate natural gas
- pipelines for their carmpliance with Order 636 will be paid to the pipeline companies over the next several years.
l The Comparrfs Consolidated blance Sheet as ofDecember 31,1995, includes a $41 million noncurrent liability j and regulatory asset recorded for transition costs. The Company may incur other transition costs in conjunction j with future purchases ofgas, but does not expect these billings to have a matenal unpact on the cost of gas. The j Company is currently recovering costs related to Order 636 from its customers Electric and gas utilities in Iowa are required to spend approximately 2% and 1.5%, respectively, of their j annual lowa jurisdictional revenues on energy efBciency activities. In October 1994 and in January 1995, the i Company began collectag over a four-year p%Gve period S19.7 million and S18.7 million, respectively,
! related to prior energy efSciency cost recovery filings. A recent &stnct court ruhng was issued which afVinnM
- in all respects the IUB decisions allowmg such recovery. In another cost recovery fihng, the IUB issued an order
! approving the collection over a four-year prusi Gye penod of $18.6 million. Collection related to this filing j began August 8,1995. As of December 31,1995, the Canaany had approximately $68 million of energy
- efBeiency costs deferred on its Consolidated hinnee Sheet for wluch recovery will be sought in future energy j efBeiency fihngs.
{ The United Sates Environmenal Protection Agency (EPA) and state envuonmental agencies have j darannmM that enrenmmatM wastes ranammr at cenam decommmaioned mandactured gas plant facilities may l pose a threat to the public beskh or the environment if such cantaminants are in sufficient quantities and at such concentrations as to wartant remedial action.
i l The Company is evainatmg 26 propernes winch were, at one time, sites of gas mame u w plants in which l it may be a paanh.ny responsible party (PRP). The purpose of these evaluations is to determine whether waste
- materials are present, whether such matenals constnute an envuonmental or health risk, and whether the
{ Company has any responsibility for remMini action. The Company's present estunate of probable remediatiou
! costs for these sites is $21 mdhan This estnnate has been recorded as a liability and a regulatory ass,et for future recovery through the regulatory process. Refer to Note (4)(b) ofNotes for further discussion of the Company's j envuonmental activities related to mamdactured gas plant sites and cost recovery.
4 l Although the tunmg of potennal meurred costs and recovery of such cost in rates may affect the results of i operations in individual periods, ===r= believes that the outcome of these issues will not have a material j adverse effect on the Company's financial position or results of operations.
The Clean Air Act A==in " of 1990 (CAA) were signed into law in November 1990. The Company has fivejointly owned and five wholly owned coal-fired generating stations, which represent approximately
, 65% of the Company's electric generating capability.
1 Two of the Company's coal-fund generatmg units were subject to the requuuuents of the CAA beginnmg in 1995. These units were given a set number of allowances by the EPA. Each allowance permits the units to emit one ton of sulfur dioxide. The Company has completed most of the modifications necessary to one I unit to burn low-sulfur coal and to install nitrogen oxides controls and an emissions monitoring system. Under proposed regulations, the second unit will require additional capital expenditures to reduce emissions of nitrogen oxides.
l The Company's other coal-fund generatmg units are not materially affected by the provisions of the CAA.
Due to the use oflow-sulfur western coal, the Company does not anticipate the need for additional capital expenditures to lower sulfur dioxide emission rates to ensure that allowances allocated by the federal govemment are not exceeded. While the Company estimates that sufficient emission allowances have been allocated on a system-wide basis for its units to operate at the capacity factors needed to meet systemienergy
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j zego. addnional ==h of allowances may be necessary to meet desired sales for resale levels. By
] the year 2000, some Company coal-fired generating units will be required to mstall controls to reduce
, emissions of nitrogen oxides. Essentially all utility generanng units are subject to CAA provisions which j address continuous ermssion monitoring, pennit requirements and fees, and emission of toxic substances.
3 Based on currently proposed CAA regulations, the Company does not anticipate its rernammr construction costs for the installation oflow mtrogen oxides burner technology and enussions monitoring system upgrades l to exceed $16 million. -
4 AmounnngIssues In March 1995, the Financial Accounung Standards Board (F,ASB) issued SFAS No.121 R d-g
- amounhng forassetimparments "I1 is statement, which will be adopted by the Company in the first quarter of i 1996, requues the Company to review long-lived assets for
- i- :-- =e whenever events or changes in
! cucumsances nubcate that the carryung amount of such assets may not be recoverable. SFAS 121 also requires rate-regulated compames to recognize an impawment for regulatory assets that are not probable of future recovery. Adoption of SFAS 121 is not expected to have a material impact on the Company's results of operations or fmancial position at the time of adoption.
The staff of the Secunnes and Frehaa* Commie =ian has quesnoned certam of the current accounting pracnees of the electne unhtyirubstry, including those of the Company, r# d -g the iKv sinon, measurement and classificanon of nuclear decommimmioning cosa in the financial statements. In response to these questions, the FASB has added a project to its agenda to review the accouanng for closure and rernoval costs, includmg decommiccionmg of mielear power plants. If current electnc unhty nukastry accountag practices for such decamminioning are chaaad, the annual prtmsion for decommicciomng could merease relative to 1995, and the total estimated cost for decammiananmg could be recorded as a liability with reccy Gon of an increase in the cost ofrelated mreerpower plant. The Company has not daremmed what impact, if any, it would have on the Company's operation and (mancial position.
In October 1995, the FASB issued SFAS No.123 reganiia stock-based compensation plans. SFAS 123, I winch is effective for reporting periods be-- hg January 1,1996, allows for alternative methods of adopcon The Company does not expect the accountag prtmsions or ahernanveu w.* provisions of SFAS 123 to have a material impact on the Company's results of operations.
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EXHIBIT 13.2 MIDAMERICAN ENERGY COMPANY CONSOLIDATED STATEMENTS OFINCOME Years E ' 'IE - ' r 31 i 1995 1994 1993 (In thousands, except per share amoums)
Operating Revenues
! Electncutility 31,094,647 S1,021,660 $1,002,970
- Gas utility 459,588 492,015 538,989 Nonregulated 169.409 177.235 140.976 1.723.644 1.690.910 1.6R2 935 Operating Expenses Utility
Cost of fuel, energy and capacity 230,261 213,987 217,385 2 Cost ofgas sold 279,025 326,782 366,049
- Other operating expenses 399,648 354,190 340,720 4
Idamtanarra 85,363 101,275 101,601 Depreciation and amormanan 158,950 154,229 150,822 Property and other taxes 96350 94.990 93238 1.249.597 1.245.453 1.269.215 Nonregulated.
Com of sales 128,685 130,621 %,656 1 Other 44.230 41.230 353R 172.915 171.251 132 224 1.422 M12 1.417.304 1.402 019 OperstingIncome 301.132 273.606 280.896 Non-Operating Income i Interest mcome 4,485 4,334 5,805 Dividend mcome 16,954 17,087 17,601 Fam1=i gains and losses on securities, net 688 7,635 7,915 Other, net (10.467) 4316 20.842 11.660 33372 52.163 Interest Charges Interest on long-term debt 110,505 105,753 111,065 Otherinterest expense 9,449 6,446 5,066 Allowance for borrowed funds (5.552) (3.955) (2.186) 114.402 108.244 113.945 Inconte From Contissing Operations BeforeInconne Taxes ,
198,390 198,734 219,114 Income Taxes 67.984 62349 71.409 Income From Continuing Operations 130,406 136,385 147,705 Income (14ss) From Discontinued Operations 417 (5.645) (3.854)
Net Income 130,823 130,740 143,851 Preferred Dividends 8459 10.551 8367 Earnings on Common Stock @ i_12fL112 N Average Comunon Shares Outstanding 100A01 98.531 97.762 Earnings Per Common Share l C"" inning operations S L22 $ 1.28 $ 1.43 I Discontinued operations -
(0.06) (0.04) i Earmngs per average common share S L22 5 1.22 S 139 The accompanymg notes are an integral part of these matamerits.
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MIDAMERICAN ENERGY COMPANY CONSOLIDATED BALANCE SHEETS As of 6 '.a 31 1995 1994 (In thoncamtc)
Utility Plant Elecnic $3,881,699 $3,765,004 Gas 695.741 663.792 4,577,440 4,428,796 Iess acetunulated depreciation and atnortization 2.027.055 1.885.870 2,550,385 2,542,926 Construction workin progress 104.164 101.252 2.654.549 2.644.178 Power Purchase Contract 212.148 221.998 Investment la Discontinued Operations - 15.249 Current Assets Cash and cash equivalents 41,216 33,778 Receivables, less reserves of $2,296 and $2,099, respectively 261,105 212,902 Inventories 85,235 92,248 Other 22.252 19.035 409.808 357.963 Investments 826.4 % 752.428 Other Assets 420.520 423.958 Total Assets, $112,1521 116,1122d Capitalization and Liabilities Capitaltzation (see accompanying statement)
Common shareholders' equity $1,225,715 51,204.112 Preferred shares, not subject to mandatory redemption 89,945 89,955 Preferred shares, subject to mandatory redemption 50,000 50,000 Long-term debt (excluding current portion) 1.403 322 1398.255 2.768.982 2.742.322 Current Liabilities Notes payable 184,800 124,500 Current portion oflong-term debt 65,295 72,872 Current portion of power purchase contract 13,029 12,080 Accounts payable 142,759 110,175 Taxes accrued 81,898 91,653 Interest accrued 30,635 30,659 Other 57.000 54.473 575.416 496.412 Other Liabilites Power purchase contract 112,700 125,729 Deferrec income taxes 746,574 725,665 Investneat tax credit 95,041 100,871 Other 224.808 224.775 1.179.123 1.177.040 Total Capitalization and Liabilities S4.523.521 116.1122d The accompanying notes are an integral part of these statements.
2
MIDAMERICAN ENERGY COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31 1995 1994 1993 (In thousands)
Net Cash Flows From Oper3 ting Activities Netincome S 130,823 S 130,740 S 143,851 Adjusonems to reconcile net income to net cash provided:
Depreciation, depletion and amortization 202,542 198,049 193,199 Net increase in deferred income taxes and mvestment tax credit, net 10,278 36,926 1,935 Amomzation ofother assets 20,047 9,731 5,447 captalimi cost ofrealestate sold 1,744 3,723 5,737 loss (income) from A- - - M operations (417) 5,645 3,854 Gain on sale of assets and long-term investmentc (1,050) (6,409) (25,428)
Other-than-temporary decline in value ofinvestments andother assets 17,971 1,791 2,939 Impact of changes in working capital net of effects from diamnrinnM operations (19,075) (9,270) 20,066 Other 18.809 10.624 (7.746)
Net cash provided 381.672 3 R1.550 343.854 Net Cash Flows From Investing Activities Utility construction expenditures (190,771) (211,669) (215,081)
Quad-Cities Nuclear Power Station decomnussioning trust fund (8,636) (9,044) (7,918)
Deferred energy efficiency expenditures (35,841) (28,221) (24,104)
Nomegulated capitalexpenditures (56,162) (52,609) (86,505)
Puchase of securities (164,521) (l13,757) (197,490)
. Proceeds from sale of securities 94,493 142,307 205,767 Proceeds from sale of assets and other investments 34,263 6,433 55,582 Other investmg activities, net 7.060 (7.957) 13.716 Net cash used (320.115) (274.517) (256.033)
Net Cash Flows From Financing Activities Dividends paid (126,892) (125,065) (122,410)
Tumnre oflong-term debt, net ofissuance cost 12,750 180,410 796 897 Retirement oflong-term debt, including reacquisition cost (110,351) (102,472) (895,900)
Imunce of preferred shares, net ofissuance cost - - 68,140 Reacquisition of preferred shares, including reacquisition cost (9) (20,142) (32,629)
Increase (decrease) in InterCoast Energy Company unsecured revolving credit facility 95,000 (9,500) 44,500 1ssuance of common shares 15,083 27,760 -
Net increase (decrease) in notes payable 60.300 (48.535) 52.791 Net cash used (54.119) (97.544) (88.611)
Net Increase (Decrease)la Cash and Cash Equivalents 7,438 9,489 (790)
Cash and Cash Equivalents at Beginning of Period 33.778 24.289 25.079 Cash and Cash Equivalents at End of Period S 41.216 1.J1J23 S 24.289 Additional Cash Flow Information:
Interest paid, net of amounts canitalimi Income taxespaid 1.1.11&!)
$_1]LgQ
$_1.01&M M s 54.346 1.lfL121 The accompanying notes are an integral part of these statements.
3
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'MIDAMERICAN ENERGY COMPANY CONSOLIDATED STATEMENTS OF CAPITALIZATION AsofIL- -M 1995 1994 (In 6a'** except share amounts) carnman shares, no par; 350,000,000 shares authonzed, 100,751,713 and 99,686,636 shares outstandmg, respectively 5 801,227 5 786,420 Retamd earness 430,589 426,683 Valuat.on allowance, net ofincome taxes (6.101) (s.991) 1 m.715,&L3% 1.204.112 Ag*o(,
Preferred Shares (100,000,000 shares authonzed)
Cumulative preferred shares outstandmg; not subject to a=cy & -
$3.30 Senes,49,523 and 49,622 shares,respectively 4,952 4,%2 53.75 Senes,38,320 shares 3,832 3,832
$3.90 Senes,32,630 shares 3,263 3,263 S4.20 Senes,47,369 shares 4,737 4,73 7
$4.35 Senes,49,950 shares 4,995 4,995 54.40 Senes,50,000 shares 5,000 5,000
$4.80 Senes,49,898 shares 4,990 4,990
$1.7375 Series,2,400,000 shares 58,176 58,176 Cumulative preferred shares outmandmg; subject to nw t .-yredamprian:
$5.25 Series,100,000 shares 10,000 10,000
$7.80 Series,400,000 shares 40.000 40.000 139.945 m 139.955 _1J%
long-Term Debt Mortgage bonds-5.875% Senes, due 1997 22,000 22,000 Adjustable Rate Senes, due 1997 (8.8% and 7.6%, respectively) 25,000 25,000 5.05% Senes,due 1998 50,000 50,000 6.25% Senes, due 1998 75,000 75,000 7.875% Series, due 1999 60,000 60,000 6% Series,due 2000 35,000 35,000 6.75% Series,due 2000 75,000 75,000 8.15% Senes, due 2001 40,000 40,000 7.125% Senes, due 2003 100,000 100,000 7.70% Series,due 2004 60,000 60,000 7% Series,due 2005 100,000 100,000 7.375% Senes, due 2008 75,000 75,000 l 8% Series,due 2022 50,000 50,000 l 7.45% Senes, due 2023 30,000 30,000 8.125% Senes, due 2023 100,000 100,000 6.95% Senes, due 2025 50,000 50,000 i Pollution control revenue obligations: l 5.15% to 5.75% Series, due periodically through 2003 10,984 11,544 )
5.8% Series, due 2007 (secured by first mortgage bonds) - 12,750 1 5.95% Series, due 2023 (secured by general mortgage bonds) 29,030 29,030 Variable Rate Senes-D.:e 2016 and 2017 (5.0% and 5.7%, respectively) 37,600 37,600 Due 2023 (secured by general mortgage bonds,5.05% and 5.55%, respectively) 28,295 28,295 Dae 2023 (5.1% and 5.6%, respectively) 6,850 6,850 Dae 2024 (5.25% and 5.1%, respectively) 34,900 34,900 Due 2025 (5.1%) 12,750 -
7he accompanymg notes are an integral part of these eratamente
-4 I
MIDAMERICAN ENERGY COMPANY CONSOLIDATED STATEMENTS OF CAPITALIZATION As of Decemher 31 1995 1994 (In thousands)
Long-Term Debt (Continued)
Notes:
9% to 15% Series, due anmially through 1996 S -
S 22 8.75% Series, due 2002 240 240 6.4% Series,due 2003 through 2007 2,000 2,000 Obligation under capitallease 2,218 2,356 Unamortized debt premium and discount, net (4.126) (4.706)
Totalutility 1.107.741 1.107.881 Subsidiaries:
Notes -
9.30% Series,due 1995 and 1996 - 9,000 l 8.7% Series, due annually through 1996 - 25,508 Adjustable Rate Series, due aami==Mly through 1996 - 13,100
, 10.20% Series, due 19% and 1997 30,000 60,000 l 9.87% Series, due annually through 1997 - 11,664
- 7.34% Series, due 1998 20,000 20,000 l 7.76% Series, due 1999 45,000 45,000 8.52% Series,due 2000 through 2002 70,000 70,000 ;
9% Series,due annually through 2000 -
489 8% Series,due annually through 2004 581 613 Borrowings under unsecured revolving credit facility (6.3%) 64,000 -
Borrowings under unsecured revolving credit facility (6.4% and 6.6%,respectively) 66.000 35.000 Total Subsidiaries 295.581 290.374
- 1.403.322 11286 1.398.255 ,1LQ%
TotalCapitalization 122f43.82 1903 % 12J42222 1919%
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS Years Ended December 31 l 1995 1994 1993 (In thontantk, except per share amounts)
Beginning of Year S 426.683 5 421.358 5 400.621 i NetIseone 130.823 130.740 143.851 l
Deduct (Add):
) (Gain) loss on reacquisition of preferred shares (5) 312 672 Dividends declared on preferred shares 8,064 10,141 8,350 Dividends declared on common shares of $1.18, $1.17 and 51.17 per share,respectively 115,828 114,924 114,060 Other 30 38 32 126.917 125.415 123.114 End of Year S 430.589 5 426.683 m
'Ibe accompanying notes are an integral part of these statementc
1 NOTES TO LONSOLIDATED FINANCIAL STATEMENTS (1)
SUMMARY
OF SIGNIFICANT ACCOUhTING POLICIES:
1 (a) Merger: l On July 1,1995, Iowa. Illinois Gas and Electric Company (Iowa-Illinois), Midwest Resources Inc. (Resources) and Midwest Power Systems Inc. (Midwest) merged to fonn MidAmencan Energy Company (MidAmencan or Company). <
The merger was accounted for as a pooling-of interests and the fmancial statements included herein are presented as if the companies were merged as of the earliest period shown. MadAmencan is a utility company with two wholly owned nonregulated subsichanes: InterCoast EnerEy Corepany (IntesCoast) and Midwest Capital Group, Inc. (Midwest Capital).
Each c-- ; Eg st ur ofrL4 and preference stock of the predecessor companies was converted into one share of a anularly designatM series ofMidAmencan prefened stock, no par value. Each ou=*ading share of common stock of Resources and Iowa-Illinois was converted into one share and 1.47 shares, respectively, of MidAmencan commrm stock, no parvalue. l Resources' operatang revenues and net income for the six months prior to the merger were $534.2 million and $37.7 million, respectively. Iowa-Illinois' operatmg revenues, as reclassified to include nonregulated revenues in operatmg reve mes consistent with MidAmencan's presemation, and net income for the six months prior to the merger weir $298.9 million and $27.1 million, respectively.
(b) Consolidation Policy and Preparation of Financial Statements: ;
i The accompanymg Consolidated Financial Statements include the Company and its wholly owned nonregulated subsidiaries, InterCoast and Midwest Capital. All signihat intercompany transactions have been elimmated The preparation of financial statemants in conformity with generally accepted accwr'rg principles requaes management to make esumates and assumptions that affect the reported amounts of assets and liabilities and disclosure ofcormngent liabilities at the date of the financial statements and the reported amounts of revenues and expenses dunng the reporting period. Actual results may differ fmm those estimates.
(c) Regulation:
The Company's utility operations are subject to the regulation of the Iowa Utilities Board (IUB), the Ilhnots Commerce Commmion (ICC), the South Dakota Public Utilities Commission, and the Federal Energy Regulatory Commmion (FERC). The Company's accounnng policies and the accompanymg Consolidated Financial Statemems -
conform to generally accepted accounting principles applicable to rate-regulated enterprises and reflect the effects of the ra*=*ing pincess. j l
. v
The Company's utility operations are subject to the provisions of Statement of Financial Accounting Standards ,
(SFAS) No. 71, Accounting for the Effects of Certam Types of Regulation. The following regulatory assets, primanly meluded in Other Assets in the Consolidated Balance Sheets, represent probable future revenue to the Company because 4
these costs are expected to be recovered in charges to utility customers (in thousands):
1995 1994 Deferred income taxes . . . . . . . . . . . . . . . . . S144,257 S139,577 Energy efficiency costs . . . . . . . . . . . . . . . . . 101,541 72,694 Debt refinancing costs . . . . . . . . . . . . . . . . . 44,370 47,879 FERC Order 636 transition costs . . . . . . . . . 40,824 56,608 Retuement benefit costs . . . . . . . . . . . . . . . . 15,354 18,287 Environmental costs . . . . . . . . . . . . . . . . . . . 23,076 23,535 Unamortized costs of reured plant . . . . . . . . I1,618 10,824 Fmichment facilities decommmioning . . . . 8,970 9,807 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.396 10.479 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . S.39.2 3.06 S3.12122.0 (d) Revenue Recognition:
l l Revenues are recorded as services are rendered to customers. The Company reccrds unbilled Irvenues, and related energy costs, represennng the esumated amount customers will be billed for semees rendered between the meter. reading i
dates in a particular month and the end of such month. Accmed unbilled revenues are S61.0 million and $65.6 million J
at December 31,1995 and 1994, respectively, and are included in Receivables on the Consolidated Balance Sheets.
The majority of the utility's electric and gas sales are subject to adjustment clauses These clauses allow the utility to adjust the amounts charged for electric and gas service as the costs of gas, fuel for generation or purchased power
, change. The costs recovered in revenues through use of the adjustment clauses are charged to expense in the same period.
(e) Depreciation and Amortization:
The Company's provisions for depreciation and amortization for its utility operations are based on straight.line composite rates. The average depreciation and amortization rates for the years ended December 31 were as follows:
i 1995 1994 1993
. Electric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9% 3.8% 3.8% ;
Gas....................................... 3.7% 3.6% 3.9%
Utility plant is stated at ongmal cost which includes overhead costs, admmmrative costs and an allowance for funds used during construction.
l The cost ofrepans and minor repim- e is charged to mamtenance expense. Property additions and major property
. replacements are charged to plant accounts. The cost of depreciable units of utility plant reared or disposed ofin the normal course of business is elimmated from the utility plant accounts and such cost, plus net removal cost, is charged to accumulated depreciation.
I l
An allowance for the esumated annual decammiaziomng costs of the Quad-Cities Nuclear Power Station (Quad-Cities) equal to the level of funding is included in depreciation a=ance See Note 4(d) for additional inf3rmation reganhng decommissioning costs. ,
i l (f) Investments:
l invesm managed prunanly through the Company's nonregulated subsidiaries, include the following amounts as ofDecember31 (in thoncanda):
1995 1994 investments:
Marketable securities . . . . . . . . . . . . . . . . . . . . S270,162 $199,514 Oil and gas properties . . . . . . . . . . . . . . . . . . . 160,831 142,378 Equipment Leases . . . . . . . . . . . . . . . . . . . . . . 90,729 123,603 Nuclear decommissioning trust fund . . . . . . . . 64,781 49,432 Energy projects . . . . . . . . . . . . . . . . . . . . . . . . 44,741 51,150 Special-purpose funds . . . . . . . . . . . . . . . . . . . 47,046 34,767 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,232 72,721, Corporate owned life insurance . . . . . . . . . . . . 22,743 18,832 Non-public preferred stock . . . . . . . . . . . . . . . 14,372 24,451 Coal transportation equipment . . . . . . . . . . . . 10,216 11,616 Conimimentions . . . . . . . . . . . . . . . . . . . . . . . 16,332 4,793 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.311 19.171 Total investments . . . . . . . . . . . . . . . . . . . . . . . . . 182fL45!6 12EL428 Marketable securities generally consist ofpreferred stocks, common stocks and mutual funds held by interCoast. -
On January 1,1994, the Company adopted SFAS No.115, Accounung for Certam investment.i in Debt and Equity Sametiac Under this statement. investments in marketable securities clasified as avadable-for-sale are repvM at fair i value with net unreahzed gains and losses reported as a net of tax amo'mt in Other Common Shareholders' Equity until ,
realized.
investments in marketable securities that are classified as held-to. maturity are reported at amoruzed cost. An other.than-temporary decline in the value of a marketable security is recosmzed through a write-down of the investment ;
to cammgs. r investments held by the nuclear decommincioning trust fund t>r the Quad-Cities units are classified as available-for-sale and are reported at fair value with net unreahzed gains and losses reported as adjustments to the accumulated provision for nuclear decomnussioning.
(g) Oil and Gas:
r The Company uses the full cost method of === ring for oil and gas activities. Under the full cost method, all acquisition. exploranon and development costs are capitalized and amortind over the esumated production from proved oil and gas n: serves. Under the full cost method, net capitainaA costs may not exceed the present value of pmved reserves as determined under rules of the Securities and Exchange Commiczion. t r
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] (h) Consolidated Statements of Cash Hows: .
)
i l The Company considers all cash and highly liquid debt instruments purchased with a remmmng maturity of three months orless to be cash and cash equivalents forpurposes of the Consolidated Statements ofCash Flows.
, Net cash provided (used) fmm changes in working capital, net of effects from discontinued operations and exchange of assets was as .follows (in thousands)-
1 1995 1994 1993 l Receivables . . . . . . . . . . . . . . . . . . . . . . . S(48,203) 513,152 S 149 Inventories . . . . . . . . . . . . . . . . . . . . . . . . 7,013 8,427 (2,067)
Other current assets . . . . . . . . . . . . . . . . (3,217) 5,876 605 i Accounts payable . . . . . . . . . . . . . . . . . . 32,584 (19,329) 13,741 1 Interest accrued . . . . . . . . . . . . . . . . . . . . (24) (362) (374)
Taxes accrued . . . . . . . . . . . . . . . . . . . . . (9,755) (19,270) 9,338 Other current liabilities . . . . . . . . . . . . . . 2.527 2.236 (1.326)
To tal . . . . . . . . . . . . . . . . . . . . . . . . . . . S(19.075) S (9.270) 5.2.Q.Q66 During 1993, the Company exchanged its Mmnesota gas properties, with a book salue of $52 million, for gas survu6cnproperties in South Dakota, with an appraised fairvalue of S32 million, and $38 million cash. A pre-tax gain t
on the transaction of $18 million was recorded.
l (i) Accounting for Long-Term Power Purchase Contract:
l Under a long-term power purchase contract with Nebraska Public Power District (NPPD), expiring in 2004, the
, Company purchases one-half of the output of the 778. megawatt CooperNuclear Station (Cooper). The Consolidated Balance Sheets include a liability for the Company's fixed obligation to pay 50% of NPPD's Nuclear Facility Revenue Bonds and other fixed liabilities. A like a:nount represmtmg the Company's right to purchase power is shown as an asset.
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Capital improvement coss for new property, includmg canymg cosa, are being defened, amortzed and recovered ;
in rates over the tenn of the NPPD contract. Capitalimprovement costs forproperty replacements, including carrymg cosa, are being deferred, amoruzed and recovered in rates over a five-year period.
The fuel cost portion of the power purchase contract is included in Cost of Fuel, Energy and Capacity on the l Consolidated Statemens ofIncome. All other costs the Company meurs in relation to its long-term power purchase contract with NPPD are included in Other Operating Frnan= on the Consolidated Statements ofIncome. l See Notes 4(c),4(d) and 4(e) for additional information regardmg the power purchase contract. f l
(j) Statement of Financial Acconsting Standards No.121: l In March 1995, the Financial Accounting Standards Board (FASB) issued SFAS No.121 regarding accounting for asset inmaianant= This statement, winch will be adopted by the Company in the fust quarter of 1996, requires the Company to review long-lived assets for impaument whenever events or changes in circumstances inacate that the '
canymg amount ofan asset may not be recoverable. SFAS No.121 also requires rate-regulated enmpanies to recognize l an impawment forregulatnry assets forwluch funne recoveryis not probable. Adoption of SFAS No.121 is not expected l to have a matenal unpact on the Company's resula ofoperations or financial position at the time of adoption. I l
(k) Statement of Financial Acconsting Standards No.123:
{
In October 1995, the FASB issued SFAS No.123 raganiing accountmg for stock-based compensation plans. This statemnent, winch is effective for reportmg penods begmning January 1,19%, allows for alternative methods of adoption.
The Company does not expect the acx:ountag provmons or the ahernative disclosure provisions of SFAS No.123 to have
)
7 a matenal unpact on the Company's results ofoperations.
(2) LONG-TERM DEBT: )
The Company's sinirmg fund requirements and matunties oflong-term debt and preferred stock for 1996 through 2000 are $65 million, S80 million, $209 million, $171 million and $134 million, respectively.
The interest rate on the Company's Adjustable Rate Series Mortgage Bonds is reset every two years at 160 basis points over the average yield to maturity of 10-year Treasury secunties. The rate was reset in 1995.
- The Company's Variable Rate Pollution Control Revenue Obligations bear interest at rates that are periodically i established through rema*ating of the bonds in the short-term tax-exempt Inarket. The Compary, at its option, may change the mode ofinterest calm 1ation for these bonds by selectmg from among several alternative floating or fixed rate modes. The interest rates shown in the Consolidated Statemens of Capitalization are the weighted average interest rates as ofDecember 31,1995 and 1994. The Company mamtamm dedicated revolving credit facility agreements or renewable lines ofcredit to provide liquidity for holders of these issues.
Substanhally all the fonner Iowa-Illinois utility propeny and franchises, and subsenntially all of the former Midwest electric utility property in Iowa, is pledged to secure mortgage bonds l InterCoast's unsecured Notes are issued in private placement transactions. All Notes are issued without recourse to
. MidAmerican.
I InterCoast has $64 million and $110 million unsecured revolving credit facility agreements, which mature in 1998 i - .
and 1999, rispectively. Borrowmgs under these agreements may be on a fixed rate, floating rate or competitive bid rate basis. InterCoast has entered into two floating rate to fixed interest rate swaps, each in the amount of S32 million. The interest rate swaps have fixed rates at 5.97% and 6.00%, respectively, and are for three-year and two-year terms, respectively, with an optional third year on the latter. All InterCoast borrowmgs are without recourse to MidAmerican.
(3) JOINTLY OWNED UTILITY PLANT:
Underjoint plant ownerslup agreements with other utilities, the Company had undivided interests at December 31, 1995, injointly owned generating plants as shown in the table below.
The dollar amounts below represent the Company's share in eachjointly owned unit. Each participant has provided
-% for its share of each unit. Operating F==as on the Consolidated Statements ofIncome include the Company's share of the expenses of these units (dollars in millions).
Nuciaar Coal fired Council Quad-Cities Neal Bluffs Neal Ottumwa Louisa Units Unit Unit Unit Unit Unit No.1 & 2 No. 3 No. 3 No.4 No.1 No.1 In service date 1972 1975 1978 1979 1981 1983 Utility plantin service $200.4 S111.7 $286.5 S155.8 $202.2 S526.0 !
Arcin= lated depreciation S 70.6 S 64.8 5138.8 S 78.9 S 89.3 S204.3 Unit capacity-MW 1,539 515 675 624 716 700 Percent ownership 25.0 % 72.0 % 79.1 % 40.6 % 52.0% 88.0 %
(4) COMMITMENTS AND CONTINGENCIES:
(a) CapitalExpenditures:
Utility construction expenditures for 1996 are estimated to be S166 million, including S17 million for Quad-Cities nuclear fuel and $9 milhon for Cooper capital improvements. Capital expenditures for nonregulated subsidiaries depend upon the availability ofinvestment opportunities and other factors. Dunng 1996, such expenditures are estunated to be approximately 585 million.
(b) EnvironmentalMatters:
The United States Environmental Protection Agency (EPA) and the state envuonmental agencies have hemi-i that mwammated wastes r=maming at certam ?" hioned maaibnired gas plant (MGP) facilities may pose a threat to the public health or the environment if such contammants are in sufficient quantities and at such concentrations as to warrant remedial action.
The Company is evahiarme 26 properties which were, at one time, sites of gas maank t uring plants in which it may l be a potentially responsible party (PRP). The purpose of these evaluations is to determme whether waste materials are present, whether such materials constitute an environmental or health risk, and whether the Company has any i
responsibility for remedial action. The Company is currently conductmg fiald investigations at five sites and has completed investigations at three sites. In addition, the Company is currently reunoving contammated soil at three sites, and has completed removals at two sites. The Company is continumg to evahmte several sites to determme the future ,
liability, if any, for conducting site investigations or other site activity.
_ 11
The Company's present estimate of probable remediation cosa for the sites discussed above is S21 million. This ,
estunate has been recorded as a liability and a regulatory asset for future recovery. The Illinois Commerce Commiaion i has approved the use of a tariffrider wtuch pernuts recovery of the actual costs of litigation, investigation and remediation relatmg to former MGP sites. The Company's present rates in Iowa provide for a fixed anmini recovery of MGP costs. i The Company intends to pursue recovery of the remediation costs from other PRPs and its msurance camers. i l
The estnnate of probable r-diation costs is established on a site specific basis. The cosa are accumulated in a :
three-step pmccss. First, a detsmmation is made as to whether the Company has potennal legal liability for the site and !
whether information exists to indicate that contami ..at wastes remam at the site. If so, the costs of perfonnmg a prelimmary investigation are accrued. Once the investigation is completed and ifit is determmed remedial action is requand, the best estimate of remediation costs is accrued. If necessary, the estunate is revised when a consent order is issued.
The estunated recorded liabilities for these properties are based upon preliminary data. Thus, actual costs could vary siyJ'=@ from the estimats. The estimate could change matenally based on facts and cucumstances derived fmm site anvesagations, changes in requaed -Ant action and changes in technology relatmg to remedial alternatives. In addition, insnance recoveries for some or all of the cosa may be possible, but the liabilities recorded have not been reduced by any estnnate of such recoveries.
Although the tunmg ofpotennal mcurred costs and recovery of such costs in rates may affect the results of operations in indmchaal penods, mann8cmmt beheves that the outcome of these issues will not have a matenal adverse effect on the !
Company's financial position or resula of operations.
l (e) Iang-Term Power Parehase Contract: ,
. Prg.- to NPPD cover one-half of the fixed and operating cosa of Cooper (excludmg depreciation but including l debt semce) and the Company's share ofnuclear fuel cost (including nuclear fuel disposal) based on energy delivered.
The debt service pornon is appmximately $1.5 million per month for 1996 and is not contingent upon the plant being in service. In addition, the Company pays one-half ofNPPD's decommissioning fimdmg related to Cooper.
The debt amortization and Deporheest of Energy (DOE) enrichment plant decontamination and decomminioning l
compor g of the Company's payments to NPPD were 512.0 million, S10.8 million and 59.9 million and the net interest component was S4.6 million, $5.4 million and 55.7 million each for the years 1995,1994 and 1993, respectively.
The Company's payments for the debt principal portion of the power purchase contract obligation and the DOE enrrhmer plant deconrammatmn and dernmmiainning paymens are S13.0 million, $13.6 million, $14.3 million, $15.0 million and S 15.8 million for 1996 through 2000, reWycly, and S54.0 million for 2001 through 2004.
(d) Decommissioning Costs: !
Based on site-specific decommissioning studies that include decontammation, damantling, site restoration and dry f fuel storage cost, the Company's share of expected decomminionmg costs for Cooper and Quad-Cities, in 1995 dollars, ,
is $420 million. In Illinois, nuclear decomminioning costs are included in customer billings thmugh a mecharusm that permits ernual adjustments. Such cosa are reflected as base rates in Iowa tariffs.
For purposes of developing a ?-+-. mionmg fimdmg plan for Cooper, NPPD assumes that decomnussioning costs will escalate at an annual rate of 4%. Although Coopers Ope.dmg bcense expires in 2014, the fundmg plan assumes ;
decommmioning will start in 2004, the currently anticipated plant shutdown date. !
l
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i .-
! As of December 31,1995, the Company's share of funds set aside by NPPD in internal and extemal accounts for dammmmenmg was $49.4 mihmn in aMav= the fundmg plan also assumes various funds and reserves currently held to satisfy NPPD Bond Resolution regirements will be available for plant decommmioning costs after the bonds are
- reared in early 2004. The fimdmg =cheehile assumes a long term retum on funds in the tmst of 6% annually. Certain funds will be requurd to be invested on a short-term basis when decommmionmg begins and are assumed to cam at a j rate of 4% anmially. NPPD is recognizing decammmenmg costs over the expected service life of the plant, and 50%
j of the costs are kludad as a canponent of the Company's power purchased cosa. Durmg each of the years 1995,1994 i and 1993, $8.9 million of the Company's power purchased coss were for Cooper decommissioning and are included in 2
Other Operatmg Expenses in the Consohdated Statemanen ofIncome. Earning from the intemal and external trust funds, wtuch are i%. W by NPPD as the owner of the plant, are tax exempt and serve to reduce future funding requurments.
I The Company has established an extemal trust for the investment of funds for dammmi=ioning the Quad-Cities units.
The total accmed balance as of December 31,1995, was $64.8 million and is included in Other Liabilities and a like amount is reflected in Investments and represents the value of the assets held in the trust.
l The Company's provsion for depreciation includes costs for Quad-Cities nuclear decommmioning of 58.6 million,
$9.1 millen and 57.9 million for 1995,1994 and 1993, respectrvely. The provision charged to expense is equal to the funding that is bemg collected in rates. The decommmionmg fimdmg co,maanant of the Company's Illinois tanffs assumes that decommmioning costs, related to the Quad-Cities unit, will escalate at an annual rate of 5.3% and the assumed annual teturn on funds in the trust is 6.5%. The Quad-Cities decommissioning fundmg component of the ,
Company's lowa tariffs assumes that decommmionmg coss will escalate at an annuni rate of 6.3% and the assumed l annual return on funds in the trust is 6.5%. Faminy on the assets in the trust fund were $2.5 million, S2.2 million and l
$2.0 million for 1995,1994 and 1993. <
(e) Nuclearlasurance:
The Company mamtam fmancial protection agamet catastrophic loss associated with its interest in Quad-Cites and i Cooper through a combination ofinsurana purchased by NPPD (the owner and operator of Cooper) and Commonwealth ,
Edison (thejoint owner and operator of Quad-Cities), msurance purchased duectly by the Company, and the mandatory mdustry-wide loss fundmg menhamsm afforded under the Price-Anderson Amendments Act of 1988. The coverage falls into three categories: nuclear liability, propeny coverage and nuclear worker liability.
1 l
NPPD and Commonwealth Edison each purchase nuclear liability insurance in the maximum available amount of S200 million. In accordance with the Price-Anderson Amendments Act of 1988, excess liability protection above that amount is provided by a mandamry industry-wide program under which the owners of nuclear generating facilities could be assessed for liability incurred due to a serious nuclear incident at any commercial nuclear reactor in the United States.
Currently, the Company's maximum potential share of such an assessment is $79.2 million per incident, payable in inctallments not to exceed $10 million annually.
1 The property coverage provides for property damage, stabilization and decontamination of the facility, disposal of theh a btedmaterialandpremature h-- siornng.ForQuad-Cities,CommonwealthEdisonpurchasesprimary and excess property msurarre protection for the combined interest in Quad-Cities totalling $2.1 billion. For Cooper, NPPD purchases pnmary property insurance in the amount of $500 million. Additionally, commencing December 31, 1995, the Company and NPPD separately purchase coverage for their ioyeuive obligation of $1.125 billion each in excess of the $500 million primary layer purchased by NPPD. 'Ihis structure provides that both the Company and NPPD are covered for their respective 50% obligation in the event of a loss totalling S2.75 billion. The Company also directly purchases extra expense / business interruption coverage to cover the cost ofreplacement power and/or other continuing costs in the event of a covered accidental outage at Cooper or Quad-Cities. The coverages purchased directly by the
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, l Company, and the pnmary and excess property coverages purchased by Commonwealth Edison, contain provisions for 1 wuoi,yective y-muu assessments should two or more full policy-limit losses occur in one policy year. Currently, the nexanum-@ve amounts that cwid be assessed agamst the Company for its obligations associated with Cooper and Quad-Cities combined total D 0.4 m31 ion.
The master nuclear worker liability coverage is an industry-wide policy with an aggregate limit of $200 million for theinclear industry as a whole, which is in effect to cover tort claims ofworkers as a result ofradiation exposure on or aAer January 1,1988. The Company's, share, based on its interest in Cooper and Quad-Cities, of a maximum potential share of a whusiwctive asseament under this program is 53.0 million.
(f) FinancialGuarantees:
The Company has letters of enedit amountmg to S20.4 mdhon and financial guarantees amountag r ? S 11.3 nulhon
, winch are not reflected in the masohdated fmancial statements. Leters ofcredit and financial guarantees :ce conditional commitments issued by, or on behalf of, the Cnma==y to secure perfonnance for a third party. The guarantees are primanly issued to support private borrowing arrangements and smilar transactions.
j Mana& believes that the hkehhnod ofmatenal cash paymmm by the Company under these agreements is remote.
l (g) Coal and Natural Gas Contract Commitments:
i The Company has entered into coal supply and transportation contracts for its fossil-fueled generating stations. The manw". requae nunnmm paymme of$65 ndllion, S45 million, S28 million, $26 million and $16 million for the year 4
1996 through 2000, respectively, and $28 nulhon for the years thereafter. The Company expects to supplement these cord contracts withspot market purchases to fulfill its future fossil fuel needs.
The Company has entered into vanous natural gas supply and transportation contracts for its utility operations. The mmmim comnutments under these contracts are S98 million, $87 million, S49 nulhon, $26 milhon and $23 million for the years 1996 through 2000, respeenvely, and $96 million for the years thereafter. Dunng 1993 FERC Order 636 became effecove, requmng meerstate pipehnes to restmeture their services. The pipelines will recover the transition costs related to Order 636 fmm the local distnbution compames. The Company has recorded a liability and regulatory asset '
for the transition costs which are bemg recovered by the Company through the purchased gas adjustment clause. 'Ibe unrecovered balance recorded by the Company as of December 31,1995, was $41 million.
I j
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4 (5) COMMON SHAREHOLDERS' EQUITY:
Common shans outstandmg changed dunng the years mind Decenber 31 as shown in the table below (in thomnivk):
1995 1994 1993 Amount Shams Amount Shggi Amount h Balance, begummg of year . . . . . . . . . . . . . . . $786,420 99,687 $759,120 97,782 $759,610 97,778 May due to:
Issuance of common shares . . . . . . . . . . . . . . 15,083 1,065 27,760 1,911 - -
Capital stock expense . . . . . . . . . . . . . . . . . . (276) -
(377) . -(442) -
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - (83) (6) (48) 4 Balance, end of year . . . . . . . . . . . . . . . . . . . . . . 1BD.L222100.212 121L420 22 Jig 2 1252.120 2128; (6) RETIREMENT PLANS:
The Coupany has nonconinbutory defmed benefit pension plans covering =@*ially all employees. Benefits under the plans are based on participants' compensation, years of service and age at retirement.
Fundmg is based upon the ==ially determmed costs of the plans and the regh.m of the Intemal Revenue Code and the Euployee Retnemmt Income Secunty Act. The unhty has been allowed to recover fundmg contributions in rates.
Net periodic pension cost includes the followmg components for the years ended December 31 (in thousands):
1995 1994 1993 Semce cost-benefit earned dunng the penod . . . . . . . . . . . . . . S 9,817 S 13,241 S 11,140 Interest cost on projected benefit obligation . . . . . . . . . . . . . . . 27,934 26,822 25,431 Decrease in pension costs from actual return on assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (63,593) (7,835) (22,149)
Net amortization and deferral . . . . . . . . . . . . . . . . . . . . . . . . . . 32,126 (21,030) (6,075)
One-time charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,683 - -
Regulatory deferral ofincurred cost . . . . . . . . . . . . . . . . . . . . . (10.470) (2.871) (2.018)
Net periodic pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S1.Ld22 S jL222 EJL322 Dunng 1995, the Con.pany incurred a one-time charge of $15.7 million related to the early retirement portion ofits ,
resnuctunng plan. Ofsuch cost, $3.0 million was charged to expense and the reniammt amount was deferred for funne recovery through the regulatory process.
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~. - . - . - . - . - - - .- - . .- - . .. _ - - - - - - .- - - . - - - - - - -
The plan assets are stated at fair market value and are primanly g- ; W ofinsurance comracts, United States government debt and corporate equity secunties. The followmg table presents the plans' fundmg status and amounts recogmzed in the Company's Consolidated Balance Sheets as ofDecember 31 (dollars in thon= ands):
Planc in Which-Assets E.Yceed Accumulated Accunmlated Benefits Exceed so,rn. A=
1995 1994 1995 1994 Actuanal present value of benefit obligations: I vested benefit obligation . . . . . . . . . . . . . . . . . . . . . S(293,985) S(224,488) S (32,429) S(18,915) l Nonvested benefit obligation . . . . . . . . . . . . . . . . . . (7.516) (5.821) (R16) (1.744)
Amm= dated benefit obligation . . . . . . . . . . . . . . . . (301,501) (230,369) (33,245) (20,659) !
Provision for future pay increases . . . . . . . . . . . . . . (94.633) (66.414) (5.455) (2.357) i l
Projected benefit obligation . . . . . . . . . . . . . . . . . . . (396,134) (296,783) (38,700) (23,016)
Plan assets at fair value . . . . . . . . . . . . . . . . . . . . . . . . . 385.598 335.809 - -
Projected benefit obligation (greater) less than plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,536) 39,026 (38,700) (23,016)
Unrecogmzed prior service cost . . . . . . . . . . . . . . . . . . - (15,866) 22,520 2,884 6,896 !
Unrecogmzed net loss (gain) . . . . . . . . . . . . . . . . . . . . . 29,541 (40,151) 9,431 2,603 Unrecogmzed net transition asset . . . . . . . . . . . . . . . . . (21,521) (24,112) - -
Other....................................... - -
(6_R60) (7.142)
Pensionliability recogmzedinti:e Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . LHL332) s (2.717) g) m Assumptions used were:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.0% 8.5% i Rate ofincrease in compensation levels . . . . . . . . . . . . . .. . . . . 5.0% 5.0% ;
Expected long. term rate of return on assets . . . . . . . . . . . . . . . 8.75-9.0 % 8.75-9.0 %
The Company currently provides certam hmkh care and life insurance benefits for retued employees. Under the plans, !
substantially all of the Company's employees may become eligible for these benefits if they reach reurement age while l working for the Company. However, the Company retams the right to change these benefits anynme at its discretion.
In January 1993, the Company adopted SFAS No.106, Employers Accomting for Postrenrement Benefits Other Than Pensions. The Company began expensing these costs on an accrual basis for its Illinois customers and certain of its lowa customers in 1993 and includmg provisions for such costs in rates for these customers. For its remammg lowa customers, the Corripany deferred the portion of these costs above the " pay-as-you-go" amount already included in rates until recovery on an accmal basis was established in 1995. The Company is currently amortizmg the deferral, expensmg the SFAS No.106 accrual and includmg provisions for these costs in rates.
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1
i' j Net penodic postretimnent benefit cost includes the followmg components for the year ended December 31 (dollars j in thomanth):
l 1995 1994 1993 Service cost-benefit earned durmg the period . . . . . . . . . . . . . . . . . . . . . . . S1,583 S 2,147 .S2,252 ;
- Interest cost ............................................... 7,185 7,221 8,644 j lacrease (decrease) in benefit cost fmm actual return on assets . . . . . . . . . (2,090) 894 (468) j j- Amortization ofunrecognized transition obligation . . . . . . . . . . . . . . . . . . 5,291 5,442 5,449 l 1 other...................................................... (262) (1,991) 293 ,
8 one-time charge for early retuement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,353 - - j i Regulatory recognition ofincumd cost . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.140 (6.218) .I2.126)
- Net periodic pos-a benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . 12L200 11A25 1.2&ld 1
1 I
i Dunng 1995, the Company recorded a one-time expense of S4.4 million related to the early retirement portion ofits l restructunng plan.
The Company has estabikiwd external trust funds to meet its expected postrenrement benefit obligations. The trust funds are comprised primanly of guaranteed rate investment accounts and mnney market investment accounts. A reconciliation of the funded status of the plan to the amounts reahzed as of December 31 is presented below (dollars in i thousands): l 1995 1994 l
Accumulated present value ofbenefit obligations:
Recree benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S(67,488) S(55,233)
Active employees fully eligible for benefits . . . . . . . . . . . . . . . . . . . . . . . (5,904) (6,127) other active employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I11941) (26 939) l A<mmutated benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (107,341) (88,299) l Plan assets at fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.916 18.200 Accumulated benefit obligation greater than plan assets . . . . . . . . . . . . . (80,425) (70,099)
I Unrecosmzed net gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,880) (25,894)
Unrecognized transition obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 952 95.993 Postreurement benefit liability recogmzed in the Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14Jg) S -
1 Assumptions usedwere:
Discount ate .........................................~.... . . 7.0% 8.5%
Expected long-term rate of return on assets (after taxes): .
Midwest Resources union plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ! 9.0% 9.0%
Midwest Resources salaried plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : 4.6% 4.6%
Iowa-Illinois plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.0% 3.0%
C For purposes of calculating the postretirement benefit obligation, it is assumed that health care costs for covered individuals prior to age 65 will increase by 11% in 1996, and that the rate ofincrease thereafier will decline by 1%
ar-any to an ultunate rate of 5% by the year 2002. For covered individuals age 65 and older, it is assumed that heahh care costs will increase by 9% in 1996, and that the rate ofincrease thereafter will decline by 1% annually to an ultimate rate of 5% by the year 2000. ,
e 4
if the assumed health care trend rates used to measure the expected cost of benefits covered by the plans were mcreased by 1%, the total semce and interest cost would increase by 50.9 million and the accumntated postretirement benefit obligation would increase by $7.6 million.
The Conpany sponsors defined wouanuksi pension plans (401(k) plans) covering suhetantially all employees. The Company's contributions to the plans, which are based on the parncipants level of contribution and cannot exceed four perces oftheirdQ.nts salaries or wages, were S3.7 million, $3.6 million and S3.6 million for 1995,1994 and 1993, )
respeenvely.
1 (7) SHORT-TERM BORROWING:
Immm =% ofworkrog capital needs and the construenon program may be obtained from the sale of commereial paper or short-term borrowing from banks. Information reg d-g short-term debt follows (dollars in thousands):
1995 1994 1993 Balance atyear-end ................................. S184,800 $124,500 S173,035 Weighted average interest rate on year.end balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7% 6.1 % 3.4%
Average daily amount outstanding dunng the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S114,036 5105,728 $117,445 Weighted average interestrate on average daily amount e=+=ad% dunng the year . . . . . . . . . . . . . . . . . . . . . . . . . 6.0% 4.4 % 3.3%
At December 31,1995, the Company had bank lines of credit of $250 million to provide short-term financing for its unhty operations. As ofDecember 31,1995, the Conpany has regulatory authority to borrow up to $400 million of short- ,
term debt for its utility operations. In January 1996, the Company entered into a $250 million revolving credit facthty agreement to replace the lines cf credit. The Company's commercial paper borrowmgs are cunently supported by the revolving credit facility.
(8) RATE MATTERS:
The table below shows the Company's recent material general rate activities (dollars in thousands):
Filing entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Midwest Midwest State of filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Iowa Iowa Semce....................................... Gas Electric Interim revenue increase:
Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S 8,200 S15,600 Percent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2% 2.7%
Date collection began . . . . . . . . . . . . . . . . . . . . . . . . October 18,1994 January 1,1995 Finalrevenue increase:
Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 510,600 $20,300 Percent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1% 3.4%
Date collection began . . . . . . . . . . . . . . . . . . . . . . . . August 1,1995 August 11,1995 j i
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4 The table below summarizes the results of the Company's recent material energy efficiency cost recovery Eng activities (dollarsin thousands):
Filing entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Midwest Midwest Iowa. Illinois State of filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . Iowa lowa lowa Final nevenue increase granted * . . . . . . . . . . . . . . S19,700 $18,700 S18,600 Defened charges to be amortized * . . . . . . . . . . . $14,100 S13,400 513,800 Date collection began . . . . . . . . . . . . . . . . . . . . . . October 12,1994 January 21,1995 August 3,1995
- Recovery and amortization over a four-year period (9) DISCOL*lNUED OPERATIONS:
The Company reflected as discontinued operations at hr*=har 30,1994, all activities of a subsidiary that constructed generanng fik;ilities and a subsidiary that consnucted electric distribution and tranammaion systems.
Essentially all of the assets of these subsidiaries have been sold.
Midwest Capital, under the terms of certam sale agreamana. has indemmned the purchasers of the construction subsidanes for specified losses or claims relating to construction projects which occuned prior to the date of their sale.
In addition, Midwest Capital has -=rni perfonnance on a joint vennue nunkey engmeenng, procurement and consouction contract for a cogeneration pmject. The Company has pmvided a support agreement to Midwest Capital related to this project. In October 1995, the project received prelimmary :-xq- =e from the owner. Management believes that the likelihood of a Insterial adverse impact to the Cn==ny under any kA hy provision of the sale agr=n=rm or construccon connacts or matenal cash payments by the Company under the support agreements is remote.
Net assets of the consnucnon subsuhanes are separatelyed on the Consohdated Balance Sheets as Investment in Damrw==W Operanons. Proceeds received from the deposition of the construction investments thmugh December 31, 1995, were S4.1 million. Revenues imm discont==W activities, as well as the results of operations and the estimated mmme (loss) on the disposal of discontinued operations for the years ended December 31 are as follows (in thousands):
1995 1994 1993 Operating Revenues . . . . . . . . . . . . . . . . . . . . . . . i 2.33d 1. fit. fib. 1JhL31Q Income (loss) from discontinued operations before income taxes . . . . . . . . . . . . . . . . . . . . . S 880 S (2,788) S (7,033) locame tax benefit (expense) . . . . . . . . . . . . . . . . (463) 908 3.179 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 (417) 1 f.1.B2.0) S_.f.3JEd.)
Loss on disposal before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . $ - S(11,576) S -
Income tax benefit ....................... - 7.811 -
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . s -
S (3.765j s -
i
. -19
i I j .
i (10) CONCENTRATION OF CREDIT RISK:
i
)' The Conpany's electne utahty operations serve 549,000 customers in Iowa, 83,000 customers in westem Illinois and 3,000 customers in southeastan South Dakota. The Company's gas utility operations serve 471,000 customers in Iowa, 65,000 customers in western Illinois,60,000 customers in southeastem South Dakota and 4,000 customers in northaa=-m i Nebraska. The largest commumtics served by the Company are the Iowa and Illinois Quad-Cities; Des Moines, Sioux City, Cedar Rapids, Wataloo, Iowa City and Councd Bluffs, Iowa; and Sioux Falls, South Dakota. The Company's utility
! operations grant unsecured credit to customers, substantially all of whom are local businesses and residents. As of l December 31,1995, billed receivables from the Company's utility customers totalled $126 million.
l The Company has investmens in preferred stocks ofcompanies in the utility industry. As ofDecember 31,1995, I the total cost of these investmena was $163 million.
InterCoast has entered into leveraged lease agrwnwna with companies in the auhne mdustry. As of December 31, j 1995, the receivables under these agreemens totalled $38 mdhon.
! (11) PREFERRED SHARES: -
1
! On December 15,1994, the Company rwlaemad all ofis ou=== ding $4.36 Series, S4.22 Series and 57.50 Series ;
j prefared shares. The redemption was made at a pawnmm, which resulted in a charge to net income on common shares j of $312,000.
j The $5.25 Senes Prefened Shares, winch are not redeemable prior to November 1,1998 for any purpose, are subject
. to mandatory redemption on November 1,2003 at $100 per share. The 57.80 Series Preferred Shares, winch are not
! redeemable prior to May 1,1996 for any purpose, have smkmg fund requiremenn under which 66,600 shares will be redeemed at $100 per share each May 1, beganing in 2001 through May 1,2006.
The total outstandmg cumulative preferred stock that is not subject to mandatory r%Gon requiremens may be redeemed at the option of the Company at prices wtuch, in the aggregate, total $95.1 mdhon. The aggregate total the j holders of all preferred stock ou==ading at December 31,1995, are entitled to upon invohmary bankruptcy is $141.8 I i nulhon plus accrued dividesk. Anmaal dividend requnemens forrJ mistock oustanding at December 31,1995, total 59.1 million.
i 4
1 4
i 1
1
. . i i ..
- i -
l (12) SEGME!UINFORMATION:
l Infonnation related to segments of the Company's business is as follows for the years ended December 31 (in thousands):
'.{
t 1995 1994 1993 UTILITY l Electric.
1 Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . 51,094,647 $1,021,660 S1,002,970 j Cost offuel, energy and capacity . . . . . . . . . . . . . 230,261 213,987 217,385 i Depreciation and amoruzation expense . . . . . . . . 136,324 132,886 129,814
! Other ci .uug expenses . . . . . . . . . . . . . . . . . . . 459.344 438.811 424.589
- i. O==dag income . . . . . . . . . . . . . . . . . . . . . . . . .
M M 12}.L132 i
Gas- '
Q==dag revenues . . . . . . . . . . . . . . . . . . . . . . . . S 459,588 5 492,015 S 538,989 i
Cost of gas sold . . . . . . . . . . . . . . . . . . . . . . . . . . . 279,025 326,782 366,049 i
, Depreciation and amortization expense . . . . . . . . 22,626 21,343 21,008 Other operatmg expenses . . . . . . . . . . . . . . . . . . . 172 017 111.644 110.970 a
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . g_E22 3 EIM i m62 0
i Operatirig income . . . . . . . . . . . . . . . . . . . . . . . . . . . S 304,638 S 268,222 $ 272,144
- Other income (expense) . . . . . . . . . . . . . . . . . . . . . . (4,074) (3,712) 21,185 ,
} Interest charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . R3.977 76.606 R3.524
] Income from connmimg operations j bcfore income taxes . . . . . . . . . . . . . . . . . . . . . . . 216,587- 187,904 209,805 j Inc ame taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84.098 66.759 75.917
{
incate from continumg operations . . . . . . . . . . . . . @ 5 121.145 $_1},L338 i
l Capital Expenditures-Electric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S 133,490 S 164,870 S 178,903 Gas.................................... 57,281 46,799 36,178 NONREGULATED Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S 169,409 S 177,235 S 140,976 Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128,685 130,621 96,656 '
Depreciation, depletion and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . 26,573 24,884 18,771 Other operating expenses . . . . . . . . . . . . . . . . . . . . . 17.657 16.346 16.797 Operatmg income (loss) . . . . . . . . . . . . . . . . . . . . . . (3,506) 5,384 8,752 Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,734 37,084 30,978 Interest charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,425 31,638 30,421 Income (loss) from Condmimg operations bebre income taxes . . . . . . . . . . . . . . . . . . . . . . . (18,10 9 10,830 9.309 Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16.1i 9 (4.410) (d,$DB)
It'.:ome (loss) from continumg operations . . . . . . . . S (2.083) $_1124Q S 13.217 Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . S 56,152 5 52,609 S 86,505 i
, i
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. . - . ._= . -. ..-
. .o 1995 1994 1993 ASSETINFORMATION Identifiable assets-Electric (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S2,947,832 S2,915,749 S2,891,487 Gas (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 709,742 693,203 662,634 Usedin overallutility operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,644 71,399 67,622 Nonregulated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 819.303 735.423 749.518 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1521521 E M E ZZ( Si31L2fil ;
i (a) Utility plant less am-latad pitwision for deprecaton, acmunts receivable, accmed unbilled revenues, inve=twie, I deferred gas expense, energy adjustment clause balance, nuclear decommmioning trust fund and regulatory assets (13) FAIR VALUE OF FINANCIAL INSTRUMENTS: ,
The followmg methods and assumptions were used to estunate the fair value of each class of fmancial instruments Tariffs for the Company's utility semces are established based on historical cost remaWg. Therefore, the impact of any reahzed gains or losses related to financial instruments applicable to the Company's utility operations is dependent on the treatment authorized under future ratemakmg proceedmgs.
Cash and cash equivalents - The canymg amount approximates fair value due to the short maturity of these
~
instruments. ,
. Quad-Cities mdear 4+ - eiioning trust fund - Fairvalue is based on quoted market prices of the investments held by the fund.
Marketable securities - Fair value is based on quoted market prices.
Debt secunnes - Fairvalue is based on the AW--+1 value of the funne cash flows expected to be received from such ,
investments.
Equrty investments camed at cost - Fair value is based on an esumate of the Company's share of partnership equity, offers from unrelated third parties or the discounted value of the future cash flows expected to be received from such investments.
Notes payable - Fair value is esumated to be the carrymg amount due to the short maturity ofthese issues.
Preferred shares - Fair value of preferred shares with mandatory redemption pmvisions is estimated based on the quoted market prices for similar issues.
. ~t
Long-ten debt - Fairvalue oflong-ten debt is estunated based on the quoted market prices for the same or sinular issues or on the current rates offered to the Company for debt of the same rwnaining marnrities. The following table prescens the carrying amount and estunated fair value of certam financial instmments as of December 31 (in thousands):
1995 1994 Carrymg Fair Canymg Fair Amount Yahlt. A mtm nt Yahm.
FinancialInstruments Owned by the Company:
Equityinvesunents carried at costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S 58,972 5 61,316 S 22,352 S 23,930 Finarnal Insnuments issued by the Company:
Preferred shares; subject to mandatory redemption S 50,000 S 52,800 S 50,000 S 50,836 Long-teun debt, including cunent portion . . . . . . . $1,468,617 S1,528,504 S1,471,127 S1,391,372 The amortized cost, gross unreahzed gain and losses and estunated fair value ofinvestments in debt and equity securities at December 31,1995 and 1994, are summarized as follows (in thousands):
1995 Aruuaued Unreshzed Unreahzed Fair Cost Gainc I- Vahw Available-for-sale:
Equity securities $254,111 S 7,132 S (9,278) S251,965 l MunicipalBonds 38,098 3,228 (210) 41,116 Cash equivalents 8,092 - - 8,092 Otherdebt securities 42.734 355 (6.507) 363R2 1143 035 1.11215 ELt221) 132.2.215 Held-to-maturity:
Equity securities S 11,389 $ -
S (786) S10,603 Debt securities 19.440 31 (921) _,,18,$10 N S 31 1 (,1,202) 1211 l l
. l
1994 Amortizej Umeahzed Unreahzed Fair _. Cost . Gainc Louec Ygg Available-for-sale. Equity securities S 171,201 S 2,388 S (14,703) S 158,886 Municipalbonds 43,034 749 (1,773) 42,010 Cash equivalents 5,836 - - 5,836 , Other debt securities 4.102 - - 4.102 l M S 3.137 S flid2fd M Held-to-maturity: Equity securities S 40,628 S - S (1,374) S 39,254 Debt securities 14.804 39 (1.849) 12.994 M S 39 M) M At December 31,1995, the debt securities held by the Company had the following maturities (in thousands): Amoruzed Fair cost Vahie l Within 1 year S 2,575 S 2,454 1 thmugh 5 years 38,345 36,934 5 thmugh 10 years 35,788 32,239 , Over 10 years 23,564 24,621 l Dunng 1995, the Company re-evahiatevi the classifrahan ofits secunties classified as held-to-maturity and available-for-sale. As a nsult, cenam secunties, with a total amortized cost of $33.1 million and a market value ofS33.8 million, were transferred fmm securities classified as held-to-maturity to available-for-sale securities. The pmceeds and the gross realized gains and losses on the disposition ofinvestments held by the Company for the years ended December 31, are as follows (in thoncamic): 1995 1994 Proceeds from sales S107,692 S135,769 Gross realized gains 3,923 10,338 Gmss realizedlosses (3,158) 5,234
-2 4
(14) INCOME TAX EXPENSE: Income tax expense from continuing opemtions includes the following for the years ended December 31 (in thousands): 1995 1994 1993 Income taxes Current Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S 45,635 S 20,036 5 57,179 State................................. 12.071 5_387 12.295 57,706 25,423 69,474 Deferred Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,905 37,316 7,610 State................................. 2.550 6.565 3.996 18,455 43,881 11,606 Investment tax credit, net . . . . . . . . . . . . . . . . . . . (8.177) (6.955) (9.671) Total income tax expense . . . . . . . . . . . . . . . . . . . S 67.984 $_62.342 S 71 409 inchul,a in Deferred Income Taxes in the Consolidated Ralare Sheets as of December 31 are deferred tax assets and deferred tax liabilities as follows (in thonunds): 1995 1994 Deferred tax assets Related to: Investment tax credits . . . . . . . . . . . . . . . . . . . . S 63,374 5 67,279 Unrealized iosses . . . . . . . . . . . . . . . . . . . . . . . . 7,548 4,008 Pensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,938 16,834 AMT credit carry forward . . . . . . . . . . . . . . . . . 18,738 34,555 Nuclear resen'es and decommmioning . . . . . . 8,367 8,340 Other ................................. 10.679 14.640 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1125.644 M1LQ2j 1995 1994 Deferred tax liabilities Related to: ) Depreciable property . . . . . . . . . . . . . . . . . . . . . 5533,750 $563,099 ) Income taxes recoverable through future rates . . . . . . . . . . . . . . . . . . 207,631 206,856 l Intangible dnihng costs . . . . . . . . . . . . . . . . . . . 38,278 17,062 l Energy efficiency . . . . . . . . . . . . . . . . . . . . . . . . 28,616 17,635 Reacquired debt . . . . . . . . . . . . . . . . . . . . . . . . . 17,595 18,575 l FERC Order 63 6 . . . . . . . . . . . . . . . . . . . . . . . . 16,073 17,939 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.275 30.155 To tal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S873.218 112,1,12.1 The following table is a reconciliation between the effective income tax rate, before preferred stock dividends. indicated by the Consolidated Statements ofIncome and the statutory federal income tax rate for the years ended December 31: 25-
1995 1994 1993 Effective federal and state income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 % 31% 33 % Amortization ofinvestment tax credit . . . . . . . . . . . . 4 4 4 Resolution of prior year tax issue . . . . . . . . . . . . . . . - 2 - State income tax, net of federal income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) (4) (5) Dividends received deduction . . . . . . . . . . . . . . . . . . 2 2 2 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - 1 Statutory federal income tax rate . . . . . . . . . . . . . . . . __M% J% J% (15) INVENTORIES: Inventories include the following amounts as ofDecember 31 (in thoncana): 1995 1994 Materials and supplies, at average cost . . . . . . . . . . . . . . . S 27,442 S 31,688 Coal stocks, at average cost . . . . . . . . . . . . . . . . . . . . . . . . 32,163 26,878 Fuel oil, at average cost . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,523 1,907 Gas in storage, at LIFO cost . . . . . . . . . . . . . . . . . . . . . . . . 21,883 30,347 Other.......................................... 7774 1.428 Total.......................................... S 85.235 $_22,2fg At December 31,1995 prices, the current cost of gas in storage was $31.4 million. l (16) OTHERINFORMATION: The Company has completed a merger.related restructurmg plan during 1995. Other operating expenses in the Consolidated Statements ofIncome for 1995 includes $33.4 million related to the restructunng plan. Non-Operating - Other, Net, as shown on the Consolidated Statements ofincome includes the following for the years ended December 31 (in thousands): 1995 1994 1993 1 Allowance for equity funds used durmg construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S 481 5 452 S - Gain on sale of assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . 8,570 4,468 20,164 Income (loss) fmm equity method investments . . . . . . . . . (312) 2,712 2,073 Energy efficiency carrymg charges . . . . . . . . . . . . . . . . . . . 3,092 1,681 1,172 M erger costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,624) (4,510) - Other-than-temporary declines in value ofinvest aents and other arsets . . . . . . . . . . . . . . . . . . . . (17,971) (1,791) (2,939) Otic . . . ..................................... 297 1.304 372 Total........................................ jQgd{g2) S 4.316 $ 2DR2
l' (17) HOLDING COMPANY PROPOSAL The Company's Board of Directors has appmved the focuation of a holding company for MidAmerican's organnational stmeture. The holding company would have two wholly owned subsidiaries consisting of MidAmencan (utility operations) and InterCoast. Consnmmation of the holding company snucture is subject to approval by holders of a majority ofthe ww-% shams ofthe Coupany's mmman stock. In addition, certain orders must be received from the ICC,IUB, FERC, and the Nuclear Regulatory Cammmion. Subject to such approvals, each share ofMidAmencan common stock will be arW for one share of the holding company's stock. It is managements intent, if possible, to complete the formation of the holding company and share exchange by the end of 1996. (18) UNAUDITED QUARTERLY OPERATING RESULTS: 1995 1st Ouarter 2nd Ouarter 3rd Ouarter 4th Ouarter (In thousanth, except per share amounts) Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . S 461,422 S 371,712 S 434,623 S 455,887 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,841 56,312 99,887 66,092 Income fmm contimung operations . . . . . . . . . . . . . . 37,577 26,674 37,457 28,698 Income (loss) from discontinued operations . . . . . . . - 516 - (99) Earnmgs on common stock . . . . . . . . . . . . . . . . . . . . 35,296 24,908 35,780 26,780 Earmngs per average common share: Income from continuing operations . . . . . . . . . . . . . S 0.35 $ 0.24 5 0.36 S 0.27 Income (loss) from discontinued operations . . . . . . - 0.01 - - Eammgs per average common shart . . . . . . . . . . . . . S 0.35 5 0.25 S 0.36 5 0.27 l 1994 1st Ouarter 2nd Ouarter 3rd Ouarter* 4th Quarrer (In thoneansk except per share amounts) Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . S 529,422 S 368,126 5 382,492 S 410,870 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,855 55,949 85,570 45,232 Income from continuing operations . . . . . . . . . . . . . . 47,468 24,748 42,125 22,044 Loss from discontinued operations . . . . . . . . . . . . . . (759) (603) (4,236) (47) Earmngs on common stock . . . . . . . . . . . . . . . . . . . 44,136 21,571 35,315 19,167 Earnmgs per average common share: Income from continuing operations . . . . . . . . . . . . S 0.46 $ 0.23 S 0.40 S 0.19 Loss from discontinued operations . . . . . . . . . . . . . (0.01) (0.01) (0.04) - Earnings per average common share . . . . . . . . . . . . . S 0.45 5 0.22 S 0.36 S 0.19 Includes the estimated loss on the disposal of the construction subsidiaries. The quanerly data reflect seasonal variations common in the utility industry. ! . . - - - - - . - .. - . - . . - . - - - . - - ~ - -- .- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholders and Board of Directors of MuiAmencan Energy Company and Subsidiaries: We have audited the accompanymg consolidated balance sheets and consolidated statements of capitalization of MdAmencan Energy Company (an Iowa corporation) and subsidiaries, as of December 31, 1995 and 1994, and the related consolidated statements ofincome, reiamed earmngs and cash flows for each of the three years in the period ended December 31,1995. These Anancini statements are the responsibility of the ; Company's managanet. Our responsibility is to express an opinion on these Anancral statements based on our audas. We did not audit the 1994 and 1993 Ananc=1 statamann ofIowa-Illinois Gas and Electric Company, one of the compames merged in 1995 to form EdAmencan Energy On=nany in a transaction accounted for as a pooling-of-interests, as discussed in Note (1)(a). Such erstements are included in the consolidated Anancial senwnwns ofMidArnmcan Energy Company and subsidiaries and reflect total assets constitutmg 42% in 1994 and totai revenues cxestnutag 36% in 1994 and 1993, of the related consolidated totals. These statements were audited by other auditors whose report has been fumished to us and our opinion, insofar as it relates to the amounts inchidad for Iowa-Illinois Gas and Electric Company, is based solely upon the report of the other auditors. We conducted our audits in =e#=e with generally mye auditing standards. Those standards requae that we plan and perfbem the audit to obtam reasonable assurance about whether the fmancial statements , are free ofmatenalmisstatement An audit inchwies erammmr on a test basis, evidence suppomng the amounts ! and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estunates made by management, as well as evehiarmt the overall financial statement presentation. We believe4:at our audits provide a reasonable basis for our opinion. In our opunon, based on ourreport and the report of the other auditors, the Anancial statements refened to above present fairly, in all material respects, the financial position of MidAma+an Energy Company and subsidianes as ofDecember 31,1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31,1995, in confonnity with generally accepted acce. g ! principles. Anhur A% LLP Chicago, Illinois January 26,19% g t a i r. E 4 REPORT OF MANAGEMENT Ma==nent is responsible for 6e preparation of all information contained in this Annual Report, including the fi=rrial statements.. The statemeL4 snd related fmancial infonnation have been prepared in conformity with 4 generally accepted accounting principles. In the opinion of management, the financial position, results of operation and cash flows of the Company are reflected fairly in the statements. The statements have been audited by the Company's independent public accoimrants, Arthur Andersen LLl'. The Company mamtams a systen ofintrmal controls which is designed to provide reasonable assunmce, on
- a cost effective basis, that transacuans are executed in accordance with management's authorization, the fmancial statements are reliable and the Company's assets are properly accounted for and safeguarded. The Comparr/s intemal auditors continually evaluate and test the system of internal controls and actions are taken when opportunities for improvement are identified. Management believes that the system ofinternal controls is effecove.
The Audit Ci- ne of the Board ofDirectors, the members ofwhich are directors who are not employees of the Company, meets regularly with management, the internal auditors and Arthur Andersen LLP to discuss accounting, auditing, internal control and finnicial reporting matters. The Company's indapendant public acx:ountants are sypvisd anmally by the Board of Directors on recommendation of the Audit Committee. The mtemal auditors and Arthur Andersen LLP each have full access to the Audit Commitree, without management representatives present. Stanley J. Bright President, Office of the Chief Executive Officer I l Lance E. Cooper Group Vice President Finance and Accounting
- ,o EXHIBIT 133 Five-Year FinancialStatistics 1995 1994 1993 , 1992 1991 Earnings per average common share -
Continuing operations: Utility operations S 1.24 S 1.12 S 1.29 S 0.82 S 133 Nonregulated activities (.02) 0.16 0.14 0.01 (.01) , Diaenntinnad operations - (0.06) (0.04) 0.01 - ! Earmngs per average common share 5 1.22 s 1.22 s 1.39 s 0.84 5 1.32 1 Return on average common equity (%) 10.1 10.1 11.6 7.1 11.2 Cash dividends declared per common share $ 1.18 $ 1.17 5 1.17 $ 1.28 $ 138 Common dividend payout ratio (%) 97 96 84 152 105 Ratio of sarmngs to fixed charges Consolidated 2.8 2.8 2.9 1.9 2.5 Uninyonly 3.4 33 3.4 23 2.9 Ratio of earnmgs to fixed charges and Cooper Nuclear Station debt service Consolidated 2.7 2.7 2.8 1.9 2.4 Utilityonly 33 3.2 33 2.2 2.8 cana.n, tion ratios % -- Common shareholders' equity 443 43.9 44.0 43.8 42.9 Preferred shares, not subject to mandatory redemption 3.2 33 4.1 2.8 2.8 Preferred shares, subject to mandatory redemption 1.8 1.8 1.9 1.8 3.0 Long-term debt (excluding current portion) 50.7 51.0 50.0 51.6 513 Book value per common share at year-end S 12.17 5 12.08 5 12.07 5 11.86 S 12.12 Quarterly earmngs per average common share outstandmg - 1st quaner S 035 5 0.45 5 0.44 5 0.28 $ 036 2nd quarter 0.25 0.22 0.22 0.13 0.27 3rd quarter 036 036 0.52 0.26 0.47 4th quaner 0.27 0.19 0.20 0.17 0.22 Number of fulltime employees - Utility 3,331 4,077 ~ 4,196 4,305 4,370 Nonregulated 271 274 347 200 140 Utility construction expenditures $ 190,771 S 211,669 5 215,081 S 188,344 5 177,061 Net cash from utility operations less dividends as a % of ennstruction 134 121 103 71 100 Common Stock Dividends and Prices Price Ranoe Dividende Declared MidAmerican Iowa.T11innic Resnurces I
.MEC. DE[i hDER _lhgtL _I n _ _Ihgh _Jgzg High _Jgav_,
1995 4th Quaner S030 5 - S -
$171/8 SIS S -S - S -
S - 3rd Quaner 030 - - 15 5/8 13 5/8 - - - - 2nd Quaner - 0.4325 0.29 - - 22 19 7/8 15 13 5/8 1st Quarter - 0.4325 0.29 - - 22 1/8 19 14 5/8 13 3/8 1994 4th Quaner 5 - 50.4325 $0.29 - -
$20 5/8 S18 7/8 S14 1/2 512 7/8 4 3rd Quaner - 0.4325 0.29 - - 22 1/2 19 1/4 15 3/8 13 1/2 l 2nd Quaner - 0.4325 0.29 - -
24 1/2 19 7/8 16 3/4 13 7/8 1st Quaner - 0.4325 0.29 - - 24 3/4 22 3/8 18 16 i
-1 1
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l 0 MIDAMERICAN ENFJtGY COMPANY FIVE-YEAR CONSOLIDATED STATEMENTS OF INCOME
, Years Ir= dad E= "
- 31 Fr 1995 1994 1993 1992 1991 (In thousands, except per share amounts)
Operating Revenues Electric utility $1,094,647 $1,021,660 $1,002,970 $ 936,027 5 968,799 Gasutility 459.588 ' 492,015 538,989 484,687 473,251 Nooregulated 169A09 177.235 140.976 70344 46.513 1.723 A44 1.690.910 1 AR2 035 1.491.058 1.488.563 t . Operating Expenses Utility: Cost offuel, energy and capacity 230,261 213,987 217,385 ' 211,924 212,647 Cost ofgas sold 279,025 326,782 366,049 326,097 323,113 Other operaung expenses (2) 399,648 354,190 340,720 329,911 306,508 Mamtenance 85,363 101,275 101,601 93,769 91,548 Depreciation and amorn=han 158,950 154,229 150,822 144,646 135,062 Property and other taxes 96350 94.990 93.238 97A79 94.872 1,249,597 1,245,453 1,269,815 1,203,826 1,163,750 Nonregulated(2) 172.915 171.E51 137 ??4 693r 46.692 1 A?7 412 1.417 304 1.402.039 _1Z'L368 1.210A42 OperatingIncesse 301.132 273 406 280.296 217.710 272.121 Non-OperatingIncone(3) 11 A60 33372 52 163 15456 28.021 Interest Charges Interest onlong-term debt 110,505 105,753 111.065 114,732 106,538 Otherinterest expense 9,449 6,446 5,066 5,899 16,380 Allowance for borrowed funds (5352) (3.955) 0.1R6) 0.162) (4347) 114A02 108.244 113.945 11E_469 118.571 Income From Continuing Operations BeforeIncome Taxes 198,390 198,734 219,114 114,897 187,573 Inconne Taxes 67.984 62 349 71 A09 26.212 59404 Income From Contianing Operations 130,406 136,385 147,705 88,085 127,% 9 laceae (Imss)From Discontinued Operations (net ofincome taxes)(4) 417 (5A45) (3.854) 794 2 03 Net Income 130,823 130,740 143,851 88,879 128,172 Preferred Dividends 2.059 10.551 8367 8.735 9.708 Earnings on Comunen Stock 5 122.764 $_120JL' 1_12168d S 80 144 6 Average Cousmos Shares Outstanding M 98.531 97.762 95A30 2 Earnings Per Common Share 5 1.22 5 1.22 S 1 39 5 0.84 5 1 32 c (1) The ampany was formed on July 1,1995, through a merger, as discussed in Note (1)(a) of Notes to Consolidated Financial Starananc (Notes). All data en this maremme re6ect the pooled amounts of the pr*- compames Non-Operatmg Income includes 54.5 million and 54.6 million ofmerger-related costs in 1994 and 1995, respectively. (2) Utility other operatmg expenses include $31.9 million of costs related to a restructurmg and woric force reduction plan hM and completed in 1995. In addition, nonregulated other expenses for 1995 includes $1.5 million of related costs. (3) During 1995, the campany recorded apprommately $18 million of expense for the write-down of certato nonregulated assets. In 1993, the Company recorded an $18.5 million pre-tax gain on the exchange ofnatural gas service territory. The exchange resulted in a decrease of approximately 33,000 natural gas cunomers. (4) In 1994 the Company announced its intent to divest its construction subsidiaries. Refer to Note (9) of Notes.
MIDAMERICAN ENERGY COMPANY FIVE-YEAR CONSOIJDATED BALANCE SHEETS As of Ih--- ' r 31 1995 1994 1993 1992 1991 (In thousands) Utility Plant Electric $3,881,699 S3,765,004 $3,642,415 $3,534,703 S3,455,061 Gas 695.741 663.792 639.276 628.856 575.113 4,577,440 4,428,796 4,281,691 4,163,559 4,030,174 Less accumulated derreciation and amortuation 2.027.055- 1.885.870 1.801.668 1.680.033 1.572.946 2,550,385 2,542,926 2,480,023 2,483,526 2,457,228 Construction workin progress 104.164 101.252 111.726 67.664 51.176 Total 2.654.549 2.644.178 2.591.749 2.551.190 2.508.404
)
1 Power Purchase Contract 212.148 221.998 248.643 243.146 248.949 Investament la Discontinued Operations - 15.249 22.206 23.686 23.854 i Current Assets Cash and cash equivalents 41,216 33,778 24,289 25,079 30,384 , Receivables,less reserves 261,105 212,902 226,054 225,566 205,440 Invertories 85,235 92,248 100,675 98,608 91,753 Other 22.252 19.035 24.911 26.182 20377 409.808 357.963 375.929 375.435 347.854 Investments 826.496 752.428 760308 727.929 673.789
]
OtherAssets 420.520 423.958 372.426 192.630 107.819 Total Assets 1152L521 S4.41',./74 1422L261 31LILQ16 119.101tft9 Capitalization and Liabilities Capitalization Common shareholders' equity S1,225,715 51,204,112 $1,180,510 1,159,676 1,128,858 Preferred shares, not subject to mandatory radame 89,945 89,955 109,871 74,242 74,291 Preferred shares, subject to mandatory redemptico 50,000 50,000 50,000 48,625 79,200 Long-term debt 1403322 1.398.255 1 341.003 1 368.784 1351385 2.768.982 2.742 322 2.681384 2.651327 2 633.734 ) Current IJabilities l Notes payable 184,800 124,500 173,035 120,244 67,629 Current portion oflong-term debt 65,295 72,872 66,371 32,952 10,991 l Current portion of power purchase contract 13,029 12,080 10,830 8,065 8,948 Accountspayable 142,759 110,175 129,504 115,763 117,573 Taxes accrued 81,898 91,653 110,923 101,585 101,879 Interest accmed 30,635 30,659 31,021 31,395 31,678 Other 57.000 54.473 52.237 53.563 39378 575.416 496.412 573.921 463.567 378.076 Other Liabilkes Power purchase contract 112,700 125,729 140,655 138,085 141,890 Deferredincome taxes 746,574 725,665 670,288 596,144 525,056 Investment tax credit 95,041 100,871 106,729 113,846 119,989 Other 224.808 224.775 198.284 151.047 111.924 1.179.123 1.177.040 1.115.956 999.122 898.859 Total Capitalization and Ilabilities 54.523.521 S4.415.774 SL12L2ft1 S4.114.016 M 4 i e
j' 7 SUBSIDIARIES OF MIDAMERICAN ENERGY COMPANY ! AS OF DECEMBER 31,1995 4 !' Jurisdiction Subsidiary ofIncorporanon i
- InterCoast Energy Company Delaware Midwest Capital Group,Inc. Iowa 1
! InterCoast Capital Company Delaware i
! Medallion Production Company Delaware As of the end of the year covered by this report, MidAmerican Energy Cornpany's remaining subsidiaries, considered , in the aggregate as a single subsidiary, would not constitute a significant subsidiary as defined in Rule 1-02(w) of Regulation S-X. 3 i i i
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